Weekly Audit: Millions of Americans Could Lose Unemployment Benefits

Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.

by Lindsay Beyerstein, Media Consortium blogger

According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.

Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:

The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come.  But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.

But wait! There’s more:

  • The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
  • Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
  • Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Millions of Americans Could Lose Unemployment Benefits

Editor’s Note: Happy Thanksgiving from the Media Consortium! This week, we aren’t stopping The Audit, The Pulse, The Diaspora, or The Mulch, but we are taking a bit of a break. Expect shorter blog posts, and The Diaspora and The Mulch will be posted on Wednesday afternoon, instead of their usual Thursday and Friday postings. We’ll return to our normal schedule next week.

by Lindsay Beyerstein, Media Consortium blogger

According to official statistics, nearly 15 million Americans are unemployed. Between 2 and 4 million of them are expected to exhaust their state unemployment insurance benefits between now and May. Historically, during times of high unemployment, Congress provides extra cash to extend the benefits. Congress has never failed to do so when unemployment is above 7.2%. Today’s unemployment rate is above 9% and the lame duck session of Congress has so far failed to extend the benefits.

Congress has until November 30 to renew two federal programs to extend unemployment benefits, as David Moberg reports for Working In These Times. Last week, a bill to extend benefits for an additional three months failed to garner the two-thirds majority it needed to pass in the House. The House will probably take up the issue again this session, possibly for a one-year extension, but as Moberg notes, it’s unclear how the bill will fare in the Senate. The implications are dire, as Moberg notes:

The result? Not just huge personal and familial hardships that scars the lives of young and old both economically and psychologically for years to come.  But failure to renew extended benefits would also slow the recovery, raise unemployment, and deepen the fiscal crises of state and federal governments.

But wait! There’s more:

  • The Paycheck Fairness Act died in the Senate last week, as Denise DiStephan reports in The Nation. The bill would have updated the 1963 Equal Pay Act to close loopholes and protect employees against employer retaliation for discussing wages. All Republican senators and Nebraska Democrat Ben Nelson voted not to bring the bill to the floor, killing the legislation for this session of Congress. The House already passed its version of the bill in 2009 and President Barack Obama had pledged to sign it.
  • Economist Dean Baker talks with Laura Flanders of GritTV about quantitative easing (a.k.a. the Fed printing more money) and the draft proposal from the co-chairs of the deficit commission. Baker argues that we’re facing an unemployment crisis, not a deficit crisis.
  • Charles Ferguson’s documentary “Inside Job” is a must-see, according to Matthew Rothschild of The Progressive. An examination of how Wall Street devastated the U.S. economy, the film details the reckless speculation in housing derivatives, enabled by crooked credit rating schemes, that brought the entire financial system to the brink of collapse. The film is narrated by Brad Pitt and features appearances by former Governor and anti-Wall Street corruption crusader Eliot Spitzer, financier George Soros, and Prof. Nouriel Roubini, the New York University economist who predicted the collapse of the housing bubble.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Banks Get Big Bucks, Consumers Get Bupkis

 

by Lindsay Beyerstein, Media Consortium blogger

Last week, the Federal Reserve announced a plan to buy an additional $600 billion worth of Treasury bonds in an attempt to stimulate the economy. On Democracy Now!, economist Michael Hudson argues that the $600 billion T-bill buy will help Wall Street at the expense of ordinary Americans.

The Fed justifies the purchase as an infusion of cash into the U.S. economy. The buy-up will certainly be an infusion of cash into U.S. banks. In effect, the Fed will help the government pay back the banks that lent money to finance deficit spending. The hope is that these banks, suddenly flush with cash, will help the U.S. economy by lending money to finance projects that will create wealth and jobs (i.e. opening factories and hiring more workers).

However, as Hudson points out, there’s no guarantee that the banks are going to use the windfall to build wealth in the U.S. On the contrary, he argues, there’s every reason to suspect that they’ll invest the money overseas in currency speculation deals. Why? Because the Fed has also put massive pressure on Congress to push China into raising its currency by 20%. The banks know this because the House voted overwhelmingly to approve such a threat in September.

