Wednesday, June 10, 2009

White House had long planned GM and Chrysler bankruptcies

White House had long planned GM and Chrysler bankruptcies

By Jerry White

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While the Obama administration publicly claimed it was seeking to avoid bankruptcy filings by Chrysler and General Motors, behind the scenes the White House was determined to throw the two Detroit automakers into the bankruptcy courts.

Documents filed with the US Bankruptcy Court for the Southern District of New York make it clear that Obama’s Auto Task Force—headed by millionaire private equity manager Steven Rattner—had decided as early as Inauguration Day that a court-ordered restructuring of GM and Chrysler was needed.

The administration saw this as the most effective means for the companies to jettison unprofitable factories, brands and dealerships, gut the jobs and living standards of current auto workers and escape obligations owed to hundreds of thousands of retirees.

In the aftermath of the two bankruptcy declarations, both GM and Chrysler have announced nearly two dozen plant closings, massive layoffs and the elimination of more than 3,000 car dealerships.

Under the terms of Section 363 of the Bankruptcy Code, the two automakers’ most profitable assets are being sold to “new” auto companies. This legal fiction will allow them to sidestep state laws protecting dealerships from the violation of franchise agreements and other legal liabilities, including court cases involving unsafe vehicle claims and asbestos exposure. These liabilities, along with other assets deemed to be unprofitable will languish in the courts for years until they are wound down and liquidated.

In the case of GM, the US Treasury will take a controlling share of the new company in exchange for nearly $50 billion in public assets. President Obama has made it clear the government will not interfere with the prerogatives and interests of private investors and will leave it to a corporate board, made up of proven cost-cutters, to return the company to profitability.

“The federal government will refrain from exercising its rights as a shareholder,” Obama said last week, “In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly.”

The government plan involves handing the company—once it is reduced to a fraction of its size and freed from the “legacy costs” of decent wages and retiree benefits—to private investors as soon as possible, at a bargain basement price. This is why Wall Street celebrated the GM bankruptcy last week with a 221-point rally on the New York stock exchange.

The Wall Street Journal reported Monday that GM will use a portion of the public assets from the US Treasury to subsidize a private equity firm’s buyout of the bankrupt auto parts supplier Delphi. GM will provide more than $2.5 billion of the $3.6 billion necessary for Beverly Hills, California-based buyout firm Platinum Equity to gain control of Delphi, the Journal reported. The newspaper added, “Such transactions can prove hugely profitable for a buyer, depending largely on financing costs and the buyer’s ability to turn around the business.”

Obama’s Auto Task Force has focused on one thing from the beginning: how to exploit the crisis of the auto industry to create conditions for Wall Street to reap huge profits. Its leading figures—Secretary Treasurer Timothy Geithner and White House economic advisor Lawrence Summers—played a key role in the Wall Street bailout, opposing the slightest restrictions on compensation paid to banking executives receiving public money. When it has come to the auto industry, however, they have demanded the most brutal job cuts and wage and benefit concessions from auto workers.

Task force advisors include Wall Street investors Rattner and Ron Bloom. Another advisor, Brian Deese, was described in a recent New York Times article, entitled, “The 31-Year-Old in Charge of Dismantling G.M.” The “not-so-graduate of Yale” who “never set foot in an auto plant” until this year has pushed for a court restructuring of the two auto makers from the earliest days of the Obama administration.

After the Auto Task Force’s first meeting with Rick Wagoner, GM’s former chief executive said publicly that bankruptcy was not a viable option. However, the Times article noted, “from before Inauguration Day, few in Mr. Obama’s circle saw any other choice.”

In late March the Obama administration would fire Wagoner—who continued to oppose bankruptcy—and made it clear it would withhold any additional funding unless the company imposed far more “painful” cuts than outlined in its initial plan. That plan called for the elimination of 47,000 jobs worldwide, including 21,000 hourly workers in the US.

Despite its claims to the contrary, the administration was putting its plans into motion for the forced bankruptcy of Chrysler on April 30 and the century-old GM on June 1.

In his affidavit to the bankruptcy court, Frederick Henderson, who took over from Wagoner as GM’s CEO, made it clear the government left GM no choice but to file for bankruptcy. In the months leading up to the bankruptcy filing, GM had sought desperately to raise cash, cut costs and seek a potential partner. This was taking place in the face of what Henderson said were deteriorating economic conditions, “which can only be described as the worst economic downturn and credit market environment since the Great Depression,” including a fall in per capita vehicle sales to the lowest levels in half a century.

Given the company’s massive debt burden, Henderson said, the US Treasury was the only entity with the financial wherewithal and willingness to purchase the company. The US Treasury made it clear, Henderson said, that it was “only willing to proceed in the context of an expedited sale process authorized and approved under the bankruptcy code.”

The same was true for Chrysler. As late as April 29, the automaker’s executives reportedly still hoped to avoid bankruptcy after extracting concessions from the United Auto Workers and achieving an agreement with most bondholders. According to an article in the Detroit Free Press, “Reluctantly, however, the leaders were recognizing the harsh decision Rattner made weeks earlier: Chrysler was filing for Chapter 11, no matter what.”

Basing itself on correspondence recently released during the Chrysler bankruptcy proceedings, the Free Press continued, “Rattner had met with Ron Kolka, Chrysler’s chief financial officer, and told him how it would go. ‘We need a deal with Fiat today. We were told to pretty much take it,’ Kolka wrote in an e-mail to [Chrysler CEO Bob] Nardelli, Vice Chairman Tom LaSorda and Robert Manzo, a financial consultant Chrysler hired in November. Rattner and his colleague Ron Bloom ‘will call the union in and tell them what will happen. Then they’ll tell the banks, ‘Here’s the deal: take it or liquidate it.’”

Rattner, too, has no knowledge or experience in the auto industry. His major qualifications seem to be his Wall Street connections and an aptitude for raising millions on behalf of the Democratic National Committee, an accomplishment which has earned him the moniker of the “ATM of the DNC.” Rattner, whose net worth is estimated at $600 million, owns a Fifth Avenue apartment in Manhattan, a private jet and horse farm. This is the man who has demanded that retired auto workers and their dependents go without dental care and optical benefits.

The forced bankruptcies and dismantling of GM and Chrysler demonstrate the massive influence Wall Street exerts over economic and political life in the US generally and the Obama administration in particular. While the White House officials lambasted auto executives for poor economic decision-making and made any government assistance contingent on massive givebacks from workers, they have treated the financial masters of the universe with nothing but deference, and handed them trillions in public cash.

The outcome of the dismantling of the auto industry will mean that the industrial base of the US will shrink even more and the economy will be further dominated by the type of reckless and socially destructive speculation that is responsible for the worst economic and social crisis since the 1930s.

GM plant closures devastate Detroit suburbs

GM plant closures devastate Detroit suburbs

By Jerry White

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The northern Detroit suburbs of Oakland County, Michigan, will be particularly hard hit by the General Motors bankruptcy and restructuring plan. The area will lose 6,600 of the 9,000 jobs being cut in Michigan. This includes the closing of three major factories—the Pontiac East Assembly and Pontiac Metal stamping plant, each with 1,100 workers, and the Orion Assembly Plant, with 2,600 workers.

GM’s mid-priced car brand was headquartered and named after the city of Pontiac, although it has been years since any Pontiacs were built there. The final phasing out of the “We Build Excitement” brand is part of the forced bankruptcy of GM being carried out by the Obama administration.

Razed Pontiac GM plantAbandoned lot where GM's Pontiac West factory once stood. The plant, with 1,800 workers, closed in 1994.

Under the terms of the government restructuring of GM, 14 factories—including seven in Michigan—will be closed and 21,000 of the company’s remaining 62,000 hourly workers will lose their jobs by the end of next year. In addition, the company is closing 2,300 dealerships nationwide, which will affect another 100,000 workers.

Although Oakland County includes some of the most affluent neighborhoods in the country, its largest city, Pontiac—with a population of 66,000—has suffered decades of plant closings and worsening social distress. A city where autoworkers had once attained a decent living standard, the median income for a family is now $31,207, far below the national median of $44,334.

Pontiac streetPontiac streets

At the beginning of the year, the Pontiac School Board announced that it would close nine of the twenty schools in the district, including half of the elementary schools, in the face of a projected $10 million deficit for the 2009-2010 school year. In an unprecedented action, the board voted to lay off all 774 teachers and support personnel in the public schools, effective June 30. Workers are being forced to reapply for their jobs for next year. It is expected that less than half will be rehired.

