THE AFFORDABLE CARE ACT PART II

ABSTRACT: Other than the individual mandate (see 8/19 post), the biggest focus of resistance to the Affordable Care Act (ACA) has been the expansion of Medicaid, the health insurance program for low income individuals. If all states implement the Medicaid expansion called for by the ACA, over 21 million individuals, including 4.5 million children, who don’t have health insurance will gain coverage.

The resistance has been based on the assertion that the expansion will cost states money. However, for the first three years, the federal government will pay 100% of the cost and at least 90% thereafter. Because the newly covered individuals would have cost the states about $18 billion for uninsured, uncompensated care, overall the states will save $10 billion.

Republican Governors and state legislators, looking for a symbolic and substantive way to express their opposition to the ACA, have taken steps to refuse to participate in the Medicaid expansion, refusing significant federal funding. As a result, nationwide, hundreds of thousands of low-income residents will not receive health insurance.

FULL POST: Other than the individual mandate (see 8/19 post), the biggest focus of resistance to the Affordable Care Act (ACA) has been the expansion of Medicaid, the health insurance program for low income individuals paid for jointly by the states and the federal government. If all states implement the Medicaid expansion called for by the ACA, over the next 10 years over 21 million individuals, including 4.5 million children, who don’t have health insurance will gain coverage. But when the Supreme Court upheld the overall ACA, it ruled that states couldn’t be required to participate in the expansion of Medicaid included in the law.

Aside from the political opposition, the resistance has been based on the assertion that the expansion will cost states money. However, for the first three years the federal government will pay 100% of the cost and at least 90% thereafter. Over 10 years, it is estimated that if all states implement the expansion, they would spend an additional $8 billion, which would be a 0.3% increase over their spending without the expansion. Furthermore, because the newly covered individuals would have cost the states about $18 billion for uninsured, uncompensated care, overall the states will save $10 billion. There may be other savings to states from the implementation of the ACA as well, although the impact will vary by state. [1]

Republican Governors and state legislators, looking for a symbolic and substantive way to express their opposition to the ACA, with encouragement from the Tea Party and other staunch Obama opponents, have taken steps to refuse to participate in the Medicaid expansion, refusing significant federal funding. As a result, nationwide, hundreds of thousands of low-income residents will not receive health insurance, despite the fact that there would be no cost to the states for 3 years and a 10% maximum share of the cost after that. In some states, such as Florida, after a hard look at the numbers and some grassroots activism, Republican elected officials have reversed their original stand and have decided to participate. However, New Hampshire, for example, currently is refusing to participate. This means that 58,000 low-income residents will not receive health insurance and, for many of them, it will likely mean they don’t get care they need. [2]

Republicans, and especially Tea Partiers, are making wild claims about how Obama Care will hurt small businesses and the economy. These claims have been soundly refuted as false by independent groups such as FactCheck.org and PolitiFact.com. The latter notes that economists generally believe that the federal budget cuts due to the sequester have done much more harm to the economy.

Undoubtedly, there will be bumps in the road during implementation of the Affordable Care Act. There always are challenges in implementing complex legislation, and the ACA was made more complex by the compromises Obama made in trying to get Republican support, which they then never gave to him or to the law.

Although it is too soon to know for certain, the bottom line is likely to be that the Affordable Care Act will provide very significant benefits to those who don’t have health insurance and get it, and that there are likely to be real benefits for those who already have health insurance as well. Most experts believe that states that are focused on making the ACA work will see good results. But that in states that work to undermine the law the results will not be good. [3] For example, some states are refusing to set up the exchanges to help the uninsured buy coverage and some are refusing to provide information to help residents make informed decisions on which plan to buy. Elected officials in these states are likely to then say, “See it doesn’t work!” The sad thing about this self-fulfilling prophecy is that it will be the residents of those states who will suffer with no, or less effective, health insurance and probably worse health.

[1] Holahan, J., Buettgens, M., Carroll, C., & Dorn, S., 11/1/12, “The cost and coverage implications of the ACA Medicaid expansion: National and state-by-state analysis,” The Urban Institute and the Kaiser Commission on Medicaid and the Uninsured (http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8384_es.pdf)

[2] Editorial, 8/7/13, “GOP stance against Obamacare hurts thousands of NH families,” The Boston Globe

[3] Lehigh, S., 8/14/13, “The GOP’s Obamacare whale hunt,” The Boston Globe

THE AFFORDABLE CARE ACT PART I

ABSTRACT: As implementation of another key piece of the Affordable Care Act (ACA) (also known as Obama Care) approaches, the information and disinformation in the media and from the opposition builds. On January 1, 2014, the “exchanges” – where individuals can purchase health insurance if they don’t have it – will begin operation. On October 1, 2013, individuals can beginning selecting the health insurance plans they want to enroll in.

No one disputes that if the ACA is implemented as intended roughly 30 million Americans will have health insurance who don’t have it now. From a worldwide perspective, the US has the most expensive health care system but ranks 37^th in overall health outcomes. Nearly 45,000 deaths annually are associated with not having health insurance.

From the first days of the Congressional debate on the ACA, its supporters have done a horrible job of presenting its benefits: millions already have better health insurance, $7 billion has been saved by those with health insurance, lifetime caps on benefits are prohibited, and denying coverage for pre-existing conditions will be banned.

The primary target of the opposition has been the individual mandate, which originally was promoted by the conservative Heritage Foundation and Republicans as part of personal responsibility. However, once Obama adopted the individual mandate as part of the ACA, it became anathema to Republicans. The Republicans’ focus on repealing, obstructing, and undermining the ACA has been described by Norm Ornstein, a long-time political scientist at the conservative American Enterprise Institute, as “monomaniacal.” He went on to write, “What is going on now to sabotage Obamacare is not treasonous – just sharply beneath any reasonable standards of elected officials with the fiduciary responsibility of governing.”

FULL POST: As implementation of another key piece of the Affordable Care Act (ACA) (also known as Obama Care) approaches, the information and disinformation in the media and from the opposition builds. On January 1, 2014, the “exchanges” – where individuals can purchase health insurance if they don’t have it – will begin operation. On October 1, 2013, individuals can beginning selecting the health insurance plans they want to enroll in.

There has been good news on the cost of the new plans to be offered through the exchanges: so far 5 states’ plans will cost less than expected. Where the plans cost more than current options, it is often because they provide more comprehensive coverage than current insurance, where coverage has often been narrowed to reduce costs and increase profits.

To put all of this in some context, no one disputes that if the ACA is implemented as intended roughly 30 million Americans will have health insurance who don’t have it now. Further, many of us who have health insurance will get better and, in many cases, more affordable coverage. From a worldwide perspective, the US has the most expensive health care system (at over $8,300 per person) but ranks 37^th in overall health outcomes, and worse for infant mortality and life expectancy. And we have the most people without health insurance. In the US, nearly 45,000 deaths annually are associated with not having health insurance. [This estimate takes into account the effects of the education level, income, health behaviors (for example smoking and drinking), and baseline health (for example, obesity) of those who don’t have insurance.] [1]

From the first days of the Congressional debate on the ACA, its supporters have done a horrible job of presenting its benefits, including: [2]

3 million young adults up to age 26 have had health insurance because they could continue to be covered by their parents’ health insurance
13 million Americans with insurance have received $1 billion in rebates because their insurance companies spent more than is allowed under the ACA on expenses other than health care (for example, administration and advertising)
54 million Americans have gotten free access to preventive services, such as checkups and cancer screenings
6 million seniors have saved over $6 billion on their prescription drugs
Lifetime caps on benefits are prohibited (Isn’t the whole purpose of insurance to cover catastrophic losses? At least that used to be the case before the profit motive took over.)
Denying coverage for pre-existing conditions or denying renewal of an insurance policy when a health condition or accident occurs will be banned

The primary target of the opposition, particularly from the Tea Party types, has been the individual mandate – the requirement that everyone have health insurance or pay a penalty. Historically, the individual mandate was promoted by the conservative Heritage Foundation and Republicans as part of personal responsibility, i.e., being self-reliant and not depending on government or others for support. Democrats and progressives were cool to the idea because they were concerned that it would pose a burden on lower income families and individuals. The individual mandate was a centerpiece of the Republican alternative to the universal health care proposed by President and Hillary Clinton. And it was the centerpiece of Massachusetts’ universal health care law that Republican Governor Mitt Romney spearheaded and was so proud of (when he was Governor).

However, once Obama adopted the individual mandate as part of the ACA, it became anathema to Republicans. Ironically, as the Tea Party holds town hall forums and rallies today, the headline speaker against the ACA and the individual mandate is often Jim DeMint, the President of the Heritage Foundation, despite it having been the original promoter of the individual mandate. [3]

The Republicans’ focus on repealing, obstructing, and undermining the ACA has been described by Norm Ornstein, a long-time political scientist at the conservative American Enterprise Institute, as “monomaniacal.” The US House has voted 40 times to cut funding or repeal all or part of the ACA, knowing full well that it was a waste of time and effort given that the Senate would never pass such legislation and that the President would veto it and there weren’t the votes to override a veto. (This is one reason why Congress over the last 2 ½ years has been the least productive it’s been in the 75 years that records have been kept.)

Ornstein notes the contrast with President George W. Bush’s Medicare prescription drug plan. The Democrats, led by Senator Ted Kennedy, negotiated a compromise bill with the President. (Something Republicans refused to do with Obama on the ACA.) Then Republicans in Congress removed all of the provisions Kennedy and the Democrats had negotiated for and passed the stripped down legislation. Nonetheless, Democrats worked with Republicans and the Bush administration to make the law work.

In contrast, to undermine the ACA, Republicans refused for 3 years to confirm anyone to head the Center for Medicare and Medicaid Services, which was responsible for implementing the ACA, as it had been for the Bush Medicare drug plan. In addition, they have worked to discourage states from participating in the Medicaid expansion and the exchanges where the uninsured would obtain insurance. They are now threatening to shut down the entire government on September 30 when the fiscal year ends unless Obama stops all implementation of the ACA.

Ornstein went on to write, “What is going on now to sabotage Obamacare is not treasonous – just sharply beneath any reasonable standards of elected officials with the fiduciary responsibility of governing.” [4]

[1] Cecere, D., 9/17/09, “Uninsured, working-age Americans have 40 percent higher death risk than privately insured counterparts,” Harvard Gazette

[2] Favreau, J., 7/11/13, “The GOP is terrified Obamacare could be a success,” The Daily Beast (http://www.thedailybeast.com/articles/2013/07/11/the-gop-is-terrified-obamacare-could-be-a-success.html)

[3] Lehigh, S., 8/14/13, “The GOP’s Obamacare whale hunt,” The Boston Globe

[4] Light, J., 7/25/13, “Obstructionism for the recordbooks,” Moyers & company (billmoyers.com/2013/07/25/obstructionism-for-the-recordbooks)

LARGE FINANCIAL CORPORATIONS CONTINUE ILLEGAL ACTIVITY

ABSTRACT: The large US financial corporations, whose illegal and unethical activities caused the 2008 financial crash and recession, continue to engage in a wide variety of illegal activity. Clearly, the fines and penalties they’ve paid to-date, although hundreds of millions of dollars, haven’t been sufficient to deter them. Or they are so large and so impossible to manage that they are just out of control. The only way to reduce the risk to our financial system and economy, and to stop these illegal activities, is to break them up and institute much tighter regulation.

Their past behavior includes fraudulent creation of mortgages and the fraudulent packaging and selling of risky mortgage-backed securities, fraudulent foreclosures on home owners, manipulation of interest rates in multiple settings, money laundering for criminals and countries under international sanctions, and out-of-control speculative trading. Despite this, it doesn’t look like any senior managers will be charged with criminal activity.

More recently uncovered activities include speculation in and manipulation of commodities markets that costs consumers billions, fraudulent debt collection practices, and the selling of inappropriate securities to, among others, elderly investors seeking secure investments.

These are highlights of what we know about, and, therefore, are the tip of an iceberg of unknown size. The executives who profit (through pay, bonuses, and stock options) from these criminal and unethical activities currently have no reason to stop committing or allowing them.

The variety of illegal activities, the involvement of literally all the large financial corporations, and the scale of the impact on our economy and us individually is breathtaking. We need better laws and regulation overseeing these large financial institutions. See my posts of 8/6 and 8/4 for steps that are needed to move in that direction, including petitions of support you can sign.

FULL POST: The large US financial corporations, whose illegal and unethical activities caused the 2008 financial crash and recession, continue to engage in a wide variety of illegal activity. Clearly, the fines and penalties they’ve paid to-date, although hundreds of millions of dollars, haven’t been sufficient to deter them. Or they are so large and so impossible to manage that they are just out of control. In either case, they present a significant risk for another financial collapse, another possible bailout, and another recession. The only way to reduce the risk to our financial system and economy, and to stop these illegal activities, is to break them up and institute much tighter regulation. This is what the 21^st Century Glass Steagall Act, recently proposed in the US Senate (see post of 8/6/13), and the Dodd-Frank Act (if appropriately implemented) would go a long way toward doing.

You probably remember the fraudulent creation of mortgages and the fraudulent packaging and selling of risky mortgage-backed securities as “safe” investments. These activities were key contributors to the 2008 financial system collapse. You may remember that these same handful of corporations engaged in fraudulent foreclosures on home owners, manipulation of interest rates in multiple settings, money laundering for criminals and countries under international sanctions, and out-of-control speculative trading (which cost JPMorgan $6 billion in early 2013). Many of these activities are still under investigation with penalties still to be finalized, but it doesn’t look like any senior managers will be charged with criminal activity. (In the Savings and Loan crash of the late 1980s, which was less than one-tenth the size of the 2008 crash, over 1,000 senior managers were convicted of felonies.) (See posts of 8/29/12 and 7/12/12 for more detail.)

Here are some other examples of illegal or unethical behavior by the large financial corporations that have come to light more recently.

Their speculation in and manipulation of commodities markets costs consumers billions. This includes oil and gasoline (see post of 3/5/12 for more detail), electricity, aluminum, wheat, cotton, coffee, and other commodities. [1] In the last year, US regulators have accused three financial corporations of manipulating electricity prices, including JPMorgan, which recently agreed to a $410 million settlement. [2][3]

In the commodities market for aluminum, Goldman Sachs and others make millions in profits that end up costing consumers many times that. Using special exemptions from the Federal Reserve and relaxed regulations approved by Congress, the large financial corporations have purchased much of the infrastructure used to store and deliver aluminum (and other commodities) as they are traded on commodities exchanges. Three years ago, Goldman Sachs bought one of the largest firms storing and delivering aluminum; almost a quarter of the supply of 1,500 pound aluminum bars bought and sold on commodities exchanges is in its 27 warehouses (1.5 million tons). Goldman, over the last three years, has increased the delivery wait time for customers from an average of six weeks to roughly 70 weeks. This significantly increases the rent and fees paid to Goldman for the storage and delivery of the aluminum in its warehouses. [4][5][6]

JPMorgan and other big financial corporations are under investigation for their debt collection practices. It has recently come to light that their efforts to collect delinquent credit card debt have suffered from faulty or forged documents, improperly reviewed documentation, and failure to notify debtors of legal filings. These are some of the same practices that resulted in the lawsuits and settlements over improper home foreclosures! [7]

Morgan Stanley just settled claims that it sold inappropriate securities to, among others, elderly investors seeking secure investments. [8]

These are highlights of what we know about, and, therefore, are the tip of an iceberg of unknown size. The amounts of the fines and settlements sound large, but they’re just a cost of doing business when compared to the revenue and profits at these mega-financial corporations. (See post of 2/20/12 on the mortgage foreclosure settlement for an example with more detail.) Because shareholders and not corporate executives bear the cost of these settlements, and, furthermore, they are subsidized by us as taxpayers because they are typically considered a business expense (which reduces taxable income), the executives who profit (through pay, bonuses, and stock options) from these criminal and unethical activities have no reason to stop committing or allowing them. And the record shows they are continuing. [9]

[1] Kocieniewski, D., 7/21/13, “Aluminum shuffle is pure gold to the banks,” The Boston Globe (from The New York Times)

[2] Silver-Greenberg, J., & Protess, B., 8/8/13, “JPMorgan Chase faces civil, criminal inquiries,” The Boston Globe (from The New York Times)

[3] Associated Press, 7/31/13, “JPMorgan owes $410 million in energy suit,” The Boston Globe

[4] Kocieniewski, D., 7/21/13, see above

[5] Morgenson, G., 8/1/13, “Goldman Sachs offers to speed up metal delivery,” The Boston Globe (from The New York Times)

[6] Chan, K., 8/6/13, “Goldman Sachs, LME sued over aluminum storage,” The Boston Globe (from the Associated Press)

[7] Silver-Greenberg, J., & Wyatt, E., 7/10/13, “Big lenders face scrutiny on collections,” The Boston Globe (from The New York Times)

[8] Associated Press, 7/31/13, “Morgan Stanley settles EFT claims,” The Boston Globe

[9] Eskow, R.J., 8/7/13, “7 Things About Prosecuting Wall Street You Wanted to Know (But Were Too Depressed to Ask),” The Huffington Post

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

FINANCIAL SYSTEM REFORM

ABSTRACT: The need for financial system reform was made clear by the 2008 crash. One of the goals of the Dodd-Frank financial reform law was to end speculative trading by large financial corporations that are also banks because it has the potential to jeopardize consumer deposits. However, speculative trading has continued.

Therefore, a tri-partisan group of Senators, led by Sen. Elizabeth Warren, has recently proposed new legislation, the 21st Century Glass Steagall Act, that would require the separation of speculative trading and consumer bank deposits. You can sign on as a citizen sponsor of this proposed federal legislation at: http://my.elizabethwarren.com/page/s/glass-steagall?source=20130711emf.

Senator Warren was on CNBC to talk about the importance of this new legislation. You can watch the informative and entertaining video clip (under 3 minutes) at: http://gawker.com/nbc-censors-video-of-elizabeth-warren-taking-cnbc-to-th-837411782.

FULL POST: The need for financial system reform was made clear by the 2008 crash. We are now at the third anniversary of the passage of the Dodd-Frank financial reform law. However, implementation has been slow, due to the complexity of the law, efforts by the large financial corporations to block and delay it, and obstructionism by Republicans, particularly in the Senate. For example, a Director for the Consumer Financial Protection Bureau, created by Dodd-Frank, was finally approved by the Senate on July 17. (See post of 7/26/12 for background.)

