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In late 2005, the booming U.S. housing market seemed to be slowing. The Federal Reserve had begun raising interest rates. Subprime mortgage company shares were falling. Investors began to balk at buying complex mortgage securities. The housing bubble, which had propelled a historic growth in home prices, seemed poised to deflate. And if it had, the great financial crisis of 2008, which produced the Great Recession of 2008-09, might have come sooner and been less severe.
At just that moment, a few savvy financial engineers at a suburban Chicago hedge fund helped revive the Wall Street money machine, spawning billions of dollars of securities ultimately backed by home mortgages.
When the crash came, nearly all of these securities became worthless, a loss of an estimated $40 billion paid by investors, the investment banks who helped bring them into the world, and, eventually, American taxpayers.
Yet the hedge fund, named Magnetar for the super-magnetic field created by the last moments of a dying star, earned outsized returns in the year the financial crisis began.
How Magnetar pulled this off is one of the untold stories of the meltdown. Only a small group of Wall Street insiders was privy to what became known as the Magnetar Trade. Nearly all of those approached by ProPublica declined to talk on the record, fearing their careers would be hurt if they spoke publicly. But interviews with participants, e-mails, thousands of pages of documents and details about the securities that until now have not been publicly disclosed shed light on an arcane, secretive corner of Wall Street. Read more.
QUESTION: As the nation's largest banks have regained their footing, what, if anything, can or should they do to help Americans still struggling as a result of the financial crisis and recession? Are there specific solutions or actions the banks should take or HAVE they already done enough? Do the banks have an "ethical obligation" to help those average American families still struggling?
ANSWER: First, banks have not recovered. It is essential to remember that the banks used their political clout last year to induce Congress to extort the Financial Accounting Standards Board (FASB) to change the accounting rules such that banks no longer have to recognize losses on their bad assets unless and until they sell them. Absent this massive accounting abuse, hiding over a trillion dollars in losses, banks would (overall) not be reporting these fictional "profits" and would not be permitted to award the exceptional executive bonuses that they have paid out.
Second, banks have, in reality (as opposed to their fictional accounting ala Lehman) been suffering large losses for at least five years. They only appeared to be profitable in 2005-2007 because they provided only trivial loss reserves (slightly over 1%) while making nonprime loans that, on average, suffer roughly 50% losses. Loss reserves fell for five straight years as bank risks exploded during those same five years. Had they reserved properly for their losses the industry would have reported large losses no later than 2005.
Third, banks have performed dismally when they were supposedly profitable. They funded the nonprime and the commercial real estate (CRE) bubbles that not only cause trillions of dollars of losses and the Great Recession, but also misallocated assets (physical and human) during those bubbles. Far too few societal resources went to productive investments that would increase productivity and employment. Our nation has critical shortages of workers with expertise in physics, engineering, and mathematics -- precisely the categories that we misallocated to finance instead of science and production. In finance, they (net) destroyed wealth by creating "mark to myth" financial models that maximized executive bonuses by inflating asset values and understating risk. Read more.
At a press conference in Annapolis, Maryland, on Tax Day, April 15, 2010, social justice activists charged: “Fully one-third of the biggest corporations in Maryland paid absolutely nothing in state income taxes in 2007!” Matthew Weinstein, Fiscal Policy Director for “Progressive Maryland,” added: “The Maryland Chamber of Commerce (MCC) has played our state legislators for suckers for years...Maryland families are subsidizing business to the tune of $2 billion a year.” The event was held in front of the MCC’s office on West Street. It was sponsored by “The Heart of Maryland Coalition,” which is an ad hoc group comprising “non-profits, labor and progressive” organizations.
We are in a Massive Unemployment Crisis in this Country
By Dave Lefcourt | OpEd News
We are in a massive unemployment crisis in this country that a rising DOW above 11,000 has no connection to and if anything masks the true state of the American economy....
