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Food Stamp Usage Soars Among Working Families

October 22, 2010

HONOLULU — Lillie Gonzales does whatever it takes to provide for three ravenous sons who live under her roof. She grows her own vegetables at home on Kauai, runs her own small business and like a record 42 million other Americans, she relies on food stamps. Gonzales and her husband consistently qualify for food stamps now that Hawaii and other states are quietly expanding eligibility and offering the benefit to more working, moderate income families. Data from the U.S. Department of Agriculture reviewed by The Associated Press shows that 32 states have adopted rules making it easier to qualify for food stamps since 2007. In all, 38 states have loosened eligibility standards. Hawaii has gone farther than most, allowing a family like Gonzales’ to earn up to $59,328 and still get food stamps. Prior to an Oct. 1 increase, the income eligibility limit for a Hawaii family of five was $38,568 a year. “If I didn’t have food stamps, I would be buying white rice and Spam every day,” said Gonzales, whose Island Angels business makes Hawaiian-style fabric angel ornaments, quilts, aprons and purses. Eligibility for food stamps varies from state to state, with the 11 most generous states allowing families to apply if their gross income is less than double the federal poverty line of $22,050 for a family of four on the U.S. mainland. The threshold is higher in Alaska and Hawaii. With more than 1 in 8 Americans now on food stamps, participation in the program has jumped about 70 percent from 26 million in May 2007, while the nation’s unemployment rate rose from 4.3 percent to 9.2 percent through September of this year. “We’ve seen a huge increase in participation due to the economic downturn,” said Jean Daniel, a spokeswoman for the USDA’s Food and Nutrition Service. “That’s the way this program was designed.” In addition to helping alleviate economic pressures, many states embrace the popularity of food stamps because their cost – $50 billion last year – is paid entirely by the federal government. States are only responsible for paying half of their programs’ administrative costs. Food stamps have been blasted by some Republicans in this midterm election season as just another federal entitlement program, with former House Speaker Newt Gingrich framing the vote as a choice between “the party of food stamps” and Republican policies that create jobs. Participants in the food stamp program, technically called the Supplemental Nutrition Assistance Program, receive a per person average of $133 per month to buy staples including milk, bread and vegetables. Shortly after Hawaii announced it was raising its eligibility limits starting this month, three carloads of 10 seniors drove to the Kauai Independent Food Bank to ask if they qualified. Nine of them did, said Judy Lenthall, executive director for the food bank, which helps people apply for food stamps. “We saw an immediate and overwhelmingly wonderful response,” Lenthall said. “It surprised us how fast it’s spreading.” States that have relaxed food stamp eligibility did so by moving to a system where applicants could qualify based on their income, and their other assets such as real estate, vehicles and savings accounts could be ignored. Basing food stamps on income alone allows the newly unemployed and the elderly to seek government food aid without having to first sell their property or exhaust every dollar they’ve earned, said Sue McGinn, director of the food stamp program in Colorado, which will expand eligibility beginning in March. “They won’t have to wipe out their savings to apply for benefits,” McGinn said. Many of these states also raised income limits, although applicants still have to show they’re essentially living at the poverty line after accounting for allowable deductions, including elder medical expenses and child support. “It helps moderate and low-income people who are struggling,” said Stacy Dean of the Washington-based Center on Budget and Policy Priorities. “They’re doing everything we want: they’re working, paying all their bills, taking care of their kids, and they still don’t have enough money at the end of the month to put food on the table.” Since 2000, the only states that haven’t enacted the lower food stamp eligibility requirements are Alaska, Arkansas, Indiana, Iowa, Kansas, Missouri, Nebraska, South Dakota, Tennessee, Utah, Virginia and Wyoming. In Hawaii, where everything from milk to gasoline is typically the highest in the nation, the changes are welcomed by Gonzales and others. “As long as my kids have good food, that’s all I care about,” Gonzales said. “It makes a tremendous difference.” ___ Online: Food and Nutrition Service: http://www.fns.usda.gov/snap/

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Britain’s Austerity Movement Will Hurt The Poor Most, Economists Say

October 21, 2010

LONDON — Britain’s poor and powerful clashed Thursday over who will lose out most under austerity measures that will slash benefits, jobs and government services to reduce the country’s crippling debts. Treasury chief George Osborne has announced 81 billion pounds ($128 billion) in spending cuts through 2015 that will cost as many as half a million public sector jobs and trim welfare payments to families and the disabled. Government departments will, on average, have their budgets cut by about 19 percent, forcing them to lay off staff and limit the scope of their work. It means Britain will have fewer police, pay less to those without jobs and send fewer criminals to prison. Embassies will be shuttered, as will courts and military bases. Britons will lose billions in benefit payments, retire later, and pay more for day-to-day items like train tickets. Even the Royal Mint faces cutbacks: It will use cheaper metals in British coins in an attempt to make savings. Osborne had said Wednesday in an address to Parliament that “those with the broadest shoulders should bear the greatest burden,” saying Britain’s highest earners would be worst affected by the cuts. But economists and the public disagree, believing the measures will cause most hardship for lower-paid government workers and Britons reliant on welfare checks. The Institute for Fiscal Studies, an economic think tank, said that – aside from the richest 2 percent of people – most of the pain would be inflicted on working families, the sick and the poor. “You’re really picking on the weakest people in society and it’s completely unfair how you’re applying these budget cuts,” Margaret Lynch, 52, told Prime Minister David Cameron and his deputy, Liberal Democrat leader Nick Clegg, as they defended the plan at a public meeting in Nottingham, in central England. Lynch, who has multiple sclerosis and uses a wheelchair, said outside the event that her government benefits were being cut by about half. Hundreds of Britons demonstrated against the cuts outside Downing Street, the prime minister’s official residence in London, late Wednesday. Police said three people were arrested for breaking into the government’s business ministry. Some legislators worry that women will lose out more than men, as about 65 percent of the public sector work force is female. Pension plans for women are changing more quickly than those of men, standardizing the retirement age at 66 for both genders by 2020. “Women are more likely to work in the public sector, and more likely to use public sector services,” said Stella Creasy, a Labour lawmaker who represents the London district of Walthamstow in Parliament. The Institute for Fiscal Studies said Osborne’s spending cuts are the deepest since World War II, and public services face the harshest budget limits since the mid-1970s. Britain’s opposition Labour Party said the Conservative-led coalition government is exploiting the economic gloom to reduce the size of government, a long-held Conservative ideal. “It is a blueprint for a smaller, meaner and nastier society ,” Labour lawmaker Angela Eagle told the BBC. The opposition says cutting public sector jobs could hamper Britain’s economic growth, favoring instead a slower pace of cuts. Osborne said Wednesday the cuts were an unavoidable remedy for the debts Britain piled up during the global financial crisis. The Labour government spent billions to bail out two major banks – the Royal Bank of Scotland and Lloyds Banking Group – and took full ownership of mortgage lender Northern Rock. The Labour Party was in office for 13 years, until May of this year, and was responsible for the initial response as the financial crisis began. The Treasury confirmed Thursday there will be a permanent levy on the balance sheets of banks – expected to raise about 2.5 billion pounds ($4 billion) a year by 2014 – and there will be further discussion of measures to curb bankers’ bonuses. ___ Associated Press Writer Benjamin Timmins in London contributed to this report.

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Walden Bello: Lessons of the Obama Debacle

October 20, 2010

The progressive dilemma at this time of political crisis is not one of vision. We have identified the key fundamental values needed to construct an alternative to the abundantly discredited neoliberal world older. But on a tactical level we have failed to translate these values into a political program compelling to those most affected by the global financial crisis. Barack Obama’s young presidency neatly encapsulates this failure. Obama’s broad electoral base represented a promising coalition for progressive change, but the gap between the Obama campaign and the Obama presidency has widened into what appears to be an oncoming rout for his party in the upcoming elections. Obama’s first mistake was to acknowledge some responsibility for a downturn made possible by his predecessors’ policies. Then, even while he was tepidly laying blame at the feet of Wall Street, these firms received major bailouts and suffered no personnel changes or cuts to their sky-high bonuses. The shortcomings of subsequent financial reform legislation did nothing to alleviate these contradictions of word and deed. Obama identified the problems of deregulation but demurred on the opportunity to educate the public on the more fundamental pathologies of market fundamentalism, an unsurprising failure given his choice of chief economic lieutenants. Nor have facts on the ground offered any relief. Despite good advice from reputable Keynesians like Nobel Laureate Paul Krugman, the $787 billion stimulus was never enough investment to roll back unemployment. But even better technocratic initiatives would not compensate for Obama’s greater failure to contextualize his initiatives in a broader agenda of social transformation. Obama’s once vibrant grassroots base craved an alternative to the dog-eat-dog neoliberal order. But at this late hour, what vision will be compelling for the base? The right, in contrast, has better understood the dynamics of politics in a time of crisis. Eschewing Obama’s quest for bloodless bipartisanship, counterrevolutionary types in the Republican Party have framed the political moment in absolutist ideological terms, distancing themselves from progressives and upending traditional conservative elites. The left would do better to remember that the art of politics requires using the contradictions, spaces, and ambiguities of the current moment to shape structures and institutions and create a critical mass for change. What is needed for progressive change is smart and skilled leadership. You can read the full column here .

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Michael Hudson: 16 Cents on the Dollar: Doing the Math on Angelo Mozilo’s Big Settlement

October 19, 2010

In the end, Angelo Mozilo settled for pennies on the dollar. The former Countrywide Financial Corp. chief agreed Friday to a settlement that requires him to pay 16 cents out of his own pocket for every dollar federal authorities claimed he had taken out of the company in ill-gotten personal gains. Let’s do the math: ■ The government alleged that he added $141.7 million (before taxes) to his personal fortune through corporate misconduct. ■ Mozillo agreed to personally pay a $22.5 million fine — 16 percent of the alleged ill-gotten gains. ■ In addition, Mozillo agreed to turn over another $45 million to former Countrywide shareholders, who lost billions when the company’s stock price plummeted as loan defaults soared. But the $45 million won’t come out of Mozilo’s pocket. Under the terms of his employment contract, it will be paid instead by Countrywide’s insurers and by Bank of America, which bought Countrywide in 2008. The government settled the civil fraud and insider trading allegations against Mozilo for less than it wanted because, one legal analyst said, it would have been a challenge to prove its case. “This is not a slam dunk,” Duke University law professor James D. Cox told The New York Times . “It’s a risky case and it’s got a lot of complexities to it.” Mozilo admitted no wrongdoing, and his lawyers were sure to have mounted a ferocious defense. The Securities and Exchange Commission said the $22.5 million fine will be the largest penalty ever paid by a senior executive of a public company in an SEC settlement. Too Easy? But some observers wonder whether Mozilo got off easy. David Callahan, author of the book, The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead , writes : It is hard to see how the Mozilo settlement — coming on the heels of another weak SEC settlement with financier Steve Rattner — will deter future wrongdoing. . . . Indeed, it could have the contrary effect. If you can make a great fortune behaving badly, get busted, and still end up with most of that [fortune], then you’ve come out way ahead. At least in financial terms. Countywide reaped huge profits — and, eventually, produced huge losses for its shareholders — through a high-wire strategy that focused on selling huge volumes of subprime loans and other risky products. One of the ironies of Countrywide’s fall was that Mozilo had been hesitant, at first, to jump into the subprime market. As I write in my new book about the subprime debacle, The Monster , Mozilo and Countrywide eventually succumbed to the temptation to follow the example of Ameriquest Mortgage Co. and its billionaire owner, Roland Arnall, an entrepreneur who was in many ways the founding father of subprime. The inventive mortgage products emerging in the home-loan market were watched closely by the heaviest of the industry’s heavyweights: Countrywide Financial’s Angelo R. Mozilo. Mozilo’s company had established itself as the largest mortgage lender in America by providing loans to home owners with good credit. Mozilo called his company “my baby.” For much of his career, he had been cautious about the kinds of loans his company made. Countrywide had mostly steered clear of subprime as other lenders dived into the market throughout the 1990s. Mozilo worried that subprime loans were too risky, in some cases even “toxic.” … While Ameriquest’s methods may have made Mozilo uneasy, he wasn’t so troubled that he kept Countrywide from joining the subprime gold rush. His company had survived decades of real-estate booms and busts, and he thought it had the brains and brawn to handle the risks of subprime better than the upstarts. Mozilo’s competitive instincts beat out his caution. He couldn’t accept being second or third. “It’s a question of dominance,” he told investors. He didn’t like that Countrywide trailed Ameriquest in the subprime lending rankings. By 2003 Arnall’s companies had captured nearly 12 percent of the subprime market; Countrywide did barely half as much subprime volume, with a market share of just 6 percent. Besides, the real money in the mortgage business was now in subprime, not in prime loans. When Countrywide sold prime loans to investors, its average profit margin was 0.93 percent; when it sold subprime loans to investors, the company’s profit margin nearly quadrupled, to 3.64 percent. The fees, interest rates, and prepayment penalties embedded in subprime loans made them much more seductive to investors. Countrywide’s Size, Clout Though Mozilo’s company came late to the party, once it was there, its size and clout deepened the pain that subprime visited upon home owners and the financial system. Countrywide did little to pull back on its subprime push, even in 2006, when there were signs of an impending crash. “You have to make a choice: to get out or not. And they stayed,” a longtime mortgage industry watcher told the Los Angeles Times . “It’s hard when you’re following someone off a cliff to know when to stop.” In early 2008, Bank of America purchased Countrywide, once worth as much as $26 billion, for a fire-sale price of $4 billion. Countrywide might have survived if its founder hadn’t become fixated on competing with Ameriquest, Muolo, the National Mortgage News editor, said. “If he hadn’t followed Roland Arnall down the subprime path this would never have happened,” Muolo said. “It’s ego and ambition that sunk him.” Michael Hudson is a staff writer with the Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America — and Spawned a Global Crisis (Times Books, October 2010).

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Robert K. Lifton: Jobs, Deficits and the Coming Test of America’s Democracy

October 18, 2010

In October 1988, during my term as President of the American Jewish Congress, in what I called an “Occasional Letter,” sent out to influentials in this country and abroad, I referred to the history of cities I had just visited — Istanbul, (Constantinople) Rome and Jerusalem. The history of each of these great cities of antiquity chronicles a pattern of events which I think has relevance for our own time. For thousands of years invaders took control of each of these cities at the moment of the invader’s maximum strength; ruled it for a time as their strength gradually ebbed-generally because of increasingly less talented rulers and a spoiled self-indulgent population; and finally succumbed to the next horde of invaders. …we Americans in our relative youth as a nation and with our natural optimism pay too little attention to historical perspectives. We believe that our world leadership will last forever. [But] we continue to gird up for a military war against an enemy that is already showing its own internal weakness. At the same time, our affluent citizens indulge their insatiable appetites to consume. As a result, our debts to other nations mount, our balance of payments worsens with other countries…is this the way history will recount how our once dominant nation lost its supremacy? Over the ensuing 22 years the patterns of conduct I decried have continued to the point of having brought our country to a terrible state. I have grave concerns for my children, my grandchildren and their generations. My first concern has to do with jobs. I don’t believe that this country will be able to create sufficient jobs to re-employ a significant portion of those presently unemployed and also provide employment for the younger job seekers coming out of school. The jobs were not lost just recently as a result of the bubbles bursting. These jobs were being lost over many years. The bubble economy only covered up the losses by providing home owners with large amounts of money to maintain their consumption through borrowing far in excess of the asset value of their homes and through providing funding to financial companies like banks, investment banks and brokers — both stock and real estate — based on the inflated values of the assets they were dealing with. The jobs were lost for two reasons. First, our businesses lost their ability to compete effectively with businesses in other countries. Whether you blame the non-competitive condition on the higher costs of labor, including huge health care and pension costs, the higher costs of management, including over-the-top rewards for corporate management, or the higher costs of government, including taxes and regulations, the fact is that step by step, year by year, manufacturing and production have moved out of America and continue to move out to other more competitive areas of the world. The second factor is related to the sharp increases in productivity made possible by the many new inventions that allow business to increase production with ever fewer workers. One can hardly think of a function whether directly related to production or indirectly, for example, through all the new means of communication, that has not reduced the need for workers. Millions of Americans who are facing job losses and reduced employment opportunities are also experiencing a drop in the value of their homes and in many cases loss of their homes to foreclosure. Yet, at the same time that so many Americans are suffering lower standards of living, we are faced with huge debt levels — national, state and city, and we are running the highest deficits as a percentage of GDP than almost any time in our history. And the situation is actually worse than reported. For example, if properly accounted for with a discount rate based on realistic earnings, the shortfall in states’ pension commitments would amount to $3.4 trillion, about one quarter of all federal debt. As a nation we face a terrible dilemma. It is possible to create more jobs by spending enormous money on rebuilding our aging infrastructure. It is possible to ease the burdens on the unemployed and under employed by continuing unemployment benefits and extending health benefits. But those actions will only exacerbate our deficits and increase our debt loads. Increased debt increases the interest costs of carrying that debt and the burden on future generations of repaying at least part of it. The decision of what to do is sharply dividing our country. The unemployed are demanding that their benefits continue and that large amount of funds be allocated to create jobs through building and repairing our national infrastructure. There is pressure to increase taxes on those more able to pay. On the other side, the employed and affluent are insisting that the nation can no longer afford to support the unemployed by increasing its deficits and debt load. Already, we are seeing rising anger by those who are worried about the deficits and debt levels and the possibility of increased taxes, expressed, for example, by the Tea Party movement. So far the discussion has been civilized, but that may be because the benefits have been continued and the unemployed still have hope of finding jobs. Once the flow of benefits stops, I would not be surprised to see massive demonstrations and maybe civil unrest of the kind we have seen in Greece and France as those nations struggle to find solutions to their economic issues. Three overwhelming issues must be addressed at the same time. The nation must finding a way to provide financial help to the huge number of people who have lost their jobs and those young people looking for jobs, many of who have amassed heavy debt for their education. The nation must find a way at least to start to reduce debt levels so our citizens and creditor nations will see a direction that gives them some confidence. And the nation must find a way to become competitive in producing products that can be sold in a globalized competitive world. Our competitive position may be based on inventing new products or like the car companies on cutting production costs of existing products that we once made and sold successfully. This cannot be accomplished without enormous sacrifices by every elements of our society. It will require that labor gives up hard earned health and pension benefits, that management very sharply reduce their salaries and benefits; that federal, state and city governments pare down costs across the board, including pension payments for retired employees; that taxes be raised far beyond merely eliminating the Bush tax cuts; that social security and Medicare benefits be adjusted to reduce costs. All will feel the pain of reduced standards of living – labor, management, the affluent, the old and the young. Can the American democratic system manage such painful changes? We have taken pride in our democracy and how well it has worked. But it worked under the optimum conditions. We started with a large land mass loaded with natural resources — oil gas, coal, forests of trees, huge areas of arable farm land and water. We have profligately used up a lot of those assets and lived well in the process. Until now, to get elected those governing us only had to grant to each constituency what it demanded. Now, is the true test. Can our democracy survive when it has to take away from each constituency something of great value? Based on how our governing system is operating currently, I am not sure. What do you think?

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Video: DeKaser, Brough Debate Fed, Tea Party Economic Policies: Video

October 15, 2010

Oct. 15 (Bloomberg) — Wayne Brough, chief economist at FreedomWorks, and Richard DeKaser, chief economist at Woodley Park Research, discuss Fed Chairman Chairman Ben S. Bernanke’s remarks today that additional monetary stimulus may be warranted and the Tea Party’s view of the Federal Reserve. Brough and DeKaser speak with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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Robert Creamer: Wall Street Hopes to Use Republicans to Re-Purchase Congress

October 15, 2010

For many years the “titans” of Wall Street could pretty much have their way with Congress. They — and their huge campaign contributions — had convinced the Republicans, and many of the Democrats — that what was good for Wall Street, was good for the country. Then came the financial collapse in September, 2008, and the sudden realization that the emperor of Wall Street didn’t have any clothes. Turned out that the policies that allowed reckless Wall Street traders to run wild — and gave a tiny number of Wall Streeters the ability to claim a bigger and bigger share of our national income — weren’t actually so smart for the rest of us. Democrats in Congress and the Obama Administration turned on Wall Street and — from Wall Street’s point of view — had the “audacity” to pass legislation that reined in the recklessness that had cost eight million Americans their jobs. Many among the Wall Street types — who actually think of themselves as the “masters of the universe” — were shocked. They — and much of the conventional wisdom in Washington — assumed that the Wall Street reform bill would be watered down into thin gruel by the massive army of lobbyists they sent to do battle on the Hill. Wall Street spent almost a half-billion dollars lobbying to stop Wall Street reform. But the bill actually got tougher and tougher as the battle went on. That was because Progressives held political ground so high on the issue that even the most “moderate” members of Congress were terrified to stand up for the Wall Street elite. But this November, the Wall Street Empire plans to strike back. According to Politico : The vilification of bankers, what one bank lobbyist called the ‘show trials’ of congressional hearings and especially the outcome of financial regulatory reform has prompted an all-out effort to wrest Congress from Democratic control, several financial industry insiders told Politico.” Karen Klugh, spokeswoman for the American Financial Services Association, told Politico : “Our target ratio for the 2010 cycle is 80-20 Republicans…” She said this ratio, “reflects our deep concerns with the work of the 111th Congress.” You betcha. And the amount Wall Street is directly investing in campaigns is almost certainly just the tip of the iceberg. It is likely dwarfed by the massive secret contributions they have made to the various Republican attack groups. And you can bet they are encouraging their partners in the huge outsourcing deals — on which they make billions — to pony up as well through secret contributions to the Chamber of Commerce that can spend unlimited amounts to distort the records of their Democratic targets. Many of those contributions, as ThinkProgress has documented, come from foreign corporations that profit from outsourcing of American jobs. The thing that is especially galling about Wall Street’s approach to politics is that it so brazenly plays upon the fears of the very people who are often the biggest victims of their greed. It is no small irony that the very people whose recklessness caused so many everyday working class families to lose their jobs – who have systematically skimmed off a larger and larger portion of our national product and left smaller and smaller pieces of the pie for everyday Americans – are now stoking the anger caused by their own actions and directing it toward Democrats who have brought them to account. In the Tea Party fantasy world everyday Americans are oppressed by bureaucrats with eyeshades who go to work on the Washington Metro. They are abetted by crunchy academics who spend their days dreaming up “social engineering” schemes in their offices at Yale or Harvard. And their oppressive regime is supported by liberal news anchors and the nihilistic denizens of Hollywood who spend their nights in hot tubs surrounded by Playboy Bunnies. That is the Tea Party version of class warfare; everyday Americans versus these “elites.” This is a very convenient mythology for Wall Street. It ignores the existence of the real “elites” in America. They aren’t the bureaucrats who go to work on the Metro but rather the men and women who go to work in chauffeur-driven limousines, jet around the country in Gulfstream G-Vs, and make more on the first day of the year, before lunch, than a minimum wage worker makes all year long. The gang on Wall Street wants normal Americans to forget that they — and the top one percent of the population — control 34.6% of net assets, compared to only 15% for the bottom 80%. They want you to ignore that 42% of the financial wealth is controlled by the top 1% of the population, compared to only 7% controlled by the bottom 80% — or that 62% of the business equity that controls corporations is in the hands of the top 1% compared to only 7% for the bottom 80%. Remember all of the reckless speculation in financial securities that sunk the economy? Well 61% of financial securities are owned by the top 1% — and just 2% by the bottom 80%. And when it comes to income, the share going to the top 1% had grown from 12.8% in 1982 to 21.3% in 2006 while the percent going to the bottom 80% shrunk from 48.1% to 38.6%. When you look at numbers like that, in broad strokes it’s pretty obvious why the economy sunk into recession. The greed of the top 1% sucked the buying power out of the rest of the population who were needed as customers to keep levels of demand high enough so that investors found it profitable to expand employment, create jobs and generate more consumers to demand more goods and services. Their greed killed the goose that laid the golden egg. Of course the latest example of the consequences of Wall Street’s reckless greed is the mortgage foreclosure documentation disaster. Seems that they were in such a hurry to make more and more on their exotic mortgage-backed securities that they simply neglected to properly document the changes in ownership for the mortgages they packaged up and sold on financial markets. Why would the brilliant graduates of some to the finest universities in America make such an obvious mistake? You have to assume it’s because they figured that they would make their millions and pass the risk of their actions on the “the market” at large rather than take the time and expense to do it right. Now that their actions have come to light they may once again threaten the stability of the financial system. And let’s remember that when you fall behind in your credit card payments, these same guys are the first to invoke every provision in the fine print of your credit card agreement so they can charge you a fortune in fees. But when it comes to transferring titles of mortgages correctly, turns out they couldn’t be bothered. One more example of how Wall Street thinks it’s exempt from the rules that apply to the rest of us. Now, Wall Street is trying to harness the anger of ordinary people — who are furious because of the economic disaster that Wall Street itself created — to allow them to use the Republicans as a vessel to take back the control of Congress. It’s up to us to stop them. The plain fact is that there are more of us than there are of them. But if we don’t vote, we don’t count. Time for Progressives to get out of a defensive crouch and march — along with everyone we know — to the polls. As the MTV s slogan says: Vote again in 2010. In most jurisdictions early voting has already begun. The time to vote is now. I know a guy who trades on Wall Street, call him George, who is absolutely disdainful of ordinary Americans. He thinks that anyone who can’t get rich, like he is, must be a chump. He’s happy to exploit anyone and anything to make money for himself. Don’t let George make us all into chumps. Don’t let Wall Street use the anger caused by the economic disaster that they themselves caused, to elect Republicans and take back control of Congress. Robert Creamer is a long-time political organizer and strategist, and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com .

