Thursday, March 19, 2009

We Have Seen the Enemy...

We Have Seen the Enemy...

By Timothy V. Gatto

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The United States continues to show its ignorance to the rest of the world by grouping everyone into friends, enemies, and potential friends or enemies. This translates loosely into categorizing the nations or cultures around the world into friend or foe. The worst part of this whole scenario is that many in this country actually believe all this rhetoric. We are a nation that has elevated national opinion into a fine art. In reality, we are a country that has a media that tells us how to think. It tells us what we like, what we approve of, what we despise and how we should act. We have become what we once hated. Politically correct Americans today have become the “plastic people” we criticized in the sixties and seventies.

This has made life easier. We can join the conversation around just about any water cooler and fit right in. We know what we can say safely and what opinions to keep to ourselves. We have developed an entire vocabulary that enables us to sound wise and learned while not really saying anything of consequence. We have come to the realization that the only people who have valid opinions are in the media. If it hasn’t been uttered in front of a camera or written about in a newspaper or magazine, it just isn’t a valid opinion and not fit for public discussion. We have changed from the most innovative and revolutionary nation on Earth from our beginnings, into a nation of that has perfected the art of “group-think”. We have perfected the art of acquiescence and learned the waypoints to the paths of least resistance, and we have done so willingly.

Americans have learned where to tune into current opinions. We have designated the spokesmen for the right, the left, and the vocabulary we need to mimic the same arguments we hear in the media, replete with the “buzzwords” and catch phrases. We have freed ourselves from the burden of having our own opinions and making our own decisions. Critical thinking is frowned upon in our schools and in our boardrooms. Thinking “outside the box” has become a metaphor for saying the same thing in a different way. Those that truly “think outside the box” will find themselves looking up the latest keywords to slip into their resumes.

How did a nation that took so much pride in lively debate and different opinions become a nation that questions the loyalty of people who have dared to disagree with the policymakers in Washington? When did political dissent become a reason to end up grounded at an airport because you found out at a most inconvenient time that your name had been mysteriously added to a “no-fly list”? When did the American government begin building FEMA camps and what exactly is their purpose? When did Congress become the rubber stamp for policies of reading the correspondence and listening in on the conversations of the American public?

9/11 was the start. It doesn’t matter at this point who was behind the attack on America and what the reasons were, the results of that day have been etched into the moral fabric of the American nation. "We have met the enemy... and he is us" ( )

Indeed! We have certainly met the enemy and he does appear to be us, who could have known that in 1951 such prophetic words would be written almost sixty years before they came to be the truth? Our society has become afraid of its own people. Who is the enemy? Why were the Patriot Acts, the Military Commissions Act of 2006, the expanded FISA laws, The John Warner Defense Act (that suspended Posse Comitatus) and all of the draconian attacks on our privacy and our freedoms enacted? Is the enemy of today so much more dangerous than the enemies that came before them? Exactly who ARE the enemies of today? How did it come to be that Congress was threatened with martial law if it didn’t pass the first bailout of the financial institutions? Is radical Islam the enemy? Are America’s enemies our own dissident citizens? Is our own government acting contrary to our own best interests? Are religions becoming political movements? What exactly is “Christian Zionism” and why are religious leaders praying for Armageddon? What is so wrong with the planet that the only solution to its problems is its destruction?

This nation is clearly at odds with itself. Are we working towards a society that stifles political diversity? Are we truly afraid of our own citizens? While the rest of the world gradually eases religion out of governmental policy, America seems to embrace religious extremes. We criticize Islamic religious fundamentalists; we accept Christian fundamentalists and support a Jewish State that denies the most basic freedoms to its citizens that are not Jewish while they support right wing Jewish leaders that become more radical in calling for the destruction of everything Palestinian with each passing day.
These are truly the times that try men’s souls by the discourse of the public. These problems exist but they are kept out of sight by a mainstream media that tries its best to ignore them. It won’t be too long before we realize that the freedoms we have fought for and respected are non-existent. We already need passports to travel to the Caribbean and laws are in place that will require passports to visit Canada and Mexico. The truth is that Mexico is swiftly becoming a failed State largely because of the American “War on Drugs” that has made drug trafficking such a lucrative business that it threatens the government that tries to enforce nearly impossible drug laws demanded by the United States.

Our “War on Dugs” our “Global War on Terror” and our meddling in other nations politics and our military bases in over 130 different countries have made America a nation to be feared. Meanwhile America can’t even come to terms with the problems that besiege it. We not only refuse to come to terms with our problems, we don’t even acknowledge them. The worldwide Depression has become the focal point of our government and the people; while we watch out freedoms we have enjoyed for so long come to an end.

We need to confront the all the situations that threaten the way we see ourselves. We have seen the enemy and he is us. We may not have started this assault on America, but through our silence and inaction we have encouraged our own demise. America could also become a failed State unless we face our greatest enemy; ourselves.

Was the Bailout Itself a Scam?

Was the Bailout Itself a Scam?

By Paul Craig Roberts

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Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests.

Americans are angry that AIG executives are paying themselves millions of dollars in bonuses after having cost the taxpayers an exorbitant sum. Senator Charles Grassley put a proper face on the anger when he suggested that the AIG executives “follow the Japanese example and resign or go commit suicide.”

Yet, Obama’s White House economist, Larry Summers, on whose watch as Treasury Secretary in the Clinton administration financial deregulation got out of control, invoked the “sanctity of contracts” in defense of the AIG bonuses.

But the Obama administration does not regard other contracts as sacred. Specifically: labor unions had to agree to give-backs in order for the auto companies to obtain federal help; CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed Tuesday [March 10] that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance” [ ]; the Washington Post reports that the Obama team has set its sights on downsizing Social Security and Medicare.

According to the Post, Obama said that “it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.” [ ]

After Washington’s trillion dollar bank bailouts and trillion dollar gratuitous wars for the sake of the military industry’s profits and Israeli territorial expansion, there is no money for Social Security and Medicare.

The US government breaks its contracts with US citizens on a daily basis, but AIG’s bonus contracts are sacrosanct. The Social Security contract was broken when the government decided to tax 85% of the benefits. It was broken again when the Clinton administration rigged the inflation measure in order to beat retirees out of their cost-of-living adjustments. To have any real Medicare coverage, a person has to give up part of his Social Security check to pay Medicare Part B premium and then take out a private supplemental policy. The true cost of Medicare to beneficiaries is about $6,000 annually in premiums, plus deductibles and the Medicare tax if the person is still earning.

Treasury Secretary Geithner, the fox in charge of the hen house, has resolved the problem for us. He is going to withhold $165 million (the amount of the AIG bonuses) from the next taxpayer payment to AIG of $30,000 million. If someone handed you $30,000 dollars, would you mind if they held back $165?

PR flaks have rechristened the bonus payments “retention payments” necessary if AIG is to retain crucial employees. This lie was shot down by New York Attorney General Andrew Cuomo, who informed the House Committee on Financial Services that the payments went to members of AIG’s Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown.” As for retention, Cuomo pointed out that ”numerous individuals who received large ‘retention’ bonuses are no longer at the firm” [ ].

