Monday, October 19, 2009

Obama joins Netanyahu in shielding Israel from war crimes charges

Obama joins Netanyahu in shielding Israel from war crimes charges

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The United Nations Human Rights Council has endorsed a report into Israel’s 22-day assault on Gaza in December and January, accusing Israel of war crimes.

Israel’s premier, Binyamin Netanyahu, predictably denounced the report as biased against Israel and unjust and insisted that he would not allow any Israeli officials to face trial for war crimes. The Obama administration echoed Israel, calling the report unbalanced, and said that its adoption would damage the possibility of resuming talks between Israel and the Palestinians. The talks are a necessary fig leaf for bringing the Arab regimes on side against Iran.

The report by South African Judge Richard Goldstone said the war was “a deliberately disproportionate attack designed to punish, humiliate and terrorise a civilian population, radically diminish its local economic capacity both to work and to provide for itself and to force upon it an ever-increasing sense of dependency and vulnerability.”

It recommended that the UN Security Council demand that Israel conduct an investigation into the military’s conduct, and that it refer the findings to the International Criminal Court (ICC) if it fails to do so within six months. Some 1,400 Palestinians, the majority of them civilians, including 400 women and children were killed, at least 5,000 people injured, and 21,000 homes destroyed, as well as much of the vital infrastructure. On the Israeli side only 13 people died, several as a result of “friendly fire.”

Goldstone also called on countries that are signatories to the 1949 Geneva Conventions to use their “universal jurisdiction” to search for and prosecute those responsible for war crimes.

With help from the White House, Netanyahu mounted an international campaign of bullying and intimidation to oppose the report, get the vote deferred until March and ensure that the Security Council—dominated by the US and the European powers that hold the power of veto—does not refer the case to the ICC.

Netanyahu demanded that Mahmoud Abbas, the nominal president of the Palestinian Authority (PA)—his term of office expired last January—oppose the report, with threats that he would call off talks with the Palestinians. In reality, Netanyahu has made it abundantly clear that his government is not interested in reaching any agreement with the Palestinians. He has refused to freeze settlement construction in the West Bank, and intends to continue building in East Jerusalem. Just two weeks ago, Foreign Secretary Avigdor Lieberman said in a radio interview that there was no chance of achieving a settlement with the Palestinians any time soon, and anyone who thought otherwise “doesn’t understand the situation and is spreading delusions.”

Israel also warned Abbas that it would refuse permission for a second cellular telephone company in the West Bank, a crucial issue to the PA and Palestinian commercial interests. Israel has held up the delivery of essential telecommunications equipment at their ports and failed to deliver the radio frequency as agreed last year. Without this, Wataniya Telecom, jointly funded by Qatari and Kuwaiti investment funds, which has already made a considerable investment in the project, has threatened to withdraw, forcing the PA to repay an estimated $300 million invested in licensing and infrastructure fees and $200 million in expenses.

This has precipitated a major crisis for Abbas. Under intense pressure from Tel Aviv, Washington and Arab governments, he called for a postponement of a vote on the report—weakening his already tenuous position resulting from his subservience to Israel and his support for the repeated assaults on Hamas and Gaza. According to Lieberman, the PA actually “pressured Israel to go all the way” in Operation Cast Lead last December.

Abbas’s meeting a few weeks ago with President Barack Obama and Netanyahu, despite Israel’s pointed refusal to halt settlement construction, discredited him even further. His decision to prostrate himself once again before Israel has set off a chain of events that he is powerless to control.

The Palestinians were furious and came out onto the streets in protest. Even elements within the PA and Fatah, Abbas’s own party, spoke out against him in an effort to rescue their own abysmal reputations. Bassam Khoury, the PA’s economy minister, resigned and Prime Minister Salam Fayyad felt obliged to say, “We mustn’t give up the opportunity to go after those who committed war crimes during Israel’s attack on the Gaza Strip.”

Ahmed Jibril, head of the Popular Front for the Liberation of Palestine, told Abbas to “go home,” and the council of Palestinian organisations in Europe called on him to resign.

Nabil Amr, a former Palestinian ambassador to Egypt and aide to Abbas, also criticised Abbas. In response, the PA immediately withdrew its security forces protecting his Ramallah home. A few years ago, Amr was seriously injured in an attempted assassination.

In Hamas-controlled Gaza, people threw shoes, a sign of profound contempt, at hundreds of posters branding Abbas a traitor. For the first time, an Israeli Arab party, Balad, intervened in internal Palestinian politics and called for Abbas to be sacked. Syria cancelled an official visit by Abbas to Damascus.

Abbas’s attempt to backtrack on the vote was met with derision.

Netanyahu also demanded that Israel’s allies fall in line. When Prime Minister Gordon Brown announced that Britain would abstain in Friday’s vote, Netanyahu berated him on the telephone. In the event, both Britain and France did not abstain: they simply absented themselves from the vote.

In an interview with the BBC, British Foreign Secretary David Miliband justified their position by saying that the British and French governments had been “in the middle of detailed discussions with Prime Minister Netanyahu of Israel about three key issues—the establishment of an independent inquiry, humanitarian aid to Gaza and the restart of the peace process.” “The vote was called in the middle of those discussions and we thought it right to continue with our work on the three fundamental issues so that could really contribute to a reversal of what is a dangerous spiral of trust and mistrust in the Middle East,” he said.

The US led a block of just six nations voting against the report on the 47-member council. Three of these were east European states dependent upon on Washington’s goodwill. Twenty-five voted in favour, 11 abstained.

After the vote, Brown and French President Nicolas Sarkozy wrote a joint letter to Netanyahu proclaiming their recognition of Israel’s “right to self-defence,” but urging Israel to take a more conciliatory stance towards the Palestinians and Gaza so as not to upset relations in the Middle East. They invited Netanyahu to come to Europe for talks.

They pleaded with Netanyahu to hold “an independent and transparent investigation of the events in Gaza, whose results were shared with us,” to “facilitate increased access to Gaza,” for a “halt to settlement activity in occupied territories” and “negotiations on the basis of parameters recalled by President Obama in his speech to the UN.”

Israel’s destabilising of the PA comes at a time when there are mounting tensions between the Palestinians and Israeli extremists in East Jerusalem. The PA has accused Israel of seeking to “Judaise” East Jerusalem, and of allowing right-wing zealots into the al-Aqsa mosque complex, known as Haram al-Sharif to Muslims and Temple Mount to Jews, while denying access to Muslims. This was the flashpoint that sparked the Intifada in September 2000.

Thirty people were injured in fighting between Palestinians and right-wing Israelis at the end of September. Since then, there have been sporadic clashes as Palestinians feared that Israeli extremists were seeking to enter the complex.

