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Woman Arrested After Punching Walmart Employee In The Face

by The Huffington Post on December 26, 2011

Huffington Post…

People: we know holiday sales are great, but they’re not worth spending the night in jail. A New York woman was charged with two counts of second-degree assault after punching a 70-year old Walmart employee in the face. Jacquetta Simmons, 26, assaulted Grace Suozzi on Saturday night after the Walmart greeter asked to see her receipts, according to authorities. Simmons quickly fled the scene, but employees and customers chased her until she was surrounded. Not long after, police arrived and arrested her. Police reported that when they checked Simmons’ bags, she had receipts for all of the merchandise. WATCH:

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Woman Arrested After Punching Walmart Employee In The Face

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Bipartisan Group Casts Bizarre Pro-Porn Vote

by on December 19, 2011

Huffington Post…

WASHINGTON — On Thursday, a bipartisan coalition of lawmakers directed the federal government to deploy radical new powers to enforce and protect copyrights on pornography. By a vote of 9 to 18, the House Judiciary Committee rejected an amendment offered by Rep. Jared Polis (D-Colo.), which would have barred the Department of Justice from using the new tactics envisioned by an anti-piracy bill to protect “obsecene and pornographic works.” Members of both parties came together to defeat the anti-pornography initiative, with Judiciary Chairman Lamar Smith (R-Texas), ranking member John Conyers (D-Mich.), and even hardcore social conservative Rep. Steve King (R-Iowa) all against Polis’ amendment, and in effect, standing up to protect the porn industry. The vote came during a hearing to modify the text Stop Online Piracy Act, or SOPA, a bill which gives filmmakers and the federal government the ability to shutdown entire websites that they claim are involved in piracy — without a trial or even a traditional hearing. And while the legislation is being pushed most aggressively by Hollywood movie studio and major record labels, the sweeping enforcement powers envisioned by the bill could be deployed by adult film auteurs, as well. Yet a spokesperson for King explained his vote by arguing the Polis amendment would have actually led to more porn online. By enforcing the intellectual property rights of porn producers, King’s office argued, the DOJ would be able to take down many websites that post porn illegally. Polis is one of a handful of outspoken SOPA opponents on the Judiciary Committee, whose position is embraced by several major Silicon Valley companies alongside the ACLU, Internet experts and academics. Web programmers warn that the primary anti-piracy tactics envisioned by the bill would weaken online security measures and crack the very foundation of the Internet. The ACLU and other First Amendment advocates blast the destruction of entire websites without a trial — rather than the removal of infringing material — as a major free speech violation. By introducing his porn rider, Polis forced SOPA supporters into casting an awkward vote. Determining whether a site takedown would protect pornographers would require the Justice Department to conduct additional reviews and open up takedowns to a new category of legal challenges. And that might make the process of website annihilation slower for Hollywood studios seeking to crackdown on pirated mainstream movies. Hollywood has repeatedly cast SOPA as job-creating legislation, with Motion Picture Association of America Chairman Chris Dodd celebrating the bill as a way to protect actors and technicians alike. Economists say it’s unlikely that the bill will actually create any jobs, warning that it’s tactics are particularly problematic for legitimate tech start-ups , but film-friendly lawmakers have been happy to parrot the MPAA talking points. To date, however, no members of Congress have celebrated SOPA’s potential to create more porn stars. Several lawmakers ducked the vote by simply not attending. In fact, of the 10 amendments that received roll call votes on Thursday, Polis’ porn amendment received the fewest total votes, with just 27, compared to as many as 34 on other amendments. Reps. Ben Quayle (R-Ariz.) and Howard Berman (D-Calif.) curiously were able to vote on both the amendments offered before and after the porn amendment, but disappeared for the porn vote. A spokesman for Polis insists that the amendment was not simply a humorous effort to put SOPA supporters in a difficult position. “It makes a serious point,” Polis spokesman Chris Fitzgerald told HuffPost. “You’re basically going to have the Justice Department policing all of this, and if we’re going to be extending those resources, we shouldn’t be prioritizing the property rights of pornographers over others.” Polis’ unusual allies supporting his amendment also included members on both sides of the aisle, with SOPA opponents Reps. Darrell Issa (R-Calif.) and Zoe Lofgren (D-Calif.) joining strident social conservative Reps. Louis Gohmert (R-Texas) and Jim Jordan (R-Ohio).

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Bipartisan Group Casts Bizarre Pro-Porn Vote

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Robert Reich: Why We Shouldn’t Be Selling the Right to Live in America

October 25, 2011

America is having a fire sale. Why not sell wealthy foreigners the right to live here, too? That’s the notion behind a bill introduced last week by Republican Senator Mike Lee of Utah and Democrat Senator Charles Schumer of New York: Stoke demand for American homes by allowing foreign nationals to buy them. In return, give foreigners the right to live here (although not work here). The price? At least $500,000 cash. It could be one piece of real estate costing $500,000 or more, or several, of one would have to be worth at least $250,000. Presumably, this would help homeowners by boosting demand. “This is a way to create more demand without costing the federal government a nickel,” Schumer told the Wall Street Journal . And it would help the street. Rather than have the big banks carry all those non-performing mortgage loans on their books or be forced to write them down, we’ll just goose the housing market by selling off the right to live in America. And the measure wouldn’t allow in the world’s riff-raff, because buyers would have to be rich enough to pay cash, and live here six months a year without working. Realtors love it. Says Glenn Kelman, CEO of Redfin, an online brokerage firm, “when property values sag and this is a desirable place to live, one of the simplest solutions is just to let more people in so they can buy the homes.” In Seattle, where Kelman lives, housing prices have slumped — as they have all over America. But Vancouver, Canada — just 140 miles to the north — is enjoying a housing boom because Canada allows foreigners to buy their way into Canada, just as the Lee-Schumer bill would do here. But wait a minute. Rich foreigner buyers may be a boon to American homeowners looking to sell, because those homeowners can’t find Americans willing and able to fork over as much money as the sellers would like. But what about American home buyers — many of them young, just entering the market — who would prefer low home prices that aren’t bid upward by rich foreigners? It’s not altogether obvious why we should favor American homeowners over American home buyers. The visa-for-home swap proposal also comes at exactly the same time the nation is actively closing its doors to foreigners who aren’t wealthy. Is this what America is all about? Policy makers have tightened eligibility for entering the country legally. Student visas are harder to obtain. Family members are waiting years to become resident aliens. Green cards are in short supply. Meanwhile, many states are doing whatever they can to make immigrants — mostly poor, but legal as well as illegal — feel unwelcome. For example, Alabama and Arizona allow police to demand “papers, please” from anyone they suspect may be undocumented (read: anyone who looks Hispanic). Alabama requires public schools to demand documentation from parents of all children in K-12 programs. The nation is expelling record numbers of undocumented workers. Over the last year (from October 1, 2010 to October 31, 2011), almost 400,000 people were deported – the largest number in the history of the Federal Immigration and Customs Enforcement Agency. Annual deportations have increased 400 percent since 1996. Some of these people committed criminal acts in the United States but a significant number simply overstayed their visas. Others had been in America for decades, working and raising their families here. Some had even been here legally but had no opportunity to defend themselves. A recent report by my colleagues at the Berkeley Law School notes that many immigrants “are pushed rapidly through the system without appropriate checks or opportunities to challenge their detention and/or deportation.” If the Schumer-Lee bill becomes law, the easiest way for a foreigner to live in America will be to plunk down $500,000 for a piece of property. Maybe we should rewrite Emma Lazarus’s words on the Statue of Liberty: Give us your richest, fattest cats, Your highest net-worth, seeking pleasure domes, Your wealthy heirs and pampered brats. Send these, with a half-million to buy our homes, And gild our fading door mats. — Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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Hospital Drug Shortages Present Deadly, Costly Crisis

September 24, 2011

TRENTON, N.J. — A drug for dangerously high blood pressure, normally priced at $25.90 per dose, offered to hospitals for $1,200. Fifteen deaths in 15 months blamed on shortages of life-saving medications. A growing crisis in the availability of drugs for chemotherapy, infections and other serious ailments is endangering patients and forcing hospitals to buy from secondary suppliers at huge markups because they can’t get the medications any other way. An Associated Press review of industry reports and interviews with nearly two dozen experts found the shortages – mainly of injected generic drugs that ordinarily are cheap – have delayed surgeries and cancer treatments, left patients in unnecessary pain and caused hospitals to give less effective treatments. That’s resulted in complications and longer hospital stays. Just over half of the 549 U.S. hospitals responding to a survey this summer by the Institute for Safe Medication Practices, a patient safety group, said they had purchased one or more prescription drugs from so-called “gray market vendors” – companies other than their normal wholesalers. Most also said they’ve had to do so more often of late, and 7 percent reported side effects or other problems with those drugs. Hospital pharmacists “are really looking at this as a crisis. They are scrambling to find drugs,” said Joseph Hill of the American Society of Health-System Pharmacists. At a hearing Friday before the health subcommittee of the House Energy and Commerce Committee, hospital officials and other experts testified that the worsening shortages are preventing them from giving many patients the best care and are driving up costs. “Considering the nation’s budget crisis and our skyrocketing health care bill, these markups are nothing more than profiteering at the expense of patients and providers who are struggling to afford vital medicines,” said Mike Alkire, chief operating officer of Premier Healthcare Alliance, a group that helps U.S. hospitals and other health providers improve their patient care and finances. The shortages could cost hospitals at least $415 million a year, he said, citing data from health care providers across the nation. So far, hospitals have been absorbing the extra costs, but they’ll soon have to start passing them on to insurers and patients, according to the American Hospital Association. The scarcity of mainstay cancer drugs is not only hurting patients but is halting or disrupting clinical studies of potential new treatments, said Dr. Robert S. DiPaola, director of the Cancer Institute of New Jersey. “The drug shortages of today can have a ripple effect on the availability of new drugs and treatment combinations tomorrow,” he told the committee. On Monday, the Food and Drug Administration is holding a meeting with medical and consumer groups, researchers and industry representatives to discuss the shortages and strategies to fight them. The FDA says the primary cause of the shortages is production shutdowns because of manufacturing problems, such as contamination and metal particles that get into medicine. Other reasons include theft of prescription drugs from warehouses or during shipment, as well as the “gray market” vendors who buy scarce drugs from small regional wholesalers, pharmacies or other sources and then sell them to hospitals at many times the normal price. These sellers may not be licensed, authorized distributors. In addition, many companies have stopped making generic injected drugs because the profit margins are slim. Producing them is far more expensive than stamping out pills, and it takes about three weeks to produce a batch. Making things worse, companies don’t have to notify customers or the FDA that they’ve stopped making a medicine. That means neither FDA nor competitors can fill the gap in time. Only a half-dozen companies make the vast majority of injected generics. Even if other companies wanted to begin making a drug in short supply, they’re discouraged by the lengthy, expensive process of setting up new manufacturing lines and getting FDA approval. Hospitals that buy scarce medicines from the “gray market” are taking a gamble. The drugs may be stolen and hospitals can’t always tell whether a medicine was properly refrigerated – as required for many injectable drugs – or whether it’s past the expiration date, said Michael R. Cohen, a pharmacist and president of the institute. The active ingredient might have degraded and the drug might not work well or could even harm the patient, he said. Cohen attributes at least 15 recent deaths to drug shortages, either because the right drug wasn’t available or because of dosing errors or other problems in administering or preparing alternative medications. But many deaths and injuries go unreported, he said. In the worst known case, Alabama’s public health department this spring reported nine deaths and 10 patients harmed due to bacterial contamination of a hand-mixed batch of liquid nutrition given via feeding tubes because the sterile pre-mixed liquid wasn’t available. So far this year, 210 drugs have been added to the list of those in short supply, one less than the total for all of last year, according to the University of Utah Drug Information Service, which tracks the shortages. That’s triple the roughly 70 a year from 2003 to 2006, when shortages began to climb steadily. “The shortages aren’t resolving. They’re piling up on top of existing ones,” said Erin Fox, a pharmacist who manages the service. She said at least 55 drugs from shortages before this year are still unavailable or scarce. The average price markup on drugs sold by secondary distributors was 650 percent, according to an Aug. 16 report by the Premier Healthcare Alliance. The figure is based on an analysis of 636 unsolicited sales offers that were faxed and emailed to hospitals from secondary distributors in April and May. Virtually every offer was for at least double the normal price, the survey found. The drugs with the highest markups were for critically ill patients needing anesthesia or other medicines for surgery or for emergency care, cancer, infectious diseases and pain management. In an extreme case, one vendor was offering a generic beta blocker for dangerously high blood pressure, normally priced at $25.90 per dose, for $1,200. The FDA says it must uphold quality standards but also works hard to prevent shortages. “When FDA detects a contaminant, whether it be shards of glass or metal particles or an infectious agent, we have to take action to protect the public,” said Dr. Peter Lurie, a senior adviser in the FDA commissioner’s office. When such problems force a company to shut down production, the FDA urges other manufacturers to boost their output and expedites any approvals needed, said Valerie Jensen, associate director of the agency’s drug shortage program. When raw materials used to make drugs are in short supply, the FDA tries to find new sources. The agency averted 38 shortages last year, Jensen added. Another 99 have been prevented so far this year, Howard K. Koh, assistant secretary for health in the Department of Health and Human Services, told the committee. Legislation pending in the House and Senate would increase penalties for drug thefts from warehouses and tractor-trailers. Another proposal, which has bipartisan support, would require drug manufacturers anticipating a shortage to immediately notify the FDA. The pitches hospitals get from secondary distributors generally say they have small batches of specific drugs that are hard or impossible to find. “Are you enjoying this crazy `roller coaster ride’ of pharmaceutical shortages? … I utilize over 60 vendors to locate and procure needed pharmaceuticals to assist when you have shortage needs,” one reads. Several distributors who sent hospitals solicitations for scarce drugs didn’t return calls from the AP. One representative said he wasn’t authorized to discuss the issue. Another company, Novis Pharmaceuticals, defended the higher prices, saying secondary distributors have to charge far more because they don’t get the big rebates manufacturers give primary distributors. They also have high costs to locate and transport batches of scarce drugs, although the company, which mainly distributes blood plasma, would not disclose its profit margin. It’s illegal for companies to collude to create a medicine shortage and raise prices, and there’s no evidence of that. There’s no federal law against price-gouging on prescription drugs, according to the FDA, but it does urge pharmacists to report cases to its Office of Criminal Investigation. An agency spokeswoman said she could not discuss whether any cases are being investigated. The top three wholesalers say they try to alleviate problems by working with drug manufacturers, updating hospitals on shortages and rationing scarce supplies by giving their regular hospital customers a portion of their normal order. McKesson Corp. and Cardinal Health Inc. say they halt sales to any smaller distributors found to be diverting drugs or otherwise breaking rules. AmerisourceBergen Corp. does background checks on customers. The hospital association and other groups urge hospitals not to buy from unaccredited vendors, to insist on documentation of the drug’s source if they must, and to report price gouging to state authorities. But only three states – Kentucky, Maine and Texas – have price-gouging laws that specifically cover medicines. “Something has to be done here,” said pharmacist Michael O’Neal, head of drug procurement for Vanderbilt University Medical Center in Nashville, which has had to purchase medicines from secondary suppliers about 70 times over the past two years. “This is unethical,” he said. “We’re talking about people’s lives.” ___

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Black Households Maintain Faith In Obama

August 31, 2011

Walter Character — a self-described Atlanta family man, out-of-work African American and independent voter — spends a great deal of time consuming news that criticizes the Obama administration for ignoring blacks’ struggles, but said he doesn’t believe the president should shoulder the blame alone. In June, Character read about the spate of Republican presidential hopefuls who declared that Obama has failed black America. In August, Character saw stories about an anti-poverty tour organized by Princeton University professor Cornel West and talk show host Tavis Smiley. The two men said they wanted to draw attention to a growing group that Obama has willfully ignored: the poor . Then, Character came across stories about a group of black federal legislators frustrated with what they say is the scant attention the White House has paid to black unemployment . It has been a noisy summer, filled with bad economic news for all Americans, dismal reports on black family finances and plenty of anti-Obama rhetoric, Character said. “I watch enough news so I can tell you. There are a lot of folks, folks on every side, who seem to want to blame the president for any and everything,” said Character, 45. “But, you have to ignore the facts, pretend there is no Congress, pretend the president can just make laws and create jobs on his own to believe that idea.” Despite declines in black employment, homeownership and just about every other measure of black economic health, a pair of recently-released Pew Research Center studies found that black Americans rank the president’s job performance and the nation’s economic prospects higher than any other demographic group. “If you look at objective reality,” said Paul Taylor, the Pew Research Center’s executive vice president, “the household wealth number or the unemployment number or any other number of economic indicators, there is not a lot of cause for anybody, but in particular, African Americans to think that things are getting better. But our results are clear. There’s something quite fascinating going on here.” In late 2009, nearly a year after Obama’s inauguration, Pew researchers first noticed how strong Obama’s support remained among black Americans. Black household median income was nearly $20,000 below white household median income . The black homeownership rate was sliding faster than that of other groups grappling with the recession and foreclosure crisis. And median white household wealth — the assets that families have to tide them over if a job disappears or assets that can simply be passed on to successive generations — had reached a mark 20 times higher than that of the average black family . But when Pew researchers asked people about the state of the economy in December 2009, they found that just 7 percent of whites described it as good or excellent compared to 14 percent of blacks . Character said he wouldn’t describe the economy in such positive terms, but said he understands why some people don’t blame the president. “No president, not Bush, not Obama could turn the mess that we are in around in four years, much less the two Obama has had,” Character said. “This is a mess many years and many greedy people in the making. “Now, to get us out, could the president compromise a little bit more with the Republicans, yes. Could he let the businesses have some more tax breaks, yes. But could the Republicans behave better, could the Congress actually do its job, I would also have to say yes.” While Obama was running for office in 2008, Character was working as a cable television installation crew supervisor. Character had been with the company for six years and was earning about $43,000, plus extra pay for particularly difficult installations. His wife was earning another $35,000 at a bakery where she had worked for 20 years. Together, the couple was making enough money to send their daughter to college, their youngest on class trips and enjoy the occasional dinner together in a restaurant, Character said. “Things were really great, frankly,” Character said. “Bills were paid, you know, life was good.” Then in March, Character’s wife lost her job when the bakery closed. One month later, Character’s employer decided to lay off its Georgia crews, he said. For the first time in their two-decade marriage, Character and his wife were looking for work at the same time. The couple abandoned their plan to buy a house just outside Atlanta. They lived off of their unemployment benefits. Some bills simply could not be paid, Character said. In order to hold onto their cars — something Character said is essential for anyone who wants to get or keep work in Atlanta — the couple declared bankruptcy. By 2009, the family’s economic outlook improved, even if their financial situation did not. In January of 2009, Character landed a temporary job at an Atlanta factory. A few months later, Character’s wife found a job at an Atlanta company that processes airline food. By June, the plastic factory hired Character full time. Still, the couple was earning about $40,000 less than they had been when the recession began. “I’ve always been a worker, a hard worker,” Character said. “As a matter of fact, every job I’ve ever had, I’ve received some sort of promotion. So, those were tough times. But I knew that we would be able to climb out and pay everyone eventually. That is what Americans do. That’s certainly what we’ve tried to do.” When Obama was elected, Character said he was hopeful that the new president might be able to begin the long process of improving the nation’s economy or stimulate job growth. But to do so, Obama would need a cooperative Congress, he said. When you ask why economic trends haven’t been enough to turn African Americans against the president, it’s like asking why a person facing a torrential downpour puts on a rain coat, said David Bositis, a senior political analyst at The Joint Center for Political and Economic Studies, a Washington, D.C.-based think tank. “You have to put the choice that African Americans are making in context,” Bositis said. “Certainly there may be some residual good feelings from that historic moment in 2008. But support for the president remains strong because there is no real menu of political options for African Americans. Economic conditions don’t change what the Republican Party has become.” The Republican Party is dominated by Tea Party enthusiasts, Bositis said. In a study that began in 2006 and continued this summer , researchers found that Tea Party supporters are long-time Republicans who have a low regard for immigrants and blacks that predates Obama’s election. In July of this year, things got worse for Character. As federal officials wrangled over the best method to reduce the national deficit, the plastic factory announced layoffs and Character lost his job. So when Character saw a story indicating that the job fair organized by that group of frustrated federal legislators was coming to Atlanta on Aug.18, he made plans to go. This was a chance, he thought, to get past the faceless online application process, talk with a human being and show them what kind of worker he could be. But Character wasn’t the only one with high expectations. One Atlanta radio station that bills itself as the “home for Atlanta’s hip-hop community” announced boldly on its website that the Congressional Black Caucus was ” coming to Atlanta with jobs! ” When Character arrived just after 8 a.m., he found a line of job seekers wrapped all the way around a mammoth building on the Atlanta Technical College grounds. local paper reported the next day that about 3,000 people waited in line outside the Atlanta job fair. When a rumor spread around 10:30 a.m. that a woman who arrived before sunrise still had not made it inside, Character grew concerned. When people started to pass out in the 94 degree heat, Character grew frustrated. And when he talked to a woman leaving the job fair about her experience, he decided to leave. Character said the woman told him that employers were not hiring or even interviewing people on the spot, but rather were shaking hands and directing jobseekers to apply online. Character already spends a few hours each day doing that at a local library, he said. “I don’t know what that was at the college,” Character said. “Maybe it was organized with good intentions. Maybe somebody wanted to show the world how desperate black people are for work because 99.9 percent of the people in that line were African Americans. But, you have truly got to twist that and turn that all types of ways to say that is Barack Obama’s fault. That’s just the way things are right now.”