Last Monday, at 8:15 a.m., workers at the Pontiac East Assembly plant were informed that their 3.4 million-square foot plant, which produces Chevrolet Silverado and GMC Sierra pickups, would be closed in October or possibly sooner. It is very possible that workers will not return after a planned five-week shutdown to reduce inventory begins June 11. The nearby Pontiac stamping plant, originally opened in 1926, has been put on standby capacity and will be idled in December 2010.

Hundreds of thousands of retirees are concerned that their promised benefits, including pensions and health care benefits, are in peril after the GM bankruptcy. The Treasury Department specifically ordered the elimination of optical and dental benefits for GM’s hourly retirees. In January, GM ended paying health benefits for salaried retirees older than 65.

A WSWS reporting team spoke to a retired salaried worker at GM at the Bob E’s Super Chief Restaurant in Pontiac. (See accompanying video.)

GM is the largest taxpayer in Oakland County and the closures will have a devastating effect on county and local services. Pontiac Mayor Clarence Phillips said the shutdowns meant an estimated $1 million to $3 million less in revenue coming to the city’s $55 million general fund budget. “It’s devastating,” he told the Detroit News. “But I think the story of Pontiac is being told all over the nation right now.”

Pontiac Councilman Everett Seay said, “This is a new reality, but how much reality can we stand? It’s like Hurricane Katrina, but it’s an economic hurricane,” he said. “This is like a plane going down and you’re asking, ‘What do you throw out first?’ Where and how can we keep services going?”

HousingHousing in Pontiac

A few miles north of Pontiac is the sprawling Orion Assembly plant, originally opened in 1983, leading to a quick growth of residential and commercial expansion in the area. The factory, which once employed 3,800 workers, is down to one shift of workers producing Pontiac G6 and Chevrolet Malibu models.

In taxes alone, the plant contributes about $2.7 million to the community, according to the Oakland Press. The money, the newspaper said, is used for Orion Township’s operating budget, schools, police and fire departments, in addition to helping fund regional institutions such as the Detroit Zoo, Oakland County parks and the Oakland Community College.

In addition, the township could lose hundreds of thousands in tax revenue under a law that reduces taxes businesses pay on their equipment—known as personal property taxes—when a plant is “idled.”

Orion Township Supervisor Matthew Gibb told the Oakland Press that the plant closing would have ripple effects throughout the area. “We have 26 companies that are directly impacted by this—that’s the larger blow,” he said. Gibb said there are 26 companies located within the township that either directly or indirectly supply the Orion plant and the Pontiac plants. “Our big job is going to be supporting the supplier base so they still have a resource here in the community.”

In addition, the impact would spread to local restaurants and businesses that are frequented by workers from the plant and the supplier companies. “You throw the pebble in the pond, it’s far-reaching,” Gibb said.

A young worker at Casey’s Chicken in Lake Orion said the restaurant depends on lunchtime orders from the factory. He explained to the WSWS reporting team that young people graduating from high school in the city would have worse prospects than their parents and face an uncertain future of low-paying and insecure jobs.

The auto plants in Pontiac were the first to be organized after the United Auto Workers union won recognition at GM through the sit-down strikes and battles in nearby Flint, Michigan in 1937. The decimation of Pontiac, Flint, Detroit and other Michigan cities is the bitter outcome of the decades of betrayals and labor-management collaboration by the UAW.

The UAW has told workers that the Orion plant was one of several “idled” that could compete to make a subcompact vehicle. In order to land the model—which was originally to be produced in China—the UAW has agreed to launch a bidding war between workers at several factories to provide GM with the lowest labor costs possible.

In its latest concessions contract, the UAW said, “It is understood that the compact and small car segment is extremely competitive and in order for the Company to consider investing in producing such vehicles in the US, innovative labor agreement provisions will have to be put in place so that such production can be done profitably under what may be extremely challenging market conditions.”

Wall street on the offensive

Wall Street on the offensive

By Barry Grey

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Bolstered by the policies of the Obama administration, Wall Street is waging a political offensive to shed the minimal limits on executive pay that were tied to government bailout funds and to further weaken regulations on the banks’ speculative practices.

This week, the Federal Reserve Board and the Treasury Department are expected to give the OK for many of the biggest banks to pay back the billions of dollars in cash infusions they received last October under the $700 billion Troubled Asset Relief Program (TARP).

The banks’ rush to repay the taxpayer handouts has nothing to do with altruism or a desire to make restitution for the disaster they have inflicted on society by gambling on subprime mortgages and other semi-criminal activities. They are eager to repay the money in order to escape restrictions on executive pay as well as other requirements, such as limits on dividends and stock repurchases.

By repaying the TARP money, moreover, the banks will save billions of dollars they would otherwise have to pay the government in the form of dividends on the preferred shares they gave the Treasury in return for the cash infusions. And having repaid the TARP money, they will be in a stronger position to get back to “business as usual,” i.e., making exorbitant profits by speculating with borrowed funds.

The TARP cash comprises only a relatively small part of the government subsidies that have flowed to Wall Street. These include hundreds of billions of dollars in government guarantees on the banks’ debt, virtually interest-free loans from the Federal Reserve, Fed purchases of mortgage-backed securities, and other government programs designed to prop up the financial markets. The total commitment in public funds for these efforts runs into the trillions of dollars.

Among the firms expected to receive approval to repay their TARP funds are many, if not all, of the nine companies that were deemed by the Obama administration to have sufficient capital to withstand a deeper recession in the so-called bank “stress tests,” the results of which were announced a month ago. They include JPMorgan Chase, Goldman Sachs, American Express, US Bancorp, State Street, and Bank of New York Mellon.

The stress tests were rigged by the Fed and the Treasury to give the 19 largest banks and financial firms a clean bill of health. The administration presented a picture that understates the critical state of the banks’ finances so as to justify keeping them in private hands, boost investor confidence and the banks’ share prices, and provide a rationale for foregoing tougher bank regulation.

In the run-up to the stress test results, the Obama administration intervened repeatedly to reassure the markets that it would do nothing to challenge the property or wealth of the financial elite. Obama and his treasury secretary, Timothy Geithner, repeatedly declared their support for capitalism and private ownership of the banks. They intervened to block congressional legislation that would have imposed a tax surcharge on bonuses awarded by bailed-out firms. They laid out detailed plans to use government funds to enable the banks to offload their bad debts. And their Auto Task Force, run by investment bankers, made clear that it would force Chrysler and General Motors into bankruptcy in order slash the jobs and wages of auto workers, setting a precedent for similar attacks on every section of the working class.

They declared in advance that they would not allow any of the banks being tested to fail, making clear that there was no limit to the taxpayer bailout of the financial industry.

The result has been a run-up of stock prices, 34 percent overall since early March, with financial stocks surging even higher. One key index shows large-bank stocks rising 87 percent.

JP Morgan stock has jumped 118 percent. Bank of America shares are up 263 percent. Its CEO, Kenneth Lewis, has made a tidy profit of over $2 million on 400,000 shares he bought earlier this year.

Investors are rushing to buy up stock offerings by the banks, even though they continue to hold an estimated $1 trillion in toxic mortgages on their balance sheets. The Wall Street Journal reported on June 3, “Money is pouring in so fast that surprised bankers can hardly believe it, especially since most investors didn’t want to go near financial stocks just three months ago, even though they were nearly 40 percent cheaper.”

As Richard Bove, an analyst at Rochdale Research, put it in a note to clients last week, the banking industry is on the verge of a “golden age.”

What is the basis for this surge in investor enthusiasm for bank stocks? It is the government’s assurance that it will cover the banks’ bad gambling debts, dollar for dollar.

The Journal quoted William Mutterperl, a Wall Street lawyer and former vice chairman at PNC Financial Services Croup, as saying, “I’m an optimist by nature, but it’s perplexing because there are still problems out there. No one has suggested foreclosures are going down, and I don’t think anyone is saying loan quality is getting any better.”

Analysts at Moody’s Investors Service warned last Tuesday that US banks could lose $640 billion through next year. “In such a scenario, absent continuation, and likely deepening, of US government capital and liquidity support programs for the banking industry, numerous banks would be insolvent,” the Moody’s analysts wrote.

The Obama administration’s good offices have encouraged the big banks to launch a multi-front offensive to block any measures that would limit their profit-making, and to weaken already existing regulations.

