Thursday, December 8, 2011

Public Banks

This time, everybody wins -- except Wall Street

By Mike Krauss
Bucks County Courier Times

With every day there comes another revelation of the extent to which the American democracy has been subverted, and the degree to which the rights, welfare and prosperity of the people have been subordinated to the wealth of the Wall Street cartel and the 1 percent.

Last week Americans learned that without the knowledge or consent of Congress or the American people, Wall Street’s acolytes at the Federal Reserve gave the cartel not billions, but trillions of no-strings-attached and virtually no cost credit, while the real economy, businesses and families were starved of that credit.

Bloomberg News put the give-away at $7.7 trillion, but other estimates are far higher. The information has been ferreted out of more than 25,000 pages of documents the Fed kept secret until forced by a law suit and one lone U.S. senator to open up.

The $7.7 trillion estimate alone is an amount equal to one half the value of EVERYTHING produced in the U.S. economy for the year — and you knew nothing about it. But you know what happened next.

Wall Street’s profits skyrocketed — at least another $16 billion on the deal — as the economy collapsed. Millions of American families and thousands of communities are broken and battered. I wish that were hyperbole, but you know it is not.

The American people need urgently to dismantle the Federal Reserve and break the power of the Wall Street cartel. Creation of public banking institutions throughout the nation is the first step.

The nation needs an adequate source of affordable credit to grow the economy and support individuals and families as they struggle to achieve some measure of prosperity and economic security. The nation and the economy need an honest and well regulated banking industry, and not the failed, arrogant, fraud-ridden, private Wall Street cartel that now steals at will from the American people.

That is the promise of a national network of independent pubic banks, and counties like Bucks and cities like Philadelphia can lead the way.

A county or city uses the public funds — tax revenue, investments, rainy day and other funds and public assets — to capitalize a bank. As with any bank, these funds and assets are leveraged to create a pool of affordable credit.

Working in partnership with community banks and credit unions which originate and service loans, that credit flows into the community for new businesses, small business expansion, economic development, home buyers and homeowners, students and job creation.

A public bank can also partner with existing municipal authorities to expand their activity and jobs creation with large scale infrastructure and redevelopment projects.

Profits of the public bank are both retained to increase the bank’s lending activity, and returned to the county’s general fund — revenue without taxes, even as increased economic activity generates more county and municipal revenue.

The common wealth is put to work for the common good.

At year end 2010, Bucks County reported $624 million in assets, annual revenue of $205 million and $132 million cash on hand — resources sufficient to generate several billion in credit for the county’s economy. The City of Philadelphia has larger assets.

The possibilities are extraordinary.

Home foreclosures are tearing apart families and communities. An industry trade group, Realty Track reports that in October, the last month for which data is available, 1 in 826 housing units in Bucks County received a foreclosure notice, adding to the thousands already foreclosed. The tidal wave rolls on.

Using the power of eminent domain, the county can seize vacant and foreclosed homes and commercial properties, which further depress property values and are becoming bases of operation for vandals, gangs and drug dealers. These properties become one more asset of the public bank.

Working with existing housing authorities, home builders and others, the acquired foreclosed properties can be maintained or improved as necessary, and programs developed to put dispossessed homeowners back in their homes with affordable mortgages where possible, or as renters on the path to home ownership.

With affordable credit, start-up and expanding small and micro-businesses can occupy now vacant commercial property. Home builders can get the credit they need to hire and buy necessary goods and services from local banks, supported by the public bank.

Only state charted banks and credit unions would be eligible for participation with the public bank. The Wall Street banks need not apply.

America urgently needs an alternative to the Wall Street — Federal Reserve monopoly on our money and credit. Public banks are that alternative, and can be an engine of locally directed economic development and jobs creation across America — no federal authority or bureaucrats involved.

Creation of a state public bank modeled on the hugely successful Bank of North Dakota is many months away. But county commissioners, city councils and county and city treasurers can act now.

In the formation of any public bank, issues of governance, mission, management, transparency, accountability and risk management must be addressed. But effective models of “best practices” exist and these are hardly insurmountable tasks.

Bucks County can harness the know-how and experience of our local governments, community bankers, business and civic leaders and lead other counties and municipalities on the way to recovering opportunity, prosperity and economic security for all the people.

With public banks, everybody wins — except Wall Street.

And that is what must finally happen.

Mike Krauss, formerly of Levittown, is a director of the Public Banking Institute and chair of The Pennsylvania Project E-mail:

Wednesday, November 30, 2011

Something's gonna give

About to blow...
By Mike Krauss
Bucks County Courier Times

The American people have been asleep. That’s over.

The people are wakening and engaging in an expanding discussion about the present circumstances and future prospects of our nation.

The discussion began with the tea party patriots. But their protest at the injustice of the Wall Street bail out was turned to a focus on health care and taxes, as the money of the Republican right moved in to occupy the tea party.

The same way the money of the Democratic left hopes to occupy Occupy.

It’s all about money and power.

Americans are wakening to the reality that as wealth in America has been concentrated in the hands of the few, so too has political power.

Led by the Wall Street cartel, that power is used to preserve, protect, defend and — above all — increase the wealth of the 1 percent at the expense of the 99 percent of the American people.

Something’s gonna give.

As it does, it is essential to understand the actions of government that brought the nation to this moment, so that the barricades to equality of opportunity and upward economic mobility can be torn down and the path forward cleared of the debris.

Creation of the so called “Federal” Reserve gave control of the nation’s public money and credit to a private banking cartel, which conferred on itself what it wanted — immense wealth and power.

The birth of the banksters.

While wages for most Americans were kept flat, taxes on the rising income of the wealthiest and their capital gains have been steadily reduced, further concentrating wealth and power.

Wages were attacked by a combination of “free” trade, which opened American markets to the goods produced in low wage paying countries, and no taxes on the profits of American companies abroad, which made it even more profitable to export American jobs. Unchecked immigration of the unskilled swelled the supply of labor far above demand to further depress wages.

Private credit, which Wall Street controls and sells, was substituted for rising wages and Congress over-rode state laws and allowed banks and finance companies to gouge Americans with unconscionable interest rates.

The rich got richer and the poor got poorer.

Congress allowed America’s banks to combine and the hard assets of the American people were concentrated in the “too-big-to-fail banks,” and then Congress allowed the combination of the investment and retail operations of the banks, providing speculators access to those assets, which they gambled away.

The middle class was devastated.

Congress allowed the regulatory agencies tasked to police the financial markets to be gutted and staffed with Wall Street and corporate front men. No cops on the beat. Fraud and abuse ran rampant.

Nobody did anything about it. Justice was subverted.

Congress turned the lobbying and campaign finance laws into a system of legalized bribes. The political parties became brand names to be bought and sold, stripped of any real power to shape public policy or advance candidates accountable to their members, and the Congress was put up for sale.

Not satisfied to enrich only corporate America and miss out on the good times, members of Congress now enrich themselves by trading on private information acquired in the course of their public duties.

Finally, in a breathtaking example of intellectual sophistry, the Supreme Court “piled on” the already downed American people, turned common sense on its head and decided that corporations which exist only in the law that the people create, are no longer subordinate to the people, but in fact have the same rights as people.

This is a crisis of justice and democracy.

Wall Street career men and acolytes of the central banking bureaucracy now dominate governments in Europe as they dominated the Clinton, Bush and now Obama administrations.

They are there to enforce “austerity measures” which subsidize and protect the banks that constructed the current crisis — in which they made hundreds of billions — and continue the transfer of wealth to the wealthy.

It is the same fate to which many present leaders of both political parties want to deliver the American people, targeting Social Security and Medicare as the drivers of the national debt, while sidestepping completely the drain of war, a grotesquely over fed and under-taxed oligarchy, corporate welfare — and the cost of the Wall Street monopoly on credit.

The Federal Reserve’s website lists interest paid on the U.S. federal debt for the last 24 years — $8.2 trillion, much of that “earned” by Wall Street by borrowing from the Fed at almost no interest, and lending back to the Treasury at higher interest.

And now we’re learning the full extent of Wall Street’s colossal failure and the Fed’s bail out, kept secret even from the Congress.

But the American people are stirring, beginning to sort out how we got where we are, and how we get back to what we want our nation to be. Occupy and others have emerged to deliver the message the governing elite do not want delivered to the American people: it’s all about money and power, and the Wall Street led 1 percent now have a despotic monopoly on both.

How do we recover a just society with opportunity for all? While the candidates for president debate anything else, that is the question the American people are forming.

Monday, November 14, 2011

America has unfinished business

Tea partiers and Occupiers sharing a common cause?

By Mike Krauss
Bucks County Courier Times

Within the space of three years, two powerful popular protests have risen up in the United States — first the Tea Party and now Occupy. They are in one regard similar, but in another quite different.

Like Occupy, the Tea Party was also a spontaneous and democratic protest against the injustice of the Wall Street bailout, which the American people overwhelmingly opposed.

Yet, both political parties, their presidential candidates and Congress supported it.

At that point, the Tea Party should have been expected to redouble its attack on that injustice. It did not.

