Occupying the super committee

When I turned on the radio this morning, I heard news that Occupy Wall Street is marching on Washington D.C. to support the end of Bush era tax cuts for the wealthiest US citizens. When I checked out their Web site, I saw this this is so.

According to OWS, "On November 23rd, the Congressional Deficit Reduction Super-Committee will meet to decide on whether or not to keep Obama's extension to the Bush tax-cuts - which only benefit the richest 1% of Americans in any kind of significant way." This is actually the deadline for the committee to complete its work--so this is the day on which it would be voting on its entire plan for deficit reduction.

The OWS march will leave today, November 9, and march 20 miles every day:

A major draw for this march is to encourage more people in rural communities to get involved as well as bring spreading the word along the highway. We are hoping people will join the march along the way; whether for an hour, a day, or the full two weeks, we feel its imperative for OWS to be involved in the historical significance of long distance marches to support, promote, and encourage economic and social equality. We will be walking from 9am to to 5pm (banker hours) and will hold nightly GA's and/or discussions at 7pm in each town where we camp. We will be spending two days off at Occupy Philly and Occupy Baltimore. We are hoping a few people from these occupations will join us in the march to the White House and Occupy DC!.

This raises the question, what is the super committee and what is it doing? The committee was created by the August congressional compromise that ended the standoff over raising the national debt. The Economist has a good summary of that standoff and what the super committee does.

The deal, hammered out just days before that deadline, promises $917 billion in spending cuts over the next decade in return for a two-stage increase in the debt ceiling of $900 billion. After that, a 12-member congressional committee, equally composed of Republicans and Democrats, is to find $1.5 trillion in further deficit reductions that Congress must approve by December 23rd, in return for a similar-sized increase in the debt ceiling. If the committee fails to reach agreement or its proposal is rejected, $1.2 trillion in spending cuts will be triggered, drawn equally from domestic spending and defence.

The House and the Senate will both vote on the super committee agreement, if one is reached, but it will be a straight up-or-down vote with no amendments allowed.

In my opinion, the federal deficit and federal debt are much less of a problem than you might believe, based on mainstream news accounts. (Simply explained, the if the government spends more than it takes in any year, this creates a deficit. Deficits accumulating for a number of years create the national debt.) See this analysis, which I posted in May.

Trying to reduce the deficit at this point--that is, reducing the amount of government spending--could prove devastating to our economy as we struggle with chronic high unemployment and increasing poverty.

Over the past 30 years, taxes have been slashed for the wealthiest US citizens and we have wasted money on numerous unnecessary military adventures, such as the ones in Iraq and Afghanistan. During this period of time, when we were mostly governed by right-wing Republicans, the national debt has increased.

Now, conservatives argue for slashing much-needed social programs in order to reduce the deficit and debt. They even insist on attacking Social Security, which has not contributed to the deficit in any way. Conservatives insist on keeping the Bush era tax increases and even want to cut tax rates further--although they express willingness to raise revenue by closing tax loopholes.

Meanwhile, Democrats on the committee seem determined to sell out ordinary people in an attempt to reach a compromise with the Republicans, according to The Nation.

Representative Maxine Waters of California has introduced a bill to repeal the supercommittee, and the $1.2 trillion in cuts it’s mandated to make. She believes the committee is “illegitimate” and “borders on unconstitutional.”

At a breakfast meeting with progressive reporters and bloggers today (October 27), Waters said she knows her bill probably doesn’t have the support to pass right now, but she wants it on the table if the supercommittee deadlocks. “Of course its’s a long shot. But right now people are getting more and more agitated, frustrated and concerned about this supercommittee and not happy that there are those who are saying, including the president, they want even bigger cuts,” Waters said. “So it may fall apart. If it falls apart my bill is there to say ‘kill it.’ ” She added that she’s spoken to several Republicans who are equally unhappy with the supercommittee’s power.

Waters’s frustration is shared by many Democrats in the House, who feel not only shut out from the process by colleagues in the Senate—Baucus is reportedly acting with guidance from Senate majority leader Harry Reid, leaving House minority leader Nancy Pelosi on the sidelines—but are also shocked at the level of cuts to Medicare and Social Security being proposed.