One of the goals of the Dodd-Frank financial reform law was to end speculative trading by large financial corporations that are also banks. Such trading has the potential to generate large losses that could jeopardize consumer deposits at these banks, requiring a federal government bailout. Dodd-Frank and the so-called Volcker Rule were supposed to end such trading. However, speculative trading has continued. (See posts of 5/31/12 and 5/29/12 for more details.)

You can sign on as a citizen sponsor of this proposed federal legislation at: http://my.elizabethwarren.com/page/s/glass-steagall?source=20130711emf. It will reduce risk-taking by big financial corporations that enjoy federal insurance of depositors’ money, thereby reducing the risk of another government bailout of these huge corporations and enhancing the safety of consumer deposits.

Senator Elizabeth Warren (Democrat, MA), an expert on the financial system, states that we need to learn from the financial crisis of 2008 and, moving forward, to prevent the kinds of high-risk activities that made a few people rich but nearly destroyed our economy. She has joined forces with Senators John McCain (Republican, AZ), Maria Cantwell (Democrat, WA), and Angus King (Independent, ME) to introduce the 21st Century Glass Steagall Act to modernize core banking safety.

This legislation would reinstate some of the protections of the original Glass Steagall Act put in place after the Great Depression but repealed in 1999. For over 50 years before this repeal, the banking system was stable and our middle class grew stronger. Wall Street had spent 66 years and millions of dollars lobbying for repeal, and, eventually, the big financial corporations won.

This new law will rebuild a firewall between the banks where American families have checking and savings accounts, and the investment banks that engage in risky financial speculation. It will make sure Wall Street doesn’t gamble with your money, and will help prevent another financial crisis. The bill will give a five year transition period for financial institutions to split their business practices into distinct entities – shrinking their size and taking an important step toward ending “Too Big to Fail” once and for all, while minimizing the risk of future bailouts.

The Federal Deposit Insurance Corporation (FDIC) insures our banks to keep your money safe. That way, when you want to withdraw your money, you know the money will be there. That’s what makes our banking system safe and dependable. But the government should NOT be insuring hedge funds, swaps dealing, and other risky investment banking activities. When the same institutions that take these huge risks are also the ones that control your savings account, the entire banking system is riskier.

This is an important bill that will implement the lessons we learned from the 2008 crisis and make sure we hold Wall St. accountable. Click here to become a citizen sponsor of the new 21st Century Glass Steagall Act. (Paste the following address into your web browser if the link doesn’t work: http://my.elizabethwarren.com/page/s/glass-steagall?source=20130711emf.)

Senator Warren was on CNBC to talk about the importance of this new legislation. The video clip of Warren’s appearance was on You Tube, but CNBC and NBC in effect censored it, claiming copyright infringement. They did so, apparently, because Warren did such a good job of defending the legislation and, in the process, made the CNBC commentators look bad because they were critical of the legislation and tried to attack Warren and her arguments for the legislation. This is a reflection of how our mainstream media, which are all big corporations themselves, report on – or in many cases don’t report on – news that is not favorable to corporate America.

You can read an article about this censorship and watch the informative and entertaining video clip (under 3 minutes) at: http://gawker.com/nbc-censors-video-of-elizabeth-warren-taking-cnbc-to-th-837411782. (Paste the address above into your web browser if the link doesn’t work automatically.)

OVERSIGHT OF FINANCIAL CORPORATIONS – PETITIONS YOU CAN SIGN

INTRO: The need for strong oversight of our large financial corporations was made starkly clear by their collapse in 2008. Nonetheless, necessary changes have not happened. The six huge financial corporations are bigger than ever, despite concern that they were too big to fail back in 2008. News of illegal activity in the financial sector continues to surface regularly and financial corporations are increasingly engaging in activities similar to those that led up to the 2008 crash. [1] (See posts of 8/29/12 and 7/12/12 for background.)

Strong oversight and regulation are needed from the Federal Reserve and the Securities and Exchange Commission, among others. (See posts of 7/31/12, 5/31/12, and 5/29/12 for background.) The government bailout (trillions of dollars in total) and the economic recession (that we still haven’t recovered from) that followed must not be allowed to happen again.

Here are two steps that should happen to increase oversight and accountability, while reducing risk of a re-occurrence of the 2008 crash. I include (see below) links to petitions you can sign (each in a minute or less) that will register your support for them:

President Obama should NOT to nominate Larry Summers as the next head of the Federal Reserve (the Fed)
The Securities and Exchange Commission (SEC) should implement and enforce disclosure of the compensation given to the heads of the big financial corporations

TELL PRESIDENT OBAMA NOT TO APPOINT SUMMERS AS FED CHAIRMAN

Larry Summers is apparently Obama’s leading candidate to replace Ben Bernanke as the chairman of the Federal Reserve in January. Summers is a former Treasury Secretary, Obama economic advisor, and Harvard University President. He is currently a paid consultant to Citigroup, one of the six huge Wall St. financial corporations.

Summers contributed to the financial collapse — he helped lead the charge to deregulate Wall Street in the 1990s, he blocked efforts to regulate derivatives (which were a key cause of the 2008 collapse), and he dismissed concerns about deregulation just before the 2008 crash that tanked the economy. [2]

We need strong leadership at the Fed. We need someone willing to stand up to Wall Street instead of letting them play by their own rules and bailing them out when the going gets tough. Larry Summers is not that man.

Please email President Obama via the Daily Kos website now — tell him not to appoint Larry Summers to lead the Fed. (from Michael Langenmayr, Campaign Director, Daily Kos blog site. Paste the following address into your web browser if the link doesn’t work: http://campaigns.dailykos.com/p/dia/action3/common/public/?action_KEY=505)

TELL THE SECURITIES AND EXCHANGE COMMISSION TO IMPLEMENT DISCLOSURE OF CEOs’ PAY

Please urge the Securities & Exchange Commission (SEC) to enforce the law on disclosure of CEO’s salaries. Excessive CEO salaries contributed to the reckless financial culture that nearly ruined our economy.

The Dodd-Frank financial reform law, which Congress passed in 2010, requires publicly traded corporations to disclose how much their executives make and compare it to their average worker’s pay. Three years later, the law still hasn’t been implemented. Why? Because the SEC has not produced the regulations needed to implement the law. Meanwhile, big corporations are putting pressure on the SEC and Congress to quietly kill this requirement.

This is basic public information that we have the right to know, and will help prevent the next financial crisis. Join Daily Kos and USAction by signing this petition to the SEC, urging them to enforce Dodd-Frank’s provision on disclosing CEO salaries. (from Paul Hogarth, Daily Kos blog site. Paste the following address into your web browser if the link doesn’t work: http://campaigns.dailykos.com/p/dia/action3/common/public/?action_KEY=518)

My next post will describe, and give you the opportunity to be a citizen co-sponsor of, Congressional legislation to reduce risk and improve stability at our big bank corporations. It will reduce the risk of a future government bailout while enhancing the safety of your deposits.

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 write 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.

[1] Popper, N., 4/18/13, “Wall St. redux: Arcane names hiding big risk,” The New York Times

[2] Editorial, 8/2/13, “Tornado at the Fed? Obama has better choices than Summers,” The Boston Globe

VOTING RIGHTS AT RISK

ABSTRACT: Judicial activism by the conservative majority of the Supreme Court was on display on June 25 when by a 5 to 4 vote the Voting Rights Act (VRA) was ruled outdated and unnecessary despite: 1) Previous Supreme Court rulings upholding the law including as recently as 2009; 2) Use of the Voting Rights Act 74 times since 2000 to protect voting rights; 3) Re-enactment by Congress in 2006 by overwhelming, bipartisan votes; and 4) Extensive efforts in many of the covered states (and others) in the 2012 elections to interfere with voting rights at levels unseen for almost 50 years. The dissenting justices issued a strong critique of the decision.

It seems ironic that the Supreme Court, charged with ensuring justice in our society, has overturned the VRA, whose goal is to ensure justice for minorities in exercising that bedrock building block of our democracy, the right to vote.

The evidence for the need for the VRA has been quick in coming. Within a month after the Supreme Court decision, six states have passed or are implementing new voting requirements that will make it harder to vote. Most observers agree these requirements will disproportionately effect and reduce voting by minorities, low income individuals, the elderly, and the young. Although voter fraud will be cited as the reason for these efforts, cases of fraud are incredibly rare.

I encourage you to let your representatives in Congress know that you are outraged and that they need to pass legislation to reinstate the VRA immediately.

FULL POST: Judicial activism by the conservative majority of the Supreme Court was on display on June 25 when by a 5 to 4 vote the Voting Rights Act (VRA) was ruled outdated and unnecessary despite:

Previous Supreme Court rulings upholding the law including as recently as 2009
Use of the Voting Rights Act 74 times since 2000 to protect voting rights
Re-enactment by Congress in 2006 by overwhelming, bipartisan votes
Extensive efforts in many of the covered states (and others) in the 2012 elections to interfere with voting rights at levels unseen for almost 50 years.

The Court’s majority felt that in the covered jurisdictions – nine states, mostly in the South, and numerous smaller jurisdictions including sections of New York City – barriers to voting for racial minorities were no longer sufficient to justify the law.

The Supreme Court not only ignored its own precedents, it ignored the clear will of Congress on a law that has been in place for 48 years. The reauthorization of the VRA in 2006 passed the House by a vote of 390 to 33 and the Senate unanimously, 98 to 0, before being signed into law by President George W. Bush. It seems ironic that the Supreme Court, charged with ensuring justice in our society, has overturned the VRA, whose goal is to ensure justice for minorities in exercising that bedrock building block of our democracy, the right to vote. The VRA was a key achievement of the Civil Rights movement and a key to implementing the post-Civil War 15^th Amendment, which prohibits denying the right to vote based on race.

The dissenting justices issued a strong critique of the decision, which Justice Ginsburg presented at the announcement of the ruling – an unusual event, indicating strong disagreement. She stated in part that the decision was like “throwing away your umbrella in a rainstorm because you are not getting wet.” [1]

The evidence for the need for the VRA has been quick in coming. Within a month after the Supreme Court decision, six states have passed or are implementing new voting requirements that will make it harder to vote. Most observers agree that these requirements will disproportionately effect and reduce voting by minorities, low income individuals, the elderly, and the young. Many, if not all, of these changes in voting laws would have been rejected by the US Justice Department under the VRA. Steps are being taken on the same path in other states. Although voter fraud will be cited as the reason for these efforts, cases of fraud are incredibly rare. [2]

North Carolina is poised to enact a requirement for an ID to vote, reductions in early voting, restrictions on voter registration, and increased opportunities to deny voters at the ballot box, among other provisions. This is a dramatic change for North Carolina, which, historically, has been a state where voting and registration were facilitated, and, where, as a result, voter participation has been high. The state’s own Secretary of State has acknowledged that the new laws will reduce voting by Blacks and Hispanics. [3] The new law will also increase campaign contribution limits, reduce disclosure of campaign activities, and repeal public financing for the election of judges, putting them and the state’s justice system at the mercy of large campaign contributions.

In Texas, a new voter ID law that was blocked by the Justice Department under the VRA will now go into effect. A revised map for election districts that had been blocked will now also go into effect. And in Florida, a purge of registered voters that had been blocked will now go forward, despite errors made in previous such purges. [4]

As a result of the Supreme Court decision, the Justice Department or individuals will now have to file lawsuits challenging changes in voting procedures after the fact on a case by case basis, a much less timely and efficient remedy than the pre-approval of changes previously required by the VRA.

The fact that this Supreme Court decision abets the active and growing efforts to throw up barriers to voting that will disenfranchise minorities and those with low incomes, groups that disproportionately vote for Democrats, makes it hard not to view the decision as ideological and political activism. The fact that it undermines the right to vote – the foundation of our democracy – in the face of clear attacks on that right makes it particularly egregious.

I encourage you to let your representatives in Congress know that you are outraged and that they need to pass legislation to reinstate the VRA immediately. I know that passage in this Congress, given the partisanship and obstructionism that I have written about, probably isn’t likely, but if no one tries it definitely won’t happen and this issue needs to be put on the agenda of our policy makers, the public, and the media.

[1] Gerson, S., & Sopoci-Belknap, K., 6/28/13, “Constitutional right to vote needed more than ever after Supreme Court guts Voting Rights Act,” Common Dreams (www.commondreams.org/view/2013/06/28-5)

[2] Berman, A., 7/26/13, “North Carolina passes the country’s worst voter suppression law,” The Nation

[3] Drum, K., 7/26/13, “Supreme Court’s gutting of the Voting Rights Act unleashes GOP feeding frenzy,” Mother Jones

[4] Reeve, E., 7/26/13, “As states rush to restrict voting rights, Justice Ginsburg says, ‘I told you so,’” Associated Press in The Atlantic Wire

OBSTRUCTIONISM AND EXTREMISM BLOCK PROGRESS IN THE US HOUSE

ABSTRACT: While the use of the filibuster in the US Senate gets more attention, the obstructionism and extremism in the US House is more insidious. And it is no less harmful. One of the tactics in the House is the so-called “Hastert rule.” It stipulates that no piece of legislation will be voted on unless over half the members of the Republican majority support it. Therefore, 27% of the members of the House – barely over one quarter – can stop progress. The bipartisan immigration reform bill that the Senate passed is a current example of legislation that this conservative minority has blocked from consideration. It has meant that bipartisan compromises negotiated by the current Republican House Speaker John Boehner are rejected. Legislation that does pass the House is generally so conservative that it has no chance of becoming law. This is a major contributor to the current gridlock in our federal government.

In addition to extreme policy positions, House Republicans are also engaging in procedural extremism, including efforts that amount to hostage taking and sabotage, by a group of House members that seems to have few, if any, qualms about stopping government from functioning at all. The most dramatic example has been the use of the need to raise the federal government’s authorized level of debt (known as the debt ceiling). This brinkmanship threatened to cause the US government to default on its debt obligations, which many feel would have had serious impacts on global financial markets and the global economy – not to mention the ability of the government to function.

The fallout of this no-holds barred extremism and obstructionism has been a new breed of partisanship. Any compromise or trade-off is depicted as unacceptable and as a betrayal of values and ideals. For example, even though the economy is recovering (albeit slowly) and the government’s deficit is falling (quite rapidly actually), the heated rhetoric on the deficit and on the notion that government debt undermines the economy continues totally unabated.

Unfortunately, it’s hard to envision how this dynamic can change. I just hope that one way or another we can return to functioning government before real harm has been done to people, our institutions, and our international standing.

FULL POST: While the use of the filibuster in the US Senate gets more attention, the obstructionism and extremism in the US House is more insidious. And it is no less harmful to efforts to make progress on issues our country needs to address or to efforts to make government work effectively. The filibuster is a well-known, long standing, clearly defined tactic for stopping progress in the Senate. In the House, the tactics for blocking progress are more varied and more obscure.

One of the tactics in the House is the so-called “Hastert rule.” Named for Dennis Hastert, who was the Republican House Speaker from 1999 – 2007, it stipulates that no piece of legislation will be voted on unless over half the members of the Republican majority support it. Currently, this means that 117 out of the 234 Republicans in the House can block a piece of legislation from coming to a vote. Therefore, 27% of the members of the House – barely over one quarter – can stop progress. In other words, a piece of legislation supported by 73% of the members of the House (that’s 318 members) can be blocked by the other 117. In the Senate, a filibuster requires the support of 41% of the Senators to stop progress, while only 27% of the Representatives can block progress in the House. [1]

This unwritten Hastert rule is being used by the most conservative members of the House, including the Tea Party members, to block progress. The bipartisan immigration reform bill that the Senate passed is a current example of legislation that this conservative minority has blocked from consideration. And on numerous occasions, it has meant that bipartisan compromises negotiated by the current House Speaker John Boehner are rejected by these conservative members of his own party. To cover up this embarrassing situation, House Republicans look for ways to blame the Democrats, exacerbating the partisanship in Washington.

Another result of the Hastert rule is that legislation that does pass the House, because it has to satisfy the most conservative 117 members of the Republican Party, is generally so conservative that it has no chance of becoming law by passing the Senate and being signed by the President. Therefore, it is rare that viable legislation passes in the House. This is a major contributor to the current gridlock in our federal government.

In addition to extreme policy positions, House Republicans are also engaging in procedural extremism. In Obama’s first two years as President (2009-2010), Republican leaders pressured members to oppose any Obama initiative, even ones Republicans had previously supported. Then, emboldened by their gains in the 2010 elections, even the routine business of keeping government functioning became the subject of virulent obstructionism, including efforts that amount to hostage taking and sabotage, by an extreme group of House members that seems to have few, if any, qualms about stopping government from functioning at all. [2]

The most dramatic example has been the use of the need to raise the federal government’s authorized level of debt (known as the debt ceiling), which simply allows the federal government to make good on its outstanding debts and to fund current authorized expenditures of approved budgets. (Without this, the government has to shut down because it has no cash to pay employees or make payments on contracts for goods or services. In addition, it would default on its debts and stop paying interest on outstanding government bonds.)

In the past, increasing the debt ceiling was a routine and stand-alone matter dealt with regularly by Congress, with perhaps a little posturing. The tactic of these extreme Republicans has been to hold an increase in the debt ceiling hostage to their demands for other policy changes, primarily draconian budget cuts. This brinkmanship threatened to cause the US government to default on its debt obligations, which many feel would have had serious impacts on global financial markets and the global economy – not to mention the ability of the government to function.

The fallout of this no-holds barred extremism and obstructionism has been a new breed of partisanship. To justify total resistance to Obama, the extremists have painted him not just as a liberal (which he hardly is) but as a dangerous and extreme socialist working to destroy everything that makes the US great. Any compromise or trade-off is depicted as unacceptable and as a betrayal of values and ideals. So when Obama makes efforts to reach out, compromise, and be bipartisan, the extremists tend to move even further away, sometimes even repudiating positions they previously held, particularly if Obama comes anywhere close to meeting them.

For example, even though the economy is recovering (albeit slowly) and the government’s deficit is falling (quite rapidly actually), the heated rhetoric on the deficit and on the notion that government debt undermines the economy continues totally unabated.

