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Senate’s McConnell Calls For PIPA Bill To Be ‘Shelved’

by Zach Carter on January 19, 2012

Huffington Post…

WASHINGTON — Senate Minority Leader Mitch McConnell (R-Ky.) urged Majority Leader Harry Reid (R-Nev.) late Thursday to nix an upcoming vote on Protect IP, a major anti-piracy bill that Internet experts warn poses grave dangers to the Web’s functionality. Reid, who formally supports the bill, said on Sunday that he would proceed with a vote on a revised version, despite a public statement of opposition from the White House a day earlier. “While we must combat the online theft of intellectual property, current proposals in Congress raise serious legal, policy and operational concerns,” McConnell said in a statement. “Rather than prematurely bringing the Protect IP Act to the Senate floor, we should first study and resolve the serious issues with this legislation. Considering this bill without first doing so could be counterproductive to achieving the shared goal of enacting appropriate and additional tools to combat the theft of intellectual property. I encourage the Senate majority to reconsider its decision to proceed to this bill.” The bill lost several prominent supporters, including many original co-sponsors, on Wednesday, amid high-profile online protests in which major websites Wikipedia, reddit and others blocked access to their content. Nevertheless, opponents had continued to worry they did not have the votes to prevent the bill from coming up for a vote. McConnell spokesman Don Stewart stopped short of issuing a filibuster threat, when asked if McConnell’s opposition indicated that Republicans would prevent the bill from coming up for a vote on the Senate floor. “It’s an encouragement to withdraw the bill while they study and resolve the serious issues in the bill,” Stewart said. “There seems to be bipartisan support for that point of view.” A request for comment from Democratic leadership was not immediately returned. Protect IP and its House companion, SOPA, would grant the government and corporations broad powers to shut down Web sites they believe are engaged in copyright infringement — without a trial or a traditional court hearing. Internet experts warn that the tactics deployed in these Web site take-downs would endanger cybersecurity and the technical functioning of the Web. Supporters of the legislation, which include Hollywood movie studios and major record labels, have insisted the measures are necessary to combat online piracy.

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Senate’s McConnell Calls For PIPA Bill To Be ‘Shelved’

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Robert Reich: The Bain of Capitalism

by Robert Reich on January 10, 2012

Huffington Post…

It’s one thing to criticize Mitt Romney for being a businessman with the wrong values. It’s quite another to accuse him and his former company, Bain Capital, of doing bad things. If what Bain Capital did under Romney was bad for society, the burden shifts to Romney’s critics to propose laws that would prevent Bain and other companies from doing such bad things in the future. Don’t hold your breath. Newt Gingrich says Bain under Romney carried out “clever legal ways to loot a company.” Gingrich calls it the “Wall Street model” where “you can basically take out all the money, leaving behind the workers,” and charges that “if someone comes in, takes all the money out of your company and then leaves you bankrupt while they go off with millions, that’s not traditional capitalism.” Where has Newt been for the last 30 years? Leveraged buyouts became part of traditional capitalism in the 1980s when enterprising financiers began borrowing piles of money, often at high interest rates, to buy up the stock of ongoing companies they believe undervalued. They’d back the loans with the company assets, then typically sell off divisions and slim payrolls, and resell the company to the public at a higher share price — pocketing the gains. It’s a good deal for the financiers (the $25 billion buyout of RJR-Nabisco in 1988 netted the partners of Kohlberg, Kravis, and Roberts around $70 million each — and most of Mitt Romney’s estimated $200 million fortune comes from the same maneuvers), but not always for the company or its workers. Some workers lose their jobs when the company downsizes. Others, when the company, now laden with debt, can’t meet its payments to creditors and has to go into bankruptcy. According to the Wall Street Journal , of 77 companies Bain invested in during Romney’s tenure there, 22 percent either filed for bankruptcy or closed their doors by end of eighth year after Bain’s investment. But, hey, this is American capitalism — at least as it’s been practiced for the past three decades. Is Newt proposing to ban leveraged buyouts? Or limit the amount of debt a company can take on? Or prevent financiers — or even CEOs and management teams — from taking a public company private and then reselling it to the public at a higher price? None of the above. Rick Perry criticizes Romney and Bain pushing the quest for profits too far. “There is nothing wrong with being successful and making money,” says Perry. “But getting rich off failure and sticking someone else with the bill is indefensible.” Yet getting rich off failure and sticking someone else with the bill is what Wall Street financiers try to do every day. It’s called speculation — and at least since the demise of the Glass-Steagall Act, investment bankers have been allowed to gamble with commercial bank deposits, other people’s money. So is Perry proposing to resurrect Glass-Steagall? Not a chance. Gingrich, Perry, and others are putting particular focus on the people who lost their jobs as a result of Romney’s Bain Capital. Gingrich’s Super PAC will be running $3.5 million of ads featuring emotional interviews with some of them. But what, exactly, are Romney’s opponents proposing to do about layoffs that harm so many people? Millions of Americans have lost their jobs over the last four years — and as a result have often lost their health insurance, their homes, and their savings. Are Gingrich, Perry, and others proposing to expand health insurance coverage for jobless Americans and their families? All I hear from the Republicans is their determination to repeal the law that President Obama championed — which still leaves millions of Americans uninsured. Do Romney’s opponents have plans to keep people in their homes even when they’ve lost their jobs and can’t pay their mortgages? No. Do they propose expanding unemployment insurance? If memory serves, most of them were opposed to the last extension. I’m all in favor of reforming capitalism, but you’ll permit me some skepticism when it comes to criticisms of Bain Capital coming from Romney’s Republican opponents. None of these Republican candidates has exactly distinguished himself with new ideas for giving Americans more economic security. To the contrary — until the assault on Romney and Bain Capital — every one of them has been a cheerleader for financial capitalism of the most brutal sort. The party that has repeatedly saved capitalism from its own excesses and thereby preserved capitalism is the Democratic Party. So the only serious question here is what kind of serious reforms Obama will propose when, assuming Romney becomes the Republican nominee, Obama also criticizes Bain Capitalism. 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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Robert Reich: The Bain of Capitalism

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Major Museums And Organizations Collect Materials Produced By Occupy Movement

December 24, 2011

By CRISTIAN SALAZAR AND RANDY HERSCHAFT, The Associated Press NEW YORK (AP) — Occupy Wall Street may still be working to shake the notion it represents a passing outburst of rage, but some establishment institutions have already decided the movement’s artifacts are worthy of historic preservation. ( CLICK HERE FOR LATEST UPDATES ) More than a half-dozen major museums and organizations from the Smithsonian Institution to the New-York Historical Society have been avidly collecting materials produced by the Occupy movement. Staffers have been sent to occupied parks to rummage for buttons, signs, posters and documents. Websites and tweets have been archived for digital eternity. And museums have approached individual protesters directly to obtain posters and other ephemera. The Museum of the City of New York is planning an exhibition on Occupy for next month. “Occupy is sexy,” said Ben Alexander, who is head of special collections and archives at Queens College in New York, which has been collecting Occupy materials. “It sounds hip. A lot of people want to be associated with it.” To keep established institutions from shaping the movement’s short history, protesters have formed their own archive group, stashing away hundreds of cardboard signs, posters, fliers, buttons, periodicals, documents and banners in temporary storage while they seek a permanent home for the materials. “We want to make sure we collect it from our perspective so that it can be represented as best as possible,” said Amy Roberts, a library and information studies graduate student at Queens College who helped create the archives working group. The archives group has been approached by institutions seeking to borrow or acquire Occupy materials. Roberts said they were discussing donating the entire collection to the Tamiment Library and Robert F. Wagner Labor Archives at New York University. Tamiment declined to comment. A handful of protesters began camping out in September in a lower Manhattan plaza called Zuccotti Park, outraged at Wall Street excess and income inequality; they were soon joined by others who set up tents and promised to occupy “all day, all night.” Similar camps sprouted in dozens of cities nationwide and around the world. Many were forcibly cleared. Much of the frenzied collection by institutions began in the early weeks of the protests. In part, they were seeking to collect and preserve as insurance against the possibility history might be lost – not an unusual stance by archivists. What appears to be different is the level of interest from mainstream institutions across a wide geographic spectrum and the new digital-only ventures that have sprung up to preserve the movement’s online history. The lavish attention poured on the liberal-leaning movement has not gone unnoticed by conservatives. Judicial Watch, a conservative watchdog group, blogged sarcastically under its “Corruption Chronicles” about the choice by the Smithsonian to document Occupy. “It looks like it’s taxpayer-funded hoarding, as opposed to rigorous historical collecting,” said Tom Fitton, president of the organization. The Smithsonian said its American history collection also now includes materials related to the massive tea party rally against health care reform in March 2010 and materials from the American Conservative Union’s Washington, D.C., conference in February. The Roy Rosenzweig Center for History and New Media at George Mason University launched OccupyArchive.org in mid-October on a hunch that it could become historically important. So far, it has about 2,500 items in its online database, including compressed files of entire Occupy websites from around the country and hundreds of images scraped from photo-sharing site Flickr. “This kind of social movement is probably more interesting to me, to be honest about it. And also so much of it is happening digitally. On webpages. On Twitter,” said Sheila Brennan, the associate director of public projects. “I guess I didn’t see as much of that with the tea party.” Curators and those in charge of collections at institutions said it was not too soon to think about preserving elements of the Occupy movement. “We like to collect things as they are happening before the artifacts go away,” said Esther Brumberg, senior curator of collections for the Museum of Jewish Heritage in lower Manhattan. Brumberg said the museum had approached “Occupy Judaism” co-organizer Daniel Sieradski about a poster he had done for a Yom Kippur prayer service for protesters at Zuccotti Park that drew hundreds of people. The poster shows the silhouetted fiddler image from the Jewish musical “Fiddler on the Roof” astride the Wall Street bull. Sieradski said it made sense that his poster should end up in the museum’s permanent collection. “What I think is great is that they are actually looking to build their collection around contemporary American Jewish history and maybe broaden what their offerings are to the public so that they can tell a more complete story,” he said. While there are no immediate plans to use the poster in an exhibition, Brumberg called it “just one of a number of instances of Jewish activism” that they are interested in and are trying to collect. The Smithsonian’s National Museum of American History gave a similar explanation for sending staff to Zuccotti Square during the encampment, where they were spotted picking up materials. The museum said it was part of its tradition of documenting how Americans participate in a democracy. It declined to allow staff to be interviewed. “Historians like to take the long view and see how things play out,” said spokeswoman Valeska Hilbig in an email, adding that staff wouldn’t feel “comfortable” discussing the protests until some time had passed. Staff at the Robert W. Woodruff Library at Emory University set up a system to download and archive tweets about Occupy. So far, they have harvested more than 5 million tweets from more than 600,000 unique Twitter users. Ultimately the database will be made available to scholars, said Stewart Varner, the digital scholarship coordinator at the library. The New York Public Library has added Occupy periodicals to its collection and is considering obtaining some protest ephemera. And the Internet Archive, a massive online library of free digital books, audio and texts, has opened a mostly user-generated collection about the movement. As of Friday, the Occupy collection included more than 2,000 items, while its “Tea Party Movement” collection had fewer than 50. Unlike other institutions focused only on collecting, the Museum of the City of New York is planning a photography exhibition on Occupy at its South Street Seaport Museum offshoot when it reopens in January. Chief curator Sarah Henry said the museum will also include materials on the movement in a new gallery opening in the spring that focuses on social activism in New York City. The New-York Historical Society has collected between 300 and 400 items from the movement, said Jean Ashton, the library director. Ashton recognized the contradiction inherent in an establishment institution collecting Occupy materials. “There are probably people in Occupy Wall Street who the last thing they want is to have their materials in a library or museum somewhere,” she said. Roberts, the OWS member who is on the archives working group, said it was good that such institutions want to document the movement. However, she said they would prefer the institutions collaborate with the participants. “We know more about the movement and the stories behind the materials that have been collected,” she said. ____ Follow Cristian Salazar at twitter.com/crsalazarAP and Randy Herschaft at twitter.com/HerschaftAP

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WSJ vs. GOP

December 21, 2011

The Wall Street Journal editorial page attacked congressional Republicans Wednesday for possibly losing the payroll tax cut standoff to President Barack Obama. The editorial begins : GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest. House Republicans killed a two-month extension of the payroll tax cut, unemployment benefits and a provision avoiding Medicare payment cuts to to doctors Tuesday by a 229-193 vote. The Senate voted Saturday by an 89-10 margin to extend all three for two months. All three provisions expire on Jan. 1. House Republicans want the Senate to return and negotiate over a compromise plan. Senate Majority Leader Harry Reid (D-Nev.) said he won’t negotiate until the House approves the Senate’s package. The conservative editorial board wrote that the Republicans have “thoroughly botched the politics.” The board also added that Obama is in a “stronger re-election position today than he was a year ago.” If Congress does nothing, then the payroll tax paid by workers will rise from 4.2 percent to 6.2 percent, long-term unemployment benefits will expire and doctors will face a 27 percent cut in Medicare reimbursements on Jan. 1.

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U.S. Trade Gap Narrowest In Months, As Imports From China Hit Record High

December 9, 2011

The U.S. trade deficit narrowed in October to its lowest in 10 months, but imports from China hit a record high, a government report showed on Friday. The trade gap totaled $43.5 billion, in line with a consensus estimate from analysts before the report. However, the Commerce Department revised its estimate of the September trade deficit to $44.2 billion from $43.1 billion. As a result, the October trade gap narrowed 1.6 percent from September, instead of widening, as most analysts expected. Both U.S. imports and exports declined in October, in a possible sign of weakening demand in the United States and abroad. However, a smaller trade deficit is positive for fourth-quarter economic growth, since it suggests more domestic demand is being met by U.S. production. Also, both imports and exports of capital goods set records in October, suggesting businesses are gearing up operations. U.S. stock index futures rose on Friday after European Union leaders agreed on measures that partially addresses the region’s crippling sovereign debt crisis. The euro rose against the dollar, while U.S. government debt yields rose. U.S. exports to the 27-nation EU rose 1.0 percent in October to $23.4 billion, while imports from the community increased 6.3 percent to $31.4 billion. “Exports to Europe are bound to weaken substantially, while imports will pick up steam as U.S. companies rebuild inventory after the unexpected decline in the third quarter,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics, Valhalla, New York. Overall U.S. imports fell 1.0 percent to $222.6 billion, led by a $3.6 billion drop in industrial supplies and materials. The average price for imported oil fell for a fifth consecutive month to $98.84 per barrel, from its May peak of $108.70. The drop in the overall trade deficit “will prove temporary, because oil prices have risen significantly since October,” Shepherdson said. Despite the overall import decline, imports of capital goods and food, feeds and beverages increased to records in October. Imports from China rose to a record $37.8 billion and imports from Japan increased to $12.3 billion, the highest since April 2008. U.S. exports fell 0.8 percent to $179.2 billion, led by a $1.3 billion drop in industrial supplies and materials. The biggest monthly decline in that category was for non-monetary gold, which tumbled 25 percent to $3.5 billion. However, for the first 10 months of 2011, non-monetary gold exports totaled $27.8 billion, compared to $14.8 billion in the same period last year. U.S. exports to China increased to $9.7 billion, the highest since December. The U.S. trade gap with China was unchanged in October at $28.1 billion, but remained on track to surpass the annual record of about $272 billion set in 2010. (Editing by Neil Stempleman) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Senate Rejects Payroll Tax Cut Extension

December 2, 2011

WASHINGTON — The Senate failed Thursday to pass an extension of a payroll tax cut, leaving in limbo a break that saved working class households about $1,000 a piece this year. Democrats sought to extend and expand the break, while paying for it with a 3.25 percent surtax on incomes over $1 million. Just one Senate Republican, Maine’s Susan Collins, voted for the middle class break, which died 51 to 49 in a filibuster. Three Democrats opposed the bill. “I am extremely disappointed that Republicans’ insistence on protecting millionaires from paying a penny more in taxes has blocked our effort to extend and expand the payroll tax cut for millions of middle class families and small business owners,” said Sen. Patty Murray (D-Wash.). Minutes later, a Republican version of the measure was blocked by Democrats and a majority of the GOP senators. Democrats had complained that it was too small of a break — and that it was paid for by cutting 200,000 federal workers. “Tonight’s votes highlight a sharp contrast between the two parties: Democrats voted to put more money in the pockets of the middle class families who need it most, while Republicans would only support a bill that exacts a price from middle class workers while protecting the wealthiest Americans,” Murray, the fourth-ranking Democrat, said. Democrats pointed to the defection of Republicans from the GOP bill as an embarrassment for Senate Minority Leader Mitch McConnell (R-Ky.), who had predicted there would be support for some sort of payroll tax cut extension. “Republicans spent this week trying to convince us that they support middle-class tax cuts, but tonight a majority of Senate Republicans voted against their own bill -– calling into question whether they support middle-class tax cuts at all,” said Senate Majority Leader Harry Reid (D-Nev.). “I was encouraged to see one Republican join Democrats in asking millionaires to pay their fair share,” Reid said. “But because every other Republican continues to insist on protecting millionaires, middle class families could face a $1,000 tax increase next year.” Reid has said he will bring the measure back. Most Republican leaders have also said that ultimately the payroll tax cut should be extended, but it was not clear how after Thursday’s twin failures. President Barack Obama released his own statement to hammer the middle class message that’s emerging a key theme of his campaign. “Tonight, Senate Republicans chose to raise taxes on nearly 160 million hardworking Americans because they refused to ask a few hundred thousand millionaires and billionaires to pay their fair share,” he said. “That is unacceptable. It makes absolutely no sense to raise taxes on the middle class at a time when so many are still trying to get back on their feet.”

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The Best And Worst Run States In America

November 28, 2011

For the second year, 24/7 Wall St. has reviewed data on financial health, standard of living and government services by state to determine how well each state is managed. Based on this data, 24/7 Wall St. ranked the 50 states from the best to worst run.

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Scott Brown Follows In Elizabeth Warren’s Footsteps

November 14, 2011

WASHINGTON — Sen. Scott Brown (R-Mass.) endorsed President Barack Obama’s nominee to head the new Consumer Financial Protection Bureau on Monday, according to The Boston Globe . His backing of former Ohio Attorney General Richard Cordray will likely have little to no effect on Cordray’s prospects for actually securing the nomination. A total of 44 other Senate Republicans, more than enough to filibuster a vote on Cordray’s appointment, have already vowed not to approve any CFPB director unless the agency’s capabilities are limited by new laws. Cordray was the law enforcement official most aggressively pursuing action against banks on foreclosure fraud until he was ousted by a Republican challenger in late 2010. Elizabeth Warren, the consumer advocate who conceived of the CFPB and who is now challenging Brown for his Senate seat, hired Cordray to head enforcement activity at the bureau shortly thereafter. Obama nominated him to head the agency after passing over Warren, whose public criticism of big banks and the Wall Street bailout had agitated congressional Republicans and Democratic campaign donors from the financial industry. Meanwhile, Warren has given Cordray her full support for CFPB director, and Republican groups have continued their efforts to tie Warren to the Occupy Wall Street movement and portray that association in a negative light. Warren has not stopped criticizing big banks, although she insists that everyone involved in the protests must “obey the law.” Brown, whose top career campaign donors include Goldman Sachs, Morgan Stanley, Barclays and the hedge fund Paulson & Co., was one of just three Republicans to vote in favor of the Dodd-Frank financial reform bill. He withheld his vote, however, until he had secured highly targeted legislative favors for hometown banking giant State Street.