Representative Henry Waxman told Politico today that he has “no stake” in the committee and called it an “outrageous process” that is “not open and transparent.” He said the “things put forward by Democrats…I would never vote for.”

Democrats would like to portray themselves as the party of the 99 percent. There are indeed strong progressive Democrats who are fighting to protect the interests of ordinary working people and the poor.

The Democratic leadership, including President Obama, often seems more interested in making nice with the one percent than in protecting the rest of us. Let's hope that the march of the 99 percent on the nation's capital will encourage them to re-evaluate their position.

Update 11-10-11:  This morning's Progressive Breakfast reports that super committee Democrats continue to lessen their support for maintaining crucial social programs in hopes of reaching a compromise with Republicans.

What about the one percent?

Thanks to Truthout for reposting  this excellent analysis by Mike Konczal of New Deal 2.0. What Konczal shows is the way that income has been redistributed over the past 30 years in a way that favors executives, managers, and stock traders.

     There’s a reason the protests ended up on Wall Street: The top 1% and top 0.1% comprises all the senior bosses and the financial sector.

      One of the best things about Occupy Wall Street is that there is no chatter about Obama or Perry or whatever is the electoral political issue of the day. There are a lot of people rethinking things, discussing, learning, and conceptualizing the kinds of world they want to create. Since so much about inequality is a function of the legal structure known as a “corporation,” I’d encourage you to check out Alex Gourevitch on how the corporate is structured in our laws.

      The paper notes that stock market returns drive much of the manager’s income. This is related to a process of financialization, something JW Mason has done a fantastic job outlining here. The “dominant ethos among managers today is that a business exists only to enrich its shareholders, including, of course, senior managers themselves,” and this is done by paying out more in dividends that is earned in profits. Think of it as our-real-economy-as-ATM-machine, cashing out wealth during the good times and then leaving workers and the rest of the real economy to deal with the aftermath.

In other words, the reason for increasing inequality in our society is not because some people have worked harder or smarter than the rest of us. It's because the very few people with the most wealth also have accumulated the political power to rip off the rest of us.

More on Occupy Wall Street

If you missed it, my first post is here.

Betsy Reed at The Nation has an interesting analysis of the march and its supposed lack of demands:

t’s not that the demands being suggested by OWS’s volunteer policy advisors in the blogosphere are not worthy ideas. At a time when we desperately need to rein in financial speculation and change the incentives on Wall Street, a financial transactions tax is a terrific policy proposal. Dean Baker has been talking about it for years. The thing is, we on the left don’t have a scarcity of policy ideas. We are positively bursting with them. Create a housing trust fund! A national infrastructure bank! And, yes, sure, eliminate the carried interest loophole so fat cats don’t get a bigger tax break than working people. (Some even have more radical ideas, which are quite sensible too.) But at best, we get a polite hearing for these ideas, which then fade away or are hopelessly watered down. We simply lack the power to put them into practice.

And in the recent past, even the most smoothly organized, expertly messaged mass demonstrations have not made a whit of difference in this regard. Consider the last big march on Wall Street this past May 12. The coalition behind it was admirably diverse, including unions like the teachers and SEIU’s 1199, as well as local community organizations such as Citizen Action NY, Coalition for the Homeless and Community Voices Heard. The “May 12 Coalition,” which turned out thousands of protesters on the appointed day, presented the Bloomberg administration with a proposal that exhibited great thoughtfulness in its rigor and detail, asking banks like JPMorgan, Bank of America, and Morgan Stanley to take a 20 percent cut in their contracts to handle functions like child support disbursements or income tax remittances for the city. This would have saved $120 million, part of $1.5 billion that could have been extracted from the banking sector to prevent the city from having to slash education and social services, according to the coalition.

I would also like to nominate this song by Bonnie Lockhart as the movement's unofficial anthem:

Occupied

A few weeks ago I started receiving e-mails from organizations who were sponsoring a protest to occupy Wall Street. I deleted these e-mails without paying much attention to them. Don't get me wrong. I'm no fan of the stock market or the financial speculation industry that seems to have eaten the US economy, and I remember how they helped to crash our economy. But I didn't think these protests sounded as if they'd been planned very well, and I couldn't imagine them being effective.

I seem to have been very wrong.

