Archive for September 2009
Daily Pulse: Deep Six the Gang of Six
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By Lindsay Beyerstein, TMC MediaWire Blogger
Ed. note: The Weekly Pulse is becoming the Daily Pulse for September. Every weekday, we’ll bring you highlights from the health care reform debate, including exclusive video interviews with leading experts and independent journalists each Friday. Even better, you can be a part of the conversation. Stay tuned to find out more!
A power shift is underway in Washington. Massachusetts governor Deval Patrick announced on Monday that a special election to replace the late Sen. Ted Kennedy would not take place until January 19, 2010. With Kennedy’s seat empty, the Democrats no longer have the 60 votes they need to break a filibuster in the Senate. Up until this point, the White House was hoping for a compromise bill that the entire Democratic caucus, and maybe even a few Republicans, could agree on.
Steve Benen of the Washington Monthly notes that the Gang of Six has made itself irrelevant. These powerful members of the Senate Finance Committee were in charge of hammering out a bipartisan health care bill. They forgot that they were only powerful if people believed a bipartisan compromise was attainable.
Talking Points Memo reports that the White House has given up on Republican gangster Sen. Mike Enzi (R-WY). They finally got the hint when Enzi told a radio listeners that Democrats wanted to kill the elderly with comparative efficacy research. The White House should have cut its losses two weeks ago when Sen. Chuck Grassley (R-Iowa) repeated the “death panel” meme at a town hall meeting. Grassley has also been raising money campaigning against “Obama-care.”
It’s looking more and more like the Democrats will have to look to budget reconciliation, a special parliamentary procedure that could sidestep a filibuster and pass a healthcare bill by a simple majority vote.
In Salon, Robert Reich pleads with the congressional Democrats to instill some party discipline in their caucus.
America’s Health Insurance Plans, the industry’s top lobby group, dispatched 50,000 employees to town halls to fight the public option. Stephanie Mencimer of Mother Jones took a cue from Michael Moore in Sicko. She asks AHIP what kind of insurance their top lobbyist has. Mencimer says AHIP was so standoffish you’d think she had a preexisting condition.
In Mother Jones, Ben Buchwalter and Nikki Gloudeman take a closer look at the corporate megabucks behind the town hall brawls. Corporate enemies of healthcare reform are using front groups like FreedomWorks to organize angry mobs at town hall meetings. Zach Roth of TPM Muckraker reports that “legendary GOP bamboozler” Howard Kaloogian has launched a tea party bus tour to protest healthcare reform.
Speaking of frauds, you’ve probably heard about so-called crisis pregnancy centers that pose as abortion clinics in order to cajole women into having babies. Ever wonder what happens to those babies? In the Nation, Kathryn Joyce goes inside the world of high-pressure Christian adoption agencies that support desperate women, as long as they promise to give up their babies.
This post features links to the best independent, progressive reporting about health care and is free to reprint. Visit Healthcare.newsladder.net for a complete list of articles on health care affordability, health care laws, and health care controversy. For the best progressive reporting on the Economy, and Immigration, check out Economy.Newsladder.net and Immigration.Newsladder.net.
This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.
Weekly Audit: Four More Years of Bailout Ben
By Zach Carter, TMC MediaWire Blogger
After Ben Bernanke allowed an $8 trillion housing bubble to ravage the global economy and nearly destroy the U.S. financial system, President Barack Obama has decided he deserves another term as Chairman of the Federal Reserve. (The UpTake has video of Obama’s announcement here.) As the Fed Chair, Bernanke has more economic power than any other person on the planet. By heading the committee that sets interest rates, he can control the economy’s rate of growth or contraction; as head regulator of the largest banks, Bernanke has more influence over the rules of the economic game than anyone else.
Why is the Bernanke reappointment a mistake? Matthew Rothschild of The Progressive turns to Sen. Bernie Sanders, an independent democratic socialist from Vermont. Put simply, Bernanke is completely culpable for allowing an economic crisis to foment.
“Like the rest of the Bush administration, he was asleep at the wheel during this period and did nothing to move our financial system onto safer grounds,” Sanders said.
Corporate media generally neglects to mention Bernanke’s role at the Fed prior to 2008, and instead credits him with stopping a second Great Depression. It’s true that the Fed has done everything possible to keep Wall Street from imploding, but Bernanke also repeatedly insisted that the subprime mortgage crisis would be “contained” as late as 2007 and made no plans for a situation that might prove worse than his rosy forecasts.