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Republicans Contend Obama Wants Super Committee To Fail

November 9, 2011

WASHINGTON — In a sign of just how unlikely Congress’ deficit-cutting super committee is to succeed, Republicans took the blame game to another level Tuesday, saying the White House wants it to fail. As evidence, they pointed to recent remarks by New York Democratic Sen. Chuck Schumer, who said Monday that the committee will fail because Republicans don’t want to compromise on raising taxes. “It’s pretty clear when Chuck Schumer speaks, he’s speaking for the most partisan Democratic positions,” said Senate Minority Leader Mitch McConnell (R-Ky.). “It does raise the suspicion that the folks down at the White House are pulling for failure, because you see if the Joint Committee [on Deficit Reduction] succeeds, it [upsets] the story line that they’ve been peddling, which is that you can’t do anything with the Republicans in Congress.” Brian Fallon, a spokesman for Schumer, said his boss’s prediction had nothing to do with rooting for failure, but addressed the GOP’s anti-tax orthodoxy. “The obstacle for the super committee is Republicans’ refusal to entertain serious revenues,” said Fallon, arguing that Schumer’s remarks “clearly struck a nerve with Republicans” because Sen. Pat Toomey (R-Pa.) offered what Democrats see as a token offer to raise revenue and show reasonableness. The AP reported that Toomey’s measure would cut tax rates from about 35 to 28 percent while closing loopholes to raise an extra $250 billion from individual tax returns. It would raise another $60 billion from reforming the corporate tax code and another $40 billion by changing the way inflation is measured. Democrats see it as a phony offer because the lowering of tax rates overall would come at the expense of the middle and working classes, who would end up paying more when things like mortgage deductions were eliminated. Currently, about half of taxpayers pay no federal income tax, and half of American families earn less than $50,000. Half of workers earn less than $26,300. In order to raise the money Republicans are talking about, many of those people would have to pay more . “A day later, they [Republicans] are scrambling to come up with face-saving offers that they claim include concessions,” said Fallon. “They know the public will blame them alone if Congress misses this opportunity.” A recent Quinnipiac University poll found Americans would be more likely to blame the GOP if the super committee fails, by 46 to 36 percent , although the poll also found that voters favor spending cuts over tax hikes. McConnell was hardly the only Republican to question Schumer’s remarks. “Last I saw, Sen. Schumer was not on the super committee. I think all three of the Senate Republicans are working really hard to make it work,” said Sen. Roy Blunt (R-Mo.). “I think my side is increasingly concerned that the other side’s decided it’s strategically to their advantage for it not to work.” Blunt singled out what he said was a lack of effort by the White House. “I don’t see any real push from the administration to encourage a successful negotiation in the super committee,” he said. “My sense is they’re certainly not getting the leadership from the administration that you’d want that committee to have.” “Everybody in America loses if they don’t do something,” said Sen Tom Coburn (R-Okla.). “To be out promoting the fact [that the committee could fail] is undermining the very thing that [Schumer] should be hoping that they do. So I think it’s very ill-advised to be on the public stage now undermining what they’re trying to do.” Democrats have argued often that Republicans are trying to kill everything in Congress to avoid helping the economy or give President Barack Obama any wins to tout in the campaign season. The White House has been scoffing at charges that the president wants the super committee to fail and, in response to the latest, pointed to remarks from White House spokesman Jay Carney on Monday. “I think to declare now that Congress will fail before it’s had a chance to, I think, is not helpful,” he said. Carney also noted, “We believe that Congress has all it needs in terms of guidelines and outlines [on] the kind of policy decisions it needs to make at the committee level to do this.” And he reminded reporters that the White House backed larger deficit reductions than those mandated to be made by the super committee: “There is an opportunity here to well overshoot the goal outlined by the legislation, in terms of long-term deficit and debt reduction, as the president’s plan does. And we hope that Congress will take that up and do it.”

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WATCH: Anonymous Issues Bizarre Call To Occupy Iowa Caucuses

November 7, 2011

A new web video comes as evidence the hacker group Anonymous is getting involved in the 2012 election. The Des Moines Register reports that Anonymous has claimed responsibility for a clip encouraging viewers to disrupt January’s Iowa caucuses. The Hawkeye State-based outlet notes that local authorities are not taking the news lightly. The two-minute YouTube video is narrated by a synthetic-sounding voice leveling a charge that both Democrats and Republicans have “failed us” — citing ties to megacorporations as a key factor. Taking the argument a step further, the video alleges that both parties are guilty of deliberately driving tens of millions of people into poverty. “Voting for these parties is unethical,” the voice says. “They have destroyed the American democracy.” The clip reveals details of a planned caucus shutdown, beginning two days after Christmas. “We are calling upon you to occupy the campaign offices of presidential headquarters in Des Moines, Iowa on December 27th, and peacefully shut down the first-in-the-nation Iowa caucuses on January 3,” the voice says. CNN reported last week that Occupy Wall Street activists have plans in the works to take their message to Iowa one week before the state’s caucuses. Despite the call to “occupy” from Anonymous, the Register reports that members of Occupy Des Moines say there is no connection between the groups. In recent months, Anonymous has taken on a host of causes outside of politics. From threatening to kill Facebook over privacy issues, to taking on the prominent Zetas drug cartel , to revealing IP addresses of child porn viewers , the group has made a name for itself with these types of online operations.

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Occupy Wall Street Protesters Clash With Police Outside Courthouse

November 6, 2011

NEW YORK — Hundreds of Occupy Wall Street protesters clashed with police in front of the New York Supreme Court building Saturday afternoon, after they and thousands others marched across to Foley Square from Zuccotti Park. At first, police officers stationed along the route largely stood by and watched as protesters marched up Broadway, playing tambourines, drums and harmonicas and chanting slogans like “How do you fix the deficit? Stop the wars, tax the rich!” As the protest swelled near Foley Square, New York Police Department motorcycles and cars began blocking off intersections. Stranded drivers honked — angrily, as they impotently inched forward towards the protesters, or in support, cheering and sticking thumbs ups and peace signs out the windows of their vehicles. The protesters were met on the steps of the courthouse by a line of officers, and more soon arrived, armed with plastic ties and rolled up orange barricades. Before moving in, a group of officers coordinated. One, holding a rolled piece of paper, told the group, “We’re saying it’s blocking a pedestrian walkway.” “Let’s go,” another officer shouted at his colleagues waiting with zip ties and barricades. “Get up there!” “Let’s stand fast there, huh?” a female officer encouraged, as other officers began saying through megaphones: “Right now, it’s illegal to be on the sidewalk, it’s a hazard.” Protesters began questioning the NYPD’s actions, citing their right to peacefully assemble. They paced the sidewalk in an effort to defend against the argument that the crowd was an obstruction. Several got in the faces of officers forming a human barricade on the courthouse steps. “You’re supposed to be our nation’s finest,” they shouted. “You’re the ones blocking the sidewalk!” Physical altercations began, with several officers roughly shoving protesters and protesters refusing to move, shouting in the faces of officers narrowing the sidewalk space behind the orange net barriers. “We don’t want nobody to get hurt!” an officer shouted on the megaphone. Officers provided several different reasons for the courthouse crackdown. “It’s our jobs, it’s taxpayer money,” a plainclothes man standing with the officers on the steps shouted at protesters. “It’s the rules.” An Officer Vance described the space as a “frozen zone” and said the officers’ actions were “securing the area.” “You can see I’m having a bad day here,” Vance said, asking HuffPost to keep moving. “They asked me to clear it and I cleared it out,” said Officer Birmingham beside him, confirming that the NYPD had “deemed it unsafe.” According to witnesses, one woman was caught between advancing cops and protesters and dragged across the barricade. She was taken up the courthouse steps and cuffed with zip ties against a courthouse column. Desiree Frias, 18, cried as two cops brought her down the steps toward squad cars. “I just want to go back to college,” she said, gasping. She tried to spell her name between sobs, asking for someone to tell her fiance what had happened as the arresting officers urged her to calm down. Activist and former New Jersey city councilman Jim Keady, 40, tried to advise Frias of her rights before officers took her. “It’s going to be okay,” he said. “You might not make it back to class on Monday, but this is going to be one of the most important lessons you’ll ever learn, in exercising your rights.” One officer said she was to be taken to One Police Plaza and likely processed back at the courthouse. “They just handed her to me, I have no choice,” said the female officer on her right. The number of officers present swelled to about one hundred but only an estimated half-dozen protesters were arrested, according to witnesses. Officers declined to comment or stated they didn’t know the number arrested. Despite physical altercations and heated exchanges, there are no known injuries at this time. Pepper spray did not appear to be used to push back the crowd. The standoff between protesters and police lasted several hours before protesters dispersed, many headed back to Zuccotti Park. After they had cleared out, several dozen officers remained stationed on the courthouse steps. Later on Saturday night, several hundred protesters marched to One Police Plaza, where the arrested protesters were due for arraignment, in a show of solidarity. The march organizers interrupted a meeting of the General Assembly in Zuccotti Park to recruit support. Several dozen police officers responded by accompanying the protesters from Zuccotti Park on foot and by vehicle. Motorcycles formed a barrier in front of the courthouse steps. The protesters stopped in front of the courthouse on the corner of Hogan and Centre streets, where officers also blocked the steps. “They say this shit can’t happen,” said a speaker on the steps via the “people’s mic,” while officers looked on. Rumors have swirled in recent days that officers will attempt a clean-up or clear-out of the park this weekend, but those rumors are as of yet unconfirmed. An officer standing near City Hall Saturday afternoon additional authorities had been mobilized for the night to perform duties beyond a nightly counterterrorism check of the city’s most iconic sites. Nearly 30 additional cars were out beyond the usual 100. “We’re on standby in case anything goes on downtown,” the officer said, clarifying, “at Zuccotti.” UPDATE: 9:45 p.m. — Desiree Frias is being charged with assaulting an officer, a felony, and obstructing government administration and resisting arrest, both misdemeanors, according to the clerk’s office at One Police Plaza. According to witnesses, Frias was caught between officers trying to clear the area in Foley Square and protesters trying to hold their ground. It remains unclear what type of assault was allegedly committed by Frias, who was wearing a purple knitted cap and long blue skirt at the time of her arrest. Court clerk Joe Simon said he could not provide information about the other protesters who were arrested, and he said he believed Frias would not come before a judge Saturday night. He expected the protesters would be arraigned no sooner than 1:00 p.m. Sunday, which is when the courthouse is scheduled to open. It typically takes at least 24 hours to process the paperwork, Simon said, but he noted that at least 350 people were awaiting processing at the 5th precinct where Frias was being held. Frias’s fiance Hector Asavedo said he had not been able to reach her and had not been given any information, though the clerk said she would have access to a phone at the precinct and could consult legal aid once her paperwork was processed. The lawyer would then stand with her before the judge “once she’s physically brought up.” Moira Meltzer of the New York office of the National Lawyers Guild contacted this reporter in search of information about Frias’ charges. Meltzer said her office had so far had difficulty obtaining information from the authorities. The Lawyer’s Guild Is representing all the protesters arrested at the demonstration in front of the court building and associated protests Saturday. Meltzer said she has 21 names, but doesn’t know if that list includes all who were arrested.

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Oakland Mayor Under Fire Over Occupy Protests

November 4, 2011

OAKLAND, Calif. — Oakland Mayor Jean Quan made history in January when she became the first Asian American woman to lead a major U.S. city. Less than a year later, the Democratic mayor is quickly losing support on all sides of the political spectrum, mostly over her handling of the city’s Occupy Wall Street protests that drew heavy scrutiny. Quan’s critics say she has struggled to formulate a coherent response to the Occupy encampment that has overtaken the plaza in front of Oakland City Hall for the past few weeks. Police raided the camp last week and fired tear gas during skirmishes with marchers before Quan allowed protesters to return a day later. “It was sort of remarkable that she was able to alienate both sides,” said University of San Francisco political scientist Corey Cook of Quan’s relationship with protesters and police. “She has no friends at this point.” The Occupy movement, which began six weeks ago in New York City to decry corporate influence in government and wealth inequality, has spread to cities large and small across the country and around the world. Demonstrators have spent weeks camped out in parks, wearing at the patience of city officials – even those like Quan who have expressed some level of support for their cause. Quan, 62, a former school board president and city council member, was surprisingly elected mayor last year, succeeding Ron Dellums. She defeated the heavily favored front-runner, former state Senate President Pro Tem Don Perata, in a narrow race thanks to the city’s ranked-choice voting system. Since then, Oakland’s city attorney and police chief have both quit over philosophical differences with Quan and dozens of residents have recently signed a petition seeking to recall her. But Dan Siegel, Quan’s unpaid legal adviser and longtime friend, says she’s doing an admirable job under the circumstances. Siegel, who teamed with Quan and her husband in the fight to create an ethnic studies program at the nearby University California, Berkeley in the 1960s, said the mayor hasn’t gotten enough credit for balancing a budget, working with local unions seeking some concessions and hiring a reputable new city administrator. “These are not ordinary times,” Siegel said. “It’s difficult, but that’s what she signed up for.” Quan told reporters last week that being mayor definitely has been challenging. “This is a pretty complex job, so I have to take everybody into account,” Quan said. Quan said she and the city support the Occupy Oakland movement and its planned general strike Wednesday, when protesters plan several large gatherings through downtown, culminating in an early evening march to the Port of Oakland. City offices are to remain open Wednesday, but City Administrator Deanna Santana said workers can use vacation or other paid time off to participate in the strike. Quan said she hoped Wednesday’s strike would be peaceful and that she was working with police to ensure the protesters’ issues are “front and center.” “The pro-99 percent activists – whose cause I support – will have the freedom to get their message across without the conflict that marred last week’s events,” Quan said in a statement Tuesday. “Although getting the balance right is never an easy task, in Oakland we are committed to honoring free speech and protecting public safety.” Despite Quan’s vocal support for the Occupy movement, protesters heckled and booed her when she tried to speak to the group last week, sending her retreating into City Hall. “You need a true leader. This is all too much for her. It’s not her time,” said Ken Houston, an Oakland resident who owns a local construction business and has spent several nights at the Occupy encampment. The initial crackdown has led prominent liberals to call for her resignation, and last week a group of Oakland residents filed a petition seeking to recall Quan, saying she’s ignoring public safety as the city’s most pressing issue. Quan fired back Monday, saying that “the last thing we need is a divisive and expensive recall campaign. In 20 years of serving Oakland, my only agenda has been to work hard for our diverse city.” Yet, her stance on the Occupy Oakland protests has further strained her thin relationship with the city’s police force. Police are upset they were asked to clear the protesters’ encampment a week ago, only to have the camp return the next day. Last week’s raid, along with the tear gas-clouded standoff with marchers and other law enforcement actions related to the protest, cost Oakland $1 million, the police union said in an open letter to Quan on Tuesday. The letter also questioned why the city plans to beef up its police presence for Wednesday’s strike while giving other city workers leeway to participate. “Is it the City’s intention to have City employees on both sides of a skirmish line?” the letter asked. The latest salvo by police comes weeks after popular former Chief Anthony Batts resigned last month after just two years on the job. Batts cited frustration about not getting the resources needed to do his job. Joseph Haraburda, who heads the Oakland Chamber of Commerce and has been publicly critical of Quan over the city’s high crime rate, said Tuesday that her decision to allow protesters back into the plaza was a “grave error” that is hurting downtown stores, banks and restaurants. “It’s an intolerable situation,” Haraburda said. “There needs to be an end game. When will this end? As long as this continues, the impact on business is going to be a downward spiral.” ____ Associated Press writer Marcus Wohlsen in San Francisco contributed to this report.

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Adrienne Parks: Bullying Part Deux: Occupy Wall Street and the Gay Movement

October 31, 2011

What does the gay movement have to do with Occupy Wall Street? We have a once-empowered class of people challenging powerful bullies. That should sound only too familiar. This is one of those perfect Buckminster Fuller moments of critical mass, a time like when the labor movement initially stood up, Vietnam-era anti-war protesters said, “Enough,” feminists marched for equality, and the Stonewall men said, “No more.” It will be difficult to put our economic-collapse genie back in the bottle. Could the bully power of the 1 percent be why America has fallen so pathetically behind the rest of the world in, well, everything? Because the power to bully is the power to subjugate creativity, entrepreneurial interests, religious tolerance, out-of-the-box thinking, and society at large. Even if we all deluded ourselves into thinking we had a level playing field, it gave us hope, not to mention those great motivators: idealism, that sense of fairness owed, wrongs to be righted. Or our drive to succeed or exceed society’s expectations. Yet we have to ask: is that what America is still about? Believing in the mythical fairness of Wall Street? Of society? A patriarchal ownership of the very financial institutions that now underwrite our political campaigns, judicial process, religions, and corporate America. The 1 percent has proven it does not play fairly. Crazily, the sycophants latch on to the 1 percent to feel themselves empowered. They are fooling themselves and implicitly hurting the 99 percent. Seemingly they somehow remain clueless, intentionally or otherwise. We can say with certainty now that the proverbial Wall Street “king” has been revealed to have no clothes. Of economic necessity, good old-fashioned American democracy has come under scrutiny by soccer moms, apple pie, laid-off workers, and the rest of the educated disenfranchised. These were the very dreamers who drank the Democratic “Kool-Aid.” They are us — your neighbors, friends, and families who bought the balloon-payment homes, were scammed by the Enrons and the Madoffs, lost pensions and life savings in planned bankruptcies. Their home mortgages are larger than their equity. These are the people who have lost medical benefits. They were simply pink-slipped by corporate employers whose duty was to profit at any cost. They were abruptly dumped into an economic cauldron of Wall Street making. Some individuals, societies, cultures, religions, groups, businesses, and living environments try to find an ideal to which all can agree, find harmony, and live in peace. Not so in an oligarchy, where the very, very few control the many. Is this what America has become? Does “one person, one vote” mean anything anymore if one corporation is equal to, what, a million people, votes, dollars? A billion? Bullying is used to quell. Right-wingers brandish claims that OWS is voiceless, without a leader, and thus without power to effect change. The same was said of most great change movements. Every voice must steep and brew. Direction is found. Vowels come together. Consonants unite. There is strength in words that create sentences that lob paragraphs and whole essays at bullies. It was such with the labor, anti-war, feminist and gay movements; such I believe it will be with OWS. It is in gestation. It is forming, in the parks, on the streets, at the steps of important buildings. In the empty wallets, naïve hearts, and angst-ridden minds of the middle classes. Most importantly, in their voices. Humankind does not like to be controlled, manipulated, or especially destroyed. We don’t like having perceived rights denied us or taken away. Bullying makes the 1 percent feel big, taller, better-looking, more capable, richer, wiser, and just perhaps immortal or omnipotent. Extreme conservatives use bullying as their Christianity litmus test. Racists use bullying to justify their actions. Misogynists use bullying to subdue women; homophobes justify their hate speech against the gay community. OWS will continue from these days forward. While authorities might force them from the streets and frigid temperatures drive them inside, the very economy created by the 1 percent has imploded on itself. It is the economy, stupid, to quote James Carville. This woefully sad excuse for our once-wonderful democracy has jump-started inquiring minds. No longer will they bear blind allegiance to fund managers, stock brokers, bankers, and unfair employers. The OWS voices have begun to question and roar. In all likelihood, they cannot be stopped by wind, nor rain, snow, billy clubs, mace, or rubber bullets. They are educated pacifists who can no longer be kept down. The genie is still climbing out of the bottle.

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Politicians React To Occupy Wall Street Movement

October 17, 2011

It’s been one month since the Occupy Wall Street protests started in mid-September in New York City. The movement has now spread across the United States and other parts of the world, escalating to an estimated 20,000-person march on Times Square on October 15. President Barack Obama, Vice President Joe Biden, the 2012 Republican candidates and many other prominent politicians on both sides of the aisle have been forced to respond to the movement. Check out their reactions in the slideshow below and vote on the most appropriate response:

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Democrats’ Deficit Plans Highlight Super Congress Divide

October 13, 2011

WASHINGTON — Democrats in the House offered up their ideas for the budget-slashing super committee Thursday, insisting again that the effort be “balanced” with revenue hikes. Under the law that created the Joint Select Committee on Deficit Reduction, the various committees of the House and Senate are required to submit recommendations to the committee — or the “Super Congress” — by Friday. For the out-of-power Democrats, releasing their ideas a day early amounted to a stunt since they are unlikely to be included in the official House suggestions prepared by the GOP. But the insistence on revenues highlighted the extreme divide that remains between the two parties, and again suggested the likelihood that the 12-member super committee — evenly divided between the chambers and parties — will deadlock over the deficit reduction plan it must submit by Nov. 23. “We want it to be big, we want it to be bold, we want it to be balanced, and in the balance side … we need to have everyone pay their fair share,” said Minority Leader Nancy Pelosi (D-Calif.). Republicans have steadfastly insisted that raising taxes is out of the question. The super committee must identify at least $1.2 trillion in deficit reduction over 10 years, and if Congress fails to act by Dec. 23, the Budget Control Act that created the committee requires automatic cuts, starting in 2013, including deep cuts to the military. The Super Congress plan will not be subject to amendment or filibuster, giving the 12 members near-unprecedented power. Still, some have suggested that anything they do could just as easily be undone by a future Congress, since the cuts would not begin immediately. The top Democrats on 16 House committees offered a long list of suggestions, often including closing various tax loopholes. Among the most specific proposals came from Rep. Ed Markey (D-Mass.), the top Democrat on the Natural Resources Commitee, who suggested closing a slew of loopholes to raise more than $50 billion, including from the oil and gas industries. Energy and Commerce Committee ranking member Rep. Henry Waxman (D-Calif.) suggested proposals to spend some $16 billion to create jobs in the short run, and to save some $150 billion over 10 years. Rep. Barney Frank (D-Mass.), the Democrats’ leader on the Finance Committee, offered up fees on “too big to fail” banks, and raising $42 billion by regulating and taxing Internet gambling, among other items. All the letters can be found here.

