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There’s talk that the McCaskill-Corker spending cap will be the cost of raising the debt ceiling. This would be, to put it simply, completely insane. Spending caps are bad policy, and the McCaskill-Corker spending cap — which holds spending to 21.5 percent of GDP, or three percentage points lower than it is right now — is a badly designed spending cap. But beyond all that, it’s laughable to posit it as a compromise: It’s arguably the most radically conservative reform that could be made to the federal budget. More extreme, by far, than Paul Ryan’s plan.
Richard D. Wolff:
What difference do deficits make? When the government’s tax revenues fall short of its expenditures, it must borrow the difference. That borrowing adds to the country’s total accumulated debt. As a result, next year and thereafter, government spending will have to pay interest on this year’s borrowing. That means using a portion of its tax revenues in the future NOT to provide public services or help people, but instead, to pay interest on its borrowing this year.
Deficits matter because they divert tax revenues away from serving most taxpayers to enriching Washington’s creditors instead. They also matter when Republicans and conservative Democrats use deficits and government debts as excuses to cut government programs they oppose.
Liberals and Keynesians usually favor government deficits during recessions. They want the government to spend not only to soften hardships during economic downturns, but also to compensate for businesses’ hesitancy to invest in poor economic conditions. Otherwise, liberals fear that crises may turn people against the capitalist system and/or to extremist politics. Thus, Paul Krugman angrily urges Obama to increase rather than limit government spending and not worry about deficits. In such enthusiasms, liberals and Keynesians underestimate the real costs of deficits and who will likely have to pay for them.
The problems with these liberals’ logic are many. First, if the government taxed corporations and the wealthiest individuals more, it could maintain high spending without having to incur huge deficits. One recent calculation showed that if corporations and individuals earning over $1,000,000 per year paid the same rate of taxes today as they paid in 1961, the US Treasury would collect an addition $716 billion per year. That would cut the 2011 deficit by half and likewise its interest costs. Second, consider who lends to the US government. Major creditors include the People’s Republic of China, Japan, large corporations and wealthy individuals in the US and abroad. The greater our deficits, the more of everyone’s taxes go to pay interest to those creditors. Third, consider the basic injustice of deficits: (1) Washington taxes corporations and the rich far less than it used to in, say, the 1960s, (2) Washington therefore runs a deficit and (3) the US Treasury then borrows from corporations and the rich the money that the government allowed them not to pay in taxes.
The bottom line: US capitalism collapsed into dependence on massive government support in 2008 and since. Beyond providing immense, open-ended guarantees for the debts of defunct banks, insurance companies etc., government support to business included trillions spent on bank and corporate bailouts. The government chose to pay for most of that by massive borrowing (rather than raising taxes on corporations and the rich – not even on those corporations that government funds saved from certain bankruptcy). That is why those huge bailouts required correspondingly huge deficits.
Both parties in Washington have supported and sustained massive ongoing deficits supporting a crippled, state-dependent capitalism. Those deficits will continue to raise our national debt and continue to be used as excuses for cutting government services to people. Fake debates around deficits should not distract us from what capitalism has demanded and obtained from both of its parties or from the urgent need to build a real opposition to them both.
Leader Nancy Pelosi: A Great Deal Is At Stake
Mr Obama produced an only slightly less ambitious goal for deficit reduction than the House Republicans, albeit working from a more forgiving baseline: $4 trillion over 12 years compared to $4.4 trillion over 10 years. But the means by which he would achieve it are very different. Whereas the Republicans want to cut taxes, Mr Obama would raise them by more than $1 trillion. He wants to further strengthen his health reforms, which the Republicans want to scrap altogether. He proposes cuts in military spending—the one area where Republicans were reluctant to swing the axe. Much like Paul Ryan, the congressman who drew up the Republican plan, Mr Obama seems to have embraced the supposedly bipartisan goal of deficit reduction, but by means calculated to reassure his base and outrage his opponents.
Instead, Mr Obama proposes to cut spending by $2 trillion and increase taxes by $1 trillion, all of which would save $1 trillion in extra interest payments, the White House calculates. Of the spending cuts, $400 billion would come from the armed forces, $480 billion from health care, $360 billion from other recurring items such as agricultural subsidies, and $770 billion from the “discretionary” part of the budget, meaning the spending that must be renewed each year. All the extra revenue would come from eliminating loopholes in the tax code. Mr Obama also said he would allow taxes on the rich to rise in 2012, as they are currently slated to do (but not on everyone else, as they are also slated to do). But since he was already assuming that that increase would go ahead, despite Republican vows to stop it, it is not included in his numbers.
It may be precisely because Mr Obama anticipates fierce haggling with the Republicans over the next few months that he conceded so little ground in his speech. The Republicans, in turn, are threatening financial chaos by refusing to raise the cap Congress sets on the federal government’s borrowing, even as the debt nears the $14.3 trillion limit, unless Mr Obama concedes ground on the budget. A bipartisan group of senators, meanwhile, continues to work on a deficit-reduction scheme inspired by the fiscal commission set up by the president last year. Their proposal, likely to be unveiled in May, will probably fall somewhere between the president’s and the House Republicans’. A detente is still possible, despite all the martial rhetoric.
Barack Obama may still be President and Senator Harry Reid may still be Senate Majority Leader, but Republicans across the nation have been treating 2011 like one extended ideological victory lap. For them, the 2010 elections were not the result of a frustrated electorate upset with slow progress on the economy and frustration with the perceived effectiveness of Democratic rule. Instead, heedless of the consecutive wave elections that swept them out of control of the Congress and then the Presidency, Republicans apparently chose instead to believe that their entire ideology had finally prevailed in the minds of the public and now was the time to implement it.
To be sure, these were lofty and perhaps irrelevant goals for a party that was hired by the voters in an attempt to find a party that would jumpstart the economy to their liking. Recent polling numbers suggesting that over half the country believes that the new majority is not fulfilling its campaign promises should have sent a warning signal that perhaps it was time to refocus on the priorities of the American people. But the GOP was far from finished: It was finally time to launch the all-out war on the New Deal and the Great Society. Enter Budget Committee Chair Paul Ryan.
