Our Nation's Lost Decade

If you feel like a hamster on a wheel getting nowhere fast, there's an explanation for it according to this NYT's op-ed columnist.

For average Americans, the last 10 years were a lost decade. At the end of President George W. Bush’s eight years in office, American households had less money and less economic security, and fewer of them were covered by health care than 10 years earlier, the Census Bureau reported in its annual survey.

The poverty rate in 2008 rose to 13.2 percent, the highest in 11 years, while median household income fell to $50,303. Ten years earlier, adjusted for inflation, it was $51,295.

In fact, income for the median American household fell for the first time in four decades. The Great Recession gets some of the blame, but the decline started well before the housing and financial sectors collapsed.

Harvard economist Lawrence Katz explains what happened: "We had a plutocratic boom. Then we have egalitarian recessions. Taken together, only the top ends up growing, on average." And the top did very well indeed: "During the same period, the average income of the richest tenth of a percent increased by about $2 million, or about 35%." They can thank President Bush for his $1.3 trillion tax cuts.

How did average Americans fare? People in their prime earning years (age 45 to 54) took "the biggest hit in the last years of the Bush Administration, their median income fell by $5,000. And the region that suffered most — the South."

Income went down for all races, but "Hispanics experienced some of the biggest losses. Income declined 5.6 percent for Hispanic households, 4.4 percent for Asians, 2.8 percent for African American families and 2.6 percent for non-Hispanic whites. Hispanics and Asians also showed the biggest increases in poverty rates."

Poverty really hit children according to the EPI:

A Sept. 10 report from the Census Bureau shows that the child poverty rate rose to 19.0% in 2008, from 18% in 2007. That translates to 14.1 million children living in poverty in the richest nation on earth.

In 2008, more than one in three - 35.3% - of all people living in poverty were children. EPI projects that with the continuing deterioration in the labor market, by 2009 a quarter of all children in this country will be living in poverty and by 2010 the child poverty rate will be 26.6%.

This would represent an increase of 10.4 percentage points from 2000 to 2010 – truly a lost decade.

Speaking of the labor market, the Bush administration failed miserably on job creation according to Market Watch:

...the private sector didn't just lose jobs over the last month or the last year -- it's lost jobs over the last decade.

Yes, the very segment of the economy that was supposed to thrive under the Bush administration ended up with a net loss of 223,000 jobs since August 1999, according to the latest figures from the Bureau of Labor Statistics. Meanwhile, the nation's population has grown by 33.5 million people.

That's the worst job-creating performance by the private sector since, you guessed it, the Great Depression.

On top of that, the government created 2.1 million jobs. Wait, you say -- isn't that a positive? Well, no, because it's the worst performance by the government over a 10-year period since the last major recession of the early 1990s.

And something bad happened to young workers over the past decade too:

Since 1999, more of them now have lower-paying jobs, if they can get a job at all; health care is a rare luxury and retirement security is something for their parents, not them. In fact, many—younger than 35—still live at home with their parents because they can’t afford to be on their own.

Heckuva job, President Bush. Heckuva job, Republicans. You get credit for our "lost decade" and we get to live with the results. Some deal.

Americans want inquiry into "war on terror" tactics

Our attention may be focused on the economic meltdown swirling around us, but we aren't suffering from amnesia and we're not ready to let the Bush administration off the hook. A new USA TODAY - Gallup Poll finds most of us favor investigating whether the Bush administration broke the law in its tactics in the "war on terror."

Close to two-thirds of those surveyed said there should be investigations into allegations that the Bush team used torture to interrogate terrorism suspects and its program of wiretapping U.S. citizens without getting warrants. Almost four in 10 favor criminal investigations and about a quarter want investigations without criminal charges. One-third said they want nothing to be done.

Even more people want action on alleged attempts by the Bush team to use the Justice Department for political purposes. Four in 10 favored a criminal probe, three in 10 an independent panel, and 25% neither.

Groups like the ACLU are pressing for inquires into whether the Bush administration violated U.S. and international bans on torture and the constitutional rights to privacy, and House Judiciary Chairman John Conyers has called for a panel to gather facts and make recommendations, which could possibly lead to prosecutions.

Senator Patrick Leahy has also proposed a truth and reconciliation commission to investigate abuses, including the use of torture, warrantless wiretapping, extraordinary rendition, and executive overrides. According to Leahy...

Rather than vengeance, we need a fair-minded pursuit of what actually happened. The best way to move forward is getting to the truth, finding out what happened, so we can make sure it does not happen again.

Thousands of Americans lives were lost in Iraq, along with billions of dollars and our country's moral authority. We can't turn our back on that page in history as though it never happened. We deserve answers.

Click here to sign Leahy's online petition urging Congress to consider establishing a truth and reconciliation commission to investigate the Bush-Cheney Administration's abuses.