Last Friday, Hamas called for a “day of rage,” while Fatah had called for a strike and peaceful protests in support of the mosque. The Islamic Movement, a political organisation based in Israel, had urged Muslim citizens of Israel to flock to Jerusalem to “defend al-Aqsa.”

Israel deployed thousands of extra police and maintained their recent policy of allowing only female worshippers and men over the age of 50 into the mosque area. While the Old City remained calm with many shops closed, violent clashes broke out between masked Palestinian youths and police in full riot gear in Ras al-Amoud, in East Jerusalem, and at the Qalandia checkpoint near the West Bank city of Ramallah.

Signs of the US dollar's demise

Signs of the US dollar’s demise

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An article by veteran Middle East journalist Robert Fisk in the British Independent on October 6, entitled “The demise of the dollar”, is credited with adding to the recent weakness of the US dollar and the rise of gold prices.

The exclusive report revealed that finance ministers and central bankers from the Gulf States, China, Russia, Japan and France had held a series of secret meetings to plan an end to the use of the US dollar for oil trading by 2018. The replacement would be a basket of currencies, including the euro, the Japanese yen, the Chinese yuan, gold and possibly a new currency issued by the Gulf Cooperation Council.

If true, such a move would be an economic and political bombshell. An end to the use of the US dollar for trading in such a vital commodity as oil would be a further blow to its pivotal role since the end of World War II as the world’s reserve currency. With no obvious solid replacement, the demise of the dollar would be a recipe for the emergence of antagonistic currency and trade blocs. For the US, it would end its ability to readily fund its huge debts by selling bonds denominated in the world’s reserve currency.

An unnamed Chinese banker told the Independent that the plans to remove the dollar from the Middle East oil trade would fundamentally change the face of international financial transactions. The meetings were clearly highly sensitive, as they involved a number of close US allies—Japan, Saudi Arabia and the Gulf States—and all parties would be concerned about Washington’s reaction.

As the same Chinese banker explained: “America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.” Indeed, Saudi Arabia and other Gulf oil producers, as well as Japan and Russia, denied any such meetings had taken place. Fisk did not, however, resile from his report, writing on October 7 that Saudi denials were simply regarded “as a normal part of Gulf politics”.

The reaction of the markets indicated that the story was not implausible. In fact, there has been a growing discussion in financial circles about replacing the US dollar. Financial turbulence and the massive growth of US government debt that stands at nearly $US12 trillion as a result of falling tax revenues and astronomical bailouts to Wall Street, has created considerable nervousness about the dollar, particularly among governments holding huge dollar reserves.

The Gulf Cooperation Council of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates holds over $2 trillion in dollar reserves. China has currency reserves of more than $2.27 trillion, mostly in US dollars. A long-term decline in the value of the dollar would result in huge losses for these countries. At the same time, any rapid withdrawal from the dollar threatens to trigger a panic that would magnify losses by sending its value plunging even lower.

As the Independent pointed out, China has been the “most enthusiastic” power pushing for an alternative to the dollar for oil trading. It not only imports huge amounts of oil from the Middle East, but is also a growing exporter of manufactured goods and an increasingly large investor in the region.

Beijing is well aware of the dangers involved in a protracted decline in the dollar. Not only would an ongoing slide affect the value of its dollar-denominated assets, but would impact on Chinese exports to the US. China’s purchases of US bonds have been aimed at maintaining the existing exchange rates between the dollar and the yuan, which underpin China’s huge export trade to the US.

At the same time, China has begun to explore alternatives. Beijing has signed currency swap agreements with Russia and a number of Asian and Latin American countries to settle trade in their own currencies, rather than the US dollar. Brazil has discussed similar agreement with China. Moreover, Beijing is increasingly using its currency reserves to buy overseas minerals and industrial assets, rather than to purchase US Treasury bills.

In March, Zhou Xiaochuan, head of the Chinese central bank, published an essay calling for the replacement of the US dollar with International Monetary Fund (IMF) Special Drawing Rights—in effect a basket of currencies. During his trip to China in June, US Treasury Secretary Timothy Geithner assured Beijing that the Obama administration would make the necessary savage cuts of social spending and the living standards of the American working class to rein in US debt and maintain the dollar’s stability.

Former Chinese central bank adviser Yu Yongding told Bloomberg News before he met Geithner: “I wish to tell the US government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds’. The euro is an alternative. And there are lots of raw materials we can still buy.”

Writing on October 13, Financial Times commentator Martin Wolf played down talk of the “dollar’s death” as exaggerated. “Unless and until China removes exchange controls and develops deep and liquid financial markets—probably a generation away—the euro is the dollar’s only serious competitor. At present, 65 percent of the world’s reserves are in dollars and 25 percent in euros. Yes, there could be some shift. But it is likely to be slow. The euro zone also has high fiscal deficits and debts. The dollar will exist 30 years from now; the euro’s fate is less certain,” he explained.

In fact, the lack of any alternative to the dollar as the global reserve currency does not preclude its “demise”. It simply means that the consequence would be the formation of rival currency blocs and a descent into currency and trade conflicts.

Others, like World Bank head Robert Zoellick, recognise the dangers. In a speech in late September, Zoellick warned: “The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency. Looking forward there will be increasingly other options to the dollar.” He added: “One of the legacies of this crisis may be a recognition of changed economic power relations.”

The dominant role of the dollar was bound up with the overwhelming industrial predominance of the US following World War II. Washington effectively dictated the terms of the post-war global economic order encapsulated in the Bretton Woods agreement under which the US dollar, backed by a fixed exchange rate with gold, functioned as the world’s reserve currency.

As Japan and Europe recovered, however, the relative decline of the US was expressed in the decision by US President Nixon to end the gold backing for the dollar in 1971. The turn to the exploitation of cheap labour through globalised production in the 1980s and 1990s led to a hollowing out of US industry and the vast financialisation of the American economy. Those processes accelerated after the collapse of the Soviet Union and the opening up of China and India as vast reservoirs of low-paid labour, and ultimately led to last year’s catastrophic financial meltdown centred on Wall Street.

According to the Independent, the US was aware of the meetings over dollar oil trading and “sure to fight this international cabal”. The article cited Beijing’s former special envoy to the Middle East, Sun Bigan, who wrote in an official journal that “bilateral quarrels and clashes [with the US] are unavoidable” over the energy interests in the Middle East. “This sounds like a dangerous prediction of a future economic war between US and China over Middle East oil—yet again turning the region’s conflicts into a battle for great power supremacy,” the Independent commented.