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Video: Obama Loses Support, Republicans Prove Unpopular in Poll: Video

October 12, 2010

Oct. 12 (Bloomberg) — More than 4 of 10 likely voters who say they once considered themselves President Barack Obama’s backers now are either less supportive or say they no longer support him at all, according to a Bloomberg National Poll conducted Oct. 7-10. The poll also shows that Republican attacks on Obama’s policies are resonating with voters, even as many Americans give a thumbs-down to the party and some of its specific ideas. Bloomberg’s Erik Schatzker and Deidre Bolton report. (Source: Bloomberg)

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Ray Brescia: Truth and Consequences: Loans, Lies and Notary Stamps

October 9, 2010

Legal missteps by banks pursuing foreclosures sent the mortgage markets into uncertain territory this last week as details emerged about the scope of the robo-sign scandal and its potential implications. There are many unanswered questions, and few simple solutions. Are we looking at just the tip of the iceberg, with the original fraud masking deeper, structural illegalities? Can the real estate market recover from the scandal? What can be done for the hundreds of thousands of borrowers who may be in legal limbo? In order to find answers to these questions, a number of key issues must be resolved first. Once that is done, it is only then that we can start talking about solutions. Issue One: What is the Extent of the Problem? Just to recap what we know so far: three major banks–Ally Financial, JPMorgan Chase and Bank of America–have come forward admitting to problems with the foreclosure procedures they follow in the 23 states that require judicial intervention to foreclosure on a mortgage. These banks have halted foreclosures in these 23 states, with BofA deciding to stop all foreclosures in every state. The banks took these measures when borrower advocates exposed the fact that many of the documents filed by the banks in their foreclosure cases had serious defects, including that bank officials falsified affidavits, used electronic signatures (which is illegal), and failed to have the documents properly notarized. Admittedly, given that some major banks have been charged with fraud and discrimination in their lending practices, these allegations of procedural missteps might seem trivial. While there are real consequences resulting from these actions (see Issue Three, below), the larger question is: do the procedural irregularities hide deeper problems? Issue Two: Does the Robo-Sign Scandal Really Mask Bigger Problems with Wide-Ranging implications? The robo-sign scandal begs the question: were the affidavits falsified for a reason, or was it simply poor oversight of a crushing volume of cases? The affidavits contained allegations professing that bank officials reviewed bank records in preparing their foreclosure cases for the courts. These records purportedly held the facts that could establish the banks’ grounds to foreclose: that is, facts proving ownership of the mortgage, that the bank had the legal right to foreclose and that the borrower was behind on his or her mortgage. As it turns out, the bank officials have now admitted that they did not review those records, despite their sworn allegations to the contrary. Now, even if this is all there is to this scandal, there are still serious consequences for filing such false affidavits (again, see Issue Three, below). At the same time, it is entirely possible, and some would say likely, that the bank officials were masking a deeper problem with these cases. Here are just two of those potential problems. First, the banks may not, in fact, be able to prove that they have the right to sue under the mortgages. The mortgage securitization market operated at a fevered pitch in the middle years of the last decade, and each transaction in this market was not always properly documented. In many foreclosure cases, banks sometimes have a hard time proving that they are, in fact, the party with the legal interest that can pursue foreclosure on these mortgages. What the robo-signed affidavits might be masking is this fact: that banks often do not have the right to pursue mortgage foreclosures in many of these cases. Alternatively, it is possible that the banks might, themselves, have the right to bring the foreclosure actions while, at the same time, other entities also have a legal stake in the mortgages. As such, this stake makes their participation in the foreclosure cases necessary, and such cases cannot move ahead without them. Because it is often costly and complicated to bring such additional parties into a case, the robo-sign affidavits might have glossed over the existence of such parties to save the trouble of naming them and including them in the litigation. A second problem the robo-sign scandal may mask has far deeper implications. Tax implications. Many mortgage securities are set up as what are known as REMICs (for “Real Estate Mortgage Investment Conduits”): essentially bundles of mortgages set up as trusts and managed by trustees. The bundles of mortgages generate proceeds from the borrowers’ payments made under the mortgages in the trusts. These proceeds are ultimately passed on to the investors in these trusts. REMICs receive favorable tax treatment and the income coming into the REMICs from the mortgages is not taxable (though the payments made to the investors in those REMICs are). Those who create these REMICs must follow very strict rules in order to qualify for this special tax status. One of the rules requires that the mortgages in the REMIC trust must all be added to it at the time of its creation, and no additional assets may be placed in the trust after this point. If they are added, the REMIC loses its tax treatment, which has some retroactive effect. The robo-sign scandal has raised questions about whether the robo-signed affidavits covered up the fact that many of the assets of these REMICs may not have been made a part of the REMICs at the time of their creation. Another potential technical violation at the intersection of the robo-sign scandal and REMIC tax rules involves questions regarding what entities own the mortgages in the REMICs. The REMIC rules require that the trustee of a REMIC cannot serve as the “holder” of the assets of the REMIC, as opposed to the investors in the entity. Gathering all of the investors together to bring a foreclosure action–since they are the true owners of the assets–is often unwieldy, however. Have REMIC trustees brought foreclosure cases in their own names to make foreclosure filings easier? Yet if the trustees truly own the mortgages, that would jeopardize the REMIC status. Thus, an outstanding question remains about the ownership of these REMICs: have the robo-signed affidavits been used to mask the ownership structure of the REMICs for fear that it would either jeopardize the standing of the parties bringing the foreclosures, or, in the alternative, threaten the precious tax status of the entities? Issue Three: What Are the Penalties for these Actions? First, the banks face the prospect of significant civil penalties in the cases in which they filed these robo-signed affidavits. Courts managing these cases can institute penalties against the banks that range from monetary sanctions to outright dismissal of the foreclosure actions. Second, bank officials face the prospect of criminal penalties for falsifying affidavits, and state attorneys general are starting to band together to conduct an investigation into these issues, which may lead to criminal prosecutions. But the potential for implications that are more far reaching is staggering. To determine whether the robo-signed affidavits mask deeper problems–that the banks do not have the ability to bring these foreclosure actions or may have violated the tax rules in running these REMICs–we need to know more: if not “what did they know, and when did they know it,” perhaps “what are they trying to hide and when were they trying to hide it.” At the end of the day, it may turn out that the banks face significant hurdles to bringing foreclosures, and many of these REMICs owe billions of dollars in back taxes for their failure to follow the REMIC rules. We need a full and frank airing of these issues in order to get a grip on them: only then can we start exploring real solutions. The residential real estate market is in crisis right now due to this scandal, mostly because of the uncertainty it has generated. The first step in resolving these uncertainties is a national foreclosure moratorium, one that will allow us to gather all of the facts. Only then we can move on to solutions. In order to get out of the crisis, we need to know its full depth and breadth. Such an understanding will help to sort through some of the unresolved questions; it is within the answers to these questions that the true solutions lie.

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Stephen Herrington: Open Wide, Minimum Wage Is Good For You

October 7, 2010

There comes a time, every few years actually, when government has to be the mommy of all the little greedy business boys and girls and make them take their medicine. Among the medications that business most dislikes the taste of is the Minimum Wage. Because business dislikes it, the GOP dislikes it, joined at the hip as they are to business. Joe Miller, the crackpot Tea Party loon that won the GOP nomination for Senate from Alaska recently said, in public, that he thought the minimum wage to be unconstitutional. Bear in mind that the entire GOP hates the minimum wage. They stalled increases in it for the entire Bush Administration. Even more mainstream GOP candidates like Dino Rossi, Senate candidate in Washington State, have argued to lower it, although on less obviously irrational grounds than its constitutionality. Both Joe Miller and Dino are irretrievably wrong. Rossi argues that Minimum wage is bad for business, raises costs and so raises prices. Rossi, apparently, flunked ECON 101. The cornerstone of economics is that productivity increases create wealth. Where that wealth ends up is critical to an economy. If productivity increases are shared between labor and business, the economy grows. If not, the economy is damaged by either of inflation or deflation. Trickle down economics is, by its nature, deflationary. Wages that are too high relative to value added are inflationary. Ideally these forces balance in the free market. But as libertarians are fond of pointing out, there is not such thing as a free market, never has been. Business is the main offender in preventing a free labor market. Unions arose because of the inherent advantage that business has in setting wage scales. Unions and management can balance each other out over time and a certain amount of head knocking. But labor and management are more often than not in imbalance, wages growing more slowly with reference to productivity gains. Minimum wage is a measure by government to redress imbalance and so reduce the head knocking outcomes. That is its purpose, a sane government making sane choices about ameliorating the conflict between two natural enemies so that the conflict doesn’t spill out into the streets with torches and pitchforks. When politicians are invested in having one or the other of the sides win, the intent of minimum wages as law is corrupted. It is not intended to create winners and losers, it is intended to maintain order. So while Dino Rossi is intent on corrupting a system that has worked for 75 years to mediate the inherent conflict of labor and industry, the neophyte politician Joe Miller, and others of the current crazy crop of Tea Party candidates, is decrying it as unconstitutional. Miller is among the Tenth Amendment idiots, no clearer in vision and no more honest in intent than were the idiots who forced the Tenth’s inclusion in the Bill of Rights in the first place. The Tenth is meaningless. The Tenth Amendment endeavors, in club blunt words, to limit the power of the federal government to what was written in 1791 including the Tenth itself, seemingly negating all the effort of enacting the additional amendments. Government, both federal and state, should have saved their time if a pustule in the stream of competence such as is the Tea Party can succeed in convincing the public that all law post to the Tenth is illegal and unconstitutional. The Tenth Amendment is a joke and was seen so when adopted solely to mollify the South that feared emancipation even then. The Southern States sought to freeze the argument over slavery with the Tenth. They might have succeeded had it not been for the simple logic that the venerable document that formed the nation was left unfinished for sake of the expediency of placating the slavers. The Tenthers then seem to be arguing that a Constitution that denies the personhood of tens of percents of the population is just fine with them, even though the prime tenant of the Declaration is that all men are created equal, self evidently. Not so self evident to the King or to the Tea Party it seems. The Tenth states, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” It does not say that laws derived under and consistent with the Articles of the Constitution cannot be enacted over and above the original writing or that States, and certainly not individual citizens, obtain a power from it to overrule federal law or amendments duly adopted by two thirds of the states. The authority for making law over and above the words in the original Constitution is based in implied powers and is among the earliest arguments in Constitutional law. Implied powers are derived from the general welfare and necessary and proper clauses of the Preamble. Under the Tea Party interpretation that the Tenth limits the federal government in imposition of post ratification law, the Tenth is, logically, self nullifying. There can be no power to amend the Constitution that is asserted by a denial of its power to amend itself. It could just as easily be amended to say “we were just kidding with the Tenth”. What defines law is a recognition of what best serves all or at least most of us, it is that we all agree on the enlightened and progressive thought that is the Preamble on which the Constitution and all law that follows is based. Anything that does not meet this measure is simply not sustainable as law. No court in the land that has more than a trained ape in the seat of justice will uphold a challenge to Minimum Wage as it passes the test of promoting the general welfare. You would have to believe in Trickle Down economics to believe that it would not, and no one any longer believes in Trickle Down, if they ever did. Joe Miller is out on a Constitutional limb that won’t support a down feather, and is an attorney. All you can conclude is that he is the most intellectually dishonest cracker to run for the Senate since “Tail Gunner” Joe McCarthy. In 1968 the Minimum Wage was $1.80 per hour. On that hourly wage, in 40 hours a week, you could support a family of four with a stay at home mom in most of the country. The CPI has drifted around and the politic climate has change since then, and now the minimum wage will support about two thirds of one person. You have double up in housing and transportation to get by on it now. Don’t add children or you will need food stamps and Medicaid, things invented to fight wage deflation. The reason Minimum Wage won’t support a person is that Republicans have been winning their war on Minimum Wage and Democrats have been tepid to chilly in defending it. The moderate Democrats seem to have bought into the idea that a growing economy and a free markets obviate the need for it. In this they are wrong, but not as wrong as are Republicans. The drift away from support for Minimum Wage has been ill advised on several levels. There is no free market for wages without government support. Business and corporations exert incessant pressure to lower wages and benefits with massive advantages. Against that pressure the only recourse without government involvement is labor unions. The National Labor Relations Board was created to balance the playing field. Unions have been eviscerated starting with Reagan’s appointments to the NLRB of anti-union hard liners. Union busting became its own industry and wages have been in decline ever since. The fair market for labor, created by the New Deal Wagner Act, was destroyed by Republican governments. Minimum Wage, as an act of Congress, is now the main tool in balancing the benefits of economic growth, and without it, the economy is hostage to the willful misapprehensions of wage and economy dynamics of business and the Republicans. Now, attacks on the minimum wage are the final resort of business to maintain profitability in markets put into decline by their own anti-labor agenda. Should they succeed in eliminating the minimum wage, there is no bottom for wages in America short of parity with the $2 a day scales of the third world. Business still fails to comprehend that a world filled with subsistence consumers will not power profits of any kind, not even with slaves as laborers. It is an insanity of the gravest kind that business does not recognize the fate to which their aspirations lead. A world of impoverished people will not produce rich people. The already rich don’t care. But those that follow, their own children and the working class of the world, should care, for they inherit the consequences of their parents and their parents employer’s insatiable greed. Assault on the minimum wage is not only an assault on the working class, it’s an assault on the economy of the Untied States of America and all but an arrogant few who’s futures do not depend on that economy. In the parlance of total warfare, it’s the ultimate act of war. So, it’s more than medicine for the greedy business boys and girls, it’s really badly needed life saving medicine that they are marshaling armies of lobbyists and Tea Party zombies to resist. It’s manifestly stupid to support them for not wanting to take the medicine.

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The Sarah Palin Brand: Business Experts Weigh In

October 5, 2010

Today, when it comes to Palin, the question on most Americans’ minds is, “Will she or won’t she?” The Tea Party continues to build momentum and has positioned Republicans to potentially win back Congress in November — a political storm fueled, in part, by Palin’s endorsements — and some now see her as a presumptive presidential candidate in 2012. The charismatic former governor of Alaska is now one of the most recognizable women in America — and has parlayed the “Sarah Inc.” brand into a variety of business ventures. And despite being considered a key factor in John McCain’s failed bid for the presidency, her newfound political clout has come, ironically, from her successes in the corporate world. Taking an unknown startup brand and making it a household name seemingly overnight? Sounds like a familiar entrepreneurial story to us. So we asked our Board of Directors for their take on Palin — and whether they would consider her an entrepreneur.

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Jake Blumgart: Six Months After Upper Big Branch, Republicans Still Obstructing Progress

October 5, 2010

Six months ago, on April 5th, 29 miners were killed by an immense explosion at the Upper Big Branch mine in West Virginia. They didn’t have to die. Mine owners, government officials, and union safety experts have known how to prevent such explosions for decades. Some operators take the necessary steps to prevent such occurrences, but others are willing to put short-term profits above worker safety. Massey Energy Company, owner of the doomed mine, falls into the latter category. In fact, the company has one of the worst safety records in the nation. In 2009, the mine Safety and Health Administration (MSHA) tried to fine Massey $12.9 million, but the company appealed a stunning 75 percent of the violations, putting off payment indefinitely. Upper Big Branch alone was cited over 3,000 times since 1995, and received 53 new safety violations in March, including specific citation of the mine’s ventilation system, meant to disperse potentially explosive methane gas. Frequent inspections did little to hinder the operator’s unscrupulous practices, partly because the non-union workers feared retaliation if they expressed their concerns to inspectors. Meanwhile, Massey’s CEO, Don Blankenship, insists that the industry is capable of regulating itself. “Washington and state politicians have no idea how to improve miner safety,” Blankenship declared at a 2009 anti-union rally. “The very idea that they care more about coal miner safety than we do is as silly as global warming.” Since April, two more miners have died at Massey sites. Massey isn’t the only bad actor on the American scene. In a worldwide worker safety survey of 39 companies, provided by financial risk analysts at the RiskMetrics Group, Massey, Patriot Coal, Peabody and CONSOL all received a “CCC” rating, the worst possible outcome. No other surveyed company received such a low rating. This is partly accounted for by the fact that Appalachia’s underground mining is riskier than the machine-dominated surface mining in the Western states. Even so, there is no excuse for the industry’s sporadically inflated death toll in recent years. 44 miners have died so far this year, nearly matching 2006′s grim high of 47. According to Blankenship, the problem is government overreach, not company negligence. “The feeling of the industry is that we’re regulated too much and not too little,” Blankenship told Bloomberg T.V.’s Margaret Brennan in July, a day after the Robert C. Byrd Mine Safety Act passed the House Labor and Education Committee on a party line vote. In August, the West Virginia Coal Association’s senior vice president, Chris Hamilton, indiscriminately blasted all government regulation in a pro-mountain top removal press release . “We plan to…call on lawmakers and administration officials to discontinue efforts to regulate the coal industry–and the hundreds of thousands of jobs it provides–out of business.” These hang-wringing comments echo the views that the industry and its allies have espoused for decades. . “Rigid, inflexible, thoughtless regulation…can have a plainly detrimental effect on achieving a safe, efficient, and productive coal industry,” Ralph Bailey, chairman of the Consolidation Coal Company, protested during the 1977 hearings to update the Coal Mine Safety and Health Act of 1969–the first meaningful piece of safety legislation. “It’s the overregulation and enforcement of the Act as an end in itself that has caused the coal industry most of its problems…” Lawmakers ignored Bailey’s false warnings and passed the Federal Mine Safety and Health Act of 1977. During the 1980s and 1990s, the industry prospered and productivity increased. Contrary to the contentions of Blankenship and his cohorts, Congress’ fresh attempts to reform mine safety laws aren’t anymore likely to disrupt the coal industry than the 1977 act did. And the laws badly need updating. The safety laws were last amended in 2006, in the wake of the Sago, West Virginia mine disaster, where 12 miners died in an explosion. The resultant MINER Act was almost purely reactive–providing for more oxygen reserves, fast response rescue teams–basically strengthening safety measures for workers after a disaster took place but establishing few preventive standards. Many experts agreed that stronger, preventative legislation was needed, but when Rep. George Miller (D-CA) tried in 2008, President Bush threatened to veto the legislation. The bill died in the Senate. The Upper Big Branch tragedy renewed Congressional interest in mine safety In response, Democratic lawmakers, led by Rep. Miller and Sen.Jay Rockefeller (D-WV), crafted the Byrd Act. The Act greatly expands whistleblower protections, granting all miners the “express right” to refuse to work in unsafe conditions and ensuring that miners receive full pay if their section of the mine is closed for safety reasons. To ensure government accountability in the event of an accident involving the death of three or more workers, the act mandates a panel of independent experts to review the actions of the operator and MSHA. Among many other much needed reforms, the act would give MSHA investigators subpoena power, update the agency’s underused “pattern of violations” authority, and increase both criminal and civil penalties while requiring operators to pay their fines within 180 days, on pain of a shut down. In an attempt to justify their opposition to the Byrd Act, business lobbies have latched onto one addendum to the bill, which expands some of the legislation’s provisions to all private workplaces. (Proposed alterations include increased whistleblower rights and heightened criminal penalties.) Business groups, including the Chamber of Commerce and the National Association of Manufacturers, have fiercely denounced this aspect of the Byrd Act. “The proposed changes will impose substantial costs on businesses–particularly small businesses–which are struggling to create and retain jobs,” reads a list of objections issued by industry front-group Coalition for Workplace Safety. The Republicans have gleefully taken up this excuse. Before voting against the House Labor Committee’s version of the bill, ranking Republican John Kline (R-MN) complained: “[The Act will] drive up costs and litigation for employers, all of which — all of which would make it more difficult to create jobs at a time when our economy needs them the most.” On September 28, Sen. Rockefeller (D-WV) tried to bring the Miner Safety and Health Act to the floor for a vote, a move that requires unanimous consent from the Senate. Wyoming Republican Sen. Mike Enzi (R-WY) objected, accusing the Democrats of using the bill for partisan gain, and prevented the vote. (Wyoming produces around 40 percent of the nation’s coal, and Enzi’s largest donor for the years 2005-2010 is Foundation Coal, one of the largest operators in the country.) In fact, numerous studies document that safety regulations don’t result in the job killing apocalypse that business groups and their political allies always predict. A 2004 study commissioned by the Public Citizen Foundation shows that the cost of compliance with every environmental, safety, and health regulation studied have “never [risen] to the levels estimated by private sector industry”. A 2005 report by OMB Watch lists numerous regulations, many concerning worker safety: industry objected to every one with dire predictions of job loss, skyrocketing costs, and business failure. In every case, their predictions were proven wrong. All the rhetoric and excuses from Massey, the business lobbies, and Congressional Republicans are part of the game plan: Delay until November. The Byrd Act’s chances look bleak if the Republicans win a majority in one or both chambers in November. Rockefeller told The Hill last week that the bill “has less of a chance [in 2011 because] there’s going to be even more of the ideology factor plus the party discipline factor.” If the bill survives, it is likely to be substantially weaker than the current iteration. But activists aren’t giving up the fight. “I don’t think it’s dead, and let’s not forget what might happen in a session after Election Day,” said Phil Smith, director of communications for the United Mine Workers, referring to the lame duck session after an election but before the next Congress opens. If the Republicans and their industry allies are successful in sinking the Byrd Act, another option for reform won’t present itself again soon, or at least until the next mine explodes. Jake Blumgart is a researcher with the San Diego-based Center on Policy Initiatives’ Cry Wolf Project funded by the Ford Foundation and the Public Welfare Foundation. Peter Dreier teaches politics and chairs the Urban & Environmental Policy program at Occidental College, and co-coordinates the “Cry Wolf Project,” a foundation-funded research project to examine the accuracy of warnings about the impact of liberal and progressive policies.