Last February, for example, financial firms and banking organizations launched a multi-million-dollar lobbying drive to change mark-to-market accounting rules that forced banks to report losses or write-downs totaling $175 billion in 2008. Mark-to-market essentially requires banks to value their assets according to prevailing market prices. The banks have balked at this standard, demanding instead the right to assign their own values to their bad debts, using “internal models.”

With the aid of $286,000 in campaign donations to the 33 members of a key House subcommittee, the Fair Value Coalition, the lobby group set up by the banks, succeeded in getting the industry rule-making body, the Financial Accounting Standards Board, or FASB, to give the banks immense latitude in suspending mark-to-market rules.

The Wall Street Journal on June 3 published an investigative report detailing the banks’ use of campaign fund bribes and other monies to get their way. The Journal reported that the banking coalition spent a total of $27.6 million in the first quarter of 2009 on its lobbying effort.

It focused its drive on a House Financial Services subcommittee chaired by Rep. Paul Kanjorski, a Pennsylvania Democrat. Kanjorski received $18,500 from Fair Value Coalition members in the first quarter. Over the past two years, Kanjorski has received $704,000 in contributions from banking and insurance companies, the third-highest among members of Congress.

Barney Frank of Massachusetts, the Democratic chairman of the Financial Services Committee, received $8,500 from the coalition.

Kanjorski and other recipients of the bankers’ largess from both parties grilled the head of FASB, Robert Herz, at a committee hearing on March 12, demanding that he expedite a review of mark-to-market rules and threatening him with a bill to broaden government oversight of his board if he failed to comply.

Herz got the message, and on April 12, in advance of the stress test results and early enough to enable the banks to pad their first-quarter financial reports, FASB announced the changes demanded by the lawmakers.

According to the Journal, the American Bankers Association was the biggest contributor to the campaign funds of committee members in the weeks before the March 12 hearing. The newspaper quotes ABA President Edward Yingling as boasting, “We worked that hearing. We told people that the hearing should be used to talk about the big problems with ‘mark to market,’ and you had 20 straight members of Congress, one after another, turn to FASB and say, ‘Fix it.’”

The Journal notes: “The change helped turn around investor sentiment on banks.... Wells Fargo & Co. said the change increased its capital by $4.4 billion in the first quarter. Citigroup Inc. said the change added $413 million to first-quarter earnings.” The newspaper cites a tax and accounting analyst, who estimates that the accounting changes will increase bank earnings in the second quarter by an average of 7 percent.

The Journal quotes Lynn Turner, the former chief accountant of the Securities and Exchange Commission and a former FASB member, as saying “he doesn’t think the banking industry will be satisfied until mark to market accounting is dismantled completely. ‘Despite efforts by FASB to give ground to the banks, enough is never enough, he says.”

On a separate front, the World Socialist Web Site reported in a June 4 article on the campaign by the banks, organized in another lobbying group called the CDS Dealers Consortium, to block any serious regulation of derivatives, such as credit default swaps, which played a major role in the collapse of the financial system last year. The Obama administration has essentially adopted the proposals for regulation of derivatives drawn up by the banking group and secretly distributed to the Treasury Department and congressional leaders. (See: “Wall Street, Obama administration conspire to block financial regulation”)

Then there is the report in the June 4 New York Times that the Federal Deposit Insurance Corporation (FDIC) has scrapped a central plank in the Obama’s administration bank rescue plan because it could not get the banks to participate. The scheme, dubbed the Legacy Loan Program, was part of the administration’s Public-Private Investment Program, designed to enable the banks to offload their bad loans and asset-backed securities.

Under the “legacy loan” plan, the FDIC was to finance private investment firms, virtually guaranteeing them double-digit profits, if they agreed to buy failed mortgages and other toxic loans from the banks at inflated prices. However, the banks have refused to participate, because even at the rigged prices under the scheme they would still have to accept some losses on their bad debts.

Finally, the Wall Street Journal reported June 4 that the banks have launched a lobbying drive to block an accounting rule, slated to take effect next year, that would force them to bring some of their off-balance-sheet investments back onto their books. The rule would apply to hundreds of billions of dollars in financial vehicles through which the banks packaged and sold off loans to other investors.

The vehicles are Enron-style gimmicks by which the banks evade accounting rules requiring them to maintain sufficient capital to back their speculative bets. “Here we go again,” the former SEC chief accountant Lynn Turner told the Journal. “They will get out their checkbooks and go to [Capitol] Hill.”

Despite having plunged the US and world economy into the deepest recession since the 1930s, the banks are demonstrating their controlling influence over Congress and the federal government more openly than ever. As a result, their stock is soaring, their profits are mounting, and top executives are relishing the prospect of salaries and bonuses that will exceed the huge compensation packages that preceded the financial crash.

The diametrically opposed trajectory of Wall Street’s fortunes and those of the broad mass of the people, who are reeling from depression levels of unemployment, home foreclosures and wage cuts, exposes the class divide that dominates all aspects of American social and political life.

Obama chooses private profit over healthcare needs

Obama chooses private profit over healthcare needs

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President Obama’s Saturday address initiated the public phase of his administration’s effort to pass major healthcare legislation. His remarks were notable for the absence of any reference to the actual crisis facing tens of millions of working people in the United States: more than 47 million people are living without health insurance, and millions more are underinsured and face crippling bills and even bankruptcy in the event of a serious illness.

Instead, Obama focused entirely on the rising cost of healthcare, which he presented as a major problem both for the federal government, the largest single payer of healthcare bills, and for corporate America. He declared, “The soaring costs of health care make our current course unsustainable” and pledged to heed concerns “that the ballooning costs of Medicare and Medicaid could lead to fiscal catastrophe down the road.” In other words, the administration is concerned, not about improving healthcare services for the American people, but about cutting costs in order to improve the financial health of American capitalism.

The Obama administration has already ruled out the only rational response to the crisis of healthcare availability: the establishment of a single-payer system in which the federal government would guarantee universal access to healthcare as a matter of right. Every other advanced industrialized country has some form of universal coverage. But such a system would eliminate the tens of billions raked in by insurance companies whose “business model” requires that they limit coverage, deny treatment or reject bills—in other words, it would infringe on the “right” of MetLife, Aetna, CIGNA and other giant corporations to make a profit from illness and disease.

The abortive healthcare reform plans of the last Democratic administration, headed by Bill Clinton, collapsed ignominiously in 1993-94 in the face of intransigent opposition from the insurance companies, drug companies and for-profit hospital chains. Obama boasted in his Saturday address that he had made progress in wooing the opponents of healthcare reform to join instead of oppose him.

“Unlike past attempts at reforming our health care system, everyone is at the table—patient’s advocates and health insurers, business and labor, Democrats and Republicans alike,” he said. By now the rhetoric from the White House is familiar, even predictable. Take any critical and highly charged political issue, acknowledge the opposing factions involved, and announce that your goal is to “resolve the differences.” But in the case of healthcare, there is an intrinsic conflict between the right of the people to enjoy the benefits of modern medicine and the profits of the capitalists who control the insurance industry, the manufacture of drugs and medical equipment, and the operation of for-profit hospitals and nursing homes. Obama has come down decisively on the side of these giant corporations.

There is no difficulty, intellectually or technically, in devising a rational healthcare system. Advances in science and technology make it possible to deliver adequate healthcare services to the entire population at a fraction of the current cost. Every person should have access to healthcare as a basic right and be able to choose their own doctor and receive treatment at a modern, clean, well-run facility, run as a public utility either at no cost to patients at all, or with a modest fee. Medical bills should be relegated to the museum of antiquities, along with the saws used to conduct surgery without anesthesia.

But such a system would require putting an end to the private, profit-making medical industry, one of the most lucrative sources of wealth for the financial aristocracy that rules America. The pharmaceutical and medical equipment companies, the insurance industry, and the hospital and nursing home chains would be nationalized and operated under democratic control as a public service—a transformation that the vast majority of the American people would applaud.

Doctors would become well-paid salaried employees, like airplane pilots or nuclear physicists, not businessmen/owners concerned with profit maximization—a transformation that physicians genuinely concerned with patient welfare would welcome. Instead of a medical system driven by the dictates of insurance companies and HMO “gatekeepers,” medical decisions would be made by healthcare professionals based on the welfare of their patients.