Competition over energy supplies lies behind the present US-led confrontation with Iran. Using Iran’s nuclear programs as the pretext, Washington has been pushing for harsh new sanctions against Tehran that would impact on its oil and gas trade. China, which is one of Iran’s largest trading partners and importer of Iranian energy, has resisted a new round of sanctions.

At the meeting of the Shanghai Cooperation Organisation (SCO) meeting in Beijing last week, Iran, which is a SCO observer state, backed the creation of a new unified regional currency, an idea proposed by Russia. The SCO was formed by Russia, China and several Central Asian republics in 2001 to counter the US influence in the region. Iran replaced the dollar with the euro and yen as its trading currencies three years ago, due to intensifying US-led pressure.

Competition over raw materials is also taking place in Africa. In Ghana, the Chinese state oil company CNOOC is competing with the US Exxon Mobil’s $4 billion bid for Jubilee, one of the largest oilfields in Africa. China International Fund and oil giant Sinopec are setting up a $7 billion Guinea Development Corporation to build infrastructure, mining and energy projects for the Guinea regime, which is facing Western sanctions. The fund is more than twice the size of Guinea’s entire GDP. Guinea has the world’s biggest reserve of bauxite, as well as large quantities of gold, diamond, uranium, iron ore and potentially oil.

A recent Lex column in the Financial Times linked Sino-US competition for African oil to the weak dollar. Referring to the size of the Chinese bids, the article noted: “The more China’s leaders perceive their pile of greenbacks to be a wasting asset the more it makes sense to pledge or spend them today. Overpaying is in the eye of the beholder if such dollar anxieties are vindicated.” In other words, China is translating at least some of its dollar reserves into energy and mineral assets, contributing to the weakening of the US dollar.

In this context, high-level meetings about the long-term replacement of the dollar in Middle East oil trading may well have taken place, despite the subsequent denials, pointing to deepening tensions and rivalry between the major powers, particularly over vital energy supplies.

US House panel approves pro-Wall Street derivatives bill

US House panel approves pro-Wall Street derivatives bill

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The Financial Services Committee of the US House of Representatives on Thursday approved a bill incorporating loopholes and exemptions that will allow Wall Street banks to continue unimpeded their lucrative trade in derivatives—the murky financial instruments that played a major role in the near-collapse of the global financial system.

The measure, drafted by the Democratic chairman of the committee, Rep. Barney Frank of Massachusetts, was approved along party lines, with only one Republican member of the committee joining all 43 Democrats. The bill, ostensibly to regulate the $592 trillion derivatives market, was touted as a pillar of the Obama administration’s scheme to “toughen” federal regulation of banks, hedge funds and other financial firms.

It will be merged with a similar bill working its way through the House Agriculture Committee before being voted on by the full House. The House bill will then be reconciled with what promises to be an even weaker bill still to be acted on by the Senate.

After passing the derivatives bill, the Financial Services Committee turned to the next major plank in the administration’s financial overhaul—the creation of a Consumer Financial Protection Agency purportedly to police corporate abuses in consumer credit markets, including credit cards, auto loans, mortgages and student loans. It quickly adopted a loophole exempting 98 percent of the nation’s banks from oversight by the proposed agency.

These actions make clear that no serious measures will be taken to rein in the speculative practices of banks, insurance firms and other financial companies that precipitated the deepest economic crisis since the Great Depression. The big banks and financial firms, which have received trillions of dollars in government subsidies, are using their taxpayer bailouts and government assurances that they will not be allowed to fail to generate huge profits and record bonuses for their top traders and executives. They are employing the same methods of gambling with borrowed money, including speculation in derivatives, which led to last year’s financial meltdown.

The term “derivatives” embraces a broad spectrum of financial dealings undertaken by companies to hedge against fluctuations in everything from interest rates, currency values and commodity prices to weather patterns. Among the most important derivatives are credit default swaps. These are contracts agreed to between corporations in which the seller insures the buyer against the default of specific corporate bonds or securities.

The transactions are currently “over the counter,” i.e., arrived at privately without being listed on any exchange, such as the stock market. Since the passage of a law in 2000 supported and signed by then-Democratic President Bill Clinton, they have been unregulated.

The 2000 law sparked an explosive growth of this form of financial speculation. The credit default swap market, according to some calculations, now has a face value of nearly $600 trillion, up from $88 trillion a decade ago. The biggest traders in credit default swaps, such as JPMorgan Chase and Goldman Sachs, make outsized profits by collecting fees for brokering credit default swap contracts.

Trading in credit default swaps played a major role in the subprime mortgage bubble that imploded in August of 2007, leading to the financial crash of 2008. The collapse of insurance giant American International Group (AIG), which has to date received $182 billion in government funds, was the result of the firm’s massive holdings in credit default swaps tied to subprime mortgage-backed securities and other dubious assets. AIG bet that the underlying mortgages would not default. It lost its bet and was required to come up with huge amounts of cash as collateral, which it did not have.

AIG’s imminent failure threatened to bankrupt thousands of “counterparty” banks and other financial firms around the world, provoking a panic that was stanched only by the infusion of hundreds of billions of taxpayer funds into its coffers and those of scores of other financial firms.

Wall Street has lobbied intensively against any effective federal regulation of credit default swaps and other derivatives. On June 1, the New York Times published a lengthy exposé revealing that Obama’s treasury secretary, Timothy Geithner (formerly the president of the Federal Reserve Bank of New York), had adopted a proposal drawn up by a group of big Wall Street firms and confidentially “shared with the Treasury Department and leaders on Capitol Hill.”

The banks proposed that trading in derivatives be conducted through privately-owned and controlled clearinghouses, closely tied to Wall Street firms, and that federal oversight be limited to so-called “standardized” derivatives. “Customized” derivatives would be exempt from federal regulation. The vague category of “customized” derivatives includes the most lucrative credit default swaps and other derivatives, which would be shielded from public scrutiny or government regulation.

The Times indicated that Geithner had in all essentials accepted the banks’ proposal.

The bill adopted by the House Financial Services Committee is even weaker than that proposed by the Obama administration. It not only exempts “customized” derivatives from oversight by the Securities and Exchange Commission and the Commodity Futures Trading Commission, it also exempts so-called “end users” of derivatives. This is a broad and hazy category embracing non-financial firms that employ derivatives to hedge against “operational risks,” such as rising energy costs, currency fluctuations and extreme weather.

But as New York Times financial columnist Gretchen Morgenson pointed out Sunday, there is nothing to stop hedge funds, private equity companies and banks from setting up dummy companies that meet the “end user” definition, so that their derivatives trades will escape federal regulation.

