This site may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. we believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law.

In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml

If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates
FAIR USE NOTICE FAIR USE NOTICE: This page may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. This website distributes this material without profit to those who have expressed a prior interest in receiving the included information for scientific, research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107.

Read more at: http://www.etupdates.com/fair-use-notice/#.UpzWQRL3l5M | ET. Updates

All Blogs licensed under Creative Commons Attribution 3.0

Monday, December 29, 2014

How American Corporations and the Super Rich Steal From the Rest of Us

Main Street is going broke. Wall Street is cashing in.

The Merriam-Webster definition of 'steal' is to take the property of another wrongfully and especially as a habitual or regular practice. Much of our country's new wealth has been regularly taken by individuals or corporations in a wrongful manner, either through nonpayment of taxes or failure to compensate other contributors to their successes.

1. The Corporations

As schools and local governments are going broke around the country, companies who built their businesses with American research and education and technology and infrastructure are paying less in taxes than ever before. Incredibly, over half of U.S. corporate foreign profits are now being held in tax havens, double the share of just twenty years ago. Corporations are stealing from the nation that made them rich.

There are many examples of greed among individual firms. Based largely on 2014 SEC documents submitted by the companies themselves:

---Exxon has almost 80% of its productive oil and gas wells in the U.S. but declared only 17% of its income here. The company used a theoretical tax to account for 83% of last year's income tax bill, and paid less than 2% of its total income in current U.S. taxes.

---Chevron has about 75% of its oil and gas wells and almost 90% of its pipeline mileage in the United States, yet the company claimed only 13% of last year's income in the U.S., and paid almost nothing (less than 1/10 of 1%) in current U.S. taxes.

---Pfizer had 40% of last year's sales in the U.S., but claimed losses in the U.S. and $17 billion in profits overseas.

---Bank of America, despite making 84% of its 2011-2013 revenue in the U.S., declared just 31% of its profits in the United States.

---Citigroup had 43% of its 2011-2013 revenue in North America but declared less than 3% of its profits in the United States.

---Apple still does most of its product and research development in the United States. Yet the company moved $30 billion in profits to an Irish subsidiary with no employees, with loopholes in place to avoid establishing residency in any country. The subsidiary files no returns and pays no taxes. Apple CEO Tim Cook said, "We pay all the taxes we owe."

---Google's business is based on the Internet, the Digital Library Initiative, and the geographical database of the U.S. Census Bureau. Yet the company has gained recognition as one of the world's biggest tax avoiders.

2. The Forbes 40

Defenders of inequality argue that fortunes are deserved because of innovation and hard work. But many of the 40 Americans who own as much as the poorest half of the country have relied on less deserving means of accumulating great fortunes (details here).

---Warren Buffett's company (Berkshire Hathaway) made a $28 billion profit last year, yet claimed a $395 million refund.

---The Koch brothers have taken clean air and water from us.

---The Walton siblings take our tax money to subsidize their employees.

---Larry Ellison was #1 on Sam Pizzigati's Greediest of 2014 list.

The rest of the Top 40 List (details here) is speckled with instances of fraud, tax avoidance, and billionaire subsidies. The worst is probably hedge fund manager John Paulson, who has built a $13 billion fortune after conspiring with Goldman Sachs in 2007 to bundle and bet against sure-to-fail subprime mortgages that took the homes from millions of Americans.

Speaking of hedge fund managers, the carried interest loophole allowed just 25 individuals to take almost $5 billion from society last year by claiming that their income is different from the rest of ours.

3. The Deniers

After 35 years of wealth theft there are still inequality deniers -- notably the American Enterprise Institute, which claims that income inequality has been shrinking since 1989, and that we should be asking whether or not the bottom 60% are paying their fair share.

Another insult from The Federalist: Income Inequality Is Good For The Poor.

The Reason Foundation tops it off, advising us that the best way to defuse the situation is to teach tolerance for inequality..
All of which suggests that the theft of society's wealth may be due to ignorance as well as to greed.

Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

Friday, December 26, 2014

How's the Economy Where You Live? 3 Interactive Maps Show State-by-State Comparisons


The economy might be leaving a lot of people dissatisfied, but at least we're living in a golden age of interactive maps about how the economy sucks. Three different maps released in the last few weeks approach the question from three different angles: wage stagnation, when wages peaked, and men who aren't currently part of the labor force.

The Wall Street Journal's map addresses the question of wage stagnation (click through to see the interactive version of the map), looking county-by-county at whether inflation-adjusted wages are better than they were a decade ago, or not. Dark-colored counties have seen wages increase, while light-colored counties have gone backward. Nearly one-third of all counties, which hold 46 percent of the nation's population, have seen a decline in median income in the period from 2004 to 2013, when adjusting for inflation. There isn't a clear red/blue split between the counties that did or didn't decline, though; 280 of about 700 counties that voted for Barack Obama in 2012 saw declines (about 40 percent), while 800 of 2,400 counties that voted for Mitt Romney saw declines (about 33 percent).

As the WSJ points out, the biggest wage increases came in states most associated with the energy sector: not just new sites of fracking like North Dakota and Wyoming, but also old-school oil patches like Texas and Louisiana. The states with the declines seem, in particular, to be manufacturing-centered (not just traditional smokestack-industry states like Michigan and Ohio, but also the Carolinas). States with either direct (California, Florida) or indirect (Oregon, via the timber industry's collapse following the collapse in housing construction) housing bubble problems during the 2000s also show up.

Another map comes from the Washington Post, as part of an introduction to a multi-part series about the problems facing the middle class. It's an interesting chronological map (click through for the interactive version), filtering out the counties according to in which decade inflation-adjusted incomes peaked. Here, the light-colored counties are the ones doing well (with incomes currently peaking), while the dark-colored counties are doing the worst (having peaked furthest in the past). Rust Belt (especially upstate New York) incomes tended to peak in the '60s, Appalachian incomes peaked in the '70s, and most places' incomes peaked in the prosperous '90s.