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Progress Reversed: Economy Tips Toward Recession With Little Relief In Sight

August 3, 2011

NEW YORK — Three years after the worst economic downturn in generations, the American economy increasingly appears vulnerable to another recession. Months of slow growth and external shocks have wounded the economy to a critical extent, economists say. After Washington lawmakers agreed to raise the nation’s debt ceiling in exchange for hundreds of billions in federal spending cuts over the next decade, investors breathed only momentary relief. They quickly changed focus to the increasingly ugly fundamentals: Gross domestic product is barely growing, the unemployment rate is high, home prices are falling and the manufacturing sector is suffering, with little relief in sight. A stream of data in recent days vividly portrays a sick economy. One more obstacle, experts say, might put an end to growth. “The economy has so little momentum that if something were to happen — if there were some exogenous shock — that might tip us into recession,” said Mark Vitner, a senior economist at Wells Fargo. Many economists say it is too early to write off the fragile recovery, arguing that in such an enormous economy, growth is an almost organic process. Disappointing manufacturing numbers, for instance, do not on their own signal a broader economic slowdown, Ian Shepherdson, chief U.S. economist at High Frequency Economics, said in a recent note. But even the optimistic experts suggest that a prolonged period of slow growth is a likely outcome, even if the United States manages to avoid a second recession. The economic situation may be worse than the headline numbers make it seem. Economic output grew at an annual rate of just 0.85 percent in the first half of the year, the government announced Friday. Growth in the first three months clocked in at a meager 0.4 percent. Officially, at least, the economy is not in a recession. But dig below those numbers, and the outlook is more grim: Seen in relation to population growth, gross domestic product has hardly expanded at all this year, Wells Fargo economists said in a research note Tuesday. By this measure — known as real gross domestic product — growth actually shrank in the first quarter, at an annual rate of 0.4 percent, Wells Fargo said. It then grew at an annual rate of 0.6 percent in the second quarter. Small wonder, then, that the current slowdown feels like an outright recession to many Americans. “If you’re one of the unlucky people who have lost their job and are struggling to find another one, I’m pretty sure that to your mind there’s been no recovery at all,” said Paul Dales, senior U.S. economist at Capital Economics. The unemployment rate has ticked steadily upward for three straight months, reaching 9.2 percent in June. And with more companies planning to lay off workers, economists expect July’s reading to be similarly gloomy. When fewer members of the workforce have jobs, less money circulates through the economy, and general economic progress slows. A job loss can cause a person to default on their mortgage, which can lead to a foreclosure. That in turn can further depress home prices, again weakening the broader economy. In a widely circulated research note this week, Goldman Sachs economist Andrew Tilton described a formula for predicting recession. If the unemployment rate rises to 9.3 percent in July and stays that high in August, that means the economy has either already entered recession, or will do so within six months, Tilton said. Experts see an economy vulnerable to shocks. Bill Gross, who manages the world’s biggest bond fund at PIMCO, said the economy had stalled, in a Tuesday interview on Bloomberg TV . He stopped short of predicting a return to recession, but called the current situation a “tipping point.” Larry Summers, former Treasury Secretary and recently head of the White House’s National Economic Council, said in a Reuters column Tuesday there’s a one-in-three chance the economy will revert to recession, “if nothing new is done to raise demand and spur growth.” Government stimulus programs, such as the payroll tax cut and unemployment benefits, are set to expire at the end of the year. The deficit-reduction deal passed this week doesn’t renew them, instead enacting a decade of cuts. “The economy’s problem remains a lack of aggregate demand,” author Bruce Bartlett, who was a senior policy analyst under President Ronald Reagan, said in an email. “The unwinding of the 2009 stimulus has already had a depressing effect on growth, and any further fiscal contraction from the budget deal will make matters worse.” Economic growth this year will likely average less than 2 percent, said John Richards, head of strategy at Royal Bank of Scotland in the Americas. “Empirically, growth at that level is not a stable long-run point,” Richards said. “You move off it rapidly, in one direction or another.” Financial markets reflect the dismal mood. Stocks have taken a relentless beating in the past couple weeks, with investors eying the fight in Washington over raising the government’s debt ceiling. After days of selling, the Standard & Poor’s 500 Index at Tuesday’s close had erased all of the gains it had made so far this year. If stocks hadn’t risen Wednesday, the Dow Jones Industrial Average would have logged its longest losing streak since 1978, Bloomberg News reported . Perhaps a more telling indicator is the interest rate on Treasury debt, which plunged this week to fresh lows. Yields on the 10-year note fell to the level of early November, when the Federal Reserve was beginning a massive stimulus program, Bloomberg data show . Falling Treasury yields are typically a sign that investors foresee a weak economy, as they clamber for a safe-haven investment. Fears that the Treasury might default, which were hardly reflected in the data to begin with, are now wholly irrelevant, as the darkening economic picture pushes rates down, economists say. Indeed, there’s been little cause for hope in the stream of data released in the last few days. Consumer spending , a key driver of growth, fell in June, the government said Tuesday. It was the first decline in nearly two years. On Monday, the Institute for Supply Management announced that activity in the manufacturing sector hardly increased at all in July. New orders in manufacturing actually shrank, for the first time since June 2009, the ISM said. Manufacturing, used as a gauge for the health of the economy, had been showing strength earlier in the year. But now, that seems to have changed. At Vista Metals, a manufacturer outside Pittsburgh, orders shrank by about 15 percent in June, according to Mark Shelleby, the company’s treasurer. “This may be more of a fundamental decline in demand than just summer doldrums,” Shelleby said. Others in his field see the slowdown as seasonal, he said. But Shelleby insists it’s based on the weakening economy. “I hope I’m wrong,” he said.

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Charles H. Green: Who’s Poor Rupert Murdoch to Trust?

July 21, 2011

Rupert Murdoch claimed in his July 19 British Parliament Committee appearance that people he “trusted” were responsible for the News of the World phone hacking scandal . Murdoch: This is the most humble day of my life… we have broken our trust with our readers… Q: Do you accept you are ultimately responsible for this whole fiasco? Murdoch: No. Q: Have you considered resigning? Murdoch: No. Because people I trusted let me down… and I am the best person to clean this up. Can you say “cognitive disconnect”? Few people in the world can simultaneously believe that a) Murdoch was not responsible for the hacking fiasco, b) he was done in by those whom he trusted, and c) that he nonetheless remains the best person to clean things up. I sincerely doubt that Murdoch himself believes all three of those propositions. And so we have yet another trust-destroying scandal, the principals posturing and spinning, and the public left asking, where is Sherlock Holmes when we need him, to ask why there was no barking dog at the scene of the crime? Gregory (Scotland Yard detective): Is there any other point to which you would wish to draw my attention? Holmes: To the curious incident of the dog in the night-time. Gregory: The dog did nothing in the night-time. Holmes: That was the curious incident. –”Silver Blaze, The Memoirs of Sherlock Holmes,” by Sir Arthur Conan Doyle And the answer is that, just like in the Holmes story, the watchdogs were very familiar with the crook whodunit. The News Corp hacking scandal has three points in common with most systemic failures of trust — think Enron , Watergate and the recent financial crisis : “Leaders” who have a tendency to blame and an inability to confront Corporate cultures based on secrecy and rules, not on virtues and values The compromise of a social institution key to social trust Bad Corporate Cultures The best way to spot an untrustworthy corporate culture is to look at how it tries to be trustworthy. If it relies on secrecy and threats, well, enough said. But in addition, a culture that relies on laws, procedures, processes, rules and compliance — and little else — is in trouble. Trustworthiness and ethical behavior are viewed in such cultures as just another set of rules to be gamed. There’s a very thin line between “keep your nose clean” and “just don’t get caught,” and that line has a way of breaking down. A corporate culture that fosters trust, by contrast, is almost certainly one that relies on virtues and values and that preaches them all the time. How does News Corp stack up? Listen to this description from Andrew Ross Sorkin’s “Dealbook: column : “This is a board that qualifies for an ‘F’ in every category,” Nell Minow, a member of the board of GovernanceMetrics International and founder of the Corporate Library, a governance firm, said without any hesitation. “It is the ultimate crony board.” Transparency? Values? I don’t think so. Which brings us to the third trait: a threat to societal institutions of trust. Compromised Social Institutions Watergate is, of course, the gold standard of corruption, the poster child for scandals. How does the News Corp scandal measure up? Surprisingly well. That is, bad. Watergate compromised the U.S. Justice Department, the White House, a major political party and, ultimately, a president. But there was sort of a hero in that story: the press. In the Murdoch case, the press is itself on trial. And so is Scotland Yard . Right there, the players are bigger than in Watergate. When the cops and the press are in cahoots, you have muscle backing up politics. The rule of law is at stake. Think I’m kidding? Think about your perception of this case to date — even from media other than News Corp. I’ll bet your image is loaded with thrown pies, hacked phones and trophy wives. Speculation in the U.S. media is focused on whether it will turn out that 9/11 victims’ phones were hacked. Meanwhile, did you know that News Corp’s News America Marketing subsidiary has paid out $655 million dollars to settle charges of corporate espionage and anticompetitive behavior — in the U.S.? Do you think Rupert Murdoch didn’t know about more than a half-billion dollars paid out that way? Did you know that News America was led by Paul V. Carlucci, who, according to Forbes, used to show the sales staff the scene in “The Untouchables” in which Al Capone beats a man to death with a baseball bat ? Mr. Emmel testified that Mr. Carlucci was clear about the guiding corporate philosophy. According to Mr. Emmel’s testimony, Mr. Carlucci said that if there were employees uncomfortable with the company’s philosophy — “bed-wetting liberals in particular was the description he used,” Mr. Emmel testified — then he could arrange to have those employees “outplaced from the company.” You might wonder what became of Mr. Carlucci? Rupert Murdoch appointed him head of The New York Post , calling him “without peer in the consumer advertising and marketing industry.” You know The New York Post : they’re the Murdoch paper that branded a New York hotel maid a hooker on the front page. The story was hugely helpful to one Dominique Strauss-Kahn but has not been verified by any other newspaper to date. But I digress. The problem is that the press wields enormous power, even in allegedly educated and refined countries. So do the police. And when Scotland Yard’s leadership and even Downing Street appear compromised by an evil corporate culture like News Corp’s, there are serious implications for society’s ability to trust anyone. Who’s poor Murdoch to trust? That’s what Rupert Murdoch would have you ask. And if you can believe the nerve of his News Corp empire and its culture, check this clip from Fox News . Syndicated columnist Cal Thomas explains the phenomenon as “piling on,” adding that “the left has been itching to get after News Corp for years.” Just another witch hunt, going after poor Mr. Murdoch. Makes you wonder if he paid the guy with the pie . For the rest of us, keep your ears open. Emulate Sherlock Holmes. Look for the barking dog, and when you don’t hear one, cry bloody murder, because someone has to.

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John Edwards In $2 Million Dispute

July 20, 2011

RALEIGH, N.C. — The Federal Election Commission is considering whether former North Carolina Sen. John Edwards’s 2008 presidential campaign should repay the treasury about $2.3 million. The FEC is scheduled to consider at its meeting Thursday whether to order the repayment. Federal auditors say all but about $200,000 of that sum came from matching funds. The campaign collected a total of nearly $13 million in matching funds after it was approved in December 2007. Edwards dropped out of the presidential race Jan. 30, 2008. FEC auditors say Edwards’s campaign understated its cash and overstated its expenses. At issue is how much Edwards’s campaign was entitled to receive as a result of qualifying for matching funds and the cost of winding down the effort. Edwards’s lawyers say the Democrat doesn’t owe anything.

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Gang of Six Plan On Charitable Deductions Would Follow Debt Commission Guidelines

July 19, 2011

WASHINGTON — Part of the debt-reduction plan unveiled Tuesday by the Gang of Six would “reform, not eliminate tax expenditures” for charitable giving. The plan says nothing more about charitable tax deductions, which it lumps in with reforms in health, home ownership and retirement. Asked what “reform” meant, Senate Budget Committee spokesman Stu Nagurka emailed The Huffington Post, “I don’t have any information that I can share with you.” That being said, an executive summary of the proposal gives a hint at the approach to reform, saying it is “consistent with the recommendations of the Bowles-Simpson fiscal commission .” The document called for simplifying the tax code while increasing or maintaining fairness. Under the current system, taxpayers who donate to charities are eligible for a deduction based on their marginal tax rate. Those in the top bracket currently are allowed to deduct a maximum of 35 percent of their taxable income. Those with more modest incomes get more modest deductions. The federal debt commission proposed late last year that all taxpayers be given a 12 percent, non-refundable tax credit as long as they contributed at least 2 percent of their adjusted gross income to charity. If they give less than that, they would get no deductions. Charitable deductions are estimated to cost the federal government about $237 billion between 2009 to 2013.

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House Republican Freshmen Caught Between Rock And A Hard Place

July 19, 2011

WASHINGTON — House Republican freshmen are caught between rock-solid fiscal conservatism and a political hard place. The class of 2010 that lifted the GOP to its comfortable House majority pushed the leadership to a vote Tuesday on legislation that would slash spending by trillions of dollars and require a balanced budget constitutional amendment in exchange for an increase in the nation’s borrowing limit. At least a dozen freshmen spoke out for the bill during hours of House debate Tuesday. “Washington has a spending addiction,” insisted Rep. Rich Nugent, R-Fla. Securing a vote was a hard-won victory consistent with the campaign promises that helped get the 87 GOP members elected in November. But the measure’s chances are poor in the Senate, setting the stage for a backup plan from congressional leaders that would allow the government to avoid an unprecedented default on Aug. 2. That would force freshmen to back an increase in the $14.3 trillion debt ceiling, and several constituents are telling them not to do it. “I’m actually being accused of selling out back home,” Rep. Mick Mulvaney, R-S.C., said in an interview. “Some folks don’t want to raise it under any circumstances. I tried to explain to them that this is the one chance to actually change Washington, so most folks will come around after we have that discussion.” The former state lawmaker who ousted the chairman of the House Budget Committee, Democrat John Spratt, said he was hearing from the “extreme right wing.” Solid backing of tea partyers helped propel several freshmen to Washington, boosting the candidacy of citizen-lawmakers such as car dealers, pizza shop owners, farmers and businessmen. The Tea Party Express on Tuesday made it clear they better stay in line, threatening GOP primary challenges to Republicans who support Senate Minority Leader Mitch McConnell’s alternative plan to give President Barack Obama the power to order an increase in the debt limit of up to $2.5 trillion over the coming year. Another tea party group warned about the “disease of Republican compromise” infecting Washington and ceding to Obama’s demands. On the other side, freshmen Republicans face pressure from McConnell’s sober assessment that failure to raise the debt ceiling could be blamed on Republicans and ensure another term for Obama in 2012. Separately, House Republicans are hearing from business owners who echo the dire warnings from economists and financial analysts about the ramifications of a government default. The votes in the coming days could have widespread implications for GOP freshmen next year, determining whether they get a challenge from within the party in a primary or have to answer for their decisions in the general election. A new CBS poll found the public had soured on both Obama and congressional Republicans in the debt talks, but the GOP got lower marks than the president. Frustrated with the president, about 20 freshmen took a bus to the White House on Tuesday to press Obama to detail his deficit-cutting plan. “We don’t care about re-election. We’re here to do the work and we’re asking the president, `Put it in writing, let’s debate it,’” said Rep. Tom Reed, R-N.Y. “We thought it was so important, we came here physically.” Scoffing at claims of economic calamity if the debt ceiling isn’t raised, Rep. Mo Brooks, R-Ala., said such statements are “absolutely wrong” and “misleading the American people.” Brooks argued that the government would still have enough revenue to pay its creditors. “This is Barack Obama’s debt, this is Barack Obama’s debt ceiling,” Brooks said, adding that Obama had been “AWOL” on the issue. Neither Obama nor a White House official met with the group and they returned to the Capitol. Rep. Vicky Hartzler, R-Mo., who owns an agriculture business with her husband, said business owners, bankers and others in her district are pushing for deep spending cuts. “They understand this overwhelming debt is hurting our economy and impeding job creation so we need to rein in this runaway spending, get control of our debt so that we can grow and create jobs,” Hartzler said in an interview. The Missouri congresswoman said she hasn’t heard specifically from tea partyers, but added, “My district was tea party before tea party was cool.” It’s unclear how freshman Republicans will vote in the coming days if faced with a possible compromise that includes raising the debt limit. Hartzler said she would vote “no, at this point.” Mulvaney pointed out that for lawmakers who backed the so-called cut, cap and balance bill in the House, “there’s a lot of latitude in some of those things.” The GOP freshmen are hardly monolithic on budget issues. In April, most of the 87 relented and voted for the compromise worked out by Obama and House Speaker John Boehner to keep the government running. Sixty of the 87 supported the package that included spending cuts of $38 billion, far less than the $61 billion many had pushed for, while 27 of the freshmen opposed it. In February, House Republican freshmen led the charge in voting to cancel $450 million for an alternative engine for the next-generation F-35 fighter plane, going against Boehner and other House GOP leaders. Whatever the spending cuts in any deal, Mulvaney offered an assessment of Washington after more than a half year in office. “There’s more smoke and mirrors in this town than a Barnum & Bailey circus when it comes to counting,” he said. ___ Associated Press writer Erica Werner contributed to this report.

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News Corp. Reports Political Donations

July 15, 2011

COLUMBUS, Ohio — Under assault in a phone hacking scandal, News Corp. met a self-imposed deadline Friday for reporting its latest political contributions online, revealing $115,750 in contributions mostly to Democrats. The company reported that its single largest contribution since January went to the Democratic Governors Association, which strongly criticized the media giant’s $1.25 million in donations to its Republican counterpart ahead of the 2010 elections. The sum was donated by Wireless Generation, an independently owned subsidiary that News Corp. bought in November. News Corp. or its affiliates also have given nearly $16,000 to state chapters of the Motion Picture Association of America, $5,000 to the California Republican Party and $2,000 to Democratic New York Gov. Andrew Cuomo 2014. The company’s board approved a new disclosure policy for its political giving in April after two 2010 donations by Rupert Murdoch, the Australian mogul who controls the company, raised concern among shareholders. Murdoch gave $1 million to the U.S. Chamber of Commerce and $1.25 million to the RGA, saying later that he hoped it would help Republican John Kasich, a former commentator on News Corp.’s Fox News. Kasich is now Ohio’s governor. News Corp. was the top donor to the RGA in 2010, according to research conducted by the nonpartisan Center for Responsive Politics. Other top donors were Contran Corp., Devon Energy, Altria Group and U.S. Sugar. The DGA’s top donors were labor unions. Center spokesman Michael Beckel commended News Corp. for consolidating the information. “Certainly, posting it all in one place is a very nice thing for people who are interested in these numbers,” he said. “They don’t have to hunt and peck through reports filed with the IRS, the FEC (Federal Elections Commission) and elsewhere.” But Beckel said it’s unclear whether the board’s new policy will prompt News Corp. to reveal those politically motivated donations that are exempt from disclosure. Ilyse Hogue, of the liberal watchdog group Media Matters, said maximum transparency will help Americans monitor the investigation of News Corp. and track political influence. “It’s an important indicator if there’s evidence of wrongdoing, and there is: Are legislators going to come down on the side of the truth, of getting at the truth, or on the side of their campaign donors?” she said. “It’s not a crime to take donations, but it does show a significant breach of ethics if you come down on the side of the donors when they break the law.” News Corp. posted a notice about the new policy on its website without fanfare in April. It calls for for the company – which also owns 20th Century Fox movie studio and The Wall Street Journal – to disclose political contributions first now, then once a year each January. Joan Lebow, a spokeswoman for Wireless, said the education software company has a longstanding relationship with the Democratic governor’s group and the $25,000 donation is consistent with its past support. The contribution, like some others on Friday’s list, had already been reported as part of other required filings. Wireless has partnered with the DGA to improve student achievement in schools across the country, association spokeswoman Lis Smith said. She said the relationship is not political. The DGA filed a complaint with the Ohio Elections Commission during the campaign alleging Fox provided Kasich with an illegal in-kind contribution when it displayed his website address during one of his appearances on “The O’Reilly Factor.” It later amended the complaint to reflect Murdoch’s remark that he hoped the money would help Kasich. In December, the commission found no violation of campaign finance laws. Denise Roth Barber, research director for the National Institute on Money in State Politics, said the Republican and Democratic governors associations took on the political role generally played by the national parties in 2010. “The RGA became sort of the RNC (Republican National Committee), because the legislators and governors picked at the state level were the ones in charge of drawing the lines that will determine the outcome of the next congressional race,” she said. Ohio campaign filings show the RGA spent more than $5 million in the state ahead of the November election. Kasich led a Republican sweep of statewide offices and both chambers of the Legislature. The national institute found that Fox Group affiliates and employees also gave nearly $1.5 million directly to state parties and candidates last year. Many of its 2011 donations revealed Friday also went to state-level politicians, mostly in California. ___ Online: http://www.newscorp.com

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Layoffs Return, Along With Fears Of Deepening Economic Stagnation

July 14, 2011

In recent months, as the unemployment rate has unexpectedly climbed, experts have put the blame on a lean job market, asserting that employers still spooked by the Great Recession have proven reluctant to hire. But a disturbing new trend appears to be emerging, one that may portend even deeper, longer-lasting problems for the American economy: Layoffs are again on the rise. Though economists stress that it remains too early to assert this with certainty, recently released government data suggest that layoffs exceeding weak hiring was the primary cause for rising unemployment in May and June. New weekly unemployment claims have topped 400,000 a week for more than three months — the level generally considered the dividing line between an improving labor market and a stagnant one. The most recent government snapshot of the job market found that, in June, the number of people officially unemployed for less than five weeks climbed above 3 million, from 2.6 million in May. The last two months have shown a significant jump in layoffs, according to Challenger, Gray & Christmas, an outplacement consultancy group in Chicago. The firm cites declines in government spending and concerns among employers that the economy is not growing enough to justify their current payrolls as drivers of the trend. “It’s really simple,” said John Challenger, the company’s chief executive officer. “It’s demand. It’s orders. I think employers are very cautious right now. Most business people are just looking at their sales prospects. What revenue is in? What are my sales people telling me is coming? How many people do I really need to maintain profitability?” A recent analysis of Labor Department data by Goldman Sachs concluded that, in May, “the downshift in employment growth was primarily caused by an increase in layoffs.” For an American economy still struggling to recover from the worst economic downturn since the Depression, a sustained return of layoffs would be both an indication and a cause of fresh trouble: Businesses have apparently yet to gain sufficient confidence in improving sales prospects to invest in expansion. By eliminating paychecks, they are further weakening spending power throughout the broader economy. “There’s obviously been a decision made by businesses that the economic outlook is not as bright as it was three months ago,” said Bernard Baumohl, chief global economist at The Economic Outlook Group, who last summer was envisioning a more vigorous economic recovery. Baumohl is still undecided on whether the rise in layoff is a momentary occurrence, or the beginning of a firm trend. But if it’s the latter, he said, the economy could sink into a second recession. “If layoffs accelerate and the unemployment rate increases, households would end up spending less,” he said. “If they spend less, then inventories at companies would start to balloon. If unwanted inventories start to balloon and companies are finding themselves stuck with goods they were hoping to sell, then they will stop ordering new supplies from factories. If factories start getting fewer orders, they lay people off. This is the vicious cycle that will ultimately cause a second recession.” During the worst of the recession in late 2008 and into 2009, as businesses absorbed the twin threat of rapidly declining sales and a severe pullback in credit, mass layoffs characterized the situation. And even as the fear subsided and modest economic growth resumed last year, tepid hiring remained the practice: The recession reinforced a predilection among American companies to find ways to rack up more sales with fewer people on their payrolls — a task accomplished through increasing reliance on automation and outsourcing, along with the perpetual pursuit of more efficient means of production. Today, companies are producing more goods and services than ever before — with some 7 million fewer workers than were employed in late 2007, when the recession officially began. Budget shortfalls at the state and local level have prompted months of layoffs by governments. In the private sector, layoffs in May were concentrated in professional and business services, which includes lawyers, accountants, consultants and other office-dwelling employees, as well as in manufacturing, according to Goldman’s analysis of the Labor Department’s Job Openings and Labor Turnover Survey. Layoffs have also hit recreation-related industries such as hotels. In May, MGM Resorts International laid off about 60 employees who once staffed the Gold Strike, a 500 room hotel and casino in Nevada. The company said declining business forced the layoffs, the Las Vegas Review Journal reported. The company did not respond to a request for comment. Layoffs have also hit temporary workers, whose declining fortunes amount to a particularly troubling sign for future hiring prospects. Through much of 2010, more optimistic economists cited moderate growth in temporary jobs as a signal that American employers would soon hire aggressively. Temporary jobs were seen as early, tenuous efforts by businesses to expand as they exploited growth opportunities. Once a firmer recovery took hold, employers were supposed to start amassing bigger permanent payrolls. But the second part never happened, and now temporary hiring is going in reverse: The overall number of temporary employees dipping between May and June, according to the Bureau of Labor Statistics. Some economists dismiss fears of growing layoffs, suggesting that recent job cuts are the result of acute developments such as the Japan tsunami — which disrupted the global supply chain, particularly in the auto industry — and spiking gasoline prices, which have subsequently fallen. “I’d prefer that layoffs don’t increase, but I don’t think this is the start of a pullback by businesses,” said Mark Zandi, chief economist of Moody’s Analytics. “Even transitory events can turn into big problems if they undermine confidence in hiring. And the odds of that are higher in the current circumstances because we’re all shell-shocked.” But others see a troubling trend unfolding as layoffs climb — particularly as the boost from the government’s package of spending measures aimed at stimulating the economy becomes exhausted. “The stimulus provided some lift to the economy through 2009, 2010,” said Dean Baker, co-director of the Center for Economic and Policy Research. “It’s fading out, and there is just nothing to replace it.” As government payrolls shrink, the loss of economic activity is rippling out across the rest of the economy. “The government is in recession,” Challenger said. “That affects a lot of businesses as well, because a lot of businesses depend on government orders.” In June, Lockheed Martin, a Maryland-based defense contractor, initiated a wave of layoffs expected to reach 300 after the U.S. Navy opted not to deliver what had been an anticipated order for an aircraft maintenance facility. The company also cut 2,700 jobs from its space systems and aeronautics divisions, said spokesman Chris Williams. For some companies, continued difficulties securing financing amid tightened credit standards, combining with weakening sales prospects, appears to be yielding job losses. In Little Rock, Ark., Yarnells Premium Ice Cream ceased operations and laid off 200 workers on June 30. The family-owed business had produced ice cream for 80 years, employing people in Arkansas, Tennessee and Mississippi. The company said it closed its doors because of declining sales, intensive competition and rising material costs. But it also cited an inability to secure financing. “This has been an extremely tough year for the ice cream industry in general,” said Christina Yarnell, chief executive officer of Yarnell’s, in a press release. “We have examined many possible avenues to keep the company afloat – actively marketing the company to investors and strategic buyers – the majority of whom are undergoing the same financial distress we are. However, we’ve been unable to obtain additional financing from our lenders or locate a buyer, and have come to the difficult decision that the appropriate course of action is to shut our doors.” For publicly traded companies whose stock prices are dependent on remaining profitable, diminishing business prospects appear to be generating momentum for cost-cutting through layoffs. In May, the H.J. Heinz Company began layoffs as it closed several factories worldwide, including one in Pennsylvania, where 60 people lost their jobs, according to the company. Heinz intends to shutter another American plant in an as-yet undisclosed location, a spokesman added. “To provide fuel for future growth, Heinz is investing in initiatives to increase our manufacturing efficiency and accelerate productivity on a global scale,” said Michael Mullen, a company spokesman, in an email. All in all, Heinz is expected to shed 1,000 total jobs worldwide, according to Challenger, Gray & Christmas. Despite the recent spike in layoffs, most experts say it is far too early to forecast another economic downturn. “I’m not buying that yet,” said Challenger. “The economy is slipping right now. It’s sliding. But we’ve seen periods of much heavier layoffs in the past. I don’t feel like we know yet whether or not the economy is going to continue to slip and not have much momentum or whether or not it’ll catch some wind and pick up again later this year.” James Sunshine and Janell Ross contributed to this report.

