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Obama Calls For Job Training, Unemployment Insurance Reform

by Dave Jamieson on January 25, 2012

Huffington Post…

WASHINGTON — In a State of the Union speech focused tightly on jobs and the economy, President Barack Obama outlined his ideas for getting long-term unemployed workers back to work and closing the “skills gap” separating jobless Americans from employers who have positions to fill. In a speech setting his presidential agenda for 2012 — as well his burgeoning re-election campaign — Obama put forth policies that he said would “restore an economy where everyone gets a fair shot,” calling for more job training for young or unemployed workers as well as reforms to the unemployment insurance system. “We will not go back to an economy weakened by outsourcing, bad debt and phony financial profits,” the president said. “I want to speak about how we move forward and lay out a blueprint for an economy that’s built to last — an economy built on American manufacturing, American energy, skills for American workers and a renewal of American values.” To aid the unemployed, Obama proposed a new initiative to train and place 2 million workers in jobs through partnerships with businesses and community colleges, based on existing programs in cities like Charlotte, N.C., Chicago, Orlando and Louisville, Ky. Senior administration officials, speaking on condition of anonymity, told HuffPost that Steve Jobs, the legendary and recently deceased figurehead of Apple, urged Obama to put forth such proposals in a past meeting of the two men. Jobs’ widow, Laurene Powell Jobs, was a guest of First Lady Michelle Obama at the speech. In his speech, Obama cited the experience of Jackie Bray, a single mom in North Carolina who was laid off from her job as a mechanic. “Then Siemens opened a gas turbine factory in Charlotte and formed a partnership with Central Piedmont Community College,” Obama said. “The company helped the college design courses in laser and robotics training. It paid Jackie’s tuition, then hired her to help operate their plant. I want every American looking for work to have the same opportunity as Jackie did.” Additionally, Obama said he’d simplify government-sponsored training programs — something that Republican presidential candidate Mitt Romney has also proposed. “I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website and one place to go for all the information and help they need,” the president said. “It’s time to turn our unemployment system into a re-employment system that puts people to work.” The president also proposed “eligibility assessments” for long-jobless workers applying for emergency federal unemployment insurance. He did not mention the Bridge to Work program he had proposed during an address to a joint session of Congress last September. During the lasting jobs crisis, long-term unemployed workers have been hit particularly hard, with many still unable to find jobs even after exhausting their unemployment benefits. More than 13.1 million people were unemployed in December, according to the Labor Department, and an unprecedented 42.5 percent of them had been out of work for six months or longer. Nearly 2 million people have been unemployed longer than 99 weeks, beyond the reach of unemployment insurance. But the president pointed to more positive numbers. “In the last 22 months, businesses have created more than 3 million jobs,” Obama said. “Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s.” Economists and worker advocates say people out of work for an extended period have a harder time landing new jobs, and they may ultimately wind up burdening another part of the safety net once their unemployment insurance runs out. “The long-term unemployed are concerned that they’re less employable because they’ve been out of the workplace a couple of years,” says Karen Nussbaum, executive director of Working America, an affiliate of the AFL-CIO union federation. “People do need to be trained, and we need to make sure that long-term unemployment doesn’t mean never being employed again.” The White House said in a December report that applications for Social Security disability payments increased among people older than 50 who would soon exhaust their unemployment insurance. Obama mentioned the anxiety of older workers who lose their jobs — while touting the renewable energy industry. “When Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance,” Obama said. “But he found work at Energetx, a wind-turbine manufacturer in Michigan. Before the recession, the factory only made luxury yachts. Today, it’s hiring workers like Bryan, who said, ‘I’m proud to be working in the industry of the future.’” In recent years economists have been debating how best to address the American “skills gap,” discussing the idea that many Americans simply don’t have the advanced manufacturing and technological skills required for the better-paying working-class jobs that remain in the United States. Although not everyone agrees that this wide gap exists — economist and New York Times columnist Paul Krugman, notably, has deemed “structural unemployment” a “fake problem” — some employers and their allies have insisted that they have skilled positions they’d like to fill but simply can’t find the right American workers for them. Many of those same employers would surely like to see government step in and provide some of the necessary training. In his speech, the president said he hears “from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. Think about that — openings at a time when millions of Americans are looking for work.” If nothing else, Obama’s speech Tuesday could help make job training part of the mainstream dialogue, says Andy Van Kleunen, executive director of the National Skills Coalition, a nonprofit group that advocates for publicly funded job training. “President Obama has tried several times over the past couple of years to increase our investments and training for workers,” says Van Kleunen. “Finally, we’re going to get a clear national debate about where the skills gap is, and how to deal with unemployment together with it.”

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Romney Makes Startling Remark

by The Huffington Post on January 25, 2012

Huffington Post…

WASHINGTON — Mitt Romney said corporations “are people too.” Now, he says not only that banks are people, but they “aren’t bad people.” The comment came Tuesday in Florida, which has the seventh-highest foreclosure rate in the country. “In this case, it’s because of the banks,” he said to a small group in front of a Fannie Mae-foreclosed home in the town of Lehigh Acres in the southwest part of the state. “Well, the banks aren’t bad people. They’re just overwhelmed right now.” The remarks echoed Romney’s previous response to a heckler last August two days before the Ames Straw poll. “Corporations are people, my friend…of course they are. Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People’s pockets. Human beings my friend,” he said. It’s part of a pattern of Romney making offhand remarks that make him sound out of touch with the economic , which he says he can fix. “Don’t try and stop the foreclosure process. Let it run its course and hit the bottom,” he said in Las Vegas last October, which has the highest foreclosure rate of any metro area over 200,000 people according to RealtyTrac. Nevada leads the states among foreclosures. “I’m also unemployed,” he said to a group of unemployed people in June, also in Florida, which has jobless rates above the national average. “I like being able to fire people who provide services to me,” said Romney in New Hampshire earlier this month as part of an answer on why he favored competition among health insurers. “If someone doesn’t give me the good service I need, I want to say I am going to get somebody else to provide that service to me.” Romney later defended his remarks as being taken out of context; however, Romney himself took a quote of Obama out of context in an attack ad. The remarks came on the same day that the former Massachusetts governor — who has an estimated wealth between $190 million and $250 million — released his tax returns , which showed that he and his wife paid a 13.9 percent effective rate on $21.7 million in 2010–much lower than most middle-class taxpayers due to their income entirely deriving from investments.

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Green Building Trends For 2012

January 24, 2012

From Earth Advantage Institute : Earth Advantage Institute, a nonprofit green building resource that has certified more than 12,000 homes, announced its annual prediction of 10 green building trends to watch in 2012. The trends, which range from a boom in certified multi-family construction to the advent of consumer friendly home energy technology, were identified by Earth Advantage Institute based on discussions with a broad range of audiences over the latter part of 2011. These sectors included policymakers, builders, developers, architects, real estate brokers, appraisers, lenders, and homeowners. “While the economy has not been kind to most new home builders, we have seen a surging interest in home energy management and energy improvement among homeowners,” said Sean Penrith, executive director, Earth Advantage Institute. “Those builders and remodelers who have adopted a transparent green message have been quite successful.” List and captions courtesy of Earth Advantage Institute .

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

January 19, 2012

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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Romney’s Offshore Investments Revealed

January 18, 2012

GOP presidential candidate Mitt Romney holds millions of dollars in offshore investments, a new report from ABC News finds. While it is unclear whether any of the investments provided specific personal tax benefit to Romney — a possibility that his camp has explicitly denied — the report nonetheless adds further support to an ongoing narrative that the presidential hopeful stands on a financial plane reserved only for the top flight of the elite. According to ABC News, Romney, a former executive at private equity firm Bain Capital who is projected to be worth upwards of $250 million, holds around $8 million of his personal wealth in as many as 12 funds based in the Cayman Islands. Romney also lists a separate investment, valued between $5 million and $25 million, placed on the same Caribbean island chain. ABC News reports that Bain holds some 138 shrouded offshore funds in the Cayman Islands alone. Romney’s campaign has maintained that such behavior is not unusual, and that Romney himself has paid all the appropriate U.S. taxes on his holdings within the accounts. From ABC News: Tax experts agree that Romney remains subject to American taxes. But they say the offshore accounts have provided him — and Bain — with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens. Reuters reported earlier Wednesday that Bain also held accounts harbored in places such as Bermuda, Ireland and Hong Kong, which could lead to further questions about Romney’s personal involvement in these holdings. Andrea Saul, a spokesperson for the Romney campaign, pushed back quickly after the ABC News report, taking exception to their characterization of the investments as “tax havens.” “ABC is flat wrong. The Romney’s investments in funds established in the Cayman Islands are taxed in the very same way they would be if those funds were established in the United States. These are not tax havens and it is false to say so,” she said in a statement. Romney has come under increasing scrutiny this week after first dancing around a question about his intent to release his tax returns at a debate, then dealing himself a one-two punch by announcing that he had paid “closer to the 15 percent rate” in taxes while simultaneously downplaying $374,327 in speaking fees as “not much.” On Wednesday, New Jersey Gov. Chris Christie (R), one of his supporters, encouraged him to immediately release his returns to prove that nothing is amiss.

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Bill Parks: Remodeling Homeowner Incentives: A Plan to Revive the Housing Market by Replacing Mortgage Interest Deductions with Tax Credits

January 17, 2012

Almost four years after the 2008 mortgage collapse, whole neighborhoods stand empty, the construction industry is in shambles, and despite very modest improvements countless homeowners remain upside down on their loans and on the verge of default. Meanwhile, the economic recovery continues to lag. The evidence is undeniable: attempts to put an end to the U.S. mortgage crisis have failed. The Housing and Economic Recovery Act of 2008 and other measures have done little to solve the housing problem, and it’s clear that additional steps must be taken. In October, 2011, President Obama announced a new plan to encourage home refinancing inspired by Columbia University economists Chris Mayer and Glenn Hubbard (a former advisor to President George W. Bush). But even Mayer and Hubbard have expressed reservations that the plan won’t go far enough. While encouraging mortgage refinancing is a good start, it is time that we considered deeper, more meaningful reforms that would help existing homeowners, encourage prospective buyers and spur the construction, banking and real estate industries now and in the future. Exchanging the popular home mortgage tax deduction for a cashable tax credit, as Nobel Prize winning economist Joseph Stiglitz has proposed, would help us achieve these objectives. When combined with the President’s refinancing plan, it could well end the mortgage crisis once and for all. According to Stiglitz 1 : [W]e need assistance to average homeowners. We pay through our tax system nearly half of mortgage interest for the rich, but little if anything to find housing for the poor who don’t own homes. Converting our mortgage deduction to a cashable tax credit would not only be fairer, it also would help ordinary Americans to stay in their homes. For many years, economists and other experts with diverse political persuasions have supported similar proposals to substitute a tax credit for mortgage interest deductions. For example, in 1983 Senator Bob Dole introduced a mortgage bill that would substitute tax credits for deductions under certain circumstances. 2 Now is the time for Stiglitz and others to present concrete proposals. To start the discussion, the plan outlined below supports vulnerable homeowners with aid that will decrease foreclosures. Substituting a tax credit for all interest deductions may initially be expensive, but the costs would decrease over time as existing mortgage balances are reduced. Because of the continuing weakness in the economy and the support that the mortgage deduction continues to receive, existing mortgages could continue to have their interest deductible. However, all new mortgages would only be eligible for the tax credit described below. (One difficulty will be that for many taxpayers, the deductibility of mortgage interest is what fuels the taxpayer’s ability to take many other deductions instead of taking the standard deduction.) Tax Credit Proposal: 1. A refundable tax credit for 25% of interest paid on first mortgages. 25% is a middle-income rate and so will benefit everyone below that income level. Since the homeowner will not need to itemize to get the refund, it will benefit all homeowners, not just those that itemize deductions. The credit provides relief for all homeowners without further interference in mortgage contracts, but does not inhibit other measures to provide additional aid for at-risk homeowners. The 25% credit is a compromise between those who pay the highest tax rates and those who either pay no taxes at all, or pay taxes at a low rate. Suggestions for credit instead of deductions have been common, but increasing the credit percentage with strict limits may be a better alternative. 2. Maximum annual credit of $5,000. This credit will provide for a subsidy for all homeowners and particularly for those with less than20,000 per year in interest payments. The subsidy could almost equal payments for three months per year. If the interest rate were 5%, the mortgage total could be up to400,000. The5,000 limit reduces tax incentives for the largest homes and promotes more responsible home ownership. Even with a lower maximum credit, such as4,000, homeowners would receive substantial assistance. 3. Homeowners could apply for the credit to be paid directly to the lender, thereby reducing their monthly mortgage payments by almost 25%. If the credit is made available for the 2012 calendar year, a significant percentage of at-risk homeowners could avoid foreclosure because some of the interest for the year has already been paid or accrued. Paying the credit directly to the mortgage holder would assure that the credit is only used for mortgage payments. Arrangements could be made to pay the credit directly to the mortgage holder as it is accrued as long as the remaining balance is being paid by the homeowner. 4. Homeowners with existing mortgages would have the option to either keep their income tax deduction or convert to the tax credit system. Over time, this would reduce the percentage of the tax expenditure that supports the most expensive houses. It also rewards middle and lower income borrowers that presently receive little or no benefit from interest deductions. 5. For those that advocate scrapping the deduction altogether, future inflation will reduce the maximum value of the deduction unless the maximum is indexed for inflation. This system could assist anyone with mortgage payments, but it would especially help homeowners with recent mortgages in which the monthly payments go mostly to interest and little to principal. Though not a complete solution, the tax credit would provide benefits to all income groups and maximum benefit to middle- and lower-middle-class homeowners. It targets the benefits towards those who own homes but either do not itemize deductible expenses or are not in a high tax bracket. It is simple to set up and does not require modifying terms of existing mortgages. Converting the mortgage interest deduction to a tax credit would make sense at any time, but it is particularly urgent in the present economic climate. This program, unlike the current interested deduction, will encourage home ownership for those with middle and lower incomes. No longer will most benefits go to those who need them least. 1 Joseph A. Stiglitz, “A Chance to Improve Bailout,” USA Today, September 30, 2008. 2 “Its proponents say that by giving the tax credit directly to the home buyer, the measure could save the Treasury about $600 million. With the mortgage-subsidy bonds, which are tax-exempt and therefore reduce Treasury revenue, much of the tax benefits go to investors in the bonds and financial intermediaries such as banks and lawyers. The Reagan Administration, however, reflecting apparent recognition of the bonds’ popularity, has said it would support the Dole proposal, with some changes, if it were the only alternative to repealing their use.” NY Times , September 18th, 1983

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Romney Will ‘Probably’ Release Tax Returns

January 17, 2012

Former Massachusetts Gov. Mitt Romney moved a step closer to releasing his tax returns during Monday’s debate, saying he would “probably” do it around April if he becomes the nominee. “I looked at what has been done in campaigns in the past with Sen. McCain and President George W. Bush and others,” he said. “They have tended to release tax records in April or tax season. I hadn’t planned on releasing tax records, because the law requires us to release all of our assets — all of the things we own — that I’ve already released. It’s a pretty full disclosure.” “But you know, if that’s been the tradition, I’m not opposed to doing that,” he added. “Time will tell. But I anticipate that most likely I am going to get asked to do that around the April time period and I’ll keep that open.” When asked again whether he was agreeing to release them, Romney replied, “I think I’ve heard enough from folks saying, ‘Look, let’s see your tax records.’ I have nothing in them that suggests there’s any problem, and I’m happy to do so. I sort of feel like we are showing a lot of exposure at this point. And if I become our nominee, and what’s happened in history is people have released them in about April of the coming year and that’s probably what I would do.” Newt Gingrich, Rick Santorum and Rick Perry have all called on Romney to release his tax returns, as has former vice presidential candidate Sarah Palin , who released her records.

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Foreclosure Filings Fell Steeply In 2011, Little Consolation For Struggling Homeowners

January 12, 2012

Foreclosure filings fell dramatically last year, according to a report released Thursday. Several prominent economists said the news was a sign that the housing market could be stumbling toward recovery. “There’s light at the end of this very dark tunnel,” said Mark Zandi, chief economist at Moody’s Analytics. But don’t break out the champagne just yet. Zandi explained that there’s still a mountain of foreclosures to work through. And there are millions of Americans living in limbo, reeling from the lingering affects of the housing crisis and waiting to see if they will lose their homes. The number of homes with foreclosure filings plunged 34 percent to 1.89 million in 2011, according to RealtyTrac, a real estate site that tracks such filings. Total foreclosure activity was at its lowest yearly level since 2007. “This long, painful correction is not over yet, but probably mostly behind us,” said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and a former Obama administration economic adviser. “There was a time when housing was driving the economy down. We’re more in a situation where the economy is driving housing down.” It is difficult to “achieve economic liftoff” until house prices hit bottom, Bernstein added. Though there is still downward pressure on housing prices, “we are getting closer to digging our way out.” The decline in foreclosures was mainly due to banks’ hesitance to foreclose on homeowners in the first half of the year, as the so-called robo-signing crisis played itself out, said RealtyTrac chief executive Brandon Moore in a statement. By the end of 2011, he said, that had changed. “There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets.” Zandi noted that the number of 30- and 60-day delinquencies has fallen substantially and that demand for homes is starting to grow, but added that it still will take four to five years for the housing market to become “well-functioning” again. That’s a long time for the 1 in 5 homeowners who remain underwater on their mortgages, owing more than their houses are worth. Many homeowners are in limbo as banks try to determine whether to offer modifications on their loans or foreclose on them. Some experts said that the number of foreclosures has declined because there simply are fewer delinquent homeowners. Banks have been slow to offer loan modifications because the mortgage servicing operations were set up like remote call centers, and banks have to organize the paperwork, said Dean Baker, co-director of the Center for Economic and Policy Research, adding that recently they have become more willing to facilitate modifications, lowering the number of foreclosures. Banks have realized that they may not make much money selling a foreclosed home in a depressed housing market, he said. It is helpful for families to be able to spend more time in their homes as banks delay foreclosure since they can find decent alternative living arrangements in the meantime, Baker said. “If you’re living out of your car, you may end up losing your job,” he said. “You come to work not having showered.” Servicers have been slow to foreclose because they are not timely in processing anything, said Diane Thompson, a lawyer at the National Consumer Law Center. There could be a double dip in the foreclosure crisis as banks step up foreclosures in 2012, she said. For homeowners in limbo, “it’s extremely emotionally stressful,” Thompson said. “Lots of people lose their jobs, and marriages fail … The fees will continue to mount … Delay makes a loan modification harder to get for most homeowners because it makes it more expensive.”

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Paul Ryan Changes Tune On Controversial Bill

January 9, 2012

Facing pressure from constituents, Rep. Paul Ryan (R-Wis.) came out against the Stop Online Piracy Act (SOPA) on Monday. In a statement released on his official website, the House Budget Committee chairman outlined why he does not support the bill, noting that the current openness offered by the web should stay as is. “The internet is one of the most magnificent expressions of freedom and free enterprise in history. It should stay that way. While H.R. 3261, the Stop Online Piracy Act, attempts to address a legitimate problem, I believe it creates the precedent and possibility for undue regulation, censorship and legal abuse. I do not support H.R. 3261 in its current form and will oppose the legislation should it come before the full House.” Mashable notes that a Reddit campaign may have played a role in Ryan’s decision. “Operation Pull Ryan” was introduced last month, directing criticism against the congressman over his then-pro stance toward the bill. Ryan has accepted hundreds of thousands of dollars from organizations that support the initiative. Rob Zerban , Ryan’s 2012 Democratic challenger , has been part of the Reddit thread . The Kenosha County Supervisor applauded Ryan’s change of heart as an example of social networking power. “This is an extraordinary victory,” Zerban wrote. “Reddit was able to force the House Budget chair to reverse course — shock waves will be felt throughout the establishment in Washington today — other lawmakers will take notice.” Back in mid-December, The Huffington Post’s Zach Carter provided some SOPA background , explaining how the bill has “the power to fundamentally reshape the laws governing the internet.” Passage of the act would give the federal government broad powers to eliminate web domains believed to be partaking in piracy-related activities. SOPA opponents have come out swinging against the legislation. Moves against the measure include creating boycott apps , filming protest videos and transferring domains from pro-SOPA sites. GoDaddy.com was among the victims of that movement, eventually releasing a statement expressing opposition to the bill.

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Obama Whiffs On Campaign Promise

January 5, 2012

WASHINGTON — In 2008, then-President-elect Barack Obama made an ambitious pledge as part of his agenda to fight poverty, one he claimed would help “make work pay for all Americans” in an era of widening economic inequality: By the end of 2011, he would raise the federal minimum wage to $9.50 an hour and index it to inflation, “to make sure that full-time workers can earn a living wage,” as his transition team’s website put it. In effect, Obama was pushing for a 31 percent pay raise for millions of the country’s lowest earners. But when they collect their first paychecks for 2012, those workers will see no such raise. The federal minimum wage remains $7.25 an hour , the same rate it’s been since 2009, when the last of a series of wage bumps signed into law by George W. Bush was implemented. The cost of living continues to climb although the wage floor remains the same. Despite his pledge, Obama hasn’t exactly been stumping for the minimum wage increase. Pursuing such legislation is a long shot in the Republican-controlled House, given the opposition of business interests and free-market conservatives who argue that higher minimum wages force owners to curtail hiring. Even though the voting public generally supports raising the minimum wage, the administration might be fearful of the “job-killer” tag that inevitably would come with it. The president’s labor secretary, Hilda Solis, dodged the question when asked this summer if the wage should be boosted. The Obama campaign declined to comment on the issue this week. Plenty of economists — not to mention low-wage workers — believe the raise is due. Because the federal rate isn’t adjusted annually for inflation as many state rates are, it tends to lose some of its purchasing power every year. (Eighteen states and the District of Columbia have higher minimum wages that prevail over the federal one.) The federal minimum has been generally declining in real dollars since its high in the late 1960s. If it had kept pace with inflation since 1968, it would now stand at around $10. The extra $2.25 an hour floated by Obama would mean a lot to workers like Fernando Gomez, 23, of Indianapolis. The minimum wage in Indiana is $7.25, as is the case in most states. Working as a full-time custodian in a hotel for the second half of 2011, Gomez took home just a couple hundred dollars each week in wages, he said. He still lives with his family since his rent check would swallow most of his income if he tried to live on his own. Gomez wants to go to community college and maybe become a nurse someday, but he can’t sock away enough money working for $7.25 an hour to cover both tuition and living expenses. And though many people refer to minimum-wage jobs as temporary or entry level, some of Gomez’s colleagues have worked for years at the minimum rate, he said. Gomez recently switched to a hotel banquet worker job, but he’s still earning $7.25 hourly. “I believe it would help a lot,” Gomez said of a federal rate hike. “I could maybe afford to go to school. Another dollar or two would be great.” Heidi Shierholz, an economist at the liberal Economic Policy Institute, said the economic argument for a higher minimum wage is strong, especially in a sluggish economy such as this one: An extra dollar or two in pockets of the poorest workers serves to stimulate the local economies. Such workers have little choice but to spend the money, the argument goes. Obama has made such a case when it comes to extending unemployment benefits or the payroll tax cut but has been quiet on the minimum wage. “I get mystified by the politics surrounding all this … but the economics says this would’ve been a very good time to do it, and it still would be,” Shierholz said. “There’s the stimulus argument: You’re getting money into the hands of people who are very likely to spend it.” Without a federal rate pegged to the cost of living, Shierholz said, “it literally takes an act of Congress to get a pay raise” for minimum-wage workers. No such bill has gone anywhere in the current Congress. Liberals hoping to see a bump in the minimum wage under Obama have at least one ray of hope: Alan Krueger, the chair of the White House’s Council of Economic Advisers , is widely known for his work on the subject. A study by Krueger and his Princeton University colleague David Card in the early 1990s found that a rise in the minimum wage in New Jersey did not lead to a decline in jobs at fast-food restaurants. Within the large body of research on the minimum wage and job loss, no consensus has been reached — and Krueger’s work has been criticized by other economists — but some recent studies have bolstered the case that modest raises are not major job killers. Economist Dean Baker has argued that any lost work hours resulting from a minimum wage hike would be more than offset by the gain in pay for workers and higher productivity. When it comes to the politics at play, Baker compared Obama’s silence on the minimum wage to his underselling of the stimulus package and how large it needed to be: “He didn’t make the effort to try to educate the public as to what had to be done.” “I’m hard-pressed to see why we shouldn’t have the same [minimum] wage we did in the late ’60s” when adjusted for inflation, Baker said. “This isn’t welfare. By definition, we’re talking about people who are working. It gets a lot of sympathy from the public, and guess what? It’s good for the economy right now.” Some states have taken their own initiative. This week eight states raised their minimum wages , led by Washington State, which became the first to break the $9-per-hour threshold. All eight states have so-called cost-of-living adjustments that require tweaking the minimum wage each Jan 1. The wage raises will benefit roughly 1.4 million workers. According to an analysis by the Economic Policy Institute, the vast majority of those 1.4 million workers are not teenage part-timers , belying a widespread myth about minimum-wage earners. In fact, about 80 percent of the workers in those states are in their 20s or older, and 78 percent of them work at least 20 hours or more in a week, the institute’s David Cooper wrote. In short, a lot of them are like Gomez, the Indianapolis banquet worker who didn’t get a raise with the new year. “So many people are not able to stretch that paycheck,” Gomez said. “If food and gas prices are going up, why not the minimum wage?”

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Mary Eileen Williams: Powerful Resolutions for the Savvy Job-Seeker

January 3, 2012

As a mature job-seeker contemplating the start of the new year, you’re likely asking yourself how you can maximize your efforts to begin seeing real results in 2012. How can you eliminate some of the more frustrating roadblocks in today’s difficult job market? How can you present your skills and experience more effectively? And how can you take best advantage of the hiring opportunities that abound in January and February? (For more information on opportunities available during this special time of year, see my post entitled ” New Year, New You, New Job! “) Answers to these questions may well be found in evaluating the methods you’ve been using, eliminating those that waste your time and resources, and creating a list of powerful new techniques to move you forward. Just like the beginning of the New Year lends itself to reevaluating goals and creating a list of resolutions for your personal life, this is the time to take a look at how you’ve been conducting your job search. So plan to spend several minutes assessing your successes and failures. Then write up a set of action steps based on the behaviors that work best for you. Here’s a list of three resolutions for “Job Search 2012″ to get you started: 1) Ignore the negative press. Recognize that the media loves to spin bad news. Even more, the statistics they cite are, by definition, generalities. These have nothing to do with you as an individual job-seeker: the ways you’re conducting your job search, how many people are in your network and how you present yourself to others. Your attitude about your viability as a candidate underscores everything you do. In order to be successful, you’ll need to present yourself with confidence, energy and enthusiasm. So rather than feeling discouraged, take pride in the wealth of experience you bring, the challenges you’ve faced and overcome, and the well-honed skills you’ve accumulated over a lifetime. These are just a few of the true assets of age and experience. 2) Use the bulk of your time employing the most direct route to your next position. People get people jobs. Hiring statistics show that close to 75 percent of new positions are obtained through personal referral. This number grows even higher the older you are and the tighter the job market. Therefore you’ll want to plan your time accordingly — at a minimum you should be spending 75 percent of your time and efforts enlarging your network of contacts and making new connections in your field of interest. 3) Learn how to present yourself as a knowledgeable insider. Be sure to research trends in your industry and be able to speak to current developments locally, nationally and internationally. In addition to an enthusiastic, can-do attitude, you’ll need to converse with the knowledge and confidence your research will provide. Preparation is key. Therefore, spending some time educating yourself will pay off, both as you network and as you’re presenting yourself in job interviews. Be certain to check back soon for more tips and resolutions for 2012. With the right attitude, preparation, and connections, you’ll be positioning yourself for success. And, if you’re currently pounding the pavement, you know there’s no better way to start the New Year off than with a brand new job! Mary Eileen Williams is a Nationally Board Certified Career Counselor with a Master’s Degree in Career Development and twenty years’ experience assisting midlife jobseekers to achieve satisfying careers. Her book, Land the Job You Love: 10 Surefire Strategies for Jobseekers Over 50 , is a step-by-step guide packed with tools to turn age into an advantage — providing mature applicants with techniques to successfully navigate the modern job market as well as strategies that give them the edge over the competition. Visit her website at Feisty Side of Fifty.com and celebrate your sassy side! .

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Obama Delays Vital Request

December 30, 2011

HONOLULU — President Barack Obama is delaying his request for another $1.2 trillion increase in the nation’s debt limit at the request of congressional leaders. It’s basically because of a technicality. The White House had been ready to ask for the increase Friday because the government is within $100 billion of exhausting its current borrowing authority. Congress would then have 15 days to reject the request, though Obama would veto any objections in order to ensure that the government does not default on its obligations. But with Congress not due to return to Washington until mid-January, a bipartisan group of lawmakers asked Obama to delay his request so they would be in session during the 15-day period allowed for objections. “The administration is in discussions with leaders in both houses to determine the best timing for submission of certification and any subsequent votes in the two houses,” White House spokesman Josh Earnest said Friday. Kevin Smith, a spokesman for Speaker John Boehner, said the House leadership preferred not having to call members back to Washington early to vote on the increase request, but would have done so if necessary. A senior White House official said Obama will make his request within days. The Treasury Department will use accounting measures to ensure that the nation does not reach its debt limit before the $1.2 trillion increase is finalized, said the official, who requested anonymity because the person lacked authority to speak publically. The debt limit is the amount the government can borrow to finance its operations. It has soared because the government has run record deficits over the past decade. The borrowed money has helped pay for two wars, stimulate the nation’s economy after the worst recession since the Great Depression and keep intact broad tax cuts initiated during the Bush administration. Obama’s request to increase the nation’s borrowing authority would boost the debt limit to a record $16.4 trillion. The president and Congress agreed to raise it to that level in three steps as part of the August deal that was struck hours before a threatened government default. Officials say the $1.2 trillion increase should be enough to allow the government to keep borrowing until the end of 2012, or just after the presidential election. Congress agreed to raise the debt limit by $400 billion in August and by another $500 billion in September. House Republicans voted against the second increase, but failed to block it because the Senate approved it. The increases are scheduled to take effect unless both chambers vote against them. The White House announced the delay in the debt limit request from Hawaii, where the president is on vacation.