Socialized medicine would be nothing but beneficial for small businessmen as well, since it would relieve them of an employee benefit cost that puts them at the mercy of rate hikes demanded by insurance companies. Small proprietors and self-employed professionals would have the same access to the healthcare system as all other working people, unlike the present system where they frequently go without coverage or pay prohibitive individual rates.

Despite the fevered rhetoric of the ultra-right, the Obama administration’s plans have nothing in common with such a restructuring of the healthcare system along socialist lines. On the contrary, Obama has repeatedly sought to reassure the profiteers that their interests will be looked after and that they are better off at the table, working with him, than outside. The for-profit healthcare and insurance firms have taken up this offer with enthusiasm.

A major reason for the changed posture of the corporations is the financial crisis sweeping world capitalism. They see Obama’s healthcare “reform” as an opportunity to join the banks and speculators in raiding the federal treasury. These concerns are evident in the plans being drafted at the White House and by congressional committees.

One key provision is a mandate that every American buy health insurance coverage, similar to the requirement that automobile drivers purchase liability insurance. This will produce a guaranteed market of tens of millions of new insurance customers for the private companies, with the federal government helping low-income purchasers—in effect, providing a mammoth federal subsidy to the insurance companies. The number of people buying private health insurance has declined by 9 million since 2000 because of soaring premiums, deteriorating real incomes and employer cutbacks in benefits. This decline will accelerate as baby boomers become eligible for Medicare beginning in 2011 and leave the private market.

The “debate” between the Republicans and Democrats in Congress involves little more than the terms on which hundreds of billions in treasury dollars will be turned over to the healthcare profiteers. The Obama administration wants to offer a public option as an alternative or supplement to private insurance, in the name of promoting competition and “keeping the insurance companies honest.”

The Republicans, and a sizeable number of right-wing Democrats, oppose any public option—largely for ideological reasons, since they fear the establishment of any form of public health insurance, no matter how inadequate, will lead to demands for a fully public healthcare system. One consulting firm recently estimated that 119 million of the 172 million now privately insured would switch to a public health plan that paid Medicare rates and charged premiums accordingly.

An analysis in the New York Times Sunday noted “the fears of private insurers that they would not be able to compete with a Medicare-like option and might gradually be priced out of existence,” and cited the arguments of right-wing critics of Obama “that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage.”

One could hardly state the advantages of a fully state-run healthcare system more succinctly. A system with “low administrative costs and no need to produce profits” might be regarded as “unfair” by the healthcare profiteers, but it is the only way to meet the needs of working people to healthcare that is decent, affordable, and available to all as a basic human right.

Protest stops eviction by Bank of America

Protest stops eviction by Bank of America

By Kris Hamel

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A militant demonstration on May 29 outside Bank of America in downtown Detroit stopped the scheduled June 1 eviction of Michelle Hart and her elderly mother. Countrywide Home Loans, which is owned by Bank of America, refused to modify Hart’s subprime, adjustable rate mortgage as required by federal law. The demonstration, as well as phone calls from around the country to BOA president Kenneth Lewis at the bank’s headquarters in Charlotte, N.C., forced the lender to adjourn the eviction.

Vanessa Fluker

Vanessa Fluker
WW photo: Alan Pollock

Hart’s attorney, Vanessa G. Fluker, told Workers World: “She tried since January 2008, for almost a year and a half, to get a loan modification from Countrywide. By the time the lender got around to looking at the papers, they said it was ‘too late’ to modify because the sheriff’s sale already took place. In reality a simple affidavit of expungement would have allowed them to modify her loan.”

Like millions of homeowners, Hart fell behind on her mortgage when the interest rate adjusted upward while she was experiencing a job loss. According to Fluker, Hart was able to get work through a temp agency, but Countrywide told her that the income from those jobs “didn’t count” for purposes of loan modification.

Countrywide and BOA are required under federal contract to do loan modifications. But they still refuse to help many homeowners and instead move forward on foreclosures and evictions. They would rather force families onto the streets than work out terms that would allow the bank to receive payment and the borrowers to save their home.

“Both Countrywide and Bank of America have received billions of dollars in taxpayer-funded bailouts,” said Fluker. “On top of that, the federal government actually pays banks to do what they are required to do under laws like the Making Home Affordable Program: work with lenders to modify mortgages so that people can keep their homes. Anyone can go online to and read the contracts. You’ll see that Countrywide receives $1,864,000,000 and Bank of America gets $798,900,000 to modify loans.”

Countrywide told Fluker on May 29 that the eviction of Hart and her mother, who suffers from pancreatic cancer, was “adjourned while they review the file.” In the meantime, no promise to modify Hart’s loan has been forthcoming and the eviction is still pending.

The Moratorium NOW! Coalition to Stop Foreclosures and Evictions, which organized the May 29 demonstration on less than two days’ notice, urges Hart’s supporters to keep up the pressure on Countrywide and Bank of America. Call Bank of America CEO Kenneth Lewis at 704-386-5687 and tell him to modify Michelle Hart’s loan. Her home is located at 27685 Sutherland, Southfield, Mich.; loan no. 138009372.

Mass layoffs cause foreclosures to soar

Mass layoffs cause foreclosures to soar

By Kris Hamel

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The home foreclosure crisis in the United States continues to grow in scope and size. Workers are losing their homes at record rates as mass layoffs and plant closings affect millions.

A new twist has been added to the foreclosure disaster, one that accelerates the overall capitalist economic crisis even further.

What started out as a racist, sexist ploy by bankers and lenders to lure poor and working people into usurious subprime loans has now grown into an avalanche of foreclosures on homeowners with prime mortgage loans, mostly workers who have lost their jobs.

On May 25 the New York Times sounded the alarm with the headline: “Job Losses Push Safer Mortgages to Foreclosure.” Analysts predict that up to 60 percent of mortgage defaults in 2009 will be primarily due to unemployment, up from 29 percent in 2008.

The article reports: “From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

“During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans—those given to people with slightly tainted credit—rose 159,000, to 836,000.

“Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.”

The article also states: “With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy. ‘We’re about to have a big problem,’ said Morris A. Davis, a real estate expert at the University of Wisconsin. ‘Foreclosures were bad last year? It’s going to get worse.’”

The Mortgage Bankers Association reported on May 28 that a record 12.07 percent of homeowners in the U.S. are currently in foreclosure or delinquent in their mortgage payments. “The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 3.85 percent, an increase of 55 basis points from the fourth quarter of 2008 and up 138 basis points from one year ago. Both the foreclosure inventory percentage and the quarter to quarter increase are record highs.” (

The Obama administration has earmarked $75 billion for “incentives” for banks and lenders to modify home loans, as they are required to do under federal law. The Making Home Affordable Program instituted in March was supposed to save up to 4 million homeowners from foreclosure. But the Treasury Department has estimated that the number of loan modifications accomplished thus far is “more than 10,000 but fewer than 55,000.”

Under the federal MHAP, unemployed workers must verify that they will be receiving unemployment benefits for at least nine months in order to count those funds as income for purposes of getting their mortgage modified. Many unemployed workers are or will be excluded from being able to take advantage of the program because of this. The program must be amended immediately to take into account the vast unemployment impacting homeowners.

It is the duty of the federal government to enforce all laws requiring banks and financial institutions to modify home loans under the terms of their multibillion-dollar, taxpayer-funded bailouts. It is past time for a blanket moratorium on all foreclosures and evictions to be implemented nationwide to mitigate the disaster facing poor and working people.

Words and War

Words and War

It takes at least tacit faith in massive violence to believe that after three decades of horrendous violence in Afghanistan, upping the violence there will improve the situation.

Despite the pronouncements from high Washington places that the problems of Afghanistan can't be solved by military means, 90 percent of the spending for Afghanistan in the Obama administration's current supplemental bill is military.

Often it seems that lofty words about war hopes are boilerplate efforts to make us feel better about an endless warfare state. Oratory and punditry laud the Pentagon's fallen as noble victims of war, while enveloping its other victims in a haze of ambiguity or virtual nonexistence.

When last Sunday's edition of the Washington Post printed the routine headline "Iraq War Deaths," the newspaper meant American deaths -- to Washington's ultra-savvy, the deaths that really count. The only numbers and names under the headline were American.

Ask for whom the bell tolls. That's the implicit message -- from top journalists and politicians alike.

A few weeks ago, some prominent U.S. news stories did emerge about Pentagon air strikes that killed perhaps a hundred Afghan civilians. But much of the emphasis was that such deaths could undermine the U.S. war effort. The most powerful media lenses do not correct the myopia when Uncle Sam's vision is impaired by solipsism and narcissism.