Our "official" unemployment level is close to 10% but unofficially is closer to 20% when including those no longer looking for work, people working part time but want (and need) full time jobs as well as those who have exhausted their unemployment benefits. So the reality of joblessness (close to 30 million) doesn't match the "official" figures....
In the immediate dire situation, short term deficit spending will be needed to achieve large scale job creation. But over the long haul, considering our existing trillion dollar deficits where can we find the resources to fund and sustain these type programs long term (as is likely)? The answer ; the bloated defense budget of unnecessary military hardware (planes, aircraft carriers, atomic submarines, tanks and other military hardware that are still being built for an enemy (the USSR) that ceased to exist over 20 years ago.
Couple this unnecessary spending with our undeclared wars in Afghanistan and Iraq (not to mention our clandestine war in Pakistan) funded through Congressionally approved supplements not included in the yearly approved Defense Department budget) there exists yearly, well over a trillion dollars in wasteful and unnecessary government spending directed to the military/industrial complex.
This unnecessary military spending has been all but a sacrosanct and virtually untouchable to serious cuts (or for that matter even given to serious political debate).
But that situation has to change and the American people must be made aware that our endless war driven economy is depleting us financially and is a political straitjacket preventing us from providing the necessary resources that can help us return to and sustain a full employment economy. Read more.
To Organize Against Wall Street, We Need a Narrative Focusing on Crime and Massive Fraud
By Danny Schechter, Independent Filmmaker, Plunder | Global Research
In politics, it’s always all about the narrative, about how issues are framed.
As we ask ourselves, how we can be experiencing the largest economic meltdown in decades with millions out of work, and millions more losing their homes, and yet, with no real mass mobilization or ongoing response from the progressive world.
To understand this paradox, we need to reflect on how most of us we define the problem.
To this day, there has not been an aggressive investigation of who and what brought down the system ala the Pecora Commission appointed by FDR. Instead we have a wimpy ineffectual body that can’t get its act together. The New York Times, which hailed its appointment, now buries its defacto obit way back in the business section, noting it has “been hobbled by delays and internal disagreements and a lack of focus,”
At the same time, the bookshelves are filling up with volumes of complicated treatises on the complexities of derivatives, risky profit models and credit default swaps. The practitioners of the “dismal science” of economics are having a field day with longwinded dissertations that fail to engage the popular imagination.
We had a word for this when I worked in network television—MEGO, standing for “My Eyes Glaze Over!”
More popular writers are spinning catchy “yarns” like “The Big Short” which put it all down with psychologically-driven, character-based storytelling to how deluded everyone on Wall Street was. That leaves us feeling superior to the dunderheads who lost us trillions and, then, laughed all the way to their mansions in the Hamptons.
Missing is a hardnosed look at the financial crisis as a crime story---an approach that allows for morality as well as indignation, and resonates with public anger. It touches the nerve that most people feel. Read more.
A critical moment in banking reform
By Kevin Zeese | Prosperity Agenda US
Last month saw record bankruptcies since the federal personal bankruptcy law was tightened in October 2005, the underemployment rate increased to 20%, and the percentage of borrowers three months behind in mortgage payments is at 6.67% up from 2% in 2005.
People are hurting and the banks are taking advantage of them. Major banks are now part of the pay day loan scam charging up to 120% or higher interest rates. The rich are getting richer - the number of billionaires is increasing, the wealth divide is expanding with 70% of wealth now owned by the top 1%, CEO pay is $500 to every $1 made by the average worker. Wall Street is paying themselves record bonuses and salaries only because the taxpayers have provided them with trillions of dollars of our money.
The financial interests who dominate the Congress are doing a very effective job of preventing real financial reform. Rather than breaking up the big banks whose existence assures another financial collapse, the "reform" actually includes a back door bailout that gives the Fed emergency lending authority. And the Fed, which many criticized as a cause of the collapse, is gaining power under the proposed "reforms" including controlling the consumer protection agency.
