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Global Financial and Economic Crises

US Economic Policies and Events

Project: Global Financial and Economic Crisis 2007-Present
Open-Content project managed by KJF, mtuck

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Testifying to Congress on his opposition to raising taxes on the wealthy, millionaire financier J. P. Morgan Jr. says: “If you destroy the leisure class, you destroy civilization. The leisure class can be defined by people who can afford to hire a maid.” [Hunt, 9/1/2009, pp. 4]

Entity Tags: J. P. Morgan, Jr.

Category Tags: Other Events in Economic History, Commentaries and Criticisms

Roosevelt giving his inaugural address.Roosevelt giving his inaugural address. [Source: US Politics Guide]Newly elected President Franklin Delano Roosevelt delivers his Inaugural Address in Washington immediately after being sworn into office. To a country reeling from the effects of the Great Depression, Roosevelt offers a ringing promise of economic change—the first hints of what will become his “New Deal” economic policies. “The only thing we have to fear is fear itself,” he tells the crowd, “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”
Acknowledges Economic Calamity - He continues: “Our common difficulties concern, thank God, only material things. Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce: the savings of many years in thousands of families are gone. A host of unemployed citizens face the grim problem of existence. Only a foolish optimist can deny the dark realities of the moment.”
'Rulers of the Exchange,' 'Money Lenders' Stand Responsible - “Primarily, this is because the rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence, have admitted their failure and abdicated,” Roosevelt says. “Practices of the unscrupulous money changers stand indicted. True, they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit, they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. There must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance.”
Call to Action - He continues: “This nation asks for action, and action now. Our greatest primary task is to put people to work. It can be accomplished in part by direct recruiting by the government itself, treating the task as we would treat the emergency of a war.… It can never be helped by merely talking about it. We must act, and act quickly. There must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money, and there must be provision for an adequate but sound currency. These are the lines of attack.” [Time, 3/13/1933]

Entity Tags: Franklin Delano Roosevelt

Category Tags: Pre-2001 Policies and Actions

President Nixon officially announces the end of the gold standard system of monetary policy for international exchange of gold deposits in an evening address to the country. Nixon’s move to sever the link between the dollar’s value and gold reserves effectively ends the Breton Woods system of monetary exchange and changes the dollar to a “floating” currency whose value is to be determined largely by market influences. Nixon’s decision results from a run on gold exchanges and rampant speculation in gold markets in Europe, and he changes the US monetary policy after receiving advice from Treasury Secretary John Connally, Under Secretary for Monetary Affairs Paul A. Volcker, and others in a special working group. The dollar becomes a fiat currency, causing a brief international panic before other countries follow suit and also allow their currencies to “float.” [New York Times, 8/16/1971, pp. 1]

Entity Tags: John Connally, Paul Volcker, Richard M. Nixon

Category Tags: US Monetary Policy, Pre-2001 Policies and Actions

Senator J. William Fulbright (D-AR) of the Foreign Relations Committee warns of further turmoil in the Middle East due to dependence of foreign oil and the US stance on Israel. He states his assertion that forcible acquisition of Middle East oil rights and supplies is imminent given the current course he sees. He proceeds to outline a vision for a political solution amenable to all sides recognizing Israel’s security interests, the need for stability in the region to guarantee oil exports, as well as recognizing Arab state economies. Senator Henry “Scoop” Jackson (D-WA) immediately replies to Fulbright’s statements, calling them “irresponsible” and goes to support Israel in the debate. Fulbright responds with his plan for keeping a calm Middle East, but also warns of the possibility of terrorist actions perpetrated by Middle Eastern powers and individuals stemming from current policy stances taken by the US and Israel. He also cautions on the possibility of an oil embargo should the current policy proceed unabated. [New York Times, 5/22/1973, pp. 5]

Entity Tags: Henry (“Scoop”) Jackson, J. William Fulbright

Category Tags: Oil and OPEC, Commentaries and Criticisms

Efforts are made to improve the interest rate environment in which banks, and especially thrifts, have to operate, such as the Monetary Control Act of 1980 (see April 1, 1980), and numerous changes in the regulatory frameworks at the state and federal level. Despite all this activity, it remains the case that interest rates on sources of funds to the thrift industry lags behind those that could be paid by commercial banks and nonbanks in new vehicles such as money market accounts. Consequently, thrift bankers find it increasingly difficult to keep their businesses supplied with enough funds to sustain a profitable rate of new lending. The industry therefore cannot avoid a period of higher than historical failure levels and voluntary mergers and departures from the industry. [Brumbaugh et al., 1987]

Entity Tags: Monetary Control Act of 1980

Category Tags: 1980s Savings and Loan Crisis, Pre-2001 Policies and Actions

President Jimmy Carter signs the Depository Institutions Deregulation and Monetary Control Bill into law. Carter says the bill will “help control inflation, strengthen our financial institutions and help small savers.” Among the bill’s main provisions are raising of ceilings on the interest paid to small savers and a substantial enhancement to the monetary control powers of the nation’s central bank, the Federal Reserve System. The main provisions of the law:
bullet Permanently overrides state-imposed ceilings on mortgage rates unless states act within three years to reenact them.
bullet Wipes out for three years interest rate limits on agricultural and business loans of more than $25,000.
bullet Increases to 15 percent from 12 percent the maximum interest rate on credit union loans, with even higher rates possible for periods up to 18 months.
bullet Continues use of credit union share drafts, bank’s automatic transfer accounts and remote service units.
bullet Simplifies truth-in-lending laws.
bullet Requires lenders to repay consumers for overcharges.
bullet Authorizes federal savings and loan associations to expand their consumer loan and credit card operations and allows them to offer trust services.
bullet Gives the Federal Reserve a more effective reach by establishing a universal and uniform system of banking reserves. Over an eight year period all depository institutions, including savings and loan associations and mutual savings banks, will be encouraged to post reserves with their chapter Federal Reserve banks which will be 12 percent of all transactions as opposed to the tiered structure at 16 1/4 percent, leaving those that left the Federal Reserve System prior to the enactment of this law at a competitive disadvantage until they themsleves register their funds with the Federal Reserve. [New York Times, 4/1/1980, pp. 1]

Entity Tags: James Earl “Jimmy” Carter, Jr., US Federal Reserve

Category Tags: US Monetary Policy, Pre-2001 Policies and Actions

Congress approves legislation which repeals the Glass-Steagall Act of 1933, greatly reducing regulation of Wall Street and clearing the way for the cross-ownership of banks, securities firms and insurers. The measure is approved in the Senate by a vote of 90 to 8 and in the House by 362 to 57. President Bill Clinton will sign the Gramm-Leach-Bliley Act into law on November 12th, 1999. [Library of Congress, 3/27/2009] The New York Times reports that passage of the bill elicits optimism that the measure will enhance American competitiveness and ensure American dominance in the global financial marketplace, as well as concerns that deregulation will lead to a future financial meltdown. The Times further notes that experts predict the new law will result in a wave of large financial mergers.
Optimism over Passage of the Measure - Treasury Secretary Lawrence H. Summers praises the legislation, declaring that the law “will better enable American companies to compete in the new economy.” Among others praising passage of the measure:
bullet Senator Phil Gramm (R-TX), sponsor of the bill, says: “We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.”
bullet Rep Jim Leach (R-IA) remarks: “This is a historic day. The landscape for delivery of financial services will now surely shift.”
bullet Senator Charles E. Schumer (D-NY) says, “There are many reasons for this bill, but first and foremost is to ensure that US financial firms remain competitive.”
bullet Senator Bob Kerrey (D-NE) says, “The concerns that we will have a meltdown like 1929 are dramatically overblown.”
Warnings over Implications of the Measure - The measure provokes warnings from a handful of dissenters that “the deregulation of Wall Street would someday wreak havoc on the nation’s financial system,” according to the Times. Among the dissenters are:
bullet Senator Byron L. Dorgan (D-ND), who says: “I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010;”
bullet Representative Maxine Waters (D-CA), who remarks that the bill is “mean-spirited in the way it had tried to undermine the Community Reinvestment Act;”
bullet Senator Paul Wellstone (D-MN), who says: “Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.” [New York Times, 11/5/1999]

Entity Tags: Clinton administration, Byron L. Dorgan, Barney Frank, Bob Kerrey, Charles Schumer, William Jefferson (“Bill”) Clinton, US Congress, Jim Leach, Phil Gramm, Gramm-Leach-Bliley Act, Larry Summers, Paul Wellstone, Maxine Waters, Glass-Steagall Act

Category Tags: US Financial Deregulation, Pre-2001 Policies and Actions, Commentaries and Criticisms

TIA logo.TIA logo. [Source: Conventions (.net)]At a rally at Chicago’s O’Hare Airport, surrounded by politicians and airline executives, President Bush exhorts the American public to begin flying again. The open, and unprecedented, endorsement of commercial airlines and tourist resorts by a sitting president is part of a “pro-consumption publicity blitz” launched by the White House in conjunction with the travel industry. “[O]ne of the great goals of this nation’s war [against terrorism] is to restore public confidence in the airline industry,” Bush says. “It’s to tell the traveling public: Get on board. Do your business around the country. Fly and enjoy America’s great destination spots. Get down to Disney World in Florida. Take your families and enjoy life, the way we want it to be enjoyed.” Bush’s remarks are part of a coordinated advertising campaign by the Travel Industry Association of America (TIA), which hinges on a series of “public service” television ads by Bush himself (see Early 2002). [White House, 9/27/2001; Roberts, 2008, pp. 90]

Entity Tags: George W. Bush, Travel Industry Association of America, Bush administration (43)

Category Tags: Commentaries and Criticisms, Bush Policies and Actions

At a rally in New York City, President Bush is asked whether the federal government will ask the average American to do anything else besides spend money to help battle terrorism and assist the country in recovering from the 9/11 attacks. Bush replies: “Well, I think the average American must not be afraid to travel. We opened Reagan Airport yesterday for a reason—we think it’s safe, and that people ought to feel comfortable about traveling around our country. They ought to take their kids on vacations. They ought to go to ball games.… But people ought to—listen, we ought to be aware in America—we are aware; how can you not be aware that we’ve entered into a new era. The imagery is vivid in people’s minds. But nevertheless, Americans must know that their government is doing everything we can to track down every rumor, every hint, every possible evildoer. And, therefore, Americans ought to go about their business. And they are beginning to do so. The load factors were up on the airlines, which means more people will be going to hotels and restaurants.” [White House, 10/3/2001; Roberts, 2008, pp. 91] Not only has Bush been exhorting Americans to spend their money on airline tickets and amusement parks (see September 27, 2001), he will take part in a marketing campaign designed to boost the travel industry (see Early 2002). New York Mayor Rudolph Giuliani adds his voice to Bush’s, asking the rhetorical question, “What can you do to help in this crisis?” and answering, “Spend, spend, spend.” Time magazine columnist Margaret Carlson writes that while consumer spending is indeed essential to the country’s economic recovery, it “strike[s] a sour note” for Bush, Giuliani, and other leaders to tell Americans that they can best help their country by spending money on themselves. “In the aftermath of one awful moment, we’ve finally come to understand what our parents meant by a cause larger than ourselves,” she writes. “We’re hungry for a way to help the war effort, honor the dead, and help the survivors. We’re not shunning the perfect marbled steak at Morton’s for want of a tax break but because it feels wrong with planes being shot at in Afghanistan. The fact is there’s going to be no grand mobilization for which we can sacrifice. It’s not our parents’ war, with its visible monsters, quantifiable victories, and necessary sacrifices. The Greatest Generation got to save old tires, dig a Victory Garden, and forgo sugar. The Richest Generation is being asked to shop.” [Time, 10/15/2001]

Entity Tags: Rudolph (“Rudy”) Giuliani, George W. Bush, Margaret Carlson

Category Tags: Bush Policies and Actions, Commentaries and Criticisms

The Travel Industry Association of America (TIA) coordinates its effort with the Bush administration to sell America’s airlines and hotel chains to consumers after the 9/11 attacks (see September 27, 2001). According to the TIA, “Travel was also linked to patriotic duty with expressions, such as ‘A return to travel is normal. Restoring travel is restoring our country’s economy.’” President Bush, apparently unaware that sitting presidents do not normally appear in industry ad campaigns, appears in “public service” ads created by TIA. The ads are part of a $20 million advertising campaign steered by, among others, J. W. “Bill” Marriott of Marriott International, one of the world’s largest hotel chains. Marriott personally solicited Bush’s participation in the television advertisements, which run throughout the US and in a number of foreign countries for four weeks. According to TIA polls, the Bush ad campaign reaches 70 percent of Americans, and most understand it as an appeal to travel and spend money. In 2008, author and public policy professor Alasdair Reynolds will write, “Many Americans appreciated that there was something strangely out of kilter about the president’s prominent role in boosting consumption in a moment of crisis.” [Association of Travel Marketing Executives, 2002; Roberts, 2008, pp. 90]

Entity Tags: Marriott International, Alasdair Roberts, Bush administration (43), Travel Industry Association of America, George W. Bush, J. W. (“Bill”) Marriott

Timeline Tags: Complete 911 Timeline

Category Tags: Bush Policies and Actions, Commentaries and Criticisms

The Bureau of Labor Statistics announces that it will no longer publish its monthly Mass Layoffs Statistics Report, which details factory closings around the country. The administration says the reports are too costly. Labor unions say the government is attempting to conceal negative economic news. [Savage, 2007, pp. 104]

Entity Tags: US Bureau of Labor Statistics, Bush administration (43)

Category Tags: Bush Policies and Actions

The Bush administration announces that it will no longer publish an annual report that details how much money each state receives from each federal program. The announcement coincides with heavily critical reports that federal budget cuts are creating huge shortfalls in state budgets. Without the annual report, it is now much harder to track how the budget cuts affect individual states. An administration spokesman says the information is still available, albeit in “a different mode,” from individual information releases from the separate agencies, but Congressional Democrats accuse the administration of trying to hide the damages caused by the budget cuts. [Savage, 2007, pp. 104-105]

Entity Tags: Bush administration (43)

Category Tags: Bush Policies and Actions

The White House prepares to launch a huge PR campaign to win public support for sweeping changes to Social Security, including the creation of individual accounts with the option to invest (and win or lose) in the stock market, and partial privatization of the management of social security investments. In 2008, current White House press secretary Scott McClellan will write: “It was the kind of bold domestic initiative Bush had always hoped would define his presidency. He would get it passed through a massive [public relations] campaign to bring public pressure to bear on Congress.” The first major strategy meeting to develop the White House PR campaign centers on two main foci:
bullet “Educating” the public about the economic and fiscal problems facing Social Security, the need to fix them, and creating a “crisis mentality” among the public, which, McClellan will write, “would give us a better shot at getting the necessary public support to bring about bipartisan backing for our reform plan in Congress”;
bullet Shaping the solution and ensuring that “personal retirement accounts,” as the stock accounts will be termed, are included.
The White House’s congressional liaison, David Hobbs, says: “Seventy percent of the battle is defining the problem and putting Congressional leaders on the spot. We need public pressure.” The plan is for Bush to travel around the country touting the program, specifically visiting states and districts represented by targeted members of Congress. “Bush would use the re-election hopes of those crucial swing votes in Congress as the lever with which to apply the pressure required,” McClellan later writes. McClellan will reflect that, though the marketing campaign is well thought out, the reform plan isn’t, writing: “We were spending excessive effort on selling our sketchily designed plan while skimping on other elements of the process that probably should have been at least as important. We weren’t spending much time deliberating with members of Congress to work out details of our reform plan—we were doing minimal outreach to Democrats to build the kind of consensus that would make such a dramatic change easier to pass. Instead, we were leapfrogging many of the vital steps and jumping straight to the stage in the process we found most congenial—the public relations effort.” McClellan will compare the Social Security campaign to the administration’s efforts to market the Iraq invasion, calling it “reminiscent of the way we’d short-circuited debate over the necessity for war in Iraq and chose instead to turn it into the subject of a massive marketing blitz. We used a similar approach as we planned the Social Security campaign. With Iraq, it was a threat that needed confronting, with Social Security, it was a crisis that needed solving.” [McClellan, 2008, pp. 248-249]

Entity Tags: George W. Bush, Bush administration (43), Scott McClellan, David Hobbs

Category Tags: Bush Policies and Actions

Fox News senior anchor Brit Hume and Fox analyst William Bennett both make the false claim that former President Franklin D. Roosevelt wanted to replace Social Security with private accounts. In fact, Roosevelt, who implemented Social Security, was in favor of “voluntary contributory annunities” to supplement Social Security benefits, but never proposed replacing Social Security with private money. Hume and Bennett both support President Bush’s plan to partially “privatize” Social Security; Bush himself has asserted, equally falsely, that Roosevelt supported privatization. On Fox’s political talk show Hannity and Colmes, Bennett tells viewers: “Franklin Delano Roosevelt, the guy who established Social Security, said that it would be good to have it replaced by private investment over time. Private investment would be the way to really carry this thing through.” That same evening, Hume tells his audience: “In a written statement to Congress in 1935, Roosevelt said that any Social Security plans should include, quote, ‘Voluntary contributory annuities, by which individual initiative can increase the annual amounts received in old age,’ adding that government funding, quote, ‘ought to ultimately be supplanted by self-supporting annuity plans.’” Hume fails to point out that Roosevelt was not talking about “supplant[ing]” Social Security with any “self-supporting annuity plans,” but instead was talking about a different fund that provided pension benefits to Americans too old (in 1935) to contribute payroll taxes to Social Security. In 1935, Edwin Witte, the director of the Committee on Economic Security, told Congress flatly that voluntary accounts were intended as a “separate undertaking” meant to “supplement” the compulsory system, not replace it. [Media Matters, 2/4/2005] Days before the Fox broadcasts, Roosevelt’s grandson James Roosevelt Jr., a former Social Security associate commissioner, noted that “Bush invoked the name of my grandfather… as part of his campaign to privatize Social Security,” and added, “The implication that FDR would support privatization of America’s greatest national program is an attempt to deceive the American people and an outrage.” [Boston Globe, 1/31/2005] Liberal pundit Al Franken calls on Hume to resign over his historical distortions; MSNBC host Keith Olbermann calls Hume’s statements “premeditated, historical fraud,” and Roosevelt Jr. says that “outrageous distortion… calls for a retraction, an apology, maybe even a resignation.” [Media Matters, 2/18/2005] Influential conservative blogger Glenn Reynolds will acknowledge that Roosevelt was not advocating for the privatization of Social Security, instead noting that Roosevelt’s plan “would have involved, essentially, a sort of government-supplied 401k plan.” [Glenn Reynolds, 2/4/2005]

Entity Tags: George W. Bush, Al Franken, Brit Hume, Franklin Delano Roosevelt, William J. Bennett, Fox News, Glenn Reynolds, Keith Olbermann, James Roosevelt Jr

Timeline Tags: Domestic Propaganda

Category Tags: US Financial Deregulation, Bush Policies and Actions, Commentaries and Criticisms

Libertarian Representative Ron Paul (R-TX), contemplating a run for the 2008 presidential nomination, discusses the many federal programs, agencies, and bureaus he would eliminate if he had the power. He would do away with the CIA, the Federal Reserve, the Food and Drug Administration (FDA), the IRS, and the Department of Education, among others. He would eliminate Social Security, Medicare, and Medicaid. He would abolish the federal income tax (see April 28, 1999). He would zero out federal funding for public education, leaving that to local governments. Paul recently refused to vote for federal funds to aid victims of Hurricane Katrina, explaining that to do so would “rob” other Americans “in order to support the people on the coast.” He routinely votes against federal subsidies for farmers. He supports absolute gun rights, and absolutely opposes abortion, though he thinks regulations supporting or denying abortion should be left up to the states. He wants to repeal federal laws regulating drugs and allow prohibited drugs such as heroin to be sold legally. Paul says the US should withdraw from the United Nations and NATO, and wants the country to stop giving foreign aid to any country for any reason, calling such assistance “foreign welfare.” He even says President Lincoln should never have taken the nation to war to abolish slavery. Referring to the years before the income tax, Paul says: “We had a good run from 1776 to 1913. We didn’t have it; we did pretty well.” As for Social Security, “we didn’t have it until 1935,” Paul says. “I mean, do you read stories about how many people were laying in the streets and dying and didn’t have medical treatment?… Prices were low and the country was productive and families took care of themselves and churches built hospitals and there was no starvation.” Historian Michael Katz describes himself as aghast at Paul’s characterization of American life before Social Security. “Where to begin with this one?” he asks. “The stories just break your heart, the kind of suffering that people endured.… Stories of families that had literally no cash and had to kind of beg to get the most minimal forms of food, who lived in tiny, little rooms that were ill-heated and ill-ventilated, who were sick all the time, who had meager clothing.” Charles Kuffner of the Texas progressive blog Off the Kuff writes, “I can only presume that the Great Depression never occurred in whatever universe Paul inhabits.” [Washington Post, 7/9/2006; Charles Kuffner, 7/10/2006]

Entity Tags: United Nations, US Food and Drug Administration, North Atlantic Treaty Organization, Ron Paul, US Department of Education, US Federal Reserve, Charles Kuffner, Central Intelligence Agency, Internal Revenue Service, Michael Katz

Timeline Tags: Domestic Propaganda, 2008 Elections

Category Tags: USA, Commentaries and Criticisms

George W. Bush.George W. Bush. [Source: Annie Leibovitz / Vanity Fair]In a news conference, President Bush says that because of the nation’s increasing economic difficulties, the year ahead will “require difficult choices and additional sacrifices.” The nation needs economic growth, and thusly he says to the American populace, “I encourage you all to go shopping more.” [Vanity Fair, 2/2009]

Entity Tags: George W. Bush

Category Tags: USA, Bush Policies and Actions, Commentaries and Criticisms

The Washington Post publishes an editorial by New York Governor Eliot Spitzer, accusing the Bush administration of protecting predatory lenders from state officials through use of the federal Office of the Comptroller of the Currency (OCC). Spitzer notes that since the OCC’s founding in the 1860s, its function was to monitor the records of national banks and ensure they were balanced. Yet as the current crisis in predatory lending became acute, the OCC used a clause from the 1863 National Bank Act to make all state predatory lending laws inert. In addition, Spitzer asserts that the OCC created new rules making it impossible for state officials to employ their own consumer protection laws against national banks. Spitzer continues to note that when he opened an investigation of the mortgage lending practices of several banks, the OCC brought a federal lawsuit to prevent the inquiry from moving forward. “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners,” Spitzer concludes, “the Bush administration… will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits.” [Washington Post, 2/14/2008]

Entity Tags: Eliot Spitzer, Bush administration (43)

Category Tags: USA, Bush Policies and Actions, Commentaries and Criticisms

May 2008: Jobless Rate Rises in 48 States

Unemployment rates in several states rise to their highest levels since 1976. The states are California, Nevada, North Carolina, Oregon, Rhode Island, South Carolina, Florida, and Georgia. There is also a year-on-year increase in unemployment in all 50 states and the District of Columbia. As in all prior months, Michigan leads the nation with 14.1 percent, up from 12.9 percent in April; Oregon is second with 12.4 percent, up four-tenths of a percent from the previous month. Thirteen other states post rates above 10 percent. In recent months, the manufacturing sectors in Michigan and Rhode Island have been decimated, and Chrysler and GM plant closings in early May are particularly devastating to Michigan. Only Vermont has no change in its rate, while Nebraska’s rate decreases 0.1 of a percentage point to 4.4 percent. Both Nebraska and North Dakota tie for lowest unemployment rates while, nationally, the unemployment rate hits a 26-year high as it rises to 9.4 percent, from 8.9 percent in April. The highest regional jobless rate of 10.1 percent is reported in the West, followed by the Midwest at 9.8 percent. Not since September 1983, when the Midwest posted a 10.1 percent rate, has any region recorded a rate of 10 percent or more. The Pacific and South Atlantic regions also post record highs in May. [CNN News, 6/19/2009]

Category Tags: USA, Bush Policies and Actions

Conservative radio host Michael Savage says that homeless Americans should be put in “work camps.” As documented by progressive media watchdog organization Media Matters, Savage, answering a caller’s question about how he would address the “problem with the homelessness in this country,” says: “Why not put them in work camps? Most of them are able-bodied.” When the caller asks, “How much do you plan on paying them in these work camps, sir?” Savage responds, “Well, since they’re already receiving public assistance, I’d pay them nothing.” He continues: “Why do you have to pay a man who’s right now living off the fat of the land? And he’s sucking the fat of the land for, you know, a fairly small check—it is true—but he is a leech. He is not a productive member of society. Where is the money supposed to come from? No, I’ve studied the homeless problem for many years, Ed, because I live in one of the most infested cities in the United States—San Francisco—and I’ve observed the bums for many years. And the good—the largest portion of them are able-bodied. They’re drug addicts or alcoholics. There’s no reason they could not be put into work camps and do much of the labor that our illegal aliens are doing. Now, who do you think did this labor in previous generations? It was ne’er-do-wells, who today are basically able to live on the fat of the land and then drink or use drugs because they’re getting a check for nothing. In the old days, they’d pick the crops and they would spend their money on alcohol.” [Media Matters, 6/9/2008]

