Wednesday, November 30, 2011

Defense Industry Launches Propaganda Campaign

Read: After the Deficit Committee, A New Propaganda Push from the War Profiteers

Now that the deficit committee failed, war profiteer CEOs are launching an all-out propaganda campaign to protect their profit margins. They and their allies in Washington are working to protect the massive, corruption-filled war budget by slashing social safety nets that help create jobs. This would be a disaster for our economy.

With the failure of the deficit committee, Congress must act to cut the bloated, corruption-filled war budget. War Costs' latest video shows that military spending actually costs jobs compared to other ways of spending the same money. Yet, incredibly, many elected officials are publicly contemplating shielding the military from cuts while slashing other programs far better at job creation. This is absolutely unacceptable.

Now is the time to make budget changes to put the most people back to work. The cuts to the military budget have to be your top priority. Use our tool to send Congress War Costs' latest video to make sure they understand the consequences of failing to make real cuts to the military budget: Send our petition to Congress: 

One Nation, Under Arms - by Todd S. Purdum

The private papers of the late George F. Kennan: Military spending had become a national addiction. “We could not now break ourselves of this habit,” Kennan wrote, “without the most serious of withdrawal symptoms. Millions of people, in addition to those other millions that are in uniform, have become accustomed to deriving their livelihood from the military-industrial complex. Thousands of firms have become dependent on it, not to mention labor unions and communities.”

American military spending accounts for 43 percent of all defense spending worldwide, 6 times the share of China, 12 times that of Russia. The U.S. Navy is larger than the next 13 navies combined. Overall, defense spending increased about 70 percent under George W. Bush.

That does not include what is spent by related agencies, such as the Department of Homeland Security, or by the myriad intelligence services. Despite the winding down of the wars in Iraq and Afghanistan, and recent talk in Washington about reining in military spending, the trend shows every evidence of continuing. Last spring, the Pentagon identified some $178 billion in potential savings and efficiencies through fiscal year 2016, but then proposed to keep $100 billion of it and redirect it to other programs.

The amorphous bogeyman of global terrorism has made the notion of significant adjustments in defense spending off limits. Officials who should know better—including Defense Secretary Leon Panetta, an old deficit hawk in his days as a congressman from California—warn of the dire consequences of potential cuts.


Read my post: Defense Spending, Bogus Parts, Transnational Mergers

The 99% "Mic Checks" Eric Cantor (the 1%)

By Carl Gibson - Reader Supported News - November 21, 2011

As the lead Republican negotiator during the manufactured debt crisis, Eric Cantor had the podium all summer long. He walked out of the early debt talks, insisting on a cuts-only solution. The House Majority Leader readily dismissed sensible proposals like ending billions in wasteful tax giveaways for corporations and the super-rich. Cantor's callousness is legendary - he even withheld FEMA assistance to his own and other hurricane-ravaged districts until disaster-relief spending was offset by cuts.

With Cantor at the helm, Republicans in the House refused to end $20 billion in wasteful subsidies to tax-dodging oil companies, stalled on closing corporate tax loopholes that bleed out $100 billion annually, and even refused to close a tax loophole for corporate jet owners. Republicans got everything they wanted thanks to Cantor - cuts to public services, no new revenues and a "super-committee" tasked with making even more harmful cuts.

So on November 10 in Houston, a handful of brave Rice University grad students interrupted the House majority leader with a "mic check" protest live on C-SPAN, despite an overwhelming security presence (and my own arrest).

All Cantor could do was smile sheepishly and be quiet while law-abiding, taxpaying Americans directly confronted him and spoke loudly, in unison, against his cruel policies. With Occupations in hundreds of cities across all 50 states, and past mic checks of the likes of Wisconsin Gov. Scott Walker, Michele Bachmann, Karl Rove and Wells Fargo CEO John Stumpf, the goons of the corporatocracy will now always have to be wary of a mic check wherever they go.

The mic check can disrupt the most powerful people in the world and demand the attention of every person and every camera. It evades all metal detectors, x-rays and pat-downs. All it requires is a handful of people with loud voices and determination. The mic check has recently become the Occupy movement's preferred method of speaking directly to the corporate executives and government officials who actively work against the interests of the 99 percent. And when it starts, those within earshot have no choice but to be quiet and listen, even over attempted shout-downs and police intervention.

Critics of mic check protests accuse Occupiers of denying these politicians and CEOs their right to free speech by interrupting their speeches. This is equivalent to telling a kid he was wrong for shouting a pithy insult at the bully who just bloodied his nose and stole his bike. Of course, such accusations are nonsense - these are powerful people who own cable-news networks, newspaper conglomerates, radio airwaves and gerrymandered Congressional districts. They can call press conferences and have swarms of reporters record every word at a moment's notice. And for all the ceaseless attacks on public-sector jobs, Medicare/Medicaid, food stamp assistance, and pensions by Cantor, Walker and their ilk, they rightly deserve some verbal pushback from their victims. Just like with the Tea Party's 2009 town hall shout-downs over universal healthcare, free speech is still free speech, even when it disrupts the 1 percent.

As the super-committee nears its deadline of proposing massive cuts to the services the 99 percent pay for and depend upon, Washington should take note of the Occupiers at McPherson Square and Freedom Plaza. They should be ready for a surge of Occupiers in the coming weeks as Occupy Wall Street activists march toward Capitol Hill on foot. And Congress should be prepared for thousands more to bring the fight right to their doorstep next month in defiance of unforgiving December weather.

If they can't hear our voices in our own cities, we'll raise them loudly right under their noses. The mic check might even find its way inside the House and Senate galleries.

Carl Gibson, 24, of Lexington, Kentucky, is a spokesman and organizer for US Uncut, a nonviolent, creative direct-action movement to stop budget cuts by getting corporations to pay their fair share of taxes. He graduated from Morehead State University in 2009 with a B.A. in Journalism before starting the first US Uncut group in Jackson, Mississippi, in February of 2011. Since then, over 20,000 US Uncut activists have carried out more than 300 actions in over 100 cities nationwide. You may contact Carl at carlATrsnorgDOTorg

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.

The Right is just "Blowing Smoke"

Blowing Smoke: Why the Right Keeps Serving Up Whack-Job Fantasies about the Plot to Euthanize Grandma, Outlaw Christmas, and Turn Junior into a Raging Homosexual - by Michael Wolraich


  • Television sensation Glenn Beck warns of White House plots to institute fascism, communism, and other terrifying “isms.”

  • Radio titan Rush Limbaugh charges that a racist Obama regime encourages black schoolchildren to beat up white kids.

  • Evangelical luminary James Dobson frets that Christians will be arrested for thought crimes and people will be allowed to marry donkeys.

  • Protesters in knickers and colonial-style hats march on Washington with signs that order Hitler-like caricatures of President Obama to return to Kenya.

As madness reigns, pundits, politicians, and cab drivers debate the source of the hysteria. Some blame ignorance; some blame racism; some blame the economy.

After poring over mountains of political screeds and heedlessly subjecting himself to countless hours of Fox News, author Michael Wolraich discovered the secret formula that turns ordinary men and women into fire-breathing, smoke-blowing, right wing maniacs. It’s “persecution politics” . . again.

In Blowing Smoke, Wolraich documents, dissects, and deconstructs the myths that underlie the right’s growing reliance on the politics of persecution, from Joe McCarthy to the Tea Party movement. In the process, he delivers an original and compelling hypothesis with penetrating insight and blistering wit.

At turns hilarious, disturbing, and edifying, Blowing Smoke is a must-read account of modern American politics.

Reader Review Jerry Bucknoff, MBA, PMP

Why do Fox Cable Channel viewers, and supporters of the Fox News Party candidates believe and stand by the obviously grossly untrue misinformation broadcast by Fox and published by Fox TV personalities (such as Coulter, Palin, O'Reilly, Hannity and, their mentor, Karl Rove)? The answer is: because they WANT TO BELIEVE it -- even if it's totally ridiculous and proven untrue time and time again. They WANT to believe that all the damage caused by Cheney, Rove and Bush was caused by Obama or, worse yet, they want to believe that none of the bad things that these guys did ever happened. They want to believe that the house is not on fire, even as the burning ceiling falls down upon them.

