Saturday, April 11, 2009

Mass layoffs threaten New York state and city employees

Mass layoffs threaten New York state and city employees

By William Moore

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Following closely on the adoption of the new state budget last week, New York’s Democratic Governor David Paterson is moving forward with a plan to lay off nearly 9,000 state workers. Initiation of the layoff process was announced in a letter to all state workers on Tuesday in which the governor ordered agency heads to come up with layoff plans.

While expressing regret regarding the need to take this action, the governor repeated his claim that he has no alternative because of the refusal by state employee unions to accept cuts in their existing contracts, including elimination of scheduled raises, withholding at least a week’s pay until retirement or departure, and various reductions in benefits for new hires.

The job cuts will reportedly represent 6.6 percent of each agency’s unionized workforce. The majority of the cuts will take place in agencies that affect health, education, welfare, recreation or other necessary services.

Among the hardest hit agencies would be the departments of Mental Retardation and Mental Health, which would lose 1,434 workers and 1,054 respectively. The Department of Health would see 366 layoffs, while Children and Family Services, Environmental Conservation, Labor and Education would all lose 200 or more employees.

Notably, no cuts will be made to the governor’s executive staff, which was significantly augmented since Paterson took over from Eliot Spitzer a year ago. Many of these individuals received substantial pay increases compared to their previous positions.

Paterson has withheld pending 3 percent raises for all employees not under union contract, despite the fact that he had earlier promised that all state employees would get this raise. His order includes not only managerial-level personnel but categories of lower-level employees who are unorganized or in “confidential” positions. Paterson stated that enough money would be saved to reduce the total number of planned layoffs by 200 (i.e., down to 8700 from the originally announced 8900).

In a letter hand delivered to these employees on Wednesday, Paterson appeared to indicate that they would be exempted from the planned layoffs. However, the language is ambiguous, conditioning the supposed exemption from layoff on “legality.” The last time the state engaged in mass layoffs, in the 1990s, some non-union employees who are paid from sources other than the budget were “bumped” out of their jobs in order to make room for civil service personnel, with the latter usually taking a pay cut.

Paterson’s maneuver seeks to play off one section of the work force against another, telling the unionized civil service workers that if only they would accept the elimination of their scheduled raise along with a number of other cuts they can avoid the threatened layoffs, just as the non-union employees have (of course the latter had no choice). At the same time, the unorganized workers are told that if only the union members weren’t so greedy and intransigent they, the non-union workers, wouldn’t be in danger of being “bumped.”

The union bureaucrats have facilitated Paterson’s maneuver by targeting a large number of unorganized workers as “consultants.” They lump them together with high-paid private consultants, despite the fact that many such workers perform the same tasks as those with civil service status, but are paid from separate funds. One of the main slogans of the union bureaucrats has been to reduce the state budget deficit by “getting rid of the consultants.”

Bumping can also occur among the unionized workers, based on seniority. Depending on the structure of their particular agency, workers might be required to move to another part of the state in order to take the position into which they have been bumped or lose their jobs entirely.

So far, aside from bluster, the leaders of the Civil Service Employees Association (CSEA) and the Public Employees Federation (PEF), the two main public employee unions, have presented no meaningful strategy to block the planned layoffs. The Albany Times Union reported Thursday that the leaders of the two unions plan to contact legislators to pressure Paterson to reverse his layoff plan.

The planned layoffs are likely to have a particularly devastating effect on the Albany Capital Region, where 27 percent of the workers subject to layoff reside. There are already news reports about the fears among retailers and others who depend on consumer spending that the local economy may take a serious hit.

Meanwhile, New York City’s Mayor Michael Bloomberg threatened Wednesday to lay off 7,000 city workers. The layoffs would come on top of 1,300 already proposed and another 8,000 jobs to be eliminated through attrition.

The billionaire Bloomberg said that workers could only avoid the job cuts if they agree to work with the city to amend state pension laws to provide lower benefits and to accept co-pays on their health insurance premiums. The mayor is also seeking the state legislature’s approval for raising the city’s sales tax.

“This is not a negotiating strategy,” said Bloomberg. “Pension costs and health costs...are going to bankrupt this city.”

What is bankrupting the city, as well as the state, is the collapse of revenues from Wall Street, where Bloomberg made his fortune. Now workers are being told to pay for the financial crisis that he and his associates created. The financial sector accounted for nearly 20 percent of the state’s tax revenues and 12 percent of the city’s.

The Municipal Labor Committee, the umbrella group for city unions, claims it has already offered $200 million annual health-care givebacks, and union leaders indicated that they are willing to offer more concessions.

"We understand the severity of the economic crisis facing the city," United Federation of Teachers President Randi Weingarten told the New York Daily News, calling on the head of the city’s public schools to “work with us.” A proposed $100 million cut in the city’s education budget could translate into as many as 1,400 teacher layoffs.

Obama seeks $83.4 billion to continue US wars

Obama seeks $83.4 billion to continue US wars

By Bill Van Auken

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The Obama White House Thursday submitted its formal request to the US Congress for $83.4 billion in “emergency” supplemental funding to pay for the continuation of the wars in Iraq and Afghanistan launched under the Bush administration.

The funding will pay for the two wars through the current fiscal year, which ends September 30. By that time, tens of thousands more US troops will be deployed in Afghanistan as part of the administration’s escalation there, while the deployment of 140,000 troops in Iraq will remain largely unchanged.

Also included in the funding bill are $350 million for the further militarization of the Mexican border and $400 million in counterinsurgency assistance to Pakistan.

Echoing the “support our troops” rhetoric of the Bush administration, Kenneth Baer, a spokesman for the White House budget office, declared, “We look forward to working with Congress to give our men and women in uniform what they need this year to do the hard work we are asking of them in Iraq and Afghanistan.”

While the White House claimed that beginning in fiscal 2010 the administration will include the war funding in the regular Pentagon budget, the use of the “supplemental,” which comes just days after the unveiling of the $534 billion Pentagon budget, only underscores the fundamental continuity between the policies of the two administrations. Such “emergency” funding bills were a staple of the Bush administration, used to conceal the wars’ real cost and override congressional spending limits.

Between the money for the two wars being sought for the remainder of the current year and the funds included in the fiscal 2010 Defense Department budget, the direct cost to the US Treasury for America’s two wars of aggression will top $1 trillion.

There is no question that the Democratic-led Congress will pass the war funding bill. Under the Bush administration, the Democrats went through the motions of attempting to attach timetables for partial withdrawals from Iraq and other restrictions on war policy before ultimately bowing to the Bush White House and passing the war funding with no strings attached.

Now, with a Democrat in the White House, even this limited show of opposition will largely evaporate. As the Wall Street Journal reported Wednesday: “Rep. John Larson (Democrat, Connecticut) suggests Democrats may be less inclined to joust with the current White House on the issue than they were with former President George W. Bush. ‘We have somebody that Democrats feel will level with them,’ said Mr. Larson, the House’s fourth-ranking Democrat.”

In his letter to Congress requesting the funding, Obama stressed the deteriorating situation for the US occupation in Afghanistan. “The Taliban is resurgent and Al Qaeda threatens America from its safe haven along the Afghan-Pakistan border,” he said.

“This funding request will ensure that the full force of the United States—our military, intelligence, diplomatic and economic power—are engaged in an overall effort to defeat Al Qaeda and uproot the safe haven from which it plans and trains for attacks on the homeland and on our allies.”

By contrast, the president’s letter gave scant attention to Iraq, where he said that “violence has been reduced substantially because of the skilled efforts of our troops and the Iraqi people’s commitment to peace.” Because of this, he added, Washington is “positioned to move forward with a responsible drawdown of our combat forces, transferring security to Iraqi forces.”