The Tea Party was in effect diverted, some might say hijacked, and its energy and anger were instead focused on the proposed health care legislation, and the members of Congress and the president who supported it.

Occupy has not lost focus. Despite the inability of fatuous talking heads to discover its “message” and an orchestrated defamation of its activities, polls indicate that Occupy remains broadly supported, while the tea party has lost support.

The American people well understand the larger issue from which the tea party was turned: the government of the people, by the people and for the people has been subverted, and become a government of, by and for the corporate establishment, led from Wall Street.

The other place at which the tea party and Occupy diverge is how each relates to the first American Revolution. The Tea Party adopted the symbols, while Occupy has taken the form.

The first tea partiers were, and some still are fond of donning the attire of 18th century American patriots and brandishing muskets and colonial flags. None of that is to be seen among the Occupiers.

And while the Tea Party quickly gained a central organization, staff and command, the Occupiers remain a loose confederation of independent communities, with one binding message.

“We’ve had it.”

The parallel to the first American Revolution is striking.

Occupy organizes and communicates through local and autonomous “General Assemblies,” a term which harkens back to the days of the Quaker founders of Pennsylvania, and their embrace of the concept of the common wealth.

And these General Assemblies function as did the Committees of Correspondence that spread throughout America before the Revolution, and led to a Continental Congress that eventually declared its independence from an oppressive and unrepresentative central government, then in London, but which like the central government in Washington today represents the overbearing and oppressive commercial interests of the age.

Now as then, there is as much or more communication among these independent local organizations within Occupy than there is with the external and increasingly anxious central authority of the established interests.

Now as then, those established interests, mostly corporate and led from Wall Street treat the American people as little more than servants to their wealth and power, deserving no voice in their government or future.

This is what Occupy seeks to replace, and the Tea Party initially challenged.

Now the pundits are waiting for some kind of “declaration” from Occupy. But Mr. Jefferson’s original will be hard to improve upon. It has rightly been called “American Scripture.”

In it we declared the rights of the people (“life, liberty and the pursuit of happiness”), declared that the purpose of government is “to secure” those rights, and further declared “That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”

What Occupy is getting at is a need to update the U.S. Constitution, which in fact was suggested by President Roosevelt in an address to Congress at the close of World War II. FDR called it the “Second Bill of Rights.”

“It is our duty now to begin to lay the plans ... of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people-whether it be one-third or one-fifth or one-tenth-is ill-fed, ill-clothed, ill-housed, and insecure.

“This Republic had its beginning, and grew to its present strength, under the protection of certain inalienable political rights... They were our rights to life and liberty.

“As our nation has grown in size and stature, however-as our industrial economy expanded — these political rights proved inadequate to assure us equality in the pursuit of happiness.

“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.”

The American people are now in the early stages of the Second American Revolution.

At some point, perhaps tea partiers and Occupiers will understand they all started out from the same place, will come together, and together end up at the same place: one nation, indivisible, with liberty, justice and economic security and independence for all.

The American people will need each other to prevail against the rank economic oppression and tyranny of the present age.

America has unfinished business.

Monday, November 7, 2011

Tied up and held for ransom

Betrayal of justice

By Mike Krauss
Bucks County Courier Times

There is a cancer in American government. It is aggressive and spreading.

The cancer was first diagnosed by the FBI in 2004, when it warned of “rampant” mortgage fraud. But the warning was ignored. No action was taken and the cancer spread.

Now, after a congressional investigation and the work of a few courageous journalists, we know the extent of the fraud. One of those journalists, Greg Hunter summarized it.

“There was real estate document fraud when the original Promissory Notes and loan documents were ‘lost.’ The Promissory Notes were required to create tens of thousands of mortgage-backed securities (MBS). No ‘note,’ no security. That is security fraud. No security means the special IRS tax treatments for the MBS’s were fraudulently obtained. That is IRS tax fraud. Because there were no documents, the rating agencies fraudulently made up triple ‘A’ ratings for the securities. When the whole mess blew up, big banks hired foreclosure mill law firms to create forged documents. That phony paperwork was and is being used to wrongfully remove homeowners from their property. That is foreclosure fraud.”

From the local loan originators and their managers up to the CEOs, rating agencies and foreclosure mill law firms — fraud as a business model.

Hunter and others point out that after the savings and loan scandal of the 1980s, which cost taxpayers more than $160 billion, there were more than 1,000 felony convictions, and even more prosecutions.

The cost of the mortgage fraud that brought on the collapse of the American economy, and has ruined the lives and destroyed the futures of tens of millions of Americans, is at least 40 times greater than the S&L fraud, according to William Black, now an economics and law professor who helped investigate and prosecute that earlier criminal wrongdoing.

Yet there has not been one criminal prosecution by the U.S. Justice Department related to the monstrous mortgage fraud; only a few fines and settlements that paper over the crimes. Why?

Gretchen Morgenstern, writing for the New York Times and recently Richard Cohen at the Washington Post have asked the question, but obliquely. Both can only go so far.

As documented by the independent public policy organization Global Research, the boards of directors of the Times, Post and Time Warner, which owns CNN and Time Magazine, are a virtual Who’s Who of the nation’s corporate and financial elite, and they do not want that question asked or answered.

The technical answer, provided by Black, is that the Office of Thrift Supervision, the regulator which in the S&L scandal referred more than 9,000 investigations to the FBI, has in this case referred none.

So the regulators are AWOL, the attorney general of the United States is missing in action and no one asks the president why that is, nor does anyone ask that question of the GOP front runner presidential wanabes, nor the members of Congress who have oversight of the Justice Department.

Because the honest answer would expose the extent of the cancer and the degree to which justice in the United States has been subverted.

It is difficult to get campaign contributions, donations to post-presidential foundations, lucrative sinecures on boards of directors or in academia, invitations to Davos or the regulators’ “round trip ticket” back to the big bucks on Wall Street from people you prosecute for criminal fraud.

The Sunlight Foundation tracks the maze of campaign contributions, and reported that executives of Goldman Sachs, the flagship of the pirate fleet that looted America, are splitting their campaign contributions 50-50 between Mr. Obama and Mr. Romney, the likely GOP presidential candidate.

The finance industry has spent nearly $4 billion lobbying Congress since 1998, apart from campaign contributions. The regulators have been silenced and the revolving door is fully greased.

There was a moment of hope, when the state attorneys general proposed to collectively take action on the fraud. But that moment may have passed. The cancer has metastasized.

With furious lobbying from Wall Street and under enormous pressure from the White House, as reported by Ms. Morgenstern and others, the effort of the state attorneys general was turned away from any investigation and prosecution and a deal has been proposed.

In exchange for paying some billions in fines, those who committed the fraud that has cost the middle class trillions of lost wealth and destroyed lives and futures, will get immunity from criminal prosecution and any future claims for damages.

Call it the first class action sell out.

But now six of the 50 state attorneys general are opposing this betrayal of justice: New York, Delaware, Kentucky, Minnesota, Nevada and California. They are demanding a full investigation and criminal prosecutions where warranted.

Profiles in courage. And in a hopeful sign, these courageous public servants are gaining more support daily.

If you want to fight the cancer eating at the American democracy, now is the time. There is a web site for a statement of support for these attorneys general.

Americans hope that justice is blind; but, tied up and held for ransom?

Mike Krauss, is chairman of The Pennsylvania Project, a non partisan public policy advocacy organization.

Tuesday, November 1, 2011

Drowning in sea of debt

Pennsylvania to Harrisburg: "Sorry."

By Mike Krauss
Bucks County Courier Times

Harrisburg is going under, drowning in a sea of municipal debt.

Like many American cities, the Pennsylvania capitol’s tax base has steadily eroded over many decades. Jobs have been lost as industry has died or gone offshore, and much of the middle class long ago fled the city.

With the Wall Street crash of 2008, tax revenues took another dive. And an expensive investment in a new trash incinerator has failed to produce anticipated revenues.

City Council members want to file for bankruptcy to buy time to work the city’s way out of this mess. The mayor disagrees, and now the governor with the support of the Legislature is stepping in.

The city will be put in receivership. One recent newspaper editorial headlined, “State had to act to spare Harrisburg.”

But that is not what’s happening.

As the story under the headline explained, the state is moving quickly “to reassure worried bond-holders,” and the state will take control of the city’s finances “to meet its financial obligations by selling off revenue-generating assets and raising taxes.”

In other words, the bond holders get a life boat and the city drowns. Already strapped for revenue, the city will be forced to divest of revenue generating assets, among them the municipal incinerator and parking garages.

These assets will almost certainly be snapped up at fire sale prices, another transfer of wealth to the already wealthy who will raise fees at these facilities and pocket the loot, while for the 45,000 residents of the city, a reported 29 percent of whom already live in poverty, life will get worse in already hard times.

It is doubtful that the legislators will be riding to the city’s rescue. State lawmakers just went through a gut wrenching exercise in slashing state spending. There is little appetite for spending money or raising taxes to save the people of Harrisburg — or anywhere else.

In fairness to Pennsylvania Gov. Corbett, when it comes to paying off the bondholders, he is in a bind.

