Posts tagged with 'unions'
Showdown in Madison: A Primer for the Wisconsin Protests
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by Raquel Brown, Media Consortium blogger
It’s been a tumultuous week in Madison, Wisconsin. Tens of thousands of state workers, teachers, and students have packed the state Capitol building to protest Republican Gov. Scott Walker’s plan to weaken public unions.
In a move ostensibly aimed to balance the state budget, Walker proposed a bill on Friday, February 11 that would dislodge collective bargaining rights for all public workers except for police, firefighters and the state patrol—some of the few public employee unions that supported Walker’s gubernatorial campaign. In addition, the bill will require most state workers to pay significantly more for pensions and health premiums.
Armed with scores of clever signs, demonstrators are rumbling through Madison, chanting “Kill the bill” and “This is what democracy looks like!” To delay the passage of Walker’s controversial bill and forge negotiations, 14 state Senate Democrats fled the state on Thursday, leaving the chamber with too few lawmakers to take a vote.
The Uptake is also LiveStreaming from Madison:
Roger Bybee of Working In These Times explains why the protests in Wisconsin are vital to America’s labor movement. “America’s labor movement is enjoying a great start in this epic battle to hold onto fundamental union rights in Wisconsin. It’s already had vast repercussions across the nation,” Bybee writes.
For the people?
Walker claims that the Democrats’ boycott is disrespectful to democracy. Further, he contends that his anti-union bill is representative of the people since he fairly won the election and Republicans gained control of both houses in the Wisconsin state legislature last November.
But John Nichols of The Nation argues that Walker’s elected position does not give him total free reign over the state: “Democracy does not end on Election Day. That’s when it begins. Citizens do not elect officials to rule them from one election to the next. Citizens elect officials to represent them, to respond to the will of the people as it evolves.”
This week, Wisconsin workers have embraced their First Amendment right to “peaceably assemble and petition the government” and are making sure their voices are heard.
Furthermore, according to Colorlines.com’s Kai Wright, the current assault on public workers is racialized. He writes:
But as governors and columnists have painted pictures of overpaid, underworked public employee in recent weeks, I have also seen the faint outline of familiar caricatures—welfare queens, Cadillacs in the projects, Mexican freeloaders. It’s hard to escape the fact that, in the states and localities with the biggest budget crunches (New Jersey, California, New York…) public employees are uniquely black.
Young people rallying
Emboldened by the bill’s potential to destroy the quality of their education, students have helped the protests gain momentum. While graduate students led a “teach-out,” undergraduate students organized a “walk-out” from university classes and a sleep in at the capital’s rotunda.
Micah Uetricht of Campus Progress writes, “If public sector union workers—indeed, all workers—are to gain dignified work and lives, it will take a mass cross-generational mobilization that engages students and workers of all ages and industries. In other words, it will take the kind of movement in full bloom in Madison right now.”
Here comes the Tea Party…
Tea party activists will meet head-to-head with union protesters on Saturday, as many are flocking to the state Capitol for a massive counter-demonstration in support of Walker’s bill. Led by the conservative group American Majority, and other conservative pundits like Andrew Breitbart, Jim Hoft and Joe “The Plumber” Wurtzelbacher, Stephanie Mencimer of Mother Jones reports that “the organizers of this anti-union protest do have the resources and know-how to stage a big rally. … But more important, the scheduled protest appears to be resonating with Tea Party activists across the country, who have been praising Walker for taking on unions.”
Historical perspective
Wisconsin was “the birthplace of public sector unions” 50 years ago, which makes Walker’s proposal a significant break from the state’s pro-labor past. Even worse, “other state legislatures could see Walker’s assault on public employees and their unions as a blueprint for how to fix their own budget catastrophes,” notes Mother Jones’ Siddhartha Mahanta. “Such plans are already under consideration in places like Ohio, Indiana, and Tennessee, where the GOP scored major electoral victories last November.” Thus, the bill is an attack not only on Wisconsin’s workers, but on the rights of public workers across the country.
From Egypt to the Midwest
So does this make Walker the Mubarak of the Midwest? In light of Egypt’s recent uprisings, The American Prospect’s Harold Meyerson examines the glaring double standard surrounding Wisconsin’s protests:
American conservatives often profess admiration for foreign workers’ bravery in protesting and undermining authoritarian regimes. Letting workers exercise their rights at home, however, threatens to undermine some of our own regimes (the Republican ones particularly) and shouldn’t be permitted. Now that Wisconsin’s governor has given the Guard its marching orders, we can discern a new pattern of global repressive solidarity emerging – from the chastened pharaoh of the Middle East to the cheese-head pharaoh of the Middle West.
But, wait: There’s more! Here are some other notable stories from Wisconsin:
- The Progressive’s Josh Healey provides a list of ten things you should know about Wisconsin’s crusade for worker’s rights.
- Adele M. Stan of AlterNet describes Walker’s cozy relationship with the Koch Brothers’ deep pockets.
- On GRITtv, Milwaukee’s Ellen Bravo reveals state workers struggle for basic rights, while Ev Liebman shares her similar experience in New Jersey.
- Free Speech Radio News interviews Wisconsin Senate Minority Leader Mark Miller from an “undisclosed location.”