Eliot Spitzer, the former New York Governor who was set-up in a sex scandal to prevent him investigating Wall Street’s financial gangsterism, pointed out on March 17 that the real scandal is the billions of taxpayer dollars paid to the counter-parties of AIG’s financial deals. These payments, Spitzer writes, [ ] are “a way to hide an enormous second round of cash to the same group that had received TARP money already.”

Goldman Sachs, for example, had already received a taxpayer cash infusion of $25 billion and was sitting on more than $100 billion in cash when the Wall Street firm received another $13 billion via the AIG bailout.

Moreover, in my opinion, most of the billions of dollars in AIG counter-party payments were unnecessary. They represent gravy paid to firms that had made risk-free bets, the non-payment of which constituted no threat to financial solvency.

Spitzer identifies a conflict of interest that could possibly be criminal self-dealing. According to reports, the AIG bailout decision involved Bush Treasury Secretary Henry Paulson, formerly of Goldman Sachs, Goldman Sachs CEO Lloyd Blankfein, Fed Chairman Ben Bernanke, and Timothy Geithner, former New York Federal Reserve president and currently Secretary of the Treasury. No doubt the incestuous relationships are the reason the original bailout deal had no oversight or transparency.

The Bush/Obama bailouts require serious investigation. Were these bailouts necessary, or were they a scam, like “weapons of mass destruction,” used to advance a private agenda behind a wall of fear? Recently I heard Harvard Law professor Elizabeth Warren, a member of a congressional bailout oversight panel, say on NPR that the US has far too many banks. Out of the financial crisis, she said, should come consolidation with the financial sector consisting of a few mega-banks. Was the whole point of the bailout to supply taxpayer money for a program of financial concentration?

The "Card Check" Hullabaloo

The "Card Check" Hullabaloo

By Mike Whitney

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Big business has launched a no-holds-barred propaganda blitz against the Employee Free Choice Act. Their goal is to scare people into believing that if the bill passes it will trigger higher unemployment and a deeper recession. According to opponents, there's even the threat of creeping socialism. The truth, of course, is far less dramatic. The Employee Free Choice Act or so called "card check" simply makes it easier for unions to organize. Here's a short summary of the bill posted on the Change To Win web site:

1--Majority Rules, Not the Boss:

Currently, a majority of workers can sign up for a union, but the company can veto that decision and demand an election. This allows the company to fire or harass workers, and threaten that it will close the workplace, in order to coerce workers into voting against a union. Under EFCA, if a majority of employees sign cards indicating they want a union, the company has to recognize the union, as long as it is certified by the National Labor Relations Board (NLRB). (Change To Win supports EFCA)

That's it. All that's needed for union certification is for a majority of workers to sign cards. No one is coerced into doing anything they don't want to do; it's completely voluntary. There's nothing in the process that will have any material effect on the economy and, despite all the fearmongering, union goons will not force people to sing L'Internationale at baseball games or make them wear funny-looking blue jumpsuits to work. It's just a better way to organize, which is why the Chamber of Commerce and other far-right organizations are in a lather.

True, there are provisions that deal with contract negotiations and bargaining in good faith, but those are just added to discourage management from dragging its feet on contracts. (which is a typical strategy) The bill also gives the government the power to settle disputes on wages and benefits through binding arbitration, which is about as good as it gets. And, yes, there are penalties for firing workers for engaging union activity, but most people think these are both fair and reasonable.

Naturally, the boardroom bullyboys are worried that more of the profits will trickle down to workers instead of being transferred to off-shore bank accounts in the Caribbean. Too bad; the corporate mucky-mucks will just have to scrape by with a little less.

The lies and disinformation about the EFCA have been so extreme, they border on ridiculous. These guys are playing for keeps and it shows. The Wall Street Journal has run five anti-EFCA articles this week alone, each one more vicious than the last. It will take a superhuman effort to get this bill passed. It all depends on how much pressure the unions can bring to bear on Congress. If they get sidetracked or bogged down, they'll lose, for sure. They must stay focused.

In the last few weeks, the rhetoric has gotten more and more incendiary. Here's a typical anti-EFCA posting in the Kansas City Star by Larry Marsh :

"The United States Congress is considering, in effect, denying workers the right to a secret ballot in union certification voting under the so-called Employee Free Choice Act (EFCA)...This is no doubt good news to Mr. Mugabe in Zimbabwe and General Than Shwe in Myanmar.

Vladimir Putin in Russia will be glad to know that the United States Congress does not consider the secret ballot to be essential to democracy.

The Chinese government will now have a way to get foreigners to stop meddling in its affairs. With "open" "free-choice" voting, it can become a western-style "democracy."

It is a shameful day in America when the United States Congress even considers legislation to take away a worker's right to the secret ballot.

If we let the secret ballot go by the wayside, what will be next -- the Free Speech Choice Act (FSCA)?"

"Mugabe, General Than Shwe, Putin?"

Does Marsh really think he can change hearts and minds with type of claptrap? Public relations is a means of shaping opinion through perception management, not hitting people over the head with a sledgehammer. Apparently, the desperation is so overpowering that discretion has been abandoned altogether. And it's easy to see why. According to a new survey, more than half of Americans have already made up their minds on the issue. They like the idea of making it easier to join unions. Here's the story from Gallup:

"A new Gallup Poll finds just over half of Americans, 53%, favoring a new law that would make it easier for labor unions to organize workers; 39% oppose it. This is a key issue at stake with the Employee Free Choice Act now being considered in Congress.

The poll reveals sharply differing reactions to the issue within the general public according to political orientation. Most Democrats (70%) say they would favor a law that facilitates union organizing, while a majority of Republicans (60%) say they would oppose it. Independents lean in favor of such a law, 52% vs. 41%.

Previous Gallup polling has shown that Americans are fundamentally sympathetic to labor unions, and these underlying attitudes are no doubt reflected in their general support for legislation characterized as making it easier for workers to unionize. For example, Gallup's annual polling on workplace issues, conducted each August, has found consistently high approval of labor unions in recent years, including a 59% approval rating last summer. The current level of support for a new law facilitating more union membership -- 53% in favor -- is only slightly less favorable to unions. (Majority Receptive to Law Making Union Organizing Easier, Lydia Saad, Gallup)

There it is in black and white. The public hasn't been hoodwinked by big business's saturation campaign. The majority still supports unions and think it should be easier to join. In fact, there would probably be even greater support if they knew how much money was being spent to torpedo the EFCA. According to Cleveland Indy Media Center:

"Powerful Corporate Front Groups... are carrying out one of the biggest Anti-Union Busting campaigns in history, hoping to wrench public opinion in their direction and spread misinformation about the Employee Free Choice Act...Several anti-union Corporate Front Groups plan to collectively spend almost $100 million in the next year against the bill and those who support it. The breakdown is as follows (from the National Journal):

Chamber of Commerce: $20-30 million

Coalition for a Democratic Workplace: $30 million

Employee Freedom Action Committee: $30 million

Freedom's Watch: $30 million (from one anti-union contributor)

Center for Union Facts: unknown, but in the millions (

And this, from the Wall Street Journal:

"Pro-business organizations have spent millions on ads in key states in the past year. The Center for Union Facts ran $20 million in ads in 2008 against the bill." (Unionizing Fight Focuses on Three States", Kris Maher, Wall Street Journal)

The most zealous opponent of the EFCA has been Murdock's Wall Street Journal. The WSJ's biggest fear is that Obama might heed the call of his progressive constituents and lead the country in the direction of what the Journal derisively calls "The European Model", which features higher wages, protection against pay discrimination, and better health benefits.

