Category: Corporate power and influence

THE CORPORATE EDUCATION INVASION Part 1

ABSTRACT: Corporations covet public funding streams, especially large and consistent ones. A relatively recent example of a focused effort by corporations to capture public funding is evident in our public schools. These efforts have included an extensive public relations campaign aimed at convincing the public and elected officials that our public schools are failing. This is a standard corporate strategy: create a real or imagined crisis in a public service and push privatization as the solution.

This attack on our public schools is not only inaccurate, it diverts attention from the real issues underlying poor educational outcomes, which are poverty and inequality. Another key component of the PR strategy is to blame teachers for the supposed failure of our public schools. This undermines teachers and their unions, who are the most likely constituency that would stand up and oppose these privatization efforts.

The PR strategy has worked and privatized public education and testing are now multi-billion dollar corporate revenue streams. Charter schools, despite the promises of privatizers to produce better results, are no better on average than public schools with comparable populations of students.

Corporate efforts to profit off of public funding streams are not new. Eisenhower warned of the military-industrial complex back in the 1950s. The flow of money to private corporations, privatization in the broad sense, threatens to distort public services, decisions, and spending, because the interests and priorities of the corporations receiving the public funds are different from those of the public.

FULL POST: Corporations covet public funding streams, especially large and consistent ones. A relatively recent example of a focused effort by corporations to capture public funding is evident in our public schools. Although corporations have long sold textbooks and other curriculum materials to public schools, a lucrative business with a large and reliable funding stream, recent efforts have focused on privatizing the actual delivery of education, as well as designing and implementing testing.

These efforts have included an extensive public relations campaign aimed at making the public receptive to privatized spending in these areas. A major focus of this public relations (PR) campaign has been to convince the public and elected officials that our public schools are failing, that alternatives are necessary, and that the private sector is by definition more effective and efficient than the public sector. This is a standard strategy straight out of the playbook of corporate America and their political allies: create a real or imagined crisis in a public service and push privatization as the solution. (For more on this strategy, see my blog post, “Find a crisis, demand privatization,” of 6/5/14 [https://lippittpolicyandpolitics.org/2014/06/05/find-a-crisis-demand-privatization/].)

The PR campaign makes the case that our schools are failing by comparing US students to those from other countries. Although average scores indicate that US students perform worse than others, white children from well-off families do just fine in international comparisons. It is the gap between those students and less affluent and minority students that drags the average down. In actuality, a reliable nationwide test of student performance, the National Assessment of Educational Progress (NAEP), finds that US students’ performance is at the highest level on record. [1] So this attack on our public schools is not only inaccurate, it diverts attention from the real issues underlying poor educational outcomes, which are poverty and inequality in the US.

A second component of the PR strategy is the assertion that standardized, high stakes testing is necessary to measure the performance of US students and to establish accountability for improving results. Although testing is presented as part of a “no child left behind” goal, the commitment and funding to improve schools and education (including preschool education) for the students identified as being behind has never materialized. Meanwhile, policies and the funding to address poverty and inequality more broadly are not even on the radar screen.

A final component of the PR strategy is to blame teachers for the supposed failure of our public schools. This again diverts attention from the real underlying issues of poverty and inequality in the US. It also undermines teachers and their unions, who are the most likely constituency that would stand up and oppose these privatization efforts. Undermining unions (and the bargaining power and rights of workers in general) is an overarching goal of large corporations, so this kills two birds with and one stone from their perspective.

The PR strategy has worked and privatized public education and testing are now multi-billion dollar corporate revenue streams. Testing alone is a $2.7 billion a year industry in the US and the new Common Core standards will grow the testing business further. Wall Street investors, including private equity and hedge fund managers, are investing in for-profit corporations in the student testing and charter school industries because they are seen as opportunities for high profits and growth.

Charter schools, despite the promises of privatizers to produce better results, are no better on average than public schools with comparable populations of students. Many of the charter schools that show good results achieve them by attracting motivated students from motivated families. And they also cull students along the way, forcing or pushing out students who aren’t performing well, thereby improving testing results and other statistics. They also typically serve fewer students with special needs and with English as a second language than the public schools. [2]

Corporate efforts to profit off of public funding streams are not new. Eisenhower warned of the military-industrial complex back in the 1950s, when private corporations’ receipt of Defense Department funds was already distorting public policy making and spending. The corporate effort to tap into health care funding from Medicare and Medicaid is another example. For-profit prisons, water and sewer systems, and public education are more recent examples.

In all these cases, the flow of money to private corporations, privatization in the broad sense, threatens to distort public services, decisions, and spending, because the interests and priorities of the corporations receiving the public funds are different from those of the public. Most notably, the corporations are primarily interested in increased revenue and profit, while public goals such as quality and effectiveness of services, public health and safety, and equitable treatment of all service recipients, are typically secondary, at best, to the corporation. Furthermore, there is substantial evidence that private delivery of these services is NOT more effective or more efficient. Nonetheless, the advocates of privatization continue to assert that they are. (For more detail, see my previous posts on privatization, especially the ones on 10/16/12 and 10/23/12.)

[1]       Ravitch, D., 2/17/14, “Reign of error: The hoax of the privatization movement and the danger to America’s public schools,” as reviewed by Featherstone, J., in The Nation

[2]       Ravitch, D., 2/17/14, see above

TITLE: CORPORATOCRACY OR DEMOCRACY?

ABSTRACT: Here are three current examples of corporate power and influence.

Tax dodging: Burger King is the latest corporation to announce plans to move its legal headquarters to a foreign country as a way to avoid paying taxes in the US; a so-called “inversion.” Corporations suffer no consequences as a person would if he or she renounced US citizenship. The tax burden increases on the rest of us to pay what these corporations don’t. I encourage you to contact President Obama and urge him to take action to prevent, or at least discourage, these corporate inversions.

Fracking: In an effort to get favorable treatment of fracking in North Carolina (and elsewhere), the oil and gas corporations have been telling legislators and the public that there are no documented cases of fracking contaminating water supplies. That lie was dramatically exposed recently when the state of Pennsylvania released previously hidden details of 243 cases of water contamination between 2008 and 2014.

High-speed Internet: The fastest Internet access in the US is in Chattanooga, TN. It is about 50 times faster than the US average because it is provided by the municipally-owned electric company. The big cable companies had vigorously tried to prevent Chattanooga from building a publicly-owned network. They don’t want competition for their stranglehold on the slower, more expensive internet service that they provide. Despite their multi-billion dollar annual profits, internet service in the US is worse than that in thirty other countries, including Uruguay.

Conclusion: Corporate power and influence over public policies and our governments is achieved through campaign spending and lobbying. It is hurting our health, our quality of life, and our pocketbooks. It’s time to elect leaders who will stand up to corporations; stand up for consumers, workers, and the middle class; and change our campaign finance and lobbying laws. This is essential to preventing our democracy from becoming a corporatocracy.

FULL POST: Here are three current examples of corporate power and influence that affect our daily lives.

Tax dodging: Burger King is the latest corporation to announce plans to move its legal headquarters to a foreign country as a way to avoid paying taxes in the US; a so-called “inversion.” Although it would, in effect, renounce its US citizenship, everything else remains the same: the same executives and employees, the same stores and facilities, the same customers, and the same benefits from the publicly supported infrastructure in the US, including education of its employees, public benefits for its low wage employees (food stamps, subsidized health care and child care, etc.), transportation, police, fire, and military protection, etc. The only thing that does change is that it pays fewer taxes in the US.

As Senator Elizabeth Warren noted, “If a person did that we’d call them a freeloader. We’d insist they pay their fair share. And that’s exactly what our tax laws do for people who renounce their American citizenship.” However, corporations suffer no consequences; they are treated better than a person would be.

Senator Dick Durbin stated that, “With every new corporate inversion, the tax burden increases on the rest of us to pay what these corporations don’t.” This growing problem is an example of the tremendous corporate influence on our politics and policies through campaign spending and lobbying. [1]

I encourage you to contact President Obama and urge him to take action to prevent, or at least discourage, these corporate inversions.

Fracking: In an effort to get favorable treatment of fracking in North Carolina (and elsewhere), the oil and gas corporations have been telling legislators and the public that there are no documented cases of fracking contaminating water supplies. That lie was dramatically exposed recently when the state of Pennsylvania released previously hidden details of 243 cases of water contamination between 2008 and 2014.

The industry has pressed hard to keep cases of water contamination from being made public. Pennsylvania’s inspector general stated that problems with fracking have overwhelmed state regulators who were “unprepared to effectively administer laws and regulations to protect drinking water and unable to efficiently respond to citizen complaints.” [2]

High-speed Internet: The fastest Internet access in the US is in Chattanooga, TN. It is about 50 times faster than the US average because it is provided by the municipally-owned electric company. This has spurred the local economy, including a growing high tech sector.

This all happened because the electric company needed a high-speed network but the country’s big cable companies wouldn’t be offering service there for a decade or more. So Chattanooga raised $220 million through bond financing and won $111.5 million in federal stimulus dollars and built the network in 3 years.

The big cable companies had vigorously tried to prevent Chattanooga from building a publicly-owned network (as they have in other places). Chattanooga’s electric company had to lobby the state government for permission to participate in the telecom market. It had to win several court battles with Comcast and the state cable association.

Twenty states prohibit or restrict municipalities from doing what Chattanooga has done due to lobbying by the big telecom and cable companies. They don’t want competition for their stranglehold on the slower, more expensive internet service that they provide. They are taking legal steps to stop any further expansion of Chattanooga’s internet service, calling on the Federal Communications Commission (FCC) to block its (and another city’s) plans to expand public high-speed internet services for local residents.

Meanwhile, Comcast and Time Warner, 2 of the giants in the field, are seeking approval for a mega-merger, saying it won’t hurt competition or quality of service. However, Time Warner just paid $1.1 million to resolve an investigation by the FCC that found that it did not properly report multiple network outages, which is a violation of FCC rules.

Furthermore, despite their multi-billion dollar annual profits, internet service in the US is worse than that in thirty other countries, including Uruguay. With the deregulation and glorification of big business corporations, we’ve seen America go from being a leader in many fields to falling further and further behind even many third world countries, such as in Internet speed and access. [3]

Conclusion: Corporate power and influence over public policies and our governments is achieved through campaign spending and lobbying. It is hurting our health, our quality of life, and our pocketbooks. It’s time to elect leaders who will stand up to corporations; stand up for consumers, workers, and the middle class; and change our campaign finance and lobbying laws. This is essential to preventing our democracy from becoming a corporatocracy.

[1]       Germanos, A., 8/27/14, “Burger King ‘inversion’ allows it to profit off public, dodge taxes, say critics,” Common Dreams (http://www.commondreams.org/news/2014/08/27/burger-king-inversion-allows-it-profit-public-dodge-taxes-say-critics)

[2]       FishOutofWater, 8/29/14, “Pennsylvania makes public 243 cases of fracking contaminated water, “ Daily Kos (http://www.dailykos.com/story/2014/08/29/1325694/-Pennsylvania-Makes-Public-243-Cases-of-Fracking-Contaminated-Water)

[3]       Steven D, 8/30/14, “Fastest Internet in US? It’s Chattanooga, TN, thanks to local and fed $$$ (Ps. Big cable very angry),” Daily Kos (http://www.dailykos.com/story/2014/08/30/1325887/-Fastest-Internet-in-US-It-s-Chattanooga-TN-Thanks-to-Local-and-Fed-Ps-Big-Cable-Very-Angry)

INEQUALITY IS NOT INEVITABLE

ABSTRACT: “Inequality is not inevitable” is the title of a recent piece in the New York Times by Joseph Stiglitz. Our current levels of inequality – and the undermining of the middle class – are the result of policies and politics, not a fundamental feature of capitalism. One example is the recent bailout of the large bank and financial corporations with hundreds of billions of taxpayers’ dollars while only a pittance went to homeowners and other victims of these corporations’ predatory lending.

Our campaign finance laws allow economic inequality to lead to political inequality by letting the wealthy buy political influence. And political inequality increases economic inequality in a vicious cycle: politicians increase corporate welfare and give the rich tax cuts while cutting support for middle class workers and the poor.

True economic success is measured by how well the typical citizen is doing, especially in America, which claims to be the bastion of equal opportunity. But here in the US, the typical worker’s income is lower today than it was 25 years ago.

There are policy solutions that will simultaneously strengthen our economy, address the federal government’s budget deficit and debt issues, tackle our infrastructure needs, and reduce inequality. Tax reform is a core ingredient of these policy changes. (See details below.) It and other policies that can and should be changed will reduce inequality, improve our economy, and address other important issues.

FULL POST: “Inequality is not inevitable” is the title of a recent piece in the New York Times by Joseph Stiglitz, [1] a Nobel prize-winning economist. It is the final piece of a New York Times series on inequality entitled “The Great Divide.” [2] The series presents a wide range of examples that demonstrate that our current levels of inequality – and the undermining of the middle class – are the result of policies and politics, not a fundamental feature of capitalism. Other countries’ economies are performing as well or better than ours with far greater equality.

Policies that have increased inequality and weakened the middle class include the recent bailout of the large bank and financial corporations with hundreds of billions of taxpayers’ dollars while only a pittance went to homeowners and other victims of these corporations’ predatory lending. More help for homeowners and the unemployed would have helped the economy recover more quickly and vigorously. We also allow corporate monopolies and near monopolies to exist and make huge profits while they ship jobs and profits overseas, avoiding paying US taxes.

Our campaign finance laws allow economic inequality to lead to political inequality by letting the wealthy buy political influence. And political inequality increases economic inequality in a vicious cycle: politicians increase corporate welfare and give the rich tax cuts while cutting support for middle class workers and the poor. The wealthy corporations and individuals increase their wealth, not by working harder or being smarter, but by manipulating the rules of our economic and political systems. As a result, for example, corporate income taxes have declined as a portion of the federal government’s revenue from 39.8% in 1943 to 9.9% in 2012. Furthermore, Wall St. corporations and executives were not brought to justice for their criminal behavior that led to the economic collapse, or even for their abuse of our legal system in foreclosing on and evicting homeowners, inappropriately, fraudulently, and sometimes in total error.

True economic success is measured by how well the typical citizen is doing, especially in America, which claims to be the bastion of equal opportunity. But here in the US, the typical worker’s income is lower today than it was 25 years ago. And the life prospects of our children are determined more by the income and education of their parents than they used to be, and more than they are in other advanced countries. The tremendous growth in income and wealth of the top 1% in the US has not trickled down, it has evaporated, often in Caribbean and other tax havens. [3] There is compelling evidence that the current level of inequality in the US is weakening our economy and our social cohesion.

There are policy solutions that will simultaneously strengthen our economy, address the federal government’s budget deficit and debt issues, tackle our infrastructure needs, and reduce inequality. We can improve economic growth, promote economic efficiency, and reduce unemployment through changes in our tax system. Tax reform is a core ingredient of the policy changes needed to reduce inequality. Such tax reform includes: [4]

  • Reducing incentives and opportunities for corporations and wealthy individuals to avoid paying taxes
  • Increasing the top marginal income tax rates and reducing preferential treatment of unearned income, such as capital gains and dividends
  • Reforming corporate taxation to incentivize investing in the US (rather than overseas) and to close loopholes that are essentially corporate welfare
  • Taxing too-big-too-fail financial institutions to create a rescue fund (for future, probably inevitable bailouts) and to provide a disincentive for unlimited corporate growth and for speculative, highly leveraged financial activities that increase the likelihood of a bailout
  • Implementing a financial transaction tax to provide a disincentive for unproductive and sometimes harmful financial speculation and activity, such as high volume, high speed, computer-driven trading
  • Reforming the estate and inheritance tax to improve economic efficiency and fairness
  • Taxing pollution and other negative environmental effects
  • Ensuring the government gets full value when it sells public assets, such as natural resources like oil and gas

Tax reform is not an end in itself. The objective is to create a more efficient tax system, while simultaneously producing higher employment and economic growth, reducing inequality and environmental harm, and enhancing the efficiency of our economy.

Inequality is the result of tax and other policies that can and should be changed. Moreover, well-designed changes that address inequality will simultaneously improve our economy and address other important issues.

[1]       Stiglitz, J., 6/29/14, “Inequality is not inevitable,” The New York Times

[2]       See a listing and abstracts of The Great Divide series at http://opinionator.blogs.nytimes.com/category/the-great-divide/?module=BlogCategory&version=Blog Post&action=Click&contentCollection=Opinion&pgtype=Blogs&region=Header

[3]       Stiglitz, J. 6/29/14, see above

[4]       Stiglitz, J., 5/28/14, “Reforming taxation to promote growth and equity,” The Roosevelt Institute, http://rooseveltinstitute.org/sites/all/files/Stiglitz_Reforming_Taxation_White_Paper_Roosevelt_Institute.pdf

FIND A CRISIS, DEMAND PRIVATIZATION

ABSTRACT: Republicans are up to their old tricks: create a crisis at a public agency and then claim that privatization is the answer. The latest example is the Department of Veterans Affairs (VA). Congress hasn’t provided sufficient funding to serve the 1.5 million new veterans from the Iraq and Afghanistan wars. When US Senate legislation proposed 27 new VA health facilities (a 2% increase) and authorized hiring additional doctors and nurses back in February, the Republicans filibustered it, obstructing progress. Now that the lack of capacity has come to public attention, the Republicans are claiming that privatization is the answer.

Most veterans give high ratings to the care they get from the VA and are opposed to privatization. The VA system is actually a model from which our private health care system could learn a lot.

This political tactic of using a “crisis” to push for privatization is one that Republicans have used with Social Security, the US Postal Service, the public school system, road and bridge building and maintenance, the prison system, and so forth. Conservatives in Canada have used the tactic as well to attack their postal service and their universal public health care system.

Using a real, created, or perceived crisis as an excuse to allow inefficient corporate takeovers of societal functions best suited to provision by a public entity puts corporate profits ahead of the public good. Such privatization through “crisis” is a disingenuous tactic used by ideologues who want to shrink government and expand corporate profits regardless of whether or not it’s in the best interests of citizens and taxpayers.

FULL POST: Republicans are up to their old tricks: create a crisis at a public agency and then claim that privatization is the answer. Sometimes the crisis is real, sometimes it is manufactured, and sometimes it’s a perception created by a public relations campaign. However, the answer is always the same: privatize the agency because the “crisis” proves that the public sector can’t do the job.

The latest example is the Department of Veterans Affairs (VA). The cover-up of the waiting list for needed care in the VA’s Phoenix office is unforgiveable. But why was the agency unable to deliver timely care? Is it because doctors, nurses, and others were sitting around with their feet up doing nothing? Or is it because of a lack of capacity to provide the needed care? I’m willing to bet it’s the latter.

Congress hasn’t provided sufficient funding to serve the 1.5 million new veterans from the Iraq and Afghanistan wars. Many of these veterans have injuries, including traumatic body and brain injuries, that would have killed them on the battlefield in the past. However, our improved medical capabilities on the battlefield have saved their lives, but returned them home with significant health care needs. Mental health needs have grown as well.

However, when US Senate legislation proposed 27 new VA health facilities (a 2% increase) and authorized hiring additional doctors and nurses back in February, the Republicans filibustered it, obstructing progress on expanding needed health services for our veterans.

Now that the lack of capacity has come to public attention, the Republicans are claiming that privatization is the answer. Should we turn health care of our veterans over to the health care system that increases its profits by finding ways to deny coverage and care? Interestingly, most veterans give high ratings to the care they get from the VA and are opposed to privatization. The VA has unmatched expertise in traumatic brain injury, amputee care, and other combat-related health issues and it serves rural areas where private sector care is scarce. [1] It computerized medical records and undertook quality of care initiatives long before the private sector. The VA system is actually a model from which our private health care system could learn a lot. [2]

This political tactic of using a “crisis” to push for privatization is one that Republicans have used with Social Security, the US Postal Service, the public school system, road and bridge building and maintenance, the prison system, and so on. Conservatives in Canada have used the tactic as well to attack their postal service and their universal public health care system. [3] Using a real, created, or perceived crisis as an excuse to allow inefficient corporate takeovers of societal functions best suited to provision by a public entity puts corporate profits ahead of the public good.

Privatization of the VA is not good for our veterans or taxpayers. Such privatization through “crisis” is a disingenuous tactic used by ideologues who want to shrink government and expand corporate profits regardless of whether or not it’s in the best interests of citizens and taxpayers. [4]

[1]       Weisman, J., 5/30/14, “VA scandal forces Congress to study systemic change,” The Boston Globe from The New York Times

[2]       Gordon, S. 5/27/14, “Privatization won’t fix the VA,” The Boston Globe

[3]       Taliano, M., 5/16/14, “Privatization is the problem, not the solution,” Common Dreams, http://www.commondreams.org/view/2014/05/16-7

[4]       See my previous posts on privatization, especially the ones of 10/23/12 and 10/16/12, for more detail on the shortcomings of privatization.

CEO PAY: THE RACE TO THE TOP FOR THOSE AT THE TOP

ABSTRACT: CEO pay has increased over 50% in the last 4 years while pay for workers has barely increased. The typical CEO’s pay in 2013 was $10.5 million. The industry with the fastest growth in pay was the banking industry where CEO pay grew 22% in 2013 – on top of 22% growth the year before. While the economy remains weak and unemployment is high, the executives in the banking sector – that we as taxpayers bailed out after they crashed our economy – are making money hand over fist.

CEO pay has increased dramatically over not only the last 4 years but over the last 35 years for a variety of reasons. There also are a variety of reasons that the average workers’ pay has barely increased over the last 4 years and over the last 35 years as well. (See below for more detail.)

As income and wealth inequality have grown dramatically in the US over both the last 4 years and the last 35 years, the wealthy have re-invested part of their windfall in buying influence in our political system through campaign spending and lobbying. They have succeeded in tilting government policies to favor them and their large, typically multi-national, corporations.

Our elected representatives can and should change government policies and actions so that the growing inequality in the US is reduced. We, as the voters in a democratic political system, need to – and can – make them do so.

FULL POST: CEO pay has increased over 50% in the last 4 years while pay for workers has barely increased. CEO pay is now 257 times that of the average worker, up sharply from 181 times workers’ pay in 2009. The typical CEO’s pay in 2013 was $10.5 million – topping the $10 million mark for the first time. The highest paid CEO got over $68 million and the top 10 were all over $31 million. [1] CEO pay was up 8.8% last year while the average workers’ pay rose only 1.3%. [2] And CEO’s wealth is increasing dramatically too, in part because over 40% of their pay is in stock, where gains are taxed at a lower rate than regular cash income.

The industry with the fastest growth in pay was the banking industry where CEO pay grew 22% in 2013 – on top of 22% growth the year before. While the economy remains weak and unemployment is high, the executives in the banking sector – that we as taxpayers bailed out after they crashed our economy – are making money hand over fist.

CEO pay has increased dramatically over not only the last 4 years but over the last 35 years for a variety of reasons. One reason is that CEO pay is set by corporate Boards of Directors that include many current and former CEOs of other corporations and often include members hand-picked by the CEO him or herself. When friends and peers set your pay level, is it any surprise you get big increases? Furthermore, every corporation and board want to tout their CEO as the best and the brightest – and, of course, therefore, the highest paid. Hence, it becomes a race to the top for those at the top. [3] If shareholder approval were required for CEO pay, perhaps things would be different.

There also are a variety of reasons that the average workers’ pay has barely increased over the last 4 years and over the last 35 years as well. Over the last 4 years, high unemployment has meant that workers have little leverage to ask for pay raises and corporations don’t need to reward workers because there is little opportunity for workers to quit and find another job. Workers’ negotiating power has also been eroded over the last 35 years by the decline of union membership and power. In 1983, over 20% of workers were members of unions compared to 11% in 2013. Globalization and technology have played a role by reducing the number of middle class jobs in the US, which tends to increase unemployment and reduce workers’ bargaining power and wages. However, their effects could have been ameliorated through rules governing trade that better protect workers both at home and abroad, as well as by policies and programs for job retraining and retention. [4]

As income and wealth inequality have grown dramatically in the US over both the last 4 years and the last 35 years, the wealthy have re-invested part of their windfall in buying influence in our political system through campaign spending and lobbying. They have succeeded in tilting government policies to favor them and their large, typically multi-national, corporations. These policies include:

  • Tax laws that a) have dramatically reduced the income tax rate on high incomes, b) have even lower rates for unearned income (i.e., income from investments), and c) favor corporations;
  • Government spending priorities, that include bailouts for financial and banking corporations but not for homeowners and workers who were devastated by the recession caused by the financial and banking industry; and
  • Labor and other laws that weaken workers’ bargaining power and fail to increase the minimum wage to keep up with inflation.

Our elected representatives can and should change government policies and actions so that the growing inequality in the US is reduced. We, as the voters in a democratic political system, need to – and can – make them do so.

[1]       Sweet, K., 5/28/14, “Median pay for CEOs rises sharply to $10.5m,” The Boston Globe from the Associated Press

[2]       Boak, J., 5/28/14, “Why executives get lavish compensation as rank-and-file wages lag,” The Boston Globe from the Associated Press

[3]       Boak, J., 5/28/14, see above

[4]       Boak, J., 5/28/14, see above

What liberal media? Part 2

ABSTRACT: The conventional wisdom is that the mainstream media has a liberal slant. Here’s part 2 of my refutation of the liberal media myth based on the information that we do NOT receive from it. There’s been little mainstream media coverage of gerrymandering, obstructionism in Congress, Supreme Court decisions that favor the wealthy and corporations, our growing and disproportionately minority prison population, our inefficient health care system, and the consolidation of the mainstream media into six huge corporations.

Our mainstream, corporate media are for-profit corporations, focused on selling advertising and making a profit by reporting the sensational and the titillating, rather than stories of substance and significance. Where’s the coverage of what truly ails our economy and our country? Where are the stories about how, by working together, we can address important issues? That’s what a truly liberal media would cover and I don’t see much of it in our mainstream media. My blog is designed to fill that gap for those of you who don’t have the time to peruse other sources of information.

FULL POST: The conventional wisdom is that the mainstream media has a liberal slant, despite the fact that it is owned by large corporations. Here’s part 2 of my refutation of the liberal media myth based on the information that we do NOT receive from it. I don’t believe we get the information we need to be informed citizens and voters from the mainstream media. My blog is designed to fill that gap for those of you who don’t have the time to peruse other sources of information.

