Category Archives: Congress

The Myth of the Greedy Geezer

The following appeared today as an opinion piece on Al Jazeera English.

Old people are becoming everyone’s favourite scapegoat for America’s economic woes. Among the growing ranks of self-styled deficit hawks, Social Security and
Medicare are depicted as an intolerable burden to the nation’s already crippled
economy, which can only be saved through massive cuts to these so-called old-age entitlement programs. To advance this agenda, proponents of entitlement cuts have attacked not only the programs themselves, but the people who benefit from them – the selfish old folks like myself, who insist upon bankrupting the
country for the sake of their own costly health care and retirement income.

We in the over-65 set have become the present-day equivalent of Reagan’s notorious “welfare queens,” supposedly living high on the hog at the expense of the taxpayer. According to what I call the Myth of the Greedy Geezer, we lucky
oldsters spend our time lolling about in lush retirement villas, racing our golf
carts to under-priced early-bird dinner specials and toasting our good fortune
with cans of Ensure – all at the expense of struggling young people, who will
never enjoy such pleasures since the entitlement “Ponzi scheme” will collapse
long before they are old.

The fervour for entitlement-cutting remains strongest among conservatives, but these days, even President Obama is taking part, promoting the recommendations of his National Commission on Fiscal Responsibility and Reform, commonly known as the Deficit Commission (and to its opponents as the Cat food Commission, since that’s what old people will be eating when the Commission finishes its work).

The appointed chair of the Deficit Commission, Alan Simpson, is one of the primary promulgators of the Myth of the Greedy Geezer. A former Republican senator from Wyoming who is known for his colourful turns of phrase, Simpson insists that “This country is gonna go to the bow-wows unless we deal with entitlements, Social Security and Medicare.” The majority of the people opposed to such cuts, he claims, are “These old cats 70 and 80 years old who are not
affected in one whiff. People who live in gated communities and drive their
Lexus to the Perkins restaurant to get the AARP discount. This is madness.”…

Read the rest at Al Jazeera.

U.S. Senator Talks Up War with Pakistan

South Carolina Republican Senator Lindsey Graham, a leading figure on the Senate Armed Services Committee, talked openly on “Fox News Sunday” about the possibility of war with Pakistan. As usual, it was couched in terms like “elevate our response” and “put all options on the table”–but he was clearly referring to military action.

“The sovereign nation of Pakistan is engaging in hostile acts against the United States and our ally Afghanistan that must cease,” Graham said. “I will leave it up to the experts, but if the experts believe that we need to elevate our response, they will have a lot of bipartisan support on Capitol Hill.”

“They’re killing American soldiers,” he continued. “If they continue to embrace terrorism as a part of their national strategy, we’re going to have to put all options on the table, including defending our troops.”

Obama, Can You Spare a Job?

One of the latest attacks on Obama’s failed policies claims that his economic stimulus created few jobs at exorbitant cost to taxpayers: $278,000 per job, to be exact. Fuzzy math aside, what these attacks omit to mention is that the stimulus, like all else these days, operated under the conservative creed that everything has to be done through the private sector. This ethos, firmly embraced by Obama
himself, prevents the government from taking the far more efficient route of simply employing people, which might have created many more good jobs for the same price tag.

Had Obama had heeded FDR’s experience during the Great Depression, we could have put unemployed people to work rebuilding American infrastructure—bridges, tunnels, railroads, roads–not to mention restoring and shoring up wetlands and carrying out other environmental projects. That’s what Roosevelt
famously did
with his Works Progress Administration and Civilian Conservation
Corps.

Such an initiative might conceivably have been possible, on some scale, prior to the midterm elections. But with the gridlock in Congress and diminishing confidence in the President and government, any such course now is hard to imagine. Instead, the austerity imposed by the debts deal will likely further impede any chance at real job growth–as Roosevelt himself found in 1937 when he briefly adopted austerity measures, only to see falling unemployment rates spike once again.

But even at this dismal stage, there are nonetheless a handful of realistic projects that ought to appeal to some fiscally minded conservatives as well as to Democrats.

Jonathan Alter, who is a historian of FDR’s New Deal as well as a journalist, has promoted an idea that involves allowing states to “convert their unemployment insurance payments from checks sent to the jobless into vouchers that can be used by companies to hire workers.” The amount of the unemployment checks would in effect become subsidies to the employers, so that “for instance, a position paying $40,000 might cost employers only $20,000, thereby encouraging them to hire…If a mere 10 percent of unemployed Americans persuaded employers to accept such vouchers, more than a million people would find work with no new spending beyond some administrative costs.”