This is vaguely reminiscent of an interactive map I created earlier this year, mapping when counties' populations peaked, but the new map shows something very different: the mostly empty counties across the Great Plains that peaked, population-wise, in the 1920s and 1930s are the ones where incomes are peaking right now. That's partly thanks to the energy sector, especially fracking, but also because of agriculture, which can be profitable but thanks to automation doesn't require any near as large a work force as it used to.

The final map is from a New York Times multi-article look at, specifically, men in the work force. It's a map of the percentage of men of prime working age (25-54) who aren't working (click through for the interactive version), drilling all the way down to the census tract level. Dark-colored counties have the highest rate of men not working, while light-colored counties have the highest rate of men in the labor force. The lowest rates are in both prosperous urban cores and suburbs in major metropolitan areas, and also in those Great Plains rural counties mentioned above.

The highest rates tend to be in high-poverty areas like the Appalachians, reservations, and the Black Belt, and also some agricultural areas with seasonal work forces. While some urban cores have high levels of worker participation, certain others don't (try zooming in on Detroit, for instance). There are also high rates in pockets around major universities; this exposes a weakness of this kind of analysis ... late-twentysomethings pursuing graduate degrees get lumped in with disabled and long-term unemployed persons. A separate chart helps distinguish these categories, but only at a national level; A recent Pew study also found a similar breakdown of what men who aren't working do (with "ill or disabled" a plurality, and "unable to find work" not a much bigger segment than stay-at-home dads or full-time students).

Joseph Stiglitz on Why the Rich are Getting Richer and Why it Could Get Much Worse


Through corporate consolidation and even gentrification, the elite are syphoning up all the world's wealth for themselves.

Photo Credit: via YouTube/Moyers & Company

Nobel laureate Joseph Stiglitz has been writing about America’s economically divided society since the 1960s. His recent book,The Price of Inequality, argues that this division is holding the country back, a topic he has also explored in recent research supported by the Institute for New Economic Thinking and others. On December 4, Stiglitz chaired the eighth INET Seminar Series at Columbia University, in which he presented a paper, "New Theoretical Perspectives on the Distribution of Income and Wealth Among Individuals.” In the interview that follows, he explores the themes of this paper, the work of Thomas Piketty, and the need for the field of economics — and the country — to come to terms with the growing gulf between haves and have-nots.

Lynn Parramore: You’ve mentioned that economic inequality was the subject of your Ph.D studies. How did you come to be interested in how income and wealth get divided up in society?

Joseph Stiglitz: First, when you grow up as I did in Gary, Indiana, it was sort of prototypical of a divided America. You had lot of people in poverty. We didn’t have the 1 percent, but we had the 5 percent. I had no idea what real inequality was like, but we had a lot of people at the bottom. And second, it goes back to the years I went to college and the Civil Rights Movement. You remember Martin Luther King’s march was a march for the end of discrimination and for economic empowerment. So I think a lot of us realized at that time that we weren’t going to fully address the problems of a divided America — of race discrimination — if we didn’t do something about the economic differentials.
LP: What’s new in your recent work on the distribution of income and wealth among individuals?

There are several things. There’s some debate about this, but I think most readers of Thomas Piketty’s book (Capital in the Twenty-First Century) get the impression that the accumulation of wealth — savings —is responsible for the rise in inequality and that there is, therefore, in a way,a link between the growth of the economy — the accumulation of capital— on the one hand and inequality and wealth. My paper begins with the observation that in fact, you cannot explain what has happened to the wealth/income ratio by that analysis. A closer look at what has gone on suggests that a large fraction of the increase in wealth is an increase in the value of land, not in the amount of capital goods.

LP: When you say “land,” you’re not talking about land in the Jane Austen sense, that is, agricultural land under the ownership of the lord of the manor, right?

JS: It’s not agricultural land, it’s the value of urban land. I would include in that, broadly, rents associated with natural resources (“rent” is an economic term for unearned revenue). It’s the value of existing assets. As a footnote, some of what has gone on, in addition to an increase in the wealth/income ratio, is a capitalization of the increase in other kinds of rents, like monopoly rents. If monopoly rents get increased, if the market power of firms relative to workers gets increased, as when you have the ability of a few, like the banks, to get government guarantees — the value of that is increased and gets capitalized.
That increases wealth but it doesn’t increase capital. So it’s that distinction between wealth and capital that turns out to be critical. That’s the first idea.
The reason that’s important is that you then begin an inquiry into the explanations of why the value of the land or other sources of the value of rents would have gone up. A lot of my book, The Price of Inequality, is about why there has been an increase in rent-seeking. But the other part is more external in terms of the value of land or the value of assets. That, I suggest, is very closely linked with the credit system.

LP: How do you explain this link between credit and inequality?

JS: If you get a flow of credit increasing, as we’ve seen in the last few years —that flow of credit didn’t go to more wealth accumulation as we normally use the term in economics, as capital goods. What you got is an increase in bubbles of one kind or another.

What has happened repeatedly in recent years is that we’ve had monetary authorities allowing — through deregulation and lax standards —banks to lend more. But this lending has not gone for creating new business, not for capital goods. Disproportionately it has gone to increase the value of land and other fixed resources (buildings, real estate, etc). And that’s what everybody was worried about. So in that sense, in that discussion that occurred with quantitative easing nobody linked that with inequality or linked it with the overall macro growth. The links with inequality are twofold: one is that at a very, very macro level, if more of the savings of the economy leads to an increase in the value of land rather than the stock of capital goods, then worker productivity won’t go up. Wages won’t go up. So some of what is going on is that we haven’t been doing the kind of investment that we should be doing.

But the other part that’s probably more important is that when you deregulate, you allow more lending against collateral. Then those who have the assets that can be used for collateral see those assets go up in price, like land. And so those who hold wealth become wealthier. The workers, who have no wealth, don’t benefit from that expansion. So the link is that credit affects land prices and fixed asset prices, and those go disproportionately to the rich. And that is a major part of the increase in the wealth. That’s one strand of my paper.

