Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-settings.php on line 229

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-settings.php on line 231

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-settings.php on line 232

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-settings.php on line 249

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-includes/cache.php on line 36

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-includes/query.php on line 21

Deprecated: Assigning the return value of new by reference is deprecated in /home/themedia/public_html/reporting/wp-includes/theme.php on line 507
The Consortium Report
The Consortium Report
A project of The Media Consortium
 

Kicking the Wall Street Habit


by ZachCarter, The Media Consortium: Tue., Nov 11, 2008
Filed under: NewsLadderEconomyUncategorized

As Barack Obama readies himself to lead the United States through what appears to be a scathing recession, he faces a choice between feeding the political sphere’s Wall Street addiction and investing in economic progress. Two key former Clinton cabinet officials could determine which course he takes.

It was more than a little startling to hear a U.S. leader who sounded like (gasp!) an economist at the president-elect’s first press conference last week, after years of Bush speeches that treated economic policy as a realm defined exclusively by tax cuts and bailouts. But without policy specifics, we still do not know which voices of the many men and women flanking Obama at the event will impact the next administration’s economic platform. Mother Jones notes that several of the names included on the list of Obama’s economic advisers represent schools of thought that brought us directly to the current crisis. Two of the alleged experts, former Clinton Treasury Secretaries Robert Rubin and Lawrence Summers, signed off on major financial deregulatory moves in the latter half of the Clinton years. The two sided often with former Federal Reserve Chairman Alan Greenspan on policies that included a refusal to place government oversight on the credit derivatives market, which eventually ballooned into the $60 trillion quagmire that destroyed AIG in September (who got another $40 billion from taxpayers on Monday).

Summers has successfully sparked controversy on several occasions, and while some of the scandals haven’t received a fair hearing in the court of public opinion, others are of genuine concern. In 2005, Summers said he believed innate inferiorities were more responsible for the under-representation of women in science and engineering fields than either discrimination or socialization. Writing for the Women’s Media Center, Veronica Arreola demonstrates how advancing gender equality would improve the broader U.S. economy, and expresses well-founded doubts about Summers’ commitment to Obama’s campaign pledge to implement equal pay for equal work legislation.

But not all Clinton cabinet officials are of the same stripe, and hopes for serious economic progress under Obama may rest largely on what position he gives former Clinton Labor Secretary Robert Reich. Reich feuded frequently with Rubin during Clinton’s first term, urging that more energy be spent addressing inequality than balancing the budget. Sadly, Reich lost that battle and left the administration in 1997, but he remains one of the most impressive economic voices of the day. John Nichols writes in The Nation that it was “reassuring” to see Reich and organized labor ally David Bonior on stage with the president-elect last week.

Reich himself penned a piece that ran in Talking Points Memo this weekend, placing emphasis on one side of the economic equation that has all but disappeared from public discourse amid the Wall Street meltdown: demand. Stretched to their limits by decades of deepening inequality, consumers are cutting back on everything except basic necessities amid a mountain of high-interest debt and the increasing likelihood of losing their jobs. With consumers reeling, Reich says the government needs to step in as the spender of last resort.

There are still people who oppose increasing government spending in a recession. They are called Republicans, because one has to turn to backward political ideology to oppose a measure that has been understood as a basic economic fact for more than 70 years. There simply are no serious economists who disagree. Reich notes that even former Reagan advisor Martin Feldstein now favors adopting government infrastructure projects to stimulate the economy.

But a glance at the Friday edition of The Washington Post reveals that the anti-spending mythology remains popular. House Republican Leader John Boehner charged that “Democrats are proposing hundreds of billions of dollars in new government spending masquerading as ‘economic stimulus.’”

There is no masquerading involved. Reich is quite explicit that it will take hundreds of billions of government dollars to fend off a “Mini Depression.” By singling out socially important projects– a health care overhaul, green energy investments and and new child care programs– that spending can help make the economy even stronger once it rebounds. But consumers simply are not capable of shouldering the burden alone.