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David Paul: Before They Left Town, Did House Republicans Change the Rules of the Tax-cutting Game?

December 24, 2011

House Republicans, just days after standing their ground, decided instead to head home for Christmas dinner. So much for the principles that brought them to power in 2010. So much for ending business as usual in the nation’s capital. But their language changed by the end. Gone was the moral outrage, the appeals to end the mindless spending that was bankrupting the nation. This week, the House Republican talking points led with the insistence that America’s working men and women deserved more than a two-month payroll tax holiday. Somehow, the Tea Party-spawned House Republicans had morphed into demagoguing Proletarian heroes. But this was an important moment. After all, when the current House majority seized the reins, they were clear that their mission was to curtail spending as the singular path to curbing massive fiscal deficits, while not impeding the morally righteous task of cutting taxes. Specifically, the House Republicans changed “Paygo” rules that had been in effect for many years — whereby tax and spending measures must be budget-neutral over a 10-year period, as scored by the Congressional Budget Office — to provide instead that such constraints should not apply to tax cuts. This perspective — that deficits are not a function of the mix of revenues and expenditures but rather a function of spending alone — is an odd vestige of the Reagan era, when cutting taxes emerged as the sine qua non of the modern Republican Party and liberated the GOP from its stodgy traditions of fiscal prudence and school marmishness. At the time of the Reagan revolution, when marginal tax rates were high, one could make a fairly reasoned argument of the supply-side premise, that cutting taxes would increase revenues. But that argument was bound up in the facts and economics of that era, and only attained that status of a moral imperative in the ensuing years. But in the debate regarding extending the payroll tax cut, for reasons that are unclear, the House Republicans did not merely forsake their rule that tax reductions are morally self-justifying, they went to the mattresses to demand that they be paid for like any other legislation of Democrat-inspired spending. Then, suddenly, they got up off the mattresses, changed their votes and went home. Fast forward to late next year and the implications of the House action looms large. At the end of 2012, the Bush-era tax cuts are set to expire just like the payroll tax cut that was just extended. Under the House Paygo rules, Republicans would have no problem demanding that such tax cuts remain permanent, despite the $4 trillion of projected costs over ten years. But the payroll tax debate should cast the stance of the House Republicans in a new light. This month, for the first time in recent memory, the Republicans took a stand against tax cuts because of the fiscal implications of those cuts. For the first time in recent memory, Milton Friedman and the Republican Party of my grandfather were redeemed. This was a significant point that should not be lost. Because the simple truth is that to extend the Bush tax cuts is wrong. Little, if anything, has been said in the public debate over those tax cuts to remind the public about why they had an expiration date to begin with. After all, changes in the tax code tend to be eternal, and ability to rely on the rules of the tax system is a bedrock principle of our economy. But the Bush-era tax cuts had to expire if they were going to comply with the fiscal rules in place when the cuts were enacted into law. To meet the ten-year Paygo scoring rules, the Bush-era tax cut legislation provided for rates to return to the levels in effect in 2001 after seven years in order to pay for the largesse that was bestowed upon taxpayers over the period the cuts were to be in effect. Oddly, in the debate over extending those tax cuts, up until now the Democrats and Republicans essentially had to act under different political rules. Democrats, because they are the party of wanton over-spending and fiscal profligacy, had to justify how extending the tax cuts would be somehow fiscally justifiable. Republicans, because their brand includes the long-defunct notion that they are the party of fiscal prudence, felt no such constraint, and they have felt free to argue that the cuts be made permanent, whatever the fiscal impact might be. The argument in Congress that the Bush-era tax cuts should be extended has given the lie to the notion that Congress is subject to any rules, even the ones it places on itself. The argument that tax rates should not be increased in the face of a recession is utterly disingenuous. Those arguing to gut the 2001 and 2003 tax bills now would be doing so regardless of our economic condition. Look back at the historical record. Even as the Bush-era tax cut legislation was being considered, Republican leaders assured their base that by 2010 those cuts would be made permanent, as the Republicans pledged from the outset to attack as taxers any who would let the cuts expired. That is to say, even at the moment of the original legislation, those who supported those tax cuts eschewed any intention of adhering to the fiscal rules that Congress had imposed on itself. At the time, the cynicism was breathtaking. But as political calculation, it was prescient. This month, House Republicans veered from the Republican orthodoxy on cutting taxes without offsets in favor of their Tea Party anti-deficit principles when they demanded spending cuts if the payroll tax cut was to be extended. For the first time in recent memory, Republicans returned to pre-Reagan principles and demanded that tax cuts be paid for. A cynic might argue that this was not a change from the Republican playbook. They might suggest instead that we have seen the emergence of a codicil to the principle that tax cuts are morally self-justifying that suggests that such cuts must be paid for if the benefit accrues to working class Americans. Or perhaps the House leadership simply got caught up in needing to oppose anything that Democrats supported and lost sight of the fact that they were in the odd position of opposing a tax cut. In acting to demand that the payroll tax cut extension be paid for, will the House Republicans apply the same rule to extending the Bush-era tax cuts? That would be a game changer. But it is more likely that the House Republicans will get their act together, and once again the $4 trillion cost — and profound hypocrisy — of extending the Bush-era tax cuts will be subordinate to the higher moral principle of cutting taxes — without regard to cost.

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Key Company Reverses Course In Online Piracy Fight

December 23, 2011

The largest Internet domain registrar and web hosting company Go Daddy has abandoned its support for the proposed Stop Online Piracy Act (SOPA), according to a statement released by the company Friday. “Fighting online piracy is of the utmost importance, which is why Go Daddy has been working to help craft revisions to this legislation — but we can clearly do better,” said Warren Adelman, Go Daddy’s newly appointed CEO. “It’s very important that all internet stakeholders work together on this. Getting it right is worth the wait. Go Daddy will support it when and if the internet community supports it.” Go Daddy had been one of two major tech companies to support the legislation . “If you’re Nike, and you make tennis shoes and there’s a company in some other country that can manufacture those for 10 cents on the dollar and sell them as if they were real Nikes, you have a big problem,” said Christine Jones, general counsel for Go Daddy, earlier this month. The Huffington Post’s Zach Carter reported on the bill’s implications: SOPA would imbue the federal government with broad powers to shut down whole web domains on the basis that it believes them to be associated with piracy — without a trial or even a traditional hearing. It would provide Hollywood with powerful new legal tools to stifle transactions with websites whose existence worries the movie industry. The bill’s supporters, which also include major record labels, trial lawyers and pharmaceutical giants, call SOPA a robust effort to curb piracy of American goods online. Opponents, however, have castigated it as an unparalleled attack on free speech online. Civil liberties advocates say SOPA would give the U.S. government the same censorship tools used in China. Those in the technology sector warn that the bill creates enormous new barriers to entry for web startups, threatening innovation and job creation. Farther afield, librarians say that under the letter of the proposed anti-piracy law, they could be jailed for simply doing their jobs. In a November interview with HuffPost, Jones had endorsed the legislation, saying everyone in the internet ecosystem needs to do their part to fight illegal downloading. At the time however, Jones did express some reservations about the use of Domain Name System (DNS) blocking — the tool the government would use to shut down websites — as a technique that could create significant technical problems for the functioning of the internet. She also expressed reservations about the bill’s “private right of action,” which allows movie studios and other companies to seek site takedowns outside of court. DNS blocking by the government and a private right of action for companies that believe their content is being infringed are the main features of the bill. Nevertheless, Jones wrote several blog posts for the Go Daddy website explaining and defending the bill. The company says those blog posts have now been removed. Leah Kauffman, the singer-songwriter who had a 2007 viral sensation with “I got a Crush … on Obama” released a new song attacking SOPA called “Firewall (Don’t Let Our Government Ruin The Internets).” A coalition of Silicon Valley leaders, including Google co-founder Sergey Brin, Craigslist founder Craig Newmark and Huffington Post CEO Arianna Huffington, have signed an open letter to Washington opposing the bill. The House Judiciary Committee confirmed Tuesday that work on the legislation would be delayed until Congress returns from its winter recess.

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Dems, Reps Agree On Reducing Jobless Benefits

December 21, 2011

WASHINGTON — Republicans and Democrats have clashed frequently over federal unemployment insurance ever since the unemployed first became eligible for 99 weeks of benefits at the end of 2009. Despite the high-profile disagreements, which have repeatedly led to lapsed benefits for millions of people, Republicans and Democrats broadly agree on what to do next: reduce the duration of benefits and make sure their cost isn’t added to the federal budget deficit. But unless Congress reaches a compromise in the next week or so, federal unemployment benefits will lapse again for nearly 2 million people come January. In December, Republicans proposed reducing the number of weeks available by 40. Democrats are willing to meet them halfway by cutting 20 weeks, albeit in a backdoor fashion: Congress would reauthorize the two federal unemployment programs, but the second would automatically phase out in one state after another over the course of 2012. The phaseout would begin under a bill that passed the Senate on Saturday per a deal between Senate Majority Leader Harry Reid (D-Nev.) and his GOP counterpart, Sen. Mitch McConnell (R-Ky.). Democrats in the House of Representatives want the House to pass the Senate bill immediately. Although the Senate legislation would keep the federal programs in place for just two months, the second Extended Benefits program would phase out in 11 states during that time. It’s a “wholly inadequate” outcome, said Rep. Sander Levin (D-Mich.), the top Democrat on the committee overseeing unemployment, because “with very little warning, tens of thousands of long-term unemployed Americans will be cut off unemployment insurance.” Levin did not say, however, that he opposed the bill. The Extended Benefits program, which provides help for up to 20 weeks, kicks in after workers exhaust up to 53 weeks of federal Emergency Unemployment Compensation following 26 weeks of state benefits. The program is restricted to states with high and rising jobless rates. If a state’s jobless rate isn’t significantly higher than its rate three years ago, the program is not triggered. Democrats in both the House and Senate initially proposed reauthorizing Extended Benefits to allow states to extend their “lookback” period to four years ago, which would have meant more states kept the benefits through 2012. Those proposals have been pushed aside. As Republicans have noted, the Obama administration was the first to suggest letting Extended Benefits dwindle in 2012. Cynthia Rogers of Minneapolis received a letter last week telling her that Extended Benefits would end on Jan. 8. Rogers, 55, has been drawing unemployment benefits since September 2010, after she lost her job as a registered nurse due to an injury. She’s currently on the third “tier” of Emergency Unemployment Compensation, which lasts only 47 weeks in Minnesota (the duration of federal unemployment programs varies by state ). Rogers will be eligible for 13 weeks of Extended Benefits starting in January — if Congress renews the program and allows states to change their triggers. Rogers could use the money. “I’d be able to pay my medical premium for another month or two, and my car insurance and my rent,” she said. “But I still need a job.” She said she has already sold her house and is grateful her children are grown. She’s applied for pet store jobs as well as nursing positions. She’s planning to enroll in dog grooming school and launch a new career in Texas as soon as she can. “At age 55, no one wants to hire you,” she said in an email. “So, unless a Christmas miracle happens, I am at the mercy of Congress and the Lord Himself. I place my trust in God, not Congress.” As recently as 2010, Democrats insisted that the cost of federal unemployment compensation not be offset with spending cuts or tax hikes elsewhere in the budget, arguing that deficit spending stimulates the economy. They’ve since abandoned that stance and only disagree with Republicans on how the benefits should be paid for. Another area of agreement: Both parties support making millionaires ineligible for unemployment insurance. If such a policy had been in place in 2009, it would have saved $20 million out of $135.9 billion spent on benefits, according to the National Employment Law Project. The worker advocacy group argued in a recent report that cutting off higher earners could undermine what is supposed to be an entitlement for anyone who loses a job through no fault of his or her own: “[E]xaggerating the extent to which millionaires, a group of potential beneficiaries who garner little or no public sympathy, are drawing UI [unemployment insurance] benefits opens the door to means-testing of unemployment benefits at any level of income by essentially eliminating UI for certain workers at the highest income levels.” Republicans are on their own, however, when it comes to allowing states to drug-test the jobless and require layoff victims who haven’t finished high school to enroll in GED courses as a condition for receiving benefits. Neither Democrats nor Republicans have said they’d be willing to drop extended unemployment compensation altogether, something Congress has never done with a national jobless rate above 7.2 percent. But the latest deal has fallen apart, and most members of the House and Senate have returned to their districts for a Christmas break that ends in late January. As many as 1.8 million long-term jobless will lose assistance over the course of the month. Arthur Delaney is the author of ” A People’s History of the Great Recession ,” HuffPost’s first e-book.

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If Payroll Tax Cut And Unemployment Benefits Are Not Extended, Labor Market Could Take Big Hit

December 19, 2011

As Congress jockeys over emergency stimulus measures that are set to expire soon, economists warned Monday that congressional inaction could spell further woes for the already sputtering economy, making an stagnant labor market even worse. If Congress doesn’t continue a payroll tax break for working Americans and extended unemployment benefits for the country’s long-term jobless — the two key measures being debated in Washington — Americans could hold back on spending, crippling the consumer-driven economy. “It’s not just that Americans are going to have less funds available to spend, but people are also going to be more pessimistic,” said Bernard Baumohl, chief global economist at The Economic Outlook Group. He warned of a vicious cycle of pessimism, sparked by what he calls concern over the “brinkmanship” in Washington, driving the economy downward. “People are going to be more concerned about the economic outlook and likely cut back on spending even further,” he said. “They’ll see that the economy will be even closer to skirting recession.” If Congress doesn’t reach an accord, employed people will see a larger slice of their paychecks going to payroll taxes, leaving them less to spend with — the payroll tax break passed in late 2010 has meant savings of around $1,000 for those earning $50,000, according to estimates. And as many as 1.8 million long-term jobless will lose their unemployment assistance in January if no compromise is reached, according to worker advocacy group the National Employment Law Project. Since 2008 workers laid off through no fault of their own have been eligible for extended benefits funded by the federal government after using up the state benefits, which usually last 26 weeks. In an economy driven by consumer spending — losing those two stimulus measures could make employers even more reluctant to hire. “We’re just seeing this recovery drag on and on and on, and this is going to make it drag on that much longer,” said Dean Baker, co-director of the Center for Economic and Policy Research. Economists expect losing the stimulus measures could hit the economy hard; estimates range from a loss of 0.7 to 1.1 percentage points in expected-GDP growth. The economy grew at an annual rate of 2 percent in the third quarter, and dropping of a full percentage point would be a significant loss. Baker said he expected around 1.3 million jobs would be lost if both measures expire. The labor market is already lagging; 13.3 million Americans were officially unemployed last month, and millions more are either working part-time because they can’t find full-time work or have left the labor force, giving up the job search entirely. Economists reached by The Huffington Post asked the same question about Washington’s current impasse: With growth already so slow and the stimulus measures already modest, why is this debate happening at all? “Maybe we’ll keep growing in spite of the withdrawal of spending power, but we’re not growing very strongly as is,” said Gary Burtless, an economist at the Brookings Institute. “Why put the recovery in peril?” As Burtless sees it, the payroll tax cut extension is already an insufficient compromise. He, like many economists, says that there are more effective ways to stimulate the economy, such as a targeted tax cut that encourages employers to increase hiring or direct spending on public works projects. “There are millions of worthy public projects that are better done than left undone, and a lot of unused skills that could be immediately put to work,” he said, referencing the languishing construction industry, where employment levels still sit far below their pre-recession heights. “I’m more worried about the politics of what it takes to get those things done quickly.” The House is scheduled on Monday to take up the Senate bill, passed on Saturday, but House Speaker John Boehner (R-Ohio) said Monday he expects the House to reject the Senate-passed package.

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White House Suggests A Short Tax Holiday

December 15, 2011

WASHINGTON — Faced with (still) intransigent Republicans, the White House on Thursday floated an idea: that Congress extend the payroll tax cuts and long-term unemployment insurance “for a short period of time.” Until today, the Obama administration had been arguing for a full-year extension of both. The compromise idea, floated by a senior administration official at a small meeting with reporters, would constitute a significant concession to Republicans and fits what many Democrats see as an all-too-familiar pattern of the Obama administration caving in to GOP leaders, who are bent on making life as miserable as possible for the president and, some would argue, the economy. Congress, said the official, “could pass a continuing resolution through to January tied to an extension of the payroll tax and unemployment insurance for a short period of time.” Contacted afterward to confirm and clarify the official’s remarks, White House Communications Director Dan Pfeiffer said that the official was “just making the point that the president’s principle is, no one goes home until we guarantee taxes won’t go up.” Still, “going home” with only a temporary “guarantee” is far different from what the administration and Democrats have publicly championed. It constitutes sticking to “principle,” but in a way that would be less costly — finding ways to pay for the measures would be much easier — and less confrontational. In the long run, however, it would require another legislative drama sooner rather than later. Administration officials such as Treasury Secretary Tim Geithner have said repeatedly that failure to fully extent the payroll tax cut and unemployment insurance would not only pose hardships for working people and the middle class, but would cut economic growth by at least 1 percent at a time when the economy needs all the help it can get. A short-term extension of both would at least put off that danger for now, at a moment when Europe is teetering on the brink and the Obama administration (and the world) can’t afford another bout of legislative paralysis here. On Wednesday, Democrats and administration officials privately abandoned their preferred method of paying for extension of the payroll tax holiday: a surtax on millionaires. The tax is popular in the country, but Obama and his allies have decided they aren’t willing to risk a confrontation — including another possible shutdown of the federal government — to get it. As for the payroll tax cut itself, some Democrats have suggested that the White House simply let it lapse and pick up the issue after the Christmas recess. It’s a popular measure and Republicans would take a political hit for raising taxes. But the senior administration official said that keeping the economy moving along — it has been performing somewhat better than expected — is more important, both for its own sake and, ultimately, for the president’s. “You would have the issue, but you would also have the reality” of slower growth, the official said. As a result, the administration is casting about for alternative ways to pay for extending the payroll tax cut and unemployment insurance, including raising fees paid by Fannie Mae and Freddie Mac and further cuts to mandatory spending . The administration is also open to negotiating a reduction in the number of weeks that long-term unemployment insurance benefits would be available. The current limit is 99 weeks; the GOP has suggested 55, the Democrats 79. The official said that a compromise of some kind was still possible on that score.

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Chad Stone: House Republican Unemployment Insurance Proposal Acts As If Economic Slump Is Over

December 15, 2011

House Republicans must think the job market is improving rapidly and that the Congressional Budget Office is way off base in projecting that the unemployment rate will average 8.7 percent in 2011 and 2012.  How else can one explain their proposal to slash federal emergency unemployment insurance (UI) benefits? The House Republican proposal — part of their larger proposal to extend the payroll tax cut and UI benefits — would slash, by 40, the number of weeks potentially available to unemployed workers who are struggling to find a job in some states that were hit the hardest by the jobs slump (see map).  That greatly raises the risk that unemployed workers will run out of UI benefits before they find another job, imposing even greater hardship on them and their families.  It also reduces the amount of support that UI — one of our highest-bang-for-the-buck stimulus programs — can provide for the struggling recovery.  And, to add insult to injury, the Republican proposal contains onerous requirements on qualified UI applicants, such as drug tests and requirements to hold or be working toward a GED, that would make it harder for them to receive benefits at all. Current policy provides an unprecedented amount of federal emergency UI because this is an unprecedented economic slump.  Two-fifths of the unemployed have been looking for work for more than 26 weeks, which is the maximum number of weeks of regular UI available in most states.  At no time in the last 60 years (before the current downturn) has the share of the unemployed who have been out of work this long been this high.  Pew Economic Policy Group research indicates that more than half of the long-term unemployed have been searching for work for more than a year. Under the Republican proposal, workers who exhaust their 26 weeks of regular UI early next year would be eligible for up to 20 additional weeks of federal emergency UI in all states.  In states with an unemployment rate of 6 percent or higher, there would be up to another 13 weeks available, but in most of them that would be it.  Many unemployed workers now receiving emergency federal benefits would experience a premature cutoff next year compared with current policy.  The biggest cuts would come in states with the highest unemployment rates. Continuing current federal UI policy into 2012 would provide $45 billion of support for a recovery that’s still struggling to gain traction.  The Republican UI proposal would provide over $10 billion less support for the recovery and impose needless hardship on the long-term unemployed who are struggling to find a job in an economy in which there are still four times as many people looking for work as there are job openings. We can only wish we had a job market that was improving so fast that the Republican policy made sense. Here’s more information about that proposal for our wonkier readers: The Republican proposal maintains the 20-week first tier of Emergency Unemployment Compensation (EUC) available in all states, replaces the 14-week second tier available in all states with a 13-week second tier available only in states with an unemployment rate above 6 percent, and eliminates the third and fourth tiers of 13 weeks in states with an unemployment rate of 6 percent or higher and 6 weeks in states with an unemployment rate of 8.5 percent or higher, respectively.  It continues the policy of allowing states to adopt a three-year “lookback” for the Extended Benefits (EB) program.  However, a four-year lookback is necessary to prevent EB from triggering off in most states over the course of 2012, causing states to lose either 13 or 20 weeks of EB depending on their particular circumstances. Related Posts: Extending Payroll Tax Cut Would Keep 1.1 Million People Out of Poverty Cutting Federal Pay and Workforce Poses Problems Today’s Jobs Report In Pictures This post originally appeared on the Center on Budget and Policy Priorities’ blog, www.OfftheChartsBlog.org .

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Congress Threatens Foundation Of Internet

