News Release Archive - The U.S. Economy

Middle Class Wealth Plummets

June 12, 2012

The New York Times reports: “The recent financial crisis left the median American family in 2010 with no more wealth than they had in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday. The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.”

WILLIAM K. BLACK, blackw at umkc.edu
Available for a limited number of interviews, Black is now an associate professor of economics and law at the University of Missouri, Kansas City and the author of The Best Way to Rob a Bank is to Own One. He was the deputy staff director of the national commission that investigated the cause of the savings and loan debacle. He said today: “The facts are in, and we now know that the ongoing crisis represents by far the most expensive epidemic of fraud in history. It was an epidemic of fraud that the FBI first warned of in 2004 — and predicted that it would cause a financial ‘crisis.’ It was an epidemic that Chairmen Greenspan and Bernanke could have ended with a stroke of their pens by heeding the pleas to ban liars’ loans. And it is an epidemic led by elite bankers with total impunity. A staggering percentage of homeowner wealth was stolen and destroyed by the elite frauds. Attorney General Holder, Chairman Bernanke, and Secretary Geithner should resign and be replaced by those who will insure that no man is above the law.”

CHUCK COLLINS, Bob Keener, bob at wealthforcommongood.org
Collins, a senior scholar at the Institute for Policy Studies and long-time inequality activist. He was born into the 1 percent. His brand new book is called, 99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It. Collins said today: “The economic meltdown, triggered by reckless financial speculation and extreme wealth inequality, has cost the middle class two decades of economic prosperity. Reducing wealth and income disparities is key toward rebuilding an economy that works for the 100 percent.”

See Collins’ recent piece: “99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It.”

MATTEA KRAMER, mattea at nationalpriorities.org
Kramer is a research analyst for the National Priorities Project, which is just releasing a book A People’s Guide to the Federal Budget.

Kramer said today: “This is compounded by a federal income-tax system riddled with tax breaks that largely benefit wealthy Americans. Thus, even as middle-class wealth has eroded in recent years, the federal government handed a $4.4 billion housing subsidy to the top 1 percent of Americans in 2011. That diverted tax dollars away from long-term investment in the middle class, such as tuition support for higher education.”

Beyond Wisconsin: “The Case Against the Middle Class”

June 11, 2012

ANDY KROLL, andykroll at gmail.com
Kroll, a reporter for Mother Jones magazine and an associate editor at TomDispatch.com, just wrote the piece “Getting Rolled in Wisconsin,” which states: “The energy of the Wisconsin uprising was never electoral. The movement’s mistake: letting itself be channeled solely into traditional politics, into the usual box of uninspired candidates and the usual line-up of debates, primaries, and general elections. The uprising was too broad and diverse to fit electoral politics comfortably. You can’t play a symphony with a single instrument. Nor can you funnel the energy and outrage of a popular movement into a single race, behind a single well-worn candidate, at a time when all the money in the world from corporate ‘individuals’ and right-wing billionaires is pouring into races like the Walker recall.”

ARUN GUPTA, ebrowniess at yahoo.com
Gupta, a founding editor of the Indypendent magazine and the Occupy Wall Street Journal, recently wrote the piece “Wisconsin’s Recall Election: An Ominous Crucible of U.S. Politics.”

He said today: “The Wisconsin recall election is a snapshot of an organized, energized right swimming in cash, a Democratic Party in disarray, a labor movement sliding toward oblivion and an Obama campaign in deep trouble. The continuous protests by tens of thousands last year in Madison put the right on the defensive and proved real power can be exercised outside the voting booth. The instant Democratic and union leaders steered the Wisconsin Uprising into electoral politics spelled doom. Democrats are bereft of principles other than those provided by pollsters and consultants. Progressives confuse elections with movements. And unions have lost their organizing muscles. The result is a party and president who talk endlessly about the middle class, but endorse similar austerity policies as the right. And they run away from their true base — workers, the marginally employed and the poor, who now make up the majority of the country.”

In April of 2011, Gupta wrote a piece titled “The Case Against the Middle Class,” which stated: “In Madison, however, the intoxicating talk of ‘general strike’ has been replaced by recall elections to oust eight Republican state senators. A general strike requires months of education, debate, organizing, community outreach, producing media, building links to other sectors. Labor has the resources in terms of money, staff and infrastructure. There is no guarantee of victory, but it would be a glorious display of the chaos and creativity of democracy.

“A recall election, on the other hand, is authoritarian politics run by self-selected consultants, pollsters, wealthy donors and Democratic Party honchos. They need labor, but only as a mindless automaton to gather signatures, do phone banking, get out the vote and spread messaging decreed from above.