This post is a continuation of my summary of a listing of issues that the supposedly “liberal” media have barely covered based on a recent article on Daily Kos (http://www.dailykos.com) entitled “15 things everyone would know if there were a liberal media.” [1]

  • The manipulation of the boundaries of US House members’ districts to gain political advantage is called gerrymandering. While not a new phenomenon, it has been carried to a new extreme in the last 25 years. It is a significant contributor to the gridlock in Congress. You probably haven’t heard much about this except in my recent blog post: https://lippittpolicyandpolitics.org/2014/03/09/government-gridlock-and-gerrymandering/.
  • Speaking of gridlock in Congress, you probably haven’t read a lot about the number of bills, judges, and executive branch positions that Congressional Republicans have blocked. For my blog’s coverage of this, see, for example, https://lippittpolicyandpolitics.org/2013/10/17/republican-sabotage/.
  • Supreme Court decisions allow wealthy individuals and organizations, primarily corporations, to spend unlimited sums in our political campaigns. The Citizens’ United decision in 2010 and the McCutcheon decision in early April give wealthy individuals and organizations bullhorns for political speech and contributions, drowning out the voices of average citizens. For information on this issue, see, for example, https://lippittpolicyandpolitics.org/2014/02/28/how-money-is-corrupting-our-politics/.
  • The number of people in our prisons has grown dramatically with significant over-representation of minorities. With 2.3 million Americans in prison, we have more people incarcerated than any other country, including China which has 4 times our population but only two-thirds as many prisoners. With 5% of the world’s population, we have 25% of the world’s prisoners. The US prison population is roughly 5 times what it was in 1980, despite falling crime rates. For-profit prison corporations are one interest group that has pushed for increased incarceration. Blacks are 39% of the prison population but less than 14% of the overall population.
  • US health care costs are the highest in the world, while our health outcomes are among the worst. The US spends $8,233 per person on health care while Norway, with the second highest health care costs, spends $5,388. We spend 17.6% of GDP (our total economy) on health care while the Netherlands, in second place, spends 12%. For more information, see: https://lippittpolicyandpolitics.org/2011/12/09/medicare-and-medicaid-and-our-health-care-system/.
  • Exploiting racial and ethnic prejudices, albeit somewhat subtly, has become standard fare for some political campaigns. Built on the concepts of Nixon’s Southern strategy from the 1960s, some people refer to the current version as “dog whistle” politics, because only those sensitized to it, sometimes subconsciously, hear it. For more detail, see Bill Moyers’ website at: http://billmoyers.com/episode/ian-haney-lopez-on-the-dog-whistle-politics-of-race/.
  • Bees may well be the “canary in the coal mine” for the dangers of high tech, high pesticide agriculture. Bees, which are needed to pollinate much of our food supply, are dying in huge numbers. For information on this, see my blog post: https://lippittpolicyandpolitics.org/2013/08/10/banning-bee-killing-pesticides/.
  • There’s been a tremendous consolidation in the media industry. Six huge corporations now control roughly 90% of the media in the US: Time Warner, Disney, News Corporation (Fox), Viacom, Comcast, and CBS. This corporate consolidation and lack of competition are reasons our news coverage is narrow and not liberal. It’s ironic that as our “news” becomes more and more infotainment, we get some of our best news and analysis from our entertainers, such as Jon Stewart and Stephen Colbert.

Our mainstream, corporate media don’t have a commitment to providing the information needed to have the informed citizenry that a democracy requires. They are for-profit corporations, focused on selling advertising and making a profit by reporting the sensational and the titillating (e.g., scandals, tragedy, crime, celebrities, disasters, and the like), rather than stories of substance and significance. In-depth information, investigative journalism, and analysis, the things a truly “liberal” media would cover, are sorely lacking. Where’s the coverage of what truly ails our economy and our country? Where are the stories about how, by working together, we can address important issues? That’s what a truly liberal media would cover and I don’t see much of it in our mainstream media.

[1]       Akadjian, 8/7/13, “15 things everyone would know if there were a liberal media,” Daily Kos http://www.dailykos.com/story/2013/08/07/1229087/-15-things-everyone-would-know-if-there-were-a-liberal-media?detail=email

What liberal media?

ABSTRACT: The conventional wisdom is that the mainstream media has a liberal slant. The best refutation of the liberal media myth is the information that we do NOT receive. There’s been little mainstream media coverage of corporation-friendly “trade” agreements, outsourcing and downgrading of jobs, growing inequality of income and wealth, the power of corporations in our supposedly democratic process, the out-of-control financial industry, and the undermining of the middle class. My blog is designed to fill that gap for those of you who don’t have the time to peruse other sources of information.

FULL POST: The conventional wisdom is that the mainstream media has a liberal slant, despite the fact that it is owned by large corporations. The best refutation of the liberal media myth is the information that we do NOT receive. I don’t believe we get the information we need to be informed citizens and voters in the mainstream media. My blog is designed to fill that gap for those of you who don’t have the time to peruse other sources of information.

My favorite examples of information NOT provided by the mainstream media are the Trans-Pacific Partnership “trade” agreement and Trans-Atlantic Free Trade Agreement along with the President’s effort to have them considered under a Fast Track process in Congress. These “trade” agreements, which are more about economic, regulatory, and legal issues than trade, will benefit multi-national corporations at the expense of US workers, consumers, and citizens. These agreements will hurt local businesses, the middle class, our health, and our national sovereignty. Nonetheless, there has been very little coverage of them in the mainstream media. You can read about this in my blog. See, for example: https://lippittpolicyandpolitics.org/2014/01/20/history-and-leaks-make-case-against-trade-treaties/.

There was a nice listing of other issues that the supposedly “liberal” media have barely covered in a recent article on Daily Kos (www.dailykos.com) entitled “15 things everyone would know if there were a liberal media.” [1]

Here’s a partial summary:

  • Jobs, especially good, middle class jobs, have been outsourced or converted to temporary or part-time jobs. The result is high unemployment (despite an economic recovery) and stagnant wages. Since 2000, US multinational corporations have cut 2.9 million jobs in the US while increasing overseas employment by 2.4 million. And the number of temporary and contract workers is growing rapidly. They now represent 12% of the workforce. They typically have no job security, receive no benefits (such as health insurance or retirement), and often receive low pay. There’s been little coverage of this in the mainstream media but my blog has covered it: https://lippittpolicyandpolitics.org/2013/09/02/labor-day-and-the-middle-class/.
  • Inequality of income and wealth has grown dramatically in the last 30 years. The wealthiest 1% of Americans own over a third of all the wealth in the US. These 3 million individuals have almost 3 times as much combined wealth as all of the 240 million individuals who make up the least wealthy 80% of Americans. See my blog for more detail. For example: https://lippittpolicyandpolitics.org/2013/11/06/us-capitalism-is-out-of-control/.
  • The tax cuts and loopholes instituted in the last 30 years have provided huge benefits to the wealthy, increasing inequality. Cuts in income tax rates, special low rates on investment income, reductions in the estate tax, loopholes for off-shore investments, and other tax laws disproportionately benefit the well-off and shift the tax burden to the middle class. They also reduce government revenue, which leads to cuts in services and programs that help the middle and working class. See my blog post on how income tax rates have changed over the last 35 years: https://lippittpolicyandpolitics.org/2011/11/27/income-tax-rates-an-historical-perspective/.
  • Large corporations through lobbying, campaign spending, and organizations like The American Legislative Exchange Council (ALEC) have bent our governments, including tax policy and regulation, in their favor. ALEC is a corporate sponsored-organization that drafts laws for consideration by state legislatures. It then finds friendly legislators in multiple states whom it works with to promote these corporate-friendly proposals such as public education privatization, anti-worker laws, laws to promote gun sales, laws to block regulation of corporation behavior and products, including environmental, health, safety, intellectual property, finance, and other regulations. For more information, see Bill Moyers’ website at: http://billmoyers.com/spotlight/eye-on-alec/.
  • At the federal level, for 66 years the Glass-Steagall law kept risky financial investing by Wall St. corporations separated from government-insured deposits. Based on a multi-year, concerted campaign by Wall St., that law was relaxed and eventually repealed. As a result, a series of financial crises occurred, capped by the great crash of 2008. We haven’t heard much from the mainstream media about this pattern of deregulation and financial crises, or Wall Street’s continuing fight to avoid regulation. My blog has covered this multiple times. See, for example: https://lippittpolicyandpolitics.org/2012/03/25/the-2008-financial-collapse-context-and-follow-up/. I’ve also blogged on the minimal penalties on the financial corporations and their executives for their illegal and unethical behavior. See, for example: https://lippittpolicyandpolitics.org/2014/02/06/weak-penalties-for-financial-corporations-misbehavior/. In general, see my blog category “The banks & the financial system.”

More examples of what you do NOT learn about from the mainstream media will be in my next post.

[1]       Akadjian, 8/7/13, “15 things everyone would know if there were a liberal media,” Daily Kos http://www.dailykos.com/story/2013/08/07/1229087/-15-things-everyone-would-know-if-there-were-a-liberal-media?detail=email

HISTORY AND LEAKS MAKE CASE AGAINST “TRADE” TREATIES

ABSTRACT: Twenty years of experience with previous “trade” treaties and the recent leaks of draft language for the Trans-Pacific Partnership (TPP) make the case that the “trade” treaties currently in negotiation will not benefit the US economy, our workers, or our middle class. These treaties focus on and benefit multi-national corporations and investors, rather than trade and the public interest. (See my previous posts of 1/13, 1/8, 9/13/13, and 9/10/13 for more detail.)

The growing resistance to Fast Track authority and these new “trade” agreements in Congress and the public is fueled by growing data on the damaging impacts of the 20 year history of the North American Free Trade Agreement (NAFTA). The same claims are being made for the current trade treaties as were made for NAFTA: that they will promote economic growth, increase jobs, and reduce trade deficits or increase trade surpluses. However, the Mexican trade surplus ($2 billion in 1993) quickly turned into growing deficits, totaling $1 trillion over the 20 year life of NAFTA. With Canada, the other country in NAFTA, the story is similar.

It is estimated that NAFTA has eliminated almost 700,000 jobs in the US. NAFTA established the principle that US corporations could move production out of the US but import the goods produced back into the US without any tariffs or other disincentives. This undermines the wages and benefits of American workers and the middle class. In all three NAFTA countries, wages and benefits for workers have not kept up with increased worker productivity over the last 20 years.

Since NAFTA, the US has entered into trade agreements with Korea, China, and others. While the promise has always been growth in US jobs, our economy, and our trade balance, the result has typically been the opposite. The trade agreements of the past 20 years have cost our economy more than $1 trillion through increased trade deficits and close to a million jobs.

I urge you to contact your elected officials in Washington and tell them you have serious concerns about the “trade” agreements being negotiated. And that these “trade” agreements are too important and too far reaching to be approved quickly and quietly.

FULL POST: Twenty years of experience with previous “trade” treaties and the recent leaks of draft language for the Trans-Pacific Partnership (TPP) make the case that the “trade” treaties currently in negotiation will not benefit the US economy, our workers, or our middle class. These treaties focus on and benefit multi-national corporations and investors, rather than trade and the public interest. (See my previous posts of 1/13, 1/8, 9/13/13, and 9/10/13 for more detail.)

The latest leak has been of the environmental provisions of the TPP. They lack mandated standards and have weak enforcement provisions. They are even weaker than the provisions in previous trade agreements, such as the North American Free Trade Agreement (NAFTA). [1]

Those arguing for Fast Track consideration of the TPP and other treaties by Congress (i.e., short timeframe, no amendments, and no filibuster) argue that treaties should be negotiated by the President and the Executive Branch (and not fiddled with by Congress) and that treaties are generally negotiated behind closed doors. [2] However, the current trade negotiations have included extensive involvement and input from corporate interests but virtually no input from the public; from advocates for workers, the environment, or ordinary citizens; or from Congress and other elected officials (other than the President). Furthermore, the Fast Track process is not necessary to pass trade agreements. President Clinton implemented more than 130 trade agreements without the Fast Track process. [3]

The growing resistance to Fast Track authority and these new “trade” agreements in Congress and among the public is fueled by growing data on the damaging impacts of the 20 year history of the North American Free Trade Agreement (NAFTA). The same claims are being made for the current trade treaties as were made for NAFTA: that they will promote economic growth, increase jobs, and reduce trade deficits or increase trade surpluses. And TPP has specifically been described as NAFTA on steroids.

When NAFTA was being promoted for approval by Congress in 1993, it was stated that it would expand our trade surplus with Mexico, thereby creating 200,000 US jobs in two years and a million in 5 years. However, the Mexican trade surplus ($2 billion in 1993) quickly turned into growing deficits (of $16 billion in 1995, $65 billion in 2008, and $50 billion in 2013). Our trade deficit with Mexico has totaled $1 trillion over the 20 year life of NAFTA.

With Canada, the other country in NAFTA, the story is similar: our trade deficit of $11 billion in 1993 grew to $78 billion in 2008 and $28 billion in 2013. (The dramatic drop in the deficit after 2008 is due to reduced imports because of our Great Recession.) [4]

It is estimated that NAFTA has eliminated almost 700,000 jobs in the US, with 60% of them being in manufacturing. Most of the workers who lost jobs have experienced a permanent loss of income; if they have found other jobs, they pay significantly less. [5] Many workers have experienced long-term unemployment (more than 6 months), which is at historically high levels. Numerous other workers have simply dropped out of the labor force. All of this has led to increases in the costs of government assistance programs, including unemployment benefits and food assistance. [6]

NAFTA established the principle that US corporations could move production out of the US but import the goods produced back into the US without any tariffs or other disincentives. This undermines the wages and benefits of American workers and the middle class. It increases job insecurity and weakens labor unions’ ability to negotiate because of the threat that jobs will be moved out of the US. The result has been stagnant wages for all but the richest Americans and, therefore, growing income inequality. In all three NAFTA countries, the US, Canada, and Mexico, wages and benefits for workers have not kept up with increased worker productivity over the last 20 years. [7]

Even Mexican workers have not experienced any significant increase in wages. An important reason for this is that the export of cheap, subsidized corn from the US to Mexico undermined the livelihoods of an estimated 2.4 million Mexican farmers. This displaced Mexican farmers and led to increased immigration (legal and illegal) to the US. Due to the abundant supply of desperate workers, it also pushed down wages in the maquiladora factory zone (the area just south of the US border). [8]

Although Mexico has experienced increased trade and some job growth under NAFTA, the jobs, even those in manufacturing, have been at low wages. The average Mexican manufacturing wage is only 18% of the US wage and that percentage has grown only slightly. The poverty rate in Mexico is 51%, down only slightly from the 52% when NAFTA went into effect. There has been an increase in the availability of consumer goods, but environmental protections have had mixed results at best. Disposal of US waste in Mexico has increased, including, for example, a 500% increase in US exports of highly toxic, spent lead-acid car batteries, with minimal control to ensure environmentally safe handling of them. [9]

Under NAFTA, US corporations have attempted to weaken Canadian regulations on a range of issues, including offshore oil drilling, fracking, pesticides, and drug patents. [10] Mexico and Canada have paid $350 million to foreign corporations for claims that their laws, rules, regulations, or other actions reduce current and expected profits.

Since NAFTA, the US has entered into trade agreements with Korea, China, and others. While the promise has always been growth in US jobs, our economy, and our trade balance, the result has typically been the opposite. Since the 2012 agreement with Korea, the US trade deficit with Korea has increased by $8.5 billion and an estimated 40,000 jobs have been lost. Our trade deficit with China has soared to $294 billion in 2013 from $83 billion in 2001 when China was permitted to join the World Trade Organization. [11]

The trade agreements of the past 20 years have cost our economy more than $1 trillion through increased trade deficits and close to a million jobs. They are key reasons that unemployment is high and the economic recovery is so weak. Furthermore, the mitigation provisions for these past trade agreements, such as retraining for workers who lost their jobs, have been woefully inadequate and ineffective.

I urge you to contact your elected officials in Washington and tell them you have serious concerns about the “trade” agreements being negotiated. And that these “trade” agreements are too important and too far reaching to be approved quickly and quietly. Full disclosure and debate of their provisions is what democracy requires.

[1]       Queally, J., 1/15/14, “Leaked TPP ‘Environment Chapter’ shows ‘Corporate Agenda Wins,’” Common Dreams (http://www.commondreams.org/headline/2014/01/15)

[2]       Boston Globe Editorial, 1/19/14, “Pacific, EU trade deals need up-or-down votes,” The Boston Globe

[3]       Johnson, D., 1/10/14, “New Fast-Track bill means higher trade deficits and lost jobs,” Campaign for America’s Future

[4]       US Census Bureau, retrieved 1/7/14, “U.S. trade in goods by country,” http://www.census.gov/foreign-trade/balance/

[5]       Johnson, D., 12/18/13, “Will we fast-track past the lessons of the NAFTA trade debacle?” Campaign for America’s Future (http://ourfuture.org/20131218/obama-administration-to-push-fast-track)

[6]       Folbre, N., 8/5/13, “The free-trade blues,” The New York Times

[7]       Faux, J., 1/1/14, “NAFTA, twenty years after: A disaster,” Huffington Post

[8]       Wallach, L., 12/30/13, “NAFTA at 20: ‘Record of damage’ to widen with ‘NAFTA-on-steroids’ TPP,” Global Trade Watch, Public citizen

[9]       Stevenson, M., 1/3/14, “20 years after NAFTA, a changed Mexico,” The Boston Globe from the Associated Press

[10]     Carter, Z., 12/8/13, , “Obama faces backlash over new corporate powers in secret trade deal,” The Huffington Post

[11]     Johnson, D., 12/18/13, see above

STOP FAST TRACK FOR CORPORATE POWER GRAB

ABSTRACT: Bipartisan legislation was introduced in Congress last Thursday to allow the President to submit “trade” agreements to Congress and require expedited consideration of them. There is opposition to this Fast Track consideration (formally known as Trade Promotion Authority) in both parties. There is also opposition to the “trade” agreements currently being negotiated themselves. One reason for this opposition is concern that the agreements benefit multi-national corporations (including foreign corporations) at the expense of local businesses, US workers and citizens, and national sovereignty.

Corporations, who have had access to the agreements’ negotiations (while the public has been kept in the dark), are lobbying to weaken current standards for food safety, labor, health, Internet freedom, the environment, and the financial industry. According to leaked documents, the US is pushing for multi-national corporations to be able to challenge countries’ laws and regulations in privately run international courts or tribunals. Concerns about such provisions stem in part from experiences under existing “trade” agreements. For example, under current “trade” treaties, tobacco corporations are suing or threatening to sue a range of countries over existing or proposed smoking reduction efforts. These legal actions are undermining the World Health Organization’s tobacco control efforts.

I urge you to contact your Representative in the US House and your Senators and tell them you do not want Fast Track authority approved. Full disclosure and debate of the provisions of “trade” agreements is what democracy requires, especially given the essentially irreversible nature of them.

FULL POST: Bipartisan legislation was introduced in Congress last Thursday to allow the President to submit “trade” agreements to Congress and require expedited consideration of them – on a quick timetable, with no amendments, and no filibuster. The bill would require that Congress have access to draft language as agreements are being negotiated (which is currently being kept secret); would specify protections for labor, the environment, and intellectual property; and would require provisions in agreements against currency and exchange rate manipulation. There is opposition to this Fast Track consideration (formally known as Trade Promotion Authority) in both parties, so it is unclear when or if this bill will move forward. Alternative bills that give Congress more say over “trade” agreements are likely to be introduced. (I put trade in quotes because recent “trade” agreements, such as the North American Free Trade Agreement [NAFTA], go well beyond trade issues and cover a broad range of legal and regulatory issues. The provisions for reducing trade barriers and increasing trade are only a small part of the agreements.)

The President and the supporters of the “trade” agreement (largely corporate America) want Fast Track authority for the two broad “trade” agreements mentioned in my previous post (1/8/14): the Trans-Pacific Partnership (TPP) among a dozen Pacific Rim countries and the Trans-Atlantic Free Trade Agreement (TAFTA) [1] with 28 European countries. In addition, there is a global agreement on services (as opposed to manufactured goods) with about 50 countries that is currently being negotiated that would also be covered by the Fast Track authority. [2]

As I noted in my previous post (1/8/14), there is opposition to the “trade” agreements currently being negotiated and Fast Track consideration of them for 3 main reasons, one of which is concern that they benefit multi-national corporations (including foreign corporations) at the expense of local businesses, US workers and citizens, and national sovereignty (our ability to control what happens within the boundaries of the US). For example, a goal of TAFTA is to establish health and safety rules and regulations that would be standard across the US and EU. [3] Many people are concerned that this will lead to a race to the bottom, with the weakest standards winning out. For example, the US is demanding that the EU reduce restrictions on importation of genetically modified foods and hormone-treated beef. Europeans, however, want strong regulation of their food. Corporations, who have had access to the agreements’ negotiations (while the public has been kept in the dark), are lobbying to weaken current standards for food safety, labor, health, the environment, and the financial industry. [4]

In the TPP, according to leaked documents, the US is pushing for multi-national corporations to be able to challenge countries’ laws and regulations in privately run international courts or tribunals. This would result in a significant loss of national sovereignty. (This is a change to current rules under the World Trade Organization where countries’ own courts rule on such matters, although NAFTA included a similar but narrower provision for international tribunals.) The US is also advocating for expanded intellectual property protections, including long-term patents, and therefore monopolies, on drugs (similar to current US laws). It is also pushing to ban government agencies from negotiating lower drug prices with pharmaceutical corporations. (Such a ban is included in the US Medicare program and costs the program billions of dollars every year.) There is widespread concern that such provisions would increase drug prices, pharmaceutical corporations’ profits, and health care costs. This would seem to be borne out by the fact that drug prices are much higher in the US than in other countries. The US is also pushing for weak regulation of the financial industry. Leaked TPP documents have raised concerns among health, Internet freedom, environmental, and labor advocates over provisions supported by the US, the US Chamber of Commerce, and corporations in general. [5]

These concerns stem in part from experiences under existing “trade” agreements. For example, under existing “trade” treaties, tobacco corporations are suing or threatening to sue a range of countries (including Australia, Canada, Gabon, Namibia, New Zealand, Norway, Togo, Uganda, and Uruguay) over existing or proposed smoking reduction efforts. These legal actions are undermining the World Health Organization and its Framework Convention on Tobacco Control, a public health treaty signed by 170 countries, whose goal is to reduce smoking and its negative health effects by limiting and controlling advertising, packaging, and sale of tobacco products. As a specific example, Philip Morris is suing Australia for its cigarette packaging law claiming it will reduce current and future profits. The suit is brought under a treaty between Australia and Hong Kong, and the case will be decided in a private, non-public proceeding of a private international tribunal of arbitrators in Singapore. Although the US says it wants the new TPP to promote public health, and specifically named tobacco as a concern, the US Chamber of Commerce objected because it felt that such public health provisions could allow the regulation of other products such as sugar and soda. [6]

My next post will focus on our 20 year experience with NAFTA and some of its implications for what could be expected with these new “trade” agreements.

In the meantime, I urge you to email, call, write, and, if you can, meet with your Representative in the US House and your Senators [7] and tell them you do not want Fast Track authority approved. These “trade” agreements are too important and too far reaching to be approved quickly and quietly. Full disclosure and debate of the provisions of “trade” agreements is what democracy requires, especially given the essentially irreversible nature of them.

[1]       Also known as the Trans-Atlantic Trade and Investment Partnership

[2]       Calmes, J., 1/9/14, “A proposal to speed up action on trade accords,” The New York Times

[3]       Dahlburg, J., 11/12/13, “US, EU restart trade talks,” The Boston Globe from the Associated Press

[4]       Todhunter, C., 10/4/13, “The US-EU Transatlantic Free Trade Agreement (TAFTA): Big business corporate power grab,” Global Research (http://www.globalresearch.ca/the-us-eu-transatlantic-free-trade-agreement-tafta-big-business-corporate-power-grab/5352885)

[5]       Carter, Z., 12/8/13, “Obama faces backlash over new corporate powers in secret trade deal,” The Huffington Post

[6]       Tavernise, S., 12/13/13, “Tobacco firms’ strategy limits poorer nations’ smoking laws,” The New York Times

[7]       You can find contact information for your US Representative at http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

TRADE TREATIES NEED OPEN DEBATE, NOT FAST TRACK

ABSTRACT: Action in Congress on requiring Fast Track consideration of trade treaties is likely to happen soon. Two broad “trade” agreements are scheduled for Congressional action this year: the Trans-Pacific Partnership (TPP) with a dozen Pacific Rim countries and the Trans-Atlantic Free Trade Agreement (TAFTA) with the European Union (EU). Fast Track authority requires that Congress consider and act on a treaty in a short timeframe with no amendments or changes allowed and with no filibustering.

I urge you to email, call, write, and, if you can, meet with your member of Congress and your Senators and tell them you do not want them to approve Fast Track authority. These “trade” agreements are too important and too far reaching to be approved quickly and quietly.

Business groups are pushing hard for Fast Track consideration in Congress. They are supporters of the treaties, which are widely viewed as very favorable to corporate interests. The growing resistance to Fast Track authority is fueled in large part by:

  • Secrecy on the negotiations and agreement provisions, which breeds suspicion;
  • Concern that they benefit multi-national corporations at the expense of others; and
  • Growing data on the damaging impacts of 20 years with the North American Free Trade Agreement (NAFTA), on which these treaties are modeled.

The indirect effects of the past and these possible new “trade” agreements on the balance of power in employer-employee relations and in our political system, as well as on economic inequality, may be more significant than the direct effects, such as job losses. The TPP and the TAFTA, based on what is known about them, will likely benefit corporations and investors, while hurting US workers and citizens. Moreover, if approved, these treaties will be very difficult to change, as the consent of all the parties is required. At the least, a full discussion of their provisions, based on full disclosure, is warranted.

FULL POST: Action in Congress on requiring Fast Track consideration of trade treaties is likely to happen soon. President Obama would like to have Fast Track authority, formally known as Trade Promotion Authority, for two broad “trade” agreements that are scheduled for Congressional action this year: the Trans-Pacific Partnership (TPP) with a dozen Pacific Rim countries and the Trans-Atlantic Free Trade Agreement (TAFTA) [1] with the European Union (EU). (I put trade in quotes because these “trade” agreements, like NAFTA, go well beyond trade issues and cover a broad range of legal and regulatory issues. The provisions for reducing trade barriers and increasing trade are only a small part of the agreements.)

Fast Track authority requires that Congress consider and act on a treaty in a short timeframe with no amendments or changes allowed and with no filibustering. Fast Track authority was first used in 1974 and has been used on a number of occasions since then.

I urge you to email, call, write, and, if you can, meet with your member of Congress and your Senators and tell them you do not want them to approve Fast Track authority. [2] These “trade” agreements are too important and too far reaching to be approved quickly and quietly. Full disclosure and debate of the provisions of “trade” agreements is what democracy requires.

The Democratic and Republican leaders of the Senate Finance Committee, along with the Republican chairman of the House Ways and Means Committee, have reportedly reached an agreement on a Fast Track authority bill, although they have not yet released its details. The argument for Fast Track consideration of trade treaties is that it means other countries will be more likely to make concessions and reach agreement on the treaty if they are confident that the US Congress can’t change it.

Business groups, including the US Chamber of Commerce and the Business Roundtable, are pushing hard for Fast Track consideration in Congress. They are supporters of the treaties, which are widely viewed as very favorable to corporate interests, [3] and are presumably worried that debate in Congress and the public on the treaties would reduce their chances for approval.

There is significant opposition to granting Fast Track authority in Congress and outside of it. Nearly 200 members of the US House, mostly Democrats but some Republicans, have signed letters strongly questioning the granting of Fast Track authority for these treaties. [4]

The growing resistance to Fast Track authority for these new “trade” agreements in Congress and the public is fueled in large part by:

  • Secrecy on the negotiations and agreement provisions, which breeds suspicion;
  • Concern that they benefit multi-national corporations at the expense of local businesses, workers and citizens, and national sovereignty; and
  • Growing data on the damaging impacts of 20 years with the North American Free Trade Agreement (NAFTA), on which these treaties are modeled.

