Monday, December 12, 2011

ACLU asks Supreme Court to invalidate patents for human genes

ACLU asks Supreme Court to invalidate patents for human genes

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DNAdoublehelix-publicdomain

The American Civil Liberties Union and the Public Patent Foundation urged the U.S. Supreme Court on Wednesday to invalidate patents for human genes associated with hereditary breast and ovarian cancer.

“We are asking the Court to rule that patent law cannot impede the rights of scientists and doctors to conduct their research and exchange ideas freely,” said Chris Hansen, staff attorney with the ACLU Speech, Privacy and Technology Project. “Something as natural as human DNA cannot be owned by a particular company.”

Myriad Genetics and the University of Utah Research Foundation hold patents on the genes BRCA1 and BRCA2. The patents give the company exclusive access to the genes, including the
right to perform diagnostic tests, which the ACLU says restricts both scientific research and patients’ access to medical care.

“Nobody ‘invents’ genes, so no one should be able to claim ownership of them,” said Daniel B. Ravicher, executive director of PUBPAT and co-counsel in the lawsuit. “We are not talking about a new drug or a new tool to fight cancer. We are talking about a genetic marker that occurs naturally in the human body. That cannot, and should not, be patented.”

In July, a divided federal appeals court held that Myriad Genetics can patent the two human genes, overturning a previous decision by a federal district court. But the court ruled that the method used to determine a patient’s risk of cancer was not patentable.

The federal appeals court ruled the genes were patentable because they were different than genes that occur in nature. In nature, genes are bonded to other genes and histone proteins. By chemically separating and isolating the gene, the company had produced “a distinct chemical entity,” the court argued.

The lawsuit, Association for Molecular Pathology, et al. v. U.S. Patent and Trademark Office, et al., was filed in May 2009 on behalf of researchers, women patients, cancer survivors and scientific associations against the U.S. Patent and Trademark Office, as well as Myriad Genetics and the University of Utah Research Foundation.

The U.S. Patent and Trademark Office has already granted thousands of patents on human genes. It is estimated that nearly 20 percent of human genes are patented.

Land of the free, home of the hungry

Land of the free, home of the hungry

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Nowhere is the chasm between America's political class and its working poor more vast than in the demand to cut food stamps

US food stamps: Republican lawmakers want to cut the Department of Agriculture's budget for food stamps by 20%

On Monday afternoon this week, Rachelle Grimmer went into a Department of Health and Human Services in Texas with her two children, Timothy, aged 10, and Ramie, aged 12, and asked for a new case worker who could assist her application for food stamps. She had first applied in July but had been told she hadn't provided enough information and, by most accounts, had been struggling to get by and get help since she moved from Ohio.

She was taken to a small room, where she pulled a gun, sparking a seven-hour standoff with police. Shortly before midnight, three shots were heard. Rachelle had shot both herself and her kids. Police rushed in to find the mother dead and Ramie and Timothy in critical condition. Earlier that morning, Ramie had posted a Facebook message, saying: "may die 2day". She actually hung on until Wednesday. Timothy's condition remains critical.

The tragic unravelling of this particular episode is hardly typical. But the desperation that underpins it is. For, in this period between Thanksgiving and Christmas (when many Americans are worrying about what overindulging will do to their waistline), a significant number is wracked with an entirely different concern: not having enough to eat.

This is no marginal group, no handful of unfortunates and ne'er-do-wells in a time of crisis. Indeed, in one of the wealthiest countries in the world, food insecurity is a common, growing and enduring problem. According to Gallup polling, one in five Americans reported not having enough money to buy food in the past 12 months – the highest level since the month Barack Obama was elected. Around the country, food banks are feeling the pinch of market forces: as poverty climbs, demand is rising and supply is falling as people who would have donated have less left to spare.

An analysis by the New York Times revealed a 17% increase in the number of school students receiving free and reduced lunches across the country between 2006/07 and now. In Rockdale County, east of Atlanta, 63% of students now have subsidised food – up from 46% four years ago.

Between 2008 and 2011, the number of those living on food stamps, assistance to those who lack sufficient money to feed themselves and their families, soared by 50%, putting one American in seven in the programme. Catholic Charities recently revealed that requests for the working poor were up 80% over the second quarter, and up 59% for the middle class.

Similarly, Operation Homefront, a national organisation that feeds the families of military personnel, has seen demand for help double over the last two years. The Washington Post reported that in Fort Hood, Texas, military families stayed up after midnight to register for a free turkey online for Thanksgiving. The 450 birds were gone within an hour. Even as soldiers fight for empire abroad, their families struggle for food at home.

You would think this would be a national disgrace. The land of the free – and the home of the hungry. The sheer scale and intensity of the problem refutes any suggestions of the undeserving poor.

But want has become a term of political abuse, with Newt Gingrich launching his campaign earlier this year by branding Obama "the food stamp president" and continues to berate him as such. Indeed, behind the partisan posturing over deficit reduction, it is rarely noted that rather than impose taxes on millionaires, Republicans are eager to balance the budget on the stomachs of the hungry.

As editor of the Left Business Observer, Doug Henwood, points out in a recent blog posting, these benefits are not particularly generous. "The average [food stamp] recipient gets $134 a month in assistance, which works out to $4.40 a day. That's 10% less than the US Department of Agriculture's "thrifty" meal budget, and about half its "moderate" budget. For your average well-fed American, living on a daily ration of less than $5 for food prepared at home would be hard to imagine. But without SNAP benefits, 46 million people would be in a state of anguish rather than just scraping by."

Yet, this is one area the Republicans are keen to target for cuts. They want to reduce spending on food stamps by around 20%, and in June, voted to slash a different health and nutrition scheme (WIC) for poor pregnant women and children by 10%, which would have denied assistance to around a quarter of a million people.

This will be the primary terrain on which the forthcoming elections will be fought: the needs and aspirations of the working poor. Not so much the destitute – America is always forgetting about them – but the working poor and those who fear descending among them. But for the Democrats to capitalise on these anxieties, they will have to shift the country's sense of what it takes to be poor and convince them that government has a role in alleviating that condition before desperation kicks in.

You'd think that would be straightforward. But illusions of meritocracy, equal opportunity, class fluidity and social mobility die hard. This a country where, according to a Pew survey in 2008, 91% believe they are either middle-class, upper middle-class or lower middle-class, and a Gallup poll in 2005 showed that while only 2% of Americans described themselves as "rich", 31% thought it very likely or somewhat likely they would "ever be rich". Sooner or later, though, reality tends to intrude.