The other strand of the paper was an attempt to lay out a general theory of the transmission, you might say, of wealth and other advantages across generations, and trying to identify, very broadly, forces that would lead to a more unequal distribution and forces that would lead to a more equal distribution. You could almost say it’s a taxonomy — it’s a framework for thinking through things. And when you start to think about it, you see that there are many more forces going on right now for increasing inequality. And that’s also a framework for policy prescriptions. So if we have more economic segregation in a world in which we have local schools, locally financed schools, we’re going to get inequality in education, and therefore the children of rich parents are going to get more human capital.

This model actually provides a very robust general theory explaining inequality. There are many other wrinkles in the paper, but the final insight is that when you think of policies that are going to address inequality of wealth, you have to be very thoughtful about what economists call “incidence of taxes.” If most of the savings is being done by capitalists, and you tax the return on capital, then they will have less to invest. That would mean, over the long run, that the rate of interest would go up. That would therefore undo some of the intent to lower the income of capitalists.

LP: How do you prevent that negative effect of taxes on capitalists?

JS: One way you might think about preventing that from happening would be making sure that the government invested — took up some of money from tax revenue and invested in capital itself. That would prevent the rate of return from rising. Not all of this is all worked out, but it’s trying to say that some of the statements that Piketty made that you should just tax capital may have been overly simplistic.

LP: In your paper, you indicate that the power of the 1 percent to exploit the rest seems to be increasing. Why is this happening? Are there limits to this exploitation?

JS: In a more careful, academic way of putting it I would say that one of the explanations of what is going on is increased exploitation. You see the ratio of wages to productivity going way down, and that certainly is consistent with increased exploitation. And you see that the ratio of CEO pay to worker pay has gone up. So what I would say is that some of the explanations have to do with weakened worker bargaining power, weaker unions, asymmetric state liberalization where capital moves but labor can’t move, corporate governance laws that provide relatively little check on abuses of corporate power by CEOs, and an increase of monopoly power because of network externalities.

So there are certainly a number of factors that would lead one to suggest that overall there is an increase in market power. There are some things where there’s more competition — because of the Internet, for example, there’s more competition on the price side, but overall, when you look at the ratio of wages to productivity, there’s a marked increase in market power.

Probably there are limits — sometimes the degree of exploitation is expressed as the ratio of wages to marginal productivity of labor, and when that ratio gets down to zero – that’s a limit! What I would say is that things could get much worse if we don’t do something. That’s a relevant issue. What’s important is whether or not we’re on a path that’s looking worse and worse.

LP: You suggest that monopoly power is on the rise. What role does this play in income and wealth inequality?

JS: The holders of monopoly tend to be very concentrated. When you look at the Forbes list, the top two are both monopolists. [Bill] Gates got his money through monopoly power, and [Carlos] Slim got his money through monopoly power in Telemex. It’s not a statement that they weren’t efficient or they didn’t do things well. They may or may not have been innovative — there’s a lot of criticism about Microsoft but we don’t have to go there. But what we can say is that a lot of the income they got was through the exercise of monopoly power, and I don’t think anybody would doubt that. So when you look at the top, it’s monopoly power.

LP: Many neoclassical economists have argued that when people contribute to the economy, they get rewarded proportionally. Is this model breaking down?

JS: Yes. I think that the thrust of my book, The Price of Inequality, and a lot of other work has been to question the margin of productivity theory, which is a theory that has been prevalent for 200 years. A lot of people have questioned it, but my work is a renewal of questioning. And I think that some of the very interesting work that Piketty and his associates have done is providing some empirical basis for doing it. Not only the example that I just gave that if you look at the people at the top, monopolists actually constrain output.

It’s also true that people who make the most productive contributions, the ones who make lasers or transistors, or the inventor of the computer, DNA researchers — none of these are the top wealthiest people in the country. So if you look at the people who contributed the most, and the people who are there at the top, they’re not the same. That’s the second piece.

A very interesting study that Piketty and his associates did was on the effect of an increase in taxes on the top 1 percent. If you had the hypothesis that these were people who were working hard and contributing more, you might say, OK, that’s going to significantly slow down the economy. But if you say it’s rent-seeking, then you’re just capturing for the government some of the rents.

LP: How can we prevent inequality from getting worse?

I divide it into two parts: what can we do to reduce inequality of before-tax and transfers income, and what can we do to improve the after-tax and transfers income. The first part is things like higher minimum wages, stronger unions, better education, and stronger enforcement of anti-trust laws and corporate governance laws. Those are the kinds of things that are likely to improve the before-tax and transfers income. The second part is addressing things like capital gains taxes, the preferential treatment that mainly benefits people at the very top, and better redistributive policies. Those would help the after-tax and transfers income become more equal.

Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of "Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture." She received her Ph.D. in English and cultural theory from NYU. Follow her on Twitter @LynnParramore.

Friday, December 12, 2014

SCOTUS Rules Workers Don’t Need To Be Paid for All Their Time Working

In These Times

With liberty and justice for all...

Working In These Times

Wednesday, Dec 10, 2014, 1:30 pm 

SCOTUS Rules Workers Don’t Need To Be Paid for All Their Time Working


BY Moshe Z. Marvit

Yesterday's Supreme Court ruling against Amazon warehouse workers means bosses can require workers to work for periods of time and simply choose not to pay them for it. (Scott Lewis / Flickr)   

Stories of the horrid conditions for workers in Amazon warehouses have been trickling out for years: The temperatures at the warehouses vary wildly, with some workers having to work in sub-zero conditions, others passing out from days where the temperature soared above 100 degrees, workers crying from not being able to keep up the brutal pace demanded, and then being threatened with termination for crying. And we can now add another indignity to the list, coming yesterday at the hands of the U.S. Supreme Court, which ruled in a 9-0 decision that it is legal for Amazon warehouse workers not to be paid for a portion of their workday.

At the end of long, taxing shifts at warehouses, Amazon requires workers to go through security screenings to ensure that no one has stolen anything from the warehouse. Because Amazon does not hire enough security guards or stagger the quitting times of the workers, these screenings add an additional 25 minutes to each employee’s shift. These workers sued, arguing that under the Fair Labor Standards Act (FLSA), the staffing company that hired them to work in Amazon warehouses was required to pay them for the time spent in these security checks.