December 14, 2011

Ryan Grim contributed reporting WASHINGTON — A month ago, Google lobbyist Katherine Oyama absorbed one of the more unusual congressional tongue-lashings in years when she appeared before a hearing of the House Judiciary Committee. Rep. Tom Marino (R-Pa.) joked that Oyama had walked into a “lion’s den.” After praising representatives of drug giant Pfizer and the Motion Picture Association of America for their aggressive efforts to combat online piracy of American products, a bipartisan cadre of committee members spent much of the hearing berating Google, and Oyama personally, as corrupt, compromised and selfish. “One of the companies represented here today has sought to obstruct the Committee’s consideration of bipartisan legislation,” House Judiciary Committee Chairman Lamar Smith (R-Texas) said. “In my experience there’s usually only one thing at stake when we have long lines outside a hearing as we do today, and when giant companies, like the ones opposing this bill, and their supporters start throwing around rhetoric like, ‘This bill will kill the Internet,’” said Rep. Mel Watt (D-N.C.), glowering at Oyama. “That one thing is usually money.” It’s not unheard-of for corporate representatives to pay public penance on Capitol Hill, but Google had seemed an unlikely target: Unlike recent corporate target MF Global and congressional villain Goldman Sachs, Google’s shaming wasn’t preceded by massive public outcry. So what raised the committee’s ire? An extremely technical, low-profile bill that isn’t being covered by cable news, but has nearly 1,000 registered lobbying officially working on it: the Stop Online Piracy Act, or SOPA — a bill with the power to fundamentally reshape the laws governing the Internet. SOPA would imbue the federal government with broad powers to shut down whole web domains on the basis that it believes them to be associated with piracy — without a trial or even a traditional hearing. It would provide Hollywood with powerful new legal tools to stifle transactions with websites whose existence worries the movie industry. The bill’s supporters, which also include major record labels, trial lawyers and pharmaceutical giants, call SOPA a robust effort to curb piracy of American goods online. Opponents, however, have castigated it as an unparalleled attack on free speech online. Civil liberties advocates say SOPA would give the U.S. government the same censorship tools used in China. Those in the technology sector warn that the bill creates enormous new barriers to entry for web startups, threatening innovation and job creation. Farther afield, librarians say that under the letter of the proposed anti-piracy law, they could be jailed for simply doing their jobs. But with buy-in from powerful members of Congress on both sides of the aisle, SOPA’s backers had hoped for few roadblocks en route to Thursday’s committee vote and, from there, the House floor. The bill’s future is in greater doubt, however, given unexpectedly strong opposition from both grassroots organizers and corporate players with a vested interest in maintaining the Internet’s status quo. In fact, SOPA and its companion Senate bill, Protect IP, have splintered the U.S. Chamber of Commerce, the nation’s preeminent business lobby. In October, Internet portal Yahoo publicly withdrew from the Chamber — an extremely rare move for a big U.S. business. Google lobbyists tell HuffPost they “wouldn’t be surprised” if the leading search giant soon followed Yahoo out the door. The opposition has succeeded in slowing legislative momentum. Sources in Congress and on K Street now say that Senate is unlikely to vote on its measure by the end of the year. And the bill’s prospects become much slimmer in 2012, an election year in which members will spend much more time away from the Hill. Yet in the meantime, other legislation has been left sitting idle, including bills to maintain current Medicare reimbursement rates for doctors, renew the payroll tax cut for the middle class and maintain the flow of unemployment benefits. So how has a bill this arcane occupied so much congressional attention? Grassroots lobbying has been a factor, but the SOPA war in Congress has mostly been waged between different corporate elements, each with deep pockets. While bipartisanship has been hard to come by in Washington this year on high-profile issues, it’s been easy to find on SOPA and the other corporate disputes that have taken much of the legislature’s time this year — banks vs. retailers , Silicon Valley vs. Big Pharma . But unlike previous corporate spats on Capitol Hill, voters would quickly see the impact of the year’s final congressional action if the government uses it to give their favorite websites the ax. * * * * * Movie studios, cable companies and major record labels have been railing against copied songs and films for decades. In the ’20s, record labels required musicians to sign contracts promising never to appear on a new medium called “radio.” Nearly a century later, the Recording Industry Association of America sued a 12-year old girl for downloading children’s TV theme songs on her parents’ computer. And for the past decade, they’ve hammered Capitol Hill with the same demand: Stop online piracy. “Hollywood and the recording industry have a one-item agenda. You can’t say to them, ‘If you go softer on this, I’ll give you that,’ because there’s no ‘that’ for them,” says Gigi Sohn, president and Co-Founder of Public Knowledge, the leading nonprofit on Internet freedom issues, and a staunch opponent of SOPA. The top target has been the Judiciary Committee, a powerful circle of lawmakers that is responsible not only for intellectual property rules, but judicial appointments, bankruptcy law and scores of issues involving constitutional rights. In recent decades, the line between Hollywood and the Judiciary Committee has blurred. In the early 1990s, then Rep. Sonny Bono (R-Calif.), of Sonny & Cher, drafted a bill for the Judiciary Committee that extended the length of copyright protection by an additional 20 years. Bono’s Southern California district was very close to Disneyland, and the copyrights on Disney’s oldest Mickey Mouse cartoons were nearing their expiration. Bono’s efforts ensured that Mickey’s first appearance in “Steamboat Willie” would not enter the public domain until 2023. Senate Judiciary Committee Chairman Pat Leahy (D-Vt.) is Hollywood’s current favorite son in Washington. His top two career campaign contributors are Time Warner and Disney, according to data compiled by Center for Responsive Politics ; Time Warner has even given him cameo appearances in Batman movies , an experience Leahy talks of proudly. Another committee member, Sen. Al Franken (D-Minn.), who has repeatedly called net neutrality ” the most important free speech issue of our time ,” is a co-sponsor of the new anti-piracy legislation. An aide to Franken says that the issue is personal: “He is … a copyright holder and he has worked with creatives and copyright holders.” Franken has written several best-selling books, and was a longtime star of NBC’s Saturday Night Live. On the Republican side, former Judiciary Committee aides Allison Halataei and Lauren Pastarnack recently signed on as lobbyists for the entertainment industry, as Politico has reported . According to an analysis by the Sunlight Foundation, a nonpartisan government transparency nonprofit, a full 16 former House Judiciary Committee staffers are now lobbying on intellectual property issues, with all but a handful pushing to enact SOPA. In May Leahy introduced Protect IP, declaring that it “will protect the investment American companies make in developing brands and creating content and will protect the jobs associated with those investments.” The bill would give the Department of Justice the power to bring down foreign websites “dedicated to infringement” without going through the hassle of a trial — or even a traditional hearing. All DOJ has to do is convince a judge to approve the department’s view that a site is in fact “primarily dedicated to infringement”; the law doesn’t require the judge hear any defense from the website’s operator. Currently the government can only shut down domestic websites, and only if it plans to go to trial; taking down a website can only occur if a judge is shown probable cause that the site was used in the commission of a crime. The new bill doesn’t require criminal activity for a takedown — only that the DOJ believes the site be “primarily dedicated to infringement.” Even with its existing powers, the government has improperly shuttered legitimate websites. In late 2010, Immigration and Customs Enforcement brought down dozens of websites with names like “boxedtvseries.com” and “dvdscollection.com.” Most of those sites quickly moved their operations to identical sites with different domain names. But in the same sting, ICE also knocked out a handful of quite popular music blogs that artists frequently leaked songs to as a promotional tool . On December 8, 2011, after more than a year, one of those websites, dajaz1.com, went back up. ICE, which declined to comment for this article, decided not to prosecute. Under Leahy’s bill, the government would have no obligation to ever even pretend to be proceeding toward a trial in order to keep a site suppressed indefinitely. “Can the government be trusted to get this stuff right?” Asks Andrew Bridges, a lawyer with Fenwick & West who represented dajaz1.com throughout the proceeding. “I think the obvious answer is no. There’s a reason why we have trials.” Leahy’s bill would also empower corporations to demand that payment processors, advertisers and search engines stop doing business with sites the companies believe to be dedicated to infringement. A Hollywood studio could claim a website is “dedicated to infringement,” tell Google to stop registering the website in its search results. If Google protested, the company could haul Google into court. This new set of corporate liabilities — known as a “private right of action” — prompted resistance from Wall Street. Both JPMorgan Chase, which operates a major global payment processing business, and the Financial Services Roundtable, a lobbying group representing the nation’s biggest banks, had been lobbying Congress against the bill, arguing that it was unfair to hold banks accountable for the sins of others. Banks and payment processors didn’t want to have Hollywood telling them who to do business with. * * * * * In 2010, Secretary of State Hillary Clinton blasted China’s Internet censorship as an ” information curtain .” But the way Protect IP tries to cut off foreign pirates’ access to resources within the U.S. mimics many of the Chinese government’s methods. Even former Sen. Chris Dodd (D-Conn.), now chairman of the Motion Picture Association of America, invoked China’s methods when challenging Google’s claim that it couldn’t block access to specific websites on its search engine. “When the Chinese told Google that they had to block sites or they couldn’t do [business] in their country, they managed to figure out how to block sites,” he told Variety . The government’s ability to shut down sites would involve federal tampering with the domestic Domain Name System — a basic Internet building block that links numerical addresses where Internet data is stored to alphabetical URL addresses that people actually type into web browsers. The Chinese government censors the Internet for its citizens by engaging in DNS blocking, restricting access to certain domains. Tech experts warn that giving the U.S. government such powers could hinder the functionality of many web applications, severing the connection between domain URLs and numerical data addresses that many programs rely on. It would also hamper efforts to introduce a new security system known as DNSSEC, which national security programmers have been developing for years. “The Act would allow the government to break the Internet addressing system,” wrote 108 law professors in a July letter to Congress . “The Internet’s Domain Name System (“DNS”) is a foundational building block upon which the Internet has been built and on which its continued functioning critically depends. The Act will have potentially catastrophic consequences for the stability and security of the DNS.” Leahy’s bill has whipped Internet advocacy groups into a frenzy. Dozens of nonprofits, including the Electronic Frontier Foundation and The Center for Democracy and Technology, issued strong statements condemning the bill. Fifty venture capitalists sent a letter to the Hill warning lawmakers that Leahy’s bill could cripple tech startups with absurd legal fees prompted by Hollywood. “Either they don’t understand the basic fundamentals of the Internet,” says Fred Wilson, referring to the broad congressional support for SOPA, “or they’re just doing this to get the MPAA and the [Recording Industry Association of America] off their backs.” Wilson is managing partner with Union Square Ventures , the New York-based venture capital firm that seeded Twitter, among others. By the fall, things would get much worse for tech companies. Amid intense lobbying pressure, the House would expand Leahy’s bill, giving the U.S. Attorney General the power to shut down domestic websites without any intent to proceed to trial. Once that news became konwn, a slew of U.S. web companies, including Twitter, eBay and HuffPost parent company AOL, significantly ramped up lobbying efforts against the legislation. But during the spring and early summer, the response from tech companies to Leahy’s bill, though negative, was relatively muted. Most tech giants simply did not believe that such an extreme bill would ever really pass, according to lobbyists who worked against the legislation and staffers for Senators who oppose it. Leahy had introduced a previous Hollywood anti-piracy bill, known as COICA, in September 2010; that attempt had floundered for six months before he rewrote it as Protect IP. Sen. Ron Wyden (D-Ore.) responded to pressure from online activists by quickly putting a hold on Protect IP, preventing it from coming up for a vote indefinitely. Tech-friendly lawmaker Rep. Bob Goodlatte (R-Va.) was tasked with drawing up the House version, which Silicon Valley was assured would be far narrower in scope than Leahy’s effort. But over the summer, Hollywood ginned up support anywhere it could. “Hollywood is really putting the screws to just about everybody they do business with. Netflix, the Writers Guild — they’re all coming to me and saying, ‘Can’t you say something good about this?’ ” says Public Knowledge’s Sohn. Several unions associated with the entertainment industry endorsed the bill, including the Teamsters, a decidedly non-celebrity trucking union that works with Hollywood loading and transporting films and supplies. And since courts would ultimately have to decide what constitutes a site “dedicated to infringement,” Leahy’s bill would create a whole new realm of legal disputes, offering trial lawyers their own slice of the Internet. The result was a perfect agglomeration of traditional Democratic Party constituencies, and Leahy quickly round up 21 Democrats as co-sponsors — including some of the most progressive and Internet-friendly members of either chamber. Top members of the Democratic leadership, including Sens. Chuck Schumer (D-N.Y.) and Dick Durbin (D-Ill.), signed on alongside progressive stalwarts, like Sherrod Brown (D-Ohio) and Amy Klobuchar (D-Minn.), to the chagrin of Internet freedom groups who had once counted all of them as allies. All 22 Democratic co-sponsors of Protect IP previously voted to protect net neutrality, a policy that prevents corporate telecommunications giants from dictating the accessibility and functionality of individual websites. NBC Universal is one of multiple television behemoths lobbying in support of the bill, as is News Corp., the parent company for both Fox Pictures and Fox News. In the past six months, Fox News, Fox Business, MSNBC and CNBC have remained silent on Protect IP and SOPA, the house equivalent, according to a HuffPost review of cable TV records. Both Fox and NBC declined to comment for this article. News Corp. Chief Rupert Murdoch has personally lobbied Congress on Protect IP, meeting with Senate Minority Leader Mitch McConnell (R-Ky.) among others. AOL Inc., HuffPost’s parent company, is lobbying against the bill; CEO Tim Armstrong has personally met with President Obama. * * * * * While Washington has demonstrated little enthusiasm for taking substantive action on the jobs crisis, lawmakers always try to portray to whatever else they’re working on as jobs-oriented. Obama heavily touted a Bush-negotiated free trade pact with Korea as a job-creator, though the government’s own numbers on Korea imply a “negligible” impact on American jobs. Even in inter-corporate fights, jobs remain the focus of every legislative pitch a lobbyist makes, and piracy provides a natural hook: stopping foreign websites from pirating U.S. goods would create American jobs! The Motion Picture Association of America — a lobbying group for the dominant Hollywood studios — is pushing that line harder than anyone else in the fight. But amid epic unemployment, few voters are interested in prioritizing the complaints of silver-screen celebrities over the American middle class. So former Sen. Dodd, now the chairman of the MPAA, has embarked on an ambitious lobbying and PR campaign emphasizing the many less glamorous jobs involved in the film industry. During the last Congress Dodd moved more large and complex legislation through Congress than any Senator in modern memory, taking a lead role in the Wall Street overhaul and credit card reform, among other bills. If anybody can lead SOPA through this Congress, it’s Dodd. “Behind Hollywood’s red-carpet image lays a blue-collar reality. Most of those 2.2 million jobs are held by middle income families and small-business owners, men and women whose names will never appear on a theater marquee, but whose efforts are critical,” Dodd said in a Nov. 16 speech before the Hollywood Chamber of Commerce, the organization responsible for the “Hollywood Walk of Fame” honoring film and music celebrities . Dodd’s 2.2 million jobs figure, however, exaggerates Hollywood’s contribution to the American economy. According to supplemental data provided to HuffPost by MPAA , only 272,000 people work for movie studios and television companies. The lobby group claims that an additional 430,000 people work in related “distribution” jobs dependent on Hollywood, legal web streamers like Netflix, the few remaining video store clerks and cashiers checking out DVD purchases. Just how many of these “downstream” positions are really dependent on Hollywood is the subject of dispute among economists, and how many are hurt by kids downloading movies for free is even less clear. But the vast majority of the jobs Dodd & Co. claim are threatened by online piracy are only peripherally related to the entertainment business. MPAA takes credit for nearly 1.6 million jobs at florists, catering companies, hardware stores and other industries that work with major movie studios, assuming that these jobs could not ultimately be out of a job without Hollywood help. “This is a joke,” says economist Dean Baker, co-Director of the progressive-leaning Center for Economic and Policy Research. “This bill will have very little impact on jobs directly. And of course the money that people don’t pay to the MPAA, they spend somewhere else. So this is about the distribution of jobs, not the number.” In July, MPAA launched Creative America , a site that purports to demonstrate the ravages of piracy on ordinary folks in the entertainment industry. The group is now engaged in an aggressive and expensive advertising campaign to promote Protect IP and SOPA as job-protecting legislation, claiming that pirates are “stealing … hundreds of thousands of American jobs.” WATCH the MPAA ad: Dozens of other industries have lined up to support the bill, chanting the less-piracy-equals-more-jobs mantra. But like many talking points circulating around Capitol Hill, the sound bite hinges on a link between higher corporate profits and more jobs. For many of the firms in favor of the bill, that link is tenuous at best. “If you’re Nike, and you make tennis shoes and there’s a company in some other country that can manufacture those for 10 cents on the dollar and sell them as if they were real Nikes, you have a big problem,” says Christine Jones, General Counsel for Go Daddy, one of just two major tech companies to support the bill. Jones was a bundler for the 2008 presidential bid by Sen. John McCain (R-Ariz.), raising as much as $100,000 for him. McCain, a Protect IP co-sponsor, denies any contact between himself and either Go Daddy or Jones. But a large portion of Nike’s labor force works overseas (often working in abusive labor conditions that the company has long vowed to end). Most of the firms lobbying on the legislation will not even publicly disclose the number of employees who actually work in the United States (Tiffany & Co., a supporter of the bill that does disclose, has 44 percent of their employees overseas ). But supporters of anti-piracy legislation continue to tout the jobs line. In a statement provided to HuffPost, Franken says the bill “an important jobs issue,” insisting that, “The online sale of copyrighted content and counterfeit goods hurts American workers and businesses, and it ultimately means lost jobs.” Protect IP’s support from liberals like Franken and traditional Democratic donors has not been lost among the conservative base. As the Tea Party Patriots proclaimed in an early autumn Facebook post : “Have your own website? Maybe the government will shut it down tomorrow…without any notice to you. Republicans are going to introduce this in the House, Democrats in the Senate. WHAT??? Big Labor, Hollywood, U.S. Chamber of Commerce all in this together…against you.” During the years-long debate over net neutrality, Republicans repeatedly claimed that net neutrality rules amount to a “government takeover” of the Internet, insisting that the government doesn’t need to and shouldn’t “regulate the Internet.” “Here’s what they wanna do: take the private Internet and put it all under government control,” Tea Party favorite Rep. Marsha Blackburn (R-Tenn.) said in a web video uploaded to her own YouTube account in April . “Think about it. What’s going to happen to the next Facebook innovator if they have to go apply with the government to get approval to develop a new application?” And yet elected Republicans of all stripes, including Blackburn, whose district includes Nashville, are lining up to hail Protect IP and SOPA — accounting for 17 of 39 Senate co-sponsors and seven of nine House co-sponsors. Tea Party favorite Sen. Marco Rubio (R-Fla.), whose state houses Universal Studios and Disney World, is a co-sponsor on the Senate side, while Reps. Mary Bono Mack (R-Calif.), Elton Gallegy (R-Calif.) and Dennis Ross (R-Fla.), who have heavy Hollywood presence in their districts, have signed on as co-sponsors in the House. “This … is a huge giveaway to the trial lawyers, but the Republicans are all over this,” says a frustrated Pedro Ribeiro, spokesman for Rep. Zoe Lofgren (D-Calif.), a lawmaker whose district is home to several Silicon Valley stalwarts and was one of the first members of Congress to speak out against the piracy bill. * * * * * With major corporate constituencies organizing on behalf of the bill, Silicon Valley stalwarts couldn’t count on the U.S. Chamber of Commerce to air their complaints. In addition to Hollywood and Nike, pharmaceutical giants were making a big push. Americans pay higher prescription drug prices than the citizens of any other nation , a product of strict intellectual property rules for prescription drugs. So many among the elderly and the uninsured import the same drugs at lower prices from Canada to avoid the sticker shock, a strategy advocated by both Consumer Reports and AARP . Though buying prescription drugs from Canada is technically illegal, the Food and Drug Administration has informally tolerated the purchases for year, provided the medicine is approved by prescription and is only for personal use. Several states have even adopted official Canadian drug importation regimes over the last decade, including Kansas under then-Gov. Kathleen Sebelieus, who now heads Obama’s Department of Health and Human Services chief. Over one million Americans order drugs from pharmacies certified by the Canadian International Pharmacy Association, , a credentialing organization recommended by AARP for seniors to help ensure that a pharmacy in Canada is safe. But major pharmaceutical companies hate this practice, which drains on their revenues, and the companies have deployed an aggressive campaign to associate legitimate Canadian drugs with the very real problem of Internet-purchased counterfeit medicines. (There are websites peddling bogus drugs who do their best to masquerade as legitimate Canadian pharmacies.) “The major threat to patients in the U.S., however, is the Internet and the many professional-looking websites that promise safe, FDA-approved, branded medicines from countries such as Canada or the U.K.,” Pfizer Chief Security Officer John Clark said at the Nov. 16 House hearing. SOPA includes a host of provisions designed to crack down on counterfeit medicine that are written broadly enough to encumber the importation of safe medicine from legitimate Canadian pharmacies. Provisions that bar the importation of “mislabeled” drugs would block a great deal of unsafe pills from making their way to the U.S., but they would also block all Canadian prescription drugs, because Canada’s drug warnings don’t exactly match FDA warnings. So while SOPA cosponsor Rep. Steve Chabot (R-Ohio) has few ties to unions or Hollywood, his second-biggest career campaign donor is Proctor & Gamble, a major drug company. The number two donor for Rep. Lee Terry (R-Neb.), another co-sponsor, is USA Drug, a southern drug store chain. Pharmaceutical giant Abbott Laboratories is the top 2012 donor for Protect IP co-sponsor Sen. Mike Enzi (R-Wy.), and 3 of the top 10 career donors for fellow co-sponsor Sen. Lindsay Graham (R-S.C.) are pharmaceutical companies. With both Hollywood and the pharmaceutical industry backing the bill, the U.S. Chamber of Commerce threw it’s full support behind the legislation, lobbying Congress directly. It also peddled its case to the public, starting up cuddly shell organizations to mask its own involvement. The Chamber set up The Coalition Against Counterfeiting and Piracy, which in turn established FightOnlineTheft.com. And FightOnlineTheft.com produced tear-jerker videos about the horrors of counterfeit medicine. WATCH FightOnlineTheft.com’s ad: “Somebody could end up sick,” reads a narrator, whose friend died after taking medicine purchased from Canada online. “Somebody could end up dead. It could be a child next time. It could be your friend, it could be anybody. And they just don’t care. They are just after the money. And it has to be stopped.” * * * * * By October, Smith, the House Judiciary Committee Chairman, who declined to comment for this article, stripped tech-friendly Rep. Goodlatte of responsibility for the House version of Protect IP, sparking panic among tech firms. Smith delivered for Hollywood, expanding Leahy’s bill to give governments and corporations the power to bring down foreign and domestic websites alike, and broadening the definition of a condemnable site to anything that “infringes or facilitates infringement.” Courts will ultimately decide the meaning of that term, but if you believe SOPA-supporter Monster Cable, which keeps an extensive list of “blacklisted dealers” that sell “fake” Monster products , some of the biggest names in both the Internet and American retail could be targeted: eBay, Craigslist, Costco, Facebook, Sears and Twitpic. If SOPA passed, Monster, which makes high-priced versions of guitar cables and home electronic connectors, could demand that web hosting services take down not merely individual web pages selling allegedly bogus Monster cables at Sears.com, they could demand that the entire Sears website be taken down. “The new law is touted as providing additional remedies for foreign sites, but it really strongly targets domestic players as well,” says Bridges, the attorney for dajaz1.com, the site raided by ICE in 2010. And the prospect of the government sacking entire websites because some user-generated content allegedly violates copyright laws creates tremendous free speech problems, civil liberties advocates say. “Our primary concerns are with the fact that non-infringing content is going to be taken down in the process of taking down infringing content,” says Michael MacLeod-Ball, First Amendment counsel for the American Civil Liberties Union. “The way the bill is set up, if a site has infringing content on it … their default reaction is going to be to take down the whole site.” While a judge has to review the Attorney General’s request to take down a site, nobody from the site being targeted must be given a chance to defend themselves before the judge grants the AG’s request. The AG doesn’t ask a judge for a search warrant under SOPA, it requests to take down an entire website without a trial — or even a hearing. Under current law, any U.S. website posting infringing content has to take the song or movie down at the request of whatever company owns the copyright. But under SOPA, companies could go directly to web hosting companies and require them to take down the entire website — not just individual songs and videos. As a result, SOPA creates a new opening for corporate command of the Internet. Under SOPA, web hosting companies that take down legitimate websites at the behest of copyright holders would be granted blanket immunity from any liability for losses caused to those legitimate sites. “Nobody’s responsible,” says UVA’s Sprigman. “A website is taken down, there are robust First Amendment standards that should prevent it from being taken down, and it gets taken down anyway. Well whose responsible? No one.” That model could also pave the way for a new business model among hosting companies. Instead of waiting for Hollywood to ask that a site be shutdown, hosting companies could agree to monitor web traffic for them for a fee and preemptively take down infringing sites without having to be asked, Internet activists warn. “It would be a very tragic thing if in the name of protecting artists, we saw the most important platform of our time become the province of just a few companies deciding what is and isn’t legitimate expression,” says Casey Rae-Hunter, deputy director of the Future of Music Coalition, an advocacy group for independent musicians that staunchly opposes Protect IP and SOPA, emphasizing that what is good for corporate record labels often doesn’t translate into positive outcomes actual musicians. Big companies targeted by Hollywood may be able to win copyright disputes in court. But for small startups, the implications are more dire. At worst, the bill would force productive startups to shut down in their nascent stages. At best, companies would have to hire additional legal staff to protect against the threat of a SOPA lawsuit. Hollywood and the recording industry will “sue startups,” says Patrick Ruffini, a Republican strategist and founder of Engage LLC, which is running PR against SOPA, “and if you get a $6 million or $7 million lawsuit slapped at you, it’s very hard as a startup.” Twitter, for instance, could be required to remove any link on its platform to infringing content or face DNS annihilation, Internet activists have warned. SOPA’s supporters insist they aren’t after Twitter or other prominent tech firms. But they also oppose narrowing the legislation to remove connotations for sites like Twitter. “It’s already hard enough to build a legitimate new business as it is, and this would make it much worse,” says Dennis Yang, vice president of Infochimps , a company that provides specialty data-set search services. “What’s really scary is we won’t know which productive new businesses won’t get off the ground, because MPAA used this bill to kill them before anybody heard about them.” While DNS blocking may well lead to the delisting of legitimate sites, web experts say it would be extremely unlikely to actually hamper piracy efforts that involve even moderate levels of sophistication. When the domain “illegalfreemovies.com” is taken down, site operators can take all of their information to “newillegalfreemovies.com.” And tech developers are developing workarounds for domain seizures. A third-party developer has already introduced a program for Mozilla Firefox, the popular open-sourced web browser that allows its users to program their own add-on features, that forwards users from a domain that has been taken down to its newly-registered name . The House bill also includes a host of provisions to expand the scope of what constitutes criminal copyright infringement at home, and would even make make it a felony to stream copyrighted videos online. The tactics are so extreme that American libraries are urging Congress to reject the bill on the grounds that librarians could be jailed for making good-faith judgments that their activities were within the law. Libraries have always provided copyrighted material to the public for free. But in recent years, major lawsuits have been filed against libraries for streaming educational videos in university classes, allowing college students to access chapters of books electronically, and compiling a database of “orphan” books that are no longer in commercial circulation. All of these activities have generally been protected by “fair use” — a legal doctrine that allows for free distribution of copyrighted information under a variety of circumstances, especially for educational use. But “fair use” standards have changed over time, from lawsuit to lawsuit. And with movie studios and publishing houses challenging the meaning of fair use under digital methods of distribution, a librarian who copies a DVD to the library’s database and streams it in the library could find herself charged with a felony under SOPA. “It’s just freaky for libraries to find themselves in this kind of situation, because we’re nonprofit, small-potatoes actors,” Brandon Butler, Director of Public Policy Initiatives for the Association of Research Libraries, tells HuffPost. * * * * * In October, the Chamber continued to support Protect IP as indications mounted that the House version would not moderate the Senate bill, but instead launch a still more-aggressive assault on the Internet’s infrastructure. By mid-month, Yahoo! had had enough — it left the Chamber outright. No corporation had publicly left the Chamber since 2009, when Apple departed after the lobby shop officially opposed climate change legislation, siding with oil companies while peddling science-denialist talking points. Google could leave the Chamber any day now, but unlike Yahoo!, Google is deeply involved in the Chamber’s effort to allow American companies to bring money stashed offshore back to the U.S. at a greatly reduced or nonexistent tax rate. A tax holiday could save Google significant change: The company saves about $1 billion a year by pushing its profits to Ireland and the Netherlands, Bloomberg reported, but it only avoids paying U.S. taxes on that money so long as it never brings the money back to the states. Leaving the Chamber would mean bearing the full brunt of the PR blow for its lobbying, as Google would no longer be able to shield its activity behind Chamber coalitions. Since Leahy proposed similar legislation in late 2010, Google has been the most high-profile corporate opponent of the anti-piracy legislation. The company’s business model depends on an open Internet, and some of its top properties, particularly YouTube, have long been targets for Hollywood and TV moguls. Having a corporate ally is a clear boost for libraries, free speech advocates and open-Internet nonprofits, who don’t have the lobbying might Google has. But of all the corporate sponsors to have in Washington right now, Google is probably the least helpful. The Internal Revenue Service is investigating the company’s tax maneuvering; the Department of Justice is reviewing its acquisition of Motorola Mobility; the Federal Trade Commission and a Senate panel are investigating whether its search tactics constitute an illegal monopoly. But nothing has been more damaging on SOPA than Google’s run-in with online pharmacies. In August, Google paid $500 million to settle charges from the U.S. Department of Justice that it accepted ads from pharmacies that shipped drugs to American consumers in violation of American law. Many of these were violations that the government frequently tolerates, but by blatantly and repeatedly allowing ads from pharmacies that sell prescription drugs without a prescription, DOJ decided to take action. “Google’s been great on this, but their reputation has been systematically trashed in Washington by their opponents,” says Aaron Swartz, co-founder of Reddit, whose group Demand Progress was an early Protect IP opponent, and which now boasts of organizing over 600,000 people to oppose it. Roughly a week after the House bill dropped at the end of October, nine tech giants — including Google, Facebook, Twitter, eBay, and HuffPost’s parent company, AOL Inc. — sent a letter to lawmakers urging them to reject the bill. But on Capitol Hill, Google’s name was the one that mattered. Things got especially ugly during the House hearing featuring Google’s Oyama, a week after the letter was sent. Of the nine tech companies, only Google was invited to appear before the Judiciary Committee — against five SOPA supporters. Lawmakers didn’t hide their hostility. “Google just settled a federal criminal investigation into the company’s active promotion of rogue websites that pushed illegal prescription and counterfeit drugs on American consumers,” Smith said at the hearing. “Given Google’s record, their objection to authorizing a court to order a search engine to not steer consumers to foreign rogue sites is more easily understood.” On the Senate side, Google doesn’t even have the backing of one of its own Senator, Democrat Dianne Feinstein. When HuffPost asked Feinstein, a Protect IP co-sponsor, if it was difficult for her to navigate the bill with Silicon Valley and Hollywood on opposite sides, she responded: “I don’t believe that they are. I thought we had reconciled the issues. The bill’s been passed out of committee.” The response seems incredible given the outcry from Silicon Valley, and Google in particular, but the complexity of the legislation has left many lawmakers vulnerable to K Street spin. Tech companies had also lost Wall Street as a key ally; by this fall, the baggage of earlier lobbying campaigns weighed heavily on the banks. During the first six months of 2011, banks worked Congress hard on debit card swipe fees, pressuring just about every member of the Senate to buck loyal campaign contributors in the American retail industry . The banks ultimately lost in Congress, but not before winning over several reluctant lawmakers. Persuasion came with a high price: Banks take a reputation hit every time they’re in the news lobbying. So for the time being, Wall Street is shying away from obvious feuds with other companies. “Nobody likes this private right of action,” says Peter Freeman, a lobbyist with the Financial Services Roundtable. “But we’re focused on other things right now.” * * * * * Never underestimate the ability of venture capitalists, who invest in new, job-creating companies, to charm Congress. This fall, when it became clear that the House bill would cause havoc for tech companies, a handful of tech-friendly VCs, including Twitter-investor Union Square, sent a letter to Congress and flew to Washington to meet with lawmakers. Rep. Darrell Issa (R-Calif.), chair of the powerful House Oversight and Government Reform Committee and an aggressive partisan whose top career campaign contributors include SOPA supporters AT&T and Microsoft, was particularly attentive to the substance of the issues involved, according to VC representatives who met with his office. In December, Issa, a business owner himself, joined a small bipartisan group of lawmakers in proposing an alternative to the Leahy/Smith legislation. Issa jumped in with Sen. Wyden, who chairs the Senate subcommittee on international trade, and Sen. Mark Warner (D-Va.), a former venture capitalist who helped seed telecom company Nextel and a host of Internet companies. “I got a company, Rosetta Stone, who gets pirated on a regular basis — you’ve gotta have accountability around that,” says Warner, referring to the language-learning software company with offices in Arlington and Harrisonburg, Va. “But … I think the approach Senator Wyden has been working will strike a better balance.” The alternative legislation would drop all of SOPA’s efforts against domestic websites, and would not allow the DOJ to engage in DNS blocking. It would also kick arbitration of any foreign infringement claims to the U.S. International Trade Commission, which already handles issues of foreign piracy as a policy issue. After a formal public hearing, ITC would be empowered to regulate rogue infringing websites as unfair imports — permitting ITC to cutoff any U.S. payment processors or advertisers from doing business with such sites, denying them access to American money and financial infrastructure. It’s not clear how much support the Wyden-Issa bill can secure: The Chamber declined to comment on it. But those backing the alternative don’t have to actually pass their version to stall SOPA. “There really is a worthwhile strategy in delay,” says Tim Karr, campaign director for Free Press, a media reform nonprofit. And the potential of SOPA passing in January has already sparked a new round of corporate interest in the legislation, forcing companies on both sides of the issue to throw money at any lawmaker who signals ambivalence on the issue. Sen. Joe Lieberman (I-Conn.), a Protect IP co-sponsor, has suggested he’s willing to jump ship. “I’ve been trying to gauge the concerns,” Lieberman tells HuffPost. The White House is intensely divided over SOPA and Protect IP, according to administration sources, and hasn’t issued any statement on them — suggesting the President won’t be pushing piracy legislation as hard as he did for free-trade and the patent-reform legislation. And opponents of Protect IP and SOPA have the dysfunctionality of Congress at their backs. Next year is an election year, and congressional leadership will not want to force an issue that divides campaign donors anywhere near November. It’s a strategy that has worked before. In 2006, Congress pressed for legislation to give telecom giants the capacity to dictate traffic volumes to individual websites. Billions of dollars a year in corporate profits were at stake, and the bill had bipartisan support. But the legislation died, quietly, over several years. “By pushing it off and pushing it off, we eventually killed it,” says Adam Green, co-founder of the Progressive Change Campaign Committee, a long-time net neutrality defender. This year’s legislative tussles over corporate profits have been only tangentially related to the ordinary lives of American citizens — they’ve essentially been about hidden fees. The price of the patent fight and debit swipe fees are reflected in more expensive consumer goods, but citizens don’t see how much of that price tag results from a corporate dispute over intellectual property or merchant card charges. But everyone uses the Internet. While many of SOPA’s consequences would be hidden from public view in out-of-court negotiations, some effects will be felt directly. The intensely personal nature of Internet use has elevated this particular intra-corporate squabble to something the broader public is beginning to pay attention to. “Congress is on the verge of wrecking the greatest engine of innovation and greatest platform for democracy ever known to human kind,” says David Segal, Executive Director of Demand Progress. “And for what? For the sake of propping up an ossified industry that refuses to change with the times, but happens to make a lot of campaign contributions.”