As thousands of people gathered at New Orleans convention centre following Hurricane Katrina, Michael Brown, the hapless head of the disaster relief agency, Fema, was asked why he was not tending to them with shelter and water.

"We're seeing people that we didn't know exist," he said. This has been the official policy of America's political class for some time. "This is a special interest group that not many people talk about because they don't have the wealth to lift a candidate to be president of the United States," explained D Jermaine Husser, the former executive director of South Carolina's Low Country Food Bank.

But there is only so long you can pretend that such a large group of people doesn't exist, and as the poverty rates grow, more and more people who are likely to vote become ensnared in it. Gallup's Basic Access Index, which tracks access to basic needs like food, shelter and healthcare or medicines, is at the lowest it's been since its inception in January 2008. A new measurement of poverty by the Census Bureau, which takes regional cost of living, medical payments and other expenses that do not intrude on the official poverty count, found a third of Americans are either in poverty or desperately close to it.

"These numbers are higher than we anticipated," Trudi Renwick, the bureau's head poverty statistician, told the New York Times recently. "There are more people struggling than the official numbers show."

Poverty may be relative but hunger is absolute. The third world is alive and struggling in the heart of the first. No one can deny it exists. And those who claim they can't see it, either refuse to see it for what it is or simply do not want to look.

Sen. Bernie Sanders: Corporations Are Not People and They Shouldn't Be Allowed to Buy Our Elections

Sen. Bernie Sanders: Corporations Are Not People and They Shouldn't Be Allowed to Buy Our Elections


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The Constitution of this country has served us well, but when the Supreme Court says that attempts by the federal government and states to impose reasonable restrictions on campaign ads are unconstitutional, our democracy is in grave danger. That is why I have introduced a resolution in the Senate calling for an amendment to the U.S. Constitution.

I did not do this lightly. In fact, I had never done it before. The U.S. constitution is an extraordinary document. In my view, it should not be amended often. In light of the Supreme Court's infamous 5-to-4 decision in the Citizens United case, however, I saw no alternative.

I strongly disagree with the ruling. In my view, a corporation is not a person. A corporation does not have First Amendment rights to spend as much money as it wants, without disclosure, on a political campaign.

Corporations should not be able to go into their treasuries and spend millions and millions of dollars on a campaign in order to buy elections.

The ruling has radically changed the nature of our democracy. It has further tilted the balance of the power toward the rich and the powerful at a time when the wealthiest people in this country already never had it so good. History will record that the Citizens United decision is one of the worst in the history of our country.

At a time when corporations have more than $2 trillion in cash in their bank accounts and are making record-breaking profits, the American people should be concerned when the Supreme Court says that these corporations have a constitutionally-protected right to spend shareholders' money to dominate an election as if they were real, live persons. If we do not reverse this decision, there will be no end to the impact that corporate interests can have on our campaigns and our democracy.

According to an Oct. 10, 2011, article in Politico, "the billionaire industrialist brothers David and Charles Koch plan to steer more than $200 million -- potentially much more -- to conservative groups ahead of Election Day 2012." Others are doing the same thing.

Does anybody really believe that that is what American democracy is supposed to be about?

Think about the consequences in Congress. When an issue comes up that impacts Wall Street, like breaking up huge banks, what will senators be thinking about when they decide how to vote? Every member of the Senate, every member of the House, in the back of their minds will be asking this: If I cast a vote this way, if I take on some big-money interest, am I going to be punished? Will a huge amount of money be unleashed in my state?

It's not just taking on Wall Street. Maybe it's taking on the drug companies. Maybe it's taking on the private insurance companies. Maybe it's taking on the military-industrial complex. Whatever powerful and wealthy special interests members of Congress are prepared to take on -- on behalf of the interest of the middle class and working families of this country -- they will know in the back of their mind that there may be a flood of money coming in to their state. They're going to think twice about how to cast that vote.

When the Supreme Court says that for purposes of the First Amendment, corporations are people, that writing checks from the company's bank account is constitutionally-protected speech and that attempts by the federal government and states to impose reasonable restrictions on campaign ads are unconstitutional, when that occurs, our democracy is in grave danger.

I am a proud sponsor of a number of bills that would respond to Citizens United and begin to get a handle on the problem. But more needs to be done, something more fundamental and indisputable, something that cannot be turned on its head by a Supreme Court decision. That is why I proposed the constitutional amendment in the Senate as a companion measure to an amendment proposed in the House of Representatives by Congressman Ted Deutch.

We have got to send a constitutional amendment to the states that says simply and straightforwardly what everyone - except five members of the United States Supreme Court - understands: Corporations are not people with equal constitutional rights. Corporations are subject to regulation by the people. Corporations may not make campaign contributions -- the law of the land for the last century. And Congress and states have the power to regulate campaign finances.

Rich People DON'T Create Jobs: 6 Myths That Have to Be Killed for Our Economy to Live

Rich People DON'T Create Jobs: 6 Myths That Have to Be Killed for Our Economy to Live


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In the movie Groundhog Day, Bill Murray's character is forced to relive a single day over and over and over—waking up to the same song every morning, meeting the same people, having the same conversations—until, after thousands of repetitions, he finally realizes what a shmo he's been his entire life. With that epiphany, the calendar starts to flip forward again. His life reboots, and he once again gets to hear new songs, meet new people, and have entirely new conversations.

When it comes to the economy, we're stuck in our own version of Groundhog Day—and this one doesn't seem to be coming to an end. America is in a deep and persistent slump, and unemployment is mired at more than 9 percent. Yet when you turn on the TV, all you hear are the same manufactured sound bites delivered in the same apocalyptic tones from the same pack of talking heads—over and over and over. Groundhog Day has turned into the eighth circle of hell.

Unfortunately, these zombie talking points aren't just wrong; they're dangerous. If we're ever going to revive the economy, we've got to tackle them head on. Here are six of the worst.

MYTH #1: THE STIMULUS FAILED

For the first four years of his presidency, Franklin Roosevelt tackled the Great Depression with inflation, easy monetary policy, and government spending. But in 1937, FDR's advisers persuaded him to reverse gears. After all, interest rates had been close to zero for years, commodity prices were climbing, and fear of inflation was on the rise.

Bust or Boost?