Gallup says, "At this point, it is unclear whether investigations into possible Bush-era wrongdoing will in fact take place," but when asked about Leahy's plan, President Obama said he would look at it.

Sign the petition and send the message that letting the Bush administration off the hook is wrong.


(Cross posted at Blogging for MI.)

Not so smart Republican economic calls

Time Magazine looks back at what they see as Bush's biggest economic mistakes, adding that "by almost every measure — GDP growth, jobs, median incomes, financial-market performance — he stacks up as probably the least-successful President on the economic front since Herbert Hoover. ... As the decider in the White House for the past eight years, George Bush made some economic calls that don't look smart today. Here are eight of them."

The Big Picture clicked through the list so we wouldn't have to.

1. The Return to Deficits: Bush’s tax cuts and spending increases — and clear disdain for the pay-as-you-go approach that had brought deficits down in the 1990s — brought a return to permanent deficits.
2. Iraq: Even if you think the war did bring benefits to the U.S., they would have to be pretty gigantic to justify the costs of $1-3 trillion dollars;
3. Tax Cuts for the Rich: Bush came to Washington facing almost diametrically opposing economic conditions, yet he offered up the same solutions as Reagan.
4. Financial Regulation: What is true is that most Bush-era financial regulators were less than enthusiastic about the very act of regulating, and that Bush’s “ownership society” push glossed over a lot of potential dangers.
5. Telling Us to Go Shopping: After the 9/11 terrorist attacks, President Bush didn’t call for sacrifice. He called for shopping.
6. Energy Policy: Not much to say here, except that there wasn’t an energy policy.
7. A State of Denial: Every Administration spins and sugarcoats the economic truth. But the Bush White House took this disingenuousness to new levels.
8. The Muddled Bailout: The main problem has been the ambivalence with which both Paulson and the White House have approached the financial rescue.

Bush was the decider, but Republicans were the enablers. They rubber-stamped every idea Bush threw their way, and questioning or discussing the merit behind his plans was verboten or "unpatriotic." After all, Republicans must not be challenged or questioned. They know best.

It turns out they weren't so smart after all, so why do they feel they deserve to be heard?

Republicans, who said they were receptive to Obama's call for a "unity of purpose," promptly tested the day-old administration. They criticized Democratic spending initiatives and requested a meeting with the president to air their tax-cutting plans.

There they go again! Tax cuts, tax cuts, tax cuts. I hope Obama politely listens and then tells them don't let the door hit you "thanks, but no thanks." Why? I'll let this economist speak for me:

Tax cuts won't build schools, or any other public good.

And right now, with so much of our infrastructure in need of attention, we need public goods.

We tried the tax cut approach to stimulating the economy once, we had no choice since Bush and the Republicans would not have passed any other type of stimulus package.

Guess what? It didn't work very well, and we have little to show for it. Had we, say, rebuilt water systems instead, at the very worst we'd have better water.

Republicans, please go back and read #7 above. You don't deserve to be heard as long as you continue to sing the same old song.

Modern Day Charles Dickens Era

In the midst of the bailout crisis, I worried that taxpayers were being played. It looks like my concerns were well-founded. Via Dean Baker:

Remember way back to last week when it was going to be the end of the world if Congress didn't pass the bailout package? Remember the Washington Post's account in which Treasury Secretary Henry Paulson told President Bush, "there is no Plan B."

Well, it looks like the Fed has discovered a Plan B. It turns out that the Fed can buy commercial paper directly from non-financial corporations needing credit to maintain operations. This will keep the credit markets working even if the zombie banks aren't up to the task. In other words, the threat of a complete meltdown in the absence of a bailout was nonsense and the media once again got taken for a ride by the Bush administration.

Adding insult to injury, we now find out that the limits on executive compensation were essentially meaningless too. When do we get our bailout, or do we have to work till we drop over dead? That scenario becomes more probable with each passing day.

Via the AP:

Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.

Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — have lost some 20 percent overall since mid-2007.

Rep. George Miller, D-California, summed it up best: "Unlike Wall Street executives, America's families don't have a golden parachute to fall back on. It's clear that their retirement security may be one of the greatest casualties of this financial crisis."

U.S. is blamed for spawning global financial crisis

Add Germany to the list of countries less than impressed with the Bush administration and Wall Street.

Germany blamed the United States on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status. [...]

"The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the centre-left Social Democrats (SPD), told the Bundestag lower house.

"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar," he said.

Germany recognized we were headed for trouble over a year ago and tried to do something about it to no avail.

Chancellor Angela Merkel, whose conservatives rule in coalition with the SPD, and Steinbrueck both pushed the Group of Eight (G8) to agree measures to boost financial market transparency during Germany's presidency of the G8 last year.