Both treaties are being negotiated in great secrecy. For the TPP, the Obama administration has deemed the negotiations classified information, restricting Congressional access to documents and banning discussion of the negotiations and treaty provisions with the press or the public. [5] In 2013, Senator Elizabeth Warren opposed the confirmation of the US Trade Representative because he refused to share any of TPP’s provisions. She noted the important need for transparency and public debate on the treaty. [6]

These treaties are seen by many advocates for health, labor, safety, environmental, and financial industry standards and regulations as a masquerade for a corporate power grab, designed to weaken regulation and run roughshod over workers’ and citizens’ interests. [7] These “trade” agreements would enable multi-national corporations to operate with weakened oversight by national governments, free of nations’ court systems, and with reduced consumer and citizen protections. Corporations would become supra-national entities and would answer only to a separate system of rules and courts, administered by new international tribunals. In essence, an international system, parallel to the United Nations system of international governance for nations, would be created for international governance of corporations – a United Multi-national Corporations system, if you will. (More on this in a subsequent post.)

The same claims are being made for these two trade treaties that were made for NAFTA: they will promote economic growth, reduce trade deficits or increase trade surpluses, and increase jobs. The actual experience with NAFTA is that it has done none of these things, which is probably the best indicator of the likely effects of these new trade treaties. And the TPP has specifically been described as NAFTA on steroids. (More on this in a subsequent post.)

The indirect effects of the past and these possible new “trade” agreements on the balance of power in employer-employee relations and in our political system, as well as on economic inequality, may be more significant than the direct effects, such as job losses. The corporations and investors who have been the winners in this globalization of trade and commerce can invest their winnings (i.e., profits) in campaign contributions, lobbying, and political strategies that ensure they are the victors in next round of “trade” agreements. [8]

Although President Obama recently described growing economic inequality in the US as a major issue, NAFTA has increased inequality and the new trade treaties are likely to as well. NAFTA and other recent “trade” agreements have provided benefits to corporations and investors globally, while hurting workers and the middle class in the US, and sometimes hurting workers in other countries. The TPP and the TAFTA, based on what is known about them, will similarly benefit corporations and investors, while hurting US workers and citizens. Moreover, if approved, these treaties will be very difficult to change, as the consent of all the parties is required. At the least, a full discussion of their provisions, based on full disclosure, is warranted.

 

[1]       Also known as the Trans-Atlantic Trade and Investment Partnership.

[2]       You can find contact information for your US Representative at http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[3]       For more information see my previous posts, “Trade” Agreement Supersizes Corporate Power, 9/10/13, (https://lippittpolicyandpolitics.org/2013/09/10/trade-agreement-supersizes-corporate-power/) and “Trade” Agreements & Corporate Power, 9/13/13 (https://lippittpolicyandpolitics.org/2013/09/13/trade-agreements-corporate-power/).

[4]       Politi, J., 12/13/13, “US Senate deal sets up fierce trade battle,” Financial Times

[5]       Carter, Z., 12/8/13, , “Obama faces backlash over new corporate powers in secret trade deal,” The Huffington Post

[6]       Loth, R., 12/21/13, “Take trade agreement off fast track,” The Boston Globe

[7]       Todhunter, C., 10/4/13, “The US-EU Transatlantic Free Trade Agreement (TAFTA): Big business corporate power grab,” Global Research (http://www.globalresearch.ca/the-us-eu-transatlantic-free-trade-agreement-tafta-big-business-corporate-power-grab/5352885)

[8]       Folbre, N., 8/5/13, “The free-trade blues,” The New York Times

US CAPITALISM IS OUT OF CONTROL

ABSTRACT: Of all the developed countries, the United States has the most unequal distribution of income and wealth. 1928 and 2007 were the peak years for income and wealth inequality in the US. In the periods leading up to these two peaks, the wealthy invested and speculated in financial markets. Speculative bubbles were created. The middle class saw their incomes stagnate. This led to economic instability, the Great Depression of the 1930s, and the Great Recession of 2008.

So where should we look for an example of greater economic stability and equality? The answer is the United States after World War II from 1946 to 1978. So what do we need to do to return to greater economic stability and equality? We need to keep and encourage the creation of jobs that pay middle class wages and have benefits.

We need to change the rules of our economy so the gains of economic growth are more widely shared. Capitalism needs rules, otherwise it runs out of control. A well-functioning democracy can create and enforce appropriate rules (laws and regulations). But if the democratic process of electing officials and making laws and regulations is corrupted by money and lobbying from wealthy capitalists and their corporations, the appropriate rules won’t be in place and capitalism can run out of control.

Currently, the huge amounts of money being spent by wealthy capitalists and their corporations on elections and lobbying are determining the rules of our economy. Americans are losing faith in our democracy, which is our most precious gift and our most important legacy for future generations. What the powerful moneyed interests would like, is for us all to get so cynical about politics and government that we basically give up. But if we’re mobilized, if we’re energized, if we take citizenship to mean not simply voting, paying taxes, and showing up for jury duty, but actually participating actively and knowledgeably, we can make our democracy – and capitalism – work.

FULL POST: Of all the developed countries, the United States has the most unequal distribution of income and wealth. 1928 and 2007 were the peak years for income and wealth inequality in the US. [1] What happened a year after 1928? The Great Crash. And what happened a year after 2007? Another financial system crash. The parallels are breathtaking if you look at them carefully. [2]

In the periods leading up to these two peaks, the wealthy invested and speculated in financial markets. Both times, speculative bubbles were created. In both periods, the middle class saw their incomes stagnate, so they went deeper and deeper into debt to maintain their living standard, creating a debt bubble. These bubbles and the undermining of the middle class led to economic instability, the Great Depression of the 1930s, and the Great Recession of 2008.

Today, many in the middle class are one crisis away from being poor. If they lose a job, have a health crisis, or have a serious accident, they can find themselves suddenly in need of public assistance, which may be unemployment benefits, food stamps or food pantries, or subsidized health insurance from Medicaid. They may find themselves deep in debt and at risk of losing their home.

We seem to be close to the point where the middle class doesn’t have the purchasing power to keep the economy going and where the majority of people feel like the economic and political systems are rigged against them. There may be a tipping point, where the degree of inequality and economic insecurity actually threaten our economy, our society, and our democracy.

So where should we look for an example of greater economic stability and equality? The answer is the United States in the decades after World War II. From 1946 to 1978, the economy doubled in size, everybody’s income doubled, and inequality was low. Although the top income tax rate was as high as 91% and was never below 70%, we had greater annual economic growth than we’ve had since. With today’s top tax rate under 40%, anybody who says that we have to reduce taxes to foster economic growth, simply doesn’t know our own history.

So what do we need to do to return to greater economic stability and equality? We need to keep and encourage the creation of jobs that pay middle class wages and have benefits. We need to increase the minimum wage and we need to include labor standards in our trade treaties. We need to give workers and the middle class the voice and power to stand up to the wealthy and ensure that our economy works for all people, not just for the 1% at the top. We need to change the rules of our economy so the gains of economic growth are more widely shared. (For more detail see my post of 10/29/13 at https://lippittpolicyandpolitics.org/2013/10/29/lack-of-good-jobs-is-our-most-urgent-problem/. )

The rules of our economy are largely set by the federal government. Capitalism needs rules, otherwise it runs out of control, resulting in financial collapses; air and water that are harmful; cars that are unsafe; drugs and food are tainted; industrial accidents where oil wells blow out, chemical plants explode, and trains crash and burn; and so forth.

A well-functioning democracy can create and enforce appropriate rules (laws and regulations) that balance public safety (including environmental safety) and corporate profitability. But if the democratic process of electing officials and making laws and regulations is corrupted by money and lobbying from wealthy capitalists and their corporations, the appropriate rules won’t be in place and capitalism can run out of control.

Currently, the huge amounts of money being spent by wealthy capitalists and their corporations on elections and lobbying are determining the rules of our economy. They are using their economic power to gain political power. They are using this political power to entrench and enrich themselves economically and politically by obtaining laws and regulations that are tilted to benefit their self-interest. This is not a matter of partisan politics; both Democratic and Republican politicians and policy makers receive the money and do the bidding of these powerful economic elites.

Examples of laws and regulations that are tilted to favor capitalist interests include individual and corporate tax laws; bankruptcy laws; antitrust laws and enforcement; intellectual property laws on copyrights, patents, and trademarks; health and safety laws; campaign finance laws; laws and regulations for the financial industry; and priorities for government spending.

Americans are losing faith in our democracy, which is our most precious gift and our most important legacy for future generations. We are losing faith in equal opportunity and upward mobility as practical realities, and we’re feeling real anxiety over our lack of economic security.

Americans need to understand what’s at stake and push good people in government to do the right thing. If we don’t, eventually the moneyed interests will win because they are persistent and there won’t be anybody who can speak loudly enough to be heard over the bullhorn of their money.

What the powerful moneyed interests would like, is for us all to get so cynical about politics and government that we basically give up and say, “Okay, you want our democracy? Take it.” Then they win everything. But if we’re mobilized, if we’re energized, if we take citizenship to mean not simply voting, paying taxes, and showing up for jury duty, but actually participating actively and knowledgeably, we can make our democracy – and capitalism – work.

We can do it if we understand the nature of the problem. Time and again, in the early 1900s and again in the 1930s, for example, we have saved capitalism from its own excesses. We made sure that rules were in place to make capitalism work as it should: as an engine of prosperity for everyone and with a brake on the excesses of greed and power, as well as on the money that can otherwise corrupt our democratic process.

I encourage you to watch, listen to, or read the transcript of Bill Moyers’ show with Bob Reich (http://billmoyers.com/episode/full-show-inequality-for-all/). And I encourage you to go see Bob Reich’s movie, Inequality for All. It’s entertaining and informative. You can see the trailer for the movie, get lots more information, and find opportunities to take action at http://inequalityforall.com/.

[1]       The latest data appear to show that inequality was even greater in 2012 than 2007 as the great majority of the benefits of our weak economic recovery are going to the richest people. For more detail, see my post of 9/27/13 at https://lippittpolicyandpolitics.org/2013/09/27/whats-up-with-the-economic-recovery/.

[2]       Moyers, B., with Reich, R., 9/20/13, “Inequality for all,” http://billmoyers.com/episode/full-show-inequality-for-all/ (This post is a summary of this Bill Moyers show. You can view, listen to, or read the transcript of it at the link provided.)

LACK OF GOOD JOBS IS OUR MOST URGENT PROBLEM

ABSTRACT: The most urgent problem facing the US right now is a lack of jobs, especially jobs that pay middle class wages and provide benefits. Unemployment is high and long-term. The jobs being created during our 4 year old economic recovery are disproportionately low-wage, low skill jobs.

Fast food workers are emblematic of the low wage, low skill jobs being created. The typical fast food worker makes $8.69 per hour. As a result, over half of fast food workers rely on public, taxpayer funded benefits to make ends meet. The cost to taxpayers is estimated to be $7 billion per year. Meanwhile, the fast food corporations make billions of dollars in profits and pay tens of millions of dollars to their senior executives. Workers at Walmart, the largest employer in the US, are in a similar situation. These very profitable corporations can afford to raise their workers’ wages to $15 an hour – a wage they could live on without public assistance. In the meantime, taxpayers are subsidizing these corporations.

It used to be that unions and government provided workers with a voice and the power to balance that of the large employers. Today, that voice and power are largely gone. Therefore, wages, benefits, and job security have been eroding. Starting in the late 1970s, the historic link between growth in the economy and productivity on the one hand, and growth in workers’ wages on the other hand, was severed. We undid or failed to adopt rules for our economy that ensure the gains of economic and productivity growth are widely and fairly distributed.

The failure of our policy makers in Washington to focus on creating jobs, let alone good jobs, and on spurring economic growth is the clear and tragic result of the ascendancy of politics over rational policy making.

FULL POST: The most urgent problem facing the US right now is a lack of jobs, especially jobs that pay middle class wages and provide benefits. Unemployment is high and long-term – since 2010 roughly 40% of those unemployed and actively looking for work have been unemployed for more than 6 months. This is triple the rate of long-term unemployment in the period from 2000 – 2007. [1]

The official unemployment rate is 7.2% based on those who are actively looking for a job. It would be significantly higher, well over 10%, if those who have given up looking were included. And higher still if the under-employed were included – those working part-time who would like to be working full-time and those who are working at jobs for which they are over-qualified.

The jobs being created during our 4 year old economic recovery are disproportionately low-wage, low skill jobs. (See post of 9/27/13 for more detail.) High unemployment and low wage jobs are key factors in our slow economic recovery (consumers’ lack purchasing power), in the government’s budget deficit (reduced tax revenues), and in growing inequality (95% of the economic gains during the recovery have gone to the richest 1%). As a result, income and wealth inequality have increased to levels not seen since the 1920s.

Fast food workers are emblematic of the low wage, low skill jobs being created. The typical fast food worker makes $8.69 per hour. Two-thirds of them are adults, most of them bring home at least half of the family’s income, and a quarter of them have children. Only 13% get health insurance through their employers.

As a result, over half of fast food workers rely on public, taxpayer funded benefits to make ends meet. The cost to taxpayers is estimated to be $7 billion per year; much of it is for health care, but also food assistance and other economic supports. [2] You can watch a 2 minute video about this, which includes a recording of the McDonald’s help line telling a 10-year employee with 2 children to access food stamps and Medicaid, at
http://lowpayisnotok.org/mcvideo/?utm_campaign=LowPay&utm_medium=email&utm_source=mcvideo-r.

Meanwhile, the fast food corporations make billions of dollars in profits and pay tens of millions of dollars to their senior executives. For example, McDonald’s has 700,000 employees. They are estimated to get $1.2 billion a year in taxpayer funded benefits. McDonald’s is very profitable, making $5.5 billion a year and paying its CEO $13.8 million. It has just purchased a $35 million luxury jet for its executives, which costs at least $2,400 an hour to operate.

Workers at Walmart, the largest employer in the US, are in a similar situation. They make an average of $8.80 an hour. When General Motors was the largest employer in the 1950s, it paid its workers about $50 to $60 an hour (adjusted for inflation). As with the fast food workers, we taxpayers are supporting Walmart workers with multiple types of public assistance. [3]

These big, profitable corporations operate with a business model that uses low paid and part-time workers, typically without benefits, who are, therefore, unable to afford the necessities of life. This leaves taxpayers to pick up the tab for the public benefits they need. These very profitable corporations can afford to raise their workers’ wages to $15 an hour (see post of 9/8/13 for more detail)  – a wage they could live on without public assistance. In the meantime, taxpayers are subsidizing these corporations.

Nationally, the typical workers’ wages, adjusted for inflation, have barely increased over the last 30 years. (See post of 9/2/13 for more detail.) The typical male worker in 1978 was making around $48,000 (adjusted for inflation), while the average person in the top 1% earned $390,000. By 2010, the typical male workers’ pay had gone down, while the person in the 1% had their pay more than double. Today, the richest 400 Americans have more wealth than the bottom half of the country, 150 million people, combined.

It used to be that unions and government provided workers with a voice and the power to balance that of the large employers. Today, that voice and power are largely gone. Therefore, wages, benefits, and job security have been eroding. Workers are not even receiving the benefits of their increased productivity. As a result, we are losing the middle class, equal opportunity, and upward mobility. This is undermining our economy and our democracy.

In the first 4 years of the current recovery, the richest 1% of Americans took home 95% of the income gains. In stark contrast, between 1946 and 1978, as the economy doubled in size, everyone’s income doubled as well.

Starting in the late 1970s, the historic link between growth in the economy and productivity on the one hand, and growth in workers’ wages on the other hand, was severed. Income gains started going to the richest Americans and people in the middle, the typical worker, saw their wages stagnate. Part of the problem is that we didn’t adapt to globalization and technological change. We didn’t change public policies. We didn’t change the rules of our economy to continue to provide opportunity, upward mobility, and ensure that economic and productivity growth were broadly shared. We could have done so, but we didn’t. [4]

Among other things, we let the minimum wage fall behind inflation. If it had kept up with inflation, the national minimum wage would be $10.40 today instead of $7.25. If productivity improvement was included, it would be at least $15 an hour. We deregulated the financial system, both domestically and internationally, favoring investors and corporations over workers. And we didn’t include labor standards in trade treaties. Meanwhile, we cut tax rates on high incomes and wealth substantially.

If we had a democracy that was working for the people, the average citizen and worker would have the voice and power to see that their interests and the greater good were served. Instead, we undid or failed to adopt rules for our economy that ensure the gains of economic and productivity growth are widely and fairly distributed – without sacrificing efficiency or innovation. The failure of our policy makers in Washington to focus on creating jobs, let alone good jobs, and on spurring economic growth is the clear and tragic result of the ascendancy of politics over rational policy making. This failure may put their political careers at risk because every poll shows that the public is much more concerned about jobs and the economy than any other issue, including the deficit.

[1]       Woolhouse, M., 10/22/13, “Long search finally ends,” The Boston Globe

[2]       Johnston, K., 10/16/13, “Public aid crucial to fastfood workers,” The Boston Globe

[3]       Moyers, B. with Reich, R., 9/20/13, “Inequality for all,” http://billmoyers.com/episode/full-show-inequality-for-all/

[4]       Moyers, B. with Reich, R., 9/20/13, see above

“TRADE” AGREEMENTS & CORPORATE POWER

ABSTRACT: The Trans-Pacific Partnership (TPP) “trade” treaty that is currently being negotiated (see post of 9/10) would give corporations the right to sue governments if their laws, regulations, or actions negatively affect current or expected future profits. Under existing trade agreements, over $380 million has already been paid to corporations by governments. Furthermore, there are 18 pending suits by corporations against governments for $14 billion. Corporations will use or set up foreign subsidiaries to file suits under investor-state dispute resolution provisions of trade treaties (corporations are referred to as “investors”), thereby avoiding a country’s legal system and relying instead on the international tribunals (i.e., courts) created by the treaties.

The TPP would require countries to allow corporations to compete for the delivery of public services. The result could well be that some people cannot afford a corporation’s fees for basic, formerly universal, public services (such as water).

If ratified, the Trans-Pacific Partnership treaty would enhance the power and rights of corporations while weakening US sovereignty. Given its unlimited term and the virtual impossibility of making changes (which require the unanimous consent of the parties), it amounts to a Constitutional change that gives foreign corporations equal (if not greater) legal status and power than the US and other governments. Furthermore, it would foster a race to the bottom for public health, the environment, and workers, especially well-paid blue and white collar workers, as jobs continue to move overseas and compensation and safety are attacked as limiting profits.

The secrecy and potency of the TPP make it feel like a conspiracy among our corporate and political elite to give corporations the ultimate power in our society. I strongly urge you to call your US Senators, and your Representative as well, to ask them to oppose “fast-track” rules for consideration of the Trans-Pacific Partnership “Trade” Treaty and to demand full disclosure and discussion of its provisions in Congress and with the public.

FULL POST: The Trans-Pacific Partnership (TPP) “trade” treaty that is currently being negotiated (see post of 9/10) would give corporations the right to sue governments if their laws, regulations, or actions negatively affect current or expected future profits. The North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico and other treaties that are already in place give corporations similar rights. Under existing trade agreements, over $380 million has already been paid to corporations by governments. Furthermore, there are 18 pending suits by corporations against governments for $14 billion. [1] For example, Chevron is suing Ecuador over its environmental laws, Eli Lilly is suing Canada over its patent laws, and European investment firms are suing Egypt over its minimum wage laws. [2]

Philip Morris is suing Australia over its cigarette labeling laws. However, because the US – Australia trade agreement doesn’t include investor-state dispute resolution provisions (corporations are referred to as “investors”) that allow such suits, Philip Morris is using other trade treaties and its Swiss and Hong Kong subsidiaries to file its suits. [3] Corporations will use or set up foreign subsidiaries to file suits under investor-state dispute resolution provisions of trade treaties, thereby avoiding a country’s legal system and relying instead on the international tribunals created by the treaties.

Other examples of corporations suing governments include:

  • Under NAFTA, a US corporation sued and received $13 million from Canada, which then reversed its ban on a gasoline additive that contains a known human neurotoxin.
  • Another US corporation has filed a $250 million investor-state suit against Canada under NAFTA because of its ban on fracking.
  • A French and a US company have succeeded in separate suits totaling close to $300 million against Argentina because its federal government failed to override 2 provinces’ limits on water rate increases after water systems were privatized in a period of economic distress, even though it would have been an unconstitutional intervention in provincial affairs for the federal government to do so. [4]
  • (There are many more examples and much more information on the TPP at www.citizen.org/TPP.)

The TPP language would require countries to allow corporations to compete for the delivery of public services, such as water and sewer, electricity, education, and transportation services. The result could well be, as has occurred in Argentina and other South American countries, that some people cannot afford a corporation’s fees for basic, formerly universal, public services (such as water), or that a distinctly two-tiered system emerges with high quality services for those who can afford to pay and poorer quality services for those who can’t. [5]

If the TPP is ratified by the US, it would, for example, undermine efforts to make the giant international mining corporation Rio Tinto abide by the Clean Air Act at its massive copper mine west of Salt Lake City. [6] Under the TPP, US and local regulations could be nullified or forced to change in areas such as:

  • Worker safety and the minimum wage
  • Importation of food and food labeling
  • Fracking for and exportation of natural gas
  • The length of patent protection on drugs (which could raise drug prices by delaying availability of generic versions of drugs)
  • The separation of banking from financial speculation that has been proposed as part of the answer to the 2008 financial collapse (i.e., reinstating Glass-Steagall provisions). Furthermore, TPP would prohibit a transaction tax on the buying and selling of securities, derivatives, and other financial instruments (as has been proposed in the US and as is being implemented in Europe).

If ratified, the Trans-Pacific Partnership treaty would enhance the power and rights of corporations while weakening US sovereignty. Given its unlimited term and the virtual impossibility of making changes (which require the unanimous consent of the parties), it amounts to a Constitutional change that gives foreign corporations equal (if not greater) legal status and power than the US and other governments. This is in total contradiction to the design of US democracy where there is a balance of power, checks and balances, elections every two years, and law making that can change policies and the course of the country on a regular basis.

Furthermore, it would foster a race to the bottom for public health and the environment by giving corporations the right to challenge health and environmental laws and regulations in pursuit of ever higher profits. Similarly, it would foster a race to the bottom for workers, especially well-paid blue and white collar workers, as jobs continue to move overseas (as they have done under NAFTA), and compensation and safety are attacked as limiting profits.

I’m not one who generally buys conspiracy theories, but the secrecy and potency of the TPP make it feel like a conspiracy among our corporate and political elite to give corporations, which are totally focused on maximizing profits, the ultimate power in our society. Therefore, corporations, not our governments or other civic organizations, would determine our well-being as individuals, communities, and nations, as well as, ultimately, the well-being of our planet. I strongly urge you to call your US Senators, and your Representative as well, to ask them to oppose “fast-track” rules for consideration of the Trans-Pacific Partnership “Trade” Treaty and to demand full disclosure and discussion of its provisions in Congress and with the public.

(You can find out who your Congress people are and get their contact information at: http://www.senate.gov/general/contact_information/senators_cfm.cfm for your Senators and http://www.house.gov/representatives/find/ for your Representative.)

[1]       Public Citizen, retrieved 9/9/13, “TPP’s investment rules harm public access to essential services,” www.citizen.org/TPP

[2]       Hightower, J., August 2013, “The Trans-Pacific Partnership is not about free trade. It’s a corporate coup d’état – against us!” The Hightower Lowdown

[3]       Public Citizen, retrieved 9/9/13, “TPP’s investment rules harm public health,” www.citizen.org/TPP

[4]       Public Citizen, retrieved 9/9/13, “TPP’s investment rules harm the environment,” www.citizen.org/TPP

[5]       Hightower, J., August 2013, “The Trans-Pacific Partnership is not about free trade. It’s a corporate coup d’état – against us!” The Hightower Lowdown

[6]       Moench, B., 6/25/12, “America: A fire sale to foreign corporations,” Common Dreams (http://www.commondreams.org/view/2012/06/25-0)

“TRADE” AGREEMENT SUPERSIZES CORPORATE POWER

ABSTRACT: The US is currently negotiating a trade agreement known as the Trans-Pacific Partnership (TPP). The negotiations have been so secretive that most members of Congress have never seen a draft of the treaty and the public is mostly unaware of its existence. The mainstream (corporate) media have hardly mentioned the TPP, despite its target date for completion of December 2013.

Much of the TPP has nothing to do with trade; its focus is largely on providing legal rights to multi-national corporations so they can make profits without interference from government laws, regulations, or sovereignty. Foreign corporations would have the right to sue national or local governments if their laws, regulations, or actions negatively affected current or expected future profits. These suits would be resolved by an Investor-State Dispute Resolution system using an international tribunal (i.e., court).

Interestingly, conservatives have generally objected to the use of international precedents and tribunals that might impinge on US sovereignty and initiatives. However, they are generally supportive of the rights and power given to foreign corporations and international tribunals by the TPP.

The Trans-Pacific Partnership treaty puts corporate interests ahead of American interests. I strongly urge you to call your US Senators to ask them to oppose “fast-track” rules for consideration of the Trans-Pacific Partnership “Trade” Treaty and to demand full disclosure and discussion of its provisions in Congress and with the public.

FULL POST: The US is currently negotiating a trade agreement known as the Trans-Pacific Partnership (TPP). The negotiations have been so secretive that most members of Congress have never seen a draft of the treaty and the public is mostly unaware of its existence. Yet, Congress is going to be asked soon to vote on considering the treaty under “fast-track” rules that mean it would get a yes or no vote in Congress with limited debate and no amendments allowed. And once the treaty is approved, it has no expiration date and changes can only be made with the unanimous agreement of the participating countries. [1]

The mainstream (corporate) media have hardly mentioned the TPP, despite the fact that it includes 40% of the global economy, involves 12 (and potentially more) countries [2], has had 18 negotiating sessions, and has a target date for completion of December 2013.

Given that the tariffs among the participating countries are already low and that the US already has trade agreements with many of them (Canada, Mexico, Chile, Peru, Australia, and Singapore), there would seem to be little need for the TPP. However, much of the TPP has nothing to do with trade – only 5 of its 29 sections actually deal with trade. Its focus is largely on providing legal rights to multi-national corporations so they can make profits without interference from government laws, regulations, or sovereignty. It has been described as the most business-friendly “trade” agreement in history and as NAFTA (the North American Free Trade Agreement between the US, Canada, and Mexico) on steroids. (Most people view NAFTA as having been good for US corporations but as not having lived up to the promise that it would create jobs in the US, let alone good jobs with good wages.)

The only people with access to the negotiations and draft treaty language have been members of the US Trade Representative’s official Trade Advisory Committees. These individuals are sworn to secrecy, as are the negotiators for the other countries. Of the roughly 700 US advisory committee members, about 600 represent the business community, about 20 represent workers, and none represent citizens’ or civic groups.