Ryan’s extremist prescription for getting our nation’s fiscal house in order paradoxically calls for a massive tax cut for the wealthy: those making $373,650 a year would see a reduction in their top marginal rate of nearly thirty percent. But the much bigger deal is that it would eliminate Medicare as we know it by replacing it with a voucher system to purchase private insurance, costing seniors more money on average than they would need to pay for medical services otherwise. Now, anyone who has been paying attention to politics for the past some time would be perfectly aware that Republicans have been eager to cut marginal rates for the wealthy and to cut so-called “entitlement programs.” Consequently, one would assume that the conservative intellectuals who had been pushing these policy prescriptions would be thrilled that someone like Paul Ryan was “bold” enough to draft it, and that the Republicans had a strong enough majority to pass it.
Instead, DCCC chair Steve Israel is saying that this vote will cost the Republicans that house. And conservative pundit David Frum has said that this vote will enable Obama to rebound and be in much stronger position when the 2012 elections roll around.
Major Garret explained in the National Journal that Republicans may believe in the principles behind the Ryan plan, but were extremely hesitant to embrace it for one simple reason: they know that individually, the policies of eliminating Medicare and cutting taxes for the wealthy even more are severely unpopular. But taken as a twin bill in one legislative performance? A potential political disaster. As Frum explains:
And so Republicans have united around Rep. Paul Ryan’s (R-Wis.) proposal that for the first time in modern conservative history explicitly joins a big tax cut for the rich to big cuts in health care spending for virtually everybody else. If this were a tennis game, the Republicans would be placing the ball in exactly the spot on the court where it must never, ever go.
There are two lessons to be learned from this: first, it must be difficult to be a conservative and be forced to consistently hide from one’s actual policy positions in the interests of getting elected. But more importantly, it is incumbent on Democrats and their allies in the progressive movement to use articles like those by Frum and by Garrett to remind voters at every available opportunity that no matter what Republicans campaign on, their real objectives that are obfuscated on the campaign trail but discussed only in Republican Study Committee backrooms are still out there.
Republicans and conservatives may try to continually nibble at the edges of the social contract in the interest of making marginal gains. But they have forgotten that the American public does not in fact support their actual objectives and they must, in fact, lie to get elected on a nationwide scale. In 2011, they have finally come to believe that the American public actually supports their actual agenda. And if Democrats play their cards right, they should be able to parley this into long term gains. To finish Frum’s analogy: the ball is in our service court.
At this point, millions of Americans are no doubt wondering what happened to their local Borders Bookstore. Well, Borders closed them. Initially 200 of them. Later, more, including my own, for a total of 225.
[…]On February 16, Borders Group Inc. (BGP) filed for Chapter 11 protection and announced it would close about 30% of its stores nationwide in the coming weeks (In re Borders Group Inc., 11-10614, U.S. Bankruptcy Court, Southern District of New York). Borders is/was currently the second-largest book chain after Barnes & Noble Inc. (BKS),
Six thousand people – 6,000 – out of work.
As the New York Times reported, the troubles of Borders are rooted in a series of strategic missteps, executive turnover and a failure to understand the digital revolution — problems in many ways of Borders’ own making.
Rather than fix the problem, or punish those responsible, it punished its innocent employees, and the book-hungry public, by closing hundreds of stores. Meanwhile, the President and CEO is asking for $8.3 million in executive bonuses (including nearly $1.7 million for himself).
CEO Mike Edwards currently has a salary of $750,000. The bonus plan would give other top executives bonuses equal to as much as 90% to 150% of their base pay.
Doesn’t seem fair. But then, that’s corporate America. That’s the America Republicans love.
Borders is in debt to the tune of $1 billion, folks.
Video- President’s Weekly Address: America’s Fiscal Future
Treasury Secretary Timothy Geithner says Republican leaders have privately assured the Obama administration that Congress will raise the government’s borrowing limit in time to prevent an unprecedented default on the nation’s debt.
But a top Republican quickly pushed back Sunday and said there was no guarantee the GOP would agree to increase the $14.3 trillion debt ceiling without further controls on federal spending.
A last-minute deal last month between the White House and GOP avoided a government shut down on a budget running through September. But Republicans are seeking additional savings in the budget for next year, and say unless they get them, they won’t support raising the debt ceiling.
In an interview with The Associated Press on Friday, Obama predicted that Congress would raise the debt ceiling, but he acknowledged that he would have to offer more spending cuts in the budget to get a deal. Later, Obama’s spokesman said a debt ceiling vote could not be contingent on upcoming negotiations over the budget.
Treasury Secretary Timothy Geithner said he was confident that lawmakers would not allow the nation to hit the ceiling and default on its debt.
“I want to make perfectly clear that Congress will raise the debt ceiling,” he said on ABC’s “This Week.”
“They told the president that on Wednesday in the White House,” Geithner added, referring to a meeting between Obama and bipartisan Congressional leaders. “And I sat there with them, and they said, we recognize we have to do this. And we’re not going to play around with it. Because we know — we know that the risk would be catastrophic.”
Payments to Medicare, Medicaid, Social Security and veterans’ benefits would otherwise halt, Geithner said. “We’d have to stop paying all the other payments on all the other things the government does,” he added. “And then we would risk default on our interest payments. If we did that, we’d tip the U.S. economy and the world economy back into recession, depression. I think it would make the last crisis look like a tame, modest crisis. It would be much more dramatic. The cost of borrowing would go up for everybody, and it would have a permanent devastating damage on our credit rating as a country. And that’s why there is no responsible person that would take any risk that we allow the world to start to fear that the U.S. would court that — that tragedy.”
As millions of procrastinators scramble to meet Monday’s tax filing deadline, ponder this: The super rich pay a lot less taxes than they did a couple of decades ago, and nearly half of U.S. households pay no income taxes at all.
The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.
Over the same period, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent.
The top income tax rate is 35 percent, so how can people who make so much pay so little in taxes? The nation’s tax laws are packed with breaks for people at every income level. There are breaks for having children, paying a mortgage, going to college, and even for paying other taxes. Plus, the top rate on capital gains is only 15 percent.
There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.
