New Rule: Not Everything in America Has to Make a Profit

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Bill Maher
July 24, 2009 - Huffington Post

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How about this for a New Rule: Not everything in America has to make a profit. It used to be that there were some services and institutions so vital to our nation that they were exempt from market pressures. Some things we just didn't do for money. The United States always defined capitalism, but it didn't used to define us. But now it's becoming all that we are.

Did you know, for example, that there was a time when being called a "war profiteer" was a bad thing? But now our war zones are dominated by private contractors and mercenaries who work for corporations. There are more private contractors in Iraq than American troops, and we pay them generous salaries to do jobs the troops used to do for themselves ­-- like laundry. War is not supposed to turn a profit, but our wars have become boondoggles for weapons manufacturers and connected civilian contractors.

Prisons used to be a non-profit business, too. And for good reason --­ who the hell wants to own a prison? By definition you're going to have trouble with the tenants. But now prisons are big business. A company called the Corrections Corporation of America is on the New York Stock Exchange, which is convenient since that's where all the real crime is happening anyway. The CCA and similar corporations actually lobby Congress for stiffer sentencing laws so they can lock more people up and make more money. That's why America has the world;s largest prison population ­-- because actually rehabilitating people would have a negative impact on the bottom line.

Television news is another area that used to be roped off from the profit motive. When Walter Cronkite died last week, it was odd to see news anchor after news anchor talking about how much better the news coverage was back in Cronkite's day. I thought, "Gee, if only you were in a position to do something about it."

But maybe they aren't. Because unlike in Cronkite's day, today's news has to make a profit like all the other divisions in a media conglomerate. That's why it wasn't surprising to see the CBS Evening News broadcast live from the Staples Center for two nights this month, just in case Michael Jackson came back to life and sold Iran nuclear weapons. In Uncle Walter's time, the news division was a loss leader. Making money was the job of The Beverly Hillbillies. And now that we have reporters moving to Alaska to hang out with the Palin family, the news is The Beverly Hillbillies.

And finally, there's health care. It wasn't that long ago that when a kid broke his leg playing stickball, his parents took him to the local Catholic hospital, the nun put a thermometer in his mouth, the doctor slapped some plaster on his ankle and you were done. The bill was $1.50, plus you got to keep the thermometer.

But like everything else that's good and noble in life, some Wall Street wizard decided that hospitals could be big business, so now they're run by some bean counters in a corporate plaza in Charlotte. In the U.S. today, three giant for-profit conglomerates own close to 600 hospitals and other health care facilities. They're not hospitals anymore; they're Jiffy Lubes with bedpans. America's largest hospital chain, HCA, was founded by the family of Bill Frist, who perfectly represents the Republican attitude toward health care: it's not a right, it's a racket. The more people who get sick and need medicine, the higher their profit margins. Which is why they're always pushing the Jell-O.

Because medicine is now for-profit we have things like "recision," where insurance companies hire people to figure out ways to deny you coverage when you get sick, even though you've been paying into your plan for years.

When did the profit motive become the only reason to do anything? When did that become the new patriotism? Ask not what you could do for your country, ask what's in it for Blue Cross/Blue Shield.

If conservatives get to call universal health care "socialized medicine," I get to call private health care "soulless vampires making money off human pain." The problem with President Obama's health care plan isn't socialism, it's capitalism.

And if medicine is for profit, and war, and the news, and the penal system, my question is: what's wrong with firemen? Why don't they charge? They must be commies. Oh my God! That explains the red trucks!

TOON

The Secret Evidence of Global Warming Bush Tried to Hide

Satellite images of polar ice sheets taken in July 2006 and July 2007 showing the retreating ice during the summer.

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Photos from US spy satellites declassified by the Obama White House provide the first graphic images of how the polar ice sheets are retreating in the summer.

Suzanne Goldenberg and Damian Carrington
July 26, 2009 - The Guardian/UK

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Graphic images that reveal the devastating impact of global warming in the Arctic have been released by the US military. The photographs, taken by spy satellites over the past decade, confirm that in recent years vast areas in high latitudes have lost their ice cover in summer months.

The pictures, kept secret by Washington during the presidency of George W Bush, were declassified by the White House last week. President Barack Obama is currently trying to galvanize Congress and the American public to take action to halt catastrophic climate change caused by rising levels of carbon dioxide in the atmosphere.

One particularly striking set of images - selected from the 1,000 photographs released - includes views of the Alaskan port of Barrow. One, taken in July 2006, shows sea ice still nestling close to the shore. A second image shows that by the following July the coastal waters were entirely ice-free.

The photographs demonstrate starkly how global warming is changing the Arctic. More than a million square kilometers of sea ice - a record loss - were missing in the summer of 2007 compared with the previous year.

Nor has this loss shown any sign of recovery. Ice cover for 2008 was almost as bad as for 2007, and this year levels look equally sparse.

"These are one-meter resolution images, which give you a big picture of the summertime Arctic," said Thorsten Markus of NASA's Goddard Space Flight Center. "This is the main reason why we are so thrilled about it. One-metre resolution is the dimension that's been missing."

Disappearing summer sea ice poses considerable dangers, scientists have warned. Ice shelves are used by animals such as polar bears as platforms for hunting seals and other sea creatures. Without them, they could starve. In addition, ice reflects solar radiation. Without that process, the Arctic sea could warm up even more. The phenomenon threatens to set off runaway heating of the planet, say climatologists.

The latest revelations have triggered warnings from scientists that they no longer have the funds to keep a comprehensive track of climate change. Last week the head of the US's National Oceanic and Atmospheric Administration (NOAA), Professor Jane Lubchenco, warned that the gathering of satellite data - crucial to predicting future climate changes - was now at "great risk" because America's aging satellite fleet was not being replaced.

"Our primary focus is maintaining the continuity of climate observations, and those are at great risk right now because we don't have the resources to have satellites at the ready and taking the kinds of information that we need," said Lubchenco, who was appointed by Obama. "We are playing catch-up."

Even before her warning, scientists were saying that America, the world's scientific superpower, was virtually blinding itself to climate change by cutting funds to the environmental satellite programs run by the Oceanic and Atmospheric Administration and NASA. A report by the National Academy of Sciences this year warned that the environmental satellite network was at risk of collapse.

In February, a NASA satellite carrying instruments to produce the first map of the Earth's carbon emissions crashed near Antarctica only three minutes after lift-off.

The satellite would have measured carbon emissions at 100,000 points around the planet every day, providing a wealth of data compared to the 100 or so fixed towers currently in operation in a land-based network.

The NOAA is under additional pressure to provide environmental data because of the re-emergence of the El Niño climate phenomenon, where warming of the tropical Pacific causes heatwaves, droughts and flooding around the world. June's land and sea surface temperatures were the second hottest on record, and scientists are predicting this will be the warmest decade in recorded history. The last major El Niño was in 1998, the hottest year in recorded history.

The Obama administration has already taken steps to tackle America's flagging scientific lead. The president's economic recovery plan allotted $170m (£100m) to help close the gaps in climate modelling. The NOAA is seeking an additional $390m in its 2010 budget to upgrade environmental satellites, and help make data more available to researchers and government officials.

Why Nuclear Energy Is Not the Answer to Climate Change

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Ben Williams
July 26, 2009 - Examiner.com

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It's funny. People really believe that nuclear power is emissions free. Powering cities with nuclear, they propound, is the panacea to climate change. And yet, if you really take a look at the fuel cycle, it is obvious nuclear energy is, in fact, emissions intensive.

First off the ore needs to be mined. This involves drilling, explosions, heavy equipment. Even at the EPA standard of 15 grams of carbon per break horsepower engine hour, this translates to a lot of carbon. Then the ore needs to be shipped to a processing facility, or mill.

Here, twenty-four hours a day, heavy equipment loads the ore into a hopper, the intake into the semi-autogenous grinding mill. This grinding mill uses electricity (coal) to turn an enormous steel drum filled with metal tumbling balls. Additionally, tons -- yes tons -- of concentrated sulfuric acid are needed to help leach the uranium from the ore, among quantities of other highly caustic chemicals, all of which must be prepared on industrial scales and shipped to the facility.

After a number of other mechanical operations, all of them energy intensive, the ore must be dried in an oven, where, twenty-four hours a day, countless kilo-watt hours are burned heating the rock to temperature.

Finally, the processed ore, now 'yellow cake', has to be boxed up, sealed in steel drums (refined and produced industrially), and then shipped to market.

Then, of course, it needs to be reacted with hexaflourine, or some other chemical, to be refined and turned into the uranium rods that are used in the reactor core. Only now can the power be said to be emissions free: once the rods are installed and operational, powering generators with their nuclear heat.

Of course, after a few months the rods are spent. They then need to be safely disposed of -- or, more accurately, buried somewhere where no one will notice them, contained for 1,000 years, after which they become someone else's problem (probably the DOE or EPA). They must be safely interred for over four billion years. Yes, they need to be baby-sat for an amount of time that exceeds the current age of the Earth.