“This is symptomatic of labor’s deeper malaise in which it can’t see beyond the market, the middle class and electoral politics. By some estimates, in the last two election cycles, organized labor poured more than half-a-billion dollars into the Democratic Party with disastrous results.

“What if organized labor had poured one or $200 million into organizing the unemployed? This could have created a mass popular force on the left, but its politics might have been more radical than middle-class conformism.”

Filed Under: The U.S. Economy Tagged With: Andy Kroll, Arun Gupta, economy, worker's rights,

“Bain Actually Loves Dems”

May 29, 2012

DOUG HENWOOD, dhenwood at panix.com
Editor of Left Business Observer and author of the book Wall Street, Henwood just wrote the brief piece “Bain Actually Loves Dems,” which states: “All good Democrats are busily hating on Bain Capital right now. What they’re forgetting is how many Bain-affiliated political contributions have gone to Democrats.

“Plug the words ‘Bain Capital’ into an OpenSecrets.org search and you learn that while Bain people have lovingly contributed to their former CEO’s presidential campaign, almost three-quarters of their contributions to other candidates, 72 percent to be precise, have gone to Democrats. That’s a higher percentage to Dems than the AFL-CIO!”

“And among the top recipients are Dem headliners like Al Franken, Claire McCaskill, John Kerry, Mark Udall, Nancy Pelosi, and Sherrod Brown. They were also major contributors to the Democratic National Committee and the national Democratic party. There are very few Republican candidates on the OpenSecrets list, and no major gifts to the GOP itself.

“So [Newark, N.J., Mayor] Cory Booker’s defense of PE [private equity] against attacks by the Obama campaign has a very materialist explanation: PE titans like Bain have been funding Dems for ages — including Booker himself (e.g., ‘Cory Booker’s Bain Capital money‘). It was just a few years ago that HF [hedge fund] hotshot Paul Tudor Jones held a 500-guest fundraiser for Obama, back when ‘the whole of Greenwich’ (an epicenter of the industry) was behind him (‘Another top hedge fund chief backs Obama‘). Then he hurt their feelings with one intemperate use of the term ‘fatcats.’ But it’s not like Obama is about to expropriate the PE and HF types.”

A recent Bob Fitch memorial lecture by Henwood contains a broader critique of Wall Street and real estate support for many establishment Democrats. (Fitch was author of the book The Assassination of New York, which charged that elites seeking ever greater profits had effectively gutted New York City neighborhoods and productive economic sectors.)

Filed Under: Electoral Issues, The U.S. Economy Tagged With: Bain Capital, corporations, Doug Henwood, economy, elections, Mitt Romney,

How Much Does Washington Spend on “Defense”?

May 23, 2012

CHRIS HELLMAN and MATTEA KRAMER, mattea at nationalpriorities.org
Hellman is communications liaison at the National Priorities Project, and Kramer is a research analyst with the group. They just wrote a report “War Pay: The Nearly $1 Trillion Security Budget,” which tallies the military budget, showing it to be much higher than is often stated. Their piece states: “In fact, with projected cuts added in, the national security budget in fiscal 2013 will be nearly $1 trillion – a staggering enough sum that it’s worth taking a walk through the maze of the national security budget to see just where that money’s lodged. …

“The Pentagon’s base budget doesn’t include war funding, which in recent years has been well over $100 billion. With U.S. troops withdrawn from Iraq and troop levels falling in Afghanistan, you might think that war funding would be plummeting as well. In fact, it will drop to a mere $88 billion in fiscal 2013. By way of comparison, the federal government will spend around $64 billion on education that same year. …

“You might assume that we’ve already accounted for nukes in the Pentagon’s $530 billion base budget. But you’d be wrong. Funding for nuclear weapons falls under the Department of Energy (DOE), so it’s a number you rarely hear. In fiscal 2013, we’ll be spending $11.5 billion on weapons and related programs at the DOE. And disposal of nuclear waste is expensive, so add another $6.4 billion for weapons cleanup.”

Filed Under: The U.S. Economy, War: Info, Analysis, Policy Options Tagged With: budget, Christ Hellman, economy, Mattea Kramer, militarism, military, military spending, Military-Industrial Complex,

JPMorgan is Biggest Contributor to Senate Chair Calling Them to Testify

May 21, 2012

THOMAS FERGUSON, thomas.ferguson at umb.edu
Ferguson is professor of political science at the University of Massachusetts, Boston and a senior fellow of the Roosevelt Institute. He just wrote the piece “Senate Banking Chair Calls Jamie Dimon to Testify: But JPMorgan Chase is His Biggest Contributor!” about Senate Banking Committee Chair Tim Johnson of South Dakota announcing his panel would call JPMorgan Chase Chair Jamie Dimon.