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Recession Cost Average American $7,300, Fed Economist Says

July 12, 2011

The recession that struck the U.S. in 2007 has cost consumers about $7,300 each in lost spending, according to a San Francisco Federal Reserve economist. In a paper published Monday, Kevin Lansing, a senior economist at the Federal Reserve Bank of San Francisco, wrote that if personal consumption had continued on from December 2007 to the present day at the same rates that it occurred from 2000 to 2007, Americans would have each spent an extra $7,356 by now. Taken over a period of 42 months, that’s about $175 in lost spending per month, Lansing writes. However, it’s not necessarily true that personal consumption should have continued on at pre-2008 rates. That kind of spending was symptomatic of a bubble economy, Lansing notes in the paper, and “was bound to slow sooner or later.” The climbing rates of consumption may not have been “economically desirable,” he writes, in part because Americans were saving so little and taking on so much debt. And much of that spending was made possible by “unsound lending practices,” which have since come under scrutiny. In an interview with Bloomberg, Lansing said the pre-recession spending reflected an “artificial economy that was driven by debt.” Real consumer spending took a nosedive in December 2007, the official start of the recession, which was declared to have ended in June 2009. Lansing points out that after the recession of 1990-91, personal consumption took 23 months to recover to pre-recession levels; by contract, current personal consumption is still 1.6 percent below its pre-recession peak, 42 months later. Last month, the U.S. Department of Commerce reported that month-over-month consumer spending rates were virtually unchanged in May, making for the weakest month in spending since September 2009. It was suggested that inflation, particularly in the form of high gas prices, accounted for the slowdown in spending. And it seems as though spending remained sluggish during June, according to economist forecasts showing that retail sales probably stagnated during that month. The Commerce Department will release its figures for June on Thursday. In his report, Lansing notes that policymakers might have done more to address the housing bubble while it was happening. In particular, he cites monetary policy as an instrument central banks can use to prevent harmful deflation. Lansing writes that interest rate policy could have “a distinct advantage” over regulatory measures “because vigilant central bankers can deploy it against bubbles regardless of the regulatory environment.” Given the costly results of the housing-bubble burst, Lansing writes, “the case for preemptive action against bubbles may be strong indeed.”

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Robert Kuttner: Address the Jobs Crisis First

July 11, 2011

Does anyone care about the American middle class? The working middle class — especially its younger members — now faces a prolonged period of high unemployment, declining wages, and diminished public services. Meanwhile, the cost of things that you need to enter the middle class, like college tuition and affordable health care, keep outstripping paychecks. The housing crisis is somehow stripping asset values from those who do own homes without offering many bargains to aspiring young homebuyers, because banks belatedly have tightened credit requirements. As unemployment keeps rising and the economy faces a period of prolonged stagnation, political elites of both parties can only yammer about debts and deficits. But reducing the deficit before we get a recovery going will only worsen joblessness, cut back essential public services, and deny government the needed tools to produce an economic recovery. What’s needed is a mass movement to shake the dominance of the austerity lobby. Here’s a start: the Change to Win labor federation has begun a 12-city organizing tour, working with the House Progressive Caucus, to throw a spotlight on continuing joblessness combined with the failure of government to clean up banking abuses. While the U.S. Chamber of Commerce prepares for another ” Jobs Summit ” scheduled for Wednesday emphasizing tax cutting and more deregulation (one featured speaker is the ever helpful Erskine Bowles, the Democratic co-chair of the austerity commission), Change to Win is partnering with the AFL-CIO, Demos, and the Economic Policy Institute on a pre-emptive Monday summit on the jobs crisis and the future of the middle class. This counter-event, moderated by former New York Times Columnist Bob Herbert, will try to break through the austerity storyline. For the straight scoop, you can’t do better than this three-minute video produced by Change to Win. The leaders of the unions make three core points. The creation of the American postwar middle class didn’t just happen. It was socially constructed during the postwar boom, built on public investment, low-interest rates combined with right regulation of finance, and a strong labor movement which assured that as productivity rose, wages would rise with it. The postwar middle class went to public universities, could buy affordable homes, enjoyed rising wages, and could afford to raise kids often on one income. The June jobs report could not have come out at a worse time for those on the political right and center who are obsessing about the deficit and the debt. Every key indicator is down, and we face prolonged economic stagnation. The Republican story is that cutting public spending, deregulating, and refusing to raise taxes on the wealthy are the keys to job creation. That did not work so well for George W. Bush. Indeed, if low taxes and light regulation were all that it took to create jobs and sustain prosperity, John McCain would be president. The political center — Obama, the Bowles-Simpson Commission, the Peter G. Peterson Foundation — offers essentially the same austerity medicine, but wants tax hikes as well as spending cuts. So eager is Obama to make a deal that he is now willing to throw Social Security and Medicare, as well as trillions in other spending cuts, into the pyre. But that centrist austerity formula won’t work any better than the right-wing version. It won’t restore jobs or prosperity. In the short run, Obama may be saved from himself by two factors — the right and the left. With each passing day, the Republicans become more in thrall to the know-nothings of the Tea Party. The White House keeps offering them the family jewels, but they won’t accept. Meanwhile, Democrats in both houses are growing more and more wary of the kind of deal Obama seems all too willing to make. The budget of the Congressional Progressive Caucus produces a surplus within 10 years, but does so by increasing taxes on the rich, plowing the money into social investment, increasing jobs and social programs, cutting back spending on military adventures, and safeguarding social programs. This should be the White House budget. Until we get a recovery going, austerity will only breed more austerity. With consumer demand flat, business hesitant to invest, and banks reluctant to lend, there is only one economic force that can jump-start a recovery and that is government investment. We need a massive public investment program, of the kind that finally ended the Great Depression. That was called World War II. Imagine if we put all that money to peaceful public purposes like rebuilding our communities and converting to clean energy. With Republicans increasingly intransigent on any budget bargain that raises revenues, a deal would depend heavily on Democratic votes. But the Democratic caucuses in both houses, which have been largely ignored by the White House in Obama’s evidently futile courting of Republican House Speaker John Boehner, are now refusing to vote for cuts in Social Security or Medicare. The Republican stance is such bad economics and so irresponsible as budget politics that a president with strong convictions and a feel for how you use the bully pulpit to move public opinion would be eating their lunch. But we have long since realized that this is not the president we have. Even commentators who have been willing to give Obama the benefit of the doubt are now out of patience . “I’ve been stunned, both in the spring during the government shutdown negotiations and now, that Obama has hardly ever gone to the American people to insist firmly that there are some things he would never abide,” writes my former colleague Michael Tomasky in Daily Beast/Newsweek . Though Republicans are practically inviting Obama to define a new progressive center, he just won’t deliver. There are two ways progressives can prevent this economic calamity from turning into a deeper political catastrophe — an inside game and an outside game. Progressives in Congress can refuse to cave in. That part of the fight is going better than one might have feared. Democrats in the House and Senate are resisting the capitulation impulses of a Democratic president. The other way is to build a movement. Better yet, we need to do both, and it is encouraging to see the two labor federations coming together and working with the Congressional Progressive Caucus. There are far worse fates for this Republic than to miss the nominal deadline of August 2 for raising the debt ceiling. One would be to capitulate to Republican blackmail and give away the fruits of 40 years of struggle. The other would be to fail to seize this moment to build a movement of our own. Robert Kuttner is co-editor of The American Prospect, a senior fellow at Demos, and author of A Presidency in Peril.

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Obama Administration Makes Anti-Foreclosure Program More Generous For Jobless

July 7, 2011

WASHINGTON — The Obama administration announced Thursday that its signature anti-foreclosure program and the Federal Housing Administration would be getting a little more generous to struggling homeowners who are out of work through no fault of their own. In making the announcement, the administration is finally heeding homeowner advocates and federal auditors who have called for extended forbearance for unemployed homeowners for over a year. Unemployed homeowners who’ve fallen slightly behind or are at risk of falling behind on their mortgage payments soon may be eligible for a 12-month forbearance period during which their monthly payments are reduced or suspended. Currently, jobless homeowners receiving unemployment benefits are eligible for just three or four months of forbearance. “Today’s action is yet another step toward breaking the link in America between losing your job and losing your home,” said Rev. Lucy Kolin of the PICO National Network, a coalition of faith-based community organizers. “It’s only fair that the big banks who caused so much job loss in America extend relief to the millions of families who’ve lost their jobs as a result of the financial crisis.” The Special Inspector General of the Wall Street Bailout, which funds the modification program, also strongly encouraged the administration to extended the forbearance period, noting that average unemployment spells tend to last a lot longer than three months. The administration’s Home Affordable Modification Program, which President Obama said in 2009 would help as many as three to four million homeowners modify their mortgages, is not on track to meet its goal. According to the Treasury Department’s most recent data, the program has resulted in permanent modifications for 630,000 homeowners, while more than 850,000 HAMP modifications have been canceled. Stories chronicling homeowner frustration with the program are legion. “We’ve had to revamp our housing program several times to try to help people stay in their homes and try to start lifting home values up,” Obama said during a ” Twitter town hall ” on Wednesday. “But of all the things we’ve done, that’s probably been the area that’s been most stubborn to us trying to solve the problem.” The biggest changes to the program came in the summer of 2010, when the Treasury Department began requiring homeowners to thoroughly document their income to verify their eligibility before they could begin three-month “trial” modifications. Homeowners who successfully make three trial payments — usually hundreds of dollars cheaper than full payments — are supposed to be put in “permanent” modifications. The modifications lower payments to 31 percent of income by cutting interest rates, extending the life of the loan, and, in a small minority of cases, by cutting principal owed. Last summer the administration also said that unemployment benefits could not be counted as income, but that people receiving benefits could apply for a new forbearance program that would reduce or suspend payments for three months or until the homeowner found a job, whichever was shorter. On Thursday, the administration announced that the forbearance period for HAMP applicants and homeowners with FHA loans could last as long as 12 months. Homeowner advocates have long criticized the Treasury Department for not punishing banks that violate HAMP guidelines, a sentiment heard again in the wake of Treasury’s announcement. “As they have begun to do with other HAMP regulations,” Kolin said, “Treasury must be clear with the large banks that failure to swiftly and aggressively market this new Extended Forbearance program to their borrowers will result in significant penalties.”

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SEC Delays Yet Another Rule, Exempts Small Hedge Funds

June 22, 2011

Another week, another Dodd-Frank proposed rule gets delayed and watered down. The Securities and Exchange Commission approved on Wednesday new rules for hedge funds and private investment advisers that manage more than $150 million in assets to register with the SEC and disclose information about their operations. But the implementation of the rules have been delayed nine months until March 30, 2012, and the SEC exempted small hedge funds and venture capital funds from most reporting requirements. The rules were passed in a divided vote, with Republican commissioners complaining that the exemptions were too narrow. Last week, The Watchdog reported that key regulators, including the Commodity Futures Trading Commission and the SEC, delayed and weakened new rules and regulations. FDA Procedures Could Allow Hazardous Medical Devices To Remain On The Market: GAO The Food and Drug Administration’s procedures for recalling hazardous medical devices is riddled with flaws that could leave the defective products on the market to potentially harm more consumers, according to a new Government Accountability Office report . From 2005 through 2009, the FDA initiated over 3,500 medical device recalls, about 83 percent of which involving devices which carried a moderate health risk, the report said. Just over 40 percent of the recalls involved cardiovascular, radiological or orthopedic devices. But in a crucial oversight, the FDA has failed to analyze that data to “determine whether there are systemic problems underlying trends in device recalls. Thus, FDA is missing an opportunity to use recall data to proactively identify and address the risks presented by unsafe devices,” according to the report. In addition, gaps in the process limited the agency’s ability to make sure the highest-risk recalls were prioritized and handled in a timely way. “If unaddressed by FDA, the combined effect of these gaps may increase the risk that unsafe medical devices could remain on the market,” the report said. Obama Admin Slammed Again For ‘Killing’ Economy The Obama administration’s latest tongue-lashing by industry came from the chairman of the Associated Industries of Florida, who argued that over-regulation — especially by the Environmental Protection Agency — is “killing” the economy. Barney Bishop is particularly critical of the EPA’s proposal to prevent nutrient pollution in Florida waterways, which would cost industry millions by requiring the installation of pollution-control equipment. Watch Bishop’s comments on Fox Business Channel: Watch the latest video at video.foxbusiness.com Bishop and AIF have a long history of criticizing environmental regulations: Last May, he said that EPA chief Lisa Jackson “thinks she talks to God and she’s the only one who knows exactly what is the right thing to do about our environment,” reports the American Independent . In 1966, AIF vigorously opposed the authority of the state of Florida to combat water and air pollution. “Waters cannot all be pure enough to drink,” the group’s then executive vice president, John C. Lee, told the Ocala Star-Banner . “Some waters must have as their primary purposes the fulfillment of recreational needs. Some must be recognized as being commercial or agricultural in nature. And some must be recognized as being industrial.” IRS’s Whistleblower Program’s Weak Results: One Cash Award The Internal Revenue Service’s revamped whistleblower program has yielded more than 3,000 tips but only one cash award — a $4.5 million payout to an accountant who revealed a $20 million tax underpayment by an undisclosed Fortune 500 firms, reports iWatchNews . The IRS’s whistleblower program is being probed by the Government Accountability Office and the service’s inspector general, which are expected to release their reports this summer and fall, respectively. Sen. Charles Grassley (R-Iowa), who pushed for the IRS to pay whistleblowers, was disappointed in the results, saying, “The IRS needs to put on its thinking cap and figure out a way to reward whistleblowers whose tips don’t result in immediate tax collections.” On Tuesday, a lawsuit filed by a tax whistleblower was dismissed by a U.S. tax court judge. Nashville lawyer William Prentice Cooper III requested a bounty from the IRS’s new Whistleblower Office after reporting that the family of late Wall Street financier Clarence Dillon had avoided $100 million in estate taxes, reported Forbes ‘s William P. Barrett. When his requests were rejected, Cooper sued, asking that the IRS be ordered to conduct an investigation. Senate Proposals To Delay Regs Could Weaken Public Health and Safety Tomorrow, four senators will each introduce their own anti-regulatory proposal before the Senate Homeland Security and Governmental Affairs Committee. The plans would weaken public health and safety protections by delaying critical safeguards, claimed Center for Progressive Reform member scholar Sidney Shapiro, a professor at Wake Forest University School of Law. To bolster his argument, Shapiro cited the fact that it takes agencies up to 10 years to develop and issue regulations to protect health and the environment. Before it can issue a rule, agencies must run a highly complex gauntlet of analyses and reviews that have piled up thanks to several decades’ worth of misguided regulatory legislation, executive orders and OMB memos, letters and circulars. The result is a mishmash of unnecessary or duplicative analyses and reviews that do little to improve the quality of agency decision-making. He concluded: “Now is not the time to build more delays into the regulatory process. Rather, both Houses of Congress should consider ways to free up agencies from existing analytical burdens so that they can carry out their mission of protecting people and the environment more effectively and swiftly.”

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Standard & Poor’s: California Credit Rating At ‘Crossroad’

June 21, 2011

SAN FRANCISCO – California’s credit rating is at a “crossroad,” Standard & Poor’s Ratings Services said on Tuesday, noting concerns about the state’s cash and budget politics as the new fiscal year approaches. The rating agency is particularly concerned about how the state’s testy budget politics could impede its ability to issue short-term debt. S&P said in a report that it sees California’s ‘A-/Negative’ rating at a “crossroad … In our view, the budget process is significant in California’s credit profile because if a budget is not adopted in time for the state to issue its revenue anticipation notes (RANs) before its cash runs low, the state’s basic operating liquidity can become inadequate.” S&P added that “beyond near-term financial liquidity, we believe budget politics in California already impede the state’s long-term credit quality as well.” The course of California’s budget politics are uncertain as the fiscal year beginning on July looms. Democrats who control California’s legislature last Wednesday approved a budget to close a deficit of about $10 billion on their own. The next day Governor Jerry Brown, a Democrat, vetoed it, criticizing its “legally questionable maneuvers, costly borrowing and unrealistic savings.” S&P said in its report that it favors Brown’s budget proposal, although it has concerns about his plan for a statewide vote on extending temporary tax increases, which he first wants lawmakers to approve. S&P said that “enactment of a budget with structural attributes similar to those in the governor’s revised budget proposal could lead us to revise the state’s rating outlook to stable from negative. Moreover, it could potentially lead us to raise the rating depending upon how much we viewed such a budget as improving the state’s fiscal structure.” The rating agency said it would consider revising its outlook for California to stable from negative if state leaders agree to one-time solutions “to the extent it allows the state to proceed with its regularly planned cash flow borrowing.” “We would be more likely to revise the state’s rating outlook to stable if the state enacted the budget expeditiously and avoided entering a deficient cash situation,” S&P said. “By relying heavily on one-time measures, this budget path would be unlikely to benefit the state’s long-term credit quality, in our view.” If there is a protracted budget battle, which has been routine in recent years, California may need to take “extraordinary cash management measures,” S&P noted. California temporarily issued IOUs when it was running low on cash during a budget stalemate in 2009. The move allowed the state to maintain cash for its priorities payments, including payments to it bondholders. A lengthy budget impasse extending into the new year may result in a “patchwork” budget similar to one Brown vetoed, which “may lead us to lower the state’s long-term rating depending upon the severity and duration of the cash crisis that we believe could precede it.” (Editing by James Dalgleish) Copyright 2011 Thomson Reuters. Click for Restrictions .

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U.S. Housing Crisis Now Officially Worse Than Great Depression

June 15, 2011

It’s official: The housing crisis that began in 2006 and has recently entered a double dip is now worse than the Great Depression. Prices have fallen some 33 percent since the market began its collapse, greater than the 31 percent fall that began in the late 1920s and culminated in the early 1930s, according to Case-Shiller data.

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Sen. Claire McCaskill: Republicans Packed Defense Spending Bill With Earmarks

May 26, 2011

By Colin Clark Editor, AOL Defense WASHINGTON — One of the Senate’s top campaigners for good government is charging House Republicans with quietly loading their new defense policy bill with earmarks that are currently banned by the GOP’s own rules. Sen. Claire McCaskill (D-Mo.), a member of the Senate Armed Services Committee, has pledged to keep all earmarks out of the Republican version of the Defense Authorization Act. In a letter to Rep. Buck McKeon (R-Calif.), the new chairman of the House committee, and its top Democrat, Rep. Adam Smith (Wash.), the Missouri senator claims the proposed bill “has obviously been structured to circumvent the earmark ban adopted by the House of Representatives.” And McCaskill writes that if she can’t keep those earmarks out of the bill, she’ll make each one public. But the McKeon is having none of McCaskill’s scorn. “Her letter is more politics than substance,” HASC spokesman Josh Holly wrote in an email to AOL Defense. McKeon instituted changes to the traditional markup process for the policy bill: The draft bill from each subcommittee was made public 24 hours before the subcommittees met. And the draft of the final bill was also put online before the full committee met. “In the words of the former Armed Services Committee Chairman Ike Skelton (D-Mo.), we would encourage the good Senator from the former chairman’s home state to ‘read the bill,’” Holly said. “All of the information which she claims was not provided to the public has been available on the committee’s website throughout the process. In fact, this is the first time in decades that copies of the legislation were provided to the public ahead of the subcommittee and full committee markups.” “Neither exact dollar amounts nor intended recipients of the earmarks can be clearly discerned,” McCaskill said in her letter. “Under the pre-moratorium rules, earmark requests were publicly posted and funded earmarks were listed in reports accompanying bills with the sponsor, amount and intended recipient all clearly detailed.” Holly’s response: “It appears that Senator McCaskill was also unaware that all of the amendments in which she has issues were adopted in a public session of the Armed Services Committee. Additionally, every amendment that was considered by the committee — not just those that were adopted — were posted on our website within 24 hours of the conclusion of the full committee markup and made available to reporters at the time of the markup.” But McCaskill claims the House committee has proposed a billion dollar “slush fund” called the Mission Force Enhancement Transfer Fund, that would take money cut from other programs and consolidate it in the fund to pay for the “pet projects” inserted into the House defense policy bill.