Because a nuclear core demands fresh, refined uranium, there is a constant use-cycle -- an unstoppable appetite -- that, ultimately pollutes in manifold ways:

1.The diesel burned in extracting the ore produces CO2, CO, NOX, SOX, dioxins, VOCs among the other expected particulates from incomplete combustion of fossil fuels.

2.The dust produced from mining becomes airborne and settles on downwind communities, increasing the cancer rate noticeably.

3.The diesel burnt in shipping the heavy rock to processing produces the same slew of pollutants as the heavy mining machinery, while trailing radioactive dust along the way.

4.The mill itself burns up millions of KWh every year, KWh generated, in this day and age, almost exclusively from burning coal -- high SO2, H2SO3 and H2SO4 meet heavy metals like Hg with the clouds of greenhouse gases.

5.The mill must vent many toxic gases as it processes the ore. It must store radioactive slurry in the ground, hoping it will evaporate so the tailings can be capped. Groundwater and runoff pollution occurs. Once capped, the tailings are radioactive for billions of years. Future contamination becomes a certainty. (Just, the mill operators hope, not in their lifetime.)

6.Shipping the yellow cake to market. There are only two enrichment plants in the Northern United States, and one of them is in Canada. Long trips equal large emissions. Much of the yellow cake will be shipped overseas, adding emissions from large container vessels and potential maritime spills to the list.

7.The enrichment facility then vents toxic gases from the reagents used in reducing the yellow cake to weapons-grade uranium.

8.The rods are shipped to power plants, necessitating the fourth round of distribution-related emissions.

9.The rods are used, then spent, sealed up, and transported to a nuclear waste dump -- more emissions, more radioactive decay along public roads and waterways.

10.Countless emissions result from policing the waste site.

Of course, none of this includes the emissions from the industrial-scale production of the reagents needed by the uranium refining cycle. Not to mention their weekly delivery to processing mills and enrichment facilities.

Nor does it take into account the 'depleted' uranium used as munitions (which, despite what you might infer from its name, is actually enriched -- it is depleted of the less radioactive isotopes). That causes enough pollution to contaminate our armed-forces personnel before it's even fired! Let alone the land where it is unleashed.

The whole thing is utterly non-sustainable. And no model on which to base future, responsible energy production. So why all the hoo-ha? Simple. Uranium allows, not so much for clean energy, but centralized energy production. Centralized energy production -- aside from being grossly inefficient from the distribution angle, losing more than 7% of all energy generated -- means centralized profits. Same, boring story we're all tired of hearing about. Corporate profits should no longer trump the public right to choose viable, alternative energy. Making the right choice means sharing the benefits of energy production: Not letting a small group of corporate elitists eat the whole pie while pushing the future costs (which approach infinity) onto every subsequent generation of human beings, ever.

Wake up. This is madness. And it won't stop until we hold CORPORATE GREED accountable. Haven't you had enough of this yet?

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Ben Williams is the executive Director of the Colorado Renewable Energy Cooperative and Manager of the Energy Services and Consulting company, Getting Climate Change Handled, LLC (GCCH). He lives in Southwest Colorado, in San Miguel County, at the fork in the road – between a sustainable future & the wreckage of an unchecked energy agenda.

Top 1% Receive One-Third Of All Pay In The U.S., But Congress Is Still Afraid Of A Surtax

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Pat Garofalo
July 21,2009 - ThinkProgress.org

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The New York Times reported today that Democratic leaders, "bowing to unease among lawmakers and governors in their own party," are reconsidering the House Ways and Means committee's proposal to implement a surtax on the richest one percent of Americans as a way of financing a portion of health care reform.

There has indeed been a lot of pushback against the surtax proposal, which prompted Speaker of the House Nancy Pelosi (D-CA) to suggest that only households making more than $1 million should be subject to it, instead of the graduated scale starting at $350,000 that Ways and Means proposed.

But those feeling squeamish about the tax should take a look at this analysis in the Wall Street Journal, which shows how big a slice of the income pie the rich are currently receiving:

Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data — without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries. Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total U.S. pay in 2007, the latest figures available. The compensation numbers don't include incentive stock options, unexercised stock options, unvested restricted stock units and certain benefits.

In the five years ending in 2007, earnings for American workers rose 24 percent, while the highest-paid saw a 48 percent increase. So as Kevin Drum noted, "in other words, the executives got a 48% increase, the rest of us got approximately nothing, and it all averaged out to 24%." And to top it all off, median pay raises for this year and next are set to be the lowest in decades.

Income growth in America for the last few decades has been overwhelmingly concentrated at the top. Between 1979 and 2006, the inflation-adjusted after-tax income of the richest 1 PERCENT of households increased by 256 percent, compared to 21 percent for families in the middle income quintile. According to the Center on Budget and Policy Priorities, households in that richest one percent "had $617 billion more income in 2006 (or $656 billion more if measured in 2009 dollars) than they would have had if the 1979 income distribution still prevailed."

Increasing taxes on this small percentage of people — who have done very well for a very long time — would raise revenue to put toward health reform, which is the single biggest problem for America's bottom line. As Sen. Bernie Sanders (I-VT) said, "it certainly is okay for me to tell my friends on Wall Street, who just got a bonus of $600,000, they're going to pay more in taxes so we can lower health care costs in America."

TOON

Sorta nice but also creepy and disturbing.

In a trend so rich in weirdness it deserves a John Prine song, D.C. lobbyists are hiring homeless people to stand in line for them in order to get coveted seats at key hearings. The practice – complete with a website – gives money and stature to people who desperately need it, while using them to facilitate policies that often work against their interests.

"I'm a part of something today and I'm very happy about that," says Williams Howard Johnson Jr., in line since midnight for a 10 a.m. climate-change bill hearing.

- Common Dreams

Morgan Stanley Sets Aside 72% of Revenue for Employees’ Pay

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Christine Harper
July 22, 2009 - Bloomberg

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Morgan Stanley set aside 72 percent of its second-quarter revenue for compensation and benefits, more than Goldman Sachs Group Inc. or JPMorgan Chase & Co., amid a "war for talent" with rivals that generate more money.

"It was a very good quarter to be a Morgan Stanley employee," said Brad Hintz, an analyst at Sanford C. Bernstein & Co. in New York. "I'm not so sure it was so good to be a Morgan Stanley shareholder."

The average ratio of compensation to revenue at securities firms this decade has been about 48 percent, Hintz said, calling Morgan Stanley's figure "pretty extraordinary." Chief Executive Officer John Mack, 64, is under pressure to increase pay after Goldman Sachs set aside a record $11.4 billion for salaries, benefits and bonuses in the first half and JPMorgan Chase & Co. boosted investment-bank compensation by 37 percent.

First-half compensation expenses at Morgan Stanley, the biggest U.S. brokerage, dropped 14 percent to $5.91 billion as revenue plunged 40 percent. (See table, below.) The firm reported a second-quarter loss from continuing operations of $159 million that was bigger than analysts estimated. Goldman Sachs last week posted record earnings of $3.44 billion.

"The war for talent seems to be as hot as ever, I'm not sure that's sustainable," Colm Kelleher, Morgan Stanley's chief financial officer, said in an interview today.

The number of employees rose to 62,215 at the end of June, which included 20,004 people from the company's new Morgan Stanley Smith Barney retail brokerage joint venture with Citigroup Inc.

Repaying TARP

Morgan Stanley last month repaid $10 billion to the U.S. government plus dividends to shake off restrictions on the size of bonuses it can award.

"If it's seen that Goldman's the place where you're going to get compensated, that's obviously going to lead to some type of a talent drain at some point," said Ben Wallace, an analyst at Grimes & Co. in Westborough, Massachusetts, which manages $750 million in assets. "Morgan Stanley's big challenge, whether it's compensation or risk or earnings outlooks, is going to be differentiating themselves from Goldman Sachs."

Last year Morgan Stanley slashed compensation costs by 26 percent, including a 50 percent average reduction in bonuses for all employees except for financial advisers, as the firm's revenue tumbled 12 percent. The firm also changed pay practices so it can recoup a portion of employees' cash bonuses if problems arise in subsequent years.

This year, as competition for workers increased, Morgan Stanley raised base salaries for top executives to make up for a decline in bonuses.

Six Months

In the second quarter, Morgan Stanley's compensation expense of $3.88 billion was 72 percent of the quarter's $5.41 billion of revenue. For the first six months of the year, the firm's $5.91 billion expense was 71 percent of the $8.36 billion of revenue.

Goldman Sachs's first-half expenses for pay were up 33 percent from a year earlier and was enough to give each worker at Goldman Sachs $386,429 for the period. Goldman set aside 49 percent of revenue in the first six months of the year for salaries, benefits and bonuses.

JPMorgan Chase & Co. set aside $6.01 billion in the first half for investment bank employees' compensation, up 37 percent from a year earlier, even as the number of people employed at the investment bank fell 30 percent. The division's compensation makes up 38 percent of the revenue it generated in the six-month period, down from 51 percent in the same period a year earlier.

Investment banks have traditionally awarded a large portion of employees' compensation in the form of year-end bonuses tied to the performance of the firm and the individual. The more senior an employee, the bigger percentage of their pay typically comes in the form of the year-end bonus. Payments are often made in restricted stock that can't be cashed out for several years.

