Al Gore Faults Obama for Climate Inaction

<|163||”Without presidential leadership…nothing will change”>

For a brief moment the media perked up and took notice that no attention is being paid to the climate problem, but only because Al Gore wrote an article that criticized the President. In fact, this 7,000 word piece in Rolling Stone lambasted the media, the corporate world and legislators far more.

Dramatic and often violent climatic events abound. Gore cites 9 of the 10 hottest years being among the last 13; floods that displaced 20 million in Pakistan, inundated an area of Australia as big as France and Germany combined and overflowed the Mississippi’s banks all along its course; drought and fires that killed an estimated 56,000 in Russia and now record fires in Arizona, and several more examples – but says the media simply report on them as news events and move on to the Donald Trump or Charlie Sheen story. “Most of the news media completely ignore how such events are connected to the climate crisis, or dismiss the connection as controversial”, says the former Vice President.

And all the while the polluting corporations fund pseudo-scientists to “manufacture doubt” and pressure Congress with four lobbyists for every member. The media cite their need to be objective by giving equal time to telling both sides of the story, but “all things are not equally true”. With the Supreme Court decision that allows corporations and unions to make unlimited donations to election campaigns, there is no question that the power of free speech has been given over to the power of money. Elections having become hopelessly expensive, politicians owe payback to the corporations whose contributions bought them their office. Thus is legislation born that ignores the will of the people (who are largely unaware that it is even happening).

When he gets to Obama, Gore is careful to credit him with several accomplishments – his “help” to secure passage of a cap-and-trade bill in the House (which he then never pressured the Senate to take up), heightened fuel efficiency standards for autos, regulation of greenhouse gases by the EPA, “green” projects as part of the stimulus package. But there was no follow-through, no fight in him when Congress then sabotaged those projects by stripping their funding.

Above all is Gore’s complaint that, “President Obama has thus far failed to use the bully pulpit to make the case for bold action on climate change”.

That has been the President’s conduct in a host of issues. We have come to picture him as a president who prefers to preside, who visits auto plants, or military bases, or elementary school classrooms, leaving the crucial issues of the day without a champion. He seems evermore a politician than a leader, one who will not get out in front of an issue that is doomed to fail in Congress even though bellowing from that pulpit would educate the public, build support and rally outrage against that Congress. “President Obama has never presented to the American people the magnitude of the climate crisis. He has simply not made the case for action”, Gore says in the article.

So the climate issue languishes — a threat to the planet that reduces all other matters to penny-ante, a growing crisis that begs for a national energy policy to reduce our oil dependency and foreign debt, and to create new industries and jobs in the United States. Yet from a President who had made it one of his key goals when running for that office, we get silence.

On Debt Deal, Republicans Always Had the Upper Hand

Surge Withdrawal from Afghanistan About to Begin

Debt Limit Negotiations Are at a Standstill

Five weeks remain before Treasury Secretary Tim Geithner says the U.S. will not be able to pay its bills. First, Republican negotiator Eric Cantor simply quit negotiation sessions with the Vice President. Jon Kyl, the second Republican negotiator, followed suit. Pundits had said that Senate Majority Leader Mitch McConnell was pulling the strings; that he wanted Biden out of the way to force the direct involvement of the President, who tends to come to the table with concessions already granted.

And so, the two met ten days after the walkout. Compromise is obviously required, but McConnell refused to yield to a Democratic push for new revenues. “It’s time Washington take the hit, not the taxpayers”, said McConnell after the meeting, insisting that reduction of the nation’s debt come only from cuts in spending.

However, the tax changes on which the President seems to be insisting are elimination of corporate loopholes, and an end to subsidies to oil and gas companies, the top five of which earned $35 billion in profits in the first quarter. With the full faith and credit of the United States at stake, we the people are left to guess at where things stand.