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Good To Know: Holiday Hours For Your Favorite Stores

December 14, 2011

When it comes to store hours, a little heads’ up can save you time. Flickr photo by Jay Reed Need to do some last minute shopping? We all do during the holidays! To make sure you get to the store with plenty of time to spare, read through the list below for the special holiday hours of our favorite retail stores. Some hours may vary at different locations, so click on the store name to be taken to their store locator to be sure. Michaels Dec 18-22: 9am-9pm Dec 23: 8am-12am Dec 24: 8am-6pm Dec 25: Closed Dec 26: 7am-9pm Dec 27-30: 9am-9pm Dec 31: 9am-6pm Macy’s Dec 21-24: 12am-12pm (14 select locations) Dec 21-24: 8am – 2am (27 select locations) Costco Dec 24: 9am-5pm Dec 25: Closed Dec 31: 9am-6pm Jan 1: Closed Marshalls Dec 19-23: 8am-11pm Dec 24: 8am-6pm Kmart Dec 11-23: 6am-12am Dec 24: 6am-10pm Dec 25: Closed IKEA Dec 24: 9am-6pm Dec 25: Closed Dec 31: 10am-8pm Dillard’s Dec 18: 11am-9pm Dec 19-23: 9am-10pm Dec 24: 8am-6pm Dec 25: Closed Dec 26: 9am-9pm Dec 27-30: 10am-9pm Dec 31: 10am-6pm Whole Foods Dec 24: 7am-6pm Dec 25: Closed Dec 31: 8am-9pm Jan 1: 10am-10pm Target Dec 11-23: 8am-11pm or 8am-12pm Dec 24: 7am-9pm Dec 25: Closed Dec 26: 7am-11pm Dec 31: 8am-10pm Walmart Dec 24: 6pm close Dec 25: Closed Dec 26: 6am open (24hr stores), otherwise regular hours Dec 31: Normal hours Jan 1: Normal hours For other stores, check your local address below: Toys-R-Us Kohl’s Bloomingdale’s Nordstrom Nordstrom Rack Sears JCPenney

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Republicans Find Way Around Raising Taxes

December 13, 2011

WASHINGTON — Raising taxes on millionaires may be a non-starter for Republicans, but they seem to have no problem hiking Medicare premiums for retirees making a lot less. The House is expected to vote Tuesday on a year-end economic package that includes a provision raising premiums for “high-income” Medicare beneficiaries, now defined as those making $85,000 and above for individuals, or $170,000 for families. Some would pay as much as several hundred dollars a month additional for Medicare outpatient and prescription coverage. Millions who don’t consider themselves wealthy would also end up paying more. Just the top 5 percent of Medicare recipients currently pay higher premiums, a change that took effect a few years ago. The new GOP proposal would expand that over time to include the highest-earning one-fourth of seniors. On Monday the White House was mum on the Republican Medicare proposal, while AARP said it’s tantamount to a new tax. In the Democratic-led Senate, there’s not much enthusiasm. The plan is modeled on a proposal that President Barack Obama submitted earlier this year to congressional debt negotiators, when he was seeking a “big deal” to cut federal deficits. Continuing pressure to curb spending means the proposal eventually could become the law of the land, even if there’s no consensus now. “This is an idea that seems to have some traction,” said Tricia Neuman, a Medicare expert for the nonpartisan Kaiser Family Foundation. It’s also creating a lot of confusion about who is wealthy and who is not. For example, when Obama talks about raising taxes on the rich, he means individuals making more than $200,000 a year and families above $250,000. But his health care law fixed the level for paying “high-income” Medicare premiums at the current $85,000 and above for an individual, $170,000 for families. And the new Republican plan would drop the thresholds to $80,000 for an individual and $160,000 for families. “If we’re considering raising taxes on those with incomes above $250,000, then it seems to me very awkward to raise Medicare premiums on those with much lower incomes,” said John Rother, head of the National Coalition on Health Care, an advocacy group. Baby boomers just signing up for Medicare are more likely to be affected than long-term retirees, since incomes tend to be higher for the newly retired. AARP calls the proposed premium increases a tax hike. “Most of the time, when you have a payment due to the government because of your income, we call it a tax,” said lobbyist David Certner. “It’s a form of a tax.” High-earning workers already pay more in Medicare payroll taxes, he pointed out. No way it’s a tax, say Republicans. Taxpayers subsidize three-quarters of the cost of Medicare’s outpatient and prescription coverage for the typical retiree. Reducing a subsidy for those who can afford to pay more is not the same thing as raising taxes, they contend. “The proposal doesn’t raise taxes,” said Michelle Dimarob, spokeswoman for House Ways and Means Chairman Dave Camp, R-Mich. “The provision simply adjusts the subsidy they receive.” To back their argument, Republicans are circulating a letter from anti-tax activist Grover Norquist in support of the broader bill containing the Medicare provision. The premium hikes are to help pay for legislation that would prevent the Jan. 1 expiration of payroll tax cuts for workers and extra benefits for the long-term unemployed, while also staving off a steep cut in Medicare payments to doctors. With time running short, lawmakers of both parties are still far apart on key aspects of the package. Tax or not, higher Medicare premiums mean less money in the pockets of those who have to pay. Currently the high-income premiums start at 35 percent of the cost of Medicare’s outpatient and drug coverage for individuals making $85,000 year, and rise to 80 percent of the cost at the very top income brackets. Next year, a typical Medicare recipient will pay $131 a month for outpatient and drug coverage combined, according to Kaiser. Those paying the high-income premiums will pay from $183 to $417. That means beneficiaries at the highest income levels would pay nearly $300 a month more. The House GOP plan would increase the high-income premium by 15 percent in 2017 and lower the thresholds at which the higher fees kick in. Most significantly, it freezes those income thresholds indefinitely, until one-fourth of Medicare recipients are paying “high-income” premiums. It’s unclear how long that would take, but currently only about 2 million out of 47 million Medicare beneficiaries pay higher premiums. Eventually that number would easily surpass 10 million. The GOP proposal would reduce taxpayer spending on Medicare by $31 billion over 10 years; Obama’s version saved about $20 billion. “There’s a lot of interest in asking higher-income people on Medicare to contribute more,” said Neuman.

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Republicans Embrace High-Stakes Showdown With Obama

December 13, 2011

WASHINGTON — Sensing a political opening, congressional Republicans are moving toward a high-stakes showdown with President Barack Obama over a plan to link fast-tracked approval of an oil pipeline to a measure renewing a payroll tax cut. Senate Minority Leader Mitch McConnell, R-Ky., said the proposed Keystone XL pipeline from Canada to Texas will help the president achieve his top priority – creating jobs – without costing a dime of taxpayer money. “There is no reason this legislation shouldn’t have the president’s enthusiastic support,” McConnell said Monday on the Senate floor. “The only reason for Democrats to oppose this job-creating bill would be to gain some political advantage at a time when every one of them says job creation is a top priority.” The State Department said last month it was postponing a decision on the pipeline until after next year’s election. Officials said the delay is needed to study routes that avoid environmentally sensitive areas of Nebraska. The GOP language would require approval of the pipeline within two months unless Obama declares it is not in the national interest. The State Department warned Monday the congressional interference in the approval process would likely lead to a rejection of the pipeline. The State Department has authority over the project because it crosses an international border. “Should Congress impose an arbitrary deadline for the permit decision, its actions would not only compromise the process, it would prohibit the department from acting consistently with National Environmental Policy Act requirements by not allowing sufficient time” for the project to be considered, the State Department said in a statement. In that case, “the department would be unable to make a determination to issue a permit for this project,” the statement added. McConnell and other Republicans dismiss such procedural objections. “The only thing arbitrary about this decision is the decision by the president to say, `Well, let’s wait until after the next election,’” said House Speaker John Boehner, R-Ohio. Boehner and other Republicans say many Democrats support the pipeline, noting that 47 House Democrats voted in a favor a bill this summer to speed up the permitting process. GOP lawmakers say the White House opposes the pipeline provision in the tax bill so Democrats can gain political advantage by blaming Republicans for defeating the popular payroll tax cut. The tax bill is expected on the House floor Tuesday. The two parties generally agree on the bill’s fundamentals: preventing the Jan. 1 expiration of payroll tax cuts and extending coverage for the long-term unemployed. Obama has said he will reject the overall bill if it includes language speeding up approval of the Keystone XL pipeline, which would carry oil from western Canada to refineries in Texas. Obama’s threat has increased conservative support for the overall measure, with Republicans hoping to use Obama’s opposition to portray him as favoring environmentalists over jobs. Rep. Lee Terry, R-Neb., called the Keystone XL project crucial to getting thousands of people back to work. “This is an important jobs and energy security bill which just makes plain sense,” said Terry, author of the pipeline provision. “The American people want us to stop buying Venezuelan oil. The Keystone pipeline is a key component to making that happen.” Environmental groups, who celebrated the administration’s announcement of a delay in the Keystone project last month, accused Republicans of forcing a premature judgment on the pipeline in order to curry favor with the oil industry. “To get their way, House Republicans – with some support in the Senate – are even willing to block the much-needed extension of the middle-class tax cut,” said Suzanne Struglinski of the Natural Resources Defense Council, an environmental group. Struglinski called the pipeline push a “fool’s errand” because of Obama’s threat to reject the measure, and said its likely inclusion in the House bill showed that House leaders have embraced the “extreme agenda” pushed by the tea party. Senate Majority Leader Harry Reid, D-Nev., said last week that House leaders were wasting time, because the Keystone provision will not pass the Democratic-controlled Senate. The State Department decided last month to delay the project until 2013, to allow the project’s developer to figure out a way around Nebraska’s Sandhills, an ecologically sensitive region that includes an aquifer that supplies water to eight states. ___

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Banks At Risk As Crisis Drags On

December 12, 2011

Concerns about a global slowdown sharpened on Monday as markets cast a vote of no confidence in Europe’s leaders. Economists and analysts expressed worries that the European problem is spreading to American banks. Any further shock to the system could spur a credit crisis, they said, raising the possibility that the Federal Reserve would have to step in to prop up banks. Though most U.S. banks said that they have limited exposure to Europe’s troubles, economists and analysts counter that financial institutions are substantially vulnerable. At issue is not just how exposed each bank is to Europe, but how exposed their financial partners are. “You may not be holding any problem debt yourself, but your counterparty could be experiencing distress, and the relationship is no longer on firm footing,” said John Jay, senior analyst at Aite Group, a financial research firm. “If you’re an American bank, and global in nature, undoubtedly you are dealing with someone who holds that sovereign risk.” By Monday morning it was clear that the most recent European pact didn’t reassure investors, as had been hoped. Every country in the European Union except for the United Kingdom agreed on Thursday night to sign a treaty that would raise the penalties for a country running a higher deficit or debt than allowed. The S&P 500 fell 1.48 percent, and the Dow Jones Industrial Average plunged 1.34 percent (a 162.87 point drop) on Monday. The DAX in Germany plunged 3.36 percent, and the CAC 40 in France fell 2.61 percent. “They are doing window dressing right now. No matter what they say, they will still be backsliding,” said Frank Trotter, president of online bank EverBank Direct, of European leaders. American banks’ vulnerability to the crisis in Europe is “substantial across the board,” said Nicholas Economides, economics professor at New York University’s Stern School of Business. One negative event in Europe, such as a failed bond auction or an announcement by Greece that it needs a larger writedown on its government debt, could spur a credit crisis in the United States, he said. “They cannot sustain another big shock,” Economides said of American banks, which are still recovering from the global meltdown of 2008. With a weak pact in place, investors are worried about any kind of Lehman-like shock to the system. Back in 2008, when Lehman Brothers filed for bankruptcy, it led to a “credit freeze,” banks were afraid to lend to each other and the financial system ground to a halt until the Federal Reserve stepped in and greased the wheels by lending. The direct exposure of banks to Europe is modest relative to banks’ total assets. U.S. banks held $1.48 trillion in exposure to all of Europe as of the end of June — this includes government debt, insurance on that debt, as well as loans to European business — according to the Bank for International Settlements. In comparison, FDIC-insured financial institutions hold $13.8 trillion in assets. Bank of America said it has a total $14.6 billion exposure to the five eurozone countries in danger of default; the bank holds $2.26 trillion in total assets. Still it’s not clear that risk can be cleanly contained to banks’ direct exposure. Since banks are valuing their assets at face value rather than market value, trust will break down between banks in the event of a credit crunch, said Gabriel Palma, economics professor at the University of Cambridge. Even though American banks are not nearly as exposed to European sovereign debt, he said, they will be just as vulnerable to that breakdown in trust. “If there is another credit crunch, it will not really matter that much how much you actually own sovereign debt,” Palma said. “Because nobody trusts each other, because they hide their risks so well and so deep … no bank in the world will get any money from anybody else.” Palma said that if there is a credit crisis in Europe, it will be “100 percent necessary” for the Federal Reserve to lend cheap money to American banks to keep them operating. Already credit is tightening up for small business owners. “What’s going on in Europe is part of the equation that helps banks determine when to issue a loan, and there’s a real concern that U.S. banks are going to take a hit,” Bernard Baumohl, chief global economist of the Economic Outlook Group, an economic forecasting firm in Princeton, N.J., told HuffPost Small Business . “There could be spill-over into the U.S. banking system, and with that dark cloud hanging over the global and U.S. economy, it’s understandable why small businesses are not the client of choice for big banks. They don’t want to go with what they perceive is a risky customer.”

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Federal Reserve Continues To Push Toward More Transparency

December 12, 2011

WASHINGTON — The Federal Reserve under Ben Bernanke has gone further than ever to explain its policies to the public. It’s ready to go further still. A Fed policy meeting Tuesday will likely focus, in part, on an evolving plan to reveal the direction of interest rates more explicitly. The Fed may decide, for example, to regularly update the public on how long it plans to keep short-term rates at record lows. The new communications strategy could be unveiled as soon as next month. Most analysts expect no announcements Tuesday about the new strategy or any further steps to try to strengthen the economy. They think the Fed wants to delay any new programs, such as additional bond purchases, to see if the economy can continue the modest gains it’s been making. Still, the U.S. economy remains vulnerable, especially to the impact of the financial crisis and likely recession in Europe. So the Fed is keeping its options open. It’s already taken numerous unorthodox steps to try to lift the economy. December, for example, will mark three years since it cut its key rate, the federal funds rate, to a record low of between zero and 0.25 percent. It has also bought more than $2 trillion in government bonds and mortgage-backed securities to try to cut long-term rates and lower borrowing costs. The hope behind both actions was to embolden consumers and businesses to borrow and spend more. Lower yields on bonds also encourage investors to shift money into stocks, which can boost wealth and spur more spending. One possibility, should the economy worsen, would be for the Fed to buy more mortgage securities. Doing so could help push down mortgage rates and help boost home purchases. The weak housing market has been slowing the broader economy. The boldest move left would be a third round of large-scale purchases of Treasurys. But critics say this would raise the risk of future inflation. And many doubt it would help much, because Treasury yields are already near historic lows. Unless Europe’s crisis worsens and spreads, few expect another program of Treasury purchases. Still, it can’t be ruled out. “Europe is going to be a big headache for quite a while,” said Diane Swonk, chief economist at Mesirow Financial. “We are going to have a lot of icebergs to dodge, and if the situation dramatically deteriorates, the Fed will act.” On Nov. 30, the Fed joined other central banks in making it easier for banks to borrow dollars. The goal is to help prevent Europe’s crisis from igniting a global panic. The announcement sent the Dow Jones industrial average up nearly 500 points, its best day in 2 1/2 years. After its September meeting, the Fed said it would re-arrange its bond holdings to stress longer-term maturities, to try to exert more downward pressure on long-term rates. That followed the Fed’s announcement in August that it planned to keep its benchmark rate at a record low until at least mid-2013. It was the first time it had committed to keeping the rate there for a specific period. Now, Fed officials are debating how much further to go to signal a likely timetable for any rate changes. Under one option, the Fed would start forecasting the levels it envisions for the funds rate over the subsequent two years. It could publish this forecast, as it now does its economic outlook, four times a year. Doing so would help assure investors, companies and consumers that rates won’t rise before a specific time. This might help lower long-term yields further – in effect providing a kind of stimulus. Some worry that such guidance risks inhibiting the Fed’s flexibility to revise interest rates if necessary. Others counter that the Fed wouldn’t hesitate to shift rates if warranted. And they say the benefits of clearer guidance outweigh any constraints it might impose. “You could make investment decisions with more certainty,” said Mark Zandi, chief economist at Moody’s Analytics. The Fed is also discussing setting an explicit target for “core” inflation. Core inflation excludes the volatile categories of energy and food. It’s remained historically low – around 1.5 percent by one measure. Making a specific rate an official goal could anchor inflation expectations and guide investors on when the Fed might adjust rates to try to hit the inflation target. Stabilizing prices is one part of the Fed’s dual mandate. It’s also supposed to try to maximize employment. One member of the policy committee, Charles Evans, thinks the Fed should set a threshold for unemployment, too – say, 7.5 percent. It would keep rates low until unemployment fell below that level. Unemployment is now 8.6 percent. Among the Fed’s options for more explicit guidance, many economists say an interest-rate forecast is most likely. A probable time for an announcement would be after the Fed’s Jan 24-25 meeting, when it will update its economic forecasts. Such a move would follow other steps to make the Fed more transparent that began under Chairman Alan Greenspan and accelerated under his successor, Bernanke. Not until Greenspan’s tenure did the Fed even announce any changes in its benchmark rate. Until then, financial firms had to study the Fed’s purchases of Treasurys in the bond market to try to determine whether it was raising or lowering rates. Previous chairmen tended to think the Fed operated best when it could keep financial markets guessing. “I was there when Arthur Burns was chairman: His motto was, `Never tell anybody anything,’” economist David Wyss said of Burns, who was chairman during the 1970s. Private economists widely support the Fed’s shift toward more transparency. Most dismiss concerns that the Fed, by being more open and specific in forecasting rates, might lock itself into wrongheaded policies. “If we had another financial crisis, people would understand that the Fed would throw their forecast out the window and do what they needed to do,” Zandi said. “I don’t think it hamstrings them in any way.”

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Robert Naiman: Could GOP Sanctions on Europe Tank the Economy and Elect Romney?

December 8, 2011

Remember, “It’s the Economy, Stupid?” So how come Democrats in Congress — over the objections of the Obama Administration — are helping Republicans press sanctions on Europeans who buy oil from Iran — sanctions that would increase unemployment in the U.S. during the 2012 campaign? The National Defense Authorization Act now contains a Senate amendment by Republican Senator Mark Kirk — supported by many Democrats in Congress — that would sanction European banks and companies that do business with Iran’s Central Bank, in order to stop Europeans from buying Iranian oil. This is a big deal, because Iran is the world’s fifth-largest oil exporter, and blocking Iranian oil exports to Europe would raise the price of oil, in Europe and in the United States. Kirk’s amendment would hurt the U.S. economy, at a time when economic contraction in Europe could push the U.S. back into recession. Is fear of the economic blowback of the sanctions on Europe that Kirk wants to impose justified? Many Europeans seem to think so. On Tuesday, Reuters reported : The European Union is becoming skeptical about slapping sanctions on imports of Iranian oil, diplomats and traders say, as awareness grows that the embargo could damage its own economy without doing much to undercut to Iran’s oil revenues. “Maybe the aim of sanctions is to help Italy, Spain and Greece to collapse and make the EU a smaller club,” one trader joked. The remark reflects the growing unease that EU sanctions would hit hardest some of the continent’s weakest economies, because Iranian oil provides the highest share of their needs, not to mention the rest of the bloc. “The likely increase in oil prices that would result from a ban would be felt by all (European) oil refiners, not just those that are big customers for Iranian oil,” ratings agency Fitch said last week. An oil industry source in Greece, which mostly relies on Iranian oil, said: “Greece can’t be put with its back to the wall.” The threat to Iran’s oil exports and fears about a possible military strike on its nuclear facilities have helped keep oil prices above $100 a barrel… Raising the price of oil will hurt the U.S. economy directly. In addition, hurting the European economy will also hurt the U.S. economy by causing U.S. exports to Europe to fall. Furthermore, adding to Europe’s economic problems now would undermine attempts to contain the European financial crisis, as the trader’s joke about sanctions helping Italy, Spain and Greece to collapse suggests. And if efforts to contain Europe’s financial crisis fail, we’re going to feel that pain in the U.S., just as Europe felt the 2008 U.S. financial crisis. What’s the Republican response to all this? When a U.S. Treasury Department spokesman said , “it is critically important that the steps we take do not destabilize the U.S. and global economy,” a senior GOP Senate aide responded by saying, “Treasury should go back and model the cost to the U.S. economy and the world economy of an Israeli strike on Iran.” So, according to this Republican argument, we only have two choices: sanctions on Europe that will hurt the U.S. economy, or an Israeli military strike on Iran that will hurt the U.S. economy even more. But that’s a false choice, because 1) a lot of people in Israel, including the former head of the Mossad, think the idea of an Israeli attack on Iran is insane, and 2) the U.S. can keep Israel from attacking Iran if it wants, just as the U.S. did during the Bush Administration. Of course, many Republicans claim that Iran’s nuclear program constitutes a national emergency in the United States, so we should be willing to accept higher unemployment in the United States in order to block Iran’s oil exports to Europe. But the “emergency” claim is extremely dubious, for the following reasons: 1) As Pulitzer Prize-winning journalist Seymour Hersh recently noted in the New Yorker , there is still no definitive evidence that Iran has a nuclear weapons program. 2) As former AIPAC staffer MJ Rosenberg recently noted , leading neoconservatives at the American Enterprise Institute — a key cheerleader for war with Iran, as it was a key cheerleader for war with Iraq — are now publicly conceding that the issue for neoconservatives isn’t really whether Iran has a nuclear weapon — it’s trying to maintain a balance of power in the region in favor of Israeli military ambitions. It’s certainly understandable that some Israeli generals would want to maintain their freedom, as they see it, to invade Lebanon anytime they want, but does supporting this ambition constitute a national emergency for people in the United States? 3) As Defense Secretary Leon Panetta recently affirmed , at best a Western military strike on Iran would set back its nuclear program by two years. Since a military strike can’t stop Iran’s nuclear program — and since such a strike would be extremely costly to the U.S. — it’s an extremely stupid thing to do, if the goal is to stop Iran’s nuclear program. The only way that military force can stop Iran’s nuclear program is if it is used to overthrow the Iranian government and install a Western client government. But few dare call for this openly, since thanks to the Iraq and Afghanistan experience, the public is now quite aware of what this program would cost in blood and treasure, and is also aware that despite that cost, the program of installing a client government could fail anyway. So there is no emergency requiring sanctions that hurt the U.S. economy. There’s just another manufactured crisis, designed to force Americans to submit again to the neoconservative agenda. But the question remains: Why would Democrats support this? Do they want to lose the election?

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Alabama GOP Leaders Rethinking Strict New Law

December 8, 2011

By PHILLIP RAWLS, ASSOCIATED PRESS MONTGOMERY, Ala. — Alabama Republicans who pushed through the nation’s toughest law against undocumented immigrants are having second thoughts amid a backlash from big business, fueled by the embarrassing traffic stops of two foreign employees tied to the state’s prized Honda and Mercedes plants. The Republican attorney general is calling for some of the strictest parts of it to be repealed. Some Republican lawmakers say they now want to make changes in the law that was pushed quickly through the legislature. Gov. Robert Bentley, who signed the law, said he’s contacting foreign executives to tell them they and their companies are still welcome in Alabama. “We are not anti-foreign companies. We are very pro-foreign companies,” he said. Luther Strange, the attorney general who’s defending the law in court, this week recommended repealing sections that make it a crime for an undocumented immigrant to fail to carry registration documents and that require public schools to collect information on the immigration status of students. Both sections have been put on hold temporarily by a federal court. Two foreign workers for Honda and Mercedes were recently stopped by police for failing to carry proof of legal residency. The cases were quickly dropped, but not without lots of international attention that Alabama officials didn’t want. One of the groups challenging the law in court said the auto workers’ cases turned public opinion. “Suddenly the reality of what the state has done hit people in the face,” said Richard Cohen, president of the Southern Poverty Law Center. Before 2011, Republicans tried repeatedly to pass an immigration law but were always stopped by the dominant Democrats. That changed when Alabama voters elected a Republican legislative super majority – the first since Reconstruction. The result was a law described by critics and supporters as the toughest and most comprehensive in the nation. It requires a check of legal residency when conducting everyday transactions such as buying a car license, enrolling a child in school, getting a job or renewing a business license. After the U.S. Justice Department and other groups challenged the law, the federal courts put some portions on hold, but major provisions took effect in late September. Alabama suddenly found itself at the center of the nation’s immigration debate, ahead of other states with tough laws, including Arizona, Georgia and South Carolina. Within Alabama, much of the debate is within the business community that helped fund Republicans’ new strength. The Birmingham Business Alliance this week called for revisions in the law, expressing worry that it’s tainting Alabama’s image around the world. The group also said complying with the law is a burden for businesses and local governments, but did not offer specific changes. James T. McManus, chairman of the Alliance and CEO of one of the state’s largest businesses, the Energen Corp., said revisions “are needed to ensure that momentum remains strong in our competitive economic development efforts.” In Thomasville, a town of 4,700 about 80 miles southwest of Montgomery, Mayor Sheldon Day worries about recruiting industries. He said about 25 foreign companies have visited the town to consider possible plant sites since Thomasville recruited a Canadian steel company in July 2010. “Up until a few months ago, nobody raised the immigration issue,” he said. But in the last few months, it’s been brought up regularly. Day suspects competing states are portraying Alabama as hostile to foreigners even though he says that is not the truth. Based on the questions he gets from industrial prospects, he also believes competing states are recounting stories from Alabama’s civil rights past. “It’s bringing back old images from 40 or 50 year ago,” he said. The governor says he’s declined many national TV interviews about the law because he doesn’t want to fuel comparisons with what he sees as Alabama’s long gone past. “It’s going to take us a long time to outlive those stereotypes that are out there among people that Alabama is living in the `50s and `60s,” Bentley said. The Republican sponsors of the immigration legislation promoted it as a jobs bill that would run off undocumented immigrants and open up employment for legal residents. That was an easy political sale in a state suffering from nearly 10 percent unemployment. Even some Democrats voted for the law. Since the law took effect, Alabama’s unemployment rate has dropped a half percentage point. Economists and state officials who compile the statistics say it’s too early to say whether to credit the immigration law. But one of the sponsors, Republican Sen. Scott Beason of Gardendale, said neighboring states without a similar law haven’t seen the same drop. “There is nothing else to attribute it to,” he said. If there has been any damage, he said it’s the fault of inaccurate portrayals in the news media. He said the media ought to be reporting: “This law establishes a safer, more secure environment for people to come here and invest their money.” Republican House Speaker Mike Hubbard of Auburn said no industrial recruiters have complained to him about the law, and he will only support “tweaks” that make it more effective without weakening it. Some Democratic Party leaders have called for repeal, but the party is now so weak in Alabama that the real debate is among Republicans. The governor says the law is “very complicated” and needs to be simplified. He hasn’t recommended any specifics, but he says Alabama won’t abandon its goal of ensuring that only legal residents get jobs. Strange, the attorney general, says his recommended changes “don’t weaken the law, they just make it easier to defend.” Beason, however, said Strange’s proposals would weaken the law by repealing two sections that allow private citizens to sue state and local officials to enforce it. Beason said that’s needed because some officials are already saying they won’t follow the law. Other Republicans say the law is causing unnecessary problems for legal residents. Senate Republican Whip Gerald Dial of Lineville said legislators hear complaints from people about digging out documents to prove their legal residency when renewing professional licenses and buying car tags. “I made some mistakes in voting for this bill, and I want to step up and fix them,” he said.