I believe that during the past 18 months, there were very few instances of serial default and contagion that could have not been contained by adequate risk-based capital and liquidity. I presume, for example, that with 15% tangible equity capital, neither Bear Sterns nor Lehman Brothers would have been in trouble. Increased capital, I might add parenthetically, would also likely result in smaller executive compensation packages, since more capital would have to be retained in undistributed earnings.
FCIC Testimony, 4/7/10
It’s a question on everyone’s mind: how much capital must banks be made to hold? No other regulatory change can do as much to prevent another financial collapse. A bigger equity cushion not only buffers bank creditors from losses — preventing cascading bank runs — it by definition would reduce frothy lending that inflates bubbles in the first place.
The issue has new immediacy today, in the wake of revelations published by WSJ that major banks are masking their leverage. Because balance sheets are reported at a single point in time, i.e. the last day of the quarter, there’s an incentive to reduce risk around that particular day in order to present a pretty face to the world. Meanwhile, during the quarter banks are jacking up leverage in order to boost profits. While Lehman actually hid leverage (with Repo 105), other banks are temporarily reducing it, “understating debt levels used to fund securities trades by lowering them an average of 42% at the end of each of the past five” quarters.
This is just another reason that, when setting new capital standards, regulators should err on the high side. Not only are banks sitting on large embedded losses with the help of extend and pretend accounting, there’s now strong evidence they’ll game whatever standards are set. Read more.
Last week the federal government’s Financial Crisis Inquiry Commission held hearings as part of their continuing investigation into the causes of the acute economic meltdown which occurred in late summer 2008. This bipartisan commission, partly inspired by the Pecora Commission- which investigated the causes of the Great Depression- is expected to report back to Congress before the end of the year.
Things don’t seem to be going well. The individuals questioned by the commission mostly seem to be diverting blame for the whole fiasco to someone else. Nobody is offering any tangible insights into the causes of the financial crisis.
Predictably, the commission will avoid calling any witnesses who might unequivocally indict the federal government for its role in the crisis, or suggest solutions which take away government power. Government commissions have a remarkable tendency to recommend granting even more power to the same useless government agencies that so utterly fail to prevent crises in the first place. We saw this with the Pecora Commission, we saw it after 9-11, and we’re seeing it again today with regard to financial regulations. For example, this latest commission almost certainly will suggest granting more power to the SEC, when in fact the SEC should be abolished as an embarrassing farce. Rest assured that this recommendation will be made without apology or sense of irony. Read more.
More Banker Outrage: Protesters Plan Marches on Wall Street Banks
Activists, Union Members Will Take to the Streets Again, but Are They Having any Impact?
By Alice Gomstyn and Rachel Humphries | ABC News
- "There's something fundamentally wrong with an economic and political system that allows the big banks to rewrite all the rules to stay afloat while allowing entire communities to collapse in the wake of the disaster caused by Wall Street," Anna Burger, the secretary-treasurer of the Service Employees International Union, said on a conference call with reporters Thursday. "That's why we're escalating and expanding this campaign."
- Organizers are calling on banks to help people stay in their homes, offer more small business loans, stop offering financing to payday lenders and stop attempts to block financial reforms. They say they're targeting their demands at the country's biggest banks: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
- When it comes to changing public policy, behind-the-scenes moves, including lobbying politicians and bureaucrats, typically work better than "outsider tactics" like demonstrations, said Dean Lacy, a professor of government at Dartmouth College.
- While much attention is paid to the massive amounts of cash that banks and lobbying groups pump into political campaigns, Lacy said lobbyists also have an advantage over grassroots protesters because they can make more targeted moves, such as urging a Congressional committee to block a specific provision in a bill or influencing an agency to change its enforcement of an existing policy. Read more.
More Banker Outrage: Protesters Plan Marches on Wall Street Banks
Activists, Union Members Will Take to the Streets Again, but Are They Having any Impact?
