Republicans are blaming Obama for high gas prices: Mississippi Gov. Haley Barbour (R), a former oil industry lobbyist, on Face the Nation (6/5) said Obama was deliberately trying to drive gasoline prices higher as he sought to promote alternative energy. The right-wing Americans for Prosperity is launching a national campaign to hang blame for gasoline prices around the presidents neck, but Lee Fang noted at ThinkProgress.org that market fundamentals are not driving the nearly $4-a-gallon prices.
In fact, under the Obama administration, Fang noted, oil production is at record highs and there is adequate global supply of crude. Commodity Futures Trading Commissioner Bart Chilton blames rampant oil speculation, which is at its highest level on record, for high gas prices. The Dodd-Frank Wall Street reform law gave the CFTC the ability to limit excessive speculation but the commissions Republican members and one of its Democrats, Michael Dunn, have blocked the new rules. At the same time, congressional Republicans are pushing steep cuts to the commissions budget.
Fang also reported (6/6) that Koch Industries, America's second-largest private company, controlled by politically connected David and Charles Koch, is a financial player in the derivatives markets, buying and selling speculative products that are increasingly contributing to the skyrocketing price of oil. Energy speculation is at its highest levels ever, and even Goldman Sachs admits that at least $27 of the price of crude oil is a result of reckless speculation rather than market fundamentals of supply and demand. Fang said some experts think speculation has doubled the price of crude oil.
Koch pioneered the risky speculation industry, as a Koch executive devised the first oil-indexed price swap between Koch Industries and Chase Manhattan Bank in 1986. From 1990-92, Koch joined several oil companies and Wall Street speculators to form a coalition lobbying group to deregulate oil speculation.
In 1993, Wendy Gramm, then chair of the CFTC under George H.W. Bush, made the first major move to deregulate oil speculation by approving a rule exempting key energy futures contracts from government regulation. She then left the commission and a month later joined the board of directors of Enron. Koch continued to shift from oil refining and pipelines to financial products in the 90s.
The night of 12/12/00, Sen. Phil Gramm (R-Texas), Wendy's husband, attached a 262-page amendment deregulating the oil speculation market to the Commodities Futures Modernization Act, which was then attached to an omnibus spending bill that was signed into law by President Clinton before he left office. The Gramm amendment, containing the Enron Loophole, received no public scrutiny or committee hearings but radically expanded and codified the energy deregulation agenda begun by Gramms wife during the first Bush administration. It allowed over the counter energy derivatives not only to be traded outside of regulated exchanges, but for private unregulated exchanges to deal in these sorts of financial products. Thus, massive dark oil speculation markets were born, including Enron's platform for trading oil futures.
In 2008, rampant oil speculation spiked prices to unprecedented levels, but regulators were toothless. A bipartisan majority in the House overwhelmingly passed legislation to award powers to the CFTC to oversee oil speculation, but Republicans in the Senate acting with help from Koch lobbyists killed the bill. In 2009, Koch boasted that it was on the level of transnational banks among the world's top five oil speculators.
In 2010, Koch funded Tea Party front groups, organizations such as Americans for Prosperity and lobbyists to fight financial reforms designed to reign in the energy market. The sweeping Dodd-Frank reform bill contained broad new powers for the CFTC to crack down on speculation, while also requiring that derivatives be traded on a regulated and open exchange.
In 2011, as oil speculation again leads to record high oil prices, Kochs allies in Congress fight to undermine new reforms and allow unchecked speculation to spiral out of control.
Charles Koch, the CEO of Koch Industries who is worth a reported $22 bln, likes to call his business an example of something he describes as the Science of Liberty. In reality, his companys deregulation crusade has contributed to rolling blackouts, consolidation and monopolies in financial markets, and economy-wrecking oil price spikes, Fang wrote. In comments to the CFTC, the reform-minded nonprofit Better Markets noted that, 'the history of these markets is a history of anti-competitive, self-interested, predatory conduct that serves the interest of the exclusive few at the expense of the many and the system as a whole.'
After working furiously to unleash oil speculators like Koch and Enron, the Gramm family was rewarded with plum jobs, including spots on corporate boards and placements at speculator-funded think tanks. Wendy Gramm still holds a position at the Koch-funded Mercatus Center at George Mason University, although she hasnt authored a paper in years. While the Gramm family has faded somewhat from the public eye, their actions have radically changed the global economy. Since the Koch-Gramm-Enron deregulation bonanza, non-commercial oil speculators have flooded the market and increased the price volatility of oil in leaps and bounds, hurting consumers and businesses across the globe while making a small set of oil barons and financial giants very rich.