All of this amounts to a combination of half-truths and outright lies. The reality is that the bulk of the supplemental will go to fund the continued occupation of Iraq. If Obama conceals that fact it is because he knows that sections of his own party’s leadership, including congressional Democrats, had postured as opponents of the Iraq war, while supporting the supposedly “good war” in Afghanistan.

The claim that the US is doubling the number of troops on the ground in Afghanistan and spending billions of dollars to “defeat Al Qaeda” is preposterous. Just last month, the director of the Defense Intelligence Agency, Gen. Michael Maples, testified before a Senate committee that Al Qaeda’s presence in Afghanistan is “still at a relatively minor scale.”

Even though his administration has adopted a tactical change in terminology, Obama’s invocation of Al Qaeda as the principal target of the US escalation and his talk of “attacks on the homeland” amount to the recycling of Bush’s repeated “war on terror” justifications for the wars in both Iraq and Afghanistan.

The reality is that Obama’s “surge” in Afghanistan is aimed at the violent suppression of popular armed resistance to the US occupation. It is the continuation of a dirty colonial-style war directed at installing a stable US client regime in Kabul as part of Washington’s attempt to assert its domination over the strategic oil reserves of Central Asia and the pipeline routes for extracting this wealth.

Obama’s rosy depiction of Iraq, meanwhile, was belied by the eruption of violence over the past week in which hundreds of Iraqis were killed or wounded in a series of coordinated bombings in Baghdad and elsewhere.

On Friday, just a day after Congress received Obama’s letter, the US military suffered its worst attack in a year, with five soldiers killed in the northern city of Mosul when a suicide bomber drove a truck packed with explosives into a security checkpoint. Two other soldiers were wounded. The city, wracked by sectarian divisions between Arabs and Kurds, is the scene of continuing major combat operations by the US military.

In an interview with the Times of London published Friday, before news of this latest deadly attack, the US commander in Iraq, Gen. Ray Odierno, said that the violence in Mosul and Baqubah, another city in the north of Iraq, called into question the withdrawal timetable set by the Obama administration. “US troop numbers” in the two cities “could rise rather than fall over the next year,” the Times reported. The interview amounted to a public warning that the military is prepared to veto Obama’s plan.

Under the timeline announced by the administration, US combat troops were supposed to have been withdrawn from Iraqi cities by June. The pullback was the first stage in what the White House terms a “responsible withdrawal” that supposedly would see all US “combat troops” removed by August 2010 and all US military personnel out of the country by the end of 2011.

The term “combat troops” is used to refer to specific units, while others will stay behind continuing to engage in armed repression. Pentagon officials have acknowledged that if need be, some of the so-called “combat troops” will simply be redefined as noncombat units and kept in Iraq. It is estimated that this stay-behind force will number up to 50,000 under the Obama plan.

As for the 2011 deadline, it is written into the Status of Forces Agreement signed between the Bush administration and the US-backed government of Prime Minister Nouri al-Maliki and is by no means binding. It is widely anticipated that it will be amended to allow US forces to remain in Iraq and continue their original mission of subjugating the country and placing its oil wealth under Washington’s domination.

Tens of thousands of Iraqis took to the streets of Baghdad April 9 in a demonstration demanding an end to the US occupation. The protest, called on the sixth anniversary of the fall of the Iraqi capital to the US invasion force, was dominated by supporters of the Shiite cleric Muqtada al Sadr, but also included some Sunni Arabs. A similar protest took place in the predominantly Sunni city of Fallujah, which was decimated by a US siege at the end of 2004.

Meanwhile, in Afghanistan, the US military was compelled to revise its claims about a raid conducted in the eastern city of Khost near the Pakistan border. Following reports by local officials, it acknowledged that the “armed combatants” it claimed to have killed in a nighttime raid Wednesday were actually five innocent civilians. Among the dead, according to Afghan officials, were a seven-day-old infant boy, two women and two men. Another woman, who was nine months pregnant, was wounded and lost her baby.

Afghanistan’s US-backed president, Hamid Karzai, issued a statement protesting the killings and asking that “international forces carry out their counterterrorism in ways that do not cause civilian casualties.” Karzai’s is utterly dependent on foreign occupation forces, and such hollow protests are aimed at deflecting some of the popular anger against his corrupt regime.

According to a report issued by the United Nations in February, a record 2,118 civilians were killed in Afghanistan last year, nearly 40 percent of them by US-led occupation forces. These figures are undoubtedly an underestimation of the real death toll.

In Pakistan, the government released a report showing that out of 60 missile attacks carried out by US pilotless drones in the country’s tribal areas over the past three years, only 10 had struck their actual targets, killing 14 people identified as Al Qaeda operatives. The other 50 claimed the lives of 687 Pakistani civilians, including women and children. This death toll is steadily rising, with 385 civilians killed in 2008 and 152 in the first 99 days of this year alone.

The supplemental funding bill sent to the Congress by Obama will pay for an escalation of this carnage as the Obama administration moves to nearly double the size of the US force currently in Afghanistan to 68,000 troops, while aggressively extending the war across the border into Pakistan.

Less than three months after Obama’s inauguration, the actions of his administration have demonstrated the impossibility of bringing an end to war by means of the ballot box under America’s present two-party system.

While millions of Americans voted for the Democratic candidate last November out of anger and disgust over the eight years of militarism under Bush, it is now clear that not only will the occupation of Iraq continue, but the war in Afghanistan will be escalated and extended deeper into Pakistan.

Obama’s policies are determined not by these mass antiwar sentiments, but by the interests of the financial oligarchy and the agenda of the military, for which he serves as a mouthpiece.

The fight to end war can go forward only as a struggle for the independent political mobilization of working people against the Obama administration and the capitalist profit system which is the source of militarism.

The Obama administration and torture

The Obama administration and torture

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On Thursday, Leon Panetta, the director of the Central Intelligence Agency (CIA), issued an internal memo declaring the Obama administration’s opposition to the investigation of intelligence personnel who carried out torture under the Bush administration.

The statement, announcing a blanket amnesty for those who have committed grave violations of international and human rights law, came on the heels of a leaked International Committee of the Red Cross (ICRC) report that detailed, and defined as torture, the CIA’s horrifying “enhanced interrogation” methods. (See: Red Cross report details CIA war crimes)

The media has largely ignored the ICRC report, instead seizing on parts of Panetta’s memo that indicate the Obama administration will decommission CIA “black site” prisons and cease using private contractors in interrogations.

Panetta claims that CIA personnel cannot be investigated because they were acting under legal findings crafted by Bush administration Justice Department officials—findings the Obama administration has thus far refused to make public. The memo reads, “Officers who act on guidance from the Department of Justice—or acted on such guidance previously—should not be investigated, let alone punished.”

Yet international law, including precedents established in the Nuremberg trials of Nazi military and civilian officials, makes clear that this “just following orders” defense is not applicable to violations of human rights and war crimes such as torture. Nuremberg Principle IV states, “The fact that a person acted pursuant to order of his Government or of a superior does not relieve him from responsibility under international law, provided a moral choice was in fact possible to him.”

More importantly, Panetta’s claim that CIA personnel were only following orders begs the question: Why not prosecute those who gave the orders?

There are two primary reasons for the Obama administration’s opposition to any investigation of Bush administration torturers. In the first place, a serious investigation of torture, extraordinary rendition and the global gulag of prison black sites would implicate not only those who carried out these policies and high-ranking Bush administration officials, but also the Democratic Party and the US media.

The entire American political and media establishment is implicated in criminal methods traditionally associated with fascist and totalitarian regimes.

In the wake of the September 11 terrorist bombings, the media, liberal as well as conservative, spearheaded a campaign to justify the torture of terrorism suspects as a necessary part of the so-called “war on terror.” At the time, articles appeared in leading publications such as the New York Times and Washington Post uncritically presenting intelligence and military officials’ defense of torture. The magazine Newsweek infamously ran an article entitled “Time to Think About Torture,” which argued that “survival might well require old techniques that seemed out of the question.”