This post features links to the best independent, progressive reporting about the Wisconsin protests by members of The Media Consortium. It is free to reprint. For more news on Wisconsin, follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Abortion Doctor’s Assassin Goes On Trial
By Lindsay Beyerstein, Media Consortium Blogger
The man who admitted to gunning down Dr. George Tiller in church last May went on trial in Kansas on Friday. Tiller was one of a small number of doctors performing late term abortions in the U.S.
Scott Roeder admitted to shooting the Tiller, but he is pleading not guilty to murder, as Robin Marty reports in RH Reality Check. Yesterday, Judge Warren Wilbert shocked observers by allowing Roeder’s lawyers to argue that their client is guilty of voluntary manslaughter, not premeditated murder.
Kansas law allows the accused to plead “imperfect self-defense” if he had an “honest but unreasonable belief” that deadly force was necessary to protect innocent third parties. Roeder says he killed to protect the unborn. Pro-choice activists are alarmed that the judge allowed Roeder to use this defense. If he beats the murder rap, Roder could face just five years in prison. In the unlikely event that his legal gambit is successful, the precedent could be tantamount to declaring open season on abortion providers.
No doubt Nidal Hasan sincerely believed that he was protecting innocent lives when he murdered 12 soldiers at Fort Hood last November. Somehow, I doubt the Army will be as deferential to Hasan’s crazy religious ideas as Judge Warren Wilbert has been to Roeder’s.
In other health care news, Robert Reich of TAPPED asks whether the rich or the middle class will pay for health reform:
There’s only one big remaining issue on health care reform: How to pay for it. The House wants a 5.4 percent surtax on couples earning at least $1 million in annual income. The Senate wants a 40 percent excise tax on employer-provided “Cadillac plans.” The Senate will win on this unless the public discovers that a large portion of the so-called Cadillacs are really middle-class Chevys—expensive not because they deliver more benefits but because they have higher costs.
Reich cites a shocking statistic: Less than 4% of the variation in the cost of insurance coverage is based on differences in benefits provided. Most of the difference in price is based on the perceived riskiness of the beneficiaries. So, if you’re in a high risk pool comprised of, say, retired autoworkers, you’re going to pay a lot more for the same benefits than someone in a younger, healthier risk pool. When you look at it that way, it seems unfair to pay for reform on the backs of people who are already paying more for the same thing due to circumstances beyond their control.
President Barack Obama and Health and Human Services Secretary Kathleen Sebelius are meeting with top labor leaders on the “Cadillac tax,” as Brian Beutler of Talking Points Memo reports. Obama and Sebelius are trying to hash out a compromise that would be acceptable to the unions, who so far, have been implacably opposed to taxing expensive health care plans. The unions are reluctant to give any ground on this issue because so many of their members have accepted expanded health care benefits in lieu of wage increases over the years. Taxing those benefits now would effectively erase some hard-won gains by workers. Obama and the unions are reportedly discussing some kind of grandfather clause proposal that would exempt existing plans and only tax new plans.
Elsewhere in our high-deductible democracy, it turns out that health insurers secretly steered more than $20 million to the U.S. Chamber of Commerce to oppose health reform while publicly professing to support the effort, according to Josh Harkinson of Mother Jones. The bagman was America’s Health Insurance Plans (AHIP). While AHIP was soliciting donations to run attack ads, AHIP’s top lobbyist, Karen Ignagni penned an op/ed in the Washington Post assuring the public that AHIP supported reform.
Steve Benen of the Washington Monthly hopes that the scandal will give ammunition to Democrats in the last big push to pass health care reform: “Policymakers struggling to resolve differences on the final reform bill may want to keep a simple adage in mind: Don’t let AHIP’s duplicitous campaign win.”
This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Weekly Pulse: Problems for the Public Option
By Lindsay Beyerstein, Media Consortium Blogger
The House released a final version of the health reform bill. It has a public option all right, but not the robust version progressives were hoping for. The public plan would only cover 2% of Americans and premiums will cost more than anticipated.
Meanwhile, Sen. Joe Lieberman (I-CT) continued to threaten to join a Republican filibuster of a health care bill with a public option. A lot of people still think he’s bluffing. Realistically, the public option probably faces more serious threats from inside the Democratic caucus. It’s been whittled down at an alarming rate. (more…)
Weekly Audit: EFCA, Tax Cheats and the Racial Wealth Gap
By Zach Carter, TMC MediaWire blogger
The U.S. economy may finally be bottoming out. But if the worst is really behind us, we are likely facing a painful period of “growth” that looks very much like the present. Without increasing unionization and mitigating racial inequality, our economic progress will prove as hollow as it is slow. While the economy may improve in a dry, statistical sense, the foundation for a productive economy has been decimated over the past three decades.
The economy has shown some encouraging signs of strength lately. Home prices have actually increased and the pace of layoffs slackened quite a bit in July. But that data doesn’t signify a strong recovery, as Andrew Leonard notes in a pair of blog posts for Salon. Even in areas where there is some good news—housing and the job market—there is plenty of contradictory bad news. First, mortgage delinquencies are at an all-time high, and the souring loans are not just subprime. Even people with relatively affordable mortgages have problems paying when they lose their jobs, and with the unemployment rate at 9.4%, a lot of people are losing their jobs.
What’s worse, Leonard notes, new claims for unemployment benefits escalated in August, suggesting that last month’s job market improvements may have been a fluke. And while home prices may be ticking up slightly, they have been abysmal for the past two years. Since many households accumulated debt based on higher home values, the overall ratio of consumer debt to household net worth is perilously high.