A McClatchy investigation found: Prior to the 1990s, speculators made up about 30% of the futures market. In the latest reporting period, the ratio on May 3 stood at 68% speculators to 32% users of oil.
With the exception of ExxonMobil, which has explicitly stated that it does not engage in speculation, all the major oil companies (Shell, BP, Occidental, etc) operate like Wall Street investment banks and use their privileged position in the oil market to make speculative bets on the price of oil, Fang wrote. And as the unregulated oil market has grown, investment banks like JP Morgan and Morgan Stanley have become more like oil companies, buying tankers, pipelines, oil containers, and other physical assets to give them an edge while betting on oil. The Koch contango strategy, which stockpiles oil when future prices are expected to rise, is not limited to Koch Industries either, Fang noted. Shell for instance is known for buying up cheap oil, storing it in tankers, and betting on future prices as they reserve the oil from the market.
NOBEL LAUREATE NOT GOOD ENOUGH FOR FED. Republicans successfully blocked the nomination of Peter Diamond to the Federal Reserve board, as the Nobel laureate, an MIT economics professor, withdrew his nomination (6/6), which President Obama originally made in April 2010. Sen. Richard Shelby (R-Ala.), Diamonds fiercest opponent, said, It would be my hope that the President will not seek to pack the Fed with those who will use the institution to finance his profligate spending and agenda.
Diamond noted in a New York Times op-ed (6/6) that Shelby questioned the relevancy of his expertise in pensions and labor market theory rather than monetary policy. But understanding the labor market and the process by which workers and jobs come together and separate is critical to devising an effective monetary policy, Diamond wrote. The financial crisis has led to continuing high unemployment. The Fed has to properly assess the nature of that unemployment to be able to lower it as much as possible while avoiding inflation. If much of the unemployment is related to the business cycle caused by a lack of adequate demand the Fed can act to reduce it without touching off inflation. If instead the unemployment is primarily structural caused by mismatches between the skills that companies need and the skills that workers have aggressive Fed action to reduce it could be misguided.
Felix Salmon noted at Reuters.com (6/6) that Republicans also have pledged to block Elizabeth Warren to head the Consumer Finance Protection Bureau, not because of her qualifications to lead that agency but because she stands for What Obama Wants, and therefore the Republicans will close ranks against her.
This puts the White House into something of a bind, Salmon wrote. The right thing to do from a policy perspective is to get the likes of Warren and Diamond into important positions in the pantheon of bank regulation. Politically, however, thats extremely difficult, if not impossible. So whats the alternative? Is it even possible, at this point, for the Obama administration to nominate someone who the Republicans wont automatically oppose on the grounds that he or she is an Obama nominee? And if its not possible, does the whole stalemate just become a shouting match? Im not sure I can cope with a year and half of unproductive debate but that seems much more likely right now, than anybody actually achieving something substantive."
FOOD CUTS WORTH A WEEK OF TAX BREAKS FOR RICH. Melissa Boteach and Seth Hanlon noted at the Center for American Progress (6/2) that the GOP-dominated Appropriations Committee in May approved $833 mln in cuts to assistance for Women, Infants and Children (WIC), which would prevent nearly 500,000 eligible women and their children from accessing the program. The committee also cut $38 mln from the Commodity Supplemental Food Program, which delivers meals to low-income, often homebound seniors. And while conservatives often claim that charities can pick up the slack, the bill also cuts $63 mln from Emergency Food Assistance, which supports community food banks and charitable pantries.
While Agriculture Subcommittee Chairman Jack Kingston (R-Ga.) patted himself on the back for making some of the tough choices necessary to right the ship, Boteach and Hanlon noted that the cuts represent less than 0.1% of this year's federal deficit.
In all likelihood, these cuts would leave the country and the federal budget in worse shape. Investing in the nutrition of pregnant women, infants, and young children is often credited with saving federal dollars in the short term and long run. By ensuring vulnerable children have access to adequate nutrition, WIC often prevents more costly health problems down the line and improves childrens school performance. According to researchers at Childrens HealthWatch, children's brain size more than doubles in their first year of life when they are provided with appropriate nutrition. By ensuring moms and new babies have the nutritional supports they need to thrive during this critical time, WIC decreases the risk of developmental delays and promotes school readiness.
The programs biggest cost-savings, however, often come before the child has even turned 1 year old. Economists estimate that every $1 invested in WIC saves between $1.77 and $3.13 in health care costs in the first 60 days after an infants birth by reducing the instance of low-birth-weight babies and improving child immunization rates. In fact, it is estimated that the program has saved more than 200,000 babies from dying at birth.