For their part, Democratic congressional leaders were briefed by Bush officials on the criminal methods being employed, supported them, and provided political cover for the US government’s violations of international law. The Military Commissions Act, passed by Congress with significant Democratic support in 2006, sanctioned the legal chimera “enemy combatant,” thus denying terrorism suspects recourse to the legal system of any country or to any international body.

The liberal wing of the Democratic Party is steadfastly opposed to criminal investigation of the Bush administration. Senator Patrick Leahy, who postures as a defender of democratic rights, has proposed a toothless “truth commission,” which would take as its starting point the rejection of criminal prosecution of perpetrators. Such a procedure could have but one purpose—to bury the crimes of the Bush years and “move on.” Even this meager proposal has been abandoned by the Democratic leadership, which proceeds from the standpoint that the less discussion on torture, the better.

Second, Obama seeks to keep at his disposal similar methods as those used by Bush, while effecting a cosmetic change in image. If the administration is opposed to holding accountable those who perpetrated war crimes and violations of both US statutes and international human rights laws, then all of its verbal disavowals of torture and affirmations of “American values” are worthless. It should be recalled that Bush also declared repeatedly that “We do not torture.”

The Panetta memo underscores the essential continuity in Washington’s personnel and policies. Obama has retained leading Bush administration figures who are implicated in all its policies, including the defense secretary, Robert Gates, and the military brass responsible for conducting the brutal colonial wars in Iraq and Afghanistan.

Like all of his attempts to distance his administration from the policies of his predecessor, Obama’s purported closure of the secret prisons is full of loopholes.

Panetta did not say when the secret prisons—which likely exist in Poland, Romania, Jordan, Morocco and Thailand, among other places—would be closed, while claiming that the CIA has not sent any people to the black sites since he took over the CIA’s helm in February.

But since their locations remain classified, it is impossible for third parties, including the ICRC, to investigate Panetta’s assertion that there are currently no suspects in the prisons.

At the same time, Panetta declared that the CIA “retains the authority to detain individuals on a short-term transitory basis.” He did not explain on what evidence a suspect could be detained. Moreover, the reference to “short-term and transitory” imprisonment deliberately leaves open the door for extraordinary rendition, whereby those abducted in the “war on terror” are moved, without access to any legal system, to third countries to be tortured there. Panetta and other administration officials have all but acknowledged that this practice will continue.

Nor does the closure affect the large prison camps in Iraq and Afghanistan where the US military holds thousands of captives and where some of the worst examples of abuse have taken place.

Obama’s protection of Bush administration officials and his continuation of its basic policies—whatever the change in rhetoric and tone—shows that these illegal and anti-democratic methods are the consensus policies of the US ruling elite.

The liberal and “left” groups that continue to claim that Obama can be pressured into defending democratic rights and enacting social reforms are only serving to cover up Washington’s crimes.

It is not only a matter of justice that those who carried out torture be brought to justice. It is also a political necessity. Unless the crimes of the CIA and military are brought to light, the US ruling elite will eventually use these methods against its political opponents at home as well as abroad.

The inability and refusal of any section of the US political and media establishment to forthrightly oppose torture and the panoply of related police-state methods openly employed in the Bush years testifies to the political and moral collapse of American democracy.

Banks aren't reselling many foreclosed homes

Banks aren't reselling many foreclosed homes

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A vast "shadow inventory" of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.

Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

"We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market," said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. "California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You'd have further depreciation and carnage."

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity - only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as "shadow inventory."

"There is a real danger that there is much more (foreclosure) inventory than we are measuring," said Celia Chen, director of housing economics at Moody's Economy.com in Pennsylvania. "Eventually those homes will have to be dealt with. If they're all put on the market, that will add more inventory to an already bloated market and drive down home prices even more."
More than one-third locally

In the Bay Area, a Chronicle analysis of data from San Diego's MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.

For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick

Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.

But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.

Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.

"We try not to be in the business of owning homes," he said. "Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly."

Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.

"The inventory might be growing because there is just a lot of volume coming in. That would not surprise me," he said.

Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.

Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold

A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay's ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.

"Foreclosure numbers are artificially depressed," said CEO Sean O'Toole. He puts California's shadow inventory at about 100,000 homes.

So why aren't banks selling off their foreclosures?

Observers say several factors are at work.

-- The "pig in the python": Digesting all those foreclosures takes awhile. It's time-consuming to get a home vacant, clean and ready for sale. "The system is overwhelmed by the volume," Sharga said. "In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month."

-- Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. "With banks in the stress they're in, I don't think they're anxious to show losses in assets on their balance sheets," O'Toole said.

-- Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don't fall as fast. "They want to be careful about not releasing them too quickly so they don't drive prices down and hurt the values," O'Toole said.

Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they're negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.

"The problem is that no one knows how extensive (the shadow inventory) is," said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. "It's a wild card. If it's a really big number, you'll see prices drop a lot more and deeper problems for the financial system."
Missing foreclosures

Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.

Social Security's Surplus Disappearing Fast in Downturn

Social Security's Surplus Disappearing Fast in Downturn

By JUSTIN FOX

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Federal-budget worrywarts (myself included) have been fretting for years about the arrival of the Dread Fiscal Year 2017, when Social Security was projected to start becoming a drag on federal finances.

Well, no need to worry about 2017 anymore. Thanks to the worst economic downturn since the 1930s, the moment of reckoning is already almost here: according to both the budget proposed by the White House in February and projections issued by the Congressional Budget Office (CBO) in March, Social Security benefits ($659 billion, according to the CBO) will exceed payroll taxes ($653 billion) in fiscal 2009 for the first time since 1984. Payroll-tax receipts generally hold up much better in recessions than do income taxes, but job losses have been so severe that the CBO expects them to decline slightly from 2008, while benefits rise almost 9% because of cost-of-living adjustments and the beginnings of the baby-boomer retirement wave. (See five reasons for economic optimism.)

If you count the $17 billion in income taxes expected to be paid on Social Security benefits, the system will still manage to provide a slight surplus for federal coffers in fiscal 2009. But from 2010 through 2012, there are small projected deficits, and after heading back into the black from 2013 to 2015, the program will then become a growing drain on federal finances, projects the CBO.

Back in 1983, when Social Security last faced deficits, Congress approved a set of Social Security reforms that included a graduated hike in the payroll tax and an increase in the retirement age. Thanks to those changes, payroll-tax receipts surpassed benefits in 1985, and the system has been operating at a surplus ever since. The money has been invested in Treasury securities that the Social Security system is supposed to live off in the future. In the meantime, it has provided a significant boost to the federal bottom line for almost 25 years. No more.

Blogger Paul Lukasiak noticed this sudden change in Social Security's fortunes back in February, and economist Kevin Hassett caught on in March, but it has otherwise attracted little notice. There's been some media coverage since then of Social Security's declining revenues, but none clearly makes the point that Social Security is about to cease playing its decades-old role as subsidizer of the rest of the Federal Government.

This is partly because officially, Social Security is still running a substantial surplus and will be throughout the next decade, according to the CBO. A key source of that surplus, though, is interest payments on federal debt held by the Social Security trust fund. It's money that Social Security has definitely earned, but it's coming out of the rest of the federal budget. Same goes for employer contributions to Social Security for federal employees, which also boost the program's bottom line but not the government's.

A better reason for the lack of attention paid to the disappearance of Social Security's surplus may be that it's starting to seem like small change. My earlier worry about 2017 was that the country was going to have to find a way - through raising taxes or cutting spending - to make up for the $100 billion or so that Social Security had been handing over to the rest of the Federal Government annually. Now, with a budget deficit projected at $1.8 trillion this year, we've got far bigger fiscal issues to worry about.