Let’s go back to September 29, 2008. The news channels watched on one side of a split screen the failing vote in the House of Representatives for the $700 billion financial bailout, while the other half of the screen tracked the Dow Jones index plunging 777 points in reaction. Two-thirds of Democrats had voted for the bailout, but only one-third of Republicans. It missed by 13 votes. The Bush administration desperately re-submitted the bill. On the second try, it passed.

If you’ve ever wondered what might have happened had there been no bailout, you might soon have that opportunity. This time it won’t be bank credit that will seize up, but the country itself. By August 2, says Treasury Secretary Timothy

I am struck very recently by the number of leaders in American business, politics and journalism who now get a certain faraway look in their eyes…and say, “It’s worse than people think, you know’”. Peggy Noonan in the Wall Street Journal

Geithner, the nation will run short of money if Congress doesn’t raise the debt ceiling above the current $14.3 trillion. By law, the government cannot spend or obligate itself beyond that dollar sign.

Raising the debt limit usually passes without notice. During the George W. Bush presidency, the limit was raised seven times without incident (twice in 2008). But since 2008, Republicans have gained 63 seats in the House; 28 of them are Tea Party candidates bent on little other than shrinking government by slashing spending and enacting still more tax cuts. In return for raising the debt limit, they are pressuring the Republican leadership to demand that the Obama administration cut $2 trillion from the budget 10 years.

Moody’s has already issued a warning that if the debt limit is not increased, it would consider downgrading U.S. credit. Politicians on both sides blame each other for the continuing impasse.

Government spending has already bumped up against the debt limit, but Treasury’s financial shuffling has bought time until the checks finally bounce in mid-summer. At that point the government would use its funds to the extent it can prevent the country from going into default with other nations, a catastrophe that would cause the collapse of the dollar, soaring inflation and a worldwide panic. The Treasury will instead need to shortchange domestic spending: seniors will not receive social security checks, student loans will be suspended, military pay held up, and more. The panic will be here at home.

But it’s worse. The standoff a few months ago, with a government shutdown in the offing, was resolved with a last-minute $38.5 billion cut in spending. It didn’t bother Wall Street that the government might turn off the lights for a while. But the stakes this time are far higher; this has never happened before and the consequences could be seismic. If the political parties do not show progress and instead engage in brinksmanship right to the cliff edge, then well before any last minute theatrics, the bond market is likely to be spooked. If our politicians, stuck in their intractable positions, do not show progress and flirt with United States default, markets around the world could spin out of control.

Jun 24 2011 | Posted in Debt & Deficit | Read More »

Senate Votes to End Ethanol Subsidies

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That the Senate would in the span of a mere fortnight vote to fix two of America’s problems is enough to make one positively giddy. Shortly after refusing to delay the Dodd-Frank financial reform bill’s cap on debit card fees charged by banks, the Senate, in a coalition of both Republicans and Democrats, voted to end the 45-cent-a-gallon subsidy to the ethanol industry.


And they didn’t stop there: they eliminated the 54-cent-a-gallon import tariff that has doubly protected the ethanol industry.
The subsidy, which costs U.S. taxpayers $6 billion a year, took the form of a tax credit to refiners for using corn ethanol even though they are mandated by law to use some form of ethanol anyway — 36 billion gallons of biofuels by 2022.

“Either we subsidize it, we protect it from competition or we require its use…[it is] the only product that receives all three. We simply cannot afford to pay the oil industry for following the law”.

That was Susan Collins, Republican of Maine, on the Senate floor. The measure was championed by Sen. Tom Coburn (R-OK) about whose kerfuffle with anti-tax puppet master Grover Norquist we reported on earlier.

Corn was already the nation’s most subsidized crop when in 2007 legislators from the agricultural states pushed through the subsidy in the guise of reducing oil imports and the carbon dioxide it releases into the air. Ostensibly, plant products, which take in CO2 to grow, only return the ledger to zero when their CO2 is released back into the atmosphere when burned as fuel. But it was quickly realized – a study at Cornell led the way – that when all elements involved in the entire life cycle of corn ethanol are factored in (land clearing, fertilizer, and so on), emissions of CO2 are little different than oil. PlanetWatch.org explains that in “Biofuels Come a Cropper”.