Again, the Wall Street Journal:

"In Euro-terms, a "social market economy" offers state-provided health care, generous unemployment benefits, long holidays, various job protections and a prominent role for unions. Sounds good, you might say. But consider that the Europeans have spent the past two decades struggling to wean themselves off entitlements that are a huge drain on the overall economy. These welfare states leech off the productive parts of the economy through onerous taxes, debt and regulations.

Everyone ends up paying. Consider just one measure: the tax wedge, the share of labor costs that never reaches an employee's wallet but goes straight to state coffers. In Belgium, Germany and France, the tax wedge is around 50%; in America, it was 30% in 2007. (See the nearby table.) Not coincidentally, salaries and job opportunities are better here, especially for the least-skilled. The Obama budget, universal health care and now the union-revival effort known as the Employee Free Choice Act would steer America toward the Continent. That's good for the unions, but not for the public good.....The 2009 debate over Big Labor's agenda is about whether we want to continue to be a dynamic, entrepreneurial nation, or slip into unionized decline." (Labor's European model, Wall Street Journal)

What nonsense. Anyone who's spent time in Europe knows that workers are a zillion-times better off than their American counterparts. Who wouldn't want 6 weeks paid vacation per year and a secure retirement? Or should we assume that the free market loonies who oppose EFCA would rather stay true to the principles of "scorched earth" capitalism and accept less pay, crappier benefits and zero health care, just so the Bernie Madoffs in the luxury suites can indulge their girlfriends with a few more baubles from Tiffanys?

The anti-EFCA coalition has tried a number of strategies, but has yet to settle on any one course of action. Sen. John Thune blurted out one of the talking points earlier in the week in an interview with the Washington Post. Thune said, "In a time when we have an economy that's already struggling, we can't put more burdensome regulations on employers. This is a job killer for our economy when we really don't need it."

This sounds reasonable, but in fact, Thune's got it all wrong. As Sen. Tom Harkin points out in the same article:

"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20 percent unemployment. So tell me again why we can't do this in a recession?...This is the time to do it. This is exactly the time we should be insisting on a fairer playing field for people to organize themselves."

Andrew Stern, president of the Service Employees International Union adds this:

"The truth is that Franklin Roosevelt passed those laws (The Wagner Act) under similar circumstances, and from 1945 to 1974, we had an era where workers' wages and productivity was joined together...It was probably the most tested economic stimulus of any public policy that has worked for us." (Alec MacGillis, Washington Post, Labor Union Bill Raises Broader Capitalism Issues)

Stern makes a good point. The reason the economy is contracting so violently, is that for the last decade, growth in the US has depended almost exclusively on debt-fueled consumer spending and Wall Street alchemy. When the credit bubble finally burst in late 2006, the over-leveraged financial institutions were forced reduce their debts quickly which drove down prices on all asset classes and sent unemployment into the stratosphere. This never would have happened if workers wages had kept pace with production. Any downturn would have meant a short period of retrenchment, rather than a precipitous decline from the unwinding of massive leverage. The surest path to sustainable growth is a well paid workforce. That, and that alone, is the secret for maintaining strong consumer demand and, thus, financial stability. Unions are an essential part of that mix because they create internal demand for goods and services through the efficient distribution of capital. If workers cannot afford the things they make, then the economy becomes increasingly dependent on exports, which means that it is more vulnerable to fluctuations in foreign markets.

Here's a passage from Henry C.K. Liu's "The Global Economy in Transition" that sheds a little light on this topic:

"The theory of rising wages asserts that employers should understand that rising wages are the only venue of assuring strong demand for their products, supported by the theory of technology-driven productivity increases, and the broad-based ownership of securities to spread wealth. The historical data show that the largest average increases in purchasing power have taken place at recession times when employers and bankers tried their best to keep wages down, but the stickiness of wages made wage deflation slower that price deflation, as in the 1920-22 depression. The result was that when full employment returned in 1923, US workers had higher purchasing power than they had in 1920. But average manufacturing worker's yearly income decreased by $55 between 1923 and 1928, a miner's income by $187. Falling wages amid prosperity was a major structural cause, albeit little noticed, of the 1929 crash. If wages had been higher, equity prices would not have risen as much, thus dampening the speculative fever. Wealth effects from the speculative boom made low wages tolerable and caused a corresponding rise in debt without altering prudential debt to equity ratios. But when the speculative bubble burst, debt-equity ratios skyrocketed and there were insufficient wage levels to sustain consumption. Similar conditions appear to be facing the US economy now.

After the 1929 crash, the economic downward spiral was caused mainly by falling wages. Despite all promises of maintaining production, goods could not be sold as fast as they were produced because of a collapse of income due to layoffs and wage reductions. Globalization in the past two decades temporarily kept US purchasing power increasing despite a slow growth of domestic wages. This resulted from still lower wages in the emerging markets. Now the world is awash with overcapacity in relations to low demand caused by insufficient wage levels. ("The Global Economy in Transition", Henry C.K. Liu)

Unions have steadily lost ground since the 1950s when they represented 32 percent of the total workforce in the US. Today, union membership has dwindled to less than 8 percent, which is too small to have any real impact on policy. Even if we ignore the appalling lack of political power or the growing wealth gap, which is greater than any time since the Gilded Age, the same fundamental problem still arises: How does one sustain aggregate demand if wages stay stagnant? The answer is; it can't be done, which is why labor must have a bigger place at the table to level the playingfield. The only way to build a strong, stable economy, and avoid the boom and bust cycles brought on by speculative bubbles, is by empowering workers and making sure they are fairly compensated for their labor. The Employee Free Choice Act is an important first step in that direction.

House approves bill to tax AIG bonuses at 90%

House approves bill to tax AIG bonuses at 90%

By Rex Nutting

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Responding to the anger about bonuses paid to AIG traders, the House approved a bill Thursday that would impose a punitive 90% tax on bonuses paid by American International Group Inc. and other financial companies that receive federal help. The vote was 328-93. The bill would apply to bonuses of people making more than $250,000 a year, and would apply only to payments from companies getting more than $5 billion from the federal government.

Auto parts suppliers to get $5 billion in taxpayer bailout

Auto suppliers to get $5 billion in aid


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The Treasury Department will pump up to $5 billion in financing into troubled auto parts suppliers to prevent an auto industry collapse that could undermine the government's work to restructure General Motors and Chrysler.

The funds, announced Thursday, will be made available from the government's Troubled Assets Relief Program, or TARP, in a financial entity similar to a revolving credit. Large suppliers would be eligible for financing auto parts they have shipped to the Detroit carmakers but have not yet received payment.