Ferguson said today: “Four years ago, the failure of Lehman Brothers precipitated a world wide financial collapse. Now policymakers in Europe are weighing whether to let not a bank, but a whole country — Greece — go down the drain. We have been repeatedly told that American banks have so carefully hedged their European exposures that there is no reason to fear contagion from such a disaster. The JPMorgan Chase case raises fundamental questions about these breezy assurances and whether American bank regulators truly understand what our Too Big To Fail Banks are really up to. We cannot afford another expensive policy failure by our money-driven Congress: Senator Johnson’s committee needs to start posing searching questions not in weeks, but immediately, before American banks and their regulators are once again overtaken by events.”

Also see Ferguson’s piece on Congress and money in the Financial Times.

See Johnson’s information from the Center for Responsive Politics at OpenSecrets.org

Filed Under: Electoral Issues, The U.S. Economy Tagged With: corporations, economy, Jamie Dimon, JP Morgan, Thomas Ferguson, Tim Johnson,

Bilking the Poor: America’s Poverty Taxes

May 17, 2012

Multibillonaire Pete Peterson’s Fiscal Summit concluded on Tuesday with a stand for no-compromise austerity and Speaker of the House John Boehner laying out the case for massive spending cuts. Yesterday the Senate voted down budget proposals that would have slashed Medicaid, cut SNAP, voucher-ized Medicare, and shrunk most other domestic human needs programs. At the same time, these proposals protect and even increase the military budget and cut taxes for those at the top. The Center on Budget and Policy Priorities estimates that nearly two-thirds of those proposed program cuts would hit low-income people disproportionately.

But authors Barbara Ehrenreich and Gary Rivlin argue that any discussion of the safety net and poverty alleviation has to include the ways that local and state governments and private enterprise actively prey on the poor.

BARBARA EHRENREICH, via Beth Schulman, barbara.ehrenreich at economichardship.org,
Ehrereich is the author of “Nickel and Dimed: On (Not) Getting By in America” and is most recently the founder of the just-launched Economic Hardship Reporting Project, which supports innovative journalism on poverty . In her report “Preying On the Poor,” released today by TomDispatch, she writes: “Before we can ‘do something’ for the poor, there are some things we need to stop doing to them. … The amounts extracted from the poor by the private and public sector are comparable to the amounts ‘given’ to the poor through the safety net. It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license.”

She said today: “I am surprised by the size of these numbers, and made all the more impatient with the standard liberal discourse on poverty. We can’t go on talking about poverty without talking about how it is being manufactured and intensified all the time.”

GARY RIVLIN, grivlin at mindspring.com
Journalist and author of five books, including “Broke USA,” and co-editor of the Economic Hardship Reporting Project with Ehrenreich, Rivlin just wrote the piece “America’s Poverty Tax,” where he reports on the exorbitant fees the poor and the working poor pay because they have lousy credit or because they have no savings. Rivlin said today: “The numbers show it’s very expensive to be poor.” The article states: “Add up all the profits pocketed by all those payday lenders, check cashers, subprime auto lenders, and other Poverty, Inc. enterprises and divide it by the 40 million households the Federal Reserve says survive on $30,000 a year or less. That works out to around $2,500 per household, or a poverty tax of around 10 percent.”

Filed Under: Electoral Issues, The U.S. Economy Tagged With: Barbara Ehrenreich, corporations, economy, Gary Rivlin, poverty,

Standing Up to JPMorgan’s Dimon and “Hedginess”

May 15, 2012

STEPHANY GRIFFITH JONES, sgj2108 at columbia.edu
Stephany Griffith Jones is Financial Markets Program Director at the Initiative for Policy Dialogue at Columbia University. With José Antonio Ocampo, and Joseph E. Stiglitz she co-edited “Time for a Visible Hand: Lessons from the 2008 World Financial Crisis.” She said today: “Two billion dollar losses in JPMorgan give us further confirmation of the need to regulate the financial system much more, particularly increasing transparency of derivatives, forcing all derivatives on exchanges, and tightening the Volcker rule. Dilution of regulation by financial interests must be resisted strongly. More radical questions need to be asked: whether such complex financial activity, where risks are impossible to measure, and with no positive effect on the real economy, should be allowed at all?”