Entity Tags: Michael Savage, Media Matters

Timeline Tags: Domestic Propaganda

Category Tags: USA, Commentaries and Criticisms

Samuel Wurzelbacher, a.k.a. ‘Joe the Plumber.’Samuel Wurzelbacher, a.k.a. ‘Joe the Plumber.’ [Source: Orlando Sun-Sentinel]Republican presidential candidate John McCain (R-AZ)‘s running mate, Sarah Palin (R-AK), accuses Democratic presidential candidate Barack Obama (D-IL) of advocating socialism as an economic plan. “[N]ow is no time to experiment with socialism,” Palin says, referring to Obama’s proposal to offer tax credits to those paying no income taxes. Palin echoes comments made by Pennsylvania resident Samuel Wurzelbacher, known to the media as “Joe the Plumber,” in which he said Obama’s tax plan sounded like socialism to him. Palin tells a crowd in New Mexico: “Senator Obama said he wants to quote ‘spread the wealth.’ What that means is he wants government to take your money and dole it out however a politician sees fit.” Referring to a man in the crowd holding up a sign identifying himself as “Ed the Dairy Man,” Palin adds, “But Joe the Plumber and Ed the Dairy Man, I believe that they think that it sounds more like socialism.” She continues: “Friends, now is no time to experiment with socialism. To me, our opponent plans sounds more like big government, which is the problem. Bigger government is not the solution.” She calls Obama’s tax plan “a government giveaway,” and says the plan will raise taxes on those who already pay taxes: “He claims that he’ll cut income taxes for 95 percent of Americans, but the problem is, more than 40 percent of Americans pay no income taxes at all,” she says. “Since he can’t reduce taxes on those who pay zero, he wants the government to send them a check that’s called a tax credit. And where is he gonna get the money for all those checks that he will cut? By raising taxes on America’s hard-working families and our small businesses.” Later, at an airport in Colorado Springs, Palin tells a reporter, “There are socialist principles to [Obama’s tax plans], yes.” She continues, “Taking more from a small business or small business owners or from a hard-working families and then redistributing that money according to a politician’s priorities—there are hints of socialism in there and that’s why I don’t fault or discredit Joe the Plumber for bringing that up, asking if that is socialism.” Palin says that the $700 billion White House bailout of failing banks and other financial institutions is not socialism: “I believe that there are those measures that had to be taken by Congress to shore up not only the housing market but the credit markets, also to make sure that that’s not frozen, so that our small businesses have opportunities to borrow and that was the purpose, of course, of that part of the bailout and the shoring of the banks.” [ABC News, 10/20/2008]

Entity Tags: Barack Obama, Samuel Wurzelbacher, Sarah Palin, John McCain

Timeline Tags: Domestic Propaganda, 2008 Elections

Category Tags: USA, Commentaries and Criticisms, Obama Policies and Actions

John Fund.John Fund. [Source: Rightsideva]Fox News runs an interview with right-wing journalist and Wall Street Journal editorialist John Fund, author of the book Stealing Elections: How Voter Fraud Threatens Our Democracy, in which Fund claims that ACORN was “at the heart of the subprime mortgage crisis,” and is planning to “overload the election system, to make it so there’s such chaos at the polls that they can bring a lot of voters there.” He also calls Barack Obama “radical” and suggests that he is working in concert with ACORN on a hidden agenda to expand government and “dramatically change American society,” in ways he does not specify. On the Fox website the video is posted under the headline, “Author of book on voter fraud explains how ACORN’s actions are detrimental to Democracy.” [Fox News, 10/19/2008]

Entity Tags: Association of Community Organizations for Reform Now, John Fund, Barack Obama, Fox News

Timeline Tags: Civil Liberties, Domestic Propaganda, 2008 Elections

Category Tags: Commentaries and Criticisms

The US’s two most popular conservative radio hosts, Rush Limbaugh and Sean Hannity, are repeatedly labeling the current economic collapse the “Obama recession,” even though the recession has started already, and President-elect Barack Obama was only elected on November 4 and will not assume the presidency until January 20, 2009.
Blaming Obama for Wall Street Plunge - According to reports by progressive media watchdog site Media Matters, Hannity’s guest Dick Morris, a conservative political operative, tells a Fox News audience on November 6 that the stock market plunge is directly attributable to Obama’s election and his intention to “raise the capital gains tax.” Hannity calls the stock market plunge “the Obama tanking.” On the same day, Limbaugh says on his show: “We have the largest market plunge after an election in history. Thank you, man-child Barack Obama.” [Media Matters, 11/7/2008] Hannity says on November 11 that Obama’s election is directly responsible for plunging stock market performances, telling his listeners: “Wall Street keeps sinking. Could it be the Obama recession: The fear that taxes are gonna go up, forcing people to pull out of the market?” On November 12, Limbaugh echoes Hannity’s characterization, telling his listeners that, as reported by MSNBC’s Chris Matthews, “the recession isn’t President Bush’s fault. It’s the fault, catch this, of the president who hasn’t yet taken office. It’s an ‘Obama recession’; that’s what he’s calling it.” Matthews, clearly impatient with Limbaugh’s characterization, calls the host’s statement an example of “the bitter sore loser’s rhetoric we are hearing from the right these days.” [Media Matters, 11/12/2008]
Experts Credit Obama with Wall Street Stabilization - Experts refute Limbaugh’s and Hannity’s attribution of the nation’s economic calamity to Obama, with the Wall Street Journal giving Obama credit for a post-election upturn in the stock market and blaming “lame economic data” and the continuing “drumbeat of bailouts, potential bailouts, and worries about other bailouts” for the stock market’s poor performance. [Wall Street Journal, 11/12/2008] Fox News business commentator Eric Bolling credits Obama’s election with stabilizing the stock market until a dismal national employment report caused the market to drop again. And Fox Business Channel’s vice president, Alexis Glick, tells her audience on November 7: “I so did not believe that the market reaction over the past two days was about Obama. Wednesday morning we walked in, we saw the Challenger and Gray [planned layoff] numbers, we saw the ADP numbers, the weekly jobless claim numbers—yeah, well, they were basically in line, but we knew two days ago that this was going to be a bloody number. Frankly, we probably knew several months ago that it was going to be a bloody number.” The Wall Street Journal and New York Times both agree with Glick’s assessment. [Media Matters, 11/7/2008; New York Times, 11/7/2008]

Entity Tags: Alexis Glick, Media Matters, Barack Obama, Fox Business Channel, Eric Bolling, Dick Morris, New York Times, Chris Matthews, Fox News, Rush Limbaugh, Sean Hannity, Wall Street Journal

Timeline Tags: Domestic Propaganda, 2008 Elections, 2010 Elections

Category Tags: Commentaries on Economic Issues, USA, Commentaries and Criticisms, Bush Policies and Actions, Obama Policies and Actions

Fox News pundit Bill O’Reilly and former Bush administration political director Karl Rove tell listeners that media journalists are “overstating” the current economic problems in order to help the incoming Obama administration. O’Reilly asks Rove, “All right, so you are agreeing with me then that there is a conscious effort on the part of the New York Times and other liberal media to basically paint as drastic a picture as possible, so that when Barack Obama takes office that anything is better than what we have now?” Rove’s response: “Yes.” O’Reilly says that the “plot” is to “blame everything on Bush for quite a long period of time.” Rove calls the economic reporting little more than “scare tactics.” O’Reilly concludes: “All I want is an honest press. I’m not hoping one way or the other.” Amanda Terkel of the Center for American Progress observes: “For years, in fact, the Bush administration has tried Rove and O’Reilly’s strategy of insisting that nothing is wrong. Although the United States has been in a recession since December 2007, the Bush administration has continued to insist that the economy was strong. The result? A government unprepared to deal with ‘the worst financial crisis since the Great Depression.’” [Think Progress (.org), 12/9/2008]

Entity Tags: Karl C. Rove, Center for American Progress, Fox News, Amanda Terkel, Bill O’Reilly

Timeline Tags: Domestic Propaganda, 2010 Elections

Category Tags: USA, Bush Policies and Actions, Obama Policies and Actions, Commentaries and Criticisms

January 2009: New Home Sales Plunge in US

According to a Commerce Department report, in January, new home purchases drop 10 percent to an annual pace of 309,000, the lowest level since data tracking began in 1963. The report, published in February 2009, will attribute the fall to high unemployment and foreclosures. In addition, at 13.5 percent, the median home price falls the most in almost four decades. [Bloomberg, 2/26/2009]

Entity Tags: US Department of Commerce

Category Tags: Other, USA, Bush Policies and Actions

Washington Post economics columnist Steven Pearlstein criticizes Mary Schapiro, President-Elect Barack Obama’s pick to chair the Securities and Exchange Commission (SEC), a financial market regulator. Pearlstein says that the selection of Schapiro, who has a long background in regulating the industry, is “as safe and predictable as it is disappointing.” He adds that Schapiro has some good qualities and would be a sound pick at another time. However, “The problem is that there is nothing in her record to suggest that she is likely to clean house at the agency and launch a brutal and sustained assault on Wall Street culture.”
Unethical Practices - Pearlstein adds: “Remember the good old days when corporations would routinely manipulate earnings so that they came out just as the analysts expected? Or when analysts used to issue buy recommendations for stocks they knew were lousy just because it helped their firms win investment-banking business? Or when brokerage firms would routinely put clueless customers in mutual funds that offered high commissions, not the best results? Or when investment banks would put aside shares in the hottest IPOs for the personal accounts of corporate chief executives who steered underwriting business their way? These practices weren’t secrets—to anyone even vaguely familiar with the industry, they were hidden in plain view. And yet for years, no regulator, including Schapiro, was willing to risk being demonized by the industry, criticized by Congress and overturned by the courts to do what was necessary to stop these practices.”
'Show Trials' - He then sets out his vision for what the new chairman should do, what he thinks Schapiro will not do: “We need an SEC chairman who is willing to move beyond narrow enforcement actions and no-fault consent decrees to stage a series of regulatory show trials that will expose in graphic detail how people think and behave at all levels of Wall Street firms. We need a chairman who will use the commission’s broad powers to fine and debar from the industry big-name directors, top executives, ratings agency officials and other gatekeepers whose nonfeasance resulted in significant losses for investors, customers and taxpayers. We need a chairman who will make effective use of the bully pulpit to expose other well-known industry practices that put the interests of Wall Street ahead of those of its customers.” [Washington Post, 1/7/2009]

Entity Tags: Barack Obama, Steven Pearlstein, Mary Schapiro, US Securities and Exchange Commission

Category Tags: Commentaries on Economic Issues, USA, Commentaries and Criticisms

NYU Economics Professor Nouriel Roubini tells Bloomberg News that, following the $350 billion injection by the Bush Administration, President Barack Obama will have to use as much as $1 trillion of taxpayer funds to shore up capitalization of the banking sector. “The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.” Roubini also predicts that oil prices will continue to trade between $30 to $40 a barrel all year. Regarding commodities, Roubini said, “I see commodities falling overall another 15-20%. This outlook for commodity prices is beneficial for oil importers, it’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative.” [Street Insider.com, 1/20/2009; Bloomberg, 1/20/2009]

Entity Tags: Barack Obama, Citibank, Nouriel Roubini, Bank of America

Category Tags: Bailouts and Other Government Aid, USA, Bush Policies and Actions, Obama Policies and Actions

Eric Cantor.Eric Cantor. [Source: Washington Post]House Minority Whip Eric Cantor (R-VA) claims, falsely, that the Obama stimulus package would spend four times as much money on “lawn grass” as it allocates for small businesses. Cantor is referring to the plan’s $200 million allocation for renovating Washington’s National Mall, which fellow Republicans characterize as “earmarks” or “pork.” According to MSNBC and Fox News, Cantor claims: “When you’re seeing four times as much money spent on grass in Washington—that is actually lawn grass in Washington—than you do to help small businesses, that has your priorities backwards.… If you look at the bill that passed the ways and means committee yesterday, for every dollar spent to help small businesses, four dollars is being spent to help upkeep the grass on the lawns of Washington. Again, what does that have to do with a stimulus bill?” The Center for American Progress (CAP), a progressive think tank, accuses Cantor of “completely invent[ing] the truth.” The draft version of the House stimulus plan allocates over four times as much money for “creating small business opportunity”—$880 million—than for renovating the National Mall. The figures also do not include the stimulus plan’s more than $20 billion in business tax cuts. CAP notes that spending money on infrastructure, such as the Mall renovations, is considered one of the most effective ways to stimulate the economy, creating “twice as many jobs as tax cuts.” The tax cuts that Cantor champions—mostly for large businesses and wealthy Americans—are, CAP says, among the least efficient ways to grow the economy. Cantor is also wrong in characterizing the Mall spending as money for “lawn grass.” The money will be allocated for, among other projects, repairing the Tidal Basin’s seawall, adding restrooms to the Mall, and renovating buildings and monuments in Washington’s Capitol district. CAP notes that “all of [this] will require new workers and create jobs.” [Think Progress, 1/23/2009]

Entity Tags: Eric Cantor, Obama administration, Center for American Progress

Category Tags: Commentaries and Criticisms, Obama Policies and Actions

Conservatives and Congressional Republicans attack President Obama’s economic stimulus plan with a variety of claims centering on “earmarks” or “Democratic pork.” One claim is that the stimulus package wastes hundreds of millions of dollars on funding for contraceptives. “You know, I’m concerned about the size of the package.” says House Minority Leader John Boehner (R-OH). “And I’m concerned about some of the spending that’s in there, [about]… how you can spend hundreds of millions on contraceptives. How does that stimulate the economy?” [New York Post, 1/26/2009]
Reduces Costs to State, Federal Budgets - House Speaker Nancy Pelosi (D-CA) explains the rationale behind the funding: “Well, the family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now and part of what we do for children’s health, education, and some of those elements are to help the states meet their financial needs. One of those—one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government.” [Think Progress, 1/26/2009]
Limbaugh's Suggestion - Conservative talk show host Rush Limbaugh retorts that if Pelosi “wants fewer births, I have the way to do this and it won’t require any contraception: You simply put pictures of Nancy Pelosi… in every cheap motel room.… That will keep birthrates down because that picture will keep a lot of things down.” [Media Matters, 1/26/2009]
Savings of $700 Million - The language of the stimulus bill reads: “Under current law, the secretary [of health and human services] has the authority under section 1115 of the Social Security Act to grant waivers to states to allow them to cover family planning services and supplies to low-income women who are not otherwise eligible for Medicaid. The bill would give states the option to provide such coverage without obtaining a waiver. States could continue to use the existing waiver authority if they preferred.” The Center for American Progress (CAP), a progressive think tank, explains that this portion of the stimulus bill “would not only aid states, but also provide preventative, cost-saving health care to help low-income women support their families and keep working.” According to the Congressional Budget Office (CBO), the measure would save the nation $200 million over five years and $700 million over 10 years. States that choose not to participate in the program are not required to do so. Representative James Clyburn (D-SC) notes, “I think that Mr. Boehner is looking for one little sound bite rather than looking at the total package here and seeing what it will do for the American people.” [Think Progress, 1/26/2009]

Entity Tags: Rush Limbaugh, James Clyburn, Congressional Budget Office, Center for American Progress, John Boehner, US Department of Health and Human Services, Nancy Pelosi

Category Tags: Commentaries and Criticisms, Obama Policies and Actions

“The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part,” says Guardian City editor Julia Finch, who lists individuals who led the world into its current economic crisis (see June 2008). These individuals include:
bullet Alan Greenspan, US Federal Reserve chairman, 1987-2006: “[B]lamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. Backed sub-prime lending; urged homebuyers to swap fixed-rate mortgages for variable rate deals, leaving borrowers unable to pay when interest rates rose. Defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later.”
bullet Mervyn King, governor of the Bank of England: “His ambition was that monetary policy decision-making should become ‘boring.’”
bullet Bill Clinton, former US president: “Beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans. Repealed the 1999 Glass-Steagall Act, prompting the era of the superbank; the year before the repeal, sub-prime loans were just 5 percent of all mortgage lending. By the time the credit crunch blew up it was approaching 30 percent.” [Guardian, 1/26/2009]

Entity Tags: Mervyn King, William Jefferson (“Bill”) Clinton, Alan Greenspan, The Guardian, Julia Finch

Category Tags: Commentaries on Economic Issues, Britain, USA, Pre-2001 Policies and Actions, Bush Policies and Actions

Yale economist Robert Schiller reflects on the genesis of the economic recession, tracing it back in part to policies pursued by the Bush administration for the 2004 presidential election effort. At that time, Schiller warned of a “housing bubble” caused by a plethora of bad loans and toxic debt, and called for re-regulation of the housing markets. His warnings were ignored. Schiller says: “The Bush strategists were aware of the public enthusiasm for housing, and they dealt with it brilliantly in the 2004 election by making the theme of the campaign the ownership society. Part of the ownership society seemed to be that the government would encourage home ownership and, therefore, boost the market. And so Bush was playing along with the bubble in some subtle sense. I don’t mean to accuse him of any—I think it probably sounded right to him, and the political strategists knew what was a good winning combination. I don’t think that he was in any mode to entertain the possibility that this was a bubble. Why should he do that? Attention wasn’t even focused on this. If you go back to 2004, most people were just—they thought that we had discovered a law of nature: that housing, because of the fixity of land and the growing economy and the greater prosperity, that it’s inevitable that this would be a great investment. It was taken for granted.” John C. Dugan, the comptroller of the currency since 2005, says he believes a lack of regulation caused the “housing bubble.” Dugan says: “A lot of mortgages got made to people who could not afford them and on terms that would get progressively worse over time, and that created the seeds of an even bigger problem. As the whole market became even more dependent on house-price appreciation, when house prices flattened and then started to decline the whole situation began to unravel. The question you have to ask yourself: Why did credit become so easy? Why would lenders make mortgages that became increasingly less likely to be repaid? Part of the answer is that there was a huge chunk of the mortgage market that was not regulated to any significant extent. The overwhelming proportion of subprime loans were being done in entities that were not banks and not regulated as banks—I’m talking here about mortgage brokers and non-bank mortgage lenders that could originate these mortgages and then sell them to Wall Street firms that could package them into new kinds of mortgage securities, which arguably could take into account the lower credit risks and still be salable to investors worldwide. Unfortunately, the theory was not in accord with the reality. Although they thought they had accurately gauged that risk, they too were in fact depending—when you get to the bottom of it—on house prices continuing to go up and up and up. And they did not.” [Vanity Fair, 2/2009]

Entity Tags: Robert Schiller, Bush administration (43), John C. Dugan

Category Tags: Commentaries on Economic Issues, Bush Policies and Actions

Henry Paulson, the former secretary of the treasury, explains how the recession and market destruction came about on his watch. Part of his problem was his admitted lack of knowledge about regulation and regulatory authorities. “I easily could imagine and expected there to be financial turmoil,” he says. “But the extent of it, okay, I was naive in terms of—I knew a lot about regulation but not nearly as much as I needed to know, and I knew very little about regulatory powers and authorities. I just had not gone into it in that kind of detail. This’ll be the longest we’ve gone in recent history without there being turmoil, and given all the innovation in the private pools of capital and the over-the-counter derivatives and the excesses around the world, we figured that when there was turmoil, and these things were tested for the first time by stress, it would be more significant than anything else. I said at the time, I have a concern that every rally we’re going to have in the financial markets will be a false rally until we break the back of the price correction in real estate. And these things are never over until you have a couple of institutions go that surprise everyone. Bear Stearns can hardly be a shock (see March 15, 2008). But having said that, it’s one thing to see it intellectually and it’s another to see where we are.” [Vanity Fair, 2/2009]

Entity Tags: Bear Stearns, Henry Paulson, US Department of the Treasury, Bush administration (43)

Category Tags: Commentaries on Economic Issues, USA, Bush Policies and Actions

The American Recovery and Reinvestment Act (ARRA) invests $90 billion in clean energy projects for the next 10 years via loan guarantees, tax incentives, and grants. $38 billion of this is government spending and $20 billion is tax incentives. Symbolically, President Obama signs the bill into law at the Denver Museum of Nature and Science, where he takes a tour of the museum’s solar panel installation. He says he hopes the bill will inspire Americans to get involved in “green” energy the same way that President Kennedy’s goal to put a man on the moon inspired Americans in the 1960s. “I hope this investment will ignite our imagination once more in science, medicine, energy and make our economy stronger, our nation more secure, and our planet safer for our children,” Obama says before signing the bill. The bill includes:
bullet A three-year extension to the tax credit for wind, which would have expired at the end of this year, and an extension until the end of 2013 for geothermal and biomass renewable-energy projects. The credit has been increased to 30 percent of the investment.
bullet $4.5 billion in direct spending to modernize the electricity grid with smart-grid technologies.
bullet $6.3 billion in state energy-efficient and clean-energy grants, and $4.5 billion to make federal buildings more energy efficient.
bullet $6 billion in loan guarantees for renewable energy systems, biofuel projects, and electric-power transmission facilities.
bullet $2 billion in loans to manufacture advanced batteries and components for applications such as plug-in electric cars.
bullet $5 billion to weatherize homes of up to 1 million low-income people.
bullet $3.4 billion appropriated to the Department of Energy for fossil energy research and development, such as storing carbon dioxide underground at coal power plants.
bullet A tax credit of between $2,500 and $5,000 for purchase of plug-in electric vehicles, available for the first 200,000 placed into service.
Most companies in the green-tech field hail the new focus on energy efficiency and renewable energy in the bill, contrasting it with the Bush administration’s support for fossil fuel energy production and its disdain for clean energy programs. Investors and analysts say the new law is a step towards a comprehensive energy policy based on sustained commitment to renewable energy and efficiency. Michael Liebriech of New Energy Finance says: “For years, US policymakers’ support for clean energy has been uneven. No longer… the US will have a great chance to be the growth engine for our industry over the next several years.” The spending should have an almost-immediate impact, especially in areas such as smart grid technology and energy efficiency, says venture capitalist Dennis Costello. However, even this influx of government funding does not solve all the financial problems facing energy technology firms. The recession continues to grip the economy, he notes, damping demand and making financing of new projects difficult. “It’s kind of refreshing to see at least beginnings of a real energy policy, some sort of unified approach to our energy problems,” he says. “But it isn’t going to solve our energy problems. There are a lot of countervailing factors to give pause to being over-exuberant on the future of energy sector and clean tech.” [CNET News, 2/17/2009; Adam Johnston, 7/2013]

Entity Tags: Bush administration (43), Barack Obama, Michael Liebriech, Dennis Costello, Obama administration, American Recovery and Reinvestment Act of 2009, Denver Museum of Nature and Science, US Department of Energy

Timeline Tags: US Solar Industry

Category Tags: Bailouts and Other Government Aid, Obama Policies and Actions

FedUpUSA, a group of investors in Troy, Michigan, issues a call for people to send tea bags to Congress as a sign of their disapproval of Democratic economic policies. The group calls the event a “Commemorative Tea Party.” This will become one of the earliest events in the history of the “tea party” movement. [Institute for Research & Education on Human Rights, 8/24/2010] Nineteen days later, CNBC commentator Rick Santelli will launch what he calls an unplanned, “impromptu” rant against the Obama administration’s economic policies, in which he will call for a “tea party” protest (see February 19, 2009).

Entity Tags: Rick Santelli, Obama administration, FedUpUSA

Timeline Tags: Domestic Propaganda, 2010 Elections

Category Tags: Commentaries and Criticisms

Wall Street Journal editorial board member Stephen Moore, appearing as a guest on Fox News host Glenn Beck’s show, compares Social Security to “a big Ponzi scheme.” Moore and Beck are discussing the issue of the US debt, and Moore compares the cycle of different government agencies buying and selling portions of the debt to one another to Social Security, saying: “It’s very much like the way Social Security works. It’s a big Ponzi scheme. It’s like a big vault of IOUs.” [Media Matters, 2/2/2009; Media Matters, 9/7/2010] Beck will later call Social Security a “Stalinist” program designed to forcibly redistribute wealth to poorer citizens (see January 27, 2010).