"It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grammes a week. And only yesterday, he reflected, it had been announced that the ration was to be reduced to twenty grammes a week. Was it possible that they could swallow that, after only twenty-four hours? Yes, they swallowed it."-- George Orwell, 1984, Part 1, Chapter 5

Take the "Obama's War on Christmas", something invented by Bill O'Reilly, Fox Channel personality. Because some holiday season signs say "Happy Holidays" instead of "Merry Christmas (the birthday of our Lord, Savior and American Founding Father), O'Reilly deliberately made the claim that Obama has declared war on Christmas (which, of course, he never did or even thought about doing).

The slippery slope, twisted, logic that O'Reilly and his Fox News handlers (Ailes and Rove) are counting on their gullible viewers to make is Obama declared war on YOU, personally. The War on Christmas: i.e., war on Christianity, i.e., war on the central premise of the American Way of Life (Christianity, as Jesus spoke of it when he wrote the U.S. Constitution), i.e., the war on Americans, i.e., the war on YOU and your family (since you are an Americans -- therefore, Obama has declared war on your children, therefore, it's OK to be against Obama because he hates your children and America. So if you hate it, it's not because he's black. Therefore your hate of Obama has no racism in it at all. Good thing, too, because it there wasn't a LEGITIMATE reason to hate Obama your hatred would come from your racial bigotry (which you do, in fact have), not from reason.

Racial bigots; ignorant people who irrationality hate all Democrats because Bill Clinton kissed a girl in the late 1990s; and uneducated folks (folks with limited schooling or, if they did have some schooling, it was in Texas) are looking for a reason to hate the black Presidents and hate all those commie liberals who want to force their daughters to have abortions from babies fathered by Jewish or Muslim homosexuals who live on welfare from YOUR taxes. Fox, Ailes, Rove, Limbaugh and the other leaders of the far-right tell these folks what they want to hear. I mean, do YOU want your daughter impregnated by a homosexual Jew living on welfare who supports radical Islam and belongs to the Nazi party? Of course not.

Michael Wolraich explains how Fox and the radical right can cause otherwise normal (and mostly well-meaning and patriotic) people to become so irrational. It's an important read but also a bit lighthearted. Although there is nothing funny about Fox and Ailes' war against Americans, some of the stuff they do is pretty silly if looked at from the eyes of a rational person.

I highly recommend this book. I know that Fox viewers and supporters of Fox News Party candidates will want to avoid this book like the plague since the last thing they want to do is actually know what's going on the world. So I'm confident they'll keep their heads in the sand.

The book is now available used for under $3, a bargain, and also available on Kindle, also under $3.

An interesting aside: A recent study at Fairleigh Dickinson University (peer reviewed and submitted to strict, empirical, scrutiny) shows that Fox News viewers are more ignorant than people watch neither Fox nor watch actual news. Read: FDU Study Fox Viewers Ignorant (MODERATOR: No to criticize, but to inform.)

Editorial Review From Booklist

The persecution narratives of right-wing extremists aimed at stirring up hysteria about the “socialist“ agenda of the Democrats generally and President Obama specifically are part of a long history of fear-mongering and paranoia, asserts political blogger Wolraich. Citing broadcasts and blogs by Glenn Beck, Bill O’Reilly, Rush Limbaugh, Sean Hannity, Sarah Palin, and others, Wolraich scoffs at claims that there is a conspiracy to destroy Christmas in an overwhelmingly Christian nation or that Obama’s policies are racist and aimed at helping minorities at the expense of whites. He intersperses his criticism of modern extremists with historical perspectives on fear-mongering and paranoid campaigns, including the execution of Socrates on charges of corrupting youth, the banning of Shakespeare from London on similar fears, bans on comic books in the U.S., and the Red-baiting of the McCarthy era. He dates the intermingling of right-wing extremism and religious fundamentalism to the 1980s with the IRS crackdown on the tax-exempt status of segregated schools. The Tea Party is the latest manifestation of worries about hodgepodge conspiracies that are being dangerously exploited by political opportunists. Wolraich is keenly analytical and often caustic in this compelling look at the use of persecution to push politics to the extreme. --Vanessa Bush

Blowing Smoke

On Sale at Amazon: Blowing Smoke: Why the Right Keeps Serving Up Whack-Job Fantasies about the Plot to Euthanize Grandma, Outlaw Christmas, and Turn Junior into a Raging Homosexual


See my post Republicans Use Psychology to Promote Fear

Huffington Post - Non-Existent 'War On Christmas' Is Apparently Being Won By The People Who Invented It

Tuesday, November 29, 2011

Low Wages Kills Jobs, Not High Taxes

U.S. corporations are sitting on a huge and growing pile of cash, and have no idea what to do with it. Without "demand" (money in people's pockets) there's no reason to "supply" -- to expand, produce, and hire (at least, not domestically).

I don't believe that since the Bush tax cuts in 2003, a lower capital gains tax for CEOs (with stock-options) and hedge-fund mangers, does not create jobs, just digital wealth for "shareholders". We need no further proof than to look at the current unemployment rate -- 9% unemployed (those looking for work) and 16% (including those that lost jobless benefits and are reported by the Bureau of Labor Statistics as "no longer looking for work").

Corporations are not in business to create jobs, but profits for shareholders, and their biggest shareholders are the banks, hedge funds, and the corporate executives themselves. They own huge blocks of stocks and the executives often sit on each other's board of directors. When a CEO talks about their noble responsibility of protecting their investors, they aren't referring to little day-trader who has an online account at Charles Schwab or eTrade, they're referring to themselves.

Wal*Mart is just but one example. When it comes to the 1%, Rob Walton and the Walton family are it. The Walton family has amassed more than $93 billion in wealth, making them the richest family in the country. 1,382 institutions and the Walton family own the bulk of outstanding shares, and we all know how well their employees are doing.

Outsourcing jobs for cheaper labor (or depressing domestic wages) and eliminating workers benefits like healthcare, and/or closing factories to bust unions, increases corporate profits. Lobbying congress for lower taxes also increases profits. Removing environmental regulations increases profits. Restricting lawsuits for wrong-doing ("tort reform") increases profits. Increased profits in 2011 (or record CEO salaries) isn't the problem though, it's job creation, a declining middle-class, and a widening disparity between rich and poor.

New York Times: "In the eight decades before the recent recession, there was never a period when as much as 9% of American GDP went to companies in the form of after-tax profits. Now the figure is over 10%. For companies, these are boom times. For workers, the opposite is true."

Robert Reich: "New data from the Commerce Department shows employee pay is now down to the smallest share of the economy since the government began collecting wage and salary data in 1929. Meanwhile, corporate profits now constitute the largest share of the economy since 1929.

In 1914 Henry Ford paid three times what the typical factory employee earned at the time. The higher wage turned Ford's auto workers into customers who could afford to buy Model T's and in two years Ford's profits more than doubled.

Because of the many loopholes in the U.S. tax code, on average, the largest U.S. multi-national corporations and banks already pay a lower effective tax rate in corporate taxes (14% to 18%) than they would in China (25%). It's not over-regulation or taxes that keeps businesses from hiring, they just don't have to.

CEOs only “earn” bonuses when their company “performs.” (such as saving labor-related costs). One measure of that performance: “earnings per share,” or company income divided by outstanding shares of stock.

But execs have figured out they don't have to boost earnings to hit their per-share targets. They simply reduce the number of company shares — by having their companies “buy back” shares of their own stock off the open market. U.S. corporations overall have so far this year authorized $445 billion worth of buybacks.

(For more details on how stock-options work, read Startup Equity For Employees)

So with corporations paying a record low "effective tax rate", they can also pay themselves generous stock options, and then pay a record low capital gains tax. (Read The Laffer Curve & Capital Gains Taxes)

If the Bush tax cuts are allowed to expire, the top tax bracket of 35% would go up to 39.6% (for income over $379,000 a year), and tax on capital gains (like CEO stock options) would go from 15% to 20% - - but this is what needs changed. Capital gains and dividends should be taxed as regular income.

That's how the ultra-wealthy make most their income (instead of paying taxes in the higher income bracket, they pay the lower capital gains rate), and that's how Warren Buffett's secretary pays a higher effective tax rate for income taxes than her boss.