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Meltdown

December 7, 2011

CAPE CORAL, Fla. — They sent her off with a lavish retirement party — dinner and drinks at a local yacht club, overlooking the inky waters of the Caloosahatchee River. They thanked her for her more than two decades of service in the office of a local real estate company and they wished her well. She was 63 years old and looking forward to the rewards of a lifetime of work, moderate living and diligent savings. She had stashed away nearly $400,000 in her retirement savings account, a sum that seemed sufficient to produce the income needed to make the payments on her modest home in this community alongside the Gulf of Mexico. She envisioned occasional vacations, entertaining friends on her patio, and seeing a show every now and again. But 10 years later, she is sitting inside the Cape Coral United Way house, amid hungry people waiting to pick up groceries at a food bank. She is about to see a career counselor, hoping for insights on how a woman might reenter the work force at age 73 with minimal computer skills, a rusty resume and a local unemployment rate above 11 percent. The stock market crash that accompanied the financial crisis of 2008 wiped out half her retirement account. She is current on her mortgage, but only because her son has been making the payments. She worries that she might yet slide into the weeds of foreclosure. Eileen — who asked that her last name be withheld, citing embarrassment — could pass for any retiree you might encounter on a cruise ship or at the Grand Canyon. She wears a crisp white blouse over Bermuda shorts and sandals. Her silver hair is cut short and neat. Yet here she is among the homeless and near-homeless, her gaze steely, as a clerk calls names to pick up donated cans of green beans and chicken noodle soup. “It’s humiliating to be in this position,” she says, her composure giving way abruptly to tears. “There’s a value that is inbred by your parents. You contribute to society. You don’t take from it.” Eileen has landed at the confluence of two precarious currents tearing at the foundation of this waterfront community on Florida’s southwestern coast and, more broadly, the American economic landscape. The gears of the foreclosure machinery grind on as millions of formerly middle-class suburbanites continue to slip into poverty — each reinforcing the other. Since the real estate bubble burst, replacing the finer points of no-money-down mortgages with details of the bankruptcy code, Cape Coral and the city of Ft. Myers across the river have become leading centers of foreclosure. As of August, more than one in 10 homes in the greater metropolitan area was in some stage of the process, according to CoreLogic, a housing data research firm. Nearly 17 percent of homeowners were delinquent on their mortgage payments by 90 days or more. “I’d like to think we’ve been through the ugliest part of the foreclosure process,” says Marc Joseph, a local realtor. “But we’re nowhere near out of the woods.” Not coincidentally, Cape Coral has emerged as a conspicuous example of another wrenching American trend — the growth of the suburban poor . Between 2007 and 2010, the share of people living in poverty in the suburbs of Cape Coral, a city of about 150,000, leaped from 11.3 percent to 18.6 percent, according to analysis of Census data by Elizabeth Kneebone, a senior research associate for the Metropolitan Policy Program at the Brookings Institution. Only Modesto, Calif., another community assailed by foreclosure, suffered a larger percentage increase during those years. A full accounting of the human costs of this reckoning runs beyond the material facts of diminished incomes and homes lost to foreclosure. It encompasses the anxiety and bewilderment that now dominates life in many households. That includes the soaring demand for aid. Local relief organizations such as Community Cooperative Ministries, Inc., which runs the food bank at the United Way House, have grown accustomed to a steady influx of people who had never before in their lives asked for help. In 2007, the year the recession officially began, United Way received 19,000 calls on its 211 hotline, a kind of 911 call center for people who need food and help paying their bills. Last year the hotline fielded 59,000 calls. A full accounting also includes those hunkered down inside deteriorating houses effectively lost to the messy filing cabinets of the financial system — people who have not made payments to the bank in years, yet have received no orders to vacate. They occupy the surreal purgatory of the mortgage crisis, a morally ambiguous realm in a nation where the very concept of ownership seems to have been compromised. To the outsider, they are freeloaders occupying properties at no expense, but they speak of daily fears of eviction and a dispiriting sense of rootlessness, their futures colored darkly in uncertainty. And a full accounting must include the spectacle of a senior citizen who began working as a teenager, who thought she would by now be sitting on her lanai drinking in the musty Florida breeze, yet instead needs charity to keep herself fed. “It’s devastating,” Eileen says. “I did everything I was supposed to do.” HOUSE OF CARDS Ever since the boom in American real estate gave way to a crippling bust, I have used Cape Coral as a journalistic laboratory to explore the consequences. On my first trip here, four years ago , I confronted a community in which declining housing prices were insinuating themselves into basic expectations about the future. The school district was scrapping plans to construct new buildings. The city was putting off a plan to expand the sewer system. On my second trip two years later , the mess left behind by the real estate disaster had seeped into the fiber of the community. Code enforcement officers found themselves picking through the detritus left behind by families abandoning homes lost to foreclosure — human excrement, boxes full of unpaid bills, furniture left curbside. Joseph, the real estate agent, had begun running foreclosure bus tours, serving up distressed real estate as something like an amusement park adventure for opportunistic buyers. But on my most recent trip here late last month, the mess seemed to have crystallized into something permanent. More than its physical imprint of dilapidation, the decline has brought financial pain to the doors of people who did not even participate in the upside, back when real estate was synonymous with growing local spending power. Even people like Eileen are now suffering. Eileen did not partake in the orgy of real estate speculation that has made Cape Coral an involuntary poster child for homes surrendered to banks. She is living in the same 1,900-square-foot, single-story stucco home she built 18 years ago. Her mortgage balance is just $43,000. Unlike many of her neighbors, she did not tap her home equity for a newer car or a boat. She did not sign off on an exotic mortgage to trade up for a larger lot on the water with a swimming pool. She watched such things happening all around her with a mixture of scorn and alarm. “I saw all these young people buying all these beautiful homes on the water,” she recalls. “I thought, ‘I can’t afford to get something like that. How can they afford it?’ It was not obvious to me, and I knew there had to be a consequence. It’s a house of cards. It’s going to come tumbling down.” But even as she avoided participating in the events that turned Cape Coral into a financial wasteland, her prudence did not render her immune to the consequences of its collapse. In every direction, houses once full of retirees and families with children have gone lifeless, with weeds overtaking some formerly well-tended yards, and trash piling up in empty driveways. She is not clear on the particulars — who landed in foreclosure, who walked away, who moved, who died. But the effect is palpable: Her neighborhood is pockmarked by abandonment. “It’s been happening up and down the street,” she says. “It’s tragic. Young people raising families, they need a home. It’s home to their kids. They’re in school. They lose everything when they walk away. It’s a very, very sad thing.” Eileen is adamant that she will hang on to her own home, yet she is also cognizant of the arithmetic. Her monthly mortgage payment is only $600, yet her retirement savings now produces less than $1,000 a month in income. “Every month,” she says, “I struggle to make that payment.” So she applies for jobs, bracing for rejection. Online applications for secretarial work yield come-ons for commission-only positions selling insurance. An administrative job she sees advertised at a nearby hospital attracts 1,500 applicants. She is taking classes on how to use spreadsheets and word processing software, but she cannot dismiss the sinking feeling that even additional skills will not transcend the crudest facts of her situation. “Look at me,” she says. “I’m an old lady. Nobody wants to bring an old lady in.” LIFE BEYOND WINTER Sprawling across a flat peninsula, Cape Coral has for decades beckoned as a developer’s paradise, with tens of thousands of buildable lots arrayed on a network of canals filtering into the Gulf. From the Midwest to the Northeast, the winter-averse have descended, availing themselves of waterfront access at discount prices. By the dawn of the 2000s, this process was accelerating dramatically, fueled by a credit bubble that made mortgages nearly as easy to secure as scratch-off lottery tickets. Speculators poured in, smelling easy winnings. Between 2000 and 2004, the median house price in the Cape Coral-Ft. Myers metro area soared by 70 percent, reaching $192,100, according to the Florida Association of Realtors. In 2005 alone, the price jumped by another 45 percent to $278,000. But these increases rested on the assumption that new people would continue to pour into the area and snap up the properties then being constructed seemingly at the rate of Lego pieces. When the markets figured out that much of the appreciation was the result of speculators flipping properties to other speculators, local real estate suddenly looked like a Ponzi scheme and prices commenced plunging. By 2008, the median home was selling for $153,000. In 2009, it dropped to $88,000, less than one-third of its value only four years earlier. Thousands of homeowners who had bet on being able to refinance their mortgages before their low introductory rates jumped sharply higher instead saw their equity wiped out, triggering a wave of foreclosures. Speculators walked away, leaving their bad investments to the elements. At the worst of it, in the summer of 2009, nearly 14 percent of all houses in the metropolitan area were in foreclosure, according to CoreLogic. At the offices of the realty companies that remain, marketing efforts filled with golden sunsets and yachts have given way to signs promising full lists of distressed property. Outside Lehigh Acres, a spread of suburban development carved from former pasture east of Ft. Myers, the model homes once draped in banners for national homebuilders are largely abandoned. A hot-pink stretch Hummer sits parked in front of one such home, now the headquarters of a limousine company. Some now see signs of a turnaround. By the middle of this year, the median home was again selling for more than $100,000 — a fraction of the market’s peak, yet up from its nadir. And sales volume has exploded: More 16,000 homes changed hands in Lee County, which contains Cape Coral and Ft. Myers, in both 2009 and 2010. The county is on track to hit similar numbers this year. But much of this volume represents speculators returning to scoop up distressed assets. Few foresee an end to the ceaseless drip of foreclosed homes landing on the market, even as the pace of foreclosure has slowed. The slowdown has more to do with bottlenecks in the court system than improving economics, say realtors and housing experts. Following disclosures that many lenders did not properly handle the paperwork during the real estate bubble, many banks lack the documents needed to establish title and foreclose on a given property. Faced with a flurry of lawsuits from state attorneys general charging them with unlawful foreclosures, and under fire from some judges who accuse them of unjustly seizing homes, mortgage companies are generally moving much more slowly to take possession of homes when the owners stop making the payments. Where a foreclosure in Lee County once took an average of six to nine months to complete, the process now runs nearly two years. Indeed, banks now find it so difficult to complete foreclosures that they are pursuing alternatives — not least short sales, in which a house is sold for less than the outstanding balance on its mortgage. Four years ago, homeowners who owed more than their homes were worth were generally eager to unload their properties via short sales, but banks were reluctant to go along, resistant to selling at a loss. Today that dynamic has reversed. Cognizant that they can remain for years before foreclosure becomes final, so many people here now live in houses without making payments that the banks offer them $10,000 and $15,000 checks to sell their properties short. Whatever happens next seems certain to involve more distressed property landing on markets, though likely in a trickle as opposed to a surge. Realtors engage in a parlor game, trying to calculate the size of the so-called shadow inventory — homes that banks have taken or will take through foreclosure, but which are not listed on the market. So long as this inventory remains, so will downward pressure on prices and the financial strain that has become as much a feature of life here as palm trees and golf carts. “There’s so many people that haven’t even been addressed,” says Joseph, the real estate agent. “There’s still a big shadow out there.” PURGATORY IN PARADISE Lisa Chandler is living in that shadow. More than two years ago, in April 2009, the duplex she was renting fell into foreclosure. A judge gave her 30 days to vacate. For Chandler, 40, this was an emergency. She had been unemployed since almost two years earlier, when the construction supply company where she worked fell on hard times and laid her off. A single mother of two boys, she went from earning more than $40,000 a year to subsisting on a $250 weekly unemployment check, supplemented by $400-a-month in food stamps and $200-a-month in child support. She was pregnant with her third boy. She needed a new place to live, fast. She soon found a four-bedroom, two-story house with a swimming pool and jacuzzi in an older, established part of Cape Coral. The owner told her that he, too, was behind on his mortgage payments, but expressed confidence that he could ultimately work something out with the bank. He let her rent it for a mere $600 a month, with the proviso that the property was entirely her problem: If something broke, she was on her own. “It sounded like a good deal,” she says. Two weeks after she moved in, the foreclosure paperwork arrived in the mail, and she prepared herself for another forced exit. Then, nothing happened. Months passed without clarity. More than two years later, little has changed. “I think my particular house is kind of lost in the system,” she says. Last April the bank sent two people to the house with clipboards and cameras. They took photos and made a note that she was occupying the property, but nothing more came in the mail. She recently checked the website of the Lee County Clerk’s Office and discovered that the house was officially foreclosed in September 2010, yet no eviction notice has come. She stopped paying the rent more than a year ago, when her unemployment benefits ran out. When she bumped into her landlord recently, he expressed surprise that she was still in the house, but seemed not to care. Meantime, Chandler has grappled with the consequences of living in a home she cannot maintain. Back when her baby was only a few weeks old, one of the toilets developed a leak that she did not detect until it produced a $1,000 water bill. When she could not pay, the city shut off her water. After a month of shuttling in buckets of water from neighbor’s homes, she persuaded the city to restore the flow while putting her on a payment plan, she says. Then the central air conditioning system gave out. She added a window unit to a small bedroom downstairs, where she and her boys now typically cluster, exploiting their lone refuge from the heat. While her sons watch television, she sends out fresh job applications. She pressed her laptop against the wall to tap the one spot where she can sometimes cadge a free internet connection from a neighbor’s Wi-Fi network. Her house feels like what it is — a tenuous shelter of indeterminate duration. Upstairs, clothes lie strewn across the bedroom floors. A bed sits parked in the living room downstairs, amid half-open boxes of books and clothes. Behind a sliding door, the pool and hot tub are choked with neon-green algae and mud, since she cannot afford the chemicals needed to clean them. The garage is full of odd pieces of furniture and bric-a-brac she picked up from an older couple who walked away from their home and moved into their RV. She has sold some of this stuff at garage sales to raise funds — tools, a picnic table, a workbench. She sold a lawn mower for $200. Since then, a city code enforcement officer has begun threatening her with a fine if she does not trim the green haze of grass and weeds — a potential nesting ground for snakes and rodents — encasing the property. “He says, ‘You shouldn’t even be living here,’ ” she says. “You’re squatting.” If only she had an alternative, she says, she would have moved out long ago. “I don’t want to stay here until I have to leave,” she says. “I’d like to move, but I can’t. I don’t have any money.” The local utility recently informed her it would shut down her electricity for lack of payment. She managed to keep the lights by calling in a payment by phone, despite the fact that her bank account lacked the funds. “I wrote a bad check,” Chandler says. “I knew I didn’t have the funds, but I said, ‘Let me try it. If it goes through, I have electricity for another day.’ ” Then she called 211, where an operator referred her to the United Way House. When she arrived, Community Cooperative Ministries agreed to pay her electric bill for a month. How long will she stay in this home seemingly claimed by no one? Where will she go if she must? She contemplates these questions while her 18-month-old son cheerfully explores the wooden children’s table and chairs painted with farm animals set in a corner of the United Way House. At home, he lacks such amenities. “My plan?” Chandler asks. “My plan is to get a plan. I’m just trying to get through, and I’m hoping they don’t come knocking on the door.” THE SHADOW LENGHTENS By all indications, several more years could pass before a knock comes. Cape Coral is so saturated with delinquency, and the banks are grappling with so much legal scrutiny, that the foreclosure process is lengthening further. “The bank can only take back so many homes at a time,” says Bobby Mahan, a real estate broker whose company, Selling Paradise, has become largely focused on the trade in distressed property. “Everybody who knows anything says this shadow inventory isn’t going to clear out until 2016.” On the other side of the river in Ft. Myers, a woman who once earned a six-figure salary selling real estate says she has not made a payment on her own five-bedroom house for more than four years. Yet she is still there, inside a gated community. Her lender, Bank of America, sent her a delinquency notice back when she first stopped paying, she says, but has yet to complete the foreclosure. The real estate agent, who shared her story on condition she not be named, says she was laid off in the midst of the unraveling in 2007. She now works part-time answering the phones at a retail business and does some real estate sales on the side, not enough to afford her nearly $5,000 monthly mortgage payment. “I want out of this house,” she says. “At this point, it’s just depressing. It would be nice to get on with my life. But it wouldn’t be fair to my neighbors to just walk away. The house is going to go to hell. There would be mold. I’m in a holding pattern.” Last month, she called Bank of America to check on the status of her file and see if she could pursue a short sale, she says. “This idiot tells me that they don’t have access to my file,” she says. Apparently, the bank lost the paperwork and has been unable to track it down. The representative promised to call back, she says, but three weeks later, her phone has yet to ring. Sometimes, though, finality comes even when it is unwanted. Four years ago, Asheley Mass, a 30-year-old single mother, paid $184,000 for a three-bedroom home in Cape Coral, taking on mortgage payments of $1,220 a month. At the time, she was able to manage that sum easily. She worked as a permitting and office manager at a local civil engineering firm, earning nearly $60,000 a year. But when construction dried up, so did her hours and her annual bonus. Last August, she was laid off. Mass tried and failed to secure relief from her bank through a mortgage modification, she says. Initially, she was turned away because she was current on her mortgage, making the payment by tapping her rapidly diminishing savings. A representative told her only the delinquent were securing relief. But when she stopped making payments, the bank offered to cut her burden by only $20 a month. In January, she gave up altogether on making payments, intent on putting aside as much cash as possible to start over in a rental. Last month, she found herself in a courtroom in downtown Ft. Myers, where she hoped to plead her case to the judge. This was the first house she had ever owned. It was home to her 11-year-old daughter. She had refurbished the kitchen. She wanted to keep it, if only the bank would share the loss and give her a lower payment. The lawyers for the bank and the judge all seemed familiar with one another in a clubby sort of way, she says. They exchanged inside jokes and spoke in shorthand as they processed a fat stack of files. They acted as if they were surprised that she had bothered to attend a hearing that seemed merely pro forma, another box to check on the paperwork. And the judge appeared amused and unmoved by her speech, she says. “I tried to tell him what had happened, how my hours had been cut and how I’d lost my job,” Mass says. “He said, ‘Well, when you signed the note, it didn’t say I promise to pay unless I lose my job.’ He was very sarcastic and treated me like another person trying to put one over on the system.” It was as if they occupied two separate worlds: these men of the court, moving their files through the pipeline, closing the books on failed investments — and her, an oddball just for showing up, confronting the loss of her home. “It feels awful,” she says. “This was my first house, and it hurts.” THE NEW NORMAL When the unraveling began here, a sense of hope endured that it was perhaps a momentary pause. Housing prices were plummeting, as they would soon nationally, but people told themselves that the Florida story would again prevail, exerting its magnetic pull on regions familiar with snow tires. Houses would be filled with retirees and younger people seeking bargains. Fear would give way to the next wave of upward mobility. But so much time has elapsed with the damage still rippling out that a sense of resignation has entered the local conversation. Among those focused on providing aid, the mission has evolved from one of handing out temporary relief. Now, they talk long-term strategies to assist a community in which poverty has become indisputably entrenched, albeit papered over for a time by easy money. “This is the new normal,” says Jorge Acevedo, pastor of the Grace United Methodist Church. “The old normal wasn’t normal.” Back in early 2006, Grace Church bought a failed grocery store in a low-income pocket of Cape Coral. The plan was to turn the building into a community center for after school programs, support groups for those struggling to overcome drug and alcohol problems, and other church gatherings. The church envisioned operating a modest food pantry that would feed perhaps 1,000 people a year. Last year, it fed about 10,000 people. This year, it is on track to feed more than 20,000. Acevedo and Wes Olds, the pastor for the campus that includes the community center, have launched a dialogue with university economists to try to settle on job creation strategies. They have begun classes to help people obtain GEDs, and coach job applicants on resume writing and interviewing strategies. They are reaching out to area businesses to foster a sense of community in the interest of spurring growth, functioning as much like members of an economic development authority as spiritual advisers. “We never dreamed this is what we’d be doing,” says Acevedo. “This is nothing that Wes and I studied at seminary.” On a recent Wednesday evening at the community center, as people wait for donated bags of groceries, some pick up donated bags of pet food. The pet ministry, as it is known, was launched in recognition that when people sink into poverty, they often give away their pets, facing a choice between feeding the children or feeding the dog. In a darkened wing of the former supermarket, dozens of bicycles line one wall. Volunteers attached to the bicycle ministry bring in abandoned models and donated parts, putting them in working order and handing them out to people who have lost cars and require transportation to get to work or school — no minor matter in a sprawling metropolis with minimal public transportation. The church is now pursuing the development of a community garden on a quarter-acre patch of the parking lot. The idea is to add homegrown fruits and vegetables to the typical goods donated to the food bank, where sugared cereals and glazed donuts take up shelf space. The garden project is also aimed at teaching congregants techniques they can use to grow food for themselves at home. The church is working to develop the garden with a group called Educational Concerns for Hunger Organization, or ECHO, which is accustomed to helping poor people in malnourished corners of the globe. “They have been doing this in Africa,” says Olds. “Now, there’s a need to do this right here.” At the back of the community center, a thrift store offers many of the goods needed to outfit a home — high chairs, clothing, appliances. It is also the scene of a love story that seems perfectly emblematic of the age, a romance forged in foreclosure. Two years ago, Stacy Linder, 42, broke his wrist, causing him to miss three months of work as a driver for Federal Express. Without his wages, he found himself unable to make the mortgage payments on his three-bedroom house, beginning a painful slide into foreclosure. Distraught and in need of fellowship, he began volunteering at the Grace Church thrift store. He found himself drawn to the store manager, Donna Wenzlaff, who had lost her own home to foreclosure after she was laid off from a local bank. Kindred spirits, the couple was soon engaged. They now spend much of their time sifting through the household goods that arrive at their loading dock — some donated, others scavenged from houses lost to foreclosure. “It’s strange,” Linder says. “You see truckloads pulling in here with furniture and things, and you think about the heartbreak of the people who left it behind. You know what they’ve gone through. It’s amazing what people have had to walk away from.”

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What God Told Bachmann In Vision About Her Husband

December 3, 2011

ON THE ROAD TO ESTHERVILLE, Iowa — The cornfields edging two-lane Iowa Highway 9 fade to a sunbaked blur as Rep. Michele Bachmann’s blue-and-white campaign coach rolls on, bound for a “town hall” meeting with voters in the basement of a public library 25 minutes down the road. Inside the bus – which four years ago was chartered by John McCain and whose odometer now has 460,000 miles to show for it – the candidate folds her feet underneath her on a blue velour bench, answering questions with variations of the sound bites she’s repeated for months across this critical first-to-vote state. She pauses just once for a query that seems to catch her by surprise: What’s the public’s biggest misconception about her? “Oh, that’s a good question,” she says, the brassiness in her voice softening as she looks to a pair of campaign aides. “One thing people will say to me at these town hall conventions … they’ll say `the media doesn’t tell the story of who you are. They make you two-dimensional, a caricature.’” Bachmann has a point. The choreographed repetition of modern presidential campaigns can turn the most personable candidate into an endless loop of talking points. But any close observer of Bachmann’s political career would be hard-pressed to dismiss her as two-dimensional. At a time when voters accuse politicians of being difficult to pin down on issues, Bachmann proudly draws herself with hard lines and sharp edges. First in Minnesota and later in Washington, Bachmann has alienated some members of her own party nearly as much as Democrats. On this trip through a conservative corner Bachmann must win to resuscitate her candidacy in Iowa’s January caucus, she has another chance to make her case and offer voters a window into a political life that, now clouded by time and rhetoric, remains a singular story. Bachmann calls herself an accidental politician. But both supporters and critics say that’s selling her short. ___ Campaigning across Iowa, Bachmann frequently reminds voters she is a native. But that does not explain the route she has traveled: from Waterloo, a manufacturing city of 68,000 where she was born 55 years ago in a Democratic-voting family with union roots, to congresswoman from St. Paul’s exurbs whose personal and political life have been shaped by her embrace of evangelical Christianity and later, a highly combative brand of conservatism. Bachmann’s family left Iowa when she was 12 and her father, an engineer, took a job in Minnesota. Her parents divorced two years later. Bachmann’s father moved to California. Her mother found work as a store clerk and bank teller, but money was tight. The family managed by rigorously watching spending and relying on the generosity of relatives, says Bachmann’s brother, Paul Amble, a Connecticut psychiatrist six years her junior. “I just remember taking trips down to Iowa where my grandmother lived and we’d come back with huge Tupperware things full of food,” Amble says. The family attended a Lutheran church. But Bachmann says her life was transformed at 16 by a religious awakening. In a speech this year at Liberty University, Bachmann recalled entering church one night with three friends after mistakenly hearing there was a party inside. “When we got up to the front of the church, all of us under the power of the Holy Spirit, were called to our knees and we knelt in front of the altar and we started in prayer and the Holy Spirit convicted me and touched my heart and that of my three friends and one thing that I understood at that moment is that I didn’t know Jesus,” she said. In college, Bachmann met husband Marcus (in a vision, God told her to marry him, she says). After law school, the Bachmanns returned to Minnesota, eventually settling in Stillwater, whose historic downtown along the St. Croix River is a popular shopping and dining destination. Marcus opened a Christian mental health counseling practice nearby. Michele Bachmann tells audiences she began working as a “tax litigation attorney.” But the outspoken critic of big government avoids talking about the specifics of her job as an Internal Revenue Service lawyer pursuing people who did not pay their taxes. The couple sent their five children to a private Christian school. But over the years their colonial became home to 23 foster children who attended public schools. Bachmann says she became dismayed by one girl’s high school math assignment to color a poster. In 1993, Bachmann joined a group starting one of Minnesota’s first publicly funded charter schools. But it immediately became the center of controversy, with some parents and teachers complaining founders were trying to incorporate religious teachings. Bob Beltrame, a member of the school’s parental advisory board, says teachers complained that Bachmann and another school board member were sitting in on classes and questioning them about their methods. He recalls a phone conversation with Bachmann that fall discussing the school’s approach. “I remember one thing she said. I’ll never forget it. She said, `You know, if you really read the scientific literature you’ll find that today there’s a lot more evidence of creationism than there is the theory of evolution,’” Beltrame says. The controversy peaked that December, when the school’s CEO and board members including Bachmann resigned. But her interest in education and policy was far from over. ___ Icicle lights twinkle from the ceiling of the Rock Rapids Community Center when Bachmann steps before about 60 people on a Friday afternoon, betraying the Rotary Room’s usual function as a rental wedding hall. On the way to the podium, she works her way diligently around the room, always smiling and spending a few seconds with each person, being sure to ask their names and to make contact with her deep aquamarine eyes. “Hi, I’m Michele,” she sometimes offers. “A couple of Lyon County facts for you,” says Cody Hoefert, a chiropractor and chairman of the local Republican party, in his introduction of the candidate. In 2004, the county gave George W. Bush the third largest margin of victory of any in Iowa, he tells Bachmann. What’s more, Rep. Steve King – generally considered one of the most conservative members of Congress – gets 80 percent of Lyon’s vote. “Oh, man,” Bachmann replies. The diminutive politician beams up at Hoefert, more than a foot taller. “This is it! This is the center of the universe.” Bachmann assures the audience that together they will take their country back. “This will be a miracle from God for us to be able to repeal `Obamacare,’” she says, inviting questions. The last comes from Hoefert, who asks if Bachmann understands what it’s like to spend hours on the phone trying to get an answer from federal tax officials. “Yes, I have called the IRS because my background is I’m a federal tax litigation attorney,” replies Bachmann, not mentioning that she worked for the very agency being criticized. “So, yes, I have called them. I’ve called them and been rerouted 19 times.” ____ In Minnesota, Bachmann attacked state education standards called Profile of Learning, warning church audiences the guidelines were dumbing down lessons. She railed against federal involvement in schools. “My clearest memory is people saying `amen, amen,’ often,” said Mary Cecconi, then a Stillwater school board member who attended one of Bachmann’s presentations. “It had a true sense of a revival meeting.” One presentation impressed Bill Pulkrabek, a county commissioner and chair of the district Republican Party, who found Bachmann articulate, smart and attractive. “I said you’re too good of a candidate to be sitting on the sidelines,” Pulkrabek said. Pulkrabek backed Bachmann’s 1999 run for Stillwater’s school board, atop a slate with four of her friends. But at a candidate forum, Bachmann said she might not serve the full term because she was considering a challenge to state Sen. Gary Laidig, a moderate Republican in the legislature for 28 years. “I tried to present information to Sen. Laidig on the Profile of Learning, he was not interested,” the Stillwater Gazette quoted her as saying. “I told him if he’s not willing to be more responsive to the citizens that I may have to run for his seat or find someone else who would do so.” Bachmann and other Republican board candidates lost, alienating voters accustomed to non-partisan elections. But the turnout tripled from the previous election, raising her profile. Laidig said he arranged for Bachmann to meet legislators, but was one of just two Republicans who voted to retain state education standards. Still, he was surprised the following April at the district Republican convention, when she was nominated to oppose him. Bachmann has said she came to the convention without makeup and in a sweatshirt, not expecting to be nominated. But Bill McCallum, a party official responsible for counting votes, said he saw printed signs supporting Bachmann when he walked in the door. Bachmann won the nomination by two votes. Her candidacy caused a Republican rift, with the Senate minority leader backing Laidig in the primary. But Bachmann blanketed the district in yard signs and sent out mass mailings, including a letter promising to defend the Second Amendment in which she called a Washington rally for gun control, “the Misinformed Mom March.” And she won. In the state Senate, Bachmann led a campaign to ban gay marriage. Some Republicans saw the issue as needlessly distracting and gay rights activists called for a boycott of stores in Bachmann’s hometown. But Bachmann urged 3,000 supporters at a 2004 rally at the Capitol to “storm the doors.” Her push came despite divisions within her own family. One of the most notable opponents of the gay marriage ban was Bachmann’s stepsister, Helen LaFave, a lesbian who came to the Capitol with her partner to “bear witness on what she’s doing that’s so personally hurtful to me and to so many others.” ___ The campus center at Dordt College in Sioux Center is packed at lunch hour as Bachmann takes the stage. When rivals Newt Gingrich and Herman Cain spoke here last summer, Bachmann was on her way to victory in an August straw poll. But ever since Texas Gov. Rick Perry entered the race the same day, Bachmann has struggled to reclaim the mantle as the field’s conservative champion. Today, Bachmann wins the loudest applause for statements against abortion and defending traditional marriage. But she speaks mostly about her distaste for big government. “I want to close down the federal Department of Education – turn off the lights, lock the doors and keep that money here in Iowa,” she says. Afterward, standing before TV cameras in the parking lot, Bachmann briefly commends Perry for announcing an energy plan similar to hers, before tarring him as a politician too willing to ignore the Constitution. “We’ve seen President Obama do that by putting into place EPA regulations through the executive order. That’s a misuse of power and authority. Unfortunately we’ve seen Gov. Perry have a pattern of that in Texas,” Bachmann says. “But I do thank him and welcome him for endorsing my energy plan today.” ___ When Bachmann ran for a House seat in 2006, she drew criticism after a video surfaced in which she told worshippers at a church in her district that God “has focused like a laser beam in his reasoning on this race,” and had instructed her to run. But in a year when Democrats took control of the House, Bachmann won handily. “I’m coming here as a conservative,” she told reporters. “I’m not coming here for the purpose of controversy.” In Washington, Bachmann emerged as one of the most outspoken members of Congress, criticizing Obama’s “anti-American views” during the 2008 presidential campaign. Republican leaders kept her at arm’s length, despite her fundraising prowess, supporting a rival’s bid for a House leadership role. Bachmann, though, found her own soapbox, embracing the tea party movement and delivering a response on its behalf to Obama’s State of the Union address in January, moments after the Republican Party’s official response. And when conservative commentator Glenn Beck staged a “Restoring Honor” rally on the National Mall in August 2010 but did not invite Bachmann, she staged her own rally immediately afterward. It was a reminder of Bachmann’s fierce will, says Ron Carey, a former chair of the Minnesota Republican Party who served as Bachmann’s chief of staff in 2010. Carey – the fifth chief of staff in four years – quit after five months. He says he left because Bachmann repeatedly refused to listen to her staff’s advice. The last straw, he said, was a disagreement over paying a campaign contractor. Carey says Bachmann believed the contractor was not fulfilling its duty, and while he agreed, he pointed out that she was bound by a contract. She ordered him not to pay the company anyway. “She wanted what she wanted the way she wanted it and even though the facts said she couldn’t have it, she was just adamant she was going to have it her way,” Carey said. ___ On the road, Bachmann tells voters she will push to elect “13 like-minded senators,” giving her a filibuster-proof majority to push through changes as president. As her bus nears Estherville, she is asked what that says about her vision of leadership for a country whose increasingly fractured politics have left many voters mourning the seeming inability of leaders to find compromise. “My plan is not to fail. My plan is to succeed,” Bachmann says. Later, about 60 voters fill the basement of the Estherville library to hear the candidate and ask for autographs. “It’s going to be a lot of tough love,” Bachmann promises if she’s elected president. “You’re going to be hearing screaming and crying and gnashing of teeth from Washington, D.C. all the way to Estherville.” Afterward in the library’s lobby, Bachmann rushes over to hug Stacie Seckinger, a long-ago friend from Stillwater. It’s been years, the women tell each other, and so much has changed. Seckinger’s daughter, Erin, recalls how Bachmann gave her class a tour of the state capitol after her election to the Minnesota Senate. Then Bachmann dashes for the bus. This, Seckinger says, was the same strong woman she knew as a school activist. “She knows what she wants,” Seckinger says. “And she doesn’t waver.”