Entity Tags: Glenn Beck, Stephen Moore, Fox News

Timeline Tags: Domestic Propaganda

Category Tags: USA, Commentaries and Criticisms

Pete Sessions.Pete Sessions. [Source: Washington Post]Representative Pete Sessions (R-TX), the chairman of the National Republican Congressional Committee, says that House Republicans should become political “insurgents” to oppose and undermine the Obama administration, specifically its economic proposals, and says the GOP can learn from the example of the Taliban. “Insurgency, we understand perhaps a little bit more because of the Taliban,” he tells editors of the conservative National Journal. “And that is that they went about systematically understanding how to disrupt and change a person’s entire processes. And these Taliban—I’m not trying to say the Republican Party is the Taliban. No, that’s not what we’re saying. I’m saying an example of how you go about [sic] is to change a person from their messaging to their operations to their frontline message. And we need to understand that insurgency may be required when the other side, the House leadership, does not follow the same commands, which we entered the game with.” Sessions complains that neither President Obama nor House Democrats have attempted to work with Republicans in a truly bipartisan fashion. “If they do not give us those options or opportunities then we will then become insurgency of a nature to where we do those things that are necessary to making sure the American public knows what we think the correct answer is. So we either work together, or we’re going to find a way to get our message out.” Sessions says he is not comparing House Republicans to the Taliban: “I simply said one can see that there’s a model out there for insurgency.” Sessions is interrupted by an aide, who explains that Sessions is merely trying to express the need for Republicans to start thinking about how to act strategically as the minority party. Sessions blames House Speaker Nancy Pelosi (D-CA) for the Republicans’ new approach: “I think insurgency is a mindset and an attitude that we’re going to have to search for and find ways to get our message out and to be prepared to see things for what they are, rather than trying to do something about them. I think what’s happened is that the line was drawn in the sand” by Pelosi. [National Journal, 2/5/2009] At a House Republicans’ retreat the week before, Sessions told fellow Republicans that they “need to get over the idea that they’re participating in legislation and ought to start thinking of themselves as ‘an insurgency’ instead.” [Think Progress, 2/5/2009]

Entity Tags: Obama administration, Barack Obama, National Republican Congressional Committee, Pete Sessions, Nancy Pelosi

Category Tags: USA, Commentaries and Criticisms

US Treasury Secretary Timothy Geithner announces a much bigger plan to rescue the US financial system than previously predicted or envisioned, including a much greater government role in markets and banks since the 1930s (see March 15, 2008). Although the administration provides few details, one central portion of the plan that investors most desired to learn about creates bad banks that rely on taxpayer and private investor funds to purchase and hold bad assets racked up by the banks from subprime mortgages, derivatives, and credit defaults. An additional focal point of the plan stretches the final $350 billion that the Treasury may use for the bailout, relying on the Fed’s capability to create money. This last tranche of funding allows the government to be involved in the management of markets and banks. For example, with the credit markets, the administration and the Fed propose to expand a lending program that spends as much as $1 trillion as a replacement for the $1.2 trillion decline between 2006 and 2008 for the issuance of securities backed primarily by consumer loans. The third component of the plan gives banks new capital to lend, but banks that receive new government assistance will have to cut the salaries and perks of their executives and limit dividends and corporate acquisitions. Banks must also publicly declare more information about their lending practices. With the newly proposed Treasury requirements, banks will have to give monthly statements on how many new loans they make, yet the plan stops short of ordering banks to issue new loans or requiring them to account in detail for the federal money. The Obama administration’s commitment to flood the banking system with funds will combine the $350 billion left in the bailout fund; the rest of the money will be from private investors and the Federal Reserve. Some market observers, along with some federal legislators and economists, criticize the plan for its lack of details. [New York Times, 2/10/2009]

Entity Tags: Obama administration, US Federal Reserve, US Department of the Treasury, Timothy Geithner

Category Tags: Bailouts and Other Government Aid, USA, Obama Policies and Actions

The salt marsh harvest mouse, currently receiving no funding from the Obama stimulus package.The salt marsh harvest mouse, currently receiving no funding from the Obama stimulus package. [Source: Environmental Protection Agency]Conservative opponents of the new stimulus package claim that the legislation allocates $30 million for saving the endangered salt marsh mouse, and would be spent entirely in House Speaker Nancy Pelosi’s (D-CA) district. The claim is part of a larger set of claims that the bill is “stuffed with Democratic pork” or “earmarks” (see January 23, 2009 and January 25-26, 2009). The claim is false, with Pelosi’s office calling it a “total fabrication” and examination of the bill finding no mention of any such funding allocation. The claim begins with an e-mail from an unidentified House Republican staff member, who claims that he was told by an unidentified federal agency source that if that agency were to receive stimulus money, it would spend “thirty million dollars for wetland restoration in the San Francisco Bay Area—including work to protect the salt marsh harvest mouse.” The e-mail identifies neither the agency nor the source, nor does it claim that the money is actually in the package. However, the story is quickly picked up and echoed by Republicans such as former Arkansas governor Mike Huckabee and Representative Mike Pence (R-IN), both of whom appear on Fox News stating the claim as unvarnished fact. Representative Dan Lundgren (R-CA) calls the supposed spending “absurd.” And House Minority Leader John Boehner (R-OH) asks how $30 million “for some salt marsh mouse in San Francisco is going to help a struggling auto worker in Ohio?” The Drudge Report makes the same claim. And the Washington Times runs an article entitled “Pelosi’s mouse slated for $30m slice of cheese.” The House staffer who circulates the e-mail later acknowledges that the claim, as stated by Huckabee, Lundgren, and others, is erroneous. “There is not specific language in the legislation for this project,” he admits. However, the staffer claims: “If the bill passes, the project will be funded according to what the relevant agency told our staff. The bottom line is, if this bill becomes law, taxpayers will spend 30 million on the mouse.” Pelosi’s staff says that the $30 million is for federal wetland restoration projects such as the California State Coastal Conservancy, none of which will be spent on the salt marsh mouse or even in Pelosi’s district. Pelosi spokesman Drew Hammill says: “There are no federal wetland restoration projects in line to get funded in San Francisco. Neither the Speaker nor her staff have had any involvement in this initiative. The idea that $30 million will be spent to save mice is a total fabrication.… This is yet another contrived partisan attack. Restoration is key to economic activity, including farming, fisheries, recreation, and clean water.” [Washington Times, 2/12/2009; Plum Line, 2/12/2009; Associated Content, 2/14/2009]

Entity Tags: Fox News, California State Coastal Conservancy, Dan Lundgren, Drudge Report, Mike Pence, Drew Hammill, Washington Times, John Boehner, Nancy Pelosi, Mike Huckabee

Category Tags: Obama Policies and Actions, Commentaries and Criticisms

House Minority Leader John Boehner (R-OH) accuses the Obama administration of colluding with Democrats to include a “high-speed rail system” from “Las Vegas [Nevada] to Disneyland” in the administration’s economic stimulus package. “Tell me how spending $8 billion in this bill to have a high-speed rail line between Los Angeles and Las Vegas is going to help the construction worker in my district,” he demands. [US House of Representatives, 2/13/2009]
Claim at Odds with Facts - Boehner is joined in the claim by several of his House Republican colleagues, including Patrick McHenry (R-NC), Thaddeus McCotter (R-MI), and Candice Miller (R-MI), as well as Republican Senators John McCain (R-AZ) and Jim DeMint (R-SC). Governor Bobby Jindal (R-LA) includes the claim in his response to President Obama’s address to Congress regarding the stimulus package. Many of these lawmakers add the accusation that the supposed rail line, which they call a “levitating train,” is an earmark inserted for Senate Majority Harry Reid (D-NV), whose state would benefit from the rail line. In reality, the stimulus bill does not set aside any money at all for a train of any kind between Los Angeles and Las Vegas. The bill does provide $8 billion for unspecified high-speed rail projects, which includes “magnetic levitation,” or maglev, train systems. The money will be allocated by Transportation Secretary Ray LaHood, one of two Republican holdovers from the Bush administration in President Obama’s cabinet. A Department of Transportation spokesperson says it is “premature to speculate” about what exactly will be funded; the nonpartisan Taxpayers for Common Sense says there is “no way that this provision is an earmark for Senator Reid.” The governors of Nevada and California—both Republicans—have indicated they would support such a maglev line between those two cities. The nonpartisan site FactCheck.org writes: “We can’t predict the future, and it’s certainly within the realm of possibility that the Republican who is Obama’s transportation secretary will decide to devote the entire $8 billion to a project that is nowhere near shovel-ready and that the Federal Railroad Administration says is not cost-effective—all for the benefit of the Democratic majority leader. But we wouldn’t bet on it.” [FactCheck (.org), 2/25/2009; New York Times, 2/25/2009] The Center for American Progress notes that Republicans mock the idea of “levitating trains” because, apparently, “they [think] the term sounds funny.” FactCheck observes, “In truth, ‘levitating’ trains really do exist—but they are properly called maglev trains, and they are high-tech marvels” employed in Japan, among other places. [FactCheck (.org), 2/25/2009; Think Progress, 3/2/2009]
Plans Include Ohio Lines - While there are no plans for a train line of any kind between California and Nevada in the stimulus package, there are at least two proposals for rail lines in and out of Ohio, Boehner’s state. The plans under consideration include a Cleveland-Toledo-Chicago line and a Cleveland-Columbus-Cincinnati-Indianapolis line. [Think Progress, 2/13/2009]
Train to Las Vegas Brothel? - In March, a Republican House member will claim that the supposed “levitating train” will not just go to Las Vegas, but to a brothel. The claim is entirely false (see March 2, 2009).

Entity Tags: John McCain, Ray LaHood, Taxpayers for Common Sense, John Boehner, US Department of Transportation, Thaddeus McCotter, Jim DeMint, Patrick McHenry, Federal Railroad Administration, Bobby Jindal, Candice Miller, FactCheck (.org), Center for American Progress, Harry Reid

Category Tags: Commentaries and Criticisms, Obama Policies and Actions

Some of the protesters at the ‘Porkulus’ rally in Seattle.Some of the protesters at the ‘Porkulus’ rally in Seattle. [Source: American Typo / Michelle Malkin]A rally in Seattle called “Porkulus,” a term popularized by conservative radio host Rush Limbaugh, draws about 100 participants. The rally is to protest the Obama administration’s economic policies. It is organized by area math teacher Keli Carender, who blogs under the moniker “Liberty Belle.” During the rally, Carender shouts, “We don’t want this country to go down the path to socialism!” eliciting “Hear, hear!” responses. She calls the government’s economic stimulus package (which Limbaugh has dubbed “porkulus”) “the reason we’re in this mess.” She also plays an audiotape of a speech by former President Ronald Reagan. Rally participant Connie White tells a reporter that Congressional Democrats are “ramming things through for their liberal agenda. I’m one of the poor. I used to be middle class. But I don’t want the government helping me.” Carender will become one of the area’s more prominent “tea party” organizers, and after she is brought to Washington, DC, for training by the lobbying group FreedomWorks, becomes part of the nationwide Tea Party Patriots organization. The next day, the day President Obama signs the American Recovery and Reinvestment Act, another “Porkulus” rally occurs in Denver, hours after Obama visits another site in the city to promote the bill. The Denver “Porkulus” rally is sponsored by Americans for Prosperity and the Independence Institute. The next day, CNBC commentator Rick Santelli performs his five-minute “impromptu” rant against the legislation, and calls for “tea party” protests to oppose it (see February 19, 2009). [Publicola, 2/17/2009; Institute for Research & Education on Human Rights, 8/24/2010]

Entity Tags: Tea Party Patriots, Rush Limbaugh, Independence Institute, Keli Carender, Americans for Prosperity, Barack Obama, Rick Santelli, Connie White, FreedomWorks

Timeline Tags: Domestic Propaganda, 2010 Elections

Category Tags: Commentaries and Criticisms

Less than one month after his inauguration, President Barack Obama signs into law a $787 billion recovery package, stating that this will “set our economy on a firmer foundation.” However, Obama reiterates during the bill’s signing ceremony at the Denver Museum of Nature and Science that he will not pretend “that today marks the end of our economic problems, nor does it constitute all of what we have to do to turn our economy around. Today marks the beginning of the end, the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs.” The legislative battle on the bill ended with only three Republican votes in the Senate and none in the House. As president-elect, Obama initially expected to spend between $675 billion and $775 billion on the recovery package, and the final number is almost exactly that. However, Congress included $70 billion worth of tax cuts in the bill they approved, although more than a few economists say $70 billion in tax cuts won’t create as many new jobs as $70 billion in spending would. According to the government’s Recovery (.gov) Web site, the 2009 American Recovery and Reinvestment Act:
bullet Saves and creates more than 3.5 million jobs over the next two years;
bullet Takes a big step toward computerizing Americans’ health records, reducing medical errors, and saving billions in health care costs;
bullet Revives the renewable energy industry and provides the capital over the next three years to eventually double domestic renewable energy capacity;
bullet Undertakes the largest weatherization program in history by modernizing 75 percent of federal building space and more than one million homes;
bullet Increases college affordability for seven million students by funding the shortfall in Pell Grants, increasing the maximum award level by $500, and providing a new higher education tax cut to nearly four million students;
bullet Enacts the largest increase in funding of the nation’s roads, bridges, and mass transit systems since the creation of the national highway system in the 1950s;
bullet Provides an $800 “Making Work Pay” tax credit for 129 million working households, and cuts taxes for the families of millions of children through an expansion of the Child Tax Credit;
bullet Requires unprecedented levels of transparency, oversight, and accountability.
White House press secretary Robert Gibbs says Obama will seek additional stimulus/recovery funding if needed. [New York Times, 2/17/2009; recovery.gov, 2/17/2009]

Entity Tags: Obama administration, Barack Obama, Robert Gibbs

Category Tags: Bailouts and Other Government Aid, Commentaries on Economic Issues, USA, Obama Policies and Actions

Conservative syndicated columnist Cal Thomas uses a recent editorial by health care industry lobbyist Betsy McCaughey (see February 9, 2009) to accuse the Obama administration of planning a “euthanasia” program to exterminate hapless Americans. President Obama’s economic stimulus plan, Thomas writes, “means the government will decide who gets life-saving treatment and who doesn’t. It is survival of the fittest in practice.” Thomas then writes that the Obama administration’s support of legal abortions will inevitably lead to “euthanasia” of older and less productive citizens. He quotes a 1979 book by theologian Francis Schaeffer and future Surgeon General C. Everett Koop, Whatever Happened to the Human Race? as saying, “Will a society which has assumed the right to kill infants in the womb—because they are unwanted, imperfect, or merely inconvenient—have difficulty in assuming the right to kill other human beings, especially older adults who are judged unwanted, deemed imperfect physically or mentally, or considered a possible social nuisance?” Thomas then writes, “No one should be surprised at the coming embrace of euthanasia.” Schaeffer and Koop’s prediction that “the next candidates for arbitrary reclassification as nonpersons are the elderly” now “seems to be coming true,” Thomas writes. He also repeats a claim from the 92-year-old Koop that in 1988, he had suffered from an ailment that temporarily paralyzed him. Under Britain’s government-run health care, Koop claims, “I would have been nine years too old to have the surgery that saved my life and gave me another 21 years.” Soon, Thomas writes, “dying will become a patriotic duty when the patient’s balance sheet shows a deficit.” [Tribune Media Services, 2/18/2009]

Entity Tags: Obama administration, Elizabeth (“Betsy”) McCaughey, Francis Schaeffer, C. Everett Koop, Cal Thomas

Timeline Tags: US Health Care, Domestic Propaganda, 2010 Elections

Category Tags: USA, Commentaries and Criticisms

CNBC commentator Rick Santelli ‘rants’ about the Obama economic policies.CNBC commentator Rick Santelli ‘rants’ about the Obama economic policies. [Source: CNBC / Media Matters]In what is purportedly an impromptu on-air “rant,” CNBC financial commentator Rick Santelli exhorts viewers to join in what he calls a “Chicago tea party” to oppose the Obama administration’s plans to bail out several large financial institutions. Santelli’s rant comes during CNBC’s Squawk Box broadcast. [CNBC, 2/19/2009; CNBC, 2/19/2009] Santelli’s “impromptu rant” is actually preceded by a number of “tea party” protests and activities, and some of the protests’ organizers claim to have given Santelli the idea for his on-air “tea party” statement (see After November 7, 2008, February 1, 2009, and February 16-17, 2009).
'It's Time for Another Tea Party' - Broadcasting from the Chicago Mercantile Exchange, Santelli tells viewers in part: “The government is promoting bad behavior. We certainly don’t want to put stimulus pork and give people a whopping $8 or $10 in their check and think that they ought to save it.… I have an idea. The new administration is big on computers and technology. How about this, Mr. President and new administration. Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages? Or would they like to at least buy buy cars, buy a house that is in foreclosure… give it to people who might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water? This is America! How many people want to pay for your neighbor’s mortgages that has an extra bathroom and can’t pay their bills? Raise their hand! President Obama, are you listening?… It’s time for another tea party. What we are doing in this country will make Thomas Jefferson and Benjamin Franklin roll over in their graves.” Santelli also compares the US to Cuba: “Cuba used to have mansions and a relatively decent economy,” he says. “They moved from the individual to the collective. Now they’re driving ‘54 Chevys.” [RightPundits, 2/19/2009] Santelli’s “tea party” metaphor is in reference to the Boston Tea Party, a Revolutionary War protest against taxation by America’s British rulers. [New York Daily News, 2/20/2009]
Financial Traders Are the 'Real Americans' - Santelli tells viewers that the “real” Americans are not the working-class citizens trying to pay mortgages larger than they can handle, but the stock traders and other members of the Chicago Mercantile, New York Stock Exchange, and other members of the financial industry. [Business Insider, 2/19/2009] Santelli says, “We’re thinking of having a Chicago Tea Party in July (see After November 7, 2008), all you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” [Institute for Research & Education on Human Rights, 8/24/2010]
Cheers and Applause - Behind Santelli, traders erupt in cheers and applause at his comments. [College News, 2/20/2009]
Active Promotion of the Video - Within hours, CNBC begins promoting the video of Santelli’s comments, calling it “the rant of the year” and posting it on YouTube and its own website. [CNBC, 2/20/2009]
Protests, Organizations Begin Forming - Within minutes of Santelli’s broadcast, “tea party” organizations and groups begin forming (see February 19, 2009 and After).
More Studied Response - Three days later, Santelli will explain the thinking behind his comments, saying: “America is a great country and we will overcome our current economic setbacks. The issues that currently face us and the solutions to correct them need to be debated, vetted, and openly studied. This should not be an issue about the political left or right. This is an issue of discourse on a topic that affects the foundation and principles that make our country great… free speech, contract law, freedom of the press, and most of all the legacy we leave our children and grandchildren.” [CNBC, 2/22/2009]
Human Rights Organization: 'Racial' Component to Santelli's Rhetoric - In 2010, a report by the Institute for Research & Education on Human Rights (IREHR) will say that “[a]n unstated racial element colored Santelli’s outrage over the Obama administration’s home mortgage rescue plan.” The report will explain that many of the “losers” responsible for the “bad loans” Santelli is criticizing were made by banks that “disproportionately targeted communities of color for subprime loans.” Santelli’s “losers” are largely African-American or Hispanic borrowers who had “been oversold by lenders cashing in on the subprime market. Their situations were worsened by derivatives traders, like Santelli, who packaged and re-packaged those loans until they were unrecognizable and untenable.” [Institute for Research & Education on Human Rights, 8/24/2010]

Entity Tags: CNBC, Chicago Mercantile Exchange, Barack Obama, Rick Santelli, Institute for Research & Education on Human Rights, New York Stock Exchange, Obama administration

Timeline Tags: Domestic Propaganda, 2010 Elections

Category Tags: Bailouts and Other Government Aid, Commentaries on Economic Issues, Commentaries and Criticisms

The media responds strongly to CNBC commentator Rick Santelli’s call for a “tea party” to oppose the Obama economic stimulus. [CNBC, 2/20/2009]
Santelli 'Equally Complicit' in Economic Crisis - Writing for College News, Jon Graef notes that Santelli has opposed virtually all of the Obama economic policies, including all the bailouts of the mortgage and automobile industries. He lauds Santelli for “embracing the democratic possibilities that the Internet allows,” but says that “Santelli and his ilk are equally complicit in the housing/finance crises as those who refused to live responsibly within their means. If Santelli doesn’t like the details of the mortgage bailout, then why is continuing to work in conjunction with an industry that received its own government bailout—and promptly spent it on press releases and product placement?” [College News, 2/20/2009]
'Mad as Hell' - Writer Jerome Corsi, who penned a lurid and highly inaccurate “biography” of President Obama before the 2008 election (see August 1, 2008 and After), notes that some are comparing Santelli’s rant to that of fictional news anchor Howard Beale in the movie Network, where Beale screams, “I’m mad as hell, and I’m not going to take this any more!” [WorldNetDaily, 2/19/2009]
'Investors Have It All Figured Out' - Market analyst Donald Luskin writes that Santelli “went a little bit berserk in his broadcast… warning that all the bailouts, programs, rescues, stabilizations, and stimuli are turning our capitalist nation into Cuba. He got the floor traders so stirred up it seemed for a minute there that an armed revolution was going to start at any moment.” Luskin continues, with at least some sarcasm: “Santelli is right. This country is being rescued to death. The voters may be fooled, for a while at least. But obviously investors have it all figured out.” [Smart Money, 2/20/2009]
'Santelli Hates Poor People' - The avant-garde Washington political gossip blog Wonkette calls Santelli “unlikable” for calling Americans forced to default on their mortgage “losers,” and calls his on-air rant “apesh_t.” Commentator Jim Newell continues, “Maybe Obama’s plan isn’t so great, who knows, but one thing is clear, and that’s that Rick Santelli hates poor people—and by poor people we mean the bottom 50-90 percent of per capita income earners.” [Jim Newell, 2/20/2009]
'Speaking Truth to Ego and the Far Left' - Financial blogger Thomas Smicklas writes that Santelli “sp[oke] truth to ego and the far left.… It is becoming more apparent each day of the new administration those who work hard, save, and are responsible citizens are getting hosed by the practice of class warfare.… Ladies and gentlemen, the politics of vote buying, legal extortion, and the re-distribution of wealth to the lazy and ill-educated has begun in earnest. And we haven’t even touched upon a deteriorating foreign policy. Thanks to CNBC’s Rick Santelli and the workers in the pit that deal in commodities who finally expressed it. We can all be grateful for the lesson.” [Thomas Smicklas, 2/20/2009]
Rewarding Those Who Caused the Bad Lending - The Huffington Post’s Jason Linkins writes that right-wing media figures such as Matt Drudge are “freaking out” over Santelli’s rant, “fomentin’ a revolution on the trading floor of the Chicago Mercantile Exchange. He’s assembled a small army of half-hearted, floor-trading broheims to cheer and hoot as he rails against President Obama’s plan to not immediately foreclose on everybody and kick them out into the streets, because that rewards ‘bad behavior,’ and clearly what we should be doing is rewarding people who incentivized all the risky lending, because until the house of cards collapsed, things were looking pretty for everybody!” [Huffington Post, 3/22/2009]
'Hysteria a la Fox News' - Columnist Mary McNamara calls Santelli’s rant “colorful,” but says Santelli’s “rhetoric/hysteria a la Fox News is damaging to national discourse.” The financial crisis has hit hardest, not in the businesses and mansions of the people Santelli works with, but in the working-poor and lower-middle class families. “They work hard,” she writes. “They weren’t buying luxury homes. Sure, there were a few speculators. But mostly, they just wanted a little piece of the American dream, especially good schools for their kids and closer proximity to their work.” [MultiChannel (.com), 2/19/2009]
'Money for Idiots' - Conservative columnist David Brooks refers to Santelli’s “lustily” delivered rant in defending the necessity for the government to stabilize an economy sliding into chaos. [New York Times, 2/19/2009]
'Pretty Awesome' - New York Magazine’s Jessica Pressler writes that she finds Santelli’s “call for revolution… pretty awesome.” She writes, “Santelli is pissed off about the Obama administration’s bailout measures so far, in particular the housing plan the administration announced yesterday, and he wants America to stand up and revolt before we turn into some kind of not-even-tropical version of Cuba.” [New York Magazine, 2/19/2009]
Favorable Coverage from Limbaugh, Hannity, Drudge - Associated Content’s Mark Whittington notes that Santelli’s rant is garnering tremendous coverage from conservative commentators Rush Limbaugh, Sean Hannity, and Drudge. “More importantly,” he writes, “Santelli’s attack on the Obama mortgage bailout scheme seems to reflect a growing disquiet over President Obama’s spending schemes, which started with the stimulus package, and will now not only include a bailout for mortgages but also a new bailout for the car companies and perhaps even a second stimulus.” [Associated Content, 2/19/2009]
'Almost Inciting a Riot' - Business Insider’s Joe Weisenthal observes: “CNBC’s RIck Santelli is always pugnacious, but he outdid himself today, almost inciting a riot among the traders in Chicago when talking about Obama’s housing plan. Suffice to say, the capitalists on the floor do not want to pay for anyone else’s mortgage. Neither do we. That being said, his insistence that these guys represent the ‘real America’ won’t ultimately play that well among most people.” [Business Insider, 2/19/2009] Progressive columnist and blogger John Amato calls himself “disgusted” at Santelli’s “embarrassing diatribe at the expense of the American people,” and writes that watching Santelli “made me realize that these Wall Street frat boys still don’t get it. America is sick and tired of the riches they have manipulated out of the system and then be lectured by people who make more money than 100 middle class workers put together.” Referring to Santelli’s experience as a trader in the high-risk derivative market, an area that many have blamed for causing much of the economic downturn, Amato writes sarcastically, “The next time I want advice on how to live I’ll be sure to ask a man who was deeply involved in ‘derivatives.’” He concludes: “Don’t blame the crooked mortgage lenders who were having bidding wars to acquire their next mansion, but blame first time buyers or average Americans, the lifeblood of our society and call them ‘losers.’ Santelli needs to own that he is the loser and if it wasn’t for the gasbag insider crowd that gives his words a modicum of respect, crowds would gather outside his home with torches and pitchforks.” [John Amato, 2/21/2009]
'Voice of the Silent Majority' - Progressive author and blogger Jane Hamsher writes: “Rick Santelli is just the explosive id of CNBC, saying what everyone else thinks. Somehow it’s not the pervasive institutional rot, the criminal malfeasance at the highest levels, or the chairman of the Federal Reserve telling Americans over and over again that housing prices would never go down. They have convinced themselves that the real problem is once again people at the absolute bottom of the economic scale. If they’d only used appropriate ‘judgment’ and lived within their means, we’d all be fine. Santelli is now being promoted by CNBC as a truth teller, a voice of the… ‘silent majority.’ ‘Would you join Santelli’s “Chicago Tea Party?”’ they want to know. With 170,000 respondents, 93 percent say yes! I guess it was only a matter of time before a hero emerged.” [Jane Hamsher, 2/20/2009; CNBC, 2/20/2009]

Entity Tags: Jessica Pressler, Thomas Smicklas, Sean Hannity, David Brooks, Jane Hamsher, Jerome Corsi, Donald Luskin, Rush Limbaugh, Jason Linkins, Obama administration, Jim Newell, Joe Weisenthal, Jon Graef, Rick Santelli, Mark Whittington, Matt Drudge, Mary McNamara, John Amato

Timeline Tags: Domestic Propaganda

Category Tags: Commentaries and Criticisms

A day after CNBC’s Rick Santelli engaged in a “rant” against President Obama’s economic policies, and called for a modern-day “tea party” to protest those policies (see February 19, 2009), White House press secretary Robert Gibbs invites Santelli to the White House for coffee and to discuss Obama’s plan to help homeowners. “I’d be happy to buy him a cup of coffee,” Gibbs says. “Decaf.” Gibbs has said that Santelli needs to learn more about the economic bailout before engaging in such sharp criticism. “I’ve watched Mr. Santelli on cable the past 24 hours or so,” he says. “I’m not entirely sure where Mr. Santelli lives or in what house he lives but the American people are struggling every day to meet their mortgages, stay in their jobs, pay their bills, send their kids to school.… Mr. Santelli has argued, I think quite wrongly, that this plan won’t help everyone. This plan helps people who have been playing by the rules.… I would encourage him to read the president’s plan.… It’s tremendously important for people who rant on cable TV to be responsible and understand what it is they’re talking about. I feel assured that Mr. Santelli doesn’t know what he’s talking about.” Santelli, who has admitted to not reading the White House’s bailout proposals, tells CNBC viewers he “would love to accept” the invitation, but—holding a tea bag to the cameras—says he prefers “tea” to coffee. [CNBC, 2/20/2009; Politico, 2/20/2009; Think Progress, 2/23/2009; New York Times, 2/23/2009; Associated Press, 3/2/2009] Shortly thereafter, Santelli will say that he felt “threatened” by Gibbs’s reference to not knowing where he lives (see February 23, 2009).