Unfortunately, it’s hard to envision how this dynamic can change. Obama’s efforts at bipartisanship and compromise have not only not been reciprocated, but at times seem to have led to even more extreme demands. Unless Republican leaders, in the party and specifically in the House, are willing to stand up to the extremist in their party, changes made by voters at the ballot box may be the only way to achieve change. But given state level politics, the way House districts are drawn (and gerrymandered), and the dynamics of campaigns (both in terms of money and messaging), change from the grassroots in elections doesn’t seem to be a likely scenario either.

I just hope that one way or another we can return to functioning government before real harm has been done to people, our institutions, and our international standing.

[1] Editorial, 7/17/13, “More insidious than filibuster, ‘Hastert rule’ locks up the House,” The Boston Globe

[2] Chait, J., 7/21/13, “Anarchists of the House,” New York Magazine

A RESPITE FROM OBSTRUCTIONISM

ABSTRACT: The US Senate reached a bipartisan agreement that ended the obstruction of confirmation for seven of the President’s nominees for executive branch positions. Votes will be held before the August recess on these seven nominees. To obtain this concession, Senate Democrats threatened to change the filibuster rule to prevent its use on executive branch nominations.

No permanent changes in the filibuster rules were made and there was no commitment to end obstruction of nominees beyond these seven positions. These positions are but the tip of the iceberg of obstructionism in the Senate. Hopefully, this respite from obstructionism will apply to other presidential nominations as well and will change the pattern of blocking and delaying confirmations of nominees. Only time will tell.

FULL POST: As you may have heard, the US Senate reached a bipartisan agreement that ended the obstruction of confirmation for seven of the President’s nominees for executive branch positions. Although this deal was greeted with widespread celebration, it is a small step and it is unclear whether it will have any long-term effects.

To obtain this concession, Senate Democrats threatened to change the filibuster rule to prevent its use on executive branch nominations. This rule change can be done with a simple majority vote, i.e., 51 Senators, and the Democrats had the votes to do so. After an extremely rare, three hour, bipartisan, closed-door meeting at which almost all of the 100 Senators spoke, followed by negotiations through the night, a deal was reached.

Votes will be held before the August recess on nominees for seven positions. [1]

Richard Cordray to head the Consumer Financial Protection Bureau. (He has been approved after a two year wait with a 66 to 34 vote.)
Gina McCarthy to head the Environmental Protection Agency.
Thomas Perez for Secretary of Labor.
Fred Hochberg for a second term as president of the Export-Import Bank.
Mark Pearce for a second term on the National Labor Relations Board.
Two nominees to the National Labor Relations Board to be named.

No permanent changes in the filibuster rules were made and there was no commitment to end obstruction of nominees beyond these seven positions. These positions are but the tip of the iceberg of obstructionism in the Senate. (See posts of July 21, 16, and 9 for more details.) Republicans in the Senate have taken the obstruction of confirmation of presidential nominees for judgeships and executive branch positions to an unprecedented level. They oppose nominees “for reasons unrelated to their basic qualifications, largely, it seems, to torment and undercut the president.” [2]

Hopefully, this respite from obstructionism will apply to other presidential nominations as well and will change the pattern of blocking and delaying confirmations of nominees in the Senate. Only time will tell.

[1] Bierman, N., 7/17/13, “Faced with rules change, GOP relents on Obama nominees,” The Boston Globe

[2] Keane, T., 7/21/13, “Too much transparency,” The Boston Globe

BLOCKING JUDICIAL NOMINATIONS

ABSTRACT: Senate Republicans have delayed and filibustered President Obama’s nominees to fill vacant judgeships nationwide, resulting in 87 vacancies for federal judges, 10% of the total judgeships. Even when President Obama goes out of his way to nominate what would seem to be uncontroversial choices with bipartisan support, Senate Republicans have blocked and delayed confirmation. Many words can be used to describe this: one would be obstructionist; others would be undemocratic and unpatriotic.

I encourage you to contact your Senators to express support for ending the blocking of judicial appointments. Our justice system needs these judgeships filled so it can function effectively and provide justice for all!

FULL POST: Senate Republicans have delayed and filibustered [1] President Obama’s nominees to fill vacant judgeships nationwide, resulting in 87 vacancies for federal judges, 10% of the total judgeships. A third of these vacancies are considered “judicial emergencies” because of their impact on the administration of justice. [2]

For example, four of eleven judgeships on the D.C. federal appeals court, considered one of the most important courts in the country, were vacant when Obama took office in 2009. In May, 2013, after five years of trying, one judge was confirmed on a 97 to 0 vote. The nominee had worked in both Democratic and Republican administrations and had been a clerk for former Supreme Court Justice O’Connor, who was appointed by President Reagan. So despite being a bipartisan and apparently uncontroversial nominee, it took five years to get Republicans to allow his confirmation.[3]

A second nominee for this court was filibustered for a second time this spring [4] (or the fourth time depending on how you count). The nomination was originally made in September, 2010, and Obama renominated her four times after the Senate failed to act on or filibustered her nomination. [5] President Obama then withdrew this nomination and recently nominated three others, all current judges, to fill the remaining vacancies. He challenged Senate Republicans to stop their obstructionism and at least allow a yes or no vote on these nominees. [6]

Even when President Obama goes out of his way to nominate what would seem to be uncontroversial choices with bipartisan support, Senate Republicans have blocked and delayed confirmation. These seem to be clear cases of wanting to score political points by making life difficult for Obama and slowing down the work of his administration.

As I wrote in my last post, the examples above are not isolated incidents but part of a concerted strategy of extreme partisanship and/or rigid ideology by some Republicans to prevent government from functioning, to undermine President Obama, and to bog down the Senate and the Obama administration in political fights that prevent important issues facing our country from being addressed. Many words can be used to describe this: one would be obstructionist; others would be undemocratic and unpatriotic.

[1] A filibuster occurs when one or more Senators refuse to end debate on a piece of legislation or other matter. It requires a super-majority of 60 out of 100 votes to close off debate (cloture) and allow a vote on the bill or other matter.

[2] Viser, M., 5/10/13, “As Obama, Senate collide, courts caught short,” The Boston Globe

[3] Jackson, H. C., 5/24/13, “After 5 years, Senate OK’s key judicial appointment,” Associated Press in The Boston Globe

[4] Associated Press, 3/7/13, “GOP senators block court nominee for a second time,” Political Notebook in The Boston Globe

[5] Viser, M., 5/10/13, see above

[6] Pickler, N., 6/5/13, “Obama pushes 3 judges for court; Challenges GOP on ‘obstruction’,” The Boston Globe

BLOCKING EXECUTIVE BRANCH APPOINTMENTS

ABSTRACT: The willingness of some Republicans to impede the effective functioning of the federal government has extended to consistent efforts to block or delay the President’s nominees to fill positions in the Executive Branch. Senate Republicans have filibustered, threatened to filibuster, or have otherwise delayed a number of Obama’s selections for cabinet posts, including the secretaries of State, Defense, and the Treasury, as well as the head of the Environmental Protection Agency. Similarly, Senate Republicans are blocking nominees to the National Labor Relations Board and for two years have refused to confirm anyone to head the Consumer Financial Protection Bureau. House and Senate Republicans have refused to appoint members to the Independent Payment Advisory Board, a health care cost control group.

Even when President Obama goes out of his way to nominate what would seem to be uncontroversial choices with bipartisan support, Senate Republicans have engaged in filibustering and delaying confirmation. Many words can be used to describe this strategy: one would be obstructionist; others would be undemocratic and unpatriotic. I encourage you to contact your Senators to express support for ending the blocking of Executive Branch appointments. Our government needs to be able to function!

FULL POST: The willingness of some Republicans to impede the effective functioning of the federal government has extended to consistent efforts to block or delay the President’s nominees to fill positions in the Executive Branch.

Senate Republicans have filibustered [1], threatened to filibuster, and otherwise delayed many of President Obama’s nominees to fill executive branch positions, including a number of Obama’s selections for cabinet posts. They threatened to filibuster and conducted such an aggressive campaign against Susan Rice, who Obama wanted to nominate for Secretary of State, that her name was never formally submitted. They threatened to filibuster Chuck Hagel’s nomination for Secretary of Defense, even though he was a former Republican Senator, and a conservative one at that. After a concerted effort to discredit him, he was eventually approved.

Senate Republicans are delaying confirmation of the President’s nominee to head the Environmental Protection Agency (EPA), Gina McCarthy, and have been for over four months. One of their delaying tactics, and part of an effort to make the delaying tactics seem justified, is their submission of over 1,000 written questions, some with multiple parts, that they demand that she answer. (The previous three EPA nominees had received between 157 and 305 written questions.) Answering these questions in writing required over 200 pages and untold hours of work over two weeks by an unknown number of government employees.

Political scientist Norman Ornstein of the conservative American Enterprise Institute said, “One thousand questions is beyond the point of absurdity … This is ratcheting up obstruction and partisan warfare to an unprecedented level.” [2]

Furthermore, Senate Republicans blocked a scheduled committee vote on her nomination by boycotting the meeting. McCarthy, who has 25 years experience in the field, was viewed as a safe, compromise choice given that she had worked for five Republican Governors (four in Massachusetts and one in Connecticut). One of those MA Governors was Jane Swift, who wrote, “I have witnessed firsthand the qualities that make McCarthy so uniquely qualified to take on the challenges of heading the nation’s top environmental department. … Obama deserves to select his own team. The Senate should swiftly approve McCarthy’s nomination.” [3]

Similarly, Treasury Secretary Jack Lew, when nominated earlier this year faced 444 written questions or 700 if each question in a multipart question is counted individually. This was far more than his predecessors, despite the fact that his Wall Street and government experience meant he was from the same mold as his predecessors. Confirmation of Obama’s nominee for Secretary of Labor is currently being delayed.

Even when President Obama goes out of his way to nominate what would seem to be uncontroversial choices with bipartisan support, such as McCarthy for the EPA and Hagel for the Defense Department, Senate Republicans have engaged in blocking and delaying confirmation. Every other president has been allowed to pick his cabinet members without much opposition in the Senate, under the premise that a president should be allowed to select his own team and then be held accountable for their performance. Currently, some Republicans are engaged in a “state of permanent partisan warfare over Obama’s Cabinet nominees.” [4]

Senate Republicans are also blocking five nominees to the National Labor Relations Board, the agency charged with protecting the rights of workers. They are also suing the President to invalidate the appointments he made without Senate confirmation when the Senate was in recess, a practice previous presidents have used when appointments have been delayed. The combination of these efforts effectively paralyzes the agency and may invalidate some of its previous actions. Part of the motivation for these obstructionist tactics is the Republicans’ effort to undermine the effectiveness of unions, given that this Board addresses formal complaints filed by unions. As Massachusetts Senator Elizabeth Warren put it, “This is about complete obstructionism because the minority senators don’t like the agencies, and they don’t like the work these agencies do.” [5]

Senate Republicans have for two years refused to confirm (by threatening a filibuster) anyone to head the Consumer Financial Protection Bureau, once again because they don’t like this agency and its role of protecting consumers from fraud and misleading practices by financial corporations. (See 7/26/12 post.)

House and Senate Republicans have refused to appoint members to the Independent Payment Advisory Board. This Board of medical experts, created by the Affordable Care Act (aka ObamaCare), works to control health care costs by evaluating drugs, treatments, and other health care measures. Because Republicans oppose the health care law, they are defying the law and refusing to appoint the members they are required to, which was part of the effort to make the law bipartisan. Board members need to be confirmed by the Senate as well, and if Senate Republicans block confirmation of appointees to the Board, its responsibilities will fall to Obama’s Secretary of Health and Human Services. This isn’t what one would think the Republicans would want to see happen. Therefore, it appears that this is an effort to delay and obstruct the functioning of government, while hoping to score political points for appearing to oppose ObamaCare. [6]

Republicans’ obstructionism, at least in part, is due to their opposition to current policies, to the established missions of some agencies, and to most government regulation in general. In our democratic system, the way to address such concerns is to change them through legislation. The Republicans resort to the undemocratic tactics of obstruction because the majority of the country does not agree with them.

The examples above are not isolated incidents but a concerted strategy of extreme partisanship and/or rigid ideology by some Republicans to undermine President Obama, to bog down Congress and the Obama administration in political fights that prevent important issues facing our country from being addressed, and, ultimately, to prevent government from functioning effectively. Many words can be used to describe this strategy: one would be obstructionist; others would be undemocratic and unpatriotic.

The Senate may well vote soon on restricting the use of the filibuster to block Executive Branch appointments. I encourage you to contact your Senators to express support for ending the blocking of Executive Branch appointments. Our government needs to be able to function!

[2] Bierman, N., 5/16/13, see above

[3] Swift, J., 5/25/13, “Qualified nominee for EPA,” The Boston Globe

[4] Bierman, N., 5/16/13, “1 nominee, 1,000 questions,” The Boston Globe

[5] Associated Press, 5/17/13, “GOP fights labor board nominees,” The Boston Globe

[6] Editorial, 5/9/13, “Congress, the death panel’s death panel,” Ringside Seat from The American Prospect

IDEOLOGY, OBSTRUCTIONISM, AND MAKING GOVERNMENT WORK

ABSTRACT: Democrats believe in making government work. Republicans, at least many current ones, don’t exhibit a commitment to making government work. They block legislation and an unprecedented number and breadth of Presidential appointments, including judges and cabinet secretaries.

Rigid ideology and extreme partisanship are drivers of the gridlock: many Republicans seem willing to use any means available to block Obama’s initiatives, anything that would appear to be a success for him, and his administration’s efforts to govern effectively. Senate Republicans filibuster, while Republicans in the House have developed a strategy of policy hostage taking. While there are isolated examples of Democrats using some of the Republicans’ tactics, the current obstructionism by Republicans is unprecedented in both its breadth and its frequency.

Some of the Republicans, particularly those that identify with the Tea Party, are doing everything they can to sabotage government and keep it from operating effectively. Then when it falls short, they shout “See, we told you government can’t do anything right!”

Examples of Republicans impeding the functioning of Congress include: 1) in the budget process, they refused to appoint members for the conference committee that resolves differences between the House and Senate bills; 2) filibustered legislation to reduce gun violence; 3) blocked the ratification of an international treaty despite widespread, bipartisan support; and 4) blocked progress by filibustering or threatening to filibuster over 400 times since 2006.

The public’s well-being and future generations are hurt when our legislative branch doesn’t function.

FULL POST: Democrats’ ideology is that government has an important and positive role to play in our society. Republicans’ ideology is that a minimal government role is best and that government is more often a negative than a positive factor. But it goes a step further. Democrats believe in making government work, in doing the best that can be done to foster a civil and just society, despite limitations and challenges. They believe in implementing existing laws and making existing agencies work to fulfill their missions. Republicans, at least many current ones, don’t exhibit a commitment to making government work. As a consequence, they block legislation, including essential legislation, even when there is a majority in favor of it, through tactics such as filibustering in the Senate (see posts of 6/15/12 and 6/10/12) or refusing to move legislation forward in the House. [1] Senate Republicans have also used the filibuster to block an unprecedented number and breadth of Presidential appointments, including judges, cabinet secretaries, and other positions in government agencies. (See 5/20/12 post.)

In addition to rigid ideology, extreme partisanship is also a driver of the gridlock: many Republicans are of the mindset that if President Obama is for something, they will be against it – even in cases where they had previously supported the position or issue. And they seem willing to use any means available to block Obama’s initiatives, anything that would appear to be a success for him, and his administration’s efforts to govern effectively. While the Senate Republicans filibuster, Republicans in the House, led by Eric Cantor (VA), Paul Ryan (WI), and Kevin McCarthy (CA), have developed a strategy of policy hostage taking. Their most notable effort was their refusal to raise the US government’s debt ceiling, which was needed to fund the activities previously approved by Congress and the president under the country’s budget. They took hostage the full faith and credit of the US Government to pay its debts. As Thomas Mann said, “It’s hard to imagine a more destructive action.” [2] In the House, the extreme partisanship of the Republican majority means that the Democratic minority is all but ignored. [3]

While there are isolated examples of Democrats using some of these tactics, the current obstructionism by Republicans is unprecedented in both its breadth and its frequency.

Some of the Republicans, particularly those that identify with the Tea Party, do not feel a responsibility to abide by the historical rules of operation or to work to promote the successful functioning of government. A recent survey documented that Tea Party activists do not want their elected representative to compromise and are happy to have them prevent government from functioning. [4] Furthermore, some of these activists and elected officials promote their ideology by doing everything they can to sabotage government and keep it from operating effectively. Then when it falls short, they shout “See, we told you government can’t do anything right!” [5]

Examples of Republicans impeding the functioning of Congress include the following:

This spring, both houses of Congress passed budget bills. The process calls for a conference committee of both chambers to be appointed to reconcile differences between the two bills. However, the House Republicans, led by Paul Ryan, chair of the Budget Committee, refused to appoint members for the conference committee – an unprecedented act of obstructionism. After a month of negotiations, Democrats gave up on the effort to form a conference committee, so the government continues to run without a normal budget in place. [6]

Senate Republicans have filibustered * legislation to reduce gun violence by expanding background checks for gun purchases. (See 4/20/13 and 5/9/13 posts.) Senate Republicans also blocked the ratification of an international treaty on the Rights of Persons with Disabilities, despite widespread, bipartisan support, ratification by 126 other countries, and the fact that it was modeled on the American with Disabilities Act. (See post of 12/8/12.)

Senate Republicans have blocked progress by filibustering or threatening to filibuster over 400 times since they lost the majority in 2006; that’s over once a week on average. As two, bi-partisan political scientist have written, Senate Republicans are using the filibuster “to delay and obstruct quietly on nearly all matters, including routine and widely supported ones.” They have filibustered judges, top administration officials, and a wide range of legislation. [7]

The US has serious problems, short and long-term, including unemployment, stagnant wages, and global competition, that need to be addressed through legislation. The public’s well-being and future generations are hurt when our legislative branch doesn’t function because Republicans are committed to a rigid ideology, refuse to compromise, and believe that scoring political points is more important than solving problems. [8]

My next post will review the impacts of Republican obstructionism on the judicial and executive branches of government.