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Focus Turns To House After Senate Defeats Crucial Expiring Provision

December 2, 2011

WASHINGTON — Senate defeat of competing Democratic and Republican plans to extend a cut in the Social Security payroll tax has punted the issue to the House, where GOP leaders are facing ideological divisions within the party over whether to pass the tax holiday. The focus is on the GOP-controlled House after Senate votes Thursday exposed wide reluctance by Republicans to go along with the costly proposal – a centerpiece of President Barack Obama’s jobs agenda. As expected, Senate Republicans defeated Obama’s plan to extend the payroll tax cut through the end of next year while also making it more generous for workers. But in a vote that exposed rare divisions among Senate Republicans, more than two dozen of the GOP’s 47 lawmakers also voted to kill an alternative plan backed by their leader, Mitch McConnell, R-Ky., to renew an existing 2 percentage point payroll tax cut. A spokesman for House Speaker John Boehner, R-Ohio, said Republicans weren’t planning on negotiating with Democrats before unveiling a payroll tax cut plan – and the spending cuts to pay for it – next week. But the Senate vote would seem to indicate that House Republicans will be hard-pressed to muscle a payroll tax cut through without Democratic support. And those votes could be hard to come by if the GOP plan contains spending cuts Democrats dislike. Many Republicans and even some Democrats say the payroll tax cut hasn’t worked to boost jobs and is too costly with the deficit requiring the government to borrow 36 cents of every dollar it spends. “I can’t find many people who even know that they’re getting it, OK?” said Sen. Joe Manchin, D-W.Va., who opposed both plans. “So with that being said, we’re going to double down on something that we thought should have worked that didn’t work.” Sen. Jerry Moran, R-Kan., said after Thursday night’s vote that previous tax rebates “stimulated little and increased the debt a lot” and that it would be better to simply cut spending than turn around and use spending cuts on stimulus-style tax cuts. The defeat of the competing Senate plans came as Boehner said for the first time that renewing the payroll tax cut would boost the lagging economy. Boehner also promised compromise on a renewal of long-term jobless benefits through the end of 2012. The payroll tax cuts and unemployment benefits are at the center of a costly, politically-charged year-end agenda in which Democrats seem poised to prevail in renewing a tax cut that many Republicans back only reluctantly. But Republicans are insisting – in a switch from last year – that the payroll tax cut and jobless benefits be paid for by cutting spending. Both parties are seeking the political high ground as next year’s elections loom, with Democrats accusing Republicans of siding with the rich, and Republicans countering that Democrats were taxing small business owners who create jobs. The first payroll tax plan to fall was a Democratic measure that was at the heart of the jobs package Obama announced in September. It would cut the Social Security payroll tax from 6.2 percent to 3.1 percent next year and also extend the cut to employers, with its hefty $265 billion cost paid for by slapping a 3.25 percent surtax on income exceeding $1 million. Republicans and a handful of Democrats combined to kill the measure on a 51-49 tally that fell well short of the 60 votes required under Senate rules. For the first time, a Republican, Susan Collins of Maine, voted to support the millionaires’ surcharge. In a surprising result, Democrats and more than two dozen Republicans then voted 78-20 to kill the $120 billion GOP alternative that would have simply extended the existing 2 percentage point payroll tax cut, financed by freezing federal workers’ pay through 2015 and reducing the government bureaucracy. Republicans offered a simple one-year continuation of the existing law, jettisoning Obama’s call to deepen the cut to 3.1 percentage point on workers’ first $106,800 in earnings, while expanding it to cut in half employers’ Social Security contributions for their $5 million in payroll. To pay for the measure, Senate Republicans proposed freezing federal workers’ pay through 2015 – extending a two-year-freeze recommended by Obama – and reducing the bureaucracy by 200,000 jobs through attrition. The Democratic plan would give a worker earning $50,000 a more than $1,500 tax cut; the GOP plan would provide a $1,000 tax cut for such an earner. A two-income family making $200,000 would reap a $6,000-plus tax cut under the Democratic plan and a $4,000 tax cut under the GOP version.

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Republican Leaders Quietly Support Unemployment Reauthorization

November 30, 2011

WASHINGTON — For the second year in a row, Congress must decide during the holiday season whether to renew federal jobless benefits for people out of work six months or longer. While Democrats have been making a huge fuss, with a press conference Wednesday featuring hundreds of unemployed workers, Republicans have been relatively quiet — but that doesn’t mean they’re against reauthorizing the benefits. Republican leaders in both Houses of Congress have expressed support for continuing the benefits, saying the holdup is just a matter of how the legislation is put together. “We’re going to be discussing between the House and Senate ways to deal with both continuation of the payroll tax reduction and unemployment insurance extension before the end of the year,” Sen. Mitch McConnell (R-Ky.) said Tuesday. “And in the end, it will have to be worked out in a joint negotiation between a Democratic Senate and a Republican House.” If the benefits are not reauthorized, 1.8 million jobless will stop receiving checks over the course of January, according to worker advocacy group the National Employment Law Project. The federal benefits kick in for laid off workers who use up to six months of state-funded compensation without finding work. Congress routinely provides extensions during recessions and hasn’t dropped extended benefits with the national unemployment rate above 7.2 percent. Yet the need to reauthorize benefits has been overshadowed by the looming expiration of a payroll tax cut put in place last December, which would result in a tax hike on every working American — an average hike of $1,000 — a scenario Republicans would like to avoid. And Congress also needs to pass a so-called “doc fix” by the end of the year to prevent a 27 percent cut in pay for doctors who see Medicare patients. “Nobody is coming out with any definitive statements on [unemployment insurance]. Last year they were happy to,” Judy Conti, a lobbyist for NELP, told HuffPost. “I think it’s indicative of the fact that on a bipartisan basis people understand that workers families and the economy need these programs to continue.” The sticking point over renewing the benefits through next year will be their roughly $50 billion cost. Republicans typically insist that the aid must be “paid for,” but that calculation may not apply if the benefits can be attached to something attractive like a tax cut. Republicans blocked renewed unemployment aid last year until President Obama agreed to extend the Bush-era tax cuts for two more years — at a cost much greater than unemployment. Earlier this year President Obama pressed Congress to pass a jobs package that included many items Republicans favored — for instance a “Bridge to Work” training program — but so far congressional Democrats have not signaled support for those programs. Many members of Congress expected the deficit reduction super committee to craft a deal that included the benefits, but the committee turned out to be less super than advertised . “Any kind of grand deal that we’ve been after has eluded us,” House Speaker John Boehner (R-Ohio) said Tuesday, referring to the failed broader talks on the budget and debt. “So let’s try and work incrementally towards a conclusion this session that can benefit all Americans. Because we Republicans do care about people that out — that are out of work. We don’t want to raise taxes on anybody. We want to provide the help to the physicians and the providers in the health care arena in this country, and we want to make sure this country has a sound national defense policy.” Even Sen. Orrin Hatch (R-Utah), who suggested during an standoff on jobless benefits last summer that unemployed people blow the money on drugs, sounded sympathetic to jobseekers on Wednesday. “Nobody really has a real quick answer. We’re studying it, looking at it. We’re clearly going to have to do something — nobody wants to see people suffer,” Hatch told reporters outside the Senate floor on Tuesday. “There’s a huge underemployment rate as you know, of 16, 18 percent, somewhere in that area. People don’t even want to look for jobs anymore. There oughta be some incentives to find jobs, to get to work. It’s easier said than done. I think there’s a general consensus that we need to help people.”

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Illinois House Blocks CME, Sears Tax Break Bill

November 30, 2011

SPRINGFIELD, Ill. — What a state takes away, it also can give back. Less than a year after raising personal and corporate income taxes, Illinois officials are pushing a $250 million package of tax breaks for several prominent businesses threatening to leave the state, including Sears and the Chicago Mercantile Exchange. To make the measure more palatable, individual taxpayers also would get a dollop of relief. The measure suffered a setback Tuesday when the House rejected it, but legislative leaders said they were determined to reach a deal in the coming days or weeks. The idea of giving tax breaks to companies is a hard sell in the state Legislature when many families are struggling and the Occupy Wall Street movement is reflecting anger at corporate interests. But advocates say if Illinois doesn’t take action, the businesses and their thousands of jobs will be lured away by states that are eager to take advantage. “If we don’t do it, another state will. That’s the reality of the world in which we live,” said Rep. John Bradley, a Marion Democrat who is chairman of the Illinois House Revenue Committee. The Senate approved the proposal Tuesday in a special session, but the House balked, sending lawmakers into further negotiations. “We are prepared to come back as soon as there is an agreement, as soon as we are able to work this out,” said Bradley, who has overseen negotiations. “Unfortunately, that day is not today. Whether it’s tomorrow or the next day or next week, we are prepared to come back as soon as this is settled.” Illinois’ tax dilemma is a collision between two different goals: Balancing the budget and avoiding the image of a state that’s bad for business. And in the process, officials want to avoid being exploited by companies making threats, perhaps empty ones, to flee Illinois. When 2011 began, the state faced a deficit projected to hit $15 billion. The Democratic governor and Democratic majorities in the Legislature decided an income tax increase had to be part of the response to that gap. They bumped the individual tax rate to 5 percent, up from 3 percent originally, and the corporate rate to 7 percent, from 4.8 percent. The increase, most of which is temporary and will expire in stages over the next 15 years, is supposed to generate about $6.8 billion in its first year. Other states pounced. New Jersey, Indiana, Wisconsin and more began promoting themselves to Illinois businesses. They succeeded in drawing some companies away, despite protestations from Illinois officials that the state still has a low overall tax burden. In the months since then, the same Democratic governor and Democratic legislators have passed measures to cut business costs for workers’ compensation and unemployment insurance costs. Now the package of tax breaks is on the table. Doug Whitley, president of the Illinois Chamber of Commerce, sees the proposal as acknowledgement that officials went too far with the January tax increase. “They overreached,” Whitley said. “They’re trying to bring the pendulum back to a more middle ground and they’re trying to send a strong message to employers that elected officials are not oblivious to their outcry.” The tax package would renew a $15 million income tax credit and a break on local property taxes for Sears Holdings Corp., which has its headquarters in the Chicago suburbs. The proposal also cuts income taxes about $85 million for CME Group Inc. and CBOE Holdings Inc., which run the Chicago Mercantile Exchange and the Chicago Board Options Exchange. The companies complain that they are still taxed on every transaction they handle, as if all business is still conducted by shouting men on trading floors, when most of their trades are now done electronically by buyers and sellers who have no connection to Illinois. The legislation being discussed would tax the exchanges on only 27.54 percent of their revenues. Some legislators question whether Sears, CME and CBOE would really uproot their operations and leave Illinois. They worry that giving the companies what they want will encourage similar demands from other businesses. “What’s going to stop the next big company from putting a gun to our head with the same type of threat?” said Rep. Mary Flowers, a Chicago Democrat. The package includes a raft of tax breaks that apply to Illinois businesses in general: renewing a research-and-development credit, changing the way losses can be applied to tax bills, exempting more assets from the estate tax and extending a variety of existing credits for five more years. Families would get a little help, too – roughly $110 million in tax relief. The standard personal exemption on income taxes, now $2,000, would be bumped to $2,050 and then increase with the rate of inflation in future years. The state version of the earned-income tax credit for poor families would rise to 10 percent of the federal credit, up from 5 percent. Gov. Pat Quinn’s office denies the package is a response to the earlier tax increase. His spokeswoman, Brooke Anderson, said that despite headlines about the effect of the increase, Illinois is still adding jobs and ranks highly in some assessments of the best places to do business. She said the tax package is about making the state’s system fairer for everyone. More than 30 states have raised taxes since the recession began, said Jon Shure, director of state fiscal strategy at the Center on Budget and Policy Priorities. Some of those have gone on to offer tax breaks to businesses, but Shure said he sees no evidence of a direct link. That is, states don’t seem to be cutting business taxes out of a sense that they were wrong to raise taxes in the first place. Shure said cutting state business taxes doesn’t help create jobs, but it can suck money away from education, infrastructure and other important state obligations. “If you cut taxes to address the political perception that it creates jobs, what you’ve really done is take money away from the things that really do create jobs,” Shure said. “In the long run it’s detrimental to economic recovery.” ___

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Foreclosure Crisis Far From Over

November 17, 2011

Five years in, the nation is less than halfway through its foreclosure crisis, the nonpartisan Center for Responsible Lending warned in a report released Thursday. “For people that think we’re out of the woods, they need to kind of rethink that premise,” said Roberto Quercia, director of the Center for Community Capital at the University of North Carolina at Chapel Hill and one of the study’s authors. Roughly 42.2 million Americans took out a mortgage loan between 2004 and 2008. By February of this year, 2.7 million of those households, or 6.4 percent, had lost their home to foreclosure. CRL estimates that an additional 3.6 million households, or 8.3 percent, are at “immediate, serious risk” of losing their homes. And that estimate is probably lowballing the problem, the researchers said: CRL’s research only extends through February 2011, and it excludes both loans originated outside the given time-frame and loans that are not yet seriously delinquent. What exactly is pushing homeowners to the brink? Researchers found the type of mortgage a borrower has can have a greater impact on the borrower’s ability to stay in their home than even income or credit history. This trend has had particularly adverse affects for minority homeowners. Higher-income Latinos are three times more likely to lose their homes to foreclosure than their white counterparts, according to the report. Similarly, higher-income African Americans have foreclosure rates twice that of higher-income white borrowers. In low-income communities, minority foreclosure rates also eclipse those of white borrowers. What separated the minority borrowers from their white counterparts is the type of mortgages they were sold, the researchers concluded. Minority borrowers have a disproportionately large percentage of risky subprime loans, the mortgages infamous for their high interest rates and problematic payment options. African American and Latino borrowers with good credit histories — a credit score of at least 660 — are three times more likely than white borrowers to end up in a high interest rate mortgage, the report found. “It’s industry which has painted this picture of ‘oh, it’s the borrower’s fault,’ that the homeowner is behind on mortgage payments,” said CRL spokeswoman Kathleen Day. “But they do that to deflect attention from the unbelievably irresponsible lending they were doing.” Researchers also discovered that the type of person most likely to lose their home to foreclosure changes depending on geography. In cities and states where property values were high prior to the collapse of the housing bubble — including many parts of California, Florida and Arizona — it is wealthier homeowners who have the highest foreclosure rates. In communities where real estate prices remained relatively low before the market collapsed — such as Detroit, Cleveland and St. Louis — it is the lower-income borrowers who are fighting to keep their homes. “The story in Michigan is different than the story in Florida,” said Quercia. “In Michigan, in the run up to the bust, there was very high unemployment and people were given loans to take equity from their homes to make ends meet. In Florida, where there was very low unemployment prior to the crisis, mortgages were used to increase the affordability of the home.” The idea that the national foreclosure crisis is a collection of local foreclosure crises suggests that any solution to the slump needs to be tailored to local situations, Quercia said. And customized remedies are especially important in minority neighborhoods that have been hardest hit by the crisis. “The idea of letting the market fix itself won’t really work because these communities of color will be so heavily impacted,” says Quercia. “In many lenders’ minds, these neighborhoods have a reputation as high risk areas because of all the foreclosures, so it will take a very proactive approach to rebuild them.”

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Company Announces Major Decision In Controversial Pipeline Saga

November 14, 2011

LINCOLN, Neb. — TransCanada will move the route of its planned oil pipeline out of the environmentally sensitive Sandhills area of Nebraska, two company officials announced Monday night. Speaking at a news conference at the Nebraska Capitol, the officials said TransCanada would agree to the new route, a move the company previously said wasn’t possible, as part of an effort to push through the proposed $7 billion project. They expressed confidence the project would ultimately be approved. Alex Pourbaix, TransCanada’s president for energy and oil pipelines, said rerouting the line would likely require 30 to 40 additional miles. “We’re confident that collaborating with the state of Nebraska will make this process much easier,” Pourbaix said. The announcement follows the federal government’s decision last week to delay a decision on a federal permit for the project until it studies new potential routes that avoid the Sandhills area and the Ogallala aquifer. The proposed pipeline would carry crude oil from Canada to Texas Gulf Coast refineries. Debate over the pipeline has drawn national attention focused largely on Nebraska, because the pipeline would cross the Sandhills – an expanse of grass-strewn, loose-soil hills – and part of the Ogallala aquifer, which supplies water to Nebraska and parts of seven other states. Nebraska Gov. Dave Heineman called a special legislative session to seek a legal and constitutional solution to the pipeline debate. But the session’s stated goal – to enact oil pipeline legislation – has lacked a clear consensus about what, if anything, state officials ought to do. Environmentalists and some Nebraska landowners fear the pipeline would disrupt the region’s loose soil for decades, harm wildlife, and contaminate the aquifer. Business and labor groups who support the project say the criticism is overblown, and based more on opposition to oil than the project itself. They say the project will create construction jobs, although the exact number is disputed.

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RAW VIDEO: Man Shot Outside Occupy Oakland Camp

November 11, 2011

A man was shot outside the Occupy encampment by Oakland City Hall Thursday evening, witnesses said. He did not survive. Sources on the scene said four to six shots were fired outside the 12th Street BART station at the intersection of 14th Street and Broadway by Frank Ogawa Plaza, which has served as the epicenter of Occupy Oakland since the group formed more than a month ago. The victim was given CPR by Oakland firefighters before an ambulance drove him away. (SCROLL DOWN FOR AFTERMATH VIDEO) Members of Occupy Oakland remained adamant that the incident was unrelated to their movement. “This was not an internal incident,” 35-year-old Shake Anderson told the San Francisco Chronicle . “What happened was the result of neighborhood violence. Don’t forget, we’re in downtown Oakland.” Interim Oakland Police Chief Howard Jordan confirmed the victim’s death during a press conference, explaining that the a fight transpired between two groups of African American males, during which one pulled out a gun and fired several rounds into the crowd. Protesters interrupted his speech several times, shouting, “Turn the lights on!” Occupy Oakland’s official Twitter account expressed condolences while also distancing itself from the shooting. “This was unrelated to the occupation. Please keep this man in your thoughts,” one tweet read . According to the Bay Citizen , ABC7 News cameraman Randy Davis sustained injuries during the chaotic aftermath, but remained on the scene to continue filming. Occupy protesters, meanwhile, stood in a line with locked arms so officials could address the situation. Some formed a candlelight vigil nearby, while others packed up and left for the night. SF Weekly reports that Occupy Oakland is planning a peace march for Friday and another vigil for 10pm Thursday evening. “This is what we are fighting against,” the occupiers said during Thursday’s General Assembly. As of Thursday evening, officers had not made any arrests, and the suspect remains on the loose. Take a look at aftermath video ( courtesy of NBC Bay Area ) below: View more videos at: http://nbcbayarea.com .

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Ohio Tea Party Turns To New Anti-Union Measure

November 11, 2011

COLUMBUS, Ohio — Just two days after Ohio voters overwhelmingly rejected a state law curbing collective bargaining rights, a tea party coalition said it will push an amendment to the state’s constitution that would prevent workers covered by union contracts from being required to join unions or pay dues. Chris Littleton, the co-founder of the Ohio Liberty Council, told reporters Thursday the group has submitted an initial 1,000 signatures and the proposed wording for its right-to-work amendment to the state’s attorney general. The group needs state officials’ approval of the phrasing and signatures before it can start collecting the roughly 386,000 valid signatures needed by July to get the question on 2012 ballots. If the group fails to get the question before voters during next year’s presidential election, it would continue its push in 2013, Littleton said. “We’re in this for the long haul,” he said. The proposed amendment comes on the heels of Tuesday’s election, when more than 61 percent of voters rejected a law that restricted the collective bargaining rights of Ohio’s more than 350,000 public workers. Forty-six percent of registered voters turned out, setting a 20-year record in terms of voter percentage and an all-time high in total people voting in an off-year general election. Labor groups and opponents of the law poured more than $24 million into the repeal campaign. The defeat of the Ohio union law marked one of the biggest victories in decades for the labor movement. Tim Burga, president of the Ohio AFL-CIO, said in a statement that the proposed amendment was “an even more broad assault on workers’ rights” than the union law, and that the union wouldn’t shy away from defending workers’ rights once more. Democrats at the Statehouse immediately criticized the proposal. “Right-to-work doesn’t guarantee rights to the worker,” said state Rep. Tracy Heard of Columbus, contending unions have made it easier for women and minorities to earn a better wage. Littleton said the ballot initiative is about freedom of choice in the workplace, not collective bargaining. The proposal would amend the state’s constitution to say that no law, rule or agreement should require employees to join a union or pay dues, as a condition of their employment. “This has everything to do with freedom for the worker,” Littleton said. “It doesn’t address anything else except for the idea that you should be free to choose whether or not you want to participate in a labor organization.” The union law rejected by voters included a provision to prevent nonunion employees affected by contracts from paying so-called “fair share” fees to union organizations. That part of the overhaul didn’t receive as much attention during the repeal effort compared with other parts that banned public worker strikes and prevented unions from negotiating health care or pension benefits. Republican Gov. John Kasich and GOP leaders in the Legislature had urged voters to keep the collective bargaining law in place, contending that it would help local governments and communities better control their costs. Following Tuesday’s election results, they said they would spend time contemplating how best to take the state forward. With the announcement of the right-to-work amendment effort, the Kasich administration, Senate President Tom Niehaus and House Speaker William Batchelder repeated the need to reflect on the election’s outcome. “Now’s not the time to be taking up or considering these types of issues,” said Kasich spokesman Rob Nichols. Niehaus said in a statement that lawmakers needed to work to build consensus for what steps to take next. “We just finished a very divisive and contentious election, and Ohioans made it clear they want us to be more deliberate in our approach to major reform,” Niehaus said. The Ohio Liberty Council, a coalition of more than 60 tea party groups, sees a chance for success based on Tuesday’s election results. Nearly 66 percent of voters supported their amendment to let the state opt out of a provision of the 2009 federal health care overhaul, which mandates that most Americans purchase health care. “People don’t like the idea of compulsory participation – that I’m mandated or forced to do something against my will,” Littleton said. The Columbus-based 1851 Center for Constitutional Law and Associated Builders and Contractors of Ohio, which represents nonunion construction firms, have joined with the Ohio Liberty Council in the effort. Twenty-two states have right-to-work laws that prohibit union fees from being a condition of employment.

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Jerry Brown vs. Community Government

November 11, 2011

By Judy Lin and Paul Elias, Associated Press SAN FRANCISCO (AP) — Gov. Jerry Brown and state lawmakers asserted their right to eliminate community redevelopment agencies and divert billions of tax dollars to fund schools and other services in oral arguments Thursday before the California Supreme Court. Deputy Attorney General Ross Moody, who represented the state, said redevelopment agencies were created by the Legislature, so lawmakers have the power to dissolve them and impose new requirements if they want to continue operating. Steven Mayer, the attorney representing cities and redevelopment agencies, told justices the state’s actions this year are illegal because they constitute the type of raid on local government money that voters banned in 2010. The case has long-term implications for state budgeting. The state is counting on $1.7 billion from the agencies in this year’s budget and $400 million a year thereafter. It also will determine the fate of about 400 redevelopment agencies, which primarily are controlled by cities and counties and are used to promote construction projects and rehabilitate downtrodden business districts. Critics say many of those agencies have strayed from that intent and audits have revealed some misuse of funds, a portion of which is intended to be used for low-income housing. The Supreme Court is expected to rule before Jan. 15. During an hour-long hearing before the justices, Mayer argued that Proposition 22, passed by voters in November with 61 percent of the vote, protects redevelopment agencies from tampering by the Legislature. He said the state violated the measure in eliminating redevelopment agencies. Mayer said the Legislature’s offer to keep the agencies in business if they give up a large portion of their funding is unconstitutional. He compared that option to a bank teller receiving a note from a robber saying, “The money or your life.” He said most agencies will make payments so they can continue to operate. Justice Carol Corrigan picked up on the bank robber analogy when she asked Moody if the state was demanding “ransom” from the agencies to stay in business. “It’s hard to argue it’s a voluntary payment,” Corrigan said. Moody contended lawmakers had the authority to eliminate the agencies despite Proposition 22. He said the measure did not strip control of redevelopment agencies from the Legislature, which passed legislation in 1945 allowing cities and counties to establish redevelopment agencies. “Proposition 22 had an extremely limited purpose,” Moody said. He said Brown was confronted with a historic deficit when he took office and had to make tough budget choices immediately after assuming office in January. ___ Lin reported from Sacramento.

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Air Pollution Bill Drives Wedge Between Republicans

November 10, 2011

WASHINGTON — This time, a Tea Party-backed measure to let pollution increase in the name of saving jobs is running into Republican opposition. It’s coming from East Coast senators, who are not keen on Midwestern power plants fouling their air. Republicans in the House have passed numerous bills over the past year aimed at gutting the Environmental Protection Agency and anti-pollution protections, including at least 170 separate votes targeting environmental regulations. A number of these bills made it to the Senate and failed there amid filibusters. On Thursday, Sen. Rand Paul (R-Ky.) is set to bring up a new piece of legislation that needs just a simple majority to pass — and it probably would if it weren’t for a number of Republicans who approve of air pollution limits under an enhanced version of a Bush-era clean air rule. Paul’s measure is an attempt to halt the EPA’s cross-state air pollution rule , a court-ordered refinement of a similar rule first written in 2005. His bill invokes the Congressional Review Act , which allows the Senate to reject new federal rules with a simple majority vote, instead of the usual 60-vote threshold that is now virtually required in the Senate. Paul’s legislation has attracted several Democrats — including Sens. Mary Landrieu of Louisiana and Joe Manchin of West Virginia — which would give the bill a shot if it weren’t for Republicans in states that would be victimized by the fallout. “New Hampshire is a downwind state … and I think it’s very important that we’re not the tailpipe for out-of-state power plants,” said Sen. Kelly Ayotte (R-N.H.), another Tea Party favorite, after the GOP policy caucus on Tuesday. “It’s essentially pollution coming into New Hampshire.” She was not alone in her objections. Sen. Lamar Alexander (R-Tenn.) took to the Senate floor to complain about Paul’s move. “Tennesseans admire much about our Kentucky neighbors. We admire their bluegrass, we admire their basketball, we admire their distinguished senators,” Alexander said. “But Tennesseans don’t want Kentucky’s state income tax, and we don’t want Kentucky’s dirty air.” Alexander noted that the reason for the cross-state air pollution rule was that states like Tennessee and North Carolina had sued and won. Paul and other opponents of the rule argue that it will cost $2.4 billion for power companies to comply and will destroy jobs at a time when the economy is struggling. They also say it sets overly ambitious goals and imposes an unreasonable time frame for compliance. The Obama administration’s energy and climate adviser, Heather Zichal, has argued that the flip side of the corporate cost is that scientists believe 34,000 people will die prematurely every year if the rule is blocked. Environmental advocates find the calculus by the rule’s opponents unsupportable and short-sighted. “These health safeguards will deliver up to $280 billion in annual benefits to the American people, compared to $2.4 billion in compliance costs to polluting coal-burning power plants, yielding benefits that outweigh costs by an astonishing 116 to 1,” wrote John Walke of the National Resources Defense Council on his blog . “Many politicians and industry lobbyists claim to support benefit-cost analysis; how much would health benefits to Americans have to outweigh polluter compliance costs before Senator Paul and his resolution’s co-sponsors would support clean air safeguards? 200 to 1? 500 to 1?” Walke asked. Should Paul cobble together enough Democrats to make up for the loss of Republicans — an unlikely feat — the White House has threatened to veto the bill. The bigger fear of environmental advocates is that such a measure could wind up in a must-pass piece of legislation, such as the super committee’s budget-cutting plan.