As William Greider explains for The Nation, it’s a bit too soon to celebrate our economic salvation at Bernanke’s hands. Small banks are failing at an alarming rate, job losses remain heavy and households are being squeezed by plummeting property values and growing credit card debt.
Greider emphasizes that Bernanke repeatedly bailed out financial giants without demanding anything in return, which bodes poorly for any future economic crisis. Kenneth Lewis remains Bank of America’s CEO, even though the company has needed $45 billion in taxpayer funds to date, and high-level Fed officials think Lewis may be guilty of securities fraud. On the one bailout where the Fed did assume ownership of the company and discharge it’s top-level management, AIG, the deal was structured to funnel no-strings-attached money to other Wall Street companies. Goldman Sachs raked in $12.9 billion from the arrangement. It’s one thing to funnel money to financial firms in the name of economic necessity. It’s quite another to allow executives at those companies to be paid like princes and subsidize their shareholders.
As economist James K. Galbraith discusses in a piece for The Washington Monthly, it’s not clear if Bernanke and Co. actually saved the economy. Even if the financial system gets back to normal functioning, that stability has been purchased with massive taxpayer support. In order to do just about anything involving finance in the United States, a company now needs a very explicit government seal of approval to convince investors that they’re safe to do business with. Just ask Colonial Bank, which failed earlier this summer after being denied bailout funds under the Troubled Asset Relief Program.
But there has been secret support as well. Bernanke’s Fed committed over $2 trillion in emergency loans to keep the financial system from collapsing during the crisis, and has refused to tell the public who got the money, and on what terms. We don’t know who we saved, or at what the consequences of this massive bank support operation will be. Bernanke always believed that rescuing Wall Street would prevent major damage to the broader economy, but Galbraith questions whether the economy would be stronger if policymakers had focused more on direct aid to workers and homeowners, including an earlier, more robust economic stimulus package.
“Perhaps the right thing would have been less focus on saving banks, and much more on saving jobs, families, and homes.”
Writing for In These Times, Roger Bybee profiles a new group called Americans for Financial Reform, which is pushing for changes on Wall Street and fighting against business-as-usual at the Fed. The bank lobby is probably the most powerful interest group on Capitol Hill. Unfortunately, there hasn’t been a strong and consistent voice urging lawmakers to protect the entire economy, rather than the banks. The very structure of the Fed makes it more responsive to Wall Street interests than those of the general public. Private-sector banks like Citigroup and Bank of America are shareholders in each of the Fed’s regional branches, while private-sector bank executives sit on the board of directors at each branch. Since the boards get to name the regional presidents, private-sector bank CEOs are given major power to name their own regulators. Regional presidents also rotate through positions on the Fed’s monetary policy board, making decisions to set interest rates.
The Fed’s institutional structure, and its reliance on mainstream economists overly acquiescent to the financial sector has helped fuel the boom-and-bust bubble economy, as the Real News explains in this video piece:
In addition to the turmoil surrounding the Bernanke appointment, the recent budget deficit projections have been receiving a lot of attention lately. By throwing around a lot of big numbers that end in “trillion,” deficit hawks have created the impression of crisis where none exists. The government will have a $1.6 trillion shortfall this year, equal to about 11% of the U.S. economy. That’s the highest such number since the U.S. economy started to soar in the years after World War II, high enough to mobilize CNBC pundits to warn of financial apocalypse and a bankrupt U.S. government.
But as Robert Reich notes for Salon, it’s not really worth getting too worked up over the current deficit projections. In a recession, countries want to run a deficit: the government needs to fill hole created by the drop-off in private-sector economic activity. If the U.S. doesn’t run a big deficit, it will shed millions of additional jobs. And the country is nowhere near losing control of its currency. The federal debt stands at about 54% of our economic output right now, and is projected to reach 68% by 2019. But Reich notes that in 1945, the number was far higher: 120%. This number shrank dramatically over the next few years, not because of draconian cuts to government programs, but because the economy grew so much that the debt burden became less severe. We are nowhere near a crisis with the budget that compares to the current unemployment crisis, so pulling back spending right now doesn’t make much sense.
Bernanke has always argued that the Fed chair’s only duty is to control inflation. But managing the economy means not only attending to inflation, but making sure the true engine of economic growth—financially secure households—isn’t sacrificed to the short-term interests of a few Wall Street elites. Bernanke failed to block that economic predation early in his tenure as Fed Chairman. If Bernanke is going to be with us for another four years, President Obama needs to find other ways to restore our economic balance.
This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.