If the banks convert their extra billions to Chinese currency, and China raises the value of its currency in response to the threat of an across-the-board U.S. tariff on its imports, then banks that bought Chinese RMB when it was still artificially cheap will reap huge profits overnight.

Later in the Democracy Now! broadcast, Nobel Laureate Joseph Stiglitz describes how the U.S. employed a similar strategy of currency devaluation to insulate itself against the ravages of the Great Depression, with devastating global consequences:

So, the irony is that money that was intended to rekindle the American economy is causing havoc all over the world. Those elsewhere in the world say, what the United States is trying to do is the twenty-first century version of “beggar thy neighbor” policies that were part of the Great Depression: you strengthen yourself by hurting the others. You can’t do protectionism in the old version of raising tariffs, but what you can do is lower your exchange rate, and that’s what low interest rates are trying to do, weaken the dollar.

Trade war between the U.S. and China

The U.S. and China have a longstanding trade rivalry, but suddenly the two powers seem to be even more at odds than usual.

William Greider of The Nation argues that plummeting global demand has ratcheted up tensions as the two exporting nations fight over a dwindling pool of customers. The U.S. accuses China of artificially deflating its currency to make its exports cheaper. In retaliation, the U.S. imposed tariffs on Chinese tires and tubular steel. China, in turn, imposed a tariff on U.S. poultry. As I mentioned above, the House voted 348-79 in September to impose additional tariffs on nearly all Chinese imports if China doesn’t revalue its currency, though the Senate has yet to vote on this legislation.

The U.S. acts indignant about China manipulating its currency, but Grieder argues that this stance is hypocritical in light of the Federal Reserve’s decision to buy an additional $600 billion worth of Treasury bonds from the federal government to help finance the budget deficit. One effect will be to weaken the U.S. dollar, which will make our exports more competitive relative to those of China.

Voters reject free-for-all trade

In last week’s midterm elections, voters rewarded candidates who oppose unfettered free trade, according to Kari Lydersen of Working In These Times. According to a new report by Public Citizen, 60 congressional races were fought wholly or largely on trade issues in 2010. Only 37 candidates favored NAFTA-style free trade pacts and half of them lost. Not all the candidates who won on a protectionist trade platform were advocating a progressive agenda of fairly compensating trading partners, protecting American jobs, and upholding environmental regulations. Senator-Elect Rand Paul (R-KY) argued that the World Trade Organization is a threat to U.S. sovereignty.

Anti-union ballot initiatives win big

Mikhail Zinshteyn of Campus Progress brings us an update on the anti-union initiatives that appeared on the ballots in many states last week. Voters in Arizona, South Carolina, South Dakota and Utah approved legislation to preemptively neutralize the already-stalled Employee Free Choice Act (EFCA), should it ever become federal law. EFCA, also known as card check or majority sign-up, would allow workers to organize by signing up for a union, instead of going through a grueling National Labor Relations Board (NLRB) election process, which makes workers sitting ducks for management threats and propaganda.

Bean there, done that

Move over, Elizabeth Warren. The White House may be poised to appoint one of Wall Street’s favorite Democrats to head the new Consumer Financial Protection Bureau. Andy Kroll and David Corn report in Mother Jones that Rep. Melissa Bean (D-IL) is a favored contender for the job if her still-undecided race for reelection doesn’t work out. That would be heartening news for Bean’s former chief of staff, John Michael Gonzalez, now a leading lobbyist for Big Finance.

Bean, who serves on the House finance and small business committees, has received over $2.5 million in campaign contributions from the financial sector over the course of her 5-year career. Bean was also a big beneficiary of the Chamber of Commerce, which vehemently opposed the Dodd-Frank financial reform bill that created the CFPB in the first place. Bean ultimately voted for the bill, but not before she unsuccessfully attempted to water down the consumer financial protections therein, the very provisions Bean would be tasked with enforcing.