What happened next is now called the "Mistake of 1937" (PDF). Federal spending was cut and monetary policy was tightened up, with disastrous results: GDP immediately began to plummet, and industrial production fell by a third. Within a year everyone had had enough. In 1938 the austerity program was abandoned, and the economy started to grow again.

The truth is that stimulus worked in 1933 and it worked in 2009. So why is our economy still in such bad shape? For one, partly due to political considerations and partly because it wasrushed through Congress, the 2009 stimulus wasn't as well designed as it could have been. It was also sold badly. If the bill passed, administration economists predicted, unemployment would peak at 8 percent and then start declining (PDF). But the recession was far worse than the White House originally thought. Unemployment peaked in the double digits, and that's made the stimulus a fat target for Republican critics ever since.

But as awkward as it is to argue that things would have been worse without the stimulus—"Not as bad as it could have been!" isn't a winning slogan—well, the truth is that things would have been a lot worse without the stimulus. Everyone from the nonpartisanCongressional Budget Office (PDF) to private-sector forecasting firms have concluded that it increased economic growth, reduced unemployment, and put millions of people back to work. It just wasn't big enough, or long-lasting enough. Unfortunately, this has given conservatives an opening to demand tighter money and lower spending—exactly the same mistake we made in 1937.

MYTH #2: THE DEFICIT IS OUR BIGGEST PROBLEM

If your credit card company offered you $30,000 interest-free to buy a car, would you take the deal? Sure you would. It's a three-way win: You replace your clunker, the auto industry keeps its assembly lines humming, and the credit card company is happy to have made a safe loan, even at no interest. Apparently, they think you're a pretty good credit risk.

The Bush Effect

This is pretty much the situation the US government is in now. If our national debt were really at dire and unsustainable levels, as conservative economists and Republican leaders have taken to arguing, nervous investors would be driving up interest rates on federal borrowing. But just the opposite has happened: As I'm writing this, 10-year real treasury yields are at 0.00 percent. The seven-year rate is actually negative. Apparently, the financial markets think we're a pretty good credit risk.

It's true that the United States needs to address its long-term deficit problem—a problem almost entirely due to Medicare and other health care expenditures. (Domestic, defense, and Social Security spending have actually decreased as a percentage of GDP over the past 40 years, and there's no reason to think that's about to change.) But that's in the long term. Right now, our problem is a sluggish economy and too many people out of work. The real answer to future deficits is to spend money now to get the economy growing again.

America's infrastructure is crumbling, there are people who could be put to work fixing it, and banks are practically begging us to take their money. A trillion dollars in infrastructure spending would be good for our economy today, good for economic growth tomorrow, and thanks to those low interest rates (and the increased revenue that would come from growth), it wouldn't even increase our debt much. As they say, only an idiot turns down free money.

Only an Idiot Turns Down Free Money

MYTH $3: LOWER TAXES ARE THE BEST WAY TO GROW THE ECONOMY

There's no greater orthodoxy in the Republican Party than unconditional fealty to tax cuts. In a recent GOP debate, when the candidates were asked whether they'd walk away from a deficit deal that included just $1 in tax increases for every $10 in spending cuts, every single hand shot up.

Taxes have been the third rail of American politics ever since the California tax revolt of 1978. Even Democrats are nervous about touching them: President Obama has famously called for letting some of the Bush tax cuts expire, but he's always careful to make it clear that he wouldn't change rates for anyone earning less than $250,000 per year. In other words, he'd repeal less than a quarter of the Bush tax cuts.

This fear is easy to understand. No one likes paying higher taxes. But do lower taxes actually spur economic growth? Bruce Bartlett, an economist in the Reagan administration, has compared tax rates in various rich countries in 1979 to each country's growth rate since then. His conclusion? There's virtually no correlation.

Recent US history backs this up too. Bill Clinton raised tax rates in 1993, and Republicans insisted it would cripple the economy. Instead, the economy boomed. In 2001 and 2003, George W. Bush lowered taxes and Republicans insisted the economy would flourish. Instead, we got the weakest expansion of the past century. Republicans are simply wrong about taxes: Within reason, high tax rates don't hinder growth, and low tax rates don't stimulate it.

But don't high taxes reduce the incentive for people to work? Actually, no: For ordinary wage earners, participation in the job force and total hours worked barely respond to taxes at all. (According to tax specialists Joel Slemrod and Jon Bakija, this is "a rare example of a question on which there is a broad consensus among economists.") The same is true for rich people. As a trio of prominent economists concluded last year after reviewing the literature, "there is no compelling evidence to date of real economic responses to tax rates" (PDF). Even capital gains rates have virtually no impact: During the past few decades, they've bounced up and down from 40 percent to their post-Depression low of 15 percent. The effect on business investment is nil.

If a Tax Rate Falls...

Will the Economy Notice?

MYTH #4: REGULATORY UNCERTAINTY IS CLOGGING THE ECONOMY

Are American businesses paralyzed by fear of a tidal wave of new regulations? WhenMcClatchy reporter Kevin Hall went out and asked small-business owners about this, he got a clear answer. "Absolutely, positively not," said one. "Government regulations are not choking our business," said another. In its most recent quarterly survey (PDF) of small-business trends, the National Federation of Independent Business reports that sales—i.e., lack of demand—is the No. 1 concern, beating out taxes, regulations, inflation, and everything else.

The Bottom Line Is the Bottom Line

In any case, regardless of what the Wall Street Journal editorial page says, the Obama administration has hardly been a whirlwind of regulatory activity. Its health care reform will have very little effect on either small businesses (which are exempt) or large businesses (which mostly offer health plans already) and only a modest effect on medium-size businesses (PDF). Its financial reform bill affects only the financial sector. Its proposed new air-quality regulations will mostly affect old coal-fired electrical plants that would have shut down anyway (PDF).

Dumb and outdated regulations are no friends to the economy—and the Obama administration has undertaken a regulatory review that's projected to save an estimated $10 billion during the next five years. But as welcome as that is, our economy's biggest problem right now isn't regulatory uncertainty. It's economic uncertainty.

MYTH #5: OBAMA IS DEBASING THE DOLLAR

In one of the most infamous moments of his young candidacy, Republican presidential hopeful Rick Perry decided to tee off on Federal Reserve Chairman Ben Bernanke last summer. "If this guy prints more money between now and the election," he told an enthusiastic audience in Cedar Rapids, "I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas."

Bernanke's sin? Pumping money into the banking system after the collapse of 2008. Although this is widely credited with helping prevent a second Great Depression, tea partiers and gold bugs are convinced that Bernanke's actions have debased the dollar. There are two problems with that claim. First, it's not true. Second, we'd be better off if it were.