U.S. automakers — General Motors Corp., Chrysler LLC and Ford Motor Co. — will have the option of using the program and designate the companies that need financing, giving them a large role in determining which parts suppliers will survive.

GM and Chrysler, which have received $17.4 billion in government loans, said they would use the program. Ford, which has not sought the government aid, said in a statement it would not participate "as we remain viable and expect no issue with continued payments to our suppliers."

The action was intended to help with the cash flow needs and stability of distressed auto suppliers, whose collapse could lead to the disruption of car production by the Big Three and inflict more damage on the economy.

Members of the auto task force, who spoke on condition of anonymity because their discussions have been private, said the financing was a first step in restructuring the car industry. They expect to provide a framework for revamping GM and Chrysler by March 31.

"The program will provide supply companies with much needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need," Treasury Secretary Timothy Geithner said in a statement.

Officials said foreign automakers with U.S. operations would not be eligible to use the so-called "supplier support program."

Lawmakers from Michigan and other states with auto manufacturing cheered the announcement, but it was met with resistance from some Republicans who said the TARP funding should not be used to prop up manufacturers.

"The administration needs to work with Congress instead of running the country by executive fiat without checks and balances on the use of taxpayer money," said Sen. Bob Corker, R-Tenn.

Auto suppliers have sought up to $25 billion to stabilize the beleaguered U.S. auto industry and have met with members of President Barack Obama's auto industry panel, which is trying to restructure GM and Chrysler. The two companies want an additional $21.6 billion in aid.

Neil De Koker, president of the Original Equipment Suppliers Association, said he was "very optimistic that this will provide many companies with the relief they need."

But the program was not intended to save company in the supply chain. Treasury officials said certain suppliers would still fail as part of the natural business cycle and analysts expect some suppliers to collapse because the industry has too much manufacturing capacity for current sales levels.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said the financing will likely be used for suppliers that make complex engineered components that are made by few companies. Suppliers that manufacture body side moldings and other parts that can be duplicated elsewhere will not likely receive the aid, he said.

In a statement, General Motors said the program could "reduce the risk of vehicle production disruptions that would occur if auto suppliers were unable to produce due to lack of access to working capital liquidity." Chrysler spokeswoman Shawn Morgan declined to comment.

Suppliers who ship parts to car companies typically receive payment for those shipments about 45 to 60 days later. Under normal credit conditions, suppliers sell or borrow against those commitments to pay their workers and fund their operations.

But banks have been unwilling to extend credit to suppliers because of the uncertainty of the auto companies, so the government entity will help parts suppliers access financing.

Under the program, auto companies will be required to pay a 5 percent fee of up to $250 million to join. Suppliers will have to agree to terms of the government-backed protection and pay a small fee to participate. Suppliers will be able to sell parts that they have not yet been paid for into the government program at a modest discount.

Parts makers employ about 600,000 people nationwide and many of the nation's roughly 5,000 suppliers have been cash-strapped for several years as GM, Chrysler and Ford have reduced car and truck production because of falling sales. Their outlook has deteriorated with the economic downturn, a steep decline in auto sales and prolonged car plant shutdowns in December, January and part of February.

American Axle & Manufacturing Holdings Inc., Visteon Corp. and Lear Corp. have all warned in recent weeks that they could be forced to file for bankruptcy protection if business didn't pick up soon.

Meanwhile, Delphi Corp., GM's former parts division, is still trying to restructure itself after more than three years under Chapter 11 bankruptcy protection.

In all, auto suppliers have said that more than 40 major suppliers have filed for Chapter 11 bankruptcy protection and more could collapse if the government does not act.

Parts suppliers told Treasury that the estimated March 2009 payments to suppliers from the Big Three automakers are $2.4 billion, compared with an average of $8.4 billion per month in the fourth quarter of 2008, threatening their industry.

"This aid comes at a critical time for this vital industry," said Rep. John Dingell, D-Mich. "I am pleased the program will be able to keep the doors open and lines operating at many U.S. auto suppliers."

13 firms receiving bailouts owe back taxes

13 firms receiving bailouts owe back taxes

Rep. John Lewis: 'This is shameful. It is a disgrace'

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At least 13 companies receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.

Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two companies owe more than $100 million apiece.

“This is shameful. It is a disgrace,” said Lewis. “We are going to get to the bottom of what is going on here.”

The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 companies receiving the most money, Lewis said as he opened a hearing on the issue.

The committee said it could not legally release the names of the companies owing taxes. It said one recipient of bailout money had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.

“If we looked at all 470 recipients, how much would they owe?” Lewis asked.

Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every one of them.

“We’re not done,” he said.

Banks and other companies receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, told the hearing that if an executive signed a contract knowing that information about unpaid taxes was false, “that would potentially be a crime.” He said his office will look to see if crimes were committed.

No one from the Treasury Department appeared at Thursday’s hearing. Lewis said he asked Treasury officials for a private briefing on their efforts to uncover unpaid taxes, as well as someone to testify at Thursday’s hearing.

“They said no one was available,” Lewis said in an interview.

The Internal Revenue Service “has every expectation that these amounts will be paid and is committed to collect every dollar of taxes that are owed,” IRS spokesman Frank Keith said in a statement. “The IRS recognizes that those entities that receive taxpayer support have a special obligation to pay their taxes, and these taxpayer accounts will remain closely monitored by the IRS to ensure that the full amount of taxes due are paid.”

Keith noted there could be many reasons why a taxpayer has an unpaid balance. For example, taxpayers could be challenging their bills.

“In and of itself, this does not signal any intent not to pay,” Keith said.

Treasury Secretary Timothy Geithner is already under fire on Capitol Hill for not preventing $165 million in bonuses from being paid to employees at troubled insurance giant AIG.

People will ask, said Rep. Artur Davis, D-Ala., why there are “large companies getting taxpayer dollars, making false representations, and we can’t even name them, much less make them pay the money back, much less prosecute them.”

Davis continued: “Will they get their day on a billboard, hopefully?”

“Absolutely,” said Barofsky. If someone lied, he said, “They need to be prosecuted.”

Davis announced Thursday evening that he would introduce a bill requiring the IRS to certify that companies are current in their federal taxes to qualify for federal bailout money.

The revelation is sure to spark more criticism on Capitol Hill, where the House is expected to vote Thursday on a bill that would impose steep taxes on employee bonuses at AIG and other companies that have received bailout money.

To date, the Troubled Asset Relief Program, or TARP, has paid out more than $300 billion to private companies, with billions more on the way.

Citigroup May Spend $10 Million for Executive Suite

Citigroup May Spend $10 Million for Executive Suite (Update3)

By Erik Schatzker

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Citigroup Inc. plans to spend about $10 million on new offices for Chief Executive Officer Vikram Pandit and his lieutenants, after the U.S. government injected $45 billion of cash into the bank.

Affidavits filed with New York’s Department of Buildings show Citigroup expects to pay at least $3.2 million for basic construction such as wall removal, plumbing and fire safety. By the time architect’s fees and expenses such as furniture are added, the tally for the offices at the bank’s Park Avenue headquarters will be at least three times as high, according to a person familiar with the project who declined to be identified because he’s not authorized to comment. Citigroup said the project will help it save money over time.