By Alice Gomstyn and Rachel Humphries | ABC News
Outrage over bonuses, bailouts and home foreclosures have prompted angry demonstrations at bank office buildings, bank conferences and even bankers' homes since the financial crisis began. With Wall Street reform proposals up for debate in Congress and bank shareholder meetings taking place later this month, protest organizers say they're getting ready to rally the troops again with several new demonstrations expected to draw thousands.
"There's something fundamentally wrong with an economic and political system that allows the big banks to rewrite all the rules to stay afloat while allowing entire communities to collapse in the wake of the disaster caused by Wall Street," Anna Burger, the secretary-treasurer of the Service Employees International Union, said on a conference call with reporters Thursday. "That's why we're escalating and expanding this campaign."
The SEIU, one of the most vocal critics of Wall Street and big U.S. banks, is part of a coalition of at least six groups -- including the AFL-CIO; the National People's Action, a racial and economic justice advocacy group; PICO National Network, a faith-based group; and North Carolina United Power, an organization of religious and community groups -- planning demonstrations across the country later this month.
Organizers are calling on banks to help people stay in their homes, offer more small business loans, stop offering financing to payday lenders and stop attempts to block financial reforms. They say they're targeting their demands at the country's biggest banks: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. Read more.
- Economists at the International Monetary Fund project that the amount of government debt held in the world's advanced economies will soon be so great that it surpasses the value of what they produce in a year.
- In the United States, where the federal government's debt has reached 84 percent of GDP, Federal Reserve Chairman Ben S. Bernanke spelled out the risks in a speech this week calling for restraint of public spending on entitlement programs.
- But the same discourse is being heard across the world's mature economies, and IMF officials have begun to spell out the options -- tax hikes that might amount to as much as 3 percent of total economic output, a cap on increases in health and retirement benefits, and restrictions on spending on all other government programs.
- Economists disagree on the level at which government debt becomes a problem. Even the amounts currently forecast -- an average of 118 percent of GDP among the world's top developed economies by 2014 -- might be sustained if countries were willing to pay the price of high interest costs and slower growth. Some see 90 percent of GDP as a point at which government debt begins to influence growth. Read more.
The solution is simple though paradoxical: sufficient numbers of adult persons should be given enough money to purchase the necessities of life without having to work at all.
This is so because the benefits of technology have brought us to the point where distribution of purchasing power without reference to labor is the most efficient and least wasteful economic model available. The borrowed or printed federal dollars currently lavished on the banks, the armed forces, and the government bureaucracies that implement stimulus programs would be much more efficiently spent if simply given away.
No one can seriously doubt that the huge amounts of borrowed federal dollars poured into the economy since Barack Obama became president has prevented even more jobs from being lost than might otherwise have been the case in the current devastating recession. It’s impossible, however, to come up with a “real” number, because no economist has a good enough handle on matters to sort out all the variables at play, including readjustments due to the fall of housing prices, low interest rates, a slightly improved export environment, rebounding of depleted inventories, new highway construction resulting from stimulus spending, etc. Still, let’s look at some facts about the current so-called “recovery”:
- Un- and under-employment remains high–officially over 17 percent, not including people who have given up looking for work.
- The cost to create (or save) jobs has been ludicrously high. Estimates of what it has cost the federal government–meaning the taxpayer–to create a single job range from $70,000 to $500,000, depending on whether bailouts lavished on the failed banking system are included.
- While Wall Street rakes in record profits and the stock market creeps back with the DJIA now approaching 11,000, the rest of the economy is sputtering. Public service jobs at the state and local level, including teacher positions, are disappearing like shredded newspaper in a blast furnace. The best the Obama administration can come up with for the next phase is some extremely convoluted encouragement for more bank lending to small businesses, even though these businesses are operating in an environment of crippled consumer demand that may last for years to come.
