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Sen. Sanders questioned Treasury Sec. Geithner at a Budget Committee hearing and talked about Republican efforts to shift blame for record deficits away from their own unpaid-for spending habits during the Bush presidency. Watch Secretary Geithner bob and weave his way around the questions, appearing to agree without directly doing so.
Federal Lobbying Climbs in 2009 as Lawmakers Execute Aggressive Congressional Agenda | Open Secrets
Efforts by Health, Business Industries Help Push Influence Peddling to New Heights
At nearly $266.8 million, the pharmaceutical and health products industry’s federal lobbying expenditures not only outpaced all other business industries and special interest areas in 2009, but stand as the greatest amount ever spent on lobbying efforts by a single industry for one year....In 2009, this sector spent nearly $544 million on federal lobbying efforts, up almost 12 percent from its 2008 total of about $487 million.
The economy stunk. Corporations slashed jobs. And some firms, once juggernauts of American industry, simply ceased to exist.
But for federal lobbyists, 2009 proved to be a year of riches unlike any other, a Center for Responsive Politics analysis indicates.
In all, federal lobbyists’ clients spent more than $3.47 billion last year, often driven to Washington, D.C.’s power centers and halls of influence by political issues central to the age: health care reform, financial reform, energy policy.
That figure represents a more than 5 percent increase over $3.3 billion worth of federal lobbying recorded in 2008, the previous all-time annual high for lobbying expenditures. And it comes in a year when a recession persisted, the dollar’s value against major foreign currencies declined and joblessness rates increased....
To explore the Center for Responsive Politics' full lobbying database, go here.
New Mexico's House of Representatives voted Monday to pass a bill that allows the state to move $2 billion - $5 billion of state funds to credit unions and small banks.
The municipal funds bill was approved 65-0 (roll call - PDF), and is subject to a vote by New Mexico's Senate. Governor Bill Richardson told the bill's sponsor that he supports the legislation.
The altered view of New Mexico lawmakers in favoring local control of state funds, officials said, follows national mention of the New Mexico effort in the "Move Your Money" campaign of New York pundit Arianna Huffington in her online Huffington Post columns. Read more.
Washington D.C. (February 8, 2010) – Congressman Dennis Kucinich (D-OH) today sent a letter to President Obama commending him for calling for new ideas and a renewed discussion about health care reform. Kucinich requested that supporters of Medicare for All be represented at the upcoming February 25 health care summit.
“I hope you will invite a representative of the community that is advocating for the only health care that has consistently proven to address each of the criteria you have outlined for a satisfactory health care plan: Medicare for All,” wrote Kucinich.
Kucinich, who co-authored HR 676, Medicare for All, with Representative John Conyers (D-MI), further pointed out that many states have embraced a single-payer system of health care. Most recently, the California State Senate passed a single-payer health care bill on January 27, 2010.
Read the full letter here.
The Defense Department just released its king-sized, $708 billion budget for the next fiscal year. Much of the proposed spending is fairly detailed — noting exactly how many helicopters the Pentagon plans to buy and how many troops it plans on playing. But about $56 billion goes simply to “classified programs,” or to projects known only by their code names, like “Chalk Eagle” and “Link Plumeria.” That’s the Pentagon’s black budget.
Cobbling together this round figure for the military’s hush-hush projects is easier than it seems. The Pentagon’s separate ledgers for operations, research and procurement all contain line items for “classified programs.” Add those to the nonsensically-named programs, and you’ve got yourself an estimate for the Pentagon’s secretive efforts. Read more.
U.S. President Barack Obama calls the $3.8-trillion US budget he just sent to Congress a major step in restoring America’s economic health.
In fact, it’s another potent fix given to a sick patient deeply addicted to the dangerous drug — debt.
More empires have fallen because of reckless finances than invasion. The latest example was the Soviet Union, which spent itself into ruin by buying tanks.
