Thursday, April 17, 2008

In midst of recession, multi-billion-dollar paydays for US hedge fund managers

In midst of recession, multi-billion-dollar paydays for US hedge fund managers

By Barry Grey

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A survey of the 2007 income of American hedge fund managers published Wednesday sheds light on the ugly reality of American capitalism.

The annual ranking of top hedge fund earners compiled by Alpha, a magazine that caters to wealthy and institutional investors, reports that the top money-maker, John Paulson, took home $3.7 billion last year, probably the richest singe-year haul in Wall Street history.

Paulson, the founder of Paulson & Company, was not the only multi-billion-dollar hedge fund winner. He was followed by George Soros, who took in $2.9 billion, and James H. Simons, who netted $2.8 billion.

The top 50 hedge fund managers took in a combined sum of $29 billion.

To place these astronomical figures in some perspective, the combined take of these 50 individuals is about the same as the annual gross domestic product of Kenya, a country of 32.5 million people, and a billion dollars less than the GDP of Sri Lanka, the home of 20 million people.

Paulson’s $3.7 billion income alone would cover most of the $4.2 billion shortfall projected by New York Mayor Michael Bloomberg, himself a multi-billionaire, in his preliminary budget for 2009—a deficit that is to be closed by a new round of budget cuts and layoffs.

For the most part, the top money-makers of the US hedge fund world amassed their windfalls by betting correctly that the US housing market would collapse or speculating on the soaring price of basic commodities such as oil and foodstuffs. They benefited handsomely from the housing and credit crises that are driving millions in the US and other countries into foreclosure and threatening millions more with hunger or outright starvation.

The New York Times noted on Wednesday that Paulson began betting that complex mortgage-backed securities known as collateralized debt obligations, which played a key role in the housing and credit bubbles that fueled record banking profits until they collapsed last year, would decline in value. One fund that he established achieved a return of 590 percent last year and another gained 353 percent. By the end of 2007, Paulson presided over $28 billion in assets, up from $6 billion 12 months earlier.

Forbes magazine, which published its own survey of hedge fund and private equity CEOs, headlined its story “Wall Street’s Top Earners: Your Pain, Their Gain.” The article begins:

“Problems paying the mortgage, filling the gas tank and feeding the family have eroded living standards for millions of Americans during the past several months. Not so for people who mange big piles of money: many of them made a fortune betting correctly on the housing debacle and rising commodity prices last year.”

Forbes’ survey of the top 20 hedge fund and private equity managers concluded that their combined income for 2007 was 43 percent higher than in 2006. “To even make the list,” the magazine wrote, “you needed minimum earnings of $350 million, which is $90 million higher than the year before.”

The magazine reported that hedge funds increased their assets by 14 percent to $2.2 trillion, while private equity funds raised a record $300 billion to reach $2 trillion in assets.

Hedge funds and private equity funds are virtually unregulated companies that cater to wealthy investors, pension funds, university endowments and the like. Hedge funds promise their moneyed investors super-high returns from speculation in stocks, bonds, derivatives and commodities. The managers usually collect a fee of 2 percent on the total investment of their clients plus a 20 percent cut of any gains realized.

Last year, the Democratic Congress quietly dropped a proposal to end a tax windfall for hedge fund managers, whose income is taxed at the 15 percent capital gains rate, rather than higher income tax rates.

Characterizing the operations of hedge funds, Gary Burtless, an economist at the Brookings Institution, said, “To some degree it’s a very gigantic version of Las Vegas.”

Alpha noted that the top 25 hedge fund managers on its list earned an average of $892 million, up from $532 million in 2006.

It wrote: “He [Paulson], Soros, Simons and the others who earned more than $1 billion—Philip Falcone and Kenneth Griffen—led what may well prove to be the greatest display of individual wealth creation in any year in the modern history of finance...

“Five of the managers on this year’s list each made more in 2007 that the $1.2 billion that JPMorgan Chase & Co. agreed to pay for the almost failed 85-year-old Bear Stearns Cos.

“When we published our inaugural list, in 2002, Soros led the way with $700 million, a showing that this year would have put him at No. 9. Back then it took $30 million to crack the top 25; this year, $360 million.

“The grand total earned by the top 25 in our 2003 ranking, almost $2.8 billion, was less than what any of the top three managers made this year and less than one fifth of what the top ten made altogether ($16.1 billion).”

It said that minimum required to make it into this year’s top 50 list was $210 million.

What do these gargantuan incomes say about the parasitism of American capitalism and the social inequities it engenders? If one takes Paulson’s income for all of 2007 and divides it by 365, one arrives at a daily take of $10, 137,000. This breaks down to $422,374 an hour, $7,040 a minute, and $117 per second.

The wage of the average American worker is about $17.50. If one were to assume that Paulson worked a 40-hour per week, 52-week schedule, his hourly “wage” would be 24,136 times that of the average worker in the US.

Every hour, Paulson took in a sum nearly equal to the median yearly income ($60,500) of seven American families. The combined $29 billion that went to the top 50 hedge fund managers is equivalent to the median annual income of 479,000 US families.

The sums raked in by the most successful (and lucky) hedge fund managers are only the most spectacular expressions of a far broader phenomenon in corporate America. A survey of CEO pay published Monday by the Wall Street Journal noted that the median salary and bonus for CEOs of 200 US firms with annual revenue over $5 billion rose 4.7 percent last year to $2,939,000. Total direct compensation, including stock options and other incentives, rose to a median of $8,848,000.

Another study estimated that the average top US corporate executive received total compensation of $18.8 million as of February 2008, up from $15.6 million a year earlier.

For the most part, CEOs who have presided over financial disasters and plummeting share prices, including those at major banks and investment houses, continue to award themselves multi-million-dollar salaries and bonuses, and even those who have been forced to resign or retire at companies like Citigroup and Merrill Lynch have gotten severance packages worth tens of millions of dollars.

The concentration of wealth at the top and pervasive social inequality are greater in the US today than at any time since the Great Depression. A study released last week by the Economic Policy Institute and the Center on Budget and Policy Priorities reported that economic inequality has continued to grow rapidly this decade.

The study concluded that the nation’s wealthiest 5 percent of families were paid, on average, more than 12 times as much as the poorest fifth in 2004-2006, compared with nearly nine times as much in 1987-89. Since 1998-2000, the income of the poorest fifth has fallen by 2.5 percent, while the wealthiest fifth saw income rise by 9.1 percent. The Income of the middle fifth of families has grown since the late 1990s by just 1.3 percent.

These figures, in fact, significantly underestimate the growth of inequality because they do not take into account income from capital gains, the vast bulk of which goes to the richest layers of society.

On average, the report notes, real wages for low- and middle-income families are now the same or lower than they were in 2001.

Jared Bernstein, a senior fellow at the Economic Policy Institute, said that since 1913, the United States witnessed only one other year of such unequal wealth distribution—1928, the year before the stock market crash.

As the New York Times detailed in an April 14 article headlined “Even When Times Get Tough, the Ultra-rich Keep Spending,” the addiction of the uppermost social layers to lavish spending and a life style that harkens back to the decadence and debauchery of the French Ancien Régime continues unabated, despite the slide of the US into recession and the growing social misery of tens of millions of people.

The Times notes that the crisis on Wall Street has begun to impact the “merely rich,” under conditions where New York’s Independent Budget Office has warned that the city could lose up to 20,000 financial sector jobs by the end of 2009, but has not had a perceptible affect on the habits of the most privileged layers of the financial elite.

The newspaper writes: “Many businesses that cater to the superrich report that clients—many of them trades and private equity investors whose work is tied to Wall Street—are still splurging on multimillion-dollar Manhattan apartments, custom-built yachts, contemporary art and lavish parties.

“Buyers this year have already closed on 71 Manhattan apartments that each cost more than $10 million, compared with 17 apartments in that price range during all of 2007... And the GoodBar, a downtown lounge, reports that bankers continue to order $3,000 bottles of Rémy Martin Louis XIII cognac.”

The article describes a party planned for May 10 at the exclusive Plaza Hotel. “It will feature a dozen female string musicians made up to look like statues and clothed in dresses of fresh flowers, like roses and gardenias. There will be caviar and cognac bars, as well as a buffet designed to visually replicate 17th-century Dutch paintings from the recent Metropolitan Museum of Art exhibit, ‘The Age of Rembrandt.’”