The hardship these cuts would inflict on America's most vulnerable families can easily be avoided with only a small change in priorities, they noted. The $833 mln in savings from cutting WIC amounts to one weeks worth of tax cuts for millionaires, according to the Tax Policy Center. One days worth of tax cuts for millionaires would cover the cuts to the Commodity Supplemental Food Program and the Emergency Food Assistance Program.
A recent Gallup Poll (4/26) showed that 64% of the American public is concerned that the GOP deficit-reduction plan will take away needed protections for the poor and the disadvantaged and will protect the rich at the expense of everyone else. Boteach and Hanlon noted, The House bill unfortunately confirms those fears.
The House Appropriations Committee also approved a 2012 spending plan that directs the USDA to ditch proposed nutrition standards for school breakfasts and lunches. Republicans said meals containing more fruits and vegetables, whole grains and low-fat dairy products that the new standards call for would cost $7 bln more over five years money they say the country can ill afford in difficult economic times.
Hunter at DailyKos.com noted (6/5) that $7 bln over five years is from the standpoint of the larger budget, not a lot of money. And $7 bln nationwide to feed schoolchildren fruits, vegetables and low-fat milk, especially seems like not a lot of money. Farmers would be able to sell more produce, which would help a continually troubled economic segment. Kids would get healthier meals, and not be prodded daily into eating something worse at least, not directly from their school.
Gov. Chris Christie wants to sharply curtail access to health care under Medicaid for adults in a family of three that makes as little as $103 a week. The state estimates that about 23,000 people in the coming fiscal year would be prevented from enrolling in Medicaid and New Jersey FamilyCare, a spinoff program for working poor who make slightly more than the Medicaid limits.
GOP: MEDICARE SCARE NO BIG DEAL. Republicans are still playing down their chances of losing the House majority next year, despite a special election (5/24) in which a Democrat captured an upstate New York seat that was considered a lock for the GOP. Kathy Hochul (D), former Erie County clerk in Buffalo, hammered state Assembly member Jane Corwin's support for the Republican Medicare privatization scheme. Hochul also attracted labor support with her opposition to free trade pacts and calling for taxes on people earning more than $500,000 a year. Hochul beat Corwin 47% to 43%, but Politico.com reported that Republicans scoff at the idea that Democrats might win 24 more seats in November 2012. The New York results are largely dismissed as an aberration pegged to the presence of a free-spending, third-party candidate, Jack Davis, who got 9% of the vote. A Green candidate got 1%.
Do I think they can make inroads? They can make some inroads, but I dont see them winning 24 seats, said former Rep. Tom Davis (R-Va.), a former National Republican Congressional Committee chairman. Barring a real Republican screwup, I just dont see it happening.
Even Democrats in the D.C. Beltway concede that gaining 24 seats is a heavy lift, Politico.com reported. But the mere fact that the tone of the conversation has subtly changed the prospect of a Democratic comeback in the House has gone from laughable to somewhat plausible is an accomplishment in itself after the party suffered historic losses in 2010, when the Republicans picked up 63 seats, Politico.com noted.
Republicans also expected to benefit from control of redistricting in states that contained 202 seats more than four times as many as Democrats. But early evidence from seven states finished with reapportionment suggests the outcome might not be that bad, Politico.com noted.
DEMS DETAIL GOP MEDICARE CUTS. House Democrats have broken down the massive changes to Medicare and Medicaid proposed by Republicans into a convenient take-home size, Evan McMorris-Santoro reported at TalkingPointsMemo.com (6/3). Reps. Henry Waxman (D-Calif.) and Frank Pallone (R-N.J.) have set up an interactive map at democrats.energycommerce.house.gov that allows viewers to find a report on the impact of the proposed changes on the population in their congressional district.
The Republican's budget would end Medicare as we know it. It also slashes Medicaid programs that cover millions of seniors in nursing homes and provide basic coverage for tens of millions of children, they write. These Republican proposals would have a devastating impact on every congressional district in the country for generations to come.
14TH AMENDMENT SOLUTION TO DEBT CRISIS. With all the talk about Republican resistance to raising the debt ceiling, Jonathan Zasloff notes at WashingtonMonthly.com (6/3) that observers such as Garrett Epps, a legal scholar, and Bruce Bartlett, a domestic policy adviser to President Ronald Reagan and Treasury official under President George H.W. Bush, have argued that Section 4 of the 14th Amendment makes the debt ceiling invalid. That section reads, in part: The validity of the public debt of the United States, authorized by law ... shall not be questioned.
The only Supreme Court case law on it concerned whether the government could renege on debts it made (no), and thus whether it applies to non-Civil War debts (yes), wrote Zasloff, a law professor at UCLA.