“Another questionable exemption,” she wrote, “says that if a swap is to be exchange-traded, it must be deemed ‘clearable’ by facilities known as clearinghouses. Some of these are partially owned by banks…. Gee, do you think the banks might be a tad hesitant to punt a very lucrative line of business onto less profitable exchanges? Do you think they night have an incentive to say that the most profitable swaps simply aren’t clearable?”

Federal regulators expressed concerns over the loopholes in the Financial Services Committee bill. Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), in a statement Thursday called for “legislation that covers the entire marketplace, without exception, and to ensure that regulators have appropriate authorities to protect the public.”

Newsweek’s web site posted an article October 16 citing a “senior regulatory official” as warning that the exemption for “end users” of derivatives was a “big regulatory gap.” The official added that Gensler was concerned that the bill exempted all foreign exchange trades as well as dealings on overseas exchanges and that the CFTC ‘will not have enough authority over exchanges and clearinghouses, for example, to set margin requirements.’ The article added that he is “worried about a provision that allows privately run clearinghouses dominated by Wall Street to change rules or contracts without CFTC review, undermining the authority of government regulators.”

Newsweek commented, “But thanks to weeks of intense pressure from Wall Street banks and their customers in corporate America, the bill that was approved on Thursday by Rep. Barney Frank’s Financial Services Committee is riddled with exceptions and loopholes, many critics say. If it becomes law, Wall Street’s finest could be driving truckloads of new derivatives products through those loopholes for years to come.”

Morgenson in her column quoted Michael Greenberger, a University of Maryland professor and expert on derivatives, as saying that “the plain language of the legislation can only be read as a Christmas tree of decorative gifts to the banking industry.”

The Obama administration gave its stamp of approval to the bill. Assistant Treasury Secretary Michael Barr told reporters Thursday, “In our view this is a tough, strong piece of legislation.”

The derivatives bill, as well as the committee’s consumer protection bill—which exempts more than 8,000 of the country’s 8,200 banks from oversight by the proposed new agency—illustrates the effective dictatorship of the US financial aristocracy over government policy. Wall Street’s domination of every branch of government is bolstered in no small measure by its use of the blunt but effective instrument of bribery, in the form of campaign contributions and other perks, dispensed to politicians of both parties.

The New York Times on Thursday noted that the financial services industry has poured over $220 million into lobbying so far this year, much of it directed toward shaping the administration’s financial regulatory plan.

The newspaper further pointed out that over the past decade, banking and other financial interests have contributed more than $77 million to the members of the House Financial Services Committee. Two of the biggest recipients are Barney Frank, who has received more than $3 million, and the ranking Republican on the committee, Spencer Bachus of Alabama.

As for the Obama administration, its leading financial officials largely consist of millionaires with close ties to Wall Street. The Financial Times on Thursday cited financial disclosure forms showing that before joining the government, Gene Sperling, a senior Treasury adviser, was paid $888,000 by Goldman Sachs and $158,000 for speeches to companies including the Stanford Group, the company headed by Allen Stanford, who has since been charged with massive fraud.

Matthew Kabaker, another Treasury adviser, earned $5.8 million at Blackstone, the private equity firm, in the two years before he joined the administration to help draft plans to rescue the financial industry.

Previously released forms revealed that Lawrence Summers, chief economic adviser to the White House, was paid $5.2 million by DE Shaw, the hedge fund, in the two years before he joined the administration. As treasury secretary under Bill Clinton, Summers ushered through the law that deregulated the derivatives markets.

Obama in New Orleans: The callous face of the US ruling elite

Obama in New Orleans: The callous face of the US ruling elite

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In a brief, four-hour stopover in New Orleans en route to a fund-raising dinner with millionaire Democrats in California, President Barack Obama made perfunctory promises to the people of the devastated city, barely disguising his indifference to their plight.

The visit, coming one day after the stock market soared above 10,000 and the Wall Street Journal estimated that compensation at major banks and financial firms would hit a record $140 billion this year, underscored the chasm that separates rich and poor in Obama’s America.

Obama has waited nine months from his inauguration to visit the city which in 2005 became a worldwide symbol of the failure of the Bush administration and the callousness of the US ruling elite, as more than 1,000 Americans died and hundreds of thousands of poor and working class people lost everything in Hurricane Katrina.

The New Orleans visit was intended as a photo-op, with heartwarming footage of cheering school children and grateful citizens, but the reality of growing popular disillusionment and anger intruded when a college student challenged Obama during his appearance at a town hall meeting at the University of New Orleans.

Gabriel Bordenave, 29, cited the continued stalling by the Federal Emergency Management Agency (FEMA) on funds to rebuild the main health care facility for the poor of New Orleans, Charity Hospital. “I expected as much from the Bush administration,” he told Obama, “but why are we still being nickel-and-dimed?”

Obama responded defensively with political boilerplate. His administration was “working as hard as we can as quickly as we can,” he said, citing unspecified “complications” in coordinating efforts with state and local governments—although he had just defended Louisiana Governor Bobby Jindal and New Orleans Mayor Ray Nagin when they were booed by the crowd during introductions.

“I wish I could just write a check,” he continued, and someone in the audience shouted out, “Why not?”

Obama was visibly put out, first by Bordenave’s question, then by the interruption. He proceeded to lecture his critics: “You say, why not? There’s this whole thing about the Constitution.” He then continued that in Washington, “everyone will attack you for spending money, unless you are spending it on them.”

This was a thinly concealed slur. His audience of hurricane survivors, Obama was suggesting, were just another special interest group seeking money from the federal government. Bordenave later told the New York Times, “I kind of thought (the Constitution reference) was a blow-off answer.”

While claiming that his administration would not follow the example of its predecessor in ignoring the suffering caused by Katrina, Obama mimicked one of the most notorious episodes of the Bush presidency. Bush left his Texas ranch to fly over the hurricane zone in early September 2005, on his way to Washington. Obama stopped off in New Orleans for three hours and 45 minutes on his way to a fundraising event in San Francisco.

At the Westin St. Francis Hotel, nearly 1,000 well-heeled supporters packed a ballroom, paying up to $1,000 each, while 160 high rollers chipped in $34,000 per couple for dinner with the president upstairs. Obama was introduced at the dinner by Mark Gorenberg, managing director of the venture capital firm Hummer Winblad. Joining them at the podium was House Speaker Nancy Pelosi, whose husband is a multimillionaire real estate investor.