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Robert Reich: The Wall Street Occupiers and the Democratic Party

October 9, 2011

Will the Wall Street Occupiers morph into a movement that has as much impact on the Democratic Party as the Tea Party has had on the GOP? Maybe. But there are reasons for doubting it. Tea Partiers have been a mixed blessing for the GOP establishment — a source of new ground troops and energy but also a pain in the assets with regard to attracting independent voters. As Rick Perry and Mitt Romney square off, that pain will become more evident. So far the Wall Street Occupiers have helped the Democratic Party. Their inchoate demand that the rich pay their fair share is tailor-made for the Democrats’ new plan for a 5.6 percent tax on millionaires, as well as the President’s push to end the Bush tax cut for people with incomes over $250,000 and to limit deductions at the top. And the Occupiers give the President a potential campaign theme. “These days, a lot of folks who are doing the right thing aren’t rewarded and a lot of folks who aren’t doing the right thing are rewarded,” he said at his news conference this week, predicting that the frustration fueling the Occupiers will “express itself politically in 2012 and beyond until people feel like once again we’re getting back to some old-fashioned American values.” But if Occupy Wall Street coalesces into something like a real movement, the Democratic Party may have more difficulty digesting it than the GOP has had with the Tea Party. After all, a big share of both parties’ campaign funds comes from the Street and corporate board rooms. The Street and corporate America also have hordes of public-relations flacks and armies of lobbyists to do their bidding — not to mention the unfathomably deep pockets of the Koch Brothers and Dick Armey’s and Karl Rove’s SuperPACs. Even if the Occupiers have access to some union money, it’s hardly a match. Yet the real difficulty lies deeper. A little history is helpful here. In the early decades of the twentieth century, the Democratic Party had no trouble embracing economic populism. It charged the large industrial concentrations of the era — the trusts — with stifling the economy and poisoning democracy. In the 1912 campaign Woodrow Wilson promised to wage “a crusade against powers that have governed us … that have limited our development … that have determined our lives … that have set us in a straightjacket to so as they please.” The struggle to break up the trusts would be, in Wilson’s words, nothing less than a “second struggle for emancipation.” Wilson lived up to his words — signing into law the Clayton Antitrust Act (which not only strengthened antitrust laws but also exempted unions from their reach), establishing the Federal Trade Commission (to root out “unfair acts and practices in commerce”), and creating the first national income tax. Years later Franklin D. Roosevelt attacked corporate and financial power by giving workers the right to unionize, the 40-hour workweek, unemployment insurance, and Social Security. FDR also instituted a high marginal income tax on the wealthy. Not surprisingly, Wall Street and big business went on the attack. In the 1936 campaign, Roosevelt warned against the “economic royalists” who had impressed the whole of society into service. “The hours men and women worked, the wages they received, the conditions of their labor … these had passed beyond the control of the people, and were imposed by this new industrial dictatorship,” he warned. What was at stake, Roosevelt thundered, was nothing less than the “survival of democracy.” He told the American people that big business and finance were determined to unseat him. “Never before, in all our history, have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me, and I welcome their hatred!” By the 1960s, though, the Democratic Party had given up on populism. Gone from presidential campaigns were tales of greedy businessmen and unscrupulous financiers. This was partly because the economy had changed profoundly. Postwar prosperity grew the middle class and reduced the gap between rich and poor. By the mid-1950s, a third of all private-sector employees were unionized, and blue-collar workers got generous wage and benefit increases. By then Keynesianism had become a widely-accepted antidote to economic downturns — substituting the management of aggregate demand for class antagonism. Even Richard Nixon purportedly claimed “we’re all Keynesians now.” Who needed economic populism when fiscal and monetary policy could even out the business cycle, and the rewards of growth were so widely distributed? But there was another reason for the Democrats’ increasing unease with populism. The Vietnam War spawned an anti-establishment and anti-authoritarian New Left that distrusted government as much if not more than it distrusted Wall Street and big business. Richard Nixon’s electoral victory in 1968 was accompanied by a deep rift between liberal Democrats and the New Left, which continued for decades. Enter Ronald Reagan, master storyteller, who jumped into the populist breach. If Reagan didn’t invent right-wing populism in America he at least gave it full-throated voice. “Government is the problem, not the solution,” he intoned, over and over again. In Reagan’s view, Washington insiders and arrogant bureaucrats stifled the economy and hobbled individual achievement. The Democratic Party never regained its populist footing. To be sure, Bill Clinton won the presidency in 1992 promising to “fight for the forgotten middle class” against the forces of “greed,” but Clinton inherited such a huge budget deficit from Reagan and George H.W. Bush that he couldn’t put up much of a fight. And after losing his bid for universal health care, Clinton himself announced that the “era of big government” was over — and he proved it by ending welfare. Democrats have not been the ones to engage in class warfare. That was the distinct product of right-wing Republican populism. Anybody recall the Republican ad in the 2004 presidential election describing Democrats as a “tax-hiking, government spending, latte-drinking, sushi-eating, Volvo-driving, New York Times -reading, body-piercing, Hollywood-loving, left-wing freak Show?” Republicans repeatedly attacked John Kerry as a “Massachusetts liberal” who was part of the “Chardonnay-and-brie set.” George W. Bush mocked Kerry for finding a “new nuance” each day on Iraq — drawing out the word “nuance” to emphasize Kerry’s French cultural elitism. “In Texas, we don’t do nuance,” he said, to laughter and applause. House Republican leader Tom DeLay opened his campaign speeches by saying “Good morning or, as John Kerry would say, Bonjour.” The Tea Party has been quick to pick up the same class theme. At the Conservative Political Action Conference of 2010, Minnesota Governor Tom Pawlenty attacked “the elites” who believe Tea Partiers are “not as sophisticated because a lot of them didn’t go to Ivy League Schools” and “don’t hang out at … Chablis-drinking, Brie-eating parties in San Francisco.” After his son Rand Paul was elected for Kentucky’s Senate seat that May, Congressman Ron Paul explained that voters want to “get rid of the power people who run the show, the people who think they’re above everyone else.” Which brings us to the present day. Barack Obama is many things but he is as far from left-wing populism as any Democratic president in modern history. True, he once had the temerity to berate “fat cats” on Wall Street, but that remark was the exception — and subsequently caused him endless problems on the Street. To the contrary, Obama has been extraordinarily solicitous of Wall Street and big business — making Timothy Geithner Treasury Secretary and de facto ambassador from the Street; seeing to it that Bush’s Fed appointee, Ben Bernanke, got another term; and appointing GE Chair Jeffrey Immelt to head his jobs council. Most tellingly, it was President Obama’s unwillingness to place conditions on the bailout of Wall Street — not demanding, for example, that the banks reorganize the mortgages of distressed homeowners, and that they accept the resurrection of the Glass-Steagall Act, as conditions for getting hundreds of billions of taxpayer dollars — that contributed to the new populist insurrection. The Wall Street bailout fueled the Tea Party (at the Utah Republican convention that ousted incumbent Republican Senator Robert Bennett in 2010, the mob repeatedly shouted “TARP! TARP! TARP!”), and it surely fuels some of the current fulminations of Occupy Wall Street. This is not to say that the Occupiers can have no impact on the Democrats. Nothing good happens in Washington — regardless of how good our president or representatives may be – unless good people join together outside Washington to make it happen. Pressure from the left is critically important. But the modern Democratic Party is not likely to embrace left-wing populism the way the GOP has embraced — or, more accurately, been forced to embrace — right-wing populism. Just follow the money, and remember history. 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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Lori Wallach: Obama Flip-Flops Off Trade Cliff

October 4, 2011

Apparently, Obama has a plan for winning re-election that does not involve Ohio… oh, and he is tired of talking about job CREATION. Yesterday, after months of seeming ambiguity about whether to really take ownership of the three job-killing, Bush-signed, NAFTA-style Free Trade Agreements with South Korea, Colombia and Panama, he sent them to Congress for approval. Keep in mind that even the official U.S. International Trade Commission studies show that the Korea deal, the most economically significant since NAFTA, will increase our trade deficit. It’s projected to cost 160,000 jobs — many in the jobs of the future categories like high-speed trains, solar, computers etc. At this point, that Obama did a total flip-flop on very specific, written, repeated campaign promises — in this instance to replace the old damaging trade model starting with fixing these three deals — is not news. But what is noteworthy is the flip-flopping right off a political cliff. See here for a memo on the polling on these issues — opposition to these sorts of pacts is one of the few things that unites GOP, Dems, and Independents. Now, the question is whether Congress will follow. Whether or not these job-killing deals go into effect will come down to whether 218 House members vote for them. Few Dems will support the deals. The Korea deal is an albatross of job loss . Congress should not even be considering a trade deal with Colombia, where scores of trade unionists, human rights defenders and Afro-Colombians are murdered or displaced from their lands every year and conditions have worsened since the administration signed off on an unenforceable “Labor Action Plan.” At a time when America is trying to reduce the national debt, Congress should not be considering a trade deal with Panama, a notorious tax-haven where U.S. firms and wealthy individuals go to dodge their taxes. A bloc of more senior GOP oppose the Korea deal, as it clobbers certain industries. So, it will come down to the GOP freshmen. The polling shows that Tea Partiers are among the most passionate opponents of these deals. But whether the freshmen GOP will stick with the critical position many of them campaigned on and/or heed the Ron Paul call to oppose these deals is at best unclear. Many have already flipped to yes votes, falling in line with the massive Chamber of Commerce campaign that has been aimed at getting them “educated.” If the deals are passed, you can imagine the Democratic congressional campaign committees again making hay with differentiator ads attacking these job-killing votes. Maybe the White House is hoping that Democratic base voters and Independents seeing those ads forget that it was those congressional GOP and the Democratic president who slammed their futures with more NAFTAs.

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TRAIN Wreck: Greens Urge Senate To Derail House Bill

September 23, 2011

The U.S. House of Representatives forwarded a bill on Friday that environmental leaders warn would undermine the Environmental Protection Agency’s ability to curb air pollution and protect public health. Green groups are now urging the Senate and President Barack Obama to stand strong — and avoid a repeat of recent environmental health failures, such as the shelving of proposed ozone and greenhouse gas standards. “The Tea Party House has passed, with ease, the most radical dirty-air legislation in the history of this country,” John Walke, the clean air director at the Natural Resources Defense Council , told HuffPost. “It absolutely eviscerates the legal standards for adopting emissions limits under the Clean Air Act.” Introduced by Rep. John Sullivan (R-Okla.), the Transparency in Regulatory Analysis of Impacts on the Nation (TRAIN) Act would create a special committee to oversee the EPA’s rules and regulations, and require the agency to consider economic impacts on polluters when it sets standards concerning how much air pollution is too much. For the last 41 years, since passage of the Clean Air Act, only scientific and medical considerations have been allowed in that analysis. “This results in lying to the American people about whether the air is healthy or not,” said Walke. The TRAIN Act would also repeal or block new and pending clean air safeguards, from standards that would curb mercury emissions from power plants to limits on pollution that travels across state lines. According to EPA estimates, such measures would save 140,000 lives over the five or more years of proposed delays. Another provision would postpone new EPA regulations on gasoline — a welcome revision, according to industry groups. “The new requirements could be devastating for consumers and communities across the nation,” Misty McGowen, director of federal relations at the American Petroleum Institute, said in a statement. “American taxpayers deserve a thorough analysis of the economic and jobs impacts before EPA moves forward with its proposal.” “EPA is a rogue agency,” Rep. Lee Terry (R-Neb.) told AP. “They are producing rules in a fast and furious manner that greatly affect this nation’s ability to generate electricity. This bill just wraps three of them together and says, ‘Take a step back, do a cost analysis as the president has asked of agencies.’” As HuffPost reported last week , a recent study from the Political Economy Research Institute at the University of Massachusetts Amherst estimated a net benefit in jobs from investments made to meet clean air standards. While the proposed TRAIN Act is not expected to pass the Senate and despite the White House threatening a veto , Friday’s vote still concerns many environmental and public health advocates. “It’s not really the passage in the Senate that is a reasonable prospect. It’s the prospect of the Tea Party putting a gun to the head of this country and refusing to fund the government unless they get their way in eviscerating the Clean Air Act,” said Walke. “It is simply outrageous that in this century we have to protect a law that has been in place since 1970 and has proven itself over and over again in its health benefits and its benefits to this economy,” said Sen Barbara Boxer (D-Calif.), chairwoman of the Senate Environment and Public Works Committee, during a press conference on Wednesday. “If you can’t breathe, you can’t work.” Boxer underscored estimates from the EPA that, by 2020, the Clean Air Act would prevent 230,000 premature deaths, 2.4 million asthma attacks, 200,000 heart attacks and 5.4 million lost school days. “That is only if our laws remain on the books and are enforced,” she added, “and that’s why we must defeat this attack being waged by the House Republicans in the name of deregulation.” “We call on the U.S. Senate to stand strong and reject the TRAIN Act and its deadly impacts on public health,” a group of leading environmental groups, including the Environmental Defense Fund and the Sierra Club, wrote in a joint statement on Friday. “The House today showed they have bought the false argument that we need to choose between protecting lives and creating jobs. Now we need the Senate and the President to protect our right to breathe.”

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Bank Of America Keeping Bankruptcy An Option For Mortgage Unit

September 17, 2011

Countrywide Financial’s lawsuit losses could compel parent Bank of America Corp (BofA) (BAC.N) to put up the unit on the bankruptcy block, Bloomberg reported citing four people with knowledge of the firm’s strategy. The bankruptcy option exists because the bank maintained a separate legal identity for the subprime lender after buying it in 2008, said the people, who declined to be identified because the plans are private. However, a filing is not imminent and the executives are aware that the move could backfire and cast doubt on the largest U.S. bank’s financial strength, Bloomberg cited the people as saying. Charlotte, North Carolina-based Bank of America has lost more than $22 billion from its consumer mortgage division in the last four quarters, in large part because of loan losses and legal settlements linked to Countrywide. In August, American International Group Inc (AIG.N) sued BofA for over $10 billion, saying the bank was liable for Countrywide’s mortgage bonds as its legal successor. (Reporting by Shravya Jain in Bangalore, editing by Bernard Orr) Copyright 2011 Thomson Reuters. Click for Restrictions .

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William Lazonick: The Global Tax Dodgers: Why President Obama and Congress Lack Job Creation Plans

August 18, 2011

Cross-posted from New Deal 2.0 . As is only too well known, for the last decade US-based business corporations have been engaged in the massive offshoring of good jobs to high-growth, low-wage areas of the world, especially China and India. In general, these companies have found offshoring to be immensely profitable. For working people in the United States to gain some benefit from this globalization process, US-based corporations must repatriate some of their foreign profits to invest in high value-added job opportunities back home. Yet prevailing US tax law both encourages offshoring and discourages the repatriation of profits. In principle, US individuals and corporations are supposed to pay US taxes on their worldwide income. Through an overseas tax deferral law, however, a US company does not pay the 35 percent corporation tax on foreign earnings until it repatriates these profits to the United States. The tax law gives US corporations an added incentive not only to offshore employment but also to reinvest the earnings of offshored operations outside the United States. The deferral law has a long history, dating back to 1960 when the Eisenhower administration wanted to encourage an expanded US business presence around the world. From 1961 to 1963, President Kennedy tried, without success, to get rid of the law, arguing that it resulted in the export of US jobs and deprived the United States of tax revenues. Since then, the Democrats have tried from time to time to rescind this corporate tax privilege. In June 1976, for example, an attempt to overturn the law narrowly failed in the US Senate. As observed in the Wall Street Journal just before the Senate vote: “Closing some tax ‘loopholes’ of corporations and the rich is required for its own sake, liberals say, and to help finance full extension of last year’s tax cuts and an immediate tax break for retired persons.” (From “Senate Liberals to Renew Attempts at Cut In Tax Benefits for Corporations, the Rich,” June 28, 1976). On the day after the vote, the New York Times reported: “The defeat by a vote of 45 to 44 was another in a series for organized labor and its supporters in the Senate who charge that thousands of United States jobs are lost because multinationals are encouraged by the deferral tax advantage to build plants overseas.” (From “Tax Law Retained for Multinationals,” June 30, 1976). Fast forward to February 2004 when Sen. John Kerry, a declared candidate for the Democratic presidential nomination, issued a press release that indicated his objection to the tax deferral law in no uncertain terms: My economic policy is not to export American jobs, but to reward companies for creating and keeping good jobs in America. Unlike the Bush Administration, I want to repeal every tax break and loophole that rewards any Benedict Arnold CEO or corporation for shipping American jobs overseas. It’s free! Sign up to have the Daily Digest, a witty take on the morning’s key headlines, delivered straight to your inbox. The preferred approach of the Bush administration to inducing repatriation of foreign profits was the Homeland Investment Act as part of the American Job Creation Act of 2004. It provided a corporate tax rate of 5.25% for profits repatriated in one fiscal year, with the stipulation that these profits had to be used for investments that create jobs. The Act expressly prohibited the use of these funds to pay dividends or do stock buybacks. US corporations responded by repatriating $299 billion in profits in 2005 , compared with an average of $62 billion in 2000-2004, and a subsequent decline to $102 billion in 2006. A study of the impacts of the tax break by Dhammika Dharmapala, C. Fritz Foley, and Kristin J. Forbes found, however, that “[r]ather than being associated with increased expenditures on domestic investment or employment, repatriations were associated with significantly higher levels of payouts to shareholders, mainly taking the form of share repurchases. Estimates imply that a $1 increase in repatriations was associated with an increase in payouts to shareholders of between $0.60 and $0.92, depending on the specification.” The authors suggest that companies were able to make these distributions to shareholders without violating the terms of the repatriation legislation by using the repatriated funds “to pay for investment, hiring, or R&D that was already planned, thereby releasing [domestic] cash that had previously been allocated for these purposes to be used for payouts to shareholders.” A persistent promise in Barack Obama’s campaigns for the Senate in 2004 and the presidency in 2008 was that he would end tax breaks for corporations that ship jobs overseas. True to his word, in a speech in May 2009, President Obama declared : “It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.” In June 2009, Microsoft CEO Steve Ballmer responded that an end to the overseas tax deferral would make “U.S. jobs more expensive” and that if the Obama administration insisted on changing the tax law, Microsoft would be “better off taking lots of people and moving them out of the U.S.” In September 2009, the Obama administration met with US high-tech executives and agreed to shelve the plan to end the tax deferral. Nevertheless, in his State of the Union address on January 27, 2010, President Obama insisted that “it is time to finally slash the tax breaks for companies that ship our jobs overseas and give those tax breaks to companies that create jobs right here in the United States of America.” This tax loophole has not yet been closed. Indeed, in October 2010, John Chambers, chairman and CEO of Cisco Systems, and Safra Catz, president of Oracle, published an op-ed in the Wall Street Journal in which they sought to counter criticism in the press that US corporations were sitting on one trillion dollars in cash instead of investing in jobs in the United States. The two high-tech executives claimed that US corporations were holding the cash in question overseas and recognized that these funds “could be invested in U.S. jobs, capital assets, research and development, and more” if US corporations had an incentive to do so. “But,” they continued, “for U.S. companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world — except here.” Having deftly transformed an existing government tax concession to US corporations into a tax penalty on US corporations, Chambers and Catz noted that, among other things, repatriated profits could “provide needed stability for the equity markets because companies would expand their activity in mergers and acquisitions, and would pay dividends or buy back stock.” To lure the $1 trillion back to the United States, they proposed a 5% tax on repatriated profits that would yield the US government a quick $50 billion, which could then “be used to help put America back to work…[by giving] employers — large or small — a refundable tax credit for hiring previously unemployed workers (including recent graduates).” “Such a program,” they crowed (their plan having saved their companies 30% in taxes on foreign profits), “could help put more than two million Americans back to work at no cost to the government or American taxpayers. How’s that for a good idea?” Along with other business executives, Chambers presented his “good idea” directly to President Obama at the White House on December 15, 2010. In mid-January 2011, Treasury Secretary Tim Geithner met with a dozen CFOs who pushed for an end to taxes on foreign profits on the grounds that it would make US companies more competitive internationally. In his State of the Union address on January 25, 2011, Obama mentioned innovation 11 times, but made no mention of the repeal of the tax deferral law to help finance it. Instead, he just exhorted Congress to simply the tax system: “Get rid of loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years — without adding to our deficit.” This past July, in Congress, the “Gang of Six”, lobbied by the Business Roundtable, pushed for an end to the taxation of foreign profits . With this kowtowing to corporate interests and their constant quest for ” maximizing shareholder value ,” it is no wonder that neither Obama nor Congressional Democrats can come up with a jobs plan. Like it or not, the US economy is an autocratic corporate economy in which the CEOs of major corporations must take the lead in investing in innovation and job creation for a jobs plan to have a significant and sustainable impact. That was true in the era of Dwight D. Eisenhower and it is true in the era of Barack H. Obama. Back then, however, US corporations were still focused on investing in the US economy, and they had not yet succumbed to the debilitating ideology that corporations should be run in the name of shareholder value. Top corporate executives, not President Obama or Congress, are the ones who control the resources to create jobs in the business sector and pay the taxes to support job creation in the government sector. These business leaders have, however, taken a hike on the nation, and indeed even on the working people and taxpayers who built the very business organizations that have made them so incredibly powerful and rich.

