Let's Fix This Country

Federal Judge Strikes Down Obama’s Assault on the Constitution

Under cover of New Years Eve last year, while the fewest Americans would notice, Barack Obama signed into law an act that disgraces his presidency.

In mid-May a federal judge appointed by Obama, Katherine Forrest of the U.S. eastern district in New York, ruled that the law is “facially unconstitutional”and enjoined it from going forward.

Section 1021 of the National Defense Authorization Act (NDAA) signed December 21, 2011 tramples the Constitution’s guarantee of due process, jeopardizes freedom of the press and discards the centuries-old guarantee that a suspect must be released from detention for lack of evidence. It allows the president to turn over to the military, rather than civil authorities, for indefinite detention without trial anyone, including American citizens, who is suspected of being a terrorist, to have had contact with a terrorist, or contact with “associated forces” or is suspected of giving “substantial support” to a terrorist organization.

Judge Forrest called such terminology unacceptably vague. Someone innocently contributing to a legitimate seeming organization that in fact has ties to al Qaeda could be swept off the street and disappear into the system for years — or for good.

The suit was brought by a group of citizen activists horrified by the law’s blatant violation of the civil rights set forth in the Constitution. Lead plaintiffs included Pulitzer Prize-winner war correspondent Chris Hedges, the outspoken public intellectual Noam Chomsky, and Daniel Ellsberg, best known for exposing the secret Pentagon history of the Vietnam War. The case was brought by lawyers working without fee.

By fighting the group in court, the Obama administration doubled down on its signing of the law, and is essentially saying that the criminal justice system, which has successfully prosecuted and incarcerated hundreds for terrorist activities, is inadequate and needs a parallel system free to ignore the Constitution and the hindrance of its civil rights guarantees. It is difficult to reconcile that a president who was a professor of constitutional law could condone a step toward fascism — where fascism is defined as the state being paramount and its citizens must therefore yield their rights for the supposed good of the state.

The government unsuccessfully tried to maintain that the group lacked “standing” to sue because none of them had been detained under the NDAA law — a stunning catch-22 considering that anyone so detained would have no access to the courts. The judge sided with the plaintiffs, who made the case that their most valuable work as journalists could entail contact with the enemy or whatever the government might choose to call “associated forces”, but fear of doing so would “chill” the pursuit of information and infringe on first amendment press freedom.

As example, The Guardian’s Naomi Wolf in this report said she was in court with her own affidavit making this claim, and to read into the record the testimony of Icelandic member of parliament and WikiLeaks activist Birgitta Jónsdóttir, who was absent on her government’s advice, fearful that she would be detained under this very NDAA law by a U.S. that had already confiscated her bank records and Twitter account and had refused to give assurance of safe passage in this contrary.

Government lawyers were challenged repeatedly by Judge Forrest to give assurance that members of the press or the other plaintiffs would not be subject to the law, citing a number of hypothetical examples such as (quoting Wolf) a “peaceful best-selling nonfiction writer who had written a hypothetical book criticizing US foreign policy, along lines theater the Taliban might agree with”. In no case could the two government lawyers state that the law would not apply. In her 85-page ruling the Judge wrote:

“The government was unwilling or unable to state that these plaintiffs would not be subject to indefinite detention under 1021. Plaintiffs are therefore at risk of detention, of losing their liberty, potentially for many years. An individual could run the risk of substantially supporting or directly supporting an associated force without even being aware that he or she was doing so. In the face of what could be indeterminate military detention, due process requires more.”

does congress understand the constitution?

The judge, however, has left the door open, asking Congress to clarify the vague language and Americans’ rights. Meanwhile, the House was taking up the very same issue — an amendment put forth by Representatives Adam Smith and Justin Amash, a Democrat from Washington and a Republican from Michigan, that would void the NDAA section’s detention without charge and its bypass of due process. The amendment was voted down 238-to-182 — almost all of the Republicans joined by 19 Democrats.

That the law was passed in the first place and now seconded by this vote provides the measure of those who Americans send to Congress. Texas Republican Mac Thornberry presumed to know that the “vast majority” of Americans “do not think telling them they have the right to remain silent … is a wise thing,”. Florida Republican Tom Rooney does not think terrorists should be given extra rights “if they manage to sneak into our country.” The issue is no rights not extra rights, and the vote says that congress members seem to assume that anyone detained under the NDAA law is guilty before the fact else why would they have been detained?

President Obama claims he will not use the law against American citizens, but his word is not the law, and is no defense for signing the law — a law that will outlive his presidency, as we reported in January in “Obama Signs a Terrible Law”. And he has shown elsewhere a disdain for First Amendment freedom as we reported here.