If President Obama does what Epps suggests, and just issues more debt, he doesn't cave to Republican demands for significant Medicare cuts, he pleases his base (and anyone who cares about good policy) and he ensures that there is no default, Zasloff wrote.
But it is also perfect from the Republican leaderships perspective. They dont cave; they dont increase the debt ceiling; and they can rail against Presidential imperialism, Obamas socialist-Muslim dictatorship, etc. And if I am right about standing, no one ever has to bring this to a head because no one has standing to sue! ...
Perhaps the only loser is the Constitution. But even thats not for sure, and since Bush v. Gore, Republicans certainly have no basis for complaining about that. Besides, playing games with Constitutional text to escape political crises is as old as the Republic itself. As Congressmember Timothy Campbell once asked of President Cleveland, What's a Constitution among friends.
BUSH TAX CUTS AT 10: GREAT FOR RICH, NOT MUCH FOR WORKING PEOPLE. On the 10th anniversary of the Bush tax cuts, Andrew Fieldhouse and Ethan Pollack at the Economic Policy Institute (epi.org) produced a briefing paper that showed that the tax cuts disproportionately benefited the wealthy; 55% of the tax breaks went to the top 10% of earners (those making over $170,000). The top 0.1% of earners (those making over $3 mln) received an average tax cut of roughly $520,000. In 2010, tax filers in the bottom 20%) those making less than $20,000) received only 1% of the tax cuts, and 75% of those low-income families saw no reduction at all. The lower 60% of earners (less than $70,000 a year) received less than 20% of the total dollar benefit.
The cuts included lower rates on capital gains and dividends, elimination of the phase-out of personal exemptions and the limitation on itemized deductions, lower marginal rates for the top two tax brackets, lower estate tax rates and an increase in the estate tax exemption.
The paper also notes that the tax cuts never trickled down, they were a poorly designed economic stimulus, they failed to create long-run growth and they cost a huge amount of money and significantly increased debt levels.
Citizens for Tax Justice estimated that the tax cuts cost $2.5 tln through 2010, and ThinkProgress calculated (6/7) that that lost revenue could have paid for health care for 122 mln children; sent tens of millions of students to college; retrofitted every household in America with the capacity to generate alternative energy; hired millions of firefighters and police officers; or put millions of more teachers into classrooms.
MASS. HEALTH REFORM IS POPULAR, BUT NOT AMONG NATIONAL GOP. Mitt Romney has been forced by the right-wing Republican base to backtrack from his signature accomplishment as Massachusetts governor the insurance reforms that have closed the gap on the uninsured. But support for the Massachusetts universal health care law, which was the model for the federal Affordable Care Act, has increased since 2009. The poll by the Harvard School of Public Health and the Boston Globe found that 63% of the state's residents support the 2006 law, up 10 points in the past two years (6/5). Just 21% said they were against the law, although opposition has grown to the requirement that people who can afford insurance buy it or face a fine, as 44% said they oppose the mandate up 9 points since 2008 while 51% support it.
The law expanded eligibility for subsidized coverage to thousands more residents, and state figures a year after the law went into effect showed that more than 200,000 residents were added to state-run coverage, the Globe reported.
An Urban Institute survey released in December 2010 stated that, as of June 2010, 98.1% of state residents had coverage. That was up from 97.3% in 2009 and 83.3% having coverage nationwide. Among children and seniors the 2010 coverage was 99.8% and 99.6%, respectively.
GOOLSBEE'S DEPARTURE MOVES WHITE HOUSE TO RIGHT. When President Obama's chief economic adviser, Austan Goolsbee, announced he was leaving the administration to return to his teaching post at the University of Chicago (6/6), Andrew Leonard of Salon.com detected the collective sigh of resigned gloominess emanating from the econoblogosphere at the pessimism that reigns in Washington. It's just no fun to be an economist in the White House anymore, Leonard wrote. The US economy is slumping, but Washington is locked in partisan gridlock. Even if Obama wanted, with all his heart and soul, to push for more fiscal stimulus, the political reality is that pretty much the only positive option left for the White House is a dreary effort to limit the damage that a budget deal might further inflict the economy ...
Worse, from a progressive's point of view, is where his departure leaves the White House. Of course, Obama's economic team never leaned to the left, by any standard even Goolsbee, who is being portrayed in some accounts as having supported more aggressive fiscal stimulus from the outset, is more properly seen as a centrist ... But there's no question: Right now, there are no economists of stature within the administration who present any serious counterpoint to Treasury Secretary Timothy Geithner and White House Chief of Staff William Daley.