Words focus our attention. The official words and the media words -- routinely, more or less the same words -- are ostensibly about war, but they convey little about actual war at the same time that they boost it. Words are one thing, and war is another.

Yet words have potential to impede the wheels of war machinery. "And henceforth," Albert Camus wrote, "the only honorable course will be to stake everything on a formidable gamble: that words are more powerful than munitions."

A very different type of gamble is routinely underway at the centers of political power, where words are propaganda munitions. In Washington, the default preference is to gamble with the lives of other people, far away.

More than 40 years ago, Country Joe McDonald wrote a song ("An Untitled Protest") about war fighters: who "pound their feet into the sand of shores they've never seen / Delegates from the western land to join the death machine." Now, tens of thousands more of such delegates are on the way to Afghanistan.

In pseudo-savvy Washington, "appearance is reality." Killing and maiming, fueled by appropriations and silence, are rendered as abstractions.

The deaths of people unaligned with the Pentagon are the most abstract of all. No wonder the Washington Post is still printing headlines like "Iraq War Deaths." Why should Iraqis qualify for inclusion in Iraq war deaths?

There's plenty more media invisibility and erasure ahead for Afghan people as the Pentagon ramps up its war effort in their country.

War thrives on abstractions that pass for reality.

There are facts about war in news media and in presidential speeches. For that matter, there are plenty of facts in the local phone book. How much do they tell you about the most important human realities?

Millions of words and factual data pour out of the Pentagon every day. Human truth is another matter.

My father, Morris Solomon, recently had his ninetieth birthday. He would be the first to tell you that his brain has lost a lot of capacity. He doesn't recall nearly as many facts as he used to. But a couple of days ago, he told me: "I know what war is. It's stupid. It's ruining humanity."

That¹s not appearance. It's reality.

Recycled radioactive metal contaminates consumer products

Recycled radioactive metal contaminates consumer products

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Thousands of everyday products and materials containing radioactive metals are surfacing across the United States and around the world.

Common kitchen cheese graters, reclining chairs, women's handbags and tableware manufactured with contaminated metals have been identified, some after having been in circulation for as long as a decade. So have fencing wire and fence posts, shovel blades, elevator buttons, airline parts and steel used in construction.

A Scripps Howard News Service investigation has found that -- because of haphazard screening, an absence of oversight and substantial disincentives for businesses to report contamination -- no one knows how many tainted goods are in circulation in the United States.

But thousands of consumer goods and millions of pounds of unfinished metal and its byproducts have been found to contain low levels of radiation, and experts think the true amount could be much higher, perhaps by a factor of 10.

Government records of cases of contamination, obtained through state and federal Freedom of Information Act requests, illustrate the problem.

In 2006 in Texas, for example, a recycling facility inadvertently created 500,000 pounds of radioactive steel byproducts after melting metal contaminated with Cesium-137, according to U.S. Nuclear Regulatory Commission records. In Florida in 2001, another recycler unintentionally did the same, and wound up with 1.4 million pounds of radioactive material. And in 1998, 430,000 pounds of steel laced with Cobalt-60 made it to the U.S. heartland from Brazil.

But an accounting of the magnitude of the problem is unknown because U.S. and state governments do not require scrap yards, recyclers and other businesses -- a primary line of defense against rogue radiation -- to screen metal goods and materials for radiation or report it when found. And no federal agency is responsible for oversight.

"Nobody's going to know -- nobody -- how much has been melted into consumer goods," said Ray Turner, an international expert on radiation with Fort Mitchell, Ky.-based River Metals Recycling. He has helped decontaminate seven metal-recycling facilities that unwittingly melted scrap containing radioactive isotopes.

"It's your worst nightmare," Turner said.

It is also one that has only barely begun to register as a potential threat to health and safety.

What is known now is that -- despite the shared belief of officials in six state and federal agencies that tainted metal is potentially dangerous, should be prevented from coming in unnecessary contact with people and the environment, and should be barred from entering the United States -- there is no one in charge of making sure that happens.

In fact, the Scripps investigation found:

-- Reports are mounting that manufacturers and dealers from China, India, former Soviet bloc nations and some African countries are exporting contaminated material and goods, taking advantage of the fact that the United States has no regulations specifying what level of radioactive contamination is too much in raw materials and finished goods.Compounding the problem is the inability of U.S. agents to fully screen every one of the 24 million cargo containers arriving in the United States each year.

-- U.S. metal recyclers and scrap yards are not required by any state or federal law to check for radiation in the castoff material they collect or report it when they find some.

-- No federal agency is responsible for determining how much tainted material exists in how many consumer and other goods. No one is in charge of reporting, tracking or analyzing cases once they occur. In fact, the recent discovery of a radioactive cheese grater triggered a bureaucratic game of hot potato, with no agency taking responsibility.

-- It can be far cheaper and easier for a facility stuck with "hot" items to sell them to an unwitting manufacturer or dump them surreptitiously than to pay for proper disposal and cleaning, which can cost a plant as much as $50 million.

-- For facilities in 36 states that want to do the right thing, there is nowhere they can legally dump the contaminated stuff since the shutdown last year of a site in South Carolina, the only U.S. facility available to them for the disposal.

-- A U.S. government program to collect the worst of the castoff radioactive items has a two-year waiting list and a 9,000-item backlog -- and is fielding requests to collect an additional 2,000 newly detected items a year.

Experts say you needn't empty your home of metal implements for fear of radiation. The peril from most individual items is generally not considered great, although some could be hazardous on their own.

In fact, everyone is exposed every day to the "background" radiation found in nature. For instance, some ceramic pots emanate low levels of radiation that occurs in clay. Granite countertops often contain measurable, but individually insignificant, amounts of naturally occurring uranium.

Other exposures come from small and contained amounts of radiation used in smoke detectors and medical devices.

The potential danger comes, however, from the cumulative effect of proximity to radiation, particularly over time and in relation to other contaminants. The precise degree of that danger has not yet been definitively determined for low-level radiation, such as that contained in commonplace goods and materials.

One scientific school of thought, which has been losing favor in recent years, holds that low levels of radiation mean low-level threats. An opposite camp contends that exposure to any level of radiation -- especially if it is chronic -- carries health risks. The U.S. government has so far sidestepped the issue of how little radiation is too much.

According to a 2006 report by a National Academy of Sciences panel, there is a direct relationship between radiation and an increased risk of cancer. Prolonged exposure can also lead to birth defects and cataracts, studies have shown.

Because the amount of tainted metals in circulation is unknown, the cumulative overall health effect -- now and over time -- is impossible to calculate. Whatever it is, there is little debate that unnecessary exposure to radiation is best avoided.

"There is no threshold of exposure below which low levels of ionizing radiation can be demonstrated to be harmless or beneficial," said Richard Monson, chairman of the Committee to Assess Health Risks from Exposure to Low Levels of Ionizing Radiation, at the release of the National Academy report.

There are no reports of anyone dying or being hurt in the United States after contact with the contaminated metal goods and materials. But the U.S. Environmental Protection Agency leaves no doubt that tainted metal poses a particular threat.

"Radioactively contaminated scrap threatens both human health and the environment," reads a cautionary statement on the EPA's Web site.

The Scripps investigation used the federal Freedom of Information Act to gain access to a previously un-mined NRC database, the only official assemblage of reports of radiologically contaminated items that have turned up in scrap yards, trash dumps and manufactured goods since 1990.

But because such reporting is neither required nor consistent, neither state nor federal environmental officials -- nor many in the scrap-metal industry -- consider the NRC accounts an accurate reflection of the problem's true dimensions. (The only mandatory rule is that anyone knowingly transporting radioactive material must notify the U.S. Department of Transportation.)

"Typically, these go unreported," said Carolyn Mac Kenzie (cq), a U.S. Department of Energy physicist who is a world expert in radioactive metals. "Whatever number you come up with would not reflect reality."

One of the most conservative estimates comes from the U.S. Government Accountability Office, which put the number of radioactively contaminated metal objects unaccounted for in the United States in 2005 at 500,000. Others suggest the amount is far higher. The most recent NRC estimate -- made a decade ago -- is 20 million pounds of contaminated waste.

What is known is that the NRC's national Nuclear Material Events Database has documented 18,740 cases involving radioactive material in consumer products, metal intended for their manufacture and other inadvertent exposures to the public, the vast majority since 1990. State environmental reports -- obtained under state freedom of information requests -- also reveal dozens of others.