The Madness of Ben Bernanke

The Madness of Ben Bernanke

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The dollar is in a tailspin, the trade deficit is growing and a recession is on the horizon. The American way of life is in serious danger. But the head of the Federal Reserve keeps on pumping easy credit into the system -- a crazy policy that will worsen the crisis.

Alan Greenspan and Ben Bernanke have more in common with the big cat entertainers Siegfried & Roy than any of us can be comfortable with.

The Las Vegas magicians call themselves "Masters of the Impossible" and have been fascinating audiences for decades by getting snow-white tigers to leap through burning rings.

The legendary Federal Reserve Chairman and his successor were equally adept at fascinating their audiences -- with a policy of miraculous monetary growth that gave America one of the longest periods of economic expansion in modern times. Many saw them as "Masters of the Universe." It seemed as if the central bankers had tamed predatory capitalism with their constant interest rate cuts.

Siegfried & Roy at times seemed at one with their cats, until the day everything went out of control. A tiger bit Roy in the neck during a show and looked as though it were about to devour him alive.

Greenspan and Bernanke too have lost their magic touch, and their image has been shredded by the real estate crisis and the dollar slide. The ravages of the financial markets aren't doing them any personal harm. But devalued stocks, bad mortgage loans and the diving dollar are damaging millions of small investors and savers.

It's as if the tiger has leapt of the stage and is mauling the audience. We can't blame wild cats or financial markets for being ruthless. It's in their nature to be brutal. Their unmistakeable message is: you can take things this far and no further.

In the case of the real estate crisis which reached the banks and is now unsettling the stock markets, the markets are now showing what G7 finance ministers and central bank governors meeting last weekend in Washington for their annual spring get-together declined yet again to admit publicly: Americans must change their lives -- or it will be changed for them by force.

American Way of Life Under Threat

The credit-financed consumer boom of recent years is coming to a painful end. Today's American Way of Life has no chance of surviving the coming years undamaged. The virus will continue to ravage its way through the financial system.

The property crisis is likely to spread to credit card providers soon and will then probably infect car manufacturers, furniture makers and all the other firms that owe their sales increases to the growth in credit finance. "The virus will keep on infecting the system," one management board member from a large bank said, requesting anonymity in return for the candour of his analysis.

His argument is that banks that grant mortgages to home buyers virtually unable to pay their bills are unlikely to be especially scrutinizing when it comes to lending cash to the buyers of fridges, cars and furniture. Indeed, a furniture store in Miami recently tried to lure consumers with the following offer: buy now, pay your first credit installment in three years, and no need for a down-payment.

The credit-financed way of life is typical of the US these days. Many people resort to credit to plug the gap between the lifestyle they have become accustomed to and their declining wages.

Dulling the Pain With Credit

The borrowed cash is like an anaesthetic against the painful impact of globalisation. Private household debt has been growing by $4 billion each business day for years.

All this wouldn't be so bad if the US economy were at least doing well in foreign markets. But it isn't, and hasn't been for a long time. Despite the depreciation of the dollar, which makes imports into the US far more expensive while making US exports cheaper in foreign markets, US manufacturers are finding it hard to sell their products.

Contrary to forecasts by both the Federal Reserve and the Treasury, the trade deficit has continued to grow, by 6 percent in February alone. America imported $62 billion worth of goods more than they exported in February, including a disturbingly large number of cars, computers and pharmaceutical products. Try as they might, most private households in America can't keep up this consumer miracle. The savings behavior of many Americans means that many of them now live from hand to mouth.

But Bernanke is doing nothing to dampen this hunger for credit. The former advisor to President George W. Bush is even trying to whip up credit-financed consumption by lowering interest rates. This is helping to fuel inflation because the monetary growth isn't being matched by growth in real economic output. Inflation in the US currently stands at 4 percent.

It's a paradox. The private commercial banks which have just had to make billions of dollars in write downs have become more cautious. They're scared of further risks. The management resignations at Citigroup and Bear Stearns have had a sobering impact.

Patriotic Madness

Meanwhile the Federal Reserve is urging the banks to go on taking risks. It has been injecting cash into the banking system for the past half-year while urging bank CEOs in confidential chats to offer more credit. The aim is to keep on financing consumer spending and even to stimulate it further -- for reasons of patriotism.

There's a word for this policy -- madness.

But because there is method in this madness, the meeting of mighty central bank governors and finance ministers in Washington over the weekend remained silent about it, at least officially. Outside the meeting rooms, though, there were murmurings about the poisoned legacy of Alan Greenspan and Bernanke's irresponsible behavior.

One participant told me: "There's an unwritten code of honor that says central bank governors should refrain from criticizing each other." Not least out of respect for the independence of central banks.

But the US is unlikely to realize the error of its ways on its own. "The Americans will always do the right thing," British Prime Minister Winston Churchill once said, "after they've exhausted all the alternatives."

Central bankers and tiger tamers have something else in common -- obstinacy. Roy has recovered from his wounds and wants to return to the stage in Las Vegas. "The magic is back," came the defiant announcement.

Alan Greenspan cut a similarly indestructible figure at the weekend. Even though criticism of his cheap money policy was only murmured privately, the 82-year-old legend of central banking said: "I was praised for things I didn't do. I am now being blamed for things I didn't do."

Not that he ever complained about getting false praise.

March Housing Starts Down 36.5% Year-over-Year

March Housing Starts Down 36.5% Year-over-Year

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New construction of U.S. houses plunged to the lowest level in 17 years in March, the Commerce Department estimated Wednesday. Starts fell 11.9% in March to a seasonally adjusted 947,000.

This is the lowest level of starts since March 1991. Starts are down 36.5% year-on-year.

Starts of new single-family homes fell by 5.7% to 680,000 in March, while starts of large apartment units fell 24.6% to 267,000. Building permits, a leading indicator of housing construction, fell 5.8% to a seasonally adjusted annual rate of 927,000. This is the lowest level of permits since April 1991

The Most Powerful People in America

The Most Powerful People in America

By Joel S. Hirschhorn

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They are not the rich and superrich, nor the politically powerful running the two-party plutocracy, nor the greedy heads of banking and finance companies, and certainly not the media moguls and bloviating pundits.

The most powerful people are US, American consumers that account for over 70 percent of the economy. It is exactly now, when the economy is in the toilet, that consumers hold the maximum power. So why are we the people still deluding ourselves that the path to a better future rests on electing a new president?

We are suckers, conditioned by decades of clever marketing and advertising to believe the lies of politicians, and worst of all to believe that elections and our votes provide us with power. Wrong. Our real power can only be manifest through our spending dollars.

The overwhelming majority of Americans have been severely damaged by economic oppression by government policies that have produced historic economic inequality. Yet, despite revolting conditions, Americans seem unwilling to revolt by using their remaining economic power. They have let themselves become economic slaves.

What is amazing and depressing is that there are no national leaders from the worlds of politics, religion, education, media or public interest that are attempting to harness consumer power at this critical time. No one is capturing the public’s attention by making it crystal clear that consumers could obtain any political or economic reform in the public interest by joining together to withhold their discretionary spending.

Where are the anti-Iraq war leaders? Why are they not shouting about forcing an immediate commitment to ending the Iraq war by using the power of a massive consumer boycott that clearly could destroy the whole economy? Tell President Bush that consumers will greatly curb their spending for a month to give him time to implement a plan for withdrawal from Iraq. Make it clear that the coming federal rebates will not be used for spending. Make it clear that Bush inaction will result in continuation of the boycott.

Where is Ralph Nader, the ultimate consumer advocate? Why is he not proclaiming the brilliance of a consumer boycott as the winning tactic to force effective government assistance to the millions of Americans screwed by the sub-prime mortgage fiasco and about the lose their homes?

Where is Barack Obama, who supposedly wants to produce change? Rather than putting all his energy into satisfying his egoistic hunt for the presidency, why is he not talking about harnessing consumer power right now to get political reforms, like .ending trade agreements that are destroying the middle class? Why does he not send a clear message to his million-plus contributors to join a national consumer boycott to obtain immediate concessions from the Bush administration?

Where are the professors who have published books making the case for a second constitutional convention as the way to restore American democracy? Not one has the courage to say that the way to get Congress to obey Article V of the Constitution and convene that the first Article V convention is by American consumers threatening to plunge a dagger into the heart of American business.