Obama’s performance in New Orleans was so callous and arrogant that it drew criticism from two African-American columnists usually in the administration camp, both writing on their newspapers’ web sites. Jim Mitchell of the Dallas Morning-News observed that the president “snaps at a person who asks a very reasonable question—why the area doesn’t have a full service hospital back up and running so many years after Katrina.” He added that Obama’s response was “snide, elusive, and surprisingly, politically tone deaf.”

Eugene Robinson of the Washington Post called Obama’s “brief display of drive-by compassion” in New Orleans “by far the worst outing of his presidency thus far.” Dismissing Obama’s claim that it was difficult to expedite the flow of funds to the storm-ravaged area, he wrote: “We now know that our government can make hundreds of billions of dollars available to irresponsible Wall Street institutions within a matter of days, if necessary. We can open up the floodgates of credit to too-big-to-fail banks at the stroke of a pen. But when it comes to New Orleans and the Gulf Coast, well, these things take time.”

The contrast is indeed stark. While Obama boasted of having freed up $1.5 billion in federal funds for Gulf Coast recovery projects since taking office, this compares to more than $12 trillion made available to Wall Street financial interests—8,000 times more. Obama’s new money for Katrina recovery is less than one week’s expenditure on the war in Afghanistan.

The indifference of the president was demonstrated in the perfunctory character of his tour of the hurricane zone. He stopped at a public charter school in the Lower Ninth Ward, the same school visited by George W. Bush during one of his post-Katrina jaunts. The school sits in an area that remains 75 percent uninhabited. Then the presidential motorcade made its way to the University of New Orleans field house for an hour-long town hall, and Obama was on his way back to the airport.

Obama did not bother to visit the other areas hardest hit by Katrina, including the vast New Orleans East area, which remains the site of mile upon mile of flood damage, or the Mississippi and Alabama Gulf Coast.

It was not that Obama lacked time to go to these areas. The day after his stopover in New Orleans, he was back in the region for an event with George H. W. Bush, to mark the 20th anniversary of the former president’s “A Thousand Points of Light” foundation, at Texas A&M University. In all, Obama spent far more time with venture capitalists and Bush loyalists than with the people of New Orleans.

The visit to the Bush foundation was particularly provocative. It amounted to a message to the American people that when the next disaster hits, they should look to private charity, not the federal government, for assistance.

This is in keeping with the record of the Obama administration on reconstruction of the storm-ravaged Gulf Coast. Last month, the Institute for Southern Studies published a survey of 50 community leaders from coastal Texas, Louisiana, Mississippi and Alabama, who gave the Obama administration a D+ for its recovery efforts, only slightly better than the D- they awarded the Bush administration.

The only area where Obama rated a C- was in his willingness to “publicly acknowledge the challenges facing recovering Gulf Coast communities.” In other words, Obama is better than Bush in talking about recovery, but gets the same D’s for doing anything about it.

The administration’s lowest scores came on the biggest reconstruction issues: helping displaced families return home, rebuilding infrastructure, increasing protection against hurricanes, and reviving the coastal economy through job-creation.

The New Orleans Times-Picayune cited an Obama administration document revealing that the Second Congressional District of Louisiana, which comprises most of Orleans Parish and the entire city of New Orleans, was receiving the lowest amount of funding for any congressional district in the country from the economic stimulus package passed last February.

The social needs in the area remain enormous. According to a study by the Brookings Institution, there are 62,557 homes vacant or abandoned in Orleans Parish, about one third of the total number of homes in existence before Katrina. A survey showed that 40 percent of these abandoned or vacant homes showed signs of habitation, in some cases by the former owners attempting to rebuild, in other cases by squatters and the homeless.

The Katrina Recovery Index published by the Institute of Southern Studies gives a glimpse of the dimensions of the social crisis in New Orleans, more than four years after Katrina:

• 100,000 displaced persons from New Orleans are now living in Houston, Texas.

• The percentage of households with children in New Orleans has fallen from 30 percent to 20 percent.

• Only 752 federal housing vouchers have been issued in New Orleans; since the waiting list for vouchers was established, 16 people on it have died.

• Rents in New Orleans are up 40 percent since Katrina.

• Demand for emergency food relief at New Orleans-area food pantries is up 35 percent.

• 60 percent of New Orleans school children now attend privately-operated charter schools.

• 43 percent of the city’s medical facilities have not reopened since Katrina.

• Two-thirds of the city’s population reports chronic health problems, up 45 percent since 2006.

• The suicide rate in New Orleans is up 200 percent since Katrina, while only one local hospital provides in-patient mental health care.

• Louisiana ranks 50th among US states for overall health care quality.

Bailed out insurance giant AIG plans $198 million in new bonuses

Bailed out insurance giant AIG plans $198 million in new bonuses

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American International Group, which has received nearly $200 billion in bailout funds from the federal government, is slated to pay 400 employees in its financial products division another $198 million, according to a report published Wednesday by the Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP).

Kenneth Feinberg, the Obama administration’s “pay czar” for executive compensation at bailed out institutions, has “informally advised” the company not to pay the bonuses, according to the report. But the White House has claimed that Feinberg is not legally empowered to block the bonus payments, since they were negotiated prior to laws regulating bonus payments at companies now largely owned by the government.

AIG had planned to pay a total of $475 million in “retention bonuses” to employees in its financial products division, covering the years 2008 and 2009. This includes $168 million in March 2009 and the $198 million in March of 2010, along with smaller amounts paid out at different time intervals. Total retention bonus payments going to all of the company’s 4,800 remaining personnel will amount to over $600 million.

The report notes that AIG had 13 different bonus plans, the details of which executives themselves did not fully understand. Barofsky faults the federal government for not having “detailed information” about AIG’s bonus system before offering it billions in aid.

The Treasury Department was “broadly aware of the existence of contractually required retention and bonus payments in November 2008,” he wrote, but did not take steps to find out the details or make reductions to pay.

The report also found that AIG traders and executives, who sought to diffuse the popular outrage over their bonuses last year by promising to give some of their money back, have returned far less than they claimed.

At a congressional hearing in March, then AIG CEO Edward Liddy called on traders to give back half of their bonuses, saying that “some have already given back 100 percent.” They ultimately pledged to give back a quarter, but, according to the report, have thus far paid back only $19 million of the $45 million promised.

Feinberg’s suggestion that AIG not pay its bonuses is meaningless. The bankers will get their money, and the Obama Administration will do everything in its power to make sure they are allowed to.

When AIG’s plans to pay its second batch of 2008 bonuses became publicly known in March, the House of Representatives responded to the public outcry by passing a bill that would put a 90 percent tax on bonuses at companies receiving federal assistance. A similar bill stalled in the Senate, largely due to the White House’s opposition. The whole issue was eventually dropped.