Hedge fund managers are making a killing paying capital gains taxes, rather than paying the higher top marginal income tax rate on their personal income. Read: Tax breaks for billionaires: Loopholes for hedge fund managers by the Economic Policy Institute (a non-profit and non-partisan think tank).

Higher income earners also have the advantage in that Social Security taxes are capped at $106,800.

And because corporations have been paying a low effective corporate tax rate for decades, that didn't keep them from outsourcing jobs overseas for cheap labor, but rather, it did enable them to pay very excessive CEO salaries...who only mostly pay 15% in federal income taxes on their capital gains. And the Republicans want to lower the tax rates for corporations more.

And the Republicans either want to lower capital gains taxes for the rich, or not tax capital gains at all...even though it doesn't create jobs but only make the top 1% richer -- and further widening the income gap. The ultra-wealthy have been enjoying historically low tax rates for years, but it didn't create jobs. In the past 10 years alone we've lost 56,000 factories and 8.2 million jobs.

American corporations might be hiring Chinese workers with engineering degrees, but their level of education isn't why they're being hired. A high school drop out can work on any of Apple's assembly lines with only 8 hours of on-the-job training. It's only for low wages paid to citizens of a country that has a government violating every imaginable labor law that we have here in America (Read America's Race to the Bottom)

Capital gains and dividends should be taxed as regular income (and we should remove corporate loopholes). Rather than over-paying themselves, the CEOs should start paying fair wages to their employees. $10 million year in employee's wages will go right back into the economy. $10 million a year into the pocket of a CEO will only stimulate the yachting industry.

As an aside: When you earn equity in your pension fund that's invested in stocks, when you retire your pension or Roth IRA is taxed as regular income (according to your marginal income bracket), not at the lower rate that CEOs, banks, and hedge-fund mangers pay with capital gains from THEIR stocks.

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Monday, November 28, 2011

FOIA Reveals $7.7 Trillion in Secret Guarantees to Banks

Bloomberg reports that documents obtained under the Freedom of Information Act reveals the Federal Reserve acted on their own without even telling Congress of almost $8 TRILLION in taxpayer guarantees to banks!

Will Social Security be Sacrificed for Bank Profits?

While losing their jobs and homes, taxpayers have been saving the investors of banks who have been paying huge bonuses to their executives, while at the same time politicians have also been asking taxpayers for a "shared sacrifice" in Medicare and Social Security.

The amount of money our central bank (Federal Reserve) parceled out dwarfed the Treasury Department’s $700 billion TARP program. Adding up guarantees and lending limits, the Fed has committed $7.77 trillion as of March 2009 to rescue the financial system - more than half the value of everything produced in the U.S. that year.

And according to Bloomberg, a Freedom of Information Act also reveals that the Federal Reserve acted on their own without even telling Congress!

Total assets held by the six biggest U.S. banks have increased 39% to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data. And the CEOs have been raking in massive salaries (and only paying 15% in capital gains taxes on their ill-gotten gains. (READ: Mom Pays More Taxes Than Bankers!)

Secret Loans to Big Banks

(Bloomberg, November 27, 2011) The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

‘Change Their Votes’

“When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio who in 2010 introduced an unsuccessful bill to limit bank size. “This is an issue that can unite the Tea Party and Occupy Wall Street. There are lawmakers in both parties who would change their votes now.”

The size of the bailout came to light after Bloomberg LP, the parent of Bloomberg News, won a court case against the Fed and a group of the biggest U.S. banks called Clearing House Association LLC to force lending details into the open.

The Fed, headed by Chairman Ben S. Bernanke, argued that revealing borrower details would create a stigma -- investors and counter-parties would shun firms that used the central bank as lender of last resort -- and that needy institutions would be reluctant to borrow in the next crisis. Clearing House Association fought Bloomberg’s lawsuit up to the U.S. Supreme Court, which declined to hear the banks’ appeal in March 2011.

$7.77 Trillion

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

Bankers didn’t disclose the extent of their borrowing. On Nov. 26, 2008, then-Bank of America (BAC) Corp. Chief Executive Officer Kenneth D. Lewis wrote to shareholders that he headed “one of the strongest and most stable major banks in the world.” He didn’t say that his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.

‘Motivate Others’

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.

Howard Opinsky, a spokesman for JPMorgan (JPM), declined to comment about Dimon’s statement or the company’s Fed borrowings. Jerry Dubrowski, a spokesman for Bank of America, also declined to comment.

The Fed has been lending money to banks through its so- called discount window since just after its founding in 1913. Starting in August 2007, when confidence in banks began to wane, it created a variety of ways to bolster the financial system with cash or easily traded securities. By the end of 2008, the central bank had established or expanded 11 lending facilities catering to banks, securities firms and corporations that couldn’t get short-term loans from their usual sources.

Senator Bernie Sanders asks Ben Bernanke, "WHERE IS THE MONEY?"

Senator Bernie Sanders questions Federal Reserve Chairman Ben Bernanke during a Senate Budget Committee hearing. Sanders asks to know who received almost $2.3 trillion in taxpayer loans from the Fed. Bernanke flatly refuses to answer.

‘Core Function’

“Supporting financial-market stability in times of extreme market stress is a core function of central banks,” says William B. English, director of the Fed’s Division of Monetary Affairs. “Our lending programs served to prevent a collapse of the financial system and to keep credit flowing to American families and businesses.”

The Fed has said that all loans were backed by appropriate collateral. That the central bank didn’t lose money should “lead to praise of the Fed, that they took this extraordinary step and they got it right,” says Phillip Swagel, a former assistant Treasury secretary under Henry M. Paulson and now a professor of international economic policy at the University of Maryland.

The Fed initially released lending data in aggregate form only. Information on which banks borrowed, when, how much and at what interest rate was kept from public view.

The secrecy extended even to members of President George W. Bush’s administration who managed TARP. Top aides to Paulson weren’t privy to Fed lending details during the creation of the program that provided crisis funding to more than 700 banks, say two former senior Treasury officials who requested anonymity because they weren’t authorized to speak.

Big Six

The Treasury Department relied on the recommendations of the Fed to decide which banks were healthy enough to get TARP money and how much, the former officials say. The six biggest U.S. banks, which received $160 billion of TARP funds, borrowed as much as $460 billion from the Fed, measured by peak daily debt calculated by Bloomberg using data obtained from the central bank. Paulson didn’t respond to a request for comment.

The six -- JPMorgan, Bank of America, Citigroup Inc. (C), Wells Fargo & Co. (WFC), Goldman Sachs Group Inc. (GS) and Morgan Stanley -- accounted for 63 percent of the average daily debt to the Fed by all publicly traded U.S. banks, money managers and investment- services firms, the data show. By comparison, they had about half of the industry’s assets before the bailout, which lasted from August 2007 through April 2010. The daily debt figure excludes cash that banks passed along to money-market funds.

Bank Supervision

While the emergency response prevented financial collapse, the Fed shouldn’t have allowed conditions to get to that point, says Joshua Rosner, a banking analyst with Graham Fisher & Co. in New York who predicted problems from lax mortgage underwriting as far back as 2001. The Fed, the primary supervisor for large financial companies, should have been more vigilant as the housing bubble formed, and the scale of its lending shows the “supervision of the banks prior to the crisis was far worse than we had imagined,” Rosner says.

Bernanke in an April 2009 speech said that the Fed provided emergency loans only to “sound institutions,” even though its internal assessments described at least one of the biggest borrowers, Citigroup, as “marginal.”

On Jan. 14, 2009, six days before the company’s central bank loans peaked, the New York Fed gave CEO Vikram Pandit a report declaring Citigroup’s financial strength to be “superficial,” bolstered largely by its $45 billion of Treasury funds. The document was released in early 2011 by the Financial Crisis Inquiry Commission, a panel empowered by Congress to probe the causes of the crisis.

‘Need Transparency’

Andrea Priest, a spokeswoman for the New York Fed, declined to comment, as did Jon Diat, a spokesman for Citigroup.

“I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability,” says Alabama Senator Richard Shelby, the top Republican on the Senate Banking Committee.

Judd Gregg, a former New Hampshire senator who was a lead Republican negotiator on TARP, and Barney Frank, a Massachusetts Democrat who chaired the House Financial Services Committee, both say they were kept in the dark.

“We didn’t know the specifics,” says Gregg, who’s now an adviser to Goldman Sachs.