But their drive collapsed amid opposition from Washington and London.

Merkel criticized their stance at the weekend, saying the days of laissez-faire capitalism were over.

It's not just Germany either. The criticism comes from other countries too.

The German views were echoed by leaders of governments from around the world meeting this week at the United Nations in New York.

Many sharply criticized the George W. Bush administration's financial record and warned that U.S. financial mistakes now threatened the global economy.

Financial mistakes? I'm not convinced the Bush administration made a mistake. I think they knew all along what the outcome would be, but didn't give a damn as long as they kept raking in the money.

Terrorist watch list continues to grow

Following 9/11, the U.S. government compiled a list of 20 known terrorists (19 of them died in the attacks); however, that list quickly grew by 20,000 names a month. It recently hit the one million mark according to the ACLU.

"Members of Congress, nuns, war heroes and other 'suspicious characters,' with names like Robert Johnson and Gary Smith, have become trapped in the Kafkaesque clutches of this list, with little hope of escape," said Caroline Fredrickson, director of the ACLU Washington Legislative Office. "Congress needs to fix it, the Terrorist Screening Center needs to fix it, or the next president needs to fix it, but it has to be done soon."

Even Assistant Attorney General Jim Robinson, the Justice Department's former top criminal prosecutor, turned up on the list. Just how does the government conclude a name belongs on the list? Are they guessing? It certainly seems that way. From Mother Jones:

The argument for maintaining such an unwieldy and quickly growing list is perhaps best voiced by cliché: better safe than sorry. But that philosophy has spawned a list that a recent GAO study found much too large to be effective, and much too inaccurate to protect the civil liberties of innocent people. The FBI's Terrorist Screening Center manages the list, but to date the administration has failed to establish a clear, consistent methodology for government agencies to use when determining who goes on the list and who doesn't. The criteria vary widely, when they're known at all. The Central Intelligence Agency, for instance, flatly refuses to disclose its criteria for submitting a name to the list. The FBI, on the other hand, generally nominates any and all subjects of ongoing counterterrorism investigations.

No clear criteria or methodology, and the data is inaccurate. Do you feel safer?

Mother Jones said it remains unknown how many names on the list are part of government-designated terrorist groups (Al Qaeda, Hamas, Hezbollah, the Iranian Revolutionary Guard Corps, and affiliates of the IRA and the Tamil Tigers) since that's classified information, but using public information available in November 2007, they figured these groups total about 200,000 people.

Their conclusion? "Assuming every one of those members is on the list — an absurd assumption — it would reflect an accuracy of only 23 percent." That means nearly 77% of the names of that list don't belong there.

Sorry, Charlie...or Gary Smith or Robert Johnson.

Obama talks about fair trade

Obama addressed more than 1,000 people at Flint's Kettering University today. Christine from Blogging for Michigan attended and took some pictures that you can check out, and I helped do some live blogging and posted my comments there too.

Obama's speech was: "Renewing American Competitiveness." How appropriate for Flint and Michigan in general. Manufacturing jobs have been leaving here for years and being sent to places like Mexico and China, and along with those jobs went pensions and health care. Workers are ready for change because, as Obama noted, we've "lost confidence in that fundamental American promise that our children will have a better life than we do."

Click the link above to read his speech. There's something in there for everyone. Obama touches on health care (he states he will push for universal coverage), green jobs and energy policy, broadband access, education (college education must not be a privilege of the few – it should be a birthright of every single American), jobs, trade and more. Because trade is responsible for decimating manufacturing jobs here in Michigan, I pulled out that part of his speech for you to read.

But even as we welcome competition, we need to remember that our economic policies must be supported by strong and smart trade policies. I have said before, and will say again – I believe in free trade. It can save money for our consumers, generate business for U.S. exporters, and expand global wealth. But unlike George Bush and John McCain, I do not think that any trade agreement is a good trade agreement. I don't think an agreement that allows South Korea to import hundreds of thousands of cars into the U.S., but continues to restrict U.S. car exports into South Korea to a few thousand, is a smart deal. I don't think that trade agreements without labor or environmental agreements are in our long term interests

If we continue to let our trade policy be dictated by special interests, then American workers will continue to be undermined, and public support for robust trade will continue to erode. That might make sense to the Washington lobbyists who run Senator McCain's campaign, but it won't help our nation compete. Allowing subsidized and unfairly traded products to flood our markets is not free trade and it's not fair to the people of Michigan. We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products. We cannot let enforcement of existing trade agreements take a backseat to the negotiation of new ones. Put simply, we need tougher negotiators on our side of the table – to strike bargains that are good not just for Wall Street, but also for Main Street.

I think that last sentence makes an important point. It's too late to put the genie back in the bottle and rescind NAFTA and other trade agreements, but there's no reason we can't change those agreements so that labor gets their fair share of the pie too.