Dean Baker hammers the point home for The American Prospect. The housing bubble’s aftermath has hampered the supply of credit, Baker argues, but the more severe economic problem is the massive loss of housing wealth for consumers, who now have less money to spend and invest. The U.S. has encouraged homeownership as means of forced saving for decades. Those savings have now evaporated.

Housing woes are far from over. Mary Kane lays out the mortgage landscape for a piece in the Washington Independent, noting that while the economy has paid a price for the subprime debacle, the Alt-A nightmare is just beginning. Alt-A loans are exotic mortgages that do not require borrowers to document their income or employment information. Many Alt-A loans are adjustable-rate mortgages that allow borrowers to pay nothing but the interest on the loan for a few years before the monthly payments “reset” up to 63% higher, Kane writes. Banks pushed the most reckless of these “option-ARM” loans in the years leading right up to the housing market’s implosion, 2006 and 2007, and the lion’s share of unaffordable rate resets are scheduled for 2009. It’s a dire situation—just check out the stock price of option-ARM lenders in hard-hit housing markets like California.

Obama’s fiscal stimulus package should provide a window into his governing philosophy. After eight years of squandered opportunities, let’s hope he gets us moving in the right direction.

This post features links to the best independent, progressive reporting about the economy. Visit economy.newsladder.net for a complete list of articles on the economy. And for the best progressive reporting on critical immigration and healthcare issues, check out Immigration.NewsLadder.net and Healthcare.NewsLadder.net.

This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.

See more tagged with: , , , , , , , , , , , , and

Post-Katrina Aftermath: How the Department of Labor Fell Down on the Job


by Brian Beutler, The Media Consortium: Tue., Jul 17, 2007
Filed under: House Oversight Committee Reports

Part 2 of 2 Part Series

After Hurricane Katrina pummeled the Gulf Coast in late August 2005, tens of billions of dollars in federal and private contracts (the largest of which went to companies like Bechtel, Halliburton, and its subsidiary Kellogg, Brown, and Root) were dispatched to New Orleans to fund a clean-up effort the president said would require “a sustained federal commitment to our fellow citizens.” That, of course, never came to pass.

Thanks to its initial disastrous rescue effort, today, the Federal Emergency Management Administration (FEMA) receives most of the blame for chaos in New Orleans. But it wasn’t just FEMA. The anatomy of the failed reconstruction is complicated, but understanding what went wrong requires examining the Department of Labor (DOL) as much as any other agency. The DOL has been in decline for a generation, suffering from long-term decreases in funding even as the number of people whose livelihoods it is supposed to protect has grown. The problems have only been exacerbated throughout the six-and-a-half years of the Bush administration. But the consequences have never been more appalling than in New Orleans, where the failure of high-level DOL officials to require proactive oversight of reconstruction employers led to an endless string of abuses, which were detailed in Part 1. After Katrina, employers, unfettered by rules, became less concerned with the task at hand than with profiting at the expense of workers without protection. They became predators in a lawless environment. Part two of this series examines how the DOL enabled such lawlessness.

Read the full report…

See more tagged with: , , and

Post-Katrina Aftermath: In Absence of Oversight, Reconstruction Workers Became Another Casualty


by Brian Beutler, The Media Consortium: Tue., Jul 17, 2007
Filed under: House Oversight Committee Reports

Part 1 of 2 Part Series

After Hurricane Katrina pummeled the Gulf Coast in late August 2005, tens of billions of dollars in federal and private contracts, the largest of which went to companies like Bechtel, Halliburton, and its then-subsidiary Kellogg, Brown, and Root, were dispatched to New Orleans. The alleged goal was to fund a clean-up effort President Bush said would require “a sustained federal commitment to our fellow citizens.” That, of course, never came to pass.

Thanks to its initial disastrous rescue effort, today, the Federal Emergency Management Administration (FEMA) receives most of the blame for chaos in New Orleans. But it wasn’t just FEMA. The anatomy of the failed reconstruction is complicated, but understanding what went wrong requires examining the Department of Labor (DOL).

Read the full report…

See more tagged with: , , and