Pandit, criticized by lawmakers over Citigroup’s use of U.S. bailout capital, canceled an order for a company jet in January and told Congress on Feb. 11 that, “I get the new reality and I’ll make sure Citi gets it as well.” Of the biggest U.S. banks that received federal aid, only Citigroup has turned to the government three times for rescue. The company, once the biggest U.S. bank by assets and market value, has agreed to limit perks and restrict executive pay.

“In this environment, it absolutely sends the wrong message,” said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, referring to the office renovations. “Timing in life is everything.”

Cost Savings

Citigroup said in a statement that the construction is part of a global space-saving initiative. The bank plans to reduce its office space worldwide by more than 10 million square feet to help save $15 billion over the next few years, according to a company official who declined to be identified. Pandit has already slashed Citigroup’s dividend and sold units to free up capital. He said in November that he would cut 52,000 jobs, about 15 percent of the firm’s headcount as of Sept. 30.

“Senior executives in our corporate headquarters are moving from two floors to smaller, simpler offices on a single floor,” the company’s statement said. “Based on estimates made when the project was initiated, we expect to generate savings in the next few years well in excess of the project costs.”

The company said in a statement today that consolidating its office space will save $20 million over the life of its lease. Citigroup began planning the renovation last June and obtained demolition permits in September, before the bank received any bailout funds, said a person briefed on the process.

Sub-Zero Fridge

Some city approvals for the project weren’t issued until after Citigroup got its first $25 billion from the U.S. in October, under the Troubled Asset Relief Program, or TARP, according to records available at the New York Department of Buildings.

The new executive suite will be located on the second floor of Citigroup’s office on 399 Park Avenue, a floor below the one Pandit, 52, inherited when he took over as CEO from Charles “Chuck” Prince in December 2007. The second floor previously contained offices, which are being demolished, as well as boardrooms and executive-dining quarters. The floor being vacated will be subleased, Citigroup said in its statement.

Plans and instructions for the bank’s contractors, on file with the city, specify the installation of at least one Sub-Zero Inc. refrigerator and icemaker in the renovated space, along with “premium grade” millwork and Madico Inc. “Safety Shield 800” blast-proof window film. The project encompasses 17 private offices, each with space for administrative assistants, as well as two conference rooms and open areas with “soft seating,” according to the plans.

‘Parallel Reality’

“Maybe there’s some rational argument” for the remodeling, said Senator Robert Menendez, a New Jersey Democrat and a member of the Senate Banking Committee. “But I think our friends in the banking and financial universe have to understand that they have to stop living in an alternate parallel reality.” Given the nation’s economic challenges, “people simply don’t understand those types of expenditures,” he said.

Citigroup hired New York-based Conant Architects, whose Web site says it designed the bank’s offices in downtown and midtown Manhattan. The plans also list acoustical, telecommunications and lighting consultants, as well as engineers.

Lawmakers have criticized banks over the way they’re using TARP funds. Democrats led by House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd say more of the money should be going to consumer and small-business loans.

Liddy to Thain

American International Group Inc. CEO Edward Liddy was lambasted by lawmakers at a hearing in Washington yesterday for allowing the insurer to allocate $165 million for bonuses to employees after taking government loans.

President Barack Obama spoke out against inappropriate spending at banks on Jan. 23, following reports that former Merrill Lynch & Co. CEO John Thain incurred more than $1 million of expenses to redecorate his personal office at the New York- based securities firm. Thain was ousted the same month, after Bank of America Corp. completed its takeover of Merrill.

Citigroup fell 48 cents, or 16 percent, to $2.60 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 61 percent this year.

Update - Dollar, Gold, Oil

Update - Dollar, Gold, Oil

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These are historic, scary times.

After their FOMC meeting, the Fed announced they will print money and flood the financial system with a jaw dropping - $1.2 trillion.

There are probably many reasons why the Fed has resorted to these desperate measures:

- This past Sunday, 60 Minutes had an interview with Fed Chairman Bernanke. At the end of the interview he was asked what is the biggest risk to the economy, he responded by saying - will lawmakers have the political will to rescue the economy?

The Fed got part of their answer when they saw lawmaker’s “outrage” over AIG bonuses. It will be hard for lawmakers to fork over more taxpayer money to fix our financial system.

This means the Fed will have to pick up the slack.

-The Treasury has not communicated its long-term plan to fix our financial system.

This means the Fed will have to pick up the slack.

-In a statement yesterday they expressed their concern about “increasing economic slack here and abroad”

At this point they are much more concerned with deflation and a prolonged deep recession.

Many sectors of the markets expressed differing viewpoints of flooding the world with U.S. dollars. It certainly scared our trading partners and holders of dollars.

Here is a current chart:

[Image 1]

As one would expect, the dollar got slammed.

Global investors are not only concerned what the U.S. is doing, but there is a rightful concern that other central banks will follow, also debasing their currencies.


After another pullback to the $900 dollar area, prices quickly recovered after the Fed announcement.

Here is a current chart for gold:

[Image 2]

Investment and speculative dollars continue to be attracted to the safe haven of gold.


With the potential of all this liquidity, investors are also seeking other inflation hedges like oil.

Here is a current chart for oil

[Image 3]

After shunning oil and energy stocks for the past 6 months, investors have moved out of the dollar and into inflation hedges like gold and oil.

The Secret War Against American Workers

The Other War on Workers

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A.I.G. is, of course, back in the news -- and how! Not that it was ever too far off the radar screen. Having received yet one more massive infusion of federal tax dollars, as everyone from here to hell now knows, the insurance giant handed out yet another round of lucrative bonuses. Over the last year, company management has doled out about $1 billion in such payments, roughly half to employees in the financial products subsidiary that concocted the type of high-risk, highly-leveraged deals in derivatives which helped send the company, and Wall Street, and most of the rest of us into steep decline last year.

Bonuses went to 418 employees, 73 "retention bonuses" of $1 million or more each to members of that subsidiary (including 11 who have left the firm) to help "unravel" the deals they created. How's that for an A.I.G. mea culpa to the taxpayers and the newly unemployed who officially "own" 80% of the company (which might well be 80% of next to nothing)?

Meanwhile, there's been a drumbeat of headlines about mass layoffs of public employees. In California, more than 26,000 public school teachers were given notice last Friday that they might not have jobs next year. An additional 15,000 school bus drivers, janitors, and administrators might be in the same boat. Unions turned members out across the state for "Pink Slip Friday" protests.

In Michigan, Pontiac's school board voted to lay off every one of the district's more than 600 employees. In both cases, officials claim that not all those who received notices will, in fact, be laid off, yet such notifications speak to the enormity of the problem that local and state governments face. Nobody, of course, asks schoolteachers and bus drivers to stay on (with lucrative bonuses) to unravel the crises they created. Oh, maybe that's because, unlike A.I.G.'s traders, they didn't do anything wrong.

The insurance giant isn't the only company feeling its oats in bad times, however. As journalist Robert Eshelman suggests below, while mass layoffs are grabbing headlines -- and for good reason -- businesses may have opened up a new front in the war on labor, hiding behind horrific economic news the way an advancing army might use a smoke screen.