Now, the mainstream and alternative news (and my inbox) seem to be full of news of a movement that has spread across the US in the past two or three weeks. Busy grad student that I am, I am still trying to sort through all of this stuff and make sense of it.

Here is what I've figured out so far.

First, the feminist peace group Code Pink is leading an effort to make sure the demonstrations are inclusive and have a feminist perspective. See this great post on AlterNet by Melanie Butler:

If Week I of Occupy Wall Street was about surviving, Week II has been about finding our voices. This protest is about the 99 percent of people in America who have been on the short end of the economic stick, but it appears the media believes it's 90 percent made up of men. Some of the organizing and facilitation processes we've developed to make our movement inclusive and participatory have proven not to be enough, and we are constantly adapting and regrouping to ensure that everyone's voice in this broad and vibrant coalition is heard.

Via an e-mail from Code Pink, I also found out about Occupy Together. Their Web site says that they're "an unofficial hub for all of the events springing up across the country in solidarity with Occupy Wall St.," and they also have a Facebook page.

Thanks to a link shared by a friend on Facebook, I found out that there is a local Occupy OKC group, which as a Facebook page and a Web site. Their next "general assembly" is scheduled for tomorrow, Friday Oct. 7, at 7 p.m. at Kerr Park in downtown OKC. I'm not sure I'll be able to make this, but it looks interesting.

Will the financial reform bill really work?

I have been so busy rewriting my circus novel that I haven't had much time to attend to current events. So I was happy to see this op-ed piece on t r u t h o u t by economist Dean Baker discussing the financial reform bills currently being considered by Congress. Dean Baker, incidentally, is one of my favorite economists. You can see a selection of his work at the home page of the Center for Economic and Policy Research.

I have received several emails from barackobama.com, urging me to tell my Republican senators to support this reform effort. My question has been will this reform actually do any good?

According to Dean Baker, the answer is a big maybe.He says that the bills passed by the House and approved by the Senate Banking Committee would help prevent some of the worst abuses that we've seen over the past decade -- but that neither bill will prevent future economic crises. Furthermore, the recent reappointment of Federal Reserve Chairman Ben Bernanke "told future regulators that the failure to crack down on recklessness in the financial sector carries no consequence."

Baker identifies three possible additions to the Senate Bill that could help weaken the power of the financial services industry so that future crises would be less likely. First is an amendment proposed by Senators Brown and Kaufman which would put a size limit on banks. If banks are kept at a reasonable size, then they won't be "too big to fail" -- and thus the pressure for future bailouts would be much less. Second, an amendment by Senators Merkley and Levin that would prevent banks that are covered by federal deposit insurance from trading in the stock market. This amendment would restore some of the protections of the old Glass-Steagall Act. This would stop banks from "speculating in financial markets with the money guaranteed by the government." Finally, Baker says, the Senate will wrangle over the issue of how to regulate derivatives trading.

The bill that was voted out of the Agriculture Committee would prohibit commercial banks from being directly involved as brokers in derivative trading. The rationale is that this trading creates large risks and potential conflicts of interest. This would mean a major departure from current practice, since the six major banks currently control the overwhelming majority of derivative trading. If they had to spin off their derivative business, it would lead to a very different structure in the financial industry.

Without those three changes, Baker says, financial reform legislation will not make much difference in the way the financial services industry does business.

Not that they are likely to listen, but when I write to senators Inhofe and Coburn, I will ask them to support a bill that limits the size of banks, and prevents federally insured banks from trading on the stock market or speculating in derivatives.

A New Way Forward

One of the most vexing things about the Obama Administration is its perplexing generosity with Wall Street and the banking industry. We've already thrown billions of dollars of bailout money at the greedy incompetents running the financial industry, and they still can't see their way clear to make credit available to individuals and businesses. Defenders of the bailout say that the giant banks are too big to be allowed to fail, and that if they go under, they'll take the whole economy with them. Meanwhile, economists such as Paul Krugman argue that this type of bailout can't and won't work.

Thanks to janinsanfran and William Greider, I discovered the website of a group of activists who are mad as hell and not going to put up with nonsense any more. According to A New Way Forward, "If it's too big to fail, it's too big to exist." They insist that "We must break up the banks and never again let them get so big that they distort our politics and take down the economy."