The consequences of the rush to ethanol have been still more damaging. Land clearance fells vegetation and trees, which releases their stored carbon into the atmosphere. Worse, corn diverted to running cars has created food shortages and driven up food prices. In countries like Mexico, where corn is a staple of the diet, there have been riots. So far, biofuels in general have proved to be more mistake than solution, covered in some detail here, in “Bloom Fades for Agrofuels”.

Getting to Know Paul Ryan’s Medicare Plan

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When Wisconsin’s Paul Ryan first released his “Path to Prosperity” it was met with hosannas for his bravery, particularly in confronting the problem of Medicare’s looming insolvency.

If you haven’t read it (and here it is), it is for the most part a white paper that spells out what has gone wrong, the grim future the nation faces on its present course and the brighter future that his budget would achieve. It states what his budget will accomplish (e.g., “2.5 million additional private sector jobs in the last year of the decade”, “growth, increasing real GDP by $1.5 trillion”) but does not spell out how he would get there. Much of the text is devoted to uplift such as “Above all, this Path to Prosperity calls for a government faithful to its limited but noble mission: securing every American’s right to pursue a destiny of his or her own choosing”.

But it doesn’t detail the specific assumptions that lead to his end results. As Paul Krugman says, “It’s a plan for a plan”. When we get to Medicare, for example, it says it would:

“Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs.”

It doesn’t say what that payment will be nor is it clear what is meant by “a list of guaranteed coverage options”.

The budget itself appears as only a 10-page appendix in a 71-page document. It is not detailed. For Medicare: a single row of ten numbers for the years from 2012 to 2021.

Which is why time elapsed before reports appeared that discovered some worrisome thorns lurking in the rosy language. Economists and others had to dig further to find out what lay beyond 2021 and match the numbers against demographics to make these discoveries:

The premium payment to seniors beginning in 2022 would already be $6,000 less than the projected cost of insurance according to the Congressional Budget Office. That’s $6,000 that the average senior must pay out of pocket.

In subsequent years the Medicare payment increases at a slower rate than projected insurance costs. Seniors would have to pay an ever-greater share of their annual insurance bill.

Because the budget requires repeal of the health care bill signed last year by President Obama, that bill’s prohibition against an insurer turning away an applicant with a precondition would be void, as would the prohibition against dropping a sick client.

Does that mean that seniors now guaranteed coverage under Medicare would be tossed out into the marketplace where they would be met with increasingly dim prospects of finding any insurer willing to take them on as they age? The phrase “guaranteed coverage options” above is disturbingly vague.

What no one we’ve encountered has mentioned, and with which we take further issue, is that (a) the plan does not take effect until 2022 rather than confronting Medicare’s problems now (how can it save Medicare by doing nothing until two years before the 2024 date when insolvency is forecast?) and (b) all now over age 55 get the goodies, all under 55 get the shaft.

This stark inequity strikes us as a cynical attmpt to keep the votes of the baby boomers – the ten year population bulge of those born when the troops came home after World War Ii who have just begun to reach age 65. They, and all those already in Medicare, make no sacrifice and feel no pain. Those under 55 are told that they will go on subsidizing the older age group that will receive full rate benefits, but will be shortchanged when their time comes.

For shame, Mr. Ryan.

The Ryan Medicare Plan: Still On the Table?

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Asked if Republicans running for the Senate in 2012 should support the Ryan budget and its overhaul of Medicare, House majority leader Eric Cantor said, “Yes”, they should.

Both Tim Pawlenty and Jon Huntsman have said they would vote for a bill that kills Medicare.