Some legal scholars view overturning the law as problematic because the law derives from Congress’ 2001 use of force authorization that gave the executive branch a free hand against those behind the 9/11 attacks. A war against terrorism that can be said never to end — there are always elements out there that loathe the United States for its unwelcome presence in their countries — gives the executive branch open-ended freedom to impose a parallel legal system to graft onto the war powers authorization. It is eleven years after 9/11 with Congress and the executive branch showing no inclination to relinquish their claim of national security as justification for ignoring the civil liberties protected by the Constitution. Indefinite detention without trial is to protect our freedom, you see.

May 23 2012 | Posted in Law | Read More »

Is “Interminable War” Romney’s Foreign Policy?

May 22 2012 | Posted in World | Read More »

JPMorgan and Solyndra: Opposite Outcomes?

It is indicative of the corporate dominated culture we now live in that, in the wake of JPMorgan’s Chase $2 billion-and-counting trading loss, we expect nothing to come of it. Nothing will change.

The “Volcker Rule” is meant to curb such trading. It is an ever-expanding part of the Dodd-Frank financial reform that is not yet in effect two years after passage of the law because regulators are still writing its rules. First expressed by former Fed Chairman Paul Volcker in a three-page letter to President Obama, it urged that banks be prohibited from trading with their own capital, which puts at risk consumer depositor money that the government insures against loss.

The Volcker Rule was still a modest 10 pages when the bill went to Congress, but when regulators went to work to turn the law into rules, lobbyists for the banks, JPMorgan Chase foremost among them, swooped in to persuade the rule makers that it would make American banks uncompetitive unless its strictness were relaxed. When it went for public comment last October, it had swelled to 298 pages with a torrent of exceptions. By February it was 530 pages. Having engineered this monstrosity, the banks could now complain that it is impossibly complex.

Banks need the ability to protect their balance sheets by hedging against the risk that loans could turn non-performing. The original rule allowed for banks to hedge against specific loans or positions. But the banks — with JPMorgan Chase and Dimon arguing for it intensely — chipped away at this constraint until the heavily-diluted Volcker Rule allowed them to hedge against entire portfolios of loans. In effect, anything goes — anything that the banks’ legal staffs can contrive to call a hedge rather than a bet.

Senators Carl Levin and Jeff Merkley, who had worked on the law, objected in a letter sent to regulators that, “There is no statutory basis to support the proposed portfolio hedging language,” they wrote, “nor is there anything in the legislative history to suggest that it should be allowed.”

That’s what the JPMorgan Chase trade supposedly was — a hedge against the bank’s entire $724 billion loan portfolio. Except New York Times columnist Joe Nocera nailed it when he said that an investment office chief who was paid $14 million last year is not a risk manager, she was a risk taker expected to make money — lots of it.

If elements of that portfolio turned sour, the hedge would increase in value. But then the London chief investment office went a step further and took out a hedge against the hedge in the form of credit default swaps linked to an index of corporate bonds. If it wasn’t already, that’s where the hedge became a bet and the bank became a casino.

In reaction, there are renewed calls to return to Glass-Steagall, the simple (37-pages) 1932 law that forbade banks from risking federally-insured depositor money in other than loans to businesses and people. It worked to produce a safe banking industry for 60 years. So we got rid of it.

Its resurrection won’t happen, of course. Instead, we will again see the banks inundate the regulators with lobbyists and bring pressure to bear to leave untouched all the exemptions to the law that they jointly orchestrated. Dimon, who has railed against the limits imposed by the Volcker rule (“Paul Volcker by his own admission has said he doesn’t understand capital markets. He has proven that to me”), has begun skillfully to cast the errant trades as rogue blunders, calling them “sloppy” and “stupid” and “poorly vetted and poorly executed”. By telling us “what this hedge morphed into violates our own principles”, Dimon wants to persuade us that this is an anomaly, as if it cannot recur in his shop or elsewhere, and that the watered-down Volcker Rule should be left as is.

He will have the backing of most Republicans, who detest the Dodd-Frank law (Mitt Romney says he would repeal it) and the two Democratic New York senators who are on the take from the city’s banking industry. Obama, too. He’s a fan of Jamie Dimon, calling him “one of the smartest bankers we got”, and with a huge account at the bank, and a need for Wall Street money for his re-election campaign.

Which is why we expect nothing to change.

Now compare that with another case of big losses — the $535 million Solyndra collapse. True, the JPMorgan Chase loss — now said to have risen possibly to $4 billion — will be absorbed by the bank whereas Solyndra impacted taxpayers. But, left in place, the broad weakening of the Volcker Rule sets the stage for the banks to indulge in the same risky behavior that brought about the 2008 bailouts, and that would add to the debt to be borne by taxpayers.