At 2 p.m. EDT, (this would be 1 p.m. Central time), A New Way Forward is sponsoring demonstrations nationwide to support their program to nationalize, reorganize, and decentralize the banks. There may even be a demonstration here in OKC, although as of this writing, only two people have committed to attend it.

In my rush to finish this post before the library closes, I'm probably oversimplifying what A New Way Forward is all about. For more information, you can visit their blog. They also offer an online discussion forum.

Senate bill to benefit subprime borrowers offers most aid to women

According to Women's eNews, "Women are almost twice as likely as men to hold subprime mortgages. That means the ability of many to hang on to their homes could be tied up with Senate action--expected this month--on a bill to reduce mortgage payments."

They have the details here.

This isn't change. This is large amounts of our money, and our President seems to want to throw it away.

Common Dreams has this disconcerting view by Paul Krugman of the Obama administration's plan to unfreeze US capital markets.

This plan will produce big gains for banks that didn't actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won't be able to come back to Congress for a plan that might actually work.

Krugman is basing his analysis on this New York Times article. The article not only gives details of the three-part administration plan to get credit flowing again, but explains what the source of the problem is:

Risk-taking institutional investors, like hedge funds and private equity funds, have refused to pay more than about 30 cents on the dollar for many bundles of mortgages, even if most of the borrowers are still current. But banks holding those mortgages, not wanting to book huge losses on their holdings, have often refused to sell for less than 60 cents on the dollar.

The result has been a paralyzing impasse. Banks, unwilling to sell their loans at fire-sale prices, have had less capital available to make new loans. Mortgage investors, unable to leverage their investments with borrowed money, have been unwilling to pay more than fire-sale prices.

To break that impasse, the government’s crucial subsidy is meant to provide investors with the kind of low-cost financing that has been utterly unavailable in today’s credit markets.

In an update posted on his blog, Krugman gives a further explanation of his opposition to the Obama plan:

So now we have a bank crisis. Is it the result of fundamentally bad investment, or is it because of a self-fulfilling panic?

If you think it’s just a panic, then the government can pull a magic trick: by stepping in to buy the assets banks are selling, it can make banks look solvent again, and end the run. Yippee! And sometimes that really does work.

But if you think that the banks really, really have made lousy investments, this won’t work at all; it will simply be a waste of taxpayer money. To keep the banks operating, you need to provide a real backstop — you need to guarantee their debts, and seize ownership of those banks that don’t have enough assets to cover their debts; that’s the Swedish solution, it’s what we eventually did with our own S&Ls.

Now, early on in this crisis, it was possible to argue that it was mainly a panic. But at this point, that’s an indefensible position. Banks and other highly leveraged institutions collectively made a huge bet that the normal rules for house prices and sustainable levels of consumer debt no longer applied; they were wrong. Time for a Swedish solution.

Krugman argues, cogently I think, that if this plan fails, as it is likely to do, the Obama administration won't have the political capital to try a plan that might actually work.

In addition, I would argue that the failure of this Wall Street bailout would undermine efforts by the president to gain support for his ambitious budget.

Stimulus package gains final approval

Our Bodies Our Blog has this analysis.

Paul Krugman analyzes stimulus

CommonDreams.org posted this interesting commentary.

Home Economics

I am having a wonderful time the past week or so as I frantically try to get ready to move out of my apartment by the end of the month when my lease expires, while also trying to get my new house fixed up enough to move into by then.

Sometime soon, I would like to learn how to do patient, painstaking, and beautiful work on my projects. As it is, I am probably too impatient and doing things too fast, and much of what I do is sloppier than I would like it to be. But it's getting done, and it's a thrill to discover that my house is being transformed into a home.

Most recently, I had a complicated adventure involving downloading the manual for my floor furnace from the Internet, crawling under my house, hiring plumbers, having help from a really nice installation guy from Oklahoma Natural Gas, and installing a new thermostat. But the good news is, the floor furnace seems to be working fine. I feel very fortunate and very pleased with myself.

Last night I also had another adventure correcting the installation of my outdoor faucet so it wouldn't freeze. The big difficulty was, I couldn't open up the little jar of plastic cement I needed to use.I had never learned the little trick where you bang all around the edges of a stuck lid to get it to open, so I had to swallow my pride, drive down to the Red Cup, and seek the assistance of a clever and muscular gentleman to open it. After that, the repair was pretty easy. Tomorrow when it warms up a little bit, I'm going to cut on my water and see if my plumbing's okay.

