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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.

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In Iraq Until When?


by Brian Beutler, The Media Consortium: Wed., Jan 23, 2008
Filed under: War Making and Oversight

Close followers of the Iraq mess might remember that on November 28 of last year, President Bush and Iraqi Prime Minister Nouri al Maliki signed a statement of intent–called a Declaration of Principles–to “frame the future relationship between the two countries.”

The Declaration itself was vague and unbinding, but it left open the possibility that future negotiations between Washington and Baghdad could result in a commitment of sorts, from the White House to Maliki, that the United States will commit troops to the defense of the Iraqi state from both internal and external threats for years to come.

For instance:

1. Providing security assurances and commitments to the Republic of Iraq to deter foreign aggression against Iraq that violates its sovereignty and integrity of its territories, waters, or airspace.

2. Supporting the Republic of Iraq in its efforts to combat all terrorist groups, at the forefront of which is Al-Qaeda, Saddamists, and all other outlaw groups regardless of affiliation, and destroy their logistical networks and their sources of finance, and defeat and uproot them from Iraq. This support will be provided consistent with mechanisms and arrangements to be established in the bilateral cooperation agreements mentioned herein.

3. Supporting the Republic of Iraq in training, equipping, and arming the Iraqi Security Forces to enable them to protect Iraq and all its peoples, and completing the building of its administrative systems, in accordance with the request of the Iraqi government.

The language here doesn’t necessarily imply a coming commitment of U.S. troops. But, historically, that’s what the term “security commitment” means in the non-binding language of diplomacy. So, what’s the time-frame, then? The Iraqi defense minister, Abdul Qadir has suggested that Iraq won’t be ready to defend itself until 2018. A quick decade or thereabouts.

Of course, only a lame-duck commander-in-chief gone mad would promise the Iraqi government 10 years of military protection (perhaps even from rebel factions within Iraq) during his last year in office. But that just might happen. And that’s where Congress steps in. Today, Rep. William Delahunt (D-Mass.) chaired a joint subcommittee hearing devoted to examining whether such a commitment would be Constitutional without the ratification of a treaty by the U.S. Senate. (A treaty requires a two-thirds vote in the Senate for passage, and would, in this instance, almost surely fail).

That would be the theoretical avenue by which the Congress could block the president from making this sort of agreement with Maliki. But this is the realm of foreign affairs, and as such, words like “legal” and “binding” don’t apply as usual. In absence of a treaty the president could provide similar assurances informally, leaving the future president–Democrat or Republican–in a tricky diplomatic position if he or she decides not to honor Bush’s promise.

Fortunately, there are other constraints. One is time: The Declaration lays out a framework for negotiations that will begin in February with the goal of reaching an agreement of some sort by the end of July. In the meantime, Congress could, for instance, consider legislation floated by Rep. Rosa DeLauro (D-Conn.) which would “require the Bush Administration to consult with Congress before moving forward with any agreement that could lead to long term security arrangements… and makes clear that any such agreement must come in the form of a treaty.”

The other constraints, though, come from within Iraq. On the one hand, those within the Iraqi government who would like a long-term commitment from the United States may not sign on to anything that doesn’t have the force of U.S. law behind it (a treaty, for instance). And on the other hand–according to Iraq expert Kenneth Katzman, who testified at today’s hearing–any agreement of any kind between the U.S. and Iraq would meet “tremendous difficulty passing the Iraqi parliament”. So this is far from a done deal. But it’s also a situation, which, if ignored, could make the Iraq problem even more complicated for the next president than it already promises to be.

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Congress Pushes Ahead on Detainee Rights


by Brian Beutler, The Media Consortium: Wed., Jun 27, 2007
Filed under: House Judiciary Committee ReportsUncategorized

Democrats and civil libertarians have been understandably livid over the administration’s demolition of the writ of habeas corpus. But remedying the problem isn’t quite as simple as it should be.

For starters, the Military Commissions Act of 2006 (MCA), signed by President Bush last October, didn’t end habeas in a straightforward, easily reversible way. It ended habeas by inference—first, by denying the writ to “unlawful enemy combatants,” and then by defining that term broadly enough that it could, in some cases, include American citizens. Today, an enemy combatant is anybody “engaged in hostilities or who has purposefully and materially supported hostilities against the United States.” It was through that legal two- step that the government held, tortured, and denied trial to Jose Padilla, an American citizen arrested in Chicago in 2002 for engaging in terrorist activities.

Read the full report…

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Bush to Congress: Drop Dead


by Brian Beutler, The Media Consortium: Tue., Jun 19, 2007
Filed under: House Judiciary Committee Reports

Well, it’s official: President Bush doesn’t much respect the laws Congress passes. A Government Accountability Office (GAO) report—commissioned by Sen. Robert Byrd (D-WV) and Rep. John Conyers (D-MI) and released today—confirms that Bush’s use of presidential signing statements are, in fact, utterly without precedent.Though they’ve been used by American presidents for about 200 years, signing statements—edicts issued by the president to declare his intent to construe a provision within a law differently than Congress does—are Constitutionally questionable. But George W. Bush’s use of them far exceeds his predecessors’, both in number and in severity, and he has consistently used them to flout the will of the legislative branch.

Though the GAO report makes no claims about the legitimacy of Bush’s statements or of the use of statements in general, it indicates that, in practice, the statements have the effect of nullifying the law in question in about 30 percent of cases. The issues are important: They include accounting for Iraq war funding and security measures for the border patrol.

Read the full report…

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