But risky investments in alternative energy? That’s quite another matter. Republicans are steadfast in protecting taxpayers from this form of folly.

Solyndra was an ugly matter with crony overtones, pushed forward by the Obama administration against contrary advice because they were eager that to parade it as an exemplar of green technology and green jobs. Above all, it was an outsize bet on a single company that had come up with a different technique for solar energy that became far too expensive when the high cost of silicon, used by other solar technologies, plunged. But it is the Republican script not to view Solyndra as an isolated blunder; the name is reflexively used to ridicule any and all attempts by government to nurture renewable energy.

It is inescapable that humans will continue to rely on fossil fuels for well into the future. Discovery of ever more sources has dispelled any notions of “peak oil” and improved recovery techniques have created a natural gas bonanza. But that oil is found in ever more inaccessible places at greater risk of colossal spills, and natural gas drilling is both draining aquifers and fouling them with runoff and chemical-laden drilling fluids improperly disposed of. Little heed is paid to either of these problems by those in Congress, virtually in the employ of the oil and gas interests that fund their campaigns. They find it their job to stand in the way of any other form of energy development. Solyndra is rigorously invoked to characterize all government funding of renewable energy as failed policy.

So the public doesn’t hear about the government guaranteed loans such as the $737 million given to a company in Nevada that is building an array of 17,500 mirrors to generate power from the sun. The company has advance contracts to sell the power, so the risk is minimal. Nor does the public hear of the grants of $156 million in awards last fall, in amounts of typically $2 and $3 million, to 60 companies and labs that are developing better batteries to store such energy, or exploring plants that grow fuel molecules in their leaves, or teaching tobacco plants how to do the same, or working on high-efficiency motors using magnets that do not need rare earth materials, or attempting to increase the per acre yield of camelina plant oil to substitute for jet fuel or diesel, or to the company that has halved the cost of silicon wafers used in crystalline solar cells.

Instead, various funding measures are about to expire, and House Republicans, hostile to anything other than the ongoing subsidies to the biggest oil companies, have shown no indication of their continuance in their cost-cutting budgets. If nothing is done to renew these programs, support for clean energy projects and research is slated to plummet by 75% beginning next year.

Such limited vision boggles. Lack of a vigorous energy policy has already allowed China to make off with a solar industry that we pioneered and that was to have been a new industrial frontier for the U.S. It should be clear that solar will become the ultimate energy source and that it is rank stupidity that government programs are not in place to develop it to the fullest. Sunlight falling on Earth is free, inexhaustible, non-polluting and delivers more energy in an hour than humans consume in a year. Instead all we hear is “drill here, drill now, drill, baby, drill”.

May 17 2012 | Posted in Politics | Read More »

Social Security Out of Money Three Years Sooner

We’re living longer and the baby boomers are retiring, but we’ve known these dynamics for years. So how can the Administration explain the sudden discovery that the Social Security trust fund will be exhausted by 2033, three years earlier than was predicted just a year ago.

The answer is something that a Democratic administration doesn’t want to bring up: the surge in disability claims. The fund within Social Security allotted to disability is slated to go broke by 2016.

Most Americans are probably only dimly aware that one can qualify for payments from the Social Security Administration (SSA) beginning at any age if able to prove an inability to earn an income over $1,000 a month. (And after two years under that plan, that person qualifies for Medicare as well, irrespective of age).

Manufacturing has declined and hazardous jobs along with it, there are no genetic defects suddenly manifest that account for increasing infirmities, the cure rate for crippling disease continues to improve, accidents on the highways have declined — what could be the cause?

First the obligatory acknowledgement that disability is real, that society has a moral responsibility to help those dealt the unfair hand of an illness or mishap that can cause a life of possibly unrelenting pain even, and — because the Social Security payments are no bonanza — the prospect of penury.

But those worthy beneficiaries under the social contract are not our subject and their cohort does not account for the Congressional Budget Office telling us that the number of Americans on disability had by 2009 doubled as compared to 1970, whereas the population rose only by half.

One in five dollars paid out by the SSA is now for disability; 8.56 million people and 2 million dependents will received $122 billion this year, and another $90 billion for those who have qualified for Medicare as well.