The TPP benefits corporations, particularly foreign corporations, by

  • Strengthening patent, copyright, and intellectual property rights
  • Banning government contracting rules that favor domestic businesses (e.g., Buy America incentives)
  • Allowing government regulations to be challenged and overridden if they reduce a foreign corporation’s profits, including, for example, regulations of food safety, environmental impact, the financial system, public utilities and services, and working conditions (including minimum wage, overtime, safety, and child labor laws)
  • Giving special international tribunals (i.e., courts) the ability to overrule domestic laws and regulations if they would hurt foreign corporations profits
  • Creating a special visa program for highly-paid, white-collar professionals that bypasses all other immigration regulations and processes. [3]

Corporations would have a legal status equal to or superseding that of countries. Foreign corporations would have the right to sue national or local governments if their laws, regulations, or actions negatively affected current or expected future profits. [4] These suits would be resolved by an Investor-State Dispute Resolution system using an international tribunal (i.e., court). (Corporations are referred to as “investors.”) Basically, this is an alternative legal system that supersedes US courts and laws. The three person tribunals would operate behind closed doors and be made up of private lawyers. The same lawyers who serve as judges in one case might represent corporations in other cases. There is no appeal process and when a corporation wins, the losing government must pay the corporation for its “lost” profits and legal costs. (My next post will provide examples of how corporations are using similar rights under existing treaties and of the effects TPP is likely to have.)

Interestingly, conservatives have generally objected to the use of international precedents in making court decisions and writing US laws, and to the United Nations, treaties, and international human rights tribunals that might impinge on US sovereignty and initiatives. However, they are generally supportive of the rights and power given to foreign corporations and international tribunals by the TPP, despite the fact that they would clearly limit US sovereignty. The TPP would give foreign corporations greater rights than domestic firms and would expand incentives for US corporations to move investments and jobs overseas. [5]

The Trans-Pacific Partnership treaty puts corporate interests ahead of American interests. And it is widely viewed as benefitting large, international corporations, while hurting small businesses, small farmers, and workers, especially well paid blue and white collar workers. I strongly urge you to call your US Senators, and your Representative as well, to ask them to oppose “fast-track” rules for consideration of the Trans-Pacific Partnership “Trade” Treaty and to demand full disclosure and discussion of its provisions in Congress and with the public.

(You can find out who your Congress people are and get their contact information at: http://www.senate.gov/general/contact_information/senators_cfm.cfm for your Senators and http://www.house.gov/representatives/find/ for your Representative.)

[1]       Hightower, J., August 2013, “The Trans-Pacific Partnership is not about free trade. It’s a corporate coup d’état – against us!” The Hightower Lowdown

[2]       The negotiations currently include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Other countries are allowed to join in the future and China, Indonesia, and Russia are likely to join at some point.

[3]       Stangler, C., 9/2013, “MBAs without borders,” In These Times

[4]       Hauter, W., 8/22/13, “The un-American way: The Anti-democratic Trans-Pacific Partnership threatens food safety and public health,” OtherWords (www.commondreams.org/view/2013/08/22-3)

[5]       Moench, B., 6/25/12, “America: A fire sale to foreign corporations,” Common Dreams (http://www.commondreams.org/view/2012/06/25-0)

LABOR DAY AND THE MIDDLE CLASS

ABSTRACT: Labor Day is a time to celebrate the contributions working people make to our country. But with unemployment still high, inequality on the uptick, and the middle class shrinking and under serious financial strain, many working families just don’t have much to celebrate. For 30 years, wages for the middle and lower income workers have barely kept up with inflation and have not kept up with their significant productivity increases. This means that they aren’t being paid fairly for what they produce. From 1979 to 2012, a typical worker’s wages grew only 5.0% despite a 74.5% increase in productivity.

Efforts are building at the federal level and in a number of states to raise the minimum wage, which has not kept pace with inflation or productivity growth. Low wage workers at fast food chains, big box retailers, and elsewhere have been organizing rallies and strikes to protest low wages and poor working conditions.

President Bill Clinton’s Labor Secretary, Robert Reich, has put together a short video (under 3 minutes) that explains how we can turn things around. (http://front.moveon.org/how-workers-can-get-a-fair-shake-a-labor-day-message-from-robert-reich/#.UiSXAknD_IU)

Jobs with wages that support a middle class life are essential to the well-being of individuals, families, our economy, and our country. Such jobs have been disappearing for 30 years. We need to reverse this trend. And we can, through our actions as citizens and through the policies of our government.

FULL POST: Labor Day is a time to celebrate the contributions working people make to our country. They power our economy both through what they produce and what they consume. (Consumer spending is about two-thirds of economic activity.)

But with unemployment still high, inequality on the uptick, and the middle class shrinking and under serious financial strain, many working families just don’t have much to celebrate. The recovery is weak and the jobs that are being created are largely low wage jobs. So far in 2013, 61% of new jobs have been in low-wage industries and 77% have been part-time. [1] Many of the laid off workers who are getting jobs are earning much less than they used to and many are only working part-time; many of them, especially older workers, are experiencing long-term unemployment with unemployment benefits running out and the loss of health insurance. [2]

For 30 years, wages for the middle and lower income workers have barely kept up with inflation and have not kept up with their significant productivity increases. This means that they aren’t being paid fairly for what they produce. Their increases in productivity are not rewarding them, but instead are going to corporate profits, executive pay, and shareholders. Between 2007 and 2012, wages fell for the 70% of workers at the bottom of the income distribution, despite productivity growth of 7.7%. From 1979 to 2012, a typical worker’s wages grew only 5.0% despite a 74.5% increase in productivity. [3] If the minimum wage had kept pace with productivity growth since the 1960s, it would be $16.54 instead of $7.25. [4]

Since 2008, corporate profits are up 25% – 30% while wages have fallen to their lowest portion of corporate revenue since the 1940s. Part of this is due to the continuing trend of employers changing full-time jobs with benefits into part-time or contracted jobs, typically without benefits. [5]

Efforts are building at the federal level and in a number of states to raise the minimum wage, which has not kept pace with inflation or productivity growth. More than 7 million children live in homes whose income would increase if we raised the minimum wage and more than 10 million Americans, including 4% of full-time workers, qualify as the “working poor.” That means they spent at least half the year working yet still live below the poverty line ($19,530 for a family of three, which might be a single parent and two children). [6]

Low wage workers at fast food chains, big box retailers, and elsewhere have been organizing rallies and strikes to protest low wages and poor working conditions.[7] If you didn’t see The Daily Show’s piece on fast food workers and the minimum wage (with John Oliver subbing for Jon Stewart) it’s, as usual, both informative and entertaining. It’s at: http://www.thedailyshow.com/watch/thu-august-1-2013/can-t-you-at-least-wait-until-jon-stewart-gets-back. (It’s 10 minutes long with short ads at the beginning and in two breaks.)

President Bill Clinton’s Labor Secretary, Robert Reich, has put together a short video (under 3 minutes) that explains how we can turn things around. It lists 6 policies that are needed to make sure workers’ get a fair return for their labor and that would support the middle class. It’s at: http://front.moveon.org/how-workers-can-get-a-fair-shake-a-labor-day-message-from-robert-reich/#.UiSXAknD_IU.

As an initial step, the site includes a petition you can sign that calls on two very profitable companies – McDonald’s and Walmart – to pay their workers fair wages. Walmart, for example, pays its typical employee less than $9 an hour and many of its jobs are part-time, while its profits in 2013 were $28 billion. Most people who work for big-box retailers like Walmart, as well as those who work in the fast-food industry, are adults, not teenagers. They are responsible for bringing home a significant share of their family’s income and they should be paid enough to lift them and their families out of poverty.

When Martin Luther King, Jr., led the March to Washington for Jobs and Justice fifty years ago, one of the objectives was to raise the minimum wage to $2 an hour. $2 an hour in 1963, adjusted for inflation, comes to over $15 an hour today. (You can read more on this and many other topics at Bob Reich’s excellent blog at: http://robertreich.org.)

Jobs with wages that support a middle class life are essential to the well-being of individuals, families, our economy, and our country. Such jobs have been disappearing for 30 years. We need to reverse this trend. Increasing the minimum wage is one step. Increasing investments in human capital are another, including high quality, affordable early care and education, good schools, and affordable, quality post-secondary education. Universal access to good health care and steps to increase compensation and conditions for workers here in the U.S., as well as around the globalized world (for example, through trade treaties), are essential. We can affect these matters through our actions as citizens and through the policies of our government.

[1]       Wiseman, P., 8/5/13, “Most new jobs in July were low paying, part time,” The Boston Globe (from the Associated Press)

[2]       Winerip, M., 8/26/13, “Set back by recession, shut out of rebound,” The New York Times

[3]       Mishel, L., & Shierholz, H., 8/21/13, “A decade of flat wages: The key barrier to shared prosperity and a rising middle class,” Economic Policy Institute

[5]       Garson, B., 8/20/13, “How corporate America used the Great Recession to turn good jobs into bad ones,” TomDispatch

[6]       Eskow, R.J., 8/26/13, see above

[7]       Johnston, K., 8/27/13, “Local rally part of nationwide call,” The Boston Globe

DETROIT’S BANKRUPTCY

ABSTRACT: Detroit’s bankruptcy is the result of a long term decline with many contributing factors. Detroit’s bankruptcy proceeding will favor the big financial corporations because of federal bankruptcy laws, which give priority to paying off financial firms’ interest rate swaps before paying pensions or bond holders. If Detroit ends up cutting workers’ pensions and defaulting on its municipal bonds, it will create dangerous precedents. Other financially ailing cities and municipalities may consider filing for bankruptcy, too, to relieve pension and debt costs.

It will be interesting to watch how the state and federal governments respond. Many precedents will be set. We will learn whether our big corporations and their executives and employees are more important from the federal government’s perspective than our cities, their residents and municipal workers, and their municipal bond holders.

FULL POST: Detroit’s bankruptcy is the result of a long term decline with many contributing factors. Since the financial system collapse of 2008, the federal government has done little to help municipalities that took a double hit from the loss of tax revenue due to the recession itself, as well as from the decline of property tax revenue due to falling property values and homeowners in distress. Certainly, state and federal policies for urban America and trade agreements that let manufacturing jobs, especially in the auto industry, move out of the country played a role. Mismanagement by and corruption of Detroit’s elected leadership played a role as well.

Detroit’s bankruptcy proceeding will favor the big financial corporations because of the 2005 changes in federal bankruptcy laws. Those changes, lobbied for heavily by Wall Street, give priority to paying off financial firms’ interest rate swaps before paying pensions or bond holders. (These interest rate swaps are sold by the big financial firms to cities as insurance to protect them from increases in interest rates. However, unlike insurance, they are really interest rate speculation because they require the cities to pay the financial corporations if interest rates fall. And they have fallen dramatically in the wake of the 2008 financial collapse, which was caused by the big financial corporations.) So the financial firms that speculated on interest rates with Detroit will get paid first and its bondholders and employees’ pensions will get whatever is left over. [1]

If Detroit defaults on its municipal bonds, in other words pays less than it owes, it would set a dangerous precedent for the municipal bond market. Other financially ailing cities and municipalities may consider filing for bankruptcy too, to reduce what they owe bondholders. And it is likely to make borrowing more expensive for states, municipalities, and school districts as municipal bonds will no longer be viewed as virtually risk-free. [2]

Similarly, if Detroit ends up cutting workers’ pensions, it will create a scary precedent for other municipal and government employees. (The average pension owed to Detroit municipal workers, incidentally, is less than $23,000 per year. [3]) Other cities, municipalities, or even states could declare bankruptcy as a way to reduce pension costs. [4] In the private sector, declaring bankruptcy has become a standard tactic for cutting pensions and other benefits for retirees. The airline industry has done this and it has been a standard tactic in leveraged buyouts of private companies. (This was a tactic used by Bain Capital, Mitt Romney’s firm, and became an issue when he ran for President.) In many cases, when a corporation declares bankruptcy, the pensions of its workers become the responsibility of the federal government’s Pension Benefit Guaranty Corporation (PBGC). In 2012, PBGC paid for monthly retirement benefits for nearly 887,000 retirees in 4,500 pension plans that could not pay promised benefits. However, it does not cover state or municipal pension plans. [5] (This is another example, along with bailouts, of how the federal government picks up the pieces when corporations fail to meet their commitments.)

It will be interesting to watch how the state and federal governments respond. Here are two interesting tidbits:

  • While the Michigan state government is doing little to help the city itself, it has approved $450 million in bonds to build a new arena for the Red Wings hockey team and its billionaire owners (who also own Little Caesars Pizza and the Tigers baseball team). Decades of studies have shown that sports facilities’ subsidies are massive wastes of taxpayer money. There is no evidence of a return to the public (as opposed to the private owners of the teams) and they are not an efficient way to create jobs. [6]
  • The federal government has been providing about $100 million a year to Detroit under a variety of federal programs. By way of comparison, US aid to Columbia (the South American country) is about $323 million a year to combat drug trafficking and violence. However, Detroit’s homicide rate is 81% higher than Columbia’s. [7]

Many precedents will be set as Detroit moves through the bankruptcy process. It will be interesting to see who the big winners and losers are, as well as whether the federal government steps in to help out the city as it did the big financial corporations and the big auto companies. We will learn whether our big corporations and their executives and employees are more important from the federal government’s perspective than our cities, their residents and municipal workers, and their municipal bond holders.

[2]       Brown, E., 8/6/13, see above

[3]       Kuttner, R., 8/11/13, “We are all Detroit,” The Huffington Post, (http://www.huffingtonpost.com/robert-kuttner/we-are-all-detroit_b_3741418.html?utm_hp_ref=email_share)

[4]       Brown, E., 8/6/13, see above

[5]       The Pension Benefit Guaranty Corporation, A U.S. Government Agency, http://www.pbgc.gov/home.html

[6]       Jackson, D. Z., 7/31/13, “Motor City hustle,” The Boston Globe

[7]       Christoff, C., & McCormick, J., 8/1/13, “US aid to Colombia tops help for Detroit, but more is unlikely,” The Boston Globe (from Bloomberg News)

BANNING BEE KILLING PESTICIDES

ABSTRACT: Pesticides and other toxic chemicals are ubiquitous in our environment and even in our blood. Regulation of them is weak. One of the unintended consequences of widespread pesticide use is the harming or killing of animals, other than those targeted. Last month, 50,000 bumblebees died after a spraying of the pesticide dinotefuran. The class of pesticides called neonicotinoids, of which dinotefuran is one, is the likely culprit in a broad decline in bee populations. Europe has already implemented restrictions on the use of neonicotinoids.

A bill has been introduced in the US House to restrict the use of these chemicals until we can be sure that they are safe and being used properly. The bill is H.R. 2692, the “Save America’s Pollinators Act”.

I urge you to join me as a citizen co-sponsor of this important legislation by signing the petition at: http://org.credoaction.com/petitions/tell-congress-stop-the-pesticide-that-is-killing-bees?akid=8530.653385.cfRZJV&rd=1&t=5.

FULL POST: Pesticides and other toxic chemicals are ubiquitous in our environment and even in our blood. Regulation of them is weak at best because the chemical corporations are very active in lobbying, making campaign contributions, and using the revolving door to move personnel between the industry and government regulatory agencies. (See posts of 6/29, 6/21, and 6/10/13 for more information.) One of the unintended consequences of widespread pesticide use is the harming or killing of animals, other than those targeted. Birds were the victims of DDT 50 years ago and today bees appear to be a victim.

Last month, 50,000 bumblebees died after trees in Wilsonville, Oregon were sprayed with the chemical dinotefuran, the key ingredient in Safari pesticide. This was the largest bee die-off ever recorded. Bee populations are declining across the country at an alarming rate, and a class of pesticides, called neonicotinoids, of which dinotefuran is one, is the likely culprit.

Both our environment and food supply are inextricably tied to the welfare of bees, making the decrease in bee populations a cause for alarm. Many crops, including fruit trees, rely on bees for pollination. The Oregon Department of Agriculture is investigating the die-off and is temporarily restricting the use of 18 pesticide products containing dinotefuran and the Environmental Protection Agency is currently reviewing the use of neonicotinoid pesticides. However, that review is not scheduled to be completed for another five years. Europe has already implemented restrictions on the use of neonicotinoids.

A bill has been introduced in the US House of Representatives by Congressmen Earl Blumenauer and John Conyers to restrict the use of these chemicals until we can be sure that they are safe and being used properly. The bill, H.R. 2692, the “Save America’s Pollinators Act”, would suspend certain uses of neonicotinoids until the Environmental Protection Agency reviews these chemicals and makes a new determination about their proper application and safe use. This will increase pressure on the EPA to speed its review before another mass bee die-off occurs. One strategy for getting the bill passed is to include it in the reauthorization of the Farm Bill, which is currently under active consideration.

I urge you to join me as a citizen co-sponsor of this important legislation by signing the petition linked to below. You can also contact your Representative and urge him or her to support this legislation.

Will you join me and add your name to this petition to the United States Congress asking it to pass legislation suspending use of the pesticides that are killing bees?
This petition was created on org.credoaction.com, a new people-powered platform that allows activists to start and run petition campaigns. org.credoaction.com helps activists like you make progressive change and fight regressive policies by creating online petitions.

NOTE: Please let me know by submitting a comment on this post if you would like me to continue sharing links to on-line petitions on issues I have written about. These petitions are an easy way to express your opinion and increase its weight by combining it with that of others. The effectiveness of these petitions varies greatly based on a wide range of factors, but there’s little downside given how quick and easy it is to do. Each petition also will give you a link to the advocacy organization sponsoring it. If it’s an issue you are particularly interested in, you may want to engage directly with the organization. One forewarning: in many cases when you sign a petition the sponsoring organization will put you on their email list. In some cases, there is a check box on the petition that you can uncheck if you don’t want the organization to start sending you information. You can, of course, always unsubscribe via any email you get from such an organization

OUR TOXIC ENVIRONMENT AND WHAT YOU CAN DO

ABSTRACT: On a societal level, a disproportionate burden of toxic pollution is borne by Americans of color. At the specific level, every day skin care products contain toxic chemicals. Many contain formaldehyde (a known carcinogen), phthalates (linked to hormonal disruption and birth defects), and/or parabens (which mimic the hormone estrogen and have been linked to breast cancer). Lead (a neurotoxin so damaging to young children that it is banned from house paint and gasoline) is present in lipstick.

The US Food and Drug Administration (FDA) does NOT have the authority to test cosmetic ingredients before they are marketed or to order recalls. Regulation is in the hands of the industry itself, which to-date has found only 11 chemicals to be unsafe for use. In contrast, in Europe, 1,400 chemicals have been banned from personal care products. The chemical and cosmetics corporations spend millions of dollars every year on lobbying and other efforts to influence US policy.

Atrazine is a weed killer, widely used in the US but banned in the European Union. As an example of the lengths the chemical industry and its allies in Congress will go to stop any momentum to regulate toxins, they blocked a resolution honoring Rachel Carson, author of Silent Spring 50 years ago, which established a clear link between DDT and other pesticide use and the widespread deaths of birds, as well as reproductive, birth, and developmental abnormalities in mammals.

Options for what you can do at home and politically are included in the full post below.

FULL POST: Before sharing some specific examples of toxic chemicals in our everyday lives and some things you can do about them, here’s an important societal perspective. A disproportionate burden of toxic pollution is borne by Americans of color. The environmental justice movement has documented the disproportionate presence of pollution sources in and near communities with high percentages of people of color. Prominent examples are in Louisiana and Detroit. The stretch along the Mississippi River from Baton Rouge to New Orleans is dotted with oil refineries that belch a variety of toxins into the air of the surrounding, largely minority, communities. This area is known as “Cancer Alley.” Detroit’s zip code 48217 is 85% African American and is know as Michigan’s most polluted area. It is adjacent to a steel plant, a coal-fired power plant, a salt mine, and a huge oil refinery. The refinery alone emits close to 4 tons of toxins per year. Virtually every household in the area has at least one member who suffers from asthma, leukemia, cancer, or sarcoidosis (a disease in which inflammation occurs in the lymph nodes, lungs, liver, eyes, skin, or other tissues). After some homes in the area tested positive for up to 20 toxic gases, the refinery offered to buy the homes in an effort to reduce its liability. [1]

At the specific level, every day skin care products, including cosmetics, contain toxic chemicals. Many of these products, from suntan oil to makeup to hair spray to perfumes and colognes, contain formaldehyde (a known carcinogen), phthalates (linked to hormonal disruption and birth defects), and/or parabens (which mimic the hormone estrogen and have been linked to breast cancer). Lead (a neurotoxin so damaging to young children that it is banned from house paint and gasoline) is present in lipstick at concentrations 30 times higher than what the FDA allows in candy bars. Our skin is our largest organ and readily absorbs these products’ ingredients. Some of the chemicals absorbed accumulate over time because our bodies do not eliminate them or break them down. [2]

The US Food and Drug Administration (FDA), created by the Federal Food, Drug, and Cosmetic Act of 1938, does NOT have the authority to test cosmetic ingredients before they are marketed or to order recalls – as it does for drugs and medical devices. Regulation is in the hands of the industry itself, which to-date has found only 11 chemicals to be unsafe for use in its products, including for use by women of child bearing age. In contrast, in Europe, 1,400 chemicals have been banned from personal care products because they are carcinogenic, mutagenic*, or toxic to reproduction.

The chemical and cosmetics corporations spend millions of dollars every year on lobbying and other efforts to influence US policy. In 2012, they blocked federal legislation that would have required complete ingredient labels on fragrances and hair sprays, as well as banned the use in cosmetics of carcinogens and chemicals linked to reproductive disorders. In addition, these corporations attempted to pass legislation that would block state regulation, such as that in California. If you would like more information and to take action, you can go to the Campaign for Safe Cosmetics at http://safecosmetics.org.

Home cleaning products are another example of every day items that contain toxic chemicals. For information on how to keep your home clean and shiny without using products with toxic chemicals go to http://www.bostonhealthcoach.com/oilrecordings.html and select the teleclass entitled “Chemical-Free Home.”

Atrazine is a weed killer, widely used in the US but banned in the European Union. In the human body, it mimics hormones and has what are referred to as endocrine system disrupting effects. It has been shown to disrupt the reproduction and immune systems in a wide range of animals, including mammals. It is present in water everywhere, including in rain water. It can actually turn male frogs into functioning females. [3]

As an example of the lengths the chemical industry and its allies in Congress will go to stop any momentum to regulate toxins, they blocked a resolution honoring Rachel Carson, author of Silent Spring, on its 50th anniversary and what would have been her 100th birthday. They attacked her as having made “junk-science claims about DDT” and accuse her and her supporters of being responsible for the deaths of “millions of people … particularly children” because supposedly the lack of use of DDT led to deaths from malaria and other diseases. The facts are that the EPA never banned DDT for use against malaria and Carson did not support a universal ban on pesticides but advocated for use of as little as possible. In Silent Spring, Carson established a clear link between DDT and other pesticide use and the widespread deaths of birds, as well as reproductive, birth, and developmental abnormalities in mammals. DDT, other pesticides, and some of the tens of thousands of chemicals in use today will be part of the environment and in our bodies for decades to come because they decompose or are eliminated very slowly. [4]

I urge you to contact your US Representative and Senators (and your state ones too) and to ask them to support the Safe Cosmetics and Personal Care Products Act (H.R. 1385) and the Safe Chemicals Act (S. 696). (Find your Representative at http://www.house.gov/representatives/find/ and your Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.)

[1]       Brune, M., July / August 2013, “And justice for all,” Sierra Club magazine

[2]       Wasik, J.F., May / June 2013, “Beauty tips for the FDA: Did my wife’s cosmetics give her breast cancer?” The Washington Monthly

*       Mutagenic chemicals cause changes in the genetic material, usually DNA, of an organism and thus increase the frequency of mutations. As many mutations cause cancer, mutagenic chemicals are therefore also likely to be carcinogens. http://en.wikipedia.org/wiki/Mutagen

[3]       Steingraber, S., 4/19/13, “Sandra Steingraber’s war on toxic trespassers,” Bill Moyers public TV show, available at BillMoyers.com. Note: Steingraber has written multiple books including “Having faith: An ecologist’s journey to motherhood” and “Raising Elijah: Protecting our children in an age of environmental crisis.”

[4]       Mangano, J.J., & Sherman, J.D., 10/1/12, “Rachel Carson’s brave, groundbreaking ‘Silent Spring’ at 50 years,” The Washington Spectator

CHILDREN AND TOXINS

ABSTRACT: Children are continuously exposed to many toxic chemicals. None of the over 75,000 synthetic chemicals in use in the US are regulated based on their potential to affect children. Chemicals in a mother’s blood can cause a preterm birth or even a miscarriage, and do get into her fetus’s blood. After birth, breast milk can be harmful as it is the most highly chemical-contaminated of any food.

In January, the Environmental Protection Agency (EPA) issued its report America’s Children and the Environment. While there is some good news on air quality, blood lead levels, and tobacco smoke, it finds that children may be exposed to relatively higher amounts of chemicals than adults and have higher blood levels of toxins. Although definite cause and effect is hard to establish with current knowledge and data, and because of multiple risk factors, respiratory diseases, childhood and adult cancers, neuro-developmental disorders, obesity, and adverse birth outcomes are some of the negative health outcomes for which there is evidence of a link to environmental factors. The report finds, among other things, that 1) air pollution and exposure to lead are still problems; 2) mercury in women of child bearing age has not declined over the last 10 years; 3) phthalate blood levels were 10% to 33% higher in children than in women and were detected in all samples of indoor air and dust at child care centers; 4) pesticides were detected in all samples of indoor air and dust at child care centers; 5) asthma rates are up to one in 11 children and the rate for Black children is nearly double that of White children; 6) childhood cancer rates have increased over 10% over the last 15 years; 7) attention-deficit / hyperactivity disorder (ADHD) diagnoses have increased by 50%; 8) one in 100 children now exhibits autism symptoms, a ten-fold increase. Puberty is occurring about a year and a half earlier, with one in 10 girls going into puberty before age 8.

Despite the very high economic and human costs of exposure to toxins, we do not have an effective regulatory system in place to protect us – not even our children.

FULL POST: Children are continuously exposed to many toxic chemicals in the air, dust, water, and everyday items that surround them with no regulation and no evaluation of possible negative effects. None of the over 75,000 synthetic chemicals in use in the US are regulated based on their potential to affect children. The science about how chemicals can affect growth and development in children and fetuses has advanced tremendously in the last 40 years, but our laws regulating toxic substances have not changed. The chemical industry, and related industries, has blocked regulation under existing law, as well as improvements to the current law. (See post of 6/10/13 for more detail.) [1]

Thousands of consumer products for children, such as toys, car seats, bedding, and clothes, contain toxic chemicals linked to cancer, hormone disruption, developmental problems, and reproduction and immune system problems. Yet there is no national requirement to regulate, disclose, or label such products. Washington State in 2008 became the first state to require manufacturers to report the presence of toxic chemicals in their products. [2]

Chemicals in a mother’s blood can also be harmful to children. During pregnancy, toxins can cause a preterm birth or even a miscarriage, and do cross the placenta and get into her fetus’s blood, with unknown effects on her yet to be born baby. After birth, breast milk can be harmful as it is the most highly chemical-contaminated of any food. It contains dioxins, pesticides, PCBs, and the range of other chemicals that are found in human blood. (See posts of 5/22/13 and 6/2/13 for more detail.) These are examples of toxic trespass: toxic chemicals in our bodies that got there without our consent or control. [3]

In January, the Environmental Protection Agency (EPA) issued its report America’s Children and the Environment. The good news is that it finds that air quality has improved, children’s blood lead levels have declined, and children’s exposure to second hand tobacco smoke has decreased. However, it states that research is need on the causes of increased asthma rates, the potential impacts of early life exposure to chemicals, and the higher incidences of diseases in children in minority and low income families than in other families. It notes that children may be exposed to relatively higher amounts of chemicals than adults because they eat, drink, and breathe more relative to their size. Furthermore, they may be exposed to chemicals that adults are not because they play on the ground or floor and more frequently put their hands to their mouths. And children in minority and low income families generally have higher body burdens of toxic chemicals. [4]

It is often difficult to determine the impact of chemicals and the cause of adverse health outcomes because of the presence and interaction of multiple factors. For many environmental exposures, there is very little information on the potential health consequences of exposure levels typically experienced by US children. Furthermore, the impact on children of a given exposure can vary widely due to genetics; the length, avenue, and magnitude of exposure; age and developmental stage; concurrent or prior exposure to other contaminants; and the presence of other, non-chemical stressors. The prenatal period is the most sensitive, generally. Respiratory diseases, childhood and adult cancers, neuro-developmental disorders, obesity, and adverse birth outcomes are some of the negative health outcomes for which there is evidence of a link to environmental factors. The effects of harmful exposure may not be evident until years later and may contribute to the onset of chronic diseases in adulthood.