Washington’s deficit (the difference between spending and income from taxes) will reach a vertiginous $1.6 trillion US this year. The huge sum will be borrowed, mostly from China and Japan, to which the U.S. already owes $1.5 trillion. Debt service will cost $250 billion.
To spend $1 trillion, one would have had to start spending $1 million daily soon after Rome was founded and continue for 2,738 years until today.
Obama’s total military budget is nearly $1 trillion. This includes Pentagon spending of $880 billion. Add secret black programs (about $70 billion); military aid to foreign nations like Egypt, Israel and Pakistan; 225,000 military “contractors” (mercenaries and workers); and veterans’ costs. Add $75 billion (nearly four times Canada’s total defence budget) for 16 intelligence agencies with 200,000 employees.
The Afghanistan and Iraq wars ($1 trillion so far), will cost $200-250 billion more this year, including hidden and indirect expenses. Obama’s Afghan “surge” of 30,000 new troops will cost an additional $33 billion — more than Germany’s total defence budget.
No wonder U.S. defence stocks rose after Peace Laureate Obama’s “austerity” budget. Read more.
Kucinich Subcommittee Investigation Found Possible Securities Law Violations by Bank of America in December 2009
Kucinich on new NY AG fraud charges against Bank of America and SEC settling charges against BofA for misleading shareholders
Kucinich Subcommittee Investigation Found Possible Securities Law Violations by Bank of America in December 2009 | Press Release
Washington D.C. (February 4, 2010) – Congressman Dennis Kucinich (D-OH) today made the following statement after New York Attorney General Andrew Cuomo announced civil fraud charges against former Bank of America CEO Ken Lewis and CFO Joseph Price for misleading shareholders, and the SEC announced it would settle similar charges. Kucinich’s investigative subcommittee conducted a 9 month investigation into the matter and concluded in December 2009 that Bank of America had possibly violated securities law for failing to disclose to shareholders mounting losses at Merrill Lynch. Kucinich chairs the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee.
“Attorney General Cuomo today stood up for shareholders, taxpayers and the rule of law in bringing charges against the individuals at Bank of America whose actions concealed from shareholders the mounting losses at Merrill Lynch, known before the shareholder vote on the merger. Attorney General Cuomo’s enforcement action is a critical step towards ending the culture of corruption on Wall Street. Mr. Cuomo did the country a service today,” said Kucinich.
Additionally, The Securities and Exchange Commission (SEC) today announced they are seeking court approval for a $150 million settlement with Bank of America for failing to inform shareholders of accelerating losses, and for concealing $3.57 billion in bonuses, at Merrill Lynch before a vote to approve the merger.
But this year's Social Security cash shortfall is a watershed event. Until this year, Social Security was a problem for the future. Now it's a problem for the present.
A report from the Congressional Budget Office shows that for the first time in 25 years, Social Security is taking in less in taxes than it is spending on benefits.
Instead of helping to finance the rest of the government, as it has done for decades, our nation's biggest social program needs help from the Treasury to keep benefit checks from bouncing -- in other words, a taxpayer bailout.
No one has officially announced that Social Security will be cash-negative this year. But you can figure it out for yourself, as I did, by comparing two numbers in the recent federal budget update that the nonpartisan CBO issued last week.
The first number is $120 billion, the interest that Social Security will earn on its trust fund in fiscal 2010 (see page 74 of the CBO report). The second is $92 billion, the overall Social Security surplus for fiscal 2010 (see page 116).
This means that without the interest income, Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30.
Why disregard the interest? Because as people like me have said repeatedly over the years, the interest, which consists of Treasury IOUs that the Social Security trust fund gets on its holdings of government securities, doesn't provide Social Security with any cash that it can use to pay its bills. The interest is merely an accounting entry with no economic significance. Read more.
By Dave Lindorff
There were two points in President Obama’s State of the Union address that provoked resounding and universal applause in the chamber from the assembled senators and representatives of both parties. One point was when the president said he wanted to start his job-creation program “in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides its time she became her own boss.” The other point was when he said, “While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.”