“However, JPMorgan led the effort to gut the Volcker Rule and the provision that requires transparency. JPMorgan is the world’s largest proprietary purchaser of financial derivatives — precisely what the Volcker Rule sought to end. The bank claims that it does not engage in proprietary trading and that it purchases derivatives solely to hedge. That claim is an example of what Stephen Colbert meant when he invented the term: ‘truthiness.’

“A hedge is an investment that offsets losses in another investment. JPMorgan’s supposed hedges aren’t hedges under accounting rules because they haven’t been shown to perform as hedges. JPMorgan bought tens of billions of dollars of derivatives that increased its losses rather than reduced them. It calls these anti-hedges ‘hedges’ — in other words, it practiced ‘hedginess.’”

On Friday, Black will be speaking at a United Nations summit on the “State of the World Economy and Finance in 2012.”

GERALD EPSTEIN, gepstein at econs.umass.edu
Professor of economics and a founding co-director of the Political Economy Research Institute at the University of Massachusetts, Amherst, Epstein just wrote the piece “Standing Up to Jamie Dimon: Is it Safe?” which states: “How do we stand up to Jamie Dimon and the other tax payer subsidized bankers that use the privileged position of tax payer underwritten banks to engage in risky activity that harms the real economy and generates massive salaries and bonuses for the bankers (Ina Drew is reportedly in line to make $14 million this year).

“First, we must unmask the Republican and Democratic politicians that have actively served to eviscerate the Dodd-Frank rules on proprietary trading, derivatives and swaps regulations and other parts of the Dodd-Frank regulations, in the name of job creation and liquidity enhancement. The regulators at the Federal Reserve, Securities and Exchange Commission and others must be badgered to write and enforce rules that implement strict enforcement of the Dodd-Frank rules against proprietary trading, controls over derivatives…

“But such provisions will not be enough because banks will eventually find ways around them and continue to act like the world is one big casino and ponzi palace. There is increasing recognition by economists and public officials that the too big to fail banks need to be cut down to size. Senator Sherrod Brown has introduced the SAFE banking act”

Epstein was just interviewed by The Real News

Filed Under: The U.S. Economy Tagged With: corporations, economy, Gerald Epstein, JP Morgan, JP Morgan Trading Loss, JP Morgan Volcker Rule, Stephany Griffith Jones, William K. Black,

JPMorgan “Shock Disclosure” a “Wake-Up Call We Dare Not Ignore”

May 11, 2012

The Financial Times reports today: “JPMorgan Chase announced a surprise $2 billion trading loss on credit derivatives trading, which chief executive Jamie Dimon blamed on ‘errors, sloppiness and bad judgement’ and warned ‘could get worse.’

“The shock disclosure, made after the market closed on Thursday in a regulatory filing, prompted renewed calls for tougher regulation. Investors reacted by sending the bank’s shares down by more than 9 percent when Wall Street opened on Friday. Other U.S. banking stocks also suffered sharp falls.”

STEPHANY GRIFFITH JONES, sgj2108 at columbia.edu
Stephany Griffith-Jones is Financial Markets Program Director at the Initiative for Policy Dialogue at Columbia University.

WILLIAM K. BLACK, blackw at umkc.edu
Available for a limited number of interviews, Black is now an associate professor of economics and law at the University of Missouri, Kansas City and the author of “The Best Way to Rob a Bank is to Own One.” He was the deputy staff director of the national commission that investigated the cause of the savings and loan debacle. He said today: “JPMorgan has announced that it has suffered large losses, and remains exposed to far greater losses, because purported ‘economic hedges’ did not perform as ‘expected’ because they were poorly designed. These purported hedges are not real. JPMorgan was speculating wildly and its panicky releases reveal that it is afraid that the positions it took exposed it to grave risks. The experience demonstrates the importance of the Volcker rule, the largest banks’ efforts to gut and evade the rule, and the continuing refusal of bank regulators to say ‘no’ to practices of the systemically dangerous institutions or SDIs (the roughly 20 ‘too big to fail’ banks) that are unsafe and unsound. As long as we permit the SDIs to remain so large that regulators fear that their failure will produce a global crisis we are rolling the dice 20 times a day wondering when (not ‘if’) the next SDI failure will occur and blow up the economy. JPMorgan’s losses on its faux hedges are the wake-up call we dare not ignore.”

Also see: “‘JOBS Act’ a ‘Recipe for Fraud’ Creating a ‘Race to the Bottom’.”

Filed Under: Electoral Issues, The U.S. Economy Tagged With: corporations, economy, JP Morgan, JP Morgan Speculating, JP Morgan Stocks Fall, JP Morgan Trading Loss, Stephany Griffith Jones, William K. Black,

Is Inequality Good?