How big is the problem? Well, we just don't know. As newspapers continue to disappear or scale back -- the Washington Post recently did in its stand-alone business section -- the reporters that remain on the economic beat may not be paying enough attention to a war against workers that lurks just below the surface of the headlines. Tom

The Secret War Against American Workers

The Unemployment Story No One Notices
By Robert S. Eshelman

Juanita Borden, 39 and jobless, patiently waits as her résumé methodically works its way, line by line, through a fax machine at a state-run job center in downtown Philadelphia. Lying open before her on a round conference table is a neatly organized folder. "This is my résumé and everywhere I've been faxing to. This is how I keep track of what day I've sent them on, so I can call and check back," she says, leafing through pages of fax cover sheets. "I usually give five business days before I inquire whether or not they've received it and whether or not they're interested."

Juanita was fired last October, when her employer found out that her driver's license -- a job requirement -- had expired. "It was only a matter of twenty-six dollars. I was under the impression that it expired in November of '08, but it was actually November of '07, and because I hadn't been driving I wasn't aware of it." The one occasion on which she was required to drive, though, she couldn't, and that was all her employer needed to fire her for failing to fulfill her employment responsibilities. She has since renewed her license and says with an air of futility, "I'd like to have my job back if they would give it to me."

She hasn't been asked back and, despite her persistent efforts, she hasn't received a single call from a prospective employer either. "The good thing," she says, remaining remarkably buoyant despite her misfortune, "is that usually when I interview I get the job. So... I'm hoping for an interview soon." Until then, her carefully managed folder serves as a small measure of control over an otherwise steady drift into poverty and homelessness.

Juanita isn't the only one at this job center on the precipice of acute need. And she isn't alone in relating a story about being fired for what would seem to many a frivolous reason. Chris Topher, 25 and making his first visit here, was axed in March of last year. The telecommunications company he had been working for sent him packing when, as he tells it, he installed cable equipment a customer hadn't ordered. It didn't matter that the mistake was on the work order Chris was given. "It was the best job I had since I graduated high school and I've had a few: Turnpike Commission, working in a Senator's office. I've had some nice jobs, but that one, I enjoyed it the most."

And there was good reason to enjoy it. Chris pulled down $1,200-1,300 every two weeks in addition to receiving a full benefits package. He thought of contesting his termination, but at the time it looked like a long, uphill battle that he wasn't eager to take on. It's a fight that, in hindsight, he thinks he could have won and that his employer probably knew he would win as well. "And that's why I believe I was approved by my employer for unemployment," he says.

Under unemployment eligibility requirements, an employer must certify whether an employee committed a "fault" on the job and was therefore terminated. If an employer indicates that no fault was committed and the employee meets several other requirements, including being physically able to work, states grant an unemployment claim. In other words, Chris's former employer granted him a small concession, while otherwise turning his life upside down amid the worst job market since 1983.

"Unemployment is the pits pretty much," says Chris, whose unemployment compensation is significantly less than half what he made as a cable installer. Still, he's better off than Juanita, who has applied for unemployment twice and been denied both times. She is now appealing, but her employer is conceding nothing. In a recent arbitration hearing, Juanita says, her former supervisor claimed that, if she had only told them about her expired license, they would have allowed her renewal time. If only.

Now, Juanita lives with her brother and his wife, but they, too, have financial problems. "My brother is working part time and it's driving him crazy, because it's causing money problems between him and his wife," she explains. "And with me being there," she hesitates, "'s a little constrained."

Ratcheting Up the Fear

The mainstream media has generally sketched a picture of a labor market in which, under the pressure of an economic meltdown, workers succumb to two types of downsizing. In one, a fierce recession forces businesses, desperate to cut costs in terrible times, to lay off workers. They, in turn, face grim prospects for gainful employment elsewhere. In a kinder, gentler version of the same, employers, desperate to cut costs in terrible times, offer -- or sometimes force workers to take -- "furloughs," salary cuts, union give-backs, four-day work weeks, or un-paid holidays rather than axing large numbers of them.

In this case, tough as it may be, workers benefit, retaining at least some of their income, while businesses wait out the recession. In both cases, businesses are largely depicted as unenthusiastic dispensers of pink-slips. Managers and bosses are just facing up to an unpalatable reality and unavoidable pressures imposed on them by the worst economic moment in recent memory.

A visit to a job center is hardly a scientific survey. The experiences of Juanita and Chris, along with those of other unemployed people I spent time with while in Philadelphia, may be purely anecdotal evidence. But they do raise questions about a subject of no small importance, and it's not one you're likely to read about in your daily paper -- not yet anyway. If a deepening recession weighs down and threatens businesses, some of those businesses are undoubtedly also making convenient use of the times to do things they might have wanted to do, but were unable to do in better conditions.

In some cases, under the guise of "recession" pressure, they may be waging a secret war against their own workers, using even the most innocuous transgressions of work-place rules as the trigger for firings -- and so, of course, putting the fear of god into those who remain. In this way, company payrolls are not only being reduced by mass layoffs, but workers are being squeezed for ever greater productivity in return for lower wages, worse hours, and less benefits. The weapon of choice is the specter of unemployment, a kind of death by a thousand (or a million) cuts.

Companies stand to gain a lot these days from such small-scale but decisive actions. After all, they reap a double benefit. Not only do they pare down the size of their payroll, often without needing -- as in Juanita's case -- to consent to unemployment compensation, but they also contribute to a climate of intensifying fear. Workers who remain on the job are now not only on edge about lay-offs or scaled-back hours, but also know that a late return from a bathroom or lunch break might mean being shown the door, becoming another member of the legions of unemployed -- now at 12.5 million and rising fast.

This dynamic is, of course, hardly new. Countless critics of working conditions have written about it since the dawn of the industrial age. But at the moment, even as the latest unemployment figures make screaming headlines, this is a subject that seldom comes up. Consider, though, that in December, Wal-Mart, the world's largest retailer, settled 63 outstanding class-action lawsuits that alleged massive wage and hours violations. Fearing termination, Wal-Mart workers, according to their testimony in the lawsuits, labored through lunch breaks and past their scheduled hours for just above minimum wage pay, with little hope of getting enough hours to qualify for the company's health benefits.

As a condition of the settlement, Wal-Mart will pay out as much as $640 million to those workers. If corporations were able to exert such coercive power when the unemployment rate was around 5%, what can they do in a job market in which 14.8% of the population can't find adequate work?

In fact, the world's largest retailer is one of the few American corporations doing well in dark times. While retail sales slid almost everywhere, the company's same-store sales went up 5.1% in February (when compared with February 2008 sales). Yet, in that same month, it announced a move to "realign its corporate structure and reduce costs." It cut 700 to 800 jobs at its Wal-Mart and Sam's Club home offices, in effect acting no differently than any of the companies being battered by the deepening recession.

Free-Firing Zone

Rodney Green, a soft-spoken 52-year-old, comes to the job center three times a week to search on-line job listings. He describes his decades-long drift from full-time employee with benefits to marginalized temp-worker with no benefits and, finally, to the category of unemployed for an extended period.