By Dave Lindorff
For months, the various government departments dealing with things economic--Treasury, Commerce, Labor and of course the Council of Economic Advisers and the Federal Reserve, have been issuing soothing words that the nation’s economy is headed back up from the Great Recession that allegedly began in December 2007.
But now comes word from the Department of Labor that, whoops, we minsunderestimated, as former President George W. Bush would say, the number of jobs lost. The Department of Labor’s Bureau of Labor Statistics is reporting that because of a “modeling error,” it misstated the number of jobs lost between March 2008 and March 2009 by 17%. In hard numbers, that is to say, the BLS was reporting that a record 4.8 million jobs were lost during those 12 months of economic collapse, when in fact the job loss total was actually 5.6 million.
Questions Linger About Full Payments to Goldman Sachs: Kucinich Dissatisfied With Geithner's Answers
Questions Linger About Full Payments to Goldman Sachs
Kucinich Dissatisfied With Geithner's Answers
By Mike Lillis | Washington Independent
To hear Treasury Secretary Tim Geithner tell the tale, the federal officials negotiating the taxpayer bailout of American Insurance Group had no choice but to provide full payment to the company’s trading partners, including Goldman Sachs.
“There was no way, financial, legal, or otherwise, we could have imposed haircuts, selectively default on any of those institutions, without the risk of downgrade and default,” Geithner told lawmakers on the House Oversight and Government Reform Committee last week.
Don’t tell that to Rep. Dennis Kucinich. The Ohio Democrat — who heads the committee’s domestic policy subpanel — says that federal officials had plenty of leverage to push Goldman for a lesser payout, but simply chose not to use it. Indeed, an investigation by his office, Kucinich says, found that Goldman was already preparing to take less than 100 cents on the dollar for the complex, AIG-backed securities it held at the time. He’s charging that Geithner — who headed the New York Federal Reserve when it funneled billions of dollars through AIG to other firms — simply put Goldman’s interests above those of taxpayers.
“There was only one way for Goldman Sachs to get all of the billions they claimed from AIG, and that was if the New York Fed voluntarily agreed to give it to them,” Kucinich, the populist former mayor of Cleveland, said in a little-noticed exchange with Geithner last week. “If the Fed had fought for taxpayers, Goldman would have had to take some losses and the cost to the people could have been minimized.” Read more.
Pelosi Demands Any Budget Freeze Also Apply To Military Spending
By: David Dayen | FireDogLake
In her weekly press conference today, House Speaker Nancy Pelosi was fairly adamant – a proposed spending freeze should apply to defense, not merely non-security discretionary spending, as the President seeks. “I don’t think we have to protect military contractors. I do not think the entire military budget has to be exempted,” Pelosi said.
“We want them to have everything they need,” Pelosi said of military forces abroad and their families. “But we do not support an entitlement program for overruns in defense contracting,” she quickly added, noting millions could be saved if lawmakers ensured Defense contracts did not overshoot spending targets.
Defense contracting waste really does not flow to other areas of the economy, and a “freeze” where discretionary spending can rise as defense spending falls would actually create more jobs and improve the economic outlook. We really cannot afford a military-based stimulus.
Pelosi has some powerful support for her criticism of the exemption of the military budget – military analysts who face the bloat in the contracting system every day.
Steve Kosiak has spent much of his career as a defense analyst frustrated by military bloat. In early 2003, he found it was “impossible to say precisely” how much of the Bush administration’s military buildup was actually attributable to the post-9/11 emergency and how much was pre-existing defense pork. A 2005 paper he authored for the Center for Strategic and Budgetary Assessments, a leading Washington defense think tank, warned that rising defense costs could add “some $900 billion to projected deficits.” And in December 2008, he devoted almost 100 pages to carefully itemizing the costs of the Iraq and Afghanistan wars — $970 billion as of then, he found — and placing them in a broader social, economic and budgetary context.