- The two economic sectors that are reasonably “strong”–the military and health care–are essentially non-productive. The military uses Keynesian deficit-spending to support its gargantuan job base, while the health care industry feasts at the public trough through the ever-increasing cost of Medicare and other spending programs. But like the bailouts and stimulus, it’s being done by both sectors with borrowed or printed money through marketing of Treasury bonds whose value becomes more precarious by the day.
- What stimulus there is has been is coming to an end as the Federal Reserve reduces “quantitative easing” and the Obama administration launches its bipartisan deficit reduction commission. Read more.
If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.
As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears."
Homes stood empty, businesses were boarded up, and parts of already-blighted Birmingham began to take on the feel of a ghost town. There were also a few bills that were unique to the area — like the $64 sewer bill that Pack and her family paid each month. "Yeah, it went up about 400 percent just over the past few years," she says.
The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human shit into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack. Read more.
The Republican Party and major corporations have joined forces in the first major rearguard attack on health care reform, charging that the cost of complying with "Obamacare" is resulting in hundreds of millions of dollars in added business expenses.
The crime that reform is guilty of: Slashing corporate welfare.
Under the previous system, major corporations were subsidized by the government to provide prescription drug coverage to their retired employees. At the same time, corporations could claim on their tax returns that it was they -- not the taxpayers -- who paid for the drug coverage, and could write the expense off as a tax deduction.
Health care reform cuts out that fat. The corporations still get taxpayer money to help pay for their drug coverage, but they can no longer continue the fiction that they're using their own money to do it. Read more.
Note: Although this topic was previously published, this article explains how corporations benefit while taxpayers pay much more clearly, especially toward the bottom of Ryan's article.
The U.S. should bust up its megabanks and impose strict laws curbing the size and complexity of financial institutions, a top Federal Reserve official told the Huffington Post.
In a 45-minute interview this week, Federal Reserve Bank of Kansas City President Thomas M. Hoenig, who's emerged as one of the few influential voices calling for a fundamental redesign of a broken U.S. financial system:
- Lambasted the tilted playing field that benefits Wall Street banks over Main Street banks;
- Called the idea that the U.S. needs megabanks to compete globally a "fantasy";
- Said Congress should mandate simple, easily understood and enforceable rules -- rather than guidelines -- so regulators can restrain financial firms and rein in the financial system;
- Prodded the Senate to get tougher on permanently ending Too Big To Fail by enacting laws that would take away much of the discretion currently held by policymakers (who bailed out financial firms when confronted with these decisions in late 2008);
- And criticized the Federal Reserve's ongoing policy to keep the main interest rate near zero because it "guarantee[s] a spread to Wall Street", enabling unearned profits and "encourag[ing] speculation."
Hoenig's criticisms echo those made by reformers pushing to remake a financial system that melted down in 2008 after years of excessive risk-taking and loose regulation finally took its toll, causing the worst economic collapse since the Great Depression and costing the nation more than 8 million jobs. Read more.
End Israel’s U.S. Allowance So Both Can Gain: Celestine Bohlen
Commentary by Celestine Bohlen | Business Week
The crisis in U.S.-Israeli relations isn’t going away. If anything, it keeps getting worse, precisely because it has exposed and crystallized a gap between the goals, expectations and even the national interests of these old allies.
The basic relationship may still be “rock solid,” as U.S. Secretary of State Hillary Clinton put it recently, but it is being tugged in opposite directions. Maybe now is the time to take money out of the equation.
Israel will get $2.7 billion in military aid from the U.S. this year -- or 18 percent of Israel’s military budget. By 2013, that will lock into an annual level of $3.15 billion for five years. It also has almost $4 billion outstanding in available U.S. loan guarantees, left over from $9 billion extended at former Prime Minister Ariel Sharon’s request in 2003.