The sheer volume of credits, deductions and exemptions has both Democrats and Republicans calling for tax laws to be overhauled. House Republicans want to eliminate breaks to pay for lower overall rates, reducing the top tax rate from 35 percent to 25 percent. Republicans oppose raising taxes, but they argue that a more efficient tax code would increase economic activity, generating additional tax revenue.
President Barack Obama said last week he wants to do away with tax breaks to lower the rates and to reduce government borrowing. Obama’s proposal would result in $1 trillion in tax increases over the next 12 years. Neither proposal included many details, putting off hard choices about which tax breaks to eliminate.
In all, the tax code is filled with a total of $1.1 trillion in credits, deductions and exemptions, an average of about $8,000 per taxpayer, according to an analysis by the National Taxpayer Advocate, an independent watchdog within the IRS.
More than half of the nation’s tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent. Still, the wealthy have access to much more lucrative tax breaks than people with lower incomes.
Obama wants the wealthy to pay so “the amount of taxes you pay isn’t determined by what kind of accountant you can afford.”
The premises of corporate education reform are: the main impediments to improving public schools are teachers’ unions because they rigidly defend bad teachers; schools need to be run like businesses to make them less bureaucratic and more dynamic; educational experience is not required to be a teacher, principal, or chancellor; the corporate education reform model is the only way public education can be transformed; and success can be measured through data-driven outcomes, with the most important data being student test scores.[…]
Rhee’s strategy of attacking unions and teachers eased the implementation of free market policies, which rely on three main tenets: a top-down organizational structure, privatization, and competition (or “school choice”).
It is not surprising, then, that reforming public education has become a very profitable industry, involving testing companies, consultants, supplemental educational services, educational management companies and charter schools. Some are non-profit but a growing number are for profit. And then there are the venture philanthropists: the Broad, Bill and Melinda Gates, and Walton Foundations, who direct huge amounts of money to projects they deem worthy.
The Broad Foundation’s website claims, “We take an untraditional approach to giving. We don’t simply write checks to charities. Instead we practice ‘venture philanthropy.’ And we expect a return on our investment.”
A year after BP’s Macondo well blew out, killing 11 men and spewing millions of barrels of oil into the Gulf of Mexico, the much-maligned federal agency responsible for policing offshore drilling has been remade, with a tough new director, an awkward new name and a sheaf of stricter safety rules. It is also trying to put some distance between itself and the industry it regulates.
But is it fixed? The simple answer is no. Even those who run the agency formerly known as the Minerals Management Service concede that it will be years before they can establish a robust regulatory regime able to minimize the risks to workers and the environment while still allowing exploration offshore.
“We are much safer today than we were a year ago,” said Interior Secretary Ken Salazar, who oversees the agency, “but we know we have more to do.”
Even the officials who run it, Mr. Salazar and the new director, Michael R. Bromwich, admit that they have a long way to go before government can provide the kind of rigorous oversight demanded by the complex, highly technical and deeply risky business of drilling for oil beneath the sea.
But Mr. Bromwich says his agency still lacks the resources, personnel, training, technology, enforcement tools, regulations and legislation it needs to do its job properly. He lays a large part of the blame on insufficient financing.
The bureau’s budget has been basically flat since it was created in 1982, even as drilling activity in the deep-water gulf has drastically increased and the technology has grown more complicated.
The NRC says that is not the case, and commission Chairman Gregory Jaczko defended the agency’s independence and professionalism. “I have a great staff who are dedicated to public health and safety, and people who interact with this agency, they know that and they see that,” he said in an interview.
Critics of the NRC say the problem at Davis Besse, 20 miles southeast of Toledo, is a prime example of the agency’s deference to industry. The inspector general concluded that a conflict between the NRC’s twin goals of inspecting the plant to protect public safety and a desire to “reduce unnecessary regulatory burden” on the owner led to the delay in finding the gaping hole.
WASHINGTON — Oil and gas companies injected hundreds of millions of gallons of hazardous or carcinogenic chemicals into wells in more than 13 states from 2005 to 2009, according to an investigation by Congressional Democrats.
The chemicals were used by companies during a drilling process known as hydraulic fracturing, or hydrofracking, which involves the high-pressure injection of a mixture of water, sand and chemical additives into rock formations deep underground. The process, which is being used to tap into large reserves of natural gas around the country, opens fissures in the rock to stimulate the release of oil and gas.
Hydrofracking has attracted increased scrutiny from lawmakers and environmentalists in part because of fears that the chemicals used during the process can contaminate underground sources of drinking water.
“Questions about the safety of hydraulic fracturing persist, which are compounded by the secrecy surrounding the chemicals used in hydraulic fracturing fluids,” said the report, which was written by Representatives Henry A. Waxman of California, Edward J. Markey of Massachusetts and Diana DeGette of Colorado.
Companies injected large amounts of other hazardous chemicals, including 11.4 million gallons of fluids containing at least one of the toxic or carcinogenic B.T.E.X. chemicals — benzene, toluene, xylene and ethylbenzene. The companies used the highest volume of fluids containing one or more carcinogens in Colorado, Oklahoma and Texas.
The report comes two and a half months after an initial report by the same three lawmakers that found that 32.2 millions of gallons of fluids containing diesel, considered an especially hazardous pollutant because it contains benzene, were injected into the ground during hydrofracking by a dozen companies from 2005 to 2009, in possible violation of the drinking water act.
A 2010 report by Environmental Working Group, a research and advocacy organization, found that benzene levels in other hydrofracking ingredients were as much as 93 times higher than those found in diesel.
The use of these chemicals has been a source of concern to regulators and environmentalists who worry that some of them could find their way out of a well bore — because of above-ground spills, underground failures of well casing or migration through layers of rock — and into nearby sources of drinking water.
The E.P.A. is conducting a national study on the drinking water risks associated with hydrofracking, but assessing these risks has been made more difficult by companies’ unwillingness to publicly disclose which chemicals and in what concentrations they are used, according to internal e-mails and draft notes of the study plan.
The new estimate is based on just 136 samples of beef, chicken, pork and turkey purchased from grocery stores in Chicago, Los Angeles, Washington, D.C., Flagstaff, Ariz. and Fort Lauderdale, Fla.
Proper cooking kills the germs, and federal health officials estimate staph accounts for less than 3 percent of foodborne illnesses, far less than more common bugs like salmonella and E. coli.