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Robert Kuttner: The Great Deflation

November 7, 2011

I never liked the term “The Great Recession,” because this is not an ordinary recession, not even a great one. It is a period of protracted deflation, where weak demand, declining incomes, and falling asset prices keep dragging the economy downward into a self-deepening sinkhole. With the latest unemployment numbers, the evidence keeps accumulating that this will be a prolonged economic stagnation. The unemployment rate — stuck around 9 percent — is not as bad as that of the Great Depression, but in some respects the prognosis is equally grim . We are already entering year four of the crisis, with a strong recovery nowhere in sight. Household income has declined by 10 percent since the recession began in 2007. GDP growth improved slightly, to 2.5 percent , in the third quarter, but only because households began borrowing more, and that can’t continue for very long. Consumer income was actually down 1.7 percent. If you compare our progress with the comparable period in the Great Depression, things actually looked more promising in the mid 1930s. By late 1933, on the fourth anniversary of the stock market crash, strong economic growth had resumed. The economy expanded by 11 percent in 1934, 9 percent in 1935, and 14 percent in 1936. By contrast, optimists today hope the economy will somehow reach 3-percent growth. The Federal Reserve, once again, has just revised its growth forecasts downward to well under 3 percent, and expects unemployment still to be in excess of 8 percent in 2013. By the end of year four of the Great Depression, the banking crisis was over. The 1933 Glass-Steagall Act, deposit insurance, and the Reconstruction Finance Corporation stabilized the financial system. Bank failures ceased — while in the current crisis our banks are still a mess. The Roosevelt administration dealt forthrightly with the housing crisis of that era, creating a Home Owners Loan Corporation that made direct loans to one homeowner in five, to keep people from losing their homes. In the current crisis, some 10 million homeowners are still on track to default, and the Obama administration keeps producing half-measures too feeble to solve the problem. Four years into the Roosevelt administration, unemployment was still high, but Roosevelt was re-elected by a landslide in 1936 because things were improving and people felt he was on their side. It’s anybody’s guess who will win the White House in 2012. A lot of pundits seem to think that the current crisis has no solution, and that we just have to get used to a prolonged period of slow growth, high unemployment, and general belt tightening. This is nonsense, but the remedies that might actually solve the crisis are mostly outside mainstream debate. A real recovery program would be one part massive public investment — partly financed by higher taxes on the wealthy, partly by deficits — and one part a complete reconstruction of the financial system so that it returns to its role of servant of the real economy rather than master. Neither party is proposing this, and proponents of a new political center are mainly promoting austerity. The Republicans would drastically cut taxes, shrink public spending, and repeal regulations. All this, presumably, would liberate businesses to create more jobs. However, taxes were cut several times under President Bush, but that didn’t prevent the recession. Government revenues are already at their lowest share of the economy since the 1950s. The financial collapse was caused mainly by the repeal of regulations that had contained the speculative tendencies of bankers. It’s hard to see how more deregulation would promote entrepreneurship in an economy when consumers lack money to buy products. Centrist groups like Third Way and No Labels decry the extreme partisanship and call for a new consensus to deal with the crisis. These and similar groups begin with a plea for budget discipline. But austerity would not solve the economic crisis either. With unemployment high, consumer demand depressed, and businesses understandably hesitant to invest, more belt-tightening will only worsen conditions. The Obama administration, for its part, has tried a blend of modest economic stimulus and a long-term path to budget balance. Obama’s latest jobs program proposed a total of $447 billion over 10 years — better than nothing but far from enough to produce a sustained recovery. Even if by some miracle Republicans were to relent, the stimulus is insufficient. Obama’s original Recovery Act, enacted back in February 2009 when the Democrats controlled both Houses of Congress, spent $775 billion over three years. But during the same three years, state and local governments cut about $460 billion. So the net government stimulus was barely $100 billion a year in a more than $14-trillion economy. Obama’s own top advisers considered the sum inadequate. In the Great Depression, it was the massive spending of World War II that finally cut unemployment to less than 2 percent and then powered the postwar recovery. The wartime deficits were astronomical — nearly 30 percent of GDP in the last year of the war. But after the war, high growth paid down the debt, which was nearly twice the level of the current debt relative to GDP. Nobody in mainstream American politics is proposing public outlays anywhere near this scale. So the likelihood is for continued economic deflation — and deepening voter frustration. Absent a more radical recovery program than anything on offer in mainstream politics, the chief executive elected in 2012, whether Obama or his Republican opponent, is likely to be the next Herbert Hoover, presiding over a prolonged economic slump with popularity to match. Ours is a very resilient political system. But before America emerges from this combined economic and political crisis, it will take some new combination of mass reform movements at the grassroots and more effective leadership at the top than we’ve seen in a very long time. Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril .

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Jobs Message War Hits Fever Pitch As Obama Makes Case For Infrastructure Bill

November 2, 2011

WASHINGTON — The high political stakes of winning the debate on jobs was on prominent display Wednesday — and will be again Thursday — as both parties fought in multiple forums to convince Americans that the opposing side is doing nothing and playing politics. The Democrats’ marquee proponent was President Obama, who made the case for the Senate’s $60 billion infrastructure bill at an aging bridge connecting Washington to Virginia. Pointing to a recent CNN poll that found large majorities support federal spending to repair infrastructure and create jobs, Obama ripped the GOP for standing in the way. “When 72 percent of the American people support the ideas in this bill — 72 percent of Americans agree with this, Republicans, Democrats and independents — there’s no excuse for 100 percent of Washington Republicans to say no,” Obama said, noting that the bridge is structurally “deficient.” “That means that the Republicans in Washington are out of touch with Republican voters,” Obama said, hitting a note that Democrats think has struck a chord — and which Republicans answered aggressively. Senate Minority Leader Mitch McConnell (R-Ky.) pointed to 15 bills that the House has passed aimed at jobs, saying that every one of them was bipartisan, and that the Senate Democratic leadership is the only thing holding them up. “What we’re witnessing in Washington right now is two very different styles of governance: a Republican majority in the House that believes we should actually do something about the problems we face,” McConnell said in a floor speech that House leaders later distributed. He argued that action was blocked by “a Democratic Majority in the Senate that’s teamed up with the White House on a strategy of doing nothing — all for the sake of trying to score political points and spread the blame for an economy that their own policies have cemented into place.” “What we’re saying is let’s stop the political games,” McConnell added. “The problems we face are too serious to ignore.” Democrats scoffed at McConnell’s argument, saying the 15 bills were a bunch of small-bore gifts to lobbyists that will do little for the economy. “Who would believe that this hodgepodge of bills will do more for jobs than the traditional way we get out of recessions: infrastructure building,” Sen. Chuck Schumer (D-N.Y.) said. “Most of the ideas cited by the minority leader have next to nothing to do with jobs at all. Many of these ideas belong more on a lobbyists’ wishlist rather than any serious jobs agenda.” “Many of these bills are items that Republicans would be seeking to pass even if we were in a boom and had full employment,” Schumer added. “Many are just ideological priorities dressed up as job solutions — it’s laughable for the House leadership to act like these proposals would address the jobs crisis.” As evidence of political motive, Democrats again pointed to McConnell’s old vow to make Obama a one-term president. And Senate Majority Leader Harry Reid (D-Nev.) declared that much of the politics being played by Republicans is aimed at appeasing the extreme right and anti-tax crusader Grover Norquist. “Republicans have obstructed and opposed every Democratic effort to create jobs this year. How did they do that? Fear,” Reid said. “The truth is they are terrified to violate the infamous Grover Norquist tax pledge, even though they know Norquist is wrong, or if they don’t know, they should know.” “They’re in a thrall, my Republican colleagues,” Reid added. “They’re in submission to a man whose singular focus is keeping taxes low for the very, very, very wealthy no matter what the effect is on this nation. They fear his political retribution.” The Senate bill would raise its $60 billion by levying a 0.7 percent tax on earnings above $1 million, effectively targeting only the very rich. Republicans in turn sent out a statement accusing Reid of hypocrisy because he once opposed McConnell over a measure that affected revenue, arguing that the Senate shouldn’t vote on it because it was certain to die since revenue bills are supposed to come from the House. Reid had argued it had no chance of passing the House. “Strange that he will force a vote anyway [on the jobs bill],” said McConnell spokesman Don Stewart. “But don’t worry, it’s not political.” The jobs bill is scheduled to face a vote in the Senate on Thursday. The ongoing word war is likely to remain heated, with Democrats repeatedly invoking rhetoric from Occupy Wall Street , even though many in the party are reluctant to embrace it directly. Republicans also pointed to letters from the U.S. Chamber of Commerce that oppose the Senate plan because of the tax. The Chamber argues that the wealthy already face various surtaxes, and that another 0.7 percent would only add to the burden. Obama also took a potshot at the House Republicans for spending time voting on a measure to reaffirm “In God We Trust” as the country’s motto . “That’s not putting people back to work,” Obama said. “I trust in God, but God wants to see us help ourselves by putting people back to work.”

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Another Reporter Arrested At Occupy Protest

November 2, 2011

Another journalist has been arrested at an Occupy movement protest. Kristyna Wentz-Graff, a photographer for the Milwaukee Journal-Sentinel, was arrested on Wednesday during a rally near the University Of Wisconsin, the paper reported . Wetz-Graff was photographing other arrests taking place when she was grabbed by the police. The Journal-Sentinel said she texted the newsroom informing them she had been arrested. A number of other journalists have been arrested by police at Occupy protests around the country. A freelance writer for the New York Times was one of hundreds arrested at the Brooklyn Bridge in late September. Another reporter for an alternative Nashville newspaper actually filmed his own arrest .

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Police Use Force On Occupy Denver Protesters

October 30, 2011

DENVER — The simmering tension near the Colorado Capitol escalated dramatically Saturday with more than a dozen arrests, reports of skirmishes between police and protesters and authorities firing rounds of pellets filled with pepper spray at supporters of the Occupy Wall Street movement. Officers in riot gear moved into a park late in the day where protesters were attempting to establish an encampment, hauling off demonstrators just hours after a standoff at the Capitol steps degenerated into a fight that ended in a cloud of Mace and pepper spray. Denver police spokesman Matt Murray said 15 people were arrested in the evening confrontation, where authorities were moving to prevent protesters from setting up tents in the park, which are illegal. Officals say the demonstrators had been warned several times that the tents would not be allowed and those who attempted to stop police from dismantling the camp gear were arrested. Protesters have been staying in the park for weeks, but tents have repeatedly been removed. Murray said that most of the protesters were peaceful but there was “just a die-hard group that didn’t want to cooperate.” “We showed great restraint,” he said. “We were calm. We went in and did what we had to do. There’s a group of very committed people who believe in a cause, and then there are a few people who just want to cause trouble.” Earlier in the day about 2,000 protesters rallying against what they see as economic inequality and corporate greed marched downtown toward the Capitol, setting up the most intense moments of the Denver movement, which has lasted weeks. A group of the marchers advanced toward the building and some tried to make their way up the steps. About eight officers scuffled with a group of protesters and police confirmed that they used Mace and fired pepper balls – hollow projectiles filled with the chemical irritant – to break up the crowd. Protesters told the paper at the time that they believed police used rubber bullets. Murray said protesters kicked police and knocked one officer off his motorcycle. He said five protesters were arrested, including two for assault and one for disobedience. Chantrell Smiley, 21, of Denver, said she has been protesting downtown for more than a week, sleeping on the ground in the park. She said she didn’t see the officer get knocked from his motorcycle and didn’t see any reason for the afternoon confrontation. “It was just chaos. This wasn’t necessary. My friend got hit with rubber bullets in the face. He was screaming and bleeding, then they Maced him. We’re being peaceful. We don’t want to be harmed. They came through and took everything down – our food, our blankets, everything’s gone.” Mike Korzen, 25, told the Denver Post that he was among the group that police dispersed with rubber bullets and pepper spray and suggested that the police force was excessive. “I was standing there with my hands behind my back,” Korzen said, using a water bottle to rinse pepper spray from his eyes. After nightfall about a dozen Denver police and Colorado state patrol cars remained in the area. About 100 protesters milled about, most coughing and sneezing from the haze of pepper spray and Mace that still hovered in the air. Some laid out tarps on the ground, preparing to spend another night outside. Throughout the evening vehicles pulled up, dropping off blankets and food with cheering protesters.

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Midwest Occupy Wall Street Protesters Seek To Highlight Foreclosure Mess

October 28, 2011

As the Occupy Wall Street movement enters its seventh week of protest against income inequality, some Midwestern Occupiers are zeroing in on housing issues affecting their communities. Occupy Minneapolis successfully pressured U.S. Bank this week to postpone a Twin Cities woman’s eviction . Now they’re planning “Operation F,” a campaign pushing for a foreclosure moratorium by occupying foreclosed homes. “What we started to do was to make preparations, digging in and taking the occupations to peoples’ homes,” said Ben Egerman, a protester at Occupy Minneapolis. The protesters will go to houses where the homeowners face eviction and ‘occupy’ the homes to highlight the ongoing mortgage mess. And in Iowa, Occupy activists met Thursday with state Attorney General Tom Miller, who is leading a nationwide investigation of bad faith foreclosure dealings by big banks, to voice their concerns. Homeowner advocates fear the attorneys general will reach a settlement that is not tough enough on banks, despite the potential for it being the largest multi-state settlement since the agreement with tobacco companies in 1998 . “I’m still not sure if the settlement committee is going to require the banks pay anywhere near as much as they should, but that’s a hard number to get your arm around,” Ed Fallon said after he left the meeting with Miller and his staff. Fallon, a onetime gubernatorial candidate, was a state legislator for more than a decade. Now he’s active with Occupy Des Moines . When Fallon first proposed an ad hoc “Attorney General Bank Settlement Committee” at an the group’s General Assembly, the protest’s governing body, activists worried the settlement would be too small compared with the amount of abuse suffered by homeowners. But they felt since their Attorney General was leading the case, they had a shot at national influence. Some of the protesters involved with Occupy Des Moines said they were on hand when Miller said last December that he ” would put people in jail ” as a result of the investigation. They said they worried Miller wouldn’t follow through thanks in part to increased campaign contributions from the financial sector he’s brought in since taking the helm of the investigation. But Fallon said he left this week’s meeting feeling a little more at ease that the investigation would not be the be-all-end-all of the mortgage crisis. “We are focused on homeowners, not investors,” Geoff Greenwood, communications director for Miller, told HuffPost on Friday. “This case is about foreclosure and servicing issues, including robo-signing, and we do intend to leave the door open for attorneys general and others to pursue issues beyond the scope of this settlement. This case will not address everything connected with the housing crisis. There are many other pieces.” Twin Cities resident Ruth Murman connected with Occupy Minneapolis, and by Wednesday she was thanking them at a rally outside of downtown Minneapolis banks for helping push back on her eviction, according to the Star Tribune . Murman was trying to get an extension on her eviction by U.S. Bank. She had financial trouble when economy tanked and her business, day care and convalescence center for pets, lost money. Egerman said Murman’s case energized their members. And after hearing about Murman’s story, he said, dozens more people facing evictions and foreclosure asked them for help. “Members were potentially interested in this and there’s no question people were incredibly interested in helping people as much as possible,” he said. Egerman said they’re trying to help people who have been “screwed over by a bank” and are being kicked out of their homes. In the case of Murman’s eviction, Egerman said it showed the small concrete victories they could win as Occupy Minneapolis. While in Iowa, Fallon said “Our primary goal to make Wall Street pay,” adding with caution: “It looks like Wall Street is going to pay.”

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Anya Kamenetz: Abolishing Student Loan Debt And Other #OccupyWallSt Demands

October 25, 2011

Student loan debt has become a defining issue of the Occupy Wall Street movement. The nation’s cumulative student loan debt surpassed our cumulative credit card debt in 2010, and is heading north of $1 trillion ; currently two-thirds of graduates take out loans, an average of $27,000 a head. The growth of this particular kind of debt makes young people furious. It’s a betrayal of the American social contract that says if you work hard and invest in yourself through education, you’ll be able to build a better life. In my first book, Generation Debt , I explored how we got here and told stories about the emotional and cultural impacts of student loans; lately, with DIY U and the free Edupunks’ Guide , I’ve been focusing more on the underlying issue of soaring college tuition and innovations that might be able to cut the cost spiral — not to mention the growing world of free and open education. These innovations are great, but they don’t help the graduates who are already saddled with so much debt. So here are some proposals to offer student borrowers relief that #OccupyWallSt could take up, ranked from the most radical to the more feasible. 1) Forgive all student loan debt. This idea has a Facebook page, a petition with 300,000 signatures, and it’s even been introduced in Congress . There are real fairness issues here because college graduates, even those with student loans are relatively more privileged with higher earning potential than non-college graduates. Still, if included as part of a radical call for bailing out the American people across the board — mortgages and credit card debt included — it has emotional resonance and could actually jumpstart the economy to boot. 1)a. You could help out those who most need it by canceling the student loan debt of non-graduates, defaulters, people who meet certain income requirements, or people who attended for-profits or other colleges with unacceptably low graduation rates (half of all student loan defaulters attend for-profits). See also: bankruptcy protection. 1)b. The radical direct action variation of this is for people to stage a debt revolt and simply stop paying their student loans. Advantage: Unlike with a mortgage or auto loan, they can’t repossess your brain. Disadvantage: You will never have credit again, and people in your life who have worked hard to pay off their own loans might see you as a deadbeat. 2) Rein in private student loans. Private student loans, those offered by banks like Citibank and Wells Fargo, are growing three times faste r than federal student loans. They are much more expensive, with higher fees and interest rates ranging up to 15%, varying by your creditworthiness. Private student loans could be abolished outright, or they could be required to offer the same interest rates and repayment options as federal student loans, which would severely restrict their availability. If we don’t do something to tame the private student loan beast, it doesn’t much matter what happens with federal student loans — the volume of private loans is set to outpace the volume of public loans by 2025, according to Mark Kantrowitz of finaid.org. 3) Reinstate bankruptcy for student loans. Student loans are unlike any other kind of debt in that they are almost impossible to discharge in bankruptcy, barring permanent disability. For federal loans, the government can garnish your wages, seize your tax refund, your federal disaster relief payments, and even your Social Security . Even private, unsubsidized student loans, the ones with 10 and 15% interest rates, have been nondischargeable in bankruptcy since 2005. Alan Collinge of Student Loan Justice has been organizing on this issue for several years. Bankruptcy protection has failed three times in Congress; there are currently bills in the House (sponsored by Rep. Steve Cohen of TN) and Senate (sponsored by Sen. Durbin) This is an issue of basic fairness. There’s no reason to treat student loan debt so differently from other types of debt, other than as a gift to the banks. 4) Expand Income-Based Repayment and Public Service Loan Forgiveness . Depending on how much you make and how much you owe, you have the right to lower your monthly payments on FFELP and direct student loans through Income-Based Repayment . President Obama just announced that he’s accelerating access to the plan so that graduates can pay just 10% of their income, with all loans forgiven after 20 years. Meanwhile, people who work in the military, for the government, for nonprofits, police, firefighters, teachers, social workers, have the right to have loans completely forgiven after 10 years of repayments. One issue with these programs is simply that they’re undersubscribed. Another is that you may end up paying more by stretching out the payments, and you’re harnessed to that payment for 20 years. But they’re a hell of a lot better than default, and in the absence of bankruptcy protection, they’re the least bad option for people currently facing unsupportable student loan debt.

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Republican Presidential Candidates Misfire On Big Issues

October 19, 2011

WASHINGTON — Herman Cain’s 9-9-9 tax plan ignited plenty of sparks in the Republican presidential debate Tuesday night, as did testy exchanges between Mitt Romney and Rick Perry. In those instances and more, the facts took a bit of a beating. A look at the accuracy of some of the claims in the Las Vegas debate: HERMAN CAIN: “It does not raise taxes on those that are making the least.” THE FACTS: An independent analysis of his tax plan, released Tuesday, concluded otherwise. The Tax Policy Center, a Washington think tank, said Cain’s plan would increase taxes on 84 percent of U.S. households, hitting low- and medium-income households the hardest. The analysis said that households making $10,000 to $20,000 would see whopping tax increases averaging $2,705 – an increase of nearly 950 percent. The rich, however, would get big tax cuts, the analysis said. Cain’s plan would scrap current taxes on income, payroll, capital gains and corporate profits. He would replace them with a 9 percent tax on income, a 9 percent business tax and a 9 percent national sales tax. The study is in line with economic theorists – whether on the left or right – who note that sales taxes tend to hit low-income families the hardest because they spend more of their income than wealthier families do. Unlike most states, Cain’s plan would not exempt food or medicine from sales taxes. Used items, however, would be exempt. Cain said his plan would create zones where people and businesses could get additional tax deductions, which would reduce taxes for low-income people. The Tax Policy Center said it did not take the zones into account because the Cain campaign did not provide any details on how they would work. ___ RICK PERRY: “Mitt, you lose all of your standing, from my perspective, because you hired illegals in your home and you knew about it for a year. And the idea that you stand here before us and talk about that you’re strong on immigration is on its face the height of hypocrisy.” MITT ROMNEY: “I don’t think I’ve ever hired an illegal in my life.” THE FACTS: The truth is that Romney, former Massachusetts governor, never directly hired an illegal immigrant. But he hired a landscaping company that employed them. In bringing up the matter, Texas Gov. Perry resurrected a charge that has dogged Romney since his last presidential bid. In 2006, Romney learned that the landscaper of his suburban Boston home had employed illegal immigrants. He gave the company a second chance under the condition that it would no longer employ undocumented workers. But in 2007, during the height of his first Republican presidential campaign, the same company was caught employing illegal immigrants at Romney’s home. Romney then fired the landscaper. At the time, and again Tuesday night, Romney said there’s only so much an individual can do when hiring a legitimate company. ___ ROMNEY to PERRY: “You were the chairman of Al Gore’s campaign.” THE FACTS: Romney’s claim was misleading, at best. He neglected to mention that Perry’s role in Gore’s failed 1988 campaign for the Democratic nomination was limited to Texas. It was also marginal. Perry was a Democrat serving in the state legislature at the time and had no significant leadership role in Gore’s third-place finish in Texas. He was one of 28 Democratic Texas lawmakers who endorsed Gore. In any event, he was far from being “the chairman” of Gore’s campaign. Perry switched parties in 1989 and successfully ran for state agriculture commissioner as a Republican. ___ RICK SANTORUM: “(Perry) sent a letter the day of the vote on the floor of the House saying, pass the economic plan. There was only one plan, and that was the plan that was voted on the floor. It was TARP.” PERRY: “I’m just telling you I know what we sent, I know what the intention was. You can read it any way you want, but the fact of the matter, I wasn’t for TARP, and have talked about it for years since then.” THE FACTS: In October 2008, Perry appeared to be both for and against the Troubled Asset Relief Program in the same week. As chairman of the Republican Governors Association, he co-wrote a letter to Congress with his Democratic counterpart that is hard to interpret as anything other than a call to pass the bailout that became known as TARP. “We strongly urge Congress to leave partisanship at the door and pass an economic recovery package,” said the letter. It was dated Oct. 1, just after the House rejected an initial version of the economic recovery bill. That vote triggered an 800-point drop in the Dow Jones industrial average. But the next day, Perry was quoted in The Dallas Morning News as saying that he while favored some kind of economic recovery plan to help taxpayers, “In a free-market economy, government should not be in the business of using taxpayer dollars to bail out corporate America.” Within days, a new version of the bailout was passed by the Senate, then the House, and signed into law by Republican President George W. Bush. ___ MICHELE BACHMANN: “Even the Obama administration chose to reject part of Obamacare. … Now the administration is arguing with itself.” THE FACTS: True, the administration is moving to scrap a long-term insurance program that was part of Obama’s health care law. But it would be wrong to take that as a sign the administration is losing faith in the overhaul. Quite the contrary. Unlike the central provisions of the health care law, the long-term insurance plan, called CLASS, was voluntary. From an accounting viewpoint, that was its fatal weakness. Without some reason for large numbers of healthy people to sign up, experts warned all along that CLASS would attract too many people in frail health. Rising benefit costs would send premiums spiraling upward. Healthier people would drop out, and eventually taxpayers would have to bail CLASS out. Obama’s health insurance mandate, requiring nearly everyone to have insurance, protects his overhaul from a similar fate. “You have to have a broad risk pool,” said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates cutting the federal deficit. “By mandating coverage, (the health care law) creates a broad risk pool and that makes the system much more sustainable.” ___ ROMNEY to PERRY: “You probably also ought to tell people that if you look over the last several years, 40 percent, almost half the jobs created in Texas were created for illegal aliens, illegal immigrants.” THE FACTS: There’s some basis for the assertion that significant numbers of jobs were taken by immigrants, but it’s a stretch to try to pinpoint how many of them may have been in the country illegally. A September report from the conservative-leaning Center for Immigration Studies concluded that 81 percent of new Texas jobs were taken by newly arrived immigrants, basing that on a government survey used to calculate the unemployment rate. The group also estimated that about half of those jobs were taken by illegal immigrants. The government survey that is the source of the numbers asks people whether they are foreign or native born, but doesn’t ask about their legal status. The center’s estimate was an extrapolation based on other government estimates of illegal immigrant populations. ___ BACHMANN: “The biggest problem with this administration and foreign policy is that President Obama is the first president since Israel declared her sovereignty (to) put daylight between the United States and Israel.” THE FACTS: Israel and the U.S. have had their disagreements and have showed them – often in far starker contrast than today. And the consequences have been far greater, too. While the Obama administration has criticized Israeli settlement construction on disputed lands, President George H.W. Bush actually punished the Jewish state for the policy by docking housing loan guarantees. President Jimmy Carter experienced tensions with the Israeli government over his public support for a Palestinian homeland, and President Ronald Reagan harshly criticized Israel for a military attack on an Iraqi nuclear plant in the 1980s. Even in times of war, the U.S. and Israel have differed publicly. The worst disagreement came in 1956 when the United States demanded that Israel, Britain and France end their joint war against Egypt. ___ Associated Press writers Ricardo Alonso-Zaldivar, Stephen Ohlemacher, Jim Drinkard, Bradley Klapper and Steve Peoples, Tom Raum, Alicia Caldwell and Chris Rugaber in Washington; and Chris Tomlinson in Austin, Texas; contributed to this report.

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Does This Family Deserve To Lose Its Home?