Specific findings of the EPA report, based on the most recent data available, include:

  • Virtually all children experienced hazardous air pollutant concentrations above the cancer risk benchmark in 2005. 56% experienced one pollutant over the safe level standard for health effects other than cancer, (e.g., asthma).
  • Despite the reductions in blood lead levels, 15% of children birth to age 5 still lived in homes with a lead hazard in 2005-2006. The median lead blood level of Black children was one-third higher than for other children.
  • The median concentration of mercury in the blood of women ages 16 to 49 (i.e., child-bearing age) is unchanged over the last 10 years. Hopefully, the recent regulation of mercury emissions for electric power generating plants will improve this in the future. In recent years, while mercury regulation was blocked by the electric power industry, we advised women of child-bearing age to limit their intake of certain fish to avoid excessive mercury, which is a known neurotoxin for fetuses and young children.
  • The concentrations of phthalates (which have been linked to hormonal changes and birth defects in animals) were 10% to 33% higher in children than in women, with no clear trend up or down. Phthalates were detected in all samples of indoor air and dust at child care centers.
  • Pesticides were detected in all samples of indoor air and dust at child care centers.

The EPA report also found that chronic illnesses and childhood disabilities have risen dramatically in recent years. Although some of this may be due to improved diagnosis, there clearly has been an increase in incidence. While no clear cause has been established, increased exposure to toxic chemicals is very likely to be at least a contributing cause. For example:

  • Asthma rates are up to one in 11 children, increasing from 8.7% in 2001 to 9.4% in 2010. The rate (16.0%) for Black children is nearly double that of White children.
  • Childhood cancer rates have increased over 10%, from 157 cases per million children to 173.5, over the last 15 years.
  • Attention-deficit / hyperactivity disorder (ADHD) diagnoses have increased by 50%, from 6.3% to 9.5% of children over the last 13 years.
  • One in 100 children now exhibits autism symptoms, a ten-fold increase over 13 years.
  • The child obesity rate has risen from 5% to 17% over the last 30 years, but seems to have stabilized. This is due to multiple causes, but chemical exposure is likely to be a factor.
  • One in eight births occurs prematurely, increasing from 11.0% to 12.8% over the last 15 years.
  • A sampling of birth defects has shown an increase over the last 8 years.

Puberty is occurring about a year and a half earlier, with one in 10 girls going into puberty before age 8. Early puberty raises the risk of breast cancer. Puberty marks a broad range of changes in one’s body, including brain structure and functioning. No one knows what the impacts of early puberty overall might be. But we do know that the same chemicals that can cause early sexual maturation in animals in the lab are in the bodies of our children. So it seems likely that these chemicals are at least contributing to the early puberty that is being observed in our children. [5]

We know there are very high economic and human costs to these medical problems and chronic illnesses. Despite this, we do not have an effective regulatory system in place to protect us – not even our children.

 

[1]       Steingraber, S., 4/19/13, “Sandra Steingraber’s war on toxic trespassers,” Bill Moyers public TV show, available at BillMoyers.com. Note: Steingraber has written multiple books including “Having faith: An ecologist’s journey to motherhood” and “Raising Elijah: Protecting our children in an age of environmental crisis.”

[2]       McCauley, L., 5/1/13, “Report: Toxic chemicals found in thousands of children’s products,” Common Dreams. The report cited is at http://watoxics.org/chemicalsrevealed.

[3]       Steingraber, S., 4/19/13, see above

[4]       Environmental Protection Agency, Jan. 2013, “America’s Children and the environment,” http://www.epa.gov/ace

[5]       Steingraber, S., 4/19/13, see above

BLOCKING REGULATION OF TOXINS

ABSTRACT: Corporations with a financial interest in the use and sale of toxic chemicals are engaged in a major, multi-faceted effort to prevent, weaken, and delay regulation. They work to prevent clear, unbiased, scientific information from being available to our policy makers and the public. They engage in efforts to affect the regulatory process – from the enactment of laws to the implementation of regulations – in the legislative, executive, and judicial branches of government. They work to make the whole process as long and complicated as possible. This gives them many opportunities to block, weaken, and delay the actual regulation of a toxic chemical.

The chemical industry works to limit the effectiveness of any regulations eventually implemented and of the agency enforcing them.

It achieves results by using the standard tactics of 1) Campaign contributions, 2) Lobbying, and 3) The revolving door of personnel moving between the industry and legislative and executive branch staff positions, which result in personal relationships (and potential conflicts of interest) that can benefit the chemical industry.

Given that corporations typically have more resources, a more singular focus, and greater longevity for waging the battle against regulation than those working to regulate a toxic chemical, dragging out the process and making it costly generally works to their advantage.

FULL POST: Corporations with a financial interest in the use and sale of toxic chemicals are engaged in a major, multi-faceted effort to prevent, weaken, and delay regulation, despite threats to public health and safety, as well as to the environment. These corporations work to prevent clear, unbiased, scientific information from being available to our policy makers and the public. They engage in efforts to affect the regulatory process – from the enactment of laws to the implementation of regulations – in the legislative, executive, and judicial branches of government. [1] The regulation of lead [2] (see post of 6/2/13 for more detail) and tobacco are classic examples. (Similar efforts are occurring in other arenas, such as climate change and regulation of the financial industry.)

The efforts of the chemical industry on the legislative front are both proactive and reactive, offensive and defensive, as well as high profile and hidden. Examples, for among many, include:

  • The fracking* industry proactively but quietly got legislation passed that exempted fracking from review by the Environmental Protection Agency (EPA) under the Safe Drinking Water Act. This happened in 2005 under President Bush and Vice President Cheney and is widely referred to as the “Halliburton Loophole” because a major beneficiary is Cheney’s previous employer, Halliburton Co.
  • The genetically modified organism (GMO) industry quietly attached a provision to an emergency budget bill (passed and signed into law by President Obama) that allows corporations (notably Monsanto) to sell GMO seeds for agriculture even when a federal court has ordered them not to. [3]
  • A provision in the 2013 Farm Bill, currently in the US House of Representatives, would prohibit states from enacting laws requiring the labeling of food with GMO ingredients or otherwise regulating the production of agricultural goods. [4]

The chemical industry achieves legislative results by using the standard tactics of:

  • Campaign contributions to Congress people (and state legislators) who have oversight roles,
  • Lobbying, and
  • The revolving door of personnel moving between the industry and legislative staff positions, which result in personal relationships (and potential conflicts of interest) that can benefit the chemical industry.

Then, once laws are in place, the chemical industry works to make the process of implementation through rules and regulations as long and complicated as possible. This gives it many additional opportunities (beyond those of the legislative process) to block, weaken, and delay the actual regulation of a toxic chemical.

The chemical industry also works to limit the effectiveness of any regulations eventually implemented and of the agency enforcing them. One way is to lobby to make the regulations as complex as possible with loopholes and details that make them difficult to enforce and open to court challenges. This can include putting the burden of proof on the agency as opposed to the corporation and setting a high standard of proof or harm. For example, the Toxic Substances Control Act gives the EPA just 90 days to find “unreasonable risk” if it wants to regulate a new chemical (see post of 6/2/13 for more detail). Another tactic is to require an extensive and often biased cost-benefit analysis of any new regulation.

The tactics of lobbying and the revolving door of personnel, in this case involving the regulatory agency in the executive branch rather than the legislative branch of government, are used to achieve these results.

A regulatory agency can also have its effectiveness hurt by budget cuts or legislative failure to confirm key agency personnel. And challenging regulations or regulatory decisions in court uses the judicial branch of government as another way to delay and drive up the costs of regulation.

Finally, the chemical industry engages in efforts to control the flow and clarity of information. Corporations with a stake in research on a potentially toxic chemical will create a false and parallel science by paying for biased research and will control, as much as possible, the dissemination of scientific information. They will attack scientists, sometimes directly and personally, including threatening them and suing them, when their research finds toxic effects from the corporation’s chemical. [5] An important goal of these efforts is to create false or exaggerated doubt in the minds of policy makers and the public about the harm that a chemical causes.

Trade associations like the American Chemical Council and public relations experts are used in efforts to manipulate public opinion and influence the media. Supposedly independent groups are created and funded specifically to promote the industry’s position. These allow the corporation with a vested interest to remain behind the scenes and apparently independent of public relations efforts to downplay evidence of dangers, exaggerate uncertainty, allege misconduct by scientists who find toxic effects, and plant inaccurate or biased stories in the media. [6][7]

To avoid having to share information with the public, corporations will claim that it represents “trade secrets” or “proprietary information”. For example, the fracking industry makes such claims when asked to reveal the chemicals it is pumping into the ground to release natural gas. This claim is also used to avoid labeling products with their chemical contents. Eastman Chemical Co. has used this claim to suppress information from a court case on the presence and effects of chemicals in its plastics. [8]

Given that corporations typically have more resources, a more singular focus, and greater longevity for waging the battle against regulation than those working to regulate a toxic chemical, dragging out the process and making it costly generally works to their advantage.

 

[1]       Union of Concerned Scientists, Feb. 2012, “Heads they win, tails we lose: How corporations corrupt science at the public’s expense,” http://www.ucsusa.org/scientific_integrity/abuses_of_science/how-corporations-corrupt-science.html

[2]       Rosner, D., & Markowitz, G., 5/17/13, “Toxic disinformation,” Bill Moyers’ public TV show, available at billmoyers.com

*      Fracking is shorthand for hydraulic fracturing where high pressure water and other fluids, including toxic chemicals, are injected into the ground to release natural gas.

[3]       McCauley, L., 5/20/13, “Senator leads call to repeal the ‘Monsanto Protection Act’,” http://www.commondreams.org/headline/2013.05/20-2

[4]       Sheets, C.A., 5/17/13, “’Monsanto Protection Act 2.0’ would ban GMO-labeling laws at the state level,” International Business Times

[5]       Riley, T., 5/18/13, “Blinding us from science,” http://billmoyers.com/2013/05/18/blinding-us-from-science

[6]       Rosner, D., & Markowitz, G., 4/29/13, “You and your family are guinea pigs for the chemical corporations,” TomDispatch.com

[7]       Union of Concerned Scientists, Feb. 2012, see above

[8]       Dubose, L., 6/1/13, “Silencing science: What you may never know about plastic baby bottles,” The Washington Spectator

HOW AND WHY TOXINS ARE IN YOUR BLOOD

ABSTRACT: The dozens of toxic chemicals we all have in our blood are there because they are in the clothes we wear; the toys, furniture, fabrics, paint, and construction materials in our homes; the cleaning and personal care products we use; and the containers for our food and beverages. They are in all these places because our government regulators are failing us and the corporations that produce and use these chemicals engage in extensive efforts to block regulation.

The Toxic Substances Control Act (TSCA) of 1976 is the US law that regulates chemicals. Almost all of the 60,000 chemicals in use in 1976 when the law was passed were deemed safe without testing or review. Only a handful of chemicals have had their use restricted. For a new chemical, the EPA must act in just 90 days (!) and find an “unreasonable risk” or the chemical is deemed safe. In addition, the burden of proof lies on the EPA to show “unreasonable risk” rather than on the corporation to show that a chemical is safe.

There are numerous examples, historically and currently, of the difficulty of implementing regulations on chemicals, including lead, asbestos, pesticides, PCBs, formaldehyde, flame retardants, and BPA. Chemical exposure has been associated with a very wide range of health and developmental problems, including learning disabilities, asthma, birth defects, developmental problems in children, cancer, obesity, and problems with the immune and reproductive systems, as well as with the brain and nervous system. The effects of long-term exposure to multiple chemicals and the impacts on fetuses and young children are unknown.

Our bodies are toxic dumps and we are the guinea pigs – without our consent and often without even our knowledge – in the largest, uncontrolled experiment that has ever occurred.

FULL POST: The dozens of toxic chemicals we all have in our blood are there because they are in the air we breathe, the food we eat, and the water we drink. (See 5/22/13 post for more detail.) They get there from the clothes we wear; the toys, furniture, fabrics, paint, and construction materials in our homes; the cleaning and personal care products we use; and the containers for our food and beverages. They are in all these places because our government regulators are failing us and the corporations that produce and use these chemicals engage in extensive efforts to block regulation. Many of these chemicals are new, but some have been around for 100 years. [1]

The Toxic Substances Control Act (TSCA) of 1976 is the US law that regulates the introduction of new chemicals and the chemicals existing when it was enacted. Almost all of the 60,000 chemicals in use in 1976 when the law was passed were deemed safe without testing or review. The TSCA is administered by the Environmental Protection Agency (EPA). The EPA has tested only 200 of the more than 75,000 synthetic chemicals in use in the US. In the 37 year history of the TSCA, only a handful of chemicals have had their use restricted. This is partly because the Pre-Manufacturing Notice a corporation submits for a new chemical it wants to use has only limited information (e.g., no safety information is required). Then, the EPA must act in just 90 days (!) and find an “unreasonable risk to human health or the environment” or the chemical is deemed safe for use. Even the EPA’s own Office of the Inspector General has criticized the TSCA as weak and ineffective, noting that corporations’ assertions of trade secrets prevent effective testing and that the EPA process is predisposed to protecting industry information rather than providing the public with health and safety information. [2] The Natural Resources Defense Council says that under the TSCA “it is almost impossible for the EPA to take regulatory action against dangerous chemicals, even those that are known to cause cancer or other serious health effects.” One reason is that the burden of proof lies on the EPA to show “unreasonable risk” rather than on the corporation to show that a chemical is safe, as a drug company is required to do. [3]

Lead is a classic example of the difficulty of implementing regulation. The dangers of lead have been known for 100 years. Yet the lead industry engaged in a 60 year campaign to cover-up the effects of lead and to promote its use – in a campaign similar to that waged by the tobacco industry more recently. In wasn’t until 1971 that Congress passed a law to limit the use of lead paint in public housing and 1978 when the Consumer Product Safety Commission banned lead paint for consumer use. During the 1980’s, the EPA issued rules that eventually eliminated the use of lead in gasoline in 1995 (although it is still used in aviation fuel).

Even today, the Centers for Disease Control (CDC) estimates that children in 4 million US households are exposed to dangerous amounts of lead and that 500,000 children from birth to 5 have elevated levels of lead in their blood. No level of lead is considered safe and child exposure to lead is linked to attention and cognitive deficits, behavior problems, and learning disabilities – all of which risk putting a child on a trajectory for problems in school and later life. [4]

A similar pattern occurred with efforts to regulate asbestos. Chlorinated hydrocarbons, including pesticides such as DDT, were widely used until their detrimental effects became clear. Then they were successfully banned decades ago. However, these chemicals persist in the environment and have accumulated in our bodies. The same is true for polychlorinated biphenyls (PCBs). The non-stick coating for cookware, Teflon, is widely present in our blood and is linked to cancer.

Bisphenol A (BPA), which is used in plastics including baby bottles and water bottles, as well as the linings of food cans, has been found widely in our blood. At even very low doses, it has been shown to interact with our endocrine system and its hormones, with links to obesity, neurobehavioral problems, reproductive abnormalities, and breast and prostate cancers. Nonetheless, its regulation is being fought in the courts and elsewhere at this moment.

Currently, formaldehyde is used as a fungicide, germicide, and disinfectant in plywood and many materials used in building homes and furniture. However, as it ages it evaporates and the vapors we inhale accumulate in our bodies; it is known to cause cancer. Similarly, flame retardants are found in almost everyone’s blood and have been linked to thyroid, memory, learning, cognitive, and developmental problems, as well as early onset of puberty.

These are prominent examples of our widespread exposure to a large number of toxic chemicals. This exposure has been associated with a very wide range of health and developmental problems, including learning disabilities, asthma, birth defects, developmental problems in children, cancer, obesity, and problems with the immune and reproductive systems, as well as the brain and nervous system. The effects of long-term exposure to multiple chemicals are unknown.

When the TSCA passed in 1976, the scientific understanding of biochemistry was not nearly as sophisticated as it is today. The ways chemicals affect our health, their potential to accumulate in and have subtle, long-term effects on our bodies and how they function, were unknown. Even today, the effects chemicals have on fetuses and young children are largely unstudied and unknown. [5] In 1976, it was generally believed that the placenta filtered a mother’s blood and prevented dangerous chemicals from reaching the fetus. We now know that this isn’t true.

Our bodies are toxic dumps and we are the guinea pigs – without our consent and often without even our knowledge – in the largest, uncontrolled experiment that has ever occurred. The large corporations that produce and use these chemicals are using every tactic at their disposal and their huge treasuries to fight regulation and stop laws that would require testing of chemicals. My next post on this topic will focus on this battle.

[1]       Rosner, D., & Markowitz, G., 4/29/13, “You and your family are guinea pigs for the chemical corporations,” TomDispatch.com

[2]       Wikipedia, retrieved 6/1/13, “Toxic Substances Control Act of 1976,” en.wikipedia.org/wiki/Toxic_Substances_Control_Act_of_1976

[3]       Natural Resources Defense Council, retrieved 6/1/12, “More than 80,000 chemicals permitted in the US have never been fully assessed for toxic impacts on human health and the environment,” http://www.nrdc.org/health/toxics.asp?gclid=CPjZ66CLw7cCFYii4Aod6GwAWA

[4]       Rosner & Markowitz, 4/19/13, see above

[5]       Steingraber, S., 4/19/13, “Sandra Steingraber’s war on toxic trespassers,” Bill Moyers public TV show, available at BillMoyers.com

TOXINS IN YOUR BLOOD

ABSTRACT: Did you know that there are most probably dozens of toxic chemicals in your blood? These are likely to include polychlorinated biphenyls (PCBs), dioxins, and pesticides, including DDT, all of which are toxic to humans. We are all test subjects – largely unknowingly – in a huge chemical exposure experiment.

There are roughly 75,000 chemicals in use in the US and only about 500 of them have been tested for health risks. Many of the chemicals found in our blood are long-lasting in the environment and in our bodies. The impacts of the combinations of these chemicals that we all have in our blood have never been looked at.

None of us were asked if it was OK to expose us to these chemicals. Therefore, some people refer to this as “toxic trespass.” These toxins are trespassing in our bodies without our permission. From a common sense perspective, and certainly from a public health perspective, it doesn’t make sense to expose people to toxic chemicals and then engage in a debate about what level of them is safe.

Future posts will address related topics such as how we got to this point, what the possible impacts are, and what we can do about this.

FULL POST: Did you know that there are most probably dozens of toxic chemicals in your blood? These include chemicals from consumer products, plastics, pesticides, flame retardants, and non-stick coatings on cookware, as well as industrial chemicals. We are all test subjects – largely unknowingly –in a huge chemical exposure experiment. Scientists call the total amalgamation of chemicals in your body your “body burden.” [1]

Bill Moyers, as part of his documentary Trade Secrets, had his blood analyzed back in 2001. He was tested for 150 chemicals and 84 were found, including 31 polychlorinated biphenyls (PCBs), 13 dioxins, and at least two pesticides, including DDT, all of which are toxic to humans. His results are typical of what any US residents could expect to find in his or her blood. The only one of the 84 that would have been found in a person’s blood, or even anywhere in the environment, 100 years ago was lead. [2]

There are roughly 75,000 chemicals in use in the US and only about 500 of them have been tested for health risks. On average, twenty new chemicals are introduced each week, generally without testing. Many of the chemicals found in our blood are long-lasting in the environment, i.e., they don’t breakdown readily and aren’t biodegradable. Many are also long-lasting in our bodies, i.e., our bodies don’t have a mechanism for breaking them down or removing them. For example, DDT was banned in the US in 1972 and PCBs in 1979, but they were still in Bill Moyers’ blood in 2001 – and are likely to be in your blood today.

The impacts of the combinations of these chemicals that we all have in our blood have never been looked at. And only a very few of these chemicals have been investigated for their impacts children or babies in utero.

None of us were asked if it was OK to expose us to these chemical. For most of them we have no choice about introducing them to our bodies, because they are in the air we breathe, the water we drink, the food we eat, and the consumer products we use. And although we have some control over the latter two categories, we often don’t know about the chemicals that are present or that we absorb into our bodies, let alone about any potential negative effects. We know that many of these chemicals can be toxic, but we don’t know at what levels or what the risks are of the current levels of them in our bodies.

Therefore, some people refer to this as “toxic trespass.” These toxins are trespassing in our bodies without our permission. [3]

From a common sense perspective, and certainly from a public health perspective, it doesn’t make sense to expose people to toxic chemicals, some of which are known carcinogens, and then engage in a debate about what level of them is safe. We should remove them from our environment to the greatest extent possible, as we did with DDT and PCBs.

Future posts will address related topics, including:

  • How this plethora of chemicals, including toxins, got into our environment and our blood
  • How regulation is failing to protect us
  • The chemical industry’s and others’ efforts to limit regulation of these chemicals
  • The role of Genetically Modified Organisms in agriculture and food in putting toxins into our bodies
  • The body burden of chemicals in babies’ and pregnant women’s blood
  • Possible impacts of our body burden and toxic trespass, especially on children
  • What’s being done about this and what you can do

 

[1]       Barnett, S., 10/6/11, “What’s your body’s chemical burden, “ The Huffington Post

[2]       Moyers, B., retrieved 5/20/13, “Moyers moment (2001): Toxins in our blood,” http://billmoyers.com/2013/05/17/moyers-moment-2001-toxins-in-our-blood

[3]       Steingraber, S., 4/19/13, “Sandra Steingraber’s war on toxic trespassers,” Bill Moyers public TV show, available at BillMoyers.com

SHAMEFUL FAILURE TO ADDRESS GUN VIOLENCE

ABSTRACT: A filibuster in the US Senate just blocked passage of a law to require background checks on most gun buyers, despite the fact that 90% of Americans support these background checks; even 74% of National Rifle Association (NRA) members support them!

This reflects the power of money in politics – the money of the gun and ammunition makers and sellers. Their well-funded front organization, the NRA, only has about 2 million members, but wields outsized influence.

The facts make this failure to address gun violence shameful. In the four months since the Newtown massacre of 20 young children and 6 adults, over 3,500 people have died from gun violence. Roughly 30,000 people die each year from gun violence in the US. This is ten times as many as died on September 11th, but we spend far more time and money to prevent violence by terrorists than we do to prevent gun violence.

Contrary to the NRA’s rhetoric, guns do NOT make you safer: 1) For every use of a gun in self-defense at home, there are 11 suicide attempts, 7 assaults or murders, and 4 gun accidents; 2) Gun death rates are over three times higher in states with high gun ownership; and 3) Despite the claim that more armed civilians would stop mass shootings, this hasn’t happened once in the last 30 years.

In 1996, Australia banned automatic and semi-automatic weapons, required strict permitting and tracking of gun purchases, and purchased and destroyed about 700,000 firearms. The results are:

  • 59% decrease in firearm murders (without an increase in non-firearm murders)
  • 65% decrease in firearm suicides (without an increase in non-firearm suicides)
  • No gun massacres in the 16 years since enactment of the law compared with 13 massacres (in which 4 or more people died) in the 18 years before enactment
  • The murder rate has dropped to 1 per 1 million people. (The US rate is 33 times higher.)

The votes in the US Senate are profiles in cowardice. There is no reason for anyone other than law enforcement and the military to have automatic and semi-automatic weapons with magazines that hold over 10 bullets. I urge you to call, email, and / or write your federal and state elected officials and demand reasonable gun laws that will prevent future gun massacres.

FULL POST: A filibuster in the US Senate just blocked passage of a law to require background checks on most gun buyers. Although there was a majority of 54 votes in favor, the Republicans, abetted by four Democrats, obstructed progress. This occurred despite the fact that 90% of Americans support these background checks; even 74% of National Rifle Association (NRA) members support them! The Senate also failed to pass a provision banning the sales of assault weapons; there were only 40 votes in favor, even though 45% of gun owners support a ban on these weapons. [1]

This reflects the power of money in politics – the money of the gun and ammunition makers and sellers. While their lobbyists operate behind the scenes, their well-funded front organization, the NRA, operates in public. Although it only has about 2 million members (out of 300 million people in the US), which is only 5% of gun owners, and 30% of gun owners have an unfavorable opinion of the NRA, it wields outsized influence. Together, the money, the private lobbying, and the public publicity have banned federal research and data sharing on gun violence and perpetrated myths about guns and gun violence.

The facts make this failure to address gun violence shameful. In the four months since the Newtown massacre of 20 young children and 6 adults, over 3,500 people have died from gun violence. Roughly, 30,000 people die each year of gun violence in the US, 12,000 murders and 18,000 suicides. This is ten times as many as died on September 11th, but we spend far more time and money to prevent violence by terrorists than we do to prevent gun violence. There is also far more focus, effort, and resources spent to keep illegal immigrants out of this country than there is to keep guns out of the hands of illegal gun purchasers.

Contrary to the NRA’s rhetoric, guns do NOT make you safer:

  1. For every use of a gun for self-defense at home, there are 11 suicide attempts, 7 assaults or murders, and 4 accidents with a gun. Six times more women were shot by husbands, boyfriends, and ex-partners than were murdered by strangers. A women’s chance of being killed by her abuser is 7 times higher if he has access to a gun.
  2. Gun death rates are over three times higher in states with high gun ownership. The state with the highest gun ownership (Wyoming, over 60% of households) also has the highest rate of gun deaths (over 15 per 100,000 people). The state with the lowest gun ownership (Hawaii, less than 10% of households) also has the lowest rate of gun deaths (less than 5 per 100,000 people). The other states clearly demonstrate this relationship that more guns means more gun deaths.
  3. Despite the claim that more armed civilians would stop mass shootings, this hasn’t happened once in the last 30 years.
  4. Civilians in the US own roughly 310 million guns while law enforcement and the military have 4 million guns. Roughly a third of Americans own a gun, down from about half in 1973. The average gun owner has 8 guns. [2]

In terms of evidence to support the effectiveness of legislation to prevent gun violence, there is a very relevant example from Australia. In 1996, 35 people were killed in Australia by a gunman in a massacre reminiscent of those we have experienced recently here in the US. In response, Australia, under Conservative Prime Minister John Howard, banned automatic and semi-automatic weapons, required strict permitting and tracking of gun purchases, and purchased and destroyed about 700,000 firearms in a gun buyback program. [3]

The results are: [4][5]

  • 59% decrease in firearm murders (without an increase in non-firearm murders)
  • 65% decrease in firearm suicides (without an increase in non-firearm suicides)
  • No gun massacres in the 16 years since enactment of the law compared with 13 massacres (in which 4 or more people died) in the 18 years before enactment
  • The murder rate has dropped to 1 per 1 million people, a fortieth of what it was. (The US rate is 33 times higher.)