Household net worth is a crucial statistic and is often overlooked by a focus on day-to-day measurements of worker well-being, like wage growth. While wages matter for paying the rent and buying groceries, our long-term economic security is defined not by what we make each week, but by the value of the things we own. In a piece for The American Prospect, economists Derrick Hamilton and William Darity Jr. detail the massive racial disparities in household net worth in the U.S. While the median white family has roughly $90,000 to its name, the median Latino family has just $8,000, while the median Black family has only $6,000.
Centuries of discrimination have resulted in today’s inequality, but Hamilton and Darity propose a simple, straightforward solution: The government should establish savings accounts for children born into poor families, and fund it with a relatively small amount of money. Children will not be able to access the accounts until they turn 18, but over the years, interest will accrue on the accounts to the point where children should have between $50,000 and $60,000 by the time they can withdraw funds. Since so many people of color are born into households with relatively low net-worth, establishing a policy to use government money to boost the wealth of those born without it would have the effect of promoting racial economic equality.
But we also have to worry about jobs. President Barack Obama’s economic stimulus package has succeeded in creating or saving hundreds of thousands of jobs since going into effect earlier this year, but it is important to focus not only on creating jobs, but on creating good jobs. As Laura Flanders of GritTV emphasizes in a roundtable discussion with key academics and labor representatives, our increasingly hostile attitude towards unions has created major barriers to a sustainable economic recovery.
The legislation critical to ending this intimidation is known as the Employee Free Choice Act, one of the most important bills presented to Congress in decades, although it has been overshadowed by the debates surrounding health care reform and financial regulatory overhaul. Flanders’ panelists include Kate Bronfenbrenner, a Columbia University Professor who wrote a recent paper for the Economic Policy Institute examining 1,000 attempts to establish unions all over the country, and found that employer opposition to unionization is more aggressive than ever. A full 30 million workers want to be part of an organized union, but only 70,000 workers successfully organize each year.
“It’s always been hard to organize, but employers now have made it harder than ever. They’ve literally have said to workers that, ‘If you try to organize, we will go after you in every way possible,’” Bronfenbrenner said. “They threaten workers, they harass them, one in every three employers fire workers for union activity . . . . There literally is a war on workers who try to organize.”
Another panelist, Mark Winston Griffith, Director of the Drum Major Institute, notes that the decline of unionization has weakened the economy. In the 1950s, when one-third of all U.S. workers belonged to a union, the potential foundation for the economy was strong. Workers were well-paid and had excellent job security, which created a strong source of demand. With less than 8% of U.S. workers unionized today, our economic demand is fueled by household debt, which has left families struggling for financial security and has injected a heavy dose of instability into the entire economy.
Writing for The Nation, Sarah Jaffe details the difficulties faced by a group of security officers in Philadelphia trying to unionize under current labor laws.
But while the workers who form the foundation of our economy are gasping for air, the elite have almost never had it better. A recent study found income inequality to be deeper than any period since World War I, and this absurdity plays out in public policy. While workers struggle to get a fair shake from their employers, executives and managers evade taxes through elaborate international financial deception. Swiss banking giant UBS recently agreed to turn over the names of thousands of its clients who allegedly used the company’s banking operations to skip out on the bill for Uncle Sam.
UBS has been caught with its hand in nearly every cookie jar labeled “bank scandal” over the past two years, from the subprime mortgage crisis to phony securities peddling to diamond smuggling. But as Robert Scheer explains at Truthdig, former senator and deregulation hawk Phil Gramm (R-Texas), has been an executive at the firm while the company has been destroying its reputation. Gramm helped pass some two key anti-regulation bills later years of the Clinton administration, and was unabashed about jumping to UBS immediately after leaving office. Scheer notes that the public knows almost nothing about Gramm’s role at the company, including any potential involvement in its laundry list of scandals.
Real economic progress in the U.S. is impossible without a stronger base of unionized workers. But it’s just as important to invest in our future by giving the children of poor families an even economic playing field.
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.
Weekly Audit: Bigger Than ‘Too Big to Fail’
by Zach Carter, TMC MediaWire Blogger
Now that trillions of taxpayer dollars have been pumped through the financial system, Wall Street giants JPMorgan and Goldman Sachs are reporting record profits—and giving out record bonuses. Goldman is planning to pay out $11.4 billion in compensation “earned” with our money. Even worse, attempts to regulate reckless financiers or empower ordinary workers are still being stymied by influential corporate lobbyists.
How did Goldman score the biggest quarterly profit in its history? Matt Taibbi explains in an interview with GritTV’s Laura Flanders. The $10 billion in direct capital that Goldman received from taxpayers under the Troubled Asset Relief Program (TARP) is actually one of the minor offenses. The company also converted corporate charters to become eligible for guarantees, and issued a whopping $28 billion in debt guaranteed by the government.
Banks were foundering last Fall, and very few investors were willing to supply them with emergency capital. So the FDIC guaranteed their debt, which allowed banks to raise funds at extremely low interest rates. The FDIC guarantee means that taxpayers will get stuck with the bill if the company defaults. If you can raise money at absurdly low rates, its very easy to turn over huge profits, as both Goldman and JPMorgan did.
There are other outrages: We still don’t know how much money the Federal Reserve loaned Goldman through its emergency lending facilities. The government’s bailout of AIG served as a huge windfall for the company, funneling at least $12.9 billion in taxpayer largesse directly to Goldman Sachs.