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Ron Ashkenas: Why Leaders Play Chicken

August 10, 2011

Do you remember the childhood game of chicken ? In my neighborhood it took many shapes — all of which involved two kids pushing each other to the brink (in front of others) to see which one would give in first. The game’s most benign form involved a staring contest to see who could last the longest before blinking. In a more destructive but higher-stakes mode, two kids would run straight at each other at full speed until one (the chicken) turned away to avoid the collision. Looking back, playing chicken was foolish, immature, and sometimes dangerous. After all, it wasn’t really a game as much as a public way of showing who had the most guts, the most nerve, and the most will-power. Whoever won was then respected (or feared) as the dominant leader of the group, whether or not that person had any real leadership abilities. It would be nice to think that the game of chicken was just a childhood phenomenon. But everywhere we look these days we see adults in suits playing highly-public versions of the same game: Governors and public-employee unions have been playing chicken over services, budgets, and employment in Minnesota, Connecticut, and elsewhere; well-to-do European countries , the IMF, private banks, and the Central European Bank have been playing chicken with Greece and other over-extended countries over debt relief; the Greek government in turn has been playing chicken with its workers and citizens over austerity measures ; and most recently President Obama , House Speaker Boehner, and their respective constituents have been playing chicken in regard to the U.S. borrowing limit . All of these “chicken games” share some common characteristics: They center around critical issues that must be resolved by a certain time limit; the principal players have strongly held but very different views about what needs to be done; and neither side wants to compromise. The result is a stare down to see who blinks first , and who becomes the alpha-dog. When problems are solved in this manner, the outcome is rarely optimal. Without a spirit of compromise and willingness to engage in collaborative dialogue, it is difficult for leaders and their teams to explore the full range of options and to be creative about alternative approaches. So instead of innovative solutions, we end up with negotiated bargains that often just defer many of the tough disagreements until some unidentified time in the future. In other words, don’t expect the various budgeting and borrowing problems to go away in either the U.S. or Europe; most likely they will just be put off until the next round of “the game.” What’s even more disturbing about games of chicken is that they tend to polarize competing groups and therefore diminish leadership. The longer the game goes on, the more people harden their positions and blame the other side for not being willing to sacrifice. And when a “compromise” is finally struck, both sides usually feel that their leader was too weak and should not have given up so much. So no one actually “wins” in the short-term; and no incentive for improvement in the long-term is created. While it’s easy to criticize our political leaders for their lack of imagination and flexibility, the reality is that we all play chicken — with customers or suppliers, other departments, colleagues, and even people in our personal lives. Most of us have strong beliefs or views about how things should be done. When others strongly disagree, a stare down is a perfectly normal human reaction. We all want the other person to blink. The challenge is to get beyond the stare down; engage in open and creative problem solving; and not let the game of chicken continue indefinitely. If we learned how to do this more often and more effectively in our professional and personal lives, perhaps our political leaders would begin to understand that the real chicken is the one who doesn’t blink. What are your ideas for avoiding or more quickly ending games of chicken, both in organizations and in government? Cross-Posted from Harvard Business Online

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David Macaray: Friends Without Benefits: Obama’s Betrayal of Labor

August 9, 2011

It’s now a bit embarrassing to admit, but organized labor actually had high hopes for Barack Obama. And it wasn’t only because of the money. It wasn’t only because labor, in 2008, had contributed a reported $400 million to the Democratic Party and naturally expected, quid pro quo , to get something meaningful in return. No, it was more than the money. Organized labor honestly thought this exciting, liberal hipster from Chicago was the answer. But unfortunately, the man who said , “Politics didn’t lead me to working folks; working folks led me to politics,” hasn’t done much to help working folks. While Obama freely acknowledges the legitimacy of organized labor, he has never demonstrated a genuine belief in the righteousness of the labor movement — and in labor’s view, a belief in the moral primacy of working people is not only a logical starting point, it’s a necessary prerequisite. Alas, the only thing Obama has demonstrated is that he can’t be trusted. Take the EFCA (Employee Free Choice Act), for instance. This legislation would have given workers the right to join a union without having to navigate the treacherous waters of management hate-campaigns or long, drawn-out NLRB elections. With the EFCA they could join simply by signing cards (“card check”). If a majority said they wished to belong to a union, presto! — they were union members — which is more or less how they do it in Europe and Canada. Only in these United States is joining a union nearly as complicated as becoming a citizen. In addition to the simple majority vote there were two other key provisions included in the bill: (1) increased penalties for management personnel found guilty of discriminating against employees engaged in union activism, and (2) the stipulation that if agreement on a contract couldn’t be reached within 120 days, binding arbitration would set the terms. What most people don’t realize is that even after a successful union certification drive, things don’t automatically proceed smoothly. Even after a union legally wins the right to represent the workers, many companies refuse to take “yes” for an answer. Seeking to sabotage the collective bargaining process, management does everything it can to avoid reaching agreement on a contract. Some inaugural bargains have been known to limp along for as long as a year or more, with no resolution. It’s management’s hope that these stalling tactics will spook or frustrate the members to the point where they reconsider their union vote, and request to decertify. Odd as that sounds, it happens. A newly formed union membership can be very skittish. The 120-day deadline would prevent that. While Obama did acknowledge his nominal support of EFCA, he did it flatly, mechanically, coming off more like an actuary than a champion of a cause. Instead of going on national television and presenting the EFCA inspirationally, introducing it as a monument to worker empowerment, Obama handed the baton to chief of staff Rahm Emanuel and told him to run with it. And from the moment Emanuel got involved it became politics as usual. Not only did Emanuel instantly begin offering concessions to Republicans (thus exposing the White House’s lack of commitment), he alienated labor by condescending to it, reminding the unions that if they didn’t appreciate what the Democrats were doing for them they could try their luck with the Republicans. Predictably, with Obama conspicuously silent, and no one to lead the charge, the legislation, even in its weakened, watered-down form, died a natural death. By the time Senator Feinstein (D-CA) got around to announcing she had changed her mind and wouldn’t be voting for it, the bill was already as good as dead. Organized labor was furious. The EFCA was viewed by many as the most significant labor initiative since the Taft-Hartley Act. If Obama had only done what he promised — had he set the national agenda and made EFCA part of the public debate — this legislation could have grown legs. Instead, Obama’s actions clearly indicated that it mattered little to him, that he was merely going through the motions, largely to placate labor. (Sorry, boys….at least we tried..) The same betrayal was evident in the president’s shocking non-response to the attacks on America’s public school teachers being made by anti-union forces and free-market fundamentalists. Although virtually every study ever conducted by reputable educational professionals has shown that the defects plaguing our school system are not the fault of the teachers, Obama remained mute. To his utter shame, Obama never once contradicted these slanderous, trumped-up accusations, which he could have easily refuted simply by citing the relevant statistics — statistics he had access to. Instead, Obama sought to curry favor with Republicans and Independents by appointing the anti-union, platitude-spouting bureaucrat Arne Duncan (a former Chicago crony) Secretary of Education. The only “studies” that blame teachers are the phony ones, the ones sponsored by Republican business groups whose goal is to replace public schools with private charters, because there’s money to be made. They want to privatize everything — they want private police forces, armies, schools, beaches, toll roads, national parks, pay-as-you-go libraries, you name it. Were it not for the outrage it would cause among evangelicals, they would privatize the churches, franchise them like multiplex theaters, and charge admission. Accordingly, their first order of business was to demonize organized labor, claiming that our public schools were failing because so many “bad teachers” were being protected by the teachers’ union. And without anyone in authority to step up and refute those accusations — with the President of the United States unwilling to set the record straight — the lies morphed into sound-bites, and these sound-bites became part of the national consciousness. Yet if anyone had taken two minutes to examine the statistics, they would have found that non-union teachers across the country get fired at about the same rate as union teachers. It’s a fact. Also, they would have found that many of the states with a preponderance of union teachers (Oregon, Wisconsin, South Dakota, Connecticut, Vermont, Washington, Minnesota, Maine, et al) happen to have excellent public schools, some of the finest in the country. Oregon and Washington’s public school teachers are 100% unionized. Wisconsin and Connecticut’s are 98% unionized. In other words, the knock against public school teachers and the unions that represent them was all part of a well-planned, well-orchestrated smear campaign. By refusing to defend the public schools against these subversive attacks, Obama contributed to what we see today as an assault not only on school teachers, but on all our public sector unions. If President Obama had been even half the friend to labor that Candidate Obama was, America’s unions wouldn’t be in the defensive position they are today. It’s been a dreadful first term. David Macaray, a Los Angeles playwright and author ( It’s Never Been Easy: Essays on Modern Labor ), was a former union rep. He can be reached at dmacaray@earthlink.net.

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Alison Craiglow Hockenberry: Getting Real on Job Creation

August 5, 2011

We don’t need more jobs. It’s true we need to “add jobs” to the economy. But more jobs is not the same as new jobs. We need new jobs. Real job creation is about new jobs in expanding markets that provide products and services that are growing in demand. But all too often, increasing employment means propping up failing industries, supporting artificial labor markets or giving people a paycheck for making and doing things the demand side doesn’t need them to do. Maintaining a bloated U.S. auto industry to propel the waning American habit of buying a new car every three years is not a plan for the long haul. Neither is training a small group of artisans in the developing world to make tchotchkes out of recycled materials and sell them in impossible-to-find online boutiques. These two examples, on opposite ends of the spectrum, highlight the same problem: a lack of innovation in the creation of quality, sustainable jobs. What the unemployed and underemployed all over the world need — and what will benefit us all — are sustainable jobs, making useful stuff that can be easily sold to people who want to buy it. Hot Bread Kitchen is doing that. They have connected a skilled but underemployed and low-wage pool of potential workers with a growing demand for variety in a product pretty much everyone buys: bread. The demand for baked goods is high and will remain so in virtually every culture, at every economic level, in every community. What’s new about Hot Bread Kitchen is that it provides new kinds of bread to meet the expanding tastes of consumers — by employing immigrant women who already know how to bake the unique breads of their home countries. The production skills are there, and the demand is there. This is a highly efficient, market-based solution that has put the products of immigrant women into some of New York City’s largest and most successful retailers. “What Hot Bread Kitchen is doing,” explained founder Jessamyn Rodriguez , “is capturing the skills that women already have when they come [to the United States], and helping them parlay those skills into better jobs — in the baking industry and in food manufacturing. “And in a large number of cases, we help women launch businesses in food manufacturing, building household assets so that families can live better.” All over the world, matching market need to qualified people has been a hard nut to crack. But Tiago Dalvi is doing it, too. His Solidarium in Brazil has put local producers to work in a way that is much more viable and sustainable than the typical artisan enterprise many in the United States associate with developing world job creation. “Before we launch a product, we make sure we really understand market demand — what the retailer and, more importantly, the consumer needs,” Dalvi said. And by retailer, he meant none other than Walmart. Solidarium has its own section on Walmart’s Brazil website, with about 400 items for sale. Solidarum thoroughly understands its customer base – professionals, homemakers, and college students – and only produces products these shoppers need. Solidarium has done essentially the opposite of what artisan-training programs often do: It has brought the demand side to the place where experienced workers are. And they are everywhere in Brazil, from large cities to small remote villages. The trouble is, despite their skill and hard work, their offerings are not aligned with market demands, and so they remain underemployed and frustrated. “The jobs available to them are low-profile jobs with minimal qualifications — people aren’t happy in these jobs,” Dalvi explained. But that has changed for those who have become part of Solidarium’s network of producers. “When they’re producing something and they see it in the major retailer in the world, it motivates them.” In China, similar initiatives are improving the efficiency of the job marketplace by putting people to work in sustainable careers where there were none before. Zuodao is an online collaborative platform that connects businesses and organizations with young people and underserved populations that have spare time to work on tasks such as data entry, translation and inquiry processing. Most who find work are living in small and shrinking cities, helping support communities that are at risk of becoming permanently economically depressed, and stemming the great migration to overcrowded, urban centers. Zuodao uses powerful technology to break down a company’s work needs into many small “mini-tasks,” then distributes them to hundreds of workers whose skills match the task. It uses human power to identify qualified job-seekers (mostly looking for part-time and flexible hours) and to ensure quality control for the finished work. Co-founders Eric Liu and Samuel Li have written about some of the shortcomings of the Chinese job market they want to address: “We have observed, in disbelief, hardworking people being arbitrarily deprived of opportunities due to social bias, coworkers spending extraordinary amounts of energy engaged in office politics, women being discriminated against, and job promotions often based on favors rather than performance. Inexperienced workers become poorly motivated and unproductive at work. “Furthermore, many young, white-collar workers receive little or no respect; they suffer through lengthy and extremely congested commutes, have no choice in what they do, and are susceptible to abuse in the absence of strong labor law enforcement. Many of them are also paid barely enough to cover their living costs. “We realized that these problems can be alleviated or even eliminated if we can create an online work ‘utopia’ based upon meritocracy and self-improvement (and we know we can).” Zuodao’s cloud-based platform could do just that, and could be easily scaled and transported to many places around the world. These examples — and hundreds of other initiatives aimed at putting more people to work in better, lasting new jobs — are a glimpse into a more efficient, healthier job economy. Hot Bread Kitchen, Zuodao and Solidarium are among the 15 stand-out semi-finalists currently vying for the opportunity to win $50,000 to take their innovations to the next level. Online voters in the eBay Foundation and Ashoka Changemakers competition can choose the ones they think are the best ideas for Powering Economic Opportunity: Create a World that Works . “We’re part of the social business movement,” Dalvi said. “I feel that we have a responsibility to succeed, to become a case to inspire young people to become part of this world. We need not only generate income and inclusion, but also inspire people.”

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Dow Jones Barely Avoids Longest Losing Streak Since The 1970s

August 3, 2011

NEW YORK — Stock indexes came back from deep losses in the morning and ended Wednesday with small gains. The Dow Jones industrial average avoided its longest losing streak since Jimmy Carter was president. The Dow rose 30 points – after being down 166 – to break an eight-day losing streak. Nine days would have been the longest since February 1978. The S&P 500 index rose 6 points and broke a seven-day streak. Markets have fallen recently because investors are becoming increasingly worried about the U.S. economy. Shortly after the market opened, the Institute of Supply Management said its index measuring the service sector of the U.S. economy grew in July at the weakest pace in 17 months. Economists had expected a slight increase. The report was the latest sign over the last week that the economy may be slowing. Consumer cut their spending in June for the first time in nearly two years; manufacturing slowed, and the government said that in the first half of the year the economy grew at its slowest pace since the recession ended in June 2009. “There has been too much at the same time for investors to hang in there and you’re starting to see some element of panic finally showing up,” said Andrew Goldberg, U.S. market strategist at JP Morgan Funds. The Dow, the Standard & Poor’s 500 index and Nasdaq were down more than 1 percent earlier in the day, but edged higher throughout the afternoon. The Dow Jones industrial average finished with a gain of 0.3 percent, to 11,896.44. The S&P 500 index rose 6.29, or 0.5 percent, to 1,260.34. The S&P had been down for seven straight days through Tuesday. It is up 0.2 percent for the year after being down 0.3 for the year on Tuesday. The Nasdaq composite added 23.83, or 0.9 percent, to 2,693.07. The broad S&P 500 index_ the index followed by most professional money managers and U.S. mutual funds – rose after it hit a low for the year of 1,234. Some investors saw it as an opportunity to buy the S&P 500 index. As a whole, companies in the index are expected to have record profits this year. Some of those gains might also be due to automatic buying triggered when an index reaches a certain level. Many traders use computer programs that buy or sell stocks once they break through their long-term averages. “It seems like the early money was based on fear and the market climbed back as computer-program trading took over,” said Mark Lamkin, the head of Lamkin Wealth Management in Louisville, Kentucky. Lamkin said the stock market was in a “tug of war” between strong corporate earnings and a “horrible economic backdrop.” Coca-Cola led the Dow average higher with a gain of nearly 2 percent. Companies that depend most on an expanding economy in order to make profits had the steepest losses. Caterpillar Inc. fell 0.9 percent, the most of the 30 stocks in the Dow average, followed closely by Chevron Corp. and Boeing. Along with the concerns about the U.S. economy, investors were also unnerved by a surge in bond yields to 14-year highs for Italy and Spain. High bond yields typically indicate that investors believe there is a greater chance that a country or corporation will be unable to make interest payments. “We’ve been so focused inwardly because of the debt ceiling debate that we’ve ignored Europe over the last couple of weeks,” said J.J. Kinahan, chief options strategist at T.D. Ameritrade. “We have problems, but if Italy falls the euro zone doesn’t look sustainable.” Italy and Spain are the third and fourth largest economies in Europe, respectively. The yield on the 10-year Treasury note fell to another low for the year of 2.56 percent, from 2.62 percent Tuesday, as investors moved money into assets that hold up better during economic downturns. Gold, another traditional safe haven, rose 1 percent to $1,666 an ounce. Several large U.S. companies reported earnings before the market opened. MasterCard rose nearly 14 percent after the company beat analysts’ estimates. Clorox fell 2 percent after the company said higher commodity costs were eating into its income. And CBS gained 1.6 percent after it said a deal with Netflix Inc. had lifted profits. Payroll processor ADP said private companies added 114,000 jobs last month. The number was within Wall Street’s forecasts, but still well below the rate of growth that signifies a healthy jobs market. ADP’s employment figures do not always predict the government’s broader employment report, which will be released Friday morning. Last month, for example, ADP reported that private employers added 157,000 jobs in June. The government later said that private companies added just 57,000 jobs. Economists expect that 90,000 were created in the U.S. last month. That’s fewer than the 125,000 jobs per month that are needed just to keep up with population growth. At least 250,000 jobs need to be created every month to substantially bring down the unemployment rate. Analysts predict that the unemployment rate was 9.2 percent in July, unchanged from the month before.

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Joseph J. Thorndike: Why Liberals Should Learn to Love the Debt Debate

August 2, 2011

The debt limit crisis is the best thing to happen to liberalism in 30 years. It’s a manufactured crisis, of course. Republicans conjured it out of thin air, convinced that it will force a radical — and permanent — reduction in the size of government. But they’re wrong. Far from starving the beast, the debt limit debate is just as likely to feed it. By rescuing taxes from the political wilderness, it has given liberals a chance to rebuild the fiscal foundation of progressive government. A Fake Crisis As any number of levelheaded commentators have pointed out, the debt ceiling is all about the past, not the future. It’s a function of spending and taxing decisions made years ago. (And made by many of the same lawmakers decrying those decisions today.) By extension, raising the debt limit is really a question of collective accountability. In a democracy, you take responsibility for your government’s decisions, even if you didn’t like them when they were made and you like them even less today. That’s the deal — you don’t get to pick and choose. Of course, it’s possible to transform the debt ceiling into something more than simply a procedural hurdle. If you’re suitably rash, you can make it about the future as well as the past. Over the past few months, Republicans in the House have shown us how it’s done: Start walking the nation toward the edge of the abyss and threaten to keep on going. A Real Crisis But if the short-term crisis over a debt ceiling is fake, the long-term crisis over debt itself is very real. As William Gale and Benjamin Harris asserted in a recent paper for the Tax Policy Center , “The United States faces a large medium-term federal budget deficit and an unsustainable long-term fiscal gap. Left unattended, these shortfalls will hobble and eventually cripple the economy.” Those warnings have been around for years, but politicians have shown scant interest in making the hard decisions that would actually stave off disaster. Politics-as-usual doesn’t make room for much in the way of sacrifice. But the artificial crisis of the debt ceiling debate has recast politics, spurring change in the face of intractable inertia. And in that sense, it’s been spectacularly effective. By insisting that payment of past debts be tied to future spending, the House GOP has managed to put entitlements on the table. That’s no small feat. But the debt limit crisis has also put taxes on the table. Sure, Republicans are toeing the Tea Party line against any sort of revenue increase. That hasn’t changed, and it isn’t likely to change soon. Even their spin on the pending compromise seeks to minimize the likelihood of a tax hike. But for the first time in many years, Democrats are talking seriously — and even proudly — about the need for more tax revenue. In fact, the transformation is even more profound, challenging the antitax politics that have dominated national politics since 1980. Fake Tax Policy Now let’s be clear: The specific tax proposals coming from the White House are less than serious. Years ago, then-candidate Barack Obama staked out his position on soaking the rich, and as president, he’s been sticking to it. His speech July 25 on the debt ceiling impasse was typical: Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don’t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don’t need and didn’t ask for? Jet owners, oil companies, Wall Street, and himself: These are the usual targets Obama offers up for tax increases. If you’re serious about solving the nation’s long-term fiscal problems, these tax reforms are a sideshow. Real Tax Policy But they’re a necessary sideshow, at least for anyone committed to serious fiscal reform. Ultimately, solving the long-term fiscal crisis will require both spending cuts and tax increases. Both elements will be broadly regressive, sparing the rich and soaking the poor. Lower spending will squeeze programs that principally benefit the non-wealthy, including Medicare and Social Security. Meanwhile, tax increases — at least the kind necessary to make a real dent in the fiscal gap — will fall on everyone, not just the rich. The regressive nature of meaningful fiscal reform — including the likely introduction of a broad-based consumption tax — militates for compensatory policy. In particular, it underscores the need for higher taxes on the rich. If political leaders are going to ask poor and middle-class Americans for sacrifice, they have an obligation to make sure that rich Americans share the pain. Taxing corporate jets, of course, won’t do that. To right the scales of tax justice, more substantive progressive reform is vital. In particular, lawmakers should eliminate the preferential treatment of capital gains (which would, of course, solve the carried interest issue, too). There aren’t many Democrats willing to make that argument — at least not yet. But the sideshow reforms currently in play still represent progress for liberals. By insisting that taxes are a necessary part of any balanced approach, they are building the foundation for a broader program of progressive tax reform. Small Steps Democrats have a long way to go. They are nowhere near breaking the bad tax news to lower- and middle-income Americans. But they finally have a president who is trying to restore the value proposition that lies at the heart of progressive governance. “We all want a government that lives within its means,” Obama said last week. “But there are still things we need to pay for as a country — things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.” And there it is: the hoary “price of civilization” argument that Oliver Wendell Holmes made famous and American voters made reality. With taxes, we do buy civilization. But Democrats have been afraid to say so for decades. Finally, they may be starting to speak up.