Now is the time for all the millions of Americans that make up the 81 percent who see the nation on the wrong track to take action, to think like patriotic revolutionaries and take the power that now only exists with their spending. Sounds simple. All this strategy needs is leadership. Rather than spending so much time and energy on the media-hyped presidential campaign, we the people should demand that someone step forward to inform and mobilize consumers to become powerful citizens by using their spending as the ultimate populist political weapon.

Joel S. Hirschhorn can be reached through He is a co-founder of Friends of the Article V Convention at

Bitter? You Ain’t Seen Nothing Yet.

Bitter? You Ain’t Seen Nothing Yet. Obama, Bitterness, Meet the Press, and the Old Politics

By Robert Reich

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I was born in Scranton, Pennsylvania, 61 years ago. My father sold $1.98 cotton blouses to blue-collar women and women whose husbands worked in factories. Years later, I was secretary of labor of the United States, and I tried the best I could - which wasn’t nearly good enough - to help reverse one of the most troublesome trends America has faced: The stagnation of middle-class wages and the expansion of povety. Male hourly wages began to drop in the early 1970s, adjusted for inflation. The average man in his 30s is earning less than his father did thirty years ago. Yet America is far richer. Where did the money go? To the top.

Are Americans who have been left behind frustrated? Of course. And their frustrations, their anger and, yes, sometimes their bitterness, have been used since then — by demagogues, by nationalists and xenophobes, by radical conservatives, by political nuts and fanatical fruitcakes - to blame immigrants and foreign traders, to blame blacks and the poor, to blame “liberal elites,” to blame anyone and anything.

Rather than counter all this, the American media have wallowed in it. Some, like Fox News and talk radio, have given the haters and blamers their very own megaphones. The rest have merely “reported on” it. Instead of focusing on how to get Americans good jobs again; instead of admitting too many of our schools are failing and our kids are falling behind their contemporaries in Europe, Japan, and even China; instead of showing why we need a more progressive tax system to finance better schools and access to health care, and green technologies that might create new manufacturing jobs, our national discussion has been mired in the old politics.

Listen to this morning’s “Meet the Press” if you want an example. Tim Russert, one of the smartest guys on television, interviewed four political consultants - Carville and Matalin, Bob Schrum, and Michael Murphy. Political consultants are paid huge sums to help politicians spin words and avoid real talk. They’re part of the problem. And what do Russert and these four consultants talk about? The potential damage to Barack Obama from saying that lots of people in Pennsylvania are bitter that the economy has left them behind; about HRC’s spin on Obama’s words (he’s an “elitist,” she said); and John McCain’s similarly puerile attack.

Does Russert really believe he’s doing the nation a service for this parade of spin doctors talking about potential spins and the spin-offs from the words Obama used to state what everyone knows is true? Or is Russert merely in the business of selling TV airtime for a network that doesn’t give a hoot about its supposed commitment to the public interest but wants to up its ratings by pandering to the nation’s ongoing desire for gladiator entertainment instead of real talk about real problems.

We’re heading into the worst economic crisis in a half century or more. Many of the Americans who have been getting nowhere for decades are in even deeper trouble. Large numbers of people in Pennsylvania and across the nation are losing their homes and losing their jobs, and the situation is likely to grow worse. Consumers are at the end of their ropes, fuel and food costs are skyrocketing, they can’t go deeper into debt, they can’t pay their bills. They aren’t buying, which means every business from the auto industry to housing to even giant GE is hurting. Which means they’ll begin laying off more people, and as they do, we will experience an even more dangerous downward spiral.

Bitter? You ain’t seen nothing yet. And as much as people like Russert, Carville, Matalin, Schrum, and Murphy want to divert our attention from what’s really happening; as much as HRC and McCain seek to make political hay out of choices of words that can be spun cynically by the mindless spinners of the old politics; as much as demagogues on the right and left continue to try to channel the cumulative frustrations of Americans into a politics of resentment - all these attempts will, I hope, prove futile. Eighty percent of Americans know the nation is on the wrong track. The old politics, and the old media that feeds it, are irrelevant now.

Robert Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written ten books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Reason. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.

UAW calls off rally, prepares sellout of American Axle strike

UAW calls off rally, prepares sellout of American Axle strike

By Jerry White

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The United Auto Workers union cancelled a rally to support the American Axle strike, which was scheduled for Friday in downtown Detroit. The move is a further indication that the UAW bureaucracy is preparing to sell out the more than seven-week-old strike by 3,600 workers in Michigan and western New York,, who are fighting wage cuts that would reduce hourly pay from $28 to as low as $11.50.

A notice posted at the UAW Local 235 hall in Detroit, signed by UAW Region 1 Director Joe Peters, read, “Please be advised that the rally scheduled for April 18 has been postponed. UAW President Ron Gettelfinger and Vice President Settles believe that it is in the best interest of the negotiating process to delay the rally at this time. While there are extremely difficult negotiations and the outcome is uncertain, some progress has been made and we are hopeful movement will continue.”

After calling the rally two weeks ago, UAW President Gettelfinger wrote in an op-ed column in the Detroit News, “We’d like nothing better than to cancel our rally because the strike was resolved by having a ratified contract.”

In the same piece, Gettelfinger said the union had put forward proposals to “address American Axle’s legitimate concerns” and made an offer that would impose “real sacrifices on our members.”

The cancellation of the rally followed a meeting Wednesday morning between local union representatives and the UAW International after weeks in which proposals and counter-proposals by the union and company have been kept secret from striking workers.

Throughout this period, the UAW has kept workers on poverty-level rations, with a strike benefit of only $200 a week—although the union bureaucracy sits on a strike fund of nearly three-quarters of a billion dollars.

Both the secrecy and the low strike pay are part of a deliberate effort by the UAW to break the resistance of strikers and soften them up to accept a contract that will impose the bulk of the company’s wage-cutting demands.

There is growing disquiet over this state of affairs among rank-and-file workers. Walter said, “If the union brings back anything that looks like concessions we are going to vote it down. There is going to be a very hostile reaction to the union leadership. They are going to tell us if they hadn’t agreed to the concessions the company would move out of the country. Then they are going to hang some money in front of us for early retirements and buyouts. All along they’ve been wanting to get rid of us, especially the ones willing to question the acts of the union leaders.”

“The union has a big strike fund,” said Ron, a worker with 14 years at the company. “We should be getting a lot more because we’re fighting for all auto workers. But the union won’t do that. Inside the shop, the UAW looks the other way while the company violates work rules. Now they are carrying out negotiations behind the backs of the workers.

“Eventually,” he continued, “they are going to come back with a lousy contract and say, ‘This is the best we could do. Go vote for it.’ But it will be all lies. They’re just dragging this out, and now a lot more are willing to take the buyouts then at the beginning of the strike.

“All the GM plants should be out with us,” Ron said. “That would strengthen us and all auto workers. But the UAW won’t do it. That shows they are nothing but a business themselves.”

A veteran American Axle worker with 27 years in the auto industry said, “I’ve seen rough times since hiring in at GM in 1977, and here we go again. I don’t trust the company or the union. Generations have fought for what we have, and now the union is giving it all back. The union doesn’t want to pay us more strike benefits because they don’t want us to fight too long. We can hardly fight the company, but how do you fight the union too?” he asked.

Last weekend, the union and management exchanged proposals. Despite the UAW’s willingness to hand over substantial wage and benefit givebacks, the company said it was “disappointed” with the union’s offer because it would still maintain wages at “double the market rate.” It reiterated the threat to shut down its four original plants in Michigan and western New York if workers didn’t accept the drastic wage and benefit concessions it was seeking.

If the union has cited “progress” in the negotiations, it can only mean that it has moved even further to meet the demands of American Axle CEO Richard Dauch. The union did not reveal the content of the company’s counter-proposal. The UAW had earlier signed a confidentiality agreement regarding financial data provided by the company, which the union said it needed in order to determine whether the wage-cutting demands were justified.

The Big Three automakers

Behind Dauch—who has pocketed nearly $250 million since leading a group of private investors to take over General Motors’ axle and driveline business in 1994—stand the Big Three automakers, GM, Ford and Chrysler LLC.

Using axles and other parts produced at an American Axle plant in Mexico, GM has begun reopening some of the nearly 30 plants that were fully or partially closed due to the American Axle strike. Company officials have assured Wall Street that production of its top-selling passenger cars would not be disrupted, even if the American Axle walkout continued indefinitely.