How has this gone out of control? The first reason is that in the last few decades, the threshold for claiming disability has been defined ever downward. Reasons that never would have qualified in the past — depression or “persistent anxiety” or “chronic fatigue”, for example — are now accepted as reasons for disability awards. None of these were ever acknowledged in times past as reasons not to work; people went to work anyway, and worked their way through them. (“60 Minutes”’ Mike Wallace acknowledged suffering from depression but didn’t quit working until age 90. Or think of Jack Kennedy, who Lyndon Johnson’s biographer Robert Caro describes as strapping “a canvas brace with metal stays tightly around him” to face the day.) These may be real syndromes, but the unscrupulous have caught on to how difficult they are to disprove and have learned to masquerade their way onto the Social Security rolls.

“Congress and, derivatively, the SSA have gradually expanded the availability of entitlements to greater and greater numbers of persons,” write SSA administrative judges Jeffrey Wolfe and Dale Glendenning in the Cato Institute’s magazine. The judges further point out that, whereas in 1971, one in five applicants were accompanied by a lawyer, the ratio has since quadrupled, which should tell you that finding and shepherding clients through the process of getting on the dole has become a lucrative practice for the legal profession. The recession is certainly a major factor, as the unemployed feign disability in order to find an income.

Charles Murray would have us understand that it is more than economics. In his widely quoted recent book, “Coming Apart” ( see this related article), Murray marshalls copious data to show that there is now a sub-culture comprising 30% of white Americans who have disengaged from society and its responsibilities. They come from broken marriages, drop out of school, stay single, abandon religion, resort to petty crime, aspire to nothing and, having done little to equip themselves with the skills needed to win what jobs there are, have instead learned how to game the disability system. In this group, the percentage on Social Security disability has quintupled since 1960, rising from 2% to 10%.

On the one hand it speaks of a creeping moral rot that has eaten away at the social fabric, an attitude of taking whatever one can get without concern for the once bedrock principles of honesty and self-reliance. It brings to mind a New York Times investigative report in 2008 which found that virtually every employee of the Long Island Railroad applied to the federal Railroad Retirement Board for disability the moment they retired, and virtually all — 97% in one recent year — were routinely approved, each paid tens of thousands of taxpayer dollars a year in addition to their pensions. The paper “sometimes dozens of them” on the golf course. Somehow, every railroad worker was untroubled by cheating and thought him- or herself entitled to other people’s money.

The announcement by Treasury Secretary Timothy Geithner that the trust fund would run dry sooner simply acknowledged disability costs as a factor. There was no speculation as to evident fraud. To this, the government turns a blind eye, especially in an election year when votes reliably take precedent over any notion of expanding funding for investigative surveillance to root out disability cheats. So, like so much going wrong, we can expect the problem to grow progressively worth with the future of Social Security at risk for seniors who have paid into the fund all their lives.

May 14 2012 | Posted in Zeitgeist | Read More »

Funding the Government on the Backs of Students

It seems inconceivable, but Senate Republicans have blocked debate on a bill that would prevent the interest rate on government student loans from doubling to 6.8% on July 1.

Republicans want to compensate for the lost interest income from students by cutting $5.9 billion of preventive care from the Obama health care law.
Graduates’ prospects: This says it all
Democrats want to raise money by changing a law that would subject a type of income enjoyed by certain wealthy individuals to Social Security and Medicare taxes which they currently avoid by classifying the income as dividends.

Current students or recent graduates are held hostage in the crossfire.

The doubling of the rate would end a moratorium of five years that had reduced the rate to 3.4% beginning in 2007 to help students with their crushing debt. This page has been covering this subject since last September, first with ”The Next Financial Crisis: Student Loans” about the crisis in student debt that, at $1 trillion, is now higher than credit card debt, and then in “Why Are We Making a College Education Unaffordable?” about the disgrace of burdening our young with such high interest charges while at the same time allowing banks to borrow at near 0% (which they then use to make money from the government by buying Treasury notes paying 2% or so).

The House and Senate bills are the polar opposite ways that Republicans and Democrats have come up with to pay for the loss of interest income at a rate that should never have been charged in the first place and which asks the question of whether any interest should be charged at all. Should the government really be subsidizing the banks with their sweetheart deal while trying to profit from our youth just starting out in life? Additional to raising the interest rate, Paul Ryan’s plan would slash funding for Pell grants and Stafford loans.

At the same time that it is generally agreed that we need a college-educated work force to compete economically in the world, Congress is so far doing all it can to make a college education more expensive and out of reach. Need we any greater proof of how onerous is the student debt burden than that it took the President of the United States and his wife until eight years ago to pay off their college loans, as he told students at the University of North Carolina in late April.