Writing for a unanimous court in Integrity Staffing Solutions v. Busk, Justice Clarence Thomas disagreed. (Though the workers work at an Amazon warehouse, they are hired through the intermediary staffing company, Integrity Staffing Solutions.)

At issue was a provision that Congress placed in the Portal-to-Portal Act of 1947, which amended the FLSA by excluding “activities which are preliminary to or postliminary to said principal activity or activities.”  The courts have included in the definition of “principal activities” anything that is “integral and indispensable” to the principal activities. In other words, as the 9th Circuit Court of Appeals (which found in favor of the workers) stated, the test is whether the activity is necessary for the work being performed and done for the benefit of the employer.

Justice Thomas disagreed, turning to at least two dictionaries for clarity. Using the Oxford English Dictionary, Justice Thomas found that “integral” means “forming an intrinsic portion or element, as distinguished from an adjunct or appendage.” Using Webster’s New International Dictionary (2nd Ed.), Justice Thomas found that “indispensable” means “a duty that cannot be dispensed with, remitted, set aside, disregarded or neglected.” So, he concluded, an activity is a “principal activity” only when it includes one that “is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”

Using this tidy definition, Justice Thomas explains that the workers are not eligible for pay for the time they spend in the security screenings. The screenings are not the principal activity of Amazon because they were not hired to go through screenings, and they are not integral and indispensable because Amazon could have easily eliminated the screenings. The Court’s argument, then, is that because it is unnecessary for Amazon to execute long security screenings to conduct its business, it need not pay these workers for the required time they spend in these screenings.

By its own logic, the Supreme Court’s decision fails. The Court discussed other cases where workers’ preliminary time was compensable and tried to distinguish them. In one case, the Court held that employers had to pay meatpackers who had to sharpen their knives, “because dull knives would slow down production on the assembly line, affect the appearance of the meat as well as the quality of the hides, cause waste and lead to accidents.”

Amazon’s warehouses work off of extreme efficiency and knowledge of where every one of millions of items are at any given time. For Amazon, the possibility of worker theft would be even more damaging to its business than most retailers because Amazon uses a system of “chaotic storage.” Under this system, items are not shelved in categories, but rather in a seemingly random manner based on empty shelve space.

If an item cannot be found using a scanner (as a result of a theft, for example), there is no simple workaround, and Amazon’s famed efficiency would suffer. Amazon is thus concerned about theft not only because of the monetary loss of the stolen product, but also because theft slows down their warehouse efficiency—a cornerstone of their business model. So if theft is as big of a concern as the retailer has alleged (and a big enough concern to hire security guards to screen workers at the end of every shift), it would seriously impair Amazon’s efficiency at least as much as dull knives would slow down meatpacking productions.

Perhaps the Supreme Court’s decision is unsurprising. In opposition to these Amazon warehouse workers, who may occupy some of the worst jobs in America, was an alliance of some of the nation’s largest corporations and trade groups, the National League of Cities, the National Association of Counties and the United States Government.

This alliance of business and government has now opened up the door for increased worker abuses and wage theft.  There is nothing stopping Amazon and other retailers from trying to save more money by laying off security staff that conduct screenings and make the workers wait longer. Now, after a long day of backbreaking labor, these workers may have to wait in hour-long lines for a security screening—a screening that everyone from Justice Clarence Thomas on down has agreed is inessential.

Moshe Z. Marvit is an attorney and fellow with The Century Foundation and the co-author (with Richard Kahlenberg) of the book Why Labor Organizing Should be a Civil Right.

The Ominous ‘Cromnibus,’ A Budget Bill That Should Have Died

The Ominous ‘Cromnibus,’ A Budget Bill That Should Have Died

Isaiah J. Poole
With all of the justifiable anger directed at what’s in the 2015 spending bill – the omnibus continuing resolution or “cromnibus” – that the House struggled to pass late Thursday, there is also a major story to be told about what’s not in the bill. It’s a story of missed opportunities that is as significant as the Wall Street giveaways, the kowtowing to fossil fuel interests and gratuitous swipes at conservative boogeymen that were written into this monstrosity.

Most conspicuous is the absence of any real effort to address the plight of millions of people who remain untouched by the so-called economic “recovery” of the past few years. They are represented by the 51 percent of respondents in a New York Times poll this week who rated the condition of the national economy as either “fairly bad” or “very bad.” In that same poll, only 30 percent saw the economy as getting better.

No wonder: The Bureau of Labor Statistics this week reported that 54 metropolitan areas around the country had unemployment rates in excess of 7 percent in October, even as the national unemployment rate was 5.8 percent. Meanwhile, those in the bottom 90 percent who are working have seen no real wage gains since 2000, as all of the gains and then some from economic growth over the past decade have accrued to the top 10 percent – and most disproportionately to the top 1 percent.

(The Economic Policy Institute on Thursday calculated what it called the “inequality tax” on the middle class, the average income a middle-class household lost by not reaping its share of the gains of economic growth since 1979. In 2011, that “tax” for an average middle-income family was $11,630.)
Given the acute need for jobs and rising incomes, what passes for “bolstering job creation” in a summary of the budget bill released by the House Appropriations Committee is scandalous. Incredibly, a provision that allows banks to engage in high-risk derivatives trading under the shield of federal insurance is listed as a measure to “bolster job creation.” So are several measures that roll back environmental protections or prevent policies that would combat climate change.

Meanwhile, “the bill has no major new investments in infrastructure, despite the need and the potential for job creation. For instance, the bill provides no funding for a proposed high-speed rail project,” said Lindsay Koshgarian of the National Priorities Project, which analyzes federal spending and taxation.

The explicit ban on high-speed rail funding is symbolic of Republican myopia on the economy. There is clear demand for high-speed rail in several high-density population corridors around the country, and the upgrading of our rail networks would create tens of thousands of jobs and revive whole industries in steel, rail cars and engine parts when coupled with a Made-In-America mandate. But on that kind of investment in the future, this is the Budget of No.