The new study found more than half the samples contained Staphylococcus aureus, a bacteria that can make people sick. Worse, half of those contaminated samples had a form of staph that’s resistant to at least three kinds of antibiotics.
“This study shows that much of our meat and poultry is contaminated with multidrug-resistant staph,” Paul Keim, one of the study’s authors, said in a statement. “Now we need to determine what this means in terms of risk to the consumer.”
The study’s authors note that livestock and poultry are steadily fed low doses of antibiotics at industrial farms. They suggest that may be a contributor to the antibiotic resistance seen in some meat samples.
Among the types of drug-resistant germs the researchers found, one was methicillin-resistant staph, or MRSA, a superbug that can be fatal. They found MRSA in three of the 136 samples.
Food and Drug Administration officials say meat does not seem to be a significant route for MRSA transmission, but health officials continue to study the issue.
The government doesn’t routinely check retail meat and poultry for staph bacteria. However, a fairly recent FDA pilot study in the Washington area looked at more than 1,100 meat and poultry samples and found staph in 280 of them.
Ryan doesn’t talk about it and it doesn’t appear in the plan published on the Vouchercare website. One has to go to the Congressional Budget Office report to find it. And there you discover that under the Ryan/Republican plan
Starting in 2022, the age of eligibility for Medicare would increase by two months per year until it reached 67 in 2033.
That means that if you were born in 1966 or later you won’t be eligible for diddlysquat until you are sixty-seven. No Medicare, no voucher, no nothing.
For those two years, seniors will be totally on their own. That means for those who are employed, if their employer offers insurance they’ll be forced to work two more years unless they want to go broke trying to buy insurance in the open market. Alternatively they can go without insurance and pray they don’t get sick. Those who are not working will truly be fending for themselves.
Nowhere was the contrast in views over health care stronger than on drugs. Obama called for using Medicare’s purchasing power to reduce drug costs; Paul Ryan, in his
hissy fit response, held Medicare Part D — which specifically denies Medicare the ability to bargain — as an example of the cost savings that can be achieved through privatization (although he didn’t call it that.)
It’s true that Part D has so far come in substantially cheaper than was predicted in 2003, when the Medicare Modernization Act was passed. That’s because overall spending on prescription drugs (pdf) has risen much more slowly than expected, mainly thanks to relatively few new drugs being introduced and greater use of generics:
What you really want is a comparison of costs with what happens when the government is able to bargain; and Austin Frakt has the goods: the VA pays 40 percent less than Medicare Part D. This comes at the cost of somewhat restricted choices — but if you’re looking for a way to save money, you want to move away from the part D model, not towards it.
The State Legislature this week passed a bill that puts Georgia in a league with Arizona, the first state to empower the local and state police to demand documentation of residency and to detain people they reasonably suspect are in the country illegally.
On Monday, the United States Court of Appeals for the Ninth Circuit upheld a trial judge’s ruling blocking the most contentious parts of Arizona’s law, which raised hope among Georgia residents fighting the bill. But the bill went back and forth between chambers until it was passed in the final hours of Georgia’s legislative session Thursday.
Lawmakers modified the Georgia bill slightly from Arizona’s and softened requirements surrounding use of the federal E-Verify program, which helps employers confirm online whether potential employees can legally work in the United States.
An investigation into the Maricopa County sheriff’s office discovered that Arpaio, the Bull Connor reincarnate of immigration enforcement, inappropriately spent $99.5 million from two jail funds over the last eight years to pay for other law enforcement operations—including immigration patrols.
This is really a disaster for the county…Taxpayers are looking at us and saying, ‘How in the hell did it happen?’…For eight years, [Arpaio has] been signing paperwork that says the budget is balanced, but it’s not.
The investigation into Sheriff Arpaio’s finances began six months ago, after budget officials and members of the county Board of Supervisors suspected that “America’s Toughest Sheriff” was using jail tax money to fund pet projects, such as rounding up undocumented immigrants at places like the Burlington Coat Factory and Pei Wei restaurants, or following county supervisors and judges around in failed public-corruption stings.
The $99.5 million figure released yesterday is an update on an estimate from last September, when investigators believed Arpaio had taken between $60 million and $80 million over five years from a jail tax and used it for other purposes. Since then, officials have discovered that $84.7 million had been diverted from the jail tax, while $14.8 million had been taken from a second fund, set up for prison inmates to buy household items and make phone calls.
USA Today quotes the budget paper released:
Discrepancies existed for years between sheriff’s employees’ actual duties and the duties reported in county payroll records. As sheriff’s employees were transferred around the agency, the payroll records were not always updated, creating a massive financial problem that will have to be confronted in coming years.
It is a question asked repeatedly across America: why, in the aftermath of a financial mess that generated hundreds of billions in losses, have no high-profile participants in the disaster been prosecuted?
Answering such a question — the equivalent of determining why a dog did not bark — is anything but simple. But a private meeting in mid-October 2008 between Timothy F. Geithner, then-president of the Federal Reserve Bank of New York, and Andrew M. Cuomo, New York’s attorney general at the time, illustrates the complexities of pursuing legal cases in a time of panic.
At the Fed, which oversees the nation’s largest banks, Mr. Geithner worked with the Treasury Department on a large bailout fund for the banks and led efforts to shore up the American International Group, the giant insurer. His focus: stabilizing world financial markets.
According to three people briefed at the time about the meeting, Mr. Geithner expressed concern about the fragility of the financial system.
His worry, according to these people, sprang from a desire to calm markets, a goal that could be complicated by a hard-charging attorney general.
Asked whether the unusual meeting had altered his approach, a spokesman for Mr. Cuomo, now New York’s governor, said Wednesday evening that “Mr. Geithner never suggested that there be any lack of diligence or any slowdown.” Mr. Geithner, now the Treasury secretary, said through a spokesman that he had been focused on A.I.G. “to protect taxpayers.”
Whether prosecutors and regulators have been aggressive enough in pursuing wrongdoing is likely to long be a subject of debate. All say they have done the best they could under difficult circumstances.