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Robert Reich: Random Paid

August 1, 2011

Anyone who characterizes the deal between the president, Democratic, and Republican leaders as a victory for the American people over partisanship understands neither economics nor politics. The deal does not raise taxes on America’s wealthy and most fortunate — who are now taking home a larger share of total income and wealth, and whose tax rates are already lower than they have been in eighty years. Yet it puts the nation’s most important safety nets and public investments on the chopping block. It also hobbles the capacity of the government to respond to the jobs and growth crisis. Added to the cuts already underway by state and local governments, the deal’s spending cuts increase the odds of a double-dip recession. And the deal strengthens the political hand of the radical right. Yes, the deal is preferable to the unfolding economic catastrophe of a default on the debt of the U.S. government. The outrage and the shame is it has come to this choice. More than a year ago, the president could have conditioned his agreement to extend the Bush tax cuts beyond 2010 on Republicans’ agreement not to link a vote on the debt ceiling to the budget deficit. But he did not. Many months ago, when Republicans first demanded spending cuts and no tax increases as a condition for raising the debt ceiling, the president could have blown their cover. He could have shown the American people why this demand had nothing to do with deficit reduction but everything to do with the GOP’s ideological fixation on shrinking the size of the government — thereby imperiling Medicare, Social Security, education, infrastructure, and everything else Americans depend on. But he did not. And through it all the president could have explained to Americans that the biggest economic challenge we face is restoring jobs and wages and economic growth, that spending cuts in the next few years will slow the economy even further, and therefore that the Republicans’ demands threaten us all. Again, he did not. The radical right has now won a huge tactical and strategic victory. Democrats and the White House have proven they have little by way of tactics or strategy. By putting Medicare and Social Security on the block, they have made it more difficult for Democrats in the upcoming 2012 election cycle to blame Republicans for doing so. By embracing deficit reduction as their apparent goal — claiming only that they’d seek to do it differently than the GOP — Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity. The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is. And the largest threat to our democracy is the emergence of a radical right capable of getting most of the ransom it demands. 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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Paul A. London: Economic History Holds the Answers

July 31, 2011

It took the United States 10 years to recover from the Crash that ended the stock speculation of the late 1920s. It may take longer to emerge from the aftermath of the housing crash of 2007 because today’s politics makes it impossible to imagine a massive spending program like the one that finally ended the Depression. Yes, World War II in its economic dimension was a stimulus program plain and simple. The great economic surge in the U.S. between 1940 and 1945 came from producing 300,000 military aircraft, 2,700 Liberty ships, aircraft carriers, battleships, 88,000 tanks and self-propelled guns, 2.4 million trucks, millions of bombs and billions of bullets, and more billions of dollars worth of food and clothing to supply 13 million American soldiers. It was largely financed by purchases of government bonds by the Federal Reserve, America’s way of printing money. What the Nation got for this was victory, full employment, and a boost to the economy that lasted well into the 1960s. Today’s “Great Recession,” painful as it, is not as dreadful as the Great Depression. Three years after the Crash of 1929 unemployment stood at 24 percent. Frederick Lewis Allen in Since Yesterday , his classic book on the lost decade of the 1930s, conveys the utter confusion of political and business leaders in the face of economic catastrophe. The Crash “blew into thin air” $30 billion of wealth, a share of the Nation’s wealth in those days far larger than the share blown into thin air by the collapse of housing prices since 2007, and nobody knew what to do about it. Allen’s book is no panegyric to Franklin Roosevelt, the New Deal or the Democratic Party. He is sympathetic to Herbert Hoover, who he sees as the unlucky Republican president who presided over a debacle that no one understood. Hoover worked himself to the bone to find a solution, and suffered because he could not do so. He was no hard-hearted reactionary. He cared about people, having skillfully managed vast humanitarian efforts in Europe after World War I, and along the Mississippi after the great flood of 1927. He tried all the conventional economic cures that the Republican Party still believes in today. He got Congress to pass “a reduction in individual and corporate income taxes.” He cut public spending wherever he could. The government maintained a budget surplus well into 1932. He and the “Big Men” of business urged “confidence.” They told the public over and over again in 1929, 1930, 1931 and 1932 that everything would be all right if the government would just let the private economy alone. But the Depression deepened until in 1933 Hoover and the business titans admitted that they had no answers. The disappearance of all that speculative wealth was not followed automatically by a recovery. Nor was the disaster amenable to small measures and happy talk, and that was all the Republicans had in their repertoire. It should be obvious on the basis of this history that the hangover from the vast destruction of housing wealth since 2007 will not be cured by a repeat of the policies that failed Hoover, and the cheery hope that business investment is waiting in the wings for a friendlier administration. The United States needs the economic equivalent of World War II to put people back to work. A large infrastructure program financed by Federal Reserve — a QE3 that encourages real investment instead of just pushing down interest rates and filling the coffers of banks — is what I think we ought to be discussing. The Fed bought government bonds in vast quantities from 1941 through 1945 to finance the war. It would be no different if the Fed now purchased a few trillion dollars worth of new infrastructure bonds collateralized in most cases — as World War II bonds were not — by a flow of user fees. And this time Americans would get assets far more useful and durable than tanks, war planes, Liberty ships, and uniforms The pity is that the Republican Party ignores the economic history captured in Lewis’s readable classic. It wants to bet the country’s future on policies that Hoover himself knew had failed. This is the definition of reaction and it is very dangerous as Allen sensed as he watched Hitler rise to power in Germany because he promised action.

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Voters Play Role In Debt Ceiling Standoff

July 31, 2011

WASHINGTON — Dear voter: Want to know why Democrats and Republicans in Congress find it so hard to work together to solve tough problems like the debt ceiling, health care and Social Security? Look in the mirror. Americans gripe about cowardly, self-serving politicians, and Congress doubtlessly has its feckless moments and members. But voters are quick to overlook their own role in legislative impasses that keep the nation from resolving big, obvious, festering problems such as immigration, the long-term stability of Medicare, and now, the debt ceiling. Here’s the truth: The overwhelming majority of senators and House members do what their constituents want them to do. Or, more to the point, they respond to people in their districts who bother to vote. Nothing is dearer to politicians than re-election, and most have a keen sense of when they are straying into dangerous waters. For a growing number of senators and representatives, the only risk is in their party’s primary, not in the general election. Most voters, and many news outlets, ignore primaries. That gives control to a relative handful of motivated, hard-core liberals (in Democratic contests) and full-bore conservatives (in GOP primaries). In politically balanced districts, a hard-right or hard-left nominee may have trouble in the general election, when many independent and centrist voters turn out. But many House districts today aren’t balanced, thanks largely to legislative gerrymandering and Americans’ inclination to live and work near people who share their views and values. The result is districts so solidly conservative that no GOP nominee can possibly lose, or so firmly liberal that any Democratic nominee is certain to win. In these districts, the primary is the whole ball game. Republican lawmakers are under constant pressure to drift to the right, to make sure no fire-breathing conservative outflanks them in a light-turnout primary dominated by ideologues. The same goes for Democrats on the left. So who turns up on Capitol Hill for freshman orientation? Democrats and Republicans who can barely comprehend each other’s political viewpoints, let alone embrace them enough to pursue a possible compromise on big issues. But what if a Republican and Democrat do decide to meet halfway in hopes of finding, say, a path to shore up Social Security for decades to come. What can they expect? In some states and districts, they can expect to be drummed out of their party for the crime of engaging with “the enemy.” That’s what happened last year to Bob Bennett of Utah, a mainstream conservative Republican senator. A relatively small number of conservative activists, led by tea partyers, bounced him from the ticket at a GOP convention. They taunted Bennett with chants of “TARP, TARP.” He had voted for the bipartisan bank bailout legislation pushed by Republican President George W. Bush. The Senate’s GOP leaders also voted for the bill. But it was an unacceptable compromise in the eyes of Utah Republicans picking their Senate nominee. In Alaska, GOP primary voters also kicked Sen. Lisa Murkowski off their ballot. She barely saved her seat with a scrappy write-in candidacy. Murkowski supported the bank bailout and, admittedly, is more moderate than the average congressional Republican. But her improbable write-in victory proved she is popular with Alaskans in general, even if her own party rejected her in the primary. Tea party leaders spell out a warning in their periodic Washington rallies. “The message is that we’re watching, and we want you to vote based on our core values,” Mark Meckler, a co-founder of the Tea Party Patriots, said at one such event. When Democratic leaders were struggling earlier this year to strike a budget deal and avert a government shutdown, Phil Kerpen of the conservative group Americans for Prosperity said sharply, “No Republican better help them.” The crowd cheered loudly. Such threats are mainly aimed at Republicans for now, largely because of the tea party’s rapid rise. But Democratic lawmakers also know liberal discontent might undo them if they stray too far to the center. “It’s astounding how often some Democratic leaders sacrifice principles when critical issues are at stake,” said a writer for the liberal AmericaBlog. The column rebuked Sen. Dick Durbin, D-Ill., for working with the bipartisan “Gang of Six” on a debt-reduction plan. A McClatchy-Marist poll this year found that 71 percent of registered voters want political leaders in Washington to compromise to get things done. If those voters skip key primaries, however, they may have little say in the matter. Political enthusiasts, whether they wear peace signs or “Don’t Tread On Me” T-shirts, will determine who gets elected in many districts before a wide swath of Americans even notice it’s an election year. Except for a recently appointed senator from Nevada, every member of Congress got there the same way: American voters elected them. People may bristle at the notion that we get the government we deserve. But there’s no denying we get the government we elect.

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Harry Reid: GOP Leaders ‘Still Refuse To Negotiate In Good Faith’

July 30, 2011

Speaking on the Senate floor early Saturday evening, Senate Majority Leader Harry Reid dismissed a suggestion made just hours earlier by Senate Minority Leader Mitch McConnell that Democrats and Republicans were inching closer to striking a deal to raise the deficit limit. “It’s fair to say that the engagement there is not in any meaningful way,” Reid said. “Republican leaders still refuse to negotiate in good faith.” Reid said the notion both sides are making progress toward reaching an agreement is “not true.” “The Republican Leader says he’s engaged,” Reid said. “Fortunately, members of his caucus, at least as far as I’m concerned, are more engaged than he is. There are meaningful talks going on with some of his members with my senators.” Reid continued, “While the Republican leader is holding meaningless press conferences, his members are reaching out to me and other members, as I’ve just indicated. They’re coming forward with thoughtful ideas to try to move the process forward. I welcome their ideas and ask all members to continue these discussions.” He suggested that delaying tactics being exercised by his Republican colleagues are preventing a measure from advancing in the upper congressional chamber to raise the debt ceiling. The Democratic leader spelled out the word f-i-l-i-b-u-s-t-e-r to make his case. “You can put lipstick on it, a nice suit, even a skirt on it sometimes, it’s still a filibuster,” Reid said in comments directed at McConnell. The Nevada Democrat suggested that it’d be “unconscionable” for Republicans to use the maneuver to prevent a bill from passing to avert default. McConnell signaled he’s more optimistic about the prospect lawmakers in Washington will reach an agreement while speaking on the Senate floor. He said, however, that “the only way that can be done” is through talks with President Barack Obama. Below, video of Reid’s remarks on the Senate floor. Click here for more on the latest developments to unfold in the debt ceiling debate. WATCH: Visit msnbc.com for breaking news , world news , and news about the economy

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Answering The Big What-If Questions Of Debt Default

July 30, 2011

(Lauren Young) – The debt negotiations are getting down to the wire. Republican and Democratic lawmakers are scrambling to broker a deal to raise the country’s $14.3 trillion debt ceiling before Tuesday, when the Treasury will no longer be able to borrow funds to meet all of its obligations. It all means the United States could face the possibility of defaulting on its debt and losing its prized triple-A credit rating. What does that mean for consumers? Here are some answers we compiled from Reuters Money experts: 1. Should I be worried that I won’t receive my Social Security benefit in August? Perhaps not immediately. Social Security’s coffers should be full enough to make the August payments. And cash flow should be positive — the system generates more from current revenue than it spends on benefits and its own administrative costs. The main source of revenue is the payroll tax paid by employers and employees (the Federal Insurance Contributions Act, or FICA); other income sources include interest payments on bonds in the Social Security Trust Fund (SSTF) and taxes paid by higher-income beneficiaries. Last year, revenue totaled $781 billion, while outgo was $713 billion. And even if funds aren’t on hand in a given week to pay benefits for timing reasons, the SSTF can redeem bonds to make up the shortfall. But here’s the rub: the bonds are obligations of the U.S. Treasury back to the SSTF. A government debt default would put us in uncharted waters, and it’s entirely possible that the administration could refuse to redeem bonds or divert payroll tax receipts to meet other pressing obligations. Social Security advocates don’t agree on what might happen. “(Obama’s statement) was a foolish bluff,” says Eric Kingson, co-director of the Strengthen Social Security coalition. “There’s no excuse for checks not being issued, and the White House’s willingness to use the threat is symptomatic of their lack of regard for the institution. Their willingness to use it as a negotiating chip is unfortunate.” But Max Richtman, acting chief executive officer of the National Committee to Preserve Social Security and Medicare, worries that the government might decide not to fund the interest on Social Security’s bonds, which would leave the program short of funds. “We really don’t know — it’s completely uncharted territory. Social Security is cash flow-positive if you count interest on the bonds. But which obligations will the government put at top of list of priorities, and who decides that? Is it paying the interest on those bonds? Will it be paying the military? There’s so much uncertainty as to who gets paid, how much and when.” 2. What if I just filed for benefits, or plan to file next month? Could I lose my benefits in the event of a government default? No, but processing of your application could be delayed if the Social Security Administration is forced to lay off employees or shut down in the event of a government funding crisis. 3. Will interest rates on mortgages, car loans, student loans and credit cards rise? Yes. Like any average Joe or Jane who misses a credit card payment, the United States will be socked with higher borrowing costs if it defaults on its debt. If the country loses its coveted triple-A rating, which is expected to happen, the cost to service its debt will probably rise. And that will have a significant ripple effect. Greg McBride, senior financial analyst at Bankrate.com, says either a ratings downgrade or debt default would result in higher borrowing rates for consumers and businesses alike. “More of a concern is that a prolonged default could cause credit markets to freeze altogether, and we will have real problems,” he says. It’s impossible to speculate how much rates will go up, he says. “There are a lot of variables at play. The downgrade will lead to a more modest increase in rates. However, that increase would be permanent.” Folks who have variable debt such as a credit card balance or adjustable-rate mortgage can take a little comfort in this: “You are going to see higher interest rates eventually, anyway, because rates are so low,” McBride says. Alas, consumers won’t see higher rates on saving products, such as certificates of deposit or money market accounts. “Those products won’t improve until loan demand picks up; any downgrade or default will only hold back loan demand,” McBride says. 4. What’s the outlook for the U.S. dollar? Fear that the United States will lose its AAA credit rating or even default on its debt is driving foreigners away from U.S. assets, and the dollar is taking the biggest hit. Recent trading in currency markets indicates overseas investors have been voting with their feet. They have also been giving short shrift to recent Treasury auctions. Traders say Asian central banks, among the world’s biggest dollar holders, have been steady buyers of alternatives to the dollar such as the Singapore dollar and other Asian currencies as well as the Canadian, Australian and New Zealand dollars. “Foreigners are at the vanguard of the drop in the dollar,” says Dan Dorrow, head of research at Faros Trading, a currency broker/dealer in Stamford, Connecticut. “I don’t think anyone expects a catastrophic U.S. default. But a downgrade will make them more aggressive in moving away from the dollar.” If global investors lose faith in the dollar, that could weaken its dominant position in global trade and its role as the world’s reserve currency. Over time, diminished demand for dollars would make it harder for the United States to finance itself at low interest rates. The bottom line? It will be more expensive to travel overseas, drink French wine or buy Japanese cars. 5. What’s the outlook for U.S. Treasuries? The Treasury market has held up better than the dollar, but bonds haven’t been let off the hook entirely. Foreigners, who hold nearly half of outstanding Treasury debt, have been less active buyers at auctions this month. Still, the 10-year yield has held below three percent for most of July, less than a percentage point from its multi-decade low. That’s partly because domestic investors have picked up the slack in recent debt sales, suggesting they see no alternative to U.S. government bonds even in the face of a default or possible downgrade. Indeed, analysts say even with a downgrade, Treasuries would remain the benchmark for world fixed income markets, as Fitch Ratings noted this week. Terry Belton, global head of fixed income strategy at JPMorgan Chase, said a downgrade would probably add just five to 10 basis points to yields in the short run. But it could cost the U.S. government up to 70 basis points, or about $100 billion, in added borrowing costs over time as foreigners look to invest their money elsewhere. 6. Will we still pay our soldiers? While a group of Congressmen pushed forward a bill this week to ensure that the active military servicemen still get paid in the case of default, there’s no firm plan yet. The White House hasn’t made any assurances and either has the Treasury Department. Some financial organizations that service military clients, like USAA and the Andrews Federal Credit Union, have stepped up to say that they will advance pay if there is a default. “Rest assured, USAA has continued to manage its financial resources to meet our commitments to members in their moments of need,” says CEO Joe Robles in a statement. What will a default actually mean for military members and their families? “The bigger concern has got to be interest rates,” says Sarah Gilbert, the wife of an army reservist and a personal finance writer who was formerly an investment banker. She says military families have been through pay stoppages before – during the last government shut-down, they actually halted all military pay a week early – but what will really hurt is if interest rates go up even a little bit. “There’s no wiggle room,” she says. “Military families are so dependent on debt because they have to move so much, they are living on small budgets and they are mostly young families that don’t have a lot of established savings. If interest rates go up, you’re looking at foreclosures, collections and not being able to pay bills.” 7. Is there an upside to higher interest rates? Barry Glassman, president and certified financial planner at Glassman Wealth Services in McLean, Virginia, says higher interest rates are good for retirees and folks who have fixed mortgages. “I don’t know anyone with a five-year Treasury bond who doesn’t believe they won’t get their interest and principal back. If yields do jump, my clients would love 10- year Treasuries with a five percent coupon,” Glassman says. But McBride of Bankrate.com says it’s going to be a bumpy ride for most folks. “There are no winners here. Your best bet is to sit tight and pull the seat belt a little tighter,” he says. (With reporting from Mark Miller, Steven Johnson, Beth Pinsker and Linda Stern.) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Boehner Rewriting Debt Ceiling Plan, Faces Tea Party Opposition