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Arielle Ford: The Secret Weapon of Success: Grow Your Profits With Testimonials

October 5, 2010

I am pleased to introduce my good friend, Mike Koenigs, as a guest contributor on my blog this week. Mike is an extraordinary marketing expert who helps authors, experts and speakers build their platforms to achieve higher levels of success. The most important thing that you can do to build your platform, get media attention, score a book deal, and ultimately, sell your product or service, is to gather effective customer testimonials and proof that what you’re offering actually works. Whether your content is about relationships, financial success, weight loss or peak performance, you need great testimonials to prove that your system produces extraordinary results for ordinary people . The power of testimonials lies in our basic human nature, our inclination to seek leaders and solutions to our problems. Simply put, we do things that we see other people doing, particularly when those people demonstrate that they’ve successfully achieved a desirable goal. That’s called “social proof” and it’s an incredibly powerful way to influence people. Exceptional testimonials don’t just prove that what you’re offering produces the results your customers desire, they also turn you and your “ordinary” clients into superstars. Plus, publishers love them! I learned the importance of testimonials the hard way, thanks to a mistake that cost me $10 million over ten years. Throughout my career, I’ve been fortunate to help big brands like Sony, Columbia, Tri-Star, BMW, Warner Brothers, Mazda, Domino’s Pizza, and General Mills take their marketing into the 21st century. Unfortunately, in my early days I forgot to collect client testimonials to prove that my own services delivered the results I was promising. For that I paid a high price, both in time–months spent selling my services to potential new clients — and in countless missed opportunities that could have multiplied my bottom line — with NO EXTRA WORK. Determined to remedy my error and kick my own marketing into high gear, I’ve since spent many hours studying testimonials, watching infomercials, reading books and through years of trial and error, developing a formula for collecting highly effective customer testimonials. That formula has brought me and my clients tremendous success — to the tune of many millions of dollars. In fact, Brian Tracy, the Tony Robbins Companies and many other thought leaders have adapted my formula and continue to use it themselves. I’d like to share it with you so you can avoid the frustration and failure I experienced. Working with authors, it’s clear that the most common mistake they make is not collecting quality testimonials, social proof or setting up an effective marketing system from the start . As I’ve experienced firsthand, it’s a mistake that can literally cost you your career. The step-by-step testimonial formula I use for my business and my clients, which is laid out in detail in the “How To Make A Perfect Testimonial” guide that you can download below, works in any business, any personal development product, any coaching, any spiritual practice, etc. The basic principles behind my formula are simple. Your testimonials should: Focus on ordinary people with ordinary problems who get extraordinary results quickly and easily without adjusting a huge amount of their lifestyle; and Answer three questions: Is it easy? Does it work? Can I do it? (Sound familiar? Those are the same questions cosmetics direct marketer Mary Kay insisted every customer needs to have answered to be persuaded to buy.) My “How To Make A Perfect Testimonial” guide includes everything you need to gather top-notch testimonials, including the ideal length of your testimonials, the three critical components of highly effective testimonials, as well as a template and release form you can quickly adapt to your needs. Download my in-depth testimonial guide free here . Even if you don’t need it for yourself, be sure to pass it along to colleagues and friends. You’ll be the first person they invite to the party after they sign a six-figure book deal! Arielle Ford has launched the careers of many NY Times bestselling authors including Deepak Chopra, Jack Canfield, Mark Victor Hansen, Neale Donald Walsch & Debbie Ford. She is a former book publicist, literary agent and the author of seven books. To learn how to get started writing a book please visit: www.HowToWriteMyBook.com

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Jess Walter: Trust Me… Finance and Poetry Are Funny

September 30, 2010

Last week, the Terminator mainframe that has replaced the American news media accidentally let a little old-fashioned news slip in between Kardashian bikini updates: Economists Locate End of Recession , the headline read. It turns out the worst economic crash since the Great Depression actually ended some fifteen months ago — although you could be forgiven for missing it, as you likely were out selling plasma or you don’t get CNN in the sewer-grate cardboard box where you live. So wait. That’s it? It’s… over? When this recession began, I was angry, agitated, upset. It felt like something structural had broken in our economy — that it was permanent and would require serious attention by serious people — reform of Wall Street and policies that would finally address the economic caste system we’ve been building the last thirty years in America. So certain was I that we were experiencing something historic and profound I did the only rational thing an angry person could do: I began working on a comic rant of a novel called The Financial Lives Of The Poets , about an unemployed guy who writes financial poetry, smokes pot outside his neighborhood 7-Eleven and stalks the man his wife is flirting with on facebook. At the time, my protagonist’s deep middle-class anxiety felt like life to me. Many of my friends were out of work, my house had lost a third of its value, and I was trying to figure out what to do about medical insurance. Two years later, the recession is over and it’s a new world. Many of my friends are out of work, my house is worth two-thirds what it was and I’m trying to figure out what to do about medical insurance. It’s Morning in America. And I can’t find my pants. To be clear, I’m not a real victim of this recession. I’m doing fine. A former journalist and now fat-cat-novelist, I am part of that media elite that President-Elect Palin keeps warning you about, a veritable multi-thousandaire whose assets are spread evenly between hard liquor (I’m hoarding; it’s the next gold) and signed copies of my friends’ books. And don’t get me wrong: I’m happy those economists finally found the end of the recession. (Turns out the damn thing was here all along; it had just slipped between cushions of the peasant-skin couch in the Goldman Sachs executive lounge.) I just wonder, now that it’s over, what’s changed? Remember in history class, how periods of American trial were followed by seismic sociological change? The Depression leads to government regulation and the beginnings of a social safety net; World War II leads to the baby boom, the beginning of racial integration and a burgeoning middle class. So what did we get for our collective trouble over the last few years? That’s easy. More of the same. The same week that economists found the end of the recession, another news story moved between Lindsay Lohan crime spree bulletins: During the last year, 3.8 million Americans (or roughly … Oregon) slipped below the poverty limbo stick. Now, 42 million people, or one in seven Americans, lives in poverty (for a family of four this means living on $22,000 a year; you should try it sometime.) This represents the largest percentage increase in that number since 1959, two full years before our current President was born (to sleeper cell agents in the very cave where Osama Bin Laden now lives; sadly, the cave is only worth 70 percent of what it was then.) This could end up being the first recession in history in which the gap between rich and poor actually gets bigger. According to several studies, the top 1 percent of people makes 23 percent of the money , the highest measure of income inequality since 1928, the year before the Great Depression. Not so fast, says the right-wing Cato Institute; these numbers aren’t fair because they don’t factor in government programs like food stamps, which would lower that number to the top 1 percent earning only 21 percent of the money . Yes. Food stamps. This is the world we live in, post-recession. The rich are richer and whining about food stamps in their attempt to keep former President Obama from raising taxes on those making more than $200,000 a year. And are the 80 percent of Americans making 20 percent of the money the ones who are inflamed? No, it’s the rich, who are fighting mad about socialism or food stamps or… something. Meanwhile, the poor are that much poorer, and more disenfranchised than ever. On CNBC , ratings are back up, along with the S&P, and they’re playing “Eye of the Tiger” as the up-ticking stock price flashes for a soaring financial concern that figured out the way to increase share price was to not hire people, to not invest its money, and seven million American homes remain in danger of being foreclosed while a handful of billionaires secretly and cynically fund the Tea Party as their own personal Trojan Horse, using religion, immigration, guns, and any other old distracting issue that will separate low- and middle-class Americans from voting in their best interest. Don’t raise taxes on the rich because you’re not factoring in food stamps. We went to the recession and all we got was this lousy T-shirt. “So what’s your book about?” a woman asked me at a reading recently. It’s a rant about the financial crisis, I said. She made a face. And it’s got poetry, I added. She made a worse face. It’s a comic novel? I tried. Finally, she smiled. “Ooh, I like those,” she said, “and do you draw the pictures yourself?” I started to say that it wasn’t that kind of comic . But baby needs more grain alcohol. Why yes, I said, I most certainly do. Jess Walter is a former National Book Award finalist and author of, most recently, The Financial Lives Of The Poets, now available in paperback .

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Lisa Mirza Grotts: Workplace Etiquette: Be Your Best at Work

September 29, 2010

Treating your colleagues with respect can gain you a winning edge and create a win-win situation for everyone at the office. Here are some basic rules of etiquette in the office and at office parties. • Have respect for those around you, and show a keen interest in your position. • Familiarize yourself with the protocols of your office. • Personal problems should be kept out of the office. It’s unprofessional to discuss such matters at work. • Romantic liaisons at the workplace can become very sticky. Need I say more? • Salaries should not be discussed with colleagues. If you are congratulated on a raise or promotion, your response requires only two words: Thank you! • Be aware of your body language in social interactions. For example, turning a shoulder and speaking with your body at an angle may suggest Get away from me. Instead, face the other person and make eye contact, which says I’d like to get to know you. • Greet visitors to your office while standing at the door or in front of your desk, never while seated behind it. • For meetings or interviews, place two chairs in front of your desk: one for you and your guest. This method presents you both as equals. • Remember the theory of mutual respect. If your visitor stands, you stand, etc. • Be respectful and courteous at all times. • Always ask before you borrow anything. Office Party Etiquette • Don’t be a wallflower. Make a point of talking to other people rather than waiting for them to come to you. • Do mingle with other employees, especially ones you don’t know. • Don’t drink too much. Less is more when it comes to alcohol and the office. • Do take small portions if at a buffet. You can always go back for seconds. Also, eat first, then mingle. This will cut down on possibly spilling food on your clothes and ruining your cocktail attire. • Do keep your drink in your left hand if possible. This way you don’t have to transfer your drink when shaking hands, and you won’t shock the other person with a cold hand. • Do remember to thank your boss when leaving the party and follow it up with a handwritten thank-you note. You can save a stamp by hand delivering it the next day. • Do dress in a presentable manner. It’s better to be overdressed than to dress too casually. If you are unsure of what to wear, ask your boss ahead of time. • Don’t show up for a party at 8 P.M. if the invitation reads 6 to 8 P.M. Arrive on the early side, as speeches generally take place early on and you don’t want to miss being thanked by the boss for all your hard work! Lisa Mirza Grotts is a recognized etiquette expert and the author of A Traveler’s Passport to Etiquette. She is a former director of protocol for the City & County of San Francisco and the founder of The AML Group ( www.AMLGroup.com ), certified etiquette and protocol consultants. Her clients range from Cornell University and Microsoft to Nordstrom, KPMG and Stanford Hospital. She has been quoted by The Sunday Times, InStyle Magazine, the San Francisco Chronicle, USA Today and the Los Angeles Times. She has appeared on various radio and television stations, such as ABC, CBS, and Fox News. To learn more about Lisa, follow her on www.Twitter.com/LisaGrotts and www.Facebook.com/LisaGrotts.

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GOP, U.S. Chamber Of Commerce Beat Back Bill To Combat Outsourcing

September 28, 2010

Senate Republicans beat back an effort by Democrats Tuesday to end tax breaks for companies who send jobs offshore only to import products back into the United States. The House has passed a series of similar legislation over the past several weeks, as Democrats work to portray Republicans as in the pocket of Big Business at the expense of workers, the economy, the trade deficit and the budget deficit. That message was muddied, however, by the defection of four Democrats and Independent Democrat Joe Lieberman, who voted against the motion to end a filibuster. “I wish this election would be a simple referendum on this issue,” Dick Durbin, the Senate’s number two Democrat, said on the Senate floor Monday night. “Who in the world believes that we should be rewarding corporations in our country for shipping jobs overseas?” The U.S. Chamber of Commerce is one powerful answer to Durbin’s query. The Chamber, which represents businesses in the United States, has aggressively battled the effort to reduce outsourcing. During the debate over the stimulus, the U.S. Chamber fought efforts to include a provision that would encourage taxpayer money to be spent on products made by domestic companies. It opposed the outsourcing bill, arguing in a letter to the Senate that “the concept of economic growth is not a zero-sum game. Replacing a job that is based in another country with a domestic job does not stimulate economic growth or enhance the competitiveness of American worldwide companies.” In 2004, Chamber head Tom Donohue made the case that outsourcing shouldn’t be a concern because only “two, maybe three million jobs, maybe four” would be lost. “American companies employ 140 million Americans,” Donohue said in a CNN interview that Chamber opponents are happy to remind him of. “They provide health care for 160 million Americans. They provide training in terms of 40 billion a year. The outsourcing deal over three or four or five years and the two or three sets of numbers are only going to be, you know, maybe two, maybe three million jobs, maybe four.” The bill included a payroll tax holiday for companies that bring jobs back from overseas, ended tax breaks for plants that shut down to go elsewhere, and blocked companies from deferring their tax bill year to year by keeping money out of the U.S. The U.S. Chamber, in a letter to the Senate, outlined its opposition to the measure and said that it may use the vote to rate how friendly to business a senator is in the lobby’s annual scorecard. The bill, argued the Chamber, would “significantly curtail [tax] deferral [of earnings], reversing longstanding tax policy and subjecting American worldwide companies to immediate double taxation on the earnings of their foreign subsidiaries. Limiting deferral would hinder the global competitiveness of these American companies, impede U.S. economic growth, and ultimately result in the loss of jobs – both at the companies directly impacted and companies in their supply chains.” Sens. Ben Nelson (D-Neb.), Jon Tester (D-Mont.) and Mark Warner (D-Va.) broke with their party to vote to continue the filibuster, as did the chairman of the Senate Finance Committee, Max Baucus (D-Mont.). Republicans argued that revoking the tax breaks would punish American companies and make them less competitive with foreign firms. But more broadly, they pressed the case that the vote was a political stunt since Democrats knew they didn’t have 60 votes to cut off the filibuster. The best thing to do, said GOP senators, is to get out of town. “I think that right now all concerns, the leader included, are to get this over with, get back home and campaign,” said Sen. Jim Inhofe (R-Okla.). “To be honest with you, because of the election, we’re not going to get anything done. We’re just wasting–they’re wasting time. My hope is that after the election we can come back here and get serious about some issues that need to be dealt with,” said Sen. George Voinovich (R-Ohio). “They may be forcing it, but what we should be taking up right now are the tax cuts,” argued Sen. George LeMieux (R-Fla.). Sen. Bernie Sanders (I-Vt.) pushed back on the GOP argument that the vote was political theater. “Republicans call this a stunt. You go and you speak to the millions of American workers who have lost their jobs, because their plants have shut down and their companies have moved to China, and you ask them if they think focusing on outsourcing and demanding that American companies reinvest in American companies is a stunt. I don’t think they believe it’s a stunt,” he said. “We’re hearing a lot of things thrown out to create a diversion,” added Sen. Debbie Stabenow (D-Mich.). “The question is this: Do Republicans think that middle class families should pay through their tax subsidies for plants to close up and the cost of shipping jobs overseas to be on their back?” House Democrats are making a similar attempt to draw a bright line on jobs between Republicans and Democrats. At Tuesday’s “Conference on the Renaissance of American Manufacturing,” House Majority Leader Steny Hoyer (D-Md.) laid out the agenda for the remaining floor time before the election. “[T]his week the House will vote on three additional bills,” he said, according to his prepared remarks. “One will make sure that the government buys American-made American flags. Another helps ensure that American workers are given every opportunity to earn certifications, degrees, and qualifications for the jobs American industry needs to fill. And the third addresses China’s unfair currency policy and its harms to American workers. By deliberately keeping the value of its currency low, China is able to sell its goods in the United States at an artificially low price–which helps put American manufacturers out of business. The bill we vote on this week will help level the playing field for American businesses and workers.”

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Danny Schechter: After Larry Summers, What? Will We Continue to Go Down Hill?

September 26, 2010

Summers Packs His Bags As The Recession is Said To Be Over And Media Buries Reports on Financial Crime As the November election approaches, the White House seems to be ending its Rip Van Winkle-like slumber and has begun crawling out of the bubble of its own making. Many fear it’s a bit late. The shakeup of President Obama’s economic team is long overdue. As Larry Summers slithers back to Harvard to save his tenure and write his book, he is likely to be replaced by exactly the wrong kind of person — a business executive, appointed to try to appease the Repugs and the Right. (Summers was paid $586,996-a-year at Hahvard and picks up all kinds of consulting deals on the side from Wall Street.) This maneuver won’t work of course because nothing Obama does will ever please them because they need him as their piñata, and a symbol of failure. He claims to see that but just can’t seem to get his appeasement gene in check. Notes the Naked Capitalism blog, “As much as some will be pleased to see Larry gone (he was a leading advocate of bank-friendly policies), his replacement is certain not to represent a change in philosophy… he has made the cardinal mistake of trying to please everyone and has succeeded in having no one happy with his policies.” Journalist Robert Scheer hopes “Summers will have time to reflect on the dismal arc of his split tenure in government service. Thanks to the banking debacle he did so much to initiate back in the Clinton years, the nation now has more people living in poverty, 43.6 million of them, than ever in our history. Americans have witnessed the disappearance of $11 trillion of their net worth, $1.5 trillion in the second quarter; the debt has risen alarmingly; unemployment is stuck at 9.6 percent; and trillions of dollars in toxic pools of housing stock are still held by the banks to be thrown into the housing market fire sale anytime home prices promise to edge upward. Behold what brilliance has wrought.” Financial journalist Michael M. Thomas believes that Summers like a gunslinger hired to clean up a town did what he was hired to do arguing, “Summers is leaving because he made sure real reform was discussed–but not accomplished.” “Larry Summers was tasked with making sure the kind of backlash that in 1933 unleashed Ferdinand Pecora on Wall Street didn’t happen in 2009. I think Larry Summers was tasked with marginalizing Paul Volcker, who could thus serve the new administration as moral window-dressing without actually causing trouble. I think it was understood from the outset that any meaningful economics program must involve taking Wall Street to the woodshed, and that this must not be allowed to happen.” Bob Woodward’s book on Obama focuses on an internal war over policy for the Afghan war. That may be mild compared to the revelations to come on the debates over what to do about the economy. (Woodward offers one telling detail about Obama’s approach describing how he laid out his plan in the form of a financial terms sheet used on Wall Street.) To “balance” his appointment of Elizabeth Warren, the President has nominated Jack Lews to head the Office of Management and Budget. Bernie Sanders says he will not support him because “I found too many echoes of the failed policies of the past in his responses to my questions on trade policy, Social Security, deregulation of banks and other issues.” Even as the rats jump ship. The National Bureau of Economic Research which took a year to admit that the country was in recession now says the Recession is over, a conclusion that is not widely shared especially because the structural, systemic and political problems that caused the crisis have not been remedied. The respected Chilean Economist Manfred Max-Neef says the US economy is “underdeveloping.” Others still fear a total collapse. But now that recovery has been pronounced — even if there has been no job creation — the media has a good excuse to move off the subject, to assume the best, and avoid investigating how the crisis happened, who benefited and who lost and is still losing, The issues I have been raising about the crimes of Wall Street have been brushed under the rug, even by filmmaker Oliver Stone from whom one might have expected a deeper critique in his new Wall Street Film, Money Never Sleeps . The Village Voice , who you would expect would welcome it, says Stone lets the “bad Guys off the hook?’ “If barely prosecuted, the real players in our last crash face a long pop-culture pillorying. That is not, however, how Stone works; regarding power, his conclusions are best summed up by the hippie chick at the Lincoln Memorial in Nixon: “You can’t stop it, can you? Even if you wanted to. It’s not you. It’s the system.” Floating off on a faux-naïve happy ending this time, one takes the lesson that there are no villains–or that villains are all there are.” So a generic indictment of “the system” substitutes for any exploration of the way that system actually worked, not just to make greed good but to hurt millions of people worldwide who lost jobs, homes and hope, plunging millions worldwide and here at home into deepening poverty. I personally gave Stone a copy of my investigative film Plunder The Crime of our Time months ago, but he seems to have brushed it off focusing instead on a miasma of slick Hollywood production values. (Disclosure: I made a documentary, Beyond JFK , for Oliver’s company and he was in it, that was back in 1992.) I have been getting some visibility for my DVD and companion book The Crime of our Time but not in mainstream media. Earlier this week, at a book launch, A Tea Party activist showed up for my spiel and took me to task loudly for being dismissive of her movement. But after we talked, I was pleased that she became open to my concerns and even, get this praised me as “fair and balanced.” I was surprised. You can hear some of our exchanges and a storm of debate on Between The Lines radio that I was also broadcasting over during my talk. The Tea Party people, by and large, don’t seem very angry with Wall Street. And as for the Republicans, Huff Post reports, “The Republican Party’s 21-page blueprint, “Pledge to America,” was put together with oversight by a House staffer who, up till April 2010, served as a lobbyist for some of the nation’s most powerful oil, pharmaceutical, and insurance companies, including AIG.” Short of a major deepening of the crisis in the next few weeks, the election will soon constitute all the news all the time. While voters are said to be angriest about the economy and Obama’s failures to stem the tide, the media will not devote much time or energy to educating the public about the deeper issues. Not when so many pundits and election insiders are fighting for face time on TV. Political blather and polls are back. Economic crime is downplayed. Unfortunately, one of the most important stories of our time is about to be buried again. News Dissector Danny Schechter made Plunder The Crime Or Our Time and wrote the companion book The Crime of our Time . See Plunderthecrimeofourtime.com . Comments to dissector@mediachannel.org.

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Jane White: I Know Firsthand That When Mortgage Banks Compete, You’re Screwed

September 24, 2010

Surprise, Surprise: A recent Wall Street Journal article noted that Elizabeth Warren and Tim Geithner met on September 21st to simplify mortgage document disclosure but things don’t look promising. Past attempts to make these documents more understandable have failed amid fierce opposition from the housing industry and “members of Congress from both parties.” Both parties? Hmm. We already know the Republican party is owned by K Street, despite its phony Tea Party persona. Could we throw out Democrats In Name Only (DINO) in the next election and replace them with real Democrats? I think we should inform the public when members of Congress do not work for the electorate by requiring journalists to note in parenthesis after their names the contributions they get from the “financial disservices industry,” not just the district they allegedly represent. The financial sector is the largest source of campaign contributions to Congress, according to the Center for Responsive Politics, doling out nearly $470 million in the 2008 cycle alone. The top recipient? DINO Senator Chuck Schumer of New York ($4.7 million, 1990-2010). While the article implies that progress has been made regarding reining in irresponsible lending practices, citing the fact that fees for brokers have been banned that enabled them to saddle homeowners with unaffordable mortgages, it’s also the bank that profits when your interest rate goes up, not just the broker. I know this firsthand. When my husband and I bought our first house in 1987, despite making a 10% down payment we were stuck with an adjustable rate mortgage and we could not discern from the documents that the payments could rise to the rate of unaffordability despite my background in finance and the fact that my husband frequently reads fine print in his line of work. No broker was involved. When the interest rate “reset” three years later — NOT as a result of a rising rates but most likely an arbitrary predetermined rate — our mortgage payments rose by 30%. Since we were already both working full time and raising a toddler taking another job was not an option. It was the scariest period of my life. And why should you have to take another job to pay a mortgage? My theory is that while banks used to turn down potential home buyers like my husband and myself who have a limited or poor credit history and insufficient funds to make a 20% down payment, at a certain point they decided they’d rather profit by ripping off people with poor/no credit history (in the same fashion that Unfair Isaac decided to rip off credit card holders with high interest rates instead of turning them down.) The assumption was that since home prices “always went up” borrowers would be able to refinance to a lower rate mortgage, and therefore an affordable monthly payment, based on the increased home equity when the rate reset. Residents in the country of my parents birth aren’t abused by sleazy practices. In 2008 the World Economic Forum ranked the highly regulated Canadian banking system the healthiest in the world compared to the U.S. ranking of 40th. As I pointed out in my book, “America, Welcome to the Poorhouse,” Canadian citizens are also educated about the corrosive influence of mortgage debt; the Financial Consumer Agency of Canada’s website demonstrates to users why it’s more cost-effective to have a shorter loan. The results: nearly 85% of Canadians make weekly or biweekly payments to speed up the loan payoff. Not surprisingly I could find no statistics reflecting the percentage of Americans who do the same. Until we get Democrats in office who work for the electorate, we can’t count on legislation to mandate plain-English disclosure, or better yet, prohibit irresponsible lending so disclosure won’t be necessary. As I said in my last blog, what Warren should do is create a website with vital information that consumers need before they make an important financial decision, rather than attempting to get legislation passed that the banking lobby will either kill, water down or get around.

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400 Richest Americans Got Richer This Year, As Most Americans’ Net Worth Tanked: Forbes

September 23, 2010

The richest Americans got even richer this year, according to the new Forbes 400 list, even as the country’s total net worth tanked during the second quarter. The top 400, all of whom are worth at least $1 billion, saw their combined wealth increase 8 percent this year, to the dizzying total of $1.37 trillion, according to analysis from CNN . Meanwhile, according to data released last week by the Federal Reserve, the net worth of American households and non-profits in the second quarter of this year plunged 2.8 percent, or $1.52 trillion, from the previous quarter, to settle at $53.5 trillion. This means the 400 richest people in America account for about 2.6 percent of the nation’s private wealth. Topping the list — again — is Bill Gates , at $54 billion, up from $50 billion last year. In second is Warren Buffett, the so-called Oracle of Omaha who Thursday said it’s “common sense” that “we’re still in a recession,” with $45 billion. Members of the Walton family (of Walmart fame) snagged spots four, seven, eight and nine. New York mayor Michael Bloomberg, with $18 billion, came in 10th. Investor George Soros, who last week called the nation’s economy “blah,” came in 14th with $14.2 billion. Charles and David Koch, the manufacturing and energy titans and Tea Party movement bankrollers, profiled by Jane Mayer in The New Yorker last month, tied for fifth place with $21.5 billion apiece. Facebook founder Mark Zuckerberg, in 35th place with $6.9 billion, is no longer the youngest billionaire on the list — his colleagues at Facebook, Dustin Moskovitz (in 290th with $1.4 billion) and Eduardo Saverin (in 356th with $1.15 billion) have joined him. Moskovitz is eight days younger than Zuckerberg. Both are 26. In a video interview with Forbes , Buffett said he is “sort of wired for capital allocation” and that he loves his profession so much that “I would be doing what I do now, and I would have done it in the past, if the payoff had been in seashells or shark’s teeth or anything else.” Buffett was having a conversation with rapper Jay-Z, who didn’t make the billionaires list, and who offered insights into his own rise to glory: “We were into a lot of street things,” he said. “It just so happened I had a talent to make music.”