The votes in the US Senate are profiles in cowardice. Colorado, New York, and Connecticut have recently passed meaningful gun violence prevention laws. There is no reason for anyone other than law enforcement and the military to have automatic and semi-automatic weapons with magazines that hold over 10 bullets. Sensible gun laws, as evidenced by the Australian experience, would make a difference. (See my post of 12/16/12 for more detail.)

I urge you to call, email, and / or write your federal and state elected officials and demand reasonable gun laws that will prevent future gun massacres. I also encourage you to participate in on-line or local actions to express your support for common sense gun violence prevention laws.

It’s past time to take serious steps to reduce gun deaths and violence, as well as hopefully, eventually, to eliminate the occurrence of gun massacres – as Australia did. We must insist that our elected officials pass sensible gun violence prevention laws.

[1]       Jan, T., & Viser, M., 4/18/13, “Wider checks on guns rejected,” The Boston Globe

[2]       Gilson, D., March/April 2013 issue, “Hits and myths: Ten pro-gun claims that don’t stand up to fact-checking,” Mother Jones

[3]       An equivalent buyback program in the US would need to purchase and destroy 40 million guns.

[4]       Matthews, D., 8/2/12, “Did gun control work in Australia?” The Washington Post

[5]       Editorial Board, 12/18/12, “Australian gun control holds lessons for U.S.,” USA Today

NO FISCAL CLIFF FOR CORPORATE TAX LOOPHOLES

ABSTRACT: So you thought our Washington politicians were serious about reducing the deficit? Guess again. The actual bill that averted the “fiscal cliff” in January included 43 corporate tax breaks worth $67 billion in 2013, which is more than the revenue that was raised! This means that the “fiscal cliff” legislation did NOT decrease the deficit, but rather increased it. The tax breaks include: 1) $11 billion for corporations such as GE, Citicorp, and Ford on overseas earnings, 2) $430 million for Hollywood producers for filming in the US, 3) $331 million for railroads for track maintenance, 4) $500 million for pharmaceutical giant Amgen, and 5) $120 million for Whirlpool Corporation. The support for corporate tax loopholes is often bipartisan as they provide leverage for campaign contributions.

So, take with a big grain of salt all the talk about deficit reduction. Corporate welfare continues unabated while deficit reduction is used as an axe to cut government programs, many focused on helping low and middle income families. And take with a big grain of salt the talk about the need to cut Medicare and Medicaid spending when big giveaways to Amgen and other pharmaceutical corporations are costing these programs billions of dollars every year.

Note: I’m back to blogging after a three month hiatus. And no, unfortunately, this post is NOT an April Fool’s joke.

FULL POST: So you thought our Washington politicians were serious about reducing the deficit given the last minute “fiscal cliff” deal in January and the automatic spending cuts (“the sequester”) that went into effect on March 1? Guess again. Corporate tax loophole giveaways that were actually part of the “fiscal cliff” bill cost more than the revenue that was raised!

As background, the manufactured austerity crisis, known as the “fiscal cliff,” was a package of spending cuts and tax increases set to go into effect automatically on December 31, 2012, if a substitute agreement on deficit reduction wasn’t reached. (See post of 12/12/12 for more details.)

Early on New Year’s Day legislation was passed that supposedly tackled the deficit by increasing revenue. It also postponed the spending cuts until March 1. Most of the scheduled tax increases were scaled back, so only $30 – $60 billion per year in new revenue was generated. Income tax rates on individuals with incomes over $400,000 were increased, with some reductions in deductions starting at $250,000 in income. The estate tax was increased a bit and workers’ Social Security taxes were increased by 2% of wages on earnings up to $110,000. (This restored a temporary cut in the Social Security tax that was targeted at boosting the economy and middle and low income workers during the Great Recession.) (See post of 1/7/13 for more details.)

The postponed spending cuts ended up going into effect on March 1 because our politicians could not come to an agreement on other deficit reduction measures. These spending cuts are likely to hurt the economy, slowing the recovery and increasing unemployment. In addition, these cuts are hurting low and middle income families. Head Start’s high quality school readiness programs are serving fewer children – fewer 3 and 4 year olds from families in poverty. School systems are laying off teachers and staff. College students are losing government support. Housing authorities are laying off staff and cutting housing assistance to poor families. And there will be cuts in health care that will disproportionately affect low income individuals. [1]

Despite all of this, quietly, and with very little coverage by the mainstream (corporate) media, the actual bill that averted the “fiscal cliff” in January included 43 corporate tax breaks worth $67 billion in 2013, which is more than the revenue that was raised by the highly publicized tax increases. [2] This means that the “fiscal cliff” legislation did NOT decrease the deficit, but rather increased it by giving more in tax breaks to corporations than it raised in tax revenue from individuals!

For example, Whirlpool Corporation got a tax benefit worth an estimated $120 million in 2012 and 2013 after spending $1.8 million on lobbying over the last two years; a 6,700 percent return on investment. Whirlpool’s total income taxes paid to federal, local, and foreign governments for 2009 -2011 were a REFUND of $561 million! And it is carrying forward federal tax credits it can use to decrease its US taxes in future years. Meanwhile, Whirlpool closed a factory in Arkansas and laid off 800 workers, moving the manufacturing of its refrigerators to Mexico. This was part of an overall reduction of its workforce in North America and Europe of 5,000 jobs, which it announced in 2011. [3]

Another example was a provision in the “fiscal cliff” legislation that gave two years of relief from Medicare cost controls for certain drugs. Although not mentioned by name, the clear beneficiary is the pharmaceutical giant, Amgen. It is estimated that this loophole will cost taxpayers about $500 million over two years – to the benefit of Amgen. The company’s CEO quickly informed investment analysts of this good news. Two factors make this particularly egregious:

  • Amgen had already received a two year delay on these cost controls and another one is hard to justify
  • Two weeks earlier, Amgen had pleaded guilty in a major federal fraud case to illegal drug marketing and had agreed to pay $762 million in criminal and civil penalties

This particular case is tied to close relations Amgen has with three Senators: Max Baucus (D – Montana), Mitch McConnell (R – Kentucky), and Orrin Hatch (R – Utah). [4][5] As in this case, the support for corporate tax loopholes is often bipartisan. Many of them have to be renewed every two years. This gives members of Congress leverage for an on-going source of campaign contributions from these corporations and their lobbyists. The supposedly temporary nature of these corporate tax loopholes also avoids the accounting analysis, and resultant publicity, the federal budget process requires of permanent or longer-term tax expenditures. Overall, corporate welfare will cost the federal government at least $154 billion in 2013 through 135 individual provisions in the tax code. [6]

Other corporate tax breaks in the “fiscal cliff” legislation include:

  • $11 billion for corporations such as GE, Citicorp, and Ford on overseas earnings
  • $430 million for Hollywood producers for filming in the US
  • $331 million for railroads for track maintenance

So, take with a big grain of salt all the talk about deficit reduction. Corporate welfare continues unabated while deficit reduction is used as an axe to cut government programs, many focused on helping low and middle income families. And take with a big grain of salt the talk about the need to cut Medicare and Medicaid spending when big giveaways to Amgen and other pharmaceutical corporations are costing these programs billions of dollars every year.

[1]       Coalition on Human Needs, 3/22/13, “Sequester Impact,” http://www.chn.org/wp-content/uploads/2013/03/sequester-impact-mar-13-21.pdf

[2]       Rowland, C., 3/17/13, “Tax lobbyists help businesses reap windfalls,” The Boston Globe

[3]       Rowland, C., 3/17/13, see above

[4]       Moyers, B., & Winship, M., 1/25/13, “Foul play in the Senate,” Common Dreams

[5]       Lipton, E., & Sack, K., 1/20/13, “Fiscal cliff bill benefits Amgen,” The New York Times

[6]       Rowland, C., 3/17/13, see above

REBUTTING ARGUMENTS AGAINST INCREASING INCOME TAXES ON THE WEALTHY

ABSTRACT: The Bush tax cuts, and the even larger cuts in the income tax rates for high incomes over the last 30 years, have contributed to creating the federal government’s deficit (see post of 12/22/12) and to dramatically widening income and wealth inequality in the U.S. There has been a dramatic shift of the tax burden from the well-off and corporations to middle and lower income households. This shift in the tax burden has contributed to stagnant incomes for middle and lower income earners while incomes at the top have skyrocketed.

 Despite the Republican rhetoric that high income individuals are “job creators,” the fact is that increased income for them is far less effective in stimulating job growth than increased incomes for low and middle income individuals. There is strong evidence, from multiple perspectives, that increasing taxes on the wealthy and redirecting the funds to productive investments or to lower income individuals, for example through unemployment benefits, will benefit the economy and job creation. It would also reduce inequality and address a root cause of the deficit.

FULL POST: The Bush tax cuts, and the even larger cuts in the income tax rates for high incomes over the last 30 years, have contributed to creating the federal government’s deficit (see post of 12/22/12) and to dramatically widening income and wealth inequality in the U.S., which are at their highest levels since the 1930s.

The 400 richest individuals in the US, as identified by Forbes magazine, have pocketed $1.3 trillion because of the Bush tax cuts. The best estimates are that these individuals actually pay only about 18% of their income in taxes, while their predecessors in 1960 paid more than 70%. Not only have their tax rates fallen dramatically (from 91% in 1960 and 70% in 1980 to 35% today [see 11/27/11 post for more detail]), but their increased use of offshore tax havens and other tax reduction strategies has further reduced the taxes they actually pay. For example, the tax return Mitt Romney released shows that he, and presumably his partners at Bain Capital, reported their management fees as capital gains rather than earned income. Assuming they all did, they saved an estimated $200 million on income taxes and another $20 million on the Medicare payroll tax. [1] Also since the 1960s, corporate taxes have fallen from over 27% of federal government revenue to about 10% today. [2]

These reductions in government revenue from high income individuals and corporations have dramatically shifted the tax burden from them to middle and lower income households at the federal, state, and local levels. This shift to regressive revenue sources [3] includes flat rate payroll taxes (i.e., Social Security and Medicare), and in the case of Social Security a cap so that no tax is paid on earnings over $110,000. It also includes most state and local revenue sources, such as sales and excise (e.g., cigarette, alcohol, and car) taxes; flat rate state income taxes; and state revenue from gambling (i.e., lotteries and casinos), all of which are quite regressive. [4] This shift in the tax burden has contributed to stagnant incomes for middle and lower income earners while incomes at the top have skyrocketed. [5] (See my post of 11/13/11 for more detail.) Both fairness and reversing causes of the deficit would argue for increased income tax rates on high incomes.

Despite the Republican rhetoric that high income individuals are “job creators,” the fact is that increased income for them is far less effective in stimulating job growth than increased incomes for middle and low income individuals. The US economy is driven by consumer spending; it’s 70% of our Gross Domestic Product (GDP), a measure of overall economic activity. The lower an individual’s income, the more likely he or she is to spend any additional income to buy goods and services in the local economy. On the other hand, the wealthy are more likely to save additional income or to spend or invest it outside of the US. Furthermore, they are much more likely than the less well-off to use the money for speculative rather than productive investments. Speculative investments do not help the economy or create jobs; they actually harm the economy by increasing prices for consumer goods (e.g., food and gasoline [see my post of 3/5/12]) and by contributing to speculative bubbles (e.g., Internet stocks and mortgage investments) that eventually burst and harm the economy.

Republicans have opposed an increase in the tax rate on high incomes, claiming it will hurt small businesses. But only about 2 – 3% of “small businesses” would be affected and many of these aren’t really small or aren’t businesses at all. Republicans also claim that such a tax increase would hurt the economy and job creation, but “yearly gains in employment, GDP growth, and small business job growth were all greater after the Clinton tax hikes of 1993 than after the Bush tax cuts of 2001.” [6]

In summary, there is strong evidence, from multiple perspectives, that increasing taxes on the wealthy and redirecting the funds to productive investments (such as infrastructure building) or to lower income individuals (who will spend it in their local economies), for example through unemployment benefits, will benefit the economy and job creation. [7] It would also reduce inequality and address a root cause of the deficit.

In my next posts, I’ll take a look at cutting the deficit through spending cuts, the spending cuts in the austerity package, and alternatives to them.

[1]       Peters, C. Nov./Dec. issue, “The Bain of my existence,” Washington Monthly

[2]       Van Gelder, S., 12/8/12, “4 ways to leap the ‘fiscal cliff’ to a better USA,” YES! Magazine

[3]       Regressive revenue sources place a greater burden, relative to one’s ability to forego the income, on middle and lower income households than on higher income individuals.

[4]       Jacoby, J., 12/9/12, “Biggest lottery winner? That’d be the Treasury,” The Boston Globe

[5]       Appelbaum, B., & Gebeloff, R., 11/29/12, “Tax burden is lower for most Americans than in the 1980s,” The New York Times

[6]       Lehigh, S., 12/14/12, “Points of clarity through the fiscal cliff fog,” The Boston Globe

[7]       Judis, J.B., 12/12/12, “Rein in the rich: How higher taxes could lift the economy,” The New Republic

STOP THE GUN MASSACRES

ABSTRACT: Gun massacres must stop. We must enact sensible gun laws. Automatic weapons with magazines that hold over a dozen bullets turn tragic murder into horrifying massacre. Sensible gun laws would make a difference; they lead to much lower gun violence in other countries, and the federal assault weapon ban made a difference in the 10 years it was in effect.

The profits of gun and ammunition makers are at stake. The right to bear arms the framers of our Constitution had in mind was not unfettered access to weapons that fire a dozen bullets per second.

We must seize this moment to loudly and collectively demand that our elected leaders enact strong, sensible gun laws (detail below). To take action, start by going to the White House petitions site (https://petitions.whitehouse.gov/petitions). Find a petition calling for action on gun laws and sign it.

FULL POST: Gun massacres must stop. We must enact sensible gun laws. Yes, guns don’t kill people, people kill people. But automatic weapons with magazines that hold over a dozen bullets turn tragic murder into horrifying massacre. There is no reason anyone other than law enforcement or military personnel should have automatic weapons with high capacity magazines. The federal bans on assault weapons and high capacity magazines that were in place from 1994 to 2004 need to be reinstated.

Why is getting a driver’s license so much more rigorous than getting a gun, including an automatic? With over 4 times as many civilians murdered each year with guns (over 12,000) as died in the September 11 attacks, why do we do so much to prevent terrorism and so little to prevent gun violence? Why do we allow gun homicides in the US at almost 20 times the rate in similar countries with similar overall crime and violence rates? [1]

Sensible gun laws would make a difference; they lead to much lower gun violence in other countries and the federal assault weapon ban made a difference in the 10 years it was in effect. In the struggle for sensible gun laws, remember that the profits of gun and ammunition makers are at stake. They support loose gun laws and the National Rifle Association so they can maximize their profits.

The right to bear arms (as part of a well regulated militia) that is in the second amendment to the Constitution was written when guns were muzzle loaders and the time per bullet – to reload and fire again – was measured in minutes. Today we measure the number of bullets fired per second. The right to bear arms the framers of our Constitution had in mind was not unfettered access to weapons that fire a dozen bullets per second.

We must seize this moment to loudly and collectively demand that our elected leaders – our President and Members of Congress, our Governors and State Legislators – enact strong, sensible gun laws including 1) a ban on assault weapons and high capacity magazines, 2) limits on the number of guns and amount of ammunition an individual can buy, 3) reasonable requirements for obtaining a gun license, and 4) strong background check requirements for all gun purchases. In addition, the penalties for violating gun laws should be tough; any gun or ammunition seller who violates the law and allows an individual to obtain guns or ammunition illegally should be treated as an accomplice to murder, under criminal and civil law.

To take action, start by going to the White House petitions site (https://petitions.whitehouse.gov/petitions). Find a petition calling for action on gun laws and sign it. (If you don’t already have an account you will need to go through the quick process of obtaining one.) There are multiple petitions on the firearms issue, which you can scroll down to find or select the “Filter by issue” button and select “Firearms”. I urge you to sign at least one and as many as you support if you have the time. This will send a strong signal of support for this issue. The two I’d suggest starting with are:

  • “Immediately address the issue of gun control through the introduction of legislation in Congress” (http://wh.gov/RN6U). It already has over 100,000 signers; please add your voice.
  • “Today IS the day: Sponsor strict gun control laws in the wake of the CT school massacre” (http://wh.gov/RRkn). It has over 19,000 signers and you can add your support.

Also, call, email, and / or write your federal and state elected officials and demand gun laws that will end the massacres now. Participate in local or on-line actions to express your support for sensible gun laws.

It’s past time to take serious steps to reduce and hopefully eventually eliminate the occurrence of gun massacres. We must insist that our elected officials pass sensible gun laws.

[1]       Brady Center to Prevent Gun Violence, retrieved 12/15/12, “Facts: Gun violence,” www.bradycampaign.org/facts/gunviolence

GENETICALLY MODIFIED FOODS: WHY NO LABELS?

ABSTRACT: There aren’t laws in the US requiring labeling of genetically modified (GM) food (as there are in the other developed countries) because the large food and agricultural-biotechnology corporations and their trade associations have spent years working to block labeling. They’ve spent $572 million on lobbying and campaign contributions over the last 10 years. In addition, the revolving door moves people back and forth between their organizations and the relevant government agencies. GM organisms are patented and provide their creators with a monopoly, significant market place power, and potentially substantial profits. Farmers are prohibited from producing their own seed for next year’s crop; they are required to buy it from the corporation.

The costs and benefits of GM foods are, at best, unclear. The large agro-biotech corporations and the related chemical corporations are working hard, through campaign contributions, lobbying, and the revolving door, to have minimal regulation and oversight, and to prevent requirements to label foods as having GM content. This is another example of corporate power riding roughshod over the public interest. Our public officials need to stand up to the corporate interests and serve the public interest and demand of over 90% of the public for GM food labeling and oversight.

FULL POST: There aren’t laws in the US requiring labeling of GM food (as there are in the other developed countries) because the large food and agricultural-biotechnology corporations and their trade associations have spent the years since 1994 (when the first GM tomatoes were marketed) working to block labeling. They’ve spent $572 million on lobbying and campaign contributions over the last 10 years. In addition, the revolving door moves people back and forth between their organizations and the Department of Agriculture and the Food and Drug Administration (FDA) – most recently President Obama appointed Michael Taylor, a former vice president and lobbyist for Monsanto, as a senior advisor to the Commissioner at the FDA – they have successful prevented federal and state efforts to require GM food labeling.

GM organisms serve corporate interests in a way that naturally occurring seeds, plants, and animals don’t. Because they are patented, they provide their creators with a monopoly, significant market place power, and potentially substantial profits. This also allows the corporations to restrict independent, objective research into the efficacy, safety, costs, and benefits of GM organisms. It gives seed corporations great power because in their contracts with farmers, the farmers are prohibited from producing their own seed for next year’s crop; they are required to buy it from the seed corporation. The large seed corporations have, through acquisition and other means, concentrated their scope and power and now four large corporations control 50% of the market. Over 200 independent seed companies have ceased to exist over the last 15 years. One of those large seed corporations, Monsanto, has gone so far as to sue thousands of individual farmers whose crops were contaminated by Monsanto’s GM crops for illegally possessing their GM plants. [1]

The costs and benefits of GM foods are, at best, unclear. The costs, beyond the immediate ones (seed, pesticides, and herbicides), are largely uncalculated, and to some extent are unknown. The benefits have not been as great as the agro-biotech corporations have claimed, for example in increased yields, reduced herbicide and pesticide use, improvement of farmers’ economic conditions, and reduction of world hunger. The large agro-biotech corporations and the chemical corporations that produce the herbicides, pesticides, and fertilizers that GM crops require, have substantial market power and profit potential. They are working hard through campaign contributions, lobbying, and the revolving door of sharing personnel with government, to have minimal regulation and oversight, and to prevent requirements to label foods as having GM content. [2]

This is another example of corporate power in the US, in contrast to other countries, riding roughshod over the public interest. There is a clear public interest, as well as public desire (over 90% in multiple polls), to have foods with GM content labeled. And there is a clear need for more effective oversight of the introduction of GM organisms into the environment and our food, as well as monitoring of long term costs and benefits. Our public officials need to stand up to the corporate interests and serve the public interest on GM food labeling and oversight.

[1]       Farm Aid, see above

[2]       Moyers, B., with Shiva, V., 7/13/12, “The problem with genetically modified seeds,” Moyers & Company

GENETICALLY MODIFIED FOODS AREN’T LABELED

ABSTRACT: Federal regulators are allowing a growing number of genetically modified (GM) agricultural products into our food. What is surprising is that these foods are not labeled. This is the result of a powerful and concerted effort by big corporations in the GM business. Over 90% of the American public in multiple polls supports GM labeling and forty-nine countries, including Russia and even China, require labeling. From a public health perspective, labeling is the only way to track unintended health effects.

FULL POST: Federal regulators are allowing a growing number of genetically modified (GM) agricultural products into our food [1]. What is surprising is that these foods are not labeled as being or containing GM products. In general, foods are required to be labeled with their ingredients so consumers can know what they are eating. The lack of GM labeling is the result of a powerful and concerted effort by big corporations who make significant profits from the raising and selling of GM products.

This lack of labeling flies in the face of the economic theory of free markets, which requires consumers to have full information and make knowledgeable decisions when purchasing goods and services. It also contradicts a basic premise of democracy – that citizens are informed.

Over 90% of the American public in multiple polls supports labeling of food to indicate GM content. Forty-nine countries, including Russia and even China, require the labeling of food that contains GM ingredients. The United Nations (UN) food safety organization supports labeling. Furthermore, the US is the only developed country that does not require safety testing of GM plants, which also is supported by the UN. The lack of testing and labeling creates the risk that other countries will block the importation of US agricultural products.

The US Senate in June 2012 voted 73 – 26 against an amendment to the 2012 Farm Bill that would have allowed states to require GM labeling of food. At least 19 states have introduced legislation on GM labeling of food. A bill in Vermont died this year after Monsanto, a dominant player in the GM field, threatened to sue the state if the bill passed.

From a public health perspective, labeling is the only way to track unintended effects. Neither you as an individual nor public health officials can know that a GM food triggers allergic reactions or other health problems if you don’t know the food that’s being eaten contains GM content. [2] For these reasons, the American Public Health Association and the American Nurses Association, among others, have called for labeling GM foods. [3]

In California, there will be a ballot question this November known as the California Right to Know if Your Food has Been Genetically Engineered Act (Proposition 37). It would require food manufacturers and retailers to label GM foods. Over 1 million people signed the petition to get this measure on the ballot. The opposition includes the big agro-biotech and herbicide / pesticide corporations such as Monsanto, BASF, DuPont, Syngenta, Bayer, and Dow Chemical, as well as big food manufacturers such as PepsiCo, Coca-Cola, and Kellogg, which are some of the biggest users of high-fructose corn syrup, soy lecithin, and sugar beets, commonly used GM ingredients. [4]

The next two posts will also be on GM foods. The next one will examine the reasons for GM organisms and foods along with the risks they present. The subsequent post will look at what’s behind the lack of GM food labeling in the US.

[1]       GM foods are also referred to as Genetically Modified Organisms (GMOs), Genetically Engineered (GE) foods, and biotech foods.

[2]       Silver, C., 6/26/12, “How Monsanto is sabotaging efforts to label genetically modified food,” Inter Press Service

[3]       Sanders, B., 6/19/12, “Label genetically engineered food,” The Huffington Post

[4]       Sauve, C., retrieved 8/16/12, “This is the food fight California cannot afford to lose,” San Jose Mercury News

WHY WE NEED STRONG REGULATION

ABSTRACT: A fierce battle is occurring over government regulation. Key arguments against regulation are that corporations will regulate themselves and that the discipline of free market capitalism will punish bad corporate behavior and reward good behavior. The series of scandals in our large banks have clearly proven these arguments are wrong. And there are many examples beyond the recent bad behavior in the financial industry.

The market is unable to detect, publicize, and punish bad behavior before very serious damage has been done. Corporations resist efforts to exert control or set standards from outside and our huge corporations have the power to successfully do so. As Robert Sherrill wrote, “thievery is what unregulated capitalism is all about.” “Trust but verify” seems applicable here. We need strong regulators and regulations to verify that large corporations are behaving in a legal and ethical manner. Albert Einstein defined insanity as “doing the same thing over and over and expecting different results.” Deregulation is insanity; we’ve seen the results time and again. Strong regulation of corporations, particularly large corporations, by government is necessary.

FULL POST: A fierce battle is occurring in Congress and the federal government over regulation of the financial industry and over government regulation in general. Key arguments against regulation are that corporations will regulate themselves (with minimal standards from government) and that the discipline of free market capitalism will punish bad corporate behavior and reward good behavior. President George W. Bush asserted that these forces were effective and sufficient as he promoted deregulation.

Over the last couple of years, the series of scandals in our large banks have clearly proven these arguments are wrong. The large banks have not regulated themselves. The mortgage and LIBOR scandals (among others) have shown a pattern of behavior by many banks over many years where they clearly did not regulate themselves, but spun further and further out of control and into illegal and unethical behavior. The recent huge JPMorgan trading loss, currently estimated at $6 billion, shows that they simply cannot control internal behavior despite strong incentives to do so. And there are many examples beyond the recent bad behavior in the financial industry: for example, the Savings and Loan scandal of the late 1980s, Enron and WorldCom’s collapses of 2001 and 2002, and the “dot com” stock bubble of 2000. Our large corporations don’t even seem to be able to exert reasonable control over executive compensation.

The discipline of a competitive market place has also clearly not been effective as a deterrent for bad behavior. The recent scandals have shown as false the assumption that banks would behave honestly to protect their reputations with customers. Moreover, it is clear in all of the examples cited above that the market is unable to detect, publicize, and punish bad behavior before very serious damage has been done. [1]

Finally, corporate capitalism, where the goal is to maximize profits, clearly has strong incentives for promoting self-interest. Conversely, the corporations have strong incentives to resist the public interest, such as worker safety, fair employee compensation, and clean air and water, because they might increase costs and reduce profits. Therefore, corporations resist efforts to exert control or set standards from outside. And our huge corporations have the power to successfully do so, in the market place, in the courts, and in our elections and government.

As Robert Sherrill (the reporter and investigative journalist for The Nation, the Washington Post, and the New York Times Magazine, among others, and the author of numerous books on politics and society [2] ) wrote about the Savings and Loan scandal, “thievery is what unregulated capitalism is all about.” The recent behavior of our large banks seems to have proven this statement again.

“Trust but verify,” a phrase President Reagan popularized when he used it to describe relations with the Soviet Union, seems applicable here. [3] We need strong regulators and regulations to verify that large corporations are behaving in a legal and ethical manner.

Finally, Albert Einstein is quoted as defining insanity as “doing the same thing over and over and expecting different results.” [4] Deregulation of the financial industry in particular, and corporate America in general, is insanity. We’ve seen the results time and again over the last 30 years of deregulation and in the events leading up to the Great Depression. We’re paying a very steep price right now in high unemployment, lost wealth in homes and investments, and over the longer haul in lower wages and reduced benefits for workers.

We need to push back against the large corporations and their special interests in the name of the public interest and the interests of we the people. Strong regulation of corporations, particularly large corporations, by government is necessary.