The Big Three and Wall Street are determined to make auto workers pay for the economic downturn and slumping sales of the US-based automakers. Top GM, Ford and Chrysler executives are no doubt calculating that a defeat of the American Axle strike would create the best conditions to reopen UAW contracts well before they expire in 2011 and impose even greater concessions, including slashing the wages of current workers, as American Axle is seeking.

The last thing the UAW wants is a unified struggle of auto workers that threatens to overturn the wage-cutting contracts it has negotiated throughout the industry. In exchange for accepting 50 percent wage cuts for new hires, the UAW was given control of a multi-billion-dollar retiree health care trust fund known as a Voluntary Employees’ Beneficiary Association, or VEBA.

The UAW has taken over the provision of health care for retirees and a fund estimated to be worth $52 billion, financed largely with shares of GM and Ford stocks. Last week, a panel of Michigan doctors acknowledged that the UAW would be under even greater pressure than the car companies to reduce medical coverage and increase co-payments on retirees in order to keep the fund solvent.

UAW isolates strike

The canceling of the rally is part of the bureaucracy’s effort to keep American Axle workers isolated from their fellow auto workers. Last week the UAW announced it might launch strikes over local contract issues at six GM plants in Ohio, Michigan and Texas. It has cancelled any action at three of the plants, while factories in Lansing, Grand Rapids and Warren, Michigan could be called out as early as Thursday or Friday. On Tuesday, the UAW call out fewer than 100 workers at parts supplier Alliance Interiors in Lansing, which could lead to the shutdown of the GM assembly plant in Lansing, The walkouts, if they occur at all, have nothing to do with extending the American Axle strike.

On the contrary, they are designed to pressure GM to help finance the buyout of thousands of American Axle workers as the automaker did with its former employees at Delphi. The latter agreement enabled the UAW and Delphi to dissipate opposition to mass layoffs and a two-thirds reduction in wages and benefits, which was imposed on the remaining workforce. A similar agreement would be a betrayal of everything American Axle workers have stood on the picket line for more than seven weeks to oppose.

Another American Axle worker, Maynard, told the WSWS, “The workers at Delphi, the other suppliers and the Big Three have all taken wage cuts. Dauch is pointing to that to justify his demands. We have to stay where we are. How can we take a pay cut with the cost of everything going up?”

From the beginning the chief concern of the UAW has been to find a way to impose the dictates of the auto companies and, at the same time, to protect the income and privileges of the union bureaucracy. The UAW is reportedly seeking guarantees from American Axle that it will employ a minimum number of workers at UAW-represented plants, enabling the UAW to continue to collect dues from workers earning near poverty-level wages. The UAW may also be seeking the expansion of the multi-million-dollar joint training program with American Axle, which has been the source of other perks and income for the union bureaucracy.

Referring to the VEBA fund the UAW received in exchange for the concessions it granted to the Big Three automakers, Walter said, “While we are out here suffering on the picket line, Gettelfinger was hosting a large group of Wall Street investors at Solidarity House to celebrate the VEBA deal. It’s a disgrace. They were drinking and having festivities with these Wall Street types while strikers out here are getting food vouchers and many are on the verge of bankruptcy.

“We’re getting no information. That itself has a demoralizing effect. This is what the union leaders want. They’ve already agreed to concessions. The local officials have sold us out along with the International. The UAW is gone from the standpoint of being for labor. It’s with Wall Street and is one of the biggest shareholders in the auto companies.

“We need a national strike of auto workers but the UAW is against it. They are telling us we have no choice: either accept the concessions or they’ll move the work out of the country.

“Dauch should come to us and say thanks for the $37 million we made him last year. But he’s greedy and wants to use the cheap labor he gets in other countries against us. It’s just like at Delphi where workers were cut down to $14 an hour and the CEO made millions. As far as the government is concerned, all they do is protect the rich.”

If the struggle of American Axle workers is not to be defeated, the conduct of the strike and negotiations must be taken out of the hands of the UAW. Workers should elect rank-and-file committees to campaign now for a rejection of any contract brought back by the UAW that contains concessions and to fight to extend the strike throughout the auto industry.

The nationalist poison of the UAW must be rejected and a special appeal made to auto workers in Canada, Mexico and other countries to unite in a common struggle against the assault on jobs and living standards being carried out by the global auto giants.

Above all a new political movement of the working class is needed that will oppose the two big business parties and the capitalist profit system, which subordinates the needs of the world’s working people to a small minority of super-wealthy executives and Wall Street investors.

US Supreme Court upholds lethal injection, opening way to resumed executions

US Supreme Court upholds lethal injection, opening way to resumed executions

By Naomi Spencer

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On Wednesday the US Supreme Court ruled 7-2 to reject a challenge to execution by lethal injection. The case was brought by two Kentucky death row prisoners, who argued that the method exposes those condemned to die to the risk of cruel and unusual punishment.

The reactionary ruling will lead to a resumption of executions, which were halted nationwide last September after the court agreed to hear the case. Moreover, while the decision is not a direct ruling on the constitutionality of the death penalty itself, it will thwart pending and future cases brought forward by prisoners on similar grounds and make challenging the death penalty more difficult.

The case, Baze v. Rees, concentrated on the constitutionally of the lethal injection procedure, the form of execution used in most states that practice capital punishment. Specifically, the two Kentucky prisoners claimed that the method of lethal injection posed a significant enough risk of misadministration and excruciating pain that its use, even when properly administered, constituted cruel and unusual punishment, which is banned by the Eighth Amendment to the US Constitution.

The court justices issued varying opinions. Chief Justice John Roberts wrote the majority opinion, which was joined by justices Anthony Kennedy, Samuel Alito, John Paul Stevens, Antonin Scalia, Clarence Thomas, and Steven Breyer. All but Kennedy filed separate concurring opinions in which they laid out differences on the ruling—most going even further to the right than the majority opinion.

The petitioners cited numerous instances in which the most common three-drug method of lethal injection left prisoners in agonizing pain for extended periods of time. In lethal injection, a prisoner is bound to a gurney and fitted with two needles connecting to intravenous drips. The first injection, consisting of the barbituate sodium thiopental, is intended to swiftly put the prisoner into a comatose state of unconsciousness.

However, if the injection is improperly placed, or the chemical does not pass evenly through the intravenous tube, there is a chance the prisoner will be cognizant and suffer severe pain when the other toxic chemicals are administered.

The second injection contains a paralyzing agent called pancuronium bromide, which renders the prisoner completely immobile and causes suffocation. If a prisoner is conscious at this point, all signs of suffering, seizures, and terror are undetectable. The third and fatal injection of potassium chloride, which induces a massive heart attack, also induces a severe burning sensation in the veins.

Wednesday’s decision will be followed by a wide resumption of executions. Forty-two people were executed in 2007, through September when the moratorium was imposed, the lowest number of executions in the US in 13 years. Yet even considering this drop, the US was still ranked fifth in the world in terms of people executed. At the time of the moratorium, the executions of 40 prisoners were imminent.

Thousands of prisoners sit on death row throughout the country. Numerous states—including Texas, California, Ohio, Arizona, Alabama, and Florida—hold well over a hundred condemned prisoners; California’s death row population is approaching 700. According to the Death Penalty Information Center, death row inmates typically spend more than a decade of their lives awaiting execution, in isolation, excluded from education and vocational programs, disallowed most forms of exercise and visitation.

Between 1977 and 2006, over 7,100 people have been sentenced to death in the US. Thirty-six of the 50 US states, in addition to the federal government, administer lethal injections to carry out death sentences, with most, including Kentucky, using the three-drug combination.

In the majority opinion Wednesday Chief Justice Roberts asserted that Kentucky’s lethal injection procedure “complies with the constitutional requirements against cruel and unusual punishment.” Making clear its support for the barbaric procedure, the high court ruling affirmed a lower court ruling and acknowledged that “there are no methods of legal execution that are satisfactory to those who oppose the death penalty on moral, religious, or societal grounds.”

Roberts wrote, “Some risk of pain is inherent in any method of execution—no matter how humane—if only from the prospect of error in following the required procedure. It is clear, then, that the Constitution does not demand the avoidance of all risk of pain in carrying out executions.”