But several years after the financial crisis, which was caused in large part by reckless lending and excessive risk taking by major financial institutions, no senior executives have been charged or imprisoned, and a collective government effort has not emerged. This stands in stark contrast to the failure of many savings and loan institutions in the late 1980s. In the wake of that debacle, special government task forces referred 1,100 cases to prosecutors, resulting in more than 800 bank officials going to jail. Among the best-known: Charles H. Keating Jr., of Lincoln Savings and Loan in Arizona, and David Paul, of Centrust Bank in Florida.
Former prosecutors, lawyers, bankers and mortgage employees say that investigators and regulators ignored past lessons about how to crack financial fraud.
A more aggressive mind-set could have spurred far more prosecutions this time, officials involved in the S.&L. cleanup said.
“This is not some evil conspiracy of two guys sitting in a room saying we should let people create crony capitalism and steal with impunity,” said William K. Black, a professor of law at University of Missouri, Kansas City, and the federal government’s director of litigation during the savings and loan crisis. “But their policies have created an exceptional criminogenic environment. There were no criminal referrals from the regulators. No fraud working groups. No national task force. There has been no effective punishment of the elites here.”
Even civil actions by the government have been limited. The Securities and Exchange Commission adopted a broad guideline in 2009 — distributed within the agency but never made public — to be cautious about pushing for hefty penalties from banks that had received bailout money. The agency was concerned about taxpayer money in effect being used to pay for settlements, according to four people briefed on the policy but who were not authorized to speak publicly about it.
To be sure, Wall Street’s role in the crisis is complex, and cases related to mortgage securities are immensely technical. Criminal intent in particular is difficult to prove, and banks defend their actions with documents they say show they operated properly.
But legal experts point to numerous questionable activities where criminal probes might have borne fruit and possibly still could.
But the Justice Department has decided not to pursue some of these matters — including possible criminal cases against Mr. Mozilo of Countrywide and Joseph J. Cassano, head of Financial Products at A.I.G., the business at the epicenter of that company’s collapse. Mr. Cassano’s lawyers said that documents they had given to prosecutors refuted accusations that he had misled investors or the company’s board. Mr. Mozilo’s lawyers have said he denies any wrongdoing.
Among the few exceptions so far in civil action against senior bankers is a lawsuit filed last month against top executives of Washington Mutual, the failed bank now owned by JPMorgan Chase. The Federal Deposit Insurance Corporation sued Kerry K. Killinger, the company’s former chief executive, and two other officials, accusing them of piling on risky loans to grow faster and increase their compensation. The S.E.C. also extracted a $550 million settlement from Goldman Sachs for a mortgage security the bank built, though the S.E.C. did not name executives in that case.
Representatives at the Justice Department and the S.E.C. say they are still pursuing financial crisis cases, but legal experts warn that they become more difficult as time passes.
On Friday, April 8, as members of the U.S. Congress engaged in a last-minute game of chicken over the federal budget, the Pentagon quietly issued a report that received little initial attention: “A National Strategic Narrative.” The report was issued under the pseudonym of “Mr. Y,” a takeoff on George Kennan’s 1946 “Long Telegram” from Moscow (published under the name “X” the following year in Foreign Affairs) that helped set containment as the cornerstone of U.S. strategy for dealing with the Soviet Union.
The piece was written by two senior members of the Joint Chiefs of Staff in a “personal” capacity, but it is clear that it would not have seen the light of day without a measure of official approval. Its findings are revelatory, and they deserve to be read and appreciated not only by every lawmaker in Congress, but by every American citizen.
The narrative argues that the United States is fundamentally getting it wrong when it comes to setting its priorities, particularly with regard to the budget and how Americans as a nation use their resources more broadly. The report says Americans are overreacting to Islamic extremism, underinvesting in their youth, and failing to embrace the sense of competition and opportunity that made America a world power. The United States has been increasingly consumed by seeing the world through the lens of threat, while failing to understand that influence, competitiveness, and innovation are the key to advancing American interests in the modern world.
Courageously, the authors make the case that America continues to rely far too heavily on its military as the primary tool for how it engages the world. Instead of simply pumping more and more dollars into defense, the narrative argues:
By investing energy, talent, and dollars now in the education and training of young Americans — the scientists, statesmen, industrialists, farmers, inventors, educators, clergy, artists, service members, and parents, of tomorrow — we are truly investing in our ability to successfully compete in, and influence, the strategic environment of the future. Our first investment priority, then, is intellectual capital and a sustainable infrastructure of education, health and social services to provide for the continuing development and growth of America’s youth.
Yet, it is investments in America’s long-term human resources that have come under the fiercest attack in the current budget environment. As the United States tries to compete with China, India, and the European Union, does it make sense to have almost doubled the Pentagon budget in the last decade while slashing education budgets across the country?
The report places considerable emphasis on the importance of achieving a more sustainable approach to security, energy, agriculture, and the environment. Again, it is important to stress that this narrative was penned by senior military thinkers, not the Sierra Club. The simple fact is that any clear-eyed analysis pretty quickly comes to the same conclusion: The United States has established an incentive system that just doesn’t make any sense. It continues to pour tens of billions of dollars into agricultural and oil subsidies every single year even as these subsidies make the gravity of the environmental, health, and land-use problems the country faces in the future ever graver. As the report argues, America cannot truly practice the use of “smart power” until it practices “smart growth” at home. While some may be quick to argue that the Pentagon should not be considering issues like smart growth and investments in America’s youth, this goes to another key point from the authors: America won’t get its approach to policy right if it leaves foreign policy and domestic policy in tidy little silos that ignore the interconnection between the two.
The paper argues persuasively that the tendency of Americans to broadly label the rest of the world has been hugely counterproductive. The authors point out that the tendency over the last decade by some Americans to view all Muslims as terrorists has made it more difficult to marginalize genuine extremism, while alienating vast swaths of the global Muslim community. In a world where credibility is so central to America’s national interest and reach around the globe, the overheated domestic debate about the war on terror has never served it very well.
Lastly, the narrative makes a clarion call for America to look forward, not back, in today’s interconnected world:
And yet with globalization, we seem to have developed a strange apprehension about the efficacy of our ability to apply the innovation and hard work necessary to successfully compete in a complex security and economic environment. Further, we have misunderstood interdependence as a weakness rather than recognizing it as a strength. The key to sustaining our competitive edge, at home or on the world stage, is credibility — and credibility is a difficult capital to foster. It cannot be won through intimidation and threat, it cannot be sustained through protectionism or exclusion. Credibility requires engagement, strength, and reliability — imaginatively applied through the national tools of development, diplomacy, and defense.