The following table compares revenue, compensation and employee numbers at Morgan Stanley, Goldman Sachs and JPMorgan Chase's investment bank in the first half:

First-Half Revenue, Compensation and Head Count:

               Revenue       Comp       Employees Comp/Employee

Morgan Stanley $8.36 bln     $5.91 bln  62,215*   $95,009

Goldman Sachs  $23.2 bln     $11.4 bln  29,400    $386,429

JPMorgan
Investment
Bank           $15,672 bln   $6.01 bln  25,783    $232,983

*Includes 20,004 employees related to the Morgan Stanley Smith
Barney joint venture with Citigroup Inc.

Source: Company reports.

US Withheld Data on Risks of Distracted Driving

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Matt Richtel
July 21, 2009 - The New York Times

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In 2003, researchers at a federal agency proposed a long-term study of 10,000 drivers to assess the safety risk posed by cellphone use behind the wheel.

They sought the study based on evidence that such multitasking was a serious and growing threat on America's roadways.

But such an ambitious study never happened. And the researchers' agency, the National Highway Traffic Safety Administration, decided not to make public hundreds of pages of research and warnings about the use of phones by drivers - in part, officials say, because of concerns about angering Congress.

On Tuesday, the full body of research is being made public for the first time by two consumer advocacy groups, which filed a Freedom of Information Act lawsuit for the documents. The Center for Auto Safety and Public Citizen provided a copy to The New York Times, which is publishing the documents on its Web site.

In interviews, the officials who withheld the research offered their fullest explanation to date.

The former head of the highway safety agency said he was urged to withhold the research to avoid antagonizing members of Congress who had warned the agency to stick to its mission of gathering safety data but not to lobby states.

Critics say that rationale and the failure of the Transportation Department, which oversees the highway agency, to more vigorously pursue distracted driving has cost lives and allowed to blossom a culture of behind-the-wheel multitasking.

"We're looking at a problem that could be as bad as drunk driving, and the government has covered it up," said Clarence Ditlow, director of the Center for Auto Safety.

The group petitioned for the information after The Los Angeles Times wrote about the research last year. Mother Jones later published additional details.

The highway safety researchers estimated that cellphone use by drivers caused around 955 fatalities and 240,000 accidents over all in 2002.

The researchers also shelved a draft letter they had prepared for Transportation Secretary Norman Y. Mineta to send, warning states that hands-free laws might not solve the problem.

That letter said that hands-free headsets did not eliminate the serious accident risk. The reason: a cellphone conversation itself, not just holding the phone, takes drivers' focus off the road, studies showed.

The research mirrors other studies about the dangers of multitasking behind the wheel. Research shows that motorists talking on a phone are four times as likely to crash as other drivers, and are as likely to cause an accident as someone with a .08 blood alcohol content.

The three-person research team based the fatality and accident estimates on studies that quantified the risks of distracted driving, and an assumption that 6 percent of drivers were talking on the phone at a given time. That figure is roughly half what the Transportation Department assumes to be the case now.

More precise data does not exist because most police forces have not collected long-term data connecting cellphones to accidents. That is why the researchers called for the broader study with 10,000 or more drivers.

"We nevertheless have concluded that the use of cellphones while driving has contributed to an increasing number of crashes, injuries and fatalities," according to a "talking points" memo the researchers compiled in July 2003.

It added: "We therefore recommend that the drivers not use wireless communication devices, including text messaging systems, when driving, except in an emergency."

Dr. Jeffrey Runge, then the head of the highway safety agency, said he grudgingly decided not to publish the Mineta letter and policy recommendation because of larger political considerations.

At the time, Congress had warned the agency not to use its research to lobby states. Dr. Runge said transit officials told him he could jeopardize billions of dollars of its financing if Congress perceived the agency had crossed the line into lobbying.

The fate of the research was discussed during a high-level meeting at the transportation secretary's office. The meeting included Dr. Runge, several staff members with the highway safety agency and John Flaherty, Mr. Mineta's chief of staff.

Mr. Flaherty recalls that the group decided not to publish the research because the data was too inconclusive.

He recalled that Dr. Runge "indicated that the data was incomplete and there was going to be more research coming."

He recalled summing up his position as, the agency "should make a decision as to whether they wanted to wait for more data."

But Dr. Runge recalled feeling that the issue was dire and needed public attention. "I really wanted to send a letter to governors telling them not to give a pass to hands-free laws," said Dr. Runge, whose staff spent months preparing a binder of materials for their presentation.

His broader goal, he said, was to educate people about the dangers of distracted driving. "Based on the research, there was a possibility of this becoming a really big problem," he said.

But "my advisers upstairs said we should not poke a finger in the eye of the appropriations committee," he recalled.

He said Mr. Flaherty asked him, "Do we have enough evidence right now to not create enemies among all the stakeholders?"

Those stakeholders, Dr. Runge said, were the House Appropriations Committee and groups that might influence it, notably voters who multitask while driving and, to a much smaller degree, the cellphone industry.

Mr. Mineta, who left as transportation secretary in 2006, said he was unaware of the meeting.

"I don't think it ever got to my desk," he said of the research. Mr. Ditlow, from the Center for Auto Safety, said the officials' explanations for withholding the research raised concerns. He said the research did not constitute lobbying of states.

And he said it was consistent with the highway safety agency's research in other areas, like seat belts.

Mr. Ditlow said that putting fears of the House panel ahead of public safety was an abdication of the agency's responsibility.

"No public health and safety agency should allow its research to be suppressed for political reasons," he said. Doing so "will cause deaths and injuries on the highways."

State Senator Joe Simitian of California, who tried from 2001 to 2005 to pass a hands-free cellphone law over objections of the cellphone industry, said the unpublished research would have helped him convince his colleagues that cellphones cause serious - deadly - distraction.

"Years went by when lives could have been saved," said Mr. Simitian, who in 2006 finally pushed through a hands-free law that took effect last year.

The highway safety agency, rather than commissioning a study with 10,000 drivers, handled one involving 100 cars. That study, done with the Virginia Tech Transportation Institute, placed cameras inside cars to monitor drivers for more than a year.

It found that drivers using a hand-held device were at 1.3 times greater risk of a crash or near crash, and at three times the risk when dialing compared with other drivers.

Not all the research went unpublished. The safety agency put on its Web site an annotated bibliography of more than 150 scientific articles that showed how a cellphone conversation while driving taxes the brain's processing power, reducing reaction time. But the bibliography included only a list of the articles, not the one-page summaries of each one written by the researchers.

Chris Monk, who researched the bibliography for 18 months, said the exclusion of the summaries took the teeth out of the findings.

"It became almost laughable," Mr. Monk said. "What they wound up finally publishing was a stripped-out summary."

Mr. Monk and Mike Goodman, a division head at the safety agency who led the research project, theorize that the agency might have felt pressure from the cellphone industry. Mr. Goodman said the industry frequently checked in with him about the project and his progress. (He said the industry knew about the research because he had worked with it to gather some data).

But he could offer no proof of the industry's influence. Mr. Flaherty said he was not contacted or influenced by the industry.

The agency's current policy is that people should not use cellphones while driving. Rae Tyson, a spokesman for the agency, said it did not, and would not, publish the researchers' fatality estimates because they were not definitive enough.

He said the other research was compiled as background material for the agency, not for the public.

"There is no report to publish," he said.

TOON

Subprime Brokers Resurface as Dubious Loan Fixers

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Peter S. Goodman
July 20, 2009 - The New York Times

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LOS ANGELES - From the ninth floor of a downtown office building on Wilshire Boulevard, Jack Soussana delivered staggering numbers of mortgages to homeowners during the real estate boom, amassing a fortune.

By Mr. Soussana's own account, his customers fared less happily. He specialized in the exotic mortgages that have proved most prone to sliding into foreclosure, leaving many now scrambling to save their homes.

Yet the dangers assailing Mr. Soussana's clients have yielded fresh business for him: Late last year, he and his team - ensconced in the same office where they used to broker mortgages - began working for a loan modification company. For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California.

"We just changed the script and changed the product we were selling," said Mr. Soussana, who ran the Los Angeles sales office of Federal Loan Modification Law Center. The new script: You got a raw deal, and "Now, we're able to help you out because we understand your lender."

Mr. Soussana's partners at FedMod, as the company is known, were also products of the formerly lucrative world of high-risk lending. The managing partner, Nabile Anz, known as Bill, previously co-owned Mortgage Link, a California subprime lender, now defunct, that once sold $30 million worth of loans a month.

Jeffrey Broughton, one of FedMod's initial partners, served as director of business development at Pacific First Mortgage, a lender that extended so-called Alt-A mortgages for borrowers with tarnished credit for Countrywide Financial, which lost billions of dollars on bad mortgages before being rescued in an acquisition.

FedMod is but one example of how many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.

Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company.

The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees. The suit seeks an end to FedMod's practices, and compensation for customers.