May 4, 2012

A new book by one of Mitt Romney’s former business partners at Bain Capital, scheduled to be the featured New York Times Magazine cover story on Sunday,argues that inequality is good.

CHUCK COLLINS, Bob Keener, bob at wealthforcommongood.org
http://99to1book.org
Collins, a long-time inequality activist was certainly born into the 1%. He went to the same high school as Mitt Romney — and is the great-grandson of Oscar Mayer. His brand new book is called, “99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It.”

Collins said today: “Inequality is destroying everything you care about. Whether you care about public health, education, civic society, sports, business — inequality is making things worse. And unless we interrupt the process, this destruction will keep increasing. We’re in an inequality death spiral, where concentration of wealth and power is enabling the wealthy and powerful to rig the rules to make themselves more wealthy and powerful — at the expense of everyone else. This is why the 1% versus 99% lens is so
meaningful to people. It reflects their lived reality.”

Collins was recently on C-SPAN’s Washington Journal:
http://www.c-spanvideo.org/program/305321-4

Background:
Paul Krugman “Rich Guy Says We Should Be Grateful For His Wealth”

Dean Baker recently wrote the piece “Mitt Romney’s Partner in Crime: Ed Conard’s Unintended Consequences,” which states: “Did Conard really miss the story of Fabrice Tourre (a.k.a. ‘Fabulous Fab’) the Goldman Sachs mortgage trader who put together collaterized debt obligations that were designed to fail and then hawked them off on unsuspecting clients? Does he not know about the flash traders who make fortunes by designing sophisticated programs that allow them to front-run major trades? (This means that they can detect major trades and jump in ahead, thereby capturing some of the profit.) …

“How much has the pharmaceutical industry profited from using its political power to get Congress to give it ever longer and stronger patent monopolies? We now spend almost $300 billion a year on prescription drugs that would cost us around $30 billion in a free market. …

“Conard and Romney’s own industry provides an excellent example of using political power to promote private wealth. One of the major ways that private equity companies make money is by taking advantage of the tax deductibility of interest. Private equity companies typically load the firms they buy with as much debt as possible. This is because the interest payments on debt are tax deductible and they don’t really care if the company ends up going bankrupt. They expect a substantial portion of their firms to go into bankruptcy.”

Filed Under: Electoral Issues, The U.S. Economy Tagged With: 99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It, Chuck Collins, corporations, economy,

Tax Day: “Buffett Rule” and Military Spending

April 17, 2012

Yesterday, Senate Democrats mustered only 51 of the 60 votes needed to advance President Obama’s “Buffett Rule” to impose a minimum tax of 30 percent on individuals earning over $1 million.

Today is the second annual Global Day of Action on Military Spending, coinciding with the Stockholm International Peace Research Institute’s release of global military spending figures. In 2010 the United States spent nearly five times more than the next closest country, China, according to the SIPRI 2011 report.

CHUCK COLLINS via Bob Keener, bob at wealthforcommongood.org
Collins is a senior scholar for the Institute for Policy Studies, and author of the new book “99 to 1: How Wealth Inequality is Wrecking the World and What We Can Do About It.” He said today: “The tax rules have tilted in favor of the 1 percent for 50 years. We need to institute the Buffett Rule and roll back the Bush tax cuts as the first step toward tax fairness and fiscal responsibility.”

JOHN FEFFER, johnfeffer at gmail.com
Feffer is co-director of Foreign Policy in Focus, a project of the Institute for Policy Studies. He said today: “Almost every country with a military is on an insane path, spending more and more of our tax dollars on missiles, aircraft, and guns, while the planet is in crisis. These countries should be confronting the real threats of climate change, hunger, disease, and oppression, not wasting taxpayers’ money on their military.”

He recently wrote a piece titled “Arms Down,” which states: “Any demilitarization plan must begin with the United States. As the number one military spender and arms exporter in the world, the United States is the heart that pumps the blood that keeps the military-industrial complex functioning worldwide. U.S. arms manufacturers have gamed the system to maintain their dominance. They have set up their manufacturing in as many states as possible in order to buy the support of Congress. …

“To break out of this zero-sum situation and create a virtuous circle of military reductions, we must pursue a three-prong strategy. The first addresses U.S. military spending, the second focuses on the global arms trade, and the third creates incentives for countries to reorient their budget priorities.”

Filed Under: The U.S. Economy, War: Info, Analysis, Policy Options Tagged With: Chuck Collins, economy, military spending, Military-Industrial Complex, taxes,

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