The truth is that the Obama administration has no desire to limit bonuses paid at Wall Street banks. On every possible occasion the Obama Administration has voiced its opposition to any explicit curbs on executive compensation, and this has played out in practice by the fact that the very people responsible for the crisis are now doing better than ever.

On a related note, the Wall Street Journal reported Friday that Feinberg compelled Ken Lewis, the outgoing chief executive of Bank of America, to pay back $1 million in bonus payments that he received this year, as well as give up another $1.5 million that he was promised.

The money Lewis will give back is tiny compared to his retirement package: $53.2 million in pension benefits, $10.6 million in deferred compensation and $5.5 million in restricted shares. This is in addition to tens of millions of dollars in shares that he was awarded during his time with the bank.

Feinberg is justifying the paltry sum requested on the grounds that Lewis’s retirement package was worked out before Feinberg was given authority to oversee it. Despite the small sums being demanded, this measure is the most high profile of any taken by Feinberg.

Bank of America last year received over $45 billion in federal aid, along with loss guarantees on over a hundred billion dollars in its assets. It has not yet repaid the money invested in it by the government.

Feinberg is charged with reviewing pay for the 175 top employees in the 7 firms under his jurisdiction. His review of pay practices at these companies is expected by the end of October.

Feinberg’s concern has been to preserve the banks’ image, calling, for instance, on banks to give money in stock instead of cash, and to find ways around federal regulations. Only last week, Feinberg allowed Citigroup to sell off its energy trading arm in order to pay Andrew Hall, one of its traders, $100 million in compensation for this year.

The Obama administration’s decision to stand by while the architects of the financial crisis receive millions of dollars in publicly-financed bonuses corresponds perfectly with its other actions. This week, the administration dropped all talk of raising taxes on overseas profits.

Meanwhile, the conditions of life for the American population are deteriorating at an unprecedented rate. Last week, Colorado became the first state to lower its minimum wage level, dropping it four cents to $7.24 an hour.

USA Today reported that average weekly wages have fallen by 1.4 percent since the start of the year after adjusting for inflation. If the present rate holds, this will be the largest yearly decline since 1991.

Obama and the fiscal crisis of the states

Obama and the fiscal crisis of the states

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The class character of the Obama administration is clearly indicated by one statistic: President Obama has made available more than $12 trillion in cash infusions, loans and guarantees to the financial industry, but for state governments that are facing massive budget deficits, Obama has thus far provided only one quarter of 1 percent of that amount in federal stimulus funds—about $30 billion.

The administration has refused to provide emergency aid to the states, including some of the largest in the country, such as California and Pennsylvania, which are on the brink of default. The White House is sitting by while states across the country lay off workers and slash spending on education, health care and other essential social programs.

The crisis confronting state governments is unprecedented. States that imposed large-scale layoffs, unpaid furloughs and wage cuts, closed offices for days at a time and slashed services in order to balance their budgets for the recently ended fiscal year are once again piling up deficits.

Tax collections gathered from April through June fell by 16.6 percent, breaking records dating back 50 years, according to a report released this week by the Nelson A. Rockefeller Institute of Government. Forty-nine states saw revenues decline in the quarter, 36 by double digits.

Preliminary data suggest that tax revenue for July and August likely fell by 8 percent, about the same as the decline for the fiscal year ending in July.

Most states approved their budgets for next year at the end of July. Little more than two months later, at least 18 face unanticipated operating deficits that will necessitate further cuts in state services.

The states’ budget crisis is caused, in large measure, by the impoverishment of the American working class. Layoffs and wage cuts have driven states’ income tax collections down by 27.5 percent from the previous year. Stressed workers have, unsurprisingly, spent less on consumer goods, thus reducing sales tax receipts by 9.5 percent, according to the Rockefeller Institute.

Declining home prices have slashed local property tax revenues, which largely finance the public schools.

Soaring unemployment is not only bankrupting the states. It is creating a social crisis without parallel since the Great Depression. Five states—Michigan, Nevada, Rhode Island, California and Oregon—have official unemployment rates above 12 percent, led by Michigan, with 15.3 percent.

This social crisis is placing unprecedented demands on state budgets. States typically provide around half of all funding for unemployment insurance, food stamps and Medicaid health coverage for the poor. They provide funding as well for public schools and colleges.

Every day, there are reports of major cuts or layoffs enacted or threatened:

• In a bid to close a $600 million deficit, Massachusetts’ Democratic Governor Deval Patrick on Thursday threatened to cut 2,000 jobs unless workers accept cuts in pay and benefits.

• Also on Thursday, New York Governor David A. Paterson, a Democrat, outlined $3 billion in cuts this year, and warned that the state faces a $50 billion three-year deficit. Paterson proposed massive cuts in education, Medicaid and public transportation, and $500 million in budget reductions for all state agencies.

• Iowa’s Democratic Governor Chet Culver last week ordered a 10 percent across-the-board cut in state spending, a total of $565 million. The cuts will result in an anticipated 1,000 layoffs of state workers.

• Tennessee will cut an additional $350 million from next year’s budget after discovering that the $753 million reduction already enacted is insufficient. Among other cuts, the state will reduce funding for its Medicaid program, Tenicare, and will liquidate its “rainy day fund,” which until recently was estimated at $750 million.

The situation confronting the states is expected to deteriorate further. Like the unemployment rate, the fiscal health of state and local governments is considered a “lagging indicator.”

“An end to the recession doesn’t mean an end to state budget problems,” said Robert B. Ward, a fiscal studies expert with the Rockefeller Institute. Ward anticipates a “long, hard slog over two, three years or more.”

Corina L. Eckl of the National Conference of State Legislatures noted that when the last recession ended in 2001, state budgets continued to deteriorate for two more years.

The states’ crisis will be further compounded when federal stimulus money is exhausted after the 2011 fiscal year. Though the stimulus program’s award to the states is dwarfed by the fiscal crisis—this year’s combined $63 billion falloff in tax revenue is twice what states have taken in through the stimulus—in some cases, it has prevented a complete breakdown. Michigan, for example, will likely use hundreds of millions in stimulus money to help meet a $2 billion budget deficit for 2010.

Lawmakers frankly acknowledge that when this money runs out, more drastic cuts in social spending will follow. Unlike previous recessions, moreover, it is widely accepted that the layoffs and reductions in government services being carried out now will never be restored.

In the name of “living within our means” and making “hard choices,” the Obama administration is opposing a second stimulus package.

At the height of the budget crisis in California, the state appealed to the Obama administration for aid to close its $26 billion deficit. This was flatly rejected, the administration declaring that states must “put in place reforms that will restore their creditworthiness.”