October 17, 2011

ALAMOGORDO, N.M. — From next to the dead tree in his backyard, Ernie Soto can see the big house where he used to live. It’s perched on the side of a mountain overlooking Alamogordo, a town of 36,000 on the eastern edge of New Mexico’s Tularosa Basin. In 2007 Soto moved downhill to a smaller house with his wife and son. They needed fewer rooms since their grown son and daughter had moved out, and Soto wanted to sell the big house and use the proceeds to start a mechanic business. He figured he’d be better off as an entrepreneur in case the economy worsened. Their downward mobility has continued, thanks to both mistakes and misfortune. “We just couldn’t backpedal fast enough,” he says. A guy moved into the bigger house in a rent-to-own situation, Soto says, but the guy died. Then Soto’s daughter got sick. He gave up trying to start his business when financing fell through. Then he lost his job. And now he’s fighting to keep the smaller house. He’s a conservative Republican, but he thinks he deserves a break, a little leniency, so he can keep his home even though he hasn’t made a mortgage payment since 2009. Soto’s congressman, a conservative Republican who’s voted to repeal the government’s anti-foreclosure programs, has shown sympathy to his constituent by helping him apply for one of those programs. Soto’s struggling against unemployment and foreclosure, the same problems afflicting tens of millions of people across the U.S., problems that pushed more than 2 million into poverty in 2010. Like many who’ve lost their jobs and homes during the Great Recession, Soto harbors a grievance against the bankers who precipitated the crisis and paid themselves bonuses after taxpayers bailed them out. While politicians regularly vow to fight for people who face the loss of their homes and jobs “through no fault of their own,” reality is rarely that simple. And it’s exemplified by the story of Ernie Soto, a hardworking, conservative family man who made questionable financial decisions in hard times, but who never got a bailout. Soto asks, “Can I have just a tiny taste of the pie?” * * * * * Soto bought the smaller property, a one-story single-family home made from red bricks and white stucco, for $146,300 in June 2007. Inside there are three bedrooms, a huge stone fireplace in the living room and a sunken TV den next to the kitchen. Outside there’s a spacious back yard with patchy grass. The bigger house boasts two stories, four bedrooms and a more distinctive Southwestern style. Soto says that when a man moved into the house in 2008 and started paying rent, he expected the man to buy the place. But then the man died at age 57 that November. The man’s obituary doesn’t say how he died, and relatives did not return phone calls. Soto says he heard the man had a heart attack and that in hindsight, “I should have made him pay for the property before I bought mine.” Soto found himself on the hook for two mortgages at the same time his daughter was going through a bad divorce and a cervical cancer scare that resulted in $5,000 worth of legal and hospital bills. With the business expenses, it added up to more than he felt he could handle. “I was faced with a short-term financial tsunami of around $33,000,” he says. He used savings to stay current on both mortgages through the first half of 2009. He tried to convince his lenders that he couldn’t keep it up for long when he asked for lower payments. He says they turned him down because he made too much money. And he says a loan he needed for working capital to start his business fell through. He and his wife, Priscilla, who works as a house and office cleaner, together earned between $80,000 and $90,000 in 2007 and 2008. But he’d already borrowed $350,000 to launch the car repair company and owed $400,000 on the two houses. As business loan payments came due, Soto worried he’d have no money left for his family. “Everything we pumped in, all the agreements we made with suppliers, leases for equipment, that house, this house, our existing bills,” he says. “It was about three quarters of a million dollars almost, and I said, it’s too much and now I need to hang to some of that money to help protect our daughter.” Soto says he told his lenders the same thing he told his own family: He feared he wouldn’t be able to maintain his income. “I warned [them] because of the car business, the car business was bad and I told [them] it’s just a matter of time. And I told my wife we’d better hang on, I’ve got a feeling something’s gonna happen, I’m gonna lose my job. I see it, I’ve been in it for so long.” A government-certified housing counselor advised him to consult a lawyer. He filed for bankruptcy protection in June of 2009. By that time he and his wife’s average monthly expenses reached $6,338, outstripping their monthly income by $450, according to court documents from the bankruptcy. The Sotos were sinking in debt. They kept their jobs though and continued trying to negotiate a mortgage modification. The process frustrated Soto: He says his loan changed hands three times, his lenders repeatedly asked him to resubmit the same documents, and he could never speak to the same person twice — an utterly common set of complaints for a homeowner seeking a mortgage modification. Not even thousand-dollar incentive payments from the government have been enough to encourage banks to treat homeowners decently when they seek loan mods; the Obama administration’s signature foreclosure prevention program has helped fewer than 700,000. More than a million have been bounced out of the program, and the reasons for rejection are often unclear. In early 2009 President Obama said the program would help 3 to 4 million homeowners. Another refinancing initiative was supposed to reach 4 to 5 million. Both programs are failures; the foreclosure crisis rolls on. A key reason Soto thought he deserved a break, aside from the bank bailouts, was that he owed more than his house was worth, a consequence of the housing bubble inflated and left shriveled by the financial sector. In 2009, Soto’s home was worth at least 10 percent less than the amount he’d borrowed to pay for it. If Wall Street already got bailed out, Soto wondered why he should have to keep lining bankers’ pockets with bubble-sized monthly payments? The following December, he quit paying and moved to a nearby trailer park. Instead of sending money to banks, he started sending furious emails to news organizations. “My modification went no where even with timely payments and mountains of paperwork sent to all of them,” he wrote to HuffPost in 2010. “After several months of this I had enough, they can all kiss my @$$! I have always had great credit and paid my obligations on time, but where was everyone else when I need them.” Shame and fear prevent more homeowners from doing what Soto did. While nearly a quarter of all American mortgages are “underwater” like Soto’s, one analysis puts the the rate of “strategic default” at just 2.5 or 3.5 percent. Soto’s shame had given way to fury. Priscilla says she could sense her husband’s anger just from the way he typed. She mimicked his hands going up and down on the keyboard with loud clickety-clack noises. “I was mad. I was mad at the bankers, I was mad at the mortgage companies and everything,” Soto says. “We couldn’t stand for no more pain, no more humiliation, so we just discreetly got our things, moved out — the neighbors were like, ‘What’s going on?’ I’ve always been a good citizen, paid my bills. All I could say was just fuck everybody.” Soto lost his job at the dealership in April of 2010. He spent a couple months unemployed before finding another service manager gig at a dealership in Hobbs, nearly 200 miles away. At first, the company paid for his gas and motel stays, but he says those perks vanished when the place offered him a full time gig. The expenses, combined with the inconvenience of working so far from his distressed family, led him to quit. * * * * * Things got better this year. In April, Soto landed a job at a rent-to-own furniture store in El Paso. The drive from Alamogordo took longer than an hour, but Soto scored a new placement near his home after several weeks of training. The job had a tremendous downside: Soto had to take people’s stuff away when they failed to make payments. He recalls visiting a rundown trailer in El Paso during the springtime. The trailer looked so bad, Soto says he thought nobody could live inside. “We got up there and knocked on the door and here comes out the guy and his daughter, a little cute two- or three-year-old girl, was holding a doll, and I’m thinking, ‘Oh my God.’ Here we are taking their furniture and washer and dryer. I walked in and the floor wasn’t really a floor. I think they had a dining table. I don’t know if they even had a TV. It was a pretty sad sight.” And it was a lesson for the man’s poor daughter: “The little girl’s asking the daddy, why are they here? He goes, ‘This is what happens when you don’t pay the bill.’ ” Soto knows well the indignity of having stuff repossessed. It happened to him in 2009 when the company that lent them $24,000 for a pickup truck in 2005 asked the bankruptcy court to let them take it back, which the court said would be fine. The repo guy found Soto in the parking lot of Alamogordo’s Ark Animal Hospital. Soto had gone there to put down Petey, his cancer-stricken pit bull. Petey was already giving Soto a hard time about going into the unfamiliar building, stiffening up as if he knew something bad would happen. “I never saw him act that way,” Soto says. The repo guy made it all harder. Soto says he asked the man if he’d let him keep the truck a little longer. The guy got on the phone with a supervisor, hoping to get out of the gruesome task, but the higher-up insisted the vehicle be taken. Soto says Priscilla showed up, the repo guy took the truck, and then they went inside and Petey died in Priscilla’s arms before they both went back to work. Soto says the episode was a low point that contributed to his later decision to deliberately default on his mortgage. Despite the humiliation of repossession, Soto has no beef with rent-to-own. “Not everybody has a lot of money these days to go out and plunk down money for furniture. So I thought it was a really neat way for people to be able to obtain furniture with the option of buying.” So things were going well this year. And then Soto heard about a temporary federal program that helped struggling homeowners catch up on their mortgages with a forgivable loan that also subsidized monthly payments. He had to live in his house to be eligible, and the banks hadn’t bothered to seize his since he abandoned it at the end of 2009. “Okay, I’ll move my ass back in there,” he says he told himself. He packed up his family and moved out of the trailer and back into the smaller of the two houses halfway through July. He only had a couple weeks to gather all the documents he needed to apply for the program, which was called the Emergency Homeowers’ Loan Program (the Obama administration later extended the deadline). HuffPost had included Soto in a story about homeowners who’d walked away from their mortgages in February. When he walked back to his mortgage five months later, HuffPost covered that event as well . The second story caught the attention of staffers for Rep. Steve Pearce, the Republican who represents Soto’s District (and for whom Soto voted in 2010). The staffers got in touch with their constituent with the help of a HuffPost reporter and launched an effort to help Soto apply for EHLP. Delinquent borrowers willing and able to pay their mortgages, but whose income had fallen by at least 15 percent, were eligible for the program, which had been created with $1 billion from the Dodd-Frank Wall Street reform bill passed in 2010. Pearce’s staffers may have had an impact on Soto’s case: On Aug. 2, the Department of Housing and Urban Development sent Soto a letter informing him he’d been selected in a random lottery for preliminary approval for the Emergency Homeowners’ Loan Program. The letter prompted Soto to send a packet of documents to complete a full application. Soto brought the letter to a meet-and-greet with Pearce at a mall in Alamogordo on Aug. 9, where the congressman posed with the Soto family for a photo that the congressman put on Facebook that day. Pearce signed Soto’s HUD envelope: “Ernie, God Bless.” “He’s a great guy,” Soto says. At the same time he applied for government help, Soto renewed his efforts to get a loan modification with Ocwen, the company servicing his mortgage. On Aug. 4, Ocwen sent a proposal. It said Soto could make monthly payments of $893.38; he’d previously paid more than $1,200 a month. (Though Soto says that when he called Ocwen, he was told his actual monthly payment would be higher by a couple hundred dollars.) The modification would jack his principal amount from $146,000 to nearly $168,000 — meaning Soto’s mortgage would be even deeper underwater than before. Otero county records indicate his property is worth $142,000. A real estate agent told Soto in September he should list it for $119,000 if he wanted to interest potential buyers. * * * * * Soto had no heat or electricity when he returned to the house this summer. He says he paid $1,100 to get power, but a plumber told him reconnecting the gas would cost a lot more. That’s why Soto’s tap runs cold and he uses the sun to warm jugs of water in his yard. If the coming winter gets as cold as it did in February, when temperatures fell below freezing, Soto will have to rely on space heaters and his ridiculously large fireplace. That is, he’ll have to rely on those things if he stays in the home. He’d have more money to fix the gas if the furniture company employing him hadn’t closed its Alamogordo store in September. Soto waited weeks to tell his lenders and his congressman’s helpful staff that he’d lost his job again. Like most of New Mexico, Alamogordo is a place of low unemployment and low incomes. Soto is trying to find another auto repair gig. He says he’s not desperate enough to start flipping burgers, but he’s not too proud to scrub toilets, either. He’s been helping Priscilla clean homes and offices. Soto says a Pearce staffer offered to help him find a job. He figures he’ll have to leave his home. He doesn’t relish the prospect of throwing money at an underwater mortgage anyway, and he doesn’t think he’ll get final approval for EHLP now that he’s unemployed. Borrowers who can’t make payments do not qualify. “The agencies are looking very carefully. They don’t know that he qualifies,” Pearce says. As for Soto, “He’s trying to make decisions what he wants to do. …There are jobs all over the district. Some areas are down to 3 percent unemployment. He may have to pick up and move.” For its part, the emergency loan program — like the administration’s other housing efforts — has fallen far short of its goals, with the government spending less than half the program’s $1 billion allocation and reaching a third of the 30,000 people it said it would help. If Pearce had had his way, the program would never have existed in the first place. Pearce joined House Republicans in voting to repeal the EHLP in March. “Many of these programs haven’t been working properly,” Pearce says. “They’re not really doing what they’re supposed to. They cost money. And so what we’re trying to figure out is how to see that the people who need help get it but the funds are not used just to feed the bureaucracy or used fraudulently.” Pearce has talked about the problems of homeowner help programs in a different way on the House floor. “I had a friend in the office today who talked about his situation with a house in Tucson where he got in at a higher price than it should have been,” he said in March. “He was willing to settle for a lesser amount. He was willing to pay. But because the bank could go to the government and make up the difference, they did not have to negotiate with this individual homeowner. Instead, this program causes lenders to say, the taxpayer will make us whole and we are not going to take our losses.” Through a spokeswoman, Pearce calls constituent service his top priority. “When a constituent reaches out to my office for help, we will go through government programs to get them help, if necessary,” Pearce says. “At that point, it is not a policy question, and it is not legislation based; instead, our offices work through the most efficient mediums available to ensure that individual cases do not slip through the cracks. As the Representative for New Mexico’s Second Congressional District, this is my job, and it is an honor to serve constituents in this manner.” Like her husband, Priscilla Soto is not optimistic they’ll get to stay in their current home. “I’m scared,” she says. “I don’t know where we’re going to end up or what we’re going to do.” One night in October, the three of us scamper up to the bigger house, which finally went for sale on courthouse steps in September, according to a court document Soto received. Soto and his wife cupped their hands around their faces to peer into the windows. We could hear coyotes howling down the mountain, somewhere between us and the twinkling lights of the city. “This is the main room here,” Soto says. “The fireplace … Stairs up to our bedroom … The kitchen’s over here.” He sighed loudly. There was nothing inside, but Priscilla remembered the big Christmas tree that you could see from the front door, which opened to an upper floor overlooking the living room below. WATCH: Arthur Delaney is the author of ” A People’s History of the Great Recession ,” HuffPost’s first e-book.

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Yale Profs Stress Need For Government Spending

October 15, 2011

As Yale University economists gathered on Thursday evening to discuss job growth strategies, many warned that a failure to act aggressively risks the increasing possibility of many years of economic stagnation, elevated joblessness and declining living standards. Some suggested that the government must act quickly to put millions of Americans back to work with large-scale public projects, while warning that an inadequate response risks a U.S. fate similar to Japan’s so-called lost decade. After a collapse in housing prices and the stock market, Japan in the 1990s suffered from a deflationary spiral that the government and central bank enabled by not substantially increasing spending or lowering borrowing costs. Unemployment remained elevated as consumer spending declined, and both people’s debt and goods and services became more expensive. “Think about Japan in 1989. It was a global powerhouse which many people thought would be number one and dominate the world economy, and 20 years after … it is off the economic map,” said economist Aleh Tsyvinski. “I am afraid that we are on the verge of something much greater and much more problematic with the U.S. economy.” Economist John Geanakoplos said the current predicament must be viewed as a long-term problem that requires long-term solutions. He proposed that government officials set up expert committees to investigate how to remake American infrastructure for the next 10 to 20 years, building airports, trains and roads for the future rather than patching up old models. In the long run, Geanakoplos said, infrastructure investment raises money for the government because those employed in construction and those using the new infrastructure spend more and pay higher taxes. Both the government’s budget and the economy benefit, he said. Economist Robert Shiller agreed with Geanakoplos’ prescription for more infrastructure investment. “When we go through a crisis like this, it’s a time for us to improve everything,” Shiller said. He suggested that the government create a Federal Employment Reserve Authority — inspired by Yale economist Martin Shubik’s 2009 proposal — which would identify shovel-ready projects around the country that the government could invest in during recessions. Just as people cannot get over colds all at once, Shiller said, the government cannot bring the unemployment rate “rapidly down” if it does not prepare for the disease beforehand. If the U.S. pinpoints shovel-ready projects before the next recession, Shiller said, “We’d have some medicine in the medicine cabinet ready to use, rather than having to make a long trip to the drugstore late at night, which you don’t do. You’ll just go to bed and suffer.” Some economists said that the U.S. is in danger of rising social unrest and a prolonged period of economic decline if the government does not act now. Continued economic stagnation would undermine prospects for future growth and be “really damaging in the long run,” warned economist William D. Nordhaus. Since businesses are not investing enough in new goods, he said, there’ll be fewer resources in the future to spur growth. This could translate into a cycle of less production, less research and development, and the “atrophying of jobs skills” of the long-term unemployed, he said. The economy needs “the jobs bill times three,” said Nordhaus, and perhaps even a large enough stimulus to rival government spending during World War II, which lifted the U.S. economy out of the Great Depression. He added that in the long run, the U.S. needs to pay for the stimulus “in ways that reduce inequality.” He recommended implementing a carbon tax and letting the Bush tax cuts expire as ways to pay for that stimulus, which would help the U.S. become a “livable” place for the 99 percent of people who have become “disenfranchised from making decisions” that could improve their well-being. The central problem weighing on the economy is a lack of business and consumer confidence, stemming from alarm about the gridlock in Congress and the European sovereign debt crisis, Shiller said. “We have a sense of inability to solve problems,” he added. The decline in unemployment that would result from a fiscal stimulus could boost confidence, said Shiller, and create a “strong” self-reinforcing cycle of more spending and hiring. Economist Richard C. Levin, who is also president of Yale University, suggested that since Congress hasn’t been able to take action to combat unemployment, a standby independent commission, similar to the Federal Reserve, should be created to make some fiscal policy decisions when the unemployment rate reaches a certain level. He said that during that 5 percent of the time when the Federal Reserve lacks the tools necessary to improve the economy, an independent commission probably would be a more effective arbiter of fiscal policy than Congress. “You have to put a very large fraction of the blame on Congress for not acting,” Levin told The Huffington Post before the panel discussion. Some of the economists said that if economic growth does not improve, the Occupy Wall Street protests could transform into social unrest on a scale similar to that of the 1960s and 1970s. Geanakoplos argued that mortgage service companies need to start forgiving some portions of loan principal before 8 million more people are thrown out of their homes, and “that’s when the riots are going to start.” He said local bankers should be writing down debt so that lenders can make as much money as possible from underwater home loans, since defaults are ultimately not the best solution for either homeowners or lenders. If mortgage principals are not written down, Geanakoplos said, the next best solution might be to boost inflation by a certain amount over the next few years, possibly as much as a 20 percent increase in prices, in order to inflate away people’s debt. “I’m not sure this idea is that good,” Geanakoplos acknowledged, “but it’s a radical idea that we haven’t really considered seriously.” He added that the Federal Reserve should focus on eliminating debt rather than encouraging borrowing with lower interest rates, since debt is the central issue preventing renewed spending. “The heart of the problem is people borrowed too much with too little collateral,” he said. In the meantime, allowing the Bush tax cuts to expire in order to raise government revenue probably would not place much stress on higher-income people, said economist Judith Chevalier. She explained that the “upward march” in incomes for the well-off has not been sensitive to changes in the tax rate over the past few decades. But she cautioned that an inordinate focus on the wealth of the top 1 percent, including populist demands for pay limits on chief executives, probably would not help the other 99 percent. If CEO pay was cut, profits might rise, said Chevalier, “but that doesn’t really have a logical connection to raising pay for everybody else or creating jobs for everybody else.”

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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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Perry’s Political Rise Began With Opposition To Pesticide Regulations

October 10, 2011

Jason Cherkis contributed reporting to this story. WASHINGTON — More than two decades ago, there was a bitter fight within Texas’ agricultural community, one that pitted low-wage farm workers and their advocates against large growers and chemical companies. The dispute was over how much field workers should know about the often-dangerous pesticides they were handling. And there are those in Texas who believe Gov. Rick Perry wouldn’t now be a leading candidate for the Republican presidential nomination had he not taken up the cause of the growers and sprayers in this fight. “This became how Perry rises in politics,” claims Jim Harrington, director of the Texas Civil Rights Project , a public interest law group. “Perry is the weathervane, pure and simple. He saw where the money was and where the politics were drifting.” In the 1980’s, agricultural workers in Texas didn’t enjoy many of the workplace protections that were taken for granted in other industries. So in 1987, after Harrington’s group had sued the state on behalf of farm workers, the Texas agriculture department developed a law called the Agricultural Hazards Communications Act , known colloquially as Right to Know. In addition to requiring that field workers be trained on the dangers of pesticides, the law required farmers to maintain a list of the chemicals they used on their crops — known as the “crop sheet” — and to provide it to farm workers, along with a notice of their rights as workers. The law also stated that workers couldn’t be forced to handle chemicals that came unlabeled, nor could they be fired or disciplined for filing a complaint against an employer with regards to Right to Know. The crop sheet was important because Texas’ heavily Latino farm workforce tends to migrate, handling different crops in different regions during different seasons. A detailed listing of chemicals used and their dangers could help workers pinpoint the cause of an illness. According to Vaughn Cox, who worked in the agriculture department in the late 80’s, Right to Know was a sensible law designed specifically to help the farm worker and the doctors in the event of a pesticide-related emergency. “If it says cabbage in South Texas is treated with these chemicals this time of year, then the doctor can say, ‘Oh, they used this kind of chemical.’ It could speed up the process of treating them,” says Cox. “So many farm workers were being exposed to chemicals in unsafe ways. They had no training, no protective clothing or anything that common sense would say you should have.” Right to Know was one step in a string of farm worker protections advanced during the late 80’s, according to Nora Linares-Moeller, who also worked in the agriculture department at the time. “It was an incredibly nasty fight with the ranchers and growers,” Linares-Moeller says. “It all had to do with the ability for farm workers to be safe in the field. They were literally being sprayed with pesticides.” Despite its relatively modest requirements, many growers and chemical companies weren’t fans of Right to Know, which would bring more transparency to the effects of pesticides and potentially slow down production when farm workers raised concerns. The agriculture department had long borne a reputation for being laissez-faire on regulatory matters, and opponents of Right to Know argued that such new regulations were burdensome, costly, and paternalistic. “The farm bureau and the chemical industry in particular, which is a very powerful lobby, went apoplectic and just fought the regulations tooth and nail,” recalls Harrington. “They didn’t want to have any accountability.” The state’s then-agriculture commissioner, populist Democrat Jim Hightower , says he faced pushback from corporate interest groups and their allies in the state legislature as he tried to craft an enforcement program. The way Hightower remembers it, one of his fiercest opponents on the pesticide matter was Rick Perry. As a state representative who was then a Democrat, Perry had already demonstrated what some considered an ambivalence toward farm workers’ rights. In 1985, lawmakers and worker advocates had pushed a bill that would bring agricultural workers into the state’s workers compensation system, after a state judge had deemed their exclusion a denial of equal protection under the law. Like the growers’ lobby, Perry opposed the bill. It eventually passed. That same year, Perry had supported an unsuccessful bill that would have stripped the agriculture commissioner of much of his regulatory power as it pertained to pesticides. That support had put him in the camp of trade groups representing farmers, cotton growers, cattlemen, and chemical producers. “He was pretty much a preacher [for] the chemical lobby,” says Hightower, an outspoken Perry critic. Perry’s stance on the pesticide issue revealed “a willingness … in fact, an eagerness” to shill for the industry, he says. Perry’s campaign did not respond to requests for comment for this article. Perry apparently had no more allegiance to his Democratic Party than he did to farm workers. In 1989, he declared himself a Republican in order to challenge Hightower for the agriculture commissioner seat, Perry’s first crack at statewide office. (“I intend to vote the same convictions,” Perry said of his political conversion. “The only difference is there will be an R beside my name.”) None other than renowned Republican strategist and Texas political operative Karl Rove claimed at least partial credit for Perry’s party switch. “Perry had planned to retire from the legislature until his best friend, David Weeks, and I talked him into switching parties and running for the GOP nomination for agriculture commissioner,” Rove wrote in his memoir , published in 2010. With Rove’s help, Perry won the election, bringing an end to Hightower’s eight-year tenure as commissioner. According to Rove, “Perry swept rural counties because, as a rancher, he actually knew something about agriculture; he won the suburbs because of his marquee good looks and conservative values.” Perry was the son of a cotton farmer and had majored in animal science at Texas A&M University . Others argue that Perry’s victory had less to do with his ranching knowledge or appearance than with the robust financial backing he received from corporate interests, many of whom wanted to see Hightower unseated. Indeed, campaign contribution records from the 1990 race, provided to The Huffington Post by the Texas State Library and Archives Commission, indicate that Perry routed Hightower in the weeks leading up to the election, his war chest bolstered by donations from farmers, ranchers, developers, and oil and gas executives. But Gene Hall, current spokesman and longtime official at the Texas Farm Bureau, says the role that pesticide regulations played in Perry’s support during the 1990 campaign has been overstated. “It would be inaccurate to say it was all about pesticides,” says Hall, noting that Perry and the bureau didn’t always agree on matters. He says Perry enjoyed wide support among the bureau because Hightower’s vision of small, organic farms was “so clearly at odds with farmers and ranchers.” “We were determined to defeat him,” Hall says of Hightower. “I’ve heard some describe it as a holy war. He had to be beaten. We allied with Rick Perry.” “I think it would be unfair to say that Rick won that campaign because of pesticides,” adds Ken Luce, who worked on Perry’s campaign for agriculture commissioner. “There was a hugely dissatisfied electorate within the agriculture community … Hightower and his people, they underestimated him.” Whatever the reason, the money poured in from deep-pocketed donors. In a one-month period just before voters headed to the polls, Perry raised $318,454.92, while Hightower’s committee netted a mere $108,802.57, according to records. (Some Hightower aides were later indicted for allegedly using state money for political purposes.) Many of Perry’s larger checks came courtesy of donors who owned large farms or had ties to groups like the Rio Grande Valley Sugar Growers. On the expenditures side, Perry’s camp made payments to a PAC affiliated with the Cattle Feeders Association, for money apparently spent on campaign events. They also made large advertising buys and sent at least $39,000 to Karl Rove & Co. for “printing” expenses, according to the disclosure forms. On the campaign trail, Perry flayed Hightower for his endorsement of Jesse Jackson in his 1988 presidential bid. Hightower also claims that Perry’s camp also ran attack ads on Texas television. It didn’t take long after the election for department employees to realize that the agency was about to change under Perry, particularly with the work related to pesticide regulation, according to Vaughn Cox. It had been Cox’s job to inform farmers about Right to Know and to “slap you on your hand” in cases of non-compliance, he says. “Soon after the election results were clear, his local campaign manager made a visit to the local office where I was working,” Cox recalls. “He explained in very clear terms that there were a list of folks that should be gone by the time the commissioner took office in January. Dang if my name wasn’t at the top of the list. They made it clear to a pretty large segment of the workforce that they were no longer welcome. All Hightower people.” A few months after the election, Perry let 52 department employees go, including Dale Burnett, the head of pesticide enforcement and a career agriculture department employee, according an Austin American-Statesman article at the time. Rebecca Flores, the former longtime head of the United Farm Workers union in Texas, says the enforcement of pesticide regulations changed with the personnel. Whereas the union had met routinely with Hightower to voice workers’ concerns, she found it nearly impossible to get the ear of Perry or his staff. “He got rid of all the staff that was doing the educating and training,” she says. “He didn’t enforce one thing.” “Rick Perry is no friend of farm workers,” she goes on. “He’s an opportunistic parasite.” But Hall says that pesticide enforcement by no means disappeared under Perry, though as commissioner he seemed to have a lighter regulatory touch than his predecessor. “The rules were not then and not now lax,” says Hall. Under Perry they were “not prohibitive, not onerous, which was the direction Hightower was moving in.” Within ten months of Perry taking office, the U.S. Environmental Protection Agency had to order the agriculture department to reduce its backlog of pesticide enforcement cases. The backlog had reached 300. The EPA attributed the problem to excessive vacancies in the area of enforcement, according to the American-Statesman . Perry’s team partly blamed Hightower for the pileup of cases; Hightower attributed it to Perry firing knowledgeable officers and replacing them with what Hightower described as political appointees. The department had had a similar backlog under Hightower years earlier, the article noted. By 1995, the farm workers union — along with seven environmental organizations — went so far as to ask the EPA to strip Perry of his pesticide regulation powers, citing a serious drop in enforcement. In a letter to the agency, the groups said that fines related to pesticide use had slid from $61,000 in 1989 under Hightower to $31,000 in 1994 under Perry, according to a Houston Chronicle story at the time. Though Perry dismissed the claims as “outrageous,” he had carved out a reputation as a lax enforcer catering to growers rather than workers, with little political price to pay. As the Chronicle story noted, “Perry’s farmer-friendly agency is sailing through the Legislature with hardly a note of controversy.”

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Wall Street CEOS May Be Held Accountable If Their Bank Breaks Rule

October 8, 2011

WASHINGTON (Dave Clarke) – Regulators are considering holding Wall Street chief executives legally liable if they allow certain types of proprietary trading on their watch. Regulators due to reveal the Volcker rule proposal next week are expected to ask whether CEOs should have to certify, or “attest,” that their bank has put in place the proper systems to make sure no proprietary trading is taking place. The idea is that holding CEOs personally accountable will add a strong deterrent effect to the Volcker rule. The rule, called for in last year’s Dodd-Frank financial oversight law, bans banks from trading for their own profit in securities, derivatives and some other financial instruments. The bank industry is already balking at the legal burden and compliance headache that would come with a CEO certification. “The whole Volcker rule proposal envisions having an army of nannies overlooking the work of the people who actually work with customers,” said Wayne Abernathy, a senior official with the American Bankers Association. “How much more does an attestation bring that that doesn’t bring?” A CEO certification approach may be similar to 2002′s Sarbanes-Oxley law. That law, put in place after major accounting scandals at Enron and Worldcom, has the power to send executives to prison and make them pay multimillion-dollar fines for submitting false certifications on corporate disclosures. It is unclear if regulators will seek CEO imprisonment or hefty fines as potential penalties for violating the Volcker rule. Whatever regulators might put in place, fines would be a far more likely punishment if any are ever doled out, banking lawyers said. Supporters of the proposal contend it would force the CEO to be more involved and accountable. “Placing personal and legal responsibility directly with a corporation’s top executive is key to ensuring financial firms comply with the Volcker Rule and stop engaging in the risky activities that led to billion-dollar taxpayer bailouts,” Sen. Carl Levin said in a statement to Reuters. The crackdown on proprietary trading, which has some exemptions, is known as the Volcker rule after former Federal Reserve Chairman Paul Volcker, who championed the reform. The rule will mostly impact large banks including Goldman Sachs, JPMorgan Chase and Citigroup. Supporters contend that large banks whose customers receive deposit insurance from the government should not be engaging in risky trading activities that could put these deposits in jeopardy. Despite banks’ concerns, regulators may go easier on the issue of CEOs’ legal liability than the industry’s worst fears. In January the Financial Stability Oversight Council, the panel of regulators headed by the Treasury Department, released recommendations for enforcing the Volcker rule. Included in this list was requiring a CEO to certify their compliance efforts’ “effectiveness.” A draft of the rule to be considered next week by regulators does not explicitly call for a CEO certification and instead solicits feedback on whether it should be in a final rule. The draft, first posted online by the American Banker on Wednesday, could be changed before the Federal Deposit Insurance Corp meeting on Tuesday and the Securities and Exchange Commission meetings on Wednesday on the proposal. Banking lawyers say the certification could work similarly to Sarbanes-Oxley. “The idea is they want to have a human being on the line saying it is true,” said Bradley Sabel, a partner with Shearman and Sterling law firm. But even some critics of the banking industry who argue the government has not done enough to respond to the 2007-2009 financial crisis question whether upping a CEO’s legal responsibility will make much of a difference. “I count myself among those who would like some CEOs’ heads on a stick but I don’t think this is the right way to go about it,” said Cornelius Hurley, director of Boston University’s Morin Center for Banking and Financial Law. “At the end of the day he is going to rely on the representations of his advisers anyway and all this does is make sure he doesn’t sleep at night.” (Reporting by Dave Clarke, Editing by Matthew Lewis) Copyright 2011 Thomson Reuters. Click for Restrictions .

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Ben Uyeda: How Re-Fueling Your Car Can Build Equity in Your Home

October 2, 2011

If you are one of the typical Americans who drives about 40 miles a day, then you should consider an atypical scenario if you happen to be planning on building a new home. If you are taking out a mortgage to build a new home and are willing to take advantage of the falling price of photovoltaic panels, then you have an opportunity to increase the value of your home and stop throwing money away on transportation fuel. 40 miles per day in a car that gets 30 miles per gallon will cost you about $140 a month (assuming a gas price of $3.50 a gallon) . This is $1680 a year that you will never see again. Solar panels in your home mortgage and an electric car in your garage make financial sense. It takes about 34 kilowatt hours (kWh) to charge an electric car like the Nissan Leaf for 100 miles of driving. It takes about 13.6 kWh for a charge equal to 40 miles of daily driving. Even in cold, gloomy northeastern cities like Boston , with an annual average of 7.5 hours of daylight and 3-4 hours of actual sunshine a day, a 4 kilowatt array of photovoltaics should be able to produce the 13.6 kWh needed for the daily commute. Assuming a conservative price of $5 per watt to purchase and install the solar panels, you would be adding about $20,000 to the price of your home. If you are buying an average priced home for about $272,000 with a typical 30-year mortgage This would increase your monthly mortgage payment by about $80 a month. By putting solar panels on your house and an electric car in your garage you would reduce your monthly expenditures on transportation fuel by about 60 bucks a month. The biggest barriers to implementing sustainable technologies are often financial. True sustainable design considers the financial scenarios that make implementation achievable in addition to the physical and aesthetics considerations of integration. Paying $20k out of pocket for solar panels is a financially daunting prospect but if you can pack it into a mortgage it makes a lot of sense to substitute reoccurring monthly expenses into financed renewable technologies that add to the value of your home. Electric cars are often presented as a compromised automobile that reduce transportation freedom with a limited mobility range and an unfamiliar refueling process. Personally, if I was going to choose a car that offered freedom, I would pass on 100-mile+ road trips in favor of freedom from carbon emissions, unpredictable gas prices, and reliance on oil companies. Electric cars and solar panels present the opportunity to own your own fuel supply. This concept of independence should be as just as important to American culture as muscle cars and the open road. Note: This scenario assumes a grid-tied net-metered house that would avoid the added cost of home energy storage technologies.

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