First things first: Has the dollar lost value under Bernanke and Obama? No. The usual measure for the strength of the dollar is called "trade-weighted value." In July 2008, just before the financial crisis erupted in earnest, the greenback's value stood at 95.4. As I'm writing this in mid-September, it has gone up, then down, and is currently sitting at 96.1.Taking a longer view, the dollar lost value under Reagan and Bush I, gained value under Clinton, lost value under Bush II, and has mostly stayed steady under Obama. There's just no basis to the claim that Obama and Bernanke have debased the currency.

And that's unfortunate. As economist Dean Baker is fond of pointing out, if we want to get our national savings rate up and our long-term budget deficit down, there's only one way to do it: by fixing our massive trade deficit. We have to import less and export more, and one way to make that happen is with a weaker dollar. A weaker dollar makes foreign goods more expensive, so we'll buy less of them, and makes American goods cheaper, so others will buy more of them.

The truth is that we'd be better off if we ditched the loaded "strong/weak" terminology and just talked about an "export dollar" (weak) and an "import dollar" (strong). Sometimes one is good, and sometimes the other is. The Chinese, for example, have done well for decades with an export yuan. Likewise, an export dollar would be our friend right now.

Bad News for Tourists...

Is a Holiday for Manufacturers

MYTH #6: IF YOU UNSHACKLE THE RICH, THEY'LL REV UP THE ECONOMY

Think of this as the supermyth—the one underlying so many other fallacies. For decades, America's economic policies have been based on the notion that catering to corporations and the wealthy is the way to stimulate the economy. Republicans routinely insist that we need to bail them out, lower their taxes, allow them to repatriate hundreds of billions in overseas profits, and free them from annoying government meddling. If we don't, the "job creators" will stay in a funk, and the economy will stay in a rut.

But here's a pesky fact neither corporate America nor the GOP establishment is trumpeting: After-tax corporate profits are currently at an all-time high. The problem businesses face isn't lack of cash but rather a lack of confidence that consumer demand will pick up in the future. So they're not expanding or hiring at the rate they should be.

Rich people don't create jobs when we hand them big windfalls. They create jobs when the economy is growing and they have customers for their businesses. And the key to solving that problem, at least during a deep economic slump like the one we're in now, is to focus like a laser on more stimulus, easier money, higher inflation, and a weaker currency. Unless we want to relive 1937 over and over and over again. As Bill Murray said,

"Anything different is good."

Wall Street's Gain...

Main Street's Pain

Shocking Charts And Statistics That Prove That America Is No Longer A Wealthy Nation

Shocking Charts And Statistics That Prove That America Is No Longer A Wealthy Nation

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How do you decide whether you are wealthy or not? Do you determine that by how much money you spend at the stores? Of course not. You can tell if you are wealthy or not by comparing your assets (the money in your bank account, equity in your home, etc.) to your liabilities (your mortgage, credit card debt, student loan debt, etc.). Well, a lot of Americans seem to believe that just because a lot of money is circulating in our economy that it must mean that we are a wealthy nation. But that is simply not true. To tell whether or not America is a wealthy nation, you need to look at the balance sheet numbers. And when you look at the balance sheet numbers, a very sobering story emerges. Over the past three decades, government debt, business debt and household debt have absolutely exploded, but our assets have not. That means that we are getting poorer as a nation. Hopefully the shocking charts and statistics in this article will help a lot of Americans to wake up. Yes, we once were the wealthiest nation on earth, but today America is no longer a wealthy nation.

Household Wealth

We live during a time when U.S. households are becoming poorer. This week the Federal Reserve announced that the total net worth of U.S. households declined by 4.1 percent in the 3rd quarter of 2011 alone.

That is a staggering decline. The total net worth of U.S. households plummeted by $2.2 trillion during those three months. When you break that down, it comes to approximately $7,800 for every single U.S. citizen.

But this is not the first time we have seen a huge decline in U.S. household wealth in recent years.

A recent article posted on CNN detailed the stunning drop in U.S. household wealth that we saw from 2007 to 2009....

Household wealth plunged $16.3 trillion in the two years from early 2007 to the first quarter of 2009, and has slowly been climbing since then. But with the drop in the third quarter of this year, households find their net worth still $9.4 trillion, or 14%, below the high they hit in early 2007, before the bursting of the housing bubble.

So right now the total net worth of U.S. households is $9.4 trillion below what it was back in 2007.

That certainly is not good news.

But not only is the total net worth of U.S. households going down, our incomes are going down as well.

Since December 2007, median household income in the United States has declined by a total of 6.8% once you account for inflation.

Not that incomes were rising very quickly prior to that time either.

Between 1979 and 2007, income growth for the bottom 90 percent of all U.S. income earners was only about 5 percent for that entire time period.

Meanwhile, household debt was absolutely skyrocketing. Take a look at the following chart which shows what total U.S. household debt has done over the last three decades....

So income growth has been pretty much flat over the past three decades but household debt has been rising at an exponential pace for most of that time.

Yes, there has been a little bit of deleveraging during this economic downturn, but there are now signs that the deleveraging is rapidly coming to an end.

According to a recent CNN article, credit card use in the United States is experiencing a major upswing once again....

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data.

That is not good news.

The truth is that U.S. households owe way, way too much money already. According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

We are up to our eyeballs in debt, and our incomes are not keeping up.

In addition, we have seen massive amounts of home equity wiped out in recent years.

An unusual thing has happened during this economic downturn. For the first time in U.S. history, the banks have more equity in our homes than we do. If you do not believe this, just check out this chart.

The truth is that the American people are not becoming wealthier. They are becoming poorer.

And a shocking number of Americans are falling into poverty. In 2010, 2.6 million more Americans fell into poverty, which set a new all-time record for a single year.

But this is not a new thing. This is a trend that we have seen building for many years. Back in the year 2000, 11.3% of all Americans were living in poverty. Today, 15.1% of all Americans are living in poverty.

So obviously U.S. households are not doing well.

But what about the government?

Government Debt

The U.S. national debt is completely and totally out of control. Right now it is sitting at $15,046,397,725,405.16. That means that it is nearly 15 times higher than it was just 30 years ago. Just check out this almost unbelievable chart....

So is our ability to pay these debts 15 times greater than it was back then?

Of course not.

Our liabilities are exploding at an out of control rate but our assets are not.