“We were aware emergency efforts were going on,” Frank says. “We didn’t know the specifics.”

Disclose Lending

Frank co-sponsored the Dodd-Frank Wall Street Reform and Consumer Protection Act, billed as a fix for financial-industry excesses. Congress debated that legislation in 2010 without a full understanding of how deeply the banks had depended on the Fed for survival.

It would have been “totally appropriate” to disclose the lending data by mid-2009, says David Jones, a former economist at the Federal Reserve Bank of New York who has written four books about the central bank.

“The Fed is the second-most-important appointed body in the U.S., next to the Supreme Court, and we’re dealing with a democracy,” Jones says. “Our representatives in Congress deserve to have this kind of information so they can oversee the Fed.”

The Dodd-Frank law required the Fed to release details of some emergency-lending programs in December 2010. It also mandated disclosure of discount-window borrowers after a two- year lag.

Protecting TARP

TARP and the Fed lending programs went “hand in hand,” says Sherrill Shaffer, a banking professor at the University of Wyoming in Laramie and a former chief economist at the New York Fed. While the TARP money helped insulate the central bank from losses, the Fed’s willingness to supply seemingly unlimited financing to the banks assured they wouldn’t collapse, protecting the Treasury’s TARP investments, he says.

“Even though the Treasury was in the headlines, the Fed was really behind the scenes engineering it,” Shaffer says.

Congress, at the urging of Bernanke and Paulson, created TARP in October 2008 after the bankruptcy of Lehman Brothers Holdings Inc. made it difficult for financial institutions to get loans. Bank of America and New York-based Citigroup each received $45 billion from TARP. At the time, both were tapping the Fed. Citigroup hit its peak borrowing of $99.5 billion in January 2009, while Bank of America topped out in February 2009 at $91.4 billion.

No Clue

Lawmakers knew none of this.

They had no clue that one bank, New York-based Morgan Stanley (MS), took $107 billion in Fed loans in September 2008, enough to pay off one-tenth of the country’s delinquent mortgages. The firm’s peak borrowing occurred the same day Congress rejected the proposed TARP bill, triggering the biggest point drop ever in the Dow Jones Industrial Average. (INDU) The bill later passed, and Morgan Stanley got $10 billion of TARP funds, though Paulson said only “healthy institutions” were eligible.

Mark Lake, a spokesman for Morgan Stanley, declined to comment, as did spokesmen for Citigroup and Goldman Sachs.

Had lawmakers known, it “could have changed the whole approach to reform legislation,” says Ted Kaufman, a former Democratic Senator from Delaware who, with Brown, introduced the bill to limit bank size.

Moral Hazard

Kaufman says some banks are so big that their failure could trigger a chain reaction in the financial system. The cost of borrowing for so-called too-big-to-fail banks is lower than that of smaller firms because lenders believe the government won’t let them go under. The perceived safety net creates what economists call moral hazard -- the belief that bankers will take greater risks because they’ll enjoy any profits while shifting losses to taxpayers.

If Congress had been aware of the extent of the Fed rescue, Kaufman says, he would have been able to line up more support for breaking up the biggest banks.

Byron L. Dorgan, a former Democratic senator from North Dakota, says the knowledge might have helped pass legislation to reinstate the Glass-Steagall Act, which for most of the last century separated customer deposits from the riskier practices of investment banking.

“Had people known about the hundreds of billions in loans to the biggest financial institutions, they would have demanded Congress take much more courageous actions to stop the practices that caused this near financial collapse,” says Dorgan, who retired in January.

Getting Bigger

Instead, the Fed and its secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.

Total assets held by the six biggest U.S. banks increased 39 percent to $9.5 trillion on Sept. 30, 2011, from $6.8 trillion on the same day in 2006, according to Fed data.

For so few banks to hold so many assets is “un-American,” says Richard W. Fisher, president of the Federal Reserve Bank of Dallas. “All of these gargantuan institutions are too big to regulate. I’m in favor of breaking them up and slimming them down.”

Employees at the six biggest banks made twice the average for all U.S. workers in 2010, based on Bureau of Labor Statistics hourly compensation cost data. The banks spent $146.3 billion on compensation in 2010, or an average of $126,342 per worker, according to data compiled by Bloomberg. That’s up almost 20 percent from five years earlier compared with less than 15 percent for the average worker. Average pay at the banks in 2010 was about the same as in 2007, before the bailouts.

‘Wanted to Pretend’

“The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out,” says Anil Kashyap, a former Fed economist who’s now a professor of economics at the University of Chicago Booth School of Business. “They shouldn’t be surprised that a lot of people find some of the stuff that happened totally outrageous.”

Bank of America took over Merrill Lynch & Co. at the urging of then-Treasury Secretary Paulson after buying the biggest U.S. home lender, Countrywide Financial Corp. When the Merrill Lynch purchase was announced on Sept. 15, 2008, Bank of America had $14.4 billion in emergency Fed loans and Merrill Lynch had $8.1 billion. By the end of the month, Bank of America’s loans had reached $25 billion and Merrill Lynch’s had exceeded $60 billion, helping both firms keep the deal on track.

Prevent Collapse

Wells Fargo bought Wachovia Corp., the fourth-largest U.S. bank by deposits before the 2008 acquisition. Because depositors were pulling their money from Wachovia, the Fed channeled $50 billion in secret loans to the Charlotte, North Carolina-based bank through two emergency-financing programs to prevent collapse before Wells Fargo could complete the purchase.

“These programs proved to be very successful at providing financial markets the additional liquidity and confidence they needed at a time of unprecedented uncertainty,” says Ancel Martinez, a spokesman for Wells Fargo.

JPMorgan absorbed the country’s largest savings and loan, Seattle-based Washington Mutual Inc., and investment bank Bear Stearns Cos. The New York Fed, then headed by Timothy F. Geithner, who’s now Treasury secretary, helped JPMorgan complete the Bear Stearns deal by providing $29 billion of financing, which was disclosed at the time. The Fed also supplied Bear Stearns with $30 billion of secret loans to keep the company from failing before the acquisition closed, central bank data show. The loans were made through a program set up to provide emergency funding to brokerage firms.

‘Regulatory Discretion’

“Some might claim that the Fed was picking winners and losers, but what the Fed was doing was exercising its professional regulatory discretion,” says John Dearie, a former speechwriter at the New York Fed who’s now executive vice president for policy at the Financial Services Forum, a Washington-based group consisting of the CEOs of 20 of the world’s biggest financial firms. “The Fed clearly felt it had what it needed within the requirements of the law to continue to lend to Bear and Wachovia.”

The bill introduced by Brown and Kaufman in April 2010 would have mandated shrinking the six largest firms.

“When a few banks have advantages, the little guys get squeezed,” Brown says. “That, to me, is not what capitalism should be.”

Kaufman says he’s passionate about curbing too-big-to-fail banks because he fears another crisis.

‘Can We Survive?’

“The amount of pain that people, through no fault of their own, had to endure -- and the prospect of putting them through it again -- is appalling,” Kaufman says. “The public has no more appetite for bailouts. What would happen tomorrow if one of these big banks got in trouble? Can we survive that?”

Lobbying expenditures by the six banks that would have been affected by the legislation rose to $29.4 million in 2010 compared with $22.1 million in 2006, the last full year before credit markets seized up -- a gain of 33 percent, according to, a research group that tracks money in U.S. politics. Lobbying by the American Bankers Association, a trade organization, increased at about the same rate, reported.

Lobbyists argued the virtues of bigger banks. They’re more stable, better able to serve large companies and more competitive internationally, and breaking them up would cost jobs and cause “long-term damage to the U.S. economy,” according to a Nov. 13, 2009, letter to members of Congress from the FSF.

The group’s website cites Nobel Prize-winning economist Oliver E. Williamson, a professor emeritus at the University of California, Berkeley, for demonstrating the greater efficiency of large companies.

‘Serious Burden’

In an interview, Williamson says that the organization took his research out of context and that efficiency is only one factor in deciding whether to preserve too-big-to-fail banks.

“The banks that were too big got even bigger, and the problems that we had to begin with are magnified in the process,” Williamson says. “The big banks have incentives to take risks they wouldn’t take if they didn’t have government support. It’s a serious burden on the rest of the economy.”

Dearie says his group didn’t mean to imply that Williamson endorsed big banks.