[1] Starr, P., May / June 2013, “Bad faith and budget politics,” The American Prospect

[2] Ornstein, N., & Mann, T., 4/26/13, “Why Congress is failing us,” on Bill Moyers’ public TV show, available at BillMoyers.com

[3] Arenberg, R.A., 6/13/12, “An effective Senate needs filibusters,” The Boston Globe

[4] Rapoport, A., May / June 2013, “Ted [Cruz] talk,” The American Prospect

[5] Editorial, 5/24/13, “Scandal, Sequestered,” Ringside Seat, The American Prospect

[6] Bouie, J., & Caldwell, P., May / June 2013, “Patty Murray in 19 takes,” The American Prospect

* A filibuster occurs when one or more Senators refuse to end debate on a piece of legislation or other matter. It requires a super-majority of 60 out of 100 votes to close off debate (cloture) and allow a vote on the bill or other matter.

[7] Mann, T.E., and Ornstein, N.J., 4/27/12, “Let’s just say it: The Republicans are the problem,” The Washington Post. Adapted from their book “It’s even worse than it looks: How the American Constitutional system collided with the new politics of extremism.”

[8] Ornstein, N., & Mann, T., 4/26/13, see above

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 50^th anniversary and what would have been her 100^th 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]

[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

THE REAL SCANDAL BEHIND THE IRS “SCANDAL”

ABSTRACT: Overwhelmed IRS employees, trying to sort through hundreds of applications for tax exempt status to identify ones that should be rejected because they were political rather than true social welfare organizations, used search terms that may have been tilted toward identifying conservative groups, although there were terms used that are neutral or tilted toward liberal or progressive politics. (Perhaps there was such a tilt because the number and spending of such groups on the conservative side has far outweighed those on the liberal or progressive side.)

As Republicans in Congress try to blow this up into a major scandal, it should be noted that the IRS Commissioner when this activity occurred was Douglas Shulman, who was appointed by President Bush in 2008 and served until November 2012.

Three factors have led to the growth of 501(c)(4) social welfare organizations that engage in political activity: 1) They do not have to disclose their donors; 2) Political committees have had to disclose their donors since 2001; and 3) The Supreme Court’s 2010 Citizens United decision allowed unlimited spending on political activity by wealthy individuals, corporations, and other organizations. Corporations and wealthy individuals who would like to keep their political activities secret have flocked to using these social welfare organizations.

The real scandals hiding behind the front page news are that the IRS: 1) Has not clarified the limits on political activity by tax exempt social welfare groups; 2) Has not taken enforcement actions against any politically active social welfare group; and 3) Has had the capacity of its staff to engage in appropriate oversight and enforcement activities cut.

The current “scandal” at the IRS should be the springboard for reform. Unfortunately, the Republicans in Congress seem far more intent on using the situation to score political points and to undermine the important work of the IRS.

FULL POST: If you were an overwhelmed IRS employee trying to sort through hundreds of applications for tax exempt status to identify ones that should be rejected because they were political rather than true social welfare organizations, how would you do it? Searching for political terms would make a lot of sense. The terms used should be balanced, so they look for any group with a political focus, not just ones with a certain perspective.

It appears that the search terms that were used may have been tilted toward identifying conservative groups, although there were terms used that are neutral or tilted toward liberal or progressive politics. (Perhaps there was such a tilt because the number and spending of such groups on the conservative side has far outweighed those on the liberal or progressive side.) And there were liberal or progressive organizations that were scrutinized and had their applications delayed, as some conservative ones did. Although the search terms used may have been efficient and rational, they may not have been appropriate from a political or public perception stand point. [1]

The Cincinnati office, where this work was concentrated, had fewer than 200 people working to process 70,000 applications for tax exempt status each year. Moreover, despite the complex legalities of these determinations, this group had few lawyers and only vague guidelines. The unit has been reorganized and its procedures revised multiple times over the past three years.

The issue of non-profit groups and their political activity has burst into the spotlight in recent years. Traditional non-profit groups are organized under section 501(c)(3) of the IRS code and are prohibited from engaging in political activity. Organizations under IRS section 501(c)(4), although originally exclusively for the promotion of social welfare, in 1960 were allowed to engage in political activity as long as their primary purpose was social welfare. The IRS has not established what “primary” or “political activity” means. Three factors have led to the growth of 501(c)(4) social welfare organizations that engage in political activity:

They do not have to disclose their donors.
Political committees have had to disclose their donors since 2001.
The Supreme Court’s 2010 Citizens United decision allowed unlimited spending on political activity by wealthy individuals, corporations, and other organizations. [2]

As a result, corporations and wealthy individuals who would like to keep their political activities secret have flocked to using these social welfare organizations. Crossroads GPS (the conservative group Karl Rove helped found in 2010) spent $88 million in the last two national election cycles, massively outspending all other 501(c)(4)s’ political expenditures. It has a tiny staff and no discernible social welfare purpose, and its application for tax exempt status is still pending. [3] (501(c)(4)s are allowed to operate as non-profits without IRS approval.) For the 2012 elections, based on reports to the Federal Election Commission, of the more than $256 million spent by social welfare non-profits on ads, at least 80% came from conservative groups. [4]

The real scandals hiding behind the front page news are that the IRS:

Has not clarified the limits on political activity by tax exempt social welfare groups (i.e., 501(c)(4)s) or even defined what is considered political activity.
Has not taken enforcement actions against any politically active social welfare group, despite their spending, combined, at least $500 million on political advertising during the last four years. [5] This includes groups that told the IRS in their tax exemption applications that they were not going to engage in political activity and then did so. [6]
Has had the capacity of its staff to engage in appropriate oversight and enforcement activities cut. (Its budget has been cut the last three years, including by the sequester, and staff levels are down from 117,000 in 1992 to 90,000 today while dollars collected have more than doubled.) This has led to overwhelmed workers as occurred in the tax exempt review group in Cincinnati.

The current “scandal” at the IRS should be the springboard for reform – for clarifying and enforcing rules on political activity by tax exempt organization, as well as for assessing and meeting the needs at the IRS for staffing and professionalization of personnel and procedures. Unfortunately, the Republicans in Congress seem far more intent on using the situation to score political points and to undermine the important work of the IRS.

[1] Confessore, N., Kocieniewski, D., & Luo, M., 5/18/13, “Confusion and staff troubles rife at I.R.S. office in Ohio,” The New York Times

[2] Norris, F., 5/16/13, “A fine line between social and political,” The New York Times

[3] Maguire, R., 5/16/13, “Conservative groups granted exemption vastly outspent liberal ones,” Open Secrets

[4] Barker, K. & Elliott, J., 5/22/13, “Six facts lost in the IRS scandal,” ProPublica

[5] Confessore, N., et al., 5/18/13, see above

[6] Barker, K. & Elliott, J., 5/22/13, see above

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

REDUCING GUN VIOLENCE

ABSTRACT: There’s good news and bad news after the recent obstruction by filibustering in the US Senate of a law to reduce gun violence. Information on the votes in the Senate and how to contact your Senators (and Representatives) is below.

Efforts to reduce gun violence are getting unprecedented attention. Four states have recently passed laws targeting gun violence. However, there is a continuing lack of good data and research on gun violence, largely because the gun industry and its supporters have aggressively worked to block government data collection and research, as well as to intimidate private researchers. This inhibits the solving and prevention of crimes, as well as the identification and prosecution of gun dealers who irresponsibly, if not illegally, sell guns, including guns that are used in crimes.

I urge you to contact your Senators and let them know how you feel about this issue, whether you agree with their vote or not. Good legislation, good data and research, and strong enforcement could significantly reduce the 18,000 suicides and 12,000 murders that happen with guns each year in this country. Communication to elected officials by voters – their constituents – is critical to taking advantage of this window of opportunity and achieving change that will reduce the tragedy of gun violence.

FULL POST:There’s good news and bad news after the recent obstruction by filibustering in the US Senate of a law to reduce gun violence. (See post of 4/20/13 for more details.) One piece of good news is that some Senators are saying they will continue the effort. Information on the votes in the Senate and how to contact your Senators (and Representatives) is below.

Other good news:

Efforts to reduce gun violence are getting unprecedented attention, including coverage in mainstream media
The issue is a much higher priority in voters’ minds than it was
Elected officials are being asked where they stand on the issue regularly
Elected officials who support steps to reduce gun violence are much more comfortable saying so in public
Four states have recently passed laws targeting gun violence: Colorado, Connecticut, Maryland, and New York. Others are considering doing so. You may want to check and see if there is such an effort in your state.

Nationally, the broad support for reducing gun violence is clear and its potential political impact has being discussed. For example, in 21 states both US Senators supported the gun background check provision that was defeated by filibuster. Those 21 states have 261 Electoral College votes, out of the 270 needed to elect a President. The 17 states where both Senators opposed the law only have 146 electoral votes. [1]

The National Academy of Sciences published a major report back in 2004, “Firearms and Violence: A Critical Review,” that found that there is a lack of good data and research on this topic. It recommended that the federal government support “a systematic program of data collection and research” (page 3). The report noted that “violence is positively associated with firearms ownership” (page 5) but that the data do not allow a conclusion about whether there is a cause and effect relationship. It stated that in comparisons among countries, “there is a substantial association between gun ownership and homicide” and that “the U.S. homicide rate is much higher than in all other developed countries.” (page 6) [2] Australia has achieved a dramatic reduction in gun violence over the last 6 years. (See post of 4/20/13 for more details.)

Despite this, there is a continuing lack of good data and research on gun violence, largely because the gun industry and its supporters, notably the National Rifle Association (NRA), have aggressively worked to block government data collection and research, as well as to intimidate private researchers. The US Centers for Disease Control and the US Department of Health and Human Services are effectively blocked from spending any money on gun violence research. In contrast, despite the fact that roughly the same number of people die each year in gun violence as in car accidents, the National Highway Traffic Safety Administration spends roughly $125 million per year to study and improve highway safety. As with highway safety, gun safety is a public health issue and should be address as such.

The blocking of the collection and use of gun data inhibits the solving and prevention of crimes, as well as the formulation of effective policies to reduce gun violence. It also inhibits the identification and prosecution of gun dealers who irresponsibly, if not illegally, sell guns, including guns that are used in crimes. [3][4]

Getting back to the gun violence prevention efforts in the US Senate, the vote on the background check provision was 54 in favor (Yeas) and 46 opposed (Nays), but because of the filibuster, 60 votes in favor were needed to move the legislation forward. It was largely a party line vote, with Republicans opposed and Democrats in favor, with the following exceptions: [5]

4 Republicans in favor: Collins (ME), Kirk (IL), McCain (AZ), and Toomey (PA).
4 Democrats opposed: Baucus (Montana), Begich (Alaska), Heitkamp (ND), and Pryor (Arkansas). (Reid [NV] voted “No”, but as a procedural move to allow him to call for reconsideration.)

I urge you to contact your Senators and let them know how you feel about this issue, whether you agree with their vote or not. If you support them they need to hear that, because there is pressure on them from both sides. If you’d like them to change their vote, they should hear that as well. You can find your US Senators’ names and contact information at: http://www.senate.gov/general/contact_information/senators_cfm.cfm

It wouldn’t hurt to contact your US Representative while you’re at it, although there is no impending action in the House. You can find their names and contact information at: http://www.house.gov/representatives/find/

Good legislation, good data and research, and strong enforcement could significantly reduce the 18,000 suicides and 12,000 murders that happen with guns each year in this country. The attention this issue is finally getting is an important step forward. Communication to elected officials by voters – their constituents – is critical to taking advantage of this window of opportunity and achieving change that will reduce the tragedy of gun violence.

[1] Green, J., 5/1/13, “A matter of time? Congress failed to act, but the gun control tides are shifting,” The Boston Globe

[2] Wellford, C.F., et al., 2004, “Firearms and Violence: A Critical Review,” Committee on Law and Justice, National Research Council, National Academy of Sciences

[3] Bender, M.C., 2/12/13, “Gun lobby blocks data collection by crimefighters,” Bloomberg

[4] Thacker, P.D., 12/19/12, “Congress and the NRA suppressed research on gun violence,” Slate Magazine

[5] The official Senate Roll Call vote record is at: http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=113&session=1&vote=00097

FIXING THE SEQUESTER’S BUDGET CUTS

ABSTRACT: The impacts of the $85 billion, 5% across the board budget cuts that went into effect on March 1^st (known as the Sequester) are being felt. The cuts to air traffic controllers caused flight delays, so Congress acted with rarely seen speed to provide funding for them.

However, other impacts of the sequester, which are having far more significant effects on people’s lives than having a flight delayed, are being ignored by Congress. It is estimated that almost 60,000 young children will lose or receive reduced Head Start and Early Head Start services. Grants for child care subsidies have been cut, which will undermine the ability of parents to work and the school readiness of an estimated 28,000 children. The estimated impacts of other cuts include: lost nutrition benefits for 600,000 mothers and their young children, reduced K-12 education supports for 1.2 million disadvantaged children, fewer meals for tens of thousands of seniors, and 4,000 fewer AmeriCorps and VISTA volunteers. Unemployment benefits, vouchers for rental housing assistance, and health care funding have also been cut.

I urge you to email, write, or call your representatives in Congress and the President to say that it’s nice to fix the sequester’s impact on flight delays, but it’s much more important to fix the significant, negative impacts the sequester is having on people’s daily lives, on our children and their education from birth onward, on seniors’ ability to live independently, and on the ability of low income families and the unemployed to make ends meet.

FULL POST: The impacts of the $85 billion, 5% across the board budget cuts that went into effect on March 1^st (known as the Sequester) are being felt. As you’ve probably heard, the cuts to air traffic controllers caused flight delays. So Congress acted with rarely seen speed and in just two days passed a bill that shifts money from airport improvement projects to provide funding for the controllers. The meat industry, the Pentagon, and the Homeland Security and Justice Departments also got some relief from the sequester’s cuts in the bill. [1]

However, other impacts of the sequester, which are having far more significant effects on people’s lives than having a flight delayed, are being ignored by Congress. Here are some examples: [2][3]

Early childhood care and education:
- Head Start and Early Head Start, which provide families in poverty with school readiness enrichment for children under 5 and other support, are cutting services. Some are closing early and some are shutting down for 2 – 3 weeks. Others are laying off staff and serving fewer children, with some conducting lotteries to determine which children will be asked to leave. This is potentially harmful to children’s brain development, which is likely to negatively affect their success in school and their ability to be productive workers in the future. Nationally, it is estimated that almost 60,000 young children will lose or receive reduced services.
- Grants to the states for child care subsidies have been cut. Therefore, states will offer less help to low income families to pay for child care. This will undermine the ability of parents to work and the school readiness of an estimated 28,000 children.
Nutrition for mothers and their young children: It is estimated that 600,000 low income mothers and their young children will lose nutrition benefits. This could do long-term harm to the health and school readiness of these children.
K-12 Education: School teachers, aides, and literacy and remedial specialists are being laid off. In particular, the Title I program that provides funding to schools serving high numbers of low income families has been cut by $726 million, which is estimated to affect 1.2 million disadvantaged students and 10,000 school staff members.
Unemployment benefits: The federal government advised states to cut their unemployment benefits to the long-term unemployed by 10.7% in the first week of April or make larger percentage cuts later. In California, for example, where unemployment is 9.6%, 400,000 long-term unemployed workers, whose average weekly check is $297, will receive a cut of $52 a week.
Housing: Vouchers for rental assistance are being cut. Some recently issued vouchers are being rescinded and some subsidized tenants are being asked to pay more toward their rent. Waiting lists and times (measured in years in many places) for housing assistance are growing. Tens of thousands of families will be affected.
Services for seniors: Transportation services for seniors are being cut and some senior centers are being closed. Meals on Wheels will deliver hundreds of thousands fewer meals for tens of thousands of seniors.
Health care: Local clinics, the most convenient and cost-effective places to get health care, are cutting services, forcing patients to travel longer distance to access more expensive services at hospitals. Hospitals and health care organizations will lose $11 billion this year. Non-profit hospitals that serve large Medicare populations will be disproportionately affected.
Community service: 4,000 of 80,000 AmeriCorps and VISTA volunteers will be cut.

The impacts of the sequester’s cuts to social and human service programs are difficult to quantify and describe because they are in numerous programs and grants, and are happening differently in each state, in each city, and in each agency and program as these entities struggle to implement the cuts with the least harm possible.

Meanwhile, Congress, including prominent deficit hawks, is insisting that the military spend almost half a billion dollars on tanks that the Pentagon doesn’t want to save 700 jobs at a General Dynamics plant in Ohio. General Dynamics, by the way, spent $11 million on lobbying last year. [4]

I urge you to email, write, or call your representatives in Congress and the President to say that it’s nice to fix the sequester’s impact on flight delays, but it’s much more important to fix the significant, negative impacts the sequester is having on people’s daily lives, on our children and their education from birth onward, on seniors’ ability to live independently, and on the ability of low income families and the unemployed to make ends meet.

[1] Grant, D., 4/16/13, “Before members rush for airports, Congress ends sequester flight delays,” The Christian Science Monitor

[2] Zero to Three, 4/26/13 and 4/8/13, “The sequester’s pain: Air travelers get relief, little kids not so much,” and “When babies share the burden – How the sequester is affecting young children,” Baby Policy Blog of Zero to Three

[3] Coalition on Human Needs, April, 2013, “Sequester impact factsheets,” http://www.chn.org/background/save-state-fact-sheets/

[4] Lardner, R., 4/29/13, “Army says no to tanks, but Congress insists,” Associated Press in Daily Times Chronicle

SOCIAL SECURITY AND CHAINED CPI

ABSTRACT: In his federal government budget, President Obama has proposed cutting future Social Security benefits. He has done so in a way that is probably meant to obscure this fact. The Social Security Administration estimates that the result would be a 5% cut in benefits over every 12 year period.

It would not reduce the annual deficit, because SS has its own, dedicated funding stream. Social Security (SS) does not have a major funding problem; its shortfall 20 years from now is easily remedied.

Therefore, it seems that the only reason President Obama is proposing this cut in SS benefits is to offer a political olive branch to Republicans who want to cut SS because they are ideologically opposed to it.

An average 77 year old is receiving $23,832 per year from SS. If chained CPI had been used over the last 12 years, this person would be receiving $22,560 instead. Despite the very modest level of income that SS provides, one-third of seniors rely on SS for at least 90% of their income and another third for over 50% of their income.