“AIG owed Goldman about $20 billion, and if AIG had gone through a normal bankruptcy, Goldman probably would have gone out of business. Instead, they got paid 100 cents on the dollar for every dollar that AIG owed them,” says Taibbi, author of a blistering take-down of the investment banking giant in the most recent issue of Rolling Stone.
In Salon, former Clinton Secretary of Labor Robert Reich says that this year’s big bank failures have resulted in a heavier concentration of financial influence in the few surviving firms, namely Goldman Sachs and JPMorgan. We have taken the “too big to fail” problem and made it bigger. JPMorgan acquired rival Bear Stearns for a pittance last March with billions of dollars in government guarantees. The company also picked up national banking giant Washington Mutual last fall. That means more risk in our economy and a greater concentration of lobbying power in our political system.
“We’ve ended up with two giants that now have most of the casino to themselves, are playing with poker chips backed by taxpayers, and have a big say in what the rules of the game are to be,” Reich writes.
Adam Schlesinger of Air America took to Wall Street to compile a hodgepodge of one-on-one interviews with bailout critics and condescending financiers. Schlesinger underscores the absurdity of Goldman’s pending bonuses by posting his own checking account balance ($13.75). The point of this massive bailout was to make the economy function for ordinary people. Instead, we’ve made sure that it benefits extremely wealthy bankers.
The government so completely resists doing anything about this staggering inequality, as Eyal Press writes for The Nation. There are two ways to approach the inequality problem. We can rein in the recklessness at the top by imposing serious regulations, and empower those at the bottom by giving them greater negotiating leverage with their employers (i.e., promoting unionization). While the bonus money flows on Wall Street, the Employee Free Choice Act (EFCA), a key bill to empowering unions, was just stripped of a crucial provision that would have made it easier for workers to organize, as David Moberg reports for In These Times.
As EFCA is gutted, bills proposing regulations for the financial sector are moving at a snail’s pace—even after two years of economic turmoil. Last week, Congressional leaders from both parties nominated members for a new panel, the Financial Crisis Inquiry Commission, to investigate the causes of the financial crisis. The investigation seems doomed to failure by its very design. Zachary Roth details the committee’s various shortcomings for Talking Points Memo. Of the panelists, six were nominated by the Democratic leadership, while four were nominated by the Republican leadership. If all four Republican nominees vote to block a subpoena, the committee cannot issue it, and without broad subpoena power, the entire exercise is futile.
Roth also emphasizes the excessively political nature of the appointees, particularly on the Republican side, which named former Rep. Bill Thomas, R-Calif., as Vice Chair. The Democratic picks are generally uninspiring, except for Brooksley Born, who fought to regulate derivatives in the 1990s as head of the Commodity Futures Trading Commission. But the Democrats have nobody anywhere near as frightening as Rep. Thomas, a vicious partisan who specialized in ushering money to special interests during his tenure as Chairman of the House Ways and Means Committee.
Mary Kane of The Washington Independent explains the troubling record of another Republican commission appointee, Peter Wallison of the American Enterprise Institute (AEI), a conservative think tank. The various conspiracy theories Wallison peddled include a robustly debunked belief that a decades-old anti-discrimination law is responsible for the mortgage meltdown. The law in question, known as the Community Reinvestment Act (CRA), dates back to 1977, and Wallison’s conspiracy theory has been rejected by nearly everyone in the financial commentariat, including regulators appointed by George W. Bush.
The Community Reinvestment Act requires banks to make loans to communities where they collect deposits. If you accept deposits at a branch in a poor neighborhood, you have to offer responsible loans in the same community. The idea is to expand access to affordable credit in the inner cities, while the subprime crisis is heavily concentrated in the suburbs. CRA loans have to be affordable, which means high-interest subprime loans do not count. CRA does not require banks to lower their lending standards, because any recipients have to be credit-worthy. Only 6% of high-interest mortgages were made by companies subject to CRA regulations, and lest we forget, this law was passed in 1977, while financial crisis erupted in 2007.
Instead of appointing toothless commissions, we should be making sure the financial oligarchs do things that are good for the rest of us. Congress should be writing regulations to curb risk in the financial system as fast as bankers are paying themselves bonuses. They’re our representatives, after all, and it’s our money.
This post features links to the best independent, progressive reporting about the economy. 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.
Weekly Audit: Unions and Wage Growth Can Fuel Recovery
by Zach Carter, TMC MediaWire blogger
The U.S. economy is in big trouble right now, and the reform process may be missing a key point. When banks ran into severe trouble late last year, the government responded quickly with a massive bailout, but very little has been done to address a major structural flaw that has left our economy so vulnerable: rampant income inequality. In a system based on consumer spending, we have stretched consumers beyond their limit.
Former Labor Secretary Robert Reich argues that we are in for a long period of economic woe over at Talking Points Memo. Consumer spending accounts for about 70% of the U.S. economy, so when consumers go broke, everything shuts down. Ordinary Americans’ wages have been declining for decades, and the collapse of the housing bubble wiped out roughly $14 trillion in household wealth. Simply rebooting in the hopes that our simultaneous assault and dependence on consumer pocketbooks will work again will not be effective.
“This economy can’t get back on track because the track we were on for years—featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere—simply cannot be sustained,” Reich writes.