Alter believes the plan, first suggested by Alan Khazei, a Democratic candidate for the Senate in Massachusetts, might appeal to “a Republican House  that loves the concept of voucher.” But so far there’s been no interest from either Congress or the Obama Administration.

Another option is the already much-discussed German experience with the short work week. As Kevin A. Hassett of the American Enterprise Institute explained this scheme back in 2009.

Firms that face a temporary decrease in demand avoid shedding employees by cutting hours instead. If hours and wages are reduced by 10 percent or more, the government pays workers 60 percent of their lost salary. This encourages firms to use across-the-board reductions of hours instead of layoffs. Here’s how the program works.

A firm facing the challenges of the recession cuts Angela’s hours from 35 to 25 per week, thus reducing her weekly salary to 714 euros from 1,000 euros. Angela does not work for the firm during those hours. As part of its short-work program, the government now pays Angela 171 euros–60 percent of her lost salary. Most important, she still has a job. Effectively, the government is giving her unemployment insurance for the 10 hours a week that she is not employed.

Senator Jack Reed and  Congresswoman Rosa DeLauro have put this program into legislation which so far has  gone nowhere, with only a handful of co-sponsors. This despite the fact that as Dean  Baker of the Center for Economic and Policy Research points out: “Twenty  one  states (including California and New  York) already have short-time compensation as an option under their
unemployment insurance system. In these states a governmental structure already  exists to support work sharing, although there would have to be changes to make  the system more user friendly so as to increase take-up rates.”

Steven Pearlstein in the Washington Post last week pointed to another way of immediately putting people to work, which harkens back to the idea of rebuilding the nation’s crumbling infrastructure:

Over the next decade, the federal government is slated to spend hundreds of billions of dollars building roads, schools, airports, trolley  lines and airport terminals, modernizing the air traffic control system, replacing computer systems and buying planes, ships, tanks, trucks and cars.  Moving up some of that spending from years 8, 9 and 10 to years 1, 2 and 3 won’t cost any more in the long run, or increase the long-term deficit any more, but could sure help put a floor under the economy in the short run. For those worried about pork, the actual spending decisions could be left to an independent Infrastructure Bank.

To spur private investment in equipment and research, the government could immediately allow companies of all sizes to deduct 100 percent of such expenses made in the next three years, rather than “depreciating” them over many years. That incentive to invest now will increase the deficit in the short run but have little or no impact on the long-term deficit.

As Suzy Khimm reports in the Washington Post, “The question of infrastructure funding will come up as soon as Congress returns from its August recess,” since “a bill reauthorizing  spending on surface transportation — which would help build roads, highways,  and the like — is set to expire in September. There’s a big gap between the House GOP proposal, which would slash federal spending to 35 percent less than Fiscal 2009 levels, and Democratic Sen. Barbara Boxer’s two-year plan to spend $55 billion a year. Boxer’s proposal would require revenue beyond what’s in the Highway Trust Fund, which receives money from the gas tax, promising yet another fight over which will be better for the economy — reducing the deficit or Keynesian spending on infrastructure.”

We all know how that fight is likely to turn out. And as Jonathan Alter points out, even these modest approaches to job creation call for an attitude of what Roosevelt called “bold, persistent experimentation” on the part of the government–and the leadership to back it up. And as we’ve seen all too clearly, Obama is no FDR.

Share

Typhoon Approaching Stricken Japanese Nuclear Plant

An approaching Typhoon has set off new alarms at the damaged Japanese nuclear Fukushima complex. This from Bloomberg

 Typhoon Songda strengthened to a supertyphoon after battering the Philippines and headed forJapan on a track that may pass over the crippled Fukushima nuclear plant by May 30, a U.S. monitoring center said.

Songda’s winds increased to 241 kilometers (150 miles) per hour from 213 kph yesterday, the U.S. Navy Joint Typhoon Warning Center said on its website. The storm’s eye was about 240 kilometers east of Aparri in the Philippines at 8 a.m. today, the center said. Songda was moving northwest at 19 kph and isforecast to turn to the northeast and cross the island of Okinawa by 9 p.m. local time tomorrow before heading for Honshu.