Almost every public project in America, from roads and bridges to port expansion, parking garages and municipal incinerators is financed with private money.

And it is expensive. Nationwide, the debt service is in the trillions of dollars, to be paid by taxpayers over generations. And now, a growing number of municipalities are in the same sinking boat as Harrisburg.

The governor’s bind is, if the bond holders don’t think they will always get their profits out, they may not invest. Where then will the money come from for vital public projects?

The answer is a new idea emerging in states and cities across the nation: public banks to provide affordable credit for public purposes.

Actually, it is an old idea, first practiced in America by the Quaker founders of the Commonwealth of Pennsylvania, who thought that the common wealth should serve the common good.

But the concept did not survive Alexander Hamilton, the first darling of New York bankers, and by the time the Federal Reserve gave control of the nation’s money and credit to a private banking cartel, the idea was extinguished altogether.

Except in North Dakota, where lawmakers responded to the creation of the Fed private banking monopoly by creating the state’s own bank, a public bank owned by the people of North Dakota..
The state of North Dakota does business as the Bank of North Dakota (BND). By state law, the BND holds all the state’s revenue and other assets. Then, as with any bank, these reserves are leveraged to create credit.

That credit is invested in Main Street and not Wall Street.

The BND is not a retail bank and does not compete with private banks. It is a partner in loans made by those banks, savings and loans and credit unions. And it provides a second level of risk assessment.

Only after a community bank approves a loan is the BND approached for participation; for example, to provide a larger loan amount than the local bank can offer, or to “buy down” the interest to the borrower. And then the loan has to pass the BND’s tests for credit worthiness.

For almost 100 years, the Bank of North Dakota (BND) has been an engine of prosperity.

In 2010 the BND reported: $30 million in profits returned to the state general fund without any taxes; a current loan portfolio of $2.8 billion in commercial loans and residential mortgages, including 255 business and industrial projects; student loans of over $1 billion; a $10 million loan program in partnership with the North Dakota Housing Finance Agency; and a disaster relief program with a fixed rate at 4 percent for five years and a variable rate currently at 2.75 percent.

Pennsylvania has a population almost 19 times greater than North Dakota and a far more varied economy. It is reasonable to project that a public Bank of Pennsylvania could produce some very large results.

And had there been a public Bank of Pennsylvania, to invest in cities like Harrisburg and offer low cost alternatives to municipal finance, the governor, state legislators, city officials and the people of Harrisburg might not be dealing with the present catastrophe.

Tuesday, October 18, 2011

A Tale of two Cities

The First Amendment or private police

By Mike Krauss
Bucks County Courier Times

Occupy Wall Street is moving into its second month. From the outset, the police in New York City took a decidedly unfriendly posture to the demonstrators: pepper spray, billy clubs pushing and shoving, trying to restrain the movements of the demonstrators and lots of arrests.

The mayor of New York swung into action and accused the Wall Street demonstrators of trying to cripple the city’s economy.

“What they’re trying to do is take the jobs away from people working in this city.”

This is of course a ludicrous claim. If anything, as people travel into the city to participate and the media begin to focus, vendors, hotels, restaurants and many other merchants are selling more of their goods and services.

But this is not the kind of convention his honor wants to host.

Of course, the mayor may not have been thinking of the jobs of hot dog vendors, deli owners and local merchants. He may have been thinking about the jobs of bankers. But if so, his worry is unfounded.

The protesters don’t want mass layoffs of bank clerks. They just want to see some of their bosses go to jail.

In Philadelphia, where Occupy Philadelphia was launched only a week ago, city leaders took a different approach. A spokesman for the mayor set the tone, telling the media, “They (the protesters) have been law-abiding; there have been no arrests or citations; they’ve controlled their site very well; they have cooperated with police.”

He continued, “They’re exercising their right to free speech, and they’re going about it in a very mature way.”

Philly Mayor Michael Nutter visited the die-hards who slept out in the open the first night — at 1:30 a.m.

Philadelphia newspapers reported that Police Commissioner Charles H. Ramsey “has directed his officers to work with demonstrators and assist with marches. He emphasized that officers are bound to protect the demonstrators’ right to protest peacefully.”

Ramsey has also had the First Amendment read at roll calls and periodically over the police radio system as a reminder.

How to explain the difference in the two cities?

One reason may be that Philadelphia is the place where the “inalienable” rights of the people were first declared, and then protected in the Constitution, and it appears are still taught in the schools.

Another may be that the police in both New York and Philly report to the mayor, and they are very different men. The mayor of New York City, Michael Bloomberg, is a billionaire who made his billions — and goes on making them — providing business services to Wall Street. He has a major Wall Street firm as business partner.

But in a recent article in the journal Counterpunch, 20-year Wall Street veteran Pan Martens reported a more troubling explanation for the aggressive behavior of the New York City police: they’ve been bought.

Oh, I don’t mean New York cops are taking illegal bribes to beat up demonstrators. This is America. The bribes have been legalized. The cops have been hired by Wall Street, in a program started by former NYC Mayor Rudi Giuliani.

Martens reports, “It’s called the Paid Detail Unit and it allows the New York Stock Exchange and Wall Street corporations, including those repeatedly charged with crimes, to order up a flank of New York’s finest with the ease of dialing the deli for a pastrami on rye.”

According to Martens, for $37 an hour, the New York Stock Exchange, Goldman Sachs and other undisclosed firms will have paid out more than $11 million by the end of the year to hire cops with uniforms, badges, guns and the power to arrest.

Not every member of the force is happy with the arrangement. One officer described it on a website as officers “... working for, and being paid by, some of the richest people and organizations in the City, if not the world, enforcing the mandates of the private employer, and in effect, allowing the officer to become the Praetorian Guard of the elite of the City.”

One hopes that is what most of the officers think, but $11 million in hard times is bound to win friends and influence people.

So it appears that the “White Shirt” NYC cops who have been all over the demonstrators, as opposed to the familiar Blue Shirts, may not be “supervisors” as has been claimed, but are part of a private gang.

And they are being used by Wall Street today exactly as Wall Street used paid thugs at the turn of the past century to break up striking miners and steel workers.

So, hats off to the Honorable Michael Nutter, Mayor of the City of Philadelphia, his commissioner of police, Charles H. Ramsey, the men and women of the force and, above all, the people of the City of Philadelphia and the Occupiers for providing the nation with a much needed civics lesson.

Fed up with a government that serves, protects and defends only established wealth and privilege, they have taken matters in their own hands; but unlike the barons on Wall Street and their allies, they have not taken the law into their own hands.

Mike Krauss is chairman of The Pennsylvania Project, a former officer of Bucks County and Pennsylvania government and an international logistics executive. Reach him at

Saturday, October 15, 2011

Death of Democracy?

The concentration of wealth, and the destruction of the middle class

By Mike Krauss
Bucks County Courier Times

27 September 2011

The changes have been taking place for 40 years, but so gradually that the American middle class was not alarmed. People are like that. We can adjust to enormous change if it occurs gradually.

So it crept up on the American middle class: 40 years of flat wages, expensive credit substituted for income, two wage earners and multiple jobs to keep heads above water, jobs off-shored and American manufacturing decimated, wages further depressed by an over-supply of labor created by unchecked and mostly illegal immigration, taxes that favored the wealthy, banking laws and deregulation that allowed the finance industry to get a stranglehold on the American economy and government.

It is as if the American house had been infested by termites, but nobody noticed until the roof began to fall in. Suddenly, we can see how the house has been ravaged.

Poverty is rampant, millions of the middle class pushed down the ladder which generations expected to climb. Fantastic wealth has been concentrated among the few as never before.

The massive damage done is expressed in a chart recently published with surprising candor by the Federal Reserve and labeled “Owners Equity in Household Real Estate.”

It shows that in 1951 Americans held about $250 billion in home equity; about the time the GI Bill began not only to put veterans through college, but also to support the home ownership which created the modern suburbs and middle class.

By the time of the 2008 Wall Street crash and bail out, that equity had grown to almost $14 trillion, its growth virtually immune to the periodic recessions in the U.S. economy.

Even adjusted for inflation, that is a lot of wealth and represents what post World War II Americans achieved: the creation of the greatest and most broadly shared prosperity the world had ever seen — the rise of the American middle class.

With the crash, home equity fell off a cliff and has now been cut more than in half. It is falling still. Those Americans who owned most of that real estate, the middle class, have lost about $7 trillion of their wealth.

That wealth will not disappear. It will be transferred to the already wealthy. The new American way.

An industry trade group, Realty Trac Inc. reports that the sale of foreclosed homes accounted for 31 percent of home sales in the last quarter. These homes were not purchased by the poor, the unemployed or the struggling middle class. They were purchased — at bargain basement prices — by the already wealthy. Why would they do such a thing in a depression?

Because the economy only moves one of two ways: up or down. And when this depression ends, home prices will once again go up, and these assets will make the wealthy even wealthier.

Meanwhile, these homes will be rented. And millions of once middle class Americans will go from homeowners to home renters, and their wages will not be invested in an asset, but instead will go as rents to the wealthy.