The use of chained CPI as the government’s new, official measure of inflation will also, over time, reduce low income families’ eligibility for benefits and push low and middle income taxpayers into higher income tax rate brackets. Thus, it will disproportionately hit low and moderate income families. This would be morally and ethically questionable in the best of times, but with low and middle income families still suffering from the effects of the Great Recession, and income and wealth inequality at levels unseen for at least 80 years, this is unconscionable.

I urge you to contact the President, your Senators, and your Congressperson in the House of Representatives and ask them to oppose this change – or to explain why they support it.

FULL POST: In his federal government budget, President Obama has proposed cutting future Social Security benefits. He has done so in a way that is probably meant to obscure this fact or at least muddy the waters so his proposal isn’t describe as a benefit reduction.

Obama has proposed that the annual inflation adjustment for Social Security (SS) benefits be calculated differently. Instead of using the current Consumer Price Index (CPI), he proposes using a figure called the “chained CPI.” [1] It gives a lower estimate of inflation than CPI, so benefits would increase more slowly. The Social Security Administration estimates that the result would be a 5% reduction in benefits over every 12 year period.

This would cut total SS payments by $10 – $20 billion per year over the next 10 years. However, it would not reduce the annual deficit (which is roughly $800 billion), because SS has its own, dedicated funding stream and is not part of the regular federal budget. Furthermore, SS does not have a major funding problem; its shortfall 20 years from now is easily remedied by other steps that don’t reduce future payments to retirees. (See posts of 1/7/13 and 12/4/11 for more details.)

An average 77 year old is receiving $23,832 per year from SS. If chained CPI had been used over the last 12 years, this person would be receiving $22,560 instead, $1,272 less or a little over a 5% reduction. [2]

Despite the very modest level of income that SS provides, one-third of seniors rely on SS for at least 90% of their income and another third for over 50% of their income. Chained CPI won’t keep up with the inflation that seniors actually experience, given the high portions of their incomes that go for the necessities of food and health care. [3]

And if that isn’t bad enough, remember that SS was meant to be one leg of a three legged stool of retirement security that included employer pension plans and personal savings. Employer pensions have disappeared for most workers and have, at best, been turned into personal savings plans, such as 401ks, where workers have all the risk, just like other personal savings. Given this, now is not the time to be cutting SS, the only guaranteed retirement benefit left in what is now a much less stable and riskier two legged stool.

The use of chained CPI as the government’s new, official measure of inflation will also, over time, reduce low income families’ eligibility for benefits and push low and middle income taxpayers into higher income tax rate brackets. For example, the federal poverty rate is adjusted annually for inflation. Using chained CPI, it will rise more slowly and, in the future, fewer families will fall below the poverty line, which is used to determine eligibility for programs from Head Start to health care, food, and heating assistance. The federal income tax brackets are also adjusted annually for inflation. With the cut off amounts for higher income tax rate brackets rising more slowly, more taxpayers will fall into higher brackets, increasing their income tax. This doesn’t affect the wealthy, of course, because they are already in the top bracket. [4]

The bottom line is that this change in the measure of inflation that is used to calculate Social Security benefits, eligibility for many anti-poverty programs, and income tax rate brackets will disproportionately hit low and moderate income families. This would be morally and ethically questionable in the best of times, but with low and middle income families still suffering from the effects of the Great Recession, and income and wealth inequality at levels unseen for at least 80 years, this is unconscionable.

In reality, this is a backdoor way to cut benefits for SS recipients and low income families, and to have low and middle income taxpayers pay more in income taxes – without having to say that’s what you’re doing. Obfuscation is the name of this game.

I urge you to contact the President, your Senators, and your Congressperson in the House of Representatives and ask them to oppose this change – or to explain why they support it.

[1] Chained CPI assumes that as the prices of goods and services rise, consumers substitute less costly alternatives. For example, if gas prices rise, consumers use their cars less or buy (usually smaller) cars that get better gas mileage. Or if the price of beef goes up, they buy less beef and more chicken or less meat overall. Or if the price of heating oil goes up, consumers turn down the heat and use electric space heaters to heat only the rooms in which they spend time. First, this sounds, in many cases, like a decline in one’s standard of living or quality of life. Second, in some cases buying a cheaper substitute isn’t really an option. When the cost of health insurance and health care goes up, there often isn’t a way to buy a less costly alternative. And for seniors, this is a big part of their budget.

[2] Matthews, D., 12/11/12, “Everything you need to know about Chained CPI in one post,” The Washington Post

[3] Warren, E., 4/10/13, Newsletter from Senator Elizabeth Warren

[4] Ohlemacher, S., 4/8/13, “Obama plan hits seniors, low-income taxpayers,” Associated Press (in the Reading Daily Times Chronicle)

CUTTING SPENDING TO REDUCE THE DEFICIT Part 2

ABSTRACT: Medicare and Medicaid do present significant funding challenges. This is because they reflect the costs of our health care system, which spends 2 ½ times what other advanced economies spend on average – and our health outcomes are worse. Obamacare takes initial steps to make our whole health care system more cost effective. One proposal to save money in Medicare is to raise the age at which one is eligible for coverage from 65 to say 67. This would save only $13 billion per year over 10 years and would only shift the cost for health insurance somewhere else.

Cuts to Medicaid mean that fewer low income individuals, primarily low income children and seniors, would have health insurance.

It is unfair and unnecessary to cut services and benefits for low income families and seniors when other options for reducing the deficit are available.

FULL POST: Medicare and Medicaid do present significant funding challenges. This is because they reflect the costs of our health care system, which spends over $7,500 per person per year. This is 2 ½ times what other advanced economies spend on average – and our health outcomes are worse. (See post of 12/9/11 for more details.)

The real issue is the need to make our whole health care system more cost effective. Obamacare takes initial steps to do just that. It includes cuts in payments to Medicare health insurers and health care providers of $700 billion, requiring them to be more efficient, but not cutting any benefits to seniors. Nonetheless, during the 2012 campaigns, Republicans attacked this as a cut to Medicare, despite the fact that their Vice Presidential candidate, Paul Ryan, the chairman of the House Budget Committee, had included these cuts in his budget the previous two years. Ironically, Republicans have also taken steps to eliminate the cost control board created by Obamacare that is charged with limiting the growth of Medicare spending. [1]

President Obama has continued his efforts to reduce Medicare costs by proposing giving Medicare the right to negotiate with drug makers for lower prices. [2] The Veterans Administration and large health insurers already do this and save significant amounts of money, but President Bush’s Medicare drug benefit prohibited Medicare from doing so, providing a windfall to the pharmaceutical corporations.

Another proposal to save money in Medicare is to raise the age at which one is eligible for coverage from 65 to say 67 and increase premiums for high income recipients. The Congressional Budget Office reviewed these proposals and concluded that they would save only $13 billion per year over 10 years. Moreover, increasing the eligibility age would only shift the cost for health insurance somewhere else and would leave some people without health insurance.

Cuts to Medicaid mean that fewer low income individuals would have health insurance or that their benefits would be cut. Medicaid beneficiaries are primarily low income children and seniors, with Medicaid paying for many seniors’ nursing home care. An expansion of Medicaid is an essential part of reducing the number of Americans without health insurance under Obamacare.

It is unfair and unnecessary to cut services and benefits for low income families and seniors when other options for reducing the deficit are available. Despite our riches, the US is less generous in its benefits for seniors and low income families than other countries with advanced economies. Surely, we can find the will and a way to maintain, if not improve, our benefits for these members of our society.

[1] New York Times editorial, 11/18/12, “A bad idea resurfaces,” The New York Times

[2] Krugman, P., 12/3/12,“The GOP’s big budget mumble,” The New York Times

CUTTING SPENDING TO REDUCE THE DEFICIT

ABSTRACT: A deal was reached to address the year-end “fiscal cliff” or austerity crisis. Spending cuts were postponed for two months and most of the tax increases were eliminated, while some tax and revenue increases were enacted. The deficit reduction focus will now largely shift to spending cuts. We should be focusing on job creation and strengthening the economy, but somehow the deficit is the hot topic.

The discussion of spending cuts will probably focus on the military and on entitlement programs, specifically Social Security and the health care programs, Medicare and Medicaid. Much of the discussion of cutting military spending will be on avoiding cuts. However, military spending can be reduced up to $200 billion per year – without jeopardizing national security.

Turning to calls for cuts in Social Security and our public sector health programs, keep in mind that every other advanced economy has health care for all and a retirement support system. Social Security has its own funding stream and does not contribute to the deficit, so rationally it shouldn’t be part of this discussion. Ideologues are using the deficit issue to target Social Security because of their doctrinaire opposition to it. Minor changes to its funding would cover benefits for the next 75 years.

My next post will review proposed cuts to Medicare and Medicaid.

FULL POST: As you probably know, a deal was reached to address the year-end “fiscal cliff” or austerity crisis. Spending cuts were postponed for two months and most of the tax increases were eliminated, while some tax and revenue increases were enacted. The cap on the US government’s debt was not addressed and will be hit in about two months. Here’s a quick summary of what was enacted: [1]

Income tax rates on incomes over $400,000 will increase from 35% to 39.6% and some reductions in deductions will start at $250,000 in income, but there is no “Buffett Rule” requiring 30% be paid on incomes over $1 million. The net result is that new revenue from income taxes will be only about $60 billion per year as opposed to up to $450 billion with the rates increased on incomes over $250,000 and the “Buffet Rule”.
The Social Security payroll tax reduction was NOT extended, so all workers will have an additional 2% taken out of their paychecks on earnings up to $110,000.
Tax benefits for low income households were extended: a child credit and the Earned Income Tax Credit, which supplements income from low paying jobs. The tuition credit was extended as was the corporate research and development credit. The Alternative Minimum Tax, which originally was to function like the “Buffett Rule”, was adjusted so it won’t affect middle income taxpayers.
Unemployment benefits for the long-term unemployed were extended for a year.
The estate tax was increased slightly but not nearly as much as some had proposed and only on individual estates of over $5 million or joint estates of over $10 million.

The deficit reduction focus will now largely shift to spending cuts. We should be focusing on job creation and strengthening the economy, given high unemployment and slow economic growth, but somehow the deficit is the hot topic. As the current experience in Europe is clearly showing, cutting government spending weakens the economy and job growth and can put countries back into a recession.

Having said that, the discussion of spending cuts will probably focus on the military and on entitlement programs, specifically Social Security and the health care programs, Medicare (for seniors) and Medicaid (for low income people including low income seniors).

Unfortunately, much of the discussion of cutting military spending will be on avoiding cuts, including the $50 billion per year cut that is now scheduled for March 1. Military spending can be reduced this much and more – up to $200 billion per year – without jeopardizing national security. (See blog posts of 9/29/12 and 11/17/11 for more information.) For example, Lawrence Korb, an assistant defense secretary under President Reagan, has itemized $150 billion in annual cuts to the military budget. [2]

In the recently enacted $633 billion Defense Department spending bill, there was widespread criticism of inclusion of unnecessary spending. The dollar amount was more than the Department or President requested. The Pentagon complained that it is required to keep weapons, as well as bases and units, that are not needed or efficient. Defense Secretary Panetta decried meddling by Congress that required “excess force structure and infrastructure.” [3][4]

Turning to calls for cuts in Social Security and our public sector health programs, keep in mind that every other advanced economy has health care for all and a retirement support system. So the issue is not whether it is possible to have these programs, it is are we willing to pay for them and are we willing to control health care costs.

Social Security has its own funding stream and does not contribute to the deficit, so rationally it shouldn’t be part of this discussion. Ideologues are using the deficit issue to target Social Security because of their doctrinaire opposition to it. Furthermore, its current funding will cover its benefits for roughly the next 20 years and after that minor changes to its funding would cover benefits for the next 75 years without any cuts in benefits. (See post of 12/4/11 for more details.)

The most prominent proposal for cutting Social Security spending is to reduce the annual increase in benefits that adjusts for inflation. This would save less than $20 billion per year over 10 years. [5] Ask any senior you know if the inflation adjustment is sufficient to keep up with their cost of living and I bet they’ll say, “No.” So cutting this will only hurt our seniors and reduce Social Security’s ability to keep seniors out of poverty. Furthermore, Social Security has become an increasingly important part of retirement income as private sector pensions have largely disappeared; cutting its rather modest benefits seems inappropriate in this environment.

My next post will review proposed cuts to Medicare and Medicaid.

[1] New York Times, 1/1/13, “Highlights of the agreement,” The Boston Globe

[2] Dubose, L., 11/15/12, Book review of Ralph Nader’s “The seventeen solutions: Bold ideas for our American future,” The Washington Spectator

[3] Bender, B., 1/5/13, “A reprieve for local military bases: New Congressional funding flouts Pentagon’s plan for cutbacks,” The Boston Globe

[4] Boston Globe Political Notebook, 12/21/12, “House approves defense bill despite Pentagon objections,” The Boston Globe

[5] Krugman, P., 12/3/12, “The GOP’s big budget mumble,” The New York Times

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

INCREASING REVENUE TO CUT THE DEFICIT

ABSTRACT: Increased revenue needs to be part of the effort to reduce the federal government’s budget deficit. Two revenue sources that are not included in the austerity package are closing corporate tax loopholes and enacting a financial transactions tax. They could eliminate over half the deficit with little negative impact on the economy.

The highest profile revenue issue in the austerity package is the personal income tax. Given that the 2001 – 2003 tax cuts on earned and unearned income were significant contributors to creating the deficit, reversing them for high income individuals would seem appropriate. Maintaining the Bush tax cuts on high incomes would cost up to $160 billion per year in lost revenue. Alternatively, using these funds on high impact spending will reduce the deficit over the long-term while strengthening the economy and creating jobs in the short-term.

FULL POST: Increased revenue needs to be part of the effort to reduce the federal government’s budget deficit. However, the increased or new taxes that produce the revenue should not be so large or so quickly implemented that they put the economy back into recession. Here’s a look at the revenue increases that are part of the current austerity package (aka the “fiscal cliff”), some of the negotiations that have occurred on them, and some alternatives that are not included in the package.

First, two revenue sources that are not included in the austerity package are closing corporate tax loopholes and enacting a financial transactions tax (as 10 European countries are doing). These could provide $250 billion and $350 – $500 billion annually, respectively, in new revenue, and eliminate over half the deficit with little negative impact on the economy. (See my post of 9/29/12 for more detail.) An alternative minimum tax for highly profitable corporations that would ensure that they pay a minimum tax rate – similar to the Buffet Tax proposal for high income individuals – would seem quite reasonable. Roughly a quarter of our large and profitable corporations pay NO federal income tax despite multi-billion dollar annual profits. (See my post of 11/5/11 for more detail.) Google, for example, avoided paying $2 billion in taxes in 2011 by funneling profits to overseas shell companies. [1]

The highest profile revenue issue in the austerity package is the personal income tax. The tax cuts enacted by President Bush in 2001 and 2003 are scheduled to expire. President Obama originally proposed letting the cuts expire on income over $250,000 per year, but keeping the cuts on income under that amount. The Republicans proposed a $1 million cut off and Obama has countered with a $400,000 cut off. As the cut off gets higher, the amount of revenue (and deficit reduction) is reduced. The difference between a $250,000 and a $400,000 cut off is estimated to be $40 billion per year in revenue (i.e., $160 billion versus $120 billion in increased revenue).

Expiration means the tax rate on upper incomes would increase from the current 35% to 39.6%, the rate that was in place in the late 1990s. (Note that for an individual with $20 million in taxable income, the Bush tax cuts of 2001 – 2003 have put roughly $1 million in their pockets each year for the last 10 years.) In addition, increasing the tax rate on unearned income – capital gains, dividends, and interest – back to 1990s rates is another hot topic. Given that the 2001 – 2003 tax cuts on earned and unearned income were significant contributors to creating the deficit, reversing them for high income individuals would seem appropriate.

The bottom line is that maintaining the Bush tax cuts on high incomes would cost up to $160 billion per year in lost revenue. Alternatively, using these funds on high impact spending, such as infrastructure investments or unemployment benefits, would generate an estimated net gain of 1.2 million to 1.5 million jobs and add 1.0% to 1.5% to economic growth. The growth in jobs and the economy will, in and of itself, reduce the deficit because taxes and revenue grow when the economy grows. Therefore, this approach will reduce the deficit over the long-term while strengthening the economy and creating jobs in the short-term. The only revenue increase in the austerity package that has a greater positive effect on jobs and the economy than letting the tax cuts on high incomes expire is terminating the cuts in the estate and gift taxes. [2]

In my next post, I’ll review the arguments against raising tax rates on high income individuals. In subsequent 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] Brown, C., 12/13/12, “Google on ‘immoral’ tax evasion: ‘It’s capitalism’,” Common Dreams

[2] Bivens, J., & Fieldhouse, A., 9/18/12, “A fiscal obstacle course, not a cliff,” Economic Policy Institute

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

A MANUFACTURED AUSTERITY CRISIS, NOT A FISCAL CLIFF

ABSTRACT: The so-called fiscal cliff you’ve been hearing so much about is actually a manufactured austerity crisis. There is widespread agreement that if nothing is changed by or relatively soon after December 31 that our economy is extremely likely to fall into a recession and unemployment is likely to increase to over 9%, an increase of between 1% and 1.5%.

The austerity package bundles together a variety of measures that are largely unrelated. Addressing these complex issues individually and with time for thoughtful consideration would make more sense than doing so in a bundle under severe time constraints. The austerity package’s cuts to social programs would be 8.4% across the board, with a few programs exempted. These cuts would have very significant negative effects on low income families and on education.

FULL POST: The so-called fiscal cliff you’ve been hearing so much about is actually a manufactured austerity crisis. [1] Congress and the President agreed on this package of spending cuts and tax increases (which take effect on December 31) because the Republicans demanded it in exchange for their votes to increase the federal government’s debt cap back in August 2011. As you may remember, they pushed the government to the brink of default – which hurt its credit rating and the economy – in order to extract these austerity measures. (By the way, I believe this brinksmanship and the harm it caused is incredibly UNpatriotic; but that’s a separate discussion.) A Congressional “Super-committee” was created to find alternative ways to reduce the deficit but was unable to come to a consensus recommendation, so we are left with this “fiscal cliff.” However, the effects of the austerity package would occur over time, so it is actually more of a “slope” than a “cliff.” [2]

There is widespread agreement that if nothing is changed by or relatively soon after December 31 that our economy is extremely likely to fall into a recession and unemployment is likely to increase to over 9%, an increase of between 1% and 1.5%. The roughly $100 billion per year in spending cuts and $350 billion in annual tax increases would reduce the deficit from about $1 trillion per year to about $600 billion. But taking this $400 billion out of the country’s economic activity would almost certainly turn slow economic growth into a recession. (See my post, The “Fiscal Cliff” and the Economy of 9/19/12 for more details.) As we’ve seen in Europe, austerity measures have pushed Greece, Spain, and Britain into a recession and the whole Eurozone is teetering on the edge of recession.