This is how the system works now according to Ezra Klein:

Put broadly, opening ourselves up to trade is really good for people who buy things, and less good for people who make things. Now, a lot of folks both buy and make things, so the story is complicated. But one reason the elite classes are so hegemonically enamored with trade is that they don't really make anything at all, and so experience none of the downsides of trade. As Dean Baker likes to point out, we've structured our trade deals such that unskilled manufacturers face a lot of international competition while reporters, say, face almost none.

If we really value all work in this country, then tweaking these trade agreements is the only right thing to do.

Bush's job creation claims debunked

Economist Dean Baker disputes the New York Times claim that "Mr. Bush has spent much of his presidency riding high on claims of solid job growth."

Not so, says Baker. Job growth has actually been pretty bad through most of President Bush's time in office. How bad? President Bush comes in dead last in job creation among recent presidents, even falling behind his dad's dismal record. Ouch!


No wonder recent polls show Bush is the most unpopular president in modern American history.

(Cross-posted at BFM.)

Labor Calls for Strike Against the War

(h/t AlterNet)

Take note, John McCain: Labor is calling for a general strike against the war. Specifically, the Vermont AFL-CIO is throwing their support behind the International Longshore and Warehouse Union (ILWU), who announced it will shut down West Coast ports on May 1st to demand an immediate end to the war and the withdrawal of U.S. troops from the Middle East.

Here's the VT AFL-CIO press release [my emphasis]:

The Executive Board of the Vermont AFL-CIO, representing thousands of workers in countless sectors across Vermont, have unanimously passed an historic resolution expressing their "unequivocal" support for the first US labor strike against the war in Iraq.

Montpelier, VT - The Executive Board of the Vermont AFL-CIO, representing thousands of workers in countless sectors across Vermont, have unanimously passed an historic resolution expressing their "unequivocal" support for the first US labor strike against the war in Iraq. The strike, being organized by the Longshore Caucus of the International Longshore & Warehouse Union (ILWU), will seek to shutdown all west coast ports for a period of 8 hours on the day of May 1st 2008. The Vermont AFL-CIO is the first state labor federation to publicly back the Longshoremen; other state federations are expected to follow.

The resolution, among other things, calls the war in Iraq "immoral, unwanted, and unnecessary", states that the vast majority of working Vermonters oppose the war, and contends that the war will only be brought to an end by "the direct actions of working people." Many other Vermont labor unions and organizations, including the Vermont Workers' Center, have also made official statements condemning the war.

The resolution also calls on working Vermonters to "discuss the actions of the Longshoremen, to wear anti-war buttons, and to take various actions of their own design and choosing in their workplace on May 1st, 2008."

"Workers in Vermont and all across this nation are against this war. We have already demanded that the government end it, but they have consistently failed to heed our words. Therefore working people are beginning to take concrete steps to make our resistance known. If the war does not immediately end we, the unions and working people of Vermont, will also be compelled to take appropriate action," said David Van Deusen, a District Vice President of the Vermont AFL-CIO.

Traven Leyshon, President of the Washington, Lamoille & Orange County Central Labor Council, AFL-CIO, said, "Vermont labor has long called for an end to this war. The untold billions being spent on the war could instead be used to address our domestic needs. It is working people who pay the cost of the war - in some cases with our lives, but always with our sacrifices."

Labor looks out for us. The same can't be said for John McCain and friends.

You can read the full text of the resolution here.

(Cross-posted at Blogging for Michigan.)

Outsourcing a threat to workers and national security

As I wrote earlier in the month, the aerospace industry is sending jobs to Mexico - including those in airline maintenance.

At least one U.S. airline, Delta, is already sending entire planes to Mexico for maintenance work. In 2006, it signed a deal handing heavy maintenance of 120 of its planes over to Aeromexico, an airline.

My concern was for the number of good paying jobs being lost, but that pales in comparison to the security risk our country faces. Teamsters President Jim Hoffa explains [emphasis mine]:

The outsourcing of aircraft maintenance is another major concern—just ask the United Airlines mechanics and related workers. Some 9,300 of these skilled workers resoundingly chose to join the Teamsters last month because we understand the real danger the outsourcing of aircraft maintenance poses to national security.

From 1996 through 2006, major U.S. airlines' outsourcing expenses increased from 37 percent to 64 percent, and the number of foreign repair facilities grew from 344 to 698 over a comparable period.

As outsourcing expanded, regulatory standards and oversight have failed to keep pace. Background checks, duty-time limitations, and alcohol and drug testing are much more lax at foreign stations than they are in the United States. For example, supervisors and inspectors who sign off on maintenance work at foreign repair stations are not required to hold a Federal Aviation Administration repairman certificate or an airframe and power-plant certificate, and neither are mechanics working on the aircraft at these facilities.