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Video: Christie Says Republicans Must Stick to Principles: Video

September 21, 2010

Sept. 21 (Bloomberg) — New Jersey Governor Chris Christie talks about his efforts to lower taxes and overhaul the state’s public-employee pension system, the future of the Republican party and the Tea Party movement, and Christie’s political future. Christie speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This is an excerpt of the full interview. Source: Bloomberg)

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Eric K. Clemons: Time to Wake Up and Smell the Antitrust

September 21, 2010

Introduction The recent House Committee on the Judiciary Hearing on Competition in the Evolving Digital Marketplace raises interesting questions on regulation, on the frameworks needed to regulate emerging digital businesses, and on the applicability of existing regulatory frameworks. Does the high tech sector require additional regulatory attention, or is the Sherman Antitrust Act, at a geriatric 120 years and still counting, sufficiently general and sufficiently frisky to deal with modern online business models as adequately as it dealt with the emergence of smokestack industry monopolies and cartels? Or are there companies, even entire categories of business, that require new regulatory models? If so, of course, it would not be the first time that the intersection of new technology, new economic forces, and new corporate strategies required a significant extension to existing antitrust law. Intent and capability Military analyses focus on both intent (or what you think a potential opponent might want to do to you) and capability (or what you think that opponent would be capable of doing to you if it so chose). Intent changes over time, perhaps quite rapidly and quite without warning. Arming Iran under the Shah was not in America’s best interests, as we discovered when Iran’s intent changed dramatically and instantaneously after the installation of the Islamic Republic of Iran. Likewise, arming the Taliban in Afghanistan so that they could defeat the Russians turned out to have surprising consequences when we, not the Russians, were the opponent in the Taliban’s cross-hairs. If the stakes are high enough, and capability is great enough, ” trust me ” is not an adequate way to assess intent or to balance benign present intent against possible future actions. Should we be interested at all? Is current antitrust regulation working or not? I will argue below that it demonstrably is not. Do regulators fully understand how the oft-touted new economics of the internet, beloved by internet and dot-com entrepreneurs , may be impossible to control with regulation designed to enhance competition in the old economy? I will argue, again, demonstrably not. FTD Bureau of Competition Director Richard Feinstein, testifying on behalf of the Federal Trade Commission, said ” Some have argued that there should be different rules for markets characterized by rapid technological development, but Congress drafted the antitrust laws in general terms to accommodate changing markets and new products, and the laws are flexible enough to meet the challenges of the high-tech era .” This was part of his testimony before the House Committee on the Judiciary, Subcommittee on Courts and Competition Policy on September 16, 2010. Not only is this statement about the Sherman Antitrust Act not true today, but it was not true almost from the Sherman’s inception. The regulatory regime of the Sherman Act was found wanting almost immediately after its drafting, and almost immediately needed to be extended to deal with the emerging telecommunications industry. Telecommunications technology, network economics, and AT&T strategy interacted in a way not anticipated when Sherman was drafted. In particular, telecommunications offers positive participation externalities or network effects , where a service gains value as the number of users increases, leading to the idea of a natural monopoly. The Government had to go outside Sherman to regulate AT&T, leading to the Kingsbury Commitment of 1913, which created AT&T as America’s first privately owned but regulated monopoly company. Sherman needed a “manual override” because it could not accommodate the market power of AT&T in the new network economy. America wanted the clear benefits of interconnectivity, with everyone able to communicate with everyone else, which given the technology of the time required a single telecommunications company. Although network effects argued in favor of a single monopoly telecommunications service provider, America did not want monopoly power in this critical new industry concentrated in one firm. For the first time, consumer welfare and technology interacted in a way that demanded that telecommunications be provided by a monopoly, and that likewise demanded regulation of that monopoly in a way not anticipated when Sherman was drafted; clearly not one of the drafters of Sherman anticipated that there would be benefits if we all used steel or oil or detergent or canned soup from the same manufacturer. So even in 1913 Sherman was not sufficiently flexible and required a “patch”. Today it is not at all clear that Sherman is up to the challenge presented by third-party payment business models, where users have free access and third parties are billed. Since users pay nothing for service, and indeed are largely ignorant of the cost of service, prices may be effectively decoupled from the discipline of the marketplace. (At present this has been covered only in academic conferences or on YouTube ; we will post on the regulatory challenges of third party payment business models shortly). The Internet economy will almost certainly pose new regulatory challenges to Sherman, and may require solutions not envisioned in the drafting of Sherman. It is easy to dismiss the need for any regulation if you fail to understand the presence or absence of barriers to entry on the Internet. Although entering online appears easy, it is one thing to create a website, and it is quite another to ensure that it has traffic. Ed Black, President of the Computer and Communications Industry Association, spoke at the House hearings and rejected claims that Google has reached a point where its practices are anti-competitive, arguing instead that there are ” few barriers to entry ” in the Internet marketplace. This sounds so plausible, and will be repeated so many times at so many future hearings, that it demands a response. Ease of Entry? Instead of assuming away barriers to entry and therefore assuming away the threat of monopolists, let’s look at the data. One of the tell-tale signs of monopoly power is monopoly profits; a first course in economics assures us that there should be no long-term super-normal risk adjusted profits; high profits not only invite competition, they more or less guarantee it. And Google demonstrably has extraordinary profits in search. Another tell-tale sign of monopoly profits is the presence of cross-subsidies; if a company is earning enough in one market to cross-subsidize other lines of business, then the business providing the cross subsidies enjoys monopoly power in the absence of contestability; once again Google demonstrably is earning extraordinary profits in search, and once again it is clearly using its monopoly power in search to subsidize everything from high speed internet access and mobile phone service to online video (YouTube) and photo sharing (Picasa). Monopoly profits are not inherently evil nor are they inherently illegal; market power legitimately obtained, without intent to monopolize or to restrain competition, is not legally actionable. But it does demand rethinking statements about the absence of barriers to entry. This suggests that we should at least look for the possibility of serious barriers to entry in search, and it’s not hard to see that they exist. Just look at how much Microsoft has spent to develop and promote Bing (hundreds of millions of dollars on advertising alone) and how limited its current market share is, and you get a sense of how severe the barriers to entry can be. How Can There Be Barriers to Entry Online? But how can anyone have monopoly power online? Anyone can build an online website; this is not like building a huge industrial facility, right? And customers are only a click away from switching, right? How can there be barriers to entry online? Build a better and cheaper mousetrap, or a better one, or a cheaper one, or even just a newer one with a catchy name, and customers will flock to you, right? The first and perhaps most important barrier to new competitors is the third party payer model . You search for a hotel in Arlington, Marriott and ArlingtonHotels.com bid for keywords, and if ArlingtonHotels.com bids enough, your search for Marriott Hotels Arlington takes you to ArlingtonHotels, one of dozens of websites operated by Otels.com. You can still book your Marriott, so you don’t care, but the surcharge Otels.com charges Marriott is 30%, so they certainly care! They might prefer to have you go to Bing, to Yahoo!, or to almost anyone else, but since you are not paying for search, the third party is paying, you have no reason to switch search engines. The second barrier is the geometry of the net . Mostly consumers can’t find anything without going through some search engine. That may make search an Essential Facility , and one that enables search engine operators to control what we find, or what we do not find. Even the ” one click away ” argument is misleading; as long as search is free to consumers, and as long as a search engine’s results are good enough for consumers, then consumers have no reason to invest in even that single click. If consumers stay with their existing search engine choices, then corporations have to go where the consumers are. Once again, the geometry of the net and the third party payer model come into play, making it almost impossible for a new entrant to compete, and almost impossible for a corporate customer to drop out of a keyword auction on an existing search engine. Why should we care? There are lots of reasons why we should care about online monopolists. In general, monopolists can and do extend their reach, subsidizing new markets until they are able to obtain monopoly power there, and in general when a “practicing monopolist” obtains new monopoly powers, we can expect these markets to be exploited also. That is, abusive monopolists grow, extend their reach, and abuse their new monopolies. The Sherman Act does not exist to protect poorly run competitors but the Sherman Act does exist to protect competition and to protect consumers from abusive monopolists. But we should worry even more about an online search monopolist, even if it could be shown that the search monopolist had not charged monopoly prices and had no intention of abusing new monopolies. Search has become the principal way in which most of us learn about everything online, from how to book a new hotel or the quality of a new movie, to how China is handling its dissidents or how the Tea Party candidates are preparing for the November elections. The net is a diverse place, and somewhere one can find exactly the right product, or the story that exactly supports or counters any opinion. But what if ” monopoly of search ” can trump ” diversity of source “? If monopoly of search can trump diversity of source, then a dominant search engine has enormous power to promote its own offerings and to stifle innovation in a range of industries. Other problems likewise follow automatically. At present, a dominant search engine can charge almost whatever it wants for keywords, effortlessly switching the balance of power between compliant and uncooperative companies, or compliant and uncooperative politicians. It can promote or stifle points of view by shifting what news stories we find, or don’t find, hiding stories it wants to hide, or allowing companies to pay to alter what we learn about them . I am, of course, not saying that any of this has happened or will happen. But if online monopolies are possible, they are also particularly dangerous. It’s time for Washington to wake up and smell the antitrust If it walks, talks, acts, and smells like a monopolist, odds are it’s a monopolist. And if this monopolist is earning extraordinary profits, and if there is even the possibility that this monopolist might be using those profits to restrain trade, then perhaps the Sherman Antitrust Act is not working. The possibility of online monopolists demands better theory than ” there are no barriers to entry online ” and purported monopolists need better defense than ” trust me .”

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Eric K. Clemons: Time to Wake Up and Smell the Antitrust

September 21, 2010

Introduction The recent House Committee on the Judiciary Hearing on Competition in the Evolving Digital Marketplace raises interesting questions on regulation, on the frameworks needed to regulate emerging digital businesses, and on the applicability of existing regulatory frameworks. Does the high tech sector require additional regulatory attention, or is the Sherman Antitrust Act, at a geriatric 120 years and still counting, sufficiently general and sufficiently frisky to deal with modern online business models as adequately as it dealt with the emergence of smokestack industry monopolies and cartels? Or are there companies, even entire categories of business, that require new regulatory models? If so, of course, it would not be the first time that the intersection of new technology, new economic forces, and new corporate strategies required a significant extension to existing antitrust law. Intent and capability Military analyses focus on both intent (or what you think a potential opponent might want to do to you) and capability (or what you think that opponent would be capable of doing to you if it so chose). Intent changes over time, perhaps quite rapidly and quite without warning. Arming Iran under the Shah was not in America’s best interests, as we discovered when Iran’s intent changed dramatically and instantaneously after the installation of the Islamic Republic of Iran. Likewise, arming the Taliban in Afghanistan so that they could defeat the Russians turned out to have surprising consequences when we, not the Russians, were the opponent in the Taliban’s cross-hairs. If the stakes are high enough, and capability is great enough, ” trust me ” is not an adequate way to assess intent or to balance benign present intent against possible future actions. Should we be interested at all? Is current antitrust regulation working or not? I will argue below that it demonstrably is not. Do regulators fully understand how the oft-touted new economics of the internet, beloved by internet and dot-com entrepreneurs , may be impossible to control with regulation designed to enhance competition in the old economy? I will argue, again, demonstrably not. FTD Bureau of Competition Director Richard Feinstein, testifying on behalf of the Federal Trade Commission, said ” Some have argued that there should be different rules for markets characterized by rapid technological development, but Congress drafted the antitrust laws in general terms to accommodate changing markets and new products, and the laws are flexible enough to meet the challenges of the high-tech era .” This was part of his testimony before the House Committee on the Judiciary, Subcommittee on Courts and Competition Policy on September 16, 2010. Not only is this statement about the Sherman Antitrust Act not true today, but it was not true almost from the Sherman’s inception. The regulatory regime of the Sherman Act was found wanting almost immediately after its drafting, and almost immediately needed to be extended to deal with the emerging telecommunications industry. Telecommunications technology, network economics, and AT&T strategy interacted in a way not anticipated when Sherman was drafted. In particular, telecommunications offers positive participation externalities or network effects , where a service gains value as the number of users increases, leading to the idea of a natural monopoly. The Government had to go outside Sherman to regulate AT&T, leading to the Kingsbury Commitment of 1913, which created AT&T as America’s first privately owned but regulated monopoly company. Sherman needed a “manual override” because it could not accommodate the market power of AT&T in the new network economy. America wanted the clear benefits of interconnectivity, with everyone able to communicate with everyone else, which given the technology of the time required a single telecommunications company. Although network effects argued in favor of a single monopoly telecommunications service provider, America did not want monopoly power in this critical new industry concentrated in one firm. For the first time, consumer welfare and technology interacted in a way that demanded that telecommunications be provided by a monopoly, and that likewise demanded regulation of that monopoly in a way not anticipated when Sherman was drafted; clearly not one of the drafters of Sherman anticipated that there would be benefits if we all used steel or oil or detergent or canned soup from the same manufacturer. So even in 1913 Sherman was not sufficiently flexible and required a “patch”. Today it is not at all clear that Sherman is up to the challenge presented by third-party payment business models, where users have free access and third parties are billed. Since users pay nothing for service, and indeed are largely ignorant of the cost of service, prices may be effectively decoupled from the discipline of the marketplace. (At present this has been covered only in academic conferences or on YouTube ; we will post on the regulatory challenges of third party payment business models shortly). The Internet economy will almost certainly pose new regulatory challenges to Sherman, and may require solutions not envisioned in the drafting of Sherman. It is easy to dismiss the need for any regulation if you fail to understand the presence or absence of barriers to entry on the Internet. Although entering online appears easy, it is one thing to create a website, and it is quite another to ensure that it has traffic. Ed Black, President of the Computer and Communications Industry Association, spoke at the House hearings and rejected claims that Google has reached a point where its practices are anti-competitive, arguing instead that there are ” few barriers to entry ” in the Internet marketplace. This sounds so plausible, and will be repeated so many times at so many future hearings, that it demands a response. Ease of Entry? Instead of assuming away barriers to entry and therefore assuming away the threat of monopolists, let’s look at the data. One of the tell-tale signs of monopoly power is monopoly profits; a first course in economics assures us that there should be no long-term super-normal risk adjusted profits; high profits not only invite competition, they more or less guarantee it. And Google demonstrably has extraordinary profits in search. Another tell-tale sign of monopoly profits is the presence of cross-subsidies; if a company is earning enough in one market to cross-subsidize other lines of business, then the business providing the cross subsidies enjoys monopoly power in the absence of contestability; once again Google demonstrably is earning extraordinary profits in search, and once again it is clearly using its monopoly power in search to subsidize everything from high speed internet access and mobile phone service to online video (YouTube) and photo sharing (Picasa). Monopoly profits are not inherently evil nor are they inherently illegal; market power legitimately obtained, without intent to monopolize or to restrain competition, is not legally actionable. But it does demand rethinking statements about the absence of barriers to entry. This suggests that we should at least look for the possibility of serious barriers to entry in search, and it’s not hard to see that they exist. Just look at how much Microsoft has spent to develop and promote Bing (hundreds of millions of dollars on advertising alone) and how limited its current market share is, and you get a sense of how severe the barriers to entry can be. How Can There Be Barriers to Entry Online? But how can anyone have monopoly power online? Anyone can build an online website; this is not like building a huge industrial facility, right? And customers are only a click away from switching, right? How can there be barriers to entry online? Build a better and cheaper mousetrap, or a better one, or a cheaper one, or even just a newer one with a catchy name, and customers will flock to you, right? The first and perhaps most important barrier to new competitors is the third party payer model . You search for a hotel in Arlington, Marriott and ArlingtonHotels.com bid for keywords, and if ArlingtonHotels.com bids enough, your search for Marriott Hotels Arlington takes you to ArlingtonHotels, one of dozens of websites operated by Otels.com. You can still book your Marriott, so you don’t care, but the surcharge Otels.com charges Marriott is 30%, so they certainly care! They might prefer to have you go to Bing, to Yahoo!, or to almost anyone else, but since you are not paying for search, the third party is paying, you have no reason to switch search engines. The second barrier is the geometry of the net . Mostly consumers can’t find anything without going through some search engine. That may make search an Essential Facility , and one that enables search engine operators to control what we find, or what we do not find. Even the ” one click away ” argument is misleading; as long as search is free to consumers, and as long as a search engine’s results are good enough for consumers, then consumers have no reason to invest in even that single click. If consumers stay with their existing search engine choices, then corporations have to go where the consumers are. Once again, the geometry of the net and the third party payer model come into play, making it almost impossible for a new entrant to compete, and almost impossible for a corporate customer to drop out of a keyword auction on an existing search engine. Why should we care? There are lots of reasons why we should care about online monopolists. In general, monopolists can and do extend their reach, subsidizing new markets until they are able to obtain monopoly power there, and in general when a “practicing monopolist” obtains new monopoly powers, we can expect these markets to be exploited also. That is, abusive monopolists grow, extend their reach, and abuse their new monopolies. The Sherman Act does not exist to protect poorly run competitors but the Sherman Act does exist to protect competition and to protect consumers from abusive monopolists. But we should worry even more about an online search monopolist, even if it could be shown that the search monopolist had not charged monopoly prices and had no intention of abusing new monopolies. Search has become the principal way in which most of us learn about everything online, from how to book a new hotel or the quality of a new movie, to how China is handling its dissidents or how the Tea Party candidates are preparing for the November elections. The net is a diverse place, and somewhere one can find exactly the right product, or the story that exactly supports or counters any opinion. But what if ” monopoly of search ” can trump ” diversity of source “? If monopoly of search can trump diversity of source, then a dominant search engine has enormous power to promote its own offerings and to stifle innovation in a range of industries. Other problems likewise follow automatically. At present, a dominant search engine can charge almost whatever it wants for keywords, effortlessly switching the balance of power between compliant and uncooperative companies, or compliant and uncooperative politicians. It can promote or stifle points of view by shifting what news stories we find, or don’t find, hiding stories it wants to hide, or allowing companies to pay to alter what we learn about them . I am, of course, not saying that any of this has happened or will happen. But if online monopolies are possible, they are also particularly dangerous. It’s time for Washington to wake up and smell the antitrust If it walks, talks, acts, and smells like a monopolist, odds are it’s a monopolist. And if this monopolist is earning extraordinary profits, and if there is even the possibility that this monopolist might be using those profits to restrain trade, then perhaps the Sherman Antitrust Act is not working. The possibility of online monopolists demands better theory than ” there are no barriers to entry online ” and purported monopolists need better defense than ” trust me .”

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Nelson Davis: Business, Politics and an Election

September 17, 2010

With a handful of primaries now behind us and the November elections barreling toward us like a dry tsunami, I’ve been thinking about the challenging place we find ourselves in as a nation. There may be a movement that is bringing business people to elected office while sending old guard politicians to the lobbying bench. Increasingly, people whose names we know because of their political careers are being opposed or defeated by names previously seen in the Wall Street Journal or even at the town bake sale. As an advocate of sound business principles being a great help in solving many of our problems, I see the changes moving across the political landscape as a good thing. Here in California, I’m finding this election cycle more interesting than any of the pro sports teams. Barbara Boxer versus Carly Fiorina and Jerry Brown battling Meg Whitman are not political contests that would have been predicted just a year ago. I do love it when career politicians and business people are spending money in a battle for the same piece of turf rather than simply cozying up over a warm contributions check. Also, the fact that these two private sector heavy hitters are women brings another fascinating dimension to the contests. This may be one of those times when California serves as the “canary in the coal mine” in relation to how our nation’s election future rolls out. In the recent round of election primaries, Tea Party candidate Christine O’Donnell threw a lightning bolt at the Republican Party establishment in Delaware by flattening their candidate choice, Mike Castle. In my home state of New York which hasn’t lived up to it’s slogan of “Empire State” in a long time, there was a big surprise in the Republican primary for the governor race. Buffalo businessman Carl Paladino is perhaps the most surprising winner in those primaries, as he defeated the Republican’s preferred candidate Rick Lazio. It brings me a chuckle whenever I hear political party big-wigs say they’re “looking forward to working with him.” That really means if you look behind them carefully there is probably a shovel and a half dug grave with his name on the headstone. I’m enjoying seeing the boat being rocked and traditional political structures challenged because it really is time for substantial change. The fact that a greater number of experienced business people are rising to the challenge of running for public office is a fine development in my opinion. I’m not a political partisan because I believe that good ideas can come from anywhere in the room. However I do feel that the crises that cover the land these days are primarily based in three areas of governance that are best understood and solved by successful business operators. The”End Times” prophesies of the Bible spoke of four horsemen of the apocalypse but I’ve got my own version of the three horsemen facing us right now: Lack of clear goals, a severe leadership vacuum and rampant failure to apply common sense. Science Fiction writer Robert Heinlein said “In the absence of clearly defined goals, we become strangely loyal to performing daily trivia until ultimately we become enslaved by it.” Would the rise of gossip based businesses such as TMZ or endlessly talking TV pundits fit the trivia description? The president of IBM or Ford Motor wouldn’t last six months if they couldn’t lay out company wide goals that employees and stakeholders could understand. We are up to our eyes in politicians and people with impressive titles, but where are the true leaders, people with a glowing vision who can move others to lift their gaze and follow them without attempting to buy their support. The 1970 motion picture “Patton” still has people saying “now there was a leader.” I think that we bestow the leader title on too many people who can barely follow, not to mention lead. I like what Thomas Paine had to say on the subject, “Lead, follow or get out of the way.” I don’t recall a U.S. President laying out a galvanizing national vision since John F. Kennedy’s send a man to the moon speech. “Just say no” or a “War on poverty” never quite cut it. As a child born in a small southern town, I often heard my parents and their friends say things like “that boy ain’t got no sense” which implied a lack of perspective or simple foolishness. For example, if simple common sense had been applied to our current public employee pension systems, they wouldn’t exist in this troubled form. A high school math failure could figure that out. It only takes a spoonful of common sense to know that a country can’t tax its citizens into prosperity. So, I’ll be following the upcoming November election like it’s the Super Bowl. I’ll be cheering for candidates of any party who have proven themselves in the business arena. There is a revolution underway in our country and I hope that we find people who’ve managed in chaos before and gotten good results. I’ll borrow a couple of lines from the biblical book of Ecclesiastes. “To everything there is a season, and a time to every purpose under the heaven; a time to get, and a time to lose, a time to keep, and a time to cast away.” I hope we lose some of the traditional politics, get a goal focused group of election winners, keep the template of what made America great and cast away those who don’t get it.

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Video: Pete Sessions Opposes Excluding Wealthy From Tax Cuts: Video

September 17, 2010

Sept. 17 (Bloomberg) — Al Hunt, Bloomberg News executive editor for Washington, discusses his interview with U.S. Representative Pete Sessions, a Republican from Texas and chairman of his party’s House campaign committee, which will air tonight on “Political Capital With Al Hunt.” Hunt, speaking with Margaret Brennan on Bloomberg Television’s “InBusiness,” also discusses the role of Tea Party activists in the Republican party and plans by TV personalities Jon Stewart and Stephen Colbert to hold opposing political rallies on the National Mall in Washington just before the November elections. (Source: Bloomberg)

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Obama Tax Cuts Plan Has House Democrats Deeply Divided

September 15, 2010

WASHINGTON — Congressional Democrats are confronting deep divisions within their nervous ranks over whether to support President Barack Obama’s plan to raise taxes on the wealthiest Americans – or just punt the entire matter until after voters go to the polls Nov. 2. Democratic leaders committed to Obama’s proposal were hearing Wednesday from endangered lawmakers who fear that raising taxes on anyone in a weak economy could be politically lethal. “Don’t raise taxes in a recession,” said Rep. Earl Pomeroy, D-N.D. Democratic leaders refused to say whether they were open to changing Obama’s plan, or even commit to a vote before the balloting seven weeks off. Instead, they called House Democrats together Tuesday night to discuss a poll showing that extending tax cuts for middle-income earners was a winning strategy for the party. House Speaker Nancy Pelosi made the case that Obama’s plan was “good policy and good politics,” her spokesman said. Not everyone was convinced. A group of moderate and conservative House Democrats was collecting signatures on a letter calling for Democratic leaders to offer a bill extending tax cuts for all Americans. Broad tax cuts passed during the George W. Bush administration are due to expire at the end of the year. “We are in listening mode,” said Rep. Chris Van Hollen of Maryland, who heads the House Democrats’ campaign committee. A fuller discussion was expected at the House Democrats’ weekly meeting Wednesday, but it was canceled. This was not the debate Democrats wanted as the midterm election season opened. The plan was to make an extension of the middle-class tax cuts the party’s closing argument – against Republicans, not each other – as voters began to focus on whether they trust Democrats to improve the ailing economy enough to reward them with control of Congress for another two years. Instead, Democrats who already have cast tough votes on bills overhauling the nation’s health care and financial regulatory systems are questioning the wisdom of debating a pocketbook issue just when voters are starting to pay attention to the election. All 435 seats in the House, 37 in the Senate and the Democratic majorities in both are on the line. The rift among Democrats contrasts with strong unity among Republicans in supporting a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama’s plan. Still, House Republican leader John Boehner said over the weekend he would vote to extend the relief only for middle-income Americans if that were the only option available. Some House Democrats, particularly moderates facing difficult re-election battles in districts carried by GOP presidential nominee John McCain two years ago, agree with a proposal offered by Republicans for a short-term renewal of all of the Bush-era tax cuts. “We look forward to working with you to extend all income tax rates,” a small group of conservative-to-moderate House Democrats wrote in a draft letter to party leaders as lawmakers trickled back into town Tuesday from their summer break. Democratic Reps. Jim Matheson of Utah, Melissa Bean of Illinois and Glenn Nye of Virginia were circulating the letter for more signatures and were picking up support. On the Senate side, Sen. Dick Durbin of Illinois said most Democrats support Obama’s plan to allow income tax rates on family income exceeding $250,000 to rise to as high as 39.6 percent. But he also said some want to raise the amount of income exempted from the higher rates above the $250,000 figure called for by Obama – while not advocating a full renewal for, say, millionaires. “Some people think it should go beyond $250,000, but how much and for what period of time is still being debated,” Durbin told reporters Tuesday. The cost of extending the tax cuts for everyone for the next 10 years would approach $4 trillion, according to congressional estimates. Eliminating the breaks for the top earners would reduce that bill by about $700 billion. A one-year extension of the lower rates for high-income earners would cost the government $39 billion. ___ Associated Press writer Andrew Taylor contributed to this report.