A recent example emerged last summer, when a Flint, Mich., scrap plant discovered a beat-up kitchen cheese grater that was radioactive. The China-made grater bearing the well-known EKCO brand name was laced with the isotope Cobalt-60. Tests showed the gadget to be giving off the equivalent of a chest X-ray over 36 hours of use, according to NRC documents.

Estimated to have been in circulation for as long as a decade, the grater likely was four to five times more radioactive when it was new. EKCO's parent company, World Kitchen, of Rosemont, Ill., described the incident as isolated and found no need to issue a recall, spokesman Bryan Glancy said.

It was not the only cheese grater found. NRC documents show that another Cobalt-60-tainted grater had turned up in Jacksonville, Fla., in 2006. The reports do not indicate what brand of grater it was or if it was related to the one that surfaced in Michigan.

Cobalt-60 also tainted a 430,000-pound shipment of metal from Brazil in 1998. Part of that load found its way to Michigan and then Indiana, where it was used to make brackets for 1,000 La-Z-Boy recliners.

The contamination was detected by a radiation monitor when scrap leftover from the brackets job was shipped to the Butler, Ind., steel recycler Steel Dynamics, according to NRC documents.

The Cobalt-60 tainted Reclina-Rocker chairs, which would have given off a chest X-ray's worth of radiation every 1,000 hours, were still in warehouses when the contamination was discovered, and never made it to stores or living rooms, according to Rex Bowser, director of the Indoor Air and Radiological Health Emergency Response Program of the Indiana State Department of Health.

The recliners' radiation levels were "enough above background to be a concern for people sitting in La-Z-Boy chairs," Bowser said.

In many instances where contamination is identified -- generally by companies that have invested in costly detection equipment -- the contamination comes from the inadvertent blending of radioactive sources with piles of other scrap that metal recyclers reprocess and later sell.

Often, when a factory shuts down or a plant relocates, industrial smoke detectors, measuring gauges and other machines and parts that contain small amounts of radioactive material are left behind. Because they commonly are encased in a protective shell, the devices pose little risk when the plant is operating.

But when a facility closes, the devices frequently are trashed as scrap. If those radioactive parts are later heated during reprocessing, the radiation can escape and blend with the finished recycled product.

Many large scrap outfits invest in radiation detectors -- which can cost $50,000 each -- that provide a measure of protection. Steel company Gerdau Ameristeel, based in Toronto and Tampa, Fla., installs as many as six levels of detection at its scrap mills, at a cost of as much as $1 million for each facility, said Jim Turner, corporate environmental director.

But even scrap and recycling operations that are diligent in scanning incoming and outgoing loads can unknowingly wind up with tainted material.

One reason is that monitoring devices are not all strong enough to penetrate a full truckload of scrap and may miss the radioactive sources. And even the weather can foul things up, as Gerdau Ameristeel learned when a 2001 thunderstorm disturbed detectors at its Jacksonville, Fla., recycling operation, permitting radioactive Cesium-137 to slip through. The plant's cleanup cost was $10 million, according to an NRC report.

Sometimes the devices containing radiation simply disappear. In January, for instance, Wal-Mart admitted that it could not account for about 15,000 illuminated exit signs, which each contain tritium, a radioactive isotope, according to the NRC.

And other times, they are purposely masked in an attempt to dump the hot items on someone else, often to avoid the cost of proper disposal. Those fees have mushroomed in the past three decades from $1 per cubic foot to more than $400, with forecasts for them to more than double in coming years, according to a 2004 estimate by Robin Nazzaro, the audit agency GAO's natural-resources and environment director.

Recycler Doug Kramer, owner of Los Angeles-based Kramer Metals, recounted how workers once found a radioactive object wrapped in lead and hidden in a beer keg -- presumably to keep the radiation from being detected.

The global dimension of the recycling of radiation problem is large, and growing, experts say.

Between 2006 and 2007, for instance, authorities in the Netherlands found about 900 women's handbags that had originated in India and were decorated with metal rings laced with Cobalt-60 on each bag's shoulder strap. Once discovered, they were sent to a radioactive waste site in the Netherlands.

Last fall, radioactive metal also from India was used by a Connecticut company to make 500 sets of buttons for Otis elevators in France and Sweden. No one realized the elevator buttons -- which had been installed -- were radioactive until a similar shipment tripped radiation alarms at the U.S. border with Mexico, according to Otis Elevator spokesman Dilip Rangnekar.

Otis scrambled to remove the tainted buttons from the elevator cabs, Rangnekar said. But an international authority on rogue radiation said it is likely even more of the buttons remain in circulation.

"Thousands and thousands were produced," said Abel Gonzalez, a former director of the International Atomic Energy Agency's division of radiation and waste safety. "I doubt they have found all of them."

U.S. officials and metal experts say evidence is mounting that radioactive metal from abroad is increasingly --- and intentionally -- being sent to the United States, sometimes decades after the contaminated material was first detected and returned to its source.

In 1991, an Indian supplier sent to the United States more than 50 shipments of chain-link fencing, some of which was tainted. Investigators found the fencing scattered around the country, including in Florida, Tennessee, New York and Washington state.

"The NRC told them not to ship more material to the U.S., but it allowed them to keep what was here, here," said Paul Frame, a radiation expert at the Oak Ridge Institute for Science and Education in Oak Ridge, Tenn.

But a decade later, another shipment of tainted Indian fencing reached the United States, Frame said.

"My guess was that it was the same stuff," he said. "You suspect that in some cases they know the material is radioactive but they're going to ship it out anyway because it's money."

John Williamson, administrator of Florida's radiation control bureau, agrees and predicts that tainted steel from China and products from India will continue to surface, at the borders and on the plant floors.

One reason is that, after U.S. customs rejects a load of contaminated material, no one knows what happens once it is sent back to its overseas producer because no tracking system exists, he and other front-line experts said.

"In China and India, who knows what happens?" Williamson said. "My belief is it goes back into the hopper."

NRC reports give weight to his belief. Construction reinforcement materials from Mexico laced with Cobalt-60 that were detected at the border in 2006 were traced back to metal from a contaminated batch produced and exported more than 20 years before by two Juarez, Mexico, foundries.

Some experts say the United States bears some blame for the infiltration of tainted metal and products. Even though there is little debate that radiation-laced material is unwelcome, neither Congress nor federal agencies have established a "safe" level of contamination, despite two decades of wrestling with the issue.

That has created a loophole that overseas metal dealers and product manufacturers can exploit, critics say. But forbidding all radioactive material in metal would throw a damaging and costly wrench into the recycling industry, according to John Gilstrap, safety director for the Institute of Scrap Recycling Industries trade group.

"If we set the thresholds unrealistically low, we're inflicting pain on businesses for no necessary reason," Gilstrap said.

But Gerdau Ameristeel's Turner disagrees. Asked what the allowable level of radiation in metal should be, Turner replied via e-mail: "ZERO."

To officials in several states, it is the absence of federal oversight and indistinct rules about materials and goods tainted with low-level radiation that is causing undue pain. After the South Carolina waste site closed last summer, six states called on Congress to act. So far, it has not.

"There is no one federal agency responsible for regulating all ionizing radiation, and therefore regulations are fragmented or non-existent in some areas," said Michael Mobley, head of a commission formed last summer by officials from Alabama, Florida, Georgia, Mississippi, Tennessee and Virginia.

"If we address all radioactive materials across the board and the waste that is generated from them, we will protect public health and the environment to a greater extent than we do now," he said.

U.S. war funding bill brims with unrelated extras

U.S. war funding bill brims with unrelated extras

By Jeremy Pelofsky

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A $100 billion bill to fund U.S. wars in Iraq and Afghanistan is rapidly accumulating extra items such as money for military aircraft the Pentagon doesn't want and possibly a scheme to jump-start sagging auto sales.

The cars and planes are not directly linked to the U.S. war effort. But they are typical of Congress' penchant for loading bills with unrelated spending in hopes the funds will sail through on the strength of the main legislation.

President Barack Obama originally sought $83.4 billion for the two wars and more foreign aid for countries like Pakistan.

But then he too sought more -- $4 billion extra to combat H1N1 swine flu and $5 billion to back credit lines to the International Monetary Fund, which is trying to help developing countries weather the global economic downturn.