Increased outsourcing is a domestic security risk. In the U.S., FAA-certificated repair stations have standards for personnel background checks and restricted access to aircraft. Foreign repair stations lack these precautions. Outside of our borders, only flimsy safeguards prevent a terrorist from exploiting an opportunity to do us harm by tampering with airline systems or inserting explosives into aircraft while they are undergoing maintenance. (Despite a mandate in 2003 to create a security standard for repair stations and audit foreign stations, the Transportation Security Administration has yet to do so.)

My son-in-law recently graduated from airline mechanics school after 22 months of studies. He's in the process of taking three written tests and two oral tests in order to receive his certification so he can work on planes. I should also mention his education was very expensive. That 22 month program cost him nearly as much as four years in college.

It just doesn't make sense for our country to mandate higher education and licensing requirements for jobs that we then turn around and allow employers to outsource without equal standards. Americans can't compete with the lower wages and now it appears we're fighting against reduced educational requirements. That's crazy. Why should our young adults spend thousands of dollars to get an education if a person in Mexico or some other country is allowed to do the job without any advanced training or certification?

We definitely need to level the playing field in this country so our workers can compete and our national security isn't compromised.

(Cross-posted at Blogging for Michigan.)

Liberators or Liars?

Wednesday marks the fifth anniversary of the Iraq war. This is what President Bush said about Iraq five years ago today:

Intelligence gathered by this and other governments leaves no doubt that the Iraq regime continues to possess and conceal some of the most lethal weapons ever devised. This regime has already used weapons of mass destruction against Iraq's neighbors and against Iraq's people.

The regime has a history of reckless aggression in the Middle East. It has a deep hatred of America and our friends. And it has aided, trained and harbored terrorists, including operatives of al Qaeda.

The danger is clear: using chemical, biological or, one day, nuclear weapons, obtained with the help of Iraq, the terrorists could fulfill their stated ambitions and kill thousands or hundreds of thousands of innocent people in our country, or any other.

This is what the media reported last week:

A detailed Pentagon study confirms there was no direct link between late Iraqi leader Saddam Hussein and the Al-Qaeda network, debunking a claim President George W. Bush's administration used to justify invading Iraq.

Coming five years after the start of the war in Iraq, the study of 600,000 official Iraqi documents and thousands of hours of interrogations of former Saddam Hussein colleagues "found no smoking gun (i.e. direct connection) between Saddam's Iraq and Al-Qaeda," said the study, quoted in US media Thursday.

And this is what McCain and Cheney told Iraq’s Prime Minister Nouri al Maliki today:

...both Sen. John McCain (R-AZ) and Vice President Cheney vowed “that the U.S. would maintain a long-term military presence in Iraq until al-Qaida is defeated there.”

So much for "Mission Accomplished," and Bush said that on May 1, 2003.

(Cross-posted at BFM. Also check out the great pictures WK posted from the anti-war march held over the weekend by the local chapter of SDS.)

Another victim of the Bush recession

Gift cards.

You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too. [...]

The Sharper Image announced late last month that it was suspending the acceptance of gift cards, at least temporarily. It urged shoppers to check the company Web site later this month for an update. That is typical of businesses that reorganize under Chapter 11 bankruptcy, which treats gift cards as a loan to the company, not as cash.

Gift card holders are at the bottom of the pecking order when a company files for bankruptcy (except for CEOs), so if you have any cards stashed away you might want to spend them. The retail environment isn't expected to improve.

The number of retail bankruptcies or liquidations this year is expected to reach the highest levels since the 1991 recession. [emphasis mine]

Brian Riley, senior analyst at The Tower Group, estimates that shoppers could lose more than $75 million just from stores and restaurant closings in 2008.

Tower Group's figure doesn't include mom-and-pop services like the local nail salon. Riley said such small operations, which are most vulnerable to economic downturns, pose the biggest risks to gift card holders.

In Sharper Image's case, Brookstone is accepting their gift cards, but consumers can also sell or trade cards online at places like Cardavenue.com.

If you own a gift card, the bottom line is this - get rid of it before you lose out completely. And if you plan on giving someone a gift, consider cash or a check.

(Cross-posted at BFM)

A lot of money for death and destruction

How much have the wars in Iraq and Afghanistan cost American taxpayers? Nobel economist Joseph Stiglitz coauthored an article in the London Times yesterday that crunched some numbers.

As the fifth year of the war draws to a close, operating costs (spending on the war itself, what you might call “running expenses”) for 2008 are projected to exceed $12.5 billion a month for Iraq alone, up from $4.4 billion in 2003, and with Afghanistan the total is $16 billion a month. Sixteen billion dollars is equal to the annual budget of the United Nations, or of all but 13 of the US states. Even so, it does not include the $500 billion we already spend per year on the regular expenses of the Defence Department. Nor does it include other hidden expenditures, such as intelligence gathering, or funds mixed in with the budgets of other departments. [...]