The Obama administration is deeply familiar with Kosiak’s work. A year ago, the White House tapped him to oversee defense spending for the Office of Management and Budget. And that makes President Obama’s decision to exempt the hundreds of billions spent annually on defense and homeland security from a proposed overall freeze in discretionary spending — a policy he formally unveiled in his State of the Union address Wednesday night — particularly difficult for defense analysts to understand. Read more.
Yesterday the Senate approved legislation to increase the national borrowing limit to $1.9 Trillion. The vote was along party lines, raising the debt ceiling to $14.3 Trillion dollars. Watch Dylan Ratigan explain the ominous implications of that debt load for our national security.
Senate Vote Sends Strong Message to the Fed | Press Release
Sen. Bernie Sanders (I-Vt.) said today that the Senate sent a clear signal to the Federal Reserve with an historic number of “no” votes against confirming Ben Bernanke to a second term as chairman of the central bank.
The Senate confirmed Bernanke by a vote of 70 to 30, more “no” votes than were ever cast in opposition to a nominee for Fed chairman.
“The Senate vote sends a loud and clear message to the Fed and to Chairman Bernanke: Start representing the needs of the middle class and working families, not just Wall Street CEOs. Stop credit card ripoffs. Free up credit for small businesses. Break up big banks, and stop the secrecy surrounding trillions of dollars in blind loans,” said Sanders, a leader of the opposition to Bernanke.
The number of votes against Bernanke far outstripped the opposition to a second term for Paul Volcker, who was confirmed in 1983 to a second term at the Fed by a vote of 84 to 16.
The roll call vote also was a stark contrast to the voice vote in 2006 when the nomination of Bernanke by President George W. Bush sailed through the Senate on a voice vote.
Sanders said the Fed has the power today to require bailed-out banks to stop ripping off consumers and small businesses by charging interest rates of 30 percent or more on credit cards and other loans.
The new restraints on bank lending for speculation proposed by President Barack Obama follow the advice of former Fed Chairman Paul Volcker but will be much more credible if the president now fires Secretary of the Treasury Timothy Geithner and National Economic Council director Lawrence Summers.
What President Obama is calling the “Volcker Rule” would take us back in the direction of the 1932 Glass-Steagall Act which kept commercial and investment banking separate for 67 years, until 1999 when it was foolishly repealed by President Bill Clinton. Then-Treasury Secretary Summers strongly supported the repeal.
It was the demise of Glass-Steagall that allowed commercial banks to create the vast amounts of unbacked credit which fueled the gigantic financial bubbles in housing, commercial real estate, hedge funds, equities, and derivatives during the catastrophic years of the George W. Bush presidency. It was the blowing up of these bubbles that brought the financial crash of 2008-9, the multi-trillion dollar bailouts of the financial industry by the Treasury and Federal Reserve, and the worst recession since the Great Depression.
American financiers became filthy rich in the meantime. Timothy Geithner, as president of the Federal Reserve Bank of New York from 2003-2009, worked closely with Bush’s Treasury Secretary Henry Paulson in overseeing the bailouts of Bear Stearns and AIG. He also favored reducing the capital required to operate a bank which would have exposed the financial system to even greater risk of failure.
A shareholder sued Goldman Sachs Group Inc's (GS.N) board for excessive bonuses and wants bank executives to pay the $500 million in charitable donations that Goldman is making after being criticized for its compensation policy.
Goldman Sachs bonuses substantially exceed what competitors pay "even though, on a risk-adjusted basis, Goldman's officers and managers have performed over the past several years in a manner that is, at best, only average," the lawsuit says.
The Southeastern Pennsylvania Transportation Authority (SEPTA), which runs public transit in the Philadelphia area, filed the lawsuit on Wednesday in Delaware's Chancery Court.
SEPTA said Goldman has been allocating nearly half of its revenues to staff bonuses even though the company's performance has been less a benefit of management skill than risks it has taken with investors capital.
"Goldman's employees are unreasonably overpaid for the management functions that they undertake, and shareholders are vastly underpaid for the risks taken with their equity," it said. Read more.