Strengthening our labor unions is probably the biggest single step the U.S. can take toward economic stability. And the best way to do that would be passing the Employee Free Choice Act, which would make it much easier for unions to organize by circumventing executive intimidation. Empowered workers can demand fair wages, decent benefits and help build a society that values all labor as an important part of collective existence.
In a profile of AFL-CIO leader David Trumka for The Nation, David Moberg presents a vision of an economy in which policymakers and voters are concerned with how much wealth exists and how that wealth is distributed. Widespread prosperity does not inevitably flow from technological or financial innovation if the resulting gains are diverted to a select few.
“In Trumka’s view, the unionism of the 1930s forged a social compact that made possible the middle class prosperity of the 1950s and 1960s,” Moberg writes. “But since the early 1970s, Wall Street and financial interests have dominated American politics, dismantling the compact and increasing inequality, debt and insecurity as workers struggled to keep up.”
It may be surprising for those of us who don’t work on Wall Street, but there is actually an enormously influential school of thought in Washington, D.C. that believes recessions are actually good for the economy. The reasoning goes something like this: When economies gorge themselves, something has to happen to correct the mistake—to “purge the rottenness from the system,” as Herbert Hoover’s Treasury Secretary Andrew Mellon once said. The idea has some level of intuitive appeal, but as Christopher Hayes writes for The American Prospect, it’s also a complete distortion of how recessions actually work.
“Economic contraction feels quite different to a bond trader and an unskilled worker,” Hayes writes. “A spike in unemployment hits those on the margins of the labor market the hardest, while contractions also usher in deflation, which has a strong tendency to make the rich richer.”
In reality, the government almost never makes the perpetrators of an economic collapse pay serious consequences. When the economy gets into trouble, the government usually takes emergency measures to avert a crisis, and then refuses to adopt reforms that would protect those dealt the most harm. It’s been this way for decades.
Not only have workers been neglected, but billions of their tax dollars have bailed out banks that ran themselves into the ground via predatory loans. But even that bailout money is not being used to help strengthen the broader economy. Writing for The Washington Independent, Mary Kane highlights a host of reports that indicate banks are booting people out of their homes, and then refusing to care for the houses once they’re vacant. When homes are overgrown and infested with all kinds of critters, the value of nearby properties plummets. Banks are hurting completely innocent homeowners whose tax dollars helped bail them out.
We don’t even know the full extent of the favors the government has performed for financial firms. In a video for the American News Project, Lagan Sebert, Harry Hanbury and Mike Fritz detail some of the Federal Reserve’s unprecedented actions during the financial crisis. The Fed has lent out over $1 trillion to banks over the course of the financial crisis without disclosing who received the loans or what kind of collateral the Fed received in return.
Much of what we do know about the Fed’s rescue plans is disquieting, as William Greider, an economics journalist with The Nation, explains in the ANP video. When Bear Stearns collapsed in March 2008, the Federal Reserve Bank of New York negotiated a rescue plan in which JPMorgan would acquire the failed Wall Street icon in exchange for $30 billion in loss protection from the Fed. But JPMorgan would have been one of the hardest hit by a Bear Stearns collapse, and JPMorgan CEO Jamie Dimon sits on the board of directors at the New York Fed.
“Tim Geithner, who was then President of the New York Federal Reserve Bank and is now Treasury Secretary, was negotiating with his own board member,” Greider says.
Going back to labor: Hourly workers will get some much-needed relief later this month, when the federal minimum wage increases from $6.55 to $7.25 an hour, as Doug Ramsey explains for Public News Service of Arizona. While executives like to argue that raising the minimum wage is a job-killer, the fact is that no serious study has ever linked the two phenomena. Interestingly, the wage increase was not a response to the economic crisis. It was one of the first legislative victories for the Democratic Party when it won back majorities in the House and Senate in 2006.
Anybody who lives on less than $7.00 an hour can attest that the added income is a welcome improvement over the status quo. But $7.25 an hour is just $15,000 a year—not nearly enough to save for the future or pay for a serious medical procedure. Our economy is suffering because many, many ordinary people are living paycheck to paycheck. We have to create an economy where work and workers are given their fair value.
This post features links to the best independent, progressive reporting about the economy. 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.
Weekly Audit: Ending the Economic Status Quo
by Zach Carter, TMC MediaWire Blogger
The banking lobby still holds enough sway inside the Beltway to torpedo sensible consumer protection rules, even after releasing a flood of predatory mortgages that kicked off the current economic crisis. On issues ranging from payday loans to subprime mortgages, the banking industry continues to successfully defend itself against new regulations that would protect the consumer. As if that weren’t outrage enough, the finance lobby has also joined other corporate interest groups to fund misinformation campaigns that smear unions and block wage growth.
As Mary Kane explains for The Colorado Independent, the push to rein in predatory mortgage lending appears to be losing steam on Capitol Hill. An extremely complex mortgage reform bill that is conciliatory to the finance lobby passed the House last month, angering consumer advocacy groups. Among the problems: the bill pre-empts many stronger state predatory lending laws and protects the Wall Street investment banks that gorged themselves on mortgage-backed securities.
Consumer protection shortfalls are not limited to messy mortgages. Lagan Sebert and David Murdoch detail the payday loan industry’s continued assault on U.S. consumers for the American News Project. By offering small loans, typically in amounts ranging from a few hundred to a few thousand dollars, payday lenders target consumers who need money for basic necessities, then charge them outrageous interest rates (as in, above 700%).