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Obama Tax Cuts Plan Has House Democrats Deeply Divided

September 15, 2010

WASHINGTON — Congressional Democrats are confronting deep divisions within their nervous ranks over whether to support President Barack Obama’s plan to raise taxes on the wealthiest Americans – or just punt the entire matter until after voters go to the polls Nov. 2. Democratic leaders committed to Obama’s proposal were hearing Wednesday from endangered lawmakers who fear that raising taxes on anyone in a weak economy could be politically lethal. “Don’t raise taxes in a recession,” said Rep. Earl Pomeroy, D-N.D. Democratic leaders refused to say whether they were open to changing Obama’s plan, or even commit to a vote before the balloting seven weeks off. Instead, they called House Democrats together Tuesday night to discuss a poll showing that extending tax cuts for middle-income earners was a winning strategy for the party. House Speaker Nancy Pelosi made the case that Obama’s plan was “good policy and good politics,” her spokesman said. Not everyone was convinced. A group of moderate and conservative House Democrats was collecting signatures on a letter calling for Democratic leaders to offer a bill extending tax cuts for all Americans. Broad tax cuts passed during the George W. Bush administration are due to expire at the end of the year. “We are in listening mode,” said Rep. Chris Van Hollen of Maryland, who heads the House Democrats’ campaign committee. A fuller discussion was expected at the House Democrats’ weekly meeting Wednesday, but it was canceled. This was not the debate Democrats wanted as the midterm election season opened. The plan was to make an extension of the middle-class tax cuts the party’s closing argument – against Republicans, not each other – as voters began to focus on whether they trust Democrats to improve the ailing economy enough to reward them with control of Congress for another two years. Instead, Democrats who already have cast tough votes on bills overhauling the nation’s health care and financial regulatory systems are questioning the wisdom of debating a pocketbook issue just when voters are starting to pay attention to the election. All 435 seats in the House, 37 in the Senate and the Democratic majorities in both are on the line. The rift among Democrats contrasts with strong unity among Republicans in supporting a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama’s plan. Still, House Republican leader John Boehner said over the weekend he would vote to extend the relief only for middle-income Americans if that were the only option available. Some House Democrats, particularly moderates facing difficult re-election battles in districts carried by GOP presidential nominee John McCain two years ago, agree with a proposal offered by Republicans for a short-term renewal of all of the Bush-era tax cuts. “We look forward to working with you to extend all income tax rates,” a small group of conservative-to-moderate House Democrats wrote in a draft letter to party leaders as lawmakers trickled back into town Tuesday from their summer break. Democratic Reps. Jim Matheson of Utah, Melissa Bean of Illinois and Glenn Nye of Virginia were circulating the letter for more signatures and were picking up support. On the Senate side, Sen. Dick Durbin of Illinois said most Democrats support Obama’s plan to allow income tax rates on family income exceeding $250,000 to rise to as high as 39.6 percent. But he also said some want to raise the amount of income exempted from the higher rates above the $250,000 figure called for by Obama – while not advocating a full renewal for, say, millionaires. “Some people think it should go beyond $250,000, but how much and for what period of time is still being debated,” Durbin told reporters Tuesday. The cost of extending the tax cuts for everyone for the next 10 years would approach $4 trillion, according to congressional estimates. Eliminating the breaks for the top earners would reduce that bill by about $700 billion. A one-year extension of the lower rates for high-income earners would cost the government $39 billion. ___ Associated Press writer Andrew Taylor contributed to this report.

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Walden Bello: The Political Consequences of Stagnation

September 14, 2010

My apologies to T. S. Eliot, but September, not April, is the cruelest month. Before 9/11/2001, there was 9/11/1973, when Gen. Pinochet toppled the Allende government in Chile and ushered in a 17-year reign of terror. More recently, on 9/15/2008, Lehman Brothers went bust and torpedoed the global economy, turning what had been a Wall Street crisis into a near-death experience for the global financial system. Two years after the collapse of the global economy, prospects for economic recovery remain distant. Despite modest upturns at the end of 2009, the end of public stimulus spending in the United States, China, and other states has renewed fears of a double-dip recession. All major sectors in the economy remain cautious; firms are not investing, banks are not lending, and consumers are not spending. Partly to blame for the continued mess is a lack of coherent, focused, and directed government action. The debate continues to rage over the merits of government intervention. While many assert that stagnation presents a significant threat to future economic stability, and can only be countenanced by direct public stimulus, others argue that widening deficits and the risk of default present a bigger problem. Anti-spending groups in the United States, relying on thoroughly discredited neoclassical economic principles, have built a wide base of support from Wall Street bankers, doctrinaire neo-liberals, Tea Party enthusiasts, and small-government supporters in the American middle class. Meanwhile, Obama’s nascent steps toward Keynesian interventionism have been compromised by the absence of an inspiring alternative to the predominant neoliberal paradigm. The Obama administration made the mistake of accepting responsibility for the crisis. Accusations leveled at greedy bankers directly clashed with the assertions that those same banks were “too big to fail” and focused too much attention on personality flaws rather than structural problems. Meanwhile, the administration watered down reform legislation, eliminating the very provisions that would have addressed the problem. Therefore, while the Obama administration did attempt to use public resources to jumpstart the economy, it relied on a pallid Keynesianism, failing to present its policies as part of a convincing narrative. A more coherent approach should supplement purely technocratic management with democratic decision-making at all levels of the economy, greater income and distribution equality, and a more cooperative business ethnic. If progressives fail to reclaim the narrative for government management and populism, these ideas may well be co-opted by other movements that also welcome state intervention, but coupled with a reactionary social and cultural program. The result is a well-known political outcome: fascism. For the full article, click here .

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Walden Bello: The Political Consequences of Stagnation

September 14, 2010

My apologies to T. S. Eliot, but September, not April, is the cruelest month. Before 9/11/2001, there was 9/11/1973, when Gen. Pinochet toppled the Allende government in Chile and ushered in a 17-year reign of terror. More recently, on 9/15/2008, Lehman Brothers went bust and torpedoed the global economy, turning what had been a Wall Street crisis into a near-death experience for the global financial system. Two years after the collapse of the global economy, prospects for economic recovery remain distant. Despite modest upturns at the end of 2009, the end of public stimulus spending in the United States, China, and other states has renewed fears of a double-dip recession. All major sectors in the economy remain cautious; firms are not investing, banks are not lending, and consumers are not spending. Partly to blame for the continued mess is a lack of coherent, focused, and directed government action. The debate continues to rage over the merits of government intervention. While many assert that stagnation presents a significant threat to future economic stability, and can only be countenanced by direct public stimulus, others argue that widening deficits and the risk of default present a bigger problem. Anti-spending groups in the United States, relying on thoroughly discredited neoclassical economic principles, have built a wide base of support from Wall Street bankers, doctrinaire neo-liberals, Tea Party enthusiasts, and small-government supporters in the American middle class. Meanwhile, Obama’s nascent steps toward Keynesian interventionism have been compromised by the absence of an inspiring alternative to the predominant neoliberal paradigm. The Obama administration made the mistake of accepting responsibility for the crisis. Accusations leveled at greedy bankers directly clashed with the assertions that those same banks were “too big to fail” and focused too much attention on personality flaws rather than structural problems. Meanwhile, the administration watered down reform legislation, eliminating the very provisions that would have addressed the problem. Therefore, while the Obama administration did attempt to use public resources to jumpstart the economy, it relied on a pallid Keynesianism, failing to present its policies as part of a convincing narrative. A more coherent approach should supplement purely technocratic management with democratic decision-making at all levels of the economy, greater income and distribution equality, and a more cooperative business ethnic. If progressives fail to reclaim the narrative for government management and populism, these ideas may well be co-opted by other movements that also welcome state intervention, but coupled with a reactionary social and cultural program. The result is a well-known political outcome: fascism. For the full article, click here .

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Video: Hunt Discusses Republican Faceoff in Delaware Primary: Video

September 14, 2010

Sept. 14 (Bloomberg) — Al Hunt, Bloomberg News executive editor for Washington, talks about today’s Republican U.S. Senate primary in Delaware. Party-backed candidate U.S. Representative Mike Castle, who polls show would be favored in November’s election to win the seat Democrats now hold, is attempting to fend off a charge by Tea Party insurgent Christine O’Donnell. Hunt speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (This report is an excerpt. Source: Bloomberg)

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Richard (RJ) Eskow: Blindsight: Economics, Country Music, Tea Parties, and Third World America

September 13, 2010

Last November, when the Tea Party Express was just building up a head of steam, it seemed worthwhile to stop for a minute and listen to a country song . Why? For one thing it’s a really good song, and it had a great hook. “Here in the real world,” it says, away from those powerful guys in Washington and New York, “they’re shuttin’ Detroit down.” That theme was so inclusive and compelling that conservative singer John Rich (John McCain’s campaign troubadour) was able to get noted lefty Kris Kristofferson to act in the video, along with Mickey Rourke. That made the song important and interesting. How was John Rich’s message able to win over those guys? Because it was simple and true: The people who got us into this mess are doing just fine, and the people who worked hard and played by the rules aren’t. What concerned me back then was that this message, while compelling and accurate, could wind up benefiting some of most bank-friendly politicians on Earth. The Republicans who deregulated banking (along with centrist Democrats) could wind up with more power. They’d then be in a better position to carry out their agenda of blocking the modest banking reforms and economic fixes being recommended by the White House and Congress. Isn’t that pretty much what’s happening? Reading Arianna Huffington’s new book Third World America made me think of that song again. There’s a medical phenomenon called “blindsight,” where people who seem to be partially or completely blind are able to respond to visual information under test conditions. The theory is that they’re not blind at all, but are unable to consciously process the information they’re receiving from their eyes. Isn’t that what’s happening in the country right now? Most people aren’t economists or policy wonks, after all, so they probably haven’t “seen” this chart: ( source ) But on some level they know it. And they may not have seen this chart, either (from CBS Moneywatch via Mike Konczal ), but you can bet they “know” it too: People need ways to integrate and process all the information they’re receiving. They’re struggling with the cognitive dissonance they experience when they’re told the economy’s doing better, because they know that in their world it’s not. Human beings have always used stories and songs to integrate the information they receive, and we need better stories and better hooks than we’ve been getting lately. Know what’s a good hook for these troubled times? “Third World America.” Know what’s not ? ” Recovery Summer .” So score one for Arianna before the cover’s even cracked. The “recovery summer” theme was bound to ring false for the millions of Americans who still live in a devastated economy. That was destined to reduce the credibility of the very institutions that prevented even greater damage – institutions that could do more to help them. We’ve seen the Administration move toward a more coherent narrative in the last week, but will it be enough? “I ran because I felt that we had to have a different economic philosophy in order to grow that middle class and grow our economy over the long term,” the President in Friday’s press conference. That sounds like a story worth telling. Third World America is direct and clear in its message: Decades of aggressive corporate lobbying, driven by bankers and other large corporations, have led to a series of policy decisions that are eroding the American standard of living. The details are all there: The financial industry’s gone from 2.5% of our GDP in 1947 to 8.3% right before the meltdown. Financial profits went from a maximum of 16% between 1973 and 1985 to 41% right before the crisis hit. And rather than being chastened by their failure, or disciplined by taxpayers in return for being bailed out, bankers have embraced their old ways with enthusiasm. Meanwhile the American households that rescued them lost $13 trillion in wealth between mid-2007 and March 2009. There has been, in economist Simon Johnson’s words, a ” quiet coup ” led by a classic “oligarchy.” Bankers now exert enormous control over both the economy and the political process. People see that, and they’re angry. Anyone who wants to discuss the current state of affairs better be prepared to speak plainly – “third world America,” “quiet coup,” “oligarchy” – or they’ll be ignored. Some of us are actually old enough to remember when the American dream was at its peak. Even if you were just a kid, you knew certain things: If you worked hard, you could retire in financial security. You lived in a country that led the world in science research, education, and social mobility. We designed things, built things. We were creating the future. Many of us later traveled into Third World countries for work or pleasure. We were saddened by the crumbling roads, unsafe bridges, and unregulated companies poisoning the air and water. The income inequities seemed so unjust, and the people’s inability to heal their country through a free political process was tragic. Little did we suspect we might be looking into our own future. But Arianna’s not just crying in her beer. The final section of the book details a series of fixes, which include: Campaign financing. Citizen activism, with less reliance on politicians as saviors and more on ourselves as the agents of change. Spending on infrastructure and education. Bank reform with teeth. Homeowner relief. Service to others. Moving your money away from predatory financial institutions. I’d add another to that fine list: Stop judging the tea party radicals around you. Sure, some may be extremists and racists, but lots of them are just frightened and angry. They’re trying to reconcile what they “see” with what they’re being told. Right now they believe a false story, but it hangs together and makes them feel sane in a seemingly insane world. Demogogues have always used these kinds of stories to exploit human fear. You can’t blame people for believing a false story if they haven’t heard the real one. So don’t blame the individuals, blame the story. Tell them a better one. The truth is a helluva story. But even the truth works better if it has a good hook. _________________________________________ Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.”

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Richard (RJ) Eskow: Blindsight: Economics, Country Music, Tea Parties, and Third World America

September 13, 2010

Last November, when the Tea Party Express was just building up a head of steam, it seemed worthwhile to stop for a minute and listen to a country song . Why? For one thing it’s a really good song, and it had a great hook. “Here in the real world,” it says, away from those powerful guys in Washington and New York, “they’re shuttin’ Detroit down.” That theme was so inclusive and compelling that conservative singer John Rich (John McCain’s campaign troubadour) was able to get noted lefty Kris Kristofferson to act in the video, along with Mickey Rourke. That made the song important and interesting. How was John Rich’s message able to win over those guys? Because it was simple and true: The people who got us into this mess are doing just fine, and the people who worked hard and played by the rules aren’t. What concerned me back then was that this message, while compelling and accurate, could wind up benefiting some of most bank-friendly politicians on Earth. The Republicans who deregulated banking (along with centrist Democrats) could wind up with more power. They’d then be in a better position to carry out their agenda of blocking the modest banking reforms and economic fixes being recommended by the White House and Congress. Isn’t that pretty much what’s happening? Reading Arianna Huffington’s new book Third World America made me think of that song again. There’s a medical phenomenon called “blindsight,” where people who seem to be partially or completely blind are able to respond to visual information under test conditions. The theory is that they’re not blind at all, but are unable to consciously process the information they’re receiving from their eyes. Isn’t that what’s happening in the country right now? Most people aren’t economists or policy wonks, after all, so they probably haven’t “seen” this chart: ( source ) But on some level they know it. And they may not have seen this chart, either (from CBS Moneywatch via Mike Konczal ), but you can bet they “know” it too: People need ways to integrate and process all the information they’re receiving. They’re struggling with the cognitive dissonance they experience when they’re told the economy’s doing better, because they know that in their world it’s not. Human beings have always used stories and songs to integrate the information they receive, and we need better stories and better hooks than we’ve been getting lately. Know what’s a good hook for these troubled times? “Third World America.” Know what’s not ? ” Recovery Summer .” So score one for Arianna before the cover’s even cracked. The “recovery summer” theme was bound to ring false for the millions of Americans who still live in a devastated economy. That was destined to reduce the credibility of the very institutions that prevented even greater damage – institutions that could do more to help them. We’ve seen the Administration move toward a more coherent narrative in the last week, but will it be enough? “I ran because I felt that we had to have a different economic philosophy in order to grow that middle class and grow our economy over the long term,” the President in Friday’s press conference. That sounds like a story worth telling. Third World America is direct and clear in its message: Decades of aggressive corporate lobbying, driven by bankers and other large corporations, have led to a series of policy decisions that are eroding the American standard of living. The details are all there: The financial industry’s gone from 2.5% of our GDP in 1947 to 8.3% right before the meltdown. Financial profits went from a maximum of 16% between 1973 and 1985 to 41% right before the crisis hit. And rather than being chastened by their failure, or disciplined by taxpayers in return for being bailed out, bankers have embraced their old ways with enthusiasm. Meanwhile the American households that rescued them lost $13 trillion in wealth between mid-2007 and March 2009. There has been, in economist Simon Johnson’s words, a ” quiet coup ” led by a classic “oligarchy.” Bankers now exert enormous control over both the economy and the political process. People see that, and they’re angry. Anyone who wants to discuss the current state of affairs better be prepared to speak plainly – “third world America,” “quiet coup,” “oligarchy” – or they’ll be ignored. Some of us are actually old enough to remember when the American dream was at its peak. Even if you were just a kid, you knew certain things: If you worked hard, you could retire in financial security. You lived in a country that led the world in science research, education, and social mobility. We designed things, built things. We were creating the future. Many of us later traveled into Third World countries for work or pleasure. We were saddened by the crumbling roads, unsafe bridges, and unregulated companies poisoning the air and water. The income inequities seemed so unjust, and the people’s inability to heal their country through a free political process was tragic. Little did we suspect we might be looking into our own future. But Arianna’s not just crying in her beer. The final section of the book details a series of fixes, which include: Campaign financing. Citizen activism, with less reliance on politicians as saviors and more on ourselves as the agents of change. Spending on infrastructure and education. Bank reform with teeth. Homeowner relief. Service to others. Moving your money away from predatory financial institutions. I’d add another to that fine list: Stop judging the tea party radicals around you. Sure, some may be extremists and racists, but lots of them are just frightened and angry. They’re trying to reconcile what they “see” with what they’re being told. Right now they believe a false story, but it hangs together and makes them feel sane in a seemingly insane world. Demogogues have always used these kinds of stories to exploit human fear. You can’t blame people for believing a false story if they haven’t heard the real one. So don’t blame the individuals, blame the story. Tell them a better one. The truth is a helluva story. But even the truth works better if it has a good hook. _________________________________________ Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future. This post was produced as part of the Curbing Wall Street project. Richard also blogs at A Night Light . He can be reached at “rjeskow@ourfuture.org.”

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Art Levine: Will Voters Listen? Obama vs. GOP on $180 Billion Tax, Infrastructure Plan

September 10, 2010

In two major speeches this week, President Obama sharpened the contrast with the GOP’s obstructionism over the economy with his proposals to spend $50 billion on infrastructure and provide as much as $130 billion in tax cuts and write-offs for businesses —on top of a $30 billion small business lending bill

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Angela Haines: Commutes, Cats and Cakes: Enterprising Ideas!

September 3, 2010

After a couple of decades as a computer programmer who commuted every morning an hour across the Potomac to work in Maryland, Carol Covin began to notice as she stalled in traffic that there were as many cars driving in the opposite direction each morning towards Virginia. Why commute, she wondered? If there were good jobs closer to home, she wanted to find them. Her search led her to a publishing career. Her first edition of The Computer Professional’s Job Guide for the Washington, DC Area sold out its 5000 copy print run in four months. Her next step was to learn the publishing business so she could expand her guide geographically. Over the next few years Carol wrote computer jobs guides for New England, the Midwest, the Southeast and eventually a second updated edition for the Washington area. Then she published a national edition, 20 Minutes from Home: The Best Computer Jobs in America , under her own imprint, Twenty Minutes Press. Her next foray followed her 50th birthday. “I decided to create a 50-year plan with a task for each decade. I needed to think about other things I could do with my life outside of computers.” At the top of her list was to help find a cure for cancer. But that motivation was not as grandiose as it sounds. One of her friends with inoperable stomach cancer had stumbled upon an alternative therapy developed by a scientist in the late 1970s that he claimed had shrunk his tumor. Wondering if that protocol — a mineral salt currently sold over the counter — had legs, Carol spent a couple of years learning everything she could on the therapy, including experiences of other patients. By 2008, she felt confident enough to create Sky Blue Pharmaceuticals, LLC with the participation of a pediatric oncologist with FDA experience to advise her on regulatory matters. Currently, Sky Blue is seeking funds and approval necessary to proceed with clinical trials. And Carol still has a couple of years left to reach this decade’s goal — before going on to planting forests in desert countries! Dr. Phyllis Scalletar also wanted a new focus. After a couple of decades as a manager in several government agencies, including a stint as chief operating officer for the U.S. Chemical Safety Board, she turned to her cat for a business idea. “As you know, cats are picky eaters and it killed me to serve my cat those awful dried pellets they call cat food. So I decided to try developing cat sauces.” Through the Department of Food Sciences at a local university, she isolated a byproduct from the extraction of oil from algae, in the former of essential biomeal for her sauces, to jazz up the dried pellets. “I know a lot of people want to solve the world’s problems, but I just wanted to create more palatable cat food.” But her Waterloo arose in the manufacturing process: every time she received a shipment of the biomeal, it varied in color, consistency and composition. Eventually she pulled the plug on that business, but not before learning “never to rely on another party for your product’s key components; you can outsource a lot, but you have to keep control of your key ingredient.” Now what she plans to do is to return to her roots in chemical safety and hazardous materials. With increasing public interest in workplace safety and environmental hazards, she sees new opportunities arising out of her former experience. For Jennifer Whitlock, the leap was, well, sky high! With advanced degrees in aeronautical and astronautical engineering from Stanford, Jen signed on as a senior engineer scientist with Boeing to design jet aircrafts. For her work as the chief designer of the Blended Wing-Body (BWB) project, a passenger aircraft with 100 -800 seats with a military capacity to be a tanker, freighter, bomber, and combat support vehicle, she was awarded two patents. Then her personal life dictated a move. Her husband, a rocket scientist, lost his job and moved back home to the Midwest to work for Rolls Royce in Indiana, close to their families in Illinois. By then Jennifer had two children and wanted a more flexible schedule. So to satisfy “a creative artistic instinct” she moved from designing jets to designing cakes and cookies, starting a business called Posh-Pastries in 2009. Her most recent accolade: first place and grand sweepstakes prize for cakes and cookies at the 2010 Indiana State Fair. Any crossover benefits from her engineering days? “Sure,” Jen says, “at Boeing I had to learn all about business, the importance of branding and selling your designs to top management, how to manage expenses. All that helps because I realize that baking a pretty cake doesn’t mean you can run a business.” Next step: well no plans for a moonshot this time, but maybe moon cakes, for which, Jen admits, she might use her aircraft drafting tools to decorate. What these entrepreneurs have in common are a couple of traits: flexibility and creativity. And business ideas often start very close to home. Please share where your ideas come from. Seems like they can crop up anywhere, even when you’re stuck in traffic!