A friend of mine told me yesterday that I'm a brave woman. Which was very sweet of her. And that is how I'm feeling right now, brave and adventurous and clever. But let's face it. I am also very, very lucky. Through what is mostly dumb luck, I am getting house when lots of people are losing theirs due to little or no fault of their own.

In conservative circles, it is popular to blame the people who are losing their houses for their own troubles. But the truth has more to do with structural inequality in the US economy, where the most wealthy one percent of the population controls an increasing share of resources. Also, there has been massive mismanagement by government leaders and economic elites.

You can get the lowdown on how all of this came to pass by reading the Economic Meltdown Funnies, published as a joint venture by Jobs with Justice and the Institute for Policy Studies.

Chicago sit-in ends in victory of sorts

A six-day sit-in by laid off workers at Republic Windows and Doors has won severance pay and benefits, according to chicagotribune.com, but not a deal to re-open the plant.

The 240 workers who had occupied the factory since its abrupt closing Dec. 5 voted unanimously Wednesday night to accept a deal to pay them severance, vacation time, and temporary health care benefits. The $1.75 million agreement was negotiated over three days with the workers' union, Republic owners and lender Bank of America.

Union negotiators were unable to obtain a commitment from the parties to reopen the Goose Island plant, said United Electrical Workers organizer Mark Meinster. So the union has decided to forge ahead to find someone new to run the plant, he said, using some of the money donated from around the world during the sit-in.

An interesting analysis of the strike and its results can be found at socialistworker.org.

Updates on the Chicago sit-in

According to thenation.com:

President-elect Barack Obama gave encouragement Sunday to the members of United Electrical, Radio and Machine Workers of America Local 1110 members who have occupied the Republic Windows and Doors factory in Chicago to demand fair treatment from a company that shut down operations after the Bank of America denied the firm operating credit.

AlterNet has cross-posted Ian Welsh's Firedoglake analysis on the genesis of the shutdown at Republic Door and Window in Chicago: How Fumbling the Bailout Led to the Chicago Sit In

Angry Black Bitch also has an interesting analysis of the situation.

Standing up by sitting down

A hat tip to Common Dreams for posting this article from thenation.com about the sitdown strike in Chicago by workers at Republic Windows and Doors Republic shut down on Friday after Bank of America -- which has received $25 billion in bailout assistance from U.S. taxpayers -- refused to extend operating credit to them.

Nation commentator John Nichols points out that Barack Obama can only create a new New Deal if there is grassroots activism to push him in that direction. The Chicago action reminds him of similar actions taken by workers in the 1930s that helped FDR create the original New Deal.

Here's the link I found at thenation.com for updates about the strike from the United Electrical Workers. Here's the link I found at the UE site to send a message to hold Bank of America accountable for their misbehavior.

No kidding, it's really a recession, folks

Thanks to Truthdig for this news item that confirms that No Kidding: U.S. Economy in Recession.

Wow. Really. A recession. Who would have guessed?

Three views of a Detroit bailout

Automobile manufacturing has been crucial to the US economy. Yet, auto companies have made gas guzzling cars and other mistakes. As the auto industry struggles, is a bailout justified? And what kind of a bailout, if there is one?

One interesting perspective comes from AngryBlackBitch. She decries the greed and stupidity of automakers, but points out how much damage the failure of the auto industry would do to ordinary folks.

Another intriguing viewpoint comes from Michael Moore, interviewed on The Takeaway. Moore suggests that the conditions for government aid should include a requirement that the companies start making trains and other mass transit vehicles.

Finally, I usually like what Dean Baker says about economic issues, and he has an interesting analysis of this one.

"Not the Change I Was Expecting "

The Women's Media Center has this commentary by Veronica Arreola about the possible selection of former Lawrence Summers as Barack Obama's Secretary of the Treasury. Summers is currently an economics professor of Harvard, and previously served as president of Harvard and as treasury secretary for the final year and a half of the Clinton administration.