The unrelated provisions have slowed the bill down, especially for the IMF because Republicans have argued the extra items should be vetted through the normal congressional process rather than jammed into an emergency spending bill.

Fights have also erupted about add-ons for the U.S. prison at Guantanamo Bay, Cuba and an attempt to bar the release of photos of detainee abuse. While Republicans do not have the votes to block the bill, they have said they will oppose it and that forces Democrats to ensure most of their members back it.

"This supplemental was supposed to be about providing funding for our troops," one House Republican aide said. Instead, it has become a mish-mashed, taxpayer funded 'Christmas tree' bill that will propagate bad policies and unnecessary spending."

Some 51 anti-war House Democrats had opposed the bill but now are under pressure to switch to give Obama a victory. But a House Democratic leadership aide said Republicans will have to answer to constituents for opposing a war funding bill.


The House and Senate are working out differences between the two versions of the war funding bill they each approved last month and hope to pass a final, single version this week.

Congress was on the verge of giving Pakistan roughly $1 billion in the bill, but Obama last week sought another $200 million for Islamabad as it fights Taliban militants crossing its border from Afghanistan.

And lawmakers are also considering adding money for a plan to spur domestic car sales by offering up to $4,500 in vouchers for buyers to trade in their less fuel-efficient vehicles for ones that get better mileage, known as "cash for clunkers".

The White House declined to directly address adding in extra provisions, but said officials continue to work with lawmakers "about the core priorities in the legislation and hope that it can get to the president soon."

When the House and Senate originally approved their separate versions of the war bill, the White House praised lawmakers for not inserting their own pet projects in the legislation -- though some pet priorities were included.

Democratic Representative John Murtha, who heads the House Defense Appropriations Subcommittee, managed to get $3.1 billion for eight C-17 and 11 C-130 military transport planes included. However, that has been pared back by four C-130s.

The Pentagon did not request the aircraft but lawmakers want them to preserve jobs in their home states and Murtha disputes the military's contention that they are not needed.

A senior Democratic House aide said the requests for flu and Pakistan money were appropriate to include in the bill because they were emergency needs Obama cited. The aide also noted that Republicans in the past backed items like the IMF funds.

"This is a dangerous game Republicans are playing by jeopardizing the well-being of our soldiers to score political points," the aide said. "The supplemental will be passed, but they will have to answer for their actions if they oppose it."

Global weapons spending hits record levels

Global weapons spending hits record levels

•US accounts for more than half total increase to $1.4tn
•China now second biggest spender in world league table

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Worldwide spending on weapons has reached record levels amounting to well over $1tn last year, a leading research organisation reported today.

Global military expenditure has risen by 45% over the past decade to $1.46tn, according to the latest annual Yearbook on Armaments, Disarmament, and International Security published by the Stockholm International Peace Research Institute (Sipri).

Though the US accounts for more than half the total increase, China and Russia nearly tripled their military expenditure over the decade, with China now second only to the US in the military expenditure league table.

"China had both the largest absolute and the largest relative increase," says the Sipri report. The increase "has roughly paralleled its economic growth and is also linked to its major power aspirations," it adds.

Other regional powers, including India, Brazil and Algeria, also substantially increased their spending on arms, the report says.

Despite increasing its military expenditure by 3% in real terms in 2008 and by 21% since 1999, Britain faces a significant military budget shortfall. Sipri says this is due partly to the UK's involvement in two conflicts, in Afghanistan and Iraq, which are projected to have cost a total of £12bn ($18bn). It is also partly due to commitments to numerous large weapons procurement projects that cannot be funded under current budget plans. To close the budget shortfall, the MoD decided last year to reduce or postpone, but not cancel, large projects including plans to build two aircraft carriers, and high-tech armoured cars for the army.

"The idea of the 'war on terror' has encouraged many countries to see their problems through a highly militarised lens, using this to justify high military spending," said Dr Sam Perlo-Freeman, head of Sipri's military expenditure project. "Meanwhile, the wars in Iraq and Afghanistan have cost $903bn in additional military spending by the USA alone."

Sipri's yearbook also lists the top 100 arms producing companies, excluding Chinese ones, for which figures were unavailable. Boeing remained the top arms producer in 2007 – the most recent year for which reliable data is available – with arms sales worth $30.5bn. All the top 20 companies are American or European.

Their aggregate arms sales amounted to $347bn in 2007, an increase of 5% in real terms over 2006.

Sipri estimates that in total there are about 8,400 operational nuclear warheads in the world, of which almost 2,000 are kept on high alert and capable of being launched in minutes. Counting spare warheads, those in storage and those due to be dismantled, there are 23,300 nuclear weapons in the arsenals of eight states – the US, Russia, China, the UK, France, India, Pakistan and Israel, according to the yearbook.

The number of people forcibly displaced by conflict has also increased in recent years, with internally displaced persons (IDPs) reaching 26 million, more than twice the number of refugees, says the Sipri report. "For a large share of these people, no sustainable solution is in sight. Mass population displacement is often a result – and even a goal – of violence against civilians."

Top 10 military spenders in 2008 ($bn)

1 USA 607

2 China 84.9

3 France 65.7

4 UK 65.3

5 Russia 58.6

6 Germany 46.8

7 Japan 46.3

8 Italy 40.6

9 Saudi Arabia 38.2

10 India 30

Clinton To Iran: Don't discount Israel pre-emptive strike

Don’t discount Israel pre-emptive strike, Hillary Clinton warns Iran

Tim Reid

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Hillary Clinton refused yesterday to rule out a pre-emptive Israeli military strike on Iran. It was the first time that a senior member of the Obama Administration had openly discussed such a possibility.

The US Secretary Of State, speaking a few days before elections in Iran that will determine the fate of President Ahmadinejad, also warned that the country would face retaliation if it launched a nuclear attack on Israel.

As President Obama extends “an open hand”, seeking direct talks with Tehran in his attempt to halt its nuclear programme, Mrs Clinton appeared ready to unnerve the Iranian leadership with talk of a pre-emptive strike “the way that we did attack Iraq”. She said that she was trying to put herself in the shoes of the Iranian leadership, but added that Tehran “might have some other enemies that would do that [deliver a pre-emptive strike] to them”. It was a clear reference to Israel, where Binyamin Netanyahu, the Prime Minister, has talked about the possibility of military action to halt Iran’s nuclear programme — something he views as a threat to the Jewish state.

Mrs Clinton, interviewed on the ABC programme This Week a year after she conceded to Mr Obama in the Democratic primary race, said that it was US policy that a nuclear attack by Iran on Israel would be seen as an attack on the US.

“I don’t think there is any doubt in anyone’s mind that were Israel to suffer a nuclear attack by Iran, there would be retaliation,” she said, though she did not spell out who would retaliate. She was responding to a question about her statement as a presidential candidate last year, when she said Iran would “incur massive retaliation from the United States” if it attacked Israel.

Yesterday she said: “Part of what we have to make clear to the Iranians is that their pursuit of nuclear weapons will actually trigger greater insecurity.” She noted that Israel and Arab states were “deeply concerned about Iran having nuclear weapons”.

She added: “So, does Iran want to face a battery of nuclear countries?”

Canadian, US, UK Life, Health Insurers Investing Heavily in Tobacco Companies

Canadian, US, UK Life, Health Insurers Investing Heavily in Tobacco Companies

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Canadian firm Sun Life has $1 billion in two companies.

Major U.S., Canadian and British life and health insurance companies have billions of dollars invested in tobacco companies, says a study published in the New England Journal of Medicine.

Wesley Boyd, the study's lead author, found that at least $4.4 billion US in insurance company funds are invested in companies whose affiliates produce cigarettes, cigars and chewing tobacco.

"Despite calls upon the insurance industry to get out of the tobacco business by physicians and others, insurers continue to put their profits above people's health," said Boyd, a faculty member of Harvard Medical School.

"It's clear their top priority is making money, not safeguarding people's well-being," he wrote.

Tobacco is considered the leading cause of lung cancer and a major risk factor for heart attack, stroke, pulmonary disease and cancer.

According to the World Health Organization, it is a contributing factor in 5.4 million deaths a year.

Researchers first revealed that health and life insurance companies had major investments in tobacco companies in 1995 in an article in the British medical journal Lancet.

"Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both," Boyd wrote.

"Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit - and smokers lose - twice over."

According to the study, U.S. insurer Prudential Financial Inc. has $264.3 million invested among three U.S. tobacco companies, including Reynolds America and Philip Morris.