For years, newspaper editorials have denounced payday lenders for systematically exploiting the most vulnerable members of society, including members of the U.S. military, who are often targeted as a result of their reliable paychecks. The solution to the problem is as simple as the business is repulsive: Capping annual interest rates on all consumer credit products at 36% would make this kind of predation impossible.
Nevertheless, the payday loan industry has been able to escape a regulatory crackdown via an intense and sustained lobbying effort. Senate Banking Committee Chairman Chris Dodd, D-Conn., is now parroting payday lending lobbyists. Since payday loans are supposedly paid back within a matter of weeks, Dodd and the payday lending lobby say that it’s unfair to hold them subject to the same standards as a 30-year mortgage.
The argument is insane. No bank would ever get away with charging a 36% interest rate on a mortgage. Even the most predatory subprime mortgages didn’t have interest rates anywhere near that high. But Sebert and Murdoch go further, highlighting a report from the Center for Responsible Lending which found that payday lenders make 90% of their revenue from borrowers who do not pay their loans off on time. The loans are structured to be so expensive that consumers become trapped into making payments for the long-term, often spending thousands of dollars over multiple years to get out from under an initial loan of just a few hundred dollars.
Dodd has received major campaign contributions from the banking industry, but sometimes the lobbying effort is much more subtle. Several major corporate lobby groups have united under the misleading moniker of “Alliance to Save Main Street Jobs” to finance shoddily researched projects that defend the interests of the executive class in economic policy. An Alliance for Main Street Jobs report written by Anne Layne-Farrar has received quite a bit of attention for its claim that the Employee Free Choice Act (EFCA) would kill 600,000 jobs by making it easier for employees to organize. Several major news outlets have cited the allegation, including Fox News, MSNBC, The Wall Street Journal, and CBS News. As Art Levine reveals for In These Times, however, this research relies on completely meaningless statistical trends and disingenuous research design that render its findings utterly hollow.
Corporate executives are not afraid of EFCA because they think it will kill jobs or disenfranchise workers. They are afraid because it will empower workers to fight for living wages and provide safe working conditions—things that leave less money around for big executive bonuses at the end of the year and give workers a greater say in how companies operate.
In some respects, EFCA also represents the other side of the predatory lending problem. It is important to ban abusive loans, but it is just as important to make sure people are paid fairly for their work to ensure they don’t need to seek out shady credit just to make ends meet.
When so many brewing legislative battles relate to the economy, it’s easy to forget about the programs that have already been enacted. Some of the tax cuts included in the economic stimulus package were aimed at fostering investment in low-income and minority neighborhoods—a worthy goal. But as Michelle Chen notes for ColorLines, the program has some significant flaws. Chen highlights a report from the Government Accountability Office (GAO) which found that minority-owned community development entities are largely being excluded from the program, with approval rates about 67% lower than other applicants. The GAO could find no reasonable explanation for why minorities were not making the cut, especially when some recipients of the tax credits have a history of consumer exploitation. Capital One Bank, for instance, is receiving $90 million of these tax credits, despite its long history of abusive subprime credit card lending.
There have been some successes this year in the push for an economy that answers to workers and consumers. Much of the stimulus bill is designed to make sure important jobs don’t disappear during the recession, and Sen. Dodd’s credit card reform bill passed both chambers of Congress by comfortable margins and included some very strong improvements. But we know what caused the economic crisis: stagnant wages and predatory lending. A true recovery will have to empower workers and protect consumers, both of which will require breaking with the corporate status quo.
This post features links to the best independent, progressive reporting about the economy. 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.
Weekly Audit: Welfare, Work and the Bailout Bonanza
The U.S. economy lost nearly 600,000 jobs in January, bringing total losses in the past three months over 1.5 million—more than the entire population of Philadelphia. If there ever was a good time to mend the tattered U.S. social safety net, it’s now. While unemployment benefits and food stamps remain relatively uncontroversial, basic welfare continues to be neglected by the general media and vilified by the right. And as of this moment, a responsible welfare program is needed more than at any point since the 1930s.
Seth Wessler has a great blog on RaceWire about retooling welfare so that it actually provides relief to people in need. The welfare reform Congress passed in 1996 tied benefits to employment, thereby excluding those who most need help, especially in an economy like this. The law’s popularity was fueled by false stereotypes about the disadvantaged.
“The punitive rules established after twenty years of racially coded frenzy to ‘end welfare as we know it’ have left Americans with no safety net during this deepening economic crisis,” Wessler writes, arguing that it is high time for this hateful chapter of American history to be over.
Pointless haggling over the economic stimulus legislation also needs to stop now. In a post for The Nation, John Nichols details the damage Senate Republicans have inflicted on the economic recovery package, and by extension, the economy itself. If the current Senate bill becomes law, Nichols notes, states will get less money to keep public employees on the payrolls, education programs will receive less funding, efforts to create jobs will be less effective and public health initiatives will be stymied. Even conservative French President Nicolas Sarkozy thinks that the changes the Senate has made to the bill are a bad idea.
And what do we get for sacrificing all of these public investments? Tax cuts. As Robert Oak notes in the Economic Populist: “We need income, people!” The government can try to create incentives for people to buy cars and houses and stocks, but without a job, a lower price tag means nothing. If tax cuts are to make any impact, they have to be accompanied by major job creation. And job creation programs mean government spending.