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Why Medicare Will Be The Issue Of 2012

May 25, 2011

WASHINGTON — The 2012 election found its defining issue on Tuesday night, with an insurgent Democrat upsetting a well-financed Republican in a deeply red district in New York state. The GOP paved the way for the Democrat’s victory by voting earlier this year to end the current Medicare program that guarantees health coverage to seniors and replace it with a voucher system that provides premium support for the elderly to purchase private health insurance. The Republican in the race, Jane Corwin, fully endorsed the GOP plan to alter Medicare, while the Democrat, Kathy Hochul, defended the social safety net. The race’s polling trends point to Medicare as the defining issue, while the conversation has played out on a national level. Former House Speaker Nancy Pelosi (D-Calif.) summed up the Democratic position: “We have a plan –- it’s called Medicare.” With some exceptions, Democrats have ranged from reluctant defenders of government spending to outright hawkish assailants of social funds. But nothing focuses the mind like political calculation, and the upset in upstate New York has sent a message so clear that not even the highest priced Democratic consultant could miss it. “Kathy Hochul’s victory tonight is a tribute to Democrats’ commitment to preserve and strengthen Medicare, create jobs and grow our economy. And it sends a clear message that will echo nationwide: Republicans will be held accountable for their vote to end Medicare,” Pelosi said in a statement after the election. The race began turning toward the Democrat when Corwin embraced the GOP’s Medicare plan in mid-April. The campaigns had already been communicating with voters, airing television spots for nearly a month. Corwin attacked Hochul on the airwaves in late March for having sought property tax increases and attempted to link Hochul to Pelosi, following the playbook Republicans applied with success during 2010. Hochul responded with a series of ads beginning in early April, but none mentioned Medicare. That changed on April 26 when the Hochul campaign began airing an ad that hit Corwin for saying “she would vote for the 2012 Republican budget that would essentially end Medicare,” that would have seniors “pay $6,400 more for the same coverage” and would “cut taxes for the wealthiest Americans.” WATCH : Just before Hochul’s television campaign shifted to Medicare, a Siena Research survey showed Corwin leading Hochul by a surprisingly narrow margin, 36 percent to 31 percent. But ten days later, an automated survey conducted by Democratic firm Public Policy Polling and sponsored by SEIU showed Hochul leading by four points (35 percent to 31 percent). And in the final week, two more surveys, one from PPP and one from Siena College, both showed Hochul leading by similar margins. Jef Pollock, Hochul’s pollster, told HuffPost that the numbers showed the Democrat winning among seniors and independents, two groups that broke heavily for Republicans in 2010. “This race was won, in a significant way, because of the disastrous decision by the GOP to dismantle Medicare as we know it,” he said. “Kathy Hochul was a great candidate. And credit is due to her for running a great race as well as credit to the campaign for making Medicare a central issue — that’s why Hochul was winning 74 percent of the voters who said that Medicare was the most important issue to them in the most recent Siena poll conducted just a few days ago,” he said. Steve Murphy, Hochul’s media consultant, argued that his candidate persuaded voters she was concerned about the deficit without needing to cut Medicare. “A Democrat in a competitive district can win on the Ryan budget and Medicare issue as long as they first demonstrate to voters that they are tough on spending and serious about the problem of rising deficits,” he suggested. “Five of our seven ads had a strong fiscal component, not just Medicare.” Democrats highlighted the serious money the Republicans put into the election. “Today, the Republican plan to end Medicare cost Republicans $3.4 million and a seat in Congress. And this is only the first seat,” said Rep. Steve Israel (D-N.Y.), head of the Democrats’ House campaign arm. House Republicans pinned blame for Corwin’s loss on a quirky third-party candidate, Jack Davis, who ran under the Tea Party despite an eclectic and sometimes liberal political past. “Republican Jane Corwin ran a hard-fought campaign against two well-funded Democrats, including one masquerading under the Tea Party name,” said Rep. Pete Sessions (R-Texas), head of the House GOP campaign operation. “Obviously, each side would rather win a special election than lose, but to predict the future based on the results of this unusual race is naive and risky.” American Crossroads, a GOP group that spent heavily in the race, said that the race indicates a resurgent Democratic party, whether the third-party candidate tipped it or not. “The debate over whether Medicare mattered more than a third-party candidate who split the Republican vote is mostly a partisan Rorschach Test,” said American Crossroad’s Jonathan Collegio. “What is clear is that this election is a wake-up call for anyone who thinks that 2012 will be just like 2010. It’s going to be a tougher environment, Democrats will be more competitive, and we need to play at the top of our game to win big next year.” The GOP can’t and won’t retreat from the Medicare valley it has occupied. “We know that bell can’t be un-rung, and we wouldn’t want to,” said a well-placed GOP aide. “We’re on the right side of history. If President Obama wants to be ‘the grown-up in the room,’ he’s going to have to grapple with grown-up problems. We have.” Indeed, the GOP has been doing plenty of grappling lately, but it’s been mostly with constituents and members of the party. Presidential candidate Newt Gingrich was browbeaten by his party for calling the Medicare plan “right-wing social engineering” and endorsing Paul Ryan’s budget, which includes Medicare reform as its signature component and has become a litmus test for candidates. At home, Republicans have faced hostile town halls with seniors questioning how they’ll be able to purchase private insurance with a voucher that doesn’t rise at the rate of health care costs. At a recent town hall, a constituent of Rep. Rob Woodall (R-Ga.) raised a practical obstacle to obtaining coverage in the private market within the confines of an employer-based health insurance system: What happens when you retire? “The private corporation that I retired from does not give medical benefits to retirees,” the woman told the congressman in video captured a local Patch reporter in Dacula, Ga. “Hear yourself, ma’am. Hear yourself,” Woodall told the woman. “You want the government to take care of you, because your employer decided not to take care of you. My question is, ‘When do I decide I’m going to take care of me?’” Sen. Chuck Schumer (D-N.Y.) pounced on the remark, telling the Washington Post that it typifies Republican ideology. Tuesday’s special election was held to fill the seat of Chris Lee, who resigned after topless photographs he sent of himself to a woman on Craigslist surfaced.

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WATCH: GOP Botches Multiple Facts, Calls Elizabeth Warren A Liar

May 24, 2011

WASHINGTON — Republicans attempting to grill Elizabeth Warren on the creation of the new Consumer Financial Protection Bureau had to be schooled repeatedly by the former Harvard professor Tuesday for botching basic facts and accusing her of lying. Warren, appointed by President Barack Obama to implement the consumer watchdog mandated by last year’s Dodd-Frank financial reform law, testified at a House Oversight subcommittee hearing dubbed “Who’s Watching the Watchmen?” But those overseers seemed to lack the basic facts about the new agency they were trying to oversee, with the hearing dissolving at the end in a remarkable dispute over how long Warren was supposed to testify. (SCROLL DOWN FOR VIDEO) Rep. Ann Marie Buerkle (R-N.Y.) betrayed the first misunderstanding, quizzing Warren on why people getting hired at the CFPB earned better salaries than the average government employee. Warren eventually noted that federal financial regulators are usually paid better (but not very well compared to the people they regulate). Rep. Frank Guinta (R-N.H.) mistakenly thought the CFPB was unique among financial regulators in having a leader with a five-year term and in not being subject to annual congressional appropriations — neither of which is true. “I don’t believe anyone else in history has had that period of time as an appointment,” Guinta contended of the five-year term. “Congressman, I think many terms are five-year terms,” Warren answered, pointing out that the head of the Office of the Comptroller of the Currency had just finished such a term. Guinta then suggested that the agencies Warren compared to the CFPB actually had more oversight from Congress through annual appropriations. “Those entities I think are at the discretion of Congress,” Guinta argued. “There’s an oversight process through appropriations — you’re excluded from that.” “No, Congressman, I’m sorry,” Warren answered. “There is no banking regulator who is subject to the political process or to appropriations.” Regulators such as the FDIC and others take fees from financial institutions for their budgets. Rep. Trey Gowdy (R-S.C.) grilled Warren on whether the bureau would make public the complaints it gets. She answered that the complaint issue was a work in progress, but that at the very least, there was progress in creating a system for large credit card companies. “Are any of the complaints public?” Gowdy demanded. “Congressman, we don’t have any complaints yet,” Warren said of the still-nascent agency. “What we’re trying to do is build the system.” Gowdy also seemed to think that Warren had written the Dodd-Frank law, and he was determined to know what Warren meant by defining “abusive” practices as something that “materially interferes” with the ability of a consumer to understand a term or a condition. “That suggests to me that some interferences are immaterial. Is that what you meant by that?” he asked a momentarily perplexed-looking Warren. “Congressman, I believe the language you are quoting is out of the Dodd-Frank act,” she said. “This is the language that Congress has adopted.” Still, Gowdy insisted on her answer, although the definitions and regulations required by the law are still being written. “You don’t want me standing here shooting from the hip about how I might want to interpret individual language,” she said. Several members raised the question of the new agency’s budget, which unlike any other regulator is capped by law at nearly $600 million. So Warren offered up the budget for the CFPB’s first two years: $143 million for the rest of 2011 and $329 million for 2012. Republicans have cast the consumer protection bureau as a huge new agency with powers beyond anything that exists currently, arguing it’s free from any outside restraints to punish financial firms at whim. They have offered legislation to turn it into a commission, make it easier for other federal agencies to overrule it and delay its start. But Warren countered that the oversight and restrictions on the new bureau were “unprecedented.” “The bureau is the only bank regulator whose rules can be overruled by a council made up of other federal agencies,” Warren said. The subcommittee chairman, Rep. Patrick McHenry (R-N.C.), began the proceedings by suggesting Warren had lied to the committee in a previous hearing that had questioned the CFPB’s role in offering advice to state attorneys general negotiating a settlement with abusive mortgage servicers. At the time, Warren said she was proud her agency had been able to help, at the request of the treasury secretary. But McHenry brought up the memo again, suggesting it showed that she hid a larger role in the negotiations from Congress. “This is our job, and we’re trying to do our job, to be helpful to other agencies, and to help those agencies to hold those who break the law accountable,” Warren said, repeating that she was proud of the work. The exchange prompted Rep. John Yarmuth (D-Ky.) to say he was sorry. “I apologize to the witness for the rude and disrespectful behavior of the chair,” Yarmuth told Warren. “The questioning of your veracity when there is documented evidence that you are being totally truthful indicates to me that this hearing is all about impugning you because people are afraid of you.” But perhaps the ugliest moment in the contentions sessions came at the end, when Rep. Elijah Cummings (D-Md.), the top Democrat on the Oversight Committee, pointed out that based on the emails his staff had gotten, McHenry was keeping Warren later than an agreed 2:15 p.m. ending time. The session had been moved repeatedly, with the timing changing as late as Tuesday morning. But McHenry insisted there had been no agreement, even though he, the subcommittee members and Warren all arrived there an hour early. “I’m not trying to cause you problems, Ms. Warren,” McHenry said. “You are causing problems,” Warren answered. “We had an agreement for a later hearing. Your staff asked us to move around so that we had to change everything on my schedule to try to accommodate your time …” “We agreed that I would be out of here at 2:15 because there are other things now scheduled at 2:30,” she said. “That was a request, ” McHenry snapped. “Congressmen, you told us one thing,” Warren responded “I did not tell you anything,” he shot back, before adding to audible gasps in the hearing room: “You’re making this up, Ms. Warren. This is not the case.” A shocked Cummings intervened, saying: “You just accused the lady of lying. I think you need to clear this up with your staff.” Cummings noted the time changes in the hearing, and a CFPB source later confirmed to Huffington Post that there had been a specific agreement. McHenry later felt no apology was warranted, and slammed Warren in a statement, saying she had refused to answer all questions because two members had not had a chance with her. “Committee staff worked diligently to accommodate Ms. Warren’s schedule,” McHenry said. “I was shocked by Ms. Warren’s blatant sense of entitlement,” he added. “She was apparently under the assumption that she could dictate a one-hour time limit for her testimony to Congress and that we were there at her behest instead of the other way around. This is just further example of her disregard for congressional oversight.” WATCH :

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Art Levine: High Noon: Tuesday Protests Take on "Fully Loaded" Chairman, GOP-Style Dems Over DC Cuts to Poor

May 24, 2011

The scandal-plagued chairman of the DC Council, Kwame Brown, best known for asking city taxpayers to pay for a “fully loaded” Lincoln Navigator worth $2,000 a month, is joining with other GOP-style Democrats to slash city services for the poor. At the same time, they’re opposing the mayor’s proposal to raise $35 million in added taxes from Washington’s richest residents — and, amazingly, the council is moving to give away $19 million in revenue through repealing some taxes for the rich altogether. With the vote scheduled Wednesday, The Washington Examiner reports that a backroom deal was apparently struck Monday evening with Brown when Marion Barry, the former crack-smoking mayor and still a councilman, agreed to reverse his support for tax increases on the rich in exchange for property tax abatements for some churches in his district. The pending budget deal could still cut over $100 million from critical services for the poor, disabled and homeless from the social services budget, roughly two-thirds of all proposed cuts. The safety-net is already so tattered that homeless mothers with infants in tow have been given bus fare to ride the buses all night rather than shelter. As a result , Save Our Safety Net , a group leading a loose coalition of progressive safety-net advocacy organizations, called for protests Tuesday at noon at DC’s City Hall, the Wilson Building. And in the day before the event, they unleashed a series of last-minute videos targeting Kwame Brown, most on the City Council and an otherwise liberal council member, Mary Cheh, for opposing raising taxes on the rich and risking the well-being of the city’s neediest. What wasn’t mentioned publicly is that these same city council members also pay themselves and their staff the most lavish salaries and expenses in the country when measured on a per-seat or per-taxpayer basis: $1.5 million per council seat. The biggest target remains Kwame Brown and his lavish lifestyle contrasted with the poor children, disabled and homeless who could be denied services. The latest video ends with an SUV heading for a crash and the tag line: “Don’t let Kwame run over our most important public services.” Brown has offered what critics see as vague promises to restore $25 million in proposed cuts, but as the S.O.S. group pointed out, following protests last week : After our Wednesday action, we had 7 confirmed Council votes in support of the Mayor’s income tax proposal, enough to pass it. But yesterday we got word that Marion Barry (Ward 8) and Tommy Wells (Ward 6) have decided they no longer support the Mayor’s proposed income tax! We have also heard that Kwame Brown is proposing $25 million in restorations. That is certainly a step in the right direction, but it is not nearly enough. Safety net services are still underfunded by $32 million. By getting rid of the income tax proposal, Chairman Brown, Barry, Wells and other Councilmembers would take away $19 million in resources that could be used to restore funding to critical services. Even though at least 85% of the city residents in a recent poll back raising taxes to preserve social services, most city council members reject that stance and instead are supporting other accounting schemes and alternative revenue measures, including some that the council has rejected in earlier years — such as ending DC’s unique tax break for those who buy out-of-state municipal bonds helping other cities. What’s especially striking is the way these formerly liberal Democrats, echoing a national right-leaning trend in the party, adopt right-wing talking points and even cite the Chamber of Commerce as “evidence” for their views. As recounted in emails about a tense meeting with constituents held by council member and law professor Mary Cheh, who represents the richest and whitest area in the city, Ward 3, liberal voters there aired their complaints that she was abandoning the principles of the Democratic Party and her campaign promises. For instance, as Jessie Sigel, a Ward 3 resident, wrote angrily to Cheh after the meeting: The tax issue aside, I was, quite frankly, shocked to hear someone who professes to be a Democrat, suggest, as her “philosophy,” that anyone one on TANF [Temporary Assistance for Needy Families ] for more than five years doesn’t want to work; that their children don’t have proper role models, followed by righteous professions about the “dignity of work.” The language you used is akin to the old Reagan demonizing of the poor as “welfare loafers” and of the poor “coming to collect their welfare checks in Cadillacs.” If one is going to take a hard line that people should get a job, they need to ascertain that there are jobs — jobs that enable people to pay the rent and feed their children — to be had. When I asked you about jobs programs, child care programs and job training, you didn’t seem to know to what degree they exist in the district. (and, obviously, revenue would be needed to support these sorts of programs)… But embracing a “philosophy” — or as I would call it, a stereotyping of people, without making an inquiry into the group’s situation and options is reprehensible. It is something I would expect of right wing Republicans who have a particular agenda in mind and who are determined not to let logic or others’ needs get in the way. Cheh, like some other leading Democrats who are moving to slash services, used to be considered a progressive, innovative member of the City Concil. Kesh Ladduwahetty, an activist with DC for Democracy , also recounted: Cheh is adamantly against the tax increase, and there’s nothing more substantive in her reasoning than “sending the wrong signal” and small [businesses]. When pressed about small biz, she doesn’t have any data (she’s just repeating Kwame’s rhetoric). Mary Beth Tinker [another DC4D member] called her on the fact that she kept citing the Chamber of Commerce, although nothing specific. Mary Beth also heard her say something to the effect that in order to get some things that she wants done, she has to do some other things (sounds like a blatant statement about trading favors with Kwame). Bottom line: she’s not budging for this vote (not that we can see), but she got the message loud & clear that her progressive base is shocked and disappointed in her. On Tuesday, groups like Save Our Safety Net hope that some in the city’s progressive base will turn out and start calling members of the City Council to support fully funding city services. To that end, some of her young progressive supporters even created a mocking rap video calling on Cheh to respond to the wishes of her constituents on taxes and the safety net:

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Controversial GOP Medicare Plan Emerges Hot Topic In Special Election Race

May 23, 2011

BUFFALO, N.Y. — A special election for U.S. House seat in upstate New York is tightening up in a race that was supposed to be an easy win for Republicans. Instead, Tuesday’s election in the rural and suburban 26th Congressional District between Buffalo and Rochester has become a referendum on the GOP’s plan to transform Medicare, the government health plan for seniors. A Siena College poll published Saturday shows Democrat Kathy Hochul (HOH’-kuhl) with a slight lead over Republican Jane Corwin, 42-38 percent. The two are vying to succeed Republican Rep. Chris Lee, who resigned in February after shirtless photos he sent to a woman were published online. Wealthy tea party candidate Jack Davis had 12 percent support in the poll – far behind but still enough to affect a close race.

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Paul Ryan: Newt Gingrich ‘Inaccurate’ On Medicare Plan

May 22, 2011

WASHINGTON — The architect of the House Republican plan for overhauling Medicare says presidential candidate Newt Gingrich’s critical description of the proposal was deeply inaccurate and a gross mischaracterization. Last week Gingrich called Rep. Paul Ryan’s (R-Wis.) Medicare proposal “right-wing social engineering.” “What you want to have is a system where people voluntarily migrate to better outcomes, better solutions, better options, not one where you suddenly impose it,” he said. “I am against Obamacare imposing radical change, and I would be against a conservative imposing radical change.” Gingrich took his words back a few days later after he was criticized by conservatives. “I made a mistake and I called Paul Ryan today, who’s a very close personal friend — and I said that,” said the presidential candidate during an appearance on Fox News. “The fact is that I have supported what Ryan’s trying to do on the budget … the budget vote is one that I am happy to say I would have voted for, I will defend, and I will answer any Democrat who attempts to distort what I said.” Gingrich also called Ryan to apologize. Ryan played down the flap when asked about it on NBC’s “Meet the Press” and played up his proposal. It essentially calls for a voucher system to help older people buy insurance in the future. Many Democrats have rejected the proposal, and some Republicans have been wary of endorsing it. Ryan says it’s time to move beyond the Gingrich comments and focus on dealing with the nation’s fiscal problems.

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Meredith Bagby: Debt Ceiling: The Sky’s Not Falling — Yet

May 17, 2011

It’s official. As of Monday, May 16, the United States of America has reached its debt limit ( $14.294 trillion ). That means that the Treasury Department can no longer borrow money to pay the debts or meet the expenses of the U.S. government. You may say, wait, the sky didn’t fall. People are not running in the streets in chaos. The stock and bond markets haven’t crashed. I had my latte this morning and it was delicious. So what’s the big deal? The reason those things haven’t happened (yet) is thanks to Treasury Secretary Timothy Geithner. Geithner sent a letter to Congress on Monday explaining how he is able to “move money around” and keep things running until August 2 . He’s “fudging” the debt constraints right now by “suspending investments in federal retirement funds.” Depending on the level of U.S. government expenses, he may also have to pay just interest due to bondholders (rather than principal) — and generally pick and choose which debtors to pay off and which to put off — on a day-to-day basis. This strategy, said Geithner, is akin to a homeowner who pays his mortgage at the expense of his car loan and credit cards. While the sky isn’t falling today, or even this week, Geithner says that he can’t keep this juggling act up forever. In his letter to Congress, he wrote that we must “increase the debt limit in order to protect the full faith and credit of the United States and avoid catastrophic economic consequences for citizens.” Fifty-six percent of Americans agree with this prognosis, according to a POLITICO-George Washington University Battleground Poll. If the debt ceiling is not raised — at a minimum — “our bond market and stock market would crash,” said former Congressional Budget Director Rudolph Penner . It’s hard to imagine what a maximum would be. Despite this looming disaster, it doesn’t seem like Congress is in too big a hurry to do anything about it. Quite the opposite: Tea Partiers and many Republicans are hoping that this coming financial apocalypse will force the Democrats to make big cuts fast to the U.S. budget. Speaker John Boehner said in response to Geithner’s plea: “There will be no debt limit increase without serious budget reforms and significant spending cuts — cuts that are greater than any increase in the debt limit.” And Senate Minority Leader Mitch McConnell threatened that he would not vote for an increase in the debt ceiling without “serious” reforms to entitlements like Medicaid and Medicare. Meanwhile, Democrats argue that any solution must include raising tax revenue — a position that Republicans have said is unacceptable. Democratic House leaders are in New York this week meeting with Wall Street execs, to present their vision of deficit reduction. (Speaker John Boehner met with Wall-Streeters last Monday.) Meanwhile in D.C., Vice President Joe Biden is leading a bipartisan, bicameral panel charged with coming up with long-term deficit solutions — even as House members are on recess. The difference, of course, between Democrat and Republican strategies, is that the Republicans are willing to drive this game of chicken all the way off the cliff if they don’t get what they want. We learned this in the last round of budget negotiations in April — and that’s a difficult position with which to negotiate. Democrats are full of warnings, but they are willing to negotiate. Republican are full of threats and they’re willing to pull the trigger. Will we get a compromise? As of today, the bond markets haven’t collapsed. Neither has the stock market. Most well-respected financial analysts are betting there will be an accord. But — given this year’s tough budget negotiation — maybe the question we should be asking is: at what price?

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Jim Cramer: The Old Me Would Have Hit Jon Stewart With A Chair

May 13, 2011

Jim Cramer, the host of CNBC’s Mad Money and a former hedge fund manager, is never one for biting his tongue. But in a profile in New York Times magazine, Cramer says he wished he’d been more outspoken to one particularly famous critic. In the profile, Cramer discusses that now famous exchange with the Daily Show ‘s Jon Stewart: Over two years later, thoughts of the interview continue to get a rise out of Cramer. “The old me would have hit Stewart with a chair. I’m proud I didn’t do that. I controlled myself. But maybe I shouldn’t have. Maybe I should have taken the gloves off,” Cramer says, according to The New York Times . “When Stewart talked about how his 75-year-old mother lost money in the market, I could have said: ‘Hey, your brother Larry Leibowitz is one of the heads of the New York Stock Exchange. Why didn’t he give your mom advice?” Cramer expressed additional frustration about Stewart had pegged him as the representative of financial crisis. From the NYT profile: “‘They wanted to make me the Face of the Era, and they succeeded. Rick Santelli’s a conservative. Ideological. O.K., I get that. But me? I was very anti-Bush. I’m a Democrat, I’ve got the canceled checks to prove it, and suddenly I’m the enemy? Me? Me?’” Early Friday, Cramer came to his own defense again, via Twitter . Check out his tweets below: “[S]o chill and elevate your game. Be a Yankee.” Below are Cramer’s tweets directed at various online critics: Read the entire piece at the NYT .