Canadian insurer Sun Life Financial Inc., which sells life, disability and health insurance, has a stock portfolio with more than $1 billion in two tobacco companies, including $890 million in Philip Morris.

Prudential Plc, which sells health and disability insurance, has $1.38 billion in two tobacco companies, including British American Tobacco.

The study also details the substantial tobacco investments of the U.S. firms Northwestern Mutual and Massachusetts Mutual Life, and the Scottish firm Standard Life Plc.

Bilderberg Agenda Exposed


AFP’s editor crashed the secret meeting of the global elite and uncovered some scary schemes

By James P. Tucker Jr.

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Bilderberg boys are a bunch of grumpy old men but remain fiercely dedicated to usurping sovereignty in the United States and throughout the world. Patriots can celebrate their setbacks but never let up: Bilderberg still threatens the sovereignty of all nations while fighting for world government.

Major goals remain exploiting the global recession and an imaginary “swine flu pandemic” to establish global departments of treasury and health under the United Nations. But at the May 14-17 meeting in Vouliagmeni, Greece, near Athens, Bilderberg took a keen interest in persuading the United States to surrender sovereignty to the International Criminal Court, or ICC.

Bilderberg is also setting up a “summit” in Israel June 8-11 so “the world’s leading regulatory experts” can “address the current economic situation in one forum,” said Zohar Goshen, chairman of a subgroup of the International Association of Securities Commissions (IOSCO). Mary Shapiro, chairman of the U.S. Securities and Exchange Commission, will represent this country.

Bilderberg found President Obama a Willing Wilkie at its June, 2008 meeting in Chantilly, Va. near Washington. They were reassured when he chose their boy, Harold Koh, a strong advocate of the U.S. accepting the ICC, as the State Department’s top lawyer.

In the Penn State Law Review, Koh wrote sneeringly of “nationalists” who oppose surrendering sovereignty to international institutions, including the ICC. He praised the “transnationalist faction” on the Supreme Court and the wisdom of the jurists for their rejection of the “nationalist faction.”


“Generally speaking, the transnationalists tend to emphasize the interdependence between the United States and the rest of the world, while the nationalists tend instead to focus more on preserving American autonomy,” Koh wrote. “The transnationalists believe in and promote the blending of international and domestic law, while nationalists continue to maintain a rigid separation of domestic from foreign law.”

The “transnationalists view domestic courts as having a critical role to play in domesticating international law into U.S. law, while nationalists argue instead that only the political branches can internalize international law,”

Koh wrote. “Transnationalists believe that U.S. courts could and should use their interpretive powers to promote the development of a global legal system, while the nationalists tend to claim that U.S. courts should limit their attention to the development of a national system.”

Five Supreme Court justices have said, to Koh’s delight, that U.S. courts should take into consideration the rulings of foreign courts in deciding domestic cases. They are: John Paul Stevens, Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer.

In a Bilderberg warm up, the Washington-based American Society of International Law called on the U.S to embrace the ICC. These luminaries
included former Supreme Court Justice Sandra Day O’Connor, former Rep. Mickey Edwards and a roster of educated fools.

Carl Bildt, Sweden’s minister for foreign affairs, made a pitch for two other major Bilderberg goals: creating a global Department of Treasury and Department of Health, with all nations surrendering sovereignty over these issues to the UN. The International Monetary Fund (IMF) is to become the Treasury Department and the World Health Organization the World Health Department. But Bildt seized on an old Bilderberg issue, global warming, to make the case for WHO. Bilderberg propaganda over a “swine flu pandemic” has fallen victim to facts: On average, 300,000 Americans develop flu each year and 30,000 die. Only a few have died or even been seriously afflicted by “swine flu.”

The world economic meltdown is a “once-in-a-generation crisis while global warming is a “once-in-a-millennium challenge,” Bildt told Bilderberg. Sources inside Bilderberg said Bildt’s speech mirrored an address he gave to the Carnegie Endowment for International Peace in Washington. Carnegie’s president, Jessica Mathews, is a long-time Bilderberg participant.

“We are at a critical time,” Bildt told Bilderberg. “The order of magnitude [of world crises] are more challenging than we are used to. The world economic recession has already reversed strong annual growth rates in many developing [poor] nations and in some parts of Europe and has the potential to bring down governments. . . . ”

“When we hit bottom, we can’t be sure where we’ll bounce back up,” Bildt said. “This is an urgent economic crisis unlike anything we have dealt with in living memory.” However, he called for a bounce-back within years, not a decade-long recession as some called for in efforts to exploit human misery.

Bildt then turned to selling global warming as the gateway to a World Health Department under the UN. Bilderberg boys, including David Rockefeller and others who inherited great wealth as the sons of smokestack industrialists, grabbed global warming as an issue more than a decade as a means of generating huge profits with investments to “save the planet.” Now, global warming has a new role.

“We know we need to take action,” Bildt said of global warming. “The global crisis is now,” he said. “The necessity to take action on climate change is now.” His calls for “global action” on these supposed “crises” were thinly disguised calls for UN control.

Bildt called for world (UN) solutions to virtually all problems. He cited the European Union as “model of integration, saying, “the EU is emerging as a global actor.” He advocates expanding NAFTA throughout the Western Hemisphere to create an “American Union.”

The International Monetary Fund sent a report to Bilderberg advocating its rise to the role of World Treasury Department. “Further actions by policymakers, particularly in the financial sector, are needed to restore market trust and confidence,” said Marek Belka, director of the IMF’s European department and former prime minister of Poland.

U.S. Treasury Secretary Timothy Geithner enthusiastically endorsed the plan for a World Treasury Department, although he received no assurance that he would become its leader. He expressed “hope” that American and European leaders could “work together” to achieve such a “global solution” to the world economic meltdown.

The IMF’s planned new role as a world Treasury Department should be welcome news to the “little guy,” Geithner told Bilderberg. “The damage has been unfair and indiscriminant,” he said. “Ordinary Americans, small business owners and community banks who did the right thing and played by the rules are suffering from the actions of those who took on too much risk.”

But, even with a World Treasury Department, problems will not disappear overnight, Geithner warned. “These are all welcoming signs, but the process of financial recovery and repair is going to take time,” he said, lending his weight to a relative short-term recession as opposed to those who backed a long-term recovery. The people of Europe and America will have suffered enough to embrace a World Treasury Department, he said.

“Our hope is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight,” Geithner said. “We can’t allow institutions to cherry-pick among competing regulators and ship risk to where it faces the lowest standards and weakest constraints.”

Bilderberg is fervently working to persuade the Irish to accept an even stronger Lisbon Treaty, which would create an even stronger European Union, creating a permanent (instead of rotating) chairman and a more powerful Parliament. The EU Parliament can even now impose laws on member states.

Irish voters rejected this EU expansion in an earlier referendum, but Bilderberg is pressing for another vote. Citizens of France and Germany overwhelmingly opposed the measure, numerous polls showed, but their heads of state signed off. Ireland requires a referendum before approval.

A meeting is planned June 18-19 in Brussels to cross t’s and dot i’s in an effort to induce Irish voters to reverse themselves and endorse the treaty. Under EU rules, all states must back a change for it to take effect. Bilderberg leaders plan a “private meeting” in advance of the formal session to push ratification.

“They’re going to make us vote until we vote their way,” said an Irishman protesting at the gates of Bilderberg, who feared reprisals if identified. There were a large number of European journalists fighting to expose Bilderberg and much is being published in Europe. Many were seized by police, surrounded by pointed guns and had their film and notes seized.

But The Times of London had a helpful story the opening day of the Bilderberg meeting, Thursday, May 14. “What we have been able to establish from a World Bank spokesman, Alexis O’Brien, that the organization’s president, Robert Zoellick, will be in Athens on unspecified business May 14,” the paper said. “And that U.S. Treasury Secretary Tim Geithner’s public schedule is mysteriously empty for the next two days. Jo Ackermann, head of Deutsche Bank, will be traveling “somewhere in Europe.’

Jean-Claude Trichet, head of the European Central Bank, will not be around until the end of the week.” (This was a moment when all journalists were striving to identify Bilderberg participants.)

“Jim Tucker, veteran stalker of the Bilderberg club meetings, claims that [Margaret] Thatcher was ordered “to dismantle British sovereignty, but she said ‘no way,’ so they had her sacked,” the paper said. (Events confirmed this, as did Lady Thatcher in a later conversation with Tucker.)