Entity Tags: CNBC, Barack Obama, Obama administration, Rick Santelli, Robert Gibbs

Timeline Tags: Domestic Propaganda

Category Tags: Bailouts and Other Government Aid, Commentaries and Criticisms, Obama Policies and Actions

President Obama names Earl Devaney to head the new Recovery Act Transparency and Accountability Board, a new agency designed to oversee the allocation and spending of the $787 billion economic stimulus plan. Devaney is a former Secret Service agent who, as the inspector general of the Department of the Interior, helped expose lobbyist corruption there; he will work closely with Vice President Joseph Biden, who will coordinate oversight of the stimulus spending. Devaney helped expose Republican lobbyist Jack Abramoff’s dealings with the Interior Department, and helped finger former Deputy Interior Secretary Steven Griles, who later pled guilty to charges of lying to Congress over his acceptance of bribes. Devaney also led an investigation of workers at the Interior Department’s Minerals Management Service, where he discovered what he called a “culture of substance abuse and promiscuity” at the Denver and Washington offices of the service. [Associated Press, 2/22/2009]

Entity Tags: Minerals Management Service, Barack Obama, Earl Devaney, Recovery Act Transparency and Accountability Board, J. Steven Griles, US Department of the Interior, Joseph Biden

Category Tags: Bailouts and Other Government Aid, Obama Policies and Actions

Citigroup CEO Vikram Pandit is in talks with the US government to increase the amount of public ownership of the bank in a move both politicians and bank bosses hope will avert the need for the ailing corporation to be taken into FDIC receivership (see March 15, 2008). Talks commenced after Citigroup shares dropped more than 20 percent in late trading on Friday, leaving the business with a share value of $10.6 billion, with balance sheet assets of $1.95 trillion. Government receivership of Citigroup is seen as politically unpalatable, and US taxpayers could conceivably own up to 40 percent of Citigroup. Economists see government takeover of the corporation as evidence of other major banks struggling with insolvency. The failure of major banks will have calamitous repercussions. The US treasury says it remains committed to helping the banking industry recover without taking complete control. “Because our economy functions better when financial institutions are well managed in the private ¬≠sector, the strong presumption… is that banks should remain in private hands,” the Treasury Department said in a joint statement with the Federal Reserve. Speculation that a major Wall Street institution could be taken into public ownership toppled the market on Friday, February 20; likely targets were heavily rumored to be Citigroup and Bank of America. Bank of America lost nearly half its share value in three days before rallying late Friday afternoon. The latest talks center on a Treasury Department proposal to convert preference shares in Citigroup into new ordinary shares. This move would not involve additional taxpayer funds, but taxpayers would surrender the guaranteed dividends that come with preference stock, as well as some degree of protection in the event of a corporate collapse. Serious questions remain, such as the price at which new shares are issued. Estimates of the size of the government’s eventual stake range from 25 percent to 40 percent. With this move, Barack Obama’s administration would become a major presence on Citigroup’s ordinary share register, thus diluting the interests of existing investors, and heightening fears of political pressure being brought on US banks. Some analysts suggest that banks relying on taxpayer bail-outs are being encouraged to focus lending and liquidity on the national US market. [Guardian, 2/23/2009]

Entity Tags: Obama administration, Citigroup, Vikram Pandit, US Department of the Treasury, US Federal Reserve

Category Tags: Bailouts and Other Government Aid, USA, Obama Policies and Actions

Official numbers released today show that the US economy fell by 6.2 percent during the fourth quarter of 2008. The decline was much worse than analysts initially predicted, sending US stocks spiraling lower. “Plunging exports and the biggest fall in consumer spending in 28 years dragged the annualized figure down from the preliminary estimate of 3.8 percent,” the BBC reports. As a whole, in 2008, the economy grew at its slowest pace since 2001, posting a mere 1.1 percent growth. The blue-chip Dow Jones industrial average dropped 119.15 points, or 1.66 percent, to 7,062.93. The broader Standard & Poor’s 500 Index fell 2.36 percent to 735.09, a 12-year low. US consumer spending accounts for nearly two-thirds of domestic economic activity, but fell by a rate of 4.3 percent in the final quarter—the biggest fall since the second quarter of 1980. This was a revision of the earlier figure of 3.5 percent. Rising unemployment, sliding home values, increasing numbers of repossessions, and the slumping value of investments indicate that many US consumers are hanging on to disposable cash. US exports fell at the sharpest rate since 1970 at an annual rate of 23.6 percent, down from 19.7 percent. Prior to the current economic crunch, exports supported the economy. “It shows the weak state of the world’s largest economy,” says Matt Esteve, a currency trader at Tempus Consulting. “Latest GDP figures are just awful and illustrates the weak state of the world’s largest economy.” Boris Schlossberg, director of currency research at GFT Forex, adds, “There is doom all over,” but predicts that the dollar would not weaken too much against the euro since “there’s no good news on the other side of the Atlantic, either.” [BBC, 2/27/2009]

Entity Tags: GFT Forex, Dow Jones Industrial Average, Matt Esteve, Standard & Poor’s, Tempus Consulting, Boris Schlossberg

Category Tags: USA, Bush Policies and Actions

Citigroup logo.Citigroup logo. [Source: Citigroup]The latest government bailout gives Citigroup bond holders excellent terms and doesn’t provide the bank with new money. Instead, Citigroup cut expenses with the elimination of preferred stock dividends, and also converted shares into common equity at an above-market-value of $3.25, positioning itself to take the first hit if it encounters additional losses. Analysts are predicting that the company’s losses will continue to increase. Since the beginning of 2009, Citigroup’s stock has fallen 78 percent. “Debt holders could eventually be required to participate in further government-led restructuring actions,” Standard and Poor’s says. [Bloomberg, 3/2/2009] Citigroup CEO Vikram Pandit tells investors that increasing the bank’s “tangible” common equity from $29.7 billion to as much as $81 billion should “take confidence issues off the table,” about the bank’s loss absorption ability. The bank lost $27.7 billion in 2008, and is predicted to lose $1.24 billion during the first six months of 2009. “There’s no difference here,” says Christopher Whalen, co-founder of Institutional Risk Analytics, a Torrance, California risk-advisory firm. “It won’t fix revenue, and you’re still going to see loss rates.” Whalen says that the government’s efforts are mainly protecting other financial institutions and foreign goverments that are Citigroup bonds holders. “The taxpayer is funding the operating loss and protecting the bondholders,” Whalen notes. “The subsidy for the banks will become one of the biggest lines in Washington’s budget.”
Government Should Organize Citigroup, AIG Bondholders - Whalen also says it would be better if the government organized Citigroup and insurer American International Group Inc. bondholders, since the insurer received a $150 billion US bailout, and also made a deal with the government to convert some of its debt to equity. US government investment fell by more than 50 percent, and the government plans to convert up to $25 billion of its preferred stock to common shares, gaining a 36 percent stake in the bank. At Friday’s closing price of $1.50, government investment is worth approximately $11.5 billion. The bank itself has a stock market value of $8.2 billion as of market closing on February 27.
Analyst: Investors Should Avoid Citigroup Shares - Richard Ramsden, head of a group of analysts at Goldman Sachs Group, recommends that investors avoid investing in Citigroup shares: “It is unclear whether this is the last round of capital restructuring, which means that existing equity may be further diluted in the future.” The bank’s move to convert preferred shares to common equity led Moody’s Investors Service to adjust its senior debt rating for the bank from A3 to A2. Standard and Poor’s also changed its outlook on the bank’s debt from negative to stable. “Citi will face a tough credit cycle in the next two years, which will likely result in weak and volatile earnings,” S&P analyst Scott Sprinzen says. “We cannot rule out the possibility that further government support may prove necessary.” With the first two Citigroup rescue bailouts, the US Treasury bought $45 billion of preferred stock, and the Federal Reserve and FDIC guaranteed the bank against all but $29 billion of losses on a $301 billion portfolio of assets. With the third bailout, the Treasury, the Government of Singapore Investment Corporation, Saudi Prince Alwaleed bin Talal, and other preferred stockholders, agreed to take common stock at $3.25 a share, giving up dividends. The chairman of the House Ways and Means Committee, Charles Rangel (D-NY), says: “The administration and the past administration have tried so many different ways that we can only hope and pray that this time they get it right. It seems like with the banks it is a never-ending thing.” [Bloomberg, 2/28/2009]
Third US Rescue Forces Citigroup Board Changes - The Obama administration demonstrated its willingness to force changes on executives at top banks that receive taxpayer-funded rescue packages by pressing Citigroup to reorganize its 15-member board with new, more independent members. The move sends a message to Wall Street that there are consequences when taxpayer dollars are used to save them. “The government is the new boss, and the new executive committee is no longer on Park Avenue,” says Michael Holland who, as chairman and founder of New York’s Holland & Co., manages nearly $4 billion in investments. [Bloomberg, 3/2/2009]

Entity Tags: Government of Singapore Investment Corporation, Christopher Whalen, Charles Rangel, Alwaleed bin Talal, AIG (American International Group, Inc.), Federal Deposit Insurance Corporation, Vikram Pandit, US Department of the Treasury, Citigroup, Richard Ramsden, Moody’s Investors Service, Standard & Poor’s, Michael Holland, Institutional Risk Analytics, Scott Sprinzen, US Federal Reserve

Category Tags: Bailouts and Other Government Aid, USA, AIG, Failing Companies, Obama Policies and Actions

Representative Mary Bono Mack (R-CA) expresses her outrage over the so-called “Disneyland to Las Vegas” train (see February 13, 2009 and After), saying she cannot believe President Obama’s economic stimulus plan has ”$1 billion wasted on a magnetic-levitation train from LA to Sin City.” When challenged by reporter Dick Spotswood over the disproven claim, Mack sends a staff member to “get him the bill, it’s right there, show him.” As Spotswood later reports, “A few minutes later, a staffer emerges with a copy and quietly says ‘it’s not in the bill.’” [Marin Independent Journal, 3/1/2009]

Entity Tags: Mary Bono Mack, Dick Spotswood

Category Tags: USA, Commentaries and Criticisms, Obama Policies and Actions

Fox’s Megyn Kelly.Fox’s Megyn Kelly. [Source: Huffington Post / 236 (.com)]Representative Trent Franks (R-AZ) builds on the false claim that Democrats want to build a “levitating train” from Los Angeles to Las Vegas as a favor to Senate Majority Leader Harry Reid (D-NV—see February 13, 2009 and After). Franks tells a credulous Fox News anchor that the train will not only go to Las Vegas, but to the door of Nevada’s most famous brothel, the Moonlight Bunny Ranch. Fox News anchor Megyn Kelly, repeating Franks’s claim, says: “It’s a super railroad, of sorts—a line that will deliver customers straight from Disney, we kid you not, to the doorstep of the Moonlight Bunny Ranch brothel in Nevada. I say, to the Moonlight Bunny Ranch brothel in Nevada. So should your tax dollars be paying for these kinds of projects?” Franks continues: “The majority leader of the US Senate, Harry Reid, has fought for this publicly and is committed to this project, even in the face of criticism.… If this is something that is truly the priority of the majority leader of the US senate, it’s pretty late in the day, Megyn.” No such earmark exists in either the stimulus package or Congress’s omnibus spending bill; when the Center for American Progress (CAP) asks Franks’s office to prove the claim, his staff refuses, and tells CAP to contact Reid’s office. There is a proposal to refurbish a historical rail line between Gold Hill, Nevada and Carson City, Nevada, a substantially different proposal than the “levitating brothel train” Franks claims is being proposed. (The Moonlight Bunny Ranch is actually in Carson City, which may explain the genesis of Franks’s claim.) Kelly asks Franks how politicians can be held accountable for such actions, and he responds, “Fortunately, people like yourself and Fox News are a tremendous help in that regard because they tell the people—you know, sunlight has a way of being an accountability all by itself” (see October 13, 2009). [Think Progress, 3/2/2009]

Entity Tags: Moonlight Bunny Ranch, Harry Reid, Trent Franks, Megyn Kelly, Center for American Progress, Fox News

Category Tags: Obama Policies and Actions, Commentaries and Criticisms

John Boehner (R-OH), the House Minority Leader, calls on the Obama administration to implement a freeze on government spending, and for President Obama to veto a $410 billion spending bill. Boehner says recent spikes in unemployment figures are a sign of a worsening recession, and the only way to address the recession is to freeze government spending until the end of the fiscal year. He calls the spending bill, crafted in December with input from Congressional Democrats and Republicans as well as from the Bush White House, full of wasteful “earmarks” and “pork.” [Associated Press, 3/6/2009] Boehner introduces a resolution calling for the freeze in the House; it fails, even though all House Republicans present for the vote and eight Democrats vote for it. [Human Events, 3/6/2008] Two days after Boehner’s call for a spending freeze, conservative columnist David Brooks calls the proposal “insane” and blames the influence of conservative talk show host Rush Limbaugh for the idea. Brooks says that Limbaugh and the Republican Party is fixated on repeating a Reagan-era economic agenda. “The problem with them and the problem with Limbaugh in terms of intellectual philosophy is they are stuck with Reagan,” Brooks says. “They are stuck with the idea that government is always the problem. A lot of Republicans up in Capitol Hill right now are calling for a spending freeze in a middle of a recession/depression. That is insane. But they are thinking the way they thought in 1982, if we can only think that way again, that is just insane. And there are a lot of Republicans like David Frum… who are trying to say Reagan was right for his era, but it is time to move on. And there are just not a lot of them on Capitol Hill right now, and I think the party is looking for that kind of Republican.” [Huffington Post, 3/8/2009]

Entity Tags: Rush Limbaugh, David Brooks, Bush administration (43), Barack Obama, John Boehner, Obama administration, David Frum

Category Tags: Commentaries and Criticisms

Republican House member Patrick McHenry (R-NC) admits that his party’s resistance to Democratic initiatives are designed to bring down the approval numbers for House Speaker Nancy Pelosi (D-CA) and the Congressional Democratic leadership. Speaking of Republican resistance to the Democrats’ recent budget proposal and other economic initiatives from the Obama administration and House Democrats, McHenry says: “We will lose on legislation. But we will win the message war every day, and every week, until November 2010. Our goal is to bring down approval numbers for Pelosi and for House Democrats. That will take repetition. This is a marathon, not a sprint.” McHenry belongs to a group of Congressional Republicans helping to shape the party’s message in opposition to Obama and Congressional Democrats. Washington Post pundit Greg Sargent writes, “It’s likely that Dems will grab on to [McHenry’s] quote today to bolster their charge that Congressional Republicans aren’t interested in playing a constructive role in governing and see their hope for political revival in the eventual failure of the Democratic majority’s policies.” The article also cites a recent statement by House Minority Leader John Boehner (R-OH), who told a group of reporters that House Republicans would not bother crafting bills to provide alternatives to Democratic economic legislation: “I have been trying to get my Republican colleagues to understand that we are not in the legislative business. We will spend more time communicating [with the American people], because that is what we can do.” [National Journal, 3/7/2009; Plum Line, 3/9/2009]
Minority Leader: Comments 'Largely Correct, but Incomplete' - Through a spokesman, Boehner says of McHenry’s statement: “I think that’s largely correct, but incomplete. Obviously, as Leader Boehner has said repeatedly, we stand ready to work with the Speaker and the president when it is in the best interest of the American people. When we cannot work together, Republicans will offer better solutions—rooted in our principles—to the problems facing our country. If House Democrats push for the same tired liberal agenda of higher taxes to pay for more ineffective government spending, I imagine that their standing in the polls will suffer, but our first priority is doing the right thing for the American people, and we hope it is theirs as well.” Sargent notes: “My parsing of this is that Boehner believes that McHenry’s description of the party’s strategic goal as winning the message war and dragging down Dem poll numbers is ‘largely correct,’ but that McHenry left out the GOP’s willingness on principle to work with Dems and that the GOP’s ‘first priority is doing the right thing for the American people.’ That would appear to stop short of disagreeing with or criticizing McHenry.” [Plum Line, 3/10/2009]
McHenry's Previous Utterances - In April 2008, McHenry was reprimanded by the Pentagon for breaching operational security and and giving terrorists potentially useful information (see April 4-7, 2008). In February 2009, McHenry joined in falsely accusing the Obama administration of funding a “levitating train from Disneyland to Las Vegas” (see February 13, 2009 and After).

Entity Tags: Nancy Pelosi, John Boehner, Greg Sargent, Obama administration, Patrick McHenry

Category Tags: Commentaries and Criticisms

US President Barack Obama attacks the payment of over $200 million in bonuses to top AIG employees (see March 15, 2009). As the company is being propped up by the government using public money (see September 16, 2008, October 8, 2008, and November 10, 2008), Obama calls the bonuses an “inappropriate use of taxpayer funds.” [Reuters, 4/17/2009]

Entity Tags: Barack Obama, AIG (American International Group, Inc.)

Category Tags: Failing Companies, USA, AIG, Obama Policies and Actions

The US House of Representatives passes a bill imposing a 90 percent tax on bonuses paid to AIG executives. The bonuses were set to be paid in December 2008 and earlier in the month, but there has been a public outcry against them, as the company had to be bailed out by the taxpayer six months ago (see September 16, 2008 and March 15, 2009). [Reuters, 4/17/2009] However, President Obama soon challenges the bill’s legality, saying: “I think that as a general proposition, you don’t wanna be passing laws that are just targeting a handful of individuals. You wanna pass laws that have some broad applicability. And as a general proposition, I think you certainly don’t wanna use the tax code to punish people.” The Democratic leadership in the Senate then says that it will wait and see what happens, instead of immediately acting on the bill forwarded by the House of Representatives. This effectively shelves the bill, although several of the executives give their bonuses back anyway (see March 24, 2009). [Politics Daily, 3/24/2009]

Entity Tags: Barack Obama, US Congress, AIG (American International Group, Inc.)

Category Tags: AIG, Failing Companies, USA, Obama Policies and Actions

At least 19 Congressional Republicans, including House Minority Leader John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY), say that the Obama administration’s “cap-and-trade” proposal would cost American families $3,128 apiece in extra taxes.
Misrepresenting an MIT Study - Boehner, McConnell, and their fellow Republicans base their claim on a 2007 MIT study. However, one of the study’s researchers, John Reilly, says that the Republicans are misreading it. According to Reilly, any tax burden on American families would not be felt until 2015, and the cost would be closer to $31 per person and $79 per year. The controversial claim originates in a Web posting by the House Republican Conference on March 24, which says: “The administration raises revenue for nationalized health care through a series of new taxes, including a light switch tax that would cost every American household $3,128 a year. What effect will this have on Americans struggling to pay their mortgages?” The St. Petersburg Times explains that the GOP’s “light switch tax” is a reference to President Obama’s proposal to tax power companies for carbon dioxide emissions, and allow companies to trade emissions credits among themselves. The program is called cap-and-trade. Republicans say the power companies would pass the tax on to electricity consumers, thus creating what they call a “light switch tax”—a term the Times calls misleading in and of itself. According to the MIT study, such a program would raise around $366 billion per year; Republicans divide that figure by the 117 million households in the US and get $3,128 in additional costs. Reilly says the Republicans are “just wrong. It’s wrong in so many ways it’s hard to begin.”
Corrected by Study's Author - And, Reilly says, he told House Republicans so when they contacted him on March 20. “I had explained why the estimate they had was probably incorrect and what they should do to correct it, but I think this wrong number was already floating around by that time.” Republicans also claim that the Obama administration intends to use cap-and-trade money to pay for what they call “nationalized health care,” a claim refuted by details of the program released by Obama officials. (House Republicans later amend this claim to say that the program will pay for “increased spending.”) The Times notes that Boehner rebuffs a second attempt by Reilly to correct the claim that the program will cost American households over $3,000 per year.
Further Falsehoods - Instead, nine other Republicans and the neoconservative Weekly Standard begin echoing the claim, with the Standard claiming that their figures show an annual cost of over $3,900 and accusing Reilly of “low-balling the cost of cap-and-trade by using some fuzzy logic.” Reilly says the Standard “just completely twisted the whole thing.… It’s false.” Senator Judd Gregg (R-NH) takes the claim even further, saying that the huge annual tax would be levied on “every living American.” Representative Paul Ryan (R-WI) restates the cost to $4,500 per family, and fellow House colleague Cynthia Lummis (R-WY) raises the rate to $4,560. Fox News correspondent Jim Angle reports Gregg’s claim without refutation or examination; on a later Fox broadcast, Gregg says, “every time you turn on your light switch, you’re going to be paying a tax.”
Denouncing the Lies - Reilly has written to Boehner and the Select Committee on Energy Independence and Global Warming to denounce the GOP’s distortion of the MIT study. Democratic Representative Earl Blumenauer (D-OR) accuses the Republicans of “using an intentional misrepresentation of the study,” and says: “One of the things I find most distressing is their repeated falsehood about somehow a $3,000 increase in taxes on the American people based on a research done by MIT. They talked about it four times again last night!… The fact is that in the budget we have an opportunity for people who want to be legislators not communicators to help us allocate how those benefits will be utilized.” [St. Petersburg Times, 3/30/2009; Think Progress, 4/1/2009; Think Progress, 4/2/2009]

Entity Tags: Judd Gregg, Mitch McConnell, Paul Ryan, Obama administration, John Reilly, Jim Angle, Cynthia Lummis, Earl Blumenauer, House Select Committee on Energy Independence and Global Warming, House Republican Conference, John Boehner

Timeline Tags: Global Warming

Category Tags: Commentaries and Criticisms, Obama Policies and Actions

Arguing against taxing corporate bonuses, Fox Business Network anchor Dagen McDowell compares such taxation to sexual abuse: “You don’t want to think if you get in bed with Uncle Sam he’s going to strip you naked, chain you to the bed, leave you there, and then take nasty pictures of you and then put them on the Internet. Because that’s what’s been happening.” Fox News correspondent Bill Hemmer calls McDowell’s remarks “well stated.” [Think Progress, 3/24/2009]

Entity Tags: Bill Hemmer, Fox Business Network, Dagen McDowell

Category Tags: USA, Commentaries and Criticisms

House Minority Leader John Boehner (R-OH) produces a Republican alternative to the Obama administration’s $3.6 trillion budget proposal. Calling President Obama’s budget “completely irresponsible,” Boehner holds up a booklet on the floor of the House and says: “Two nights ago the president said, ‘We haven’t seen a budget yet out of Republicans.’ Well, it’s just not true because—Here it is, Mr. President.” Boehner calls the booklet a “blueprint for where we’re going.” However, the booklet contains almost no details and no actual numbers; the Associated Press calls it “a glossy pamphlet short on detail.” Boehner’s House colleague Paul Ryan (R-WI) says more details will be revealed next week. “We’re going to show a leaner budget, a budget with lower taxes, lower spending, and lower borrowing,” Ryan says. “Our plan curbs spending, creates jobs, and cuts taxes, while reducing the deficit,” says Boehner. When asked about specifics, including where the cuts would come from, Boehner tells a reporter, “We’ll wait and see next week.” [CNN, 3/26/2009; Associated Press, 3/27/2009]
Cutting Deficits, Lowering Taxes for Wealthy Americans and Working Class - The proposal does not specify how it would reduce the federal deficit. It does advocate heavy cuts in domestic spending and lowering tax rates: the Republicans propose reducing the 35 percent, 33 percent, and 28 percent tax brackets to 25 percent, which would result in significant tax cuts for wealthier Americans. The proposal would also reduce the tax rate for those making below $100,000 to 10 percent. Liberal analyst Matthew Yglesias notes, “It’s strange that the Republicans railing about long-term deficits seem to love long-term deficits when the point of the deficits is to further enrich the rich.” [Think Progress, 3/26/2009]
No Actual Numbers - Representative Mike Pence (R-IN) says “[i]t’s not likely” that the GOP budget will be adopted. However, Pence says he believes “that a minority in Congress plus the American people equals the majority.” Pence adds, “We intend to take our case for fiscal discipline, growth, and tax relief to the American people from sea to shining sea and if the American people will rise up, anything is possible on Capitol Hill.” White House press secretary Robert Gibbs laughs at the Republicans’ budget proposal, noting that the blueprint contains more pictures of windmills than charts. “It’s interesting to have a budget that doesn’t contain any numbers,” he says. “I think the ‘party of no’ has become the ‘party of no new ideas.‘… The administration is glad that the Republicans heard the president’s call to submit an alternative,” he says. “We just hope that next time it will contain actual numbers so somebody can evaluate what it means.” Obama’s proposal is likely to be modified by more conservative Democrats in the upcoming days. Senate Republicans later say that they do not intend to submit a specific alternate proposal to Obama’s budget, a decision that the Associated Press notes “spares them the need to make politically difficult choices.” [CNN, 3/26/2009; Associated Press, 3/27/2009] Asked about the proposal’s effect on the federal deficit by MSNBC correspondent Norah O’Donnell, Pence is unable to answer the question. O’Donnell asks: “So you don’t have the numbers now? About what your plan would be in terms of how it would cut the deficit or add to the deficit? You don’t have any numbers on that?” Pence attempts to duck the question: “Well, it’s really a broad—when the White House a few minutes ago was attacking the numbers in this bill, the tax cut numbers. There’s plenty of numbers in the Republican recovery plan. And we just really believe the president’s plan to raise taxes by nearly 2 trillion dollars on almost every American… deserves a debate on Capitol Hill.” O’Donnell responds, “[H]ow is your plan credible?” Pence replies: “Well, I thought through this morning, we didn’t have a plan, so it may be progress our plan is being attacked.… This is the broad outline.” [Think Progress, 3/26/2009]
'Marketing Document' - Five days later, Ryan will admit that the “budget proposal” being offered by Boehner is nothing more than a “marketing document” (see April 1, 2009).

