Monday, October 7, 2013

About 15% Of Americans Live in Poverty, So Why Is No One Talking About It?

Mainstream media give very little coverage to poverty and the working class. It's a public interest failure

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It's not my intention to belittle the government shutdown or the political showdown underway between President Obama and the GOP, but more often that not, America's fickle news media is dominated by one subject. It's what gets left out that is often more telling than what everyone (or at least the news) is talking about.

Remember the food stamp fight? It was only two weeks ago that the Republican-controlled House of Representatives passed a bill that would strip $40bn from Snap (the Supplemental Nutrition Assistance Program, aka the food stamp program) over the next 10 years by imposing work requirements and eliminating waivers for "some able bodied adults". The move, which would effectively cut support for millions of poor Americans, was seen by critics as a heartless attempt by House Republicans to hack away at the nation's dwindling social safety net. But, what is more outrageous is that it took a draconian piece of legislation to even get the nation's attention on what has become one of the country's most ignored issues:poverty.

The Pew Research Center's Project for Excellence in Journalism found that out of 52 mainstream media outlets analysed, coverage of poverty amounted to less than 1% of available news space from 2007 to 2012. It's even more astonishing considering that period covered a historic recession.

One of the report's conclusions was that media organizations chose not to cover poverty because it was potentially uncomfortable to advertisers seeking to reach a wealthy consumer audience. As Barbara Ehrenreich, who contributes articles on social issues for Time Magazine, put it:

They don't want really depressing articles about misery and hardship near their ads.

Poverty coverage is seen as non-lucrative, time-consuming and involves high levels of commitment that editors are unwilling to give their reporters in this age of newsroom budget tightening. The greatest irony, however, is that poverty, as Tampa Bay Times media critic, Eric Deggans, told The Nieman Foundation for Journalism at Harvard earlier this year "is in some ways the ultimate accountability story – because, often, poverty happens by design".

In a nation where, according to the US Census Bureau's poverty statistics released last month, 46.5 million people (roughly 15%) of the nation's population lives in poverty, the idea that the media would not cover such a pressing human interest story because of financial troubles is misguided, if not inexcusable. It represents a failure on the part of the industry in fulfilling its role in serving the public interest.

The absence of coverage has left the poor with no voice in American society. As the plight of the nation's shrinking middle class, a central issue in last year's presidential campaign, consistently leads media coverage, the idea of poverty in America almost seems a relic from the past.

Nearly 50 years after President Lyndon B Johnson launched the "war on poverty" program that ushered in social security, Medicare and Medicaid amongst others, you could be fooled into believing that poverty is no longer a public policy problem in the US. Or as former Secretary of Agriculture, Dan Glickman, put it in aUS News & World Report op-ed in May:

It feels today like a 'war on poverty' would need to begin with a battle just to gain recognition that poverty even exists.

New media outlets, from blogs like Daily Kos to social media, appear ready to fill the coverage vacuum. There are independent journalists and Twitter activists who prolifically cover issues that affect the working poor from debates on raising the federal minimum wage to securing labour rights. The American Prospect, a left-leaning socially conscious bi-monthly magazine, particularly does great work on highlighting poverty.

The fast-food worker marches this past summer were a watershed moment for poverty coverage in many ways. Mainstream media coverage of the protests was scant (the Guardian a notable exception), but reporting and analysis were available elsewhere online, most notably from Democracy Now!, the independent TV network that ran a feature online titled "Forgotten Poor", offering viewers a glimpse of those struggling to make ends meet.

If this growing underclass of poor Americans continues to be ignored, it will be permanently damaging to what remains of the independent character of US journalism. By bowing to their corporate sponsors in forsaking poverty coverage, the mainstream media is doing a huge disservice to us all by denying us a national discussion on poverty that has not taken place in decades.