The reactionary role the federal government is playing in relation to the states marks a historical reversal from periods in the nation’s history when the federal government was identified with social reforms that were resisted by the states.

In response to the mass struggle of African-American workers in the 1950s and 1960s, the administrations of Eisenhower, Kennedy and Johnson undertook a series of actions that pitted Washington against Southern state capitals. In the 1930s, Franklin Roosevelt’s New Deal reform legislation provoked denunciations among state power brokers that the federal government was usurping local power. And from 1861 to 1865, the federal government under Abraham Lincoln successfully prosecuted the Civil War, which resulted in the end of chattel slavery and the destruction of the Southern slave-owning class.

Under Obama, the federal government is playing the opposite role. With state governments disintegrating by the day, working people who depend on their social services and employees who depend on these programs for their livelihoods face complete indifference from the White House.

This new relationship between Washington and the states can only serve to inflame and reignite the centrifugal tendencies that have long been an explosive force in the political life of the nation.

As popular opposition intensifies against the policies of Wall Street—which controls every branch of the government—one form it will inevitably take is increasing tension within the federal system.

Florida hospitals to implement 'death panels' in pandemic

Florida plan advises hospitals to bar some patients in event of severe flu pandemic

Outbreak would limit some hospital care

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Florida health officials are drawing up guidelines that recommend barring patients with incurable cancer, end-stage multiple sclerosis and other conditions from being admitted to hospitals if the state is overwhelmed by flu cases.

The plan, which would guide Florida hospitals on how to ration scarce medical care during a severe flu outbreak, also calls for doctors to remove patients with poor prognoses from ventilators to treat those who have better chances of surviving. That decision would be made by the hospital.

The flu causes severe respiratory illnesses in a small percentage of cases, and patients who need ventilators and are deprived of them could die without the breathing assistance the machines provide.

In June, Florida Surgeon General Ana M. Viamonte Ros sent the draft guidelines — which had already undergone a series of internal revisions — to 16 state medical organizations for their feedback.

But the state has not yet publicized the guidelines or solicited input from the general public. The Florida Department of Health released a copy of the draft plan at the request of ProPublica, a nonprofit news organization, which provided it to the Sun Sentinel.

The document addresses one of the most heart-rending issues in medicine: What to do if the number of people in need of ventilators and other treatment dramatically exceeds what is available.

The goal, the plan says, is to focus care on patients whose lives could be saved and who would be most likely to improve. While it says those decisions are not to be made based on patients' perceived social worth or role, the plan calls for different rules for some populations.

The list of conditions that disqualify hospital admission would be applied to most people only in the two most severe levels of a pandemic. However, they would also be applied in the first level ofa pandemic for patients transferred to hospitals from "other institutional facilities," such as nursing homes and mental health facilities.

Florida's planning effort reflects a growing acknowledgment that hospitals across the nation would be unable to cope with the flood of patients that a severe influenza pandemic, like the one that gripped the nation in 1918, would unleash. That resource gap is in the spotlight now, as the country is battered by a second wave of pandemic swine flu, also known as the H1N1 virus.

"What we have seen are real stresses, particularly on the emergency departments," Thomas Frieden, commissioner of the Centers for Disease Control and Prevention, said at a press conference last week.

The H1NI virus is much milder than the 1918 flu, but a small proportion of H1N1 patients, including some who have no risk factors and are young and healthy, develop severe breathing problems requiring mechanical ventilation and life support.

So far, intensive care units in the U.S. haven't been overwhelmed with people needing ventilators.

"That's something that we're tracking closely," Frieden said.

In Winnipeg, Canada, all regional critical care beds were full at the peak of the outbreak last spring, and in Mexico, patients experienced long delays before being admitted to ICUs. Four died before being transferred from the emergency room.

Florida health officials believe that the number of severely ill flu patients will likely remain at a manageable level, provided residents get vaccinated, that they know when to stay home and when to seek medical care (visit or call 877-352-3581 for information), and that the existing flu strain does not mutate into a more virulent form.

In the case of a much severer scenario, Florida's draft guidelines call for hospitals to turn away anyone whose doctor has signed a "Do Not Resuscitate" order, which instructs rescuers not to revive a patient whose heartbeat or breathing stops.

A recent report from a panel of national experts convened by the Institute of Medicine urged states not to use DNR orders for this purpose, because they reflect preferences about end-of-life planning "more than an accurate estimate of survival."

The Florida plan also calls for intensive care unit patients and those using ventilators to be reassessed after 48 to 72 hours.

Those whose chances of survival have significantly worsened would be taken off the machines or discharged from critical care to make way for others who may have a better chance of survival. If needed, they would be given palliative care to keep them comfortable.

One goal of Florida's plan is to "reduce or eliminate" the legal liability of health care workers who, in good faith, deny or withdraw treatment from some patients in an emergency. The plan includes sample executive orders that the governor could issue to shield workers and authorize hospitals to implement the guidelines.

The draft document also outlines how the health care system should stretch critical resources before moving to ration care.

The guidelines suggest reusing supplies, canceling surgeries that are not absolutely necessary, training staff to perform additional tasks and drawing on stockpiles. The general public's responsibilities include treating certain sick family members at home and monitoring public health messages.

Florida's draft guidelines aim to provide the "greatest good for the greatest number" when doing the best for all patients is no longer possible.

That goal needs to be balanced with an effort to distribute scarce resources in the least discriminatory way, said professor Ken Goodman, who directs the University of Miami bioethics program and the Florida Bioethics Network.

"Among the ways we can do that is to somehow take the evidence about what we think works and bolt it to the values that I think are uncontroversially shared: Namely, life is good, suffering is bad."

He said that methods included in the draft are still imperfect: "It's a very difficult problem to figure out how the world of science can help ensure that our strategies for allocating resources are fair and effective."

Viamonte Ros will have final approval authority and the plan will remain voluntary and subject to review, according to Doc Kokol, the health department's information officer.

The Florida health department's original goal was to have a final draft of the plan ready by December.

But with public health workers scrambling to cope with other aspects of the H1N1 pandemic, that is now unlikely, state officials said.

"People would like to have that policy," said Goodman, who chaired an ethics meeting on these issues at Jackson Memorial Hospital in Miami last week. He said that staff at the hospital have drawn up their own draft plan to cope with a potential surge of patients needing care. Florida plans to accept public input after the guidelines are revised by health officials. Kokol wrote in an e-mail that that "will likely include regional meetings for public input as well as electronic receipt of comments."

In many states, that type of input has been largely absent. Groups of doctors, lawyers and ethicists have hammered out the plans with little engagement with the public or with groups that represent children, the elderly and those with chronic illnesses or disabilities.