Another job-creating industry that would create millions of new jobs and lead the American economy toward a more sustainable future is in alternative energy. But the 2015 budget makes a point of cutting by 16 percent President Obama’s budget request for energy efficiency and renewable energy programs, while appropriating 20 percent more than the president requested on research and development of fossil fuels. That’s right: The budget would spend your tax dollars supporting already massively profitable oil, gas and coal companies perfectly capable of funding their own research, while starving the research and development needed to make the energy sources we need for the future to stave off climate change more viable.

In the Housing and Urban Development budget, Republicans made a point of noting that “no funding is included for any new, unauthorized ‘sustainable,’ ‘livable, or ‘green’ community development programs,” the quotes dripping with condescension.

There are a host of initiatives – key among them the Community Development Block Grant program – that could support economic development in those communities that are experiencing high unemployment. That would include communities like Ferguson, Mo., which not only needs to rebuild after the riots that followed the grand jury refusal to indict the police officer who killed unarmed teenager Michael Brown, but to go further in addressing the economic deprivation that, when added to tensions with the police, became combustible. But these programs are being cut, not expanded. The Community Development Block Grant, which spent $4.3 billion in fiscal 2004, is being capped at just $3 billion in fiscal 2015.

“We’re not investing in people, or in the future,” Koshgarian said. For example, “this bill ignores the President’s Preschool for All request, even though investment in preschool has bipartisan support and is proven effective. Likewise, it includes a token increase in the value of a Pell grant to help low-income students pay for college, but at $5,830, a Pell grant still only pays for a fraction of the cost of a year at a public four-year college.”

Of the total budget, $1.1 trillion, 55 percent is devoted to military spending. “This squeezes out all other priorities, from education to health care to the environment,” Koshgarian pointed out. “We’re valuing business over people across the board: even the Pentagon, which is getting over half of the $1.1 trillion in appropriations, is increasing spending on equipment – funds that will go to defense contractors – while it provides troops with a measly 1 percent pay raise.”

This budget also does nothing to reform our tax code, which allows multinational corporations and wealthy individuals to engage in ever-more-brazen tactics to avoid paying taxes. Instead, it cuts Internal Revenue Service funding, hampering its ability to go after tax cheats. Nor does the budget do anything to give people more retirement security. (In that New York Times poll, 47 percent of respondents said they were “very concerned” about not having enough money for retirement.) In fact, one clause in the budget bill will allow private companies to actually lower pension payments to more than 1 million retirees.

A major reason so many Americans are experiencing economic stagnation is the wrongheaded focus on deficit reduction, when in fact increased government spending in specific areas was needed to ensure that economic growth was more robust and more broadly shared. That’s one more reason this budget’s passage in the House is a travesty, not a triumph.

In an ideal world, this budget would be voted down so that Congress could go back to the drawing board and get its priorities straight. It goes without saying we’re not in that world, and in fact we’ll be a bit further from it when Republicans take control of the Senate in January. What we can do in the meantime is call this budget what it is – a document that shirks the basics of making the economy work for working people while paying fealty to Wall Street and right-wing fetishes – and use it as a rallying cry for the progressive populist takeover of Congress that we must start working toward today.

Friday, November 28, 2014

Paul Krugman Reveals the Culprit Behind the GOP's Rabid Anti-Environment Stance


Breathing used to be a non-partisan issue. Here's what changed.


Photo Credit: via YouTube

Since when did breathing clean air become so politicized? It predates President Obama's recent attempts to install regulations to curb ozone emissions, but not by that much. Paul Krugman takes up the truly bizarre Republican opposition to even the most tepid attempts to protect the environment in Friday's column and digs deeper to find the root cause. Of course, polluters will defend their right to pollute, he points out, but why can they always depend on Republican support?

Some background from Krugman: 
It wasn’t always thus. The Clean Air Act of 1970,  the legal basis for the Obama administration’s environmental actions, passed the Senate on a bipartisan vote of 73 to 0, and was signed into law by Richard Nixon. (I’ve heard veterans of the E.P.A. describe the Nixon years as a golden age.) A major amendment of the law, which among other things made possible the cap-and-trade system that limits acid rain, was signed in 1990 by former President George H.W. Bush.

But that was then. Today’s Republican Party is putting a conspiracy theorist who views climate science as a “gigantic hoax” in charge of the Senate’s environment committee. And this isn’t an isolated case. Pollution has become a deeply divisive partisan issue.

The Republicans have moved to the right of Nixon and Bush. That's part of it, but, again, why? 

Money in politics is part of the answer, no doubt. Mega polluters like the Koch brothers pour mega doses of cash into politics, and while it used to flow to both parties, it goes "overwhelmingly in one direction" today. What changed? Rabid anti-government, pro-market ideology is part of the answer. Krugman peels the onion further to conclude that this pernicious ideology is just "a symptom of the underlying cause of the divide:  rising inequality."
The basic story of political polarization over the past few decades is that, as a wealthy minority has pulled away economically from the rest of the country, it has pulled one major party along with it. True, Democrats often cater to the interests of the 1 percent, but Republicans always do. Any policy that benefits lower- and middle-income Americans at the expense of the elite — like health reform, which guarantees insurance to all and pays for that guarantee in part with taxes on higher incomes — will face bitter Republican opposition.
Protecting the environment has become a class issue, in part. Everyone breathes, but only the super-wealthy own huge amount of stock in coal companies. Krugman concludes: 

In the case of the new ozone plan,  the E.P.A.’s analysis suggests that, for the average American, the benefits would be more than twice the costs. But that doesn’t necessarily matter to the nonaverage American driving one party’s prior

Working for Walmart Is Even Worse Than You Think


Victoria Alvarez explains why she and other Walmart workers nationwide are striking today, despite Walmart's attempts at silencing them. 

Victoria Alvarez (R) at a sit-in strike in a Los Angeles Walmart store on Nov. 13, 2014.

Photo Credit: Claudia Koerner/BuzzFeed

When I met Victoria Alvarez, 50, at a café after her shift at Walmart, I didn’t notice her knee brace. Instead I noticed her dark eyes and glittery nail polish, which in some ways is a great metaphor for Alvarez. She’s hurting, but her bold personality still dominates.