July 27, 2011

WASHINGTON — Legislation aimed at keeping the government’s bill-paying intact is stuck in neutral, putting Congress, the financial markets and the public on edge less than a week before the deadline for heading off a potentially calamitous default. House Speaker John Boehner was forced late Tuesday to postpone a floor vote on his plan, which originally had been scheduled for Wednesday, after nonpartisan congressional scorekeepers said the proposal would cut spending less than advertised. He promised to rewrite the measure, but the move means the House can’t vote on it until Thursday at the earliest. Boehner, R-Ohio, needs to do more than pump up the legislation. He needs to shore up his standing with tea party-backed conservatives demanding deeper spending cuts to accompany an almost $1 trillion increase in the government’s borrowing cap. Many conservatives already had promised to oppose it. “We need more drastic cuts,” said Rep. Jason Chaffetz, R-Utah. “I can’t support it in its current form.” “I’m searching for a path toward yes but having a difficult time finding it,” said Rep Bill Huizenga, R-Mich. Unless he can wrestle the situation under control, Boehner risks losing leverage in his dealing with President Barack Obama and Democrats controlling the Senate. Boehner’s plan was not winning converts among some stalwart conservatives. It prompted Senate Democratic leader Harry Reid to declare that the bill was destined to fail in the Senate and it drew a White House veto threat. But it was framing the debate over how to reduce long-term deficits while raising the debt ceiling. Tuesday’s Congressional Budget Office analysis said the GOP measure would cut the deficit by about $850 billion over 10 years, not the $1.2 trillion originally promised. Even more embarrassing was a CBO finding that the measure, which would provide a $900 billion increase in the nation’s borrowing cap, would generate just a $1 billion deficit cut over the coming year. Boehner’s plan would couple budget savings gleaned from 10 years of curbs on agency budgets with a two-track plan for increasing the government’s borrowing cap by up to $2.7 trillion. The first increase of $900 billion would take effect immediately; the second increase could be awarded only after the recommendations of a special bipartisan congressional panel are enacted into law. The White House says Boehner’s measure would reopen the delicate and crucial debt discussions to unending political pressure during next year’s campaigns and risk more uncertainty in the markets. The White House promised to veto Boehner’s measure if it were to reach Obama’s desk. It’s unlikely to come to that. Reid, D-Nev., promised the measure would never make it through the Democratic-controlled Senate. Reid held back on forcing a vote on his competing measure, which he unveiled Monday to poor reviews from Republicans like Senate Minority Leader Mitch McConnell of Kentucky. Reid appears to hope that his measure, which promises $2.7 trillion in spending cuts and would increase the debt limit enough to keep the government afloat past the 2012 elections, could emerge as the last viable option standing and could be modified with input from Republicans. Those same Republicans blasted Reid’s bill for $1 trillion in war-related savings they say are phony. But McConnell is emerging as a key figure in the endgame, and he sounded a conciliatory note in an appearance Tuesday. “We need to get an outcome. And to get an outcome, a Republican House, a Democratic Senate and a Democratic president would have to reach an agreement,” McConnell said. “So I’m prepared to accept something less than perfect, because perfect is not achievable.” One area of potential compromise could be how to treat the findings of a bipartisan congressional commission to identify further deficit reductions, especially in major health care programs such as Medicare and Medicaid. Both Reid and Boehner support the idea, though Boehner wants to make a future increase in the debt limit contingent on the proposed additional cuts being enacted into law. Meanwhile, the clock was ticking down to next Tuesday’s deadline to continue the government’s borrowing powers and avert possible defaults on U.S. loans and obligations, like $23 billion worth of Social Security payments due Aug. 3. The Capitol’s telephones were jammed after Obama urged the public to contact their representatives in his Monday night address. Conservative bloggers and groups like the Club for Growth, which funds primary campaigns against Republicans it deems too squishy in their conservatism, denounced Boehner’s bill as too weak. The U.S. Chamber of Commerce, closer to the GOP mainstream, urged support. While Boehner searched for votes, some Americans seemed to edge closer to the notion that the Aug. 2 deadline might pass without a solution. The stock market fell again, although not dramatically. California planned to borrow about $5 billion from private investors as a hedge against a possible federal government default. The White House spoke with veterans groups about what might happen to their benefits if a deal isn’t reached. Obama has said he can’t guarantee Social Security checks and payments to veterans and the disabled would go out on schedule. Freshman Rep. Trey Gowdy, R-S.C., bristled at the idea that tea party-influenced newcomers are sheep-like ideologues willing to risk default. “We’re not a bunch of knuckle-dragging, mouth-breathing Neanderthals,” Gowdy said. “We’re interested in answering what we perceive to be the mandate, which is to stop the spending and change the way Washington handles money.” Gowdy said he was leaning against Boehner’s proposal.

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State Borrowing Billions To Stave Off Debt Crisis

July 26, 2011

SACRAMENTO, Calif. — California borrowed $5.4 billion from private investors Tuesday as a hedge against a possible default by the federal government. State Treasurer Bill Lockyer secured the package of short-term loans from a group of banks, credit unions and investment funds so the state can avoid a potential cash shortage if the federal government fails to extend its debt ceiling. If that happens, the government could shortchange states on health care and education funding. The treasurer said he took the step as a precaution if the federal government can’t meet all its obligations. “California had to obtain this interim financing to protect the state from the immediate, drastic consequences of a failure by Washington to resolve the debt ceiling impasse by the Aug. 2 deadline,” Lockyer, a Democrat, said in a statement. “I’m hopeful Congress and the president will do the responsible thing, solve the problem before it’s too late, and not risk pushing the country into a financial and economic abyss.” California typically borrows money in the late summer to pay operating expenses until most income tax receipts arrive in the spring. Lockyer secured the so-called bridge loan because it’s unclear whether California would be able to borrow that much money if the credit markets are thrown into turmoil. Democrats and Republicans in Washington are clashing over plans to slash spending and raise the debt ceiling ahead of the Aug. 2 deadline – the day the White House said the federal government will exhaust its ability to borrow and meet all its obligations. That could force the federal government to default on loan obligations or prioritize payments to conserve cash and avoid a default. Payments could be halted to states for Medicare, Medicaid and some public school programs. Medicaid, the federal-state health program for low-income families, is known in California as Medi-Cal. Medicare is the health insurance program for seniors and the disabled. California received loans from eight banks and private investment firms. Goldman Sachs and Wells Fargo & Co. provided the largest amounts, at more than $1.4 billion each. The state, which currently has the lowest credit rating among the 50 states at A-, plans to repay the loans later this summer through routine borrowing notes to be issued in late August. Lockyer appeared to obtain a good interest rate based on the state changing the way it calculates how much money it has in reserve this year. The treasurer’s office said the yield on the notes is 0.237 percent, compared with 1.4 percent the state paid for short-term borrowing in 2010. The latest notes mature on Nov. 22, but the state could pay them off ahead of time. The treasurer also warned that a default would trigger a downgrade of the federal government’s triple-A bond rating. It would not only raise interest rates but negatively affect state and local government borrowing costs because some states’ rates are linked to Treasury rates. “The ripple effects on state and local finance for the whole country are very substantial,” Lockyer said earlier this month.

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Church-state Groups Slam Obama On Hiring Issue

July 26, 2011

By Adelle M. Banks Religion News Service WASHINGTON (RNS) President Obama’s status-quo stance on the controversial issue of faith-based hiring has drawn criticism from atheists and church-state watchdogs. Responding to an atheist at a town hall last week at the University of Maryland, College Park, the president discussed whether religious groups receiving government funds should be permitted to make religion-related hiring decisions. “I think that the balance we’ve tried to strike is to say that … if you have set up a nonprofit that is disassociated from your core religious functions and is out there in the public doing all kinds of work, then you have to abide generally with the nondiscrimination hiring practices,” he said Friday (July 22). “If, on the other hand, it is closer to your core functions as a synagogue or a mosque or a church, then there may be more leeway for you to hire somebody who is a believer of that particular religious faith.” The Rev. C. Welton Gaddy, president of the Interfaith Alliance , called Obama’s response “a departure from the opposition to such discrimination he unequivocally stated while on the campaign trail” in 2008. The person who questioned the president, Amanda Knief of the Secular Coalition for America , also criticized Obama’s comment. “Unfortunately, the president didn’t address the most egregious aspect of this policy — that religious discrimination is occurring on the taxpayer’s dime,” she said. A coalition of two dozen leaders who support the current policy recently sent a letter to Obama asking him to retain it. Stanley Carlson-Thies of the Institutional Religious Freedom Alliance , one of the signatories, was pleased with the president’s defense of some faith-based hiring. “That’s allowed government partnerships with religious groups to flourish, for the good of those served and the good of our society,” he said.

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Dems: Boehner Once Backed A Debt Plan Similar To Reid’s Proposal

July 25, 2011

WASHINGTON — House Speaker John Boehner (R-Ohio) backed a debt limit plan in the spring that sounds very much like a deal Senate Majority Leader Harry Reid will propose Monday, Democrats are pointing out. Reid (D-Nev.) is set to unveil a proposal that would cut $2.7 trillion in spending — without raising taxes — in an afternoon press conference. That sounds very much like the requirements Boehner laid out in a major speech to the Economic Club of New York on May 9. “Let me be as clear as I can,” Boehner said, as he acknowledged that many in the audience of bankers and financiers were uncomfortable with the idea of even flirting with a default on the U.S. debt. “Without significant spending cuts and reforms to reduce our debt, there will be no debt limit increase. And the cuts should be greater than the accompanying increase in debt authority the president is given,” Boehner said. “We should be talking about cuts of trillions, not just billions.” “They should be actual cuts and program reforms, not broad deficit or debt targets that punt the tough questions to the future,” he said. “And with the exception of tax hikes — which will destroy jobs — everything is on the table. That includes honest conversations about how best to preserve Medicare.” Reid’s plan may include cuts to Medicare providers , but it would spare beneficiaries. And with $2.7 in cuts, it exceeds the $2.4 trillion debt ceiling hike President Obama is seeking. But just because Boehner has backed something that sounds similar to the Reid plan before, there’s no guarantee that will back it again. Republicans have repeatedly rejected Democratic proposals over the course of the debt talks, even when they have backed the ideas behind them in the recent past. Indeed, Boehner has already signaled that he will oppose Reid’s plan , and he is slated to put forth a new proposal of his own on Monday afternoon. His plan puts the “Cut, Cap and Balance” proposal, which includes a balanced budget amendment to the U.S. Constitution, back on the table, even though it was rejected by the Senate last week . Watch Boehner’s May 9 speech here:

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No End In Sight As Obama Restarts Debt Ceiling Talks

July 23, 2011

WASHINGTON — President Barack Obama and congressional leaders are scrambling to find a way forward on a debt deal after House Speaker John Boehner threw negotiations into crisis by walking out on them with less than two weeks left to avert a potentially catastrophic default. A visibly frustrated Obama called Boehner, R-Ohio, to come back to the White House Saturday morning along with Senate Majority Leader Harry Reid of Nevada, Reid’s counterpart Sen. Mitch McConnell, R-Ky., and House Democratic leader Nancy Pelosi of California. “We have run out of time and they are going to have to explain to me how it is that we are going to avoid default,” the president told reporters at a hastily scheduled press conference Friday night. Boehner accepted the invitation even while arguing that Obama bore the blame for the collapse of talks. “It’s the president who walked away from his agreement and demanded more money at the last minute,” Boehner said. “And the only way to get that extra revenue was to raise taxes.” The political theater played out even as the Aug. 2 deadline drew ever nearer. Barring action by then, the Treasury will be unable to pay its bills, and the economic fallout could send interest rates up, threaten the fragile U.S. recovery and send shock waves around the globe. Yet the deadline pressure has brought the parties arguably no closer to a solution, even though all involved insist they do not want a default. Underscoring the uncertainty, for the first time since talks began Obama declined to offer assurances, when asked, that default would be avoided – although moments later he said he was confident of that outcome. Obama said that Boehner left a deal on the table that was better for Republicans than for Democrats since spending cuts totaling $2.6 trillion outweighed new tax revenue of $1.2 trillion, and he said he was losing confidence that the underlying deficit problems will be dealt with even if the debt ceiling is raised. “I’ve been left at the altar now a couple of times,” Obama said wryly. Still, aides on both sides said agreement had been reached on two highly controversial changes. One would raise the age of eligibility of Medicare gradually from 65 to 67 for future beneficiaries, while the other would slow the increase in cost-of-living raises in Social Security checks. Given that accord, it seemed likely those agreements would be among many carrying over to the broader meeting Saturday morning and beyond. Even by the recent standards of divided government, Boehner’s decision triggered an extraordinary evening Friday as first the Democratic president and then the Republican speaker maneuvered for political position on an issue of enormous national import. Unspoken, yet unmistakable in all the brinkmanship was the 2012 election campaign, still 18 months away, with the White House and both houses of Congress at stake. Obama devoted his weekly radio and Internet address Saturday to the impasse, calling on Republicans to make a deal. “We can come together for the good of the country and reach a compromise; we can strengthen our economy and leave for our children a more secure future,” the president said. “Or we can issue insults and demands and ultimatums at each another, withdraw to our partisan corners and achieve nothing.” Rep. Jeb Hensarling, R-Texas, pressed the Republicans’ sharply opposing view in his party’s weekly address. “If we’re going to avoid any type of default and downgrade – if we’re going to resume job creation in America – the president and his allies need to listen to the people and work with Republicans to cut up the credit cards once and for all,” he said. Private, sometimes-secret negotiations had veered uncertainly for weeks, generating reports as late as Thursday that the two sides were possibly closing in on an agreement to slash spending. That triggered a revolt among Democrats who expressed fears the president was giving away too much in terms of cuts to Medicare and Social Security while getting too little by way of additional revenues. Obama said his only requirement for an agreement was legislation that provides the Treasury enough borrowing authority to tide the government over through the 2012 election. Boehner said he had little interest in a short-term extension either. At the same time Obama and Boehner sought to define the clash to their political advantage, their aides provided details of the abortive talks. Republican aides said Obama had upped his demand for higher taxes during the week. The aides said administration officials had tacitly agreed to $800 billion in new revenue over 10 years but that the White House backed away and wanted $400 billion more. Additionally, aides said the two sides were not able to bridge their differences over the triggers designed to force Congress to enact both tax reform and cuts to Medicare and other benefit programs by early next year. Both sides also were apart on the size of cuts for Medicaid, the health care program for poor and disabled Americans. Yet aides on both sides said the negotiations had yielded agreement for cuts of $250 billion from Medicare. ___ Associated Press writers David Espo, Ben Feller and Jim Kuhnhenn contributed to this report.

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Debt Ceiling Talks Collapse

July 22, 2011

President Barack Obama said Friday night that House Speaker John Boehner was “walking away” from negotiations to raise the nation’s debt ceiling and avert financial catastrophe. Still, Obama said he was expecting congressional leaders from both parties at the White House Saturday morning. In a dramatic appearance in the White House briefing room Obama said it was up to the Republican leaders to explain to him how they intend to avoid the default that is threatened after Aug. 2. “I expect them to have an answer in terms of how they intend to get this thing done in the course of the next week. The American people expect action,” Obama said. Boehner, in a letter circulated to the House Republican rank and file, said he had withdrawn from the talks with Obama because “in the end, we couldn’t connect. He said he would turn instead to negotiations with leaders of the Senate, which is controlled by majority Democrats. The disconnect in the talks with the White House, Boehner said, was “not because of different personalities, but because of different visions for our country. The talks had veered uncertainly for weeks, generating reports as late as Thursday that the two sides were possibly closing in on an agreement to cut $3 trillion in spending and add as much as $1 trillion in possible revenue while increasing the government’s borrowing authority of $2.4 trillion. Check back here for the latest developments. What happens if the U.S. defaults? See the slideshow below.

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House Passes Tea Party’s ‘Cut, Cap And Balance’ Fiscal Plan

July 20, 2011

WASHINGTON — House Republicans easily passed their “Cut, Cap and Balance” fiscal plan on Tuesday, a proposal that boosts their standing among Tea Party supporters but has no chance of becoming law. The bill passed, 234 to 190, on a largely partisan vote. Five Democrats, including Reps. Jim Cooper (Tenn.), Health Shuler (N.C.) and Dan Boren (Okla.), sided with Republicans in passing the measure. Nine Republicans opposed the bill, including Tea Party favorite and GOP presidential candidate Michele Bachmann (R-Minn.). In a statement issued after the vote, Bachmann said the bill “does not go far enough” and should have included provisions to defund health care reform. Other Republican defectors included Reps. Walter Jones (N.C.), Francisco Canseco (Texas), Scott DesJarlais (Tenn.), Connie Mack (Fla.) and Ron Paul (Texas). Paul said he has never voted for a debt ceiling increase and never will. In addition, he took issue with Republicans for not including defense cuts in the mix of discretionary cuts. “All spending must be deemed discretionary and reexamined by Congress each year,” Paul said in a statement . “To allow otherwise is pure cowardice.” Tuesday’s vote comes after weeks of Republicans touting the bill as proof of their commitment to conservative principles. It includes three provisions: substantial spending cuts, statutory spending caps, and a constitutional amendment to require the government to balance its books each year. Republicans say the proposal is just the kind of shot in the arm needed to address the nation’s staggering $14.4 trillion debt. Specifically, it calls for cutting more than $100 billion in fiscal 2012 and makes drastic spending cuts in areas that Democrats have prioritized as opportunities for investment: clean energy, infrastructure, education and job training. The biggest concern for Democrats, however, is the bill’s proposal to gut Medicaid funding by one-third over the next decade. Both parties know the bill has next to no chance of passing the Democratic-controlled Senate, and President Barack Obama has already threatened a veto. But Republicans have pushed for a record vote on it ahead of the 2012 elections. Democrats spent much of Tuesday’s four-hour debate bashing Republicans for wasting time on a political stunt. “This bill panders, even grovels, to Tea Party extremists,” Rep. Betty McCollum (D-Minn.) said. “Thank goodness this bill will never pass the United States Senate. Thank goodness this bill will never become law.” Republicans countered that their fiscal plan is better than nothing, which is what Democrats have put forward. Rep. Jason Chaffetz (R-Utah), the author of the GOP bill, said he would welcome debate on a Democratic alternative if there was one. “If you could slide it across the table to us, we’d love to see it,” Chaffetz said. Partisan tensions flared throughout the debate as both sides accused the other of leadership failure, sometimes with creative flair. “You guys are ruining this country’s fiscal future,” Rep. Sam Farr (D-Calif.) said to Republicans. “Shame on you for playing with fire on the United States Constitution. Shame on your ‘Cut, Cap and Ruin the United States.’” Rep. Todd Young (R-Ind.) said the debt debate reminded him of a scene from the book Alice in Wonderland , when Alice told the Cheshire Cat she didn’t really care where she went in her travels. “I get the sense my friends on the other side of the aisle don’t really much care where we go,” Young said. The measure now heads to the Senate. A senior GOP aide said Senate Republicans are pushing for a vote this week.