Top officials in President Barack Obama’s administration sided with the FSF in arguing against legislative curbs on the size of banks.

Geithner, Kaufman

On May 4, 2010, Geithner visited Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.

At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.

Anthony Coley, a spokesman for Geithner, declined to comment.

‘Punishing Success’

Lobbyists for the big banks made the winning case that forcing them to break up was “punishing success,” Brown says. Now that they can see how much the banks were borrowing from the Fed, senators might think differently, he says.

The Fed supported curbing too-big-to-fail banks, including giving regulators the power to close large financial firms and implementing tougher supervision for big banks, says Fed General Counsel Scott G. Alvarez. The Fed didn’t take a position on whether large banks should be dismantled before they get into trouble.

Dodd-Frank does provide a mechanism for regulators to break up the biggest banks. It established the Financial Stability Oversight Council that could order teetering banks to shut down in an orderly way. The council is headed by Geithner.

“Dodd-Frank does not solve the problem of too big to fail,” says Shelby, the Alabama Republican. “Moral hazard and taxpayer exposure still very much exist.”

Below Market

Dean Baker, co-director of the Center for Economic and Policy Research in Washington, says banks “were either in bad shape or taking advantage of the Fed giving them a good deal. The former contradicts their public statements. The latter -- getting loans at below-market rates during a financial crisis -- is quite a gift.”

The Fed says it typically makes emergency loans more expensive than those available in the marketplace to discourage banks from abusing the privilege. During the crisis, Fed loans were among the cheapest around, with funding available for as low as 0.01 percent in December 2008, according to data from the central bank and money-market rates tracked by Bloomberg.

The Fed funds also benefited firms by allowing them to avoid selling assets to pay investors and depositors who pulled their money. So the assets stayed on the banks’ books, earning interest.

Banks report the difference between what they earn on loans and investments and their borrowing expenses. The figure, known as net interest margin, provides a clue to how much profit the firms turned on their Fed loans, the costs of which were included in those expenses. To calculate how much banks stood to make, Bloomberg multiplied their tax-adjusted net interest margins by their average Fed debt during reporting periods in which they took emergency loans.

Added Income

The 190 firms for which data were available would have produced income of $13 billion, assuming all of the bailout funds were invested at the margins reported, the data show.

The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion.

“The net interest margin is an effective way of getting at the benefits that these large banks received from the Fed,” says Gerald A. Hanweck, a former Fed economist who’s now a finance professor at George Mason University in Fairfax, Virginia.

While the method isn’t perfect, it’s impossible to state the banks’ exact profits or savings from their Fed loans because the numbers aren’t disclosed and there isn’t enough publicly available data to figure it out.

Opinsky, the JPMorgan spokesman, says he doesn’t think the calculation is fair because “in all likelihood, such funds were likely invested in very short-term investments,” which typically bring lower returns.

Standing Access

Even without tapping the Fed, the banks get a subsidy by having standing access to the central bank’s money, says Viral Acharya, a New York University economics professor who has worked as an academic adviser to the New York Fed.

“Banks don’t give lines of credit to corporations for free,” he says. “Why should all these government guarantees and liquidity facilities be for free?”

In the September 2008 meeting at which Paulson and Bernanke briefed lawmakers on the need for TARP, Bernanke said that if nothing was done, “unemployment would rise -- to 8 or 9 percent from the prevailing 6.1 percent,” Paulson wrote in “On the Brink” (Business Plus, 2010).

Occupy Wall Street

The U.S. jobless rate hasn’t dipped below 8.8 percent since March 2009, 3.6 million homes have been foreclosed since August 2007, according to data provider RealtyTrac Inc., and police have clashed with Occupy Wall Street protesters, who say government policies favor the wealthiest citizens, in New York, Boston, Seattle and Oakland, California.

The Tea Party, which supports a more limited role for government, has its roots in anger over the Wall Street bailouts, says Neil M. Barofsky, former TARP special inspector general and a Bloomberg Television contributing editor.

“The lack of transparency is not just frustrating; it really blocked accountability,” Barofsky says. “When people don’t know the details, they fill in the blanks. They believe in conspiracies.”

In the end, Geithner had his way. The Brown-Kaufman proposal to limit the size of banks was defeated, 60 to 31. Bank supervisors meeting in Switzerland did mandate minimum reserves that institutions will have to hold, with higher levels for the world’s largest banks, including the six biggest in the U.S. Those rules can be changed by individual countries.

They take full effect in 2019.

Meanwhile, Kaufman says, “we’re absolutely, totally, 100 percent not prepared for another financial crisis.”

Secret Loans to Big Banks - By Bob Ivry, Bradley Keoun and Phil Kuntz - Nov 27, 2011 4:01 PM PT Mon Nov 28 00:01:00 GMT 2011

To contact the reporters on this story: Bob Ivry in New York at; Bradley Keoun in New York at; Phil Kuntz in New York at

To contact the editors responsible for this story: Gary Putka at; David Scheer at

Related Article: Fed secretly handed out $8 trillion

Proof the Current GOP is Incompetent

Originally posted by Milt Shook on October 31, 2011 at 11:25 AM in Right Wing Mythbusters |

The basic premise of this post is simple. The current incarnation of the Republican Party is absolutely incompetent to run government, and the evidence is clear to anyone who bothers to look. I start with the national debt and economy, but I go a whole lot farther. Stick with this to the end, and you'll have a hell of a tool to use to show people. We have to defeat these people politically, and all we need is the truth. The two parties are NOT the same. The Republican Party is demonstrably less competent than the Democratic Party, and their political ideology is demonstrably a sham.

Let's start with whether or not we're "broke."

If anyone you know thinks this country is "broke," as Congressional Republicans keep repeating over and over, find out which planet he's from, and send them this article.

This economy's had some rough times lately, but get real; there's plenty of money here. Our economy is still the second-largest in the world after the European Union, and it's only second because the EU was actually cobbled together from a number of different countries. But that's based on GDP, which is the amount of wealth that is created and/or transfers each fiscal quarter or year. That's the first reason why right wingers can't be trusted with the economy; they are simply incapable of seeing economic issues in terms other than the current year or the current quarter. For example, the best way to retire the national debt is to run it up for a couple of years and invest a ton of money in infrastructure that creates jobs. When you create jobs, you create taxpayers, and when you create taxpayers, revenue goes up.

These people also still preach the gospel of "trickle-down economics," despite the fact that even its key architect, David Stockman, is screaming to anyone who'll listen that he was wrong. Not only does the concept of reducing taxes to increase revenues not make any logical sense; it's been implemented and proven wrong. And yet, right wing idiots STILL swear that every tax cut for rich people creates more jobs, and creates more revenue.

I want you to go HERE and check out these charts; reality will blow your mind. In 1980, Reagan and the right wing claimed the debt was growing out of control, despite the fact that it was actually at its lowest point as a percent of GDP since before the Great Depression. But in 8 years, Reagan tripled the size of the debt, and in 4 more after that, Bush, Sr. doubled it again. In the first 193 years of our democratic republic's existence, even with a number of wars, recessions and depressions, we only managed to accumulate $998 billion in debt, total. In 12 years with neo-con Republicans at the helm, more than $5 trillion in debt was added. Democrat Bill Clinton forced the Republicans in Congress to help him balance the budget, and they even created a surplus. By the time Clinton left in 2001, the federal government was scheduled to run surpluses for at least the next ten years, according to the CBO, and trim the then-$6 trillion to about $4.5 trillion in that time.

Unfortunately, Bush Junior was appointed president by the Supreme Court, and immediately enacted the least necessary tax cuts in the history of the republic, and appointed cronies and crooks to fail to oversee the financial system, resulting in immediate return to record deficit spending, even before the economic collapse he caused, by ignoring warnings given to him as early as 2003.

Even under the rosiest of perspectives for Republicans, they are responsible for at least 75% of the current national debt. Given that Obama and the Democrats have tried to kill the Bush tax cuts twice, and Republicans have blocked him, It's unfair to blame Obama for much at all. Look at what was handed to him when he took office, for starters. Even the current deficit can't be laid entirely at his doorstep. More than $400 billion is paid each year just to service the portion of the debt that can be tied to Republican excesses. (HERE is that number) In all, out of $14.5 trillion in debt [date of this post], more than $12 trillion of it can be laid at the feet of the party and the ideology currently whining about it to such a degree.