Whether you are a running a family or running a government, that is a recipe for financial disaster.

The U.S. government has been running budget deficits of over a trillion dollars for several years now, and there is no sign that these trillion dollar deficits are going to stop any time soon.

So how much money is a trillion dollars?

If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

Yet somehow the U.S. government has accumulated a debt that is well over 15 trillion dollars.

The Bush administration was a nightmare when it came to running up debt, but they have definitely been outclassed by the Obama administration....

*During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

*The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.

*Since Barack Obama was sworn in, the share of the national debt per household has increased by $35,835.

And most U.S. government spending does not do a thing to build real wealth for this country. For example, the total compensation that the federal government workforce brought in during 2010 is estimated to be about 447 billion dollars.

So did federal workers create 447 billion dollars of real wealth last year?

Of course not.

The truth is that our bloated federal government is a massive drain on our society.

But the federal government is not the only one with a debt problem.

State and local governments all over America are also drowning in debt. In fact, state and local government debt in America is now sitting at an all-time high of 22 percent of U.S. GDP.

Total Debt

The following chart from the Federal Reserve combines government debt, business debt and consumer debt. As you can see, America is swimming in an ocean of more than 50 trillion dollars of debt....

To get an idea of how bad that is, just look at where total debt was at back in 1970 or 1980.

Over the last three decades we have seen an orgy of debt that has been absolutely unprecedented.

Meanwhile, we are bleeding national wealth at a staggering rate.

Every single month, tens of billions of dollars more goes out of this country than comes into it.

In fact, it is being projected that the U.S. trade deficit for 2011 will be 558.2 billion dollars.

This represents a transfer of wealth that is so vast that it is almost impossible to believe.

Our dependence on foreign oil is greatly contributing to this. It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year. Their biggest customer is the United States.

When we send hundreds of billions of dollars overseas, that is hundreds of billions of dollars that does not go into the pockets of American business owners or American workers.

The United States has had a negative trade balance every single year since 1976, and since that time the United States has run a total trade deficit of more than 7.5 trillion dollars with the rest of the world.

For a moment, imagine a giant map of the world. Then imagine a pile of 7.5 trillion dollars sitting on the United States of America.

That looks pretty good, eh?

Well, then start taking big chunks of that money and start exchanging it for oil and for cheap plastic products until the entire pile is gone.

Are you starting to understand?

We burn up the foreign oil in our cars and most of the cheap plastic products end up being discarded fairly quickly.

But our loss of national wealth is permanent.

Meanwhile, we are facing national financial obligations in the years ahead that are absolutely nightmarish.

According to Boston University Professor Laurence J. Kotlikoff, the U.S. government is facing a "fiscal gap" of $211 trillion in the decades ahead. The following comes from an article that Kotlikoff wrote for CNN earlier this year....

The government's total indebtedness -- its fiscal gap -- now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations -- including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt -- and all projected future taxes.

If you went out and liquidated all of the assets owned by all American citizens, all U.S. businesses and all levels of government in America, it would only cover about a third of that bill.

Are you starting to get the picture?

America is no longer a wealthy nation.

We are like that family down the street that is always throwing around tons of money but that is always on the verge of bankruptcy.

So when they tell you that the economy "grew" by 1 or 2 percent, please don't think that means that America is becoming wealthier.

The truth is that our debts are growing at a far, far faster rate than our assets are.

That means that we are getting poorer.

Is there anyone out there that disagrees with that?

Ethics Committee report on Newt Gingrich

In the Matter of Representative Newt Gingrich

Sen. Bernie Sanders Files "Saving American Democracy Amendment"

Sanders Files ‘Saving American Democracy Amendment'

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Warning that "American democracy in endangered," Sen. Bernie Sanders (I-Vt.) today proposed a constitutional amendment to overturn a Supreme Court ruling that allowed unrestricted and secret campaign spending by corporations on U.S. elections.

The first constitutional amendment ever proposed by Sanders during his two decades in Congress would reverse the narrow 5-to-4 ruling in Citizens United vs. the Federal Elections Commission. In that controversial decision almost two years ago, justices gave corporations the same First Amendment free-speech rights as people.

"There comes a time when an issue is so important that the only way to address it is by a constitutional amendment," Sanders said of the effort to override the court decision that he labeled "a complete undermining of democracy."

Sanders' Saving American Democracy Amendment would make clear that corporations are not entitled to the same constitutional rights as people and that corporations may be regulated by Congress and state legislatures. It also would preserve the First Amendment guarantee of freedom of the press. It would incorporate a century-old ban on corporate campaign donations to candidates, and establish broad authority for Congress and states to regulate spending in elections.

Sanders proposal in the Senate is a companion measure to a constitutional amendment introduced in the House by Rep. Ted Deutch (D-Fla.). "The dominance of corporations in Washington has imperiled the economic security of the American people and left our citizens profoundly disenchanted with our democracy," the congressman said. "I look forward to working with Sen. Sanders to save American democracy by banning all corporate spending in our elections and cracking down on secret front groups using anonymous corporate cash to undermine the public interest."

Robert Weissman, the president of Public Citizen, praised the proposal. "Sen. Sanders' amendment returns us to shared understandings that democracy is for people. Public Citizen applauds and endorses the amendment, and thanks Sen. Sanders for his long-time campaign to reduce excessive corporate power."

Marge Baker of People For the American Way said the Sanders amendment "takes a comprehensive approach to stopping the flood of corporate money in our electoral system. Our democracy belongs to all of the people, not just the wealthy, and not to large and powerful corporate interests," she added.

Lisa Graves, executive director of the Center for Media and Democracy, also applauded the amendment. She said it would "root out the rank corruption of our elections by for-profit corporations." No other amendment proposed in the Senate, she added, "has so definitively confronted the twin problems created by judges who have improperly granted rights to corporations, without democratic consent, and who have used their seats on the bench to favor the wishes of corporate CEOs."

A proposed amendment originating in Congress must be approved by a two-thirds majority in the House and Senate in order to be submitted for consideration by the states. Ratification by three-fourths of the states is required to amend the Constitution.

To read the amendment, click here.

For a fact sheet on the amendment, click here.

GOP Objects To 'Millionaires Surtax'; Millionaires We Found? Not So Much

GOP Objects To 'Millionaires Surtax'; Millionaires We Found? Not So Much

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For the second week in a row, the Senate on Thursday voted down proposals to extend the payroll tax holiday through next year. In the case of the Democrats' proposal, Republicans objected to the "millionaires surtax" that would be used to pay for it.