Another Slump Ahead The True State of the U.S. Economy

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The fact that stock prices have been drifting lower, doesn’t prove that the economy is headed for recession. Nor does political dysfunction (government shutdown), droopy home sales, plunging confidence, chronic high unemployment, rising levels of extreme poverty, unprecedented public dependence of food stamps, weak personal consumption, stagnant wages, falling middle class incomes, or gaping inequality. They may show a country that is on the wrong track and has its priorities mixed-up, but they don’t show that another recession is immanent. Even so, it’s easy to wonder how bad things have to get before the economy more closely reflects the mood of the country which is relentlessly pessimistic. To say that no one believes in Obama’s recovery would be a gross understatement. Obama supporters feel duped, misled, and despondent. Obama is not the agent of change they’d hoped for. He’s expanded the wars, slashed vital safety net programs, exonerated Wall Street criminals, and continued the vicious attack on civil liberties. He’s done everything in his power to boost the profits of the big corporations and banks, but hasn’t lifted a finger to help ordinary working people. And his efforts have paid off, too. Just look at this from Huffington Post:
“Corporate profits have increased by 18.6 percent over the past year…. In fact, corporate earnings now represent a larger share of GDP than during any other period in history…
Real wages have declined by nearly seven percent in the past seven years, according to datacollected by the compensation research company Payscale. In other words, U.S. workers have less buying power now than they did before the financial crisis…
Payscale’s findings are just the latest in a slew of research that indicates the sluggish economic recovery has not been beneficial for most of us. Income inequality in the U.S. is at a new high as skyrocketing income gains for the top one percent are met by stagnating wages for practically everyone else.” (“Corporate Profits Are Soaring, But You’re Not Feeling It“, Huffington Post)
Okay, so you’ve heard it all before, but here’s something you might not know. At the same time the corporations and banks are reporting record profits, Gallup surveys show that “trust in all three branches of the federal government remains on the lower end of what Gallup has measured historically” while “Americans’ trust in banks fell to an all-time low of 18% — lower than its level at the height of the global financial collapse.” (Gallup)
So, there is a tradeoff for all loot Obama’s friends have been pilfering from working people, and that tradeoff is trust. Americans no longer have confidence in the government, the market or the justice system. Gradually, that lack of trust will cross-over into the economy as wary consumers set aside more of their earnings to protect themselves from the government-corporate-racketeer oligarchy. A slowdown in personal consumption will impact retail sales, durable goods, hiring and capital investment. It will douse those green shoots with motor oil and push the economy back into negative territory. And while that might not happen in the next month or two, there are sectors of the economy that are showing signs of weakness already. Take housing, for example, which is progressively losing momentum as the year drags on. This is from an article at Global Economic Intersection:
“Existing Home Inventories are building, which clearly reflects a fall in demand; and also possibly greater motivation amongst sellers to get out. The inventory trajectory continues to closely shadow the pattern of 2010…. This pattern suggests that the housing market is reaching a critical point at which further intervention from both the Federal Reserve and Federal Government may be needed to give it some more momentum.” (“Housing smoke and mirrors,” Global Economic Intersection)
Then there’s this from Wells Fargo concerning the vanishing of investors who’ve been driving the market for the last year:
“The housing market is transitioning away from a rebound driven primarily by speculative forces to one where the underlying fundamentals will be much more important,” Wells Fargo said in a report. “Over the past few years investor purchases have been the primary driver of the housing recovery, helping clear inventories of foreclosed and lender-owned properties and pulling home prices dramatically higher. Home prices, which tumbled 33.7 percent from peak to trough using the S&P/Case-Shiller Home Price Index, have since rebounded 16.3 percent and are up 12.4 percent over the past year alone. The swing in prices exaggerates the extent of improvement and likely reflects the whipsaw effect of prices overshooting to the downside during the worst of the housing bust.” (“Wells Fargo Predicts Market Rebound”, DS News)
And here’s more from CNBC’s Realty Check:
“A potential stall in home price gains and a large drop in the number of distressed properties have some big investors pulling out of the single-family rental market…
“I think the investor market is largely past us,” Doug Lebda, chief executive of Lending Tree told CNBC. “People were buying investment properties three, four, five years ago. What I hear is that’s slowing now.”
Recent reports that Oaktree Capital Group is selling about 500 of its homes added fuel to other reports that Och-Ziff Capital management is selling its homes as well. Both declined to comment on the reports. Carrington Mortgage Services stopped buying distressed homes late last year, claiming the market was “a bit too frothy…” (“Investors in rental homes: ‘It’s a business not a trade’”, CNBC)
We’ve been predicting that the speculators would exit the market eventually, but we didn’t think it would happen this fast. This news should have the administration and the Fed sweating bullets as the Potemkin housing recovery is the only sector that was showing improvement at all. A dropoff in demand should show up in the October existing homes sales data which will put more pressure on the Fed to increase its purchases of mortgage-backed securities (MBS) even though bubbles are popping up everywhere in the financial markets. As Pimco’s Mohamed El-Erian said in recent Bloomberg interview “Virtually every market is trading at artificial levels” while investors are “taking more risk than is justified.” Aside from historic levels of margin debt and a splurge of corporate stock buybacks, there are also signs of froth in fixed income and junk. Take a look at this from Reuters:
“Retail money keeps flooding into loan funds, marking 66 straight weeks of heavy inflows, according to Lipper data. Loan funds pulled in $1.3 billion in the week ended September 18, during which the Fed surprised the markets with its plan to keep on buying $85 billion of bonds weekly to keep rates low and boost economic growth.
Loan fund inflows accelerated over the summer on expectations that the U.S. central bank was about to reduce those bond purchases this month, keeping interest rates rising. Issuance of collateralized loan obligations (CLO), another key source of demand for leveraged loans, at $57 billion so far this year already topped last year’s issuance.” (“U.S. leveraged loan buyers undeterred by Fed, regulation“, Reuters)
Yipee! Another gargantuan asset bubble!
By choosing not to reduce its monthly asset purchases (“Taper”) the Fed has again stepped on the gas and flooded the markets with beaucoup liquidity. That’s blowing bigger and more lethal bubbles than ever. And it’s not just junk either; the bubbles extend across the spectrum of financial assets, from stocks and bonds, to structured debt, derivatives, farmland, and CLOs. You name it, Bernanke’s inflated it. The whole shebang has been grossly distorted by the Fed’s persistent pump-priming frenzy. Just get a load of what Blackstone’s private equity chief said last week. This is from the Testosterone Pit:
“Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career…
Junk bond issuance hit an all-time record of $47.6 billion in September, edging out the prior record, set in September last year, of $46.8 billion, according to S&P Capital IQ/LCD. Year to date, issuance amounted to $255 billion, blowing away last year’s volume for this period of $243 billion. The year 2012, already in a bubble, set an all-time record with $346 billion…
The cost of a high-yield bond on an absolute coupon basis is as low as it’s ever been,” explained Baratta, king of Blackstone’s $53 billion in private equity assets. Even the riskiest companies are selling the riskiest bonds at low yields….. Baratta complained that valuations “relative to the growth prospects are out of whack right now.” (“Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth”, Testosterone Pit)
“Out of whack right now”? Think so?? You mean Bernanke can’t just hook a helium-hose up to the financial markets and pump like crazy for 4 years without creating a Hindenburg-sized monster bubble that threatens to blow the whole system to Kingdom come? Is that what you mean?
This is lunacy. The economy is sputtering along at sub-2 percent, millions of people can’t find work, public confidence in the government is down the plughole, and Bernanke’s playing circle-jerk with the money supply. This is the recovery we’re expected to believe in? Just look at the problems the banks are having. This is from the Wall Street Journal:
“New troubles are piling up for U.S. banks as they prepare to release third-quarter results amid warnings of weak trading revenue, a sharp decline in mortgage-refinancing activity and rising legal costs….Analysts reduced revenue estimates for the six largest U.S. banks during the quarter and cut profit estimates for all but Wells Fargo…
“I haven’t seen morale this bad since the Titanic,” said Richard Stein, a senior recruiter atCaldwell Partners CWL.T -3.41% who specializes in financial services…
The tempered expectations are a troubling sign for an industry already struggling to overcome lackluster loan demand, a weak economy and the hangover from the 2008 financial crisis…”
Weak Trading, Mortgage Slump, Legal Costs to Cut Results at Banks“, Wall Street Journal)
You know you’ve got problems when an industry guy compares the situation to the Titanic. That’s not what you call a “ringing endorsement”.
But can you believe it? These are the same worthless, zombie banks we bailed out just four years ago to the tune of many trillions of dollars and they’re back on the ropes again? How does that happen? And all the while the Fed has been lending them gobs of money at zero percent, loading them with trillions in reserves, pumping up their stock prices with a small ocean of free liquidity, and they still can’t hack it. They must have the shittyest business model in history. Either that, or crime doesn’t pay after all.
The fact is, the banks are dragging down the entire economy and everyone with it. You simply can’t restructure the whole system to accommodate bumbling imbeciles whose only strategy for survival is mooching off the government. Four years into the so-called recovery and bank lending is still contracting. This is ridiculous. These chiselers make their dough trading derivatives and moving loan loss provisions into the profit column to buffalo shareholders. It’s a big freaking game. We should have shut down these zombies when we had the chance. Now they’ve BECOME the government. And that’s why the economy is headed for another slump.