And let's make something clear; while $14.5 trillion is a lot of money, we are not BROKE, as the Republican leadership claims. A lot of the wealth that was claimed during the Bush years was phony -- there's no way home values should have ever been as high as they were, and a lot of securities shouldn't have existed in the first place, but in no way are we broke.

HERE are some numbers, so you can follow along. Total household wealth in the United States in 2001 was about $44.4 trillion. At the bubble's peak, that number went to about $66 trillion. I know it sounds contradictory to many, but a healthy economy does NOT grow wealth by 50% in a half dozen years. That means someone in charge had to know, or at least should have known, there was a problem, and they did nothing about it. At its lowest point during the recession, total household wealth bottomed out at $48.5 trillion. It should have been higher, but it still doesn't constitute "broke." In fact, the number is still higher than in 2001, when we were apparently so UN-broke, Republicans were cutting taxes for the rich to the bone. By the end of 2009, household wealth was back up to $54 trillion, which would seem to indicate we were even LESS broke, not more.

The total amount of wealth in the United States currently tops $82 trillion, and is the largest in the world. Calling this country "broke" is like claiming Bill Gates went "broke" after the tech bubble burst because his net worth was cut nearly in half, to "only" about $46 billion. The fact is, if the debt is such a HUGE problem -- if it was causing our country to go down in flames, as some Republicans seem to claim, we could institute a one-time "wealth tax" of 10% and wipe out two-thirds of the debt all at once. (For the record, I am NOT for anything so drastic, because it's unnecessary, and it would actually be very dangerous. When the national debt gets to $30 trillion, call me.)

Here's another perspective. As a percentage of GDP, the current debt is still under 100%, although one major reason for that is that GDP shrunk a little for two years. That's not good, but it's not unprecedented. After World War II, the debt was 120% of GDP, and in 35 years, we reduced it to about 33% of GDP. We are capable of dealing with such debt, IF we use the money to invest in those things that create more revenue, like building infrastructure. We could borrow and spend another $2 trillion right now to build infrastructure programs, and the resultant tax revenue would actually increase the GDP AND increase tax revenues AND reduce the debt, all without necessarily raising tax rates. If we spend money on the right things, we can actually pay that money back and start paying down the debt in a much shorter time than if we just cut spending. Where do Republicans think government spending goes, anyway? They seem to think it disappears like magic, but it doesn't; it goes into pockets and bank accounts, and eventually gets invested and spent.

To put it mildly, Republicans are not to be trusted with the economy. Every major economic problem in this country for the last century can be traced to the GOP. When the economy tanks, their solution is to do nothing, which always makes the situation worse. They keep proposing the same economic policies they've pushed since the 1920s, which have been proven detrimental time and time again. They don't care about deficits unless it's to their political advantage. And when they complain about them, they still refuse to take any steps to actually solve the problem, such as raising taxes on the very rich, even temporarily.

Republicans are constantly trying create an "unregulated free market," which is a recipe for disaster. If you think otherwise, try this experiment. Take your money out of your bank and drive to a mall in the richest neighborhood you can find. Now, leave all of that cash on your car seat in full view of everyone with the windows open and the doors unlocked. How much of that money will be there when you get back, do you think. THAT is an "unregulated free market," folks.

Why are we forced to listen to these people? Why are they allowed to have a forum that is at least equal to everyone else, and why doesn't anyone call them on their rhetoric? Journalists, do your goddamn job! The next time some Republican asshole is on your show telling you that cutting taxes increases revenue, be rude and call "bullshit" and show him the statistics that prove that. The stats I use in this column are very easy to find.

But let's get deeper than the federal budget deficit. There's a lot more.

To hear a typical Republican tell it, one would think their red states are a paradise, where everyone lives a chaste, moral, Biblical life. Of course, those who live in "liberal" blue states might as well be living in a jungle, run by the devil himself. After all, the narrative is that Republicans are all moral, peaceful and God-fearing, while Democrats are all heathenish retches who kill babies and coddle terrorists.

Ever bothered to look at the relative safety, security and economic stability of red states versus the blue states? Compare red states with blue states, and you are left with a road map of right wing Republican incompetence.

You're welcome.

Note; in the statistics below, I left Washington, DC out of the mix on purpose. It's not a state, and the city is largely run by Congress. Plus, a large portion of its population for most of the day is transient, which tends to skew per capita figures to a very great degree.

I've provided links so you can check my work.

Let's start this with some basic economics.

Here's a list of the ten states with the highest median incomes: 1. New Hampshire, 2. Connecticut 3. Maryland 4. New Jersey 5. Alaska 6. Virginia 7. Hawaii 8. Massachusetts, 9. Colorado 10. Washington.

Notice something about the above? Except for Alaska, whose numbers are skewed because of their largely socialized economy, in which oil companies pay them money for simply living there and pay their taxes for them, and the purplish Virginia and New Hampshire, ALL are bright BLUE.

Just as interesting are the BOTTOM ten states; 50. Mississippi 49. Arkansas 48 West Virginia, 47. Tennessee 46. Kentucky 45. Louisiana, 44.Alabama 43. Montana 42. South Carolina 41. North Carolina.

Notice something about that list? Yeah, Except for West Virginia, which can be a bit purple, all if the above states are reliably RED.

The above statistics have been pretty much static for the last 40 years; the groupings haven't changed much. And the poverty levels back that up.

The ten states with the highest populations living below the poverty line are: 1. Mississippi, 21.6%, 2. Louisiana, 19.4%, 3. New Mexico, 19.3%, 4. Arkansas, 17.9%, 5. West Virginia, 17.9%, 6. Kentucky, 17.4%, 7. Texas, 16.6%, 8. Alabama, 16.1%, 9. South Carolina, 15.7%, 10. Oklahoma, 15.3%. Yep, Republican-led states have far more poor than Democratic-led states.

Again, I ask; why are these people telling us how to put people to work and increase tax revenue? Why are they even given a forum to complain about what "liberals" and Democrats do to the economy? They're running the poorest states in the country, and they won't be satisfied until they've done the same thing for everyone else.

Let's go beyond economy. There's a lot more to the story. States run by Republicans are just terrible places to live, in some ways. For example, they're always posturing themselves as being "tough on crime"? Read it and watch the Republicans weep.

The ten states with the highest violent crime rate are, according to the FBI's Uniform Crime Statistics for 2006 via the Census Bureauare 1. South Carolina, 2. Tennessee, 3. Nevada, 4. Florida, 5. Louisiana, 6. Alaska, 7. Delaware, 8. Maryland, 9. New Mexico, 10. Michigan.

Yes, you read that right. The states with the highest violent crime rate are mostly RED, not blue. And if we dig down to the top 15, the only blue states added are Illinois and California, which means ten of the 15 states with the highest violent crime rates in the country are reliably Republican. Also note that New York and New Jersey are NOT on that list, and that bastion of liberalism, Massachusetts, is actually near the bottom.

When you focus just on the murder rate, note that, of the 19 states with rates higher than the US average, 14 are RED states. The states with the highest murder ratesin 2009 follow the same pattern; 1. Louisiana, 2. New Mexico, 3. Maryland, 4. Tennessee, 5. Alabama 6. Mississippi 7. Missouri 8. South Carolina 9. Michigan 10. Oklahoma. Eight of the ten states are reliably RED, folks.

And they love the gun in those red states, don't they? They will swear with their dying breath that the gun protects them. But check out the ten states with the highest firearm death rate (by now, you should be able to guess most of them); 1. Alaska, 2. Louisiana, 3. Wyoming, 4. Arizona, 5. Nevada, 6. Mississippi, 7. New Mexico, 8. Arkansas, 9. Alabama, 10. Tennessee.

Just for giggles, check out the states with the LOWEST firearm death rate. I'm only pointing this out to make the people in the red states squirm. 50. Hawaii, 49. Massachusetts, 48. Connecticut, 47. New Jersey, 46. New York, 45. Rhode Island, 44 New Hampshire, 43. Minnesota, 42. Maine, 41. Iowa.