The center’s forecast graphic includes a possible path over Fukushima Dai-Ichi plant, which has been spewing radiation since March 11 when an earthquake and tsunami knocked out cooling systems. Three of six reactor buildings have no roof after explosions blew them off, exposing spent fuel pools and containment chambers that are leaking.

“We are still considering typhoon measures and can’t announce detailed plans yet,” Takeo Iwamoto, a spokesman at Tokyo Electric Power Co., said by phone when asked about the storm. The utility known as Tepco plans to complete the installation of covers for the buildings by October, he said.

 

The Radicalization of Peter King

Peter King is, in one sense, uniquely qualified to hold hearings on the “radicalization” of young men to a terrorist cause: He may be the only member of the United States Congress to have undergone the process himself, at the hands of the Irish Republican Army.

Some of King’s  previous dealings with the IRA have been reported, but the depth of his embrace is best documented by Ed Moloney, author of A Secret History of the IRA and former Northern Ireland editor of the Irish Times and the Sunday Tribune, whose reportage on the IRA’s operations is second to none. Moloney now writes a  blog, The Broken Elbow, in which he recently recapped what he knows about King–including his links to none other than Col. Muammar Gaddafi, long known as an arms supplier to international terrorists:

The re-emergence of the old links to the IRA are embarrassing to Peter King and his response has been both utterly predictable and supremely dishonest – he has wrapped the peace process around himself as protection and justification for what he did. This is what he told the Washington Post:

‘ “I [wanted] a peace agreement, a working agreement, where the nationalist community would feel their rights would be respected,” King said in an interview at his Capitol Hill office. “I felt that the IRA, in the context of Irish history, and Sinn Fein were a legitimate force that had to be recognized and you wouldn’t have peace without them. Listen, I think I’m one of the people who brought about peace in Ireland.” ’

The facts, sadly for him, do not support any of this. King first came to Belfast in 1980 just when the first hunger strike, the one led by Brendan Hughes, was reaching a climax, and was radicalized by what he saw and experienced. He came back for the second hunger strike, and it was then he met the family of Bobby Sands, in particular his sister Bernadette and her then partner, now husband Micky McKevitt. He would visit them on every trip he made and often stayed in their home in Louth. When he was elected to Congress virtually the first thing he did was to jump on a plane to Ireland to host a celebratory dinner with Bernadette and Micky – and this was all at a time when McKevitt was masterminding the smuggling of Col Gaddafi’s Semtex and AK-47’s from Tripoli. In Belfast, King’s best friends were Anto’ Murray and his wife. McKevitt was the IRA’s Quarter Mster General  and Anto Murray was Belfast Operations Officer.

Moloney told me Thursday: “The point about the story is this: When King was most friendly with them in the 1980s, McKevitt was in charge of the smuggling of hundreds of tons of arms and explosives, including Sam-7 missile launchers, mortars, heavy machine guns, 1000’s of AK-47, 5-7 tons of Semtex, millions of rounds etc., provided gratis by Gaddafi. Given what is happening in Libya right now and that Gaddafi was, prior to Al Qaeda, main Muslim sponsor of international terrorism, it makes his hearings even more hypocritical. Add to that the fact that Libya was an enemy of the U.S. and the IRA was getting help from Libya–doesn’t that dent king’s claim that IRA never harmed America?” Furthermore, “One American was killed when the IRA bombed Harrods in London in 1983 and another wounded. So not quite true to say Americans were not directly affected.”

To summarize: Peter King is the last person in the world to be preaching about terrorism, including Muslim terrorism. The very idea that the U.S. Congress would put on such an odious display, led by this consummate hypocrite, humiliates the country at large.

How to Put Wall Street CEOs in Jail

“Forgive me,’’ director Charles Ferguson said in receiving an Academy Award for his documentary Inside Job, “I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong.”

In New York, Tuesday marked the beginning of the long awaited trial of hedge fund manager Raj Rajaratnam–who ran the $7 billion Galleon Group  and whose personal wealth is estimated at $1.3 billion. He is being prosecuted by the SEC for insider trade deals. Rajaratnam is said to have made $45 million in illegal profits. He has denied the charges and is free on $100 million bond. If he is convicted he could go to prison for as long as 20 years. The SEC historically has been such a handmaiden of the finance business that it’s hard to imagine anything serious coming out of its prosecutions, but one never knows.