That still leaves the question of Social Security's long-term financing needs, which will be reassessed soon in the system's annual trustees' report. But a couple of years of below-expected payroll-tax receipts shouldn't dramatically change that forecast - and whatever long-run deficits the trustees project for Social Security will pale beside those expected for sister program Medicare.

No credible evidence of Al Qaeda presence in Pakistan, says FO

No credible evidence of Al Qaeda presence in Pakistan, says FO

* Spokesman says Pak embassy in London gathering details regarding arrests of certain Pakistani nationals in Britain

By Sajjad Malik

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Pakistan has not received any credible intelligence report about the presence of Al Qaeda leadership inside its borders, Foreign Office (FO) spokesman Abdul Basit said on Thursday.

“We have not come across any authentic intelligence which would indicate that Al Qaeda leadership is in Pakistan, and we do not attach importance to speculations,” Basit said in a weekly briefing.

He said the United States drone attacks might have achieved certain tactical gains but they were largely counterproductive and in violation of Pakistan’s sovereignty. “We cannot condone these attacks,” he said.

Basit said the next Pak-Afghan-US meeting would be held in Washington in May and Pakistan would raise the issue of drone attacks again.

Approach: The FO spokesman said Islamabad had differences with Washington over certain issues, including the drone attacks, but the two sides agreed on a holistic and comprehensive approach to address regional problems.

Gathering details: He said Pakistan’s High Commission in London was gathering details regarding the arrests of certain Pakistani nationals in Britain.

Basist said draft legislation had already been moved in the US Congress and Pakistan hoped that the Congress would pass both the Kerry-Lugar Bill and the reconstruction opportunity zones legislation by June.

He said President Asif Ali Zardari would visit Japan on April 15-17 and would hold meetings with the Japanese leadership on April 16 and chair a Friends of Democratic Pakistan ministerial meeting on April 17, adding that the president would also attend the inaugural session of the Donors’ Conference.

The FO spokesman said Islamabad was closely following developments following a missile launch by North Korea on April 5.

“Pakistan will continue supporting efforts towards peace and stability on the Korean peninsula,” he said.

$75 Billion More in War Spending?

$75 Billion More in War Spending? How Many Democrats Will Stand Up to Obama's Bloated Military Budget

By Jeremy Scahill

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Much of the media attention this week on President Obama’s new military budget has put forward a false narrative wherein Obama is somehow taking his socialist/pacifist sledgehammer to the Pentagon’s war machine and blasting it to smithereens. Republicans have charged that Obama is endangering the country’s security, while the Democratic leadership has hailed it as the dawn of a new era in responsible spending priorities. Part of this narrative portrays Defense Secretary Robert Gates as standing up to the war industry, particularly military contractors.

The reality is that all of this is false.

Here is an undeniable fact: Obama is substantially increasing US military spending, by at least $21 billion from Bush-era levels, including a significant ratcheting up of Afghanistan war spending, as well as more money for unmanned attack drones, which are increasingly being used in attacks on Pakistan. (David Swanson over at AfterDowningStreet.orgjob of breaking down some of the media coverage of this issue across the political spectrum). does a great

Obama’s budget of $534 billion to the Department of Defense "represents roughly a 4-percent increase over the $513 billion allocated to the Pentagon in FY2009 under the Bush administration, and $6.7 billion more than the outgoing administration’s projections for FY 2010," bragged Lawrence Korb, author of the Center for American Progress‘ report supporting Obama’s escalation of the war in Afghanistan, in an article called, "Obama’s Defense Budget Is on Target."

Obama and his neoliberal think tankers clearly didn’t think much of Rep. Barney Frank’s call earlier this year to cut military spending by 25% to pay for urgently needed social programs and economic aid to struggling Americans. "To accomplish his goals of expanding health care and other important quality of life services without ballooning the deficit," Frank said, Obama needed to reduce military spending. "If we do not get military spending under control, we will not be able to respond to important domestic needs." Well, not only is overall military spending on the rise, but Obama is about to ask for billions more for the wars in Iraq and Afghanistan in a "supplemental" spending bill, the type which were staples in Bush’s campaign to mask the full military budget and total cost of the wars. Obama could seek the funding as early as Thursday.

Now, the Wall Street Journal is reporting that we may actually see some spine coming from Congress in standing up to Obama’s request for this additional $75.5 billion in war funds (UPDATE: Obama actually ended up asking for $83 billion). The WSJ characterized the situation as one of "raising tensions" between Obama and some lawmakers opposed to the wars. It should be noted off-the-bat that the Congresspeople speaking out are, predictably, members of the usual suspects club and the Democratic leadership is probably at this moment sharing cocktails in the backroom with McCain and McConnell, but, nonetheless, it is worth examining what is being said:

"I can’t imagine any way I’d vote for it," said Rep. Lynn Woolsey, a California Democrat and leader in the 77-member congressional Progressive Caucus. It would be her first major break with this White House.

Ms. Woolsey fears the president’s plan for Iraq would leave behind a big occupation force. She is also concerned about the planned escalation in Afghanistan. "I don’t think we should be going there," she said.

Similar sentiments echo across the House. Rep. Jim McGovern (D., Mass.) said he fears Afghanistan could become a quagmire. "I just have this sinking feeling that we’re getting deeper and deeper into a war that has no end," he said.

Rep. John Conyers (D., Mich.) dismissed Mr. Obama’s plans as "embarrassingly naive," and suggested that the president is being led astray by those around him. "He’s the smartest man in American politics today," Rep. Conyers said. "But he occasionally gets bad advice and makes mistakes. This is one of those instances."


Obama has vowed to break with the Bush-era tradition of seeking such supplementals to fund the war, saying that beginning in 2010 he will fund the wars as part of his overall budget. The antiwar caucus of Democrats is unlikely to have enough votes to block it given the increasingly overt pro-war nature of the Democratic leadership. And, as the WSJ notes, the funding bills are likely to pass "since many Republicans will support them."

An interesting point nestled halfway through the WSJ piece illustrates a point some antiwar activists have been making since Obama’s election — he is likely to win increased support from Democratic lawmakers for wars they may not have supported when Bush was in power:

The president argues that Afghanistan has been neglected, allowing al Qaeda to regroup and exposing the U.S. to new dangers.

Rep. John Larson (D., Conn.) suggests Democrats may be less inclined to joust with the current White House on the issue than they were with former President George W. Bush. "We have somebody that Democrats feel will level with them," said Mr. Larson, the House’s fourth-ranking Democrat.

This truly is one of the most important trends to watch with the Obama presidency, particularly as it relates to war policy. Obama is in a position to greatly advance the interests of empire, precisely because he is able to build much wider support for policies that are essentially a continuation of those implemented by Bush.

CIA Videos Predated Bush Memo

CIA Videos Predated Bush Legal Memo

By Jason Leopold

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The CIA began videotaping interrogations of two alleged “high value” terrorist detainees in April 2002, four months before Bush administration attorneys issued a memo clearing the way for CIA interrogators to use “enhanced interrogation techniques,” the Justice Department disclosed in court documents.

However, In a letter to a federal court judge Thursday, the Justice Department only agreed to provide details on the harshest interrogations of prisoner Abu Zubaydah that occurred in August 2002 – after the Bush administration's lawyers had provided the legal cover for waterboarding and other brutal tactics.

That letter prompted ACLU lawyers to express concern over why the government offered no promises regarding the preceding months. Amrit Singh, an ACLU staff attorney, said the government’s “motivations in confining its [latest] response to the month of August are highly suspect.”

The ACLU is suing the CIA to release documents related to 92 interrogation videotapes that were destroyed by the CIA in 2005 as public attention began focusing on allegations that the Bush administration had subjected “war on terror” detainees to brutal interrogations that crossed the line into torture.