Besides the fact that most of them are BLUE states, they put a lie to the claim Republicans make, that states with the strictest gun laws have the most shooting deaths. That's simply not true, is it? You have a far greater chance of being shot and killed in Caribou Barbie's Alaska than in New York or New Jersey. It's that cognitive dissonance, folks; they can't help themselves.

Perhaps their cognitive dissonance is because of their lack of education. I know you may find it hard to believe, but despite their efforts to force us to run schools their way, they don't have a very good track record. (I highlighted one you might appreciate.)

Let's start with the ten states with the highest graduation rates in 2008: %1. Vermont, 86.6% 2. Wisconsin, 85.6% 3. Minnesota, 85.3% 4. New Jersey, 85.2% 5. Iowa, 83.9% 6. South Dakota, 82.7% 7. North Dakota, 81.9 8. New Hampshire, 80.6 9. Pennsylvania, 79.5% 10. Nebraska, 79.5. Again, 7 out of 10 reliably blue. And Wisconsin, which its current Republican Governor is trying to claim is being ripped off by its teachers, has the second best rate.

But check out the bottom ten. (I'd say "just for fun," but it's really not funny; these are the people expected to take over the country later.) Again, you can almost guess who most of them are. 50.Nevada 49.South Carolina, 48.Louisiana, 47.Georgia, 46.Florida 45.New Mexico, 44.Mississippi 43.Alabama 42. Texas 41.Delaware.

Okay, so governments run by Republicans tend to be poorer, have more crime and less successful educational systems. That's okay, because they're more moral than those damn liberals, right?

Maybe not.

They claim they hold marriage so sacred that gays shouldn't be allowed to partake of it, for fear that to allow that will hurt the "sanctity of marriage." But how "sanctified" do they hold marriage. The ten states with the highest divorce rates are as follows; 1. Nevada, 2. Arkansas, 3. Alaska, 4. Oklahoma, 5. Wyoming, 6. West Virginia, 7. Alabama, 8. Idaho, 9. Florida, 10. Tennessee.

In all fairness, we should probably leave Nevada off the above list, because tacky people from all over the country get divorced there. But all of the others are reliably red, except West Virginia, which is a bit purple.

What about teen pregnancy? They're always on about that, right? Surely, with so many right wingers claiming that “abstinence-only” education is the key, their girls must be chaste and virtuous, right? Well, you tell me. Here are the ten states with the highest rates of teen pregnancy; 1. Nevada, 2. Arizona, 3. Mississippi, 4. New Mexico, 5. Texas, 6. Florida, 7. California, 8. Georgia, 9. North Carolina, 10. Arkansas. Once again, except for California, all of pretty reliably red over the years.

It's pretty clear that the right wing Republicans' track record regarding their pet issues is pretty poor. But it gets even better.

Republican lawmakers have spent more than two years whining about health care reform, to the point that one might think they were screwed. One might think that the states with the largest numbers of uninsured would be most in favor of creating a national health insurance system, right?

Not when one major party is dominated by hypocrites.

By now, I'm sure you can almost guess which states have the HIGHEST number of uninsured citizensin 2006-2007, before health insurance reform. 50. Texas (24.8%) 49. New Mexico (22.7%) 48. Florida (20.7%) 47. Louisiana (20.2%) 46. Mississippi (19.8%) 45. Arizona (19.6%) 44. California (18.5%) 42 (T) Oklahoma and Nevada (18.4%) 41. Arkansas (17.5%).

Now, check out the states with the LOWEST proportion of uninsured:

1. Massachusetts (7.9%) 2. Hawaii (8.2%) 3. Wisconsin (8.5%) 4. Minnesota (8.8%) 5. Maine (9.1%) 6. Connecticut (9.4%) 7. Rhode Island (9.7%) 8. Pennsylvania (9.8%) 9. Iowa (9.9%) 10. Vermont (10.7%)

By the way, the two states with the smallest proportion of uninsured also have something akin to the health care plan being proposed by Congress. Coincidence? And in Massachusetts, the number of uninsured was intolerable to Mitt Romney, which is why he gladly signed Romney-care.

The final nail I'll drive into the Republicans' political coffin has to do with their claims of "economic independence. They're always on about "welfare," and they whined about the "stimulus package that was passed in 2009. Remember their disgust over corporate bailouts, even though they've been huge fans of such things until President Obama came along? They've always claimed to be advocates for states' rights, and always seem to demand as much autonomy from the government as possible.

Well, the hypocrisy cup runneth over, folks.

Meet the state welfare queens. These are the states that get the most bang for every buck they pay in federal taxes. Every single one of them gets more federal tax money than they pay in, which means other states get less than they pay in. Next to each state is how much money they get back for every dollar in federal taxes they pay in; 1. New Mexico, $2.03 2. Mississippi, $2.02, 3. Alaska, $1.84, 4. Louisiana, $1.78, 5. West Virginia, $1.76, 6. North Dakota, $1.68, 7. Alabama, $1.66, 8. South Dakota, $1.53, 9. Kentucky, $1.51, 10. Virginia, $1.51.

First off, a case can be made that purple Virginia shouldn't even be there, because the far northern part is "DC Lite." But the same could be said of Maryland, and it's not on that list. Number 11 is Montana, anyway, so it almost doesn't matter.

Now, based on Republican logic, the following states should be ones screaming the loudest about those Red State welfare queens. These are the ten states who receive the LEAST federal money; 50. New Jersey, $0.61, 49. Nevada, $0.65, 48. Connecticut, $0.69, 47. New Hampshire, $0.71, 46. Minnesota, $0.72, 45. Illinois, $0.75, 44. Delaware, $0.77, 43. California, $0.78, 42. New York, $0.79, 41. Colorado, $0.81.

In other words, forget their whining. The fact is, Democratic-Party-led states are largely subsidizing Republican-led states. If you live in a red state, and you have low taxes, you should be THANKING the people of California, New York and New Jersey. Next time California has a debt crisis, understand that one major reason is because their federal tax money is going straight into red state pockets to give political cover to their Republican governors. Instead of pointing and laughing at California, you stupid right wing Republicans, send them some of your welfare money instead.

Put simply, the current incarnation of the Republican Party consists of hypocrites. But more importantly, their political philosophy is KILLING the country. Anytime someone tries to convince you that Republicans are better at running the government, show them these stats. In fact, print this and hand it out to any co-worker who argue that Democrats are screwing things up. It might not shut them up, but it'll make you feel better.

Moderator: If the Bush tax cuts are allowed to expire, the top tax bracket of 35% would go back up to 39.6% (for income over $379,000 a year), and tax on capital gains (like CEO stock options) would go back from 15% to 20% - - but this is what needs changed. Capital gains and dividends should be taxed as regular income. That's how the ultra-wealthy make most their income (instead of paying taxes in the higher income bracket, they pay the lower capital gains rate), and that's how Warren Buffett's secretary pays a higher effective tax rate for income taxes than her boss.

Sunday, November 27, 2011

It's All Downhill from Here

On CNN today Ali Velshi and his guests were discussing the unemployment situation, and they were telling kids in college that they'd better learn Chinese or some other second language, and to start thinking of themselves as new immigrants to this country. It sounds pretty fatalistic to the ones who are already unemployed today...especial older workers.

Excerpted from New York Times: The country’s golden age was from roughly 1945 to around 1973 - when working life was most secure for many Americans, particularly white, middle-class men.

Since the 1970s, after computers, automations, and outsourcing, a general guideline these days is that people are rewarded when they can do things that take trained judgment and skill — things, in other words, that can’t be done by computers or lower-wage workers in other countries.

A college degree is no longer the guarantor of a middle-class existence. To get a good job, you have to have some special skill that employers value. But there’s also a pretty good chance that by some point in the next few years, your boss will find that some new technology or some worker overseas can replace you.

It’s hard to see any great future for high-school dropouts or high-school graduates with no technical skills. They most often get jobs that require little judgment and minimal training, like stocking shelves, cooking burgers and cleaning offices. Employers generally see these unskilled workers as commodities — one is as good as any other — and thus each worker has very little bargaining power, especially now that unions are weaker. There are about 40 million of these low-skilled people in our work force. They’re vying for jobs that are likely to earn near the minimum wage with few or no benefits, and they have a high chance of being laid off many times in a career.