May 14 2012 | Posted in Education | Read More »

China: We Create It, They Steal It

Targeted Tariffs: In his second round of tariffs, President Trump seeks to penalize China for its theft of American intellectual property, which has been going on for more than a decade. It’s difficult for us to look back on the feeble policy of the Obama years in which there were nothing but talks and phony broken promises. Here’s what we wrote almost six years ago.
    
It has been called “the greatest transfer of wealth in history”. Gen. Keith Alexander of the National Security Agency was referring to the theft by China of American trade secrets and technology with which to jump start their own industries and use their cheap labor to beggar their American counterparts.

Most Americans are probably aware that China steals American software and movies and ships counterfeit knock-offs of designer clothing around the world. Probably less known is how much technology is being smuggled out of the United States by a China that uses dishonesty as policy and is untroubled by ethical bankruptcy.

It is also unembarrassed by its inability to create world brands on its own. In the intellectual property category, software has been the biggest swindle, easily demonstrated by comparing the ratio of how much China spends on computer hardware relative to software. In the United States in 2009, for every $8 spent on hardware, $7 was spent on software — $158 billion to $138 billion. Many countries do not come off well in this analysis, but nothing compares to China. Somehow their computers run on fumes: for every $12 spent on hardware, a tiny $1 is spent on software.

One could well be astonished by a trade meeting last November which revealed that one of worst problems Chinese officials vowed to put an end to was not pirated software sold in the back streets of Shanghai, but software stolen for use by government agencies and state-owned enterprises.

“President Hu Jintao promised to end software piracy by government agencies…”, “Senior Chinese officials pledged on Wednesday to better crack down on software piracy…”, “Chinese officials have promised to improve their protection of intellectual property…”. Year after year we hear such pronouncements with little done. Years of counterfeiting later we are still hearing U.S. officials wishfully saying, “That is why we have called for trade negotiations to start focusing less on pledges and more on tangible results.”

A stroll through the streets of any Chinese city shows a torrent of counterfeit goods: electronics, movie DVDs, and all forms of apparel, handbags and footwear. The Chinese authorities make a great show of occasional crackdowns but shuttered shops re-open a few weeks after the attention dies down.

Before the Shanghai World Expo in May 2010, police spread through the city to warn shop owners to hide their faked goods. Stores were bisected by false walls, with counterfeit items stored in hidden rooms. To those not savvy to the ways of the city, all trade looked impressively legitimate. Expo over, the walls came down.

But there is a much greater problem:

Rampant industrial espionage and theft

Nowadays, anyone going to China on business, research or governmental matters had better take unusual precautions, as this New York Times article cautions. Anything you take is likely to be invaded by malware that will read the files on your laptop, copy your keystrokes to capture passwords, listen in on your cellphone conversations and snatch your contact list. The savvy disable Bluetooth, paste passwords from a USB thumb-drive, buy throwaway phones and emptied computers that are cleaned on return, even remove cellphone batteries when phones are not in use to prevent their penetration. They do so because China is the land of electronic pickpockets.

A long list of convictions of workers in major U.S. companies for stealing trade secrets should tell us something. The ability of a Chinese company to find a person deep within the ranks of our companies, a person who has access to just the right information that fills the particular need of that Chinese company, a person likely to agree to industrial espionage and not call the cops, is severely limited. Except where there is a direct relationship between a U.S. company and a Chinese customer, such that people inside one are known to the other. To find and entice such individuals is clearly a campaign conducted at the top — by the Chinese government and military themselves.

Bloomberg-Businessweek, in this article, documents 19 cases of criminal espionage ranging across the industrial spectrum — design specs from Ford ; secrets about pesticides and chlorinated polyethylene used in vinyl siding, electrical cable jackets, and industrial hoses from Dow; information to help China make cruise missiles stolen from Northrup Grumman ; organic light-emitting diode and titanium dioxide technology (a pigment widely used in paint, plastics, paper) from DuPont ; pharmaceutical compounds from Sanofi-Aventis; technical info on the space shuttle, the Delta IV rocket, the F-15 fighter, the B-52 bomber, the Chinook helicopter from Boeing; paint formulations from Valspar. The list goes on.