"Our job was to get the money in and then we're done," said Paul Pejman, a former sales agent who worked out of FedMod's two-story headquarters in Irvine, Calif. He recounted his experience, he said, because "I really feel bad."

"I had people calling me crying, and we were telling them, 'You can pay me or you can lose your house,' " Mr. Pejman said. "People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification."

Mr. Anz, who is challenging the F.T.C. lawsuit, acknowledged that FedMod's business went "horribly wrong," but he maintains the company made genuine efforts to help delinquent borrowers. He said FedMod has refunded fees to 3,000 dissatisfied customers, while modifying 1,500 mortgages.

A New Mission

FedMod is among dozens of similar companies that have been accused by state and federal authorities of fraudulent business practices. On the same day in April that the F.T.C. sued FedMod, it brought action against four similar companies and sent letters of warning to 71 others. Last week, the commission brought lawsuits against four more loan modification companies, advancing an enforcement campaign involving 23 states.

Many of the companies formerly operated as mortgage brokers, The Times found. Since October, the California Department of Real Estate has ordered 210 businesses and individuals to stop offering loan modification or foreclosure prevention services, because they lacked a real estate license, as required by the state. In fact, nearly half the people have roots in the mortgage industry or other areas of real estate, according to public records.

Debt Barter Inc. is among them. A loan modification company based in Irvine that was cited by the state in January for collecting upfront fees without a license, it is owned by Sean R. Roberts, who formerly headed Instafi, a mortgage broker that closed $2 billion worth of loans a year at its peak. Since February, customers have filed 17 complaints against Debt Barter with the Better Business Bureau. Most accused the company of charging upfront fees, then failing to lower their payments.

"We can't please everyone all the time," said Mr. Roberts, who added that the company had modified loans for nearly 300 of its roughly 500 clients.

In Aliso Viejo, Calif., the Citywide Mortgage Corporation, which previously brokered Alt-A and subprime loans, last year became a loan modification company, USMAC. The company has not received a cease and desist order, but complaints on numerous consumer Web sites assert that it fails to deliver.

"I'm saving homes," said the company's president, Scott Gimbel, who claimed a success rate above 70 percent.

Chris Mozilo, nephew of Angelo R. Mozilo, the former chief executive of Countrywide Financial - a name synonymous with the subprime disaster - recently started a new business, eModifyMyLoan. It sells software that homeowners can use to apply for loan modifications.

Chris Mozilo worked at Countrywide for 16 years. "I'm very proud of my career in mortgage lending," he said. "We helped millions of people achieve the goal of homeownership."

From its inception in the middle of 2008, FedMod aimed to dominate the loan modification industry, growing swiftly with the aid of a national advertising campaign.

Mr. Broughton, 49, had worked in the mortgage industry since the mid-1980s. As the market ground to a halt in 2008, he founded FedMod with two Los Angeles entrepreneurs, Steven Oscherowitz and Boaz Minitzer.

Mr. Broughton sought to distinguish his company from the unscrupulous ventures that dominate the industry.

"You had a lot of these modification companies that were subprime guys," he said. "All they cared about was making quick dollars."

But the partners behind FedMod had their own questionable backgrounds. In the mid-1990s, Mr. Oscherowitz settled an F.T.C. lawsuit that accused his company, Universal Merchants, of falsely marketing the weight-loss benefits of a dietary supplement.

The partners entrusted Mr. Soussana with FedMod's Los Angeles sales office precisely because he had proved adept at selling the sorts of loans that now required modification. In 2006, Mr. Soussana, then 30, was listed as the nation's sixth most prolific mortgage broker by Mortgage Originator, a trade magazine, brokering $318 million worth of loans. The same year, he paid $1.8 million for a house near Beverly Hills.

"He was one of the biggest guys in subprime mortgages," Mr. Minitzer said. "He basically wanted to get back to his old days of 50, 60, 70 guys in his office, and we could help because we were basically taking over the market."

Bringing in the Law

The three original partners brought in Mr. Anz to gain a crucial asset: his law license. Having a lawyer in charge enabled them to market their venture as a law firm and thus collect upfront payments under California rules.

"Jeff asked me how I could, for lack of a better word, legitimize it," Mr. Anz said.

The California Department of Real Estate warns consumers that many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.

In its lawsuit against FedMod, the F.T.C. contends that the company's advertisements implied it had the backing of the federal government. "If you're like the millions of Americans out there who are struggling to pay a mortgage, you may be eligible for the Federal Loan Modification Program," radio ads beckoned.

Aggressive marketing ensured that Mr. Pejman, 22, never lacked for calls when he started at the Irvine sales office in January. He had worked at three wholesale mortgage brokerages. Now, a trainer emphasized he was at a law center.

"Our big sales pitch was that an attorney could do a better job with your loan modification," Mr. Pejman said. "If you told them these were basically washed-up people from the mortgage industry, or just people sending in paperwork, they would say, 'Well, why bother? I might as well do this myself.' "

He went on: "It was misleading to the client. Attorneys never touched those files."

Among the 700-plus full-time employees who worked for FedMod this spring, only nine were lawyers, Mr. Anz said, though the company retained a lawyer in every state.

Mr. Pejman and his fellow agents urged homeowners to send FedMod $3,495; the agents were promised a 30 percent commission for fees they took in. Most clients could not come up with more than $1,000 and agreed to a payment schedule for the rest. Assurances of relief from a homeowner's loan terms were typically extravagant, Mr. Pejman said.

"A big grabber was that your loan will be reduced to 2.5 percent to 5 percent on a 30-year fixed rate loan," he said. "They'd print out all these mythical success stories for us to read over the phone."

Under FedMod's policies, agents were prohibited from making false claims, counseling clients not to pay their mortgages or providing success rates, Mr. Anz said. New clients received follow-up compliance calls to ensure they understood nothing was guaranteed.

But sales agents were told of such policies with a wink, Mr. Pejman said.

"They basically told us, 'Do whatever you need to do,' " he said. " 'It's a sales floor. You're here to sell.' People would quote success rates and just pull them out of thin air. People would say 60 percent, 80 percent, 90 percent. To the average Joe in Kansas, that sounded great. But the reality is that 50 percent were immediately declined by the lender."

What shocked Mr. Pejman was how readily customers handed over their credit card numbers. Sales agents tapped into a deep vein of anxiety.

"I'd hear people say, 'Would you pay $1,000 to save your home? To save your marriage? Your kids' education?' " he recalled. "I'd hear people say, 'Yeah, we're the federal government.' There were a lot of corrupt people working there."

In Charlotte, N.C., Joshua Garland telephoned FedMod in March after seeing one of its television commercials. Mr. Garland's wife had been laid off from her hospital job. He had lost his job as a chef and was now bartending. Their monthly income had plunged from $3,200 to less than $1,000. They were already three months behind on their mortgage.

A FedMod agent confidently described how his company could cut their monthly payments from $1,200 to $532, Mr. Garland recalled. But first, he had to pay a $995 "retainer fee."

This was nearly as much as Mr. Garland earned in two weeks. Dental bills were piling up for his three children. He was behind on his utilities.

"I told him, 'We have $1,200 left to make our mortgage payment, and if we give that money to you, we're going to get further behind,' " Mr. Garland recalled. "He said, 'Go ahead and make the $995 payment, because once you're under our plan, the bank can't foreclose on you.' "

After several follow-up calls from the agent, Mr. Garland paid. Then, months passed with no contact from FedMod, he said. He left countless messages seeking updates, demanding a refund. His lender foreclosed on his house, scheduling a sale for Aug. 26.

"This guy hounds me for the $1,000, and then as soon as I pay him he disappears," Mr. Garland said. "I usually don't fall for stuff like this. I can usually tell if it's a scam. But this guy, I mean he came with his guns loaded."

Overwhelmed by Cases

FedMod was drowning in cases. The pipeline swelled by 8,000 clients from December to March, according to Mr. Anz.

Once sales agents took in applications, they passed files on to the processing department, where case managers were supposed to assemble documents and submit them to lenders. But their offices were hopelessly underequipped.

"The owners didn't want to invest in software, so everything was tracked manually," said Rachelle Cochems, who took over as operations manager on Jan. 19 and left the company in May after FedMod stopped paying her. "We couldn't handle the volume we were taking in. The system was broken."

Each case manager was responsible for as many as 200 files at a time, Ms. Cochems said, making it impossible to keep in regular touch with customers. Some files floated in limbo, because sales agent did not bother handing them over.

"You're paying the sales agent upfront," Ms. Cochems said. "So what motivation does he have to get it closed?"

In February, Mr. Anz shut the Los Angeles sales office, uncomfortable with reports that Mr. Soussana had filled it with "unsavory types" from the mortgage industry, he said.

"I'm not a shady person," Mr. Soussana said.

By March, sales agents were inundated by calls from furious clients who had paid long ago, but not heard from anyone. Some called from motels, their belongings piled in boxes, weeping as they recounted losing their homes.

The agents let most calls go to voicemail, playing the most dramatic messages over speakerphones for communal amusement, Mr. Pejman said.

"Guys would sit there and laugh," he said. " 'This lady's going crazy,' that sort of thing."