The federal government’s deficit does need to be addressed, but doing so precipitously and in the wrong ways will hurt the economic recovery. The immediate problems are not the government deficit, but the lack of jobs, particularly middle class jobs, and the lack of consumer spending, which represents two-thirds of our economic activity. [3] In addressing the deficit, we should use strategies that minimize negative effects on jobs and the economy. (See my post, Addressing the Deficit on 9/29/12 for four specific policy changes that would eliminate the roughly $1 trillion per year deficit with minimal impact on jobs and the economy.) Furthermore, spending cuts and increased tax revenue should be phased in over time to reduce their impact on our weak economy. [4]

The austerity package bundles together a variety of measures that are largely unrelated other than they have some impact on the federal government’s revenue or spending; although some actually have no impact on the deficit. Therefore, some view this “fiscal cliff’ as more of a “fiscal obstacle course.” [5] Major changes to both the personal and corporate tax codes are included, as well as significant changes to spending on a wide range of government programs from defense to social programs. Addressing these complex issues individually and with time for thoughtful consideration would make more sense than doing so in a bundle under severe time constraints.

In addition to the expiration of the Bush tax cuts, which expire for all income levels in the austerity package, other benefits for middle and low income households are scheduled to expire as well. These include:

Unemployment benefit extensions beyond the traditional 26 weeks (2 million individuals would lose benefits in December and another 1 million in April)
The reduction in the Social Security and Medicare payroll tax (by 2% of pay, which puts about $1,000 a year in the average worker’s pocket)
An enhancement to the Child Care Tax Credit
The expansion of the Earned Income Tax Credit, which augments incomes of low income workers
An exemption from income tax on mortgage debt that is forgiven

The austerity package’s spending cuts come 50% from the military and 50% from social programs. Many members of Congress oppose the cuts to the military. However, there are strong arguments for cutting military spending: 1) it has more than doubled (to $733 billion per year) since 2001, 2) we are winding down the wars in Iraq and Afghanistan, 3) we have far and away the largest military budget in the world, and 4) it’s widely acknowledged that there is significant waste in the military budget. Furthermore, military spending is not an efficient way to create jobs and at 58% of the federal government’s discretionary spending, it would be difficult and unfair to significantly reduce spending without cutting the military budget. (See posts of 9/29/12 and 11/17/11 for more details.)

The austerity package’s cuts to social programs would be 8.4% across the board, with a few programs exempted, such as Medicaid and the Children’s Health Insurance Program. These cuts would have very significant negative effects on low income families and on education. It is estimated that: [6]

75,000 3 and 4 year old, disadvantaged children would lose the enriched preschool services of Head Start;
25,000 young children would lose subsidies for early care and education (aka child care);
16,000 teachers and other school staff would lose their jobs;
460,000 students would lose special education services and 12,500 special education staff would lose their jobs;
20,000 youth would lose job training;
734,000 households would lose heating (or cooling) assistance;
Community health centers would lose $55 million; and
1.3 million college students would lose tuition support.

If cuts to military spending are reduced, but overall spending reductions are maintained, cuts to social programs would be even more severe.

In my next two posts, I’ll discuss reducing the deficit through alternatives to the current austerity package, including reviewing various alternative proposals that have been put forth. I’ll focus first on options for increasing revenue and second on options for cutting spending.

[1] Klein, E., 11/28/12, “It’s not a fiscal cliff, it’s an austerity crisis,” Bloomberg

[2] Stone, C., 9/24/12, “Misguided ‘fiscal cliff’ fears pose challenges to productive budget negotiations. Failure to extend tax cuts before January will not plunge economy into immediate recession,” Center on Budget and Policy Priorities

[3] Krugman, P., 11/12/12, “On deficit hawks and hypocrites,” The New York Times

[4] Woolhouse, M., 11/19/12, “Phase in deficit cuts, economists say,” The Boston Globe

[5] Bivens, J., & Fieldhouse, A., 9/18/12, “A fiscal obstacle course, not a cliff,” Economic Policy Institute

[6] Every Child Matters Education Fund, 11/16/12, “The pending threat of Congressional actions to children’s safety net programs,” Every Child Matters, http://everychildmatters.org

IRRATIONAL EXTREMISM BLOCKS PROGRESS

ABSTRACT: The irrational extremism associated with the Tea Party faction of the Republican Party has just blocked progress for disabled people around the world by defeating ratification of a treaty. Radical Republicans used scare tactics and lies to defeat it. They ignored the support of 61 Senators including John McCain, of former President G. W. Bush, of every veterans group in America, and of former Senator Dole, who came to the Senate chamber to support the treaty in a wheelchair as an 89 year old, disabled veteran, and former Republican Presidential nominee. They ignored the fact that it would improve opportunities for 4.5 million children worldwide who don’t attend school because they are blind.

This is an example of how a small number of extremists in Congress is blocking progress for millions of people in the U.S. – and around the world.

FULL POST: The irrational extremism associated with the Tea Party faction of the Republican Party has just blocked progress for disabled people around the world by defeating ratification of a treaty. The treaty, the United Nations Convention on the Rights of Persons with Disabilities, is:

Based on the Americans with Disabilities Act (ADA) passed 22 years ago.
Supported by 61 Senators including John McCain as well as former President G. W. Bush and former Senator Bob Dole.
Ratified by 126 other countries.

Despite 61 votesin favor of ratification, radical Republicans used scare tactics and lies to defeat it. (Treaty ratification requires a 2/3s majority or 66 votes.) [1]

Because it is based on the ADA, the U.S. is already basically in compliance. But because it conflicts with Tea Party ideology that views cooperation with the United Nations and other countries as surrendering U.S. sovereignty, arguments were fabricated to defeat it. Tea Party types argued that it would threaten parents and home schooling because it says that disabled children have a right to education, and that it would promote abortion because it says that disabled people have a right to health care including reproductive health. They argued both that the treaty was toothless in forcing other countries to provide access for disabled persons and that it would tie the hands of the U.S. and force unwanted changes here despite the fact that the ADA is already in place. [2]

They ignored the support of every veterans group in America, who viewed it as supporting disabled veterans, and of former Senator Dole, who came to the Senate chamber to support the treaty in a wheelchair as an 89 year old, disabled veteran, and former Republican Presidential nominee. Among other potential treaty benefits, they ignored the fact that it would improve opportunities for 4.5 million children worldwide who don’t attend school because they are blind.

This is an example of how a small number of extremists in Congress is blocking progress for millions of people in the U.S. – and around the world.

[1] Calvan, B.C., 12/5/12, “Treaty for disabled rights falls short in Senate,” The Boston Globe

[2] Boston Globe Editorial, 12/6/12, “Tea Party scare tactics doom disabled treaty in the Senate,” The Boston Globe

CAMPAIGN SPENDING: THE FUTURE

ABSTRACT: The huge sums of money in our political system are corrupting it, in subtle and not so subtle ways, and are undermining the promise of democracy of, by, and for the people. We the people need to work to blunt the impact and eventually stop the flow of these huge amounts of money. Steps that could and should be taken include: 1) Legislation at the federal and state levels should be enacted promptly that requires disclosure on a timely basis of all political spending and the sources of the funds; 2) Lobbyists’ contributions to candidates must be severely restricted and perhaps prohibited; 3) Tougher rules and enforcement are needed of the ban on coordination between Super PACs or other groups and candidates’ campaigns; and 4) Ultimately, a Constitutional Amendment is needed to overturn the Supreme Court’s Citizens United decision.

I urge you to communicate to your elected representatives at the federal and state levels your concern about the corrupting influence of huge amounts of money in our political system. Ask them what remedies they support and encourage them to support the steps listed above.

FULL POST: The huge sums of money in our political system are corrupting it, in subtle and not so subtle ways, and are undermining the promise of democracy of, by, and for the people. Despite the fact that all the outside money and all the advertising it bought were less effective in the 2012 election than was anticipated and than was hoped for by those paying for it, the big spenders learned some valuable lessons. They won’t give up on their efforts to influence and control government and its policy making. They will find more effective ways to use their money and will have substantial impacts in the future. [1] Therefore, we the people need to work to blunt the impact and eventually stop the flow of these huge amounts of money.

First, some of the lessons the big spenders learned:

Advertising, and particularly negative advertising, has diminishing returns as the amount of it and repetition of it increases.
Grassroots efforts to identify and turn out supporters can have a big impact.
Grassroots, person-to-person communications can be more effective than advertising.
Untested candidates or ones with extreme positions are more likely to lose.
Money can have a bigger impact in less visible, lower cost races.

The less visible, lower cost races include primary, US House of Representatives, and state office races (as opposed to the final Presidential election and final US Senate races). In the Republican Presidential primary, the big money from Super PACs clearly had an effect. Money from the Super PAC supporting Romney deluged state primary elections with negative advertising against whichever competitor was threatening Romney at that point. This clearly allowed Romney to win state primaries he wouldn’t have won otherwise. Huge Super PAC expenditures by extremely rich individuals single-handedly kept Gingrich and Santorum in the primary race longer than they would have been otherwise. [2]

In lower cost races, a given amount of money (e.g., $100,000) is more significant, may overwhelm other campaign spending, and can have a disproportionate impact, especially if spent late in the election period and as a surprise. State office races such as those for Governor, state legislative seats, and elected judges can be dramatically affected by relatively small amounts of money. State ballot initiatives can also be significantly altered by relatively small sums of money.

Given the corrosive effects of huge amounts of money in our political system, a New York Times Editorial stated, “A backlash against the damaging power of big money cannot come too soon.” [3] Steps that could and should be taken include:

Legislation at the federal and state levels should be enacted promptly that requires disclosure on a timely basis of all political spending and the sources of the funds. The DISCLOSE Act that has been introduced in Congress is one example. (It was filibustered by Senate Republicans multiple times.) Disclosure must cover all entities engaged in political spending, including non-profit, “social welfare” groups, known as 501(c)(4)s to the IRS.
Lobbyists’ contributions to candidates must be severely restricted and perhaps prohibited, especially for an elected official sitting on the legislative committee that oversees the special interest the lobbyist represents. The definition of a lobbyist must be expanded to cover all individuals and entities that work to influence government policies, rules, and regulations. The ability of lobbyists and others to deliver aggregated contributions from multiple individuals or groups, often referred to as “bundling,” and which can occur through fundraising events organized by a lobbyist, should be banned or at least fully disclosed.
Tougher rules and enforcement are needed of the ban on coordination between Super PACs or other groups and candidates’ campaigns. The overlap and connections between candidates’ current and former campaign staff and the staff of the supposedly independent groups, and the use of the same consultants, provide clear evidence that these groups are not, in fact, independent. [4]
Ultimately, a Constitutional Amendment is needed to overturn the Supreme Court’s Citizens United decision, to make it clear that corporations are not persons with Constitutional rights, that money is not the same as speech, and that corporations and political spending can be regulated.

[1] New York Times Editorial, 11/10/12, “A landslide loss for big money,” The New York Times

[2] Boston Globe Editorial, 11/8/12, “Billionaires: Now, mind your own business(es),” The Boston Globe

[3] New York Times Editorial, 11/10/12, “A landslide loss for big money,” The New York Times

[4] Boston Globe Editorial, 9/29/12, “As super PACs link arms, mega-donors’ clout increases,” The Boston Globe

CANDIDATES’ BUDGET PROPOSALS AND THE DEFICIT

ABSTRACT: Both Presidential candidates, Obama and Romney, have put forward tax and budget proposals that they say will reduce the deficit. Obama’s tax and spending proposals would reduce the deficit by about one quarter. Romney’s proposals cannot be reasonably expected to reduce the deficit. Furthermore, they are likely to increase the deficit and the already high levels of inequality in income and wealth.

FULL POST: Both Presidential candidates, Obama and Romney, have put forward tax and budget proposals that they say will reduce the deficit. Obama has specified tax increases and a cut to military spending that would begin to reduce the deficit. Romney says his tax proposals would be revenue neutral, although he fails to specify how he would offset his tax cuts, and he promises to increase military spending. He asserts that his proposals would produce economic growth that would increase tax revenue and reduce the deficit; however, there is no credible evidence for that assertion. (Note: President G. W. Bush’s tax cuts, increases in military spending, and promises of economic growth that would pay for them are what began the process of turning a federal government surplus into deficits.)

Obama would let the Bush tax cuts on income over $250,000 expire and would also restore or increase taxes on unearned income (i.e., capital gains, dividends, and interest). He has also proposed limiting deductions and exclusions from income, as well as implementing the “Buffett Rule,” so that households with incomes over $1 million would at least pay taxes at the rate that middle class families do. These measures would generate roughly $200 billion per year in additional revenue, reducing the deficit by one-fifth. [1]

Obama has also proposed reducing the $700 billion military budget by about $50 billion per year as the wars in Afghanistan and Iraq wind down. Together, these tax and spending proposals would reduce the deficit by about one quarter.

Romney proposes keeping the Bush tax cuts and further reducing tax rates on earned income by one-fifth. He would maintain even lower tax rates on unearned income than earned income. Overall, these proposals would reduce income tax revenue by about $400 billion per year. Romney says he will make up for the lost revenue by reducing tax deductions and credits, and that the well-off will continue to pay at least the same amount in taxes. He says would do this by limiting total deductions and credits on a tax return to a fixed dollar amount and has mentioned amounts ranging from $17,000 to $50,000. [2]

While it is theoretically possible to achieve the same amount of revenue (i.e., revenue neutrality) under Romney’s proposals, it would be challenging and would require significantly cutting very popular deductions. [3] Four deductions account for 80% of all deductions and credits; in order of size they are the deductions for 1) home mortgage interest, 2) state and local taxes paid, 3) real estate taxes paid, and 4) charitable contributions. If an across the board cut to deductions were used to offset the loss in revenue, Romney would have to cut all these deductions by about one-third. Clearly, this would be unpopular and would also hit the middle class as well as high income families.

Romney has also proposed eliminating the estate tax, while Obama proposes maintaining an estate tax on estates over $3.5 million. Romney has also stated that he will increase the military budget. Here again, Obama’s proposal clearly reduces the deficit and these Romney proposals would clearly increase the deficit. The benefits of eliminating the estate tax, of course, go to wealthy families.

With a backdrop of 30 years of decreasing income tax rates that have seen dramatic increases in income and wealth in our best-off households and middle class families struggling to keep their heads above water, further cuts in tax rates do not seem at all likely to reverse this trend or benefit the middle class. Further, to provide some perspective on Romney’s proposal, looking at the cuts in tax rates alone, a family with taxable income of $100,000 or less, whose tax rate is cut from 25% to 20%, would see a benefit of $5,000 or less. A family with taxable income of $1 million, whose rate is cut from 35% to 28%, would see a benefit of $70,000; and if income is $10 million, a benefit of $700,000. This just doesn’t seem fair, especially on top of the huge tax cuts these high income households have seen over the last 30 years.

In addition, Romney’s proposal maintains lower rates on all unearned income (i.e., capital gains, dividends, and interest), while Obama’s has lower rates only on long-term capital gains (i.e., investments held for over one year). Having lower rates on all unearned income also doesn’t seem fair, especially given that the great bulk of unearned income goes to high income, high wealth households. Moreover, one of Romney’s arguments for lower tax rates is that by letting taxpayers keep more of what they earn, they will be rewarded for working. If we want to reward work, then income tax rates on work, namely earned income, should be lower (not higher) than the rates on non-work (unearned) income.

Finally, Romney’s assertion that cuts in tax rates will spur economic growth does not have any credible evidence. [4] This rationale has been used for the tax rate cuts that have occurred over the last 30 years. The strongest economic growth of the past 30 years (and the only elimination of the federal government’s deficit) occurred under President Clinton when he increased tax rates on high incomes. Furthermore, the rationale for tax cuts spurring growth has been that they put more money in consumers’ pockets and, with consumer spending being two-thirds of our economy, their spending will grow the economy. However, Romney has said his tax cuts will be offset by reducing deductions so that there will be no loss in government revenue or increase in the deficit. Therefore, there is no increase in the money in consumers’ pockets and no increased spending to spur economic growth.

If Romney’s tax cuts are indeed offset by reducing deductions so the result is revenue neutral, and if he lives up to his commitment to cap federal government spending at 20% of the overall economy (i.e., of gross domestic product), which would require significant spending cuts, Romney’s plans are likely to lead to job losses and a recession, not economic growth. Overall, Obama’s budget and tax proposals are highly likely to do more to spur near-term growth in jobs and the economy than Romney’s. [5]

In conclusion, Obama’s tax and budget proposals do take steps that can be reasonably expected to reduce the deficit by about one-quarter. Romney’s proposals cannot be reasonably expected to reduce the deficit. Furthermore, they are likely to increase the deficit and the already high levels of inequality in income and wealth.

[1] Tax Policy Center, Oct. 2012, “Major tax proposals by President Obama and Governor Romney”

[2] Wirzbicki, A., & Borchers, C., 10/5/12, “Questions on challenger’s idea to cap tax deductions,” The Boston Globe

[3] Kranish, M., 9/21/12, “Candidates leave much unsaid on tax plans,” The Boston Globe

[4] Rowland, C., 10/15/12, “GOP faith unshaken in supply-side tax policies,” The Boston Globe

[5] Bivens, J., & Fieldhouse, A., 9/26/12, “Who would promote job growth most in the near term?” The Century Foundation

PRIVATIZATION EXAMPLES I

ABSTRACT: Currently, privatization of public sector functions is being looked to to generate badly needed immediate cash. First example: the city of Chicago, desperate for cash to cover a budget shortfall, sold its parking meter revenue for the next 75 years for $1.2 billion. Parking rates in some neighborhoods have quadrupled. The city is prohibited from engaging in any activity that could be competition for the parking meters and has to reimburse the private owners for any lost revenue due to a street closing, a meter being out of commission, and free parking provided to the disabled. Chicago has given up the ability to make decisions about parking for 75 years and appears to have in effect guaranteed substantial profits to the private investors.