Whatever happens to Rajaratnam, it  would be simple enough to prosecute many of the high rollers on first civil, then criminal charges, fining them millions of dollars and taking them out of circulation for up to 20 years.

“Contrary to prevailing propaganda, there is a fairly straightforward case that could be launched against the CEOs and CFOs of pretty much every US bank with major trading operation,” writes Yves Smith in her popular Naked Capitalism blog.  “I’ll call them ‘dealer banks’ or ‘Wall Street firms’ to distinguish them from very big but largely traditional commercial banks.’’ She proceeds to lay out the case, the key points of which I have excerpted below:

Since Sarbanes Oxley became law in 2002, Sections 302, 404, and 906 of that act have required these executives to establish and maintain adequate systems of internal control within their companies. In addition, they must regularly test such controls to see that they are adequate and report their findings to shareholders (through SEC reports on Form 10-Q and 10-K) and their independent accountants. “Knowingly” making false section 906 certifications is subject to fines of up to $1 million and imprisonment of up to ten years; “willful” violators face fines of up to $5 million and jail time of up to 20 years.

The responsible officers must certify that, among other things, they “are responsible for establishing and maintaining internal controls’” and making sure everyone concerned knows about them–and beyond that, for taking steps to have these controls evaluated and reported. Smith continues:

It’s almost certain that you can’t have an adequate system of internal controls if you all of a sudden drop multi-billion dollar loss bombs on investors out of nowhere. Banks are not supposed to gamble with depositors’ and investors’ money like an out-of-luck punter at a racetrack.

Readers may have better suggestions of where to start, but I’d target Lehman. First, it already has a smoking gun: a May 2008 letter written by former senior vice president Michael Lee to senior management, including the CFO Erin Callan. It describes numerous accounting shortcomings, none of which look to be new and many of which look to be Sarbanes Oxley violations. Second, its derivatives books were by all accounts an utter disaster at the time of its collapse: multiple non-intergrated systems, to the point where the bank did not even have a good tally of how many positions it had….

 Naked Capitalism concludes:

Will any of this happen? Of course not. The decision was made at the time of the TARP, and reaffirmed early in the Obama administration when there was serious talk of resolving Citigroup and Bank of America, that no one at the helm of the senior banks would be subject to serious scrutiny, much the less actually expected to be held accountable for actions that wrecked the economy and have imposed serious costs on ordinary Americans. The case we described above is relatively simple to explain to a jury and has the advantage of being the sort where the plaintiffs could build on their experience in one action in subsequent cases.

But that sort of truth, that most, probably all, of the major Wall Street banks were engaged in the same sort of misconduct and the violations extended to the very top of the firms, would expose numerous other parties as complicit. So we’ll permit the cancer in our society to metastasize rather than threaten the power structure. But at least we citizens can make it clear, even if we cannot change the outcome, that we are not buying the canard that nothing can be done to fight this disease.

In other words, the power structure forges ahead, while the poor and middle classes will pay for their own screwing with reduced social security, medical care, and social welfare services of all sorts. All this is being arranged by both Democrats and Republicans, in response to a recession that will only serve to deepen the already enormous divide between rich and poor in American society.

In the Social Security Debate, Today’s Democrats Are Worse Than Yesterday’s Republicans

Having “retooled’’ his Presidency for a more open accommodation of the center right, Obama will soon be overseeing the battle to launch a dismantling of the Social Security system.

His government has, from the start, been reminiscent of the Clinton years, so it’s safe to say that we can expect more triangulation. Clinton’s adoption of Republican tropes led him to fulfill some of the conservatives’ fondest dreams: His administration countenanced the demise of the banking regulations originally established by the Depression-era Glass Steagall Act, and the destruction of the welfare system established in the 1930s and expanded in the 1960s. Obama will provide much the same function on Social Security. Without entirely destroying the popular program, he will support cuts that go beyond anything that should rightly happen during a Democratic administration.

Of course, the Democrats will say that it isn’t their fault: It all happened because of that horrid Tea Party, dragging conservative Republicans even further to the right. This suggests that Democrats had no choice but to head them off at the rightward pass, as if standing and fighting simply wasn’t an option—and as if they didn’t still hold the Senate and the White House.  

What makes this especially disconcerting, for anyone who has lived long enough to remember earlier political eras, is how favorably the Republicans of the past compare to the Democrats of the present on many points.