The budget deal over the weekend lopped $8 billion off of funding for the State Department and the U.S. Agency for International Development. Defense spending was left untouched. Congress doesn’t seem to have gotten the wake-up call.
The final vote — 235 yeas, 193 nays — included only four Republicans casting “no” votes and not a single Democrat voting for the plan.
While the vote was quickly hailed as a victory by Republican leaders, there is reason to believe that for some of the 61 GOP Members who sit in districts President Obama carried in 2008 it may well be a defining moment — and not in a good way — of their first two years in Congress.
The problem for targeted Republicans who are now on the record as in support of this bill is three-fold.
First, Ryan’s proposal to turn Medicare into a voucher system is politically treacherous. In a recent Gallup poll, just 13 percent of people favored a complete overhaul of Medicare. Just 18 percent said they supported major changes in the program.
That goes double for older (65+) people, who tend to be some of the most reliable voters in any election and went for Republicans by 21 points in the 2010 election
Any time a politician find himself on the opposite end of considerable public opinion on a given issue, it’s a dangerous place to be.
Or as former Fix boss Charlie Cook wrote in a recent column about Ryan’s Medicare proposal: “House Republicans are not just pushing the envelop — they are soaking it with lighter fluid and waving a match at it.”
President Obama did a bad thing by calling cruel nonsense cruel nonsense; he hurt Republican feelings, and how can we have a deal when the GOP is feeling insulted? What we need is personal outreach; let’s do lunch!
The easy, and perfectly fair, shot is to talk about the hypocrisy here; where were all the demands for civility when Republicans were denouncing Obama as a socialist, accusing him of creating death panels, etc..? Why is it OK for Republicans to accuse Obama of stealing from Medicare, but not OK for Obama to declare, with complete truthfulness, that those same Republicans are trying to dismantle the whole program?
Beyond that, are we dealing with children here? Is one of our two major political parties run by people so immature that they will refuse to do what the country needs because the president hasn’t been nice to them?
But the main point is, what are we supposed to have a civil discussion about? The truth is that the two parties have both utterly different goals and utterly different views about how the world works.
It is inconceivable to me and most liberal Democrats who can think pragmatically to remotely spew so much lies, dishonesty and vicious attacks similar to what teabaggers do to hurt a Democratic President and claim they are really Democrats. I mean, I really don’t get it.
It is also unfathomable to see so much negativity coming from Liberal Democratic site that claims to be dedicated to electing more and better Democrats and allow RW talking points and ideologies such as calling the President a “rapist” and some calling for the President’s impeachment or imprisonment be embraced by a so called liberal community.
Seriously, these kinds of ideologies are everywhere at Dailykos, HuffPost, FDL and I wonder why communities that claim to stand for a Democratic Principle are trying their very best to elect Republicans?
The House of Representatives today approved Representative Paul Ryan’s budget, the one that ends Medicare as we know it and gives tax breaks to the wealthy. Four Republicans voted against the Ryan plan. The Democrats voted unanimously against it, for a 235-193 margin.
Afterward, Senate Majority Leader Harry Reid released this statement:
“The Republican plan to end Medicare and immediately raise prescription drug costs for seniors in order to pay for millionaire tax breaks will never pass the Senate. The fact that it passed the House shows just how far to the right the Tea Party has dragged the Republican Party.
“In addition to ending Medicare and doubling seniors’ health care costs down the road, the Republican plan would also destroy nearly two million American jobs and undermine our economic growth. Republicans’ plan would only benefit the wealthiest Americans, who would get another round of tax breaks they don’t need and that our economy can’t afford.
“In contrast to Republicans’ plan to end Medicare, Democrats support a responsible approach to reducing the deficit that doesn’t simply shift the burden onto seniors and the middle class, who did nothing to put us in the fiscal hole we are in today. As the President outlined this week, we can reduce the deficit by as much as $4 trillion by making targeted cuts in federal spending that protect seniors’ hard-earned benefits, and by asking millionaires and billionaires to contribute their fair share.”
Ryan budget, meet the brick wall known as Senator Harry Reid, Democrat of Nevada.
Rep. Tom Graves (R) of Georgia appeared on MSNBC the other day, and talked about job policy. He probably should have brushed up a bit on the basics before going on the air.
Host Contessa Brewer noted that there were massive tax breaks during the Bush era, which nevertheless were a period of awful job growth. Given the tax cuts the GOP still believes are critical to reducing unemployment, Brewer asked a good question, “How come we haven’t seen massive job growth?”
Graves responded, “Well, what we’ve seen is massive job loss that began in about 2008, and I believe that was under Barack Obama.”
OK, let’s take this slowly so Graves can follow along.
First, Contessa Brewer is right that job creation in the Bush era was a disaster. Republicans assured the nation that massive tax breaks would create millions of jobs, and they were spectacularly wrong. Graves doesn’t have to like it, and he can try to make excuses for it, but the record isn’t in dispute.
Second, Obama wasn’t president in 2008. He ran for president in 2008, but was inaugurated in 2009. It’s true that the job market fell off a cliff in 2008, but it started to improve almost immediately after Obama signed the Recovery Act into law. I’ve even put together a nice little chart on this that even Graves should be able to understand.
And third, arguing that the job losses occurred under Obama’s watch is itself deeply stupid. I’m including this chart Ezra Klein posted a while back, which, again, even House Republicans should be able to follow.
In his MSNBC interview, Graves went on to say that “high gas prices” were responsible for the jobs crisis in 2008 — it was actually the global financial meltdown — adding, “But when we see the stimuluses, the TARPs, the bailouts, the buyouts, cash for clunkers — they didn’t work.” All of this is demonstrably wrong.
How guys like this get elected in the first place mystifies me. Why they’re allowed to say dumb things on national television is just as baffling.
Nate Silver , 538:
It’s usually a mug’s game to bet on candidates who have declined their interest in an election, and who may have all sorts of personal and professional reasons for doing so. But if you could place a bet on “none of the above” as a group, you might get a good return on your investment.