From the late 1970s until the early 1990s, he worked for Bell Telecommunications, where he earned a good salary and full benefits. Since Bell laid him off, he's worked periodically as a forklift operator for various companies, getting temporary placements through an employment agency. Most recently, he earned $12 an hour working for a deli meat and artisanal cheese producer. No benefits were provided. A year's work, he explained, would mean a week's vacation, "but they don't keep you that long. They lay you off or rotate you into another job before then."

Today, as he's discovered, even such temp jobs are becoming scarce. "In the eighties, it wasn't as bad as it is now," he comments from the unemployment heartland of what, in 2009, is a deeply de-industrialized Philadelphia. "The city had jobs, but then the jobs moved to the suburbs. Now they're moving overseas. Back then, say, you applied for a job, maybe fifty others applied, too. Today, that same job, you're going to have hundreds -- I mean, a thousand for that one job. It's hard. It's depressing."

For the past year and a half, Rodney has been collecting unemployment periodically, and in that time, he hasn't landed a single interview. Recently, because the Bush administration finally acquiesced to grassroots and Congressional pressure to lengthen unemployment benefits, he received a thirteen-week extension, providing him a little cushion (unlike equally interview-less Juanita). "That helped me a lot. Times are hard right now. I hear there are over four million people collecting unemployment. That's kind of high."

If Juanita and Chris are casualties of the intensified war of attrition businesses are quietly waging on workers, Rodney represents a deeper unraveling of jobs and job security, thanks to a globalized economy in which the hard-pressed workers in this country are pitted against cheaper labor pools in Latin America, South Asia, China, and even the American South. In such a job environment, what is one to do?

Someone I interviewed prior to my job center visit described her reaction when she heard that her company had recently closed a plant in the Midwest: "The first thing I thought, and I felt bad for thinking it," she recalled, somewhat sheepishly, "was that means more work for us -- at least for the time being."

Her comment speaks volumes, as does her request not to be identified. Who needs union busters, patrolling shop-stewards, or legions of high-paid lawyers fighting wage and hours claims when a worker is so anxious about job security that she responds positively to the laying off of those she imagines as potential competitors? When employees police their own behavior for fear of the axe -- monitoring their time checking email or using the bathroom -- bad times distinctly have an upside for management.

In this job environment, it's easy to turn not just on others, but on yourself. Reflecting on what she will do without a job and unemployment benefits, Juanita wonders if the problem isn't the economy, but the choices she made in life. "I left home when I was sixteen and lived in my own places, had my children, and got married," she says nervously, continually folding and refolding a local newspaper. "I should have gone to school and did a lot more things to make myself more marketable earlier in life. Now I'm left having to start over again."

A look at corporate opposition to the Employee Free Choice Actsurveying the business elite's response to the Act, Wall Street Journal op-ed columnist Thomas Frank wrote: "Card check is about power. Management has it, workers don't, and business doesn't want that to change." (EFCA), whose passage in Congress is a central demand of organized labor, offers a glimpse of how persistently companies seek to disadvantage their workers. EFCA would allow workers to form a union when a majority of them sign union cards in a given workplace. "Card check," as it is frequently called, enables them to organize unions without the need for an election. In a November column

In Frank's estimation, the current struggle over EFCA is the latest incarnation of a constantly evolving struggle between workers and employers. For the under- or unemployed crowding into this center in Philadelphia, the current recession isn't a time-out from the normal struggle, it's more like a new open season for corporate attacks on them.

Right now, for Juanita, Chris, and others at this center, there are actually two wars going on, and only one of them seems to have caught the attention of labor and business reporters. The headlines about the first read: Desperate Companies Forced to Cut Jobs. But many here seem to be experiencing a second war in which businesses are using bad times to act in ways they couldn't in the best of times.

Shouldn't reporters be heading out in search of this one-sided, covert struggle? Isn't it time for the second business war of our moment to make a few headlines of its own?

A Disturbing D.C. Whodunit

A Disturbing D.C. Whodunit [Update II]

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UPDATE II, 3-19, 4:40pm (EST):

Tim Geithner has now confirmed Chris Dodd's contention that the Treasury Department had insisted he include a loophole in the stimulus bill that allowed AIG to pay out bonuses, despite receiving bailout money. Still no word, however, from Geithner -- or anyone else in the administration -- about the killing of Sen. Wyden's bonus amendment that is the subject of this post. But the circumstantial evidence pointing to Obama's economic team is mounting.

UPDATE, 3-18, 6:35pm (EST):

Appearing on CNN today, Sen. Chris Dodd, chairman of the Senate Banking Committee, said that officials at the Treasury Department had insisted that he modify a clause he had inserted into the stimulus bill that prohibited bonuses from being issued by bailed-out companies. This mirrors the legislative slaying of the similarly intended amendment co-sponsored by Sen. Wyden I write about below. The culprit behind the killing of the Wyden provision remains unsolved -- but Dodd fingering Treasury adds weight to Wyden's sense that members of Obama's economic team were behind the elimination of his amendment. And, in both cases, major decisions involving taxpayer money were carried out in a way that flies not in the face of fairness, but in the face of the administration's promises of transparency and accountability.

Original Post:

The mystery over who killed a provision in the stimulus package that would have curtailed bonuses at bailed out companies is a disturbing D.C. whodunit. But even more disturbing is what it reveals about how our government is run.

"It is the ultimate indictment of what Washington has become," Sen. Ron Wyden, co-sponsor of the eliminated provision, told me. "It's a place where, again and again, the public interest is deep-sixed behind closed doors and without any fingerprints."

For those of you who might have missed Sam Stein's original story, here it is in a nutshell:

Building on public outrage and presidential denunciations of executives at bailed out companies getting bonuses, Wyden and his Republican colleague, Sen. Olympia Snowe, crafted a provision in the stimulus bill that would have forced bailout recipients to cap their bonuses at $100,000 (any amount above that would be taxed at 35 percent).

According to Wyden, he "spent hours on the Senate floor," working to get the bipartisan amendment passed. He succeeded -- not a single Senator voted against the provision. "But," says Wyden, "it died in conference."

So who killed it? Wyden doesn't know.

Think about that for a second. We live in a country where one of the 100 most powerful people in government, the cosponsor of the amendment in question, has no clue how it got removed in the Senate-House conference committee -- or if it was taken out of the legislation even before it made it into conference.

And, so far, no one in the administration of a president who promised that transparency would be a "touchstone" of his presidency has demanded that whoever killed the provision step forward and own up to it.

It took Andrew Cuomo, using his authority as New York Attorney General, to get us at least some of the details about the AIG bonuses.

It's time for the White House to do the same, using its authority to uncover who removed the Wyden-Snowe provision from the stimulus bill.

"I pulled out all the stops," Wyden told me, "to convince the president's economic team that this amendment was vital to the White House for two reasons: 1) the president had spoken out against bonuses; 2) fury about bonuses would kneecap confidence in the president's entire economic policy."

But no one inside the president's economic team was in favor of it. As Wyden put it: "If the White House economic team had made it clear that this was important, this provision would never have been removed. I don't believe the president has been well-served on the bonus issue by his economic team."