Lev Dassin, acting U.S. Attorney for the Southern District of New York, said the government intends to provide the civil liberties organization “contemporaneous records that described the interrogations at issue … for the month of August 2002 (approximately 65 documents)."

In a “work plan” laying out a timetable for processing documents for release, Dassin added that “August 2002 was the month during which Abu Zubaydah was subjected to the most intensive interrogations.” Zubaydah, who is believed to have arranged travel for al-Qaeda operatives, was captured after a gun fight in Pakistan in March 2002 and was whisked away to a CIA “black site” prison on March 28, 2002.

In previous court filings, Dassin acknowledged that 12 videotapes showed Zubaydah and Abd al-Rahim al-Nashiri, the alleged mastermind of the attack on the USS Cole in 2000, being subjected to waterboarding and other harsh methods. The 80 other videotapes purportedly show Zubaydah and al-Nashiri in their prison cells.

“It seems like the letter provides no explanation for why records for other months should not be included in the government’s work plan,” the ACLU’s Singh said in an interview. “We already know that an FBI agent who witnessed Abu Zubaydah’s interrogation prior to August 2002 said he believed it to be ‘borderline torture.’”

FBI/CIA Dispute

Singh was referring to a Justice Department Inspector General report released last year about the FBI’s role in harsh interrogations. The report, prepared by Inspector General Glenn Fine, said two FBI agents, identified by the pseudonyms “Thomas” and “Gibson, interviewed Zubaydah shortly after he was captured in March 2002. One of the agents even tended to Zubaydah’s gunshot wounds.

The FBI claimed, according to Fine’s report, that Zubaydah had provided valuable intelligence via “rapport building” interviews. However, within a few days CIA interrogators intervened. They claimed Zubaydah had been “only providing ‘throw-away information’” and adopted more aggressive tactics.

When one of the FBI agents complained to the CIA interrogators about the brutal tactics, he was told the techniques were approved "at the highest levels" of government. “Gibson” and “Thomas” refused to participate and protested to senior FBI officials about the techniques the CIA used against Zubaydah.

According to Fine’s report, “Thomas” did not see Zubaydah being waterboarded but witnessed other methods being used against him that he said were “borderline torture.”

Agent “Thomas’s” complaints to the FBI eventually led Pasquale D'Amuro, the FBI’s assistant director for counterterrorism, to remove the agents from the interrogations, according to Fine’s report. D’Amuro told Fine that he brought the agents' complaints to FBI Director Robert Mueller and "stated that his exact words to Mueller were 'we don't do that' and that someday the FBI would be called to testify and he wanted to be able to say that the FBI did not participate in this type of activity."

According to Fine’s report, John Rizzo, the CIA’s acting general counsel, refused to allow investigators from the Office of Inspector General to question Zubaydah in January 2007. Fine said Rizzo’s refusal to allow investigators access to Zubaydah was “unwarranted” and “hampered” the probe.

Fine said Rizzo told the inspector general’s office that he refused the request because Zubaydah "could make false allegations against CIA employees.”

At the time of Fine’s request, the International Committee of the Red Cross had obtained access to Zubaydah and 13 other “high-value” detainees and concluded that their treatment “constituted torture.” The ICRC sent its report to Rizzo on Feb. 14, 2007.

However, neither the ICRC’s report nor Fine’s include specific dates about the “enhanced” techniques used against Zubaydah.

First Prisoner

Zubaydah told the ICRC that CIA interrogators said he was their first subject, "so no rules applied. It felt like they were experimenting and trying out techniques to be used later on other people." Zuhbaydah said he was repeatedly smashed against a wall, placed inside a black wooden box, and was waterboarded, a technique that creates the panicked reflex of drowning.

Rizzo also has been questioned about his role in the videotape destruction by John Durham, who was appointed special prosecutor last year by Attorney General Michael Mukasey to probe whether the destruction of the tapes constituted a crime.

Last week, Durham questioned the CIA’s former number three official, Kyle “Dusty” Foggo, about the destruction of the tapes. Foggo, who was sentenced to three years in prison for fraud for steering lucrative contracts to a friend, was due to report to federal prison last week but Durham asked for a delay so he could question him about the tape destruction.

Singh, the ACLU attorney, said Friday she could not speculate whether videotapes made prior to August 2002 might have depicted “enhanced” methods such as waterboarding. Those techniques were cleared for use by an Aug. 1, 2002, legal opinion that narrowly defined torture, thus enabling the Bush administration to claim that its harsh tactics didn’t qualify as torture.

Last year, Dick Cheney admitted in several interviews that he “signed off” on the waterboarding of three “high-value” prisoners and personally approved the harsh interrogations of 33 other detainees.

Cheney identified the three waterboarded detainees as al-Qaeda figures Abu Zubaydah, al Nashiri and Khalid Sheik Mohammed, the alleged mastermind of the 9/11 attacks. “That's it, those three guys,” Cheney said in an interview with the right-wing Washington Times last December.

“There are questions as to who was authorizing what for the CIA before August,” Singh said. “Those facts need to be made public and that’s why we need to have an investigation.”

Food Industry Is Pursuing Big Tobacco's Strategy

Food Industry Pursues the Strategy of Big Tobacco

Kelly Brownell has long studied the relationship between rising levels of obesity in the U.S. and the way our food is grown, processed, packaged, and sold. In an interview with Yale Environment 360, he discusses the common marketing and lobbying tactics employed by the food and tobacco industries.

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Increasingly, the question of what we eat and how it affects our health is a subject that is important not just to those concerned about nutrition but to environmentalists. Kelly D. Brownell, a psychologist who is director of the Rudd Center for Food Policy and Obesity at Yale University, has been a leading researcher into America’s obesity epidemic and its links to the practices of the food industry. Author of the 2004 book, Food Fight, Brownell has recently become interested in the connections between obesity, the environment, and hunger, believing that sustainably growing and producing more nutritious foods can help solve each of these challenges.

Recently, Brownell and Kenneth E. Warner — a prominent tobacco researcher who is Dean of the University of Michigan’s School of Public Health — met at a conference and began discussing the similar legal, political, and business strategies traditionally employed by “Big Tobacco” and the tactics now being used by “Big Food.” Struck by the common playbook that both industries have used and concerned about the public health impacts of industry actions, Brownell and Warner decided to explore the topic more deeply. The result was a paper published earlier this year in the health policy journal, the Milbank Quarterly: “The Perils of Ignoring History: Big Tobacco Played Dirty and Millions Died. How Similar Is Big Food?”

As Brownell explained in an interview with Yale Environment 360
senior editor Fen Montaigne, many of the tactics currently being used by Big Food now mirror those used by U.S. tobacco giants as they successfully fought off regulation for decades, thereby contributing to the deaths of millions of Americans. According to Brownell and Warner, the common strategies include dismissing as “junk science” peer-reviewed studies showing a link between their products and disease; paying scientists to produce pro-industry studies; sowing doubt in the public’s mind about the harm caused by their products; intensive marketing to children and adolescents; frequently rolling out supposedly “safer” products and vowing to regulate their own industries; denying the addictive nature of their products; and lobbying with massive resources to thwart regulatory action.


Yale Environment 360: Can you tell me about the genesis of the paper?

Kelly Brownell: It came about as a result of a meeting I went to on cancer, where I met Ken Warner, an economist who’s done a lot of interesting work on things like tobacco taxes. We talked about the similarities between food industry behavior now and tobacco industry behavior over the last four decades or so and it started to look as if there were a script or a playbook that industry was following.

By any definition, the tobacco industry script had been deadly — and successful for them because they forestalled government action. They had convinced the public that tobacco wasn’t as bad as it really was. They fought off lawsuits. They got government to delay many (actions).