Arreola writes:

I am the president of the Larry Summers fan club. As the director of the Women in Science and Engineering program at the University of Illinois at Chicago, you might find that odd.

After his infamous statement in 2005 that women and girls had an intrinsic handicap towards math, explaining my job was a moot point. Everyone in my circle of friends and around the country knew the importance of running an academic support program for women majoring in science and engineering at a Research I institution. Despite the fact that women are going to college in record numbers and increasingly majoring in sciences, there are still those out in the world who think women just can’t hack it in the end. It also was an easier sell to donors and funders about the importance of the WISE office and our mission. So thank you, Larry for making my case so eloquently.

After his departure from the Harvard presidency he faded from the limelight. This week his name, along with New York Federal Reserve Chairman Timothy Geithner, has been bandied about as secretary of the treasury in the incoming Obama administration (can I just say how amazing it is to say that? The Obama administration!). Could the man who sold America on change seriously be considering appointing a man who suggested that Malia, Sasha and all of our daughters have a genetic disposition from not being able to math? Sadly yes.

Over at Open Left, Matt Stoller discusses some of Summers' shortcomings:

Summers was one of the key proponents of the banking deregulation of 1999 that led to the current financial crisis. In addition, Larry Summers has argued that women are innately less gifted in science than men, that 'Africa is Underpolluted', that child sweatshop work in Asia is sometimes justified, and that job destroying trade agreements are good for America.

People get stuff wrong all the time. That's not bad. But if you got the big stuff wrong, repeatedly, while being warned against it, you shouldn't be rewarded with a promotion.

Open Left has a petition to urge President-elect Obama not to appoint Summers to this critical post. I just signed it. I hope you will consider doing the same.

Update (11/10/08 10:55 p.m.): For a detailed analysis of Summers' failures as an economist, see this post at thenation.com by Mark Ames.

Predatory Scapegoating

A friend sent me a link to this eye-opening commentary by Patricia J. Williams over at thenation.com.

Some three weeks before New York Governor Eliot Spitzer was forced to resign his office in disgrace (sex! scandal! floozies!), he published an op-ed in the Washington Post. Titled "Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers," the piece expressed Spitzer's concern that for several years there had been a marked increase in predatory lending practices, including distortion of terms, surprise balloon payments, hidden fees and deceptive "teaser" rates. These practices, he wrote, were having a "devastating effect on home buyers." In addition, the sheer number of such transactions, "if left unchecked, threaten...our financial markets." To those in the know (OK, those few egghead "elites" not enthralled by the birth of the Brangelina twins), the situation loomed so egregious that the attorneys general of all fifty states, both Democrats and Republicans, lodged suits against the worst predatory subprime lenders. A number of states, including New York, passed laws to rein in such practices.

What happened next was rather astonishing, even by current Republican standards.

Williams writes that "the Bush administration employed a little-used 1863 law to annul all state antipredatory-lending laws and, if that wasn't enough, to block states from enforcing their own consumer protection laws in suits against national banks."

Ironically, Republican operatives and right-wing radio hosts are now scapegoating black homeowners and "Franklin Raines, former head of Fannie Mae, the single black head of any organization implicated in this mess."

For details, read the whole article.

Nomi Prins on Paulson's Plan B

When the $750 billion plan to buy toxic securities failed to perk up Wall Street, Treasury Secretary Hank Paulson switched course to buy stock in banks as a way to unfreeze the credit market.

Writing for The Nation, Nomi Prins thinks that Paulson's Plan B still won't work. Former Wall Streeter Prins was once a managing director for Goldman Sachs.

Prins is calling for reregulating the financial markets. The whole article is short, lively, and worth reading.

Two economic updates from Inter Press Service

First, U.S. Bows to Pressure, Will Buy Banks:

BOSTON, Oct 11 (IPS) - The George W. Bush administration announced Friday evening it would buy shares in troubled U.S. banks, a move that upstages its own rigid, free-market ideology, and answers calls for the action by European leaders.

Second, Calls for Change Mount as IMF, World Bank Meet

WASHINGTON, Oct 11 (IPS) - Gone are the mobs in the street. Faced with a global recession, those demanding change from the rulers of the global economy appear to be on the inside as the International Monetary Fund (IMF) and World Bank hold annual talks.

Both articles are worth reading.