The next month, Mr. Anz took full control of the company, banishing his partners and blaming them for "a train wreck." He ceased marketing, he said, and concentrated on processing the backlog of files.

In April, the F.T.C. filed its lawsuit, prompting credit card companies to freeze their accounts with FedMod. The court imposed a temporary restraining order, barring FedMod from acquiring new customers.

By the time Rana Hajjar began working there on April 13 as a client representative, she found the company utterly chaotic.

"They just handed me 70 files and told me to call these people because they're very upset," Ms. Hajjar recalled. "The majority of them had paid three or four months earlier and had never heard from anyone. I was yelled at from today until tomorrow."

Several times a week, clients called to report that the police were at their door, ordering them out for foreclosure sales, Ms. Hajjar said. When she alerted negotiators, they sometimes called banks and postponed sales, but usually they ignored her messages, she said.

When Ms. Hajjar cashed her first paycheck, it bounced, she said. Over the next three weeks, she never received payment. On Monday, May 11, her manager told her and dozens of other employees to take the rest of the week off because the company had no money for payroll.

She was never called back, later adding her name to a file of more than 120 wage disputes leveled against FedMod with the California Labor Commissioner.

Today, FedMod has only 40 employees, said Mr. Anz, pledging to plow through the company's 4,200 remaining files.

"We're doing what we can," he said. "I'm the bad boy of loan mods."

Yet as television advertisements attest, many other companies remain aggressive in what amounts to perhaps the last growth industry left in American real estate.

Seance on Wall Street

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Financial analysts predicting a default on US government debt need a new crystal ball. The market tells a different story

Dean Baker
July 21, 2009 - The Guardian/UK

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There is a long history of mediums who claim to communicate with the dead. They sell their services to people anxious to talk to relatives or great figures of the past. Such exercises can be dismissed as harmless entertainment – people spend a few dollars to be treated to tall tales.

There is a Wall Street equivalent to these seances. People who claim to be knowledgeable about financial markets tell policy makers and reporters what the financial markets are thinking about current policy. These Wall Street seers claim to interpret events in financial markets for those of use who are less familiar with the mysteries of market movements.

In recent weeks, the Wall Street seers have been spinning stories about how the financial markets are very worried over the US budget deficit. They have told us that the markets are concerned about the government's ability to repay its debt. The seers tell us that the markets may soon demand much higher interest rates, if the government does not get its deficit under control.

The seers tell us that the government must take steps to rein in the budget deficits projected for the future by cutting back Medicare and Social Security. They also warn us about the risks of adding to the deficit with healthcare reform. And, the seers tell us that we certainly should not try to tackle the problem of 25 million unemployed or underemployed workers with another big round of stimulus. That would make the financial markets very angry.

Those of us who were not born with the gift of being able to communicate with financial markets cannot directly evaluate the information that the financial markets are passing on to the Wall Street seers. However, we can easily determine the risk that investors assign to holding long-term US government debt. This requires looking at interest rates.

Interest rates appear to be directly contradicting the seers' assertions about financial markets. The interest rate on 10-year Treasury bonds is currently near 3.5%. The interest rate is not determined by people rattling off their visions about future debt defaults. It is determined by investors putting their money on the line.

These investors are willing to hold hundreds of billions of dollars in long-term government debt at a return of just 3.5%. By contrast, they demanded a return of more than 5% in 2000, back when the US government was running a large budget surplus. If there is widespread fear in financial markets of a default on government debt, it is difficult to understand why investors would be willing to hold it at such a low rate of return. Usually investors demand high returns for holding risky assets.

In addition to interest rates, we could evaluate the seers' assessment by trying to carry through other implications of the bad news debt default scenario. Presumably, the stock market would be headed downwards with the financial sector stocks leading the way. After all, a default on US government debt would be cataclysmic for the US economy and especially for the banks who hold trillions of dollars in government debt or government-backed debt.

Here also the news doesn't seem to fit the seers' vision. The markets have been rallying lately, and many financial stocks are doing quite well.

One piece of evidence that these seers have occasionally used to support their case is the fact that the price of credit default swaps on US debt has risen. Credit default swaps (CDS) are in effect insurance against default. If the price of this insurance rises, then presumably the markets judge default to be a more likely event. That is the reason that people in their 60s pay more for life insurance than people in their 20s.

There is one problem with this story. The payoff of a CDS depends not only on the default but also, as those who did business with AIG know, on the ability of the counter-party to pay. What is the likelihood that JP Morgan, Goldman Sachs or anyone else will be left standing in a world where the US government has defaulted on its debt? It's not clear what the price of CDS issued on US government bonds means, but it is not a straightforward assessment of the probability of default on the government's debt.

It should not be surprising that the vision of the Wall Street seers seem to be far from reality. After all, their crystal balls could not see the $8tn housing bubble, the collapse of which has wrecked the economy.

In fact, the self-proclaimed seers are using their visions to try to discourage the public from supporting policies that the seers don't like. These people want to see cutbacks in Social Security, Medicare and other social programmes. They are more concerned that higher deficits could mean higher taxes on the wealthy at some point in the future than they are about the tens of millions of unemployed or under-employed today.

In short, those who want fantastic stories about the unknowable would be much better off visiting the people who promise to communicate with the dead than listening to the Wall Street spokespeople. They will learn more and be associating with people of greater integrity.

.....

Dean Baker is the co-director of the Center for Economic and Policy Research. He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

Common sense prevails

Heeding Obama's veto threat – and common sense – the Senate has voted to strip $1.75 billion from a $679.8 billion military spending bill that would have funded more F-22s – so-called fighter planes that cost $44,000 an hour, need 30 hours of maintenance for every hour in the air, and can't fly in the rain. Still, gung-ho right-wingers promptly proclaimed, "America is less safe now than it was an hour ago." Only $679.8 billion to go.

"If we can't get this right, what on earth can we get right?" Defense Secretary Robert Gates last week.

- Common Dreams

The Great Tax Con Job

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Thom Hartmann
July 21, 2009 - Smirking Chimp

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Republicans are using the T-word - taxes - to attack the Obama healthcare program. It's a strategy based in a lie.

A very small niche of America's uber-wealthy have pulled off what may well be the biggest con job in the history of our republic, and they did it in a startlingly brief 30 or so years. True, they spent over three billion dollars to make it happen, but the reward to them was in the hundreds of billions - and will continue to be.

As my friend and colleague Cenk Uygur of The Young Turks pointed out in a Daily Kos blog recently, billionaire Rupert Murdoch loses $50 million a year on the NY Post, billionaire Richard Mellon Scaife loses $2 to $3 million a year on the Pittsburgh Tribune-Review, billionaire Philip Anschutz loses around $5 million a year on The Weekly Standard, and billionaire Sun Myung Moon has lost $2 to $3 billion on The Washington Times.

Why are these guys willing to lose so much money funding "conservative" media? Why do they bulk-buy every right-wing book that comes out to throw it to the top of the NY Times Bestseller list and then give away the copies to "subscribers" to their websites and publications? Why do they fund to the tune of hundreds of millions of dollars a year money-hole "think tanks" like Heritage and Cato?

The answer is pretty straightforward. They do it because it buys them respectability, and gets their con job out there. Even though William Kristol's publication is a money-losing joke (with only 85,000 subscribers!), his association with the Standard was enough to get him on TV talk shows whenever he wants, and a column with The New York Times. The Washington Times catapulted Tony Blankley to stardom.

"Fellowships" and other forms of indirect sponsorship of right-wing talk show hosts have made otherwise-marginal shows and their hosts ubiquitous, and such sponsorships of groups like Norquist's anti-tax "Americans for Tax Reform" regularly get people like him front-and-center in any debate on taxation in the United States.

All so they could run a tax con on the American people, thus keeping Moon and Murdoch and Scaife and Anschutz (and others) richer than you or I could ever even imagine.

All of this money was spent - invested, really, since it's been more than saved back in low income tax rates on millionaires and billionaires - to convince Americans that up is down and black is white when it comes to income taxes. Here's how it works:

Rich Person's Tax Effect

If a person earns so much money that he doesn't or can't spend it all each year, then when his taxes go down your income after taxes goes up. This is largely because there's little to no relationship between what he "needs to live on" and what he's "earning."

Somebody living on a million dollars a year but earning five million after taxes, can sock away four million in a Swiss bank. If his taxes go up enough to drop his after-tax income to only three million a year, he's still living on a million a year, and only socks away two million in the Swiss bank. His "disposable" income goes down when his taxes go up, and vice-versa. (Technically, the word is "discretionary" income for after-tax, after-living-expenses income, but "disposable" income has become so widely used as a phrase to describe discretionary income I'll use it here.)

The Rich Person's Tax Effect is the one that virtually all Americans understand - and, oddly, most working class people think applies to them, too (this is the truly amazing part of the con job referred to earlier).

But it doesn't.

Working Person's Tax Effect - version one

Most working people spend pretty much all of what they earn - their "disposable/discretionary" income is close to zero. Savings rates in the US among working people typically are small - one to five percent - and during the last few years of the W. Bush administration actually went negative. So the take-home pay that people have after taxes - regardless of what the taxes may be - is pretty much what they live on.