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Terry O’Neill: It’s Not About Alan Simpson Anymore, It’s About Barack Obama

September 1, 2010

Since the publication of Alan Simpson’s now infamous categorization of Social Security as “a milk cow with 310 million tits,” calls for his resignation or firing by President Obama have spread like wildfire. I agree that Simpson should go — but that’s the easy part. The real elephant in the room isn’t the one on the Social Security commission — it’s President Obama. As Robert Kuttner wrote on the Huffington Post , “Simpson’s ‘Tits’ Are the Least of It.” Kuttner observed: The campaign to fire Simpson has the right spirit but the wrong target. Obama should draw a line in the sand and make clear that if the commissioners propose cuts in Social Security, he will consider the whole exercise tainted. Sounds good — but has Barack Obama shown any sign of the intestinal fortitude to take such a step? The ticking time bomb co-chaired by Alan Simpson, d/b/a the National Commission on Fiscal Responsibility and Reform (a name only a focus group could love), was created, as Kuttner reminds us, to be a smokescreen from the start, the theory being that the commission would give the president “cover” and demonstrate that he was fiscally responsible. After the drubbing Obama has received from Republicans in Congress over health care, energy and the economy, he should be giving this strategy a big re-think. Exactly who is Obama looking for “cover” from? How many Republicans who are not from the state of Maine are likely to be persuaded by a Democratic President’s contortions to display “fiscal responsibility,” — which in this case means throwing the middle class under a bus? With friends like these, who needs enemies? Let’s be clear: Social Security hasn’t contributed one penny to the deficit, and cutting it won’t fix the problem. As Speaker Nancy Pelosi said of Social Security and the deficit: “When you talk about reducing the deficit and Social Security, you’re talking about apples and oranges.To change Social Security in order to balance the budget, they aren’t the same thing in my view.” The silence from the White House on this score has been deafening. And Barack Obama’s hesitation has only affirmed the very deliberately framed argument beneath Alan Simpson’s seemingly impromptu, asinine remarks. Simpson has spent his entire time on the commission trying to convince the U.S. public that cutting Social Security benefits will somehow help reduce the federal deficit. That simply isn’t so. Social Security has nothing to do with the federal budget deficit. Its financing is completely separate from general revenues. In fact, by law, Social Security funds are not permitted to be directly spent on government operations other than its old age, survivors and disability programs. Oh, and that tired old saw that Social Security isn’t solvent and won’t be there when most of us retire? That’s not so either. Social Security is solvent all the way to 2037 because of steps taken back in 1983, which successfully prepared the system for the retirement of the baby boomers. And with very modest tweaking, the system can be solvent through 2084. (For more details, see the Social Security Trustees 2010 Report.) The good news is that the people of this country are not fooled. Polls show overwhelming opposition to cuts in Social Security — huge majorities of Democrats, Republicans, Independents, even Tea Party supporters don’t want benefit cuts. But despite all that, Barack Obama still won’t draw a line in the sand to protect Social Security. That’s why the National Organization for Women is pushing back. We’re calling on President Obama to go beyond generalities and vague assurance and take a clear, unambiguous and forceful stand. Women can’t wait until the next election–or even next week–to hear it. And Alan Simpson? He can go back to ” putting his size 15 feet ” in his mouth along with the baby pacifiers NOW members are this week sending his way !

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Richard Laermer: Seven Signs The Recession’s Still Ramming Us

September 1, 2010

This is not a rant. It’s a reintroduction to something you knew in 2009 all too well: The Great Recession. People tried to tell us it was over. I, like you, was skeptical. Here is a look at how to recognize that we are back in the throes of a tough time, when we need to rely on our own instincts. What follows is information that might help you get through these difficult months. Deep breath. Most of us are going to make it just fine when this is over — even if it’s years. And incidentally, you should be proud of each of your gray hairs, earned by stress and success. The best indicators of The Recession That Would Not Depart? I see them daily, especially as I lead RLM Public Relations through this, dare I say it, quagmire. 1.) Clients say they need to stop paying for services for budgetary reasons, but they request a pass from the agreement terms. Their idea: “We thought you would want to help us.” We what? 2.) A so-called friend (SCF) says please do a presentation/in-person project/bit of work they don’t want to do — which will take lots of your time — for free because “it’ll be good for you.” Really? Oh, and I doubt the SCF says please either. 3.) When you ask someone how he or she is doing, this person changes the subject, and you both laugh. 4.) You read a post like this and nod like a bobble head doll. When you woke up to this recently, no one around you wanted to admit it! Now you say, “Damn it, I was right.” 5.) Having insufficient funds suddenly is neither painful nor shocking. You can’t complain because everyone has these pains. What can you do? Do you have un-payable bills? Send them back with a let-me-tell-you-why note — respectful but explanatory. (Writing thoughtful notes about your money woes will get a response that will surprise you. Communication is key in recessionary times.) 6.) A regular gig is less accessible and interesting. You start to wonder how you can get paid for your honed skills — whether it be “migrant working” (term for a worker freelancing for a company that once paid you a salary), setting up shop and making it official via incorporation or LLC, or picking up the killer app (or the telephone) and asking everyone you know what they have for you. Keep in mind that…. …Flexibility is key during this period. Don’t be quick to say no to anything And 7.) People are really surprised when you ask for a fee! Someone in Israel actually said that even though Ernst & Young is a huge corporation and was bringing in all their clients to see me speak, well, let’s hear it from the horse’s mouth: “The fact they are giving the stage and the publicity without asking for a sponsorship fee is not uncommon.” Yeah, whatever. I have to say, based on research, doing whatever is necessary is how earlier societies made it through tougher times than this. (And also by ignoring the ignoramuses who feed us the above BS.) In the past, folks didn’t think of themselves as being on the hunt for a job. They just thought it was a break between chapters! So, 2010 and 2011 will be “survival of the fittest “. Man, that Darwin and Spencer knew their stuff Remember that being fit means “being in the know” about topics way outside your field so you can jump in and help where others are clueless. That’s how you earn money where others fail: You are so IN on what’s happening that people who interview you for freelance jobs really want to spend time with you. The following is self-promotional and worthwhile. That’s what my book 2011 is about. If you are broke just write me; I’ll just send you the chapters you need to read! I also highly recommend Sally Hogshead’s Fascinate for more on how to “fascinate” others–now, when they need it most. But this isn’t a book review. You got tough times. I got tough times. But I have one request: I would like it if Americans stopped focusing for a bit on the trivial like the JetBlue guy, Levi Johnston, and the girls who ran from the Playboy Palace. We get through with nonstop focus and non-distracted concentration. A constant discussion of what’s unimportant is problematic in an era of dribbled shit, and it explains why the celebrity magazines are down more than 10 percent. (Good riddance, In Touch Weekly . Enough about Jessica Simpson already.) A recession brings out the best in people. Did you know that Aug. 25 was the National Day of Action to help the folks most hurt by the BP disaster? That day my friend Geoff Livingston (co-host of my weekly podcast “The El Show” ) and I co-hosted a benefit in New York at the Village Pourhouse (they donated the place and 15 percent of the bar total!). This was for families who lost their livelihoods in full part due to British Petroleum… And it was our way of giving back. You can donate too! If you would like to help, here’s a link . I hope you enjoy the rest of your summer. Hey, do you think Justin Timberlake will do a song called RecessionBack ? Just askin’. Comments, questions, or compliments? Tweet @laermer . Let’s get this party stopped!

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Chip Conley: A Burning Man Economy?

August 31, 2010

Last year, liberal filmmaker Michael Moore lamented the fact that the bankers were “burning down our economy” while earning obscene bonuses. Recently, some Tea Party conservatives have suggested that President Obama, with his gentle demeanor and misplaced upbeat perspective on the economy, wasn’t acknowledging “the auditorium is filling up with smoke.” On last night’s network news, the anchor suggested that people across the country were “burning mad” about the state of the economy. So, given all the references to fire and the economy, what’s to be learned from the annual Burning Man celebration in the “high” Nevada desert? The world’s largest active art exhibition begins this week as it does each year around Labor Day. Nearly 50,000 people come together to create a temporary utopian community based upon radical self-reliance and self-expression. Think Mad Max meets Lawrence of Arabia meets Hair. The mind-altering alchemy of art, spirituality, sex, and dancing under the stars is popular with the bobo (bourgeois bohemian) crowd and gets its share of snarky press, but maybe there’s something to be learned from some of the basic tenets of the quarter-decade old festival. First of all, this isn’t Hooverville during the Great Depression. This bedouin-like tent city’s participants are there by choice and this temporary tribe has bought into the associated economic principles that define Burning Man and could inspire an under-inspired White House economic team. Here’s three lessons that we might learn from the Burning Man economy: (1) Long Live The “Gift Economy.” The only thing you can buy at Burning Man is ice or coffee (with the exception of the entrance tickets). Everything else is gifted. In other words, in this utopian midsize suburb, you can get a haircut, a massage, hang out in your favorite pop-up bar, find an outrageous outfit, or listen to a lecture on global politics all for free. What would it be like if we de-commodified our relationships and truly lived the Biblical scripture that it is better to give than to receive? What if our pecking order of status in the United States was more based upon who gave away the most as opposed to who earned the most? (2) It Does Take a Village. Just like America was built on barn-raisings in its past, so does Burning Man tap into that communal spirit of civic responsibility. No country in the world is more enamored with its sense of manifest destiny and individual liberty than the United States, but our forefathers – whether they were venturing west through the wilderness or whether they were fighting the British – truly valued the essential nature of communal participation in our democratic society (and Alexis deTocqueville wrote quite a book observing this). Both Burning Man and America pride themselves on radical self-reliance, but neither would exist without a culture of volunteerism (or, in Burning Man’s case, “voluntourism”). Social psychologists have proven that those that are unemployed who volunteer their time during their work hiatus build self-esteem and tend to be hired for new for-pay work faster than those who don’t volunteer. How can the White House tap into this slumbering giant with nearly 20% of the country under-employed currently? (3) Leave No Trace. Some might suggest these three words describe the economic impact (or lack of one) of Obama’s stimulus package. But, these words also describe that this deserted desert is wiped completely clean of the collective fingerprints of this mass event due to a collection of simple rules that everyone buys into. We’ve spent a couple of hundred years milking what we can from our natural resources in this country without fully accounting for the cost of what externalities we create whether it may be oil spills, pollution, or human or animal health risks. Ironically, Burning Man exists because the U.S. Bureau of Land Management leases the “Playa” for this event each year, but with extremely strict regulations with respect to how it will be returned to its natural condition and the Burning Man economy absorbs that cost through the ticket price and the community policing. What if our government and businesses took that same “leave no trace” mentality with respect to how we used natural resources throughout our economy? No, this won’t likely play in Peoria, but there’s something to be learned from the allure of the Burning Man experience. At a time when Nevada leads the nation in homeowners being thrown out of their homes, Burning Man will break records this year for attendance as people create their temporary home in the desert. The most resonant thing I’ve heard in past years on the final days of each Burning Man as people go back to their “normal lives” is “Why can’t life be like this all the time?” Well, we’re adults, so summer camp only lasts so long, but that doesn’t mean we can’t adopt some of the Burning Man creed when it comes to our moribund economy. Nietzsche wrote that “the measure of a society is how well it transforms pain and suffering into something worthwhile.” The idea of burning a wooden effigy started out of the pain of Burning Man founder Larry Harvey trying to get over a failed romance. Maybe it’s time the White House took Rahm Emanuel ‘s channeling of Nietzsche more seriously (“never waste a good crisis”) before America fully loses its romance with Rahm’s boss.

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Why Wall Street Donors Are Abandoning Obama: Andrew Ross Sorkin

August 31, 2010

But what is surprising is that some of the president’s biggest supporters have so publicly derided his policies, even at the risk of hurting their ability to influence the party in the future. Issues like the carry-interest tax on private equity or the Volcker Rule have become personal. Why so personal? The prevailing view is that bankers, hedge fund mangers and traders supported the Obama candidacy because he appealed to their egos.

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Frank Rich Takes On The Billionaire ‘Sugar Daddies’ Backing The Tea Party

August 29, 2010

ANOTHER weekend, another grass-roots demonstration starring Real Americans who are mad as hell and want to take back their country from you-know-who. Last Sunday the site was Lower Manhattan, where they jeered the “ground zero mosque.” This weekend, the scene shifted to Washington, where the avatars of oppressed white Tea Party America, Glenn Beck and Sarah Palin, were slated to “reclaim the civil rights movement” (Beck’s words) on the same spot where the Rev. Martin Luther King Jr. had his dream exactly 47 years earlier. Vive la révolution! There’s just one element missing from these snapshots of America’s ostensibly spontaneous and leaderless populist uprising: the sugar daddies who are bankrolling it, and have been doing so since well before the “death panel” warm-up acts of last summer. Three heavy hitters rule. You’ve heard of one of them, Rupert Murdoch. The other two, the brothers David and Charles Koch, are even richer, with a combined wealth exceeded only by that of Bill Gates and Warren Buffett among Americans. But even those carrying the Kochs’ banner may not know who these brothers are.

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Art Levine: Beyond Messaging: Obama’s Path to Jump Starting the Economy Without Congress

August 26, 2010

The rising jobless claims and skidding home sales make the Democrats’ selling job this November even tougher . But, cowed by deficit hawks, neither the Obama administration or Congress has shown an appetite for passing the sort of large-scale job creation packages that could make a difference in the ongoing jobless crisis . As the Washington Post observed this week, “A rapidly weakening economy threatens to undermine President Obama’s assertion that he has set the nation on a path to prosperity and, with barely two months until congressional midterm elections, Democrats find themselves with few options for reviving the faltering recovery. ” But the American Prospect and the progressive policy center Demos released a special report this week, to be featured in the magazine’s next issue, that could offer some short-term and long-term help by using the power of government agencies and contracts. These under-used strategies could be put into effect without needing to thread the needle of centrist Democrats and obstructionist Republicans in the Senate. As Robert Kuttner points out in the lead essay to this report, “The Case for Presidential Action,” that also features In These Times writer David Moberg, “The U.S. government spends half a trillion dollars a year to buy goods and services from the private sector. Federal procurement, directly or indirectly, influences about one job in four in the entire economy. And most most large national companies do business with the government,” including service and manufacturing companies that pay their workers relatively low wages, thwart unions and deny benefits. During a conference call this week on the report (hat tip to Campus Progress), experts pointed out: It seems Congress has given the administration the power to place conditions on those contracts–and the courts have backed them up. Ann O’Leary, a senior fellow at the Center for American Progress (CAP) senior fellow, notes that “This authority has been used by many presidents for many years.” If these aggressive enforcement and standards-raising actions were combined with effective messaging to scare the hell out of progressives and centrists over the prospect of a GOP and John Boehner take-over, it could conceivably make a difference — although time is running out before November. In his article, “Sweatshop Army: Why does the Pentagon use low-road companies to feed and clothe out troops?,” David Moberg points to the Wornick Company of Cleveland that pays its mostly immigrant work force less than $10 an hour, making it impossible for them to afford the company’s minimum health care plan. “Unfortunately,” Moberg says, “all too often the work on military contracts is ill-paid and abusive, just as it as at Wornick, and not an expression of government’s stated social policy, such as the 1935 Wagner Act’s commitment to encourage collective bargaining.” But more than just raising those contract workers could make a difference. As Demos summarized the authors and their key reform points: Harold Meyerson on the misclassification of regular workers as temporary or contract employees, and the potential impact of a high-profile and systematic enforcement effort targeted at the large companies that employee them. David Moberg on Pentagon contractors that are notorious low-wage employers, and why there is a national security case for government to set and enforce labor standards in defense contracting. This piece looks specifically at the principal contractors producing MREs and military uniforms. David Bensman, Professor of Labor Studies and Employment Relationships at Rutgers University, on federal reclassification of transportation workers and reforming US ports by modernizing safety systems and requiring trucker certification. Steve Franklin on how the Department of Agriculture, which spends upwards of800 million on produce for the school lunch program, can extend bargaining rights to farm workers and sponsor a bill of rights that includes access to sanitary facilities, clean water, and decent housing. Jan Breidenbach on making sure that government-sponsored green housing jobs, which includes the installation of solar panels and retrofitting homes, are high-wage jobs. And others on paying childcare workers a decent wage, insisting on high- quality manufacturing jobs, and the broad social and economic benefits of a high-wage workforce . As a St. Petersburg Times columnist observes: What can be done to undo the damage without legislative action, since Republicans will oppose anything proworker? Kuttner suggests that the most consequential immediate action Obama could take is to start using government’s buying power to reward good labor practices. It must be big-time, governmentwide, and high-profile. One in every four jobs in the economy is influenced by federal procurement, whether it’s foodstuffs for the military or Medicaid payments to nursing homes. Jobs in these industries could be transformed tomorrow if contracts were awarded only to employers who paid living wages, provided benefits, respected labor laws and didn’t interfere with unionizing. As Congress fights over tax breaks for millionaires, the administration could be changing the economic prospects of millions of low-skilled workers. Boosting pay and working conditions for, say, nursing home workers under new Medicaid rules could provide real hope to working poor parents. Yet in the political battles in the run up to the November, the upset victories of some Tea Party candidates in the GOP primaries are adding to the fears of some in the Democratic Party that a mobilized conservative base could trump Democratic arguments that the economy would be worse under the GOP. As Politico reports: Top Democrats are growing markedly more pessimistic about holding the House, privately conceding that the summertime economic and political recovery they were banking on will not likely materialize by Election Day. In conversations with more than two dozen party insiders, most of whom requested anonymity to speak candidly about the state of play, Democrats in and out of Washington say they are increasingly alarmed about the economic and polling data they have seen in recent weeks. They no longer believe the jobs and housing markets will recover — or that anything resembling the White House’s promise of a “recovery summer” is under way. They are even more concerned by indications that House Democrats once considered safe — such as Rep. Betty Sutton, who occupies an Ohio seat that President Barack Obama won with 57 percent of the vote in 2008 — are in real trouble. In two close races, endangered Democrats are even running ads touting how they oppose their leadership. “Democrats kept thinking: ‘We’re going to get better. We’re going to get well before the election,’” said one of Washington’s best-connected Democrats. “But as of this week, you now have people saying that Republicans are going to win the House. And now it’s starting to look like the Senate is going to be a lot closer than people thought.” But some progressives and Democrats are hoping that a more effective message — focusing on part on the consequences of Rep. John Boehner becoming Speaker of the House — might help mobilize voters to resist the upsurge in conservative-driven anger and keep enough Democrats in office. As Washington Post blogger Greg Sargent notes: There’s a reason the White House and Dems are throwing everything they have at John Boehner’s speech attacking Obama’s economic policies: Dems and White House advisers know they must not allow Boehner and the GOP to achieve a clean relaunch of their party and their ideas heading into the midterms. The big underlying fight right now is over whether Republicans will succeed in rebranding themselves, achieving separation from Bush and the party that ran Congress before the Dem takeover, or whether Dems will successfully convince the electorate that a vote for the GOP is a vote for the party that brought our economy to the edge of doom. So the White House is circulating a new set of talking points instructing Dems on the Hill and outside allies to reiterate these ideas: In a speech in Cleveland [this week], House Minority Leader John Boehner laid out Congressional Republicans’ economic dream. Their prescription for the future = the same policies that led to the worst recession since the Great Depression. They want more tax breaks for the rich, less oversight of Wall Street, and a tougher burden for middle-class families… Representative Boehner is ignoring his party’s own record, and he’s hoping that American families will, too. In the eight years before the Obama Administration took office, the Republican Leadership took the record surplus and turned it into a record $1.3 trillion deficit. Their irresponsible policies helped to create the worst economic downturn since the Great Depression, resulting in 22 months straight of job losses across America. Faced with these grim economic numbers, what can Democrats do now to save Congress? A progress writer at Daily Kos, writing under the name Meteor Blades, has some sound suggestions worth considering: To effectively put the Republicans on the defensive, the administration needs more than a message of the-economy-would-be-a-whole-lot-worse if-these-guys-had-been-in-power, even though that assessment is absolutely true. To this end, combined with a thorough thrashing of the GOP for its devil-take-the-hindmost policies, shortly after Labor Day, the administration should present basic elements of a new economic program for the next two years. It should be a program emphasizing our acute emergency, of course. But it should also lay the foundation for resolving some of the chronic problems that helped generate the emergency. That means, as so many critics have said, new approaches to trade, industrial policy, off-shoring, wage stagnation and arbitrage, and regulation. It should also look even deeper, how to deal with people’s needs for economic security in a world in which automation and other productivity-enhancing changes make the old job paradigm obsolete. No way, obviously, can reforms in all those areas be achieved in a mere two years, but a start can be made, a direction laid out. Such an economic program ought also to boast one big project, not just a flashy eye-catcher, but something practical, job-generating and an investment in the future. Replacing all our coal plants with clean-energy sources over a decade would be one possible choice with multiple benefits. But there are others. In the immediate future, these two messages could reinvigorate voters whose enthusiasm for keeping the Party of No out of office has waned during the past few months. Together, they would provide inspiring talking points to activists in the phone-bank and door-to-door trenches for their use in persuading Americans that staying at home, or choosing Republican candidates, will worsen the economic situation. But a far-sighted economic program must ultimately be about something far more important than merely winning an election. Yet given the cautionary tone and policies of the administration so far, even in the face of a continuing economic crisis and looming political disaster, it’s not at all clear such aggressive steps will be taken. UPDATE : There’s mounting evidence, according to the Congressional Budget Office, that President Obama’s stimulus package has had a positive impact on saving and creating millions of jobs. But it’s also transforming the economy, as a new Time magazine article highlights (hat tip to the Daily Beast )—but that reality hasn’t been translated into effective political salesmanship yet. ******************** This article originally appeared in the Working In These Times blog.

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Art Levine: Beyond Messaging: Obama’s Path to Jump Starting the Economy Without Congress