Further, the Obama administration has floated the idea of ending the home mortgage interest deduction in the tax code, and providing rental assistance.

So the middle class taxpayer who still owns a home and pays taxes will lose that deduction, and be taxed to provide the money to be paid as rents to the new suburban slumlords.

Middle class Americans are experiencing a disaster of historic proportions. It was entirely man made. But, what to do about it?

A place to start is to stop listening to the prevailing narrative that Washington is dysfunctional and can’t get anything done because of partisan wrangling. That is a false and intentionally misleading narrative from a captured national media, whose owners fear the day the American middle class wakes up.

Washington gets plenty done. Doing nothing is a policy, the policy of keeping things the way they are.

Americans must wake up to the fact that high unemployment, home foreclosures, and out-of-control militarism, the destruction of the middle class and the legislation of every device known to man to preserve, protect and defend the wealth of the wealthy are the intended policies of the federal government.

The American political establishment is not bumbling. It is bought.

Political power flows from wealth. When the wealth of a nation is shared among the many, when there is a middle class, democracy can flourish. When wealth is concentrated, democracy dies.

Friday, September 16, 2011

The never ending campaign

Obama jobs plan falls seriously short

In his address to the Congress and the nation, President Obama seemed in a determined fighting mood. The president said many things that will give hope to his dispirited supporters, and perhaps to many Americans.

But we have been there before, in the campaign of 2008, and Mr. Obama did not deliver. The nation got more of the same -- Wall Street and war and the protection of corporate profit as the overarching purpose of the federal government.

Mr. Obama is the most able political campaigner of his age, and his address must be seen for what it was -- a campaign speech. And whatever good the enactment of his many proposals might do, the Republicans in Congress are also campaigning (they never actually stopped), and their devotion to doctrine is as mindless, fanatical and frightening as that of the Ayatollahs in Tehran.

There will be no cooperation.

And even if the heartless, pseudo-Christian social Darwinists in the GOP should hear the cries of millions of struggling Americans, their grudging aide will come at a price: more cuts in the spending that sustains -- barely -- the lives of our most vulnerable citizens and the battered hopes of the beleaguered middle class.

In fact, as he did in the debt ceiling farce, Mr. Obama put those cuts on the table.

But, Mr. Obama's true believers will argue, look at all the good things the president proposed. Well, let's. This was billed as a jobs speech. And the word jobs was said by Mr. Obama 45 times -- almost once a minute. So, where are the jobs?

If Congress agrees to extend unemployment benefits, there will be some immediate spending, but no jobs. Grocery stores, pharmacies, auto repair shops and Wal Mart will see some more business. But it will be short-lived and no cause to hire. Just some quick profit taking and feel good headlines.

Similarly, the proposed cuts in employee and employer payroll taxes, while no doubt welcomed by both and the stuff of future campaign ads, leaves only modest sums in employees' pockets each month. And many American consumers may opt to pay down debt rather than take on new spending, as in fact they have been doing.

And even if Wal Mart adds some non-union, low-wage, no-benefits, part- time jobs, whatever will be sold will likely create more jobs in China than the United States.

And the employer payroll tax reduction will only spur hiring if employers see a sustained increase in demand, and so will lead to no immediate new hires, if ever.

But these payroll tax cuts depress revenues for Social Security and Medicare and give the U.S. Chamber of Commerce, all the GOP and many Democrats ammunition in the fear mongering campaign to eliminate both of those programs.

The president also proposed $35 billion to prevent the layoffs of an estimated 280,000 teachers, "while hiring tens of thousands more, along with additional police officers and firefighters," according to the New York Times.

Maybe. Or maybe battered school districts and local governments will use the funds to cover budget shortfalls and avoid tax increases.

The one sure jobs creator was spending on infrastructure. But the amounts proposed, given the need for jobs and the disastrous state of American roads, bridges, schools, water and sewer systems, public transportation and ...

You get the point. And after the recent storms, much of the mid-Atlantic and Northeast is a disaster area. It will take billions just to repair that damage. Obama's proposal got construction workers cheering. That was the point, as with so much of what the president proposed.

But the amounts proposed -- tens of billions -- fall hopelessly short of the scope and scale of the effort needed. And there is no guarantee that the GOP in the Congress will enact any of what the president proposed.

So the never ending campaign never ends. Already, the president and members of Congress are shaking the trees and being shaken down by the established interests that own Washington.

The president and all the GOP hopefuls are raising enormous sums through "super PACS," by passing the already anemic laws to prevent the wholesale selling of the office. And the Washington Post reported last week that members of the "super Congress" -- the elite committee that is charged to slash spending -- have set off on a furious round of fund raising, using their newly powerful positions to their best advantage.

Of course, say Mr. Obama and his would-be opponents, they have no idea what the super PACS that support them are doing with the tens of millions each is raising from contributors with no limit to their giving. And members of the super Congress would never protect the spending their contributors enjoy in exchange for a campaign contribution. That would be -- criminal.

There is no hope or health in Washington. The ship of state has foundered. It is time for the American people to put all the little boats in the water, and look to the states, counties and municipalities to provide the ideas, leadership and jobs that can collectively recover America's stolen prosperity.

Sunday, August 7, 2011

American Democracy?

Democratic Party died a slow death

By Mike Krauss
Bucks County Courier Times

The Democratic Party is dead. It was a slow death, painful to watch, but it’s over now. The remains will be buried alongside those of the Republican Party, which died some time ago.

The GOP took ill with the Civil Rights Act of 1964. Legions of Democratic southern whites fled their party and eventually made their new home in the GOP, bringing with them their passion for the Bible, guns and cars (Not necessarily in that order), and an abiding hostility to the federal government that had twice upended their social order and threatened their economic and political power.

Richard Nixon saw them coming and invited them in with a pitch to “law and order,” which gathered up the southern (and some northern) racists, the socially conservative voters upset by the changes of the 1960s, and the white suburban and rural voters who, while not necessarily racists, resented the huge and mostly urban spending of LBJ’s “Great Society.”

But Nixon was a moderate, who like Eisenhower before him did not make war on working men and women, and who took America out of war. And when Nixon went down the team that heckled Dwight Eisenhower at the ‘64 convention took over and the GOP died, to be replaced by the POG (Party of God), eager to fight His battles at home and abroad.

They joined the class of established and mostly corporate wealth that did not like it one bit when FDR started sharing that wealth and Lyndon Johnson tried to do the same.

All things federal became the enemy of the POG, while the nation’s established corporate wealth used all things federal to enlarge their wealth.

“Welfare cheats” (I wonder what color they were?), the ever useful communists and a focus on sex ( a sure attention getter) kept America’s increasingly deficient attention while the Reagan tax code accelerated the most massive transfer of wealth in American history — perhaps world history — into the hands of an ever richer few.

The Democratic Party was already weakened by Reagan’s assault on unions and the exodus of whites, and took seriously ill when Bill Clinton, a fatherless boy who longed for a family, got adopted by Wall Street.

Clinton embraced “free” trade, which actually carries a terrible price in lost jobs and low wages for Americans, and has since decimated American manufacturing and destroyed the old union base of the Democratic Party.

But “free” trade does wonders for corporate profit and Wall Street.

Then Clinton joined ranks with the POG to repeal the laws that had kept the banks and financial casinos separated since the crash of 1929. The result was not only that Wall Street crashed again, taking a lot of the middle class with it, but also that the finance industry — which produces nothing of utility — overtook all others as the source of profit in American business, and has further accelerated the transfer of wealth to the richest Americans and directed investment away from productivity.

While Americans were sold on “trickle down” — better described as “Scraps Under the Table” — economics, the wealth of America gushed up to the top.

The incomes of the richest Americans doubled under Bill Clinton, and tripled under George Bush, while those of working men and women have remained flat for decades.

Barack Obama, who also was adopted by Wall Street and will like Bill Clinton become wealthy, kept the Democratic Party in Wall Street’s pocket. Cut off from its former life’s blood — working men and women — the party’s condition grew critical.

The exact moment of death came during the posturing over the debt ceiling when President Obama put Social Security, Medicare and Medicaid on the chopping block, and moved himself to the right of Ebenezer Scrooge.

So two political parties that worked at the center of American politics and between them represented most average Americans, have been replaced by two political parties that work at the same reactionary end of American politics and represent the wealthiest Americans and the corporate engines of their wealth — Wall Street and war and the established corporate parasites.

William Penn observed that governments, like clocks, “go from the motions men give them.” But clockmakers have tools. Political parties must be understood as the tools people use to get their hands on the machinery of government. The tools Americans use to make government do what they want have been taken out of their hands.

Americans must take them back, or fashion new tools, or sit by and watch the American democracy die

Thursday, August 4, 2011

Six thousand air strikes later

Freedom lovers' quarrel

By Mike Krauss
Bucks County Courier Times

Remember the freedom loving Libyans who rose up to overthrow Muhamar Gadhafi, the ones President Obama ordered the U.S. military to support, without a vote from Congress?

Remember how upset Congress was at this further encroachment of the president on its authority?

The whole business no longer is news. What a surprise.