By Dave Lindorff
Flash! The Supreme Court’s latest 5-4 decision overturning the over 60-year-old ban on corporations giving money to political campaigns is not the end of democracy as we know it, or the onset of fascism in America, as some of hyperventilating progressives have been claiming.
Sure it’s an outrage to say, as the court majority did, that corporations have the same rights as people. But let’s face it: Corporations have long dominated the American political scene. They didn’t need to be free to donate in their own corporate names. They have had their political action committees to do the job, and that’s worked just fine for them, as witness the current state of the two pro-corporate parties in Congress, and the string of blatantly pro-corporate presidents we’ve had for as far back as I can remember.
The Federal Reserve has four main responsibilities: to conduct monetary policy in a way that leads to maximum employment and stable prices; to maintain the safety and soundness of financial institutions; to contain systemic risk in financial markets; and to protect consumers against deceptive and unfair financial products.
WASHINGTON, January 20 – Sen. Bernie Sanders (I-Vt.) said today he senses growing opposition to a second term for Federal Reserve Chairman Ben Bernanke.
“I sense that many Democrats see the Massachusetts election as a wake-up call,” Sanders said. “There is a growing understanding that our economy is in severe distress, a greater appreciation that people are disgusted with the never-ending greed on Wall Street, and a better recognition that we need a new direction at the Fed.
“People do not want another term for the man whose major job as Fed chairman was to protect the safety and soundness of our financial system but instead was asleep at the switch,” he added. “I am confident that more and more senators understand that we need a new Fed and a new Wall Street and will oppose Bernanke’s confirmation.”
Sanders on December 5 placed a hold on Bernanke’s nomination. The term of the central bank chief, first appointed by President George W. Bush, runs out on January 31.
By Dave Lindorff
The Democratic Party’s embarrassing electoral disaster in Massachusetts, losing a seat held for 46 years by the late Sen. Ted Kennedy, provided a clear warning that the party, and President Obama’s presidency, are headed for an epic trouncing this November, when all members of the House and a third of the Senate face re-election.
But all the frantic strategizing within the sclerotic Democratic Party leadership ignores the bigger crisis yet to come for this party that once brought the nation Social Security, unemployment compensation, public jobs programs and Medicare. That crisis is the economy, which is now showing signs of falling off a second cliff instead of beginning to recover.
US: Democrats agree on commission to cut Social Security, Medicare
By Patrick Martin | WSWS
The dimensions of the cuts being prepared is suggested by the commission’s mandate to propose a path to reduce the federal deficit from the current level of 10 percent of gross domestic product to 3 percent by 2015. This would amount to a reduction in the annual deficit of about $700 billion—an amount, not coincidentally, roughly equivalent to the bailout of Wall Street—to be subtracted from federal social spending every year.
Obama administration officials and Democratic congressional leaders reached agreement Tuesday on the establishment of a bipartisan commission that would put recommendations for drastic budget cuts to a vote in Congress before the end of 2010. The commission would have unprecedented legal authority to propose changes in both the tax code and major entitlement programs like Social Security, Medicare and Medicaid, with Congress required to hold an up-or-down vote on its recommendations.
The exact method for establishing the commission depends on congressional action. The Senate and House could vote to establish the commission, as an amendment for legislation to raise the national debt ceiling to $13 trillion.
Press accounts suggested this was unlikely, given divisions over policy between Republicans and Democrats, as well as within both parties. If Congress fails to act, Obama would issue an executive order to create the commission, although this would leave its decisions with less legal force.
The 18 members of the commission would be appointed: six each by the congressional Democratic and Republican leaderships, and six by Obama, of which only four could be Democrats. This would give the commission a 10-8 Democratic majority. Read more.