August 26, 2010

The rising jobless claims and skidding home sales make the Democrats’ selling job this November even tougher . But, cowed by deficit hawks, neither the Obama administration or Congress has shown an appetite for passing the sort of large-scale job creation packages that could make a difference in the ongoing jobless crisis . As the Washington Post observed this week, “A rapidly weakening economy threatens to undermine President Obama’s assertion that he has set the nation on a path to prosperity and, with barely two months until congressional midterm elections, Democrats find themselves with few options for reviving the faltering recovery. ” But the American Prospect and the progressive policy center Demos released a special report this week, to be featured in the magazine’s next issue, that could offer some short-term and long-term help by using the power of government agencies and contracts. These under-used strategies could be put into effect without needing to thread the needle of centrist Democrats and obstructionist Republicans in the Senate. As Robert Kuttner points out in the lead essay to this report, “The Case for Presidential Action,” that also features In These Times writer David Moberg, “The U.S. government spends half a trillion dollars a year to buy goods and services from the private sector. Federal procurement, directly or indirectly, influences about one job in four in the entire economy. And most most large national companies do business with the government,” including service and manufacturing companies that pay their workers relatively low wages, thwart unions and deny benefits. During a conference call this week on the report (hat tip to Campus Progress), experts pointed out: It seems Congress has given the administration the power to place conditions on those contracts–and the courts have backed them up. Ann O’Leary, a senior fellow at the Center for American Progress (CAP) senior fellow, notes that “This authority has been used by many presidents for many years.” If these aggressive enforcement and standards-raising actions were combined with effective messaging to scare the hell out of progressives and centrists over the prospect of a GOP and John Boehner take-over, it could conceivably make a difference — although time is running out before November. In his article, “Sweatshop Army: Why does the Pentagon use low-road companies to feed and clothe out troops?,” David Moberg points to the Wornick Company of Cleveland that pays its mostly immigrant work force less than $10 an hour, making it impossible for them to afford the company’s minimum health care plan. “Unfortunately,” Moberg says, “all too often the work on military contracts is ill-paid and abusive, just as it as at Wornick, and not an expression of government’s stated social policy, such as the 1935 Wagner Act’s commitment to encourage collective bargaining.” But more than just raising those contract workers could make a difference. As Demos summarized the authors and their key reform points: Harold Meyerson on the misclassification of regular workers as temporary or contract employees, and the potential impact of a high-profile and systematic enforcement effort targeted at the large companies that employee them. David Moberg on Pentagon contractors that are notorious low-wage employers, and why there is a national security case for government to set and enforce labor standards in defense contracting. This piece looks specifically at the principal contractors producing MREs and military uniforms. David Bensman, Professor of Labor Studies and Employment Relationships at Rutgers University, on federal reclassification of transportation workers and reforming US ports by modernizing safety systems and requiring trucker certification. Steve Franklin on how the Department of Agriculture, which spends upwards of800 million on produce for the school lunch program, can extend bargaining rights to farm workers and sponsor a bill of rights that includes access to sanitary facilities, clean water, and decent housing. Jan Breidenbach on making sure that government-sponsored green housing jobs, which includes the installation of solar panels and retrofitting homes, are high-wage jobs. And others on paying childcare workers a decent wage, insisting on high- quality manufacturing jobs, and the broad social and economic benefits of a high-wage workforce . As a St. Petersburg Times columnist observes: What can be done to undo the damage without legislative action, since Republicans will oppose anything proworker? Kuttner suggests that the most consequential immediate action Obama could take is to start using government’s buying power to reward good labor practices. It must be big-time, governmentwide, and high-profile. One in every four jobs in the economy is influenced by federal procurement, whether it’s foodstuffs for the military or Medicaid payments to nursing homes. Jobs in these industries could be transformed tomorrow if contracts were awarded only to employers who paid living wages, provided benefits, respected labor laws and didn’t interfere with unionizing. As Congress fights over tax breaks for millionaires, the administration could be changing the economic prospects of millions of low-skilled workers. Boosting pay and working conditions for, say, nursing home workers under new Medicaid rules could provide real hope to working poor parents. Yet in the political battles in the run up to the November, the upset victories of some Tea Party candidates in the GOP primaries are adding to the fears of some in the Democratic Party that a mobilized conservative base could trump Democratic arguments that the economy would be worse under the GOP. As Politico reports: Top Democrats are growing markedly more pessimistic about holding the House, privately conceding that the summertime economic and political recovery they were banking on will not likely materialize by Election Day. In conversations with more than two dozen party insiders, most of whom requested anonymity to speak candidly about the state of play, Democrats in and out of Washington say they are increasingly alarmed about the economic and polling data they have seen in recent weeks. They no longer believe the jobs and housing markets will recover — or that anything resembling the White House’s promise of a “recovery summer” is under way. They are even more concerned by indications that House Democrats once considered safe — such as Rep. Betty Sutton, who occupies an Ohio seat that President Barack Obama won with 57 percent of the vote in 2008 — are in real trouble. In two close races, endangered Democrats are even running ads touting how they oppose their leadership. “Democrats kept thinking: ‘We’re going to get better. We’re going to get well before the election,’” said one of Washington’s best-connected Democrats. “But as of this week, you now have people saying that Republicans are going to win the House. And now it’s starting to look like the Senate is going to be a lot closer than people thought.” But some progressives and Democrats are hoping that a more effective message — focusing on part on the consequences of Rep. John Boehner becoming Speaker of the House — might help mobilize voters to resist the upsurge in conservative-driven anger and keep enough Democrats in office. As Washington Post blogger Greg Sargent notes: There’s a reason the White House and Dems are throwing everything they have at John Boehner’s speech attacking Obama’s economic policies: Dems and White House advisers know they must not allow Boehner and the GOP to achieve a clean relaunch of their party and their ideas heading into the midterms. The big underlying fight right now is over whether Republicans will succeed in rebranding themselves, achieving separation from Bush and the party that ran Congress before the Dem takeover, or whether Dems will successfully convince the electorate that a vote for the GOP is a vote for the party that brought our economy to the edge of doom. So the White House is circulating a new set of talking points instructing Dems on the Hill and outside allies to reiterate these ideas: In a speech in Cleveland [this week], House Minority Leader John Boehner laid out Congressional Republicans’ economic dream. Their prescription for the future = the same policies that led to the worst recession since the Great Depression. They want more tax breaks for the rich, less oversight of Wall Street, and a tougher burden for middle-class families… Representative Boehner is ignoring his party’s own record, and he’s hoping that American families will, too. In the eight years before the Obama Administration took office, the Republican Leadership took the record surplus and turned it into a record $1.3 trillion deficit. Their irresponsible policies helped to create the worst economic downturn since the Great Depression, resulting in 22 months straight of job losses across America. Faced with these grim economic numbers, what can Democrats do now to save Congress? A progress writer at Daily Kos, writing under the name Meteor Blades, has some sound suggestions worth considering: To effectively put the Republicans on the defensive, the administration needs more than a message of the-economy-would-be-a-whole-lot-worse if-these-guys-had-been-in-power, even though that assessment is absolutely true. To this end, combined with a thorough thrashing of the GOP for its devil-take-the-hindmost policies, shortly after Labor Day, the administration should present basic elements of a new economic program for the next two years. It should be a program emphasizing our acute emergency, of course. But it should also lay the foundation for resolving some of the chronic problems that helped generate the emergency. That means, as so many critics have said, new approaches to trade, industrial policy, off-shoring, wage stagnation and arbitrage, and regulation. It should also look even deeper, how to deal with people’s needs for economic security in a world in which automation and other productivity-enhancing changes make the old job paradigm obsolete. No way, obviously, can reforms in all those areas be achieved in a mere two years, but a start can be made, a direction laid out. Such an economic program ought also to boast one big project, not just a flashy eye-catcher, but something practical, job-generating and an investment in the future. Replacing all our coal plants with clean-energy sources over a decade would be one possible choice with multiple benefits. But there are others. In the immediate future, these two messages could reinvigorate voters whose enthusiasm for keeping the Party of No out of office has waned during the past few months. Together, they would provide inspiring talking points to activists in the phone-bank and door-to-door trenches for their use in persuading Americans that staying at home, or choosing Republican candidates, will worsen the economic situation. But a far-sighted economic program must ultimately be about something far more important than merely winning an election. Yet given the cautionary tone and policies of the administration so far, even in the face of a continuing economic crisis and looming political disaster, it’s not at all clear such aggressive steps will be taken. UPDATE : There’s mounting evidence, according to the Congressional Budget Office, that President Obama’s stimulus package has had a positive impact on saving and creating millions of jobs. But it’s also transforming the economy, as a new Time magazine article highlights (hat tip to the Daily Beast )—but that reality hasn’t been translated into effective political salesmanship yet. ******************** This article originally appeared in the Working In These Times blog.

Read the full article →

Dave Johnson: Boehner Trade Plan: Go Back To Disaster

August 25, 2010

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party’s positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it. I write about the specifics of Boehner’s call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an “economy stalled by ‘stimulus’ spending.” But according to FOX News’ Wall Street Journal , yesterday the CBO reported that “the impact of the stimulus program estimated … the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points .” In addition, the Washington Post reported , “The CBO said the act also increased the nation’s gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy.” Boehner also said that “each dollar the government collects is taken directly out of the private sector.” This is the old “taxes take money out of the economy” argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country’s prosperity. If you think that President Eisenhower’s spending on the Interstate Highway System “took money out of the economy” you really need to see someone about your problems and not take them out of the rest of us. Taking direct shots at democracy, Boehner complained about “big government” — namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us — and said, “As Mitch Daniels, the governor of Indiana, recently said, “You’d really be amazed at how much government you’d never miss.” Boehner really has a problem with this whole “We, the People” thing. Boehner on Trade Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration’s record: This is bad enough, but these “free trade” agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower. These “free trade” agreements need to be reviewed and reformed , so they protect wages, the environment., worker’s rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can’t Buy Refrigerators ! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner’s trade ideas everyone just gets poorer and eventually the economy stops. Oh, wait, we DID follow Boehner’s trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that. This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter , sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make. Sign up here for the CAF daily summary .

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Dave Johnson: Boehner Trade Plan: Go Back To Disaster

August 25, 2010

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF. House Minority Leader John Boehner (R-OH) gave a speech yesterday describing his party’s positions on jobs & the economy going into the fall election. Summary: Our economic policies destroyed the country’s economy and millions of lives, but it made a few of my buddies really REALLY rich, so let’s do more of it. I write about the specifics of Boehner’s call to return to disastrous trade policies below, but first I just have to say a few words about his economic ideas in general and how utterly wrong they are. In the speech Boehner said we have an “economy stalled by ‘stimulus’ spending.” But according to FOX News’ Wall Street Journal , yesterday the CBO reported that “the impact of the stimulus program estimated … the plan lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points .” In addition, the Washington Post reported , “The CBO said the act also increased the nation’s gross domestic product by between 1.7 percent and 4.5 percent in the second quarter, indicating that the stimulus may have been the primary source of growth in the U.S. economy.” Boehner also said that “each dollar the government collects is taken directly out of the private sector.” This is the old “taxes take money out of the economy” argument, which is intended to trick people into thinking that the money just disappears instead of being used to pay for the schools, courts, agencies and infrastructure that enable businesses to thrive and drive the country’s prosperity. If you think that President Eisenhower’s spending on the Interstate Highway System “took money out of the economy” you really need to see someone about your problems and not take them out of the rest of us. Taking direct shots at democracy, Boehner complained about “big government” — namely We, the People making decisions instead of a few wealthy corporate owners making decisions for us — and said, “As Mitch Daniels, the governor of Indiana, recently said, “You’d really be amazed at how much government you’d never miss.” Boehner really has a problem with this whole “We, the People” thing. Boehner on Trade Boehner wants to go back to the trade policies that brought us massive job losses and trade deficits. In the speech he called for “passing free-trade agreements” with Colombia, Panama, and South Korea. He doesn’t mention what is IN these agreements, only calls for passing them. These trade agreements were negotiated by the Bush administration. Here are charts showing the Bush administration’s record: This is bad enough, but these “free trade” agreements create a worldwide race to the bottom, allowing companies to bypass the protections that democracies fought to provide for their citizens, pitting exploited, low-wage workers against citizens in democracies, forcing wages and standards ever lower. These “free trade” agreements need to be reviewed and reformed , so they protect wages, the environment., worker’s rights and small businesses around the world. We have a chance to lift each other up instead of push each other down. In February I wrote about Whirlpool closing a refrigerator plant in Evansville, moving the jobs to Mexico where workers are paid $70 a week. The problem is that Mexican Workers Paid $70/Week Can’t Buy Refrigerators ! If they were paid decent wages, we could sell things we make to them, while they sell things they make to us. But if we follow Boehner’s trade ideas everyone just gets poorer and eventually the economy stops. Oh, wait, we DID follow Boehner’s trade plans, and everyone DID get poorer, and the economy DID stop! But a few of his buddies got really REALLY rich. So he wants to do more of that. This speech by Boehner is just more calling for a return to the policies of the past: we’ve been seeing the trade deficit soaring in the last few months, as the economy tries to go back to old economy. China is 96% of our trade deficit. Boehner sayting lets go back to the path we followed when we were borrowing $2 billion a day, it took away 2.8% growth in 1st quarter , sapping the recovery. This notion that Boehner calling for continuing course shows a perverse blindness to changes country has to make. Sign up here for the CAF daily summary .

Read the full article →

Nathan Gardels: While China Hits No. 2, Opportunity in America Is Shrinking

August 23, 2010

America was once known around the world for its pragmatic attitude in getting things done and looking toward the future. Now we’ve been overtaken by partisanship, political gridlock and short-termism. Today it is the non-ideological pragmatism and long-term political horizons of the emerging economies, notably China, that are showing the way. Nobel laureate Michael Spence, chairman of the independent Commission on Growth and Development associated with the World Bank, thinks there are lessons to be learned from their resilient bounce back after the financial crisis. I spoke with him last week in Italy. ———————— Nathan Gardels : In your report on “post-crisis growth” you noted the “resilience” of China, which has bounced back to high growth after the Wall St. crash and is now officially the second-largest economy in the world. What are the key factors of China’s resilience? Will China be able to keep bouncing back, or might the recessionary winds from across the Pacific cool things down? Michael Spence : China — along with India and Brazil — is going to get through this crisis pretty well and will be able to sustain its growth in the years ahead. China, in particular, is capable of sustained growth if it can properly manage structural change in several dimensions. First, China is going through a “middle-income transition” in parts of the country as earlier “growth drivers” in the export sector, notably low-wage manufacturing along the coast, die off and must be replaced with other drivers such as services. The domestic consumer will have to become more important so there is a better match between the productive potential of the economy and domestic demand. Second, China is going to have to get quite a bit more income into the hands of the household sector in order to drive growth from within the domestic market. That means getting away from the very high levels of investment in the corporate and public sector where the marginal return on investment is declining. Disposable income as a percent of GDP is low, and the savings rate is high, around 40 percent of GDP. Third, they have to get their current account surplus down in the global economy or they will get a bad reaction from outside, for example protectionism. If they can get the surplus down, that will help the global economy, but it will also help build domestic demand and household income. This is a complicated set of changes to navigate, but I believe the Chinese leadership is up to it. I’ve been able to listen in and participate in some of their internal discussions, and I think they are going in the right direction. Certainly there are interests that want to block these changes. But the same qualities that have enabled China’s resilience so far — a long-term horizon, decisive policy-making and consistent follow-through by a generally competent government — bode well for the future. Because of their long time horizon there is a high level of understanding by the leadership that the economy has to evolve. Looking out at where they want China to be in 10 or 20 years, they know that an advanced economy cannot be based, as China is today, on labor-intensive process manufacturing for export. They have seen how South Korea has managed the middle-income transition. I’m sure they are intensively studying that experience. Gardels : With a nearly 9 percent annualized growth rate, Germany has picked up as the bright spot, a saver and strong exporter among the indebted consumer democracies of the West. Yet, some say this so-called “German miracle” is really “the Chinese miracle” since their dramatic recovery is mostly due to high-end exports to China. Are we seeing a “German miracle” from which rest of the West could learn? Or is it mainly due to a kind of “reverse coupling” where China is pulling Germany out of the doldrums? Spence : Germany is doing well for two related reasons. First, the export sector is very healthy. And that is the result of the fact that over the last decade Germany has gone through a major restructuring of its economy in which workers traded some income for more job security, greater flexibility of hiring and firing was allowed, and work-sharing (kurzarbeit) instead of layoffs during the downturn has enabled key companies to retain skilled workers so they can get back on track quickly as demand rises. All of these reforms have put German companies in a more competitive position. Second, as we’ve discussed, major emerging markets from China to Brazil have not only restored growth but are sustaining it. Germany’s export sector is in a strong position to take advantage of that. So, the “German miracle” is what has enabled that country to benefit from the “Chinese miracle.” Gardels : Where do you come down on the global debate between whether it is time to cut back and move toward austerity vs. continuing stimulus spending by governments? Spence : There are such large differences among countries that it is hard to come down on any one position. There is a difficult balance between maintaining enough support to avoid a deflationary downward spiral on the one hand, and the longer-term costs of high debts and deficits on the other. It is not surprising there is lively debate about this because there are good arguments on both sides. As far as the United States is concerned, I would be on the conservative side at the moment. On the fiscal stimulus side, we’ve done about as much as we can do. I’m very much in favor of extending long-term unemployment benefits because they are essential to protect people while at the same time providing a stimulus. If you are going to spend limited resources, this is a good place to do it. But, beyond that, the U.S. is in for a period of painful restructuring of balance sheets to deleverage decades of overspending by borrowing. That will take time to work through. I don’t think you can accelerate the recovery by further government spending. It just won’t yield much benefit. America has clearly not yet come to terms with the fact that a healthy long-term future depends on suffering short-term pain. As much as we might wish it, there is no painless recovery after such a long bout of overleveraging. That pain must involve both tax increases, partly to increase public-sector investment in infrastructure that has been way too low, and budget cuts in some government services to help further finance those same infrastructure investments. Tax cuts, only if they stimulate job creation, must also surely be part of the mix. What worries me most is that as we — so far unsuccessfully — try to gather the political consensus to take decisive action, opportunities for the younger generation are shrinking. They are going to pay a high price in the short and medium term. Gardels : Fifty years ago, California made the kind of massive public investments — in a world-class university system, a vast road grid and canals to bring water from north to south — that China is making today, from the world’s fastest trains to the cutting edge of clean-energy technologies. Yet, as we speak, California, like the U.S. as a whole, is mired in debt and political gridlock. In your final Commission report, you write with China in mind that “Experience suggests that strong, technocratic teams focused on long-term growth can provide some institutional memory and continuity of policy” — in short, effective government. “Leadership,” your report says, “requires patience, a long planning horizon and an unwavering focus on the goal of inclusive growth.” Perhaps the Western consumer democracies, where the feedback signals of politics, the media and the market all tend to steer society toward immediate gratification, could learn something these days from China? Spence : Yes, we could especially learn from the way they think about the evolution of the economy over the long term and then, in a pragmatic, non-ideological way, set about getting things done. Democracy makes it a much more complicated and time-consuming process to get from A to B, to build consensus, invest in and support those things that sustain long-term growth. It is not impossible to do that in democracies today, of course. Brazil has turned itself around, and India seems to be doing so. So there is something to learn from them as well. And, as you point out in the example of California, we were able to do that at one time in the U.S. But we’ve forgotten what it takes. Too often in some parts of the American political culture there is a narrative that simply says that “the government should provide stability and the private sector will take care of everything else.” It doesn’t work that way. And it never has, even in the U.S. It takes a commitment of resources and a long-term perspective. It is a bit like the way venture capital works. You don’t know exactly how things will unfold, but you have to have a portfolio of projects to try to create and capture emerging opportunities. In the developing countries that are successful, they think more in terms of a complementary relationship between the public and private sector. Gardels : Is there a cultural issue here? Do societies dominated by a consumer mentality have the political gumption anymore to save and sacrifice for the longer term? Spence : I’m not sure I understand the underlying forces that have led us to short-termism and underinvestment. But I do know changing that is above all a political process of building consensus for responsible governance. Those who think all you need to do is cut taxes and everything else will fall in place are wrong. For a country of our level of income and wealth, the state of the infrastructure has become an embarrassment. Why can’t we set a goal in America of having first-class infrastructure in 15 years? Gardels : You said recently, “I have this gnawing feeling about the future of America. When people lose their sense of optimism, things tend to get more volatile. The future I most fear for America is Latin American: a grossly unequal society that is prone to wild swings from populism to orthodoxy, which makes sensible government increasingly hard to imagine.” You mentioned the Tea Party movement as one example. What can be done to prevent the U.S. from becoming like Latin America? Spence : I don’t know how to get there politically. But I imagine there is still a non-ideological middle in America that is patriotic but not overly nationalistic. We were once a very pragmatic nation with the ability to compromise to move things forward. If we believe what we say — that America is the land of opportunity for all and that is why people want to come here — then we need the policies that will make that actually true. Many are worried about the stubbornly high U.S. unemployment rate, but believe we will get back to normal after the recession is over. But going back to where we were is not realistic. The emerging economies are going to be more than 50 percent of global GDP in the not-too-distant future. It is a changing world. We can’t afford to stand still and settle for endless political gridlock. I think the U.S. can change, but, to be honest, I just don’t see the political will at the moment. © GLOBAL VIEWPOINT NETWORK/TRIBUNE MEDIA SERVICES

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Les Leopold: Five Washington Excuses for Ignoring the Jobs Crisis

August 19, 2010

” Slowly but surely we are moving in the right direction. We’re on the right track. ” ~ Barack Obama, Aug. 18, 2010 President Obama’s pollyanish comments coupled with Press Secretary Robert Gibbs’ outburst against “the professional left” reveal just how out of touch the Obama Administration is with the tens of millions of everyday Americans who are engulfed by the jobs crisis. Obama and Gibbs are miffed at liberal pundits for complaining about the Administration’s concessions on everything from health care and financial reform to jobs creation. But Obama’s real problem isn’t Arianna Huffington or Paul Krugman. For now, liberals have no place else to go–and they’ll never cross over to the Republican Party. Instead, the Administration should be very worried about the more than 29 million Americans who have lost their jobs or are forced into part-time work. Unemployment is stuck at 9.5 percent–and that’s just the narrowest measure of joblessness. The more accurate Bureau of Labor Statistics jobless rate (U6) is over 16.5 percent. (This includes people who have stopped looking for jobs and those working part-time involuntarily.) Five workers are competing for every job opening while the average length of unemployment is over 35 weeks. If it weren’t for unemployment insurance and food stamps, we’d have Depression era soup kitchen lines going round the block. Since the 1930s struggling workers like these have flocked to the Democratic Party, which they viewed as the party of jobs. Now they’re not so sure, and the party risks losing its mass base Our current unemployment trough, by far the longest and deepest since 1937, directly violates the social compact that glues together modern industrial societies — the tacit commitment that business and government will produce a full-employment economy. When that promise goes unmet for long periods, chaos ensues. It is not an accident that the rise of fascism in Europe during the 1930s corresponded with a prolonged period of high unemployment. Unfortunately, rearmament and war also are tools to put people back to work. Our political and business leaders are playing with fire by failing to seriously address the jobs crisis. Wall Street gamblers tore an enormous hole in our economy, destroying 8 million jobs in a matter of months. Those jobs still haven’t come back and may never return. Therefore, it is the fundamental purpose of government to relentlessly attack the problem, just as we did during the Depression, with long-term funding to get people into decent, sustainable jobs. But instead of shouldering this responsibility, far too many politicians and public officials of both parties hide behind spurious arguments. Here are a few of the most outrageous: “The unemployed have only themselves to blame”: It’s remarkable how many politicians and pundits argue that joblessness is sky-high because unemployed people haven’t developed “the skills they need to compete successfully in the 21st century.” We expect that kind of twisted logic from anti-worker conservatives who think that unemployment insurance keeps workers from finding jobs (even if there are no jobs). But it’s downright pathetic when a Democratic administration sings from the same hymnal. Here’s Treasury Secretary Timothy Geithner at the pulpit: “The share of workers who have been unemployed for six months or more is at its highest level since 1948, when the data was first recorded, and we must do more to ensure that they have the skills they need to re-enter the 21st-century economy.” Dear Tim: Now that your Wall Street buddies have wrecked the economy and you’ve bailed them out, there are no jobs–except maybe for derivatives traders. What skills enable people to find nonexistent jobs? “Unemployment is a lagging indicator — the jobs are coming “: The Obama Administration and Democratic Party leaders fall prey to their own version of trickle down economics when they argue that their mammoth Wall Street bailout and puny, short-lived stimulus program will bring back jobs for regular Americans (eventually). Money was no object when it came to bailing out every bank and investment house that could possibly be put on life support. By some estimates the financial sector got over10 trillion in bailouts. Economists Nouriel Roubini and Stephen Mihm estimate that Goldman Sachs alone got60 billion in direct and indirect taxpayer largess. This huge cash infusion worked like a charm: Financial elites quickly got back to collecting fat bonuses and reopened their casinos, setting the stage for Financial Collapse 2. The Administration looked the other way. Then came a modest stimulus package designed to prime the pump with tax cuts, public works bills and programs to quickly push money into the economy. The Administration hoped that this primed pump — plus a resuscitated financial sector — would bring unemployment down below 8 percent by the mid-term elections. Unfortunately, that part of the plan didn’t work: The stimulus was far too small and diffuse to restore the millions of jobs that the financial gamblers had destroyed. We now need 22 million new jobs to get back to 5 percent unemployment. That’s a tall order — the equivalent of creating 640 Apple Computer companies, with 34,000 employees each. “We can’t afford a job creation program — it’ll increase the deficit”: It’s certainly true that the deficit is growing rapidly as a result of the Wall Street crash and bailouts. But if we want the deficit to shrink, we’ll have to put people back to work so that they start paying taxes again. We also need to place a significant windfall profits tax on the very financial elites who wrecked the economy. We wouldn’t have a deficit problem if our politicians had the will to truly tax the super-rich — those earning3 million or more a year. (More on this below.) “US workers are overpaid. Cut wages by about 20 percent and the jobs will come back”: Apparently many officials and business leaders actually believe this. Fed Chief Ben Bernanke, for example, argues that during the Great Depression, workers’ refusal to take more wage cuts during a period of deflation kept employers from hiring, driving unemployment to new heights. So…now that Wall Street has run off with the taxpayers’ money, the taxpayers need to live with less so they can have jobs. (Never mind that we’ve already stumbled through decades of stagnant wages.) Wage cuts indeed are badly needed — on Wall Street. “Government interference is creating uncertainty in the private sector and keeping companies from creating new jobs”: The government haters, reinforced by the know-nothing Tea Partyites, really believe that if government would just leave private enterprise alone, it would generate jobs for all. Maybe these folks didn’t notice that the crash we just lived through happened precisely because the government let the free market run wild. It’s probably impossible to convince ideologues that the private sector can’t police itself or create millions of new jobs all on its own — even though we’ve known this for more than 80 years. The Republican Party, hiding behind this ideology, hopes to see the economy collapse again so it can reap the rewards in November. (Might the giant Wall Street firms quietly engage in a capital strike to retard economic growth and help anti-regulatory Republicans recapture Congress? No, they wouldn’t do that… Would they?) The Republicans are hoping that by the time they take power again, the economy will quickly right itself and they can take the credit. That and the Tooth Fairy will bring us new jobs. The Republicans are playing a very dangerous game that is likely to worsen an already severe jobs crisis and send our nation into uncharted and dangerous territory. We can’t tackle the jobs crisis until we’re willing to tackle Wall Street. Both Democrats and Republicans have stood idly by as the wage gap has turned into a Grand Canyon of inequality. (In 1970, the top 100 CEOs made 45 times more than the average worker; in 2008, they made 1,081 times more. See The Looting of America ) Almost no one in Washington has the nerve to challenge Wall Street’s socially useless and reckless financial games. They’re afraid to say that it’s wrong that the top 25 hedge fund managers made as much money during 2009 as 658,000 teachers — or that the top ten hedge fund managers “earn” $900,000 an hour . The money for job creation is right there, in the hands of the elites who profited so handsomely from the financial meltdown they helped create. The American people are hungry for proposals to rectify this injustice. Why not turn Wall Street’s ill-gotten gains into programs that put our people back to work? Here’s a plan we’ll probably never hear from Democrats, Republicans or the Tea Party: Place a windfall profits tax on the super-rich who profited from our bailouts to pay for the jobs that these gamblers destroyed. Call it a windfall profits tax or a financial transaction fee. But really it’s reparations, long overdue. Tens of millions of Americans are suffering through no fault of their own. These working people didn’t buy houses they couldn’t afford. They didn’t gamble their life’s savings on derivatives and securitization.. They just went to work one day and were told their job was gone. They came home to find their neighborhood disintegrating as the housing bubble burst around them. All thanks to reckless financial games on Wall Street. Unless the Obama Administration finally organizes a major assault on the jobs crisis, there will be no relief for Mr. Gibbs or his boss. Many angry Americans — liberals and conservatives — will turn against the party in power. Too bad we no longer have a real Party of Jobs to support. Les Leopold is the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