As economist David Ricardo pointed out in 1817 in the "On Wages" chapter of his book "On the Principles of Political Economy and Taxation," take home pay is also generally "what a person will work for." Employers know this: Ricardo's "Iron Law of Wages" is rooted in the notion that there is a "market" for labor, driven in part by supply and demand. So if a worker is earning, for example, a gross salary of $75,000, his 2008 federal income tax would be about $15,000 ($802.50 on first $8,025 of income; $3,687.75 on income from $8,025 to $32,550; $10,612.50 on income from $32,550 to $75,000), leaving him a take-home pay of $60,000.

Both he and his employer know that he'll do the job he's doing for around $60,000 a year in take-home pay.

So what happens if his taxes go up, cutting his take-home pay to $55,000 a year (even though his gross is still $75,000)? Over time (typically one to three years) his wages will rise enough to compensate for the lost income.

Alan Greenspan used to be hysterical about this effect - he called it "wage inflation" - and The Wall Street Journal and other publications would often reference it, although the average working person has no idea that if his taxes go up, his wages will eventually go up. Similarly, when working-class people's taxes go down, their gross wages will, over time, go down so their inflation-adjusted take-home pay remains the same. We've seen both happen over the past eighty years, over and over again.

When I was in Denmark last year doing my radio show from the Danish Radio offices for a week and interviewing many of that nation's leading politicians, economists, energy experts, and newspaper publishers, one of my guests made a comment that dropped the scales from my own eyes.

We'd been discussing taxes on the air, what the Danes get for their average 52% tax rate (free college education, free health care, 4 weeks of vacation, being the world's "happiest" country according to research reported on CBS's "60 Minutes" TV show, etc.). I asked him why people didn't revolt at such high tax rates, and he smiled and just pointed out to me that the average Dane is very well paid with a minimum wage that equals about $18 US (depending on the exchange rate from day to day).

Off the air, he made the comment to me that was so enlightening. "You Americans are such suckers," he said, as I recall. "You think that the rules for taxes that apply to rich people also apply to working people. But they don't. When working peoples' taxes go up, their pay goes up. When their taxes go down, their pay goes down. It may take a year or two or three to all even out, but it always works this way - look at any country in Europe. And it's the opposite of how it works for rich people!"

Working Person's Tax Effect - Version Two

The other point about taxes - which Obama leveraged with his "no tax increases on people earning under $250,000 a year" pledge - has to do with the fact that our tax structure in the US is progressive.

Here's how it breaks out for a single person from the 2008 federal tax tables:

10% on income between $0 and $8,02515% on the income between $8,025 and $32,550;25% on the income between $32,550 and $78,850;28% on the income between $78,850 and $164,550;33% on the income between $164,550 and $357,700;35% on the income over $357,700.

Note that our $75,000/year worker has two full tax brackets above him, which, if they go up, will not affect him at all. (This is also true, of course, for the median-wage and average-wage American workers who earn in the low to mid-$40,000/year range.)

The top tax rate that a person pays is referred to as their "marginal tax rate" (in our worker's case 28%). So what happens if the top marginal tax rate on people making over $357,700 goes up from its current 35% to, for example, the Eisenhower-era 91%?

For over 120 million American workers who don't earn over $357,700/year, it won't mean a thing. But for the tiny handful of millionaires and billionaires who have promoted The Great Tax Con, it will bite hard. And that's why they spend millions to make average working people freak out about increases in the top tax rates.

Income taxes as the "Great Stabilizer"

Beyond fairness and holding back the Landed Gentry the Founders worried about (America had no billionaires in today's money until after the Civil War, with John D. Rockefeller being our first), there's an important reason to increase to top marginal tax rate, and to do so now.

Novelist Larry Beinhart was the first to bring this to my attention. He looked over the history of tax cuts and economic bubbles, and found a clear relationship between the two. High top marginal tax rates (generally well above 60%) on rich people actually stabilize the economy, prevent economic bubbles from forming, prevent economic crashes, and lead to steady and sustained economic growth (and steady and sustained wage growth for working people).

On the other hand, when top marginal rates drop below 50 percent, the opposite happens. As Beinhart noted in a November 17, 2008 post on the Huffington Post, the massive Republican tax cuts of the 1920s (from 73% to 25%) led directly to the Roaring '20s stock market bubble, temporary boom, and then the crash and Republican Great Depression of 1929.

Rates on the very rich went back up into the 70-90% range from the 1930s to the 1980s. As a result, the economy grew steadily; for the first time in the history of our nation we went 50 years without a crash or major bank failure; and working people's wages increased enough to produce the strongest middle class this nation has ever seen.

Then came Reaganomics.

Reagan cut top marginal rates on millionaires and billionaires from 74% down to 38% and there was an immediate surge in the markets - followed by the worst crash since the Great Depression and the failure of virtually the entire nation's savings and loan banking system.

Bush I cut taxes, and the nation fell into a severe recession while debt soared and wages for working people fell.

Things stabilized somewhat when Clinton slightly raised taxes on the very rich, but W. Bush dropped them again - including taking taxes on unearned income (interest and dividends - the "income" that people like W. born with a trust fund "earn" as they sit around the pool waiting for the dividend check to arrive in the mail) down to a top rate of 15%. (That's right - trust fund babies like Bush and Scaife pay a MAXIMUM 15% federal income tax on their dividend and interest income, thanks to the second Bush tax cut.) The result of this surge in easy money for the wealthy, combined with deregulation in the financial markets, was the "froth" Greenspan worried about and led us straight into the Second Republican Great Depression, ongoing today.

The math is really pretty simple. When the uber-rich are heavily taxed, economies prosper and wages for working people steadily rise. When taxes are cut for the rich, working people suffer and economies turn into casinos.

Roll Back The Reagan Tax Cuts

While there's much discussion about letting the Bush tax cuts expire, if we really want our country to recover its financial footing we must do something altogether different. We need to roll back the Reagan tax cuts that took the top marginal rate from above 70% down into the 30% range.

First, though, we have to help Americans realize that "no new taxes" is a mantra that is meaningful to the very rich, but largely irrelevant to average working people.

Only when the current generation re-learns the economic and tax lessons well known by the generation (now dying off) that came of age in the 30s through the 60s, will this become politically possible. Americans need to learn what Europeans know about taxes - they only matter to the rich.

Thus today the uber-rich are spending hundreds of millions to make sure words like "burden" are always associated with the word "tax," and to convince average working people that they should throw out of office any politicians who are willing to raise taxes on the rich.

We have a lot of education to do...and as long as the Right Wing Machine of the uber-rich continues to "lose" (e.g. "invest") millions of dollars a year in their ongoing disinformation campaign, it's going to require all of us reciting the mantra, "Roll back the Reagan tax cuts!"

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Thom Hartmann is a Project Censored Award-winning best-selling author, and host of a nationally syndicated daily progressive talk show carried on the Air America Radio network and Sirius. www.thomhartmann.com His most recent book, just released, is "Screwed: The Undeclared War on the Middle Class and What We Can Do About It." Other books include: "The Last Hours of Ancient Sunlight," "Unequal Protection," "We The People," and "What Would Jefferson Do?"

Zen Moment of the Day

Cambridge police responding to a call about "two black males" breaking into a home ended up arresting the man who lives there – Harvard professor Henry Louis Gates Jr., probably the country's pre-eminent African-American scholar. The 58-year-old director of Harvard's W.E.B. Du Bois Institute forced his own door open after finding it jammed; he was handcuffed and arrested on a disorderly conduct charge by police who said they were investigating a break-in.

"Why? Because I'm a black man in America?" Gates responded.

- Common Dreams

The Man in the Mirror

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Chris Hedges
July 13, 2009 - TruthDig.com

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In celebrity culture we destroy what we worship. The commercial exploitation of Michael Jackson's death was orchestrated by the corporate forces that rendered Jackson insane. Jackson, robbed of his childhood and surrounded by vultures that preyed on his fears and weaknesses, was so consumed by self-loathing he carved his African-American face into an ever changing Caucasian death mask and hid his apparent pedophilia behind a Peter Pan illusion of eternal childhood. He could not disentangle his public and his private self. He became a commodity, a product, one to be sold, used and manipulated. He was infected by the moral nihilism and personal disintegration that are at the core of our corporate culture. And his fantasies of eternal youth, delusions of majesty, and desperate, disfiguring quests for physical transformation were expressions of our own yearning. He was a reflection of us in the extreme.

His memorial service—a variety show with a coffin—had an estimated 31.1 million television viewers. The ceremony, which featured performances or tributes from Stevie Wonder, Brooke Shields and other celebrities, was carried live on 19 networks, including the major broadcast and cable news outlets. It was the final episode of the long-running Michael Jackson series. And it concluded with Jackson's daughter, Paris, being prodded to stand in front of a microphone to speak about her father. Janet Jackson, before the girl could get a few words out, told Paris to "speak up." As the child broke down, the adults around her adjusted the microphone so we could hear the sobs. The crowd clapped. It was a haunting echo of what destroyed her father.