Has everybody forgotten that Democrats just won back-to-back elections? Trickle-down economic policies were rejected by voters across the nation last November. Republicans lost seats in Idaho and Virginia, of all places! When a party suffers such complete losses, it means that voters don’t put much stock in its ideological toolkit—and they probably don’t want the winning party to do so either.
“There’s been a sort of embarrassment at the prospect of aggressively using the Democratic mandate, and there shouldn’t be,” Ezra Klein writes for The American Prospect.
Of course, the U.S. government plans to do more than provide more tax cuts for rich people. It’s also going to bail out the shareholders and executives of huge multinational corporations that wounded the economy in the first place, creating a new welfare program for the wealthy. We will need some kind of financial sector to support economic recovery, and freshly sworn-in Treasury Secretary Timothy Geithner could take one of two reasonable routes to economic salvation: The Treasury could nationalize the major “too-big-to-fail” banks outright, or simply let them die and have the Federal Reserve fill the credit-shaped hole in the economy. Unfortunately, the Obama team appears ready to pump money into the banks and shield shareholders from losses that stem from some of the worst management decisions in business history.
If Geithner and Co. orchestrate another bank bailout, however, we lose an opportunity to rebuild the U.S. economy that actually addresses the needs of individuals in an environmentally sustainable way. As David Korten argues in Yes! Magazine, the Wall Street-driven economy has created huge sums of money, but done almost nothing to meet any serious social challenge. To build a better economy, we need to transcend Wall Street. “Trying to solve the crisis with the same tools that caused it is the definition of insanity,” Korten writes.
Beyond Wall Street, the Obama administration has inherited a decimated manufacturing sector. It’s currently propped up by a deeply flawed loan the Treasury Department extended to General Motors and Chrysler in December. Below is a segment from a four-part series on the auto bailout from The Real News. In it, Host Paul Jay notes that unions are being asked to take pay cuts as part of the effort to retool the Detroit car makers, even as decades of dreadful management decisions and poor environmental policy are being shut out of the public discussion.
It’s important to note that autoworkers’ union could be helping cement the false perception that workers are responsible for Detroit’s problems by agreeing to accept pay cuts as part of the bailout plan. Acquiescing to the demands of incompetent executives and opportunistic lawmakers also sets a terrible precedent for other stand-offs between CEOs and their employees. The millionaire managers who created the mess should be held accountable for the clean-up, not the factory workers who had the audacity to ask for health insurance.
Something is terribly amiss when the most neglected members of society can’t ask for help paying the bills, while even those protected by union contracts can’t expect to have their health care costs covered. The U.S. economy will be losing at least half a million jobs for the foreseeable future. We cannot abide by a system that punishes those who are already being hit hardest by the economic downturn.
This post features links to the best independent, progressive reporting about the economy. 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.
Weekly Audit: Obama’s Stimulus Plan Signals End of Era
Since the U.S. is officially in a recession, and the Congressional Budget Office has predicted the worst economic downturn since the Great Depression, just about everybody acknowledges that times are tough. Everybody, that is, except the National Republican Congressional Committee. Talking Points Memo’s David Kurtz caught the Republican fundraising operation spouting some embarrassing doubletalk on their website earlier this week, including the proud declaration that “the U.S. economy is robust and job creation is strong.”
In fact, job creation is non-existent. The U.S. economy is losing over half a million jobs every month and even optimistic Wall Street economists expect unemployment to keep rising for at least another year.
Tough times call for unity, and President Barack Obama dedicated much of his inauguration speech to working together to usher in a “new era of responsibility.” Obama’s sentiment is essential—there is no way we can limit the damage of this recession without a massive collective commitment. The problem is, we all know how we got here, as Jose Garcia points out at The Progressive. Reckless bank lending, lax government oversight and insufficient social safety nets combined to saddle consumers with unaffordable levels of debt and directed family savings into completely irrational home values.
“Yes, we all need to pitch in, but above all the private sector and government regulators need to act responsibly,” Garcia writes. The surge in U.S. consumer debt over the past twenty-five years has been accompanied by stagnant wages and deceptive loan contracts. People often rely on credit to meet basic needs, Garcia notes, and bankers routinely do not disclose how much those loans will cost borrowers. Banks rewarded loan officers and mortgage brokers for pushing unaffordable loans, and a recent study by the Center for Responsible Lending revealed that most people do not understand the fine print on their credit cards.
Let’s be clear, then: Collective responsibility means overhauling Wall Street regulations and not holding the plight of working Americans hostage to banker bonuses.
Collective responsibility also means making sure that everyone has an affordable place to live. The Bush administration supported unregulated subprime mortgages and a totally disregarded rental housing programs. That approach was misguided. Renting is the only realistic housing option for the least well-off swath of the U.S. population, and affordable housing is supposed to help that demographic. Inattention to the rental market has created serious imbalances for low-income Americans. Adam Doster highlights some frightening statistics in a piece for The Nation, noting that a full-time worker would have to earn $17.32 an hour to afford the average rent on a two-bedroom apartment, well over double the minimum wage.