Entity Tags: Paul Ryan, Mike Pence, Matthew Yglesias, Norah O’Donnell, John Boehner, Obama administration, Robert Gibbs

Category Tags: USA, Commentaries and Criticisms

Dick Morris discussing the economy on Fox News.Dick Morris discussing the economy on Fox News. [Source: Fox News]Conservative political pundit Dick Morris tells a Fox News audience that the recent G20 economic summit advocated a “global approach” to the current economic crisis, and discussed putting both the Securities and Exchange Commission (SEC) and the Federal Reserve under the control of the International Monetary Fund—a position not advocated or discussed by anyone in the Obama administration. He worries that there will soon be what he calls “a supernational authority run by bureaucrats, not by elected officials, that will be telling the elected governments, including the United States, what its [economic] regulations should be.” President Obama is far more amenable to the idea of allowing a multinational authority to control the US economy, Morris insists, and adds that Obama intends to preside over what he calls “a global redistribution of income, downward,” using environmental policy as “an excuse.” “We’re about to meet Barack Obama the internationalist,” Morris continues, “not fighting for American interests, but looking for global coordination.” He concludes, “Those crazies in Montana who say, ‘We’re going to kill ATF agents because the UN’s going to take over’—well, they’re beginning to have a case.” [Media Matters, 3/31/2009]

Entity Tags: Fox News, Dick Morris

Timeline Tags: Domestic Propaganda

Category Tags: Commentaries and Criticisms, Obama Policies and Actions

Republican Representative Paul Ryan (R-WI) admits that the “budget proposal” offered the previous week by the GOP in response to President Obama’s own budget proposal (see March 26, 2009) was never anything more than a “marketing document.” On MSNBC’s “Morning Joe,” Ryan says, “The thing you saw last week was not the alternative budget, this is our alternative budget.” Ryan is referring to a budget the GOP intends to release later today. The “budget” touted on the floor of the House by Minority Leader John Boehner (R-OH) was a “marketing document,” Ryan says. “Somewhere along the line there was a misimpression given that that was our budget.” In the Wall Street Journal, Ryan says the GOP budget will include the following:
bullet A five-year non-defense spending freeze;
bullet Cutting the deficit 50 percent more than Obama’s proposal by 2019;
bullet More oil exploration and fewer regulations on pollution;
bullet A revamping of Medicare for those currently below age 55;
bullet Making permanent the Bush administration’s tax cuts for wealthy Americans, and a simplified tax code that taxpayers could choose to use.
Of President Obama’s budget, Ryan says, “If this agenda comes to pass, it will mark this period in history as the moment America turned European.” [The Hill, 4/1/2009] The Center for American Progress, a progressive think tank, says that a spending freeze as advocated by the GOP budget would be calamitous for the American economy. The freeze would negate the entirety of the Obama administration’s multi-billion stimulus package, and would rely entirely on economic recovery generated by supply-side tax cuts. MSNBC’s Chris Matthews compares the idea to the economic ideas that led to the Great Depression: “[I]t sounds very much like [former President Herbert] Hoover. This is a doctrine which was tried in 1932 and failed. In a period of international deflation, the worst thing you can do is join in the deflation by cutting spending.” [Think Progress, 4/1/2009]

Entity Tags: Paul Ryan, Chris Matthews, Center for American Progress, Barack Obama, John Boehner

Category Tags: Commentaries on Economic Issues, Commentaries and Criticisms

Alisyn Camerota.Alisyn Camerota. [Source: Fox News]Several media outlets report discredited Republican claims that the Obama administration’s “cap-and-trade” global warming initiative would cost American taxpayers over $3,000 per year. Fox News anchors Eric Shawn and Alisyn Camerota (see October 13, 2009), CNN producer Ted Barrett, and the Washington, DC, newspaper Roll Call repeat the claim, which originated in a March 23 House Republican Conference (HRC) “talking points” press release. [GOP (.gov), 3/23/2009; Media Matters, 4/6/2009] The claim points to a 2007 study by the Massachusetts Institute of Technology, but one of the study’s authors, John Reilly, says the Republicans’ interpretation of it is wrong (see March 24 - April 2, 2009). Reilly says the average household cost of $3,128, as calculated by the HRC, is “nearly 10 times the correct estimate” based on his study’s cap-and-trade model. The HRC’s error is further shown by a March 30 analysis conducted by the St. Petersburg Times. [St. Petersburg Times, 3/30/2009; Media Matters, 4/6/2009] Both Reilly and the Times show that the average annual cost per household will be closer to $340. On Fox News’s America’s News HQ, Shawn claims “this cap-and-trade, or as the Republicans call it, cap-and-tax—could add $3,000 a year on our electric bills.… [T]hat’s about—$290 or so a month. I mean, imagine the American public, everyone watching right now—all of us—getting an extra 300 bucks or so a month tacked on to our utility bills.” Camerota tells viewers of Fox News’s America’s Newsroom that the cap-and-trade proposal “would be $3,100 per US household.” Roll Call’s Jay Heflin publishes a claim by Senator John Cornyn (R-TX) that “the effort equates to a ‘light switch tax’ of up to $3,128 each year for families” without informing readers of Reilly’s and the Times’s differing analysis. [Media Matters, 4/6/2009; Roll Call, 4/6/2009] Similarly, on CNN’s Political Ticker blog, Barrett repeats a similar claim, writing, “Senate Republican Leader Mitch McConnell praised the Senate for having ‘slammed the door on using the fast-track process to jam through a new national energy tax’ that Republicans say will cost families $3,000 a year in higher energy costs.” [CNN, 4/1/2009; Media Matters, 4/6/2009]

Entity Tags: Obama administration, Ted Barrett, St. Petersburg Times, John Reilly, House Republican Conference, Jay Heflin, Alisyn Camerota, John Cornyn, CNN, Fox News, Eric Shawn, Roll Call

Timeline Tags: Domestic Propaganda

Category Tags: Obama Policies and Actions, Commentaries and Criticisms

Fox News on-screen chyron falsely claiming Obama’s 2010 budget is four times larger than biggest Bush budget.Fox News on-screen chyron falsely claiming Obama’s 2010 budget is four times larger than biggest Bush budget. [Source: Media Matters]Fox News’s flagship morning news broadcast, America’s Newsroom, displays an on-screen “chyron” that falsely claims the 2010 budget proposed by President Obama—$3.6 trillion—is four times the largest budget ever submitted by former President Bush. As progressive media watchdog Web site Media Matters notes, Bush submitted a $3.1 trillion budget for 2009 and a $2.9 trillion budget for 2008 (see October 13, 2009). [Media Matters, 4/3/2009]

Entity Tags: George W. Bush, Media Matters, Barack Obama, Fox News

Timeline Tags: Domestic Propaganda

Category Tags: US Monetary Policy, Obama Policies and Actions, Commentaries and Criticisms

President Barack Obama implements a home mortgage rescue plan that he says will prevent as many as 9 million Americans from losing their homes to foreclosure. Obama says that turning around the battered economy requires stemming the continuing tide of foreclosures. He says that the housing crisis that began last year set many other factors in motion and helped lead to the current, widening recession. “In the end, all of us are paying a price for this home mortgage crisis,” Obama says. “All of us will pay an even steeper price if we allow this crisis to deepen. The American dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods. While this crisis is vast, it begins just one house and one family at a time.” Of the nearly 52 million US homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their home is currently worth. Obama’s plan contains three initiatives:
bullet Fannie Mae and Freddie Mac homeowners owing between 80 and 105 percent of what their homes are worth can refinance their mortgage. Prior to implementation of the rescue plan, only those borrowers with at least 20 percent home equity could refinance. Refinancing at a lower rate may save borrowers thousands of dollars yearly on their mortgage payments.
bullet Banks will be encouraged to work with homeowners to modify existing mortgages, which is different from refinancing. The Bush administration plan, “Hope for Homeowners,” passed late in 2008, tried to do what Obama has now accomplished, but, since banks were not eager to modify terms to help people stay in their houses, the Bush plan is considered a failure. Under Obama’s plan, banks who received TARP funding will have to participate and, if they do not, Obama may request that the Congress allow bankruptcy judges to modify mortgage terms. Before Obama’s new plan, judges already had the power to modify mortgage terms on a homeowner’s second and third homes, although not on their primary residences.
bullet Interest rates will be kept low by having the Treasury Department buy up mortgage-backed securities from Fannie Mae and Freddie Mac, in the hope of re-inflating the market for mortgage-related products, even if Treasury may be overpaying for toxic assets in a market with few, if any, other buyers. [Mother Jones, 2/18/2009; CNN, 4/16/2009]

Entity Tags: US Department of the Treasury, Barack Obama, Fannie Mae, Freddie Mac, George W. Bush, Troubled Asset Relief Program

Category Tags: Bailouts and Other Government Aid, USA, Obama Policies and Actions

The US Senate rejects an amendment to the US Bankruptcy Code supported by President Barack Obama that would have saved nearly 2 million homeowners facing foreclosure. Sponsored for the second time in as many years by Senate Majority Whip Richard Durbin (D-IL), the controversial amendment would have given judges the power to modify home mortgages, but strong opposition from the banking industry—as well as 39 Republicans and 12 Democrats—prevents passage. The House version of the controversial measure passed in March 2009. Called the ‘cramdown,’ the provision was supported by Obama as a final recourse for people to keep their homes. The amendment was a major priority of congressional Democrats and the Obama administration in a drive to tackle the housing crisis. “[H]ard to believe in a time when we’re facing a banking crisis that many of the banks created—[that the banks] are still the most powerful lobby on Capitol Hill. And they frankly own the place,” Durbin said earlier in the week during an interview with Illinois radio. [ProgressIllinois.com, 4/29/2009; MinnPost.com, 4/30/2009]

Entity Tags: Barack Obama, Richard (“Dick”) Durbin

Category Tags: Bailouts and Other Government Aid, USA, Obama Policies and Actions

In an interview with Bill Moyers, Robert Reich, former labor secretary under President Clinton, says: “I believe that there’s no doubt that we’re going down to government intervention everywhere, government ownership unprecedented in this country. And it’s a long road and a slippery slope. Essentially, capitalism has swamped democracy. The Bush administration started the bank bailouts because the financial system had overreached with wild speculation and was on the verge of breaking down. Tim Geithner and [President] Obama are continuing these big bank bailouts, and I happen to think the bailouts have not worked very well, except as a kind of socialism for big corporations. There’s no such thing as pure capitalism without rules and regulations that set limits on profit making, because otherwise it’s everybody out for themselves. Otherwise, nobody can trust anybody. Otherwise, it’s the law of the jungle.… We rely upon government to set the boundaries—this can’t happen because it’s fraud, that can’t happen because you’re stealing something, this can’t happen because you’re imposing a huge burden on other people. Unless you have a democratic system that allows the rules to be created not by the companies but by the people and the people’s representatives reflecting what the public needs—not what the corporations need—you’re going to have a system that is not a democracy and not democratic capitalism. It’s super capitalism without the democracy. People pressuring their individual Congress members and Obama standing up to the banking industry will force real regulation. There will be no recovery in the sense of going back to where we were because the old path was unsustainable. If we don’t lift middle class wages, if we don’t get some control over Wall Street, if we don’t have genuine health care reform, if we don’t do something about the environment and global warming, we will not have a recovery. The next downturn is going to be worse than the downturn we just had, so there’s no going backwards. In every conversation I’ve participated in with the president, I was left with the impression that he understood this very, very well. I think most of the people around him understand this. The question is can he pull this off? Can he overcome the vested interests? It will be a clear indication of his toughness with regard to the willingness to twist arms and demand that the public interest be foremost.” [Bill Moyers Journal, 6/12/2009]

Entity Tags: Timothy Geithner, Bill Moyers, Robert Reich, Barack Obama

Category Tags: Commentaries on Economic Issues, Commentaries and Criticisms, Bush Policies and Actions, Obama Policies and Actions

The Federal Deposit Insurance Corporation (FDIC) spent $314.3 million to shut down 16 banks in June 2009, according to reports released today. The federal insurer closed seven banks on June 25, pushing the number of bank failures for 2009 to 52, more than double the failures for all of 2008. The late June closures included six Illinois regional banks, all controlled by one family whose bank business model, according to the FDIC, “created concentrated exposure in each institution.” The FDIC says that the failure of the six family-owned banks is due to the banks’ investments in collateralized debt obligations and other losses. The failures and subsequent government takeover of the Illinois banks brought total 2009 Illinois bank failures to 12. Local and regional banks have been especially hard hit by plummeting home values that devalued mortgage-backed assets, while rising unemployment rates forced increased numbers of consumers to default on their loans.
June 2009 Bank Failures FDIC Update through July 2, 2009 -
bullet Founders Bank, Worth, Illinois, with approximately $962.5 million in assets, closed. The PrivateBank and Trust Company, Chicago, Illinois, agreed to assume all deposits, approximatedly $848.9 million.
bullet Millennium State Bank of Texas, Dallas, Texas, approximately $118 million in assets, closed. State Bank of Texas, Irving, Texas, agreed to assume all deposits, approximately $115 million.
bullet The First National Bank of Danville, Danville, Illinois, approximately $166 million in assets, closed. First Financial Bank, N. A., Terre Haute, Indiana, assumed all deposits, approximately $147 million.
bullet The Elizabeth State Bank, Elizabeth, Illinois, approximately $55.5 million in assets, closed. Galena State Bank and Trust Company, Galena, Illinois, agreed to assume all deposits, approximately $50.4 million.
bullet Rock River Bank, Oregon, Illinois, approximately $77 million in assets, closed. The Harvard State Bank, Harvard, Illinois, agreed to assume all deposits, approximately $75.8 million.
bullet The First State Bank of Winchester, Winchester, Illinois, approximately $36 million in assets, closed. The First National Bank of Beardstown, Beardstown, Illinois, agreed to assume all deposits, approximately $34 million.
bullet The John Warner Bank, Clinton, Illinois, with approximately $70 million in assets, was closed. State Bank of Lincoln, Lincoln, Illinois, agreed to assume all deposits, approximaedly $64 million.
bullet Mirae Bank, Los Angeles, California, approximately $456 million in assets, closed. Wilshire State Bank, Los Angeles, California, agreed to assume all deposits, approximately $362 million.
bullet MetroPacific Bank, Irvine, California, approximately $80 million in assets, closed. Sunwest Bank, Tustin, California, agreed to assume all non-brokered deposits, approximately $73 million.
bullet Horizon Bank, Pine City, Minnesota, approximately $87.6 million in assets, closed. Stearns Bank N. A., St. Cloud, Minnesota, agreed to assume all deposits, excluding certain brokered deposits, approximately $69.4 million.
bullet Neighbor Community Bank, Newnan, Georgia, approximately $221.6 million in assets, closed. CharterBank, West Point, Georgia, agreed to assume all deposits, approximately $191.3 million.
bullet Community Bank of West Georgia, Villa Rica, Georgia, approximately $199.4 million in assets and approximately $182.5 million in deposits, approved for payout by the FDIC board of directors.
bullet First National Bank of Anthony, Anthony, Kansas, approximately $156.9 million in assets, closed. Bank of Kansas, South Hutchinson, Kansas, agreed to assume all deposits, approximately $142.5 million.
bullet Cooperative Bank, Wilmington, North Carolina, approximately $970 million in assets, closed. First Bank, Troy, North Carolina, agreed to assume all deposits, excluding certain brokered deposits, approximately $774 million.
bullet Southern Community Bank, Fayetteville, Georgia, approximately $377 million in assets, closed. United Community Bank, Blairsville, Georgia, agreed to assume all deposits, approximately $307 million.
bullet Bank of Lincolnwood, Lincolnwood, Illinois, approximately $214 million in assets, closed. Republic Bank of Chicago, Oak Brook, Illinois, agreed to assume all deposits, approximately $202 million. [CNN, 7/2/2009; FDIC.gov, 7/2/2009]

Entity Tags: Martin J. Gruenberg, Sheila Bair, John E. Bowman, Thomas J. Curry, John C. Dugan, Federal Deposit Insurance Corporation

Category Tags: Bailouts and Other Government Aid, Failing Companies, USA, Obama Policies and Actions

Eighteen consecutive months of job losses and an economy on the verge of collapse have left record numbers of US consumers either unable to pay their debts or chronically late in payments during the first quarter of 2009. According to the American Bankers Association, home equity loan delinquencies rose to 3.52 percent, from 3.03 percent of all accounts in the last quarter of 2008. Late payments on home equity credit lines climbed a record 1.89 percent, and an index of eight types of loans rose to 3.23 percent from 3.22 percent for a fourth consecutive quarter. In a telephone interview with Bloomberg, the American Bankers Association’s chief economist, James Chessen says: “The number one driver of delinquencies is job losses, which we’ve seen build and build. Delinquencies won’t come down without a dramatic improvement in the economy, and businesses will have to start hiring again.” For the first quarter of 2009, the US economy lost an average of 691,000 jobs in each of the quarter’s three months. According to a Bloomberg survey of 61 economists, since the recession began in December 2007, more than 6.5 million jobs have been cut, and the US economy will shrink in 2009 the most since 1946. Outstanding debt on bank card delinquencies rose a record 6.60 percent in first quarter 2009, from 5.52 percent in the fourth quarter of 2008, indicating that unemployed borrowers are relying on bank cards, as housing prices corrode their home equity. The ABA stated that more borrowers are using cards to meet daily expenses following their job losses. US banks distributed 9.8 million credit cards from January through April 2009, a 38 percent decline from the same period a year earlier, with the average limit for a new bank card falling 3 percent to $4,594, according to data released by credit reporting agency Equifax. “There is less equity to draw on and certainly financial institutions have been scaling back the available lines of credit,” Chessen says. [Bloomberg, 7/7/2009; American Bankers Association, 7/7/2009]

Entity Tags: James Chessen, American Bankers Association (ABA)

Category Tags: Commentaries on Economic Issues, Other, Bush Policies and Actions, Obama Policies and Actions

Tom Raum, a reporter and analyst for the Associated Press (AP), calls Social Security “a giant federal Ponzi scheme” destined to “bury… the nation ever deeper in debt.” Raum then writes: “Although calling Social Security a Ponzi scheme—think of the huge frauds that sent billionaires Bernard Madoff (see August 14, 2009) and R. Allen Stanford to prison—may be a bit of a stretch, there is one clear similarity. As in a Ponzi scheme, the concept works fine at first. So long as there are more new ‘investors’ pumping money into the system to pay off the earlier ones, everyone is happy. But at some point not enough new money is coming in and the scheme collapses.” Raum claims that Social Security system trustees have reported that by 2016, money paid out in benefits will exceed the revenues flowing in, and in 2037, the system will be entirely penniless. Thusly, Raum writes, Social Security “is projected to go insolvent in 2017.” [Associated Press, 8/16/2009] (The Raum article is reprinted over several days by different press outlets, but according to progressive media watchdog organization Media Matters, originally appears on August 12.) [Media Matters, 8/12/2009] However, the trustees did not say what Raum claims they said. In their May 12, 2009 report, the trustees said that the Social Security trust fund, not Social Security itself, will be completely depleted in 2037. And after that happens, according to the trustees, revenue from payroll taxes will be sufficient to pay about three-quarters of scheduled Social Security benefits through 2083: “Under the intermediate assumptions, the OASDI cost rate is projected to increase rapidly and first exceed the income rate in 2016, producing cash-flow deficits thereafter. Redemption of trust fund assets will allow continuation of full benefit payments on a timely basis until 2037, when the trust funds are projected to become exhausted. This redemption process will require a flow of cash from the general fund of the Treasury. Pressures on the federal budget will thus emerge well before 2037. Even if a trust fund’s assets are exhausted, however, tax income will continue to flow into the fund. Present tax rates are projected to be sufficient to pay 76 percent of scheduled benefits after trust fund exhaustion in 2037 and 74 percent of scheduled benefits in 2083.” The Associated Press accurately reported on the trustees’ report the same day it was issued. [Administration, 5/12/2009 pdf file; Associated Press, 5/12/2009; Media Matters, 8/12/2009] Stephen Moore of the Wall Street Journal made a similar claim to Raum’s in February (see February 2, 2009).

Entity Tags: Associated Press, Tom Raum, Stephen Moore

Timeline Tags: Domestic Propaganda

Category Tags: USA, Commentaries and Criticisms

Eric Bolling, a host on Fox Business Channel, appears as a guest on Fox News’s The Live Desk, where he attacks Social Security as a “Ponzi scheme.” Bolling explains that a lack of increase in July’s Consumer Price Index (CPI) means that Social Security benefits also fail to increase, but then shifts into a claim that Social Security is “underfunded or almost unfunded.… People are paying into Social Security. That money’s being used to pay for seniors right now, so, it’s kinda like a Ponzi scheme.… They should rename it the Madoff Social Security system, because down the road, there’s not going to be enough money.” Bolling is making reference to Wall Street financier Bernie Madoff, who stole billions of dollars from clients through a web of fraudulent schemes. [Media Matters, 8/14/2009; Media Matters, 9/7/2010] In February, the Wall Street Journal’s Stephen Moore made a similar claim (see February 2, 2009). And an Associated Press reporter made a similar claim two days before Bolling (see August 12-16, 2009).

Entity Tags: Eric Bolling, Bernard Lawrence (“Bernie”) Madoff, Stephen Moore, Fox News

Timeline Tags: Domestic Propaganda

Category Tags: USA, Commentaries and Criticisms

Federal Deposit Insurance Corporation (FDIC) regulators take over real estate lender Colonial BancGroup Inc. in the biggest US bank failure this year. Regulators also close four banks in Arizona, Nevada and Pennsylvania. This increases to 77 the number of federally insured banks that have failed in 2009. The FDIC is appointed receiver of Colonial BancGroup, based in Montgomery, Alabama; Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Arizona; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, located in Pittsburgh. The FDIC approves the sale of Colonial’s $20 billion in deposits and about $22 billion of its assets to BB&T Corp., which is based in Winston-Salem, North Carolina. According to the FDIC, the failed bank’s 346 branches in Alabama, Florida, Georgia, Nevada, and Texas will reopen at normal times starting on Saturday as BB&T offices. A temporary government bank is established by the FDIC for Community Bank of Nevada to give depositors approximately 30 days to open accounts at other financial institutions. As of June 30, Community Bank of Nevada had assets of $1.52 billion and deposits of $1.38 billion; Community Bank of Arizona had assets of $158.5 million and deposits of $143.8 million; Union Bank had assets of $124 million and deposits of $112 million as of June 12. MidFirst Bank, based in Oklahoma City, agrees to assume all the deposits and $125.5 million of the assets of Community Bank of Arizona, as well as about $24 million of the deposits and $11 million of the assets of Union Bank, with the FDIC retaining what’s left for eventual sale. Dwelling House had $13.4 million in assets and $13.8 million in deposits as of March 31. PNC Bank, part of Pittsburgh-based PNC Financial Services Group Inc., agrees to assume all of Dwelling House’s deposits and about $3 million of its assets; the FDIC will hold the rest for eventual sale. The FDIC expects Colonial BancGroup’s failure to cost it an estimated $2.8 billion and that of Community Bank of Nevada, $781.5 million; Union Bank, $61 million; Community Bank of Arizona, $25.5 million; and Dwelling House, $6.8 million. The 77 bank failures nationwide this year compare with 25 last year and three in 2007. As the economy spiraled downward, bank failures increased seismically, siphoning billions out of the FDIC which, at $13 billion as of the first quarter, is at its lowest level since 1993. While losses on home mortgages may be leveling, commercial real estate loan delinquencies remain a potential trouble spot, say FDIC officials. The FDIC’s list of problem institutions soared to 305 in first quarter 2009—the highest since the savings and loan crisis in 1994—increasing from 252 in fourth quarter 2008. Regulators anticipate US bank failures will cost the FDIC about $70 billion through 2013. The shutdown in May of Florida thrift BankUnited is expected to cost the federal insurer $4.9 billion, the second-largest hit since the financial crisis commenced. So far, the costliest is the seizure of big California lender IndyMac Bank in 2008, where it is estimated that the FDIC lost $10.7 billion. In September 2008, the largest US bank failure was the failure of Seattle-based Washington Mutual Inc. (WAMU), with about $307 billion in assets. In a deal brokered by the FDIC, JP Morgan Chase and Co. purchased WAMU for $1.9 billion. [fdic.gov, 8/2009; ABC News, 8/14/2009]

Entity Tags: Federal Deposit Insurance Corporation, Colonial BancGroup, Inc., IndyMac Bank, JP Morgan Chase, Washington Mutual Inc.