The stories we like best are "real life" stories—early fame, wild success and then a long, bizarre and macabre emotional train wreck. O.J Simpson offered a tamer version of the same plot. So does Britney Spears. Jackson, by the end, was heavily in debt and had weathered a $22 million out-of-court settlement payment to Jordy Chandler, as well as seven counts of child sexual abuse and two counts of administering an intoxicating agent in order to commit a felony. We fed on his physical and psychological disintegration, especially since many Americans are struggling with their own descent into overwhelming debt, loss of status and personal disintegration.

The lurid drama of Jackson's personal life meshed perfectly with the ongoing dramas on television, in movies and in the news. News thrives on "real life" stories, especially those involving celebrities. News reports on television are mini-dramas complete with a star, a villain, a supporting cast, a good-looking host and a dramatic, if often unexpected, ending. The public greedily consumed "news" about Jackson, especially in his exile and decline, which often outdid most works of fiction. In "Fahrenheit 451," Ray Bradbury's novel about a future dystopia, people spend most of the day watching giant television screens that show endless scenes of police chases and criminal apprehensions. Life, Bradbury understood, once it was packaged, scripted, given a narrative and filmed, became the most compelling form of entertainment. And Jackson was a great show. He deserved a great finale.

Those who created Jackson's public persona and turned him into a piece of property, first as a child and finally as a corpse encased in a $15,000 gold-plated casket, are the agents, publicists, marketing people, promoters, script writers, television and movie producers, advertisers, video technicians, photographers, bodyguards, recording executives, wardrobe consultants, fitness trainers, pollsters, public announcers and television news personalities who create the vast stage of celebrity for profit. They are the puppet masters. No one achieves celebrity status, no cultural illusion is swallowed as reality, without these armies of cultural enablers and intermediaries. The producers at the Staples Center in Los Angeles made sure the 18,000 attendees and the television audience (even the BBC devoted three hours to the tribute) watched a funeral that was turned into another maudlin form of uplifting popular entertainment.

The memorial service for Jackson was a celebration of celebrity. There was the queasy sight of groups of children, including his own, singing over the coffin. Magic Johnson put in a plug for Kentucky Fried Chicken. Shields, fighting back tears, recalled how she and a 33-year-old Jackson—who always maintained that he was straight—broke into Elizabeth Taylor's room the night before her last wedding to "get the first peek of the [wedding] dress." Shields and Jackson, at Taylor's wedding, then joked that they were "the mother and father of the bride." "Yes, it may have seemed very odd to the outside," Shields said, "but we made it fun and we made it real." There were photo montages in which a shot of Jackson shaking hands with Nelson Mandela was immediately followed by one of him with Kermit the Frog. Fame reduces all of the famous to the same level. Fame is its own denominator. And every anecdote seemed to confirm that when you spend
your life as a celebrity you have no idea who you are.

We measure our lives by these celebrities. We seek to be like them. We emulate their look and behavior. We escape the messiness of real life through the fantasy of their stardom. We, too, long to attract admiring audiences for our grand, ongoing life movie. We try to see ourselves moving through our lives as a camera would see us, mindful of how we hold ourselves, how we dress, what we say. We invent movies that play inside our heads with us as stars. We wonder how an audience would react. Celebrity culture has taught us, almost unconsciously, to generate interior personal screenplays. We have learned ways of speaking and thinking that grossly disfigure the way we relate to the world and those around us. Neal Gabler, who has written wisely about this, argues that celebrity culture is not a convergence of consumer culture and religion so much as a hostile takeover of religion by consumer culture. 

Jackson desperately feared growing old. He believed he could control race and gender. He transformed himself through surgery and perhaps female hormones from a brown-skinned African-American male to a chalk-faced androgynous ghoul with no clear sexual identity. And while he pushed these boundaries to the extreme, he did only what many Americans do. There were 12 million cosmetic plastic surgery procedures performed last year in the United States. They were performed because, in America, most human beings, rich and poor, famous and obscure, have been conditioned to view themselves as marketable commodities. They are objects, like consumer products. They have no intrinsic value. They must look fabulous and live on fabulous sets. They must remain young. They must achieve notoriety and money, or the illusion of it, to be a success. And it does not matter how they get there.

The moral nihilism of our culture licenses a dark voyeurism into other people's humiliation, pain, weakness and betrayal. Education, building community, honesty, transparency and sharing are qualities that will see you, in a gross perversion of democracy and morality, ridiculed and voted off any reality show. Fellow competitors for prize money and a chance for fleeting fame elect to "disappear" the unwanted. In the final credits of the reality show "America's Next Top Model," a picture of the woman expelled during the episode vanishes from the group portrait on the screen. Those cast aside become, at least to the television audience, nonpersons. Celebrities who can no longer generate publicity, good or bad, vanish. Life, these shows teach, is a brutal world of unadulterated competition and constant quest for notoriety and attention. And life is about the personal humiliation of those who oppose us. Those who win are the best. Those who lose
deserve to be erased. Those who fail, those who are ugly or poor, are belittled and mocked. Human beings are used, betrayed and discarded in a commodity culture, which is pretty much the story of Jackson's life, although he experienced the equivalent of celebrity resurrection. This has been very good for his music sales and perhaps for his father's new recording company, which Joe Jackson made sure to plug at public events after his son's death. Compassion, competence, intelligence and solidarity are useless assets when human beings are commodities. Those who do not achieve celebrity status, who do not win the prize money or make millions in Wall Street firms, deserve their fate.

The cult of self, which Jackson embodied, dominates our culture. This cult shares within it the classic traits of psychopaths: superficial charm, grandiosity and self-importance; a need for constant stimulation, a penchant for lying, deception and manipulation; and the incapacity for remorse or guilt. Jackson, from his phony marriages to his questionable relationships with young boys, had all these qualities. This is also the ethic promoted by corporations. It is the ethic of unfettered capitalism. It is the misguided belief that personal style and personal advancement, mistaken for individualism, are the same as democratic equality.  It is the celebration of image over substance. 

We have a right, in the cult of the self, to get whatever we desire. We can do anything, even belittle and destroy those around us, including our friends, to make money, to be happy and to become famous. Once fame and wealth are achieved, they become their own justification, their own morality. How one gets there is irrelevant. It is this perverted ethic that gave us Wall Street banks and investment houses that willfully trashed the nation's economy, stole money from tens of millions of small shareholders who had bought stocks to finance their retirement or the college expenses of their children. The heads of these corporations, like the winners on a reality television program who lied and manipulated others to succeed, walked away with hundreds of millions of dollars in compensation and bonuses. The ethic of Wall Street is the ethic of celebrity.

The saturation coverage of Jackson's death is an example of our collective flight into illusion. The obsession with the trivia of his life conceals the despair, meaninglessness and emptiness of our own lives. It deflects the moral questions arising from mounting social injustice, growing inequalities, costly imperial wars, economic collapse and political corruption. The wild pursuit of status, wealth and fame has destroyed our souls, as it destroyed Jackson, and it has destroyed our economy.

The fame of celebrities masks the identities of those who possess true power—corporations and the oligarchic elite. And as we sink into an economic and political morass, as we barrel toward a crisis that will create more misery than the Great Depression, we are controlled, manipulated and distracted by the celluloid shadows on the wall of Plato's cave. The fantasy of celebrity culture is not designed simply to entertain. It is designed to drain us emotionally, confuse us about our identity, make us blame ourselves for our predicament, condition us to chase illusions of fame and happiness and keep us from fighting back. And in the end, that is all the Jackson coverage was really about, another tawdry and tasteless spectacle to divert a dying culture from the howling wolf at the gate.

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Chris Hedges writes a regular column for Truthdig.com. Hedges graduated from Harvard Divinity School and was for nearly two decades a foreign correspondent for The New York Times. He is the author of many books, including: War Is A Force That Gives Us Meaning, What Every Person Should Know About War, and American Fascists: The Christian Right and the War on America.  His most recent book, Empire of Illusion: The End of Literacy and the Triumph of Spectacle, will be out in July.

America's White Underclass: When seeing ain't believing, somebody's blind

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Joe Bageant
July 19, 2009 - joebageant.com

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"White underclass" is a term I've used often in my writing, and most American readers seem to know what I mean. They've got eyes and live in the same nation I do. But in a sudden burst of journalistic responsibility, I decided that if I am going to throw around the word underclass, then I should offer some clearer, perhaps more scientific definition.

So I started writing this with a pile of published research papers before me. Now they are in the trash can by my side. Looking down on them, I can see the gobbledygook titles, the stuff of which government policy and political platforms are made. They run together in slurry of the language of our society's commissars: Concerning-Prevalence-Growth-and-Dynamics-Concentrated Urban Poverty Areas- block-level vs. tract-level segregation-800-tract-tables-urban abstracts-Defining-and-Measuring-the-Underclass-from-The Journal of Policy Analysis and Management-statistical-summary-of ...