But it did get a blurb the other day. One of the freedom-loving rebels shot and killed the freedom-loving “military chief” of their rebellion. Another of the freedom-loving Libyan rebels from their “special forces” held a press conference to blame the crime on someone in the “faction” known as the Feb. 17 Martyrs’ Brigade.

Still paying attention? Or does this sound a lot like every other place in the Muslim world into which the U.S. sticks its nose?

The wire service news report explained, “The Feb. 17 Martyrs Brigade is a group made up of hundreds of civilians who took up arms to join the rebellion. Their fighters participate in the front-line battles with Gadhafi’s forces, but also act as a semi-official internal security force for the opposition. Some of its leadership comes from the Libyan Islamic Fighting Group, an Islamic militant group that waged a campaign of violence against Gadhafi’s regime in the 1990s.”

Clearer? Maybe not, because one spokesman of the rebels blamed “gunmen” for the murder, implying an unfortunate, but uncoordinated wartime casualty; while a spokesman for the rebel military said the murdered commander had been “summoned” to a meeting and was killed en route, suggesting a set up.

This is bad news for freedom- loving Libyans, but possibly good news for the non-freedom loving supporters for Mr. Gadhafi. Many who attended the funeral of the deceased rebel were reported to be shouting that they wanted Gadhafi back.

But a lot of Libyans may know less of these events than you. The day the story broke, NATO forces bombed the broadcast facilities of the government (non-freedom loving), so that other non-freedom loving Libyans would not get the good news, or freedom loving Libyans the bad news.

Sorting out the freedom lovers from the non-freedom lovers is more of a challenge in Libya than it was in Egypt and other parts of the “Arab Spring” uprising, which continues with considerable loss of life in Syria and other places.

That may be because in Egypt and elsewhere, unarmed citizens took to the streets in their capitol cities to oppose their governments, whereas in Libya, armed, uniformed and trained fighters no one had heard of came out of the dessert to attack, first oil facilities, and then set up a bank.

Why oil facilities? Why a bank? Who are these freedom- loving Libyans with interests in oil and banking?

One explanation is that Gadhafi has kept control of the country’s oil industry, and has even allowed the Chinese to get into it — but not the U.S.

Oh, dear.

Another explanation, widely circulated in Africa but not much heard in the U.S., is that Gadhafi was using the revenue to set up development and infrastructure banks in Africa, offering low-cost financing and cutting in on the action of U.S. and European banks.

Oh dear, oh dear.

And freedom fighters emerged.

But freedom is never cheap, as American presidents like to point out when they get bogged down in expensive wars, and the freedom-loving Libyans needed cash. Fortunately, it was available.

The bank accounts that held the billions Gadhafi planned to put into African banks and development were frozen by Mr. Obama. (With the help of course of the international banking cartel. It’s one thing to bypass Congress, and quite another to bypass the banks). And the freedom loving Libyans were recently given $30 billion of those now unfrozen funds to play with.

Which may explain why they are now killing each other.

And freedom-loving Libyans and their freedom-loving American and NATO sponsors are left to hope they sort out which freedom-loving Libyans control the money, so they can get on to the really important business of who controls the oil and the banking.

Monday, July 25, 2011


Another campaign of misdirection

By Mike Krauss
Bucks County Courier Times

For the second time in three years, the American people are being hoodwinked by a non-stop campaign of misdirection.

The previous campaign took place when Wall Street melted down in 2008. The barons were desperate. President Bush rode to the rescue. And then something totally unforeseen happened. The American people got so angry at the fraud, the Congress actually said “No!” to Wall Street.

In a panic, Wall Street mobilized the corporate dominated media, the VERY SERIOUS PEOPLE, talking heads and an army of lobbyists to scare the daylights out of the American people. Day after day, night after night the almost hysterical message went out: failure to bail out Wall Street will destroy the American economy and the lives of tens of millions.

Specifically, credit will dry up, businesses will lay off workers or close, there will be no loans for anything – homes, business, farmers, a new car or a college education – unemployment will skyrocket.

“The sky is falling!!”

After pretending to think about it, the presidential candidates of both parties got on board and the Congress caved. Wall Street got the cash.

And the sky fell on the American economy.

Credit dried up, the economy crashed and a tidal wave of home foreclosures and unemployment swept away about $7 trillion of the wealth of ordinary Americans. But Wall Street was saved.

The administration, the Congress and Federal Reserve were working for Wall Street, and not your street.

And they still are.

The American people are again being told their house is on fire, told it can’t all be saved, told some rooms must be sacrificed to the awful flames of deficit and debt.

Failure to act “boldly” will mean “The end of American economic supremacy,” warned one widely read columnist. (About a decade too late). No time to think! Quick, decide!

And Americans have decided. In every poll I have seen, Americans overwhelmingly want taxes raised on the wealthiest, wars ended, corporate tax loopholes closed, corporate subsidies ended and spending on Medicare, Medicaid and Social Security maintained, if not increased.

But instead, the President and Congress are positioning themselves to do the opposite; abetted as always by the corporate media, the VERY SERIOUS PEOPLE, talking heads and the army of lobbyists they hope to join after their “public service.”

Never mind that the deficit was caused by the Bush tax cuts and the cost of two wars, and could be erased completely by 2016 simply by letting those tax cuts expire.

Never mind that the U.S. military budget is mindlessly out of control, larger than almost every other nation on earth combined, with a reported 1,000 U.S. military bases spread around the world to defend Americans against no known military threat.

Never mind that the debt has been far higher in the past, as a share of the Gross National Product, and the nation survived, and in fact prospered.

Never mind that small business people, still unable to get loans, are turning to their credit cards for the money to keep their doors open – and paying legally criminal interest rates to Wall Street for that credit, thanks to a Congress that over-rode state usury laws.

Americans are being sold another lie, told that what must be done to save the nation and build a prosperous future is to gut the spending that feeds, clothes, houses, educates, provides health care and sustains the lives of tens of millions, many of whom are already in very dire straits.

As one reader of this column observed, “It used to be only the mafia that shot at your knees. Now it’s our politicians.”

New York Times columnist Thomas Friedman and others argue that the American people are morally obligated to “do the right thing,” accept that they have it coming, and have no one to blame but themselves after decades of profligate, selfish spending.

But the truth is that corporate America collapsed manufacturing and off-shored millions of good paying jobs, and continues to, in a race to the bottom for the lowest wages and least regulation anywhere in the world, and has depressed wages in the U.S. for decades.

The truth is that millions of American parents keep their children’s heads above water only by working two or more jobs, if they can find a job.

The truth is that Wall Street introduced and aggressively marketed massive and expensive consumer credit to mask the reality and maintain an illusion of prosperity.

And make billions in profits.

The truth is that wealth in the United States has been concentrated in the hands of a few in ways not seen in almost one hundred years.

The truth is the nation is going backwards.

Friedman’s argument is a pseudo- economist’s equivalent of the rapist’s defense, and equally vile: the victim is the culprit

“She really wanted it, your honor. She made me do it.”

The governing, corporate elite of the United States are now almost completely without shame and the knowledge of justice. The broad majority of the American people are almost completely without representation in the federal government.

There must be an alternative to the Wall Street, Washington and Federal Reserve government of the United States. The states, local communities and new leaders must step forward.

Before the Statue of Liberty swims back to France – for shame.

Wednesday, July 20, 2011

Liberals' Lament

President Obama's remaining liberal supporters are in agony.

By Mike Krauss
Bucks County Courier Times

One by one Mr. Obama has abandoned the hopeful promises of his 2008 campaign, and has emerged as the champion of established wealth, Wall Street and war, and the global club of parasites in pinstripes.

New York Times columnist Paul Krugman was compelled to note that with his proposals to go after what remains of middle class security, Mr. Obama sounds no different than the Darwinian predators in the GOP.

First, Vice President Biden, the administration’s “regular Joe,” was dispatched to give cover to “negotiations” that proposed budget cuts of between $1.5 trillion and $1.7 trillion over 10 years.

Hit hardest were Pell Grants for college students, (while tuition goes through the roof), food stamps (while one in four American children already depends on them), transportation funding (while roads and bridges crumble) and pensions for federal employees.

Not members of Congress, of course.

Then the president put Medicaid, Medicare and Social Security on the chopping block.

Medicaid helps mostly those with no resources, a number that is rising with a vengeance. The administration has proposed to cut as much as $100 billion over the next 10 years, mostly by reducing funding to the states, cutting the Children’s Health Insurance Program and imposing restrictions on the states’ ability to tax hospitals and other health-care providers.
Corporate profit will be protected.

This will further squeeze the states and cut off health care for hundreds of thousands, and over the next 10 years millions, many of them the same children who increasingly lack a decent or sufficient diet. Nice.

Medicare is targeted for the biggest cuts, reportedly $353 billion over 10 years: cuts in prevention, medical education and public health programs. The future. Reimbursements will be slashed for hospitals that run up losses by treating patients who cannot afford to pay.

Charity and compassion must be discouraged.