Ever since the idea of the surtax was introduced weeks ago, Republicans in Congress have railed against it, arguing that it is a direct hit on small-business owners and other job creators.

The argument is that many small-business owners report company profits on their individual taxes because of the way their businesses are structured. Republican Sen. John Thune of South Dakota says the "millionaires surtax" would hurt small-business owners' ability to hire new workers.

"It's just intuitive that, you know, if you're somebody who's in business and you get hit with a tax increase, it's going to be that much harder, I think, to make investments that are going to lead to job creation," says Thune.

We wanted to talk to business owners who would be affected. So, NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview.

So we went to the business groups that have been lobbying against the surtax. Again, three days after putting in a request, none of them was able to find someone for us to talk to. A group called the Tax Relief Coalition said the problem was finding someone willing to talk about their personal taxes on national radio.

So next we put a query on Facebook. And several business owners who said they would be affected by the "millionaires surtax" responded.

"It's not in the top 20 things that we think about when we're making a business hire," said Ian Yankwitt, who owns Tortoise Investment Management.

Tortoise is a boutique investment firm in White Plains, N.Y. Yankwitt has 10 employees and in recent years has done a lot of hiring.

As a result, Yankwitt says he's had many conversations about hiring, "both with respect to specific people, with respect to whether we should hire one junior person or two, whether we should hire a senior person."

He says his ultimate marginal tax rate "didn't even make it on the agenda."

Yankwitt says deciding to bring on another employee is all about return on investment. Will adding another person to the payroll make his company more successful?

For Jason Burger, the motivation is similar.

"If my taxes go up, I have slightly less disposable income, yes," said Burger, co-owner of CSS International Holdings, a global infrastructure contractor. "But that has nothing to do with what my business does. What my business does is based on the contracts that it wins and the demand for its services."

Burger says his Michigan-based company is hiring like crazy, and he'd be perfectly willing to pay the surtax.

"It's only fair that I put back into the system that is the entire reason for my success," said Burger.

For the record, both Burger and Yankwitt have made campaign contributions to Democrats in the past, but they say their views on the surtax are about the economics of their businesses and not their politics.

And they're not alone.

"I, like any other American, especially a business owner, I want to make as much money as I can and I want to keep as much money in my pocket as I can, but I also believe in the greater good," says Deborah Schwarz, who owns LAC Group, an information management firm with offices nationwide and in London.

Surtax or no, Schwarz says she hopes to keep hiring.

"We're going to keep on writing proposals, going after contracts, hopefully winning them, and when we do we're going to continue to hire people," says Schwarz.

All of this contradicts the arguments about job creators being made by Republicans in Congress.

"Those I would say were exceptions to the rule," responds Thune. "I think most small-business owners who are out there right now would argue that raising their taxes has the opposite effect that we would want to have in a down economy."

But those small-business owners apparently don't want to talk.

By the Numbers: A Closer Look at the Real Wealth of US Households

By The Numbers: A Closer Look At The Real Wealth Of US Households

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Americans are poorer than they think…

Dow up again yesterday. Gold still bouncing around…

The press is still focused on Europe. A “deal over eurozone fiscal rules,” was announced earlier in the week. Every day brings more speculation about what form the final deal will take…and whether the European Central Bank will lend a hand.

Nobody really wants to sell stocks. Because a real deal might send stock prices shooting up in a giant Christmas rally.

They don’t want to buy either. Because a failed deal might send them collapsing. So investors watch…and wait.

In America and Europe investors are playing it cool. Congress has to extend the payroll tax cut by December 16th or the economy is probably going to bite the dust. But no one seems particularly concerned about it.

The automatic cuts probably aren’t going to happen — at least, not the way they were supposed to happen. The pols are negotiating now. Their challenge is how to scam the voters and investors by pretending to cut spending, without really cutting much of anything.

They’re pretty good at it; we’re pretty sure they’ll get the job done.

But despite all this backdrop of chicanery and tomfoolery, the real USA is in deep trouble. The number of people living with the help of US government food handouts has risen to 46 million — a new record.

And figures from Credit Suisse’s World Wealth Report show that the typical American is a lot poorer than generally believed. The report compares average wealth to the median wealth. For the benefit of Dear Readers who have forgotten the distinction, average is what you get when you add all the wealth together and divide by the number of people. Put in a few super-billionaires and everyone looks rich. The median, on the other hand, is what you get when you separate the people into two groups…those above and those below. At the center is the “median”…or what we usually refer to as the “typical” American.

In Britain, for example, the average wealth is $258,000. Not bad. But it’s not what most people have. It’s just what you get when you average all those rich people — with their very expensive houses in London — along with everyone else. Few people in Britain actually have $258,000 net worth.

The median net worth is not even half that amount — $121,000. That’s what the typical fellow has. And even that amount depends heavily on real estate prices that have still not come down in Britain.

But get this. In the US, the average wealth figure is a little less than in Britain — $248,000. But the median figure — what most people actually have — is much less, only $53,000.

What this means, says our Bonner Family Office chief economist, Rob Marstrand, is that “wealth in America is heavily skewed to the rich, with a lot of adults with very little net worth.”

Compared to the typical Japanese or European, the typical American is only half as rich. Half the people in the US have less than $53,000 net worth. You can imagine what the bottom 20% have.

This is a devastating and grim insight. It explains why so much of America seems, well, so poor. Because it is poor. People don’t have any money. They dress poorly. Eat poorly. Live poorly.

Compared to Britain and Europe, much of the difference can be explained by the housing bubble, and subsequent housing crash in America. If we remember correctly, the US housing stock was valued at about $20 trillion in ’07. It lost 33% of its value, putting a quarter of mortgaged houses underwater and wiping out about $7 trillion of “wealth.”

This explains why there are so many reports of people living in motels…and, according to a recent CNBC report…in automobiles. Yes, families have taken to living in trucks and cars.

We recently rented an RV for Thanksgiving. The idea was to give our son and his family somewhere to stay when they came for the holidays. It was as nice as a small apartment, with three TVs and sophisticated electronic gizmos we couldn’t quite figure out. But the poor aren’t living in Class A motor-homes. They’re living in panel trucks and old vans.

In this regard, it is probably worth pointing out that the recent news of a decline in unemployment was a fraud. The news reports told us that 120,000 jobs were added last month. Unfortunately, 150,000 are needed just to keep up with population growth…and 500,000 to convincingly claim to have a ‘recovery.’