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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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Senate Dems Don’t Return Obama’s Embrace Of ‘Gang’ Plan

July 19, 2011

WASHINGTON — The Obama administration and congressional lawmakers appear to be at odds over whether they can attach a recently revived bipartisan proposal for deficit reduction to legislation raising the nation’s debt ceiling. An administration official told The Huffington Post on Tuesday that there was enough time before the Aug. 2 debt ceiling deadline for lawmakers to tinker with the so-called Gang of Six plan, which would reduce the deficit by $3.7 trillion over ten years, primarily through spending cuts and entitlement reforms. “We feel we have time to do a big deal, yeah,” the official said, pointing to comments made on Sunday by Office of Management and Budget Chairman Jack Lew that were similarly optimistic about the legislative timeframe. But if the goal was to wax optimistically about the prospects of going big, members of Congress apparently didn’t get the memo. Hope bloomed on Capitol Hill Tuesday that a renewed “Gang of Six” could offer a bipartisan cure for ailing debt talks, but cautious words from many senators suggested the deficit-slashing plan could end up cut to ribbons. The slice came from Senate Majority Leader Harry Reid (D-Nev.), who suggested there simply is not enough time to act on a package that would cut nearly $4 trillion over 10 years. “I’m happy to work and use anything in the Gang of Six that we can,” he said, suggesting the Senate might swipe parts in the short-term, but that moving the entire thing was too big a lift. “Remember, we only have 13 days — 13 days — and there’s a number of senators who have said they’ll do everything they can to stop the debt ceiling from being increased.” Even one of the Gang members, Sen. Mark Warner (D-Va.), was not sure what path the deficit-cutting plan could take, or if it would even wind up in the bargain to prevent a historic U.S. debt default. “There’s still a question of how these two intertwine at this point, or if they do,” Warner said. And other Democratic senators seemed far from convinced that the fresh proposal was a good idea at all, because it could require large sacrifices by the middle class. Sen. Dianne Feinstein (D-Calif.) took an especially cautious tone, saying she needed to study new proposal more carefully. “It’s huge, so you have to really take some time and go over,” Feinstein said. But she quickly pointed to a potential trip wire for Democrats, saying a plan to change the way inflation is adjusted is “one of the things I need to find out exactly what that means.” Altering the inflation index could be a way to cut benefits in Social Security because hikes in benefits are linked to inflation. Feinstein would prefer to toss the “Gang of Six” plan to a commission that would come back in six months. Sen. Ron Wyden (D-Ore.), who has been working on a tax-reform plan with Sen. Dan Coats (R-Ind.) and former Sen. Judd Gregg (R-N.H.), waved another large, red flag for middle-income Americans. He noted that the proposed plan slices individual tax rates more deeply than his own bipartisan group thought possible — which means more money has to come from somewhere to offset the breaks. “One of the questions will be, as you go forward in this, how is that going to affect key tax incentives that middle class people rely on — like the mortgage deduction, their health and their retirement? That’s where the bulk of the money is,” Wyden said. “There has to be a clear recognition that you would have to dramatically reduce some of the tax incentives that middle class people have felt very strongly about.” That means people would be able to write off less for their IRAs, mortgage interest and other things like charitable giving . Indeed, it seemed likely the deal would have little support from the left. Justin Ruben, executive director of the progressive advocacy group MoveOn.org, said the proposal appears to “ask seniors, the middle class and the poor to bear the burden of deficit reduction.” “We cannot allow a minority of Tea Party-led Republicans in the House to hold our nation’s economy hostage in order to protect tax breaks for the rich and corporations, while forcing cuts to programs families depend on,” Ruben said in a statement. Health Care for America Now, which fends off attacks on Obama’s health care bill, was similarly skeptical of the Gang of Six proposal. “A budget deal that devastates America’s seniors and middle-class families while letting big corporations and the wealthy off the hook is a bad deal for America, even if it’s bipartisan,” executive director Ethan Rome said in a statement. “America needs a budget agreement that keeps alive the promise of financial security and economic opportunity for the people who built this country and make it work.” The new plan’s ideas won their most enthusiastic support from conservative Democrats such as West Virginia Sen. Joe Manchin — who said hearing about the deal made Tuesday the best day of his Senate career — and Republicans. But several Senate Democrats wondered if their colleagues across the aisle could convince the Tea Party-steeped GOP in the House to go along. House Speaker John Boehner (R-Ohio) did not seem especially committed to the Gang of Six with his own members still pursuing an even more draconian cutting plan. “This plan shares many similarities with the framework the Speaker discussed with the president, but also appears to fall short in some important areas,” said Boehner spokesman Michael Steel. “The House is voting today on our ‘Cut, Cap, and Balance’ plan, and we hope the Senate will take it up soon. That remains our focus.” With additional reporting by Tyler Kingkade and Elise Foley

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Governors Reflect Partisan Divide In Contentious Debate

July 16, 2011

SALT LAKE CITY — Governors nationwide are nervously watching the debt-ceiling debate in Washington, fearing that a partisan impasse could rattle financial markets and slow the economic recoveries they desperately want for their states. Yet many of them are sticking to the same partisan loyalties and talking points that are making it so difficult for President Barack Obama and Republican lawmakers to find a way to avoid a borrowing cutoff, which could force the government to default on some of its bills. In fact, some of the harshest rhetoric was heard this weekend in Salt Lake City, where the National Governors Association is holding its annual meeting. At stake is “the full faith and credit of the United States of America, and we have Republican members of Congress that say `Faith and credit, baloney. We don’t care about that,’” said Montana Gov. Brian Schweitzer, a Democrat. He called those lawmakers “the same yahoos who didn’t pay for two wars,” a reference to the Afghanistan and Iraq invasions, which President George W. Bush launched while cutting taxes. Maryland Gov. Martin O’Malley, chairman of the Democratic Governors Association, said Republicans should be a moderating voice in the debt talks. He criticized House Majority Leader Eric Cantor and “the dinosaur wing of the Republican Party” for adamantly opposing tax increases on the wealthy, which Obama and demands as part of a deficit-reduction package. Republican governors defend their party’s lawmakers. Iowa Gov. Terry Branstad laughed at the notion that “dinosaurs” are heading the GOP effort in Washington. “The dinosaurs are the ones that spent all the money,” he said “This is the new energy.” “I don’t think Eric Cantor and Paul Ryan are out of touch,” Branstad said. “I think they might be a little more bold than most politicians have historically been. But maybe the times call for that.” Ryan, a Wisconsin Republican, chairs the House Budget Committee and authored a major spending plan passed this year by the House. Despite the rhetoric, governors in both parties agreed that failing to problem could gravely injure state economies. Noting that dozens of Chinese political and business officials are attending the governors’ meeting here, Schweitzer said potential investors from Asia and Europe might steer away from Montana and other states if they feel the U.S. government is in fiscal disarray. “The amount of havoc that would be created in the financial markets would make Greece and Portugal and Ireland and Italy look miniscule,” said Connecticut Gov. Dan Malloy, also a Democrat. Republican Gov. Scott Walker of Wisconsin said the impasse in Washington created uncertainty, which employers hate when deciding whether to expand their businesses. But he said he was not surprised because Washington decisions are usually made based on what will win the next election. “What states are better at doing is courage,” Walker said. “It’s having the courage to make decisions that some might view as more about the next generation than about the next election.” But neither Walker nor other governors here found any fault with specific stands taken by their party in the debt showdown. Branstad strongly defended Cantor’s opposition to new taxes, even if they were to hit only wealthy people. “This anti-wealth rhetoric actually hurts the economy,” Branstad said, “because it makes these people afraid to invest for fear that whatever they make is going to get confiscated.” “Those are the people you want to invest in great jobs,” he said. Branstad, who notes that he has never lost an election in his long career, said Republicans credit much of their 2010 campaign success to a fiercely anti-tax stand. He said voters sent a message last fall: “The last time the Republicans had control of the Congress, they lost their way on spending. And you’d better not do that again.” Mississippi Gov. Haley Barbour, who strongly considered a presidential bid this year, echoed those remarks, even as he left the door slightly ajar for a possible compromise. “I think a tax increase would be terrible,” said Barbour, who once chaired the national Republican Party. But Republicans might have to grimace and accept a compromise, he said, if they can win deep spending cuts and cost-saving changes to Medicare and Social Security. “At the end of the day,” Barbour said, “you have to look at the whole package.” The governors here differ widely on how that package should be shaped. But to a person, they say they desperately want an end to the debt brinkmanship in Washington. ___ Associated Press writer Josh Loftin contributed to this report.

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Obama Accused Of Using ‘Human Shields’ In Debt ‘Bluff’

July 15, 2011

WASHINGTON — President Obama is “bluffing” about the impacts of a debt default and holding troops and the elderly as “human shields” in the deadlock over raising the nation’s borrowing limit, Republicans charged Friday. The group of conservatives were touting a piece of legislation that would tell the White House how to prioritize spending if credit were to get cut off. The spending recommendation starts with paying interest on the debt, then funds military personnel, national security priorities and finally Social Security and Medicare. According to the lawmakers, after those priorities were funded, about $30 billion per month would be left over for the president to deal with other responsibilities — putting the lie to Obama’s warning that Social Security checks might not go out after Aug. 2 . “As he stated himself, he’s bluffing,” said Rep. Joe Wilson (R-S.C.) “He told Eric Cantor, ‘ Don’t call my bluff .’ The president is admitting he’s bluffing, but it’s not right. His bluffing consists of threatening senior citizens, threatening disabled veterans.” “I truly believe that this president is completely out of touch with reality when it comes to the grave circumstances that we face in our economy,” added Rep. Trent Franks (R-Ariz.). “I am convinced that he is willing to use our senior citizens and our soldiers as human shields, as it were, to continue this spending binge that could ultimately destroy our country.” The bill’s author, Rep. Daniel Webster (R-Fla.), said the measure was not a first choice, but would help ensure the GOP gets the spending cuts it is seeking in debt ceiling negotiations. “This is a backstop,” Webster said. “We’re not saying it’s our favorite piece of legislation as far as the future, but we want spending cuts; we’ve got to have them.” Treasury Secretary Tim Geithner has warned that without a raise to the debt ceiling, the country will no longer be able to borrow beginning on Aug. 2. The GOP legislators’ idea seems simple enough: In the event the debt ceiling is reached, the government should shield its most vital expenditures and let the president figure out how to deal with the rest. But a recent independent analysis shows there is no way for the government to stop borrowing without cutting spending to significant programs. “After Aug. 2, there is a near certainty the federal government will run short of cash and be unable to pay approximately half its bills, other than interest,” said Jay Powell, a scholar at the Bipartisan Policy Center, who analyzed what the government would have to slash if the administration were to continue to pay interest on bonds. The numbers are stark. According to the analysis, which relies on Treasury Department reports, the government would face $307 billion in expenses for the remainder of August, but would only have about $172 billion to spend. That leaves a shortfall of just over $134 billion. If the debt interest were paid, a 50 percent cut to the rest of the budget would result. So what programs would go begging? As the GOP legislation suggests, the Treasury Department has no guidance from Congress on how to prioritize its 80 million-odd payments that are due next month. According to a recent Congressional Research Service report , some experts think the administration has the power to prioritize. But the report also found Treasury officials believe that without legislation from Congress, they must pay the bills in the order they get them, and wait-list what can’t be afforded. That first-come, first-serve scenario is likely what prompted Obama to warn there’s no guarantee Social Security checks will go out on Aug. 3 if the debt ceiling isn’t raised. But even assuming the GOP legislation passes, the math of the budget predicts an extremely ugly bottom line. For instance, about $29 billion will be needed in August to pay interest on bonds and avoid a bond default. After that, Social Security benefits are expected to cost about $49 billion, with Medicare ringing up about $50 billion. If military salaries ($2.9 billion), veteran benefits ($2.9 billion) and contracts for all the vendors that support the military ($32 billion) are also paid, there would be very little money left. “You can’t cut 50 percent without cutting a lot of important and proper programs,” Powell said, pointing to the FBI and Bureau of Prisons as examples of programs that could receive de facto cuts. Despite the GOP representatives’ desire to prioritize, there appear to be few easy cuts. “Even the ones that might appear to be soft targets are really not that soft,” Powell said, pointing to a popular conservative target: the Department of Education. “People think, ‘Oh the Department of Education, let’s shut that down.’ But what’s in that is special ed programs,” Powell said. “That’s several billion dollars that go to states during August. The schools are going to open in September. This is assistance for special ed students. What happens there? Do they not go to school?” The Bipartisan Policy Center also looked at a scenario that preserved not just Social Security, as the GOP has been demanding, but most of the popular safety net and education programs. If those programs were all funded, Powell said, “the problem with that is you haven’t paid one dollar — not a dollar — for defense. You’ve got all these people in uniform you can’t pay any money.” Another problem with trying to pick and choose which programs to fund — something administration officials seem to have considered — is whether the Treasury Department, even with legislation, has the legal authority. Many legal scholars believe such an action would be tantamount to a back-door line-item veto, and therefore be deemed unconstitutional. “The precedent here is the case called Clinton vs. City of New York ,” said UCLA constitutional law professor Jonathan Zasloff, referring to the successful 1997 challenge of a line-item veto law passed by Congress. “Congress passes a piece of legislation and the president knocks certain things out of the budget,” Zasloff said, explaining the case. “The Supreme Court holds 6-3 that that’s a violation of separation of powers, because only Congress can spend money — the president can’t — and so the president cannot pick and choose among expenditures that he’s given by Congress.” Webster denied the Clinton decision related to his proposed legislation. Though he had earlier specified that his proposed legislation would leave the president with $30 billion left over to spend as he saw fit, Webster said the legislation did “not necessarily” give the president the power to make decisions about spending. “This has nothing to do with the line-item veto — that would be a power of the president,” Webster said. “We have the purse strings and we can pass what we will.”

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Debt Ceiling Debate Continues As Deadline Looms

July 11, 2011

WASHINGTON — With the United States government set to begin defaulting on its loans on Aug. 2, the White House is working with lawmakers on a deal to raise its borrowing limit in exchange for major spending cuts and, potentially, revenue increases to shrink the debt. Leaders from both chambers and parties are meeting with the administration nearly every day to work out a deal, after meetings on July 10 bore no agreements on whether to raise revenues as part of a debt-reduction plan. President Barack Obama gave lawmakers 10 days to come to an agreement, insisting he will call daily meetings until a deal is reached to raise the debt ceiling. The Treasury hit its debt limit — most recently set by Congress at $14.29 trillion — on May 16, but is using “extraordinary measures” to avoid a U.S. default for now.Treasury Secretary Timothy Geithner warned that failing to raise the debt ceiling would be disastrous to the economy, telling Sen. Michael Bennet (D-Colo.) in a May 13 letter that rapidly reducing federal outlays in the event of default “would likely push us into a double dip recession.” Although lawmakers could vote to raise the debt ceiling without preconditions, many members of Congress have said they will not approve an increase to the federal borrowing limit unless there is a longterm plan to deal with the debt. Lawmakers are currently looking to build off of bipartisan talks led by Vice President Joe Biden, which fell apart in June over the issue of tax increases in a final deal. Those talks had reached agreement on about $2.4 trillion in cuts, which House Republicans have said they would now be willing to accept rather than a “grand bargain” that saves about $4 trillion. In addition to major spending cuts, the House GOP has also pushed for major changes to Medicare — including those laid out in Rep. Paul Ryan’s (R-Wis.) 2012 budget proposal — to be as part of a final debt ceiling deal. Although Senate Majority Leader Harry Reid (D-Nev.) said in June that Medicare cuts are off the table, Democrats have since signaled they would allow for some changes to the retirement insurance program, provided they be on the delivery-side as opposed to the beneficiary side. House Speaker John Boehner (R-Ohio) has said the lower chamber will not approve a bill that includes tax increases, a option that Democrats have insisted should be on the table. Democratic leadership is pushing for an end to subsidies and tax preferences for major oil and gas companies and individuals that make more than $500,000 per year. Check back here for the latest developments. What happens if the U.S. defaults? See the slideshow below.

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Obama Faces Tough Task In Making Case On High-Stakes Economic Issues

July 9, 2011

WASHINGTON — Immersed in an intense struggle to cut the national debt, President Barack Obama faces a dilemma that will stay with him even if he succeeds in striking a grand deal with Congress: convincing Americans that the entire effort will do anything to create desperately needed jobs. Obama ties deficit reduction to jobs, on the basis that trying to balance the nation’s books will promote economic stability and give businesses more confidence to hire. But that’s a tough sell to the millions of Americans out of work right now. And the communications problem just got harder. The latest snapshot of the economy, out Friday, was a body blow that showed employers added a meager 18,000 jobs in June. The leaders of the country, meanwhile, are consumed with negotiating a major debt-reduction deal built upon cutting spending and raising taxes. It is not directly aimed at boosting jobs. Obama’s challenge is to link all this in meaningful terms and to get faster results. At stake are the country’s economic recovery and his re-election chances. The debt is the urgent problem for Obama and a divided Congress because they have no choice. Reaching a deal has become the key to winning Republican support for raising the nation’s debt limit, a politically noxious vote that Congress must take by Aug. 2 to keep the nation from risking default for the first time ever. “There’s no question that this is a complex, almost impenetrable issue,” said David Axelrod, a longtime Obama adviser and now a senior strategist to the president’s re-election campaign. “It’s not just the issue of the potential default, but it’s the larger issue of what he’s trying to get at, the opportunity of trying to do something big about the deficits and the debt. Big things are at stake, but they’re hard to penetrate, so the process of dealing with them is painstaking.” Republicans, too, face the challenge of explaining and defending how cutting debt will create jobs in the short term. They won control of the House last year in large part because of voter anxiety about government spending and jobs. But it is Obama who bears the largest burden, as any president does. In addressing the dismal jobs report, Obama made plain he knows what the country is thinking. “The debate here in Washington’s been dominated by issues of debt limit,” Obama said. “But what matters most to Americans, and what matters to me most as president in the wake of the worst downturn in our lifetimes, is getting our economy on a sounder footing so the American people can have the security they deserve.” As an imperative unto itself, deficit reduction is embraced by all parties as vital for stabilizing the nation and shrinking the debt passed on to the next generations. And a failure to extend the nation’s borrowing limit could cause a kind of enormous economic breakdown that would only worsen the employment picture. Now under deadline pressure, Obama and congressional leaders of both parties were to hold a rare weekend negotiation session on Sunday on a debt-cutting package that remains far from certain. It could cut the deficit by roughly $4 trillion over 10 years or so, which even by Washington spending standards would be considered a big deal. Yet it is joblessness itself that cuts to the heart of the American struggle. Obama said people “pour their guts out” when they write him letters about it. So he is pushing jobs ideas distinct from the debt talks. The president is prodding Congress to pass three pending trade deals, create construction jobs by repairing the nation’s infrastructure, extend a payroll tax cut that could keep money in people’s pockets, and make it easier for entrepreneurs to get patents. But the debt discussion is taking up Washington’s bandwidth. And not everyone is so sure it will help speed job creation. “Washington seems tone deaf,” said Scott Paul, executive director of the Alliance for American Manufacturing, a sector of the economy Obama has been actively promoting. “The metric for President Obama and congressional leaders must now be the number of jobs we create, rather than the amount of deficit reduction we see.” The White House says the priority is both the deficit and jobs and that people understand that. A Pew Research Center poll in June found that more people favored cutting the deficit than spending to help the recovery. That mood varied widely, though, by political constituency. Independents, who will be key to Obama’s bid for a second term, favored deficit cutting over economic spending by 54 percent to 39 percent. “The key is making sure that you’re communicating the importance to the future of the country of dealing with our deficit, without slipping into inside-the-Beltway lingo,” said Dan Pfeiffer, Obama’s communications director. “If communicated incorrectly, it can feel removed from day-to-day life. On the other hand, there’s an element of common sense to why this is important that I think people in the country get that sometimes eludes folks in this town.” The debt limit remains an obscurity to people. An Associated Press-GfK poll in June found Americans divided on raising it or not. Obama has tried to make the case that calamity awaits without action by Congress. “I want everybody to understand that this is a jobs issue,” he pleaded in a news conference last week. “This is not an abstraction.” The struggle has drawn Obama again into a reality of his job: time-eating negotiations with Congress on matters that resonate little with voters. After a bruising midterm election season last year, he conceded that meeting his White House responsibilities cost him some connection with the people. The president has since made a point to get out of town more regularly. Not this month, though. He is expected to keep meeting with congressional leaders at the White House until a deal can be reached, just as he did, day after day and night after night, earlier this year on a budget deal that prevented a government shutdown. Irrespective of the jobs element, Obama stands to gain if he emerges with a package that genuinely shrinks the debt in a way most Americans think is fair. “What’s fundamentally at stake here are economic issues. And barring any surprises, that’s what the election will be about,” said Robert Shapiro, a Columbia University professor who studies public opinion. “Getting out in front is something that would play well publicly, if things fare well. Taking the lead on the economy is probably a very good use of his time.”