Category Tags: Failing Companies, USA, Obama Policies and Actions

Since implementing a program to help millions of homeowners restructure their mortgages to prevent foreclosure, only 235,247 loans have actually been modified, according to the US Treasury Department in its first progress report. After the plan was announced in February, the first banking institutions began accepting applications in April. Between now and 2012, the Obama administration says it is on track to assist 4 million homeowners. The report occurs a week after the administration summoned institutions to Washington to discuss speeding up the program after large numbers of borrowers’ complaints that assistance was barely occurring. The Obama administration plans 500,000 modifications by November 1, and hopes to hold the institutions responsible for their performance with the release of monthly reports that allow consumers to see which banks are slow to implement the plan. So far, institutions have extended offers to 15 percent or 406,542 homeowners in danger of losing their homes, with uneven performances by 38 participating servicers. Morgan Stanley’s subsidiary, Saxon Mortgage Services, tops the list with 25 percent of its delinquent loans placed in trial modifications. Saxon is followed by Aurora Loan Services, a Lehman Brothers Bank subsidiary, with 21 percent. GMAC Mortgage, partially owned by the US government, has put 20 percent of its troubled loans into trial modifications, while major banks JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America have late loan trial modifications of 20 percent, 15 percent, 6 percent, and 5 percent respectively. The lenders acknowledge that they must improve their performance, and say that they are committed to President Obama’s foreclosure prevention plan, stressing that they were already performing modifications prior to the administration’s program. Wells Fargo says that it will soon have the ability to send eligible borrowers trial modification agreements within 48 hours. “We set a high bar for ourselves in terms of customer service, and we didn’t hit that bar in all cases in the first seven months of this year,” says Mike Heid, co-president of Wells Fargo Home Mortgage, “We have added 4,000 employees to our loan workout division this year. JPMorgan Chase says it has another 150,000 applications in need of processing and is currently training an extra 950 workout specialists hired earlier in 2009, bringing its modification staff to 3,500 people. “We know we’ve got more work to do,” says Chase spokesman Tom Kelly. “But the bank is pleased with its performance to date.” CitiGroup’s mortgage agency, CitiMortgage, added 1,400 staffers to its modification team, with 800 dedicated to loss mitigation at its recently opened Tucson, AZ call center. It began placing troubled borrowers in trial modifications in early June. “In the next quarter, one can expect the pace will be even higher,” Sanjiv Das, CitiMortgage head, says. Bank of America says it needs to improve its reach out efforts, while noting that it holds nearly one in four trial modifications offered under the Obama plan and has extended nearly 100,000 offers, although only 28,000 trial modifications are in process. Bank of America purchased mortgage giant Countrywide Financial last year, and has the largest number of eligible delinquent loans with almost 800,000. Borrowers have been pressuring the Obama administration as well as servicers and are complaining that servicers are not responding to applications and calls, are losing their paperwork, and are not making timely decisions. Servicers say they are increasing their staffing and upgrading their computer systems to handle the hefty increase in applications. Says Michael Barr, assistant US Treasury secretary for financial institutions, “We are working with servicers to ensure that they can adequately implement the program and servicers are increasing staff and training, but they must also treat borrowers more respectfully and respond in a much timelier manner.” [CNN News, 8/9/2009]

Entity Tags: Countrywide Financial, Wells Fargo Bank, N.A., Bank of America, Aurora Loan Services, US Department of the Treasury, Citigroup, Tom Kelly, Sanjiv Das, GMAC, JP Morgan Chase, CitiMortgage, Lehman Brothers, Morgan Stanley, Michael Barr, Saxon Mortgage Services

Category Tags: Bailouts and Other Government Aid, Commentaries on Economic Issues, Failing Companies, Obama Policies and Actions

In their new report, “The State of Working America 2008-2009,” two economists at leading US think tank Economic Policy Institute (EPI) issue warnings that US workers will face harsh challenges as what they term “the Great Recession of 2007” draws to a close.
Unemployment - Heidi Shierholz and Lawrence Mishel, co-authors of the report, say that the extent of the huge global crash would have been much worse without President Obama’s American Recovery and Reinvestment Act of 2009. “The disaster would have been even worse without the stimulus law President Obama pushed through earlier this year,” Shierholz says. “Job losses would have been so high that the July unemployment figures would have been 9.6 percent or 9.7 percent, not 9.4 percent. We expect a steady climb in the unemployment rate up and over 10 percent by the end of the year. And it’ll rise slightly above 10 percent for a few months in 2010 before turning downwards. Until the economy is adding 122,000 jobs per month to take care of the people coming into the job market, unemployment will stay high. We still have a long way to go.”
Human Cost - Both economists speak of the human penalty. “This is more than a bunch of dry numbers,” Mishel declares. “One-third of the jobless—a record—have been out of work at least six months. Many have exhausted their unemployment benefits, which translate into bankruptcies, lost homes, no medical care, and more ills afflicting workers—even employed workers. This recession is much more than just the numbers of unemployed and underemployed, which is also setting a record,” he says. “Employed workers are seeing their hours cut, there’s an implosion in wage growth, and about 17 percent of large private employers have resorted to unpaid furloughs to save money.” Mishel explains that a one-week furlough is the equivalent of a 2 percent pay cut for a worker and his or her family.
Media Coverage Poor - In their report, the economists also criticize major media’s coverage of the crisis, urging workers not to fall for the usual chatter that things will automatically improve once productivity rises. “In the popular media, economic experts endlessly debate dynamics and causes of the downturn but most of these debates have very little to do with the real economic challenges facing working families today. The men and women of the workforce have worked harder and smarter to make the US a world-class economy and the mantra among economists and policy makers is that ‘as grows productivity, so shall living standards improve.’ Would that it was so.”
'YOYO Economics' - Prior to the crash, the report says, workers faced “rising inequality and lower real incomes for all but the richest 5 percent, diminished bargaining power, less health coverage, riskier pensions if any at all, income constraints that prevent workers’ kids from getting college educations to better themselves, and fewer high-paying jobs for those college grads, due to off-shoring and outsourcing.” The report nicknames it “YOYO (‘You’re on your own’) economics.” “We are in a unique position to judge the results of this experiment in reduced worker bargaining power and YOYO economics,” write the two economists. “The macro-economy is in serious disrepair and policymakers must move beyond temporary patches to fundamentally remake the economy so that it works for workers.”
Effect of Stimulus - The two offer praise for the Obama administration’s move to correct economic imbalances with the $787 billion stimulus package, the “cash for clunkers” program, initiatives to help the Detroit auto industry, and the $500 million “green jobs” initiative that have “partially staunched the bleeding.” Mishel predicts that, in conjunction with these programs, Congress will pass a second federal extension of unemployment benefits. They also argue that there should be fundamental restructuring away from “free market” policies that give corporations and financiers free sovereignty while the masses are forced to tighten their belts. [People's Weekly World Newspaper, 9/4/2009]

Entity Tags: Lawrence Mishel, Economic Policy Institute, Heidi Shierholz

Category Tags: Commentaries on Economic Issues, Bush Policies and Actions, Obama Policies and Actions

Having received what the Obama administration calls “exceptional assistance,” American International Group (AIG), Citigroup, Bank of America, General Motors (GM), GMAC, Chrysler, and Chrysler Financial are now meeting with executive pay czar, Kenneth Feinberg, and must submit 2009 pay plans for their top 25 executives. In turn, Feinberg must perform a 60-day assessment while working with the seven companies on their salary configurations. Plans for the other 75 executives of the seven corporations are due later. Exorbitant executive pay and bonuses has its critics, with many outraged that the companies are collecting taxpayer money only to pay out expensive bonuses during a massive recession. Others fear that the feds have insinuated themselves too deeply into private business affairs. Feinberg himself admits that his job has built-in conflicts. “Historically, the American people frown on the notion of government insinuating itself into the private marketplace,” he says in an interview, one day after his appointment. “My answer to those critics is I understand that concern, I share that concern, and the question is how do you strike a balance between that legitimate concern and the populist outrage at prior industry compensation practices?” The Obama administration has already seen and experienced taxpayers’ fury; Feinberg hopes to avoid such outrage. Corporations must prove to him that they are rewarding good performance and discouraging undue risk-taking. “We are not going to provide a running commentary on that process, but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance,” say US Treasury Department spokespersons, while noting that Feinberg can’t force companies to renege on contract obligations executed prior to February 12, 2009. However, this hasn’t prevented cries of foul play by critics upset over excessive government interference in private businesses. “No matter which way I turn, you’re facing criticism either from those who are appalled at what these companies did versus those who question the value of the government getting involved,” Feinberg says. The recently appointed executive compensation czar is used to dealing with contentious sides having served as compensation fund chairman for the families of victims of the September 11 attacks. [ABC News, 8/12/2009]

Entity Tags: Chrysler Financial, AIG (American International Group, Inc.), Bank of America, Citigroup, Chrysler, General Motors, GMAC, US Department of the Treasury

Category Tags: Bailouts and Other Government Aid, Commentaries on Economic Issues, Obama Policies and Actions

With unemployment rates for American Indians at 27 percent, African-Americans logging jobless rates of 15 percent, and Hispanics at 13 percent, experts say that for these ethnic groups, the economic recession is more of a “Great Depression.” The foreclosure crisis is equally ominous, having worsened with increasing joblessness, unduly impacting minority groups at a staggering rate. Dr. James Carr, chief operating officer of the National Community Reinvestment Coalition, explains: “The crisis is now fueled by unemployment and loss of income. In 2009, nearly 60 percent of foreclosures are triggered by unemployment.… The Obama administration’s endeavors to curtail foreclosures aren’t working.” He emphasizes that the loan modification program has “plenty of carrots” for the banks, “but no meaningful sticks to compel more responsible actions.” On average, lenders lose 10 times as much on foreclosures than loan modifications, or about $144,000 as opposed to a loan modification tax write-off of $14,000. Because they can, banks are choosing to deduct the greater loss on their current tax bill by foreclosing rather than modifying the loan. Consequently, only 12 percent of homeowners eligible for modification have received such through voluntary Making Home Affordable program set up by the Obama administration. According to Raymond Skinner, Maryland’s secretary of housing and community development: “Foreclosures are taking on a different face. As of the second quarter of 2009, the majority of the nation’s foreclosures are now on prime loans.”
Bankruptcy Law Reform, Homeowners Loan Corporation - What is needed, says Carr, is bankruptcy reform to allow judges to modify mortgages using the same methods they use to modify yacht and investment property payments; at least 30 percent of loans on the way to foreclosure could be helped by reformation of bankruptcy laws. Still, experts agree that even loan modifications won’t help many unemployed persons. Carr is calling for “a new version of the Great Depression-era Homeowners Loan Corporation” (HOLC) to allow the use of eminent domain to purchase loans between current market value and face value cost. The discount could then be used to modify the loans so that the unemployed homeowner could enter into rental agreements to stay in their homes, or even obtain emergency grants or loans to continue paying their mortgages. HOLC, however, is not under consideration by either Congress or the Obama administration.
Insufficient American Recovery and Reinvestment Act Resources - Some argue that the 2009 American Recovery and Reinvestment Act did not provide the resources needed by those hardest hit by the recession, which was supposedly the goal of the bill. As a result, there is now an immediate need for a targeted stimulus for job creation and unemployment benefits extension. “Channeling dollars to the individuals and communities that need them most will immediately stimulate the economy and save and create jobs for both the neediest households and the US population generally,” Carr says. “Families that live on the edge of survival will pour these recovery dollars immediately back into the economy through spending on groceries, medicine, clothing, childcare, energy, transportation, and other basic necessities. That spending would support multiple sectors of the economy and have positive impacts far outside of the communities where dollars are immediately spent.” Additionally, racial barriers and continuing discrimination need to be addressed to guarantee access to affordable housing alternative, transportation, education, and economic opportunity. [Nation, 9/25/2009; NPR, 9/28/2009]

Entity Tags: James Carr, Maryland, American Recovery and Reinvestment Act of 2009, Obama administration, US Congress, Raymond Skinner, National Community Reinvestment Coalition

Category Tags: USA, Commentaries and Criticisms

Fox News host Glenn Beck says that Social Security and Medicare are “socialist” programs that “should have never been created.” Beck tells his viewers: “Do you think programs like Social Security and Medicare represent socialism and should have never been created in the first place?… I’m an American. I read. I believe in the Constitution. And, of course, Social Security and Medicare represent socialism and should have never been created. Since FDR and his progressive buddies started Social Security, not our Founding Fathers, that should be fairly obvious to people.” Beck tells his viewers that Social Security was created by Harry Hopkins, an adviser to then-President Franklin Roosevelt who, Beck says, “had a relationship with [Josef] Stalin,” the then-dictator of the Soviet Union. Therefore, Beck says, Social Security is a Stalinist “redistribution of wealth” program that is inherently Marxist in its nature. [Media Matters, 1/27/2010; Media Matters, 9/7/2010] Beck’s allegation that Hopkins was some sort of “Stalinist” is false. The allegation originally came from KGB defector Oleg Gordievsky, who wrote a sensationlist book, KGB: The Inside Story, where he alleged Hopkins was “an unconscious spy” for the Soviet Union during World War II. In reality, Hopkins was the top official in the Roosevelt administration charged with dealing with Soviet officials during World War II. His job involved explaining American policies and positions to Stalin and other top Soviet officials. Since Soviets who spoke to Hopkins routinely reported the contacts to the Soviet national security agency, the NKVD, Hopkins was listed as a “source” or “agent” of information for Moscow. No evidence has ever surfaced that Hopkins provided any classified or unauthorized information to the USSR, or in any way worked to advance the cause of Soviet Communism. [New York Times, 10/28/1990]

Entity Tags: Josef Stalin, Fox News, Glenn Beck, Harry Lloyd Hopkins, Roosevelt administration, Oleg Gordievsky

Timeline Tags: Domestic Propaganda

Category Tags: Commentaries and Criticisms

On Fox News’s business show Bulls and Bears, Fox Business Channel host Eric Bolling tells viewers that he is glad young Americans will not have Social Security and will have to work instead of relying on what he calls that “Ponzi scheme” of a program. When Bolling calls Social Security a “Ponzi scheme,” the host and four other guests laugh and call out approving statements; host Brenda Buttner shouts repeatedly, “I love his show!” Bolling says that it is good young people “realize they’re not going to be able to suck at the teat of the nanny state too much longer, get off their butt, work, put some money away, and not have to rely on a system that’s gonna fold, probably by the time they get to collect a check.” [Media Matters, 7/24/2010; Media Matters, 9/7/2010] In February 2009, the Wall Street Journal’s Stephen Moore made a similar claim (see February 2, 2009).

Entity Tags: Eric Bolling, Brenda Buttner, Stephen Moore, Fox News

Timeline Tags: Domestic Propaganda

Category Tags: USA, Commentaries and Criticisms

Stephen Schwarzman.Stephen Schwarzman. [Source: Time magazine]Stephen Schwarzman, one of Wall Street’s leading hedge fund managers, equates the Obama administration’s plan to levy taxes on the private equity industry as akin to Adolf Hitler’s invasion of Poland, London’s Daily Telegraph reports. Schwarzman says America faces a “crisis of leadership” that is hindering the nation’s economic recovery. His concerns are echoed by Daniel Loeb, the founder of the Third Point fund, who accuses the Obama administration of attempting to implement economic “redistribution rather than growth.” Loeb decries an April 2010 lawsuit brought by the Securities and Exchange Commission (SEC) against Wall Street investment firm Goldman Sachs as “politically laced,” and blames the lawsuit for making investors lose confidence in the economic recovery. Loeb says that “so long as our leaders tell us that we must trust [them] to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire.” [Daily Telegraph, 8/31/2010]

Entity Tags: Obama administration, Daniel Loeb, Goldman Sachs, US Securities and Exchange Commission, Stephen A. Schwarzman

Timeline Tags: Domestic Propaganda

Category Tags: USA, US Monetary Policy, Commentaries and Criticisms

Fox News host Sean Hannity has as a guest Fox business commentator Stuart Varney. Varney accuses the Obama administration of implementing “socialist,” “un-American” economic policies. “We’ve had an 18-month experiment with American socialism,” Varney claims, and “we do not like it, we want to reverse it.” President Obama’s economic policies, Varney says, are “un-American.” [Media Matters, 11/17/2010]

Entity Tags: Fox News, Barack Obama, Sean Hannity, Obama administration, Stuart Varney

Timeline Tags: Domestic Propaganda

Category Tags: Bailouts and Other Government Aid, USA, Obama Policies and Actions, Commentaries and Criticisms

President Obama tells how his ideas of bipartisan compromise with Republican lawmakers were dashed. Obama reflects on the American Recovery and Reinvestment Act of 2009, signed into law in February 2009. Interviewer Jann Wenner of Rolling Stone asks: “When you came into office, you felt you would be able to work with the other side. When did you realize that the Republicans had abandoned any real effort to work with you and create bipartisan policy?” Obama responds: “Well, I’ll tell you that given the state of the economy during my transition, between my election and being sworn in, our working assumption was that everybody was going to want to pull together, because there was a sizable chance that we could have a financial meltdown and the entire country could plunge into a depression. So we had to work very rapidly to try to create a combination of measures that would stop the free-fall and cauterize the job loss. The recovery package we shaped was put together on the theory that we shouldn’t exclude any ideas on the basis of ideological predispositions, and so a third of the Recovery Act were tax cuts. Now, they happened to be the most progressive tax cuts in history, very much geared toward middle-class families. There was not only a fairness rationale to that, but also an economic rationale—those were the folks who were most likely to spend the money and, hence, prop up demand at a time when the economy was really freezing up. I still remember going over to the Republican caucus to meet with them and present our ideas, and to solicit ideas from them before we presented the final package. And on the way over, the caucus essentially released a statement that said, ‘We’re going to all vote “No” as a caucus.’ And this was before we’d even had the conversation. At that point, we realized that we weren’t going to get the kind of cooperation we’d anticipated. The strategy the Republicans were going to pursue was one of sitting on the sidelines, trying to gum up the works, based on the assumption that given the scope and size of the recovery, the economy probably wouldn’t be very good, even in 2010, and that they were better off being able to assign the blame to us than work with us to try to solve the problem.” No House Republican voted for the package; only three Republican Senators voted for it. [BBC, 2/14/2009; Rolling Stone, 9/28/2010]

Entity Tags: Barack Obama, American Recovery and Reinvestment Act of 2009, Republican Party, Jann Wenner

Category Tags: Bailouts and Other Government Aid, USA, Commentaries and Criticisms

US Senator Mike Lee (R-UT) posts a video on his YouTube channel in which he declares federal child labor laws “unconstitutional.” Lee says: “Congress decided it wanted to prohibit [child labor], so it passed a law—no more child labor. The Supreme Court heard a challenge to that and the Supreme Court decided a case in 1918 called Hammer v. Dagenhardt. In that case, the Supreme Court acknowledged something very interesting—that, as reprehensible as child labor is, and as much as it ought to be abandoned—that’s something that has to be done by state legislators, not by members of Congress.… This may sound harsh, but it was designed to be that way. It was designed to be a little bit harsh. Not because we like harshness for the sake of harshness, but because we like a clean division of power, so that everybody understands whose job it is to regulate what. Now, we got rid of child labor, notwithstanding this case. So the entire world did not implode as a result of that ruling.” Think Progress reporter Ian Millhiser calls Lee’s interpretation flawed. The Constitution gives Congress the power “[t]o regulate commerce… among the several states [and to] make all Laws which shall be necessary and proper for carrying into Execution” this power to regulate commerce. This provision has been upheld in many Court cases. Lee failed to note that in 1941, the Court unanimously overruled Hammer v. Daggenhardt in United States v. Darby. Moreover, Millhiser notes, child labor exploitation did not stop until Congress placed strict limits on it in the Fair Labor Standards Act of 1938, a law upheld by United States v. Darby. [Think Progress, 1/31/2011] Senate Republicans will give Lee a seat on the Senate Judiciary Committee, which works with constitutional interpretation. Lee has also declared Social Security, Medicare, the Federal Emergency Management Agency (FEMA), the Food and Drug Administration (FDA), food stamps, and income assistance to the poor all unconstitutional. [Think Progress, 1/27/2011]

Entity Tags: Ian Millhiser, US Supreme Court, Michael Shumway (“Mike”) Lee, Senate Judiciary Committee

Timeline Tags: Civil Liberties

Category Tags: US Labor Issues, Commentaries and Criticisms

A list of 10 companies that have avoided paying US income taxes is provided by Senator Bernie Sanders (I-VT), who is pushing for legislation that will close the legal tax loopholes that allow large corporations to avoid the bulk of their tax responsibilities. Chicago Sun-Times reporter Lynn Sweet writes, “Some people call the income tax system with generous loopholes for big companies corporate welfare or corporate entitlements.” Sanders’s list, based on returns and Securities and Exchange Commission (SEC) documents filed in 2009 and earlier, includes:
bullet ExxonMobil. The oil giant made $19 billion in profits in 2009, but paid no federal income taxes, and received a $156 million tax rebate.
bullet Bank of America (BoA). The financial corporation made $4.4 billion in profits in 2009, and received nearly $1 trillion in Federal Reserve and Treasury Department “bailout” funds. The bank received a $1.9 billion tax refund.
bullet General Electric. This multinational conglomerate made $26 billion in profits in the US, and over the last five years has received $4.1 billion in tax refunds.
bullet Chevron. The oil giant made $10 billion in profits in 2009, and received a $19 million refund from the IRS.
bullet Boeing. The defense contractor received a $30 billion contract from the US Department of Defense in 2009 to build 179 airborne tankers, and received a $124 million tax refund.
bullet Valero Energy. This energy corporation, the 25th largest company in the US, garnered $68 billion in sales in 2009, and received $157 million in tax refunds. Over the last three years, Valero has received a $134 million tax break from the oil and gas manufacturing tax deduction.
bullet Goldman Sachs. The financial giant paid only 1.1 percent of its income in taxes in 2008, though it recorded $2.3 billion in profits. It also received nearly $800 billion from the Federal Reserve and the Treasury Department.
bullet Citigroup. The financial conglomerate made over $4 billion in profits in 2010, but paid no federal income taxes. It received a $2.5 trillion “bailout” from the Federal Reserve and Treasury.
bullet ConocoPhillips. The oil conglomerate garnered $16 billion in profits from 2007 through 2009, paid no taxes, and received $451 million in tax breaks through the oil and gas manufacturing deduction.
bullet Carnival Cruise Lines. This entertainment giant made over $11 billion in profits between 2006 and 2011, but paid only 1.1 percent of its income in taxes during that period.
In a press release calling for “shared sacrifice,” Sanders writes: “While hard working Americans fill out their income tax returns this tax season, General Electric and other giant profitable corporations are avoiding US taxes altogether.… [T]he wealthiest Americans and most profitable corporations must do their share to help bring down our record-breaking deficit.” Sanders writes that “it is grossly unfair for Congressional Republicans to propose major cuts to Head Start, Pell Grants, the Social Security Administration, nutrition grants for pregnant low-income women, and the Environmental Protection Agency while ignoring the reality that some of the most profitable corporations pay nothing or almost nothing in federal income taxes.” Sanders calls for closing corporate tax loopholes and eliminating the deductions for oil and gas companies. He is also introducing legislation that would impose a 5.4 percent surtax on millionaires that would garner as much as $50 billion a year in tax revenues. Sanders says: “We have a deficit problem. It has to be addressed, but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.” [Chicago Sun-Times, 3/27/2011]

Entity Tags: Boeing Company, Carnival Cruise Lines, Citigroup, Bernie Sanders, Bank of America, ConocoPhillips, Goldman Sachs, Chevron, Lynn Sweet, Valero Energy Corporation, General Electric, ExxonMobil

Category Tags: US Monetary Policy, Bailouts and Other Government Aid, USA, Bush Policies and Actions, Obama Policies and Actions

Alan Binder.Alan Binder. [Source: PBS]TPMDC reporter Brian Beutler notes that many Congressional Republicans, led by but not limited to those who consider themselves “tea party” members (see April 30, 2011), are heeding the advice of a small number of unorthodox financial experts who go against the “common wisdom” that a possible credit default by the US would lead to potential catastrophe among national and global financial markets. The issue centers on Congressional Republicans’ insistence that they will not raise the US debt limit, or debt ceiling, unless the Obama administration gives them a wide array of draconian spending cuts; in the past, raising the US debt limit has been a routine matter, often handled with virtually no debate and little, if any, fanfare. Beutler says that the most influential of these advisors is Stanley Druckenmiller, who made billions managing hedge funds. Druckenmiller’s advice was that the US could weather several days of missed interest payments if the US debt ceiling were not immediately raised without serious consequences. House Budget Committee chairman Paul Ryan (R-WI), House Majority Leader Eric Cantor (R-VA), and Senator Pat Toomey (R-PA) are all echoing Druckenmiller’s claims in media interviews and in Congress. Beutler writes that the newfound popularity of Druckenmiller’s claims “alarms everyone from industry insiders to Treasury officials to economists, conservative and liberal, to non-partisan analysts who say the consequences of the US missing even a single interest payment to a debt-holder would be catastrophic—even if it was followed immediately by a legislative course correction.” Former Federal Reserve chairman Alan Binder, now a Princeton economist, warns that if the US were to default on its debt even for a few days, the US dollar would crash in value, interest rates would spike, and the US economy would find itself spiraling into a full-blown recession. Binder writes: “For as long as anyone can remember, the full faith and credit of the United States has been as good as gold—no one has better credit. But if investors start to see default as part of US political gamesmanship, they will demand compensation for this novel risk. How much? Again, no one can know. But even if it’s as little as 10-20 basis points on the US government’s average borrowing cost, that’s an additional $10 billion to $20 billion in interest expenses every year. Seems like an expensive way to score a political point.” JPMorgan CEO Jamie Dimon agrees, telling PBS viewers: “Every single company with treasuries, every insurance fund, every—every requirement that—it will start snowballing. Automatic, you don’t pay your debt, there will be default by ratings agencies. All short-term financing will disappear. I would have hundreds of work streams working around the world protecting our company for that kind of event.” JPMorgan issued a statement after Dimon’s comment saying that even a brief default would trigger “a run on money market funds… that would leave businesses unable to meet their short-term obligations and teetering on the bring of bankruptcy.” JPMorgan compares the money-market run to the aftermath of the 2008 Lehman Bros collapse, which sent the US into a recession. Analyses and reports by the Treasury Borrowing Advisory Committee and Government Accountability Office have warned of dire consequences following a default even of a day or two. Toomey and others insist that a credit default would simply make the Treasury Department find other ways to avoid missing interest payments, but, economists and financial leaders warn, the consequences of that would be enormous. Binder writes: “If we hit the borrowing wall traveling at full speed, the US government’s total outlays—a complex amalgam that includes everything from Social Security benefits to soldiers’ pay to interest on the national debt—will have to drop by about 40 percent immediately. That translates to roughly $1.5 trillion at annual rates, or about 10 percent of GDP. That’s an enormous fiscal contraction for any economy to withstand, never mind one in a sluggish recovery with 9 percent unemployment.” Druckenmiller and some Republicans believe that forcing a credit default would end up benefiting the country, as the Obama administration would give in to Republican demands for enormous spending cuts in return for Republicans’ agreement to raise the debt ceiling. Business Insider reporter Joe Weisenthal recently wrote: “Of course, a default by the world’s most stable nation would probably have impacts in ways nobody can imagine, but one thing seems to be clear. The notion—as some people suggest—that a default would somehow increase US credit-worthiness is absurd.” [Business Insider, 4/20/2011; New York Times, 4/26/2011; TPMDC, 5/20/2011]

Entity Tags: Government Accountability Office, Eric Cantor, US Department of the Treasury, Alan Binder, Treasury Borrowing Advisory Committee, Stanley Druckenmiller, US Congress, Brian Beutler, JP Morgan Chase, Jamie Dimon, Paul Ryan, Pat Toomey, Joe Weisenthal, Obama administration