We simply didn’t want the food industry to be able to get away with some of those same tactics. The public has become skeptical of food industry behavior and a great deal of concern has been raised about things like
marketing to children, selling unhealthy foods in schools. That means the industry is at a crossroads. They can behave as tobacco did, which is lie about the science, distort the truth, and buy up the scientists. Or they can come face-to-face with the reality that some of their products are helping people and some are hurting, and we need to shift the balance.

There are some differences in the industries. Tobacco was one product — cigarettes — and about half a dozen big companies that sold it. With food, there are hundreds of companies and many thousands of products. But the behavior of the industry shows some pretty striking similarities.

e360: I’d like to have you take us through some of those.

Brownell: Well, one is distorting the science and denying the health effects of their products. (Recently) a study was done showing that how close people lived to fast food restaurants predicted their likelihood of obesity. The study was really quite well done. So the National Restaurant Association then came out with their own statement that basically trashed the study and more or less called it junk science.

Now, this is a perfect repeat of what tobacco did for many years. They said smoking doesn’t cause lung cancer. There is not definitive evidence. There aren’t good-enough studies. It’s junk science. It’s just the advocates out to get us. And then they denied that second-hand smoke was killing people. They denied that nicotine was addictive. You can go on and on and on. Well, so here comes a (food) study that’s pretty persuasive. It certainly supports other studies showing a link between fast food consumption and obesity, and what did they do? They trashed the science. They deny it’s the case. In all likelihood, they will pay scientists who they know to produce results favorable to them to disprove this finding. It’s all part of the same script.

e360: You gave another example in your paper of a study about obesity and consumption of sodas. How did the industry react to that?

Brownell: The results couldn’t have been more clear that the more sugared beverages you’re consuming, the more likely you are to have weight problems, the higher your risk for diabetes, and the less likely you are to be eating a healthier diet.

The day the study came out, the trade association for the beverage companies, the American Beverage Association, trashed the study, said it was biased, accused us of cherry-picking only the studies that were in support of our position. And this study was published in the American Journal of Public Health, a good peer-reviewed journal. So attacking it was the first strategy that they used. Then the next strategy they used is they went and they paid some scientists who have produced in the past studies that are favorable to industry positions. They go and they review the literature, and then they do a study that says, “Oh, what do you know? There’s no link between soft drink intakes and these bad outcomes.”

Now, I think if I were them, I would say that’s not how we’re going to behave. When we hear studies that are contrary to our interests, we’re going to say, “Well, we’ll take this seriously and we’ll do what we can to change our products and change our marketing, and we’ll work with the scientists.” But that’s not what they’re doing, for the most part.

e360: You also pointed out the link between what big tobacco did and what big food is doing, trying to sow doubt and confusion in the public’s mind.

Brownell: What the tobacco industry and other industries have done, they realized that if you can instill just enough doubt or impugn the integrity of the people who produce the science or get people second-guessing, then people will say, “Well, we’re not sure if this is the case, so we’re not going to go through with a public policy. We’re not going to sue the industry or come down hard on them for anything.” And so it basically does enough to stall action. And I imagine that’s what the food industry is seeking here. Again, the food industry has some players who are quite progressive and others who are less so.

e360: Tell us about some of the other similar strategies between tobacco and food in terms of trying to keep selling their product.

Brownell: One is the introduction of what the industry will call safer products. And the classic example in tobacco was the introduction of filtered cigarettes. Now, the food industry has done this a lot. They’ve introduced and reformulated products. In some cases, it’s exactly what public health people have been calling for — take out some of the fat, take out some of the sugar, take out some of the salt. But sometimes, they take a little of these things out, but they make it sound as if they’ve taken a lot out. And so the health benefits that get promoted in the marketing aren’t in concert with the actual benefits that have been achieved from reformulating their products.

e360: You mention in your paper the example of a Kentucky Fried Chicken advertisement.

Brownell: Right. Well, KFC is owned by a large parent company called Yum! Brands. And they own Taco Bell and Pizza Hut and some other restaurants. They were very resistant early on to taking the trans fats out of their food and then they got sued by an advocacy organization, and it got to the point where competitors were starting to take out the trans fats and they looked pretty bad for not doing it.

So then they did take out the trans fats reluctantly but started this campaign that inferred that you can now eat this chicken with impunity because the trans fats had been removed. There is one advertisement where the husband came in and the mother and children were sitting there in the counter. The husband looked at the chicken and the wife said, “Guess what?” in words to this effect, “KFC is now free of trans fats.” And so, he lets out a yelp of glee and starts gorging on the chicken. And so, somebody could look at that advertisement and say, “Okay. Well now it doesn’t have trans fats, it means it’s okay to eat it.”

Well in fact, if you swap out trans fat for another kind of fat, there’s no calorie advantage at all. It’s better for your heart because it’s a healthier fat, but there’s no calorie advantage. I like the fact that they took out the trans fat and we need more of that kind of thing happening. But if they oversold the benefits, this could be an example of introducing what the industry could call a safer product but consumption patterns wouldn’t lead it to actually be safer.

e360: What about the similarities of Big Food hitting this theme of personal responsibility?

Brownell: People believe that personal responsibility should be the way we address problems. I don’t have any quarrel with that. It’s probably not a bad place to start, but when this industry behaves in a way that undermines personal responsibility, then we’ve got problems and that’s usually a place where people feel government intervention is warranted.

So with tobacco, you had a clearly addictive substance. So, people would start when they were teenagers. Their ability to behave in a responsible way was being undermined by the marketing and of course the addictive nature of the product. So, that means government could step in and so what do we do? We pass clean air laws, we tax the heck out of cigarettes, we sue the tobacco industry. And society now accepts that as responsible behavior on the part of government because personal responsibility was being eroded.

So the question is, in food, does that same set of conditions exist and does that warrant government response? Well, everybody comes down in a different place, but there certainly are similarities, including very heavy duty marketing of these products, especially to children.

I don’t want to say that personal responsibility is not important, because it certainly is. But in some cases we’ve decided that’s not enough and then government gets involved. With tobacco, with drugs, with alcohol, with immunizations for children, with fluoride in the water, with mandatory airbags in cars, we’ve decided that if we’re serious about these public health things, the government should be involved.

In the food arena, a great example of this would be in New York City, where the health department has banned trans fats in restaurants. So if you go to New York now, you can’t get trans fats in the restaurants. Now you could try to solve that problem of people eating trans fats, and having heart disease as a consequence of it, by personal responsibility. You could say, “Okay, well, let’s educate people about trans fats.” But it’s a pretty hard concept to understand. Restaurants would have to label them. People would have to have options within restaurants, trans fat versus no trans fat. And you see you’d have this complex, burdensome system that would never work. And so, that would be an example where personal responsibility wouldn’t get the job done but government intervention would. And so, in New York City, they’ve decided that we can’t default to personal responsibility there, we need to take action. And that would be an example of a real success story from a public health point of view.

e360: Of course, with tobacco very clearly there was an issue of addiction. But one interesting point you raised is the addiction triggers in substances like caffeine and sugar?

Brownell: We don’t know the answer yet to the question about whether food can trigger an addictive process in the brain. But it’s a darn important question that we need to know. Some addiction researchers have started studying this, including a few animal researchers in the obesity field. And the studies are pretty amazing so far. There are animal studies in the labs and there are brain imaging studies in humans. And what’s been studied the most is sugar, which looks like it has effects on the brain like classic substances of abuse. Now, the magnitude of the effect, the addictive effect isn’t that strong, but it does seem to exist.

Why do we need to know this? Well, people are eating in ways that would suggest that addiction might be a possibility. I mean, people know it’s bad for them to overeat these kinds of foods. But people do this anyway at great peril to their health. And if these foods are behaving on the brain in an addictive way, if that happens, even to a small extent, it could have pretty important public health consequences.