“The White House needs to beat back the Bean idea, otherwise they’ll look like fools,” one Democratic strategist told Corn and Kroll. “This is the craziest thing I’ve ever seen. She’s a tool of the financial industries.”

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

Weekly Audit: Surprise! Bailed Out Banks Backing Anti-Bailout Candidates

by Lindsay Beyerstein, Media Consortium blogger

Some of the banks that got bailed out during the financial crisis of 2008 are backing Republican candidates running on an anti-bailout platform. The Republican National Committee is running attack ads against Democrats who voted for the Troubled Assets Relief Program (TARP), better known as the bank bailout, but as Steve Benen of the Washington Monthly notes, Republicans were for TARP before they were against it:

But the details matter here. The financial industry bailout was passed in October 2008. It was requested by a conservative Republican administration (George W. Bush and Dick Cheney). It was enthusiastically endorsed by the House Republican leadership (John Boehner, Eric Cantor, and Roy Blunt), the Senate Republican leadership (Mitch McConnell and Jon Kyl), both members of the Republican presidential ticket (John McCain and Sarah Palin), and assorted, high-profile conservative voices (Mitt Romney and Glenn Beck).

Running against the bailout is meaningless. The payouts have already happened. The Republican candidates who retroactively oppose the bailout are also opposed to tougher financial reforms that would prevent a repeat of the 2008 debacle. This is typical of the incestuous relationship between corporations and politics. These banks were saved by the bailout and having been restored to solvency by U.S. taxpayers, proceeded to funnel money to political candidates who rail about the last bailout without lifting a finger to prevent the next one. Talk about redistribution of wealth.

The Monster

AlterNet is running an exclusive excerpt from Michael Hudson’s book The Monster:  How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America – And Spawned a Global Crisis. Hudson takes us inside the boiler rooms at Ameriquest Mortgage, where ambitious twenty-somethings pushed mortgages by phone.

“Subprime” is a dirty word now, but in those days, Ameriquest was admired for breaking new ground in the debt industry by lending large sums of money with few questions asked to borrowers with bad credit. They had one big problem to work around: A lot of people are reluctant to take on huge debts they aren’t sure they can repay. So, Ameriquest hired aggressive salespeople to help overcome their resistance and then put immense pressure on the sales force to sell as many loans as possible. According to Hudson, salespeople would routinely resort to forged signatures and other tricks to close deals that never should have been struck.

Those who oppose government assistance for struggling mortgage-holders like to promote a stereotype of the irresponsible borrower who took on more debt than they could handle. This never made a lot of sense to me. Nobody takes out a mortgage they know they can’t afford. At some point, someone must have convinced these borrowers to bite off more than they could chew. Hudson’s book tells part of that story. Ameriquest aggressively sought out people with bad credit and bombarded them with high pressure sales tactics to convince them to take on unreasonable debts.

We’re accustomed to thinking of lenders being conservative about who they lend money to. So, if a mortgage broker says that you can afford a mortgage of a certain size, the fact that they’re offering to lend you the money is tacit reassurance that they think you can pay it back. What most consumers didn’t know was that Ameriquest wasn’t holding these mortgages, it was selling them off to become mortgage-backed securities. So, it didn’t care whether borrowers could make their payments. If these borrowers defaulted, as Ameriquest surely expected many of them to do, their toxic loans would long since have been sold to some unexpected mortgage backed bond holder.

The Kroll files

Andy Kroll of Mother Jones has been doing groundbreaking reporting on the foreclosure crisis. In this video, Kroll discusses the prospects for a foreclosure moratorium, the impact of the foreclosure crisis on the larger economy, and political responses to the foreclosure crisis.

Adding value

We spend a lot of time dissecting the failures of the old economy. We don’t spend nearly as much energy envisioning more constructive, humane, and stable alternatives to the old system.

Sarah van Gelder outlines her vision of a family-friendly economic policy in Yes! Magazine. One key component to keeping families in their homes involves allowing judges to modify the terms of mortgages to make payments more affordable. Next, fund job programs and increase the minimum wage. The economy won’t revive until large segments of the population that are currently scrimping and saving have enough money in their pockets to buy goods and services.