The cuts in Medicare, combined with another administration proposal to raise the eligibility from age 65 to 67 will take a toll: An already large and growing number of older Americans will find themselves choosing between eating, getting a prescription, paying rent and paying their doctor.

Finally, Mr. Obama proposes cuts in Social Security, now, even though the fund is sound for another 20 years.

Two-thirds of the nation’s elderly rely on Social Security for most of their income, and for one-third, Social Security accounts for 90 percent of their income.

Wall Street has wiped out the investments, savings and home equity of millions, and Social Security is a life line for millions who worked all their lives but now have little left to carry them through old age.

But after months of bogus fear mongering over the debt and deficit as cover, Mr. Obama apparently concluded it was safe to turn his back on those struggling millions.

The change the White has proposed is an accounting devise designed to understate inflation and justify declining monthly support as people age. As noted by the actuaries of Social Security, the longer you receive benefits, the smaller they will be. Retire at 65, and by 85 the benefit level would be cut $1,000 a year; by age 95, $1,400 a year.

In Mr. Obama’s America, the longer you live the worse it will get.

Not for everyone, of course.

While wages for most Americans have remained flat for decades, the wealthiest saw their income double under Mr. Clinton, and triple again under Mr. Bush.

Americans have begun to wake up to the staggering transfer of wealth into the hands of a few, and with elections approaching the president and many in his party now say they want to raise the taxes of the richest.

Don’t hold your breath. Mr. Obama and too many members of Congress now depend heavily on the people who can pony up $75,000 per election in campaign contributions. So they will talk about taxing those Americans, but never put it to a vote without an off-set to give it back somewhere else.

Krugman offered up some pop psychology to explain Mr. Obama’s failure to stand up to the shameless monopoly of prosperity in America and protect the many millions now struggling.

“Mr. Obama is clearly still clinging to his vision of himself as a figure who can transcend America’s partisan differences.”

Translated: He’s just too nice and a little too naive for the job.

Earth to Paul Krugman.

Mr. Obama and the GOP are equally in the pocket of the nation’s established wealth, the latter set up to make the former look good in an increasingly grotesque parody of representative government.

Mr. Obama will be re-elected in a set piece against a GOP candidate pushed to the right of Ebenezer Scrooge. And while it is possible that champions will emerge in the next Congress to join the few brave souls now there who want to mount a resistance to the destruction of the American middle class, it is unlikely.

Reapportionment will make the safe seats safer, and campaign contributions, an army of lobbyists and the prospect of lucrative post-office sinecures will keep many, if not most members in line.

If there is to be a restoration of the prosperity of the American middle class and some hope for those who aspire to a better future for every American, leaders must be found outside Washington.

Saturday, July 2, 2011

Rome of the Caesars or England of the Tudors

“Let Freedom Ring”

By Mike Krauss
Bucks County Courier Times

I have a Fourth of July tradition. On the day, I read the Declaration of Independence, Lincoln’s Gettysburg Address, and thanks to the internet, I listen to Martin Luther King’s speech on the Mall in Washington.

The first two still give me goosebumps. The third stirs strong emotion.

The speech is named by its great refrain, “I have a dream.” But in that speech there is another refrain, and I have always thought that perhaps Dr. King thought that was the one that would be remembered. He gave the dream a name: freedom.

“Let freedom ring,” he said.

You have to hear it. Dr. King was a marvelous orator, and the changes in the cadence, timber and tone of his voice as he said those words over and over –“Let freedom ring!” – can make you hear the bell.

It rang clearly, defiantly for Jefferson and the Founding Fathers. “All men are created equal… they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.”

That declaration is the bedrock of democracy, although some of these ideas were already current in Europe, a part of Enlightenment thought, though not declared so boldly. (But the “pursuit of happiness” was pure American, Ben Franklin's inspired edit.) But there was more.

“That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it.”

That was news. The purpose of government is to secure the rights of the people, and the only legitimate government was republican, empowered by the people.

Lincoln understood how world changing that idea was, if it survived, if a nation “conceived in liberty and dedicated to the proposition that all men are created equal… can long endure.”

Well, by the grace of God and the sacrifice of generations it did endure, and prospered, and the bell rang loud and clear for more than another century.

But this July 4th the sound is muted and far off.

It must be hard to hear indeed for tens of millions of Americans who lost their jobs, homes and futures, and for whom the American dream has become the American ordeal.

And it must be almost impossible to hear for millions around the world, for whom the sight of an American soldier was once and not so long ago a cause for joy, but is now too often occasion for alarm, fear and even loathing.

And for Americans who cherish the Constitution, the sound can only be a sad echo of former things.

Constitutional protections like habeas corpus, which prohibit government from holding people indefinitely without presenting charges, and others which prohibit government from denying citizens the “due process and equal protection of the law” have been thrown out the window.

The Military Tribunals Commissions Act of 2006 allows anyone alleged to be an “unlawful enemy combatant” to be sentenced to death on the basis of secret and hearsay evidence.
American citizens may be similarly murdered based on a “finding” of some faceless “national security” bureaucrat: no judge, evidence or jury.

This is Rome of the Caesars or England of the Tudors.

The fourth amendment, which protected Americans from “unreasonable search and seizure” and guaranteed the privacy of their persons, homes and papers has been trashed.

Federal agents are now authorized to search anywhere, anytime for virtually any reason, as they do to track protesters (so much for free speech) or the cub scout who was groped or the aged and dying grandmother who was forced to strip and surrender her adult diaper in an airport.

“Warrant? Probable cause? What’s that?”

The driver in all this is the collapse of what was meant to be the “Peoples House” and the repository of representative and therefore republican government: the Congress of the United States. It was long ago hijacked along with the political parties.

Energy companies that make zillions are hauled before the Congress, asked why the people’s taxes ought to further subsidize their fantastic profits and then – nothing happens.

The robber barons who looted the wealth of a nation are similarly beaten up in public shows of righteous indignation, patently perjure themselves in attempts to avoid the truth of their fraud and then – nothing happens.

The Peoples House can no longer pass a budget, take responsibility for the spending it approved, assert its authority to make war or defend the rights of the people.

Small wonder that the presidency has taken on increasingly authoritarian powers. Nature abhors a vacuum. The Capitol being effectively vacant, the president has moved in.

The major change in American government over the course of the past forty years has been the elevation of profit to sacred status, and the subversion of the democratic and republican government of the Founders, Lincoln and King, as presidents and Congresses worship at profit’s altar.

If there is to be a “new birth of freedom” in America, if freedom is to ring again and Americans are once again to enjoy equally their God given rights, then corporate profit and power must be reined in.

Let freedom ring.

Tuesday, June 14, 2011

Skinner Box

Steady diet of panic and fear pits Americans against each other

Bucks County Courier Times

In a college course on psychology I studied behaviorism — the understanding that animals can learn, can be “conditioned” to make predictable responses to repeated stimulus and circumstances.

In one experiment, we placed laboratory rats in a small cage called a Skinner Box, named after one of the pioneers in the discipline, and observed the “bar press” response.

At one end of the cage was a bar on a hinge. When a rat eventually leaned on it, it was pressed down and released a food pellet into a tray. The rat ate it. The smarter rats made the connection quickly — do this and eat — but eventually even the dumb ones figured it out.

Then we put the same rats in another cage with a bar at both ends. One released a food pellet when pressed and the other did not, and we discovered the really smart rats.

We would later learn that people can be similarly conditioned to make predictable responses. This understanding is the basis of all modern advertising, and most politics.

For example, if a politician makes the right response when voting on legislation or directing policy, there may be a reward for that behavior; or in scientific terms, a stimulus to repeat that behavior. But some rewards are better than others, and some politicians learn very quickly indeed.

But voters can also be conditioned to pull the right lever. Say the word “jobs” or “values” after a politician’s name in a million dollar’s worth of 30-second spots over six weeks, and people start to associate them; even though the politician has no plan to create jobs and may well be devoid of values.

There was another experiment. We put a lot of rats in a big cage, and gradually reduced the food supply. The competition for the dwindling resource got ugly.

This is behavior that Americans have observed many times among people in the news from very poor, Third World countries and in some disasters. Now, we can see it daily in the United States.

As ever more of the wealth and resources of the United States are concentrated in fewer hands, and as food, housing, health care and other vital resources are withdrawn, the competition for what remains is getting ugly and Americans are set one against the other.

In some communities, teachers and unions seem to be the villain as Americans confront dwindling available resources and fight to hold on to what they have left.

Teachers, it is argued, have it too good — salaries, health care and retirement that are better than those of others. And in some communities that is true. But leaving aside for the moment that teachers did not steal these benefits, but rather secured then in contract negotiations to which there was another party — a democratically elected school board — it is interesting to note how some voters have been conditioned to make a particular response.

Instead of fighting for better wages, health care and retirement for themselves and everybody else, many seem only to want to pull down the teachers.

This is all the more remarkable because, while the rats in the Skinner Box could not know or understand that someone was manipulating the food supply, most American adults are capable of understanding that someone is manipulating and controlling the wealth and resources that could be shared to lift every American up, and there is no need to pull anyone down.

The American people are being conditioned to make these responses, no less than rats in a Skinner Box.