So who asked for the amendment to be removed? Jason Furman? Peter Orszag? Tim Geithner? Larry Summers?

Such a move would certainly be consistent with the positions put forth by Summers who, as late as yesterday -- even contradicting the president -- continued to argue that attempting to stop the AIG bonuses would have "put the whole economy at risk."

Have you noticed how, whenever there is a serious effort to put an end to business-as-usual, we are warned by insiders like Paulson and Summers that the result will be the end of civilization?

"This lack of transparency -- and the lack of accountability that results -- is one of the most significant threats to our democracy," Wyden told me. "This is not at all how the civics books tell us the system is suppose to work. What we have here is a prime example of Washington deny, defer, delay."

He's right. We deserve better. Let's make this D.C. mystery the cause célèbre it deserves to be. Let's demand that the White House live up to its vows of transparency.

If you have any information about who killed the Wyden-Snowe bonus amendment, please let us know.

Pentagon drafts border plan as Mexico hits US protectionism

Pentagon drafts border plan as Mexico hits US protectionism

By Bill Van Auken

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Relations between the US and Mexico deteriorated further this week as the Mexican government imposed a set of tariff increases against some 90 US imports in retaliation for the Obama administration signing legislation that ended a pilot program allowing Mexican long-haul trucks to operate on US highways.

The trade dispute has erupted in the midst of growing tensions between the two countries over the increasingly militarized drug war being waged by the Mexican government against narcotics traffickers. The Pentagon's US Joint Forces Command issued a recent report comparing Mexico to Pakistan as potential "failed states" facing the danger of a "rapid and sudden collapse." The State Department, meanwhile, has issued a travelers' warning in response to the drug violence, which has claimed 1,000 lives so far this year.

While for the past year Washington has been committed to providing Mexico with some $1.4 billion in military hardware and "technical assistance" under the so-called Merida Initiative, which is modeled largely on the counterinsurgency Plan Colombia, top US officials have signaled that the American military is preparing to become much more directly involved.

In testimony before the Senate Armed Services Committee on Tuesday, Gen. Gene Renuart, head of the US Northern Command, revealed that the Pentagon is reviewing plans to send US troops to the Mexican border.

"Certainly, there may be a need for additional manpower," Renuart told the Senate panel. "Whether that is best suited or best provided by National Guard or additional law enforcement agencies, I think, this planning team will really lead us to." A comprehensive strategy proposal should be ready within a week, he added.

Renuart told the senators that the US military is already operating on the border and employing "techniques developed in the war zones in Iraq and Afghanistan." These methods include the use of piloted spy planes and drones.

Last week, in an interview with regional newspapers, President Barack Obama also raised the possibility of deploying US military forces on the border. "We're going to examine whether and if National Guard deployments would make sense and under what circumstances they would make sense," said Obama.

The growing collaboration between the Pentagon and the Mexican military, to which Renuart referred in his testimony, is undoubtedly having a substantial effect in the increasing and unprecedented militarization of Mexico under President Felipe Calderón.

As the Spanish daily El País reported this week, not only has the military been used to patrol the streets, arrest civilians and engage in armed confrontations with drug gangs, but it has also provided up to 80 percent of the personnel in the country's federal police force, made up largely of soldiers who have changed uniforms.

The paper also reported that Mexican political parties are vetting their candidates with the country's defense department's intelligence unit to ensure that they are not running individuals tainted by drug ties. Moreover, the military command is pushing for a law that will grant the armed forces impunity, giving them a blanket protection against any legal actions brought by their civilian victims in Mexico.

This militarization has taken its most visible form in Ciudad Juarez, across the border from El Paso, Texas, where some 7,000 soldiers and 2,000 federal police have been deployed to patrol the city. On Monday, the government installed a retired Mexican army general as head of public safety in the border city and a retired colonel as head of the city's police force. Meanwhile, an active-duty military officer has been assigned to Ciudad Juarez's Mayor José Reyes Ferriz as his "security adviser." The city has been placed effectively under martial law, ringed by roadblocks and with civilians subjected to constant stops and searches.

It is in the context of this explosive situation that Washington has unleashed the threat of trade war between the US and Mexico, with the move by the Democratic-led Congress and the Obama administration to scrap a program allowing a limited number of Mexican truckers to operate on US soil.

The program was initiated in 2007 following a 12-year effort by the Mexican government to convince Washington to comply with the terms of the North American Free Trade Agreement. Under the NAFTA agreement, Mexican trucks were to be allowed to travel anywhere in four border states—Arizona, California, New Mexico, Texas—by December 1995, and to travel freely throughout the US by 2000.

Under pressure from the Teamsters union bureaucracy and the US trucking industry, the Clinton administration violated the agreement, refusing to allow Mexican trucks to deliver goods beyond a 30-mile-wide commercial zone on the US border, where they would have to be transferred to American long-haul trucks to reach their destination. Some 70 percent of US-Mexican trade is carried out via trucking.

The chauvinist union bureaucracy and the Democratic politicians have always insisted that their opposition to allowing in Mexican trucks was based on safety concerns. Even after Mexico won an arbitration decision in 2001, allowing it to impose trade sanctions, Washington continued to block them, while imposing rules and restrictions that apply to neither US nor Canadian trucks.

Finally in 2007, the US and Mexico signed an agreement allowing 100 carriers from each country to join in a demonstration project aimed at quelling the safety complaints. With 45,000 border crossings since then, there have been no significant verified complaints about the safety of Mexican trucks.

Nonetheless, when Congress passed the $410 billion omnibus spending bill last week it attached a provision denying any funding for the continuation of the project and thereby halted even the limited access granted to Mexican trucking.

Mexico responded angrily, denouncing the action as protectionism and slapped tariff increases on 90 products ranging from pet food to toilet paper. The goods account for just $2.4 billion out of the $367 billion in annual trade between the two countries, but Mexican officials said that they had been selected in part for maximum effect on different industries located in a large number of US states.

Mexico's secretary of the economy, Gerardo Ruíz Mateos, said that the tariff hikes were imposed on Tuesday after lengthy and unsuccessful attempts to get Washington to change its position on the trucking program.

In a sharp criticism of US policy, the minister stated, "In these moments of economic crisis, when we should avoid protectionism at all cost, the US decision goes in the opposite direction and sends a negative signal to Mexico and to the rest of the world."

"The action of the United States is wrong, protectionist and clearly violates the Treaty," Ruíz Mateos added. "In deciding to protect its transport sector it has decided to affect the competence and competitiveness of our countries and of the region, impacting many other productive sectors."

On Monday, White House spokesman Robert Gibbs opened a press briefing by referring to Mexico's announcement of its intention to impose the retaliatory trade measures. He stated that the Obama White House recognizes "the legitimate concerns of Congress" over the Mexican trucks, but added that the administration would attempt to negotiate with both Congress and the Mexican government to initiate a new program.

Whatever the final outcome of this process, the clash over the issue is symptomatic of growing tensions between US and Mexico under conditions of the mounting global economic crisis in which the US economic slump is threatening to create a massive increase in joblessness and poverty south of the American border.