And in the Senate, Republican leader Mitch McConnell says the GOP will refuse to lift the debt ceiling unless President Obama and the Democrats agree to Ryan Medicare.

The President went golfing with John Boehner and Joe Biden is negotiating with Congress, but Biden says the “really hard stuff” still remains. Asked by Jim Lehrer on the News Hour if it would probably be resolved in “one of these midnight deals”, David Brooks answered,

““I think it’s going to go past midnight..I’m very pessimistic about it. I think Wall Street is vastly underpricing the possibility. “.

The nation’s debt must be cut; it is frighteningly high. But the debt ceiling relates to current obligations to which the nation is already committed. A U.S. default in a world where the dollar is the universal trading currency would cause turmoil and possibly catastrophic collapse. How could the Ryan plan be worth that?

So what’s going on here? Have Republicans already forgotten the acrimonious town hall confrontations when they went home to their districts this spring and faced the wrath of the public? And the portent of the Democrat win in an upstate New York by-election reversing a vote that was 74% Republican last fall?

In the most recent poll by CNN/Opinion Research Corporation, 58% percent of Americans said they are against Ryan’s proposal. Not an overwhelming majority except only 35% say they support the plan. Most interesting: today’s senior citizens, who would be unaffected by the plan, were the most disapproving — 74% against.They know best the benefits the plan confers and perhaps they are concerned for their under-55-year-old sons and daughters. Other polls — here’s a quick summary — say much the same.

Disbelief that McConnell and Cantor would actually take the country to the brink, as well as stir a voter rebellion, says that they are merely using Medicare as a bargaining chip to force other cuts on the administration. But how are they going to back away from these unyielding stands when the time comes without appearing to the Tea Party element to have caved in?

For their part, Democrats are making statements that, while they may apply only to the immediate vote on the debt ceiling, irresponsibly lead the public to believe that they will never change Medicare and have no plan. “I could never support any arrangement that reduce benefits for Medicare…that’s a nonstarter”, says Nancy Pelosi.

Medicare cannot survive in its current state. A recent estimate said insolvency will occur in 2024 — 5 years sooner than expected — done in by a combination of lower payroll tax collection brought about by unemployment and by ever-steeper rises in health care costs.

But rather than any attempt to repair Medicare, Wisconsin Congressman Paul Ryan went to the opposite extreme. His transparent agenda is to remove this social program from government and hand it in its entirety as a huge bonanza to overjoyed private insurance companies. Donations from them will pour into Republican coffers.

His plan makes no attempt to reduce medical costs. The government would be reduced to simply collecting the payroll tax and forwarding it to the insurers. And from a system that is remarkably efficient, with Medicare administrative overhead measured at 4% or so, the transfer to private companies adds a layer of cost having nothing to do with health care. The premiums seniors will pay will be fattened by the higher administrative costs of the supposedly efficient private sector, the huge paychecks and perqs of management, advertising and marketing that do not exist with Medicare, and atop all that &#0151 profit.

Beyond that, as has been reported elsewhere, seniors would have to pay an average of $6,000 a year out of their own pockets — the estimate by which the cost of policies would exceed the “premium support” paid by Medicare.

The argument in favor says that the commercial world, driven by that same profit motive and by competition among themselves for customers, will force medical costs down. How then to explain why for non-seniors that same private sector has seen health insurance costs soar over the last two decades well beyond other inflation? In fact, as these charts show, private insurance costs per beneficiary have risen 40% higher than Medicare costs since the program’s inception in the 1960s.

Meanwhile, Democrats have irresponsibly proposed nothing to save Medicare. Pointing only to the untested trickle of cost cutting experiments in so-called Obamacare is simply the politics of hope. Aware of the backlash against the Ryan plan, it appears that the president intends to say nothing that would roil the electorate before the 2012 election — in other words, we drift for another year and a half as the noise of the falls grows louder and the precipice draws nearer.

So We Default. What Happens Next?