Roberts stated that the court had “never invalidated a State’s chosen procedure for carrying out a sentence of death as the infliction of cruel and unusual punishment.” He cited an 1879 ruling upholding the use of firing squads, which found that the practice was not cruel and unusual, in contrast to English executions in which “terror, pain, or disgrace were sometimes superadded.” What punishments like being “emboweled alive, beheaded, and quartered” had that was absent in American executions, Roberts asserted, “was the deliberate infliction of pain for the sake of pain—‘superadding’ pain to the death sentence through torture and the like.”

Citing another 19th century ruling, Roberts noted that the US justice system recognized punishment as “cruel” when involving “something inhuman and barbarous, something more than the mere extinguishment of life.”

“Simply because an execution method may result in pain, either by accident or as an inescapable consequence of death, does not establish the sort of ‘objectively intolerable risk of harm’ that qualifies as cruel and unusual,” Roberts wrote.

Death penalty opponents have pointed out that the three-drug lethal injection method was long ago discontinued by the American Veterinary Association in the euthanizing of animals because it was determined to be unnecessarily cruel. The majority opinion rejected the extension of this logic to human beings. “If [the paralyzing agent] pancuronium is too cruel for animals, the argument goes, then it must be too cruel for the condemned inmate,” Roberts wrote. “Whatever rhetorical force the argument carries ... it overlooks the States’ legitimate interest in providing for a quick, certain death.”

By this reasoning, the “States’ interest” trumps human rights. Such logic flows from the same political origins as the Bush administration’s justifications for the use of “enhanced interrogation techniques” on prisoners held by the CIA and the military.

The opinion concluded, “The firing squad, hanging, the electric chair, and the gas chamber have each in turn given way to more humane methods, culminating in today’s consensus on lethal injection.”

Justice Stevens, who nevertheless concurred with the majority in the ruling, wrote in a separate opinion: “The imposition of the death penalty represents the pointless and needless extinction of life with only marginal contributions to any discernible social or public purposes. A penalty with such negligible returns to the State [is] patently excessive and cruel and unusual punishment violative of the Eighth Amendment.”

Justice Scalia, in a bristling counter-opinion, wrote of Stevens’s: “There is a risk that an innocent person might be convicted and sentenced to death—though not a risk that Justice Stevens can quantify, because he lacks a single example of a person executed for a crime he did not commit in the current American system.” In fact, Scalia wrote, the death penalty represented a cost to society only because those “opposed to the death penalty... have ‘encumbered it... with unwarranted restrictions neither contained in the text of the Constitution nor reflected in two centuries of practice under it.”

In other words, the United States justice system would function more smoothly and in accordance with the Constitution if only the death penalty were relieved of the ethical, moral, legal, and social considerations that make executions such a long legal process.

Justices Ruth Bader Ginsburg and David Souter dissented, with Ginsburg writing for the minority. While citing a 2002 ruling that declared the Eighth Amendment “must draw its meaning from evolving standards of decency that mark the progress of a maturing society,” Ginsburg framed the dissent strictly in terms of whether the state of Kentucky’s lethal injection protocol was meticulous enough in its safeguards to flawlessly execute prisoners.

The dissenting opinion, like the case itself, did not call into question the death penalty. Instead, the nominally more liberal faction of the court proscribed itself to questioning minor details of the lethal injection process.

Kentucky, Ginsburg wrote, did not employ “essentially costless” measures such as “saying the condemned inmate’s name,” “gently strok[ing] the condemned inmate’s eyelashes,” or “pinch[ing] the condemned inmate’s arm” after administering the first injection.

Ginsburg wrote, “Lethal injection as a mode of execution can be expected, in most instances, to result in painless death. Rare though errors may be, the consequences of a mistake about the condemned inmate’s consciousness are horrendous and effectively undetectable after injection of the second drug. Given the opposing tugs of the degree of risk and magnitude of pain, the critical question here, as I see it, is whether a feasible alternative exists.”

Bailout Bonanza

Bailout Bonanza

By Ralph Nader

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Is there a larger, more exploited, defenseless group of undifferentiated Americans than the 133 million individual federal income taxpayers? Their dollars are used to subsidize organized corporate interests, giveaway taxpayer assets like minerals under the public lands, and bail out speculative, self-enriching corporations and their crooked bosses.

As large corporations, and their trade associations, complete their takeover of the federal government—a process that President Franklin Delano Roosevelt called fascism in 1938—the corporations become the government.

Just look at the recent headlines in the business press. Article after article features abuses and over-runs by companies contracting with the Department of Defense and other agencies. The enormous volumes of waste, fraud and poor delivery affecting the Iraq war-occupation now only produces ho hum newspaper and television stories.

Recently, the student loan scandals, exorbitant burdens on students graduating from college imposed on them by companies with influence in Washington, like Sallie Mae, whose government guarantees make a mockery of capitalism, have riled members of Congress to some modest action.

Once again this year, the big boys on Wall Street stretched the envelope of risk and greed and ran down to Washington, D.C. to be bailed out by the accommodating Federal Reserve. Chairman Ben Bernanke testified before the Senate that he had no choice but to take on about $30 billion of Bear Stearns obligations or there could be a run on other big banks. Where was the Federal Reserve when this credit, debt and risk spree was building during the past five years?

There is no penalty for failure—whether on Wall Street or in Washington, D.C. for misusing or wasting the taxpayers’ monies.

When the heads of Citigroup and Merrill Lynch were asked to leave their positions recently as CEOs after tanking their companies’ shares, they could barely avoid tripping over the many millions of dollars they were taking with them through the exit door. Among many perverse incentives operating within these Wall Street firms, there are rewards for failure—big bucks rubber-stamped by the look-the-other-way, well paid Boards of Directors.

Back in 1971 and 1980 respectively, the White House proposed a $250 million loan guarantee for Lockheed corp., and a $1.5 billion loan guarantee for Chrysler with the government taking back warrants that it later sold for a profit. There was intense debate and discussion at public hearings in the House and the Senate before they authorized the guarantees.

Now federal agency bailouts of big business, even Mexican oligarchs, rarely seek Congressional approval. Just have the Executive Branch do what it wants. No public hearings. Midnight bailouts without transcripts.

I asked a powerful Senator: “What are the discernable legal limits on the Federal Reserve’s bailout authority and how much total risk can the Federal Reserve heap on the taxpayers?” “Can they go to a trillion dollars?” He did not know.

Shifting deficits, debts and unfair burdens to individual taxpayers while the rich and powerful become either tax escapees or big time welfare recipients keep pushing a limitless envelope on today’s and tomorrow’s taxpayers.

The New York Times’ prize-winning reporter David Cay Johnston, has written two books “Perfectly Legal” and just recently, the best seller “Free Lunch” that document these megatrends of corporate socialism—privatizing corporate profits and socializing corporate losses on the backs of individual taxpayers.

What can be done about these gigantic runaway sprees?

First, pass legislation that broadens individual taxpayers’ right to sue in federal court against waste, fraud and abuse, including those receivers of bailouts—the reckless, avaricious corporations who have Uncle Sam in their back pockets.

Second, have a voluntary checkoff on the 1040 tax return inviting individual taxpayers to join their own taxpayer defense organization. Such a group would have millions of small dues paying members and an on-the-spot skillful watchdog group in our national capital.

Finally, place our public elections off the private auction block and have them funded by well promoted voluntary checkoffs on the tax returns together with a certain amount of free radio and television time for ballot-qualified candidates seeking federal office.

These and other proposals, such as giving shareholders more power to restrain their top executives, will give taxpayers some grip on the wide-open spigot of taxpayer dollars delivered to the misfits of the giant corporate world.

A Man-Made Famine

A Man-Made Famine

There are many causes behind the world food crisis, but one chief villain: World Bank head, Robert Zoellick

By Raj Patel

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For anyone who understands the current food crisis, it is hard to listen to the head of the World Bank, Robert Zoellick, without gagging.

Earlier this week, Zoellick waxed apocalyptic about the consequences of the global surge in prices, arguing that free trade had become a humanitarian necessity, to ensure that poor people had enough to eat. The current wave of food riots has already claimed the prime minister of Haiti, and there have been protests around the world, from Mexico, to Egypt, to India.

The reason for the price rise is perfect storm of high oil prices, an increasing demand for meat in developing countries, poor harvests, population growth, financial speculation and biofuels. But prices have fluctuated before. The reason we're seeing such misery as a result of this particular spike has everything to do with Zoellick and his friends.