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Poll Shows Where Americans Stand On Raising Taxes In Debt Fix

May 12, 2011

WASHINGTON (Reuters) – More than half of Americans say higher taxes should be part of a fix to tame the $14.3 trillion U.S. debt, a Reuters poll released on Wednesday found, signaling a disconnect with Republicans who reject any tax increases. Fifty-two percent of respondents in a Reuters/Ipsos poll said a combination of spending cuts and tax increases was the best strategy to reduce deficits, dovetailing with other recent surveys. Republicans have taken higher taxes off the table in negotiations to reduce soaring deficits, while President Barack Obama, a Democrat, favors raising taxes, but only for the wealthiest 2 percent of Americans. “We’re not going to raise taxes. That was decided in last November’s election,” Senate Republican leader Mitch McConnell said on Tuesday. “I think the American people pretty clearly believe that we have the deficit problem because we spend too much, not because we tax too little.” Tackling rising deficits to keep the economy competitive is seen as a key issue going into 2012 presidential and congressional elections. The polling results resonated with Neal Weber, who advises corporate clients at the McGladrey tax and accounting firm in Washington. “As I talk to my business clients … I believe that more than half of them share the same belief,” that taxes should be in the deficit-cutting mix, Weber said. Democratic Senate Budget Committee Chairman Kent Conrad noted on Monday that revenue is at its lowest share of the economy in decades, while spending is at its highest. “Clearly you’ve got to work both sides of the equation,” he said. But Republicans say raising taxes would stifle economic growth and say instead the focus must be cutting spending, including for the government pension and healthcare programs for the elderly. HARD REALITIES Some critics say Democrats are not calling for enough of a tax increase to raise more revenue. Although Obama wants to end tax breaks for the wealthiest, he favors extending the George W. Bush-era tax rates on middle incomes, at a cost of $2.9 trillion over a decade, according to White House estimates. “It is obvious that the nation’s desperate fiscal condition requires higher taxes on the middle class, not just the richest two percent,” David Stockman, budget director under President Ronald Reagan, wrote in the New York Times recently. The May Reuters/Ipsos poll was conducted May 5-9, with a randomly selected sample of 1,029 adults interviewed by telephone, both landlines and cell phones. The results are considered accurate within 3 percentage points. Among independent voters, who were key to Obama’s 2008 presidential win, slightly more than half favored combining spending cuts and tax increases. Sixty-two percent of Democrats and 40 percent of Republicans favored the same. A separate Reuters poll of bond dealers and money managers released on Tuesday found a majority believe spending cuts alone cannot solve the nation’s fiscal woes and that tax increases must be part of the mix. RAISING REVENUE, CUTTING TAX BREAKS The president’s deficit commission proposed raising revenue with a tax code overhaul that trims tax breaks enjoyed mainly by those with middle and higher incomes, including the mortgage interest deduction, and health care benefits. Reagan, a hero of conservative Republicans, took office in 1981 ushering in $265 billion worth of tax cuts. But as deficits worsened and Social Security faced insolvency, he agreed to tax increases, which, according to government documents, ended up totaling $132 billion over his two terms in office. Many analysts believe decisions on taxes will be put off until after the elections. “We’re looking at the next election, and a huge fight over how much tax we should have in this country and who should pay it,” said Clint Stretch, a former legislative counsel at the congressional Joint Committee on Tax. (Editing by Vicki Allen) Copyright 2010 Thomson Reuters. Click for Restrictions .

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John Cusack: Goldman Sachs Basically Is The Government

May 10, 2011

Add John Cusack to the list of celebrities unhappy with the supposed ties binding Wall Street and Washington. On Monday night, the actor, known for his roles in High Fidelity and Say Anything among others, used his personal Twitter account to take a couple shots at Goldman Sachs. (Hat tip to Business Insider.) The investment bank has come under fire after a Senate report found that Goldman, the fifth-largest U.S. bank by assets, profited from betting against clients after misleading them into buying financial instruments the bank knew to be junk. On Tuesday, Goldman Sachs said it had received word that regulators could officially bring charges against the bank. After Roget Ebert tweeted out an article on two U.S. Senators, Democrat Carl Levin and Republican Tom Coburn, formally asking the Justice Department and the Securities and Exchange Commission to investigate the investment bank for defrauding investors, Cusack replied, “wonder if its s sham..” Only minutes later, in response to other tweets insinuating that Goldman Sachs has “friends” in Washington, Cusack replied “they basicaly ARE the gov at this point lets be honest…” Cusack isn’t the first A-lister to criticize the supposed ties between Washington and Wall Street. In March, Oscar-winner Matt Damon said in an interview that he believed President Obama had “rolled over to Wall Street completely.” John Cusack tweets at @johncusack . Below are the tweets:

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Mike Lux: Democrats and Wall Street

May 6, 2011

The Republicans in the Senate have thrown down the gauntlet: 44 Republican senators have signed a letter saying they won’t confirm anyone — anyone at all — to be the director of the new Consumer Financial Protection Bureau unless the new agency is made toothless. It is this kind of way-over-the-top overreaching that has hurt Republican governors like Walker and Kasich so badly because of their attempt to wipe out public-sector unions, and has made the Ryan budget the most unpopular bill in front of Congress in years. When you are so clearly willing to do everything the Wall Street bankers could ever ask, you paint a very big target on your back. Democrats should seize this opportunity and strike while the iron is hot, just as they did in standing up to Walker, Kasich, and Ryan. Being willing to stand tall and fight back against those unpopular right-wing policies, and the moneymen behind them like the Koch brothers, has already paid off enormously for Democrats. Just think how picking a fight with the most unpopular entity in America (now that Osama bin Laden is dead) — the big banks on Wall Street — could help them politically. The President should immediately announce he is appointing Elizabeth Warren as director of the CFPB, and when the next recess comes, immediately put her in as a recess appointment. There is no longer any reason not to, because the Republicans gave us our opening: if they are going to oppose anyone no matter how weak in that job, there is no reason to offer a compromise candidate. Obama should just give it to the person who would be the best director, which Elizabeth would clearly be. Having a big blow-up with Republicans, with us fighting for consumers and homeowners and them fighting for the banks, would be a great political fight to have. I suspect at the end of the day, that will be the conclusion the Obama team comes to as well, although they are taking their own sweet time on this CFPB decision. And their options of who to appoint got narrowed a lot by that Senate GOP too. The White House already has had several feelers rejected by candidates who didn’t want to be seen as taking the job Warren should have, which is a big factor in making Elizabeth’s appointment more and more likely. The bottom line is that this letter probably just sealed the deal for her getting the job, so we can once again thank overreaching Republicans for helping get something good done. Unfortunately, though, this rather obvious notion of picking fights with incredibly unpopular Wall Street bankers isn’t a universally held Democratic strategy. Take a look at the dynamics on a couple of other fronts. The first example is how the swipe-fee issue still has some Democrats being dumb in their politics. I got involved in this issue during last year’s financial-reform battle, forming a rather unusual (okay, extremely unusual) alliance with retailers and merchants. Dick Durbin offered an amendment that would require the Federal Reserve to provide some regulation of debit card swipe fees so that the big banks who thoroughly dominate this market (Visa and MasterCard, which are subsidiaries of the big banks, represent more than 80 percent of the debit card market) couldn’t just charge whatever outrageous swipe fees they wanted to every small businessperson and non-profit group that let customers use debit cards. The politics of this issue seemed easy to me: the Big Banks vs. Main Street Businesses and Consumers. And it was easy the first time around: when Durbin offered his amendment 63 Senators voted for it, including some Republicans. But the big banks have a ton of money, lobbyists, and muscle — and they keep chipping away at this. They have convinced a lot of Democrats to go over to their side. An organization I chair, American Family Voices , recently came out with and ad that got some notice because it targeted some Democrats, including DNC chair Debbie Wasserman Schultz. But if Democrats took the side of small businesses and consumers, and left helping Wall Street bankers to Republicans, the politics of this issue would be a lot cleaner. The second issue is the foreclosure fraud issue. The big banks have run roughshod over hard-pressed homeowners, abusing the foreclosure process to the point where they have had a series of court decisions go against them. The 50 attorneys general and multiple federal agencies have been negotiating with the big banks on this issue, but the Obama administration has been way too weak in helping underwater homeowners press for mortgage write-downs. The administration refused to issue a moratorium on foreclosures in spite of all the problems with the banks that were handling them, Treasury’s HAMP program has been a disaster, and the administration’s acting head of the critically important OCC regulatory agency has been completely in bed with Wall Street bankers on housing and many other issues. The Obama administration should be taking on the big banks on foreclosures, not coddling them. I am a Democrat because our party has historically been on the side of middle-class workers, homeowners, consumers, and small businesses against wealthy special interests like Wall Street bankers. Politically and policywise, we should be clearly, cleanly, and strongly on the side of the former, and not confuse voters by straddling both sides of the issue. I will always be a Democrat because we are the only party that would ever appoint someone like Elizabeth Warren to office, or pass legislation like the CFPB and swipe-fee regulation, but when we waver on these kinds of things, we lose our way politically as well. It is time for Democrats to take a clear side for the middle class, and let the Republicans choke on having to be on Wall Street’s side.

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Corporations That Got Massive Tax Breaks Spent Millions In 2010 Elections

May 3, 2011

This story has been updated. WASHINGTON — The top five recipients of federal corporate tax breaks are also among the biggest spenders in the U.S. political system — they shelled out a combined $7.86 million in campaign contributions during the 2010 elections (in political action committee and individual employee contributions), according to analysis from the New York City Public Advocate’s office. Bill de Blasio, the public advocate, is now calling on these companies to verify that no taxpayer dollars will be used in future election spending, warning such a move could “carry financial risk to the [companies'] bottom line.” De Blasio, a Democrat, has aggressively gone after campaign finance accountability and successfully used his bully pulpit to convince several Wall Street firms not to spend any corporate dollars on political advertising . According to the analysis by de Blasio’s office, ExxonMobil, Bank of America, General Electric (GE), Chevron and Boeing had combined profits of $77.16 billion in 2010 but paid $0 in federal income taxes in their latest filing. At the same time, they gave a combined $7.86 million in political contributions during the 2010 election cycle — a 7 percent jump over their 2008 political spending. Charts via the Office the Public Advocate: According to the Center for Responsive Politics, all five of these companies ranked among the top 100 biggest political spenders between 1989 and 2010, with Chevron and ExxonMobil giving more heavily to Republicans, and the other three corporations generally balancing donations between the two parties. In 2010 alone , Boeing ranked 28th in political giving (“on the fence” in political leanings), GE ranked 30th (“leans Democratic”), Bank of America ranked 37th (“leans Republican”) and ExxonMobil ranked 93rd (“strongly Republican”). Chevron was not in the top 100 overall donors for the year. “[Corporate] tax breaks were put in place to promote growth and create jobs, not bankroll the political causes of corporate executives,” said de Blasio in a statement. “The unencumbered and anonymous spending in elections let loose by the Citizens United ruling has opened the door for a gross misuse of taxpayer dollars. No company that can afford to spend millions of dollars to influence our elections should be pleading poverty come tax time.” The Supreme Court’s landmark ruling in Citizens United cleared the way for a federal court’s decision in Speechnow.org v. FEC , which opened the floodgates for unlimited election spending by certain independent political groups, as long as they do not coordinate their activities with political candidates or party committees. These groups can raise unlimited funds from individuals, corporations and unions. Thanks to the ruling, the five companies could have contributed even more than the $7.86 million than was disclosed in 2010. De Blasio sent letters to the heads of each of the corporations, expressing concern over the use of their federal tax credits. He urged each company to “ensure full disclosure of its political spending to demonstrate that these funds and other corporate treasury dollars are not being used for political spending and electioneering.” He also asked all of them except GE to adopt policies that prohibit their trade association dues from being used for political contributions and electioneering. His office is also launching a campaign to ask the public to email ExxonMobil and urge the company to “adopt the proposed shareholder resolution on disclosure of political spending,” which will be considered at the company’s May 25 shareholders meeting. In response to de Blasio’s statement, ExxonMobil spokesman Alan Jeffers told The Huffington Post in an email that the company complies with all tax laws and disclosure requirements. He also addressed some criticism of ExxonMobil’s federal taxes. “Recent media reports have highlighted efforts by lawmakers to end economy-wide tax deductions for U.S. oil companies that were established to support manufacturing jobs in the United States and prevent U.S. companies from paying double taxation on income earned outside the country,” Jeffers wrote. “ExxonMobil is one of the largest taxpayers in the United States,” he added. “During the first quarter of this year, on earnings of $2.6 billion in the United States, we incurred U.S. tax expenses of $3.1 billion.” Boeing held its shareholders meeting on Monday and according to a spokesman, 67 percent of shareholders voted with the management against publishing amounts contributed to trade associations. The company already publishes its other political contributions online . “Like most of its competitors, Boeing does not publish amounts contributed to trade associations or otherwise mandate disclosure of funds spent for non-political purposes that are later used by the third parties to support political activity,” reads the Board of Directors’ statement in opposition . It cites problems with potentially revealing corporate strategy to competitors through this information and problems in compelling third parties to reveal whether they used Boeing-contributed funds for political purposes. GE spokesman Andrew Williams sent a statement that, like Exxon’s, did not address the issue of political contributions and also took exception to media reports on the company’s tax liability. “We will file our 2010 tax returns by September,” he wrote to The Huffington Post. “We expect to have a small federal income tax liability. In 2010, GE paid significant federal income taxes for prior years. We also paid about $1 billion in 2010 in other state, local and federal taxes in the U.S.” Williams said the company’s federal tax rate was low in 2010 because the company “lost billions of dollars in GE Capital, our financial arm, as a result of the global financial crisis. Similarly, in 2009 GE Capital’s losses were so large that the total company lost money on its U.S. operations.” He added that GE expects its tax rate will be higher in 2011 as GE Capital recovers. In March, however, GE told shareholders that the company expected to get back a $3.2 billion tax benefit from the federal government. Last year, Bank of America agreed to begin publishing a summary of its political donations online . “We comply with all state and federal campaign regulations,” said Bank of America spokesman Jerry Dubrowski. “Our policy is not to make corporate contributions to candidates for public office.” In a statement, Chevron wrote, “Chevron is committed to adhering to the highest standards of ethics and transparency in engaging in any political contributions. We have strict policies and internal approval processes so that decision making and reporting on political contributions comply with the letter and spirit of all applicable laws. A list of corporate contributions made during 2010 is available on Chevron.com.” It also defended its taxes, stating, “Between 1998 and 2008, the oil and gas industry paid $1 trillion in total income taxes. … In 2010, Chevron, as an example, paid $12.9 billion in taxes on pretax income of $32.1 billion, or an effective tax rate of 40 percent.” Large corporations that won’t be paying any federal income taxes have faced fierce bipartisan criticism in recent weeks. Former Wisconsin senator Russ Feingold, who now runs the Progressives United political action committee , launched a campaign pressuring GE CEO Jeffrey Immelt on the issue. And in April, there were massive protests in Washington state over the Democratic-controlled legislature proposing cuts to public programs over closing corporate tax loopholes. For the past month, Sen. Bernie Sanders (I-Vt.) has been publicly shaming what he calls the ” worst corporate income tax avoiders ” in an effort to share the burden of deficit reduction more equally, rather than letting it fall more on programs that assist low-income and middle-class individuals. The top five federal corporate tax break recipients have been particular targets of Sanders’ campaign. The piece was updated with Chevron’s statement. It was amended to clarify that the company political donations are from PACs and individual employees to reflect that the tax figures are from the companies’ latest filings

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EU And IMF Near Agreement On Portugal Bailout

May 3, 2011

LISBON – Portugal is close to reaching an agreement with the European Union and IMF on a bailout for the debt-laden country and there are no disagreements between the donors, the European Commission and the IMF said on Tuesday. Portugal’s caretaker Prime Minister Jose Socrates was set to make a statement at 1930 GMT, his office said. Officials from the European Commission, the International Monetary Fund and European Central Bank have been in Lisbon for almost a month to hammer out an agreement with Portugal on a bailout expected to reach about 80 billion euros ($120 billion). An agreement could come any day, officials have said, but local media have reported that it could be delayed because of disagreements between the European Commission and IMF on the terms of the loan. EC spokesman Amadeu Altafaj, who is in Lisbon, denied any rifts. “There has been progress in talks, and we can expect a deal soon. My feeling is that we are getting close to a deal … There are no divergences among members of the troika,” he said. “Discussions are currently going on and there is good progress, we are getting closer to a staff agreement and we keep a constructive dialogue with the political parties too,” he added. An IMF spokesperson also said there were no divergences between the EC, ECB and the IMF and a deal was close. Portugal became the third country in the euro zone, after Greece and Ireland, to seek a bailout after its government collapsed in late March and borrowing costs soared. Officials said the agreement would be presented to Portugal’s opposition Social Democrats and the caretaker government soon so that they can commit to the terms of the deal ahead of a snap June 5 general election. Social Democrat leader Pedro Passos Coelho said he stood ready to meet with the lenders. The deal is expected to be approved at a meeting of eurozone finance ministers in mid-May, in time for the EU rescue fund to raise money for Portugal by June 15, when the country needs to meet a bond redemption of 4.9 billion euros. Portuguese media have said the European Commission and the International Monetary Fund diverged over whether Portugal should be given more time to meet its budget deficit targets, as well as on the size of the aid package, which Brussels initially put at around 80 billion euros. Diario Economico newspaper said earlier Portugal may need over 100 billion euros in EU/IMF loans, including up to 10 billion euros for its banks, but there were doubts whether Brussels will allow the bailout to exceed its initial target. SIC television said, without citing its sources, the bailout could reach 105 billion euros. (Reporting by Andrei Khalip; Writing by Axel Bugge; Editing by Louise Ireland) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Debt Ceiling Politics: ‘Few Exercises Produce As Much Cynical And Overtly Partisan Behavior’

April 26, 2011

Iowa has two Senators, one a Republican (Charles Grassley), the other a Democrat (Tom Harkin). Each has voted seven times since 2002 on a bill to raise the nation’s debt ceiling. Look back at those votes, and an interesting pattern emerges: Every time a Republican president has needed the debt ceiling raised to keep government functioning, Sen. Grassley, the Republican, has voted to raise it, while the Democrat, Sen. Harkin, has voted against it. But when a Democratic president has asked for an increase, their votes reverse: Sen. Harkin has voted in favor, and Sen. Grassley has voted against it.

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Richard (RJ) Eskow: Bipartisan Senators Indict Wall Street, Media Yawns. Six Guys Push Stale Deficit Hype, Media Goes Wild

April 18, 2011

It should have been the lead story from coast to coast: A bipartisan panel of senators, including some of that body’s most conservative members, released a damning report that slammed bankers, regulators and ratings agencies — and they made it clear that they’d like to see warrants issued against the CEO of Goldman Sachs and other financial executives. This report was endorsed by all of its Republican members, including conservative co-chair Tom Coburn and Tea Party Senator Rand Paul. Hey, editors, how’s this for a headline? “Libs and Tea Party Senators demand: ‘Bring me the head of Goldman Sachs.’” Now that’s what I call news! The media responded with a collective yawn. Last week also saw yet more coverage of the relentlessly publicity-grubbing “Gang of Six.” It’s hard to imagine a more stale story. The Gang’s just the latest in a series of right-leaning groups that throw a few persuadable Democrats in with Republicans, label them ‘bipartisan’ or even ‘centrist,’ then start issuing calls for a conservative agenda that cuts entitlements and keeps taxes low for the wealthy. We’ve seen that story a thousand times, both in general and specifically about these six Senators. What’s more, the Democratic Gang members have been bypassed by the president and Harry Reid, so a few more interviews with this over-exposed crowd aren’t exactly “man bites dog” stuff. Guess which story got more coverage? A Google News search on “Gang of Six” yielded 4,600 hits this morning, while a search on “Levin Coburn” came up with only 180 hits. And coverage of the Gang of Six continues to be overwhelmingly (and falsely) flattering. Reporters continue to cite the Gang’s inaccurate talking points, which were generated in think tanks and crafted by marketers, as if they were Holy Writ. But the exhaustively researched Levin/Coburn Report was treated as if it were empty Senatorial bluster. The coverage of these two stories tells us all we need to know about the media’s negative effect on the political process. Sloppy journalism doesn’t just cheapen our discourse. It changes the way that politicians govern, too. Senators, like all politicians, thrive on favorable publicity. When a self-seeking initiative like the “Gang of Six” receives twenty-five times as much coverage — and much more positive coverage — than a detailed and comprehensive study like the Levin/Coburn Report, it affects Senatorial behavior. And when truly bipartisan initiatives like Levin’s and Coburn’s are dismissed, while the phony bipartisanship of the Gang is celebrated, that sends a message to politicians who rely on independent voters. The Levin/Coburn report really is newsworthy. These senators — Democrats and Republicans, liberals and die-hard conservatives — laid the blame for the financial crisis directly at the feet of Wall Street’s executives, and they document a pattern of risky lending and fraudulent marketing by U.S. banks. They also placed the blame with regulators, who displayed both incompetence and a(sometimes embarrassing) subservience to Wall Street. The Senators slammed the morally compromised, incompetent ratings agencies. The panel even called for more regulations. That’s right. Senators like Tom Coburn, John McCain, Rand Paul, and Scott Brown signed a report that includes recommendations like “Narrow Proprietary Trading Exceptions” and “Design Strong Conflict of Interest Prohibitions.” When four of the Senate’s most prominent Republicans, including Tea Party Senators, endorse more regulation, that’s news. And the panel didn’t mince words. “Our investigation found a financial snake pit rife with greed, conflicts of interest, and wrongdoing,” said Democrat Levin. Republican Senator Coburn said: “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight.” The panel made it clear they felt laws had been broken. Sen. Levin stated that they were referring several reports regarding Goldman Sachs executives, including CEO Lloyd Blankfein, to the Justice Department for criminal prosecution on perjury and other charges. And the panel report includes a number of sentences like this one: “Federal regulators should review the (investment banking) activities described in this Report to identify any violations of law.” That’s incendiary stuff. But, as the Columbia Journalism Review reports, the story was downplayed by major media outlets and its major findings were softened. The Wall Street Journal placed the story in section C1, and falsely claimed that the report “lacked evidence of outright fraud.” Sen. Levin’s call to investigate Goldman executives was described this way: “Sen. Levin said Wednesday that he believed some Goldman executives may have misled Congress during a committee hearing in April 2010. He didn’t specify how.” Actually, he did specify how. And how did the New York Times , the nation’s “paper of record,” handle this story? An otherwise excellent story failed to mention it altogether. Other outlets either didn’t cover the story at all or, like the Journal , buried it deep in the bowels of their back sections. Contrast that with some of the recent headlines about the Gang of Six and their mediocre work: Senators Boast New Deficit Reduction Plan Will ‘Make Everybody Mad’‎ – Fox News Alan Simpson: ‘Pray for Gang of Six’‎ – Wall Street Journal ‘Gang of Six’ hopes to spur bipartisan action on deficit‎ – USA Today Gang of Six plan in demand – Congress.org Who They Are and Why They Matter: Senators Work Behind Closed Doors On Bipartisan Debt Reduction Deal – ABC News Coverage like that explains a lot. Sen. Dick Durbin has been heroic on banking reform issues, especially debit card reform. Last week he laid a mighty smackdown on overrated bank CEO Jamie Dimon of JPMorgan Chase, who has led the charge to roll back bank regulations and return us to the pre-2008 days of uncontrolled misbehavior by too-big-to-fail banks. That confrontation brought Durbin almost no publicity. But his Gang membership has provided him with fawning coverage from coast to coast. Is it any wonder that Sen. Durbin’s reluctant to leave the Gang and devote more time to combating Wall Street? The Times story on the Levin/Coburn report — co-written by Gretchen Morgenson — created a stir last week by asking the burning and critical question: Where are the prosecutions for Wall Street crime? That’s the same question that senators like Levin and Coburn are asking, along with committee members like Rand Paul, John McCain, and Scott Brown. Their report should increase the pressure on the Justice Department to reverse its shameful refusal to enforce the law when rich bankers are the perps. But with coverage like this, it’s more likely that we’ll see unnecessary cuts to Social Security and Medicare instead. __________________________________ Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project and the Strengthen Social Security campaign. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.” Website: Eskow and Associates