Within seconds of meeting her, you can tell she’s the type of person who's fun to be around; she talks with her hands, speaks her mind and doesn’t take anyone’s shit. Alvarez was born and raised in Mexico and immigrated to the United States more than 20 years ago. Her heavily accented voice is confident and captivating, and she had a lot to say.

She applied to work at Walmart during the 2009 recession. After a few months of work in Arizona, she transferred to a store in Fremont, CA, an hour from San Jose, where she lives with her husband in their mobile home. Alvarez works full-time and started at $9 an hour. After five years, she makes $11.  
“In the beginning, I almost lost my mobile home because I struggled,” Alvarez said. “My husband was sick and out of work. I had to borrow from friends, from family for a very long time.”

But there was more to the burden of working at Walmart than just low wages. Alvarez said as soon as she started working in Fremont, she noticed things weren't right. 

“A lot of people were punished for things they weren’t suppose to be, like not finishing their work on time,” she explained. “A lot of people were doing the work of three to four people. That’s what happened to me.”
Alvarez and her supervisor ran Walmart’s Tire & Lube Express department. She was servicing customers, making keys, dealing with tires, and carrying heavy merchandise.

“I was forced to skip meals,” she said, adding that many of her co-workers have to skip meals, too. Then the workers manipulate the punch-out clock to make it look like they took a break.

“They say, ‘If we find out you do it we’ll fire you,’” Alvarez said. “But then they show you how to do it.”

Eventually, Alvarez got carpal tunnel syndrome and showed managers a doctor’s note explaining that she needed modified work. But they wouldn’t recognize it. Alvarez had to call on California’s Labor Department, which finally wrote a letter to her Walmart store. Her managers then moved her to greeting customers and pushing carts.

“I had to push carts with the leg I have, with my bad knee,” she said.

When I asked Alvarez if she has healthcare, her face reddened.

“This is what happened with healthcare,” she began to explain, tears welling up. She pays $80 a month for Walmart’s lowest option for health insurance. This is all she can afford. While workers' compensation took care of her carpal tunnel surgery, an emergency room visit for appendicitis left her with a $22,000 bill.
“I said, ‘How am I going to pay this?’”

Alvarez applied for government financial aid, which fortunately took care of the bill. It’s estimated that Walmart benefits from $6.2 billion in taxpayer subsidies for healthcare, food stamps and subsidized housing.

“I’ve been through all this,” she said, closing her eyes. 

I asked Alvarez why she joined OUR Walmart—the Organization United for Respect at Walmart—and she smiled. She recalled the day she saw her co-worker walk into the store wearing a bunch of OUR Walmart bracelets two years ago. “I joked with him and said, ‘Oh I like your bracelets, can I have one?’” Alvarez said, laughing. He told her that the group was a communitiy of former and current workers fighting for better working conditions.

“He explained it to me, and I said, ‘Oh my god, this is what I need!’” she recounted. “I really wanted to join because I had a lot to say.”  

Alvarez has since participated in many actions, including strikes and rallies in front of Rob Walton’s house. I asked Alvarez what she wanted to see change at Walmart. She answered before I'd finished the question. 

“Retaliation is the most important thing I want to end,” she said. “That if you speak out about getting $15, about getting full-time, getting predictable scheduling, about the OUR Walmart organization or better health insurance, or workers comp or if you tell your manager, ‘Hey, I need people here to help me because the load that you’re giving me is for three people and I’m not going to be able to finish,’ they retaliate on you. And I want that to end.”

Alvarez began rattling off instances she felt she had been retaliated against. Once, she was called into the office and told she was disrespecting the dress code by wearing jeans. She was told either to go home or buy a pair of pants at Walmart. But Alvarez wasn’t wearing jeans. She was wearing black pants and fortunately saw a co-worker wearing the same pants in khaki. She pointed this out to her managers and told them, “If you’re sending me home, you have to apply the same rules to everyone.” They told her to forget the whole thing.
Another time, she was working apparel and needed to go to the restroom, so she called for backup. After waiting nearly an hour and calling for backup three times, she just went. When she got back, she was written up for her “irresponsible” act and for being “disrespectful” to management. Alvarez admits she was aggressive.   

“Of course, you’re going to get mad when someone comes and tells you that you’re irresponsible,” she said. “I held it for almost an hour. I was waiting for someone to come. I didn’t see anybody. When I came back somebody was already there—it was like they were waiting for me to come back.”

Most recently she faced retaliation after coming back from a strike in Los Angeles, where OUR Walmart members held their first store sit-in.

“When I came back from the strike, they sent me to work by myself at the men’s department for two days,” she said. “And then the managers called everyone in and said the schedules for the holiday week were ready and were designed based on people’s talents. And I was on for one day only. That was the first time in five years I was scheduled to work only one day. And I said to my manager, ‘Is this retaliation because I went on strike or am I not talented?’”

The manager ultimately gave Alvarez 40 hours. But she won’t be working all of it. She will be participating in OUR Walmart’s Black Friday strikes, expected to be the organization's largest ever, with actions happening at 1,600 stores. She also will be striking the day before on Thanksgiving, when Walmart’s Black Friday sale begins at 6pm. She told me that instead of her Walmart store giving employees bonuses for working on the holidays like they used to, they now only get a 25-percent-off coupon.

“How are we going to shop when we don’t have money to spend? It’s so ridiculous,” she said. “I really believe that by striking this Black Friday, we can change how things work. We really need to participate to change things. If we don’t participate, it will remain the same. We have come so far to not participate. We have started something that is very brave for everybody.”
I ask Alvarez if she ever feared standing up to Walmart.

“No, no, no, not at all,” she said. “Whatever sacrifice it takes to change things, I will do it. And I’m not doing it only for me; I’m also doing it for my co-workers. For all those who don’t have the courage. For all of those who are scared to speak out.”

After interviewing Alvarez for an hour and 40 minutes, I apologized for taking so much of her time and thanked her for meeting with me.

“You don’t have any more questions?” she asked, surprised.

I told her to tell me anything else she wanted, and she perked back up.

She told me that several of her co-workers get injured on the job but they're too scared to file for worker's compensation. One of her managers recently got fired for slapping a worker. A few of her co-workers are homeless and live on the couches of family, friends or co-workers.