US shutdown a smokescreen for assault on Social Security, Medicare

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In an interview on day two of the partial shutdown of the US government, broadcast by the pro-business cable TV channel CNBC, President Barack Obama offered talks on cutting basic social programs such as Medicare and Social Security in return for Republican support for funding federal operations and raising the national debt ceiling.
Obama continued to reject any negotiations with House Republicans on a so-called “continuing resolution” to reopen the government that is tied to a delay in implementation of his health care overhaul. At the same time, he linked a “clean” funding bill to passage of legislation to raise the national debt ceiling before the current limit expires and the country goes into default, estimated by the Treasury Department for October 17.
Obama’s remarks added to mounting evidence that behind the appearance of partisan warfare in Washington, the two big business parties are planning to use a crisis produced by an extended government shutdown as a smokescreen for reaching a deal to impose historic attacks on the bedrock social programs left over from the New Deal and Great Society periods.
In the interview, Obama said he agreed on the need to continue eliminating “unnecessary” social programs and was ready to discuss cuts in “long-term entitlement spending.” He also said he would accept Republican demands that there be no increase in personal income tax rates.
“The Democrats have already said they are ready to reopen the government at funding levels the Republicans have set,” the president said. He was referring to the acceptance by Democrats in the House of Representatives of a funding level $42 billion lower than the previous Democratic proposal.
Obama also hinted that he was willing, as part of future budget talks, to accede to demands from Republicans, speaking on behalf of corporate interests, for changes in his Affordable Care Act, which was passed in 2010 and is slated to become largely operational in January. The implication was that he would consider proposals such as repealing a tax on the makers of medical devices and increasing the cutoff for full-time workers from 30 hours a week, thereby loosening requirements for employers to provide health care coverage for their workers.
Indicating the sweeping character of the budget deal Obama is seeking, he said he was prepared to negotiate “a whole range of issues” if and when Republican House Speaker John Boehner allows a vote to reopen the government without anti-Obamacare provisions and Republicans agree to raise the debt ceiling. He wanted, he declared, a budget “that enables us to deal with problems long-term.”
Later in the day, Obama met at the White House with top congressional leaders to discuss both the government shutdown and the debt ceiling. Present were Republican House Speaker Boehner, Republican Senate Minority Leader Mitch McConnell, Democratic House Minority Leader Nancy Pelosi and Democratic Senate Majority Leader Harry Reid. Prior to the meeting, both the White House and Republican leaders made clear they were not prepared to alter their positions in order to secure a quick reopening of the government.
It appeared the main purpose of the meeting was to set the groundwork for a government shutdown of at least one week, and more likely longer, and the merging of talks on reopening the government and the debt ceiling issue. Both sides emerged from the meeting blaming the other for refusing to negotiate.
Congressional Democrats and Republicans alike have indicated support for keeping the shutdown going—with all of its punishing consequences for working people—in order to bring the budget and debt ceiling deadlines together and pave the way for a so-called “grand bargain” on social cutbacks. “Either it’s resolved this week or the debt ceiling gets rolled into it,” said Senator Richard Burr (Republican of North Carolina).
A spokesman for House Speaker Boehner said rolling the budget crisis into the debt crisis “seems like a logical progression.” Representative Paul Ryan of Wisconsin, the chairman of the House Budget Committee and 2012 GOP vice-presidential candidate, said the deadline to address the debt limit and avoid a default could be “the forcing mechanism to bring the two parties together.”
A CNBC commentator cited members of Ryan’s congressional staff as saying the congressman was preparing for negotiations with the White House and congressional Democrats to begin next week.
Dick Durbin of Illinois, the Democratic Senate whip, said, “This is now all together.”
In the previous manufactured crises of 2010, 2011 and 2012, Obama had offered to support cuts in cost-of-living raises for Social Security recipients and structural changes in Medicare, such as increasing the eligibility age and introducing means testing, along with sharp cuts in corporate taxes, as part of a broad bipartisan deficit deal.
However, no such deal on entitlement programs was reached. Instead, more than $2 trillion in cuts in domestic nondefense discretionary spending were mandated, bringing this category of social spending in the US—for education, housing, infrastructure, health and safety, the environment, culture—to its lowest level as a percentage of the gross domestic product since the 1950s.
Now, the corporate-financial elite is demanding fundamental attacks on core programs such as food stamps, Social Security and Medicare. Typical was a column that appeared in Tuesday’s Washington Post by Robert J. Samuelson. It complained that Obama “ducks the real budget issue, which is coping with the steady rise in spending on the elderly… He hasn’t confronted the reality that Social Security and Medicare are slowly squeezing most other government programs and putting upward pressure on both taxes and deficits. The central budget problem is to reconcile what’s politically popular today with what’s good for the country tomorrow.”
The current crisis has been artificially created for the cynical purpose of fostering more favorable political conditions to impose policies overwhelmingly opposed by the American people.
The immediate price—which means nothing to Obama and the rest of the politicians who shed crocodile tears for the victims of the shutdown—includes the furloughing without pay of 800,000 federal workers. This comes on top of a three-year pay freeze for the two million federal employees, payless furloughs under the “sequester” cuts that began last March, and cuts in retirement benefits.
The partial or total shutdown of most departments other than the uniformed military and police/intelligence agencies such as the CIA, the FBI and Homeland Security is hitting broad layers of the population. Besides the closure of national parks and monuments, some 8.9 million low-income mothers and children are being denied food aid due to the shutdown of the WIC program; pension and veterans’ benefit checks are being delayed; preschool Head Start programs are closing; sick people, including cancer patients, are being turned away from National Institutes of Health clinical trials; and foster care payments, nutrition aid and financial assistance for hundreds of thousands of Native Americans are being halted.
The priorities of the Obama administration are indicated by the president’s closed-door meeting Wednesday with top Wall Street bankers who head the Financial Services Forum. Those present included JPMorgan Chase CEO Jamie Dimon, currently in talks with Attorney General Eric Holder to avoid criminal prosecution for mortgage fraud, Goldman Sachs CEO Lloyd Blankfein, accused by a Senate subcommittee of perjuring himself at a hearing on his bank’s mortgage machinations, and Bank of America CEO Brian Moynihan, whose bank received hundreds of billions of dollars in bailout cash and loan guarantees from the administration.