Before he replaced Paul Wolfowitz at the World Bank, Zoellick was the US trade representative, their man at the World Trade Organisation. While there, he won a reputation as a tough and guileful negotiator, savvy with details and pushy with the neoconservative economic agenda: a technocrat with a knuckleduster.

His mission was to accelerate two decades of trade liberalisation in key strategic commodities for the United States, among them agriculture. Practically, this meant the removal of developing countries' ability to stockpile grain (food mountains interfere with the market), to create tariff barriers (ditto), and to support farmers (they ought to be able to compete on their own). This Zoellick did often, and enthusiastically.

Without agricultural support policies, though, there's no buffer between the price shocks and the bellies of the poorest people on earth. No option to support sustainable smaller-scale farmers, because they've been driven off their land by cheap EU and US imports. No option to dip into grain reserves because they've been sold off to service debt. No way of increasing the income of the poorest, because social programmes have been cut to the bone.

The reason that today's price increases hurt the poor so much is that all protection from price shocks has been flayed away, by organisations such as the International Monetary Fund, the World Trade Organisation and the World Bank.

Even the World Bank's own Independent Evaluation Groupadmits (pdf) that the bank has been doing a poor job in agriculture. Part of the bank's vision was to clear away the government agricultural clutter so that the private sector could come in to make agriculture efficient. But, as the Independent Evaluation Group delicately puts it, "in most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew." After the liberalisation of agriculture, the invisible hand was nowhere to be seen.

But governments weren't allowed to return to the business of supporting agriculture. Trade liberalisation agreements and World Bank loan conditions, such as those promoted by Zoellick, have made food sovereignty impossible.

This is why, when we see Dominique Strauss-Kahn of the IMF wailing about food prices, or Zoellick using the crisis to argue with breathless urgency for more liberalisation, the only reasonable response is nausea.

Pentagon Records Detail Prisoner Abuse by US Military

Pentagon Records Detail Prisoner Abuse by US Military

By Lara Jakes Jordan

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Washington - Military interrogators assaulted Afghan detainees in 2003, using investigation methods they learned during self-defense training, Pentagon documents released Wednesday show.

Detainees at the Gardez Detention Facility in southeastern Afghanistan reported being made to kneel outside in wet clothing and being kicked and punched in the kidneys, nose and knees if they moved, according to the documents.

A 2006 Army review concluded that the detainees were not abused but that the incident revealed "misconduct that warrants further action."

The documents, which were turned over Wednesday evening to the American Civil Liberties Union, focus on the 2003 death of Afghan detainee Jamal Nasser, who died in U.S. custody at the Gardez facility.

The documents detail interrogation techniques used on eight detainees, including Nasser, who were suspected of weapons trafficking.

The Army review found that abuse did not cause Nasser's death. But the documents include interviews with some interrogators who acknowledged slapping the detainees - a technique they learned during survival training at the Army's SERE school. SERE stands for Survive, Evade, Resist and Escape.

"You say you gave permission for (redacted) to hit detainees during interrogations; did you have a memorandum or order from your higher headquarters authorizing that?" a military criminal investigator asked one of the interrogators, according to a November 2004 transcript among the more than 300 pages of documents.

"No, I did not have a memorandum and had not seen one," the interrogator answered, according to the transcript. "I used tactics that were used in SERE."

The investigator continued: "Did you see (redacted) hit detainees during the interviews?"

"Yes, open or closed slaps, not punches," the interrogator answered.

In another interview that day, according to the documents, the Army investigator asks whether "you ever heard of a tactic of pouring cold water or a water and snow mix on persons captured?"

"They do spray cold water on prisoners," the interrogator answered, referring to SERE lessons. That interrogator was unaware, however, of men in his unit pouring cold water over the detainees, as the Afghans later complained.

ACLU attorney Amrit Singh said such interrogation techniques are taught at SERE schools only to show soldiers how to withstand them from enemy captors. She called the methods, when used together, a form of torture.

"They were intended to be defensive methods, not offensive methods," Singh said. "This raises serious questions about the interrogation methods that were being applied in Afghanistan."

SERE methods were also used on detainees by military interrogators in Iraq and at Guantanamo Bay, Cuba, Singh said.

The Pentagon and the Army did not immediately respond to requests for comment Wednesday evening.

The 2004 criminal inquiry of Nasser's death was among a string of probes into alleged abuse of prisoners in U.S. jails in Afghanistan.

Trying to deflect the kind of scandal that followed the abuse of prisoners at the Abu Ghraib prison in Iraq, the commander of U.S. forces in Afghanistan ordered a review of their secretive network of about 20 jails at bases across Afghanistan.

Nasser was among eight detainees who were held at Gardez for between 18 and 20 days. The Army concluded he died of a stomach ailment.

More Bad Press for Nestlé in their Quest to Pilfer Spring Water

More Bad Press for Nestlé in their Quest to Pilfer Spring Water

By Tara Lohan

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Rural communities beware. Although we've reported it before, Nestlé's attack on rural communities and the corporation's pilfering of spring water has made the news again -- this time in Business Week. In "A Town Torn Apart: How a deal for a bottled water plant set off neighbor against neighbor in struggling McCloud, Cailf.," Michelle Conlin explains how the small NorCal town is fighting to keep the world's largest food and beverage company from taking their spring water.

It is here that Nestlé Waters North America (NWNA), a subsidiary of the Swiss food and beverage giant, plans to operate one of the largest spring-water bottling plants in the U.S. The 1 million-square-foot facility -- picture five Wal-Mart supercenters strung together -- is to rise on the site of McCloud's defunct lumber mill, a 250-acre swath of land that bends around the base of the mountain. Nestlé aims to draw 1,250 gallons a minute of water from McCloud's glacier-fed springs. The company would then pack 300 semi-trailers a day full of Arrowhead brand water, truck it as far away as Los Angeles and Reno, and sell it at prices that are as much as 1,000 times more than the cost of tap water. In exchange, Nestlé has agreed to pay McCloud roughly $350,000 a year for the water and create up to 240 jobs in and around the town.

The plan was made with the company by district board members behind closed doors and with no public input. McCloud, a town on the economic mend, apparently was looking for someone to fill the shoes of the departed lumber industry. But it seems like the board members weren't all that sure what they were getting into with Nestlé, considering their track record in other towns in Michigan and Maine. And according to this article, they couldn't afford to hire a lawyer to look over the paperwork.

When the town found out about the deal, there was a great deal of concern, followed by anger and then action.

Nestlé Waters has run into a wall of opposition, prompting it to delay construction and resubmit its environmental permit application. Since learning about the bottling plant, nearly half of McCloud's 1,300 residents have mobilized into a well-armed resistance force. Furious that their elected representatives inked the deal without consulting them and worried about the potential impact the plant could have on Mount Shasta's delicate local hydrology, they have ordered up studies, signed up wealthy backers, and lobbied politicians.

The Business Week story lightly touches on the growing movement against bottled water -- the "tappening" movement and includes some info after the end of the article from Food and Water Watch's Wenonah Hauter dispelling myths about how some erroneously believe all bottled water is better than tap as well as figures about the environmental footprint of bottled water. It would have been good to see that info built into the story, but at least it was there ... somewhere. Overall it is good to see this information about water privatization making it to more mainstream media.

The Supreme Court Brings Back the Death Penalty

The Supreme Court Brings Back the Death Penalty

By Liliana Segura

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The Supreme Court just made a decision that will send prisoners across the country to their deaths.

In a 7 to 2 ruling, it upheld lethal injection as currently carried out as Constitutional, ending a de-facto moratorium on state-sanctioned murder.

Executions in the United States had been on hold since last September, when the Court decided to take on the case of Baze v. Reese. At stake was the question of whether Kentucky's lethal injection protocol violates the 8th Amendment prohibition of "cruel and unusual punishment." The three-drug killing technique or some version of it -- a paralytic, a barbiturate, and a dose of potassium chloride -- is used in 35 out of 36 death penalty states. (Nebraska, whose sole method of execution used to be electrocution, ruled the electric chair unconstitutional this past February.) As states froze their execution machinery to await the justices' ruling, not a single execution was carried out for seven months. Last-minute stays of execution aside, it was a glimpse into what the United States might look like without the death penalty.