From the unhealthy brew of emergency funding, multiple sets of books, and chronic underestimates of the resources required to prosecute the war, we have attempted to identify how much we have been spending - and how much we will, in the end, likely have to spend. The figure we arrive at is more than $3 trillion. [emphasis added]

Three trillion dollars for death and destruction, and a majority of it was spent on the Bush administration's lies about Iraq. How different our country and the world would be today if leaders had followed Barack Obama's example and voted against the war. Instead of reading the intelligence for themselves, they took the President at his word. Their intellectual laziness cost thousands of people their lives and put future generations in debt for years to come. History will not only judge Bush harshly, but also our leaders who blindly followed him.

Just say NO to wingnut welfare

Get a load of this wingnut welfare being proposed by the banking industry in today's WSJ:

The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government.

One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers.

Credit Suisse officials have met with senior officials from the Department of Housing and Urban Development, which runs the FHA, and other policy makers to discuss the proposal.

The risk: If delinquent borrowers default on their refinanced loans, the federal government would have to absorb the loss. [emphasis mine]

Dean Baker put this nonsense into perspective when he said: "...the WSJ did not include the views of a single person who thought this was a bad idea. Isn't there anyone in the WSJ's Rolodex who thinks that raising taxes on nurses and firefighters to give money to millionaire and billionaire bankers is not a good idea?"

I think it's time the financial industry experiences a little tough love. We're at war. We don't have money to waste on foolishness like health care for children or extended unemployment benefits for workers (says the Bush administration), so why should taxpayers bail them out? After all, as Bonddad points out, they're the actors who created this mess:

Mortgage brokers: Because the person brokering the loan knew the loan would be sold to a third party the broker has no obligation to make sure the borrower would actually repay the loan over an extended period of time. In addition, some brokers were given higher commissions for selling riskier loans.

Investment Banks: These organizations were hungry for collateral and pressured brokers and originators for more loans to pool and sell. This is the type of pressure that led the mortgage bankers to stop looking at things like "credit history." In addition, investment banks were lax in their due diligence to deeply inspect collateral.

Ratings agencies: who actually said most of this paper was AAA and therefore could be purchased by practically anybody.

Our government isn't off the hook either. They saw what was happening and failed to impose any kind of oversight on the industry. Instead, they talked about all that "free market" mumbo-jumbo.

Well, now the industry is in trouble and wants the government (taxpayers) to help. I say it's time for them to suffer some consequences. They lived by the free market sword, let them die by the free market sword.

UPDATE: Gov. Eliot Sptizer has a good read related to this in today's WaPo: Predatory Lenders' Partner in Crime

His conclusion:

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

Turning America Around for Working People

Union leadership is fired up about working conditions in this country - rightfully so. UAW President Ron Gettelfinger gave a speech in Cleveland last week and stressed that public policy must change to support manufacturing. These are the key areas he touched on:

National health care -- "What's needed, as our union has long advocated, is a single-payer, universal, comprehensive, national health insurance program that covers every man, woman and child in America. Because we believe health care should be a right, not a privilege for those who can afford it."

Fair trade -- "Let's just a write the trade agreement on a postcard -- human rights, workers rights, environmental protections, protection from import surges, no currency manipulation and an enforcement mechanism. ... Our trade deficit is $2 billion a day."

Industrial policy -- "In this country, we have the most open market in the world, and we have stood idly by while entire industries have disappeared -- toys, textiles, televisions, computers and the list goes on. Unless we take action, we are going to see a continued decline in manufacturing industries."

America is not working for working people. Union busting tactics are on the increase, good jobs are disappearing, health care costs are soaring, and retirement security is being threatened. Here in Michigan workers are living with the ramifications of decisions made by politicians, corporate America and bean counters.

Michigan fell 10 places among the states in per capita income to 26th between 2000 and 2006 - the latest available year - as it shed thousands of manufacturing jobs, according to the Michigan Future study.

The state's per capita income was 8 percent below the national average in 2006, the worst performance since the Great Depression year of 1933, according to figures for the study prepared by University of Michigan economist Don Grimes.

Something needs to be done, but what? AFL-CIO President John Sweeney has some ideas he'll be outlining via live webcast tonight. "Turn Around America" is being sponsored by the John F. Kennedy School of Government and the Labor and Worklife Program at Harvard Law School.

In the first-ever address by an AFL-CIO president to the influential Harvard University’s John F. Kennedy Jr. Forum, Sweeney will describe why America is not working for working people and what the AFL-CIO will do to create an America that works for all, including increasing member mobilization this election year and working to reform U.S. labor law to give workers a free chance to form unions. Says Sweeney:

We have an opportunity not only to restore the voice and vitality of the union movement, but to change the direction of our economy and our country. We’re faced with a fundamental choice: continue down the low road we’ve been taking and end up in a swamp of inequality where corporations and the wealthy always get more, or turn around America and head back up to higher ground where working people get a fair share of the wealth they help create.