Months of wrangling with still no agreement on terms leaves little time until August 2, when Treasury Secretary Tim Geithner says the U.S. will not be able to pay all its bills. So it’s time to think about the unthinkable – the United States of America defaulting on its debts.

Let’s go back to September 29, 2008. The news channels watched on one side of a split screen the failing vote in the House of Representatives for the $700 billion financial bailout, while the other half of the screen tracked the Dow Jones index plunging 777 points in reaction. Two-thirds of Democrats had voted for the bailout, but only one-third of Republicans. It missed by 13 votes. The Bush administration desperately re-submitted the bill. On the second try, it passed.

If you’ve ever wondered what might have happened had there been no bailout, you might soon have that opportunity. This time it won’t be bank credit that will seize up, but the country itself. August 2 is when the federal authority to borrow reaches its limit. Geithner says the nation will run short of money if Congress doesn’t raise the debt ceiling above the current $14.3 trillion. By law, the government cannot spend or obligate itself beyond that dollar sign.

Raising the debt limit usually passes without notice. During the George W. Bush presidency, the limit was raised seven times without incident (twice in 2008). But since 2008, Republicans have gained 63 seats in the House; 28 of them are Tea Party candidates bent on little other than shrinking government by slashing spending and enacting still more tax cuts. In return for raising the debt limit, they are pressuring the Republican leadership to demand that the Obama administration cut $2 trillion from the budget 10 years.

Moody’s has already issued a warning that if the debt limit is not increased, it would consider downgrading U.S. credit. Politicians on both sides blame each other for the continuing impasse.

Government spending has already bumped up against the debt limit, but Treasury’s financial shuffling has bought time until the checks finally bounce in mid-summer. At that point the government would use its funds to the extent it can prevent the country from going into default with other nations, a catastrophe that would cause the collapse of the dollar, soaring inflation and a worldwide panic. The Treasury will instead need to shortchange domestic spending: seniors will not receive social security checks, student loans will be suspended, military pay held up, and more. The panic will be here at home.

But it’s worse. The standoff a few months ago, with a government shutdown in the offing, was resolved with a last-minute $38.5 billion cut in spending. It didn’t bother Wall Street that the government might turn off the lights for a while. But the stakes this time are far higher; this has never happened before and the consequences could be seismic. If the political parties do not show progress and instead engage in brinksmanship right to the cliff edge, then well before any last minute theatrics, the bond market is likely to be spooked. If our politicians, stuck in their intractable positions, do not show progress and flirt with United States default, markets around the world could spin out of control.

Banks Lose Debit Card Fight in Senate Vote

<|174||Something got fixed in this country...almost>Update: Fed Gift to Banks: Aug 25: Could there be any greater proof that the Federal Reserve and the Treasury Department are the lapdogs of the banks than the Fed’s overruling of Dodd-Frank’s limit of debit card fees to 12 cents a transaction? That was the Dodd-Frank bill’s recommendation, but the Fed has final say. So what has the Fed done but hand the banks what we estimate to be about $4 billion — which consumers ultimately pay as seen in our original article below — by declaring 22 cents to be the limit rather than 12.

The Senate voted down the banking industry’s attempt to delay the part of the Dodd-Frank financial reform bill that puts a cap on the interchange fees paid to banks when you use a debit card. Why does this matter to you? Read on.

You pay for whatever fee is paid to banks. It’s in the price of what you just bought. The merchant had to raise the price to cover the fee.

In the case of credit cards, the banks at least advance money on your behalf until you reimburse them — and at no interest charge at all if you pay in full when first invoiced. But when you use a debit card at a store and enter your PIN, it’s paid instantly with money in your bank account. The bank simply reached into your account and transferred the money to the retailer’s bank account. Done. It is no different from handing over cash save for the convenience.

So banks deserve some compensation for this service, right? How much?