Caffeine becomes a real issue because caffeine is addictive. And some people drink a little of it through beverages, some people drink a lot of it, but so much of it is added to foods now, in things like energy drinks. And now people are putting it in candy bars and in potato chips and jelly beans and selling it as energy versions of things. There’s a version of Butterfinger candy bar out now that’s called Butterfinger Buzz. And it says on the back, “Not recommended for children.” But I mean, who’s buying these things? Caffeine, because it’s so often coupled with calories, could become a real player here that if you’re consuming calories in something that has caffeine in it and the caffeine keeps you coming back for more because of its mildly addictive nature then, again, you've got enough to create real issues of health.

e360: You mentioned with big tobacco that there was a massive lobbying effort spending countless millions of dollars to stifle government action. Could you describe the parallels, the efforts to undermine state and local efforts to crack down on fast food and trans fats?

Brownell: There’s a remarkable history there. As you might imagine, the food industry is enormously powerful. And the industry speaks as individual players but also through their trade associations. They have their lobbyists in Washington. They have a lot of money to use for this purpose, and they’re effective. But does this help public health?

New York City was the first city to pass a regulation that restaurants had to post calories on their restaurant menus, or on menu boards in the case of fast food restaurants. How did the restaurant industry respond to this? Well, they responded by lobbying heavily against it, but that didn’t work. Then sued New York City, and finally lost. And so, the regulation is now in effect. When it looked like legal action wasn’t going to help them so much, then they tried to weaken the legislation.

A lot of other places around the country are now passing menu labeling, so the industry has managed to get several legislators in Washington to introduce a national bill that would override anything that can be done at local levels by having a weak national standard. So, there’s a script that tobacco followed that food is following. If there’s no threat, you ignore it. But then when it becomes a reality, you sue. When that doesn’t work, you preempt it nationally.

e360: In order for the food industry not to go down the same deadly path that tobacco went down, could you go into what you might call a good playbook for the food industry?

Brownell: One is to stop playing the personal responsibility card as much as they have. That doesn’t mean that they have to ignore personal responsibility, but they can’t act as if that’s the only reason that people are eating and developing nutrition and weight problems.

Lying about the science, distorting scientific findings, and trashing the messenger, which they very often do — I think that should stop. I believe they should also stop paying scientists to do studies that almost 100 percent of the time favor industry. Marketing unhealthy products to children should stop instantly. And we know what some of these products are that are hurting the health of children.

e360: Can you list a few?

Brownell: Well, sugared beverages would be at the top of the list. Fast foods would be second on that list. Sugared cereals, candy. There’s just no reason at all to market those things to kids. It’s not helping them, it’s hurting them and it shouldn’t be done. There are a number of other issues about responsible marketing practices: not overstating the health benefits, not implying that something is healthier than it really is, not marketing in ways that undermine the parental ability to moderate the health of their children.

Most of all, they should reformulate their products and market the healthier versions as aggressively as possible, I think.

e360: You say that it would be a trap to give the food industry the benefit of the doubt given their past behavior. Why?

Brownell: Well, the tobacco history was so riddled with disaster and we gave them the benefit of the doubt and look at the millions of people that died as a consequence. Why are the motives of the food industry going to be any different? They want to sell as much as they can of their products. But on the other hand, the public is watching them now and government is watching them, plus some of them really may see that selling healthier products is in their best long-term interest.

But it seems to me that defaulting to trusting the industry without any oversight is really a bad idea. And so, at the very least, we should have a set of conditions that we agree on that says, “If industry is to be proven trustworthy, if we’re to grant them self-regulatory authority instead of government coming down on them, then they have to do these things.” Like, for example, they have to work with the public health community to make business priorities. If they make self-regulatory promises like, “We’re going to market less to kids,” there has to be objective evaluation of that and there has to be some effect if they don’t comply.

How the Toxic Asset Plan Will Magically Make Your Money Disappear

How the Toxic Asset Plan Will Magically Make Your Money Disappear

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Under the Treasury Department's toxic asset proposal, the government puts in 85% of the investment in these assets through a loan given by the FDIC. The Treasury puts in another 7.5% of the money and the private investor contributes the final 7.5%

This is a guaranteed way of transferring money from the American taxpayer to the private investors. Let me show you how.

Let's take two assets that the government and investors buy together, both at the purchase price of $100 million. Now, assume that one investment does great and goes up by 50% (to $150 million) and the other one does poorly and goes down by 50% (to $50 million).

Well, the combined assets would still be worth $200 million, so the investors and the government should be exactly where they started, right? Nope. Look at the financial magic in this plan that makes the money disappear from the taxpayer and appear in the private investor's pocket.

In the investment that went down, since the private investor is part of the original 15% deposit, he actually gets wiped out when the loan cannot be paid back. That's really bad for the investor and he has lost his whole $7.5 million. This is the risk that Geithner is talking about to the private investor.

The government on the other hand does not lose all of their money. They had put in $92.5 million, but now that's down to $50 million, so they lose $42.5 million. Unlike the private investor, they got something back. But they lost a lot more money.

Now, when you look at the investment that went up in value, the government has done well. They get 50% of the profits because they put in 50% of the deposit (the loan from the FDIC does not count toward divvying up the profit from these assets). So, the asset went up $50 million and the government gets $25 million in their pocket.

But when you look at the private investor he has done even better. He gets the same $25 million for his 50%, except he only put in $7.5 million to begin with. Why does that matter? Because when you add up the profits and losses for both investments, something funny and tragic happens.

The private investor put in an initial $15 million in to the two assets. He lost $7.5 million in one and wound up with $32.5 million in the other (profit plus initial investment). So, he's at $17.5 million profit overall.

The government on the other hand put in a combined $185 million into the two assets. They lost $42.5 million in one of them and made $25 million in another. Will you look at that? The government lost $17.5 million from the same exact investments with the same exact results. The $17.5 million magically got transferred from the government to the private investors.

Well, that's the magic of leverage. If you put in the great bulk of the money, you take the great bulk of the risk. If I put in a small amount of money but share equally in the rewards, then I make money while you lose money.

Oh, one final thing. Do you know who the government is? That's us. The American taxpayer. This will literally be coming out of the taxes you pay on the money you work so hard for. This toxic asset plan will pick your pocket to pay off some of the richest people in America. If you think that makes sense, then you deserve to have your pocket picked. What's that about a fool and his money ...

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Cape Fear Bank of Wilmington, N.C. fails; 22nd of year

Cape Fear Bank of Wilmington, N.C. fails; 22nd of year

By Wallace Witkowski

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Cape Fear Bank of Wilmington, N.C., became the 22nd bank failure of 2009 and the 47th of the recession, according to the Federal Deposit Insurance Corp. on Friday. First Federal Savings and Loan Association of Charleston, S.C., will assume all of the deposits of the bank. As of March 31, Cape Fear Bank had total assets of about $492 million and total deposits of $403 million. Cape Fear Bank's eight offices will reopen Monday as branches of First Federal, the FDIC said..

US budget deficit hits one trillion dollars in first half of 2009

US budget deficit hits one trillion dollars

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The US budget deficit hits almost one trillion dollars in the first half of the current fiscal year, according to figures released by the Treasury.

The deficit for the first six months of the fiscal year which began on October 1 was 956.80 billion dollars, said the Treasury's monthly statement of receipts and outlays.

Much of the increase in outlays in March came from extraordinary investments by the government in banks and Fannie Mae and Freddie Mac, loans to credit unions, and increased spending from the stimulus package for unemployment insurance and Medicaid. Some of those investments should be repaid over time, but the government is booking them as cash expenses for now.

In March, Fannie Mae received $15.2 billion, Freddie Mac received $30.8 billion, and unemployment benefits totaled $10.6 billion.

Receipts during the six-month period to March 2009 period was 989.83 billion dollars while outlays amounted to nearly 1.95 trillion dollars, the data showed.