After his address, Sweeney will take part in an interview and a question and answer session with the audience. You can see the live webcast of the forum on Feb. 12 at 6 p.m. at www.iop.harvard.edu/events_forum.html.

(Cross-posted at Blogging for Michigan - A blog so good Republicons had us censored!)

U.S. Military Spending in Context

Want to read some eye-popping figures on our military budget or the number of personnel we employ related to our defense? Check out Paul Waldman's column. He also describes just how far-flung our military power is:

According to the Defense Department's 2007 Base Structure Report, we maintain 823 military facilities in 39 foreign countries, and another 86 facilities in seven U.S. territories. According to the document, "DoD occupies a reported 343,867 buildings throughout the world, valued at over $464 billion and comprising almost 2.4 billion square feet." The DoD also owns 32.4 million acres of land (nearly all of it in the U.S.), or over 50,000 square miles, an area about the size of Louisiana (or half of Colorado; or Delaware, Connecticut, New Hampshire, Vermont, Massachusetts, and Maryland combined).

Our military doesn't come cheap. Ezra Klein took Waldman's numbers and put them into the chart you see here to give us a visual image of US military spending as compared to the handful of nations we're theoretically spending that money against (numbers are from 2005).

This is how Klein breaks the numbers down:

Our spending is 43 percent of the total. Not the total on that chart. The total of the world. The "hostile" nations on that chart barely equal out to a fraction of our spending.

Will a new occupant in the White House affect military spending? Not according to Waldman:

John McCain says that he wants "a larger and more capable military," no shock from a man who barely ever met a military operation he didn't support. The one who actually provides some specificity is Mitt Romney, who wants to increase military spending to four percent of Gross Domestic Product. According to the government's current projections, GDP in 2009 will be $15.3 trillion, which means Romney is proposing to boost military spending by about 20 percent, to $612 billion in his first year in office (not counting Iraq). [emphasis added]

...the Democrats don't have much to say -- although Barack Obama wants to add 65,000 Army soldiers and 27,000 Marines. A consistent hawk, Hillary Clinton evinces no particular desire to reduce the size of the military either.

No wonder we don't have money for infrastructure, health care, education, etc. We're spending as much on our military as the rest of the world combined. For what? So we can be safe here at home? Our spending doesn't reflect that says Waldman:

...the portion of our "defense" spending that goes to actual defense is miniscule. Our soldiers, sailors, airmen and marines aren't patrolling our borders and training to defend our cities. What they prepare for, and what they're called to do, is to project our extraordinary military power outward.

We're the world's sole superpower, but we really aren't safe at home and our domestic needs aren't being met. What a mess our leaders have made of this country.

Update: In a report released today, here's more proof those defense dollars aren't protecting us on the homefront:

The U.S. military isn't ready for a catastrophic attack on the country, and National Guard forces don't have the equipment or training they need for the job, according to a report.

Even fewer Army National Guard units are combat-ready today than were nearly a year ago when the Commission on the National Guard and Reserves determined that 88 percent of the units were not prepared for the fight, the panel says in a new report released Thursday.

Economy and war in Iraq linked

The NY Times asks, Will George W. Bush be remembered as the president who lost the economy while trying to win a war?

Mr. Bush has spent years presiding over an economic climate of growth that would be the envy of most presidents. Yet much to the consternation of his political advisers, he has had trouble getting credit for it, in large part because Americans were consumed by the war in Iraq.

Americans weren't consumed by the war in Iraq - Bush and friends were. Ironically, it's because of their war that our economy is in such bad shape.

Jon Soltz of VoteVets.org:

But, every time the president talks about it, just keep one thing in mind. You cannot separate the economy and the war in Iraq, which has cost billions of dollars. Whether one believes in the cause of the war or doesn't, an unobjectionable truth is that it has been a drain on the economy and Americans have not been asked to sacrifice to lessen the impact. We've now entered the Iraq Recession, another point the president is unlikely to admit.

The president is unlikely to admit this either:

A proposed economic stimulus plan could boost this year's deficit by $100 billion, but political leaders believe the flood of red ink is worth the cost if it keeps the country from falling into a prolonged recession.

How prolonged?

Worries that any recession could be a severe one, far surpassing the last two mild, brief downturns in 1990-91 and 2001.

Finally, I doubt you'll hear the president relate how the world views our economy:

In Switzerland, the World Economic Forum has wrapped up after five days of talks. Joseph Stiglitz, the former chief economist of the World Bank, was one of several economists attending the summit in Davos to issue grave warnings about the state of the economy.