But people are more complicated than rats, and while physical stimulation and reinforcement can be useful, these methods are generally illegal (except at places like Guantanamo) and those who wish to produce desired political behavior must resort to emotional stimulation. Fear is the No. 1 tool.

So Americans are fed a steady diet of fear — terrorists (now that the Commies are gone), global financial collapse, and life threatening debt and deficits to persuade them that improving the lives of all is just not an option, and bringing down others is the only way for you — personally — to have any security in this evidently insecure world.

I mean, your job could go tomorrow. Did we mention that?

It is all so bogus. There is money all over the place in the United States, and rather than make scapegoats of teachers, or anyone else, adult Americans should be able to look at 10 years of ruinously expensive wars, decades of massive subsidies to a few favored industries, off-shored jobs, fantastic corporate wealth, the looting of the Treasury by a relative handful of Wall Street banksters, and politicians conditioned by legalized bribes to make all that possible — and figure it out.

And perhaps Americans are now figuring it out. There was a recent election in the county where this newspaper is published — education and income well above the mean in America. Nobody came. Turnout was the lowest ever recorded.

It may be that those who control the wealth of America have succeeded too well, and the American people have been conditioned by endless experience to understand, finally, that there is no connection between voting and their welfare.

I wonder what comes next?

Sunday, May 29, 2011

After the crash

The pauperisation of middle-class America

"With the crisis now in its fifth year, it's plain that the rich and powerful have restructured society toward ever-greater inequality."

From the Guardian, Friday 27 May 2011
By Richard Wolff

The current global crisis of capitalism began with the severe contraction in the housing markets in mid 2007. Therefore, welcome to Year Five. This inventory of where things stand may begin with the good news: the major banks, the stock market and corporate profits have largely or completely "recovered" from the lows they reached early in 2009. The US dollar has fallen sharply against many currencies of countries with which the US trades, and that has enabled US exports to rebound from their crisis lows.

However, the bad news is what prevails notwithstanding the political and media hype about "recovery". The most widely cited unemployment rate remains at 9% for workers without jobs but looking. If instead, we use the more indicative U-6 unemployment statistic of the US labour department's bureau of labour statistics, then the rate is 15.9%. The latter rate counts also those who want full-time but can only find part-time work and those who want work but have given up looking. One in six members of the US labour force brings home little or no money, burdening family and friends, using up savings, cutting back on spending, etc.

At the same time, the housing market remains deeply depressed as 1.5-2m home foreclosures are scheduled for 2011, separating more millions from their homes. After a short upturn, housing prices nationally have resumed their fall: one of those feared "double dips" downward is thus already under way in the economically vital housing market.

The combination of high unemployment and high home foreclosures assures a deeply depressed economy. The mass of US citizens cannot work more hours – the US already is No 1 in the world in the average number of hours of paid labour done per year per worker. The mass of US citizens cannot borrow much more because of debt levels already teetering on the edge of unsustainability for most consumers. Real wages are going nowhere because of high unemployment enabling employers everywhere to refuse significant wage increases. Job-related benefits (pensions, medical insurance, holidays, etc) are being pared back.

There is thus no discernible basis for a substantial recovery for the mass of Americans. The US economy, like so many others, is caught in serious stagnation, a situation flowing partly from the economic crisis that began in 2007 and partly from the way in which most governments responded to that crisis. Thus US businesses and investors increasingly look elsewhere to make money.

Rapidly rising consumption is not foreseeable in the US, but it is already happening where production is booming: China, India, Brazil, Russia, parts of Europe (especially Germany). Growth-oriented activity is leaving the US economy, where it used to be so concentrated. The US was already becoming less important as a production centre as profit-driven major US corporations shifted manufacturing jobs to cheaper workers overseas, especially in China. In recent decades, those corporations' export of jobs expanded to include more and more white-collar and skilled work outsourced to India and elsewhere. Now, US corporations are also spending their money on office, advertising, legal, lobbying and other budgets increasingly where the expanding markets are – and not inside the US.

Republicans are now celebrating "American exceptionalism", the unique greatness of living conditions in the US. Yet again, their politics stress vanishing social conditions whose disappearance frightens Americans who counted on them. In reality, the US is fast becoming more and more like so many countries where a rich, cosmopolitan elite occupies major cities with a vast hinterland of people struggling to make ends meet. The vaunted US "middle class" – so celebrated after the second world war even as it slowly shrank – is now fast evaporating, as the economic crisis and the government's "austerity" response both favour the top 10% of the population at the expense of everyone else.

The US budget for fiscal year 2011 is scheduled to spend $ 3.5tn while taking in $2tn in taxes. It is borrowing the other $1.5tn – the deficit – and thereby adding to the US national debt (already over $14tn, roughly the same as the annual output, or GDP, of the US). Such massive borrowing is what got Greece, Portugal, Spain, Italy and other countries into their current massive crises.

The "great budget debate" between Republicans and Democrats over the first few months of 2011 haggled over $60bn in cuts versus $30bn with the final compromise of $38bn. That $38bn cannot and will not make any significant difference to a 2011 deficit of $1,500bn (that is, $1.5tn).
Obviously, both Republicans and Democrats are agreed to do nothing more that quibble over insignificant margins of so huge a deficit. Meanwhile, they perform live political theatre about their "deep concern about deficits and debts" for a bemused, bored and ever-more alienated public.

Neither party can shake off its utter dependence now on corporate and rich citizens' monies for all their financial sustenance. Therefore, neither party imagines, let alone explores, alternatives to massive deficits and debts. After all, government deficits and debts mean: first, the government is not taxing corporations and the rich; and second, the government is, instead, borrowing from them and paying them interest. So, the two parties quibble over how much to cut which government jobs and public services.

Yet, the tax burdens of US corporations and the richest citizens (what they actually pay) are significantly lower than in most other advanced industrial economies. Indeed, they are far lower than they were inside the US a few years ago. In the mid 1940s, the corporate income tax brought Washington 50% more than the individual income tax. Today, the corporate income tax brings the federal government 25% of what is taken from individuals. In the 1950s and 1960s, the top individual income tax rate in the United States (the rate paid by the richest citizens on all their income over about $100,000) was 91%.

Today, that rate is 35%, a staggering cut in the taxes on the richest Americans, far larger than the cuts in anyone else's tax rates. Half or more of today's federal deficits would be gone if we simply taxed the richest US citizens at the rates in effect in the 1950s and 1960s. If we also taxed corporations in relation to individuals as we did in the 1940s, the entire deficit would vanish.

In summary, shifting the burden of federal taxation from corporations to individuals and from the richest individuals to the rest of us contributed to massive deficits and debts. Instead of correcting and reversing that unjust shift, Republicans and Democrats plan, instead, to deal with deficits and debts by cutting Medicaid and Medicare and threatening social security.

A revealing historical incident can introduce our conclusion about the capitalist crisis as it enters Year Five. In May 2011, as gasoline prices rose to between $4 and $5 per gallon, a US Senate committee run by Democrats summoned the heads of major oil companies to testify. The senators asked why the federal government should continue to provide them with special tax loopholes and direct subsidies of $4bn per year when their companies were earning record high profits. The Democrats had offered a meek plan to merely cut those loopholes and subsidies from $4bn to $2bn per year. After the hearings, the US Senate voted not to cut the loopholes and subsidies at all.

The largest corporations and richest citizens long ago learned that if you want to sustain an extremely unequal distribution of wealth and income, you need an equally unequal distribution of political power. Those corporations use their profits to pay huge salaries and bonuses to their executives, to pay big dividends to their major shareholders, and to "contribute" to politics. The corporations, their top executives and the major shareholders whom they enrich all regularly finance the political campaigns and politicians that perform that sustaining function. An increasingly unequal capitalist economy pays for the increasingly undemocratic politics it needs.

Any serious effort to change the basic situation, functions and direction of government policy must change the answer our society now gives to this basic question: who gets and disposes of the profits of producing goods and services in the US economy? So long as the answer remains corporations' boards of directors and major shareholders (the status quo), current trends will continue until bigger economic collapses bring the system to self-destruction. Then we will have graduated from a crisis with banks "too big to fail" to a crisis that is itself "too big to overcome."

A changed system – perhaps called "economic democracy" – in which the workers themselves collectively operate their enterprises would immediately redirect enterprise profits in different ways, with very different social consequences. For example, according the bureau of labour statistics, during 2010, the pay for average workers rose 2% while the pay for CEOs rose 23%. Workers who collectively directed their own enterprises would distribute pay increases very differently and far less unequally. Likewise, to take another example, self-directing workers would allocate their enterprises' profits to the government (that is, pay taxes) but demand in return the sorts of mass-focused social programmes that the current CEOs and boards of directors want government to cut. Democratic enterprises would have to work out collaborations and agreements with democratically run residential units (cities, states, etc) where their decisions impact one another.

This short article is hardly the place to work out the details of so changed an economic system. That is, after all, the task of democratic economic and political institutions to do together, once the change has been discussed, adopted and set in motion.