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Representative Michele Bachmann (R-MN) tells a CBS News viewing audience that the Obama administration is lying when it says the US government would default on its loans if Congress refuses to raise the US debt ceiling. Bachmann accuses the Obama administration of using “scare tactics” to push for a debt-ceiling increase. Bachmann has said previously that Congress should not raise the debt ceiling (see April 30, 2011). Treasury Secretary Timothy Geithner and other Obama adminstration members, along with a bevy of economists and financial leaders including Federal Reserve Chairman Ben Bernanke and former Chairman Alan Greenspan, have urged Congress to raise the debt ceiling by August 2 to avoid the US defaulting on its outstanding loans and engendering what many call an economic catastrophe (see May 20, 2011). The US Treasury has used accounting steps, what it calls “extraordinary measures,” to avoid default since the nation reached its debt limit on May 16. The final deadline for the US to raise its debt limit is August 2. Bernanke and others have said that even a brief US default could cause an uproar in the global economy. But Bachmann says she has “no intention” of voting for a hike to the limit, saying instead: “It isn’t true that the government would default on its debt. Because, very simply, the Treasury secretary can pay the interest on the debt first, and then, from there, we have to just prioritize our spending.” Face the Nation host Bob Schieffer asks Bachman: “Experts inside and outside the government say that, if we don’t raise the debt ceiling, we face the United States having to default on its financial obligations. Are you saying these are scare tactics? Or are you saying that’s not true? How can you say that?” Bachmann replies: “It is scare tactics. Because, Bob, the interest on the debt isn’t any more than 10 percent of what we’re taking in. In fact, it’s less than that. And so the Treasury secretary can very simply pay the interest on the debt first, then we’re not in default.… What it means is we have to seriously prioritize. It would be very tough love. But, I have been here long enough in Washington, DC, that I’ve seen smoke and mirrors time and time again.” Bachmann says if elected president, she would end the nation’s deficit problem by making extreme cuts in spending. “I would begin very seriously by cutting spending,” she says. “President Obama, again, he spent a trillion dollar stimulus program that’s been an abject failure. We need to seriously cut back on spending first and foremost, and then prioritize.” Her only recommendation to handle the job crisis is to cut corporate tax rates; she explains: “We have one of the highest corporate tax rates in the world; we need to drop that significantly, so that we have a pro-business, pro-job creation environment. So if we cut back the corporate tax rate, if we would zero out the capital gains rates, allow for 100 percent expensing when a job creator buys equipment for their business, that would go a long way toward job creators recognizing that this is a pro-business environment.” She says that the administration’s health care package, which she calls “Obamacare,” will cost “800,000 jobs.” Schieffer says, “That is data that other people would question,” and she retorts by saying the Congressional Budget Office (CBO), not she herself, has made that claim. A recent analysis by the St. Petersburg Times’s PolitiFact showed that Bachmann’s claim of “Obamacare” costing 800,000 jobs is an “exaggeration” of the CBO’s figures, and is “misleading.” Bachmann dodges questions about the elimination of the minimum wage, which she has advocated since 2005, and the elimination of farm subsidies, from which she and her family have benefited. [CBS News, 6/26/2011]

Entity Tags: CBS News, Alan Greenspan, Barack Obama, Bob Schieffer, US Department of the Treasury, PolitiFact (.org ), Congressional Budget Office, Ben Bernanke, Obama administration, Michele Bachmann, Timothy Geithner

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms, Obama Policies and Actions

President Obama tells CBS News interviewer Scott Pelley that he cannot guarantee Social Security recipients will get paid on August 3 if Congressional Republicans block the government from raising its debt ceiling by August 2. If the debt ceiling is not raised by that date, the US will go into default on the debt it owes to other nations. “I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue,” he says, “because there may simply not be the money in the coffers to do it.” The Obama administration and a large number of economists and financial leaders have warned of economic catastrophe if America defaults on its debt (see May 20, 2011); many Congressional Republicans, led by the House Tea Party Caucus, have refused to consider the idea of raising the debt ceiling (see April 30, 2011 and June 26, 2011), and some even welcome the idea of a debt default. Many Republicans and Democrats are attempting to use the debt ceiling issue to work out a larger economic approach to long-term deficit reduction. Republicans want huge federal spending cuts, mostly from social safety-net programs such as Social Security, Medicare, and Medicaid, while Democrats want smaller spending cuts balanced by increased revenue through tax increases on the wealthy and the closing of corporate tax loopholes. Obama warns: “[T]his is not just a matter of Social Security checks. These are veterans checks, these are folks on disability and their checks. There are about 70 million checks that go out.” Senate Minority Leader Mitch McConnell (R-KY) states flatly that Congressional Republicans have no intention of attempting to work with Democrats or the Obama administration to balance the budget or reduce the deficit, saying, “After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is probably unattainable.” However, McConnell says Congressional Republicans would work to avoid default. “The president has presented us with three choices: smoke and mirrors, tax hikes, or default,” McConnell says in remarks on the Senate floor. “Republicans choose none of the above. I had hoped to do good, but I refuse to do harm. So Republicans will choose a path that actually reflects the will of the people, which is to do the responsible thing and ensure that the government doesn’t default on its obligations.” Obama says he would refuse to sign a short-term debt ceiling increase, a tactic advocated by Republican strategists who want to bring the issue up again, and perhaps force another economic crisis, in the middle of the 2012 presidential campaign. “This is the United States of America and, you know, we don’t manage our affairs in three-month increments,” Obama tells reporters. “You know, we don’t risk US default on our obligations because we can’t put politics aside.” [CBS News, 7/12/2011; Daily Mail, 7/13/2011] The next day, McConnell offers an “alternative” debt ceiling plan which many see as fraught with political costs for Obama and Congressional Democrats (see July 13, 2011).

Entity Tags: Scott Pelley, Barack Obama, CBS News, Mitch McConnell, US Congress, US House of Representatives Tea Party Caucus

Category Tags: USA, 2011 US Credit Default, Obama Policies and Actions

Three members of the US House of Representatives’ “tea party” caucus introduce a measure to force the federal government to pay the principal and interest on the debt, and to continue to pay military personnel, even if the government goes into default because Congress refuses to raise the debt ceiling. The Obama administration and a bevy of economists and financial leaders have warned that if Congress refuses to raise the debt ceiling by August 2, the US will go into default on its debt, sending the nation’s economy into a tailspin and perhaps triggering a worldwide economic downturn (see May 20, 2011). Representatives Michele Bachmann (R-MN), Steve King (R-IA), and Louis Gohmert (R-TX) introduce House Resolution 2496, the PROMISES Act (Payment Reliability for Our Obligations to Military and Investors to Secure Essential Stability Act). All three accuse the Obama administration of lying about the potentially disastrous effects of a national default (see April 30, 2011 and June 26, 2011). President Obama recently said he could not promise that Social Security and disability checks would go out to senior citizens and veterans on August 3 if the nation defaulted on its debt on August 2 (see July 11-12, 2011); Bachmann and the others accuse Obama of lying and “fear mongering.” Bachmann says, “Don’t allow military men and women to dangle over a fire and claim they won’t get paid.” All three say that even if the government defaults on its loans, there is enough money to pay the Defense Department, Medicare, Medicaid, and Social Security benefits. Gohmert says that Obama should have told the nation, “The only thing that you have to fear is fear itself,” and says House Speaker John Boehner (R-OH) should “not… trust the president anymore.” King says of Obama, “I can’t imagine what his argument would be against paying our military and keeping our credit rating up.” Obama has offered Congress a package containing $4 trillion in spending cuts and small tax increases on the wealthy, a package that has been rejected by Congressional Republicans. Instead, Bachmann says, “President Obama is holding the full faith and credit of the United States hostage so he can continue his spending sprees.” Bachmann refuses to say who would not get paid if the nation went into default, saying instead, “We want to take the politics out of this issue.” [Minnesota Independent, 7/13/2011]

Entity Tags: Obama administration, US House of Representatives Tea Party Caucus, John Boehner, Michele Bachmann, Payment Reliability for Our Obligations to Military and Investors to Secure Essential Stability Act, US House of Representatives, Louis Gohmert, Steve King

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Mitch McConnell.Mitch McConnell. [Source: Daily Political (.com)]Senate Minority Leader Mitch McConnell (R-KY) proposes an alternative to the Obama administration’s economic proposal to raise the nation’s debt ceiling and avoid the US defaulting on its debt. Republicans in the House and Senate have repeatedly refused to consider raising the debt ceiling (see April 30, 2011, June 26, 2011 and July 13, 2011); some have welcomed the possibility of a default, simultaneously saying that the nation will suffer little real economic damage by defaulting on its debt and blaming the Obama administration for any such damage. Obama officials and an array of economists and financial leaders have warned that if the US defaults on its debt, such a default could trigger a national economic collapse and send the world’s economies into a downward spiral (see May 20, 2011). McConnell’s alternative would raise the debt ceiling in three short-term increments of up to $2.5 trillion in total over the next year, as long as President Obama matched the raises with equivalent spending cuts; House Republicans could vote for non-binding resolutions of disapproval. The London Daily Mail notes that McConnell’s proposal would put the onus of raising the debt ceiling, and the negative impact of draconian spending cuts, directly on Obama and the Democrats, absolving the Republicans of blame and giving Republican presidential candidates the opportunity to slam Obama’s economic policies during the height of the 2012 presidential campaign. McConnell has blamed what he calls the intransigence of the Obama administration for the nation’s deficit, which was largely inherited from the Bush administration, and has told the Senate, “After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is probably unattainable.” Obama has said that if Congress does not raise the debt ceiling by August 2, Social Security recipients and veterans may not get the checks they are due to receive on August 3. Few Obama officials or Congressional Democrats have any positive remarks about McConnell’s plan, and House Speaker John Boehner (R-OH) refuses to endorse it. [Daily Mail, 7/13/2011]

Entity Tags: London Daily Mail, Bush administration (43), Mitch McConnell, John Boehner, US Senate, Obama administration

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Mo Brooks.Mo Brooks. [Source: Public domain / Wikimedia]Many Congressional Republicans, particularly “tea party” freshmen, believe that not only is the Obama administration lying about the potentially catastrophic consequences of a US credit default that would follow the failure of Congress to raise the nation’s debt ceiling (see April 30, 2011, May 20, 2011, June 26, 2011, and July 11-12, 2011), but some even say that a credit default would be ultimately good for the nation. President Obama is joined by House Speaker John Boehner (R-OH), the chairman of the Federal Reserve, and Moody’s credit rating agency in saying that Congress’s failure to raise the debt ceiling by August 2 would be an economic disaster and must be avoided. But Representative Eric A “Rick” Crawford (R-AK) says otherwise. Crawford says all Obama would have to do to handle a default and the subsequent halt in US borrowing would be to use existing tax revenue to pay for what Crawford sees as “essential” federal services: the military, Medicare and Social Security, and interest on existing debt. If other government services, programs, and agencies such as the FBI, veterans’ benefits, and others would be interrupted, Crawford says that would be acceptable. “That wouldn’t work for just a few days. That would work for a few years,” he says, adding that he will not vote for a debt ceiling increase unless it is coupled with massive federal spending cuts. Budget deficits require “that we take some painful measures now. I’d rather swallow that bitter pill today.” Most of the cuts Crawford and fellow Republicans want would be in social safety-net programs, from Social Security, Medicare, Medicaid, and disability benefits to funding for education and veterans programs. Crawford and a number of House Republicans simply refuse to accept statements that economic calamity would result from a missed deadline, the Washington Post reports. That opinion, the Post says, will make raising the debt ceiling far more difficult than similar ceiling raises of previous years. Representative Mo Brooks (R-AL) says that not raising the debt ceiling would actually benefit the economy in the long run. Raising the debt ceiling, he says, just enables the federal government to spend itself into more debt. “A debt ceiling problem, as large as it is, is not anywhere near as a big or as bad as” more debt, he says. He adds that the government can continue paying creditors even if it is refused further credit. “There should be no default on August 2,” he says. “In fact, our credit rating should be improved by not raising the debt ceiling.” Most financial leaders in government and the private sector believe that the US credit rating will be dropped, perhaps significantly, if the US defaults on its debt, and the consequences of that drop could send the nation’s economy into a full-blown recession or even a depression. Even Boehner says the debt ceiling must be lifted. “Missing August 2nd could spook the [stock] market,” he says. “And you could have a real catastrophe. Nobody wants that to happen.” An Obama official recently said of legislators like Crawford and Brooks, “These are the kinds of people who get eaten by bears.” Washington Monthly editor Steve Benen writes: “The problem that plagues the nation is not about competing parties, ideologies, or creeds. It comes down to a dispute between those who believe empirical reality exists and deserves to be taken seriously vs. those who don’t. With Republican members of Congress and their supporters choosing the latter, it’s increasingly difficult to imagine the United States thriving in the 21st century.” [Politico, 5/13/2011; Washington Post, 7/14/2011; Washington Monthly, 7/15/2011]

Entity Tags: Morris Jackson (“Mo”) Brooks, Jr., Barack Obama, Eric A. (“Rick”) Crawford, Moody’s Investors Service, US Congress, John Boehner, Washington Post, Obama administration, US Federal Reserve, Steve Benen

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

In an interview with CBS News’s Scott Pelley, House Speaker John Boehner (R-OH) says that he got “98 percent” of what he wanted in a deal with Senate Democrats and the White House in the just-concluded debt ceiling extension legislation. Boehner says he and his House Republicans successfully blocked a comprehensive “grand bargain” with the Obama administration because, as he says, the “president was insisting on more taxes [and] never got serious about the kind of spending cuts that were necessary in order to get America back on a sound fiscal footing.” He tells Pelley that he “walked away” from Obama’s final proposal. “We had a lot of productive conversations, a lot of tense conversations,” Boehner says. “But it became pretty clear to me that I wasn’t going to be for higher taxes, and the president wasn’t going to cut spending as he should.… I told the president: ‘I’m not going there. I can’t do that.’” Boehner says that he has no intention at this time of ever supporting revenue increases of any sort, whether it be tax increases, closing of corporate tax loopholes, or other ways to bring more revenue into federal government; instead, he hopes that the future focus of Congressional debate “will be on reducing expenditures coming out of Washington.” Asked if Republicans would ever support tax increases, Boehner says: “I think that would be a stretch. It doesn’t seem likely to me that that would be recommended, much less supported, but I’ve been surprised before.” He concludes: “When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.” Sixty-six House Republicans voted against Boehner’s final plan, though it passed both chambers and was signed into law by Obama hours before the US would have defaulted on its debt. According to the Congressional Budget Office, the deal cuts federal deficits by $2.1 trillion over 10 years while also raising the debt limit by an equal amount. The deal also creates a joint, bicameral committee of legislators charged with finding additional cuts. [CBS News, 8/1/2011; The Hill, 8/1/2011] Days later, Standard & Poor’s cuts the US credit rating (see August 5, 2011). Republicans, including Boehner, will blame Obama for the legislation and the resulting credit reduction (see August 6-9, 2011).

Entity Tags: Standard & Poor’s, Congressional Budget Office, CBS News, John Boehner, Scott Pelley, US House of Representatives, US Senate, Obama administration

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Hours after financial services firm Standard & Poor’s downgrades the US credit rating from AAA to AA+ (see August 5, 2011), Paul Krugman, a liberal economist and Nobel Prize winner, blasts both the firm and Congressional Republicans for the downgrade. “On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation,” he writes. “And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency. On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?” Krugman states that he and other economists believe S&P’s call for a $4 trillion cut in US spending is “nonsense,” writing: “US solvency depends hardly at all on what happens in the near or even medium term: an extra trillion in debt adds only a fraction of a percent of GDP to future interest costs, so a couple of trillion more or less barely signifies in the long term. What matters is the longer-term prospect, which in turn mainly depends on health care costs.” He concludes that S&P is “in no position to pass judgment” on the US economic situation. [New York Times, 8/5/2011] The next day, the National Journal’s Edmund Andrews agrees with Krugman, writing: “[I]t’s hard to read the S&P analysis as anything other than a blast at Republicans. In denouncing the threat of default as a ‘bargaining chip,’ the agency was saying that the GOP strategy had shaken its confidence. Though S&P didn’t mention it, the agency must have been unnerved by the number of Republicans who insisted that it would be fine to blow through the debt ceiling and provoke a default.” [National Journal, 8/6/2011] Krugman’s criticisms are echoed a week later by an array of economists and private-sector financial leaders (see August 12, 2011).

Entity Tags: Edmund L. Andrews, US House of Representatives, Standard & Poor’s, Paul Krugman, US Congress

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Stung by the recent decision by Standard & Poor’s to downgrade the US government’s credit rating (see August 5, 2011) and the economic turmoil triggered by that decision in response to Republican-backed debt ceiling legislation (see May 20, 2011), US Republicans begin blaming the Obama administration for the downgrade. After the legislation passed, House Speaker John Boehner (R-OH) boasted that he and his fellow Republicans had gotten “98 percent” of what they wanted from the legislation (see August 1, 2011). Boehner now says, “Democrats who run Washington remain unwilling to make the tough choices required to put America on solid ground.” He quotes the S&P report in making his criticisms of Washington Democrats, failing to note that the S&P report singled out Republicans as responsible for the legislative decisions that led to the downgrade. “This decision by S&P is the latest consequence of the out-of-control spending that has taken place in Washington for decades. The spending binge has resulted in job-destroying economic uncertainty and now threatens to send destructive ripple effects across our credit markets.” Senator Ron Johnson (R-WI) says the downgrade and subsequent stock market plummet “provide further evidence that President Obama’s agenda has been a disaster for our economy.” Mitt Romney (R-MA), the former governor of Massachusetts and a frontrunner for the 2012 Republican presidential nomination, says the downgrade is “a deeply troubling indicator of our country’s decline under President Obama.” Longshot GOP candidate Jon Huntsman (R-UT) says the downgrade is due to the spreading of a “cancerous debt afflicting our nation” and calls for “new leadership in Washington” to address the ongoing crisis. Republican presidential candidate Tim Pawlenty (R-MN) calls Obama “inept.” Michele Bachmann (R-MN), a House Republican who led the “tea party” fight to block the debt ceiling from being raised (and thereby triggering a government debt default—see April 30, 2011, June 26, 2011, July 13, 2011, and July 14, 2011), now blames the Obama administration and particularly US Treasury Secretary Timothy Geithner for the debacle. Campaigning for the Republican presidential nomination in Des Moines, Iowa, Bachmann says that President Obama should fire Geithner: “The president’s refusal to remove Treasury Secretary Tim Geithner shows the president has no plan to restore the AAA credit rating to the United States of America. The president is not listening to the people of this country, nor is he providing the leadership that is necessary to bring about economic recovery.… I once again, today, in Polk County, Iowa, call for Treasury Secretary Tim Geithner to resign immediately for the sake of our country and to return our economy to full status.” Bachmann accuses Obama of “destroying the foundations of the US economy one beam at a time.” In robocalls targeting House Democrats, the National Republican Congressional Committee (NRCC) pins the blame for the downgrade on House Democrats. One call targeting David Loebsack (D-IA) says: “… Loebsack continues to oppose a [Constitutional] Balanced Budget Amendment that would force Washington to live within its means. Loebsack and his fellow Democrats’ addiction to big government spending has led to a downgrade of America’s credit rating and a dramatic loss in the global markets that could force you to pay more for everyday expenses. While David Loebsack keeps standing in the way of real fiscal reform, middle-class families in Iowa could now see a loss in retirement savings while mortgage rates, car payments, and student loans could become even more expensive.” Democrats respond with criticisms of their own. Tim Kaine (D-VA), a Senate candidate, says that “the continuing resistance of Congressional Republicans to entertain the need for new revenue as part of a reasonable solution is a critical part of the downgrade decision.” Senator Chris Coons (D-DE) adds, “By refusing to negotiate in good faith, Republicans turned the debt-ceiling debate into a hostage crisis and last night we saw its first casualty.” Obama campaign spokesman Ben LaBolt says, “The Republican candidates would have put our economy at great risk by allowing the nation to default on its obligations.” Senate Majority Leader Harry Reid (D-NV) calls for a “balanced approach” to future economic decisions, which would include revenue increases such as tax hikes and the closing of tax loopholes for rich corporations as well as spending cuts. [Washington Post, 8/6/2011; Reuters, 8/6/2011; National Journal, 8/6/2011; Politico, 8/7/2011; Politico, 8/9/2011]

Entity Tags: Harry Reid, Timothy Geithner, David Loebsack, Ben LaBolt, Tim Pawlenty, Tim Kaine, Willard Mitt Romney, Obama administration, John Boehner, Jon Huntsman, Chris Coons, Ronald H. Johnson, National Republican Congressional Committee, Michele Bachmann

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

In a Republican presidential primary debate in Iowa, candidate Michele Bachmann (R-MN) claims that the recent decision by financial services firm Standard & Poor’s to downgrade the US credit rating (see August 5, 2011) proved that she and her fellow “tea party” Republicans in the House of Representatives were right to resist an increase in the debt ceiling. S&P itself (see August 11, 2011), along with an array of economists and private-sector financial leaders (see May 20, 2011, August 5-6, 2011, and August 12, 2011), says that the battle by Bachmann and her fellow House Republicans to refuse a debt-ceiling increase, even if it meant the US would default on its debt, is what led to the downgrade. But Bachmann sees the issue very differently. She reiterates her position in a post-debate interview on Fox News, saying, “Standard & Poor’s essentially proved me right.” The firm’s decision to downgrade the US credit rating came about, she says, because “we don’t have an ability to repay our debt.… We just heard from Standard & Poor’s, when they dropped our credit rating and what they said is we don’t have an ability to repay our debt. That’s what the final word was from them. I was proved right in my position. We should not have raised the debt ceiling.” Pat Garofalo of the progressive news Web site Think Progress writes that “it’s blatantly clear that Bachmann has no idea what S&P said, because just about every word out of her mouth regarding the agency’s decision was incorrect.” Garofalo notes that “S&P never said ‘we don’t have an ability to pay our debt.’ After all, the agency still rates the US as AA+, meaning it has a ‘very strong capacity to meet financial commitments.’ One S&P analyst characterized the difference between AA+ and AAA as just ‘degrees of excellence.’” Moreover, Garofalo notes, S&P downgraded the nation’s credit rating because, as it said in its own press releases and subsequent statements, “the use of the debt ceiling as a political football and GOP intransigence on taxes.” Bachmann has long derided the idea that not raising the debt ceiling would be detrimental to the US economy (see June 26, 2011, and July 13, 2011). [Think Progress, 8/12/2011]

Entity Tags: Michele Bachmann, Fox News, Pat Garofalo, US House of Representatives Tea Party Caucus, US House of Representatives, Standard & Poor’s

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

New Republic senior editor John Judis writes of his disappointment that the financial services firm Standard & Poor’s did not explicitly cite the actions of House Republicans as the reason why it issued its downgrade to the US credit rating (see August 5, 2011). One of the reasons why S&P issued its credit downgrade, it said, was because of the “political brinksmanship” waged by members of Congress, resulting in policymaking that has become “less stable, less effective, and less predictable.” Judis notes that while it is virtually indisputable that the firm was referring to the actions of House Republicans who worked furiously to block debt-ceiling legislation (see July 13, 2011 and August 11, 2011), “the statement was sufficiently vague that Republicans could take it as laying the blame on the Obama administration for not agreeing to their proposals for raising the debt ceiling. And, indeed, Mitt Romney and other Republican presidential candidates have blamed President Barack Obama for S&P’s decision” (see August 6-9, 2011). “[T]hose appearing to discount the danger of a default were right-wing Republicans like Representative Michelle Bachmann and Senator Pat Toomey, who are identified with the Tea Party,” Judis writes. Senior S&P director Joydeep Mukherji “acknowledged that a major factor driving the downgrade was the utter irresponsibility and ignorance of a significant minority of Republican legislators,” but refused to cite those Republican lawmakers as responsible for the downgrade. Judis writes: “Why didn’t S&P say this more clearly in the original statement? I suspect it was out of a desire to appear non-partisan, but the effect was to apportion the blame equally on both parties. That is a disservice to the country because it allows a deranged faction of the Republican Party to continue to run riot in the Congress and to undermine any possible of a constructive response to the economic crisis.” Judis concludes, “I stand second to no one in criticizing the White House for failing to fight the Republicans, but it is worth recalling here that the principal cause of our counterproductive fiscal policy is the Republican opposition.” [New Republic, 8/12/2011]

Entity Tags: Pat Toomey, John Judis, Joydeep Mukherji, Obama administration, Standard & Poor’s, US House of Representatives, Republican Party, Willard Mitt Romney, Michele Bachmann, The New Republic

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Ethan Harris of Bank of America.Ethan Harris of Bank of America. [Source: National Association for Business Economics]Many prominent economists and financial leaders lay the blame for the US credit rating downgrade (see August 5, 2011) at the feet of Congressional Republicans. Republicans have been unified in blaming the Obama administration’s economic policies for the downgrade (see August 6-9, 2011), though House Speaker John Boehner boasted that he and his fellow Republicans received “98 percent” of what they wanted in the debt-ceiling legislation that led to the downgrade (see August 1, 2011). Nobel Prize-winning Paul Krugman, a self-described liberal, blamed Congressional Republicans for the downgrade hours after credit rating agency Standard & Poor’s announced it (see August 5-6, 2011), and S&P itself implied that Republicans were at fault for the downgrade for being willing to risk sending the nation into default if they were blocked from getting their way in the debt-ceiling legislation (see August 11, 2011). Even before the credit rating downgrade, the New York Times reports, “macroeconomists and private sector forecasters were warning that the direction in which the new House Republican majority had pushed the White House and Congress this year—for immediate spending cuts, no further stimulus measures and no tax increases, ever—was wrong for addressing the nation’s two main ills, a weak economy now and projections of unsustainably high federal debt in coming years” (see May 20, 2011). These economists and forecasters generally agree with the Obama administration’s wishes to immediately stimulate the economy to include greater private-sector spending and create more jobs, with spending cuts more useful as a long-term remedy. Republicans in Congress and on the presidential campaign trail, however, continue to insist that their policies are what will rescue the US economy; House Majority Leader Eric Cantor (R-VA) says that he and his fellow Republicans “were not elected to raise taxes or take more money out of the pockets of hardworking families and business people,” and will never consider tax or revenue increases of any sort. Even Republican economic figures such as Reagan advisor Martin Feldstein and Henry Paulson, the Treasury secretary under President George W. Bush, say that revenue increases should balance any spending cuts, a position Congressional Republicans—particularly “tea party” Republicans such as presidential candidate Michele Bachmann (R-MN)—refuse to countenance. Bank of America senior economics research official Ethan Harris writes: “Given the scale of the debt problem, a credible plan requires both revenue enhancement measures and entitlement reform. Washington’s recent debt deal did not include either.” Ian C. Shepherdson, the chief US economist for research firm High Frequency Economist, says, “I think the US has every chance of having a good year next year, but the politicians are doing their damnedest to prevent it from happening—the Republicans are—and the Democrats to my eternal bafflement have not stood their ground.” Joel Prakken, chairman of Macroeconomic Advisers, and Laurence H. Meyer, former Federal Reserve governor, both call the Republicans’ calls for spending cuts “job-kill[ers].” Bill Gross, head of the bond-trading firm Pimco, lambasts Republicans and what he calls “co-opted Democrats” for throwing aside widely accepted economic theory for Republican-led insistence that draconian spending cuts, largely in social safety-net programs such as Social Security and Medicare, will “cure” the US’s economic ills. Instead, Gross writes: “An anti-Keynesian, budget-balancing immediacy imparts a constrictive noose around whatever demand remains alive and kicking. Washington hassles over debt ceilings instead of job creation in the mistaken belief that a balanced budget will produce a balanced economy. It will not.” [New York Times, 8/12/2011]