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Controversial GOP Budget Proposal Passes House Vote

April 15, 2011

WASHINGTON — The House has passed a Republican budget blueprint proposing to fundamentally overhaul Medicare for future beneficiaries while combating out-of-control budget deficits. It would impose sharp spending cuts on social safety net programs like food stamps and Medicaid. The GOP proposal passed 235-193, with every Democrat voting “no.” The nonbinding plan lays out a fiscal vision cutting $6.2 trillion over 10 years from the budget submitted by President Barack Obama. It calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time. THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below. A bold but politically risky plan to cut trillions of dollars from the federal budget steamed toward a party-line House vote Friday, as insurgent Republicans rallied behind the idea of fundamentally reshaping the government’s role in health care for the elderly and the poor. The GOP plan proposes a federal budget totaling $3.5 trillion next year, while promising more than $6 trillion in accumulated spending cuts over the next decade compared with the budget that President Barack Obama offered in February. It relies on stiff cuts to domestic agency accounts, food stamps and the Medicaid health care program for the poor and disabled. The GOP’s solution to unsustainable deficits that presently require the government to borrow more than 40 cents of every dollar it spends is to relentlessly attack the spending side of the ledger while leaving Bush-era revenue levels intact. It calls for tax reform that would lower the top income tax rates for corporations and individuals by cleaning out a tax code cluttered with tax breaks and preferences, but parts company with Obama and the findings of a bipartisan deficit commission, who propose devoting about $100 billion a year in new revenues to easing the deficit. The Republican plan “disavows the relentless government spending, taxing and borrowing that are leading America, right at this moment, toward a debt-fueled economic crisis,” according to the document. Democrats and many budget experts say this spending-cuts-only approach is fundamentally unfair, targeting social safety net programs like Medicaid and food stamps while leaving in place a tax system they say bestows too many benefits on the wealthy. Republicans shied away from tackling Social Security shortfalls, steering clear of a political minefield. But their budget plan calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time. “The changes being proposed would not affect one senior citizen in America, not one. Anyone 55 years and older will not be affected by any of these changes,” said House Speaker John Boehner, R-Ohio. “But if you’re 54 and younger, those Americans understand that if we don’t make changes, the programs won’t be there.” Virtually every budget expert in Washington agrees that projected Medicare cost increases are unsustainable, but the GOP initiative – attacked by Democrats as ending Medicare’s guarantee as we know it – has launched a major-league Washington imbroglio. The primary author of the GOP plan is unfazed by the Democratic attacks. “The biggest threat to Medicare is the status quo and the people defending it,” House Budget Committee Chairman Paul Ryan, R-Wis., told The Associated Press on Thursday. Democrats countered with official estimates showing the GOP plan would provide vouchers whose value would steadily erode. “They end the Medicare guarantee,” said top Budget Committee Democrat Chris Van Hollen of Maryland. “They force seniors to leave the Medicare program and go into the private insurance market where costs continue to rise day in and day out.” The House began debate on the measure Thursday and continued Friday with the easy defeat of two liberal budget alternatives. In a tricky vote Friday, a plan offered by the conservative Republican Policy Committee failed, 136-119, in a tally which most Democrats withheld their votes. The Democratic strategy was to force some Republicans to vote against the conservative plan, which was being “scored” by anti-tax groups like the Club for Growth, which supports economic conservatives in GOP primary races. Had the conservative plan actually passed, it would have derailed the underlying GOP budget. The GOP plan isn’t actual legislation. Instead, under the arcane and decidedly imperfect congressional budget process, the measure sketches out a nonbinding blueprint each year for running the government. The resolution doesn’t require the president’s signature, but it does set the framework for changes to spending or tax policy in follow-up legislation. The most immediate impact of the GOP plan would be to cut the $1 trillion-plus budget for appropriated programs next year by $30 billion, following on $38 billion in cuts just adopted. That would return domestic agency accounts below levels when George W. Bush left office. Friday’s voting comes on the heels of final congressional action on a long-overdue plan to wrap up the 2011 budget year. That measure claims $38 billion in savings but just $20 billion to $25 billion in lower deficits because illusory spending cuts comprise a big portion of the measure. The Democratic-controlled Senate has yet to produce its alternative plan as the Budget Committee chairman, Sen. Kent Conrad, D-N.D., and other members of Obama’s independent fiscal commission pursue a bipartisan “grand bargain” blending big spending curbs with new revenues flowing from a simplified tax code. The budget deficit is projected at an enormous $1.6 trillion this year, but more ominously, current projections show an even worse mismatch as the baby boom generation retires and Medicare costs consume an ever-growing share of the budget. But there’s a standoff between House Republicans and Obama over the president’s plan to raise taxes on upper-income people. For the long term, Ryan’s 10-year plan still can’t claim a balanced budget by the end of the decade because of promises to not increase taxes or change Medicare and Social Security benefits for people 55 and over. But eventually annual deficits are projected to fall to the $400 billion range, enough to stabilize the nation’s finances and prevent a European-style debt crisis that could force far harsher steps, Ryan says. The GOP plan seeks to cut $5.8 trillion from the budget. But that amount is inflated because, like Obama, the Ryan plan underestimates the likely costs of military operations overseas to produce $1 trillion in iffy spending cuts. The GOP measure also comes after Obama on Wednesday promised stiffer deficit curbs than contained in his February budget. Obama proposed reducing deficits by $4 trillion over 12 years, with $3 trillion coming from spending reductions and $1 trillion from additional revenue. He would leave Medicare and Medicaid intact but with new cost controls. But after Ryan asked the White House budget office for more details, he was pointed to a news release.

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House Prepares To vote On $6 Billion GOP Spending Cut Plan

April 15, 2011

WASHINGTON — A bold but politically risky plan to cut trillions of dollars from the federal budget is coming to a House vote, with insurgent Republicans rallying behind the idea of fundamentally reshaping the government’s role in health care for the elderly and the poor. The GOP plan, expected to be voted on Friday, promises more than $6 trillion in spending cuts over the next decade compared with the budget that President Barack Obama offered in February, relying on stiff cuts to domestic agency accounts, food stamps and the Medicaid health care program for the poor and disabled. But while leaving Social Security alone, the measure calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time. Virtually every budget expert in Washington agrees that projected Medicare cost increases are unsustainable, but the GOP initiative – attacked by Democrats as ending Medicare’s guarantee as we know it – has launched a major-league Washington imbroglio. The primary author of the GOP plan is unfazed by the Democratic attacks. “The biggest threat to Medicare is the status quo and the people defending it,” House Budget Committee Chairman Paul Ryan, R-Wis., told The Associated Press on Thursday. Democrats countered with official estimates showing the GOP plan would provide vouchers whose value would steadily erode. “They end the Medicare guarantee,” said top Budget Committee Democrat Chris Van Hollen of Maryland. “They force seniors to leave the Medicare program and go into the private insurance market where costs continue to rise day in and day out.” The House began debate on the measure Thursday with a vote on it and several competing alternatives – most importantly a Democratic substitute raising taxes on the wealthy and a plan by GOP conservatives to cut far more harshly – scheduled for Friday. The GOP plan isn’t actual legislation. Instead, under the arcane and decidedly imperfect congressional budget process, the measure sketches out a nonbinding blueprint each year for running the government. The resolution doesn’t require the president’s signature, but it does set the framework for changes to spending or tax policy in follow-up legislation. The Democratic-controlled Senate has yet to produce its alternative plan as the Budget Committee chairman, Sen. Kent Conrad, D-N.D., and other members of Obama’s independent fiscal commission pursue a bipartisan “grand bargain” blending big spending curbs with new revenues flowing from a simplified tax code. The budget deficit is projected at an enormous $1.6 trillion this year, but more ominously, current projections show an even worse mismatch as the baby boom generation retires and Medicare costs consume an ever-growing share of the budget. But there’s a standoff between House Republicans and Obama over the president’s plan to raise taxes on upper-income people. Friday’s voting comes on the heels of final congressional action on a long-overdue plan to wrap up the 2011 budget year. That measure claims $38 billion in savings but just $20 billion to $25 billion in lower deficits because illusory spending cuts comprise a big portion of the measure. For the long term, Ryan’s 10-year plan still can’t claim a balanced budget by the end of the decade because of promises to not increase taxes or change Medicare and Social Security benefits for people 55 and over. But eventually annual deficits are projected to fall to the $400 billion range, enough to stabilize the nation’s finances and prevent a European-style debt crisis that could force far harsher steps, Ryan said. The GOP measure also comes after Obama on Wednesday promised stiffer deficit curbs than contained in his February budget. But after Ryan asked the White House budget office for more details, he was pointed to a news release.

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For Barbour, An Issue Of Played Fast And Loose With Facts On Health Care Program

April 15, 2011

JACKSON, Miss. — Mississippi Gov. Haley Barbour, a potential 2012 Republican presidential candidate, played fast and loose with his state’s Medicaid enrollment numbers this week as he spoke in Washington and chatted up voters in the early primary state of New Hampshire. “Our rolls dropped from 750,000 to 580,000 in the first couple of years,” Barbour said Tuesday on Capitol Hill, referring to Medicaid enrollment trends after he took office in January 2004. That would be a 22.7 percent decline. The problem is, Barbour’s numbers are misleading, according to statistics provided by his own administration. The Mississippi Governor’s Office Division of Medicaid had a different way of counting Medicaid enrollment under Barbour’s predecessor, Democrat Ronnie Musgrove. The program changed its counting method in 2006, about midway through Barbour’s first term. Barbour’s numbers come close to working only if he uses a beginning figure from the old counting method and an end figure from the new method – an apples-to-oranges comparison. Mississippi Medicaid spokesman Francis Rullan said Thursday the old and new methods of counting enrollment can’t be compared or mixed and matched. Under the old method, some Medicaid recipients were counted more than once in a single reporting period. If a person dropped off the Medicaid rolls, for whatever reason, and re-enrolled during the same month, that counted as two enrollments rather than one. The new counting method, adopted by the Barbour administration, eliminates the duplicate statistics for enrollment. So a person who drops off the rolls and signs back up in the same month counts as one enrollment rather than two. Using the old method of counting, Rullan said Mississippi’s average monthly Medicaid enrollment during fiscal 2004 was 768,004. Barbour took office midway through that year. Applying the old method to today’s numbers, the March 2011 enrollment was 741,000, Rullan said. That’s a drop of 27,004, or 3.5 percent, in Medicaid enrollment since Barbour took office. Using the new method of counting, Rullan said Mississippi’s Medicaid enrollment in January 2004, when Barbour took office, was 574,852. After fluctuating up, down and then back up, enrollment hit 633,543 in January 2011. That’s an increase of 58,691, or 10.2 percent, during Barbour’s first seven years in office. Rullan, who has worked for Medicaid since the Musgrove administration, said he doesn’t know why the program changed its method of counting enrollment under Barbour. “Why do they have different ways of looking at it? I don’t know,” Rullan told The Associated Press on Thursday. “All I know is that they do and they have.” Barbour spokeswoman Laura Hipp did not say Thursday where the governor got the numbers he has been citing. “Medicaid reforms under Gov. Barbour have had a significant impact on the cost of the program while ensuring that those who are eligible for Medicaid receive it regardless of which counting method you use,” Hipp said. Soon after Barbour became governor, he persuaded legislators to change Medicaid’s re-enrollment procedures, and he said the change helps keep ineligible people off the rolls. Rather than handling annual re-enrollment by mail, Medicaid recipients are required to go to a local or regional office to sign up again in person. Critics say this “face-to-face” re-enrollment creates hardships for poor people in rural areas who might not have ready access to transportation. Barbour said the re-enrollment process is reasonable and makes exceptions for patients who are homebound or in nursing homes. In New Hampshire on Thursday, he defended the face-to-face re-enrollment. “It’s not too much to ask for someone to drive to the county seat and say, `I exist. Here are my children, here are their birth certificates, they live with me,’” Barbour said over breakfast at a restaurant in Manchester. The Mississippi Division of Medicaid is part of the governor’s office, and each governor appoints the executive director. The position generally changes when a new governor takes office. ____ Associated Press writers Ken Thomas in Washington and Holly Ramer in Manchester, N.H., contributed to this report.

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Scott Walker Defends Hobbling Unions

April 14, 2011

WASHINGTON — Wisconsin Gov. Scott Walker defended his school of union hobbling as a route to fiscal discipline to budget-weary Washington on Thursday, telling a House committee that protracted, nail-biting negotiations in tough economic times can produce inaction and bad policy. “Sometimes,” the Republican governor told the House Oversight and Government Reform Committee, “bipartisanship is not so good.” It was an extraordinary message to deliver to Capitol Hill at a time of divided government, when leaders in Congress realize they have little choice but to negotiate the path toward the nation’s economic stability. As Walker spoke to the House panel, a Congress facing tough fiscal battles ahead was preparing to send the White House a bipartisan deal for $38 billion in spending cuts over the next six months. “This is the best we could get out of divided government,” House Speaker John Boehner, R-Ohio, told reporters. Walker’s budget for Wisconsin is just the opposite – an explicit act of partisanship. Passed by a Republican-controlled legislature and now the subject of a court fight, it ends collective bargaining on everything except wages for state and local government employees and requires them to absorb more of their pension and health care costs. The state no longer will collect dues for unions through paycheck deductions. Walker’s assault on the public employee unions roiled Wisconsin politics, inspiring widespread protests and a walkout by Senate Democrats in the legislature. It also made him a hero to many conservatives and a favorite ideological target of Democrats, for whom unions are a key and well-funded constituency. Former GOP vice presidential candidate Sarah Palin is set to attend a tea party rally this weekend at the Wisconsin Capitol, the site of recent protests over legislation that would strip union rights for most public workers. The Wisconsin Democratic Party says in a statement that Palin and Walker complement each perfectly because each wants to lower wages and benefits for Wisconsin families. The bitterness followed Walker to Washington on Thursday. The hearing, billed by Chairman Darrell Issa, R-Calif., as a look at the choices faced by budget-strapped local governments, was more a coming-out for the Republican governor. The Democrats’ witness, Vermont Gov. Peter Shumlin, began his testimony by giving his fellow governor a bottle of maple syrup – a prop, as it turned out, for Shumlin’s point that “you can get more with maple sugar than with vinegar.” Governors all must balance their budgets, Shumlin, a Democrat, said, and most do it without sparking the kind of animosity roiling Wisconsin. “You can get this job done, you can balance your budget, you can create jobs in your state without taking on the basic right of collective bargaining,” Shumlin said. “If you want to go after collective bargaining … just come out and say it.” Walker told the House committee he had tried for years as a local government official to negotiate with public employee unions, only to reach no accord. He complained that past state budgets amounted to bipartisan raids on specific funds, questionable accounting principles and agreements to put off tough decisions. He said his budget will plug that deficit. Democrats at Thursday’s hearing were combative. Just how much did weakening government workers’ collective bargaining rights save the state of Wisconsin? demanded Rep. Dennis Kucinich of Ohio. “That particular part doesn’t save any,” Walker replied. Earlier in his testimony, he told the committee the changes would save local governments in Wisconsin more than $700 million a year. He has said the part of the bill that forces the workers to contribute more toward their pensions and health care saves the state $30 million this fiscal year and $300 million over the next two. Delegate Eleanor Holmes Norton, a Democrat who represents the District of Columbia, asked Walker whether he’s met with union representatives since the bill passed. Walker said no, but a member of his administration has. Norton suggested Walker should take a lesson on civility from Congress, of all places. Though she often disagrees with Issa, for example, “I have always felt that this was somebody I could talk with and we could have a civil conversation.” In your shoes, she told Walker, “I would want to take the high road.” ___ Associated Press writer Scott Bauer in Madison, Wis., contributed to this report.

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Obama Tiptoes On Proposed Tax Increases

April 14, 2011

WASHINGTON — With his striking choice of words, President Barack Obama clearly outlined the greatest perils for Republicans – and for Democrats – in the nation’s high-stakes debate over spending and social programs. Obama used vivid, populist language in a forceful speech Wednesday to denounce the GOP plan for cutting spending and revamping Medicare and Medicaid. The Republicans, he said, have concluded that “even though we can’t afford to care for seniors and poor children, we can somehow afford more than $1 trillion in new tax breaks for the wealthy.” But the president’s language was tortured and opaque when it came to one element of his own proposal: raising taxes for certain Americans, mostly high earners. Obama said he wants “to reduce spending in the tax code.” That code, he said, is “loaded up with spending on things like itemized deductions.” By any measure, “spending in the tax code” is a curious phrase. It likens tax revenue to a source of money that “spends” down its total when tax cuts are enacted and conversely “reduces spending” when taxes go up, including cases in which temporary tax cuts are ended. Long gone are the days when Democrats employed frank language on taxes, as presidential nominee Walter Mondale did in 1984. “Mr. Reagan will raise taxes, and so will I,” Mondale said in accepting the nomination. “He won’t tell you. I just did.” Obama left no doubt he believes some taxes should go up. But he couched it in careful terms designed to distance himself from proverbial “tax-and-spend Democrats” almost as much as he distanced himself from what he suggested are heartless Republicans. Throughout his 43-minute speech, Obama portrayed himself as a fair but frugal leader willing to trim popular agencies, including the military, and to raise taxes only on wealthy people who have benefited disproportionately in recent years. It’s part of a broader appeal to independent voters, who swung dramatically from Democratic candidates in 2008 to Republicans in 2010 and who hold the key to his re-election hopes next year. Americans are showing increased alarm at the fast-growing federal debt. It’s coupled with concern, along with sometimes conflicting emotions and beliefs, about the nation’s biggest social programs, Medicare and Social Security. Both parties face political opportunities and risks as they confront these issues. And both parties are seeking phrases and slogans to best exploit their openings while minimizing their weaknesses. House Republicans plan this week to pass an ambitious 10-year plan that would convert Medicare to a voucher program and turn Medicaid into a state block grant program, saving the government billions of dollars. The bill would reduce tax rates for corporations and high earners, while ending some tax-avoidance loopholes. Democrats feel the GOP is overreaching, chiefly in its proposed changes to Medicare, the rapidly expanding federal health care program for older Americans and the disabled. They think voters will recoil at the notion of higher medical costs for the elderly, especially if income tax rates are falling for high earners. Obama ripped the Republican plan. “It’s a vision that says America can’t afford to keep the promise we’ve made to care for our seniors,” he said. “It ends Medicare as we know it.” Republicans, meanwhile, have virtually perfected their attacks on any Democrat who suggests a tax increase of any kind. Several top Republicans criticized Obama’s long and multilayered speech on that topic alone. Obama “doesn’t get it,” said Mississippi Gov. Haley Barbour, a likely presidential candidate. “The fear of higher taxes tomorrow hurts job creation today.” “The real problem is that Washington spends too much, not that it taxes too little,” said Sen. Lamar Alexander, R-Tenn. Numerous bipartisan and nonpartisan analysts say it is almost impossible to solve the nation’s debt problem without some combination of tax increases, spending cuts and substantial changes to Medicare and Social Security. After calling for an array of spending cuts Wednesday, Obama made the case for targeted tax increases, albeit in roundabout language. Because Medicare and Social Security are popular with both parties, he said, “and because nobody wants to pay higher taxes, politicians are often eager to feed the impression that solving the problem is just a matter of eliminating waste and abuse, that tackling the deficit issue won’t require tough choices.” He said he would not repeat last year’s decision to extend Bush-era tax cuts – now scheduled to expire before 2013 – for families earning more than $250,000 a year. “We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire,” the president said. He renewed his call for limiting itemized deductions “for the wealthiest 2 percent of Americans.” Such deductions apply to money spent on mortgage interest payments, charitable gifts and other items. Obama described such goals as “reducing tax expenditures.” “I think it was very, very smart” to use such unfamiliar and indirect language, said Matt Bennett, vice president of Third Way, a Democratic-leaning think tank that praised Obama’s speech. “Why not put it in those terms?” he said in an interview. “It’s what the Republicans’ Frank Luntz would do.” Luntz is a GOP adviser known for pushing carefully crafted political terms, such as referring to levies on estates as the “death tax.” Bennett said Republicans have demonized even reasonable and necessary tax increases to the point that “it’s a gigantic problem” for solving the nation’s fiscal woes. If a “term of art” will blunt GOP attacks, he said, it could help Obama advance his agenda and give political cover to Republican lawmakers who believe some element of tax increases must be part of a deficit-reduction drive. In his closest brush with an explicit call for tax increases Wednesday, Obama chastised the most insistent Republicans. “Some will argue we shouldn’t even consider ever, ever raising taxes, even if only on the wealthiest Americans,” the president said. “It’s just an article of faith for them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.” It fell far short of Mondale’s candor. But it was enough to unleash a barrage of GOP criticisms, certain to resound through the fall of 2012. ___ EDITOR’S NOTE – Charles Babington covers Congress and politics for The Associated Press.

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Video: Brown Says Republicans May `Come Around’ on Tax Plan

April 13, 2011

April 12 (Bloomberg) — California Governor Jerry Brown, a Democrat, talks with Bloomberg’s Alison Vekshin about efforts to win Republican support for his plan to extend a temporary tax increase to avert deeper cuts to the state’s budget. (Source: Bloomberg)

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A Debt Ceiling ‘Blazing Saddles’ Strategy?