What I find is that nobody in social science seems to agree on the term, or, being firmly placed in the true white middle class themselves, even agree if such a thing as a white underclass exists. You can't smell the rabble from the putting green. To others, some blacks for example, the term white underclass is an oxymoron, or maybe yet another new white social code word to be deciphered. I can't blame them for their wariness. You have to be an American to get even these code words. For instance, for all practical purposes and to most Americans, regardless of race, the term "middle class" means "white." Plain and simple. We all know that, even members of the "black middle class."

Middle class also has implications of people's occupations, usually white collar occupations, though it also includes some of the ever thinning ranks of blue-collar workers. But this comes down to describing human beings solely in terms of their jobs in the capitalist labor marketplace, and assumptions about income and whether one takes their daily shower before they go to work or after they come home. By that definition, anyone of working age who doesn't have a steady job of the right type, for whatever reason, is in some sort of "economic underclass." In other words, they are the people that middle class folks feel should damned well be working, if they are over age 18 and have a pulse. ("If I gotta do time in this meaningless workhouse of a nation, you do too!") This underclass includes any people of color seen on the street at midday during the week, single mothers, and paraplegics too, now that the middle class is paying taxes for handicap parking
spaces and wheelchair access to the public shitters.

Another way we define underclass is as "losers." People who cannot talk, think, or act like middle class professional and managerial workers, people who cannot even be posers. There is absolutely no excuse for these people. We've got television 24/7 to show 'em how to behave. They could learn to act like the blue collar workers we see on the endless reruns of The King of Queens (an American sitcom about a parcel service delivery truck driver.). They could at least be funny and amiable fer godz sake.

From reading the studies, I can see that social scientists dislike plural nouns, and thus shun the word losers. So they call this the "educational underclass." Either way, it comes down to folks too wooly and uncurried for office water cooler society. Nobody is denying that they all should have jobs, of course, just nowhere near the water cooler.

Yes, eight to eighty, crippled blind or crazy, Americans generally agree that every man or woman in America should have a full time job, except those women who manage to snag a wealthy man. They are exempt, as are the middle class commissariat's own beer guzzling spawn keeping the pizza delivery and the all-night video arcade businesses thriving in college towns across the republic.

Then you've got your moral underclass. Like the rest of us, they come in two major varieties -- male and female. Females who don't bother to get married before they have babies (the non-technical term is "welfare sluts"), and men who have things more serious on their national police state blotters than a parking ticket. "Non-mainstreamers," in socio-demographic speak. Many of these are men who say, "Screw it, I ain't gonna even bother to work my ass off and be treated like dirt for six bucks an hour. I'd rather shoot pool." Me too.

The unwed mothers come in two varieties. There are those who decide they want children, but are choosy about the husband that traditionally comes with the deal. And there are those who are so young and naive due to cultural circumstance and environment they do not know what this country does to, not for, single mothers. They often find themselves working at least part time (workfare), yet permanently institutionalized into poverty by our social services industry, instead of being lifted out of it. More than 45 percent of U.S. single mothers are poor, compared to five percent in Sweden and Finland, where no stigma is attached and substantial public resources are applied to child health and development. But research done in Europe shows that even if U.S. women had a zero rate of single motherhood, poverty among American women would still be higher than in European and other socially advanced nations.

Armchair sociologist that I am, I have a theory about this: Millions of American women are in poverty because they are paid poverty wages. I could be wrong, I often am, but there seems to be a connection between poverty and money. I started developing this theory last year when I was in a Melbourne, Australia hotel and learned from a single mother hotel housekeeper there that she made $19 an hour, had government assisted childcare and was going to college at night toward becoming a medical technician. Hmmm... Over here we tell single mothers, "Get a six dollar an hour job or get married bitch! Workfare, baby, workfare." Then too, contrary to the American middle class belief system, out-of-wedlock babies are increasing at all levels of white American society. Even more contrary to popularly held notions, as many of these children turn out to be as well adjusted people as do children of the middle class. But for damned sure poorer in most cases.

And finally we have simple snottiness as a line of underclass demarcation -- one's manner of physical gesture or accent. Believe me from personal experience, a Southern accent in America is no ticket to the top. But even with a Southern accent, if you talk like a college grad, don't wear bib overhauls or gang banger gear, and appear to know where South America is on a map, Americans will deem you middle class. Actually, if you smile a lot, and sound like any sort of white customer service type, it will fly. It's called having the appropriate social and cultural skill set. Yeah, right, appropriate to be hired as a telemarketer so you can piss people off by interrupting their dinner hour.

But even if you gather aluminum cans from dumpsters for a living, with effort, you can "pass" like light skinned black folks used to do in this country. As testimony to this, I, who am a high school dropout with a Southern accent, have successfully managed entire magazine publishing groups for a living. (The secret is balls.) If I'd been black or Hispanic though, I'd have been distributing the urinal cakes in the rest rooms at night. So yes, there is a slight edge to whiteness, though not nearly as much as minorities assume. Still, you gotta make the most of that little edge.

In the end, race, gender or sexual preference are just moving parts of the class machine, with middle class perceptions setting the standard. You can indeed be black or queer, but with the properly buffed patina of white middle class mojo you can make it to the top, or near to the top of the heap (in America, proximity to the top of our cultural garbage heap is everything). All the rest of us are mere consumer refuse, as the Michael Jackson Morbidity Festival demonstrated. You can even be celebrated as an icon of diversity if you act white and middle class enough. Obama is Harvard white guy enough, Ellen DeGeneres is going strong ten years after coming out, gay Congressman Barney Franks still gets reelected. They've all got white middle class mojo. Al Sharpton on the other hand, has cootie mojo. (Tip for Al: They need golf cart drivers at the Congressional Country Club. A year of that and you'd know all you need to know about the white mojo shtick.
Because you can watch Obama play golf there).

When it comes to the underclass, there is no arguing that some people are members because they are so damned uneducated they cannot count their toes or read well enough to fill out a job app, the causes of which are too deep and tangled to go into at the moment. Others just don't care to do the smiling grammatically correct wimp assed customer service zombie thing. They prefer swinging a bigger hammer than that -- doing real work, like America used to do. And doing it without kissing ass, which is why they are called the "permanently jobless." As sociologist Christopher Jencks points out, "There is no absolute standard dictating what people need to know in order to get along in society. There is however, an absolute rule that you get along better if you know what the elite knows than if you do not." He also cautions that "the term underclass combines so many different meanings that social scientists must use it with extreme care."

Which is fine. But I'm no social scientist. If in my travels and experience in American life I see that tens of millions of Americans being screwed silly by a handful of chiselers at the top, or if I see one percent of Americans earning as much annually as the bottom 45 percent of Americans, then that 45 percent is an underclass. When I see a 70-year-old man on his second pacemaker limping through Wal-Mart as a "greeter" so he can pay at least something on last winter's heating bill this month, then he is part of an underclass. When I see the humiliated single mom waitress tugging downward on the ridiculously short red plastic skirt she must wear at the Hooter's type joint so her crotch won't show, she's part of an underclass of humiliated and socially oppressed people. Screw the hairsplitting about who qualifies as underclass and what color they are. Just fix it. Or reap the consequences.

We're finally starting to hear a little discussion about the white underclass in this country. Mainly because so many middle class folks are terrified of falling into it. Frankly, I hope they do. We've got room for them. All the lousy, humiliating jobs have not yet been outsourced. The Devil still has plenty for them to do down here.

Call all of this anecdotal evidence. You won't be the first. I was on a National Public Radio show last year with a couple of political consultants, demographers as I remember. One, a lady, was obviously part of the Democratic political syndicate, the other was part of the Republican political mob. The Democratic expert said dismissively of my remarks, "Well! Some people here seem to believe anecdotal evidence is relevant." Meaning me. I held my tongue. But what I wanted to say was this:

Sister, most of us live anecdotal lives in an anecdotal world. We survive by our wits and observations, some casual, others vital to our sustenance. That plus daily experience, be it good bad or ugly as the ass end of a razorback hog. And what we see happening to us and others around us is what we know as life, the on-the-ground stuff we must deal with or be dealt out of the game. There's no time for rigorous scientific analysis. Nor need. We can see the guy next door who's drinking himself to death because, "I never did have a good job, just heavy labor, but now I'm all busted up, got no insurance and no job and it looks like I'll never have another one and I've got four more years to go before Social Security." He doesn't need scientific proof. He doesn't need another job either. He needs a cold beer, a soft armchair, some Tylenol PM and a modest guarantee of security for the rest of his life. Freedom from fear and toil and illness.

And furthermore, Sister, we cannot see much evidence that other, more elite people's scientific analysis of our lives has ever benefited us much. When you're fucked, you know it. You don't need scientific verification.

I wanted to say that on the radio. But I didn't. The little white guy mojo voice in my head told me not to. So I just laughed good naturedly. Like any other good American.

May God forgive me.

With ironic gratitude to Christopher Jencks of the Center for Urban Affairs and Policy Research at Northwestern University.
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About author
Joe Bageant is author of the book, Deer Hunting With Jesus: Dispatches from America's Class War (Random House Crown), about working class America. A complete archive of Joe's essays can be found at http://www.joebageant.com.