Second example: Indiana received $3.8 billion in 2006 from an international consortium in exchange for the right to maintain, operate, and collect tolls for 75 years on 157 miles of Interstate 90. The 400 page lease agreement is indicative of both the thought that went into it and the complexity of such an arrangement.

A danger in these high-value, long-term privatization deals is that sophisticated investors will take advantage of government officials desperate for short-term revenue, who often don’t take the time or have the expertise to perform appropriate, long-term, cost-benefit analyses. Because of their significant impact on the public, any privatization deal should require public hearings, and those with a longer time span than the term of office of the person signing it should require super-majority approval (say 2/3) by the relevant legislative body, while those over 10 years should require a voter referendum with a super-majority (say 2/3) needed for approval.

FULL POST: In my previous post (10/16/12), I provided an overview of privatization of public sector functions and evidence that there’s no guarantee of improved performance. Privatization doesn’t always meet its stated goals of saving taxpayers’ money, improving public services, and/or increasing accountability. It only tends to be successful if there is good oversight and regulation, as well as real competition.

Currently, privatization is being looked to, not for those traditional reasons, but to generate badly needed immediate cash. This is occurring because the public sector is being squeezed by falling revenues (largely due to the recession and in some cases due to tax cuts) and rising costs (generally due to inflation). Here are two examples of privatization to raise immediate cash.

First, in 2009, the city of Chicago, desperate for cash to cover a budget shortfall, sold its parking meter revenue for the next 75 years for $1.2 billion. The private consortium of investors was led by the huge Wall Street financial corporation, Morgan Stanley (one of the companies responsible for the collapse of the financial sector and the recession that contributed to Chicago’s severe budget shortfall).

The deal will allow the private owners to increase parking fees substantially and parking rates in some neighborhoods have quadrupled. [1] It prohibits the city from any activity, such as building a new parking garage, that could be competition for the parking meters. The city has to reimburse the private owners for any lost revenue due to a street closing for repairs or a street festival. If a meter is out of commission for six hours, the city must reimburse the owners for a full day’s worth of revenue. In May 2012, the private owners had billed the city for $50 million for reimbursements for out of service meters and free parking provided to the disabled. [2]

Not only will this deal cost Chicago substantial money for 75 years, it also means it has given up the ability to make decisions about parking and its cost for 75 years. Furthermore, it appears to have in effect guaranteed substantial profits to the private investors, as there is no competition and little risk.

Second, Indiana received $3.8 billion in 2006 from an international consortium in exchange for the right to maintain, operate, and collect tolls for 75 years on 157 miles of Interstate 90 as it crosses Indiana. The 400 page lease agreement has limits on toll increases, requires the state to reimburse the private owners if tolls are waived during an emergency (such as a natural disaster), and covers details such as how quickly the consortium must remove dead animals from the highway. While the length of the agreement is indicative of both the thought that went into it and the complexity of such an arrangement, it is hard to imagine that every issue that could come up in 75 years has been identified.

In the short run, with the economy in recession and traffic down on the highway, it appears that Indiana taxpayers are coming out ahead. Indiana wisely used the funds for investments in infrastructure rather than short-term spending. [3] But it’s only six years into a 75 year lease and lots can happen over that time. For example, if traffic levels don’t increase and the consortium of owners goes into bankruptcy or defaults on their debt, what will happen? Could a bankruptcy court throw out the limits on toll increases?

Experiences with highway privatization in California, Virginia, and San Diego have all had significant problems. These privatization contracts are typically long-term, generally limit competition, and, therefore, result in significant limits on future public decisions and policies. [4]

A danger in these high-value, long-term privatization deals is that sophisticated investors and corporations will take advantage of government officials desperate for short-term revenue, who often don’t take the time or have the expertise to perform appropriate, long-term, cost-benefit analyses. A 75 year commitment clearly goes long beyond the longevity in office of the public officials who make the deal and it’s hard to believe that such a deal can be known to be in the public’s best interest over that time span.

“[P]rivatization can undermine good public policy and democratic decision making. Turning tax dollars and control of public services over to companies whose overriding incentive is to maximize profits can lead to long-term costs and sometimes devastating consequences.” (p. 4) [5]

Because of their significant impact on the public – on public services, on public policy and flexibility, on accountability, and on transparency – I would suggest that any privatization deal should require public hearings before (and after) the fact. Furthermore, those with a longer time span than the term of office of the person signing it should require super-majority approval (say 2/3) by the relevant legislative body. Privatization contracts of over 10 years should require a voter referendum with a super-majority (say 2/3) needed for approval.

[1] Rusnak, K., retrieved 10/21/12, “Privatization plans lack long-term focus,” economyincrisis.org/content//privatization-plans-lack-long-term-focus

[2] People for the American Way, retrieved 7/31/12, “Predatory privatization: Exploiting financial hardship, enriching the 1 percent, undermining democracy,” http://www.pfaw.org

[3] Daniels, M., 5/10/12, “Indiana didn’t ‘sell’ its toll road,” The Washington Post

[4] Dannin, E., 3/15/11, “The toll road to serfdom,” American Constitution Society (www.acslaw.org/acsblog/node/18553)

[5] People for the American Way, retrieved 7/31/12,, see above

AN OVERVIEW OF PRIVATIZATION

ABSTRACT: Privatization of public services or “outsourcing” has been promoted for decades as a way to save taxpayers money, improve public services, and increase public sector accountability. A resurgence is occurring as the public sector is being squeezed by falling revenues and rising costs. In this environment, privatization is often looked to to generate badly needed cash immediately. As a result, privatization is big business these days.

As background for a detailed look at current privatization activity, municipal level privatization has been used significantly and studied quite extensively, especially for water and sewer systems and for solid waste collection and disposal. From 1997 – 2002, more services were brought back in house or deprivatized than were outsourced. Services were deprivatized because of unsatisfactory results. Most studies of water, sewer, and solid waste privatization (21 of 35) found no cost or efficiency difference between public or private delivery. The other 14 studies were split.

Competition and careful monitoring are required to obtain benefits from privatization and to ensure that profit maximization doesn’t result in a loss of quality. A review of privatization by The Century Foundation [1] states that “public monopoly or government regulation is a more effective approach to ensuring efficient service delivery than privatization or deregulation.”

The delivery of public services must incorporate the fact that citizens are more than consumers. They frequently want to be engaged and have a voice. Public services are not just part of a market but part of a community.

FULL POST: Privatization of public services or “outsourcing” has been promoted for decades as a way to save taxpayers money, improve public services, and increase public sector accountability. A resurgence is occurring as the public sector is being squeezed by falling revenues and rising costs, much of which are due to inflation. In this environment, privatization is often looked to not for the traditional reasons of saving money or improving services and accountability, but to generate badly needed cash immediately. In this environment, privatization of public assets (e.g., buildings, parking facilities, roads, and land), which has been used in the past to cover short-term cash problems, has taken on new importance.

The privatization resurgence is bolstered by rhetoric from the right, which favors smaller government, and by lobbying from corporations, which are always looking for new ways to make profits.

As a result, privatization is big business these days. Wall Street firms and the big management consulting companies have public sector or public private partnership business divisions to pursue privatization deals. Financial corporations are setting up “Infrastructure Funds” that create pools of money to buy privatization deals as investments. Over $100 billion is available to Infrastructure Funds run by large financial corporations such as Goldman Sachs and JPMorgan Chase.

As background for a detailed look at current privatization activity, municipal level privatization has been used significantly since the 1960s and surged in the 1990s. It has been studied quite extensively, especially for water and sewer systems and for solid waste collection and disposal. These studies have tracked privatization, the contracting out of services, and deprivatization, the bringing of services back in house into the public sector. An overall review of privatization of 67 basic local services with a focus on water, sewer, and waste services was conducted by The Century Foundation. [2]

Up until 1997, privatization of water, sewer, and waste services was growing, but from 1997 – 2002 more services were brought back in house or deprivatized than were outsourced. The reasons for deprivatization were tracked. In 2002, among 245 cases of deprivatization the following reasons were given, including multiple reasons in many cases:

Service quality not satisfactory 73% of cases
Cost savings insufficient 51%
In house efficiency improved 36%
Problems with contract monitoring or specifications 35%

In summary, services were deprivatized because of unsatisfactory results. Furthermore, despite the fact the privatization is promoted as reducing costs and saving taxpayers money, most studies of water, sewer, and solid waste privatization (21 of 35) found no cost or efficiency difference between public or private delivery. The other 14 studies were split with 9 of the 35 finding private delivery cheaper or more efficient and 5 finding public delivery cheaper or more efficient.

The Century Foundation report notes that competition and careful monitoring are required to obtain benefits from privatization and to ensure that profit maximization doesn’t result in a loss of quality. However, it noted that in many cases, such as water and sewer services, there was no competition and privatization merely substituted a private monopoly for a public one. The report states that “public monopoly or government regulation is a more effective approach to ensuring efficient service delivery than privatization or deregulation.” (page 12)

The delivery of public services, even when privatized, must incorporate the fact that citizens are more than consumers. They frequently want to be engaged and have a voice in what, how, and the quality with which services are delivered. From a citizen’s perspective, more than just efficiency is involved; safety, reliability, transparency, and other values; local control; public accountability; and community identity can all be important. Public services are not just part of a market but part of a community.

Future posts will build on this overview and review specific examples of current and proposed privatization of public services and assets.

[1] The Century Foundation describes itself as a progressive, non-partisan think tank, founded in 1919. It convenes and promotes the best thinkers and thinking across a range of public policy questions and produces timely and critical analyses of major economic, political, and social institutions and issues.

[2] Warner, M., 2009, “Local government infrastructure and the false promise of privatization,” The Century Foundation, http://government.cce.cornell.edu/doc/pdf/Warner_2009_TCF.pdf

THE “FISCAL CLIFF” AND THE ECONOMY

ABSTRACT: The federal budget’s “fiscal cliff” is looming on December 31, 2012. If Congress and the President let us fall over its edge, it will significantly harm our fragile economy. It cuts annual spending by about $100 billion per year and increases taxes by about $350 billion per year. The result would be a significant reduction in the annual deficit, from about $1 trillion to about $600 billion. However it would also negatively affect the economy: a recession or projected growth of only 0.5% versus growth of between 1.7% and 4.4% if the fiscal cliff were completely eliminated. The negative impact on the economy would make it harder, over the longer-term, to reduce the deficit.

There are many ways to soften the cliff’s impact. One would be to eliminate the tax increase on income under $250,000. Another would be reducing the spending cuts. It’s clear that the US government’s stimulus package helped soften the US recession; it’s equally clear that austerity is not a route to economic recovery. Austerity in Europe has turned a slow recovery into a stalled economy with recession in some countries. We need to call on Congress and the President to soften the fiscal cliff. Right now, the primary focus needs to be on strengthening the economy and creating jobs, which, over the longer-term, will help reduce the deficit.

FULL POST: The federal budget’s “fiscal cliff” is looming on December 31, 2012. If Congress and the President let us fall over its edge, it will significantly harm our fragile economy. Under current law, annual spending cuts of about $100 billion per year would occur and the Bush tax cuts of 2001 through 2003 would expire, which would result in an annual tax increase of about $350 billion.

The result would be a significant reduction in the annual deficit, from about $1 trillion to about $600 billion. However, it would also negatively affect the economy; projections range from a recession (i.e., negative economic growth as economic output shrinks) to growth of only 0.5%. If the fiscal cliff is completely eliminated, in other words if all the tax cuts are extended and the spending cuts are eliminated, projected economic growth would be between 1.7% and 4.4%. [1][2] The negative impact on the economy would make it harder, over the longer-term, to reduce the deficit.

There are, of course, many ways to soften the impact on the economy and on specific groups or agencies. The fiscal cliff’s increased taxes would affect almost everyone and, therefore, hurt consumer spending. Some people are proposing eliminating the tax increase on income under $250,000. This would reduce the tax increase to about $200 billion per year (instead of $350 billion). In addition, it would significantly reduce the impact on our economy (which is 70% consumer spending) because those with incomes over $250,000, who would see their taxes increase, spend only a fraction of their income on goods and services in the local economy. The real job creators in our economy are the vast middle class; their consumer spending is businesses’ revenue and increased business revenue is what leads to job creation. [3]

Reducing the spending cuts would soften their impact. The fiscal cliff’s spending cuts would be split roughly evenly between the military and social programs. Some of the loudest voices arguing for reducing the spending cuts are opposing the $50 billion cut to military spending despite the facts that:

Military spending has more than doubled since 2001,
We’re winding down two wars, and
This represents less than 7% of the over $700 billion per year military budget, which is roughly half of discretionary spending.

One argument that is being put forth is that a cut to military spending would cost jobs. Ironically, this argument is being put forward by many of the same people who have said that government spending doesn’t create jobs and that the way to improve the economy and create jobs is to cut government spending. Yes, cutting military spending will cost jobs in the military-industrial complex. But because military spending creates fewer jobs per dollar than other types of spending, cutting it will cost fewer jobs than cuts in other areas, or, if these cuts will allow spending elsewhere, more jobs will be created than those lost, resulting in a net gain in jobs. [4] (See 11/17/11 post: Defense spending: Can we afford to cut it?)

It’s clear that the US government’s stimulus package helped soften the US recession; it’s equally clear that austerity – cutting government spending and benefits often while raising taxes in an effort to reduce government deficits – is not a route to economic recovery. [5] While deficits do need to be addressed over the longer term, doing so while our economy is weak will only exacerbate the problem. Austerity in Europe has turned the slow recovery of 2009 into, at best, a stalled economy and recession or even depression in some countries. Demands for austerity in exchange for financial aid have occurred five times in Europe, with Greece, Portugal, Ireland, Spain, and Italy. Each time the austerity measures have deepened the economic crisis and weakened the country’s economy. Cutting public spending and benefits, while increasing taxes, decreases employment and incomes. This reduces consumer spending which hurts businesses and kills jobs. As a result, tax revenue falls, increasing (not reducing) government deficits. [6]

We need to call on Congress and the President to soften the fiscal cliff. Right now, the primary focus needs to be on strengthening the economy and creating jobs, which, over the longer-term, will help reduce the deficit. There is ample evidence that austerity will only make the economy and the deficit problem worse.

My next post will examine strategies for reducing the deficit in both the short and the long-term that would be less damaging to the economy than the fiscal cliff.

[1] Businessweek, 8/2/12, “A decade of tax cuts and deficits,” Bloomberg Businessweek

[2] Lipschutz, N., 8/22/12, “Even if ‘fiscal cliff’ gets resolved, outlook is anemic,” The Wall Street Journal

[3] Reich, R., 8/30/12, “Labor Day 2012 and the election of 2012: It’s inequality, stupid,” http://www.RobertReich.org

[4] Pemberton, M., 8/16/12, “Top 10 myths of the jobs argument against military cuts,” Institute for Policy Studies

[5] Loth, R., 9/1/12, “The value of public-sector jobs,” The Boston Globe

[6] Kuttner, R., 9/10/12, “Angela Merkel’s bad medicine,” The American Prospect

OUR SLOW ECONOMIC RECOVERY

ABSTRACT: Our economy is recovering slowly, as would be expected after such a deep recession and the near collapse of the financial system. Most economists agree that the federal government’s stimulus package aided the recovery by increasing employment by about 3 million jobs. Since the recovery began in 2009, the private sector has added 4.5 million jobs. The loss of public sector jobs, however, has been a drag on the recovery; over 600,000 jobs have been lost since 2009, including over 200,000 teachers. Without these job losses, the unemployment rate would be about 0.5% lower, or roughly 7.6%. Regardless of some people’s rhetoric, a public sector job puts money into a family and the economy the same way a private sector job does.

The current rate of economic growth is too slow to generate enough jobs to quickly and significantly reduce the unemployment rate. Federal Reserve Chairman Ben Bernanke recently made a forceful argument that additional steps are needed to stimulate the economy and attack high unemployment. The implied message is that stimulus through spending by the federal government would make sense and that cuts in government spending would not help economic growth or unemployment reduction.

FULL POST: Our economy was the subject of much rhetoric at the recent Republican and Democratic conventions. The reality is that the economy is recovering slowly, as would be expected after such a deep recession and the near collapse of the financial system. Most economists agree that the federal government’s stimulus package aided the recovery by increasing employment by about 3 million jobs and keeping the unemployment rate lower than it would have been (by about 2%).

The recovery began in mid-2009. The private sector has added 4.5 million jobs with net increases in each of the last 29 months. However, this is only half of the 9 million jobs lost in the recession and unemployment is still high at 8.1%. The worst month for job losses was January 2009 when over 800,000 jobs were lost just as President Obama was taking office.

The loss of public sector jobs has been a drag on the recovery; over 600,000 jobs have been lost since 2009, including over 200,000 teachers. The public sector continues to lose roughly 10,000 jobs per month, including teachers, firefighters, police, and other local, state, and federal government workers. Without these job losses, the unemployment rate would be about 0.5% lower, or roughly 7.6%. [1][2] Regardless of some people’s rhetoric, a public sector job is a job and puts money into a family and the economy the same way a private sector job does.

Harvard economist Kenneth Rogoff, who has studied recessions historically and globally, says the pace of the current recovery is consistent with what would be expected after this recession, which continues to reverberate around the globe. Economies damaged by financial crises recover more slowly and the brinkmanship in Congress over increasing the debt ceiling in the summer of 2011 created an additional drag on the recovery. The recovery after the 2001 recession (one of four in the last 30 years) actually experienced even slower job growth than the current recession.

Mark Zandi, chief economist at Moody’s Analytics and advisor to Republican Presidential nominee John McCain, notes that the economy’s problems were brought on by Wall Street’s recklessness and that “government saved our bacon. … the cost [to the economy] would have been measurably … greater had the government not interceded.” [3]

Nonetheless, the rate of economic growth has been too slow to generate enough jobs to quickly and significantly reduce the unemployment rate, let alone the numbers of underemployed workers and those who have given up looking for a job and therefore are not counted in the unemployment figures. Federal Reserve Chairman Ben Bernanke recently made a forceful argument that additional steps are needed to stimulate the economy and attack high unemployment. He noted that the likely benefits outweigh the potential costs. However, monetary policy from the Federal Reserve has limited ability to stimulate the economy at this point because interest rates, the main tool at its disposal, are already extremely low. Therefore, the Federal Reserve may take other, nontraditional steps. [4] The implied message is that stimulus through spending by the federal government would also make sense and that cuts in government spending would not help economic growth or unemployment reduction.