April 12, 2011

WASHINGTON — Are Republicans following a “Blazing Saddles” strategy in the looming standoff over the nation’s debt limit. Imagine the scene in the Mel Brooks classic, where Cleavon Little points a gun at his own head and threatens to shoot if the armed townspeople don’t drop their weapons. “Listen to him, men. He’s just crazy enough to do it!” one says. That’s how some Democrats view GOP demands for “really, really big” concessions on spending and deficits in return for raising America’s debt ceiling. They think Republicans are essentially threatening to take a step that would spark an economic catastrophe — and that the public would blame the GOP for it. “It reminds me of the joke where the guy comes home and finds his wife in bed with another guy, puts the gun to his head and his wife starts laughing,” Rep. Gary Ackerman (D-N.Y.) told the Huffington Post. “He says ‘Who are you laughing at? You’re next!’” “The next hostage event seems to be the debt limit,” House Minority Whip Rep. Steny Hoyer (D-Md.) said. “The only reason you can hold hostage something is because the other side wants to act responsible,” he added. “Therefore you think, even though they don’t want what you’re pressing, that [Democrats will] take it to prevent a bigger harm. I think that’s irresponsible.” Even some Republicans privately wonder how the leadership can plausibly threaten a move that could pull the plug on the economy while arguing they want to fix the economy. “That’s a damn good question,” one GOP Financial Services aide acknowledged. “Even the Ryan budget requires raising the debt ceiling,” the staffer said, referring to the Republicans’ 2012 budget plan offered last week by Rep. Paul Ryan (R-Wis.) “It’s Alice in Wonderland territory,” the aide said. To recap, the U.S. debt ceiling is the maximum amount set by Congress that the country can borrow to meet its obligations. Now standing at $14.3 trillion, Treasury Secretary Tim Geithner warns the nation will hit it in mid-May . The Treasury can juggle the books for several weeks after that to pay the bills, but America will default for the first time in its history if the limit is not raised by early July. Economists have warned defaulting would spark economic calamity , beginning with spiking interest rates on bonds and potentially ending with a new, worse recession. “Yes, the Republicans are threatening to wreck the U.S. economy unless they get their way,” said Rep. Carolyn Maloney (D-N.Y.), who chaired the Joint Economic Committee before the GOP won the last election. The reason the GOP stance seems like a bad joke to many Democrats is that Congress can’t avoid raising the debt limit, whatever anyone says. The math just won’t allow it. It’s all but impossible to cut enough from the budget to avoid smacking into the limit, which last week was only about $80 billion away, a fact that many people have overlooked.. According to the Congressional Research Service, the nation needs to raise its debt limit by $738 billion just to finish 2011 — and there is only about $688 billion in discretionary spending left for the second half of the year. Cutting that spending would only delay the need to hike the debt, because there is, after all, an awful lot of interest to pay. Rep. Barney Frank (D-Mass.), the top Democrat on the Financial Services Committee, noted that the debt involves money that was already spent: on wars, an unfunded Medicare drug program and tax cuts, for instance, which he pointed out he didn’t support. “The way you deal with debt is by not incurring it,” Frank told HuffPost. “The notion that you can incur it and then ignore it is stupid.” Yet Majority Leader Eric Cantor (R-Va.) has vowed to use the debt ceiling as a ” leverage moment ,” and declared Tuesday, “We’re only talking about even doing this [raising the debt limit] if we can be assured there are guarantees in place that the spending doesn’t get out of control here.” “Maybe they’ve got an imaginary magic leverage stick,” quipped Ackerman, a senior member of the Financial Services Committee. Thinking along fairy tale lines, Frank argued that House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) know what has to be done. But he said they could have a hard time doing it because of both the new Tea Party members in their base and fears of primary challenges from the Tea Party. “Nobody knows just how far removed from reality these people are,” Frank said. “If we were dealing with just John Boehner and Mitch McConnell, it would be one thing. When you’re dealing with John Boehner, Mitch McConnell, the White Rabbit and the Mad Hatter, it’s unpredictable.” “This is not Samuel Adams’ Tea Party; this is Lewis Carroll’s Tea Party we’re dealing with here,” Frank said. And that gives Democrats pause, Ackerman said, leaving him feeling a little like Cleavon Little’s townspeople. “The problem is they might just go ahead and do it,” Ackerman said. “In a political world in which [Minnesota Republican Rep.] Michele Bachmann is a serious person, then not raising the debt limit becomes a serious threat,” said Frank. Ackerman and Frank, though, think maybe it’s time to call the bluff, rather than have Democrats give the GOP concessions as they did on this year’s budget and last winter’s tax cuts. “They’re in charge, which means they’re supposed to be the grown-ups this year,” said Ackerman, admitting, as Frank did, that the minority party generally opposes the debt limit. “But their strategy of ‘let’s hold our breath until our face turns blue’ is not a good strategy. I think the American people will blame them.” “Refuse to pay any attention to the threat,” Frank advised his colleagues and the White House. “And make no concessions.” “I think it’s clear they’d pay a very high price for this,” Frank added. Nevertheless, reports from 1600 Pennsylvania Avenue Tuesday suggested President Obama might throw the GOP at least several bones in his fiscal responsibility speech set for Wednesday — a prospect frowned upon by Ackerman. “For my taste, I’d like to see a stronger executive branch where they’re really helping direct things rather than standing by just watching them,” he said.

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Obama Sizes Up Options For Health Care Cuts

April 11, 2011

WASHINGTON — President Barack Obama’s plans to curb health care costs that drive the deficit would mean less taxpayer money for providers and more costs for beneficiaries as he draws from bipartisan ideas already on the table. But don’t look for his speech Wednesday to endorse a Medicare voucher system or turning Medicaid over to the states, as leading Republicans have proposed. Conceding the GOP’s point that government needs to cut and health care is one of the first places to look, Obama will try to change the direction of a deficit debate that threatens to get away from him. The president is using his speech to lay down broad principles and trace a path that could lead to compromise, but he won’t unveil a detailed program. White House spokesman Jay Carney said Monday that health care savings are essential to control the deficit. The spokesman indicated Obama would build on the work of his debt commission, whose recommendations he initially refrained from endorsing. Carney also praised a small group of senators from both parties, known as the Gang of Six, that is trying to set up a framework for a divided Congress to reach compromise on deficits. “The president understands very well that health care spending is a major driver of our deficit and debt problem,” Carney said. “He believes … we can achieve those savings in ways that protect the people that these programs are supposed to, and were designed to, support and help.” One proposal in the debt commission’s report last year would rework Medicare’s deductibles and copayments so that most beneficiaries have to pay a share of their everyday bills – cost shifts that in a few years would add up to more than $100 billion in taxpayer savings. In exchange, Medicare recipients would get better protection against catastrophic costs. Another called for scaling back the tax deduction for workplace benefits, which many economists say would be like putting the entire health care system on a diet. It’s strongly opposed by unions, a major Democratic constituency. And the wild card: curbs on jury awards in malpractice cases. Democrats and Republicans have been rigidly divided on the issue, an arm-wrestling match between GOP-leaning doctors and trial lawyers who tend to back Democratic candidates. A breakthrough could help in other areas. Former Senate Majority Leader Tom Daschle said “there is virtually no likelihood” Obama will endorse a voucher plan for Medicare or block grants for Medicaid. But medical malpractice is another story. “He has already said he is open to ideas there,” said the South Dakota Democrat, an adviser to Democrats on health care. Obama probably won’t drill down to that level of detail on Wednesday. Republicans already laid down their marker. Later this week, the House will debate a plan by Budget Chairman Paul Ryan, R-Wis., which would fundamentally change government health care programs that touch virtually every family, covering about 100 million Americans. Instead of Medicare, people now 54 and younger would get a government payment to buy private insurance when they retire. The Medicaid health insurance program for low-income people would be converted into a block grant, allowing each state to design its own program. But the poor would lose the right to coverage under federal law and middle-class retirees might not be able to keep up with future health costs. Ryan’s plan has been praised for its boldness. Even some who vehemently disagree with the specifics have credited the congressman for having the courage to start an adult conversation with the American people about the real costs of their health care programs. Obama’s approach would display another attribute commonly ascribed to adults: caution. A Medicare remake would probably require a mandate from the voters that neither party can claim. “You don’t have to dismantle the program in order to save it,” said Rep. Xavier Becerra, D-Calif., a member of the debt commission. But he acknowledged that there would have to be “real cuts that will be painful.” In normal circumstances, the debt commission’s ideas would be considered far-reaching. Compared to Ryan’s plan, they’re incremental. They leave the big health care programs in place, as well as Obama’s overhaul, which Republicans would repeal. Obama is also expected to indicate his support for the efforts of six senators seeking deficit deal. In the group: three conservative Republicans, Saxby Chambliss of Georgia, Tom Coburn of Oklahoma and Mike Crapo of Idaho; two moderate Democrats, Kent Conrad of North Dakota and Mark Warner of Virginia; and a liberal Democrat, Dick Durbin of Illinois. One of the ideas they are considering would trigger the recommendations of the deficit commission, if Congress doesn’t meet certain targets for spending, taxes and deficits. Until now, the Gang of Six has worked in obscurity on what many consider a thankless task. The presidential seal of approval could improve their chances.

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Judge In Target Case Rules In Favor Of Gay Rights Group

April 8, 2011

SAN DIEGO — A judge ruled Thursday that a San Diego pro-gay marriage group can continue canvassing outside of Target stores in California, but the group’s volunteers must stay 30 feet away from store entrances and canvass at just one entrance at a time. The Minnesota-based retail giant had sought an injunction barring the activists from every outlet in the state, alleging they harass customers by cornering them near store entrances to discuss gay marriage, solicit donations and collect signatures on petitions. Rights advocates have warned that the legal battle between Target and Canvass For A Cause could further damage the retailer’s already strained relations with the gay and lesbian community. Canvass For A Cause director Tres Watson called Thursday’s ruling a win for not only his organization, but also for free speech. “I think this is a victory for every American that cherishes our fundamental values,” he said. Superior Court Judge Jeffrey Barton said some Target stores may fall under California’s law that considers shopping centers to be public forums. Also, canvassing over the last year occurred mainly without incident and Target failed to demonstrate that customers were being harassed, he said. “Target has not met its burden to show that its blanket policy to ban all solicitors at all stores in California is proper,” he wrote. The corporation has said at least eight Target stores in the San Diego area have received more than a dozen complaints daily since canvassers started working the locations in October 2010. The activists have refused to leave when asked politely and shown the company’s policy prohibiting “expressive activity” on its property, Target said. During a court hearing last month in San Diego, Barton asked Target’s Los Angeles-based attorney David McDowell why the company didn’t present testimony from customers who the company said had complained. McDowell said the testimony could have been obtained, but he didn’t think it was necessary since the complaints weren’t the central issue. The case was about Target’s right to enforce its rules on its land, he said. “The question is Target’s property right and its right to exclude,” McDowell said. Target Corp. said in a statement Thursday that the legal action was “to provide a distraction-free shopping environment for our guests.” “Target’s long-standing policy is that we do not permit solicitation or petitioning at our stores regardless of the cause or issue being represented,” the company said. Barton warned the San Diego group to be respectful and to not block the flow of traffic. The restriction to canvass at just one entrance at a time was to ensure that customer access wasn’t impeded, he said in the ruling. Watson said the constraints wouldn’t affect the group’s work because volunteers don’t follow people into stores or block store entrances. Target was seen as an ally of the gay and lesbian community before it made a $150,000 donation to a business group backing Minnesota Republican candidate Tom Emmer, an opponent of gay marriage who lost last year’s governor’s race to Democrat Mark Dayton. The company later apologized for the hurt feelings and tried to repair its image by creating a committee to help scrutinize its decisions on donations. Target also negotiated a deal with Lady Gaga to sell a special edition of her upcoming album in a partnership Gaga said was tied to their “reform” – supporting the gay community and making up for past mistakes. The singer cancelled the deal a few weeks ago.

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Sen. Don Riegle: Pay Back the Money Borrowed From Social Security

April 5, 2011

Throughout its 75 year history, Social Security has provided critical economic security to millions of retirees, families, children and the disabled. Social Security is paid for by the dedicated contributions of workers and their employers, has administrative costs of less than one percent, and since it cannot borrow to fund its operations, Social Security does not contribute to the deficit. No wonder that Americans from all walks of life consistently and overwhelmingly support our nation’s most successful social insurance program — a level of support that is not achieved by other governmental programs. Social Security currently has a $2.6 trillion surplus which has been building up since the 1983 amendments and is intended to help absorb the retirement of the baby boomers. This surplus is invested in US Treasury securities that are backed by the full faith and credit of the US government. According to the Social Security Trustees 2010 report , Social Security can pay full benefits until 2037, at which time, if nothing were done to strengthen its financing, Social Security would still be able to pay about 78 percent of benefits. This quarter of a century means there is time to strengthen its financing without cutting benefits for future beneficiaries. The American people will insist that Congress do what is needed for the program to pay full benefits and protect these benefits they were promised and have earned. Social Security Opponents Use Fear to Manipulate Debate Opponents of Social Security have been working for many years to tell a much different story about Social Security in order to influence how the media and Washington decision makers view it. One example of this is Wall Street insider Pete Peterson who has dedicated $1 billion of his Wall Street fortune to the destruction of Social Security as we know it. Peterson is joined in his efforts by other wealthy special interests that have much to gain if Social Security is cut or eliminated. Despite the overwhelming public support for Social Security and the critical retirement, survivors and disability insurance it provides to millions of Americans, Peterson and his Wall Street friends want to reduce Social Security’s protections and force average working Americans to put their future retirement, life and disability security in the hands of Wall Street — the same crowd that nearly caused a collapse of our economy and pushed the country into the Great Recession. It would be very unpopular for the opponents to simply state that their goal is to reduce or eliminate Social Security, requiring politicians to eat from a poison apple. Instead, the opponents try to create false fear about the future of Social Security by making it seem as if the program contributes to the nation’s budget deficit and debt. The same Wall Street firms that needed the taxpayers to bail them out — and individuals like Peterson who took advantage of a tax loophole that enabled him to pay taxes on his Wall Street profits at the same rate as a janitor cleaning his office — are conducting a massive lobbying campaign to reduce Social Security protections for working Americans and their families by claiming it is a way to lower the federal budget deficit. The opponents’ tactic of setting up Social Security as a false culprit in the deficit problem diverts attention away from the real causes of the deficit — two wars not paid for, the Bush tax cuts for the wealthy, and the costs associated with the economic crisis, such as the Wall Street bailout. If the opponents of Social Security are able to cut Social Security’s benefits, they will accomplish two objectives: (1) reducing Social Security protections while driving retirees into the hands of Wall Street; and (2) hiding the real causes of the deficit and the debt from honest budgetary scrutiny. A look at their claims about Social Security and the budget reveals the falsehoods they continue to promote. Social Security — the most fiscally responsible program Social Security is self-financed, cannot borrow, spends less than one percent on its administrative costs, has a $2.6 trillion surplus which will continue to grow for a number of years, and is off-budget. It does not contribute to the federal deficit or the debt. The Social Security surplus is invested in US Treasuries which enables the federal government to borrow less from other sources. The government borrows these Social Security funds to pay for other government spending — but is obligated to pay interest on these borrowings — and pay back the borrowed funds in full when they are needed by Social Security for benefit payments. Opponents of Social Security obscure the real facts, but they are easy to see in the graph below. The planned build-up of the Social Security Trust Funds since 1983 makes it clear that Social Security has a $2.6 trillion surplus today that will continue to grow: The Federal Budget — Red Ink A look at the federal budget over the same time frame reveals a starkly different picture — many years of deficits, with only a few years of surplus — a surplus that disappeared during the G.W. Bush Administration. In 1993, a Democratic Congress and President Clinton, without a single Republican vote in either the House or Senate, enacted a budget plan that put it on a path to elimination of the deficits –and brought the budget into balance, and then later into surplus. In his 1999 State of the Union address, with the budget then in balance, Clinton called for the Social Security surplus investments to be held in a special reserve and not used for other government spending. As a candidate for president, Vice President Gore made a central part of his campaign a plan to put Social Security’s surplus in a “lockbox” to keep its assets from being used for other government spending. When the Supreme Court decided the 2000 election in favor of Bush, however, a very different view of the Social Security surplus became operative. During the same time period in which Social Security was building a surplus the federal budget was more often in deficit than not, as shown below: The federal budget surplus of 2000 quickly disappeared when Bush took office, turning into a sea of red ink. Bush borrowed heavily from the Social Security surplus to help obscure the fact that federal taxes were not bringing in enough revenue to pay for the wars and his tax cuts. Given this history and the fact that Social Security has not and does not contribute to the deficit, Social Security should not be “on the table” for deficit reduction now. In fact, it should not be part of the deficit debate at all. The Costs Imposed on Social Security by Wall Street’s Failures In a recent paper on deficit reduction for the Roosevelt Institute, Nobel prize-winner and Columbia University Professor, Economist Joseph Stiglitz noted about the Wall Street banks: “Even if the banks were to pay back every dime that they received, they would not have come close to compensating the country for the full costs (now in the trillions of dollars) that they have imposed on others. ” These costs were imposed on Social Security as well — Wall Street’s failures have increased Social Security costs while also reducing revenues to Social Security. Social Security revenues were reduced by 1.13 percent of payroll from its annual balance in 2010 — more than $60 billion in one year — from what the Trustees projected last year “due to a deeper recession and slower recovery than had been expected.” This does not reflect the costs to Social Security in 2008-09, nor does it reflect future costs of continued high unemployment, which reduces revenue, and higher benefit payments to beneficiaries forced to take benefits sooner than they otherwise had planned. As a result of the Great Recession triggered by the economic bubble Wall Street created, Social Security revenues were less in 2010 than benefits paid out. This required Social Security to use a portion of its interest earnings on the surplus to pay benefits — an event that would have happened several years in the future were it not for the recent economic downturn. Opponents have used the negative impact of the economy on Social Security to make it seem as if Social Security was failing, as if it had fallen into a deficit of its own. These claims are false. The interest the government owes to the Social Security Trust Fund for the funds it has borrowed from Social Security represents a legal obligation of the government. Interest earned on Social Security investments has always been used to pay Social Security benefits. But opponents pretend the interest should not be counted as savings that add to Social Security’s annual balance. This makes no sense. When Social Security claims the interest it has earned to pay benefits, the government is required to pay back the interest it owes to Social Security. This is what the opponents don’t like. Social Security did not create the economic problem or the budget deficit. Wall Street and other government spending did. But the opponents of Social Security don’t want to pay back all the money that was borrowed from Social Security, including the interest earned. Instead, they want to cut Social Security benefits. The taxpayers of America bailed out the banks — wouldn’t it be fair now to ask the banks to pay back what they have cost Social Security? A tax on financial transactions and a tax on Wall Street bonuses, with revenues dedicated to Social Security, would pay back to Social Security and its contributors what has been taken from them. Pay Back Social Security — The Government Has Borrowed More from Social Security than any Other Entity or Foreign Government Another argument made by Social Security opponents to raise fear about the national debt is how much our government has borrowed from China. They never mention how much our government has borrowed from Social Security. In fact, the government has borrowed more from the Social Security surplus than it has from any other source in the world, including China. As a result, Social Security now “owns” nearly 18 percent of the federal debt, making it the largest single holder of US debt. The government owes almost twice as much to Social Security as it does to China and Hong Kong. Why aren’t the opponents worried about paying back Social Security — why aren’t they talking about repaying this debt to the American people? According to the U.S. Treasury Department’s “Monthly Statement of the Public Debt of the United States” (9.30.10), the total debt was $13.562 trillion and was held as follows: US Holders of Debt 42.1 % — US Individuals and Institutions 17.9 % — Social Security Trust Fund 6.0 % — US Civil Service Retirement Fund 2.1 % — US Military Retirement Fund Foreign Holders of Debt 11.7 % — Oil Exporting Countries 9.5 % — China and Hong Kong 6.3 % — Japan 1.4 % — United Kingdom 1.3 % — Brazil 1.6 % — All other foreign countries House Republican Majority Leader Eric Cantor (R-VA) provided some insight to their Social Security views in a recent NPR interview when he was talking about Social Security and said, “We are going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want it to be.” If the American public were asked about what priority should be placed on the debt owed to Social Security, we have no doubt that they would resoundingly say: “Pay Us Back — pay back the money borrowed from Social Security!” Former Senator Donald W. Riegle , Democrat, represented Michigan for 18 years in the US Senate and 10 years in the House of Representatives. Lori Hansen served on the Social Security Advisory Board and was a Technical Assistant to Robert M. Ball, former Commissioner of Social Security, in his capacity as a member of the 1982-83 Social Security Commission.

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Robert Reich: Why We Must Raise Taxes on the Rich

April 4, 2011

It’s tax time. It’s also a time when right-wing Republicans are setting the agenda for massive spending cuts that will hurt most Americans. Here’s the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich. Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma — even if we cut back on our bloated defense budget — it wouldn’t be nearly enough. The vast majority of Americans can’t afford to pay more. Despite an economy that’s twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they’re employed they’re earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That’s less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that’s only because so many families now have to rely on two incomes.) Yet even as their share of the nation’s total income has withered, the tax burden on the middle has grown. Today’s working and middle-class taxpayers are shelling out a bigger chunk of income in payroll taxes, sales taxes, and property taxes than thirty years ago. It’s just the opposite for super rich. The top 1 percent’s share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent’s share has tripled. And they’re doing better than ever. According to a new analysis by the Wall Street Journal , total compensation and benefits at publicly-traded Wall Street banks and securities firms hit a record in 2010 — $135 billion. That’s up 5.7 percent from 2009. Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it’s 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II. The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it’s 35 percent and kicks in at $5 million. Capital gains — comprising most of the income of the super-rich — were taxed at 35 percent in the late 1980s. They’re now taxed at 15 percent. If the rich were taxed at the same rates they were half a century ago, they’d be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That’s enough to accomplish everything the nation needs while also reducing future deficits. If we also cut what we don’t need (corporate welfare and bloated defense), taxes could be reduced for everyone earning under $80,000, too. And with a single payer health-care system — Medicare for all — instead of a gaggle of for-profit providers, the nation could save billions more. Yes, the rich will find ways to avoid paying more taxes courtesy of clever accountants and tax attorneys. But this has always been the case regardless of where the tax rate is set. That’s why the government should aim high. (During the 1950s, when the top rate was 91 percent, the rich exploited loopholes and deductions that as a practical matter reduced the effective top rate 50 to 60 percent — still substantial by today’s standards.) And yes, some of the super rich will move their money to the Cayman Islands and other tax shelters. But paying taxes is a central obligation of citizenship, and those who take their money abroad in an effort to avoid paying American taxes should lose their American citizenship. But don’t the super-rich have enough political power to kill any attempt to get them to pay their fair share? Only if we let them. Here’s the issue around which Progressives, populists on the right and left, unionized workers, and all other working people who are just plain fed up ought to be able to unite. Besides, the reason we have a Democrat in the White House — indeed, the reason we have a Democratic Party at all — is to try to rebalance the economy exactly this way. All the president has to do is connect the dots — the explosion of income and wealth among America’s super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of vital public services for the middle class and the poor. This shouldn’t be difficult. Most Americans are on the receiving end. By now they know trickle-down economics is a lie. And they sense the dice are loaded in favor of the multimillionaires and billionaires, and their corporations, now paying a relative pittance in taxes. Besides, the president has the bully pulpit. But will he use it? Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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Goodbye To Federal Funding For 2012 Candidates