Back in the 1970s there were all sorts of stabilizers that pushed working-class wages up and kept rich people’s wages lower. The minimum wage was almost 50 percent higher than it is now (inflation adjusted, naturally). Unions were stronger and had more government support. The United States taxed the rich much higher relative to the working class. (The top bracket was taxed at 70 percent in 1978; now it’s 35 percent.) Regulations largely limited the profitability of banks and kept bankers’ financial compensation low.

The new rules, combined with the other major changes, have effectively removed both the floor and the ceiling. It’s easier for some to make a lot more money and for others to fall much further behind. That has meant a huge increase in inequality.

The top 1 percent of families now makes 26 times the average of the other 99 percent (the ratio was 11-to-1 in 1979). The top 0.1 percent makes 130 times the bottom 99 (up from a 38-to-1 ratio 40 years ago). And the inequality is not just between classes. The average wages of the average American have stayed largely flat for decades, but those averages hide a lot of volatility, as more people find themselves at the extremes of wealth or poverty.

Republicans largely claim that the new rules will make the country richer and, in the long run, will be beneficial to everyone willing to put in the hard work. Few Democrats call for a return to record high taxes and trade barriers — after all, the free flow of cheap goods has helped many, particularly the poor.

But many do want a return to the spirit of the old rules, when the government sought to make life more equal, more stable and, for some, less rewarding. The rest of us, meanwhile, should go to school, learn some skills and prepare for a rocky road.

Saturday, November 26, 2011

Drug kingpin pays $2.3 billion fine, but only 12% in taxes

Although illegal drug dealers don't pay taxes, when they're caught breaking the law, they go to prison. Legal drug dealers don't.

When they are nabbed by the authorities they can buy their way out with big settlements. A cash-strapped government, who's under-staffed by under-paid law enforcement personal, investigators, and regulators, usually have no choice, because CEOs aren't under-paid and can afford the best attorneys..

It appears that with all the tax loopholes that large corporations enjoy, we have to investigate and prosecute them to get any tax revenues from them (with the exception of the big banks, we know who rules this country. They get immunity!)

This may be news to you, but I just found this out today...

I was watching American Greed on CNBC tonight and learned that in 2009 the pharmaceutical giant Pfizer agreed to pay a record-breaking fine of $2.3 billion to settle civil and criminal allegations that it had illegally marketed its painkiller Bextra, which has since been withdrawn from the market.

The New York Times says, "It was the largest health care fraud settlement and the largest criminal fine of any kind ever."

In pursuing a case against Pfizer for fraudulently promoting drugs that eventually led to the largest health fraud settlement in U.S. history, the feds leaned heavily on evidence supplied by a half-dozen whistle-blowers.

Besides heart attacks and other dangerous side-effects, Bextra had even been known to cause Stevens-Johnson syndrome, which begins with flu-like symptoms, followed by a painful red or purplish rash that spreads and blisters, eventually causing the top layer of your skin to die and shed...

...and Pfizer's CEO and board of directors knew this, but had their salespeople push it for profits anyway. The fine was paid with a single wire transfer (easy money!)

Is this what the Republicans mean by "over regulated"? That corporations should be able to do whatever they want in the name of profits? Is this what the Republicans mean by "tort reform", so that the victims can't sue the corporate executive's "money machine" after they neglected the health and welfare of the people, just to line their own pockets with bonuses and stock options...and only paying 15% in capital gains taxes, rather than the top income rate of 35%?

Is this what the Republicans mean when they say that businesses need "certainty in the market", so that corporations can be certain they won't have to pay their share of taxes and not be arrested when they violate the law?

If corporations are really "people", shouldn't they also go to jail when they break the law? Especially when people are physically harmed? There's people sitting in prison for possession of one joint (3 strikes and you're out!)

Prior convictions and settlements of Pfizer entities:
  • Last month Pfizer agreed to pay $14.5 million to resolve False Claims Act allegations related to its illegal marketing of the drug Detrol
  • Earlier this year in January Pfizer was ordered to pay a total of $142.1 million in damages for violating federal racketeering laws in the marketing of its epilepsy drug Neurontin.
  • In 2007, Pfizer subsidiary Pharmacia & Upjohn, Inc. paid $34 million and pled guilty to paying kickbacks for formulary placement of its drugs and entered into a Deferred Prosecution Agreement for off-label distribution of the drug Genotropin
  • In 2004, Pfizer subsidiary Warner-Lambert pled guilty and paid more than $430 million to resolve criminal charges and civil liability in connection with its fraudulent marketing practices with respect to the drug Neurontin
  • In 2002, Pfizer, and its subsidiaries Warner Lambert and Parke-Davis, paid $49 million to resolve civil claims that it had failed to report best prices for its drug Lipitor as is required under the Medicaid Drug Rebate Statute

And that's just what I found with a quick Google search for criminal charges,. I didn't look for other lawsuits.

And no one went to prison....just like with the bankers. They call this "white collar crime", and it runs rampant in this country...and the biggest offenders are rarely punished. Bernie Madoff was one of the few exceptions. If the government cracked down more, maybe we'd have better corporate governance. But that's impossible, we just don't have enough people to carry out this task, just like our "war on drugs".

Now today I read that Pfizer will also have to pay more than $60 million to resolve U.S. government probes into whether the drug maker paid bribes to win business overseas. Are all these people above the law? Are all these CEOs and corporate executives Too Big to Jail?

What ever happened to "3 strikes and you're out"? If the government is going to lock up drug kingpins, then lock up drug executives too if they break the law. After all, they're "people", remember? (cont.)

And on top of their criminal activities, they're also tax cheats (albeit, lawful ones). Pfizer's effective corporate tax rate was only 11.9% in 2010 ( 20.3% in 2009, 17.0% in 2008, 11.0% in 2007, and 15.3% in 2006). The corporate tax rate in the U.S. is supposed to be 35%, but whoever actually pays that? Exxon-Mobil, GE, Boeing, and Bank of America certainly didn't. (Can I stop counting now?)

Pfizer started out marketing citric acid in the 1880's, penicillin in the 1940s, and by the 1950s was established in Belgium, Brazil, Canada, Cuba, Iran, Mexico, Panama, Puerto Rico, Turkey and the United Kingdom. So how did it grow and flourish all those years, especially during the 1950s when the corporate tax rate was once 92%?

So why are all the CEOs and Republicans now crying about high taxes, when the rate is only 35% in 2011, but most only pay between 14% and 18% on average? And why does the Tea Party keep spreading the lie of "high taxes" in their newsletters to me?

READ: Inside Pfizer's Palace Coup - Henry "Hank" McKinnell Jr. had taken over as CEO of Pfizer in 2001. In 2002 he announced the acquisition of Pharmacia, the industry's seventh-largest company, for $60 billion in stock. In January 2009, Kindler announced a $68 billion deal to buy Wyeth.

And then later, in September of 2009, was the mother of all settlements - Pfizer's $2.3 billion fine for civil and criminal "allegations" for fraud.

On Dec. 5, 2010, the CEO Henry Kindler and Pfizer agreed on a generous exit package (of course). He was getting $16 million in cash and stock, another $6.9 million in retirement benefits, and various other forms of stock compensation. What portion of this agreement was settled in stocks, whereas he'd only have pay a 15% capitol gains tax? (less than Warren Buffet's secretary).

It's ironic in that what Pfizer manufactures (drugs) is meant to help people, but at the same time, they hurt so many others, in many different ways. But I suppose that it's really only the researchers, those who discover these scientific break-throughs, who are the only ones who feel real empathy for the population-at-large.

Pfizer, as the corporation that manufacturers, markets, and distributes these miracles of modern medicine, takes on a more macabre quality. This is what happens when a company gets "too big to fail". They stop thinking of their customers as real "people", and they start becoming just "revenue streams".

Meanwhile, Pfizer's on track to layoff another 31,000 more employees, after having already having laid off 33,400 workers as of Oct. 3, 2011 due to an upcoming expiration of drug patents.

The big drug companies are facing increasing problems caused by a slowdown in the development of new “blockbuster” drugs. The pressure for profits is relentless and, it seems, that some in the industry are willing to cut corners and more, just to keep the stock price up. (Nothing personal, it's just business.) Click photo below to enlarge the photo to see their largest shareholders.

DrugAir: Why Pfizer Execs Are Addicted to Their Fleet of 9 Private Aircraft > > >Take a look

Most recent SEC filings for Pfizer