Tracking back to the New Deal, one can find Senator Robert A. Taft of Ohio—the most prominent conservative Republican of his time, later identified by John F. Kennedy in Profiles in Courage as one of the five most important senators in history–registering his support for Social Security. A champion of private enterprise and enemy of labor unions, Taft bashed Roosevelt’s “socialistic” programs every which way, fighting to reduce runaway government and even opposing entry into World War II. But at the height of the Great Depression, he also supported the new Social Security program, as well as public housing and public education.

Taft embodied the tenets of Main Street middle western life before the Second World War. And he was not unreservedly laissez faire, nor was he anti-government. He believed in the intervention and utility of the federal government where he deemed it necessary, and that included providing an adequate, if not generous, public welfare system.

Taft ran for president three times and never made it. But Eisenhower, the war hero who became a popular Republican president, carried some of these same basic tenets into the postwar era. Eisenhower was not opposed to federal intervention in the economy and, for example, backed the creation of an interstate highway system, which became a vast public works program. And Eisenhower not only supported Social Security, but took steps to enlarge the program. According to the Eisenhower Memorial Commission:

Dwight Eisenhower was the principal force behind the greatest single expansion of Social Security beneficiaries in the history of the program. He led the legislative drive to add over ten million Americans to the system. Here’s how it developed.

When the Social Security Act became law in 1935 its purposes were primarily aimed at factory workers and other employees of business organizations. The legislative process leading to passage of the law was both lengthy and contentious. Large numbers of working American’s were left out of the original Old Age and Survivors Insurance coverage. No major changes in the Social Security law had been made since its initial passage.

During the presidential campaign of 1952, candidate Eisenhower made it clear that he believed the federal government played a rightful role in establishing the Social Security system, but he made no promises concerning its future. However, after the election it became clear that the Republicans would have control, by slim margins, of both the House of Representatives and the Senate. This changed the political and legislative landscape considerably.

Previously, expansion of the Social Security system or increasing the level of payments to retired Americans had been given no chance to succeed in the Congress because there were enough conservative Democrats (and the majority of Republicans) who would vote against such bills. With a Republican President it now appeared likely that the majority of congressional Republicans would honor their President and support his initiatives. Among the new legislative possibilities, action on Social Security now seemed possible.

Thirteen days after taking his oath of office, President Eisenhower delivered his first State of the Union message to Congress and, when discussing the need for greater effectiveness of government programs, he said, “The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social security system.”

The following week, during a White House meeting of the House and Senate Republican leadership, Eisenhower brought up the Social Security expansion proposal and asked America’s most famous living conservative, Senator Robert A. Taft, if he would support the initiative. When he received a positive reply he knew that the possible had just become the probable. Before the end of the month, Eisenhower appointed a presidential commission to study the Social Security system’s deficiencies and submit a detailed report on specific reform measures. In his public statement creating the commission, the President said, “It is a proper function of government to help build a sturdy floor over the pit of personal disaster, and to this objective we are all committed.”

Those opposed to the initiative stressed their belief that retirement income was the responsibility of every individual and the federal government should not be involved. One citizen should not have to pay for the old age necessities of another. President Eisenhower responded to this notion during his press conference on June 17, 1953 with these remarks: “A strict application, let us say, of economic theory, at least as taught by Adam Smith, would be, ‘Let these people take care of themselves; during their active life they are supposed to save enough to take care of themselves.’ In this modern industry, dependent as we are on mass production, and so on, we create conditions where that is no longer possible for everybody. So the active part of the population has to take care of all the population, and if they haven’t been able during the course of their active life to save up enough money, we have these systems.”

You know it’s a measure of how far this country has moved to the right that someone like myself could wax nostalgic for the likes of Dwight Eisenhower and Robert Taft. (Next stop: Remembrances of the Nixon years, when the richest Americans were taxed at a rate of 70 percent.) Yet now we see the historic approach of these two major Republicans figures—the icon of the Senate and the storied war hero—submerged beneath the threat of the Tea Party adherents. And it is all happening under the listless hand of Obama, while the Democratic mainstream sits passively back and watches the demise of the programs that made their party great.

In the end, history most likely will judge that the final blows against the New Deal came not from the Republicans, but from weak or opportunistic Democratic politicians–first Clinton, then Obama.