As we’ve discussed in previous installments of the Audit, benefits for working families and the unemployed get spent very quickly. The average low-wage worker is probably going to spend extra money on groceries, rent, gas, and other necessities. Unlike tax cuts for the rich, food stamps aren’t going to get squirreled away in an offshore tax haven. To make money that actually pays back into the economy, van Gelder suggests eliminating the payroll tax on incomes up to $20,000 and making up the difference by adding payroll taxes to income in excess of $250,000, which are currently exempt.

Winning back the white working class

David Moberg of Working in These Times takes a look at what Democrats can do to win back the support of the white working class in the coming election. These voters used to be the Democratic party’s base, but many have drifted to the right in recent years. It shouldn’t come as a surprise that job creation is high on this demographic’s agenda.

As retired nurse Virginia Kimble told Moberg in Elyria, Ohio: “I just want them to listen to the people. Obama was going to do all this for the middle class. But I’m not seeing it. Even on housing—where’s the help? Could the Republicans do a better job? No.”

“Maybe both parties should look more at how to create new jobs and not outsource so much. It’s like all our jobs are shipped to other places so companies can make more money,” Kimble said.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Weekly Pulse: Rotten Eggs, Drowsy Doctors, and Expensive Insurance

by Lindsay Beyerstein, Media Consortium blogger

Tainted egg shell game

The Iowa chapter of the Sierra Club is pushing state regulators to investigate two factory farms and a feed mill linked to this summer’s massive recall of salmonella-tainted eggs, Lynda Waddington reports in the Iowa Independent. The Sierra Club sent a strongly-worded letter to Iowa Attorney General Tom Miller urging him to investigate Wright County Egg, Hillandale Farms and the Quality Egg LLC feed mill. All three firms were linked to the salmonella outbreak that sickened an estimated 1200 people; and all three firms are linked to agro-baron Austin “Jack” DeCoster.

Tom Philpott of Grist calls DeCoster a “habitual” environmental offender and “one of the most reviled names in industrial agriculture.” In 1996, the Department of Labor fined DeCoster Eggs $3.6 million for what the then-Secretary of Labor described as “running an agricultural sweatshop” and “treating its employees like animals.” Over the years, DeCoster enterprises racked up additional fines in other states. A previous Attorney General of Iowa dubbed DeCoster a habitual offender for water pollution. In 2002, five female employees at the DeCoster’s Wright County egg operation alleged that their supervisors had raped them and threatened to kill them if they reported the crime. The company paid $1.5 million to settle the lawsuit.

Drowsy doctors

A coalition of public health activists is pushing the Occupational Safety and Health Administration (OSHA) to regulate the work hours of doctors in training. New proposed guidelines would limit the shifts of first-year residents to 16 hours, but more senior trainees could be forced to work shifts up to 28 hours. The group, which includes the Committee of Interns and Residents/SEIU Healthcare, the American Medical Student Association, and Public Citizen, says that’s not good enough to protect doctors or the public. As I explain in Working In These Times, research shows that sleep deprivation is a major preventable cause of medical errors, which is why the coalition wants to see shifts for all residents capped at 16 hours.

Insurance premiums soar

A new report from the Kaiser Foundation Family shows that health insurance premiums continued to climb with employers shifting an ever-greater share of the burden onto employees. A family health insurance policy costs about $14,000 a year, with employees shouldering 30% of that cost. Michelle Chen reports in ColorLines that families that manage to hang onto their health insurance can’t expect relief through health care reform any time soon. The major reforms don’t go into effect until 2014 and the biggest early beneficiaries will be those who are currently uninsured rather than those who are already paying through the nose for lousy coverage. The ultimate goal of comprehensive health care reform is to reshape the health care and health insurance systems to bring costs down across the board, but that’s small consolation to workers who are struggling to stay on top of their premiums right now.

 

 

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