Obamacare Is Another Private Sector Rip-Off Of Americans

The private sector allied with government is a second IRS

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The government of the “world’s only superpower,” the “exceptional,” the “indispensable” country, claims to know what is best for Syria, Iraq, Afghanistan, Libya, Yemen, Pakistan, Somalia, Mali, Russia, Venezuela, Bolivia, Ecuador, Brazil, China, indeed for the entire world. However, the “indispensable” country cannot even govern itself, much less the world over which the “superpower” desires hegemony. The government of the “world’s only superpower” has shut itself down.
The government has shut itself down, because it cannot deal with the budget deficit and mounting public debt caused by twelve years of wars, by financial deregulation that allows “banks too big to fail” to loot the taxpayers, and by the loss of jobs, GDP, and tax base that jobs offshoring forced by Wall Street caused.
The Republicans are using the fight over the limit on new public debt to block Obamacare. The Republicans are right to oppose Obamacare, but they are opposing Obamacare largely for ideological reasons when there are very good sound reasons to oppose Obamacare.
Last February 3, I posted on this website a column, “Obamacare: A Deception,” written by an expert on the subject.
When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers.
Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets.
This might prove to be a growing percentage of Americans. On September 19 the New York Times on the front page of the business section reported what I have reported for years: that real median family incomes in the US are where they were a quarter of a century ago. In other words, in a quarter of a century there has been no income growth for the median American family.
In 2013 payroll employment is below where it was six years ago. During 2013 most of the new jobs, barely sufficient to stay even with population growth and insufficient to recover the job loss from the recession, have been part-time jobs that do not provide any discretionary income with which to drive a consumer economy.
Obamacare has resulted in the health insurance companies, who thought that they would be living in high profits from the mandated health coverage, being outsmarted by employers, who have reduced their full-time workers to part-time in order to avoid Omamacare’s requirement to provide health coverage to those employees who work 30 hours a week or more.
Employers can get away with this, because jobs are hard to find. The lack of employment opportunities results in Americans with engineering degrees working as retail sales clerks and as shelf stockers in Walmart and Home Depot. Despite the abundance of unemployed and under-employed American technical and engineering workers, the large corporations lobby Congress for more H-1B visas to bring in lowly paid foreigners with the argument that there is a shortage of qualified Americans for technical work.
As I have pointed out so many times, if there were a shortage of engineering and technical workers, salaries would be rising, not falling.
For millions of employees, Obamacare means cut hours and less take home pay plus out-of-pocket expenses to purchase an Obamacare health policy. For most people covered by Obamacare, this is a lose-lose situation.
It is also a lose-loss situation for the vast majority of the young. Most young people, unless they have jobs that provide health coverage, do without it, because the chances of the young having heart attacks, cancer, and other serious health problems is low.
Obamacare, however, requires the healthy young to pay premiums for coverage or to pay a penalty to the IRS.
In my day this might not have been a problem. However, today there are few jobs for the young that pay enough to have an independent existence. The monthly payroll jobs reports do not show well-paying jobs. The Labor Department’s projections of future jobs are not jobs that pay well. For the youth, it seems that the penalty is less than the premium, so youthful penalties paid out of waitress and bartender tips will subsidize the unusable Obamacare health policies for the poor adults who are not thrown into Medicaid, which confiscates their assets, if any.
Obamacare benefits only two classes of people. It benefits employers who drop their employees working hours below the hours specified for Obamacare coverage, and it benefits the insurance companies or the IRS who collect the premiums and penalties.
Many of the people who pay the premiums won’t be able to use the policies because of co-pays and deductions.
The very poor with no assets might receive health care if they reside in states that accept the Medicaid provisions of Obamacare.
In 21st century America, the few people who have experienced income gains are the executives and shareholders of firms who offshored their production for US markets, Wall Street which makes bets covered by the Federal Reserve, and the military-security complex which has been enriched by the neoconservatives’ wars.
Every other American has lost.