Can there be any doubt that there are hundreds of undiscovered thieves in U.S. corporations who are right now copying data onto thumb drives?

gobi gotcha

Prior to his February visit to the United States, Xi Jinping, the presumptive heir to the Chinese presidency, was handed a dossier about American Super- conductor Corp. of Massachusetts. AMSC had suddenly, mysteriously, lost 70% of its business in China. It had always supplied Sinovel, a wind turbine manufacturer in China, with the electrical systems and control software without which the machines would simply be giant white sculptures. Bloomberg tells the story that AMSC technicians, climbing to the top of a test turbine in China’s Gobi Desert to determine why a new version of their software had not turned the machine off, sent a copy of the computer code to its lab in Austria which found that it was a stolen copy. AMSC then found on the computer of a Serbian employee hundreds of e-mails with Sinovel, even the contract to pay him $1.5 million. AMSC has filed suit in China. Ludicrously, one would think, Sinovel has countersued, citing that quality problems were the reason, which begs the question of what is running their new machines if not the AMSC stolen technology they now say is deficient? The case will be decided by an arbitration commission — in China —, where U.S. firms are required to hire only Chinese lawyers.

At the same time that the Chinese are stealing our innovations and violating our patents to build their industries to compete against us, Americans go on eagerly buying Chinese products because they are cheap, putting Americans out of work and creating the soaring and ever-mounting debt with which China is beginning to buy up American industry. Thanks to our policy of rhetoric only, our timid fear of starting a trade war as if we are not in one, we can all expect one day to be working for the Chinese, muttering to ourselves “where did we go wrong”?

Part 1 of this series can be found here.

May 12 2012 | Posted in World | Read More »

Fiscal Mayhem Awaits at Year-End

How did the Mayans get it so right when they predicted that life-altering or cataclysmic events in the year 2012 are destined either to end it all or at least bring turmoil? Because as this year draws to a close in the United States, pick your metaphor —
The Mayan Long Calendar,
with its end time date of
December 21, 2012
perfect storm , Armageddon, end times — we are going to see a fiscal maelstrom.

On New Year’s Eve the sun sets on the Bush tax cuts (now Obama’s). Everyone’s tax rates go up automatically and noticeably to what they were in 2000, even the 15% rate on capital gains and dividends, which revert to treatment as ordinary income.

Remember the Supercommittee? That gathering of a dozen Republicans and Democrats charged last August with apportioning $1.2 trillion in bipartisan It begins:   House Speaker John Boehner has aready thrown down the gauntlet. In mid-May he decreed that any increase in the nation’s debt limit late this year must be paid for by still larger spending cuts and no tax increases. Even if the Tea Party doesn’t do as well in the fall elections?spending cuts? Their failure after 76 days of going in circles triggered the default agreement that the $1.2 trillion in cuts be equally split between defense and entitlements. That happens too, beginning year-end.

We can expect a fevered attempt to re-trade how the $1.2 trillion is split. Paul Ryan has already ignited furor by reneging on the deal; he intends to restore to the defense budget the $55 billion that was to have been its share of cuts.

What brought about the deal for those spending cuts was Congress’ agreement to raise the debt limit to $16.4 trillion — supposedly Update: Bernanke Sounds Alarm  If the “Bush” and payroll tax cuts are allowed to expire by Congress and the President at year-end, and the automatic defense and entitlement spending cuts go forward, Fed Chairman Ben Bernanke said in a news conference April 25th that “there is absolutely no chance that the Federal Reserve would be able to have the ability whatsoever to offset [their] effect on the economy.” enough to get us to the end of 2012 so that we wouldn’t have a debt limit crisis every few months like that of last summer. So what else do we have at the end of 2012? The reprise of the debt limit crisis.

Actually, Treasury Secretary Tim Geithner told the Senate Budget Committee in February that the debt is likely to reach its statutory limit before year-end — possibly even before the election.

And then there’s the payroll tax. It doubles to the normal 6.2% January 1. Elections over, not even Obama will probably lobby for the discount to continue, but wage earners will probably raise a ruckus if 3% more is slated to come out of their paychecks if no tax increase is in the offing for the wealthy.

And, if in June the Supreme Court decides to rule against the insurance mandate, or overturns the Affordable Car Act altogether, more chaos will descend upon the second half of the year, as the legislature is presented either with a complex repair job, or the states and federal government must take steps to roll back what they have instituted so far.

All of which portends a fiscal farrago the likes of which we have never seen as year-end approaches. No matter who wins the election, Barack Obama will still be president when the year’s clock tolls midnight. And whereas an ABC poll says the Tea Party “has stalled in public popularity…its support well below a majority”, and its card carriers may find themselves voted out of office in the coming election, they are nevertheless still in their seats until the end of the year, avidly wishing to take another swipe at reducing the federal government by starving it of funds.

We will see no end of name-calling and acrimonious outbursts as our polarized politicians take this country to the brink.

bifurcated Budgets

What better harbinger of what is to come than the polar opposite budgets unveiled first by President Obama and then by Wisconsin Congressman Paul Ryan, who has won the mantle of fiscal intellectual for the Republican Party.