[1]       Surowiecki, J., 7/30/12, “Bankers gone wild,” The New Yorker

[2]       Wikipedia, retrieved 7/25/12, “Robert Sherrill,” en.wikipedia.org/wiki/Rovbert_Sherrill

[3]       Wikipedia, retrieved 7/26/12, “Trust, but verify,” en.wikipedia.org/wiki/Trust_but_verify

[4]       BrainyQuote, retrieved 7/26/12, “Albert Einstein quotes,” http://www.brainyquote.com/quotes/quotes/a/alberteins133991.html

DODD-FRANK & CFPB ANNIVERSARIES

ABSTRACT: We have just reached the second anniversary of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the first anniversary of the Consumer Financial Protection Bureau (CFPB) that it created. Much has been accomplished despite efforts of the financial industry and some in Congress to block, weaken, and/or delay progress. The CFPB, in its first major enforcement action, ordered Capital One Bank to pay $210 million to settle charges of deceptive marketing. The CFPB has received 45,000 complaints and projects over 200,000 per year. (To file a complaint go to http://www.consumerfinance.gov/complaint.)

For the Dodd-Frank law overall, it is estimated that 31% of the rule making required by the law has been finalized. This effort is extensive because Congress was unable to resolve many of the complex and controversial issues and instead passed them on to the regulators’ rulemaking process. The financial industry has been lobbying heavily (over $200 million over the last two years and 1,300 meetings with three key regulatory agencies) to delay, weaken, and complicate the rulemaking and implementation. Sheila Bair, the very effective former chair of the Federal Deposit Insurance Corporation (FDIC) writes, “we see regulators who are too timid … they try to placate industry lobbyists … We need a regulatory system focused on the public interest, not the special interest. … and Congress needs to support them.” [1]

I urge you to let your representatives in or candidates for Congress know that you support strong regulation of the financial industry and strong penalties, including jail time, for violators.

FULL POST:We have just reached the second anniversary of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the first anniversary of the Consumer Financial Protection Bureau (CFPB) that it created. (The existence of a similar agency in Canada has been credited by some with having avoided the mortgage fraud and predatory lending that contributed to the financial and housing market collapse in the US. [2]) Much has been accomplished despite efforts of the financial industry and some in Congress to block, weaken, and/or delay progress. Most notably, Senate Republicans blocked President Obama’s appointment of anyone to head the CFPB to prevent it from functioning effectively. Obama eventually appointed a head of the CFPB in January 2012 without Senate approval when it was in recess.

The CFPB, in its first major enforcement action, ordered Capital One Bank to pay $210 million to settle charges of deceptive marketing to credit card customers. In addition, the CFPB has:

  • Engaged in lots of fact-finding and gathering of input from a wide range of constituencies
  • Undertaken its “Know Before You Owe” initiative to help people understand the consequences of debt
  • Proposed a redesign of mortgage forms to enhance disclosure and understanding
  • Started developing a range of mortgage regulations making them safer for borrowers and lenders, including a ban on balloon payments and prepayment penalties, and a cap on late fees
  • Jointly with the Education Department, issued a report on subprime-style lending in the private student loan market and created a model document on college costs and financing options [3]
  • Initiated oversight of companies reporting on individuals’ creditworthiness
  • Launched a database that tracks credit card complaints

The CFPB has received 45,000 complaints, many about credit cards and mortgages. The frequency is increasing and is projected to exceed 200,000 per year, perhaps by a lot. [4][5] (To file a complaint go to http://www.consumerfinance.gov/complaint.)

For the Dodd-Frank law overall, it is estimated that 31% of the rule making required by the law has been finalized (123 of 398 rules). To-date, 8,843 pages of rules and regulations have been created by 10 regulatory agencies. The CFPB is responsible for 1,013 of those pages and most of the 1,561 pages devoted to consumer protection. The other major contributors are the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) each with 3,200 pages and the Federal Reserve with 1,439 pages. [6] This effort is so extensive because Congress was unable to resolve many of the complex and controversial issues and instead passed them on to the regulators’ rulemaking process.

The financial industry has been lobbying heavily (over $200 million over the last two years and 1,300 meetings with three key regulatory agencies: the Treasury, the Federal Reserve, and the CFTC) to delay, weaken, and complicate the rulemaking and implementation. For example, new requirements for reserves to protect against losses won’t begin kicking in until January and won’t be fully implemented until 2019. New rules on trading of derivatives won’t start until later this year and will apply to many fewer companies than originally envisioned. The Volcker Rule, to prevent excessive, risky trading by federally insured banks, is still in the works with no draft released and nothing implemented, despite JPMorgan’s recent huge loss on such trading, estimated to be $6 billion. [7][8]

Sheila Bair, the very effective, former chair of the Federal Deposit Insurance Corporation (FDIC), writes, “Yet, still, we see regulators who are too timid … they try to placate industry lobbyists by creating this clarification or that exception, resulting in indecipherable rules that are hundreds, and in some cases, thousands of pages long. … And the irony is that once the rules have ballooned … the lobbyists who sought all the clarifications and exceptions ridicule the regulators for … red tape. … We need a regulatory system focused on the public interest, not the special interest. And we need strong, credible voices who will weigh into the debate on the side of the population at large. … The system is not getting fixed and we need to send a message to Washington. … We need regulators to write rules that the public can understand and the [bank] examiners can enforce. … and Congress needs to support them.” [9]

I hope this information and that in previous posts will help you do anything you can to support strong regulation of the financial industry. I urge you to let your representatives in or candidates for Congress know that you support strong regulation of the financial industry and strong penalties, including jail time, for violators. Tell them your personal stories about how the financial collapse has affected you and your family. Only strong grassroots pressure by voters will ultimately make the difference.

[1]       Bair, S., 7/20/12, “Two years after Dodd-Frank, why isn’t anything fixed?” Yahoo! Finance

[2]       Krugman, P., 2/1/10, “Good and boring,” The New York Times

[3]       Dougherty, C., & Lorin, J., 7/20/12, “CFPB says students victimized by ‘subprime-style’ lending,” Bloomberg Businessweek

[4]       Singletary, M., 7/11/12, “Consumer protection bureau nears its first anniversary,” The Boston Globe

[5]       Puzzanghera, J., 7/23/12, “Cordray marks consumer protection agency’s 1st year,” Los Angeles Times

[6]       Davis Polk & Wardwell LLP (law firm), 7/20/12, “Dodd-Frank progress report,” http://www.davispolk.com/dodd-frank-rulemaking-progress-report

[7]       Liberto, J., 7/21/12, “Two-thirds of Dodd-Frank still not in place,” CNN Money

[8]       Drutman, L., 7/19/12, “Big banks dominate Dodd-Frank meetings with regulators,” Sunlight Foundation

[9]       Bair, S., 7/20/12, “Two years after Dodd-Frank, why isn’t anything fixed?” Yahoo! Finance

CORPORATE RIGHTS IN TRADE TREATIES

ABSTRACT: The “Investor State Dispute Settlement” provisions in the draft of the Trans-Pacific Partnership trade treaty (TPP) give an investor (generally a multi-national corporation) the right to sue a government directly for compensation for any negative effect on its profits of any law or regulation. These suits are decided by international tribunals and raise significant concern that they can undermine public health, environmental protection, human rights, and management of economic activity. Under the North American Free Trade Agreement (NAFTA), these tribunals have required governments to pay more than $350 million to corporations and there are more than $12 billion in pending cases. Cases involve food and cigarette labeling; pesticides, drugs, and health care; and pollution and toxic waste. Australia has announced it will stop supporting the inclusion of investor state dispute settlement provisions in trade treaties.

We need openness and debate during the development of the Trans-Pacific Partnership trade treaty to ensure that protections for workers and the middle class are at least as strong as they are for corporations and the investor class. “At stake is nothing less than a democratic society’s ability to regulate a market economy in the broad public interest.” [1]

FULL POST: The “Investor State Dispute Settlement” provisions in the draft of the Trans-Pacific Partnership trade treaty (TPP), as well as in North American Free Trade Agreement (NAFTA) and numerous other treaties, give an investor (generally a multi-national corporation) the right to sue a government directly for compensation for any negative effect on its profits of any law or regulation. These suits are decided by international tribunals made up of three trade lawyers from the private sector who hear the cases and have the power to order trade sanctions or unlimited amounts in fines payable by governments to corporations. The lawyers rotate between serving as the tribunals’ judges and representing the corporations bringing the suits, thereby earning income from the corporations bringing the suits. The tribunals are conducted in secret with no accountability to the public and taking into account only the claim to profits, not health, environmental, or other concerns. [2][3]

Traditionally, international law has been used to settle disputes between countries, while a corporation was required to pursue a dispute in the courts of the country concerned. However, trade and investment treaties, of which there are now over 2,000 worldwide, typically give foreign investors (generally corporations) the right to bypass local court systems and directly sue governments. NAFTA expanded these rights and the TPP draft expands them further. (Note that these treaties allow companies to sue governments but not the reverse.) [4]

The investor state dispute settlement provisions in these treaties raise significant concern that they can undermine the ability of democratically elected governments to implement policies on public health, environmental protection, human rights, and management of economic activity. [5] Laws and regulations that could be attacked include Buy American provisions in government contracting, requirements that energy come from renewable sources, regulation of financial products and companies, and anti-sweat shops rules.

Based on suits under NAFTA, international tribunals have required governments to pay more than $350 million to corporations based on issues such as bans on toxic substances and land-use policies. There are more than $12 billion in pending cases under US trade treaties. [6] Through 2011, the United Nations Conference on Trade and Development had identified 450 lawsuits brought by companies against governments under trade and investment treaties. These are the known cases (see some examples below); most are kept secret. Argentina had the most cases (51), many related to its financial crisis and the privatization of water. It has been required to pay over $1 billion to multi-national corporations. [7]

Based on its experiences, Australia announced in 2011 it would stop supporting the inclusion of investor state dispute settlement provisions in trade treaties. It stated that it supported equal treatment of domestic and foreign business, but felt that these provisions provided greater legal rights to foreign businesses. Furthermore, it stated that it would not support these provisions because they constrained its ability to make laws on social, environmental, and economic matters. Finally, it noted that these provisions had been included at the behest of Australian businesses seeking protections when they entered foreign markets. It stated that if Australian businesses had concerns about investing in foreign countries, they should make there own assessments and decisions and not look to trade treaties for protection. [8]

In the US, concerns about previous trade and investment treaties led to press coverage, debate, and stopping them: the 1998 Multilateral Agreement on Investment, the 2005 Free Trade Area of the Americas, and the original efforts at an Asian-Pacific free trade area. We need openness and debate during the development of the Trans-Pacific Partnership trade treaty. We need to ensure that protections for workers and the middle class are at least as strong as they are for corporations and the investor class. [9] “At stake is nothing less than a democratic society’s ability to regulate a market economy in the broad public interest.” [10]

Examples of investor state dispute settlements include:

  •  The World Trade Organization (WTO) recently ruled that the US cannot require country of origin labeling on meat. Canada and Mexico brought suit against the policy and now will be able to impose trade sanctions on the US if it does not comply with the ruling. Not only will consumers not know where their meat is coming from but public health personnel will have a harder time tracking down the source if health problems occur. [11]
  • In 2012, the WTO ruled against US dolphin-safe tuna labeling and against a US ban on clove, candy, and cola flavored cigarettes.
  • Foreign manufacturers of generic drugs have sued the US government claiming US patent laws and court decisions have prevented them from marketing their generic versions of drugs.
  • A US health care provider has sued Canada, challenging its Canada Health Act, as interfering with its ability to provide services and make profits in Canada.
  • Two US manufacturers of pesticides have sued Canada based on its ban of certain pesticides.
  • Philip Morris, the multi-national tobacco company, has sued Australia and Uruguay over health warnings and advertizing on cigarette packages, even though their regulations are in compliance with and encouraged by the World Health Organization’s convention on tobacco control.
  • Ecuador was required to pay Chevron $78 million because its efforts to protect the Amazon from pollution were found to have negatively affected Chevron’s profits.
  • A Swedish energy company is threatening to sue Germany for its decision to phase out nuclear energy. It previously challenged a German standard on the increase in river water temperatures at its coal-fired power plant and got Germany to relax the standard.
  • Mexico was required to pay $17 million to US-based Metalclad because a local government refused to give it a permit to build a toxic waste dump.

[1]       Wallach, L., 3/13/12, “A stealth attack on democratic governance,” The American Prospect

[2]       Wikipedia, retrieved 7/18/12, “Investor state dispute settlement,” http://en.wikipedia.org/wiki/Investor_state_dispute_settlement

[3]       Wallach, L., 3/13/12, “A stealth attack on democratic governance,” The American Prospect

[4]       Wikipedia, retrieved 7/18/12, see above

[5]       Wallach, L., 3/13/12, see above

[6]       Wallach, L., 3/13/12, see above

[7]       Agazzi, I., 5/7/12, “Global corporations undermining democracy worldwide,” Inter Press Service

[8]       Wikipedia, retrieved 7/18/12, see above

[9]       Faux, J., 3/13/12, “The myth of the level playing field,” The American Prospect

[10]     Wallach, L., 3/13/12, see above

[11]     Public Citizen, 6/29/12, “WTO rules against yet another US consumer protection policy,” Public Citizen

TRADE AGREEMENTS PAST AND PRESENT

ABSTRACT: Past trade agreements have not lived up to their promises of new, good jobs for Americans and increased exports. While they have provided cheaper goods for us to buy, they have reduced jobs and put downward pressure on wages in the U.S., while increasing our trade deficit. [1] They have undermined U.S. laws protecting workers, the environment, and public health.

The currently under-negotiation Trans-Pacific Partnership (TPP) appears to be taking all of this a step further. TPP negotiations are being kept secret, although corporate representatives are fully involved. The big winners under past trade agreements and the TPP (as drafted) are multi-national corporations. The TPP negotiations and draft documents must be open to the public and Congress. This will ensure that various interests are appropriately balanced and that corporate interests don’t dominate.

FULL POST: First, a little history. NAFTA, the North American Free Trade Agreement, was signed in 1993. The best estimates are that NAFTA has resulted in the loss of almost 700,000 jobs in the US. Our trade deficit with the other participants, Canada and Mexico, has increased from $9 billion to $101 billion. [2][3] In the 20 years since China joined the World Trade Organization, 2.9 million jobs have been offshored to China, many of them well-paying manufacturing jobs. “[S]tate-subsidized Chinese production [has] decimated American industry and reduced the incomes of American workers.” [4] Our trade deficit with China has grown from $13 billion in 1991 to $295 billion in 2011. [5] “[I]n the past, the U.S. trade imbalance has widened after each new agreement. … U.S. businesses … profit immensely from outsourcing and offshoring … Nor is there any apparent economic benefit to the United States.” [6] “Historically, trade deals like NAFTA … are associated with economic displacement and instability, the erosion of labor and human rights standards, and the subordination of national sovereignty to foreign investors.” [7]

The current Trans-Pacific Partnership negotiations (13 negotiating meetings over two years) involve Australia, Canada, Chile, Malaysia, Mexico, Peru, Singapore, Vietnam, and other countries. TPP is actually much more than a traditional trade agreement and the negotiations have been conducted in secret because US Trade Representative Ron Kirk has indicated that he believes the only way to complete the deal is to keep it secret. (Negotiators have agreed not to release negotiating documents until four years after the deal is completed or abandoned.) Although 600 corporate representatives serve as official US trade advisors and have full access to the negotiations, the US Senate committee with jurisdiction over TPP has been denied access to the negotiations. [8][9]

Recently, two of the 26 chapters of the draft agreement were leaked. The TPP draft text includes:

  • International rights for pharmaceutical corporations that would prohibit generic versions of drugs in developing countries, dramatically increasing drug prices and reducing access [10]
  • Further financial industry deregulation
  • Prohibition on controlling the flow of money among countries and other measures designed to limit negative effects of financial speculation
  • Increased protection for foreign investors
  • Incentives for US firms to offshore jobs and investment
  • Provisions that favor foreign corporations (including government subsidized ones) over domestic ones
  • Provisions allowing corporations, including foreign corporations, to assert control over natural resources
  • Expansion of NAFTA’s international tribunals where corporations can sue governments if laws or regulations that protect the public interest (e.g., health, safety, and the environment) might have a negative affect on profits (More on this in my next post.)

Wallach sums up TPP with these words: “Countries would be obliged to conform all their domestic laws and regulations to TPP’s rules – in effect a corporate coup d’état.” [11]

We need to know more about the TPP draft. And we need to apply what we’ve learned from past experience with trade agreements so intended results are achieved and various interests are more appropriately balanced. The US is a democracy; therefore the TPP negotiations and draft documents must be open to the public and to Congress. Then, there can be open discussion and debate about its provisions and its balancing of various interests – those of the public, workers, corporations, investors, local communities, and countries. We need to ensure that corporate power doesn’t run roughshod over other interests.

[1]       Faux, J., 3/13/12, “The myth of the level playing field,” The American Prospect

[2]       Hindery, L., 5/1/12, “Free trade run amok: the TPP,” The Huffington Post

[3]       D’Amico, S.J., 7/10/11, “Trade deals are no deals for the US,” The Boston Globe

[4]       Lind, M., Dec. 2011, “The cost of free trade,” The American Prospect

[5]       U.S. Census Bureau, retrieved 7/16/12, “Trade in goods with China,” http://www.census.gov/foreign-trade/balance/c5700.html

[6]       Prestowitz, C., 3/13/12, “The pacific pivot,” The American Prospect

[7]       Chen, M., 6/21/12, “Backdoor talks on trans-Pacific trade deal aim to globalize corporatocracy,” In These Times

[8]       Wallach, L., 7/3/12, “NAFTA on steroids: The Trans-Pacific Partnership is a global coup d’état,” The Nation

[9]       Chen, M., 6/21/12, see above

[10]     Common Dreams, 7/10/12, “Obama’s trade policy ensures big pharma profit at expense of world’s poor,” http://www.commondreams.org/headline/2012/07/10-2

[11]     Wallach, L., 7/3/12, see above

WHY THE DECLINE IN LABOR UNIONS

Here’s issue #38 of my Policy and Politics Newsletter, written 7/3/12. The previous newsletter described the role of unions. This newsletter outlines the reasons for the decline in private sector union membership.

Private sector union membership has dropped from 34% of the workforce in 1954 to 7% today. (Public sector union membership has grown from 10% to 37%, so that’s a different story for another day.) [1]

The Wagner Act of 1935 (also know as the National Labor Relations Act) created the basis for current labor unions. It was part of President Roosevelt’s New Deal. It gave workers rights and protections in organizing unions and bargaining collectively. [2]

Employers, especially large corporations, have been pushing back ever since. Initial efforts to weaken the Act failed, until the Taft-Hartley Act was passed in 1947. It was vetoed by President Truman but the Republican Congress overrode his veto. Previously, employers were expected to remain neutral during union organizing efforts. Now employers were allowed to actively oppose unionization. Taft-Hartley also gave flexibility to states to regulate unions and prohibited secondary boycotts (where a union encourages customers not to buy the employers products). Requiring all employees of a unionized workplace to become union members was outlawed. It made union organizing much more difficult and is generally seen as the turning point in unionization in the US [3] (although membership continued to increase for 8 more years before beginning its long decline). In the last 30 years, labor laws have been weakened and the ones that remain are often not vigilantly enforced. [4]

Since the early 1980s, large employers have increasingly aggressively opposed unions. One strategy has been to increase competition among workers for jobs, particularly in the manufacturing and industrial sector that was the heart of middle class union jobs. For example:

  • Trade agreements, developed with corporate input, have few if any worker protections, which means US workers must compete against much cheaper labor in other countries
  • Differences in state labor laws and practices are used to make workers compete against workers in other states where unions are weaker, the standard of living and pay is lower, and state and local governments provide financial incentives for relocation of jobs
  • Threats to replace workers if they strike pit current workers against non-union and unemployed workers. Employers were emboldened in the use of this tactic by President Reagan’s firing and replacing of air traffic controllers when they went on strike [5]

Wal-Mart in particular is well known for it aggressive anti-union tactics, both in attacking any efforts to unionize (including eliminating business components where unionization seemed likely) and using part-time workers that are harder to unionize. [6] The widespread, increased use of part-time workers, contractors, and consultants effectively undermines the use of full-time, potentially union workers. The presence and hiring of immigrant workers, often undocumented ones, also weakens unions.

Weakened labor laws and weak enforcement undermines unions. For example, workers who engage in organizing efforts are not infrequently, illegally fired. However, the enforcement process typically takes many months if not years and if the firing is found to be illegal, typically the company is ordered to reinstate the worker with back pay. This provides only a small financial penalty to the employer and means the worker has to subsist for an extended period of time without the job. Under current law, there is a 45 to 90 day waiting period between the request for and occurrence of the secret ballot voting by employees for a union, and employers work to delay this even longer. In that time, the some employers retaliate against, fire, harass, and generally make life miserable for the pro-union employees, while actively campaigning against the union in mandatory meetings with employees, intimidating them into rejecting the union. [7] [8]

Finally, employers lobby and make campaign contributions to encourage public policies that weaken labor laws, unions, and their power. They band together for these activities and for media campaigns against unions through groups such as the US Chamber of Commerce, the National Federation of Independent Business, Associated Builders and Contractors, The Center for Union Facts, and the National Right to Work Committee and Foundation. [9]

There are other factors, including unions’ internal problems (e.g., corruption and lack of democracy) and unions suffering from their success. For example, their success in improving pay, benefits, and working conditions left some workers feeling that union membership was not necessary, and through their success in advocacy and standard setting, government policies have addressed many of the issues that unions originally tackled, such as limits on working hours, overtime pay requirements, and health and safety issues. [10] [11]

In the US, since 1947, our politics and policies have given employers more clout in the balance of power between employers and employees. One of the effects has been the decline of private sector union membership from 34% to 7%. It doesn’t have to be this way. In Europe, although there has been some decline in union membership, it has been nowhere near as great as in the US and union membership currently ranges between 20% and 71% (in Sweden). [12] Corporations are more likely to work with their unions than to be aggressively anti-union as they are in theUS.

[1]       Bureau of LaborStatistics,US Dept. of Labor, 1/27/12, “Union members – 2011,” http://www.bls.gov

[2]       Wikipedia, retrieved 7/1/12, “National Labor Relations Act,” en.wikipedia.org/wiki/Nation_Labor_Relations_Act

[3]      Clark, B., retrieved 7/1/12, “The decline of unions – Why?” http://www.old-yankee.com/blog/decline-of-unions

[4]       Cassidy, J., 6/8/12, “America’s class war,” The New Yorker

[5]       About.com Economics, retrieved 7/1/12, “The decline of union power,” economics.about.com/od/laborinamerica/a/union_decline.htm

[6]       Wikipedia, retrieved 7/2/12, “Criticism of Walmart,” en.wikipedia.org/wiki/Criticism_of_Walmart

[7]       Wikipedia, retrieved 4/23/12, “Labor unions in the United Sates,” en.wikipedia.org/wiki/Labor_unions_in_the_United_States

[8]       Reich, R., 6/14/11, “Why the Republican war on workers’ rights undermines the American economy,” robertreaich.org

[9]       Johnson, D., 9/1/10, “How companies turn people against unions,” Campaign forAmerica’s Future

[10]     Macaray, D., 1/10/08, “Three big reasons for the decline of labor unions,” CounterPunch

[11]     Hunter, R.P., 8/24/99, “Four reasons for the decrease in union membership,” http://www.mackinac.org

[12]     Fischer, C., 9/11/10, “Why has union membership declined?’ Economist’s View

THE ROLE OF LABOR UNIONS

Here’s issue #37 of my Policy and Politics Newsletter, written 6/28/12. Labor unions have been in the news quite a bit lately. This issue focuses on the role of unions in our society and economy.

Labor unions allow workers to approach employers as a group to discuss working conditions, pay, benefits, and other workplace issues. This affects the balance of power between workers and employers.

If you as an individual employee approach your employer about any of these issues, for example, receiving paid sick days if you currently had none, where does the balance of power lie? With the employer, of course. But if workers as a group approach the employer about such issues the balance of power is quite different.

Pay is probably the first item that comes to mind when thinking about employer – employee issues. There is lots of evidence that when employees are members of unions and bargain collectively on pay, they average 10 – 30% higher pay after controlling for other important variables. [1]

Employee pay is ultimately about how the profits of a business are divvied up among front-line or on-the-floor workers, senior executives and managers, and owners (which may be senior executives or stockholders). The balance of power among these groups affects how the rewards of the business are split. If workers participate in the discussion as a group, i.e., as members of a union, the result will be different, as indicated by hard evidence, common sense, and economic theory. Highly visible examples of this have been the negotiations between professional athletes and team owners in basketball most recently, but also in football, baseball, and hockey.

Therefore, it’s not surprising that as union membership in the private sector has dropped dramatically (from 34%in 1954 to 7% today [2]), income inequality has widened. Senior executives and stockholders have gotten much richer, while the rest of us have barely maintained our standard of living. The share of profits going to workers’ pay is the smallest it’s been since tracking began in 1947. [3]

This has not just increased in income inequality, but has undermined the middle class broadly. Union members’ pay and benefits used to set a standard in many sectors of the economy and to some extent for the economy as a whole. Non-union workers would receive similar compensation because there was competition in the job market, so companies with non-union workforces had to pay competitively to attract good workers. As union membership has declined, this is less of a factor in the job market and therefore there is downward pressure on wages and benefits.

The erosion in benefits has been very visible. Fewer and fewer workers have company managed pension plans, which were standard for union workers. And workers are paying more and more for their health care. Reductions in job security and increasing use of part-time workers are also partially the result of decreased union membership. Other issues that unions over the years have had an impact on are the length of the work week, overtime rules, availability of paid vacation and sick time, safety in the workplace (there are an estimated 58,000 workplace related deaths each year [4]), the minimum wage, unemployment and workplace injury compensation, how layoffs are handled, unfair or arbitrary actions by supervisors, and discrimination in hiring, pay, and promotions in the workplace.

Without or with weakened unions, union and non-union employees have less power and employers have more power. As a result, workers are likely to receive less pay, fewer benefits, and experience less desirable working conditions.

The next issue of the newsletter will address the reasons for the decline in private sector union membership.

[1]       Wikipedia, retrieved 4/23/12, “Labor unions in theUS,” en.wikipedia.org/wiki/Labor_unions_in_the_Unitede_States

[2]       Bureau of LaborStatistics,US Dept. of Labor, 1/27/12, “Union members – 2011”

[3]       Reich, R., 3/2/12, “Bye bye American pie: The challenge of the productivity revolution,” retrieved on 3/3/12 from www.commondreams.org/view/2012/03/02-6

[4]       Nader, R., 3/30/12, “If big labor would fight millions would join them on the ramparts,” retrieved at http://www.commondreams.org/view/2012/03/30-5

REGULATING THE BIG BANKS (Part 2)

Here’s issue #33 of my Policy and Politics Newsletter, written 5/31/12. The previous issue of the newsletter laid out the rationale and need for strong regulation of the six big banks that dominate the industry. It closed by noting that JPMorgan Chase’s recent multi-billion dollar loss from securities trading has re-focused attention on bank regulation. This issue of the newsletter takes a look at the response to the JPMorgan loss.