Baze represented a critical development in death penalty litigation, the first time the Court has considered a specific method of execution since it upheld the firing squad in 1878. Ever since the Supreme Court's last-minute intervention in the case of Florida death row prisoner Clarence Hill -- he was strapped onto a gurney with intravenous lines in his arms -- in January 2006, the stage had been set for a showdown on lethal injection. When the Court ruled later that year that prisoners could appeal their death sentences based on the possibility that lethal injection is cruel and unusual, a wave of appeals swept the country.

Now, those prisoners have lost significant legal footing and with it, very possibly, the right to live. "While the opinion appeared to leave open a chance that some further challenges could be made to the use of lethal drugs under a specific procedure in another state," explained Lyle Denniston at SCOTUSblog, "...The opinion also appeared to mean that the three drugs now used in all of those jurisdictions do not, alone or in combination, fail the Court's new standard."

In other words, the country's preferred execution method is now insulated by a legal precedent.

This is a serious blow to death penalty opponents who hoped that disabling the death machinery would lead to abolishing it. It is also, in many ways, the result of a frustrating failure of legal strategy. The attorneys who argued Baze did so on very narrow grounds, contending that Kentucky's lethal injection protocol is broken, but not beyond repair. "One needs a person trained in monitoring anesthetic death to participate in the process," defense attorney Donald Verrilli suggested, not only encouraging the controversial notion that medical professionals have a role in carrying out executions, but also encouraging the Court to treat botched executions as an aberration; freak accidents that rarely occur. "The Court has held that an isolated mishap alone does not violate the Eighth Amendment," wrote Chief Justice John Roberts in the decision. But states from California to Florida have had lethal injections go horribly wrong in recent years; with states often secretive about their execution procedures -- and many not keeping data on file about them -- how "isolated" these incidents are is largely unknown.

Lethal injection is often described as a "three-drug cocktail." The first drug is the barbiturate sodium thiopental; the second, a paralytic called pancuronium bromide, and the third, potassium chloride, which stops the heart. The technique has been favored by death penalty supporters who find appeal in its medical veneer. In theory, if the drugs are administered correctly, the victim will die quickly and painlessly. But in reality, executioners, contrary to the assumption of many, usually have little or no medical training. If they wrongly administer the first drug, the result can be grisly.

Take the case of Joseph A. Clark, a death row prisoner in Ohio. On the day of his execution in May 2006, it took the execution team 22 minutes to find a vein -- a not uncommon problem. Shortly after the catheter was finally inserted, Clark's vein collapsed and his arm began to swell, at which point, he lifted his head. "He said 'It don't work, it don't work, it don't work, it ain't working,' about five times," one witness later described. At that point, the gurney was concealed by curtains. Thirty minutes later, there was "moaning, crying out and guttural noises." An hour and a half after the start of the execution, Clark was dead.

Then there are instances where the paralytic drug can make it impossible to tell if something has gone wrong. Since a paralyzed prisoner cannot cry out or move if in pain, clues that he or she suffered only come with the autopsy. In the case of Florida prisoner Angel Diaz in December 2006, he started to move following the first drug, "squinting and grimacing as he tried to mouth words," according to the Death Penalty Information Center. "A second dose was then administered, and 34 minutes passed before Mr. Diaz was declared dead. At first a spokesperson for the Florida Department of Corrections claimed that this was because Mr. Diaz had some sort of liver disease. After performing an autopsy, the Medical Examiner, Dr. William Hamilton, stated that Mr. Diaz's liver was undamaged, but that the needle had gone through Mr. Diaz's vein and out the other side, so the deadly chemicals were injected into soft tissue, rather than the vein." Angel Diaz was quite literally tortured to death.

The cruel irony is that the paralyzing agent is totally pointless; serving no purpose aside from masking the effects of the lethal chemicals on a prisoner's body. In fact, veterinarians long ago decided not to use it for the that very reason. But death row prisoners, despite being human beings, do not inspire the humane treatment that animals do -- and twisted logic is offered to keep the paralyzing drug in place. "The purpose it serves," argued Roy Englert, the attorney representing Kentucky before the Court, "is the purpose of dignifying the process for the benefit of the inmate and for the benefit of the witnesses." In reality, it is used to "dignify the process" for the benefit of the state. It makes murder look a little less murderous.

For legal experts, the Baze decision is not a major surprise and in fact, contains some interesting language about the future of death penalty litigation. ''I am now convinced that this case will generate debate not only about the constitutionality of the three-drug protocol, and specifically about the justification for the use of the paralytic agent, pancuronium bromide, but also about the justification for the death penalty itself,'' wrote Justice Stevens. The variety of opinions expressed by the justices -- a "plurality" in legal terms -- in the rather glib interpretation of one expert blogger, "provides a little something for everyone." Unfortunately, for prisoners granted a temporary reprieve by the seven-month-long de facto moratorium, what the decision provides is death.

As they have since the return of the American death penalty in 1976, defense attorneys will find new legal arguments to try to spare their clients' lives. But how many prisoners will die before another opportunity arrives like the one presented by Baze? How many of them are on death row because they are poor or black? How many of them are innocent?

As Marlene Martin, executive director of the Campaign to End the Death Penalty says, "I think of people like Troy Davis, Rodney ReedTimothy McKinney -- all on death row, all African American, all poor and almost all surely innocent. What does this decision mean for them and the countless others like them?" As executions resume in a country with more than 3,000 people on death row -- whose names are unknown to the vast majority of Americans -- it is a question not enough people are willing to ask. and

McCain Shows Us How to Kill an Army

McCain Shows Us How to Kill an Army

By Sara Robinson

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John McCain, who from the early 1980s worked hard to establish himself as one of the Senate's shining champions of Vietnam veterans' issues, completed his betrayal of the Iraq-era troops today. Brandon Friedman of has the details:

Yesterday delivered a petition with 30,000 signatures to the office of Sen. John McCain. Through that petition, we asked him to support Sen. Jim Webb's new GI Bill. And less than 24 hours later, we have an answer:

"Sen. John McCain, R-Ariz., the presumptive Republican presidential nominee, seemed to give a thumbs down to bipartisan legislation that would greatly expand educational benefits for members of the military returning from Iraq and Afghanistan under the GI Bill ..."

The reason for McCain's refusal to support the bill is about the most disturbing rationale one could imagine. ... Officials in charge of Pentagon personnel worry that a more generous and expansive GI Bill would create an incentive for troops to get out of the military and go to college.

Friedman observes that McCain's no-college-for-grunts position essentially says to the troops: "Thanks for your service and your three combat tours in five years. Now get back to work."

Jim Webb has been trying to update the GI Bill to restore its original intention -- which was to reward returning vets for their service by giving them a full education, lifetime healthcare, and the foundations on which to build a comfortable and successful civilian life. But, says Friedman, the Cons have apparently abandoned that noble goal. And in doing so, they're unveiling an entirely different vision of our troops' future relationship to the rest of America.

McCain makes it clear that he wants to make the GI Bill so weak and useless that troops will have no choice but to stay in the military for life. Friedman argues persuasively that this is not only a breach of a sacred trust Americans have upheld with their troops for over 60 years; it's also a slap in the face to military recruiters, who ask families to give up their children to the war machine -- and now have nothing compelling to offer them in return. And in the long run, it ensures that the military will become the career of last resort for those who have no other options. Reading this, it strikes me that, as usual, the conservatives aren't being nearly careful enough about what they wish for. In fact, it's not hard at all to imagine a scenario in which this new relationship to our military -- which forsakes the last vestiges of America's traditional civilian militias and creates a new class of involuntarily indentured permanent soldiers -- creates far-flung changes that may undermine the stability of our democracy.

How we got here

The GI Bill is recent -- but the deal it represents is as old as history. It's one of the great recurring patterns: in most times and places, the best way for a young man full of brains and ambition but short on money and connections to move up in the world was to join the military and distinguish himself. (The other typical mobility paths were to become a teacher, scholar, or priest.) It was a huge risk: the odds of becoming a combat hero and rising to the officers' ranks were slim compared to those of coming home crippled -- or not coming home at all. But the potential upside was equally enormous. If you wanted to get off the farm, marry well and launch yourself into the ownership class, becoming a war hero has usually been your best way out.