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Obama Approval Rating Hits New Low For Handling Economy (POLL)

August 18, 2010

WASHINGTON — President Barack Obama earned his lowest marks ever on his handling of the economy in a new Associated Press-GfK poll, which also found that an overwhelming majority of Americans now describe the nation’s financial outlook as poor. A frustrated electorate could take it out on the party in power – Obama’s Democrats – in the November elections. Eleven weeks before the Nov. 2 balloting, just 41 percent of those surveyed approve of the president’s performance on the economy, down from 44 percent in April, while 56 percent disapprove. And 61 percent say the economy has gotten worse or stayed the same on Obama’s watch. Still, three-quarters also say it’s unrealistic to expect noticeable economic improvements in the first 18 months of the president’s term. And Obama’s overall approval rating was unaffected; it remained at 49 percent, in part because most Americans still like him personally. Americans’ dim view of the economy grew even more pessimistic this summer as the nation’s unemployment rate stubbornly hovered near 10 percent. That’s been a drag on both Obama and Democrats, who control Congress. “The economy is on life support,” says Scott Bradley, 38, general manager of a carpet store in Columbia, Mo. Bradley says he voted for Obama in 2008 but he wouldn’t again. He blames Congress for the unemployment woes but says, “Obama’s policies are making the economy worse.” Even staunch Obama backers like college student Julius Taylor of Flint, Mich., struggle to stay optimistic about the economy, particularly when they see the recession’s toll in their backyard. “I’d like to say it’s improving, but there are a lot of indicators it’s not,” says Taylor, 25. Viewpoints like those have Democrats on edge as they try to hang onto comfortable majorities in the House and Senate in a political environment made ever more challenging by economic woes. Republicans are trying to convince Americans that the GOP can create the jobs that Obama hasn’t delivered. Obama and his Democrats are pleading for the frustrated public to give them more time to prove that their economic fixes will work. “The truth is, it’s going to take a few years to fully dig ourselves out of this recession. It’s going to take time to bring back 8 million jobs,” the president said Tuesday while campaigning for Democratic candidates in Seattle. “Anybody who tells you otherwise is just looking for your vote.” Democrats are keenly aware that they face strong headwinds; 60 percent of people say the country’s headed in the wrong direction. And it’s hard to overstate the importance of the economy to voters; 91 percent of Americans say it’s a top problem, with unemployment close behind. A whopping 81 percent of people now call the economy poor or very poor, up from 72 percent in June, and just 12 percent say it has improved in the past month, compared with 19 percent in June. Both are record measurements since AP-GfK started asking those questions. “Everyone is scared – everyone,” says Gerda Chapman, 63, a retired schoolteacher in Harrison, Idaho, who backed Obama and isn’t ready to ditch him. “The man has not had a long enough time and he’s doing a good job.” She, like him, urges patience: “We’re not out of the recession and we’ve got a ways to go. It’s going to take time, but it is on an upward trend.” Stacey Pederson, 36, a massage therapist and independent voter in Asheville, N.C., agrees that it’s improving. But, she says, more progress would be made “if we would have cooperation within the two parties. It’s getting to be really difficult watching them fight.” Neither party is faultless, adds Jeff Vick, 49, a self-employed consultant from Fort Worth, Texas. “Republicans have just been incredibly greedy,” he says, and Democrats are instituting “un-American” policies that inhibit citizens’ abilities to earn a living. People have little trust in Democrats or Republicans on handling the economy; less than half trust either. But voters older than 64 and whites lean heavily toward the GOP. While Congress’ overall performance rating is at a miserable 24 percent, Democrats in Congress are slightly more popular than Republicans; 37 percent approve of Democrats while 30 percent approve of Republicans in Congress. But in a shift from earlier this summer, when Democrats had an advantage, Republicans now are about even with Democrats on the question of which party should win control of Congress. Among registered voters, 49 percent say they would vote for the Republican candidate in their congressional district – half say to express their opposition to Obama – while 45 percent say they’d cast their ballot for the Democrat. Obama is suffering in other areas, too. Just 34 percent now call him an above average or outstanding president, down from 42 percent in January. And 28 percent call him average, while 38 percent say he’s even worse. Marks on how people view him personally have fallen: 89 percent liked him personally in January, but now 82 percent do. Also, more people disapprove of his performance on the following issues than approve: the federal budget deficit, unemployment, health care, taxes and immigration. Conversely, he’s viewed more favorably than not on his handling of terrorism, the environment, relationships with other countries and education. About equal percentages of people view him positively and negatively on Iraq, Afghanistan, energy and gas prices. The AP-GfK Poll was conducted Aug. 11-16 by GfK Roper Public Affairs and Corporate Communications. It involved landline and cell phone interviews with 1,007 adults nationwide and has a margin of sampling error of plus or minus 4.5 percentage points. ___ Associated Press Polling Director Trevor Tompson, AP News Survey Specialist Dennis Junius and AP writers Alan Fram, Lauren Sausser and Natasha T. Metzler contributed to this report. ___ Online: AP-GfK Poll: . http://www.ap-gfkpoll.com

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Howard Steven Friedman: How Long Will China’s Economy Be the Second Largest?

August 16, 2010

Many probably saw the headline today stating that China’s economy is now the second largest in the world and may soon eclipse the United States’ economy. The growth in China’s economy has been tremendous, an engine that began taking off with the loosening of restrictions during the Deng Xiaoping era and has accelerated ever since. Some interpret the growth in China’s economy as a validation of its embracing capitalism but there is also a major factor of government planning involved. Yes, government planning and economic growth can go together in spite of many people’s mantra to the contrary (see Singapore for another example). While China’s manufacturing dominates much of the world’s consumer products, this will not likely last forever. Importers are looking to diversify their production since companies know they should never rely on a single supplier. Investments in Vietnam, Indonesia and other countries which have low wage costs will continue in the future. China will feel pressure externally from other countries producing competing products and will need to migrate up the value chain to drive higher margins while mitigating wage pressures. China is making huge investments in higher education to help them design and manufacture higher end products in the future but internal pressures will be significant. As more and more Chinese enjoy Western style lifestyles in Shanghai, Beijing, Hong Kong and other major cities, factory workers will be less likely to continue accepting low wages and long hours in monotonous toil. The days of motivating Chinese workers by encouraging support for the good of the party are long over. China has an astoundingly high level of inequality and this inequality will be one of the most critical issues that the Chinese government will need to address over the coming years in order to maintain strong growth. While many reading about China’s overall economy immediately think that China is a developed country, they need to remember that China has an enormous population with many living in poverty. There are hundreds of millions of rural Chinese living slightly above subsistence and factory workers struggling month to month while a small percent of the population enjoy what we, in the West, would term comfortable lives. As China’s economy continues to grow, it remains to be seen if the percent of people living these comfortable lives continues to grow or if the wealthy in China end up owning more and more of the country while the factory workers and rural poor continue to struggle. So what do I think of projections of when China will eclipse the United State’s economy? As I have stated in previous articles, economic projections 20 or 30 years out tend to be little more than guesswork. There is no question that if China and the United States both continue their current pace of economic growth, then China’s economy will be larger than that of the United States in the next few decades. Of course, there was a huge “if” in that sentence. Japan’s economy grew at a tremendous pace for much of the post World War II period, based on an export economy supported by an undervalued currency. Over time, other countries began competing with Japan for its export products and internal wage pressures developed. Not coincidentally, Japan’s economy has been relatively stagnant for about 2 decades. Calculating growth curves is easy on paper, growing an economy is much tougher. It is much easier for an economy to grow at 10% per year when an economy is smaller. Just as the life cycle of a company often has a rapid expansion phase until they become a large company and then the growth slows down, China will find that maintaining such a rapid growth rate will be a huge challenge, one that can’t be solved by simply dropping a different growth assumption into someone’s economic forecast.

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House Expected To Pass State Jobs Bill After Being Called Back From Recess

August 9, 2010

WASHINGTON (AP) — House members are giving up a couple of days reconnecting with folks in their districts this week to pass a jobs bill that Democrats say is crucial to the nation’s well-being. The unusual in-and-out session was called because the Senate waited until last Thursday, after the House had already recessed for its summer break, to pass a $26 billion bill to prevent tens of thousands of teachers and an equal number of other state and local government workers from being laid off before the November election. With the new school year just weeks away, election season fast approaching and the overall job picture still bleak, Democrats had no choice but to act quickly. Many of those whose jobs are being saved belong to teacher unions or the American Federation of State, County and Municipal Employees, two key components of the Democrats’ political base whose get-out-the-vote efforts in November could determine whether they hold or lose control of Congress. “This legislation is about creating and saving American jobs, and preventing a double-dip recession,” House Speaker Nancy Pelosi said in announcing the special session just hours after the Senate passed the bill that the administration says could save the jobs of nearly 300,000 teachers and other public workers. Rep. Chris Van Hollen, D-Md., shrugged off suggestions that Democrats were taking a gamble by ordering members back to Washington and diverting colleagues facing tough re-elections from their campaign activities. “It’s not a gamble,” he said, but “it would be gambling our children’s’ education to have them go back to school and find no teacher in the classroom or a larger class size.” Republicans forced back to the Capitol to vote against a bill see it differently. Democrats should be staying home and listening to their constituents “instead of scampering back to Washington to push through more special interest bailouts and job-killing tax hikes,” said House GOP leader John Boehner of Ohio. Republicans portrayed the special session as the Democrats’ pre-election gift to their labor union allies and objected to provisions to raise taxes on some U.S.-based multinational companies as a way to partially cover the $26 billion cost of the bill. Defining teachers and police officers as special interests while opposing closing a tax loophole for big corporations “defines the difference between our two parties,” retorted Van Hollen. The House will convene in a pro forma session Monday, meaning there will be no votes and few people around. Debate on the bill and a vote Tuesday morning should go quickly because Democrats who control the rules are not likely to permit any amendments. The House also could take up another measure the Senate passed last week – a $600 million border security bill with money for more agents and unmanned surveillance drones. “We would obviously support the House concurring in the Senate package and doing so as quickly as possible,” Homeland Security Secretary Janet Napolitano told reporters in a telephone news conference the day after the Senate passed the bill. Lawmakers weren’t the only ones caught off guard by the sudden decision to reconvene the House. The House chamber is currently under construction as workers replace the 30-year-old voting boards with new displays that will be more energy-efficient and easier to read. Temporary voting boards will be set up on the House floor so members can confirm their votes. While unusual, it’s hardly unprecedented for the House to break from vacations to take care of business the party in charge considers pressing. In December 2008 the House returned to approve the auto industry rescue plan. In August 2005 lawmakers were called back to provide emergency relief for Katrina victims. Earlier that year, lawmakers gave up the last day of their spring break to vote on restoring a feeding tube to brain-damaged Terri Schiavo.

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Raymond J. Learsy: Decline of the Middle Class as Metaphor for the Decline of America

August 8, 2010

Over the last decade this nation has experienced a massive loss of productive and high value jobs in manufacturing, trade, and the professions sending many overseas and having many destroyed through the egregious misdirection of the self serving priorities of our financial institutions encumbering viable companies making real goods and services with untenable debt, leveraging their assets in order to maximize profits for the financial engineers before flipping the company or taking it to market as an IPO. Too often the workers who made the company are left with little or nothing while the Wall Street “whiz kids” march off with a bundle having destroyed the vision, imagination and the hard work that went into creating these companies, to their benefit and to the detriment of its workers and society at large. ‘Disproportionate’ is the freighted word that shackles our society. Over the past few years some two-thirds of the gain in national income has gone to the top one percent of Americans, mostly those in the financial industry harbored in such government protected entities as ‘bank holding companies’, part of something that has come to be ominously called the “shadow banking system” bringing virtually nothing viable to the economic landscape other than egregious speculation gorging on complex derivatives enriching the financial players, while through their malign impact, impoverishing great swaths of the American and world economy (i.e. betting on the collapse of the housing market), and when these bets go dramatically wrong by also collapsing the institutions that took the long side of the bets, and then being bailed out by the government making good the value of these ‘bet’ instruments whose function had no greater economic justification than a compulsive gambler’s casino bets. And the grim irony, when the red comes up instead of black it’s the local inhabitants of the casino’s venue who are asked to pay to keep the Casino afloat, while the Casino lets the gambler keep his chips. And the local inhabitants pay dearly. Their services are curtailed, their stores are forced to close, their local banks are driven to the edge, the value of their houses plummet or are repossessed. Not having insider status their financial assets deteriorate dramatically and even in desperation had they wanted to get back into the Casino to try their own luck given their new world being bereft of all other opportunity, the house wont extend them credit. Its just as well, because they wouldn’t have to see our compulsive gambler swilling Dom Perignon and downing a small mountain of Pate de Foie Gras after having feasted on Beluga Caviar at the Casino’s resplendent restaurant. The gambler is there, and he or his proxy will always be there. And the town and its inhabitants, tattered and poorer are still there trying to make do as best they can and trying to contain their steaming anger at the unfairness of it all, not quite knowing what to do. Some joining in the regional meanderings of the Tea Party, or some equivalent movement that promises to address the clear wrongs that are being inflicted and tolerated by those in charge. When all is said and done it becomes clear that it is the Casino that needs fixing because it is the Casino that the set the rules, it is the Casino that has permitted the outrages that have resulted in the destabilizing of the norm and sanctioning the unexpected and unfair. Now with a small leap of imagination lets transpose our government for the nefarious Casino. Clearly it needs a new management or a new way of managing. What has come before is not functioning and major changes are needed. The local inhabitants need a voice in running the Casino, which in a sense has been denied them because they are unable foot either the entry tab, or the needed cash to play at the tables. And that is what it has come to be, without access and without money no one at the Casino pays attention. And that must now change for the inhabitants to ever again have a chance to rectify the wrongs imposed by the Casino’s management and to fairly share in an equitable distribution of benefits should they accrue ahead. As here, today too much of our political system is bought and paid for. Too much of our political system is self serving, responsive to the wings of our two parties and indifferent to the day to day concerns of middle Americans in spite of the incessant lip service extended to them. Yes, there is limp Wall Street reform, but no clawback of the exigencies that drove the nation to the brink. Yes there is a stimulus program, but faltering shamelesly through lack of clear direction. Yes, there is an alternative energy program without clear mandates nor meaningful results as the transfer of billions to the oil providers continues unabated. Yes, there are our soldiers dying in fragmented nation states far away without a modicum of sacrifice being asked of the home front. Yes, there are moneyed interests both domestic and foreign who have access to those who govern, without limitation and a shameless Congress ready to do their bidding in spite of the promises made in Presidential campaigns to curtail their influence. Yes we have courts of law who, through judicial minutiae rather than pragmatic sense of national welfare have given these moneyed interests even greater influence by striking down financial restraints on the powerfully funded in election laws, that make the middle class even more disenfranchised. Yes, there is talk of restraining government spending while special interests with access to government and its earmarks are encumbering the nation into ever greater indebtedness. Yes, while Main Street and middle class Americans continue to lose jobs, the pay checks on Wall Street and corporate boardrooms continue in their unabated and inflated manner while middle class Americans are absorbing pay cuts or shortened work weeks if they have any jobs at all, while teachers, the backbone of the nations future, police and firemen are losing their employment. And so it goes, leaving the nation with a Frankenstein system whose core objective of governance has become self preservation of power and personal influence. This, while governing for the greater good of the nation has become a secondary and distant gerrymandered priority leaving the great body of the American electorate virtually without meaningful representation and forestalling and diminishing America’s middle class’ engagement with its government with every passing day. And yet something is stirring. People throughout the land understand that the political system is broken and American’s throughout the length and breadth of the county that their government no longer speaks for them no matter which party happens to be in power. They feel the system is gamed from within, for and about those who have access and the money to follow through to assure their parochial interests are taken into account and acted upon. How those interests impact the greater good has become dangerously secondary. Checks and balances seem to have gone by the board long ago. Grass roots movements are beginning to stubbornly emerge from the depths of these frustrations of which I have touched on only a few, as the list could go on almost endlessly. Yes, there are the Tea Parties, and they should be listened to in order to begin to understand how people feel. But out there something much more significant is beginning to take hold. A movement new to many, headed by people of impeccable credentials who are devising a program using the new age technology to bring all Americans back into the political process in a meaningful way and most importantly in a way that each American can once again feel that he/she as a citizen once again has the stature and sense of prideful responsibility that his vote was meant to convey unto him as a meaningful participant in the process of nationhood. The new organization is called “Americans Elect”. I don’t want to steal its thunder because it can much better directly convey its goals and points of engagement. It has the potential of becoming the salutary wave of America’s political future. Their contact information is given as Kahlil.Byrd@AmericansElect.org.

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Mitchell Bard: Krugman’s Takedown of Ryan Demonstrates How Conservatives Are at War With the Middle Class

August 8, 2010

Conservatives routinely paint Barack Obama as a socialist looking to redistribute wealth in the United States. (Or worse, as Rep. Bob Inglis (R-S.C.) reported that tea party leaders, during a meeting, espoused paranoid delusions of a totalitarian takeover of the U.S. by Obama.) This charge is cynical and outrageous, not just because it is false and a naked attempt to use fear mongering to drum up votes, but because there is actually a group of Americans actively engaged in wealth redistribution, and they have been for quite some time. Who are these people looking to move massive amounts of assets from one subsection of Americans to another? The conservatives themselves. Beginning with the Reagan administration, and reaching its fullest realization during the presidency of George W. Bush, conservatives have systematically been acting to redistribute wealth from the middle class upward. The result has been the steady decay of the middle class, and it’s all a result of conservative policies, specifically involving taxes and deregulation. Bush successfully pushed through accelerated deregulation and massive tax cuts for the highest earners. The result was that while the wealthiest Americans saw substantial income gains, real income for the middle class was static (and far below the robust growth of the middle class during the Clinton administration). And when, in the absence of regulation, Wall Street’s reckless bets nearly brought ruin to the financial industry, the result was a massive recession that severely hit the lower, working and middle classes. As I lamented last month , middle and working class Americans have every right to be angry now, but that anger shouldn’t be directed at the Democrats in November, but at the Republicans, whose policies created the economic mess the country finds itself in. Which is why I was so happy to see Paul Krugman’s annihilation of the economic plan advanced by the so-called “intellectual” star of the Republican party, Rep. Paul Ryan of Wisconsin. Krugman exposed Ryan’s plan for what it is, a replay of the Bush economic policies, only this time on steroids: A massive tax break for the wealthiest five percent of Americans that would cost the country $4 trillion over the next ten years, a tax increase for the other 95 percent of Americans, and monumental cuts in government spending that would cause catastrophic pain for the lower, working and middle classes (while having little effect on the wealthy, the primary beneficiaries of Ryan’s plan). Oh, and Ryan’s plan would add to the deficit, pushing it far beyond the current projections for 2020. (Of course, Ryan is touting the savings of his spending cuts without accounting for the costs of his tax cuts for the rich.) I thought Krugman’s exposure of the realities of the Ryan plan provided a solid summing up of current Republican ideology. On the surface, Ryan appears more reasonable than the more vocal leaders of his party. He tends to avoid the outrageous pronouncements of his fellow conservatives (think Sarah Palin , Rep. Steve King (R-IA) and his talk of ” velvet revolution ,” Rep. Michelle Bachman (R-MN) and House Minority Leader John Boehner , not to mention the lies and vitriol spouted by pundits like Rush Limbaugh and Glenn Beck, as well as the consistent national security fear-mongering of Newt Gingrich , and the out-and-out insanity on parade daily in the media, like the recent charge by Colorado gubernatorial candidate Dan Maes that his Democratic opponent encouraged bike use as mayor of Denver as part of a plan to convert the city into a “United Nations community,” not to mention the possible Queen of the wackos, Nevada GOP senate candidate Sharron Angle , including her claim that the press should ask the questions she wants to answer .). Ryan is the young, normal-looking and sounding face Republicans would like to send out in front of the public, but, as Krugman comprehensively laid out, his policies are no more mainstream or plausible than those of his more obviously extreme colleagues. No, Ryan, just like the others, is completely dedicated to policies that empower corporations and transfer wealth upward, at the expense of the middle class. In short, Ryan and the rest of the conservatives are at war with lower, working and middle class Americans. The Republicans would like to frame the November midterm elections as a matchup between a socialist party looking to redistribute wealth and engineer a government takeover of the private sector (the Democrats) v. a party defending traditional American values of free market, capitalist economics (the Republicans). Such a framing of the two parties is a Republican fantasy, as accurate as the charge that President Obama was not born in the United States (which, according to a recent CNN poll , nearly two in five Republicans believe to be true ). But one look at the reality of the Bush years and the behavior of Republicans during the Obama administration paints a very different picture. On issue after issue, the Republicans have sided against the middle class, whether it was opposing financial regulation (even after GOP-touted deregulation resulted in the near financial collapse that plunged the country into deep recession), pushing for an extension of the Bush tax cuts for the wealthy, opposing any kind of job-creating stimulus (that didn’t involve more tax cuts for the rich), opposing and delaying the extension of unemployment benefits to those out of work (and painting the unemployed as lazy), opposing state aid that would preserve the jobs of teachers, police officers and firefighters (even though it would decrease the deficit), opposing health care reform (except to protect private insurance companies), and even opposing aid to workers sickened by the toxic fumes at Ground Zero after the 9/11 attacks. The smoking gun of GOP dedication to the wealthy at the expense of the middle class (and the revelation that the party’s supposed fanatical opposition to deficits is a facade) came when one Republican after another lined up to back Sen. John Kyl’s position that it was okay to add to the deficit for tax cuts for high earners (something even conservative stalwart Alan Greenspan could not support ). The GOP record of the last ten years demonstrates that, in reality, the election in November will pose a choice between Democrats who support a free market capitalist economy, but with protections to prevent against its excesses (thus protecting lower, working and middle class Americans), and Republicans at war with the middle class, advocating policies that further their suffering while benefiting Wall Street, corporations and the wealthiest Americans. Conservatives are right when they say that there are those in Washington looking to redistribute wealth. It’s just that it’s their party that is all for the redistributing.

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Diane Francis: Obama, Grumpy Old Men and Detroit

July 30, 2010

“Obama is the maid after Led Zeppelin’s been in the room” — comic Bill Maher This is the best description of the mess that the President inherited from the cowboy capitalists who let the banking system run amok and opted for the Iraq war instead of health care. It is the moral compass to many Americans. Witness that Obama’s approval rating of 47%, mid-term, is equivalent to Reagan’s and other popular presidents at this point in the presidency. Gallup’s running poll breaks down support demographically, and Obama’s highest percentages remain female and under 30 then drop with age. Old guys like him least. This is America’s Grumpy Old Man cohort that listens to Rush Limbaugh; likes to get Social Security, but not to pay taxes for it; likes Medicare but doesn’t want anybody else to get government health care, and that liked John McCain and his sidekick Sarah. The U.S. Congress, on the other hand, is in for a major purge. This week, Zogby Interactive found only 20% of voters approve of the job Congress is doing. And of this, 25% approve of Republican job performance and 37% approve of the Democrats. Zogby said the difference is that Republicans don’t approve of their party’s performance. With a margin of error of plus or minus 2.2% — or even 20% — this means a bloodbath in the House of Representatives where everybody’s seat is up for grabs and one third of the Senate’s. But that’s weeks away so the noise will abate. Besides, the well’s been capped, the BP CEO sent to Siberia and so TV ratings will track mindless distractions like Chelsea’s wedding and Mel Gibson’s anger. For business, the new convergence with politics will mean that the car company turnarounds will be front and center this fall. Obama has already begun the first of many tours of the automobile heartland — factories in Michigan, Indiana, Ohio and Illinois — to trumpet the fact that the 2009 rescue of the Big Three has gotten them back on the road. Some 55,000 jobs have returned in that sector along with profits. This is also good news for Ontario’s auto heartland. My guess is that the timing of General Motors’ new share issue in markets will be before the November vote and that pricing of the issue will be favorably tilted toward investors and headlines alike. There will also be more headlines, and selective buying opportunities, in the months ahead as the Republican press inaccurately compares the United States debt situation with that of moribund Japan’s where it is 2.5 times bigger. And in European, markets riots in Greece and Spain will no longer be the barometer of impending doom, but of positive resolution as budget constraints bite workers who have been paid forever to do very little.

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