That makes Israel the largest recipient of U.S. aid in the world, if you don’t count Iraq and Afghanistan. It also benefits from some of the easiest terms: Unlike other recipients, which must buy 100 percent American, Israel can spend about one quarter of its U.S. military aid at home, which amounts to a significant boost to its defense industry.
The problem with this kind of largess is that it muddies the picture, both for Israel and the U.S. The best thing for the relationship would be for the U.S. to cut Israel’s allowance. Read more.
In Washington, the more things change, the more they stay the same, or usually get worse. It's true each election cycle, and when Congress enacts "reform," watch out.
Obamacare: legislation that rations care and enriches corporate providers.
Financial reform, shaping up to be more business as usual, masquerading as change, and leaving what's needed unaddressed and papered over.
What Real Reform Looks Like - Abolish or Nationalize the Fed
For many years, Ron Paul waged a lonely struggle to abolish the Fed, trying and failing in the 106th, 107th, 108th, and 110th Congresses. Numerous times he explained what he said on the House floor on September 10, 2002, namely:
"Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary cycle. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people," a 1913 dollar (when the Fed was created) today worth about a nickel and continues to erode.
Under the Fed, we've also had rising consumer debt; record budget and trade deficits; an unsustainable national debt; a high level of personal and business bankruptcies; millions of lost homes; high unemployment; loss of the nation's manufacturing base; soaring poverty levels; an unprecedented wealth gap between the rich and most others; and a hugely unstable economy lurching from one crisis to another, the current one near-catastrophic with years more pain and suffering ahead for growing millions.
Yet the 1913 Federal Reserve Act violates the Constitution's Article I, Section 8 giving Congress sole power to coin (create) money and regulate the value thereof. In 1935, the Supreme Court ruled that Congress can't constitutionally delegate it to another body.
By Dave Lindorff
Back in 2005-06, I wrote a book, The Case for Impeachment, in which I made the argument that President George W. Bush and Vice President Dick Cheney, as well as other key figures in the Bush/Cheney administration--Secretary of State Condoleezza Rice, Defense Secretary Donald Rumsfeld, and Attorney General Alberto Gonzales--should be impeached for war crimes, as well as crimes against the Constitution of the United States.
These days, when I mention the book’s title, people sometimes ask, half in jest, whether I’m referring to the current president, Barack Obama.
Sadly, it is time to say, just 14 months into the current term of this new president, that yes, this president, and some of his subordinates, are also guilty of impeachable crimes--including many of the same ones committed by Bush and Cheney.
-I: The Ongoing Theft of Trillions
——-II: Off-the-Books, Off-the-Record
——-III: Osama bin Bank of America
——-IV: New Mafia World Order
——-V: The Goldman Sachs Obama Illusion
——-VI: American Heroes Speak Out on the Financial Reform Ruse
——-VII: Economic Weapon of Mass Destruction (WMDs)
——-VIII: Hank “Pentagon Sachs” Paulson
——-IX: $5.4 Trillion a Year Bullion Market Ponzi Scheme
——-X: Ponzi Nation: Welcome to America, Sucker
——-XI: Economic Shock and Awe
——-XII: Time for a Second American Revolution - The 99% Movement
——-XIII: How You Can Get Involved
As I've noted before, Haiti's earthquake recovery problems were exacerbated by the economic and trade policies pushed on them by the United States. Now Bill Clinton has admitted as much:
PORT-AU-PRINCE, Haiti -- The earthquake not only smashed markets, collapsed warehouses and left more than 2.5 million people without enough to eat. It may also have shaken up the way the developing world gets food.
Decades of inexpensive imports - especially rice from the U.S. - punctuated with abundant aid in various crises have destroyed local agriculture and left impoverished countries such as Haiti unable to feed themselves.
While those policies have been criticized for years in aid worker circles, world leaders focused on fixing Haiti are admitting for the first time that loosening trade barriers has only exacerbated hunger in Haiti and elsewhere. Read more.