At a time when working people are fighting defensive battles to preserve essential services at the state and national levels, it is all the more important that labor and community advocates are also building for the long term. Some of the best forward-looking policy making by progressives in the past decade has happened at the level of municipal regions – through a process I call regional power building. In the 1990s and early 2000s, I served as president and CEO of the South Bay AFL-CIO Labor Council and as founder of an organization called Working Partnerships, USA.
Skeptics often respond that regional power building could be done in California, a progressive state, but could not be replicated elsewhere. My response is that not only can advocates in other states achieve impressive successes; they can win them far faster than we ever dreamed in California.
An important example of this comes from Colorado, long considered a rather conservative state. There, an organization called FRESC: Good Jobs, Strong Communities (formerly the Front Range Economic Strategy Center), whose work I have followed with interest for many years, has demonstrated what might be called the Denver Doctrine: when we document best practices from local campaigns and use them to advance our efforts in other parts of the country, we can make strides in half the time we might have otherwise.
Let’s see: There were so many union supporters that Sarah Palin was drowned out at this Madison rally yesterday, yet the AP just can’t estimate how many of the thousands of people who attended were supporting unions. Here’s a clue, guys: They’re not the ones with the misspelled signs:
Capitol Police estimated about 6,500 people converged on the building Saturday, but said it was impossible to tell how many were tea partyers and how many were labor supporters.
Counter-protesters surrounded them, banging drums, bellowing into bullhorns and ringing bells. Bitter arguments broke out along the edges of the two groups over everything from the size of government to corporate power. At one point conservative blogger Andrew Breitbart took the stage and told the labor supporters to “go to hell.”
“I’m serious!” he screamed. “Go to hell! You’re trying to divide America!”
Carl Jung, genius. Talk about projection, eh?
Palin told the tea party rally that Walker is working to solve Wisconsin’s long-term budget problems so it can honor pension commitments to public workers.
Oh, Mrs. Palin. Are you simply woefully misinformed, or shamelessly cynical? (I’m going with the latter.) Wisconsin’s public pension fund is fully funded.
Kloppenburg is currently undecided on whether to request a recount:
Kloppenburg issued a statement saying her campaign will carefully weigh its options and make an announcement no later than Wednesday.
The Government Accountability Board has not yet certified the vote, but is on the brink of doing so:
Kevin J. Kennedy, director and general counsel of the Government Accountability Board, stated:“We appreciate the diligent and meticulous work of municipal and county election officials in completing their official canvass reports. Close elections always bring greater scrutiny of each step of the process, and local election officials have performed professionally and efficiently during the official canvass. We will continue to review the canvass reports and certify the official statewide results when that review is complete and when we know whether a recount is requested. That decision is now in the hands of the candidates.”
Senator Patty Murray, one of the leaders of the defense of Planned Parenthood in the Senate, says that she doesn’t remember any of the lawmakers who wanted to strip Planned Parenthood’s funds mentioning that they supported contraception services. “They just lump everything into one big basket with the word ‘abortion,’ ” she said.
This is important because it speaks to a disconnect in the entire debate we’ve been having about women and reproduction. For eons now, people have been wondering why the two sides can’t just join hands and agree to work together to reduce the number of abortions by expanding the availability of family-planning services and contraception.
The answer is that a large part of the anti-abortion community is also anti-contraception.
“The fact is that 95 percent of the contraceptives on the market kill the baby in the womb,” said Jim Sedlak of the American Life League.
Many anti-abortion activists believe that human life and, therefore, pregnancy begin when the human egg is fertilized and that standard birth control pills cause abortions by keeping the fertilized egg from implanting in the womb. This isn’t the general theory on either count. The American College of Obstetricians and Gynecologists defines pregnancy as beginning with the fertilized egg’s implantation. Dr. Vanessa Cullins of Planned Parenthood says that the pills inhibit the production of eggs or stop the sperm before they reach their destination. “There is absolutely no direct evidence that there is interference with implantation,” she said.
Beyond the science, there’s the fact that many social conservatives are simply opposed to giving women the ability to have sex without the possibility of procreation.
Shortly after Barack Obama took office in 2009 there were concerns that the corporate world had funded and promoted the Tea Party in an effort to stir up discontent over a Black man infiltrating the White House. It didn’t take very long before many on the left figured out that the Koch brothers were behind the Tea Party and warnings of oligarchy resounded throughout the blogosphere.
Within the teabag ranks there was a religious element that was making a play to gain influence and power in legislating a socially conservative agenda leading some to claim America was being driven towards theocratic rule. After the 2010 midterm elections it appeared there may be a power play that pitted oligarchs against theocrats for control of the nation, but a recent development ends that concern for the moment.
Although the greed that permeates the corporate mindset is contrary to Christ’s teachings, the religious right has begun making moves to partner with the Koch’s Tea Party movement for the 2012 campaign for the presidency. The unlikely partners are banking on millions of religious voters funded by millions of Koch brothers’ dollars to field a presidential candidate who will serve the oligarchs and theocrats. It is the nightmare scenario that should instill fear in reasonable Americans desperate to cling to democratic principles and a secular government.
Recently, Tim Phillips, president of the Tea Party group funded by David Koch was a presenter at a religious-right group’s meeting sponsored by Freedom Federation called the Awakening conference. Phillips has close ties to Ralph Reed, head of the Faith and Freedom Coalition (FFC), a religious right organization whose goals are promoting Christian morals and mobilizing people of faith to ensure the bible drives the narrative of American politics. Reed is attempting to mobilize a conservative evangelical vote in the 2012 election by enlisting the FFC’s 20 million evangelical Christian voters. Reed gained notoriety in the 1990’s for working with Pat Robertson’s Christian Coalition and endorsed Newt Gingrich’s Contract with America going so far as calling taxes a family values issue.
UPDATE, APRIL 16, 5:55 P.M.: This afternoon, Marilyn Davenport sent an email to fellow Orange County Republican elected officials, apologizing if anyone was offended by her depicting President Barack Obama as an ape–while also blasting the “liberal media” for reporting the story.