The Real Crisis Is Not The Government Shutdown

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The inability of the media and politicians to focus on the real issues never ceases to amaze.
The real crisis is not the “debt ceiling crisis.” The government shutdown is merely a result of the Republicans using the debt limit ceiling to attempt to block the implementation of Obamacare. If the shutdown persists and becomes a problem, Obama has enough power under the various “war on terror” rulings to declare a national emergency and raise the debt ceiling by executive order. An executive branch that has the power to inter citizens indefinitely and to murder them without due process of law, can certainly set aside a ceiling on debt that jeopardizes the government.
The real crisis is that jobs offshoring by US corporations has permanently lowered US tax revenues by shifting what would have been consumer income, US GDP, and tax base to China, India, and other countries where wages and the cost of living are relatively low. On the spending side, twelve years of wars have inflated annual expenditures. The consequence is a wide deficit gap between revenues and expenditures.
Under the present circumstances, the deficit is too large to be closed. The Federal Reserve covers the deficit by printing $1,000 billion annually with which to purchase Treasury debt and mortgage-backed financial instruments. The use of the printing press on such a large scale undermines the US dollar’s role as reserve currency, the basis for US power. Raising the debt limit simply allows the real crisis to continue. More money will be printed with which to purchase more new debt issues needed to close the gap between revenues and expenditures.
The supply of dollars or dollar denominated assets in foreign hands is vast. (The Social Security system’s large surplus accumulated over a quarter century was borrowed by the Treasury and spent. In its place are non-marketable Treasury IOUs. Consequently, Social Security is one of the largest creditors to the US government.)
If foreigners lose confidence in the dollar, the drop in the dollar’s exchange value would mean high inflation and the Federal Reserve’s loss of control over interest rates. It is possible that a drop in the dollar’s exchange value could initiate hyperinflation in the US.
The real crisis is the absence of intelligence among economists and policymakers who told us for 20 years not to worry about the offshoring of US jobs, because we were going to have a “New Economy” with better jobs.
As I report each month, not a single one of these “New Economy” jobs has appeared in the payroll jobs statistics or in the Labor Department’s projections of future jobs. Economists and policymakers simply gave away a good chunk of the US economy in order to enhance corporate profits. One result has been to create in the US the worst distribution of income of all developed countries and of many undeveloped ones.
In the scheme of things, the enhanced profits are a short-run thing, because by halting the growth in consumer income, jobs offshoring has destroyed the US consumer market. As I noted in a recent column, on September 19 the New York Times reported what I have reported for years: that US median family income has not increased for a quarter of a century. The lack of consumer income growth is why 5 years of massive monetary and fiscal stimulus have not brought economic recovery.
The real crisis cannot be addressed unless the jobs are brought back home and the wars are stopped. As powerful organized interests oppose any such measures, Congress will pass a new debt ceiling and the real crisis will continue.
Do you hear any mention of the real crisis in the media? Today I was on an international TV program for 25 minutes with the chief financial editor of one of England’s major newspapers. Little doubt but that he was a good-hearted and intelligent fellow, but he had no capability of thinking outside the box. He was unable to comprehend my explanations, and resorted to regurgitations of the media’s ignorance or subservience to Washington’s propaganda.
Among his regurgitations was the “solution” of cutting Social Security. The chief financial editor of a major UK newspaper did not know that for the past quarter of a century Social Security revenues exceeded Social Security payments, and that the Treasury spent the surplus to fund the annual operating expenses of the government, issuing non-marketable IOUs to the Social Security Trust Funds.
The chief financial editor also did not comprehend that cutting Social Security payments also cuts consumer spending or aggregate demand, and sends the economy down further, thus magnifying the deficit/debt problem.
Because of the serious decline in the US economy caused by jobs offshoring and financial deregulation, Social Security no longer adds to its surplus. Social Security payments need the supplement to the annual payroll revenues of repayments by the Treasury of the borrowed funds.
The only reasons that Social Security is in trouble is that jobs offshoring and wars have constrained the US Treasury’s ability to make good on its debts except by having the Federal Reserve print money. Every job that is sent abroad does not contribute payroll taxes to Social Security and Medicare.
Insouciant American economists say that manufacturing is an outmoded source of employment, but Chinese manufacturing employment is almost equal to the total US labor force in all occupations, including waitresses and bartenders and hospital orderlies. China’s economy is growing at a rate of 7.5% in real terms, while Western economies cannot move forward and some are regressing.
In order to appease Wall Street, the most corrupt institution in human history, and to prevent Wall Street-financed takeovers of their corporations, executives destroyed the American consumer market by offshoring American incomes in order to enhance profits by substituting cheap foreign labor for US labor.
In my opinion, the US economy is not salvageable in its present form. The economy is running out of water resources. The supply that remains is being decimated by fracking. The soil is depleted by glysophate, a requirement of GMO agriculture. The external costs of production are rising (the costs that the corporations impose on the environment and third parties) and possibly exceed the value of the increase in corporate output. Economists are incapable of independent thought, and elected representatives are dependent on the private interests that finance their campaigns.
It is difficult to imagine a more discouraging situation.
At this time, collapse seems the most likely forecast.
Perhaps out of the ruins, a new, intelligent beginning might occur.
If there are any leaders.