Obama called Ryan’s opus a “Trojan horse” that would herd Medicare recipients into the corrals of private insurers and called “social Darwinism” Ryan’s plan to shred social programs in the name of bolstering what Ryan called their “will and incentive to make the most of their lives”.

The President wants to forge ahead with spending on favorite programs — a near-term $350 billion to job creation, a six-year infrastructure program of $476 billion, $60 billion to renovate 35,000 schools, research on advanced manufacturing techniques, union-pleasing monies to states to help them retain teachers, fire fighters, police, and so on. He would pay for a bit of this by raising only the top tax bracket by 3.9% while permanently retaining all other Bush tax cuts, and by instituting the “Buffett Rule” requiring all who earn a million dollars and above would pay at least 30% in federal taxes. (The “Buffett Rule”, however, was rebuffed by the Senate. Mostly symbolic — we called it “a populist gimmick” in this post — it would have raised only $47 billion over 10 years.)

His is a budget that does nothing to confront the oncoming tsunami of Medicare costs brought about by the retiring baby boomers and relentlessly rising health costs, a burden that is expected to rise from 2012’s $478 billion to $1.36 trillion in 2022. It is a budget that would add $6.7 trillion to the national debt, which will already be close to $16.4 trillion when fiscal 2013 starts October 1. It is a plan for national insolvency.

Ryan’s budget goes to the other extreme. He cuts $5.3 trillion in spending across 10 years compared to Obama’s budget, yet Ryan, too, adds to the national debt by some $4 trillion, to the consternation of many in his party who had hoped that he would finally arrive at balance.

His Medicare transformation — which like his budget of last year would give “premium support” vouchers to seniors with which to buy insurance in the private market — offers them the option of staying with traditional Medicare this time around. He projects Medicare costs $205 billion less over 10 years. Add to that $770 chopped from Medicaid. And he assumes that, whether repealed after a Republican takeover or struck down by the Supreme Court, $1.6 trillion will not be spent on Obama’s health care law.

So with all these brutal cuts to programs that benefit the poor, leaving them to “pull themselves up by the bootstraps” as he puts it, how does he nevertheless manage to run a perpetual deficit?

By cutting revenue, already at the historic lows that partly explain the current annual deficit. The top rate of both personal and corporate taxes would be reduced from 35% to 25%. Corporations would pay no tax on profits earned abroad. The Alternative Minimum Tax would be cancelled. Inheritance tax would be zero. But the 15% rate on capital gains and dividends would be left untouched. All in all, a bonanza for the wealthy.

The wealthy like Mitt Romney. No surprise that he called Ryan’s plan “marvelous”, “a word you don’t often hear, generally”, said the President, chortling over the gift to his campaign of Romney embracing a budget that savages social programs while benefiting the top income earners still more.

Ryan says that various deductions, exemptions, exclusions and credits — “loopholes”, as they have collectively come to be called — would be eliminated to cover the drop in revenue. Which ones? Would employee-paid health care be counted as income and made subject to tax? Would home mortgage interest no longer be deductible? State and local taxes? These biggest items are a must if the revenue cuts are to be recouped. But Ryan ducks the question of which ones. He says such specifics are outside the province of his committee.

But the Senate hasn’t passed a budget in three years, nor will it for 2013. Federal budgets are more like ideological statements; they don’t dwell on specifics and leave the details to appropriation bills that will be voted on as fiscal 2013 debuts this fall. As to ideology, “no two documents illustrate this choice of two futures better than the president’s budget and the one put forward by House Republicans”, as Ryan himself said in a Wall Street Journal op-ed, referring to his budget, which was passed by the Republican-controlled House, signaling us what is to come if the Republicans gain control of the White House and the Senate.

All of which is to say that with synchronous end times for a cluster of laws and agreements, with not the slightest hint of possible compromise in evidence, and a Congress that will block any revenue increases while holding to a debt limit inadequate for either of those dramatically opposed budgets, we will see open warfare with both sides carpet-bombing the 24-hour news cycle daily.

Stock up on food and put your money under the mattress (remember that the Dow fell 635 points in one day last August when Standard & Poor’s downgraded the United States’ AAA rating). If the bombardment from both camps in the final months of this year doesn’t lift, the country likely will slow to a halt.

May 12 2012 | Posted in Debt & Deficit | Read More »

Obama Has a Problem with the First Amendment

“For a long time now, there’s been too much secrecy in this city” is what Barack Obama said on his first day in the Oval Office, as he signed executive orders to reverse some of the Bush Administration policies. As a candidate he had called warrantless surveillance “unconstitutional and illegal”.