When Utah tested a similar plan in late August, the drill revealed difficulties that Florida clinicians and patients are likely to encounter.

Utah family physician Pete DeWeerd had to tell a mock patient's mother that her 7-year-old daughter, who had cerebral palsy and was suffering from the flu, would be turned away from the hospital and likely die.

"I don't like to tell you this," he said he told her, "it feels unfair, but our list is our list is our list." He added: "It was awful. You get a huge lump in your throat."

Dr. Tom Kurrus, medical director of St. Mark's Hospital in Salt Lake City, called it "emotionally draining" when mock patients and family members yelled, screamed and took issue with who was denied treatment.

"The major weakness in our preparedness had to do with security," he said.

Kurrus said that although the exercise was covered widely in Utah's media, the public isn't aware that the disaster plans call for rationing.

"Even with the scenarios played out and the discussions entertained, they still don't understand," he said. "It's, 'Why can't I get into the hospital, why can't grandma get put on a respirator?'"

Goodman, the University of Miami ethicist, said open conversation about the complex, value-laden decisions that will determine who receives treatment in the most extreme circumstances is crucial, and that hospital, state or federal guidelines should always be subject to revision.

"This should be an ongoing process that includes new evidence as it becomes available and that includes, in an open society, the participation of citizens," he said.

Judge Halts Mandatory Flu Vaccines for Health Care Workers

Judge Halts Mandatory Flu Vaccines for Health Care Workers

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Daniel Barry for The New York Times Dr. Richard F. Daines, the state health commissioner, issued the vaccination requirement in August.

Updated, 4:21 p.m. | A judge on Friday morning halted enforcement of a New York State directive requiring that all health care workers be vaccinated for the seasonal flu and swine flu.

The temporary restraining order by the judge, Thomas J. McNamara, an acting justice of the State Supreme Court in Albany, comes amid a growing debate about the flu vaccine. On Friday afternoon, the State Department of Health vowed to fight the restraining order, saying that the authorities “have clear legal authority” to require vaccinations, and noted that state courts had upheld mandatory vaccinations of health care workers against rubella and tuberculosis. Justice McNamara scheduled a hearing for Oct. 30 on the three cases before him, involving the flu vaccine.

The state health commissioner, Dr. Richard F. Daines, through the State Hospital Review and Planning Council, issued a regulation on Aug. 13 ordering health care workers to be vaccinated by Nov. 30 or face fines.

Dr. Daines later explained the reasoning behind the vaccine, saying in a statement on Sept. 24:

Questions about safety and claims of personal preference are understandable. Given the outstanding efficacy and safety record of approved influenza vaccines, our overriding concern then, as health care workers, should be the interests of our patients, not our own sensibilities about mandates. On this, the facts are very clear: the welfare of patients is, without any doubt, best served by the very high rates of staff immunity that can only be achieved with mandatory influenza vaccination – not the 40-50 percent rates of staff immunization historically achieved with even the most vigorous of voluntary programs. Under voluntary standards, institutional outbreaks occur every flu season. Medical literature convincingly demonstrates that high levels of staff immunity confer protection on those patients who cannot be or have not been effectively vaccinated themselves, while also allowing the institution to remain more fully staffed.

Terence L. Kindlon, a lawyer for three nurses who sued the state, asserting that the order violated their civil rights, said the judge’s ruling was a victory. New York was the only state in the country to mandate vaccinations for health care workers, he said.

The nurses — Lorna Patterson, Kathryn Dupuis and Stephanie Goertz — work in the emergency room at Albany Medical Center, a regional trauma unit.

“These are not libertarians, they are not lefties, they are not right-wing lunatics,” Mr. Kindlon said of his clients in a phone interview on Friday. “They are health care professionals, and they think the vaccination is not going to be good for them. They have no confidence that either the seasonal flu vaccine or H1N1 vaccine is going to do any good for them.”

Justice McNamara consolidated the nurses’ suit with two other lawsuits, brought by the New York State Public Employees Federation and the New York State United Teachers Union, which also challenged the regulation.

Mr. Kindlon said of his clients: “They basically were being administratively ambushed. This regulation came out of the Health Department during the dog days of August. People weren’t aware of it until September. Then they were suddenly advised that the drop-dead rate for receiving the vaccination from the state was Nov. 30.”

The hospital imposed its own deadline — mid-October — for vaccinations for its employees, Mr. Kindlon said.

The state is all but certain to fight the lawsuits and seek enforcement of the mandate. At a legislative hearing on Tuesday, Dr. Guthrie Birkhead, a state deputy health commissioner, defended the mandate, saying, “Health care settings are no different than any other setting where vaccination is the most effective method of preventing influenza.”

In a statement on Friday afternoon, the State Department of Health noted that Justice McNamara’s order was only temporary. Officials said in a statement:

In two weeks the Department is scheduled to be in court, where we will vigorously defend this lawsuit on its merits. We are confident that the regulation will be upheld. The Commissioner of Health and the State Hospital Review and Planning Council have clear legal authority to promulgate the mandatory regulation. As one court said in a 1990 ruling rejecting a challenge to regulations requiring mandatory rubella vaccinations and annual tuberculosis testing for health care workers: “Hospitals . . . exist for the benefit of their patients. They exist to cure the sick. The Legislature of this State has charged the Commissioner of Health with the responsibility of making hospitals safe places to get well. These regulations are tailored to accomplish that end.”

The issue of mandatory vaccinations has divided health care workers and even experts.

The Public Employees Federation, which has about 5,000 members covered by the regulations, said it encouraged its members to be vaccinated against the flu but opposed making the vaccine a condition of employment.

The New York State Nurses Association has taken a similar position. The association “supports immunization as an effective way to reduce the risk of contracting the flu, but upholds the right of registered professional nurses to choose whether or not they wish to be vaccinated,” officials said in a statement, adding, “The association believes effective patient protection is achieved through an aggressive voluntary vaccination program, coupled with a comprehensive infection prevention plan that includes education, proper hygiene practices, and the appropriate use of personal protective equipment.”

Patricia Finn, a lawyer for Suzanne Field, a nurse from Poughkeepsie, N.Y., who has filed a lawsuit in State Supreme Court in Manhattan challenging the mandatory vaccinations, said on Friday that her case would proceed despite the Albany restraining order, but added about the temporary restraining order:

We’re absolutely thrilled about it. I’m very pleased that the whole process has been slowed down. That’s what we’re so concerned about, the process of vaccinating. It’s not like getting your teeth cleaned; it’s pretty serious. It shouldn’t be taken lightly. So we were happy about this.