The Trans-Pacific Partnership: We Won't Be Fooled by Rigged Corporate Trade Agreements

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This week, President Obama will attend the Asia-Pacific Economic Coordination (APEC) meeting in Bali, Indonesia, where he is expected to announce his goal of having the Trans-Pacific Partnership (TPP) signed into law by the end of 2013. Obama will host a meeting of the leaders of the TPP nations during the APEC conference.
The Obama administration has been negotiating the TPP in secret for more than three years. Unlike past trade agreements, the text of the TPP is classified, and members of Congress have restricted access to it. If they do read the text, they are not allowed to copy it or discuss any specifics of it. However, more than 600 corporate advisers have direct access to the text on their computers.
The final formal round of negotiations was held in Brunei this August, and since then, there have been informal meetings to try and finalize sections of the agreement. As far as the president is concerned, the TPP is entering the home stretch. All he needs now is for Congress to vote to grant him fast track, also known as trade promotion authority, and it's a done deal. The facts show that the president may be deluding himself or trying to fool everyone else.
This is because the TPP goes far beyond a trade deal. Only five of the 29 chapters contain provisions related to trade. The other chapters consist of provisions related to patent protections, investor state rights and finance deregulation, among others. The TPP is a backdoor corporate power grab to advance the stalled WTO agenda. Or as Sachie Mizohata writes in Asia Times, "The TPP is a Trojan horse, branded as a 'free trade' agreement, but having nothing to do with fair and equitable treatment. In reality, it is precisely 'a wish list of the 1% - a worldwide corporate power'. "
We expect the president to return from Bali with increased enthusiasm to push for fast track. To accompany this push will be the usual misinformation campaign coming from supporters of the TPP. To prepare the public for the expected propaganda, we will look at what is being said and provide facts to counter their arguments.
As far as some members of Congress are concerned, as well as hundreds of civil society groups and a growing number of US residents, fast track and the TPP are not going to slide through Congress smoothly. Opposition to the TPP is growing as more people come to understand that the TPP is a rigged corporate trade deal and not fair trade that respects the needs of people and the planet.
What's Wrong with Fast Track?
For most of the past 200 years, Congress negotiated trade policy and wrote the laws to oversee trade, as required in the Constitution's Commerce Clause. This power was first transferred to the executive office when Nixon was granted fast track in 1974 as part of his consolidation of presidential power. Fast track expired in 2007. Only 16 trade agreements have been passed using fast track, and some of these were the most unpopular and controversial pacts such as the WTO and NAFTA, signed by President Clinton.
The previous fast track legislation required the president to submit both the trade agreement and implementing legislation to Congress for approval. According to a 2011 report by the Congressional Research Services, "The fast-track authority provides that Congress will consider trade agreement implementing bills within mandatory deadlines, with a limitation on debate and without amendment. . ." In other words, fast track permits the president to negotiate an entire trade agreement over many years and then present it to Congress for an up or down vote within a short time period (60 to 90 days), with debate limited to 20 hours and no amendments. 
Fast  track severely undermines the transparent and democratic process required to ensure that the full implications of the agreement are understood and are acceptable. Trade agreements require that laws, even down to the local level, be changed to be in compliance with provisions in them. For example, when the WTO was passed, which was fast tracked despite having been negotiated for over 10 years and containing thousands of pages, most members of Congress did not read or understand it.
Great Recession Connection
One of the requirements of the WTO was that Glass-Steagall had to be repealed. This removed the wall that protected traditional banking from risky investments and is partially responsible for the current economic crisis, which started in 2008. Similarly, NAFTA was 1,700 pages, including annexes and footnotes. NAFTA involved only three countries, the TPP includes 12. Congress cannot digest all of this information and consider its implications in such a short time.
Passage of the Trans-Pacific Partnership and its sister, the Trans-Atlantic Trade and Investment Partnership (known as TAFTA), for which negotiations began in July, will require fast track to become law. Supporters of the TPP such as the US Chamber of Commerce and, of course, the office of the US Trade Representative (USTR) are promoting fast rack with flimsy and false arguments. Basically, they boil down to these points:
1.  The president should have fast track so he can negotiate job-creating agreements and boost trade and the economy.
2. It's OK to give the president fast track because Congress is going to include negotiating objectives within the fast track law, and Congress must vote on the agreement.
3. The president should have fast track because other presidents have had it.
So, let's examine the facts. First, despite promises of American jobs, past free trade agreements have actually been huge job losers. NAFTA is responsible for the loss of nearly 700,000 jobs. The recent Korea Free Trade Agreement was promised to bring 70,000 new jobs, but lost 40,000 jobs in the first year alone instead, and Public Citizen estimates that nearly 160,000 jobs will be lost over the first seven years. In total, US free trade agreements over the past two decades have netted a loss of nearly 5 million American jobs.
In addition to the loss of jobs, free trade agreements have contributed to the stagnation of wages in the United States. American workers cannot compete with extremely low wages in countries like China, Malaysia and Vietnam. A recent study predicts that the TPP will cause wages for 90 percent of American workers to decrease while wealth of the top 1% will soar. How can US workers compete with workers in Malaysia, where the minimum wage is $1.24; Peru, where it is $1.37; or Vietnam, where it is 30 cents? The TPP will increase the race to the bottom that will further impoverish US workers.
The same study predicts that the TPP will only boost US Gross Domestic Product (GDP) by 0.1 percent. In fact, free trade agreements do not seem to work at all when it comes to expanding US exports. According to the data, overall the US trade deficit has increased by 440 percent with countries with which we have free trade agreements and has declined by 7 percent with countries with which we do not have agreements. If we look at the outcome of a "21st century trade agreement," which is how the office of the USTR describes the TPP, like theKorea Free Trade Agreement, we find that "average monthly exports to Korea since the FTA have sunk 11 percent below the average monthly level before the FTA." TAFTA is expected to increase US GDP by a mere 0.2 to 0.4 percent, which Public Citizen reports, is "a smaller contribution to GDP than was delivered by the latest version of the iPhone."