He has disappointed his followers ever since, continuing with secrecy and surveillance practices indistinguishable from the Bush government’s, except where they have gone still further.

He promised during the transition period between election and inauguration to enhance “whistle-blower laws to protect federal workers.” Instead, his attempts to silence federal employees and prosecute them under the Espionage Act have exceeded every administration in history. The act has been used only three times by all presidents since its enactment in 1917. Obama has already used it six times.

Worst was the case of Thomas Drake, formerly of of the National Security Agency, for telling a reporter for the Baltimore Sun of the government’s intent to spend hundreds of millions of dollars for an outside vendor to develop data monitoring software instead of an internal product that cost far less and was less invasive of privacy. Somehow, even this was classified — as is most everything now in our secret government. For this attempt to save taxpayers’ money, Drake was looking at 35 years in prison. The case was so weak that the government settled for a face-saving misdemeanor charge but Drake had been fired, lost his pension and was ruined financially by legal costs.

Then there is John Kiriakou, a CIA officer who, in the midst of a bloody shootout, stormed a house in Pakistan, captured a badly wounded man, and sent a cellphone photo of his ear that identified him as Abu Zubaydah, a prize catch in the early moments of the new war against al Qaeda in 2002. Today, that risk of his life for his country is forgotten by the Obama government that now accuses him of revealing to a journalist the classified names of two former CIA colleagues involved in waterboarding interrogations. The Obama Justice Department that has never prosecuted anyone for actually waterboarding prisoners wants to send Kiriakou to prison for 30 years for revealing two names.

The Obama Administration has take particular aim at press freedom. It has tried to force The New York Times’s James Risen to confirm that his source for a 2006 book on the agency’s attempt to sabotage Iran’s nuclear program was a former CIA officer on trial for providing Risen that information. Risen, along with Eric Lichtblau of the Times won the Pulitzer for discovering the Bush Administration’s spying on international communication traffic. Much like attorney-client privilege the press have traditionally not been forced to reveal their sources of information. Most states have laws that shield the press and a Virginia court ruled against the government’s attempt to force Risen to testify. But there is no federal shield law and a government unconcerned for the First Amendment is appealing.

President Obama has personally seen to it that a Yemeni journalist remains behind bars for the crime of exposing the Obama Administration’s cover-up of a December 2009 bombing raid in Yemen that went wrong. Getting wind that reporter Abdulelah Haider Shaye was about to be pardoned, an early release from a five year prison sentence, Obama on the phone with Yemen president Saleh asked that Shaye be kept behind bars.

His crime was discovering that the bombing was conducted not by Yemen but by the U.S. and had not killed targeted al Qaeda militants but 14 women and 21 children. At the site Shaye had discovered the remnants of cluster bombs and cruise missiles, ordnance never in Yemen’s arsenal. The President clearly does not want the truth to come out, and keeping a reporter in jail in a coutry not in a country which most Americans cannot find on a map is a good lock down. But a Wikileak intercept caught President Saleh saying to Gen. David Petraeus that his government agreed to say, “The bombs are ours, not yours”. The full story is reported by Jeremy Scahill at The Nation.

At great risk, Shaye had in the past gone into al Qaeda controlled areas of Yemen and interviewed their leaders, even U.S. citizen Anwar al Awlaki before he was judged a terrorist, leading to his controversial assassination by the U.S. Access to al Qaeda is an invaluable reportorial resource for gaining insights into the terrorists, but the Obama Administration instead now uses it as its excuse for imprisonment. Our ambassador to Yemen dutifully fabricates “Shaye is in jail because he was facilitating Al Qaeda and its planning for attacks on Americans”. All interviewed by Scahill who know Shaye say this is a lie, and the Committee to Protect Journalists, the International Federation of Journalists, Reporters Without Borders and other international media organizations have called for Shaye’s release.

Meanwhile, we see a president who will sign off on the Justice Department’s new guidelines that permit U.S. intelligence agencies to hold the data collected on all of us — phone calls, e-mail, credit card charges, Internet wanderings, Facebook postings, everything — for five years, instead of promptly destroying it if no connection to terrorismis evident.

A press free to develop sources to find the truth is vital to preserving a democracy and preventing the encroaching secret government that Obama now finds to his liking. The one-time Chicago constitutional professor would be well to recall what Justice Hugo Black wrote when the Supreme Court ruled against the government’s attempt to block publication of the Vietnam war history that came to be called the Pentagon Papers: “The government’s power to censor the press was abolished so that the press would remain forever free to censure the government. The press was protected so that it could bare the secrets of government and inform the people.”

May 8 2012 | Posted in Law | Read More »