And the only reason the jobless figure improved was because the statisticians knocked 300,000 job seekers off the list. Never in history have so many people been unemployed for so long. So, the quants figured that if they hadn’t found a job by now, they might as well give up. Which flatters the figures, but it doesn’t do much for people looking for work…or for people who are trying to understand what is really going on.

What we take from these figures is that America has a huge and growing class of very poor people…who are bound to be getting more desperate…and more angry…as time goes by. Unless there is genuine growth, they have no way to expand their spending, no way to get good jobs, and no hope of ever getting ahead.

When you put the unemployed together with the under-employed…those with pick up work but no fulltime, stable jobs…the total rises to one of five people in the labor pool.

Ron Paul's Loyal Supporters Are Getting Ready To Shock The World In Iowa

Ron Paul's Loyal Supporters Are Getting Ready To Shock The World In Iowa

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Ron Paul Smirk

Image: AP

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Ron Paul's supporters in Iowa are very loyal and very excited. And they are poised to make Paul the winner of the Iowa Caucuses next month.

This isn't the script the media has been writing for this campaign. Instead, "Tea Party Queen" Michelle Bachman, who beat Paul by just a few score votes at the Ames Straw poll earlier this year, was supposed to win this state - and confirm that the GOP has gone bonkers.

Bachmann is polling in the low single digits now. Since Ames, Ron Paul has put in the most time in Iowa, he is running the best ads, making the sharpest criticisms of his rivals, and putting together the best organization.

In Iowa he polls behind only Newt Gingrich, the latest flavor of the week. But Gingrich commands little in the way of organization, money, or loyalty with voters.

This is no longer a political novelty act. It's not a seminar on the Constitution disguised as a campaign. This is the emergence of a populist-libertarian force that is growing into an organized movement in American politics.

And if Paul shocks the establishment in Iowa, January 3rd 2012 will be recorded in history as this movement's coming out party.

At the Washington Examiner Conn Carrol points out that all the polling shows that even though 66 percent of Iowa Caucus-goers could change their mind before January, Ron Paul's supporters are the most devoted of any candidate's in this contest.

"The people who like Ron Paul are intensely loyal and they will turn out [on caucus day] no matter what,” said Jeff Stein, a political analyst and Iowa caucus historian tells The Washington Examiner. “I don’t think there is that kind of loyalty for any other candidate in the field.”

And why wouldn't they be loyal? Ron Paul is offering something distinctive in this race - a return to a non-interventionist foreign policy, sound money, and Constitutional principles. And he has the ability to expand his support beyond his loyal fans, Iowa Republicans rate him the "most honest and trustworthy" among all candidates. It's his consistency, even when he is at odds with the average Republican voter, that has impressed Texas voters for years.

Even if Paul fails to win the nomination, his campaign ,like Goldwater's in 1964, can help leading libertarians identify their supporters and build long-term political institutions that can draw on their fund-raising power and activist energy for decades.

Corporate America Is Sitting On The Solution To The Jobs Crisis

Corporate America Is Sitting On The Solution To The Jobs Crisis: Report

Cash

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Corporate America is sitting right on top of the solution to the nation's employment crisis, according to a new report from a group of University of Massachusetts economists.

If America's largest banks and non-financial companies would just loosen their death-grip on a chunk of the $3.6 trillion in cash they're hoarding and move it into productive investments instead, the report estimates that about 19 million jobs would be created in the next three years, lowering the unemployment rate to under 5 percent.

"There is no reason that the U.S. needs to remain stuck in a long-term unemployment crisis," Robert Pollin, lead author of the report and co-director of the Political Economy Research Institute, said in a statement accompanying the report's release Tuesday.

"Getting the banks and corporations to move their hoards into productive investments and job creation requires carrots and sticks -- policies such as a new round of government spending stimulus as well as taxes on the banks' excess reserves -- that can both strengthen overall market demand and unlock credit markets for small businesses," Pollin said.

(See, for background, slide 5 of our Nov. 8 story, 6 Things Obama Could Do To Goose The Economy -- Without Congress, and, from 2010: Job Creation Idea No. 9: Encourage Banks To Lend -- Or Else.)

Even as the nation continues to confront massive unemployment, the nation's biggest companies have been hoarding cash. Banks have been able to borrow the money essentially for free from the Federal Reserve, so why not? In fact, according to the Federal Reserve (Table L.109, line 28), banks are sitting on $1.6 trillion in reserves -- about 80 times the $20 billion they held in 2007.

Meanwhile, non-financial companies are keeping their profits liquid, rather than plowing them back into investments, to the tune of about $2 trillion.

Together, that amounts to almost a quarter of the U.S. gross domestic product.

Pollin and his colleagues figured that even accounting for a massive safety cushion, at least $1.4 trillion of those reserves should be considered excess.

Meanwhile, the report notes, small business are having a hard time getting anyone to lend them money.

The report concludes that investing the $1.4 trillion in private businesses would generate an enormous surge in employment. It recommends that the money in particular be channeled toward "small businesses that face larger than normal credit constraints; more labor intensive businesses; and businesses that generate large social as well as private benefits."

Pentagon Offers US Police Free Full Military Hardware

The Pentagon Is Offering Free Military Hardware To Every Police Department In The US

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Tank

Image: wikipedia commons

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The U.S. military has some of the most advanced killing equipment in the world that allows it to invade almost wherever it likes at will.

We produce so much military equipment that inventories of military robots, M-16 assault rifles, helicopters, armored vehicles, and grenade launchers eventually start to pile up and it turns out a lot of these weapons are going straight to American police forces to be used against US citizens.

Benjamin Carlson at The Daily reports on a little known endeavor called the "1033 Program" that gave more than $500 million of military gear to U.S. police forces in 2011 alone.

1033 was passed by Congress in 1997 to help law-enforcement fight terrorism and drugs, but despite a 40-year low in violent crime, police are snapping up hardware like never before. While this year's staggering take topped the charts, next year's orders are up 400 percent over the same period.

This upswing coincides with an increasingly military-like style of law enforcement most recently seen in the Occupy Wall Street crackdowns.

Tim Lynch, director of the Cato Institute's project on criminal justice told The Daily, “The trend toward militarization was well under way before 9/11, but it’s the federal policy of making surplus military equipment available almost for free that has poured fuel on this fire.”