Second, let's look at Congressional oversight under fast track. Carol Guthrie from the office of the US Trade Representative recently wrote an email response to the producer of a video interview of Margaret Flowers in which she said:
"Checking in on your story on TPP - afraid there seems to be some misunderstanding about trade promotion authority, sometimes known as 'fast track.' Under such a law, which lays out just how the administration should consult with Congress on trade agreements, and in which Congress sets out negotiating objectives for the United States, there are indeed hearings and an up or down vote in Congress before the agreement can be implemented in law and enter into force. There are rules in TPA about whether or not the implementing legislation for an agreement can be amended, but it does not allow an agreement to become law or enter into force without Congressional approval. Glad to share more information as it's helpful to you."
Flowers wrote back immediately and asked if there was fast track legislation available for review; whether there would be full hearings on the content of the TPP and its implications; and whether amendments would be allowed. That was on September 20 and no response has been received.
In the past, fast track has limited hearings and debate and has not allowed amendments. There have also been negotiating objectives in the past, and these have often been ignored. For example, labor rights were required under the WTO, but still were not included. Even when provisions such as worker protections are included in trade agreements, they are not enforced, as is recently demonstrated in Colombia, where deaths of worker advocates have increased and there are massive strikes and protests since passage of the Colombian FTA.
In the case of the TPP, negotiating objectives enacted now, when the negotiation of the entire agreement is concluding, will have absolutely no effect. The negotiating objectives are merely window dressing designed to confuse labor unions, environmental groups and others into supporting the TPP, when in reality, protections will not be enforced.
Members of Congress are overruled by the agreements when they do try to change the provisions. Ray Rogers writes that trade agreements "have nullified the efforts of political leaders like Senator Tom Harkin (D-Iowa), who introduced legislation in 1994 to ban the imports of products produced by brutal child labor. President Clinton's US Trade Representative informed him that his bill would violate the General Agreement on Tariffs and Trade (GATT), which the United States is obliged to obey." Thus, trade agreements tie the hands of Congress and undermine US sovereignty.
What is Oversight?
The definition of Congressional oversight by the office of the US Trade Representative falls far short of the degree of oversight necessary if Congress and the public are to have the ability to fully understand what is in the secret TPP and what the economic impact will be on the United States and nations around the world, as well as how it will impact protection of workers, consumers and the environment. What we expect to see under the fast track process are limited hearings in which supporters of the TPP praise it and Congress members are not able to fully question or amend it. How could it be anything else when members of Congress will not even have time to read the agreements?
Lastly, the idea that other presidents had fast track, so President Obama should too, is embarrassing in its lack of logic. Most presidents have not had fast track. And the agreements passed by fast track have caused the loss of US jobs, lowered wages and created higher trade deficits. Congress must serve its Constitutional function as a check and balance to the power of the President and the branch of government responsible for regulating trade and passing legislation. Fast track undermines the constitutional power of Congress and creates an imperial presidency.
Fortunately, the process to grant fast track trade authority this time around has slowed significantly. In February, 2012, then US Trade Representative Ron Kirk, in his testimony before the House Ways and Means Committee, included a request for fast track by the end of 2012 to complete TPP negotiations. Senators Max Baucus and Orrin Hatch urged the White House to request fast track trade authority last April. They expected to have a fast track bill passed in Congress by last June.
President Obama waited until August of this year to formally request fast track and, as of the writing of this article, no fast track bill has been introduced in Congress. A recent report in Politico stated, "Efforts by leaders of Senate Finance and House Ways and Means to craft a bipartisan TPA [Trade Promotion Authority] bill have taken longer than expected, prompting speculation the two panels may not be able to produce a package."
Bipartisan opposition to fast track has already appeared in Congress. Alan Grayson (D-Florida) voiced opposition and Rosa DeLauro (D-Connecticut) is gathering signatures from other members on a letter to the president opposing fast track. Michelle Bachman (R-Minnesota) and Walter Jones (R-North Carolina) have a similar letter to the president. Many groups are lobbying against fast track, including Public Citizen, environmental groups and labor. We are organizing Fair Trade Brigades to track congressional support for fast track through our Flush the TPP campaign. Everyone is encouraged to participate in that effort.
Don't Fast Track this Train Wreck
As Mizohata wrote in Asia Times, the TPP is Trojan horse that is not about trade. We know this because only five of its 29 chapters are about trade. Ben Beachy reports that "of the 11 countries negotiating the TPP with the United States, six already have FTAs with the US."
So, if we already have trade agreements with these countries, and we know that trade deals don't reduce our trade deficit, what is the reason for the TPP? It looks like a backdoor to the neoliberal economic agenda that has been stalled under the WTO since the Battle of Seattle in 1999. The tremendous secrecy surrounding the TPP is because the policies that are being pushed through are both harmful to - and unpopular with - the American public. Fast track is necessary to protect this secrecy because the TPP would not survive the light of day.
Senator Elizabeth Warren (D-Massachusetts) has been one of the most outspoken members of Congress on the need for transparency. She wrote a letter to the president requesting that the text be made available to the public. Even members of Congress have restricted access to the text. Zach Carter writes that "Some [members of Congress] have said they were insulted by the complex administrative procedures the office of the U. Trade Representative, or USTR, imposed to actually access the texts - barriers not imposed on unelected corporate advisers."