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Obama Urges Lawmakers On Both Sides To Make ‘Political Sacrifices’

July 9, 2011

WASHINGTON — President Barack Obama appealed to Democrats and Republicans to “make some political sacrifices” and take advantage of an extraordinary opportunity to tackle the government’s budget crisis. Obama said in his weekly radio and Internet address Saturday that it will take a “balanced approach” that mixes limits on domestic programs and the Pentagon, curbs to Medicare and elimination of some tax breaks for the wealthy. Obama spoke a day before hosting top lawmakers in both parties for a negotiating session at the White House Even as the negotiators seek a grand deal to bring the deficit under control, Obama’s Democratic allies and GOP rivals seem to find their options limited by months of angry rhetoric and political posturing. Sharp divisions persist over increasing taxes and cutting public benefit programs. As a result, hopes have diminished for a deal on an ambitious plan to cut spiraling deficits by $4 trillion or more over the coming decade. Officials now say a smaller, $2 trillion agreement, appeared more doable. “The good news is, we agree on some of the big things,” Obama said. “We agree that after a decade of racking up deficits and debt, we finally need to get our fiscal house in order. We agree that to do that, both sides are going to have to step outside their comfort zones and make some political sacrifices.” The president was spending part of the weekend at Camp David, the presidential retreat in Maryland. He left on Marine One on Saturday morning, accompanied by senior adviser Valerie Jarrett and family friend Eric Whitaker. Obama was scheduled to return Sunday afternoon, several hours before his early evening meeting with congressional leaders. On Friday, Obama’s most important negotiating partner, House Speaker John Boehner, R-Ohio, said that the two sides were far apart. “It’s not like there’s some imminent deal about to happen,” said Boehner. “There are serious disagreements about how to deal with this very serious problem.” Obama cited a bleak jobs report Friday in hopes of prodding Congress toward a swift agreement. But the higher unemployment numbers hardened the views of partisan lawmakers who think a weak economy can’t tolerate added taxes or cuts in spending, essential parts for the broad deal that Obama seeks. White House and congressional negotiators and their aides continued to work on deficit-cutting ideas to add to a set of proposals tentatively agreed to in talks led by Vice President Joe Biden in May and June. The earlier proposals would shave $2 trillion or so off the deficit. Obama has asked the top eight leaders of Congress to come to the White House on Sunday to assess progress in the talks. A budget agreement is central to increasing the nation’s borrowing limit, currently capped at $14.3 trillion, by Aug. 2. If that deadline isn’t met, there could be a potentially catastrophic government default on obligations to bondholders, government contractors and people relying on Social Security and other government programs. That deadline and a new unemployment rate of 9.2 percent heightened the pressure for a deal, uniting the two most high-profile challenges facing Obama’s presidency. Obama urged Congress to move quickly to raise the debt ceiling, saying the uncertainty over a potential default has hindered hiring in the private sector. He later made his case privately to House Democratic leader Nancy Pelosi of California during a half-hour meeting at the White House. Both parties and private economists agree that if Washington does not raise the debt ceiling by early August, the economy could slip back into recession. The White House and Congress are seeking common ground on a budget deal that would trim 10-year deficits by as much as $4 trillion. Obama has urged lawmakers to strive for that number, but some officials on Friday said they believed that a smaller, $2 trillion deal appeared more realistic. The larger package would require new tax revenues and significant spending reductions in large government benefit programs such as Medicare, Medicaid and Social Security. But liberal Democrats whose votes will be needed to balance GOP defections and get a deal passed recoiled over the possibility that Obama would endorse cuts to Medicare or Social Security. For example, the administration and lawmakers are looking at less generous adjustments for inflation, which would reduce future Social Security payments. “I’m a Democrat. I got elected to Congress to protect Social Security and Medicare, not dismantle them,” said Rep. Jim McGovern, D-Mass. “Yes, we do need entitlement reform, but we need to do this thoughtfully, not come to a deal in a weekend.” Republicans played down media reports suggesting that Boehner was willing to entertain the possibility of higher tax revenues as part of a “grand bargain” that included cuts to benefit programs like Social Security and Medicare. “Conservatives are just not going to vote for a tax increase on this economy,” Rep. Trent Franks, R-Ariz., said, reflecting a common view among his GOP colleagues. “It’s just not going to happen.” On health care, negotiators have been closing in on cuts of about $200 billion over 10 years, about equally divided between Medicare and Medicaid, with most of the burden falling on individual industries such as hospitals, drug manufacturers and nursing homes. One Social Security proposal on the negotiating table would lower annual cost-of-living increases, reducing the retirement benefits for older Americans over the long term.

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Karl Rove-Backed Group Goes After Five Democratic Senators

July 8, 2011

WASHINGTON (AP) — A Republican-leaning fundraising group with ties to GOP strategist Karl Rove has launched a new phase of its $20 million ad campaign attacking Democrats. Crossroads GPS is running television ads targeting five Democratic senators up for re-election in 2012. They are Bill Nelson of Florida, Claire McCaskill of Missouri, Jon Tester of Montana, Sherrod Brown of Ohio and Ben Nelson of Nebraska. The group also is running ads on national cable TV outlets and in presidential battleground states including Colorado, Iowa, North Carolina, New Mexico, Nevada and Virginia criticizing President Barack Obama. It’s also targeting a handful of House districts. The ads will begin running Friday. Crossroads is spending about $7 million on the effort. Crossroads and an affiliated organization, American Crossroads, spent $38.6 million in 2010 against Democrats. WATCH:

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Federal Prosecutors Take Softer Approach To Corporate Crime

July 8, 2011

As the financial storm brewed in the summer of 2008 and institutions feared for their survival, a bit of good news bubbled through large banks and the law firms that defend them.

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GOP Governor Pushes Contentious Change

July 4, 2011

COLUMBUS, Ohio — Ohio’s new Republican Gov. John Kasich is a study in contradictions. He is candid yet secretive. He is acerbic yet personable. He quibbles over media access yet is omnipresent on Twitter and Fox. He’s made a cause of taking on public workers after spending most of his life as one. Critics call Kasich’s inconsistencies arrogance. Fans see him as bold and endearingly human. Polls have found mounting dissatisfaction among voters. One thing shines through regardless: John Kasich is a man in a hurry. Six months into a four-year term, Kasich has dumped his Democratic predecessor’s high-speed rail initiative and education overhaul. He’s moved to privatize Ohio’s job creation operation, state prisons and the Ohio Turnpike. He’s signed a bill limiting bargaining rights for 350,000 unionized public workers that’s even stricter than Wisconsin’s polarizing first-in-the-nation restrictions. The state budget he signed on Thursday closes a yawning budget gap that approached $8 billion while cutting estate, income and investment taxes. The pros and cons of Kasich have both Democrats and fellow Republicans seeing the possibility that his impact could be important as President Barack Obama seeks to retake Ohio in 2012. Obama won with 51.5 percent of the vote in 2008, but it is essentially a race between the parties to see whose ideas – Obama’s stimulus and health care policies, or Kasich’s business incentives and cuts to government – do more, faster for average Ohioans. Both know that to Ohio voters, the economy is king. “Ultimately John Kasich’s popularity will not be the most important number to determine whether Obama carries Ohio. It will be the unemployment rate,” said Peter Brown, assistant director of the Quinnipiac Polling Institute. Indeed, Kasich, appearing Sunday on CBS’ Face the Nation, said doing “what’s right” trumps any consideration of his political popularity. “At the end of the day you look yourself in the mirror and you say to yourself, `Did I do what was right for families and for children? If I paid a political price, so what?’” Kasich said. And the former congressman and chairman of the House Budget Committee in the Clinton administration admonished Washington lawmakers to re-evaluate their own motivations. “I mean, there’s too much posturing. There’s too much thinking about your party, yourself.” Looking almost shell-shocked on Election Night after squeaking out a victory over Ted Strickland, a once-popular Democrat, Kasich tossed two victorious fists in the air. He grabbed his running mate, Mary Taylor, for a twirl to the music, and grinned. “Guess what? I’m gonna be governor of Ohio!” He punctuates his proclamations with a pointed finger, a verbal jab and a nod of his head of brown tousled hair. Long-time Statehouse lobbyist Gayle Channing Tenenbaum says it’s a rare day when Kasich doesn’t say something that surprises. “It’s interesting to watch him because you just don’t know what particular thing he’s going to be grabbing onto at that particular moment,” she said. “When it’s something that you are really interested in, such as mental health or autism, it always pleases you.” Now 59, Kasich moves through his days with the demeanor of the young man he was when he arrived at the Statehouse in 1978, making history as the youngest state senator Ohioans had ever elected at 26. His youthful self-image shows through when he declares he’ll change the color of Ohio’s pink drivers’ licenses or restore snow days schoolkids were losing in a legislative battle. He likes Lady Gaga, Spiderman and wants Ohio to be cool. Yet a Quinnipiac Poll found voters’ disapproval of Kasich rose from 46 percent in March to 49 percent in May. Majorities disliked his handling of the state budget and said his policies are unfair to people like them. Kasich is among a handful of new Republican governors around the country – including Florida’s Rick Scott and Wisconsin’s Scott Walker – who are trying a new aggressive approach, often to the displeasure of the public. Public Policy Polling declared Kasich and Scott the two most unpopular governors in America in May. Protests dog Kasich wherever he goes. Last week, thousands of teachers, firefighters, police officers and other unionized workers paraded through the streets of Columbus against Ohio’s new collective bargaining law – many chanting, “O-H-I-O, John Kasich’s got to go!” On a recent afternoon at Port Columbus International Airport, Bill Parizek, a Republican from suburban Dublin, tried to explain the phenomenon, comparing Kasich to New Jersey Gov. Chris Christie, a fellow Republican and fiscal conservative. “They have that cold, just-the-facts kind of approach. They do what they think they need to do to right the ship, and they’re not as warm and fuzzy as probably a lot of people would like,” said Parizek, 49, who works for a New York investment fund. “I think that’s the profile of the kind of person you need to make really tough, fundamental structural change.” Kasich exudes confidence when he enters a room, even being so bold as to deliver his State of the State address without a script. His style can lend itself to verbal gaffes. At Ohio Memory Day, a day of advocacy for people with Alzheimer’s disease, he told the crowd he “drew a blank” trying to write his remarks. He called a police officer who once pulled him over “an idiot” in front of a gathering of Ohio EPA workers. Kasich later apologized. George Tucker, an AFL-CIO union leader for the Toledo region, interprets such misstatements by Kasich as a disregard for other people. He said the governor is “just out of touch.” “I don’t think he has any feelings or sympathy for working people,” Tucker said. “He doesn’t have to look people in the eye who are being put out of their jobs like we do and tell them, `You’re not going to get that assistance you were counting on.’” Kasich, known in Congress for fighting for a balanced budget, ran for president in 2000 but dropped out before the Republican primary. His work as a speaker, best-selling author of books on his conservative philosophies, former Fox News commentator and managing director at since-failed investment bank Lehman Brothers helped make him a millionaire – so he says he’s not worried about being a one-term governor. He says he’s trying to fix Ohio’s economy and can’t be distracted by lousy poll numbers, Statehouse protests and critics who parse his every word. By clashing with well-funded unions and special interests such as nursing homes and casinos, he says he never expected to be liked. In fact, his is almost a holy mission. “Do you have any idea the pounding I’ve taken in six months?” he asked a group of reporters and Cabinet directors at a Friday event. “I kind of like it, I think it accrues to my benefit – not in this world, but by doing the right thing, I get points, OK?” He started taking on reporters even before he took office – denying them records and attempting to bar them from his ceremonial inauguration. After he was criticized, he went beyond changing his mind to hosting the largest midnight swearing-in anyone could remember – with more than 150 onlookers and his entire Cabinet. Two months later, Kasich tried to bar recording equipment at the media’s technical briefing on his budget, hoping to focus attention on a public budget unveiling that evening that starred Ohio’s budget as Apple’s latest iPad and Kasich as Steve Jobs. Confronted again, Kasich relented – but not before the political blogosphere lit up with allegations that he was becoming a serial obstructionist. Kasich has often answered his critics – bloggers, unions, Ohio Democrats and late-night comedians – with a well-timed appearance on Fox News, where he used to host “From the Heartland with John Kasich,” or upbeat Twitter posts like this one from Wednesday: “Proud of my partners in the legislature. Together, we closed an $8 billion budget gap and cut taxes!” With the Ohio vote so closely divided between the parties, the question will be whether Kasich can ultimately win over the state with his bold approach. Right now, it seems for every Ohioan who appreciates what he’s attempting, there is another who disagrees, like Democrat John Hisey, a 60-year-old retired manufacturing worker from Newark. Criticizing Kasich and his fellow Republicans, Hisey said the governor is “bad for Ohio.” “They want everybody to work for $7.35 an hour, unless you’re a brain surgeon or something like that,” Hisey said. “A simple man can’t go out and raise his family like he used to. It’s true.”

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Minnesota Shutdown Takes Toll On State Workers, Local Residents

July 2, 2011

The post and live blog below are a collaboration between Patch and HuffPost reporters. Minnesota is encountering its second government shutdown in six years after Governor Mark Dayton (D) and state lawmakers failed to reach an agreement in negotiations to close the state’s $5 billion budget gap late on Thursday night. Richfield Patch reports : …Dayton told MPR News on Friday that budget negotiations between himself and GOP lawmakers need a “breather.” The governor said he is willing to listen to proposals and even meet with Republican leaders over the weekend but if no offers were made he would “reach out” to them sometime on Tuesday. The governor met with DFL leaders around 9 a.m. [CST] Friday but details of the talks are being kept strictly confidential. According to KSTP-TV, Dayton has been in his office all day working on a compromise deal. The situation unfolding is already taking a toll on public workers and residents across the state. Reuters reports : Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year. The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed and state parks and campgrounds closed ahead of what is usually their busiest stretch of the year for the July 4 holiday. Reading services for the blind are being suspended due to the shutdown, the AP reports . According to St.LouisPark Patch: The state shutdown will have a very real impact on the St. Louis Park Emergency Program’s food shelf, especially if the shutdown drags on. Roughly 26 percent of the nonprofit food shelf’s regular food supply comes free of charge from a federal program that supplies USDA commodity items to states for distribution, said Kate Burggraff, who is the food shelf manager. With the shutdown in effect, that food won’t come STEP’s way, meaning the food shelf could see its average monthly food expense of between $5,000 and $6,000 double in July, which is generally a busy month to begin with. Dayton and Republican lawmakers signaled on Friday they had no intention of holding discussions to resolve the ongoing budget dispute over the July 4 holiday weekend. Below, a live blog of the latest developments to unfold in Minnesota.

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Swipe Fee Shocker: Fed Caves To Wall Street

June 29, 2011

WASHINGTON — The Federal Reserve delivered the punchline Wednesday to the year-long joke that has been the lobbying blitz over debit card swipe fees. Amid heavy Wall Street pressure, the Fed nearly doubled the amount it will allow banks to charge retailers and consumers under a new regulation while effectively exempted an entire class of debit card transactions from the rule altogether. The swipe fee debate dominated the Senate for months, as nearly the entire U.S. retail industry battled banks in Capitol Hill backrooms. Last year’s Wall Street reform bill required the Fed to write a rule capping swipe fees on debit cards, which banks charge retailers for the privilege of accepting plastic. The central bank initially proposed a 12-cent limit on those fees in December, following a Fed survey of banks that found that the median cost of processing a debit card transaction was 7 cents, with an average cost per swipe of 4 cents. The 12-cent cap would have left banks with a profit margin of about 70 percent on debit cards based on the median cost, but represented a reduction of almost 75 percent from the current average swipe fee of 44 cents per transaction. Wall Street has been pressuring the Fed all year to reconsider the rule, and on Wednesday, that pressure paid off: The central bank raised its proposed cap on swipe fees to 21 cents, plus 0.05 percent of the transaction amount and 1 cent to cover the costs of protecting against fraud. All told, the Fed said it will allow banks to charge a maximum of 24 cents per transaction, on average. That’s actually higher than the current average amount that retailers pay for swipes that require customers to enter a personal identification number — meaning PIN swipes are effectively exempted from the new rules. According to the Fed’s December study, banks charge an average of 56 cents on debit card transactions that require a customer’s signature for authorization, compared to 23 cents for the more secure PIN payments. While the cost per purchase appears small, they add up to billions of dollars every month. According to data from the Nilson Report , an industry publication, banks scored $16 billion in 2009 on debit card swipe fees, with half of the total flowing to just 10 banking behemoths. The Fed also said its rule will not go into effect until Oct. 1 instead of July 21, when the regulation was originally expected to be implemented. The extra months with higher swipe fees will mean much better 2011 earnings for bank shareholders: Wall Street scores $1.35 billion for every month that the rules are delayed, the Nilson Report found. Since the new rules basically cut swipe fees in half, the extra time is equivalent to a roughly $1.5 billion gift for the banking industry. Retailers were immediately outraged. “The Federal Reserve very clearly did not follow through on the intent of the law,” said Mallory Duncan, chairman of the Merchants Payments Coalition, which represents stores both large and small. The bank lobby continued to express formal opposition to the rule, despite the victory the Fed delivered to it. “We continue to be concerned about the impact on consumers and small financial institutions from this price fixing policy,” said Trish Wexler, head of the Electronic Payments Coalition, an umbrella group lobbying on behalf of Wall Street. But small banks with less than $10 billion in assets are explicitly exempted from the new fee limits by the financial reform bill. On Capitol Hill, swipe fees represented one of the most heated corporate lobbying battles in recent history, with both Walmart and Wall Street pouring money into the campaign coffers of Republicans and Democrats alike. The public pays for much of the swipe fees banks charge retailers, as merchants pass on the costs in the form of higher prices for consumers — even those paying with cash. But retailers had hoped to profit from a rule capping debit card fees by keeping at least some of the savings for themselves. Currently, banks compensate cardholders for the higher prices charged by retailers in the form of rewards programs. This is effectively a transfer of wealth from poor consumers, who are more likely to pay in cash, to richer consumers, who use plastic. Despite Wendesday’s setback from the Fed, retailers already won the bigger battle in Congress, where a measure to delay the rules failed to overcome a filibuster on June 8 . The swipe fees struggle also served as a proxy leadership contest between Illinois Sen. Dick Durbin, the second-ranking Democrat in the upper chamber, and New York Sen. Chuck Schumer, who is formally third-ranking but is performing many of the duties of top-ranked Senate Majority Leader Harry Reid (D-Nev.). Durbin has pushed the swipe fee crackdown for years at the behest of Midwestern supermarket kingpin Richard Niemann, founder of Niemann Foods. Schumer, a prolific Wall Street fundraiser, has quietly backed the banks, but left the public advocacy on the issue to his protege, Sen. Jon Tester (D-Mont.). The bizarre political contest pitted Durbin against Tester, one of the most vulnerable Democrats coming up for reelection in 2012, on an issue that has become a signature policy for the Montana senator.

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Obama, Boehner Held Secret Debt Ceiling Meeting At White House

June 24, 2011

WASHINGTON (AP/The Huffington Post) — Efforts to find a bipartisan agreement blending huge budget cuts with a must-pass measure to increase how much the government can borrow have entered a new phase after Republican negotiators pulled out of talks led by Vice President Joe Biden. The exit of House Majority Leader Eric Cantor from the talks on Thursday means the most difficult decisions have been kicked upstairs to GOP House Speaker John Boehner of Ohio and President Barack Obama. The Biden-led group had made solid progress in weeks of negotiations but was at an impasse over taxes. Cantor, R-Va., said that the Republican-dominated House simply won’t support tax increases and that it’s time for Obama to weigh in directly because Biden and Democrats were insisting on tax increases. Democrats said it’s only fair to blend in additional revenues from closing tax breaks to balance trillions of dollars in spending cuts. It had long been assumed that the Biden group would set the stage for more decisive talks involving Obama and Boehner. As a result, Cantor’s move was interpreted as trying to jump-start the talks rather than blow them up – a view shared by Cantor himself. “The purpose here is to alter the dynamic,” Cantor said. In fact, Cantor’s withdrawal came after Boehner had already made a trek to the White House – in a secret meeting Wednesday night that followed up on a golf outing over the weekend. According to The Hill newspaper, Cantor’s walkout had been planned for weeks: The timing of Cantor’s exit from the talks has been discussed for weeks, and senior House Republicans cast it as a natural progression for the negotiations. “There have been discussions about when these talks need to end and when the Speaker and the president need to get in the game,” one GOP aide explained. For his part, Cantor didn’t inform Boehner of his decision to leave the talks until Thursday, shortly before the news broke, said a GOP official familiar with the situation. The official required anonymity because of the sensitivity of the information. The White House sought to put a positive spin on developments. “As all of us at the table said at the outset, the goal of these talks was to report our findings back to our respective leaders,” Biden said in a statement. “The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support. For now the talks are in abeyance as we await that guidance.” The Senate’s Republican negotiator, Jon Kyl of Arizona, also exited the talks. For his part, Cantor said the secretive Biden-led talks had “established a blueprint” for agreement on significant cuts in spending. One of the byproducts of Cantor’s departure was to provide an opportunity for partisans on all sides to make statements at odds with the positions they may have to take to achieve a deal. Democrats insist that at least some new revenues are needed – both to soften spending cuts and to line up the Democratic votes needed to pass the measure. “It will take Democratic votes to pass any debt-ceiling agreement,” said Sen. Chuck Schumer, D-N.Y. “As a result, certain things are going to have to be true. We cannot make cuts to Medicare benefits. We have to allow for revenues like wasteful subsidies for ethanol and oil companies. And we have to do something on jobs.” “President Obama needs to decide between his goal of higher taxes or a bipartisan plan to address our deficit,” said Senate Republican leader Mitch McConnell, R-Ky. “He can’t have both.” As for Democratic demands for new deficit-financed “jobs” initiatives, McConnell scoffed: “What planet are they on?” Cantor said that plenty of progress has been made in identifying trillions of dollars in potential spending cuts to accompany legislation to raise the $14.3 trillion cap on the government’s ability to borrow money. Passage of the legislation this summer is necessary to meet the government’s obligations to holders of U.S. Treasurys. The alternative is a market-shaking, first-ever default on U.S. obligations.

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