With the GI Bill, America democratized this ancient deal. It guaranteed that same shot at a solid middle-class life to everyone who signed up and did their tour, regardless of what their service entailed (and, in doing so, also somewhat reduced the incentive for ambitious soldiers to secure their civilian futures by instigating unnecessary battles. Combat hero or clerk typist, you were part of the effort, and you'd still get yours.). In a country that had usually resisted the very idea of raising a standing army, the GI Bill fostered the new post-war military industrial complex by normalizing military service. It was the deal that allowed families to send their sons (and later, their daughters) off in the belief that the military would open the doors to a better life. It was also the sugar that -- for a while, anyway -- took some of the bitterness from universal conscription.

Generous GI benefits became even more important in the aftermath of Vietnam, as the country abandoned the draft in favor of an all-volunteer army. The country's war hawks approved of this move: The Vietnam-era draft had touched every family in America regardless of class; and it was the middle and upper-middle classes' unwillingness to consent to that sacrifice that had so forcefully politicized the war. A military comprising troops who'd voluntarily agreed to be there would not only be easier to discipline and manage; they'd be much easier to deploy without creating major political upheavals.

The brass also knew from the start that going all-volunteer would increase the class divisions in the military. The bulk of those new recruits -- both noncoms and officers -- would be kids from working-class families looking for a shot at college. As the conservatives cut back on government-backed college grants and loans, the GI Bill and ROTC would step up to become the country's new college-aid programs. Given that this realignment happened alongside the retooling of a new high-tech military that required an extremely skilled and disciplined corps to function, this new model wouldn't work -- couldn't work -- unless the benefits and working conditions were good enough to attract a huge flow of smart, stable, high-quality volunteers.

Predictably, the number of volunteers has fallen off markedly in the Bush era, as the war has dramatically raised the risks associated with service, and the promised benefits have vanished. Working-class kids may not have many prospects left; but they can do the math, and they're staying away in droves. To keep the warm bodies coming, the military has begun to compromise on quality. According to the San Francisco Chronicle, the number of new recruits coming in on conduct waivers is up. So is the number of convicted felons, gang members, avowed racists and people with substance abuse problems. The military is increasingly turning a blind eye to soldier misconduct, because it can't afford to lose the boots -- so racist activity, rape, and other criminal acts are going largely unpunished.

Maybe McCain figures that this new crop of kids isn't all that interested in college anyway. Maybe he's decided that down here, with the bottom of the barrel coming into sight, we're getting the kids for whom the military isn't a ticket to college, or a way out of anything. It's just a better alternative than a lifetime of unemployment -- or worse, cycling in and out of jail. And maybe he's being a realist about that. It's certainly where we seem to be headed.

But we don't have to go there. And if we think this all the way through, we'll do whatever it takes not to go there. Because if McCain is serious about stripping away the barest promise of benefits and turning America's high-tech army into a dumping ground for the country's undereducated, precriminal, behaviorally unstable and economically desperate -- then there's another possible future looming, and it's the stuff of our worst nightmares.

What lies ahead

What follows is a scenario -- a little concatenation of what-if stories about what could happen if America breaks its historical pact of guaranteeing education, healthcare, and a middle-class future to its service men and women. It's not a prediction. It's just a look at some of the ways McCain's new view of what we owe our troops could play out if we don't change course.

Inside the military

As kids with any kind of prospects at all flee from recruiters who have nothing left to offer them, the sliding standards of the past few years become a fast tumble to the bottom. Soon, America's military is nothing more than the employer of last resort. It's society's dumping ground for people with inadequate education, drug problems, criminal records, and unaddressed behavior issues -- people who can't even hold down McJobs and for whom going to war and getting shot at is a marginally better choice to going to jail and getting knifed.

What happens from here is a scene from The Dirty Dozen -- or the last years of Vietnam -- writ large. Faced with battalions of armed misfits -- including a large number of sociopaths for whom punishment is meaningless -- officers can't hold down the fort. The result is anarchy, followed by the rise of internal drug-running gangs, racist militias, God squads of fundamentalist holy warriors, and other assorted warlords. (Some of these have close ties to existing civilian organizations such as prison gangs, white supremacist militias and far-right dominionist groups -- as if any of these groups need to have their own government-trained army units.) Unit cohesion fails as these groups go freelance and compete for control of military resources. Fragging becomes common; and good officers become much harder to find. (Anybody with a college education will find something better and safer to do.) The goal of teaching them useful civilian life skills is quickly abandoned.

In the name of American foreign policy, these troops are exported to other countries, where they set up operations abroad -- thus bringing America's worst authoritarians to the the world's least stable corners, and giving them a prime government-subsidized opportunity to go global.

Meanwhile, back at the ranch:

Of course, the intended goal of this system is to keep recruits inside it until they're too old to do much damage. Once they do get out, though, the results look like another movie -- and this time, it's The Godfather.

Since these veterans have no connection to the larger culture -- and no way of getting the education that will outfit them for anything else besides war -- they have every incentive to organize themselves into civilian subsidiaries of the military gangs that sustained them. They get jobs as mercenaries working abroad for private armies and cartels. Or they come home and set up local outposts of this emerging global Mafia. Soon, city and state governments are dealing with a far bigger gang problem than they've ever seen before and are completely unprepared to confront. Turf battles -- or holy wars -- erupt between the race- and religion-based gangs. In some towns, the gangs muscle out small businesses, start up extortion rackets, run their own candidates and seize control of local politics. They also infiltrate whatever legitimate institutions will have them -- just as the Mafia took over unions and the construction trades on the East Coast so long ago. Modern prison gangs are small mom-and-pop operations compared to the vast global criminal network that could arise in time.

This sounds far-fetched, but it's the historical way of armies gone bad. When you have combat-hardened warriors who have no place in the civilian world -- and governments that feel no further responsibility to the troops that risked their lives to defend them -- they will make a place for themselves. And that place will usually be well beyond the reach of government.

The citizens respond:

There are several ways Americans might respond to the broken-down military that results from the boneheaded decision to abandon the covenant represented by the GI Bill. Let's look at the best case, the worst case, and the most likely case.

The best case is that Americans quickly realize that the military culture is fusing with the prison-based gang culture and that the combined forces are threatening the foundations of the country. Driving this case is the fact is that we don't generally fund government programs that only benefit people without political power. (That's why it's so important that even the rich get Social Security, and why the upper classes need to keep their kids in public schools.) As long as the most politically influential people see that these things benefit them, they'll support them. As soon as these programs look like they're just for the lower classes, the political will to sustain them vanishes.

Turning the military into a dumping ground for the unwanted underclass (not to mention a vast channel through which taxpayer dollars are funneled to organized crime) devalues it socially and politically. Nice people won't send their kids there, any more than they'd voluntarily send them to prison for three or four years. Nobody with any brains will want to become an officer, either. And when the blowback from this long-term neglect begins washing up on the tree-lined streets of America's suburbs, there could be strong political pressure to defund the military, reform it, or abolish a standing army entirely.

The worst case is that we don't act in time, and the gangs simply take over. The government is overwhelmed or corrupted. Democracy fails, along with domestic order. Security is in the hands of local strongmen. If that's the way it goes, the story begins to look like something out of Mad Max, and it will take nothing short of a violent patriot uprising to eliminate the gangs and take back the country. (And the bad news is: They have all the weapons and know how to use them.)

This scenario is scary. And it should be. Worst-case scenarios aren't fun for me to write, not least because they can so easily become grim and over the top. What I find most frightening about this one is that you don't have to be a futurist to see its plausibility; you just have to have read some history. Broken-down armies that come home and take it out on the home folks are as common as dirt. They're stock characters in the stories where revolutions begin and empires end. But we need to be aware that this could very easily happen to us -- and blowing off our commitment to the troops could be the first tangible step down that road.

The most likely case is that we come to our senses in time and realize that the GI Bill is not entitlement, not a privilege, and not a handout. It's what we owe our troops for their service. It's fulfilling our basic obligation to return them safely and sanely to civilian life, and to give them a fair stake in the country's free and democratic future. And as long as we choose to maintain a standing army and act as an empire, it's an essential investment in our own domestic peace, security, and political stability that we cannot afford to scrimp on. If we think the price is too high, then we should reconsider whether we want to be an empire. But as long as we commission soldiers, defaulting on this debt is not an option.

No one who is willing to tear up that ancient contract between a nation and its veterans, and thus consign our nation's defense to people so dangerously incompetent that Wal-Mart won't even hire them, should ever be this country's commander in chief. And McCain, of all people, should understand that better than anyone. It's a shame that, after all these years building his career on the backs of veterans, he still doesn't understand what's at stake.