Entity Tags: Ian Shepherdson, US Congress, Eric Cantor, Bill Gross, Standard & Poor’s, Henry Paulson, Paul Krugman, New York Times, Joel Prakken, John Boehner, Laurence H. Meyer, Martin Feldstein, Michele Bachmann, Ethan Harris, Obama administration

Category Tags: USA, 2011 US Credit Default, Bush Policies and Actions, Commentaries and Criticisms

Business Insider reporter Zeke Miller says flatly that Representative Michele Bachmann (R-MN), a leading candidate for the 2012 Republican presidential nomination, is the reason why the US suffered a recent credit downgrade (see August 5, 2011). Yesterday, Bachmann insisted that the credit downgrade proved her argument against raising the US debt ceiling was correct (see August 11, 2011), but, Miller writes, the evidence, including statements by Standard & Poor’s, the agency that lowered the nation’s credit rating, shows that she and her fellow Congressional Republicans who fought to prevent Congress from authorizing the raising of the debt ceiling (see April 30, 2011, June 26, 2011, July 13, 2011, July 13, 2011, and July 14, 2011), are themselves responsible. S&P officials have said that Congress’s intransigence on raising revenues in any fashion is one of the central reasons why it lowered the US’s credit rating (see August 11, 2011). Bachmann led “tea party” Republicans in voting against every plan offered to raise the debt ceiling; she told reporters that the only way she would even consider voting for a raise in the debt ceiling was if the same legislation repealed entirely the health care reform act recently passed by Congress. Miller goes on to note that all eight Republican presidential candidates, including Bachmann, have said that they would not sign a bill into law that provided 10 times the amount of government spending cuts as it authorized tax and revenue increases. Miller concludes: “Bachmann’s statements on the debt ceiling come off either as stunningly uninformed about the issue, or deliberately misleading. Either way, this line of attack will only weaken her campaign with mainstream and business voters.” [Business Insider, 8/12/2011]

Entity Tags: Business Insider, Standard & Poor’s, Zeke Miller, Michele Bachmann

Category Tags: USA, 2011 US Credit Default, Commentaries and Criticisms

Newt Gingrich during a recent debate among Republican presidential candidates.Newt Gingrich during a recent debate among Republican presidential candidates. [Source: Associated Press]Former House Speaker Newt Gingrich (R-GA), a Republican candidate for the 2012 presidential nomination, says that schools should save educational expenses by firing all custodians except for one “master janitor” and have the children do the rest of the maintenance work for their schools. Gingrich recommends this particularly for schools in poorer areas.
Attacks Unions, Child Labor Laws - Child labor laws prohibit such actions; Gingrich blames these laws, and the unions to which many maintenance workers and custodians belong, for causing “unnecessary” expenditures and for what he says is blocking poorer children from bootstrapping their way to economic success. “This is something that no liberal wants to deal with,” he tells an audience at the John F. Kennedy School of Government at Harvard. “Core policies of protecting unionization and bureaucratization against children in the poorest neighborhoods, crippling them by putting them in schools that fail has done more to create income inequality in the United States than any other single policy,” he continues. “It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid. You say to somebody, you shouldn’t go to work before you’re what, 14, 16 years of age, fine. You’re totally poor. You’re in a school that is failing with a teacher that is failing. I’ve tried for years to have a very simple model. Most of these schools ought to get rid of the unionized janitors, have one master janitor, and pay local students to take care of the school. The kids would actually do work, they would have cash, they would have pride in the schools, they’d begin the process of rising.… You go out and talk to people, as I do, you go out and talk to people who are really successful in one generation. They all started their first job between nine and 14 years of age. They all were either selling newspapers, going door to door, they were doing something, they were washing cars. They all learned how to make money at a very early age. What do we say to poor kids in poor neighborhoods? Don’t do it. Remember all that stuff about don’t get a hamburger flipping job? The worst possible advice you could give to poor children. Get any job that teaches you to show up on Monday. Get any job that teaches you to stay all day even if you are in a fight with your girlfriend. The whole process of making work worthwhile is central.”
Proposal Called 'Absurd,' 'Insane' - Gingrich, who in 1994 proposed placing children whose families were on welfare into state-run orphanages, is quickly targeted for criticism by experts and observers. Randi Weingarten, the president of the American Federation of Teachers (AFT), calls Gingrich’s proposal “absurd,” and says: “Who in their right mind would lay off janitors and replace them with disadvantaged children—who should be in school, and not cleaning schools? And who would start backtracking on laws designed to halt the exploitation of children?” Gingrich says he has a number of “extraordinarily radical proposals to fundamentally change the culture of poverty in America and give people a chance to rise very rapidly.” [Politico, 11/18/2011; New York Times, 11/19/2011] Jordan Weissman, an associate editor of The Atlantic, calls Gingrich’s proposal “insane.” He writes: “This suggestion is, on its face, insane. It sounds like a bad Stephen Colbert joke [referring to a popular political satirist]. But if you stop and consider its merits for a minute or two… well no, it’s still quite insane. And if you spend an evening researching the nitty gritty of what public school custodians actually do for a living, it turns out to be downright cruel.” He says the proposal is “a jarring illustration of Gingrich’s casual disdain for American workers.” Weissmann refers to a job description for a New York City public school custodial engineer: that job requires the worker to use hazardous chemicals such as hydrochloric acid; repair heating and air conditioning systems; do electrical and plumbing repair; and other potentially dangerous tasks. Weissman asks, “What parent wants a nine-year-old, or even a 13-year-old, toying with the HVAC in her school?” Custodial jobs are among the most physically taxing of all jobs, causing workers to suffer an unusually high number of on-the-job injuries and causing long-term physical debilitation. Weissman concludes: “It would be easy to chalk Gingrich’s comments up simply to his well-known animus towards unions. But I don’t think that quite explains it. Rational people can argue about how much someone should be paid to clean.… But that decision starts from the respectful assumption that maintaining a school is something worthwhile for an adult to spend their lives on. That’s not the case in Gingrich’s worldview. Forget that an adult might need that job to put food on the table for their own children. Forget that he’s suggesting we flood an ailing job market with part time, minimum-wage-earning students. This isn’t about labor economics. It’s about respect, and the fact that the leading Republican presidential candidate doesn’t have a spit’s worth of it for manual labor. In his eyes, a janitor’s job just doesn’t mean much. It’s so easy, a child could do it.” [Atlantic Monthly`, 11/21/2011]
Former Custodian: Gingrich 'Doesn't Even Know Why' He is Wrong - A diarist for the liberal blog Daily Kos describes himself as a former “custodian for a very large child care center.” He writes: “I was the guy mopping up vast amounts of wet, sticky rice from the floor, sanitizing the tables, chairs and high-chairs, and washing the dishes. I sanitized doorknobs. I filed down jagged parts of metal that somehow, every once in a while, stuck out from steel door jam[b]s and bathroom stalls. I hauled out dozens of bags of dirty diapers Every Single Day… and yes, I cleaned up an unholy amount of poop from a dozen itty bitty toilets. [T]hese are many of the things Newt Gingrich believes should be jobs for poor children in our public school systems. Cleaning up vomit. Cleaning feces off of toilet seats. Handling cleaning solvents that can eat right through latex gloves. Washing dishes with an industrial dish washer that heats the water over 180 degrees, enough to scald young skin.… Plunging toilets plugged with diarrhea and toilet paper, then sanitizing the toilet seat for the Non Poor students. Newt Gingrich wants our children cleaning blood, mucous, feces, urine, dried snot, vomit loaded with God-Knows-What pathogens from floors and walls and door knobs with chemicles [sic] that can eat the skin right off your arm or cause permanent blindness if it splashed into the eyes or loss of smell if some Janitor Kid jammed his finger up his nose… which kids never do, right? Never. Because an eight-year-old is going to observe strict safety regulations, right?” The diarist concludes: “[Gingrich] should be embarrassed for suggesting we make poor children clean our schools. There is SO much wrong with that statement and the most irritating thing is, he doesn’t even know WHY.” [Daily Kos, 11/21/2011]

Entity Tags: Daily Kos, Jordan Weissman, Randi Weingarten, Newt Gingrich

Timeline Tags: Domestic Propaganda, 2012 Elections

Category Tags: USA, US Labor Issues, Commentaries and Criticisms

Republican presidential candidate Newt Gingrich (R-GA) issues accusations that Americans on government aid programs are in many cases wasteful drug users who use their aid money to go on lavish vacations. Gingrich, riding a surge of popularity as the Iowa caucuses approach, calls President Obama “the food stamp president” during his stump speeches. In an appearance in Council Bluffs, Iowa, Gingrich says: “Remember, this is the best food stamp president in history. So more Americans today get food stamps than before. And we now give it away as cash—you don’t get food stamps. You get a credit card, and the credit card can be used for anything. We have people who take their food stamp money and use it to go to Hawaii. They give food stamps now to millionaires because, after all, don’t you want to be compassionate? You know, the Obama model: isn’t there somebody you’d like to give money to this week. That’s why we’re now going to help bailout Italy because we haven’t bailed out enough people this week, the president thought let’s write another check. After all, we have so much extra money.” The nonpartisan fact-checking entity PolitiFact calls Gingrich’s accusations complete lies. The “food stamp program,” known as the Supplemental Nutrition Assistance Program (SNAP), has very strict guidelines about what can and cannot be bought with federal aid dollars. Except for very limited exceptions, SNAP recipients cannot use aid money for restaurant meals or to buy anything other than groceries. SNAP funds cannot be used to buy alcoholic beverages. The “electronic benefits transfer” card, or EBT cards, are similar in appearance to credit cards, but have a very different function. EBT cardholders cannot use their cards to buy airline tickets, whether it be for Hawaiian vacations or anything else. PolitiFact doubts that any recipients would have enough funds to buy such tickets in the first place; the average monthly SNAP benefit is $134 per person. Julia Isaacs of the Brookings Institution says, “There is undoubtedly some illegal bartering of EBT cards—though I understand trafficking in EBT cards is less than under the old food stamps—but I am having trouble imagining how you could barter an EBT card for an airplane ticket.” PolitiFact notes that Gingrich’s claims may have come from a recent news broadcast in St. Louis, which found that some Missouri SNAP recipients spent $2,737 on food in Hawaii in January 2011. The money, though spent out of state, was spent on legitimate goods such as groceries. The amount was .07 percent of the total money allocated to SNAP residents in Missouri for January 2011. And the Missouri beneficiaries had legitimate reasons to be in Hawaii—some of them were members of the military transferred to new duty bases, for example. If the Missouri story is the source of Gingrich’s claims, PolitiFact notes, then Gingrich completely misrepresented the facts of the story. As far as the “food stamps for millionaires” claim, anyone who earns over 130 percent of the poverty line cannot receive benefits. No such beneficiaries have been identified, and if they do exist, they are breaking the law. Michael Wiseman of George Washington University says, “I would challenge Newt Gingrich to find a millionaire in annual income who gets on food stamps legally.” PolitiFact says that Gingrich’s claims are “so ridiculous” that the researchers thought for a time that he might be joking. Think Progress reporter Marie Diamond calls Gingrich’s claims “absurd.” At a recent campaign event in Iowa, citizen Don Brantz confronted Gingrich, saying: “You don’t always tell the truth, Mr. Gingrich, and that food stamp thing is one of them. Iowa already has a computer system. We do not pay money so the people on food stamps can buy beer and anything else. It’s a very specific thing.” (Diamond notes that Gingrich is a frequent world traveller, taking lengthy vacations in luxury spots around the world. In one instance, he told reporters that after taking a luxury cruise in Greece, he came away with a deeper understanding of the European financial crisis.) [St. Petersburg Times, 12/1/2011; Think Progress, 12/2/2011; ABC News, 1/2/2012] MSNBC talk show host Ed Schultz will say that Gingrich, like fellow Republican candidate Rick Santorum (R-PA), “is also quick to connect programs like food stamps to the African-American community.” Schultz’s guest, author and radio host Michael Eric Dyson, says: “I don’t think we need Newt Gingrich’s pedagogy in the NAACP. I think this is condescension at its most poignant. And, as with Rick Santorum, when you have pet Negro causes, you tend to treat Negros like pets.” New York Times columnist Charles Blow will say of Gingrich’s remarks that “this sort of racial pandering is exactly what happens at this point in a race.” Blow calls Gingrich’s remarks “extreme, very racist.” [Politico, 1/6/2012]

Entity Tags: Michael Wiseman, Don Brantz, Charles M. Blow, Barack Obama, Edward Andrew (“Ed”) Schultz, Michael Eric Dyson, PolitiFact (.org ), Supplemental Nutrition Assistance Program, Marie Diamond, Newt Gingrich

Timeline Tags: Domestic Propaganda, 2012 Elections

Category Tags: Commentaries and Criticisms

Donald Trump and Newt Gingrich. The two have combined to offer 10 poor children a chance to become Trump’s ‘apprentices.’Donald Trump and Newt Gingrich. The two have combined to offer 10 poor children a chance to become Trump’s ‘apprentices.’ [Source: MSNBC / Raw Story]Republican presidential candidate Newt Gingrich (R-GA) modifies his previously stated stance that union janitors at public schools should be fired and poor schoolchildren should be put to maintenance and custodial tasks in their places (see November 18, 2011 and After). Gingrich now says that he recognizes some custodial jobs are dangerous, and says that poor students should be limited to jobs such as cleaning bathrooms. During a campaign rally, he asks, “What if they became assistant janitors and their jobs were to mop the floor and clean the bathroom?” Gingrich goes on to say that making poor kids work as janitors is similar to a successful program, Earning by Learning, that pays children to read books. He also says that poor children “have no habit of work” and no knowledge of how to make an income “unless it’s illegal.” He says: “Really poor children in really poor neighborhoods have no habits of working and have nobody around them who works, so they literally have no habit of showing up on Monday. They have no habit of staying all day. They have no habit of ‘I do this and you give me cash’ unless it’s illegal.” Gingrich then goes on to attack child labor laws and the “liberals” who support them, saying: “This is something that no liberal wants to deal with. Core policies of protecting unionization and bureaucratization against children in the poorest neighborhoods, crippling them by putting them in schools that fail has done more to create income inequality in the United States than any other single policy. It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid.… If we are all endowed by our creator with the right to pursue happiness, that has to apply to the poorest neighborhoods in the poorest counties, and I am prepared to find something that works, that breaks us out of the cycles we have now to find a way for poor children to work and earn honest money.” Alex Seitz-Wald of the progressive news Web site Think Progress responds, “Of course, reading books is not hard labor and is directly relevant to education—cleaning bathrooms is not.” [Think Progress, 12/1/2011; The Hill, 12/1/2011; ABC News, 12/1/2011] The next day, Fox News anchor Megyn Kelly opines, “He seemed to try to clarify that… and say what he’s talking about is maybe having kids be assistants to those union members.” Jeremy Holden of the progressive media watchdog site Media Matters says of Gingrich’s entire proposal: “Here’s a thought. What if we focused on fixing the economy and schools, and the students’ ‘job’ was to go to school?” [Media Matters, 12/2/2011] Fox News correspondent Geraldo Rivera later writes that it is obvious Gingrich knows little to nothing about the daily lives of poor people: “If he knew about the culture of poverty… Gingrich never would have proposed suspending child labor laws and putting ghetto public school students to work as junior janitors in fifth or sixth Grade. Like his earlier calls to bring back orphanages and to deny support to unmarried woman who have children while on welfare, this Gingrich proposal is crass and creepy.” Rivera notes that many poor families have breadwinners who work long hours in menial, physically demanding jobs, so poor children have many, many working role models in their lives. “[T]hese children know about work,” Rivera observes. [Fox News, 12/8/2011] Gingrich later says that he will address the issue of poor children and work by taking part in a “program” by billionaire Donald Trump, the host of NBC’s The Apprentice, where Trump will hire 10 poor children as “apprentices.” Gingrich will elaborate, “I’ve asked [Trump] to take one of the poorer schools in New York and basically offer at least 10 apprenticeships to kids from that school to get them into the world of work, and to get them into an opportunity to earn money, and get them into the habit of showing up and realizing that effort gets rewarded, and that American is all about the work ethic.” [Raw Story, 12/5/2011]

Entity Tags: Megyn Kelly, Alex Seitz-Wald, Geraldo Rivera, Donald Trump, Jeremy Holden, Newt Gingrich

Timeline Tags: Domestic Propaganda, 2012 Elections

Category Tags: USA, US Labor Issues, Commentaries and Criticisms

The nonpartisan Center on Budget and Policy Priorities (CBPP) finds that the Supplemental Nutrition Assistance Program (SNAP), formerly the “food stamp” program, is playing a critical role in keeping American citizens from starving during the economic recession. The program has long been reviled by Republicans and conservatives, and recently Republican presidential contender Newt Gingrich (R-GA) smeared President Obama as “the food stamp president” (see November 30 - December 2, 2011 and January 5, 2012), and falsely claimed that Obama has presided over the largest increase of Americans receiving SNAP assistance in US history (see January 17, 2012). The program benefits a disproportionately large number of children and disabled and elderly people, according to the CBPP. Since the recession began in late 2007, the CBPP says, “SNAP has responded effectively to the recession” in providing much-needed assistance to Americans, particularly since the recession has driven many families into “low-income” status. “According to the Census Bureau’s Supplemental Poverty Measure, which counts SNAP as income, SNAP kept more than 5 million people out of poverty in 2010 and lessened the severity of poverty for millions of others.” As the economy recovers and legislative provisions expire, SNAP spending will decrease, according to Congressional Budget Office (CBO) predictions. “By 2022 SNAP is expected to return nearly to pre-recession levels as a share of GDP. Over the long term, SNAP is not growing faster than the overall economy and thus is not contributing to the nation’s long-term fiscal problems.” The payment accuracy of SNAP is extraordinarily high, the CBPP claims, refuting the claims of massive fraud made by Gingrich and other opponents of the program. And, according to the CBPP, economists say that the program is “one of the most effective forms of economic stimulus,” helping grow the economy as it protects poverty-stricken families. [Center on Budget and Policy Priorities, 1/9/2012]

Entity Tags: Center on Budget and Policy Priorities, Barack Obama, US Census Bureau, Supplemental Nutrition Assistance Program, Newt Gingrich, Congressional Budget Office

Category Tags: USA, Bush Policies and Actions, Obama Policies and Actions

The nonpartisan FactCheck.org finds that recent claims by presidential candidate Newt Gingrich (R-GA) that “more people have been put on food stamps by Barack Obama than any president in American history” are wrong. In fact, far more Americans were added to the Supplemental Nutrition Assistance Program (SNAP) rolls under President George W. Bush than under Obama. Gingrich has made the claim in a number of political speeches (see November 30 - December 2, 2011 and January 5, 2012), but his reiteration of the claim during a recent Republican debate in South Carolina has drawn a great deal of media attention (see January 16, 2012). FactCheck finds: “Gingrich would have been correct to say the number now on food aid is historically high. The number stood at 46,224,722 persons as of October, the most recent month on record. And it’s also true that the number has risen sharply since Obama took office. But Gingrich goes too far to say Obama has put more on the rolls than other presidents.” Information from the US Department of Agriculture (USDA)‘s Food and Nutrition Service going back to January 2001 “show[s] that under President George W. Bush the number of recipients rose by nearly 14.7 million. Nothing before comes close to that.” Moreover, “the program has so far grown by 444,574 fewer recipients during Obama’s time in office than during Bush’s.” The trend in recent months has been for the number of food-stamp recipients to decline, another fact Gingrich fails to note. FactCheck finds that the rise in the number of Americans on food stamps—currently one out of seven—began during the second term of the Bush presidency. “In the 12 months before Obama was sworn in, 4.4 million were added to the rolls, triple the 1.4 million added in 2007,” the organization writes. “To be sure, Obama is responsible for some portion of the increase since then. The stimulus bill he signed in 2009 increased benefit levels, making the program more attractive. A family of four saw an increase of $80 per month, for example.… The stimulus also made more people eligible. Able-bodied jobless adults without dependents could get benefits for longer than three months.” Part of the reason for the higher number of recipients under Obama is the new outreach to eligible citizens by state governments, according to the USDA; many state governments have worked harder to inform eligible citizens of their right to apply for government assistance, and have reduced the amount of information that claimants must provide to receive assistance. FactCheck concludes: “We don’t argue that the program is either too large (as Gingrich does) or too small. It has certainly reached a historically high level, and may or may not grow even larger in the months to come. But the plain fact is that the growth started long before Obama took office, and participation grew more under Bush.” And it quotes the USDA’s Kevin Concannon, who recently told a Wall Street Journal reporter, “I realize Mr. Gingrich is a historian, but I’m not sure he’d get very high marks on that paper.” [USA Today, 1/17/2012] CBS News notes that the White House has called Gingrich’s claims “crazy,” and finds: “While the number of people on food stamps is indeed at a record level, that’s in part because of eligibility rules being relaxed under the administration of George W. Bush. It’s also due in part to the economic downturn that began under Mr. Bush.… [T]hat percentage increase hardly makes Obama the ‘best food stamp president in American history,’ at least when you look at the question proportionally. The percent increase in beneficiaries during Mr. Bush’s presidency was higher than it has been under Mr. Obama: The number of beneficiaries went from 17.3 million in 2001 to 28.2 million in 2008—an increase of 63 percent in years that are mostly considered non-recessionary.” [CBS News, 1/17/2012] US News and World Report agrees with FactCheck, finding that “SNAP participation has been on the rise since well before President Obama took office. Nearly 17.2 million people in FY 2000 participated in the program, a figure that increased by nearly 64 percent by 2008.” [US News and World Report, 1/17/2012] The Associated Press accuses Gingrich of distorting the facts and notes: “It’s gotten easier to qualify for food stamps in the past decade but that is because of measures taken before Obama became president. It’s true that the number of people on food stamps is now at a record level. That’s due mainly to the ailing economy, which Republicans blame on Obama, as well as rising food costs. The worst downturn since the Great Depression wiped out 8.7 million jobs, pushed the unemployment rate to a peak of 10 percent in October 2009, and increased poverty.” [Associated Press, 1/17/2012] The nonpartisan Center on Budget and Policy Priorities has found that SNAP is a critical element in keeping poverty-stricken Americans, particularly children and the elderly, from starving during the economic recession (see January 9, 2012).

Entity Tags: Kevin Concannon, CBS News, Barack Obama, Associated Press, Center on Budget and Policy Priorities, George W. Bush, US News and World Report, Obama administration, FactCheck (.org), US Department of Agriculture, Supplemental Nutrition Assistance Program, Newt Gingrich

Timeline Tags: Domestic Propaganda, 2012 Elections

Category Tags: USA, Bush Policies and Actions, Obama Policies and Actions

President Obama speaks on the topic of clean energy in front of the Copper Mountain Solar Project in Boulder City, Nevada, in March 2012.President Obama speaks on the topic of clean energy in front of the Copper Mountain Solar Project in Boulder City, Nevada, in March 2012. [Source: CleanTechnica (.org)]An analysis by Reuters claims that the $90 billion investment made by the federal government to generate jobs in the field of clean energy (see February 2009) has not produced as many jobs as initially touted. In March 2012, President Obama spoke in front of the Copper Mountain Solar Project in Boulder City, Nevada, which uses 1 million solar panels to power 17,000 homes. The facility only employs 10 people. The green initiative has put people to work retrofitting over a million homes to lower heating and cooling costs, and energy generation from solar and wind sources has nearly doubled since 2008. But some say the program has not created enough jobs. Critics say the program was expected to lower the unemployment rate, currently hovering above 8 percent, and say it has not done so. Supporters say the administration promised too much in the short term and fear a backlash that might undermine support for clean-energy policies across the board. Clean energy specialist Mark Muro of the Brookings Institution says, “All of this stuff is extraordinarily worthy for driving long-term economic transformation but extremely inappropriate to sell as a short-term job program.” Janet Bluman, head of the Foundation for an Independent Tomorrow, says, “From my perspective it makes more sense for us to arm our clients with the basic skills, rather than saying, ‘By golly, you will do something in the green economy or you won’t work.’” Bluman claims that her organization, which trains people for jobs in the Las Vegas area, has seen positions in trucking and accounting go unfilled because training money had been earmarked for green efforts. The federal program earmarked some $500 million for job training, and has employed some 20,000 people, far short of its stated goal. Republicans say the clean-energy program is merely a way for the Obama administration to give money to Obama’s friends (see October 15, 2012). GOP presidential candidate Mitt Romney has claimed, “[Obama] handed out tens of billions of dollars to green energy companies, including his friends and campaign contributors at companies like Solyndra that are now bankrupt.” Romney and other Republicans have not advanced proof of their allegations. Supporters say that in the long term, clean energy will “create a bounty of stable, middle-class jobs and fill the gap left by manufacturing work that has moved overseas,” as Reuters reports. White House officials say that there is more to the clean energy program than creating jobs. “We have a record of success that has created tens of thousands of jobs and is ensuring that America is not ceding these industries to countries like China,” White House spokesman Clark Stevens says. “Thanks to the investments we’ve made, these industries will continue to grow, along with the jobs they create.” Senator Charles Grassley (R-IA), an opponent of the program, says: “The green jobs-training program just didn’t work. It was a poor investment of tax dollars.” Darren Devine of the College of Southern Nevada says: “Will it add a significant number of jobs, enough to make a real dent in our unemployment? No, I don’t see that happening.” What it will do is help the country reduce its energy consumption, lower the amount of carbon dioxide being pumped into the atmosphere, and help create jobs in the clean-energy and other fields, such as health care, education, and technology. [Reuters, 4/13/2012]

Entity Tags: Janet Bluman, Barack Obama, Charles Grassley, Darren Devine, Obama administration, Copper Mountain Solar Project, Reuters, Willard Mitt Romney, Mark Muro

Timeline Tags: US Solar Industry

Category Tags: Obama Policies and Actions

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