Throughout the cold war decades, and even after the USSR dissolved in 1989, we remained, as a nation, afraid openly to discuss and debate a basic economic issue. Does our economic system, capitalism, serve our needs sufficiently; does it need basic changes; or might a change to another economic system be best? Instead of a debate over alternative answers to such questions, we permitted little beyond self-congratulatory cheerleading for capitalism. Seriously questioning capitalism, let alone challenging it, remained taboo, an activity to keep repressed. That repression encouraged an unquestioned and unchecked US capitalism to become ever more unequal, delivering more "bads" than "goods" to ever larger majorities of people. This unsustainable situation is being strained to breaking point by the crisis that now enters Year Five

Thursday, May 19, 2011

It's all about banking

The Second American Revolution
From the Bucks County Courier Times
May 17, 2011

More than 80 years ago, Wall Street triggered the Great Depression and cast millions into poverty and despair. The capacity of the states and local governments to deal with the catastrophe was overwhelmed. President Franklin D. Roosevelt used the federal government in ways never before seen or imagined to rescue the American people.

Today, Americans are living through a Second Great Depression, again brought on by Wall Street. Tens of millions endure great hardship and deprivation. There is no rescue in sight from what one observer rightly called "a slow moving social catastrophe."

Now, Washington is powerless to help. It is dominated by corporate interests and the institutions of a federal establishment grown so grotesquely large they can no longer act, but only feed themselves.

But far from Washington a Second American Revolution may be underway, as states from Maine to California move to fill the vacuum left by a federal establishment that can no longer make any credible claim to represent the broad majority of the American people.

The seeds of this revolution were planted in North Dakota, in a long ago and little remarked act of independent and forward looking Americans. It was all about banking.

A few years after the creation of the Federal Reserve gave Wall Street effective control of banking, money and credit in the rest of the nation, North Dakota established a public bank, independent of the Fed, to insure a steady source of liquidity and credit for the state's farmers, businesses and families.

It has been an engine of prosperity. Last month the Bank of North Dakota (BND) reported a $2.6 billion loan portfolio of credit and liquidity injected into the state's economy and people, in partnership with community banks. The bank also reported another year of record profits - $62 million. These profits belong to the bank's only shareholder, the people of North Dakota, and were produced without taxation.

That in a state with a population of only 670,000.

The bank has also acted as a "rainy day" fund for the state, and when a North Dakota town suffered a massive flood and fire, the BND provided emergency credit lines to the city.

Having a less expensive and readily available credit line with the state's own bank reduces the need for municipal and county rainy-day funds that are a waste of capital; often invested in out-of-state banks, and often at very modest interest.

And the BND purchases municipal bonds and can fund infrastructure projects, offering dramatic reductions in the costs of debt service.

Again this year, almost alone among the states, North Dakota boasts a healthy surplus, low unemployment, a booming economy and a strong banking industry, aided in no small measure by something most Americans have never heard of: a publicly owned state bank.

As states and cities slash spending on even vital services and beggar the future, the Federal Reserve declared that it cannot help with their budget problems, although it advanced almost $12.3 trillion in liquidity and short-term loans to bail out Wall Street - an amount 64 times the $191 billion required to balance the budgets of all 50 states.

It didn't matter in North Dakota.

On May 2, Treasury Secretary Geithner announced that the Treasury would stop issuing special securities that help state and local governments pay for their debt.

It won't matter in North Dakota.

Faced with the endemic failure of the federal establishment and the dire needs of the people, legislators in more than a dozen states have embraced the example of North Dakota, and fired the first shots in what may become the Second American Revolution, introducing legislation to form state-owned banks or to study their feasibility.

The Center for State Innovation performed detailed analyses for two of those states, Washington and Oregon. Their conclusion was that a publicly owned bank on the model of the Bank of North Dakota would have a substantial positive impact on employment, new lending, and government revenue in those states.

State and even municipal level public banks have the potential to direct trillions of dollars of credit and hundreds of billions in revenue into locally directed economic expansion, creating jobs and building up prosperity - without raising taxes and without the helpful hand of federal bureaucrats.

Hyperbole? Wishful thinking? Consider California. The state has the eighth largest economy in the world, and it has a debt burden to match. But as large as California's liabilities are, they are exceeded by its assets: immense revenues, investments, pensions and other funds which are sufficient to capitalize a bank to rival any in the world.

Following the BND model and adhering to the reserve requirements that the "too big to fail banks" ignored or evaded before they failed, a public bank in California could be formed with $12 billion in capital and $148 billion in deposits, which in turn could generate $133 billion in credit for the state. Such a proposal is circulating now among California legislators and policy makers.

No other state can match California's ability to capitalize a public bank. But in the aggregate, the potential impacts of only a dozen state banks are revolutionary. A river of credit, investment and revenue, locally generated and locally directed, bypassing Washington, Wall Street and the Fed.

Now as before, it's all about banking.

Friday, May 6, 2011

From rugged to savage individualism

The soul-less and the cynical

By Mike Krauss
Bucks County Courier Times

The GOP in Congress and Wall Street's man in the White House have staked out their positions on the debt and deficit. Both are campaign maneuvers. One is utterly soul-less and the other completely cynical.

And both ignore the only thing that can now help Americans climb out of the Second Great Depression: jobs.

Candidate Obama promised jobs. He didn't deliver. House GOP leader Boehner taunted daily, "Where are the jobs, Mr. President?" Now Boehner is the Speaker.

"Where are the jobs, Mr. Speaker?"

He couldn't care less, and the president so far lacks the will - or even the compassion - to go after the money to make the jobs.

Let's start with the proposals of the new GOP wonder-child, Congressman Paul Ryan. Even David Stockman, former budget director for Ronald Reagan thinks the Ryan proposals are a tax cut too far: "Trapped between the religion of low taxes and the reality of huge deficits, the Ryan plan appears to be an attack on the poor in order to coddle the rich."

When Stockman refers to the GOP devotion to low taxes as a "religion", he gets close to the truth of the modern GOP.

Ryan and his crowd are disciples and apostles of Ayn Rand, a novelist hailed as prophet who championed the individual and markets and hated any form of public limits on private activity. Alan Greenspan, former Fed chairman and one of the architects of the government of the rich, by the rich and for the rich was another of Rand's disciples.

All politics is not local, as a famous New York mayor long ago suggested. It is personal. And a look at Rand's biography tells you a lot about the person.

Rand was born in Russia in 1905. The Bolshevik Revolution and resulting communist state destroyed the prosperity of her family, part of the middle class that the Bolsheviks killed off. She hated them.

Rand got to America and made her way as a writer. Her big book, Atlas Shrugged, is Holy Scripture to the modern GOP. It preaches the virtue of the individual and the right to keep the fruits of your labor. Rand published Atlas Shrugged when the tax rate on the wealthiest Americans was 91 percent.

She hated that, too.

The justification for taxes is that we have shared responsibilities to each other. So, that had to go. Rand had no interest in or sympathy for the weak.

Rand's protagonist in Atlas Shrugged is a strong woman who battles heroically to save a railroad. The book was written in the 1950s when there were virtually no female executives in the transportation and distribution industry. There are few today. And Rand made her American life in the male dominated world of Hollywood producers and Manhattan publishers.

Strength was Rand's religion.

Like Dickens' character Scrooge, who so perfectly captured the grinding soul-lessness of the Industrial Revolution, Rand thought the surplus population of the weak was an impediment to creation of the healthy society of the strong and the new Golden Age.

And here it is.

Tens of millions of ordinary Americans without jobs, homes, health care, decent diets, educations, and futures. The nation is in a depression, and the GOP plans to make life even more difficult for the already afflicted, to protect those people of value to the future - the already wealthy.

Where the modern GOP is coming from is best observed in the debate over health care. It's the best in the world, say Ryan and his crowd. But two statistics put the lie to the claim. Life expectancy in the United States is now lower and infant deaths far higher here than in almost every other modern, industrialized society; although we did beat out Portugal on life expectancy. (But not on infant mortality)

What Ryan means to say, but cannot, is that the right Americans have great health care and are living longer, and the right Americans do not and are dying. Rugged individualism has given way in the GOP to savage individualism.

Like a lot of the leadership of the modern GOP, Ryan likes to dress up as a Christian and go to church. He just pays no attention while there.

That brings us to the campaigner-in-chief in the White House. The best Mr. Obama can manage is to suggest maybe the rich can pay more taxes, as a ploy to keep the poor and enough of the middle class on board for his re-election. It just isn't good enough.

The unfunded health and Social Security liabilities looming on the horizon are problems not because they are overly generous - but because they are unfunded.

Privatizing health care and retirement just gives Wall Street access to more trillions to gamble away.

Everyone will have to pay a bit more in taxes, and the rich a lot more, and most Americans could support that - if they had jobs and decent wages and saw an end to government-sanctioned corporate looting and a mindlessly over-extended and ruinously expensive military.

Is there a way forward for America? Of course there is. Will this president and Congress lead? Not a prayer.

With the soul-less apostles of a bitter Russian refugee dominating Congress, and a president far better at campaigning than governing, it will fall to the states and the people to rescue the American dream and save the American democracy.