And, it is not only texts, when Rep. Darrell Issa (R-California) sought to observe negotiations being held near his California Congressional District, the US Trade Representative would not allow it. While corporations have been allowed to participate throughout the process, a member of Congress who serves on committees dealing with energy, small businesses, foreign policy and government oversight - which would all be impacted by the TPP - was blocked from merely observing. As Rep. Issa wrote: "Congress has a constitutional duty to oversee trade negotiations and not simply act as a rubber stamp to deals about which they were kept in the dark. While I had hoped the TPP would permit me to observe this round of the negotiation process firsthand, our efforts to open TPP negotiations up to transparency will continue."
Looking at the office of the USTR website, one would think that the process of negotiating the TPP has been open and broad, rather than closed and exclusive as it has been. Negotiators write that they are reaching out to a "broad cross-section of stakeholders" and they want to "set the stage for a deeper level of engagement with these and other stakeholders in the weeks and months ahead." But these are empty promises and misleading statements as both members of Congress and stakeholders know.
The actions of the USTR are designed to give the illusion of engagement while the needs and interests of those affected by the TPP will be ignored. One of the authors of this piece, Kevin Zeese, participated in a stakeholder briefing last September. He found that questions from the stakeholders in attendance were not answered by the representatives and the entire event felt like a charade.
That is why last week, we decided to expose the secret TPP and make the public's demands for democracy and transparency more visiblethrough spectacle protests. On Monday, September 23, eight of us wore work coveralls and hard hats and climbed scaffolding next to the USTR building. We draped the outside of their building with four large banners calling for democracy and transparency and calling the TPP what it is in reality, a global corporate coup against people and the planet. Our effort to raise awareness was successful as the Washington Post reported on the protest, calling it "one of the best ever." The next day we spread the news by conducting a march featuring a 32-foot fast track train, going back to the US Trade Rep. office, then to the World Bank, White House, Chamber of Commerce, business district, Pennsylvania Ave. and Congress.
It is up to the public and their representatives in Congress to demand that the full text of the TPP be released and that there be a democratic process of review. We must fully understand the effects of the TPP on employment, wages, the environment, Internet freedom, public health and safety, and more. Jim Hightower outlines some of the major concerns in his newsletter, The Lowdown.
We cannot blindly accept the information coming from the USTR, President Obama and Big Business supporters of the TPP. They have misled the public before, and they are doing it again to advance an agenda that puts profits before the needs of people and protection of the planet. The TPP will force smaller countries like Vietnam to change their entire economy by eliminating their publicly supported enterprises and services and opening them up to the private sector and foreign investors. This will increase poverty and suffering while lining the pockets of the wealthy.
Countries negotiating with the United States need to realize that if the TPP becomes law, they will be under the thumb of Monsanto, JPMorgan, Bank of America, Wal-Mart and other US-based transnational corporations. Rodrigo Contreras, Chile's lead TPP negotiator recently quit to warn people of the dangers of the TPP - highlighting how big financial institutions will dominate their governments and how the TPP "will become a threat for our countries: It will restrict our development options in health and education, in biological and cultural diversity, and in the design of public policies and the transformation of our economies. It will also generate pressures from increasingly active social movements, who are not willing to grant a pass to governments that accept an outcome of the TPP negotiations that limits possibilities to increase the prosperity and well-being of our countries." The TPP will destroy the sovereignty of the nations who agree to its terms.
The destruction of sovereignty includes the United States. One of the most egregious outcomes of the TPP, if it passes, is the way it will undermine our national sovereignty as well as the ability of state and local governments to pass laws. All laws will have to be brought into compliance with the TPP. This means that public institutions like schools and hospitals can no longer give preference to buying local products, and consumers may be barred from knowing whether foods contain GMOs. It means the "Buy America" laws will be illegal, so Americans will be forced to spend their money on foreign products that create a massive trade deficit.
And if we pass laws that interfere with expected corporate profits, those laws can be challenged in a special court, an international trade tribunal that operates outside of our legal system and that is staffed largely by corporate lawyers on leave from their corporate jobs. There will be no appeal to traditional courts from these rigged trade tribunals.
The TPP Unites Us and We can Stop It
The TPP will affect everything we care about. It is a cause that unites us, and if we work together to stop it, we will have won against the behemoth of transnational corporate power. A broad range of groups across the political spectrum are involved in stopping the TPP from becoming law. This includes Internet freedom, anti-GMO, health care, labor, faith, immigrant rights and environmental groups, among others.
We can stop the TPP. Indeed, 14 trade agreements have been prevented in the last dozen years. As more people know about it, the less popular it will become among politicians who will be held accountable for the TPP's failures. It is up to the public to demand that our representatives put the interests of their constituents before the profits of their corporate campaign financiers. They must know that they will be held accountable for the detrimental consequences that are being predicted.
Public awareness and pressure are already having an effect. The media is starting to cover the TPP more, and the process of granting fast track has been slowed. We can expect more propaganda to appear as the TPP falters and so we must prepare ourselves to repel it with the truth. And we must remember that no matter what we are told about it, no matter what protections we are told are included in it, we must have access to the text before it is signed and we must review and fully understand what its impacts will be.
Other countries are taking steps to demand transparency and democracy. Recently, the Parliament of Peru passed a resolution "requesting that the government open a 'public, political, and technical debate' on the binding rules being negotiated in the TPP." Protests in Japan have been widespread. The more we are visible in our concerns about the TPP, the more people in other nations will be emboldened to stand up to US imperialism and domination.
It is time to end the era of rigged corporate trade and begin fair trade that respects all people and the planet, and that is developed in an open and transparent manner. Join the Fair Trade Brigade either in Congress or where you live. Tell your member of Congress to vote "no" on fast track and pass a resolution locally that declares your community to be a TPP-free zone. Visit for more information on what you can do.