The over $2 billion trading loss at JPMorgan has strengthened support for the Volcker Rule, which bans speculative and risky proprietary trading by banks. It has reinvigorated the discussion about financial institutions that are “too big to fail.” The six biggest US banks are bigger now than they were before the recent financial collapse and have assets ($9.5 trillion) equal to 2/3 of the entire US economy. Many believe that the collapse of any one of them would trigger events that would cripple the US economy. Therefore, despite the provisions of the Dodd-Frank law that state there will be no future bailout, many find it hard to believe that a bailout wouldn’t happen because these huge banks truly are too big to fail. [1]

Opponents of stronger bank regulation will characterize the push for the Volcker Rule and splitting up the six big banks as an attack on successful businesses, business people, and the wealthy. But JPMorgan CEO Dimon’s own reputation disproves this. Until the current fiasco, he and his leadership at JPMorgan had been praised and celebrated. The call for strong regulation is not an attack on success or wealth, but on bad and unethical business practices, failures of risk management, greed, and bad judgment that harm the public good. [2]

Because of the historical inability of these banks to control risk, as was just demonstrated by the best of them, and because of the inability of government to effectively regulate, oversee, and hold accountable these extremely large, complex, and powerful financial corporations, many experts are arguing that breaking them up into smaller entities is the only real solution. These experts include four regional Federal Reserve presidents and the head of research at one of the regional Federal Reserve banks. [3]

One example of the power of these banks and the conflicts of interest that exist in our financial system is that JPMorgan CEO Dimon sits on the Board of the Federal Reserve Bank of New York. Among other responsibilities, it regulates and oversees JPMorgan and the other Wall Street banks. Many experts see this as a major conflict of interest and are calling on him to step down. For example, Simon Johnson (professor at MIT’s Sloan School of Management and former chief economist of the International Monetary Fund) says, “he should, under these circumstances, absolutely step down from that role. It’s completely inappropriate to have such a big bank represented in this fashion.” [4]

Our current recession and financial crisis were caused by bad risk management, unethical business practices, and greed at our large financial institutions coupled with a failure of government oversight, enforcement, and regulation. The result has been high unemployment, extensive loss of homes and home value, and large losses of revenue for governments at the federal, state, and local levels. The bailout of the financial industry and the steep loss of revenue due to the recession are major factors contributing to the large federal government deficit with which we are struggling.

The big banks are working hard to weaken and delay (if not prevent) the implementation of the Volcker Rule and support for it. I am amazed they have any credibility to lobby against regulation after the financial debacle and recession they just caused. Some of their supporters, including in Congress, appear to have an ideology that corporations can do no wrong and that there is no such thing as a good regulation. Others, I believe, are swayed by the large campaign contributions from the financial sector and the new potential of unlimited spending by it through Super PACs.

The Volcker Rule is needed to prevent proprietary trading losses, like the one just experienced at JPMorgan, from seriously impacting our banking system, our federal government, and our economy. It is one, critically important step in regulation and oversight of our financial system that is necessary to reduce and, hopefully eventually eliminate, the potential for too big to fail banks again requiring a taxpayer bailout and crashing our economy.

[1]       Moyers, B. & Johnson, S., 5/17/12, “Are JPMorgan’s losses a canary in a coal mine?” Common Dreams

[2]       Editorial, 5/15/12, “Dimon in the rough,” The Boston Globe

[3]       Rohde, D., 5/11/12,  “Break up the big banks,” Reuters

[4]       Moyers, B. & Johnson, S., see above

REGULATING THE BIG BANKS (Part 1)

Here’s issue #32 of my Policy and Politics Newsletter, written 5/29/12. JPMorgan Chase’s recent multi-billion dollar loss from securities trading has focused attention on the regulation of our large banks. This issue of my newsletter and the next one take a look at this issue.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in 2010. Its goal was to put an end to practices in the financial industry that led to the 2008 collapse of the financial sector and our economy.

One of its goals was to prevent speculative securities trading by banks that many equate to gambling with taxpayers’ money. This trading, called proprietary trading, enhances banks’ profits (when things go right) and senior managers’ bonuses, but do not benefit or serve bank customers. The Volcker Rule, named after former Chairman of the Federal Reserve (under Presidents Carter and Reagan), Paul Volcker, who proposed and supports it, is the specific piece of the Dodd-Frank law that bans such trading by banks. It would reinstate a key provision of the Glass-Steagall Act, put in place after the Great Depression but repealed in 1998, that required separation of banking from proprietary trading.

The reason for separating banking and proprietary trading is that banking is protected and supported by the federal government to ensure the safety of depositors’ money. Banks’ deposits are insured by the Federal Deposit Insurance Corporation (FDIC) and banks have access to very low cost funds from the Federal Reserve. Proprietary trading is speculative and risky, providing potentially big gains and big losses to the banking corporation and its executives. If a bank, while protected and supported by the government, is allowed to engage in proprietary trading, this amounts gambling with taxpayers’ money. [1] And as we have just experienced, banks that are “too big to fail” will receive bailouts using taxpayer funds if their bets go bad.

During the process of writing the Dodd-Frank law, and now during the writing of regulations to implement the law, including the Volcker Rule, the financial industry from Wall Street has worked tirelessly to water down, delay, complicate, and confuse the process. [2] Using legions of lawyers and lobbyists, large campaign contributions, media campaigns, and friends in Congress and the Executive Branch (some who have traveled through the revolving door of moving between financial industry and government jobs), Wall Street works to add provisions and loopholes that complicate the result, and to undermine support for reform. Those working to create solid regulation and limitations try to write provisions that allow reasonable activities but close loopholes, knowing that after the fact the financial institutions will exploit any loopholes they can find.

The Volcker Rule’s ban on proprietary trading by banks only significantly affects the six biggest banking corporations, [3] as they are the ones who engage in extensive proprietary trading. Proprietary trading is not an essential banking activity and it creates a conflict of interest between the bank and its customers. The other 20 regional banks and 7,000 community banks are generally supportive of the Volcker Rule but find it “impossible … to challenge” the six big banks on this issue. The Volcker Rule is scheduled to go into effect in July 2012, but the banks have managed to get a two year delay and will have until 2014 to comply. [4] Two of the six big banks, Goldman Sachs and Morgan Stanley, got their banking licenses during the recent financial crisis specifically to reassure their depositors that their deposits were protected by the FDIC and to get access to support from the Federal Reserve. [5]

The recent $2 billion plus proprietary trading loss at JPMorgan Chase really grabbed everyone’s attention because JPMorgan is touted as having the best risk management in the industry. Its highly regarded CEO, Jamie Dimon, has been leading the charge against the Volcker Rule, claiming it is unnecessary. [6] If proprietary trading at JPMorgan in calm financial markets could result in such a big loss, many are wondering how great the current risk of huge losses at other banks might be, let alone what it would be when financial markets are more volatile.

The next issue of my newsletter will cover the response to this JPMorgan trading loss.

[1]       Silver-Greenberg, J., &Schwartz,N.D., 5/17/12, “JPMorgan losses reportedly up $1b,” The Boson Globe

[2]       Taibbi, M., 5/24/12, “How Wall Street killed financial reform,” Rolling Stone

[3]       The six biggest banks are JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley. They average $1.6 trillion in assets.

[4]       Rohde, D., 5/11/12,  “Break up the big banks,” Reuters

[5]       Moyers, B., with Volcker, P., 4/5/12, “Gambling with your money,” Moyers & Company on National Public Radio

[6]       Gogoi, P., 5/15/12, “Dimon likely to face ire, not ouster at JPMorgan meeting,” The Boston Globe

INSIDE JOB: THE 2008 COLLAPSE OF US FINANCIAL FIRMS

Here’s issue #24 of my Policy and Politics Newsletter, written 3/23/12. Last week, I finally watched the movie Inside Job, a documentary on the 2008 collapse of US financial firms that caused our current recession. I highly recommend it. Here are some highlights.

The movie Inside Job documents how the deregulation of the financial industry over the last 30 years has led to three financial crises, each of increasing severity. These three crises were the Savings and Loan (S&L) crisis of the late 1980s, the Internet stock bubble burst of 2000-2001, and the financial collapse of 2008.

The 2008 collapse was the worst of the crises and was largely caused by risky and fraudulent practices in the mortgage industry and by financial firms’ packaging of mortgages into securities that were sold to investors. These practices had fueled a bubble in the housing market – unwarranted price increases and over-building – that then caused a dramatic decline in house prices. This resulted in millions of mortgage defaults and foreclosures, and an economic recession – often called the Great Recession – that is the worst since the Great Depression of the 1930s. The losses in households’ wealth, primarily in housing and investment assets, exceed $14 trillion. Tens of millions of homeowners, who had significant equity in their homes in 2007, now have little or nothing. It is estimated that homeowners who owe more on their mortgages than their homes are worth – who are “underwater” – owe $700 billion more than their homes are worth. [1]

Inside Job documents that despite warning signs former Federal Reserve Board Chairman Alan Greenspan, Treasury Secretaries Lawrence Summers and Henry Paulson, and SEC Chairman Arthur Levitt (among others) vehemently opposed any regulation of complex financial instruments known as “derivatives” (because they are “derived” from other financial instruments such as mortgages). They blocked efforts of the Commodity Futures Trading Commission under the leadership of Brooksley Born to regulate derivatives. By the late 1990s, the unregulated derivatives market involved $50 trillion of securities and was (and is) described by many as legalized gambling.

The movie notes that an orchestrated campaign by Wall St. and its lobbyists for deregulation of the financial industry, along with the incestuous revolving door which had formerWall St. executives in senior positions in government, succeeded in creating widespread support for deregulation. Greenspan, Summers, Paulson, and other senior government officials, as well as many in Congress, supported deregulation. This led to:

  • The 1999 repeal of the Glass–Steagall Act of 1933, passed in the aftermath of the Great Recession, which had required the separation of Wall Street investment firms and their risky investments from banks to reduce the risks that banks and their depositors would need a government bailout
  • Staff cuts at the Securities and Exchange Commission (SEC), which oversees our financial markets
  • Financial firms being allowed to decrease their reserves that protect against bankruptcy to as little as 3% of their assets, increasing the risk of the need for a taxpayer bailout
  • Academic economists supporting deregulation and downplaying risks
  • Specific warnings about high levels of risk being ignored
  • Credit rating agencies (e.g. Standard & Poor’s) covering up the risks of mortgage-related derivatives

The mortgage industry pushed unaffordable, sub-prime mortgages on unwitting customers because it received higher fees for them. Then, financial firms packaged these mortgages into derivatives and sold them as safe investments when the firms knew they were risky – and often made side bets that underlying mortgages would go into default and that the derivatives would decline in value.

The next issue of my newsletter will provide more context and some follow-up on the 2008 financial collapse, including steps to take to reduce the likelihood of another financial crisis. Unfortunately, it is not at all clear that Congress and the regulators will take these steps.

[1]       Wikipedia, retrieved 3/21/12, “Late-2000s recession,” http://en.wikipedia.org/wiki/Late-2000s_recession

CORPORATE POWER (Part 3): LOBBYING AND THE REVOLVING DOOR

Here’s issue #23 of my Policy and Politics Newsletter, written 3/15/12. This issue examines how corporations influence our government and its policies through lobbying and the “revolving door.”

Corporate influence on government actions and policies occur through campaign contributions (see Newsletters #13 – 17), lobbying, and the “revolving door” where personnel often cycle back and forth between working in government and working for a corporation for which they had an oversight responsibility in their government position.

Lobbying and the revolving door are two key pieces of the puzzle of how corporations have such strong influence. Corporate personnel and their lobbyists build strong personal relationships with Congress people, their staffs, and government agency personnel. Here are examples of how these relationships are built and operate:

  • Corporations, their executives, and their lobbyists:
    • Provide electoral support to Congress people through campaign contributions, solicitation of donors, political action committees (PACs), and Super PAC expenditures.
      • $3.4 billion in campaign contributions between 2007-2010 (see Newsletter #17)
      • $774 million in 2010 from 26,783 wealthy individuals (see Newsletter #14)
    • Provide information and persuasionto Congress people, their staffs, and government agencies, through lobbying, including expertise, position papers, and draft legislation.
      • $3.3 billion in total lobbying expenditures in 2011 with 12,633 registered lobbyists, over 23 lobbyists per member of Congress [1]
      • $476 million spent on lobbying by 30 large corporations between 2008 and 2010 [2]
    • Go to work for Congress or government agencieswhere they have power and influence, which may benefit, directly or indirectly, their previous employer.
      • Obama’s 3 chiefs of staff all previously worked in the financial sector: Jacob Lew at Citigroup, Bill Daley at JPMorgan Chase, and Rahm Emmanuel at Wasserstein Perella [3]
      • Treasury Secretary Tim Geithner is the former head of the Federal Reserve Bank of NY. Hank Paulson, head of Goldman Sachs, was Treasury Secretary under Bush and Robert Rubin, co-chairman of Goldman Sachs, was Secretary under Clinton. Other Treasury Secretaries in these administrations were the CEO of CSX Corp. and the CEO of Alcoa. [4]

On the other side of the revolving door, people leave government positions and go to work for the corporations (or their lobbying firms) that they oversaw or regulated while in government. As a result of all these relationships and interconnections, corporations receive:

  • Friendly legislation from Congress such as laws governing corporate practices, regulation, taxes, competition, trade, etc.
  • Accommodating regulations and oversight from government agencies and even outright support at times, such as the recent bailout of financial firms.
  • Inside information. For example, multiple sources document multiple instances where Treasury Secretary Paulson shared inside government information with his former employer, Goldman Sachs. [5]

There are many, many examples of the results of corporate influence on government actions and policies; a few have been highlighted in previous newsletters:

  • Failure to regulate speculation in oil and gasoline markets (see Newsletter #22)
  • Lax regulation and oversight of the financial industry (see Newsletters #21 and #19)
  • Low effective tax rates for many corporations (see Newsletter #2) and low tax rates for high income individuals (see Newsletters #21, #8, and #7)
  • Failure to regulate health threats such as mercury emissions and the use of antibiotics to enhance growth of healthy farm animals (see Newsletter #20)
  • High levels of spending that benefit corporations such as military contractors and that seem impossible to cut (see Newsletter #5)

These are only highlights and examples of corporate influence; future newsletters will highlight others, but the full story takes books to tell and involves many corporations and industries. The outsized influence corporations wield in our democracy was of great concern and impact before the Citizens United decision, which now allows unlimited corporate spending in our election campaigns. With unlimited corporate campaign spending now unleashed, our democracy, and government of, by, and for the people, is truly at risk.

[1]       The Center for Responsive Politics, retrieved 3/7/12, “Lobbying database,” http://www.opensecrets.org/lobby/index.php

[2]       Public Campaign, Dec. 2011, “For hire: Lobbyists or the 99%? How corporations pay more for lobbyists than in taxes,” publicampaign.org/reports/forhire

[3]       Moyers, B., & Winship, M., 1/24/12, “The Washington – Wall Street revolving door just keeps spinning along,” http://www.commondreams.org/view/2012/01/24-3

[4]       Wikipedia, retrieved 3/13/12, “US Secretary of the Treasury,” en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury

[5]       Moyers and Winship, see above

CRONY CAPITALISM AND WINNER TAKE ALL POLITICS

Here’s issue #21 of my Policy and Politics Newsletter, written 2/29/12. This issue will begin to link the issues of corporate power, great inequality of income and wealth, and campaign finance. It is a bit long, as it is a summary of the first three shows of Bill Moyers’ return to public TV.

In case you haven’t heard, Bill Moyers is back on public television. (In theBostonarea, he’s on Sunday at 4:00 on channel 2. Or you can do what I do, download the podcasts from billmoyers.com or other sources.)

His first show back on (Jan. 13) was on Winner Take All Politics, the title of a recent book by Hacker and Pierson, whom Moyers interviews. The book and show document that the huge income disparity in the US (see issue #4 of my newsletter) is, in large part, the result of government policies over the last 30 years. Although globalization, technological change, and other changes in our economy have been factors, the real culprit is our public policies and how they have responded to these challenges. Other countries face these same challenges but have not experienced the dramatic increase in inequality that has occurred in theUS.

Over the last 30 years, the top income tax rate has been reduced from 70% to 35% (see issue #7 of my newsletter) with even lower rates for unearned (i.e., investment) income. As we’ve heard recently, multi-millionaires like Presidential candidate Romney are paying less than 15% of their income in taxes. If you were making around $20 million a year as he is, every one percentage point reduction in your tax rate puts $200,000 in your pocket. And with your tax rate cut in half, you are saving $3 million or more a year, or over $90 million over the last 30 years. Specifically, the Bush tax cuts of the early 2000s have given $50 to $100 million to each of the 400 richest Americans over the last 10 years.

This sets up a reinforcing cycle as some of these riches are funneled back into our political system through campaign contributions and Super PACs, further increasing the influence of the well-off and getting them favorable treatment. In addition, the lobbying capacity of the corporations and very rich has grown, while that of the middle class, particularly unions, has shrunk, further expanding the gap in political power and influence.

Hacker and Pierson note that politicians have learned that they can get re-elected despite ignoring or only giving symbolic support to the middle class, while moving the agenda of the corporations and very rich forward.

On Moyers’ second show (Jan. 20), David Stockman, President Reagan’s budget chief, was a guest. Stockman is writing a book entitled The Triumph of Crony Capitalism. He defines crony capitalism: using political power such as campaign contributions and lobbying to get returns that can’t be gotten in the market. He states that in theUS we do not have free market capitalism or democracy, but crony capitalism.

Stockman believes that we need to re-institute and strengthen the separation of the investment business and its risks from the banking system, as was in place prior to 1999 under a law called Glass-Steagall. Otherwise, he predicts that we will have recurring economic crashes. He says that financial institutions that are too big to fail are too big to exist and he advocates for banning corporate money from our political system and capping all campaign contributions at $100.

Moyers’ third show (Jan. 27) was with John Reed, who retired as CEO of Citigroup in 2000 after presiding over the merger of Citibank with Travelers Insurance. This merger led to and actually required the repeal of the Glass-Steagall law. The mantra at the time was that the new, enhanced financial system could handle the increased risk better than before and therefore repealing the separation of banking from the investment business wouldn’t be a problem. There was an extensive public relations and lobbying campaign to deliver this message, which ultimately skewed almost everyone’s thinking about this deregulation.

Reed, in retrospect, says that it’s amazing that everyone was so wrong and that the system as a whole went so far off the tracks that it caused the great recession we are now experiencing. He states that this was the result of crony capitalism between Wall Street executives andWashington politicians.

In other countries, including Canada, the crisis in the financial institutions wasn’t nearly as bad as here in the US. Our financial deregulation allowed financial institutions (including banks) to take great risks and to provide huge rewards to their people, an important part of our income and wealth inequality. And ultimately, these institutions and individuals did not bear the risk when things went wrong; the government and the public bailed them out.

Reed calls for re-regulation of the financial system, noting that regulations are need so that appropriate risks can be taken. He makes the analogy that cars have brakes (regulation) so that we can drive fast (take risks), but control our speed as needed. If cars did not have brakes, we’d all drive only very slowly. He is amazed that those lobbying against re-regulation and strengthening of oversight of financial institutions have any credibility given the crash they caused with deregulation. He notes that when corporations and the wealthy can buy the rules (or lack thereof), the situation is unstable.

One person who loudly warned of the dangers and, as Glass-Steagall was being repealed in 1999, predicted that in 10 years we would all come to realize that a big mistake was being made, was Senator Byron Dorgan of North Dakota. He noted that the deregulation was designed by those with a self-interest and that the complex securities, i.e. “derivatives,” that have been created are casino gambling with trillions and trillions of dollars. He states that the Dodd-Frank re-regulation law, which is being heavily lobbied against by Wall Street, is too weak to prevent the next collapse.

Another Moyers guest was Gretchen Morgenson of The New York Times who has written a book entitled Reckless Endangerment. She noted that there have been no meaningful penalties for the individuals or institutions that caused the collapse of the financial system and no one has gone to jail. Furthermore, the same people who drove the ship into the iceberg are still in leadership roles on Wall Street and in the federal government.

Moyers closes by calling the Supreme Court’s Citizens United decision, which allows unlimited spending by corporations in our political campaigns, “grotesque,” stating that it corrupts our political system and means that those with no (or little) money have no speech. He calls Winner Take All Politics immoral and notes that we have experienced a deep undermining our democratic institutions.

He cites a sign he saw at Occupy Wall Streetas telling it like it is: “The system isn’t broken, it’s fixed.”

I encourage you to listen to the podcasts of these three shows. They are 52 minutes each and will provide you the richness and depth that I can’t in this summary.

CORPORATE POWER (Part 2): HEALTH IMPACTS

Here’s issue #20 of my Policy and Politics Newsletter, writtten 2/26/12. The last issue looked at the mortgage foreclosure settlement that was very favorable for the corporations involved. Here are some different examples of corporate interests trumping the greater good.

Corporations frequently find ways to avoid costs and risks, while maximizing profits and paying huge amounts to corporate executives. These include avoiding paying for the costs of impacts on the environment and on public health.

One example is air pollution that is bad for health. Another is the use of antibiotics in animals for non-medical reasons (they grow more quickly) that jeopardizes public health.

The Environmental Protection Agency recently issued standards for the release of mercury into the air by power plants. As you probably know, mercury, even at very low levels, harms brain and nervous system development in young children and fetuses. More than 300,000 children are born each year with exposure to unsafe levels of mercury. Because airborne mercury accumulates in fish, pregnant women are advised to avoid eating many types of fish.

These regulations have been delayed for 20 years by corporate power, through campaign contributions, lobbying, and inside influence. The utility companies and their allies in Congress are continuing to try to block them today. A cost-benefit analysis shows that the public benefits are huge, $90 billion per year is a very conservative estimate, and the costs relatively small, $10 billion per year in slightly higher electricity costs. Despite this, the companies claim the regulations would kill jobs, disrupt electricity supplies, and lead to soaring electricity rates. These are the same arguments they made when acid rain regulations went into effect and none of these things happened. [1]

In a similar situation, the US Food and Drug Administration recently dropped plans to regulate the use of human antibiotics in animal feed. Livestock consume roughly 80% of the antibiotics sold in the US. This practice contributes to the presence of drug resistant bacteria. This problem was first identified in 1977 and it was recommended then that approval for the non-therapeutic use of penicillin and tetracycline be rescinded, but no action has been taken. The European Union has banned the use of antibiotics in animal feed for healthy animals. Many scientific and medical organizations have called for similar action by theUS, including the American Medical Association, the Infectious Diseases Society of America, the Pediatric Infectious Disease Society, and the World Health Organization.

Over 100,000 Americans die each year from bacterial infections and 70% of these involve bacteria resistant to the commonly used treatment drugs. Last summer over 36 million pounds of turkey was recalled after it was found to contain drug resistant salmonella. Outbreaks of disease from drug resistant E.coli have also occurred in the last year. [2]

These two are particularly egregious examples of corporate interests trumping public health. Other examples will be presented in future newsletters along with examination of the ways corporations obtain and wield this kind of influence and power, for example through campaign contributions, lobbying, and the revolving door where public officials move between government positions and positions working for or with corporations.

[1]       Krugman, P., 12/26/11, “Springtime for toxics,” The New York Times

[2]       McVeigh, K., 12/29/11, “FDA draws criticism after U-turn on antibiotics in animal feed,” The Guardian

CORPORATE POWER (Part 1): THE MORTGAGE FORECLOSURE SETTLEMENT

Here’s issue #19 of my Policy and Politics Newsletter, written 2/20/12. The last issue looked at Supreme Court decisions that favor corporations. Here’s an example of a legal settlement that favors corporations.

You’ve probably heard about the recent $26 billion settlement of the mortgage foreclosure fraud case against 5 large financial institutions: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial. This settlement, agreed to by 49 of the 50 states, is for foreclosures that occurred fraudulently, without proper documentation or where it was unclear that the institution foreclosing on the homeowner was the owner of the mortgage and had the legal right to foreclose. (This settlement has nothing to do with the creating of risky and fraudulent mortgages or the selling of them to investors as high quality investments, which are the two key elements of the financial fraud that crashed our financial system in 2008 and caused our current recession.)

Although $26 billion sounds like a lot, it isn’t very much when viewed from the perspective of these 5 companies’ $425 billion in revenue in 2010 and their $39 billion in profits (even though they hadn’t fully recovered from the financial collapse they and others created). Furthermore, they are only actually paying $5 billion. The other $21 billion comes from reducing the amount owed (principal) on mortgages where homeowners owe more than their house is worth. These costs will be borne largely by the investors who bought the mortgages or by the government’s Making Home Affordable Modification Plan that subsidizes principal reductions by banks. This latter piece means that we, the taxpayers, are again bailing out these banks! [1] [2]

If you were illegally foreclosed on by one of these 5 companies and have lost your home, you will get between $1,500 and $2,000. This doesn’t seem like much compensation for the trauma you’ve experienced! Looking at it another way, this settlement sets the penalty for forgeries and fabricating documents at a maximum of $2,000 per loan. [3]

Some other points that help put the $26 billion settlement in perspective: [4]

  • Financial institutions, including these 5, received a $700 billion bailout and $1.2 trillion in low cost loans from the Federal Reserve to keep them afloat when they crashed our financial system.
  • The federal government’s track record of enforcing consent decrees in settlements such as this one is poor. In consent decrees, companies, without admitting guilt, state that they won’t engage in specific illegal activities in the future. In the current settlement, there is essentially no penalty for Countrywide Mortgage (now owned by Bank of America) for failing to comply with a previous consent decree over some of the same practices.
  • This settlement has been reached before there has been a full investigation of what occurred. The President just announced a new federal task force to investigate the financial sector in his State of the Union speech. It may uncover more extensive or egregious fraud than is currently known.

In this settlement of “this remarkable fraud that the banks and the [mortgage] servicers have created … the only big losers are the taxpayers and, of course, the homeowners.” [5] This is a “raw demonstration of who wields power in America.” [6]  This is a great deal for the companies because no one is going to jail and the $5 billion cost may well be less than what it would have cost them to do things right in the first place. Hence, they can simply view this $5 billion as a cost of doing business.

This settlement is an example of corporations getting off easily, while people suffer. One piece of this is the not unusual practice of corporations, without admitting guilt, consenting not to engage in illegal activity in the future. As occurred here with Countrywide, there is typically little enforcement when they engage, again, in similar illegal activity. As is the case with this settlement, financial penalties are typically small and provide no significant disincentive for engaging in illegal activity.

Future newsletters will examine other examples of corporate interests trumping the greater good and ways corporations obtain and wield influence and power. One way, which has been documented in past newsletters, is through the substantial investments the business community makes in our public officials through campaign contributions.

[1]       Common Dreams staff, 2/17/12, “Mortgage settlement ‘whitewash’: US taxpayers will pay for big bank settlement, mortgage deal or not; abusive foreclosures continue,” http://www.commondreams.org/headline/2012/02/17-0

[2]       Levitin, A., retrieved 2/17/12, “The servicing settlement: Banks 1, public 0,” http://www.creditslips.org/creditslips/2012/02/the-servicing-settlement-banks-1-public-0.html

[3]       Smith, Y., 2/16/12, “The top twelve reasons why you should hate the mortgage settlement,” Naked Capitalism

[4]       Bond, B., 2/10/12, “A bad deal,” Credo Action

[5]       Common Dreams staff, see above

[6]       Smith, Y., see above