GOP: NO AID FOR DISPLACED WORKERS. Sen. Orrin Hatch, trying to position himself further to the right as he tries to ward off a Tea Party primary challenge in Utah, says Congress should go ahead and approve free trade agreements with Colombia, Panama and South Korea, without offering aid to American workers who lose their jobs as a result of the new pacts. The White House said it won't submit the trade agreements for congressional approval until lawmakers agree to renew the Trade Adjustment Assistance program, which expired in February. "We don't have the votes to pass TAA through this Congress, so why hold up three trade agreements to do this?" Hatch said during a hearing on the US-Korea agreement, The Hill reported (5/26). Renewing TAA at 2009 levels would cost about $7.2 bln over 10 years, "piling on more debt" when the "country is basically broke," Hatch said.
Andrew Leonard noted (6/1), "I don't care what your position on "free trade" is -- the vast majority of economists, left, right and middle, agree that trade produces both winners and losers. Ask almost any blue collar worker in the Midwest: even if it's possible to show that the United States gains a net benefit from trade overall, that's hardly comforting to a middle-aged man or woman who has just lost their job due to competition with China or Mexico. ...
"Hatch's argument is that the government is too broke to compensate losers. Forgive me if I sound like a broken record, but since the government is not too broke to subsidize insanely profitable oil companies, and is not too broke to afford deficit-busting tax cuts for the wealthiest Americans, the real question here is one of priorities, not finances. And workers displaced by globalization and trade simply don't rank."
Senate Minority Leader Mitch McConnell announced (5/31) that Republicans would block Obama's nominee for commerce secretary and other trade-related nominees until Democrats moved free trade agreements with Panama, Colombia and South Korea. Obama previously had said he would not forward the proposed deals until Congress approved assistance for displaced workers.
WISCONSINITES SET UP 'WALKERVILLE' TENT CITY. Hundreds of Wisconsinites are protesting Gov. Scott Walker's proposed budget by setting up a tent city around the Capitol in Madison. Students, workers and concerned citizens brought tents, sleeping bags, pillows and good spirits to kick off a continuous protest until the budget is passed by the state Legislature, Karen Hickey reported at the AFL-CIO's blog (6/5). Support the protests by donating to the Wisconsin AFL-CIO Defense Fund, 6333 W Blue Mound Rd., Milwaukee, WI 53213. See also WisAFLCIO.typepad.com.
ECONOMICS LESSON. If one wonders why Washington insiders have been busy debating deficit reduction instead of job creation at a time when the unemployment rate still hovered around 9% and jobless rates for African Americans (16.2%) and Latinos (11.9%) and youth (24.2%) were even higher, "Echidne" at Eschatonblog.com noted (6/4) that the unemployment rate for individuals over 25 with at least a bachelor's degree was a relatively puny 4.5% in May. "Which explains why the Village can concentrate on worrying about the deficits," Echidne concluded.
FLA. COUPLE FORECLOSES ON BANK. A Florida couple turned the tables on the Bank of America when they dispatched their attorney, as well as Collier County sheriff's deputies, to seize furniture at the Naples branch to be sold at public auction to pay legal costs after the bank wrongfully slapped the couple with a foreclosure lawsuit.
Warren Nyerges, a retired policeman, and his wife, Maureen, had bought a house in 2009 for $165,000 and they paid cash. But the bank insisted that the couple had a mortgage and was behind in payments. It filed for foreclosure in February 2010. The bank dropped the lawsuit two months later, but never paid the couple for attorney fee despite a court order. The lawyer told the Fort Myers News-Press he got no response from the bank or its attorney until he obtained a writ of enforcement and showed up at the bank with the lawmen and a moving van and crew to seize assets. The bank then issued a check for $2,534.
ThinkProgress noted that not only has Bank of America been involved in abusive practices against homeowners, but it also is a major tax dodger that actually got away with paying nothing in corporate income taxes in 2009. That same year, the mega-bank's top executives received compensation ranging from $6 mln to nearly $30 mln.
LIES & DAMN LIES. Dispatches is unable to work up much umbrage at the news that Anthony Weiner apparently posted suggestive photos on a website that he thought was private and when a photo of the underwear was leaked to a right-wing blog, he lied about it, repeatedly, to the press. At this writing, it appears Weiner broke no laws but the matter has been referred to the House Ethics Committee for review whether House rules were violated. At least, to our knowledge, Weiner has not presumed to lecture others on family values, as some notorious Republican adulterers have. But if lying to the press is grounds for removal, there are numerous other members of Congress who should be ousted before Weiner the House Speaker, Majority Leader and Budget Chairman come to mind.
From The Progressive Populist, July 1/15, 2011
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