From The Daily:

Thanks to it, cops in Cobb County, Ga. — one of the wealthiest and most educated counties in the U.S. — now have an amphibious tank. The sheriff of Richland County, S.C., proudly acquired a machine-gun-equipped armored personnel carrier that he nicknamed “The Peacemaker.”

This comes on top of grants from the Department of Homeland Security that enable police departments to buy vehicles such as “BearCats” — 16,000-pound bulletproof trucks equipped with battering rams, gun ports, tear-gas dispensers and radiation detectors. To date, more than 500 of these tank-like vehicles have been sold by Lenco, its Massachusetts-based manufacturer, according to a report in the Orlando Sentinel.

“It’s kind of had a corrupting influence on the culture of policing in America,” Lynch says. “The dynamic is that you have some officer go to the chief and say, people in the next county have [military hardware], if we don’t take it some other city will. Then they acquire the equipment, they create a paramilitary unit, and everything seems fine.

“But then one or two years pass. They say, look we’ve got this equipment, this training and we haven’t been using it. That’s where it starts to creep into routine policing.”

BP Accuses Halliburton of Destroying Evidence

BP accuses Halliburton over Gulf of Mexico oil spill

US contractor destroyed evidence about possible problems with cementing of Macondo well before disaster, allege court papers

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Deepwater Horizon
The Deepwater Horizon blast, which killed 11 workers, led to the biggest oil spill in US history, which affected wildlife such as pelicans. Photograph: Sean Gardner/Reuters

BP has accused Halliburton of destroying damaging evidence relating to last year's Gulf of Mexico oil spill.

In a court filing, BP has alleged that the US oil services firm of intentionally destroying evidence about possible problems with its cement slurry poured into the deep-sea Macondo well about 100 miles (160 km) off the Louisiana coast. An oil well must be cemented properly to avoid blowouts.

Also in the documents filed in a New Orleans federal court, BP accuses Halliburton of failing to produce incriminating computer modelling evidence.

BP asked a US judge to penalise Halliburton and order a court-sponsored computer forensic team to recover the modelling results.

Halliburton has told media outlets that the accusations are untrue.

The allegations in the 310-page motion add to a showdown among BP and the contractors Halliburton and Transocean over blame in the Deepwater Horizon blast in April 2010, which killed 11 workers and led to 206m US gallons (780m litres) of crude oil escaping into the Gulf of Mexico. So far, BP, the majority owner of the Macondo well, has footed the bill for the emergency response and cleanup.

Also involved are Anadarko Petroleum and Cameron International.

The first trial over the disaster is scheduled to start 27 February in New Orleans. It is expected to last three months and determine the liability of each company involved in drilling the Macondo well. There will be other phases over cleanup costs, punitive damages and other claims.

US federal and independent investigations into the disaster have found fault in Halliburton's cementing because it failed to properly plug the well. The firm used a foamy cement slurry.

In Monday's court filing, BP alleges that Halliburton employees discarded and destroyed early test results they performed on the same batch of cement slurry used in the Macondo well during an internal investigation into the disaster.

BP said Halliburton's chief cement mixer for Gulf projects testified in depositions that the cement slurry seemed "thin" to him but that he chose not to write about his findings to his bosses out of fear he would be misinterpreted.

"I didn't want to put anything on an email that could be twisted, and turned," Rickey Morgan, the Halliburton cement expert, said in depositions. He worked at a laboratory in Duncan, Oklahoma.

"Upon reviewing these latest testing results, Halliburton employees destroyed records of the testing as well as the physical cement samples used in the testing," BP alleged.

Fukushima China Syndrome

The Fed Bailouts: Money for Nothing

The Fed Bailouts: Money for Nothing

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I think it's fair to say that Congressman Ron Paul and I are the parents of the GAO's audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled "Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance." It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed's 99-year history.

Feel free to take a look at it yourself, it's right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you've heard about.

I wouldn't want anyone to think that I'm dramatizing or amplifying what this GAO report says, so I'm just going to list some of my favorite parts, by page number.

Page 131 - The total lending for the Fed's "broad-based emergency programs" was $16,115,000,000,000. That's right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

Pages 133 & 137 - Some of these "broad-based emergency program" loans were long-term, and some were short-term. But the "term-adjusted borrowing" was equivalent to a total of $1,139,000,000,000 more than one year. That's more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

Pages 135 & 196 - Sixty percent of the $738 billion "Commercial Paper Funding Facility" went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

Page 205 - Separate and apart from these "broad-based emergency program" loans were another $10,057,000,000,000 in "currency swaps." In the "currency swaps," the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed's only "collateral" was a corresponding amount of foreign currency, which never left the Fed's books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the "broad-based emergency program" loans, together, totaled more than $26 trillion. That's almost $100,000 for every man, woman, and child in America. That's an amount equal to more than seven years of federal spending -- on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American's total GNP.

Page 201 - Here again, these "swaps" were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That's almost $2,000 for every American. All sent to foreign countries. That's more than twenty times as much as our foreign aid budget.

Page 129 - In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

Pages 3 & 4 - In addition to the "broad-based programs," and in addition to the "currency swaps," there have been hundreds of billions of dollars in Fed loans called "assistance to individual institutions." This has included Bear Stearns, AIG, Citigroup, Bank of America, and "some primary dealers." The Fed decided unilaterally who received this "assistance," and who didn't.

Pages 101 & 173 - You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The "Maiden Lane I" bailout fund was in the hole for almost two years.

Page 4 - You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed's Agency Mortgage-Backed Securities Purchase Program alone. That's almost $3,000 for every American.

Page 126 - In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to "strains in the financial markets," "transitional credit," and the Fed's all-time favorite rationale for everything it does, "increasing liquidity."

81 different places in the GAO report - The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a "haircut" (discount), sometimes it didn't. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

Page 2 - As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed's discount window lending, or its single-tranche term repurchase agreements.

Pages 13 & 14 - And the Fed wasn't the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I'd like to add to this, which isn't in the GAO's report. All this is something new, very new. For the first 96 years of the Fed's existence, the Fed's primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the "discount window." Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So what does all this mean? Here are some short observations:

(1) In the case of TARP, at least The People's representatives got a vote. In the case of the Fed's bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That's now how a democracy should function, or even can function.

(2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany's hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

(3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

(4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a "haircut" and who doesn't, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

(5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don't believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

(6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn't borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can't find a full-time job?

And here's what bothers me most about all this: it can happen again. I've called the GAO report a bailout autopsy. But it's an autopsy of the undead.

Courage,

Alan Grayson