"There really are some deep structural problems. The fact that the U.S had to borrow in 2006 $850 billion from other countries-the richest country in the world; fundamental global imbalances, financial systems that don't know how to manage risk. These are not symptoms of what you might call a fundamentally strong economy."

It turns out our economic climate of growth was all smoke and mirrors. There's nothing to envy about that.

Starbucks testing $1 dollar coffee

I admire the way Starbucks spins this:

Starbucks (SBUX) is testing $1 coffee and free refills in its Seattle outlets as the global gourmet coffee chain grapples with slower consumer spending and rising competition from fast-food rivals.

Starbucks is experimenting with a smaller, "short" $1 cup as well as free refills for brewed coffee. Starbucks charges around $1.50 to $4.00 for a coffee, depending on size and flavor.

In a statement, Starbucks said, "This test is not indicative of any new business strategy."

This is what they really meant to say:

This is indicative of the fact the Bush administration ran our economy into the ground and people no longer have discretionary money to spend on our over-priced coffee.

Hopelessly (Un) Committed to John Edwards

I'm running for president because of 54 years of my life I have believed to my soul that the men and women who worked in that mill with my father were worth every bit as much as the man that owned that mill. - John Edwards

How can that message NOT resonate with every working class American? It's a message I learned from my parents and they learned from their parents. Every person has value and all work is valuable. It's too bad morality lessons are lost on the media. They've practically written John Edwards off as a footnote in campaign history. That's a shame. They might be missing a critical story according to Paul Rogat Loeb.

As media commentators proclaim Hillary Clinton’s rebirth from the ashes of defeat, they miss a critical story – Obama and Edwards won the New Hampshire primary. Add together Obama’s 36 percent and Edwards’s 17, and they beat Clinton’s 39 percent by 14 points. And because the Democratic primaries have proportionate representation, they’ll in fact come out with more combined delegates - 13 to Clinton’s 9.

Loeb's research also indicates those backing Edwards or Obama solidly pick the other as their second choice, which would make them a formidable ticket if they ran together.

The reason Edwards and Obama beat Clinton by 14 points is because politically they're much different from her. Consider Edwards' criticism that Clinton is the embodiment of Washington status quo and Loeb's description of her.

Clinton recently held a massive fundraising dinner with homeland security lobbyists. Her chief campaign strategist, Mark Penn, is CEO of a PR firm that prepped the Blackwater CEO for his recent congressional testimony, is aggressively involved in anti-union efforts, and has represented everyone from the Argentine military junta and Philip Morris to Union Carbide after the 1984 Bhopal disaster. Clinton supported an Iran vote so reckless that Jim Webb called it “Dick Cheney’s fondest Pipe Dream,” and did so, according to her campaign insiders, because she was covering herself for the general election. She’s still not apologized for her Iraq vote, and her hoarding of scarce 2006 campaign dollars may well have cost the Democrats an even larger Congressional victory.

Clinton calls herself an agent of change, but Corporate America is strongly represented among her circle of friends. That sounds like more of the same to me.

Would I like to see a woman become president? Absolutely, but I need to consider more than gender. The problems we face in this country are primarily the result of two things - (1) years of Republican dominance and (2) corporate abuse and greed. Edwards is a Democrat, so that takes care of the first problem, and Fortune Magazine recently made the claim that the Democrats' war on corporate greed is mostly bluster - except for John Edwards - they believe he is the only candidate who will stand up to corporate America. When a business magazine makes a statement like that, I sit up and take notice. So, that takes care of the second problem and makes Edwards the candidate for me.

(Attn: Michigan Democratic delegates. My uncommitted vote is a really a vote for John Edwards. )



(Cross-posted at Blogging for Michigan.)

About those speeding Iranian boats, Charlie

I wonder what Charlie Gibson has to say about this story after he so willingly acted like a propagandist for President Bush?

From ABC News:

Just two days after the U.S. Navy released the eerie video of Iranian speedboats swarming around American warships, which featured a chilling threat in English, the Navy is saying that the voice on the tape could have come from the shore or from another ship. [...]

The Navy never said specifically where the voices came from, but many were left with the impression they had come from the speedboats because of the way the Navy footage was edited.

Today, the spokesperson for the U.S. admiral in charge of the Fifth Fleet clarified to ABC News that the threat may have come from the Iranian boats, or it may have come from somewhere else.

We're saying that we cannot make a direct connection to the boats there," said the spokesperson. "It could have come from the shore, from another ship passing by.

Yipes, I sure am glad Charlie's not in a position to push "the button" based on someone else's hearsay.

UPDATE: Juan Cole has a post that explains this incident in great detail. He said it's looking more and more like a serious error if not a Republican Party fabrication. Imagine that.