“I simply found it amusing regarding the character of Obama and all the questions surrounding his origin of birth,” Davenport wrote. “In no way did I even consider the fact he’s half black when I sent out the email. In fact, the thought never entered my mind until one or two other people [Scott Baugh, Orange County GOP boss, and this writer] tried to make this about race. . . . I received plenty of emails about George Bush that I didn’t particularly like yet there was no ‘cry’ in the media about them.”
Davenport continued: “That being said, I will NOT resign my central committee position over this matter that the average person knows and agrees is much to do about nothing.”
During an appearance on Fox & Friends Saturday this morning, Fox News host and putative Republican presidential candidate Mike Huckabee was asked about Donald Trump’s soaring poll numbers and Karl Rove’s comments on Greta Van Susteren’s show last night that Trump is a “joke candidate”:
Setting aside the ethical problems inherent in Fox News hosting one of their own employees to discuss the poll numbers of one of his potential GOP primary opponents, Huckabee’s comments about Trump’s birtherism are notable. According to Huckabee, who doesn’t “think the birther issue is a good issue” and doesn’t “agree with it,” people aren’t “rallying behind Donald Trump because of the birther issue.”
But the PPP poll that Huckabee and the Fox crew were discussing tells a different story.
According to PPP’s write-up, “only 38% of Republican primary voters say they’re willing to support a candidate for President next year who firmly rejects the birther theory.” Among that 38%, Trump polls third (with 17%) behind both Romney and Huckabee.
Trump’s numbers are considerably better among those who are “not sure” whether they could support someone who outright rejects birtherism, and soar among the 23% of GOP primary voters who say they are only willing to vote for a birther. Among the latter group, Trump’s support hits 37%, nearly 24 points higher than the 2nd place finishers (Huckabee and Palin in a tie).
While Trump’s birtherism doesn’t explain his entire appeal to GOP primary voters, it certainly seems to help him immensely. And Huckabee’s own network – and Sean Hannity in particular – has played a large role in promoting Trump and moving the inane, discredited birther conspiracy from chain emails and WorldNetDaily articles into the Republican mainstream.
AND IN OTHER NEWS…
Alyssa Bereznak revisits her father’s obsession with Ayn Rand and how it didn’t make for the best parenting:
You might be familiar with Rand from a high school reading assignment. Perhaps a Tea Partyer acquaintance name-dropped her in a debate on individual rights. Or maybe you’ve heard the film adaptation of her magnum opus “Atlas Shrugged” is due out April 15. In short, she is a Russian-born American novelist who championed her self-taught philosophy of objectivism through her many works of fiction. Conservatives are known to praise her for her support of laissez-faire economics and meritocracy. Liberals tend to criticize her for being too simplistic. I know her more intimately as the woman whose philosophy dictates my father’s every decision.
What is objectivism? If you’d asked me that question as a child, I could have trotted to the foyer of my father’s home and referenced a framed quote by Rand that hung there like a cross. It read: “My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.” As a little kid I interpreted this to mean: Love yourself. Nowadays, Rand’s bit is best summed up by the rapper Drake, who sang: “Imma do me.”
You might recall The Yes Men’s phony press conference in 2009, posing as members of the U.S. Chamber of Commerce who had a change of heart and were now promoting climate change legislation.
The Yes Men is a nonprofit group with 10 core members who work on a part-time basis. It’s based in New York, has a budget of about $50,000 and a mailing list of 100,000. They also have a lab where they help budding pranksters pull one over on the press, or “execute a media spectacle,” as they put it. They’ve gained national prominence and even had a documentary made about them.
Usually, the pranks have a purpose, like the bogus GE press release, which was aimed at slamming what some perceive as corporate greed at any cost.
Van Jones had harsh words for the national political establishment. “You have to be wise enough to hold both parties to high standards,” he said:
“While they’re stuck on stupid in DC, your generation is rising.”
Van Jones also discussed President Barack Obama, who hired him as a green jobs adviser but then let him go after Jones’ politics and person came under a relentless barrage from Fox News’ Glenn Beck. Jones argued that President Obama is like the friend who has the potential to be an A-plus student, but is only getting C’s and D’s. Jones told the assembled youth from campuses around the nation they can be a “hero for making sure your friend gets an A-plus on his presidency.”
The strongest moments of his speech came when he discussed America’s basic principles, in the context of arguing with “your uncle Joe” who watches Fox News at the Thanksgiving table. “Don’t you believe in liberty?” Van asked. “Shouldn’t we have the right as Americans to be energy producers?” he asked. “Shouldn’t we have the right and liberty to be free from energy companies who dictate how much we pay, what air we breathe?” Coal and oil companies try to divide us with cultural stereotypes and political ideology, when a green economy is actually the truly American economy:
The stereotype is that solar power is just hippie power. But it’s also cowboy power, farmer power, rancher power, and Appalachian mountain power!
USUncut took over a Bank of America and made this video
We Are One
[Yesterday] afternoon, hundreds of youth climate activists shut down a BP gas station with people power. The flash mob contrasted a joyous and cheerful celebration of the beauty of the Gulf Coast — beach balls, beach chairs, and palm trees — with the devastation caused by the BP oil disaster. In an exclusive interview with ThinkProgress during the protest, Tulane University student Stephanie Stefanski explains why she drove 20 hours from Louisiana to the 2011 Power Shift conference to help to shut down BP and make them pay to restore the Gulf:
There’s still oil on our coast. I saw it two weeks ago, I touched it, I smelled it. It’s still causing massive die offs with dolphins, sea turtles, crustaceans and fish. It’s causing public health issues. I’m here to tell everyone this problem is still here one year later. The beaches are still oiled. They’re trying to “make it right” by paying off the community, but it’s still destroyed. The fisheries are damaged. There’s no money in, people still don’t trust the seafood. They’re not paying up for their damages.
Sign FAIR’s petition to the corporate media:
Thousands marched against war in New York City on April 9. Two thousand protested the Koch brothers in Washington, D.C. Neither event was covered by major media. A sparsely attended Tea Party rally just a few days earlier, though, was big news. We call on news media to explain the journalistic principle that makes thousands of progressive activists far less newsworthy than dozens of Tea Party protesters
QUOTE OF THE DAY:
Nothing is so fatiguing as the eternal hanging on of an uncompleted task. ~ William James