[1] Loth, R., 9/1/12, “The value of public-sector jobs,” The Boston Globe

[2] Woolhouse, M., 9/9/12, “Recovery slow, fits post-crisis pattern,” The Boston Globe

[3] Quoted in Woolhouse, 9/9/12, see above

[4] Appelbaum, B., 9/1/12, “Fed chief makes a detailed case for a stimulus,” The New York Times

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 1^st 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

FIXING THE FILIBUSTER

Here’s issue #36 of my Policy and Politics Newsletter, written 6/15/12. The previous issue outlined the abuse of the filibuster [1] and its impact on the gridlock in Congress. This issue focuses on what can be done about it.

The requirement for 60 votes to end debate and stop a filibuster is part of the Senate’s rules of operation. This cloture rule, as it is called, was adopted in 1975, so it is not part of the Constitution or even a rule with great historical tradition. [2] It means that 41 Senators, who potentially represent less than 15% of the US population, can bring progress in the Senate to a halt.

The Founding Fathers and the Constitutional Convention considered and rejected requiring a super majority vote to pass legislation. They established the fundamental principle of our democracy of majority rule in a legislative body. [3] As a result, the Constitution specifically lists six instances when a super majority vote is required, such as impeachment, overriding a presidential veto, ratifying a treaty, and amending the Constitution. [4]

The current, unprecedented use of the filibuster is largely unreported by the media. They typically describe the need for 60 votes to proceed in the Senate as ordinary procedure and rarely differentiate a bill or other matter that had enough votes to pass (51 or more) but was filibustered (i.e., didn’t have the 60 votes needed to end debate) from one that didn’t have the 51 votes to pass. [5]

Senator Tom Harkin (Democrat from Iowa) has proposed that the first cloture vote to end debate require 60 votes, but that over a period of days or weeks the required vote fall to a simple majority of 51 Senators. This would allow ample time for debate and discussion, in the Senate and with the public, but would provide an incentive for compromise and an ability to stop obstruction. He originally introduced this proposal in 1995 when the Democrats were in the minority, so he is offering it as an institutional reform, not to gain a partisan advantage. [6] Other Senators have presented other proposals to change the Senate’s rules to weaken the power of the filibuster. However, it takes 67 votes to change a Senate rule in the middle of a two year Congressional session. A simple majority vote of 51 Senators can change the rules when they are adopted at the beginning of a session, which occurs after an election (e.g., in January 2013).

In May 2012, a lawsuit was filed against the Senate claiming that the filibuster is unconstitutional. It was brought by four members of the US House of Representatives, three immigrant students (who would have been helped by the DREAM Act that was filibustered), and the nonpartisan, good government group Common Cause. [7] [8]

There is growing agreement that the filibuster is being seriously abused and significantly harming the ability of our federal government to govern effectively. Because of the partisan implications of filibuster reform, it is unclear whether this consensus or the current efforts to fix the filibuster will reduce its use.

[2] Wikipedia, retrieved 6/8/12, “Filibuster in the United States Senate”

[3] Harkin, T., 6/30/10, “Fixing the filibuster,” The Nation

[4] Millhiser,I., 5/15/12, “Four members of Congress sue to declare the filibuster unconstitutional,” Think Progress

[5] PR Newswire, 12/18/07, “Record breaking: Senate conservatives use filibuster for 62^nd time in this session of Congress,” United Business Media

[6] Harkin, T., 6/30/10, “Fixing the filibuster,” The Nation

[7] Wong, S., 5/14/12, “Group sues Senate to scrap filibuster,” Politico

[8] Millhiser,I., 5/15/12, “Four members of Congress sue to declare the filibuster unconstitutional,” Think Progress

THE FILIBUSTER: WEAPON OF OBSTRUCTION

Here’s issue #35 of my Policy and Politics Newsletter, written 6/10/12. It focuses on the filibuster as an important problem contributing to the gridlock in Congress.

The use of the filibuster [1] – or the threat of a filibuster – by the minority party in the Senate to block action has become much more frequent in the last six years, accelerating a trend that goes back to the 1970s. “The filibuster … became a routine weapon of obstruction” according to Mann and Ornstein in their Washington Post article of April 27 [2] (see Newsletter issue #32). Traditionally, it was used to block legislation, such as civil rights laws. More recently, since 2005, a filibuster or the threat of one has been used to block presidential nominations of judges. [3] Most recently, it has been used to block presidential nominations for positions in the executive branch and to obstruct progress in general.

The official Senate statistics only track the formal motions to end a filibuster, not the threats to filibuster, so they understate the use and impact of the filibuster. In the last six years, since the Democrats gained control of the Senate, the occurrence of formal motions to end filibusters by the Republican minority has doubled (average per two year Congressional session of 138 vs. 65 in the previous four years when the Democrats were the minority). The pattern of the Republicans increasing the use of the filibuster also occurred in the 1987-94 (average of 58 vs. 38 in the previous six years with a Democratic minority) and in 1971-80 (average of 32 vs. 7 or fewer in all previous Congressional sessions). [4]

Presidents used to receive routine approval of personnel for high-ranking executive branch positions that require Senate approval because it was seen as the President’s right to build his own team. Recently, however, the Republicans have blocked some of President Obama’s executive branch appointments. Most notably, they threatened a filibuster to block his nomination of anyone to head the Consumer Financial Protection Bureau (CFPB). This body was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the wake of the 2008 collapse of the financial sector, to protect consumers from abuses particularly in mortgage lending, but also in credit card and banking practices. To prevent the CFPB from functioning effectively, the Senate Republicans threatened to filibuster the appointment the head of the CFPB, first Elizabeth Warren (so Obama never formally nominated her) and then Richard Cordray (former Ohio Attorney General). Obama eventually appointed Cordray without Senate approval when the Senate was in recess so the agency could function. [5]

On the judicial front, Republican filibusters and other delaying tactics have created a situation where nearly one in nine federal judgeships sits empty (80 positions in the District and Circuit Courts), and nearly half of those vacancies are in courts so overburdened that they have been deemed judicial emergencies. As-of March, there were 22 judicial nominees who had been approved by the Judiciary Committee and were waiting yes or no votes in the full Senate. Sixteen had strong bipartisan support in the Committee, having received unanimous support or one dissenting vote. The wait for full Senate votes on committee-approved nominees is averaging over 3 months. For comparison, under President George W. Bush the wait was less than one month. Of the 22 filibusters of district court nominees that have occurred in the last 60 years, 19 have been of Obama nominees.

On the legislative front, the filibuster threat has been used to block the legislation preventing a doubling of the interest on student loans, the Paycheck Fairness Act promoting gender equity in wages, attempts to extend unemployment benefits, the reauthorization of the Export-Import Bank, the DREAM Act providing a path to citizenship for immigrant children brought to the country when they were quite young, and the DISCLOSE Act that requires increased disclosure of political contributions. The last three of these had passed in the House of Representatives and would have passed in the Senate except for a filibuster. [6]

As Republicans filibuster or threaten to filibuster 70% of the major legislation in the Senate, not only is important legislation blocked, but laws that ultimately pass are watered down, often hopelessly convoluted, and sometimes include irrelevant or wasteful add-ons or earmarks as necessary to get the 60 vote super-majority needed to move to a vote. The filibuster incentivizes grandstanding and the power of small minorities (sometimes an individual Senator’s threat of a filibuster) rather than effective governance. [7]

The next issue of the newsletter will examine efforts to limit the impact of the filibuster.

[2] Mann, T.E., andOrnstein,N.J., 4/27/12, “Let’s just say it: The Republicans are the problem,” The Washington Post. Adapted from their book “It’s even worse than it looks: How the American Constitutional system collided with the new politics of extremism.”

[3] Wikipedia, retrieved 6/8/12, “Filibuster in the U.S. Senate”

[4] U.S. Senate, retrieved 6/8/12, “Senate action on cloture motions,” http://www.senate.gov/pagelayout/reference/cloture_motions/clotureCounts.htm

[5] Editorial, 1/28/12, “Filibustering nominees must end,” The New York Times

[6] Wong, S., 5/14/12, “Group sues Senate to scrap filibuster,” Politico

[7] Guess, S., 1/21/10, “Filibusters are strangling the Senate,” The Guardian

WHY GRIDLOCK IN D.C.?

Here’s issue #31 of my Policy and Politics Newsletter, written 5/20/12. Just about everyone is concerned about the political and policy gridlock in our federal government. This issue of the newsletter takes a look at why this is happening.

The Washington Post published an article on April 27 that is the best piece I’ve seen on why we are experiencing gridlock in Congress. It’s entitled, “Let’s just say it: The Republicans are the problem.” [1] It is important to know that it is co-written by two scholars from two institutions that tend to have different, if not opposing, perspectives. Thomas E. Mann is at the Brookings Institution, which is often described as centrist or liberal leaning. (However, I don’t think it has ever been called progressive or aligned with Democrats.) Norman J. Ornstein is at the American Enterprise Institute, which is almost invariably described as conservative and is often seen as aligned with the Republican Party.

In the article, they state, “We have been studying politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party.” They describe the Republican Party as “an insurgent outlier … ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition.”

The authors note that both parties have moved away from the center, the Democrats in large part because of the loss of conservative, southern Democrats. They use a football metaphor, where the 50 yard line is the center, to describe the current situation: “While the Democrats may have moved from their 40 yard line to their 25, the Republicans have gone from their 40 to somewhere behind their goal posts.” (The goal line is the 0 yard line and the goal posts are actually 10 yards behind the goal line.)

They identify two individuals as key movers in the shift in the Republican Party: Newt Gingrich (Republican Representative from Georgia in Congress from 1979 to 1999) and Grover Norquist (president and founder in 1985 of Americans for Tax Reform). They state that “the forces Gingrich unleashed destroyed whatever comity existed across party lines, activated an extreme and virulent anti-Washington base … and helped drive moderate Republicans out of Congress.” Norquist created the Taxpayer Protection Pledge where signers pledge never to support a tax increase even to close a loophole. Currently, 238 of 242 Republicans in the House and 41 of 47 Republican Senators have signed the pledge. Mann and Ornstein note that this pledge, and others that it has led to, “make cross-party coalitions nearly impossible.”

They note that bipartisan groups “propose solutions that move both sides to the center, a strategy that is simply untenable when one side is so far out of reach,” and that “In the first two years of the Obama administration, nearly every presidential initiative met with vehement, rancorous and unanimous Republic opposition … followed by efforts to delegitimize results and repeal the policies.” Republicans have voted against measures that they co-sponsored to deny President Obama anything that might look like progress.

Procedurally, particularly in the Senate, progress has ground to a near halt. “The filibuster [2] … became a routine weapon of obstruction.” The confirmation process for presidential nominees has also been “abused … to block any and every nominee,” including to “posts such as the head of the Consumer Financial Protection Bureau, solely to keep laws … legitimately enacted from being implemented.”

Mann and Ornstein critique the media, noting that they understand journalism, “But a balanced treatment of an unbalanced phenomenon distorts reality.” They advise the press, among other things, to “stop lending legitimacy to Senate filibusters by treating the 60-vote hurdle as routine. The framers certainly didn’t intend it to be. Report individual senator’s abusive use of holds [on presidential nominations] and identify every time the minority party uses a filibuster.”

In closing, they note that “If our democracy is to regain its health and vitality, the culture and ideological center of the Republican Party must change.”

[1] Mann, T.E., andOrnstein,N.J., 4/27/12, “Let’s just say it: The Republicans are the problem,” The Washington Post. Adapted from their book “It’s even worse than it looks: How the American Constitutional system collided with the new politics of extremism.”

[2] A filibuster requires a super-majority of 60 out of 100 votes to end debate and allow a vote on passage of a bill or other matter.

SPURRING ECONOMIC RECOVERY

Here’s issue #30 of my Policy and Politics Newsletter, written 5/15/12. The US government budget process and the elections in Europe have focused attention on how government can best spur economic recovery.

There are basically two schools of thought on how governments can spur economic recovery:

Austerity: cut spending, raise taxes, and have tight monetary policy (i.e., high interest rates)
Stimulate: increase or maintain spending, cut taxes, and have loose monetary policy (i.e., low interest rates)

The theory behind the austerity approach is that it will spur consumer and business confidence so they will increase spending and grow the economy. In addition, government spending and borrowing (i.e., deficits) take money out of the private economy. The theory behind the stimulate approach is that when consumers and the private sector are not spending enough to grow the economy, the government should step in and spend, even if it creates deficits in the short run.

In the short run, cuts in government spending eliminate jobs, either those of public sector workers or those of the workers who provide the goods or services purchased. Those goods and services may be purchased directly by governments (e.g., military equipment or construction of highways) or by the beneficiaries of government benefits (e.g., purchases by those receiving unemployment benefits or food stamps). In the US, the public sector, primarily state and local governments, are laying off about 10,000 workers a month because of reduced spending. This hurts efforts to reduce unemployment and the economic recovery.

On the other hand, government spending does create jobs; the best estimates are that the 2009 federal stimulus package created roughly 3 million jobs and kept the unemployment rate 2% lower than it would have been otherwise. (See newsletter #26, Economic Recovery: How and for Whom.)

In the US, the federal government initially took the stimulate approach, increasing spending and cutting taxes while moving interest rates to near zero to stimulate business and consumer borrowing. Now, the approach is shifting toward austerity with calls for reducing the federal deficit by cutting spending as evidenced by the budget deal last August and the budget recently passed by the House.

In the Eurozone and Great Britain, the austerity approach was adopted. The 17 Eurozone countries have slipped back into recession and Britain is tottering on the edge of recession, while the US has seen slow growth for eleven consecutive quarters. As Paul Krugman puts it, “the confidence fairy doesn’t exist – … claims that slashing government spending would somehow encourage consumers and businesses to spend more have been overwhelmingly refuted by the experience of the last two years.” [1]

Although everyone agrees that the US government must address its deficit, the question is when. Many economists and Federal Reserve officials believe that austerity now would hurt the US economy and that we should stimulate the economy first and tackle deficits after the economy strengthens. [2] Keep in mind that when the economy strengthens, more jobs, more production, and more sales will increase tax revenues and automatically begin to reduce the deficit.

The evidence seems pretty clear, both from current experience and the Great Depression, that in the short run austerity doesn’t work and that government spending spurs job creation and economic recovery. However, it appears that ideology is overwhelming the facts in both the US and Europe.

[1] Krugman, P., 5/7/12, “Those revolting Europeans: How dare the French and Greeks reject a failed strategy!” The New York Times

[2] Fitzgerald, J., 5/13/12, “Austerity vs. stimulus debate revived by elections inEurope,” The Boston Globe

GOVERNMENTS’ ROLES

Here’s issue #27 of my Policy and Politics Newsletter, written 4/22/12. After a bit of a hiatus from the newsletter while I was on vacation, I’m back with an issue that looks at the role of government in our economy and society.

Our federal and state governments play important roles in supporting people and our economy and providing opportunities both for individuals and companies. Although sometimes criticized for hindering personal or companies’ initiative, which does happen on occasion, for the most part governments do foster opportunity – and we need them to.

Government supports are sometimes criticized as “entitlements,” which has almost become pejorative in its use. The concern is that government support leads to individuals becoming dependent on it and hence lazy and lacking in initiative. However, the great, great majority of government supports – including, for example, support for education from birth through college – provide individuals opportunities to become productive members of society.

Interestingly, government supports for businesses are almost never referred to as entitlements, although some of them have been around for a long time. Furthermore, there are many examples of companies taking advantage of government supports, sometimes to engage in highly risky or other types of activities that they wouldn’t if they didn’t have – or believe they would have – government support. The recent bailouts of the financial and automotive industries, the subsidies for large agribusiness, and tax benefits for fossil fuel companies are all examples.

In addition, companies depend on government supported infrastructure in numerous ways, including:

Availability of productive workers based on publicly supported education and job training
Ability to get products to consumers through publicly funded transportation systems
Copyrights, patents, trademarks, and a legal system to protect companies’ intellectual properties and the profits they gain from them, as well as to maintain the overall legal infrastructure of contracts and laws
Support for innovation through government sponsored research and tax credits for research and development
A supportive financial system including direct financial support (such as Small Business Administration loans) and well-regulated markets through which investors feel confident in investing their money

Although business people tend to exalt the “free market,” this isn’t really what they want or what exists. What they want – and need to succeed – is a well-regulated and supported economy where productive workers and capital are readily available, where their ideas and innovations are protected, and where they can inform and deliver products to customers.

To create a productive workforce, government provides a range of essential supports to individuals and families. Although sometimes criticized as “entitlements,” these supports provide opportunity to individuals to realize their potential and become the productive workers employers need.

Our education system is probably the primary example. This includes not only K-12 schools but also support for higher education through public colleges and universities, loans and grants for student tuition, as well as grants to higher education for direct and research support. Early care and education – often referred to child care – is receiving growing attention as our knowledge of the importance of early brain development grows and the evidence accumulates that children who arrive at school unready are unlikely to succeed in school or in life. Government financial support and regulation to ensure that children receive safe, nurturing, stimulating, and educational experiences in early care and education are essential, especially for children from low income families.

Clearly, children who aren’t well nourished or healthy will struggle to learn and succeed whether they are newborns or teenagers. Government food programs (e.g., food stamps) and Medicaid (health insurance for poor children and their families) are essential to healthy brain development, school readiness and success, and ultimately becoming productive members of society.

There are many other examples of governments’ supportive roles that range from public libraries to support for seniors (i.e., Medicare and Social Security), not to mention police, fire, and water and sewer services.

In summary, government supports or “entitlements” exist for both individuals and companies. They are important to providing opportunity and maintaining a vibrant economy and society. Although some political rhetoric juxtaposes an entitlement society as the opposite of an opportunity society, that is not the case or the reality. As Renee Loth wrote in her Boston Globe column (3/3/12), “Far from being in opposition, entitlements and opportunity go together like milk and Cocoa Puffs.”