Many of the Jobless Get No Unemployment Benefits

Many of the jobless get no unemployment benefits

By Barbara Hagenbaugh

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When Clarence Athy lost his job laying concrete just before Thanksgiving, the 56-year-old single father did what most people do: He applied to collect unemployment benefits.

But like many Americans, Athy was denied.

Athy, of Kalispell, Mont., was told by state workers that he was not at his job long enough to collect benefits. He has applied for jobs all over town — where the unemployment rate is in the double digits — without any luck. Now, he's trying to do what he can to feed himself and his son, Calvin, 15, and keep a roof over their heads. He is behind on his rent, has turned off his telephone and next week may lose his electricity.

"I ought to get something," Athy says of unemployment benefits. "It's not like I'm not trying to get work. … I'm just trying to make a living."

Millions of unemployed Americans who have lost their jobs are in Athy's shoes. While 13.2 million people were unemployed in March, approximately 5.8 million were collecting unemployment benefits at the end of the month, double the number from a year ago, the government said Thursday. That means less than half of those who were out of work and were actively trying to find a new job were receiving unemployment benefits.

"There are so many gaps," says Monica Halas, lead attorney at Greater Boston Legal Services, which provides free legal aid to low-income people. "People think (if) they are unemployed, they are going to get unemployment. Not true."

There are a number of reasons people are ineligible for unemployment benefits. Policies vary widely by state: The proportion of unemployed people who were collecting benefits in 2008 ranged from 18% in South Dakota to 61% in Idaho, according to the National Employment Law Project.

Often, those who worked part time or who were not at their job for very long before being laid off are not eligible. That tends to disproportionately include women, low-income workers and people with more seasonal jobs, such as construction, according to the NELP. A 2007 report from the Government Accountability Office found low-wage workers were about one-third as likely to collect unemployment benefits as those earning more. People who are fired for performance issues, who quit or who were self-employed are immediately tossed out.

There are no plans to expand the safety net to those in the latter category. But Congress, as part of the stimulus bill passed this year, included $7 billion to states that change their laws to make more employees who lose their jobs because of the bad economy eligible for benefits. Money for the unemployment insurance program, which began in 1935, comes from taxes paid by employers. Workers themselves do not pay into the unemployment insurance system.

Nineteen states qualified to receive all or part of their funds based on existing policy. One was Maine, which has been providing benefits to a wider pool of workers, including part-timers and those who left jobs because of concerns about domestic abuse or because a spouse was relocating, according to the NELP. Other states that have been more generous with benefits include Rhode Island, Washington and Massachusetts.

Policymakers in New Jersey and South Dakota have recently changed laws and received money from the stimulus pot, while others have legislation working their way through state capitals. This week, the Labor Department approved funds for Connecticut based on that state's policy of allowing employees with shorter work histories to collect unemployment.

But lawmakers in other states have not acted, and those in at least one have actually shot down the money. Wednesday, the Republican-controlled Virginia House of Representatives, largely along party lines, rejected a measure to expand the pool of workers eligible for unemployment benefits, 46-53.

Some Republican governors, including those in Texas, Louisiana, South Carolina, Mississippi and Alabama, have spoken out against expanding unemployment benefits, arguing that eventually the federal government funds will run out, and the states will be left with a bigger cost for their unemployment insurance programs with a larger number of people on the rolls.

Katherine Cesinger, a spokeswoman for Texas Gov. Rick Perry, said expanding the unemployment system would require raising taxes on businesses, thus "hurting our job-creation climate." Perry's "ultimate goal is to make sure there are jobs out there, so that when this economic climate turns, folks can get back to work," Cesinger said.

Still, those backing expansion of benefits point out that there have been successes. "We have had more victories than we have had defeats," NELP deputy director Andrew Stettner says.

A push from Washington

The NELP estimates more than 500,000 additional people would be eligible to collect unemployment benefits if all the states take the needed legislative steps to collect the funds.

Labor Secretary Hilda Solis says she has personally been calling governors and state lawmakers to press them to quickly pass the laws to make them eligible to collect the federal money.

"It's going to be a little tough, but overall, people are interested," Solis said, expressing confidence states will take action.

State governments would "be leaving money on the table if they did not follow through, and that is a very bad idea in these tough economic times," says Kristin Rowe-Finkbeiner, executive director of MomsRising.org, an advocacy group of mothers. The group is conducting a letter-writing campaign urging state lawmakers to expand benefits.

Any changes in law likely would only help people who lose their jobs going forward, not those who are already unemployed.

Such action would be too late for David Bowman, 53, of Avondale, Ariz.

On Dec. 31, Bowman lost his part-time job doing sales and marketing at a friend's plumbing wholesale business. He started the job in August after he had to stop driving a truck because he had a defibrillator inserted due to heart trouble. That meant Bowman neither had a long enough work history before he was laid off nor was he working full time, both conditions for collecting unemployment in Arizona.

Bowman said he's been applying for jobs every day, but hasn't gotten an interview in more than a month. He gets a pension from the Army, but it's not enough to make ends meet, he says. He's depleted savings, lost his home in foreclosure, is behind on his rent and has filed for bankruptcy.

"I'm right now almost dead in the water," he says, noting he considers himself better off than many people because he has health benefits from the military. But he wishes he could collect unemployment.

"That kind of stings me a little bit," he says.

Benefits running out for many

Some people who are eligible are also running out of benefits before finding work. Benefits have been expanded in a number of states, but with the unemployment rate the highest in more than a quarter-century, workers are taking longer to find jobs, at times exhausting their eligibility. The NELP predicts more than 1.3 million people will run out of unemployment benefits during the first half of the year.

In March, the average length of unemployment was 20.1 weeks, up four weeks from a year earlier. Nearly 3.2 million had been jobless for at least 27 weeks, vs. 1.3 million a year earlier.

Legal aid groups are also reporting an increase in the number of employers contesting a former worker's claim for unemployment benefits. Because a company's future tax liability for the unemployment program is based on how many former employees have collected, it is in a firm's best interest to limit the number of those drawing benefits.

Andrew Scherer, executive director of Legal Services NYC, a non-profit group that provides free legal assistance in New York City, says his organization is seeing "explosive growth" in contested unemployment insurance cases as employers claim workers were fired because of performance. "We are seeing more overblown reaction to what otherwise might have been a minor infraction of work rules," he said.

When claims are contested, unemployment checks are delayed. That can lead to a number of issues, including possible eviction as families get behind on their rent and mortgage payments. That can put a strain on family relationships. Scherer says his organization is seeing an increase in domestic violence cases.

"Any delay is tragic for people," says Greater Boston Legal Services' Halas. "It has really serious effects in this down economy where you can't turn around and get another job."

Economists say providing money to people who are unemployed can have a broader impact on the economy.

"If you can provide some kind of income support for them, then it might generate more spending in the economy," Forward Capital chief economist Richard Moody says.

Because the unemployment insurance system is funded by companies, those who are self-employed are likely to continue to be left out.

Dale Prost, 58, says he thinks there should be some help for out-of-work, self-employed people such as himself.

"I don't think it's fair, because I pay taxes," he says.

For 10 years, he worked as a self-employed manufacturing worker, most recently supporting a transmission assembly launch at a General Motors powertrain plant. He has not had work since December 2007, the month the economy slid into recession.

Prost, of Commerce Township, Mich., said he has applied for numerous jobs, including those paying minimum wage, but for every job, there are hundreds of people applying. He and his wife are living off her salary as an office manager for a doctor, but it does not provide medical benefits. They are negotiating with their mortgage company to reduce the interest rate and lower monthly payments on their home.

"We're sitting on eggshells, because we don't know what is going to happen," he says. "We are barely holding on. I don't think I've ever had this much stress."