March 31, 2011

NEW YORK — A cornerstone of U.S. politics since the 1970s, public funding of presidential campaigns may soon go the way of other relics of the era like long sideburns and lava lamps. Neither President Barack Obama nor any of the leading 2012 Republican contenders is expected to accept federal matching funds and the limits they impose. In fact, opting to take public money to finance a presidential campaign this year is likely to be seen as the mark of a loser. “I would be shocked if they took matching funds. I don’t think that it’s a successful model this time, or in the future,” says GOP strategist Carl Forti. He’s been an adviser to former Massachusetts Gov. Mitt Romney and helped run American Crossroads, an independent group that raised millions to defeat Democratic candidates in 2010. Obama’s record-breaking fundraising in the 2008 campaign allowed him to abandon the public system in both the Democratic primaries and the general election. With his success as a benchmark, top-tier Republican candidates now are planning to go it alone. The president, who has no Democratic primary race, may become the first candidate to raise $1 billion for the general election in 2012. Republicans in a wide field must battle each other for the party’s private donors. But the emergence of free-spending independent political groups – since the Supreme Court in 2009 cleared the way for unlimited corporate spending in campaigns – is expected to help close the imbalance between Obama and the GOP. Several of the Republicans also have immense personal wealth. Presidential candidates of both parties once relied on money from the U.S. Treasury as an indispensible part of their budgets. Indeed, the ability to qualify for matching funds was considered an indication of a candidate’s strength after the system was put in place following Watergate-era fundraising abuses. The system was intended to reduce candidates’ dependence on large contributions from individuals and groups. Money for the program comes from a voluntary $3 checkoff on Americans’ income tax returns. The fund currently contains $195 million, which can be used only for presidential primary and general election campaigns and to subsidize the major parties’ nominating conventions. Over time, the program began to weaken. George W. Bush refused public funding in his 2000 and 2004 presidential primary campaigns but did accept the money in the general election. Several candidates in both parties opted out in the 2008 primaries, but others did accept matching funds, including Democrat John Edwards. Arizona Sen. John McCain, the 2008 GOP nominee, turned down matching funds for the primaries but then took them in the general election – a move that severely hindered his ability to compete financially with Obama. For this year’s serious GOP candidates, refusing federal funds will be both liberating and daunting. By refusing matching funds, candidates are potentially forfeiting a lot of money. Edwards received nearly $13 million in matching funds in the 2008 primary, and Joe Biden, now the vice president, accepted over $2 million for his primary run. McCain, the winner of the GOP nomination that year, accepted $84 million in federal funds for the general election, but that barred him from any private fundraising. Obama opted out of the system and raised $264 million. For the general election this time, a qualifying party’s nominee would get just under $90 million and would be prohibited from raising more privately. For the primaries it’s more complicated: Qualifying candidates can receive a federal match of up to $250 for each contribution from an individual and must abide by both state spending limits and an overall spending limit of around $50 million. Among the likely Republican candidates: _ Romney, a multimillionaire, turned down public funds in 2008. He raised $66 million and lent his campaign $44 million before eventually dropping out. He’s expected to enter the 2012 field soon and has begun assembling a list of “bundlers” who have been asked to raise $25,000 apiece. He has told donors he hopes to take in $50 million for the primaries – less than his 2008 run but an ambitious figure nonetheless. He has not indicated how much of his personal fortune he will commit. _ Former House Speaker Newt Gingrich hopes to raise $30 million for the primaries, his advisers say. Gingrich has long solicited funds for several organizations including the independent American Solution for Winning the Future, which raised and spent $28 million in 2010. _ Mississippi Gov. Haley Barbour has a strong national fundraising base from his years as a lobbyist and as chairman of the Republican National Committee and Republican Governors Association. His advisers say he plans to refuse federal matching funds and has set a goal of raising $55 million for the primaries. _ Minnesota Gov. Tim Pawlenty hopes to raise about $25 million for the primaries. Advisers say they don’t believe he would accept matching funds. Pawlenty’s campaign has deployed a 16-member national fundraising team aimed at starting an aggressive fundraising push April 1. He also has raised $4 million for three separate political action committees. Other potential candidates have been less clear about their plans. _ Real estate developer Donald Trump says he will decide by June whether to join the field. Like Romney, he is very wealthy and has vast business connections. _ Former Utah Gov. Jon Huntsman is expected to launch a campaign sometime this spring when he returns from China, where his is serving as U.S. ambassador. Huntsman has abundant personal wealth. _ Minnesota Rep. Michele Bachmann, a tea party favorite weighing a run, raised more than $13 million for her 2010 re-election campaign and has a strong national fundraising base. Former Pennsylvania Sen. Rick Santorum is also considering a run and is popular among many social conservatives. _ Former Arkansas Gov. Mike Huckabee and former GOP vice presidential candidate Sarah Palin are weighing bids but are considered less likely to run. Both have strong fundraising connections. The big Republican field is off to a late start. Most 2008 contenders were in by early 2007 and were able to raise money in the first quarter of the year, between January and March. Most this time won’t start until the second quarter, beginning April. 1. “We have a very different environment than we did in 2008,” said Dave Levinthal of the Center for Responsive Politics, which tracks campaign fundraising. “These candidates have all shown they have a proven ability to raise money. The problem is, if you have half a dozen or more relatively well-known Republicans running around, there is only so much cash to go around.” Some of the GOP-favoring private groups may get involved in the primaries, raising and spending money on behalf of candidates or targeting others for defeat. But many are likely to save their firepower for the general election.

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Ohio Collective Bargaining Restrictions Prevail, But Unions Vow Fight

March 31, 2011

COLUMBUS, Ohio — Ohio lawmakers have had their chance to vote on a bill limiting collective bargaining rights for 350,000 public workers across the state. Next will be the public’s turn. Even before the contentious Senate Bill 5 – in some ways tougher than Wisconsin’s – had cleared the Legislature late Wednesday, unions and Democrats in this once-proud labor stronghold vowed to put it on November’s ballot as a referendum. “O-H-I-O! S.B. 5 has got to go!” protesters chanted ahead of a final Senate vote of 17-16 that sent the bill to Gov. John Kasich for his signature, expected this week. The vote followed a day filled with Statehouse demonstrations by about 750 people, who raucously chanted and shouted throughout the process. After a House vote of 53-44, opponents spewed expletives at House members. The vitriol wasn’t limited to the Statehouse. Leo Geiger, 34, a Republican who works as a sewer inspector for the city of Dayton, said he’s “deathly afraid that this is going to affect me, my family and the entire state of Ohio in an incredibly negative way.” He believes the bill is political payback for unions’ support of Democrats in November’s election. “I find this to be loathsome,” he said from Dayton on Wednesday night. He didn’t attend protests because he couldn’t take the time off. “I find this to be disrespectful to Ohioans and disrespectful to the process of democracy.” The measure affects safety workers, teachers, nurses and a host of other government personnel. It allows unions to negotiate wages and certain working conditions but not health care, sick time or pension benefits. It gets rid of automatic pay increases, and replaces them with merit raises or performance pay. Workers would also be banned from striking. A ballot challenge would stall implementation of the law that Republicans championed as vital to Ohio’s economic future. “This state cannot pay what we’ve been paying in the past,” House Speaker Bill Batchelder said during a news conference ahead of Wednesday’s vote. “Local government and taxpayers need control over their budgets. This bill, as amended and changed, is a bill that will give control back to the people who pay the bills.” He said House Republicans were launching a website, sb5truth.com, to correct what they see as falsehoods about the measure. Republican Gov. John Kasich has said his $55.5 billion, two-year state budget counts on unspecified savings from lifting union protections to fill an $8 billion hole. During House debate, state Rep. Robert Hagan, a Democrat from Youngstown, took issue with the notion that the bill was aimed at saving money. “Don’t ever lie to us and don’t be hypocritical and don’t dance around it as if it’s finances, because you know what it is: It’s to bust the union,” Hagan told his fellow lawmakers. Democratic state Sen. Charleta Tavares, a recent Columbus city councilwoman, called the bill “paternalistic, patronizing, disrespectful and condescending” to city leaders who balance their budgets annually, not every two years as Ohio does. Pickerington teacher Patricia Kuhn-Morgan said she was confused by connections being drawn between the bill and job creation. “As teachers, the best way we can have to job creation is to educate the public,” she said. She predicted Wednesday’s votes will hurt GOP lawmakers on Election Day. “I’ve spoken to a lot of educators who are typically straight-ticket Republicans that have said to me that they won’t ever vote for another Republican because of how this bill’s been pushed through and the democratic process has been abused,” she said as she awaited the Senate’s vote. Though protests were much larger in Wisconsin, Ohio unions claim they hold the hearts of a majority of voters in their political swing state. Wisconsin Gov. Scott Walker signed a bill this month eliminating most of state workers’ collective bargaining rights. That measure exempts police officers and firefighters; Ohio’s does not. The Ohio bill has drawn thousands of demonstrators, prompted a visit from the Rev. Jesse Jackson and packed hearing rooms in the weeks before the Senate passed the earlier version of the measure. Its reception in the House had been quieter, as unions resolved themselves to its approval and shifted their strategy to the fall ballot. Democratic state Sen. Joe Schiavoni said the way the bill had been rushed through the legislative process without union input was unfair – but he said voters would have the last word. At the ballot box, he said, “all Ohioans will get the opportunity to right the wrongs they committed in the last election, and, ladies and gentlemen, that is fair.” ___ Associated Press writers Ann Sanner and JoAnne Viviano contributed to this report.

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Ohio Union Bill Faces House Vote

March 30, 2011

COLUMBUS, Ohio — A bill that would limit collective bargaining rights for 350,000 Ohio public workers neared passage before the Republican-controlled House on Wednesday, one of its final hurdles before the measure goes to the governor of this labor-stronghold state. The legislation is in some ways tougher than Wisconsin’s, as it would extend union restrictions to police officers and firefighters. But its reception in Ohio has paled in intensity with the raucous fight in Wisconsin, where tens of thousands demonstrated against the bill. On Wednesday, an estimated 700 people came to the Ohio Statehouse to hear the debate. Chants from demonstrators inside the statehouse could be heard in the chamber. Among those who lined up to get into the House chamber was Dayton firefighter Jeff Jones, who said he came because he wanted to protect his pension and show his opposition for the bill. “It would open the door for any government agency to basically do what they want to,” said Jones, 43. Contentious debates over restricting collective bargaining have popped up in statehouses across the country, most notably in Wisconsin, where the governor signed into law this month a bill eliminating most of state workers’ collective bargaining rights. Wisconsin’s measure exempts police officers and firefighters. The Ohio bill would apply to workers such as police officers, firefighters, teachers and state employees. They could negotiate wages and certain work conditions but not health care, sick time or pension benefits. The bill would do away with automatic pay raises and would base future wage increases on merit. Workers would also be banned from striking. Debate in Ohio began with boos, shouts and laughter from protesters in the House chamber who oppose the legislation, prompting the House speaker to slam his gavel to bring order. Onlookers in the gallery balked as state Rep. Joseph Uecker said the bill would help city officials save taxpayers money and help the middle class. “You gotta be kidding!” one man shouted. “We’re going to clear the balcony if it’s necessary,” responded House Speaker William Batchelder, a Medina Republican. GOP members were coming to the defense of the measure even before floor debate started. “This state cannot pay what we’ve been paying in the past,” Batchelder said. “Local government and taxpayers need control over their budgets. This bill, as amended and changed, is a bill that will give control back to the people who pay the bills.” The House vote comes a day after a legislative committee approved changes to make the bill even tougher for unions. The GOP-backed revisions greased the measure for what was expected to be smooth passage in the House. The Senate, also controlled by Republicans, narrowly passed the bill on a 17-16 vote this month. It would have to agree to the revisions before Gov. John Kasich could sign it into law. The Senate was likely to vote on the changes later Wednesday. Kasich, a first-term Republican, supports the proposal. “We think we have a program here that’s going to allow local governments to deal with fewer dollars, it still protects the right of collective bargaining on things that we think are legitimate, and will help people be able to cope in a period of time when we do have fewer resources,” Kasich told reporters Wednesday at a separate bill signing. Kasich’s $55.5 billion, two-year spending plan for the state counts on savings from relaxed union rights at the state and local levels. Local governments and school districts face deep cuts in the wake of the state’s $8 billion budget gap. “Unions didn’t cause the problems of this budget,” state Rep. Kenny Yuko, a Democrat from Richmond Heights, told his House colleagues during debate. Democrats have offered no amendments. Instead, they delivered boxes containing more than 65,000 opponent signatures to the House labor committee’s chairman. Opponents have vowed to lead a ballot repeal effort if the Ohio measure passes. The GOP-backed revisions in the House make it more difficult for unions to collect certain fees. The committee also altered the bill to ban automatic deductions from employee paychecks that would go the unions’ political arm. Other changes would prevent nonunion employees affected by contracts from paying fees to union organizations. Unions argue that their contracts cover those nonunion workers and that letting them not pay unfairly spreads the costs to dues-paying members. “Not only are they attacking middle-class wages, rights and benefits, but now the bill will punish people for even joining a union,” said Eddie L. Parks, president of the 34,000-member Ohio Civil Service Employees Association. “Those who join will be picking up the tab for those who don’t.” Lawmakers also revised the bill to include more details on who defines merit and performance pay. For instance, performance pay for teachers would be based upon a statewide framework from the state Department of Education and objectives from the school board. Jennifer Blair, a 33-year-old music teacher from Westerville, said she believes the bill will “destroy public education as we know it.” “It’s setting out to take away services our children have, take away services our teachers have, supplies in our classroom, teachers’ rights, class size, safety issues in the classroom for our special needs teachers,” she said. ___ AP Statehouse Correspondent Julie Carr Smyth contributed to this report.

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Wisconsin Judge Blocks Implementation Of Union Law

March 29, 2011

MADISON, Wis. — The showdown over Wisconsin’s explosive union bargaining law shifted from the Statehouse back to the courthouse on Tuesday, but it remained unclear when or even whether the measure would take effect. Republican lawmakers pushed through passage of the law earlier this month despite massive protests that drew up to 85,000 people to the state Capitol and a boycott by Democratic state senators. Opponents immediately filed a series of lawsuits that resulted in further chaos that might not end until the state Supreme Court weighs in. That appeared even more likely after a hearing on Tuesday, when a Dane County judge again ordered the state to put the law on hold while she considers a broader challenge to its legality. She chastised state officials for ignoring her earlier order to halt the law’s publication. “Apparently that language was either misunderstood or ignored, but what I said was the further implementation of (the law) was enjoined,” Dane County Circuit Judge Maryann Sumi said during a hearing. “That is what I now want to make crystal clear.” Sumi is set to hear additional arguments Friday on the larger question of whether GOP legislative leaders violated the state’s open meetings law during debate on the measure. She also is considering Republican claims that the law technically took effect last weekend after a state agency unexpectedly published it online. Whether she decides it did or didn’t become law on Saturday, the measure’s legitimacy will likely be decided by the state Supreme Court, which is already considering whether to take up an appeals court’s request to hear the case. The back and forth amplified the often angry debate between new Gov. Scott Walker, his Republican allies in the Legislature and the state’s public sector unions. Walker and the GOP have aggressively pushed forward their effort to remove the bargaining rights of state workers, using a surprise parliamentary maneuver to break a weeks-long stalemate to get it passed and then finding another route to publish the law after Sumi’s order blocked the secretary of state from doing so. State Department of Justice spokesman Steve Means said the agency continues to believe the law was properly published and is in effect. Wisconsin Department of Administration Secretary Mike Huebsch, Walker’s top aide, issued a statement saying the agency will evaluate the judge’s order. Earlier this month Sumi issued an emergency injunction in the case that blocked Secretary of State Doug La Follette from publishing the law. Republican leaders sidestepped the order, convincing the Legislative Reference Bureau, another state agency, to post the law on its website on Friday. The GOP declared that move amounted to publication and said the law would take effect Saturday. Dane County Democratic District Attorney Ismael Ozanne – the plaintiff in the lawsuit heard Tuesday – argued the reference bureau can’t publish a law without a date from the secretary of state. Attorneys for the state Department of Justice, which is representing the Republicans, argued the case means nothing because legislators are immune from civil lawsuits and the law is in effect. The district attorney asked Sumi to declare that the law had not been published, but she refused to rule, saying she wanted to hear more testimony. But she issued the new restraining order, warning anyone who violates this one will face sanctions. “Wisconsin working families hope that (Gov.) Scott Walker and his Republican allies in the legislature will finally begin to respect our state’s judicial process and reverse any damage they’ve done to the working families of our state, Stephanie Bloomingdale, secretary-treasurer of the Wisconsin State AFL-CIO, said in a statement. Justice Department attorneys maintain Sumi has no authority to intervene in the legislative process. And Assembly Speaker Jeff Fitzgerald, R-Horicon, said in a statement that once again Sumi has improperly injected herself into the legislative process. “Her action today again flies in the face of the separation of powers between the three branches of government,” Fitzgerald said. The law has been a flashpoint of controversy since Walker introduced it in February. The measure requires most public workers to contribute more to their pensions and health insurance. It also strips away their rights to collectively bargain for anything except wages. Walker, who wrote the law, insists the measure is necessary to help close the state’s budget deficit. But Democrats see the law as a political move to cripple unions, who are traditionally among their strongest campaign supporters. Tens of thousands of people staged almost non-stop demonstrations at the state Capitol for nearly three weeks and Senate Democrats fled the state for Illinois to block a vote in that chamber. Republicans who control the Legislature ended the stalemate by removing what they said were the fiscal elements from the plan on March 9, allowing the Senate to vote without a quorum. The Assembly passed the measure the next day and Walker signed the measure into law on March 11. Dane County Executive Kathleen Falk, a Democrat, and several unions have filed lawsuits challenging the Senate vote, arguing the final law still contains fiscal components. Those lawsuits are still pending.

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Fresh Controversy In Wisconsin Union Bill Fight

March 28, 2011

(Reuters) – Opponents of a bill stripping Wisconsin public employees of most of their collective bargaining rights rallied at the state Capitol on Saturday, the day after a state agency published the measure despite an order barring such a move. Republican supporters of the measure said the action by the state’s Legislative Reference Bureau (LRB), which published the bill electronically on Friday, was legal and meant the controversial anti-union measure was now in effect. But Democrats insisted the temporary restraining order (TRO) on publication issued last week by a judge remained in effect and rendered Friday’s publication by the LRB moot. The move injected fresh controversy into the debate here over the measure, which would overturn a 52-year-old state policy encouraging public-sector unionism and sparked massive demonstrations in Madison, the state capital, for weeks. Lester Pines, an attorney who represents unionized teachers in Madison, told the Wisconsin State Journal newspaper the LRB’s action, which appeared to contravene both the court order and specific written instructions from the Secretary of State, would “unleash a tsunami of litigation.” Peter Barca, the top Democrat in the state Assembly, said he had consulted with attorneys at the Wisconsin Legislative Council (WLC), a separate nonpartisan legislative agency, and had been assured the measure would not be deemed legally published without further action by Wisconsin’s secretary of state. Legal publication of the legislation is required for it to go into effect. Barca distributed a memo to the media from Scott Grosz, a staff attorney with the WLC, supporting that interpretation. “While certain statutory obligations regarding publication of Act 10 have been satisfied by the LRB,” Grosz wrote in the memo, “the statutory obligation that relates to the effective date of Act 10 has not yet been satisfied by the Secretary of State, and at this time the Secretary’s actions remain subject to the temporary restraining order issued in Dane County Circuit Court.” Dane County District Attorney Ismael Ozanne, who filed the complaint that generated the restraining order, agreed. He said the judge issuing the order had been clear it was designed to “preserve the status quo” — not to enjoin a particular individual. But Republicans, including Senate Majority Leader Scott Fitzgerald, disagreed. In an interview with Reuters on Saturday, Fitzgerald reiterated his view that the LRB’s action did not violate the TRO because the bureau was not specifically mentioned in the order. “The LRB clearly had authority to do what it did yesterday — not only the authority but the obligation,” Fitzgerald said. “And it’s my understanding that, as of this morning, it’s the law.” Mary Bell, the president of the Wisconsin education Association Council, a teachers union whose members are among those affected by the law, called the Friday move “another sign that the governor and legislature are in a desperate power grab to take away the voice of teachers, support staff, nurses, home health care workers and other public employees.” The court appeal was based on an argument that the state’s open meeting laws had been violated when the bill was passed. rather than a challenge to its contents, meaning even if the appeal were ultimately upheld the Republican-dominated state legislature is likely to simply pass the measure again. But so long as it is not in legal effect, public employee unions can try to use existing bargaining powers to negotiate better contracts before their rights are curbed. Republican Governor Scott Walker had strongly pushed the legislation, saying it was part of a package needed to combat the state’s budget deficit. Union and Democratic critics said that argument was a smoke screen for busting state workers’ unions. The issue attracted hundreds of thousands to demonstrations against the measure. Democratic state senators fled the state in an ultimately unsuccessful effort to block a vote on the measure, and the battle over the bill has become a symbol for other states where unions are trying to preserve bargaining powers as Republican-led legislatures seek to curb them. (Writing by James Kelleher; Editing by Jerry Norton) Copyright 2010 Thomson Reuters. Click for Restrictions .

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Judge’s Conflict, And A Hospitalization, The Day Of Pension Fund Sentencing

March 28, 2011

NEW YORK — Disgraced ex-state Comptroller Alan Hevesi was in a hospital Monday as he faced sentencing for influence-peddling at the state’s massive pension fund, his lawyers said. With Hevesi absent, his judge angrily stepped out of the case amid what he called baseless claims from Hevesi’s lawyers that the judge had a conflict of interest. It’s now unclear when Hevesi, a Democrat, will be sentenced for accepting free travel and campaign contributions in exchange for awarding hundreds of millions of dollars in pension fund money to a certain investment manager. Hevesi, 71, has a court date April 4 with a new judge. Hevesi never made it to court Monday. He was in a hospital with internal bleeding and was to undergo an endoscopy later in the day, lawyer Bradley D. Simon said. It’s a procedure in which lets doctors insert an instrument into the body so they can see internal organs. Hevesi pleaded guilty in October to a corruption charge. Once the state’s chief financial officer, he was the highest-ranking official in a pay-to-play scandal that has brought guilty pleas and civil settlements from a roster of politicians, financiers and firms. He could face up to four years in prison or no jail time at all. The decision is up to a judge. Until now, it’s been a judge who happens to have close ties to Simon’s estranged father. Simon asked state Supreme Court Justice Lewis Bart Stone to recuse himself. The request came after an uncomfortable March 1 hearing in which Simon said he learned that his parents’ wills have disinherited him – and that the judge is the executor of those wills, as well as a trustee of a trust the parents had set up. Simon called that a conflict of interest. Stone had previously said he didn’t see a conflict, saying he and Simon’s father had never discussed the discord between father and son. The judge blasted Simon Monday for raising what he called a “meritless” issue that got media attention, saying his involvement in the parents’ financial affairs had long been known to their son. “The effect of this publicity has been to create a counter-story . to the real story here” of Hevesi’s crime, the judge said. But he said the controversy and ensuing coverage “dims the clarity of this sentencing,” so he would transfer the case. Stone has presided for two years over other cases stemming from the pension fund probe, but Hevesi and then-state Attorney General Andrew Cuomo’s office had already reached a plea deal by the time Hevesi’s case went to the judge. Cuomo, a Democrat, is now governor. The office of current Attorney General Eric Schneiderman, also a Democrat, said in court papers there was no reason for the judge to recuse himself from the sentencing. Hevesi resigned in 2006 after pleading guilty to a felony for using state workers to chauffeur his wife. The pension case emerged after he left office. He ultimately admitted letting a California venture capitalist pay for the comptroller and his family to take five trips to Israel and one to Italy, at a total cost of about $75,000. The investor, Elliott Broidy, also arranged for $500,000 in campaign contributions directed by Hevesi or his staff. And Broidy paid $380,000 in bogus consulting fees to a friend of Hevesi’s chief political adviser, Henry “Hank” Morris. Around the same time, Hevesi awarded Broidy’s company, Markstone Capital Partners, a $250 million pension fund investment. Broidy pleaded guilty to a felony charge of rewarding official misconduct. Eight people, in all, have pleaded guilty to criminal charges in the case. The only one sentenced so far, Morris, got 16 months to four years in prison; the range reflects the possibility of parole. Morris admitted using his connections to Hevesi and other pension fund officials to extract $19 million in personal payouts from firms hoping to manage some of the money. At $141 billion, New York’s retirement pool is one of the world’s largest government pension funds and a rich source of investment dollars. Several financial players paid more than $170 million in civil penalties in connection with the pension fund investigation. They include such politically connected firms as the Carlyle Group and such prominent financiers as Steven Rattner, who helped lead the Obama administration’s bailout and restructuring of Chrysler and General Motors. Before Hevesi became the state’s chief financial officer, he held the same office for New York City and was a longtime state assemblyman in a Queens district now represented by his son, Andrew Hevesi.

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