A “run on the dollar,” or any currency, for that matter, takes place when the currency is losing its value. This happens when a country’s debt becomes so great that there is danger of a major default–that is, large scale or even national bankruptcy. At that point, people whose wealth is in that currency, or in relatively liquid assets denominated in the currency, try to get rid of them as fast as they can. Today, that includes foreign countries like China or Russia that are holding large quantities of U.S. government bonds.
The U.S. currently is at risk. We see it in personal and business bankruptcies and foreclosures. One result can be a high rate of inflation in certain products like food or gasoline, even while asset prices, as with homes and stocks, are going down. The question is now whether the “recovery” that is underway can be sustained or will there be another crash like there was in late 2008 to early 2009.
Forecasters are projecting this recovery to last until June 2010 but are foreseeing slippage at that point. Investors at this time are still putting money into the stock market and getting out of dollars. By June, the U.S. government had better come up with a strategy for real economic growth–which means jobs–or we will likely see the “double-dip” recession many have predicted. Personally I see no way growth can be sustained unless the national debt burden shrinks. This can only be done through an orderly process of debt forgiveness, a resurgence of economic production, or a default that could be catastrophic.
In response to a question from a reader I sent this out today:
Yes, I think a run on the dollar is coming. A lot of people are saying this, including a man named Dmitri Orlov who recently came out with a book entitled “Reinventing Collapse” that compares the crash of the Soviet Union in the 1990s with what he believes is coming here within a short period of time. I heard that at the last meeting of the G20 the U.S. asked Russia and China if they would agree to an orderly devaluation of the dollar, and the answer was “Nyet.” So something big is likely to happen. I don’t know what it will be. A worst case scenario is a wild hyperinflation of the dollar and a total collapse of the monetary system, followed by skyrocketing gasoline prices, etc., and another Great Depression. But the Federal Reserve is too smart just to let that happen, so they will likely try in some way to keep the economy afloat while engaging in an orderly devaluation that will reduce the overall levels of debt. There are many ways to tackle this but it will require strong central planning and maybe even “monetary reform.” The possible scenarios are endless and much depends on the political will of Obama and Congress as to how much control they can exert over the financiers. I am hesitant to predict total gloom and doom, though it is certainly a possibility. One thing that could trigger it would be if the U.S. can no longer buy oil from abroad. That depends also on whether “Peak Oil” really exists or not. But clearly big changes are coming. Our country has become so fragile. Most of our population is a month away from starvation when you look at the food pipeline.
It's one of those numbers that's so unbelievable you have to actually think about it for a while...
Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion.
Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from? Read more.
By Dave Lindorff
The media punditry, corn-fed on conventional wisdom, are all atwitter about the looming Democratic debacle in Massachusetts, saying that win or lose, the poor showing by the Democratic candidate for the late Sen. Edward Kennedy’s seat, state Attorney General Martha Coakley, means Democrats in Congress should abandon plans to push through a House-Senate compromise health bill, and instead just go with the Senate’s version of health “reform” legislation, thus circumventing a certain Republican filibuster attempt.
GIVE ALL THE BANK BONUS MONEY TO HAITI
Necessity and Justice demands it!
A PETITION TO THE HEADS OF WALL STREET'S BIG BANKS:
John Mack of Morgan Stanley, Lloyd C. Blankfein of Goldman Sachs, Jamie Dimon of JP Morgan Chase, Brian Morgan of Bank of America, Robert H. Benmosche of AIG, and Piyush Gupta of Citibank
We call on the major banks to give all of the money that they have set aside for bonuses to the people of Haiti in their hour of desperate need. Justice and dire necessity demands that those who have profited while others have lost everything now bail out the people of Haiti.
Whatever the full amount of the money that the Bank of America, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Citibank, and AIG have set aside for bonuses, that sum will easily be between 10 to 100 times the amount of the combined aid that the People of Haiti will receive from the entire world.
With that kind of money, still very small by comparison to the bail out money that the U.S. government has given to the big banks, the people of Haiti may actually have the possibility of recovering from the unimaginably devastating blow that has cause so much death, destruction and suffering. Wall Streets bonus money could rebuild Haiti.