“One of my co-workers, he’s older, he lives in his car,” she said. “He has the car parking there. He eats there, he sleeps there, he takes showers I don’t know where, but he’s always there.”

She told me that the way Walmart does evaluations is unfair because they are often done by random managers, who don’t really know the workers they assess so they only give a standard satisfactory mark. That lands you a 20-40 cent raise for the year. An excellent mark gets you a 60-cent raise, the highest Walmart gives.

“You’ll never excel,” she said. “It doesn’t matter how hard you work, how much work you do, how faithful you are to Walmart, get there on time every day, when they call you to come in. You never excel.”

She told me that seeing how some of her co-workers struggle breaks her heart. Another way she sees their struggle is when she’s working the register and rings up her co-workers’ lunches.

“One woman eats the same 59-cent can of soup every day,” she said. “It’s all she can afford.”

She told me she wishes more of her co-workers would stand up for themselves, and sometimes it’s very hard for her to understand why they don’t. She has tried many times to speak to that managers on behalf of workers who are too scared, but they won't let her. But it's not like she doesn't have her own concerns. 
“Well, I am in fear. Really I am in fear,” Alvarez said. “But if Walmart fires me I’m sure something better for me is waiting for me out there—that’s how I want to think. But the only thing that I would regret is not being there for my co-workers. And it doesn’t matter if they fire me, I’m going to continue fighting until the end by supporting my co-workers with my presence in every strike. When I start something, I like to finish.”

To find a OUR Walmart Black Friday protest near you visit blackfridayprotests.org.

Alyssa Figueroa is an associate editor at AlterNet.

Tuesday, November 18, 2014

Trans-Pacific Partnership, the trade deal Obama and the GOP both love, explained

Trans-Pacific Partnership, the trade deal Obama and the GOP both love, explained

These protesters in Japan aren't happy with the massive proposed trade deal. Getty Images
You're about to hear a lot about one major trade proposal the Obama administration has been negotiating for years. The Trans-Pacific Partnership has suddenly become one of the hottest topics in Washington, as it appears to be one of the few topics on which President Barack Obama and congressional Republicans might be able to reach any sort of agreement.

Of course, what you're going to read about as a "trade deal" has to do with so much more than trade — like most modern trade agreements, it's really a broad, sweeping economic agreement that deals in everything from patents to labor rights to geopolitics. Supporters say free trade will boost the economy and curb Chinese dominance. But critics say it's a massive corporate giveaway that caters to the interests of huge multinationals while killing US jobs.

The administration has hinted that a deal is close. Before that happens, read our guide to what it's all about.

1) What is the Trans-Pacific Partnership?


The Trans-Pacific Partnership is a proposed free trade agreement between the US and 11 other countries in Asia and on the Pacific. The point of it is to open up trade between the US and these countries by getting rid of tariffs and other trade barriers. It's often compared to NAFTA, the 20-year-old massive free-trade agreement. (See a list of the US's stated objectives in the TPP.)

what you're going to read about as a "trade deal" is about so much more than trade

But sending goods from point A to B (and vice versa) is only one of a vast array of areas it deals in, many of which aren't directly related to the exchange of goods, like labor standards, international investment, telecommunications, and environmental issues. In fact, many of the 29 potential chapters as listed in this Congressional Research Service report deal in issues that are only peripherally trade-related.

And it's big — the US does nearly $2 trillion in trade with these countries each year, according to the US Trade Representative's office, accounting for nearly 40 percent of the US's trade. The 12 countries together also account for around 40 percent of global GDP. It's also a free trade agreement between two of the world's biggest economies, the US and Japan, which is itself a major milestone.

2) So wait. TPP isn't really about trade?


It is about trade, at least in part, but it's really about all sorts of different agendas being worked into one big agreement that's centered around trade agreements. There are chapters on labor rights and environmental practices, as well as financial regulation and government procurement.

So the new agreement could benefit US businesses even before any goods change hands. Leaked chapters on intellectual property have seemed to favor patent and copyright holders like pharmaceutical companies and Hollywood movie studios, as Tim Lee has written.

tpp is also about china, despite the fact that china isn't even involved in it
And this isn't just a feature of the TPP. The Transatlantic Trade and Investment Partnership (TTIP), a trade deal being negotiated with European countries, likewise covers broad swaths of economic policy.

The reason for some of these broad-ranging agendas, according to US Trade Representative Michael Froman, is that there are non-tariff barriers that need to be broken down.

"Through successive rounds of trade negotiations, both bilateral and multilateral tariffs have come down a great deal over the last 50 years," he says. "but over the same period of time other obstacles to trade have emerged," like subsidies and regulations designed to keep out other exports.

TPP is also about China, which isn't even a party to the deal. China is growing in power and economic importance, with a huge and fast-growing consumer base. As it becomes a bigger force to be reckoned with in Asia, the US is in a race to make sure it has a good foothold in the region, according to one expert.

"They would like to lock up the rules on IT and investment before China becomes a bigger economic force. Hence the TPP excludes China, but it will be welcome to join in the future if it adheres to the roles set forth by others," writes Barry Bosworth, senior fellow at the Brookings Institution, in an email. "Naturally, China is not very happy."

In part, TPP may be a way to try to pressure China into adopting more market-based economic policies, as Time's Michael Schuman wrote this week — in addition, of course, to being a way to open up non-Chinese markets in Asia to American companies.

3) Who's involved?


The countries in the TPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The below map from the Congressional Research Service shows trade flows between the 12 countries involved.

TPP countries

Of course, one huge Asian economy (China) is not involved. The US has said it's open to China's involvement, and China has said it was open to it as well.

But many people see TPP as a way to check Chinese influence in the region, as well as a way to try to get China to change its economic policies. Indeed, when the US has in the past pushed TPP, it has in the same breath criticized China, telling it to "play by the rules."

China, meanwhile, has its own free trade pact it's working on — the Free Trade Area of Asia and the Pacific. This agreement is seen as a rival to the TPP, with both countries fighting to be the major trading partner to countries in this region. At this week's APEC forum, China succeeded in pushing a study of the FTAAP.