The Federal Reserve says that the average fee extracted by the banks is 44 cents per transaction. But 44 cents in relation to what average transaction value? A clearer picture is cited in this analysis by ProPublica that tells us the fee you’d pay built into a $50 purchase — a whopping 60 cents using MasterCard and 67.5 cents using Visa.

The Dodd-Frank bill caps the charge at 12 cents.

The bill voted on would have delayed imposition of the Dodd-Frank cap for a year of “further study”. As Simon Johnson, economist co-author of “13 Bankers” , said, “In Washington, the best way to kill something is to study it further”. If you are curious whether your senator was on your side with a “Nay” vote, you can find out right here.

Once charged fees only for the use of credit cards, merchants are hurting from the added burden of debit cards. Their use has exploded, which means that merchants are being charged for what customers used to pay for with cash.

True, the industry has invested hundreds of millions in this technology, but those costs have long since been recovered by these fees. The electronic transfer is processed in an instant by computers at a tiny cost — hardly different than banking on line (how much could banking on line cost the banks if they charge us nothing for it?). The fact is that the banking industry, which showered millions on lawmakers to buy their votes, can’t bear to see that pure profit taken away. They were fighting to keep what is estimated to be $16-$17 billion a year they make in these fees.

Between 1994 and 2010, the Economist reports, the combined market share in deposits of the five top American banks rose from 7.9% to 34.3%. The financial sector had some 40% of all corporate profits by the plunge of 2008. These fees are an example of why: the great siphonage of money from other sectors into the banks. It’s much easier than what banks used to do to make their money: lending to businesses rather than taxing them with excessive fees.

A Quickening Pace of Withdrawal from Afghanistan?

<|||Ten Years and for What?>

With the force field of departing Defense Secretary Robert Gates on the wane, those national security advisors to the president who advocate a quicker drawdown from Afghanistan may be gaining the President’s ear. Time’s up for the 18-month surge he agreed to. He is to decide in July just how rapidly to bring home those 30,000 extra troops, and there were hints in the first week of June that the inclination may be more rather than less.

The sooner the better. The original thrust into that country 10 years ago
Landlocked, and with the only route of egress through increasingly hostile Pakistan.
was to destroy the al Qaeda base that had launched the 9/11 plot. That was accomplished largely by the CIA funding warlords as surrogates and using special ops teams. Fast forward to now and al Qaeda is long gone but 100,000 American troops are not. We are instead nation building in an impossibly corrupt country where the Taliban will once again reconstitute the moment we leave. An about to be issued report from the Senate Foreign Relations committee says much the same.

Gates and General Petraeus (leaving to head the CIA) and the military argue for more time, as always. But whereas a Washington Post/ABC News poll conducted in the beginning of June showed a rise to 43% of those who said the war is worth fighting, almost three-quarters said that a “substantial number” of troops should be shipped out.

A big reason to reduce the American combat role, as in Iraq, is the cost to a nation that is in dire fiscal straits. Additionally, Afghanistan’s President Hamid Karzai is doing his part to dim Americans’ ardor for liberating his country from the Taliban menace by threatening NATO. “If they don’t stop airstrikes on Afghan homes, their presence in Afghanistan will be considered as an occupying force and against the will of the Afghan people,” Mr. Karzai told reporters. “Such attacks will no longer be allowed.”

The killing of Osama bin Laden has been mentioned as another reason for a quicker exit. Surely that weakened al Qaeda, but how does that equate to speeding departure from Afghanistan? Our speculation is that the trove of material captured in bin Laden’s million-dollar cave told us that al Qaeda is far more diminished in size, organization (and money?) than thought.

Another unsaid reason for a more rapid pull-out: our prickly relations with Pakistan. The map says it all: Afghanistan is landlocked. It is supplied through Pakistan and obviously not through neighbors on either side. Pakistan will be the evacuation route for American troops and equipment. The administration may be increasingly worried about hanging around too long in that neighborhood.