Not long ago, the most prominent supporters of the public option were touting it as essential for healthcare reform. Now, suddenly, it’s incidental.
In fact, many who were lauding a public option as the key to a better healthcare future are now condemning just about anyone who insists that the absence of a public option makes the new law unworthy of support.
Consider this statement: “If I were a senator, I would not vote for the current healthcare bill. Any measure that expands private insurers’ monopoly over healthcare and transfers millions of taxpayer dollars to private corporations is not real healthcare reform.”
That statement is as true today as it was when Howard Dean, former chairman of the Democratic National Committee, made it three months ago in a Washington Post op-ed. But now, a concerted political blitz is depicting anyone who takes such a position as a menace to “real healthcare reform.”
After devoting vast amounts of time, money, energy and political capital to banging the drum for the public option as absolutely vital during 2009 and through this winter, countless liberal organizations and prominent Democrats in Congress have made a short-order shift.
You are now to understand that the public option isn’t essential—it’s expendable. And all of the sudden, people who assert that a public option is a minimal requirement for meaningful healthcare reform are no longer principled—they’re pernicious. Read more.
Last April, shortly after beginning his first term as president, Barak Obama promised that the war supplemental he requested from Congress would be the last one ever:
White House Press Secretary Robert Gibbs said Thursday that this will be the last supplemental spending request for the wars. The administration has already earmarked $130 billion for military operations next year, but officials have said they do not want that funding tagged “emergency.”
“The honest budgeting and appropriations process that the president has talked about falls somewhat victim to the fact that this is the way that wars have been funded previously,” Gibbs said. “So we can’t wait until the appropriations process is done in … August or September to fund operations in Iraq and Afghanistan in June.”
And suddenly a lot of the members of Congress who had opposed war supplementals in the past and promised not to vote for another one, decided “just this one last time” to go along. Read more.
The United States spends almost twice as much per person on health care as any other country in the world, and yet has some of the worst health outcomes of all developed nations. This means we spend a lot on care that does not contribute to better care, and there is extraordinary room for cost control that does not reduce access to or quality of care. However, we often pursue cost control strategies that are not based on evidence, and are designed to limit political opposition from the health care industry, for which our high costs are its high income. These efforts either don’t work at all, or don’t work on a scale that will have a noticeable impact on a system with double-digit premium inflation.
To a large extent, our high spending is due to a fragmented system where providers deal with hundreds of different insurers, all with different rules. This drives up administrative costs in the system, and means we lack what other jurisdictions have to effectively control costs: the ability to budget the health care system and publicly plan the allocation of limited resources to the communities and areas of care that need them most. This is why only nations with uniform payment systems and an extraordinary level of public oversight have been able to “bend the cost curve’’ without hurting health outcomes. Read more.
Most Americans believe tax hikes are OK if you're making more than $250,000, a policy proposed by President Barack Obama, but hands off Medicare and Social Security, a poll released on Monday found.
The Quinnipiac University poll found that 60 percent of Americans among both major political parties think raising income taxes on households making more than $250,000 should be a main tenet of the government's efforts to tame the deficit. More than 70 percent, including a majority of Republicans, say those making more than $1 million should pay more.
But 80 percent say raising taxes on those making less than that should not be part of the government's approach. Moreover, most oppose touching Medicare and Social Security - two long-term drivers of the budget deficit over the coming decades.
"Given those numbers, it's clear that those who want serious deficit reduction have their work cut out for them in convincing the public, which seems adamantly opposed to cutting the programs with the largest budgets," said Peter Brown, assistant director of the polling institute....
This year, the deficit is expected to top $1.5 trillion, about 10 percent of gross domestic product. The administration and many economists say a healthy deficit would be about 3 percent of GDP. Read more.
U.S. securities regulators are demanding detailed reports from major financial firms in an attempt to uncover any accounting tricks like the "Repo 105" method Lehman Brothers used to mask its losses.
Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, said on Monday that the agency would be probing every major financial institution over the coming weeks.
"We want to make sure both their accounting and disclosures are accurate when it comes to how they're characterizing repurchases," Schapiro said in an interview with CNBC. Read more.
Bank of America, Wells Fargo Probably Won't Pay Income Tax for 2009
Annual reports suggest BofA and Wells Fargo won't have to pay federal income taxes for 2009.
By Christina Rexrode | Charlotte Observer
This tax season will be kind to Bank of America and Wells Fargo: It appears that neither bank will have to pay federal income taxes for 2009.
Bank of America probably won't pay federal taxes because it lost money in the U.S. for the year. Wells Fargo was profitable, but can write down its tax bill because of losses at Wachovia, which it rescued from a near collapse.
The idea of the country's No. 1 and No. 4 banks not paying federal income taxes may be anathema to millions of Americans who are grumbling as they fill out their own tax forms this month. But tax experts say the banks' situation is hardly unique.
"Oh, yeah, this happens all the time," said Robert Willens, an expert on tax accounting who runs a New York firm with the same name. "Especially now, with companies suffering such severe losses."
Bob McIntyre, at Citizens for Tax Justice, said he opposes the government giving corporations such a break.
"If you go out and try to make money and you don't do it, why should the government pay you for your losses?" McIntyre said. "It's as simple as that." Read more.
Update: There are now 80 cosponsors of the Public Option Act. Here is the current list: Reps. Baldwin, Berkley, C. Brown, Capuano, Carson, Castor, Chu, Clarke, Wm. Lacy Clay, Cleaver, Cohen, Cummings, D. Davis, DeGette, Delahunt, Doyle, Edwards, Ellison, Engel, Farr, Filner, Frank, Fudge, Garamendi, Green, Grijalva, Gutierrez, Hall, Hare, Hastings, Hinchey, Hinojosa, Hirono, Holt, Honda, Israel, Jackson-Lee, Jackson Jr., E.B. Johnson, H. Johnson, Kaptur, Kennedy, Kilpatrick, Kucinich, Lee, Lewis, Maloney, McDermott, McGovern, Meeks, James P. Moran, Nadler, Napolitano, Norton, Olver, Payne, Pierluisi, Pingree, Polis, Rangel, Richardson, Rush, Sablan, Sanchez, Robert “Bobby” Scott, Schakowsky, Shea-Porter, Speier, Sutton, B. Thompson, Tonko, Towns, Velazquez, Waters, Watson, Weiner, Welch, Woolsey, Wu.
Congressman Alan Grayson, D-Fla., today announced that 50 Members of Congress have signed on as cosponsors of his Medicare You Can Buy Into Act. The bill opens up Medicare for anyone who can pay for it.
Congressman Grayson said, “WOW! 50 cosponsors in less than 48 hours, including five Committee Chairs. I am thrilled, but not surprised, that so many of my colleagues support this bill. We all believe it deserves a vote.” Read more.
We decided that a good place to begin with unified action was to oppose the recent Supreme Court decision allowing corporations unlimited contributions to political candidates.
MICHAEL MOORE: A LOVE STORY
By Joan Wile
If you know the Upper West Side of Manhattan, you know there are probably more progressives per square inch here than in all the 50 states. So, it's no surprise that a big bunch of people showed up this evening at my small one-bedroom apartment in this highly liberal neighborhood to see Michael Moore's masterpiece, "Capitalism: A Love Story."
My event was one of MoveOn's 700 parties nationwide tonight to show the film in an effort to generate grass roots action against some of the evil excesses of capitalism rampant in the United States. These evils are powerfully exposed in Moore's movie -- the foreclosures on people's homes; the cancellation of jobs in order to make way for profits; the practice of taking out insurance on employees unbeknownst to them and then collecting large payments when they die (of which not one cent is shared with the family survivors), and all manner of other immoral practices so harmful to decent working Americans.