But there is evidence that Obama’s economic recovery package signals an end to an era of neglect. Fresh from being named one of the 25 most influential liberal voices in U.S. media by Forbes Magazine (read: the bad guys are afraid of him), Kevin Drum emphasizes the important health care provisions and expanded unemployment benefits in stimulus bill in a blog for Mother Jones. Key measures in the plan include an immediate $450 increase in benefits for the blind, disabled and elderly, along with expanded Medicaid funding and more food stamps for the 30 million Americans currently receiving them.
“With this plan, the new government confirms that it has some responsibility for providing a safety net for its poor and disabled, its children and elderly,” Drum writes.
For those of you interested in tracking the stimulus plan as it develops, make sure to check out StimulusPlan.NewsLadder.Net, which features the best independent reporting and analysis of this bill.
Over at The American Prospect, Ezra Klein–another blogger whose name strikes terror in the hearts of Forbes editors everywhere–offers some insight on bank nationalization. Nationalization is a major step, but the terms of former Treasury Secretary Henry Paulson’s bailout operation are actually more suspect. Paulson’s plan only nationalized private-sector losses, while allowing bank shareholders to enjoy any profits stemming from public help. The result? Backward incentives for bank executives and a waste of taxpayer dollars.
Once the government allows banks—or any companies—to become too big to fail, incentives for excessive risk-taking become standard fare. Does anybody seriously believe that Bank of America would have gobbled up Merrill Lynch in weekend merger negotiation if it did not think that government support would always be available, even in a worst-case-scenario? If taxpayer largess is always on the table, then meaningful consequences should accompany it. If a bank would not be viable without the collective support of taxpayer, and it remains in the collective interest to keep the bank in operation, then the government should nationalize it, kick out the management team and wipe out the shareholders. Going halfway and simply nationalizing the losses does nothing to discourage bad management behavior.
Unfortunately, however good Obama’s recovery package may be, both his administration and Congressional leaders are sending signals that we will not see anything resembling reasonable financial policy in the near future. Truthdig posts some comments from Vice President Joe Biden and House Speaker Nancy Pelosi indicating that much more money than the original $700 billion bailout outlay could be coming down the pipe.
It is more important than ever to have a strong voice heading the Labor Department to make sure the administration does not lose focus on the nonfinancial economy. Hilda Solis, President Obama’s nomination for Labor Secretary, is just such a voice, as Kim Bobo argues in an op-ed for In These Times. She has been a staunch defender of organized labor throughout her political career. Senate Republicans are stalling her nomination citing her support for the Employee Free Choice Act, a bill that would allow workers to unionize once a majority of employees at a workplace agree. The business exec lobby is already spending big bucks to spread misleading information about the legislation, saying it would mean an end to “secret ballots” in union elections, when in fact the bill would simply allow workers to enter a union without first holding an election.
Those elections are frequently subject to intimidation from employers. We are not taking collective responsibility when we allow our workers to be threatened by their bosses when they ask for decent pay and benefits.
This post features links to the best independent, progressive reporting about the economy. Visit Economy.NewsLadder.net for a complete list 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.
Hilda Solis: Get Excited
Update: At 2:15 today, President-Elect Barack Obama confirmed the nomination of Rep. Hilda Solis,D-Calif, for Secretary of Labor.
President-elect Barack Obama has named Rep. Hilda Solis, D-Calif., as the next administration’s Secretary of Labor and is expected to formally announce the selection this afternoon. To put it simply, progressives are ecstatic about the pick.
“If you were to sketch an ideal Labor Secretary, you could hardly do much better,” Jonathan Stein writes for Mother Jones.
“Solis should make progressives feel pretty good,” according to Steve Benen of The Washington Monthly, who calls her nomination, “a big win for unions.”
Why all the excitement? As Harold Meyerson details in a great profile for The American Prospect, Solis led the successful push to raise California’s minimum wage in 1996, diverting funds from her own State Senate political account to fund a signature-gathering campaign that culminated in the measure’s passage over strong resistance from Republican Gov. Pete Wilson.
Solis doesn’t just have passion and patience, she’s got guts. When she ran for the House of Representatives in 2000, she took on a 9-term Democrat with a terrible record and absolutely trounced him in the primary, going on to win back California’s 32nd District for the left.
“In the House, Solis has continued to champion labor causes, immigrants’ rights, women’s health and environmental protections,” Meyerson writes.
She has a 100% rating from the AFL-CIO, and as Meyerson’s fellow Prospect-er Ezra Klein notes, she has successfully defused tensions between immigrant laborers and older union workers who viewed immigrants as a threat.
And then there’s her personal story. As the daughter of union worker immigrants from Nicaragua and Mexico, Solis embodies America’s most-prized and rarely realized ideal: the promise of opportunity for all citizens that rewards hard work.
The Labor Secretary position can be either enormously powerful or completely irrelevant, as demonstrated by the contrast between the tenures of President Bill Clinton’s first Labor Secretary, Robert Reich, and that of current Secretary Elaine Chao. In just four years, Reich secured the passage of the Family and Medical Leave Act, the Pension Protection Act and the School-to-Work Jobs Act, raised the minimum wage and still had time to call out deregulation ideologue, budget hawk and Treasury Secretary Robert Rubin on his reckless lunacy. Chao’s only accomplishment after eight years is a 2003 rule that denied overtime pay to 6 million workers. Progressives can trust Solis to ensure that the Department of Labor will finally be going to bat for laborers again.
This post features links to the best independent, progressive reporting about the economy. Visit Economy.NewsLadder.net for a complete list of articles on immigration, 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.