Officially both countries are downplaying talk of a rivalry. US Trade Representative Michael Froman even went so far as to say that China's proposed free trade area is not, in fact, a new free trade area, but instead a "long-term aspiration." At the same time, it's clear the US government fears that if TPP doesn't get off the ground, Asian countries will be more likely to make commitments to China instead.

4) How did the midterms make this into a big deal?


Because trade appears to be one of the few areas on which the White House and a newly Republican-controlled Congress might agree in the coming legislative session.

After the midterm elections Senate Minority Leader Mitch McConnell (now in line to be the majority leader in the next Congress) emphasized trade agreements as one area on which he thought a new majority-Republican Congress and Obama could agree.

"I've got a lot of members who believe that international trade agreements are a winner for America," McConnell said. "And the president and I discussed that right before I came over here, and I think he's interested in moving forward. I said, 'Send us trade agreements. We're anxious to take a look at them.'"
"republicans in Congress ... must vote to voluntarily give [Obama] large swaths of power"

That matters because Congress can give the president something called Trade Promotion Authority, which is often simply called fast-tracking. To help a president to more easily negotiate trade deals, Congress has to periodically grant this authority, which last expired in 2007.

The idea of fast track is that a president needs to be able to negotiate a treaty without the fear that Congress will amend it after he and a whole bunch of other countries come to agreement on a deal. When the president has TPA, he consults with Congress, but once a deal is reached, Congress can only vote it up or down — no amendments. Without that authority, it's not really feasible to reach a credible deal with foreign leaders.

The fact that Republicans seem favorable toward trade deals like the TPP creates something of a dilemma for them, as Public Citizen's Lori Wallach told Al Jazeera. "What would be required is for Republicans in Congress, who have attacked Obama as power-hungry, must vote to voluntarily give him large swaths of power," she said. "This is an interesting problem for them and their own political base."

5) So what exactly in the deal?


That's a great question. And the answer is that not a lot of people know the specifics.

This has upset a lot of people, including many congressional Democrats. This puts them in alignment with some Tea Party Republicans who say they won't grant Obama TPA because they haven't been consulted closely enough on what they call a "secret" deal covering such broad-ranging themes.

"as soon as you reveal your position ... then it's much more difficult to modify it and be flexible later."

TPP critic Elizabeth Warren said, "I actually have had supporters of the deal say to me, ‘They have to be secret, because if the American people knew what was actually in them, they would be opposed.'"

It's not that members of Congress have been kept entirely in the dark. Froman says he has had more than 1,500 meetings with members of Congress. The USTR office also provides Congress members with copies of the working text, though while they have input, members cannot directly change the deal.

While it's true that the average American (or Japanese or Vietnamese person) has no access to the talks, the secrecy surrounding TPP has a purpose. 
Negotiations would be far, far more difficult if undertaken in full public view.
"As soon as you reveal your position and put it in print, then it's much more difficult to modify it and be flexible later," explains Gary Hufbauer, senior fellow at the Peterson Institute for International Economics. "It's a negotiation, and everyone has to compromise to some extent."

Though the deals have been behind closed doors, some bits of the deal have come to light, thanks to WikiLeaks, which has obtained and published draft chapters from the deal on intellectual property and the environment. The Citizens' Trade Commission, which is also opposed to the TPP, has also published a leaked chapter on investment.

Those leaked chapters have upset some advocacy groups. The Electronic Frontier Foundation and ACLU have fought against some of the IP proposals, like longer copyright protections and making internet service providers liable for copyright infringement. Likewise, the Sierra Club objects to weaker language about countries' commitments to environmental agreements. As Mother Jones pointed out, the environmental stipulations in the leaked chapter are voluntary, not binding.

That said, Froman has insisted that there will be tough environmental rules in the deal: "Environmental stewardship is a core American value, and we will insist on a robust, fully enforceable environment chapter in the TPP or we will not come to agreement," he wrote in a January blog post.

6) Will TPP benefit the US economy?


Opening up new free-trade markets could really benefit the US economy. The TPP could particularly benefit American companies by giving US products, like cars and food, more customers — particularly in Japan. The Peterson Institute in 2012 estimated that it could add $78 billion to income for American companies, which is a lot of money, but not a game-changer in a $17 trillion economy.

That said, income for US companies doesn't necessarily mean new income for US workers, says Barry Bosworth, senior fellow at the Brookings Institution.
"There often is a conflict between the objectives of 'American' companies and workers," he writes. "For example, business groups are very interested in the expansion and enforcement of intellectual property and liberalization of access to foreign financial markets, but these create very few US jobs, even though they may create income through their effect on profits and stock values."
One expert says the tpp will lead to higher incomes for US companies but "probably a net loss of jobs"

In other words, a lot of those provisions that have little to do with goods trade could create lots of value for American companies without creating lots of jobs. Altogether, Bosworth says, he expects higher incomes for US companies but "probably a net loss of jobs."

The TPP could also become a political football again, come 2016 — as The Fix's Jaime Fuller noted earlier this year, a win on the TPP would be a belated win for former Secretary of State Hillary Clinton, meaning she'd probably tout it in debates and campaign stops if she ran for the presidency.

Obama TPP leaders
Obama and his fellow world leaders prepare for a long discussion about tariffs. (Getty Images)

7) Why has the TPP taken so long?

The US joined TPP negotiations in 2008, and the first TPP deadline was in 2012. That and others have sailed by since then. And that's because of lots and lots of sticking points. Maybe the biggest one recently is between the US and Japan, regarding Japanese subsidies for its agricultural and auto sectors.

However, agreement is looking closer all the time — in a November 10 statement, the leaders of the 12 countries reported "significant progress in recent months ... that sets the stage to bring these landmark Trans-Pacific Partnership (TPP) negotiations to conclusion."

Yes, statements after TPP talks have claimed "significant progress" before. But this time, the leaders sound unusually optimistic. New Zealand's trade minister proclaimed that "the finish line is in sight" after this week's APEC meeting, and said it could be "a few months" before that line is crossed.

Updated. This post was updated to include comment from the USTR on the US's environmental goals in TPP.