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The President attended the final sessions of the Summit of Americas. By all accounts the summit was success..
Before leaving and flying back to Washington the President held a news conference. Transcript
The Daily Hatch
Milton Friedman – A Conversation On Minimum Wage FREE TO CHOOSE
Office of Barack and Michelle Obama
P.O. Box 91000
Washington, DC 20066
I wrote you over 700 letters while you were President and I mailed them to the White House and also published them on my blog http://www.thedailyhatch.org .I received several letters back from your staff and I wanted to thank you for those letters.
There are several issues raised in your book that I would like to discuss with you such as the minimum wage law, the liberal press, the cause of 2007 financial meltdown, and especially your pro-choice (what I call pro-abortion) view which I strongly object to on both religious and scientific grounds, Two of the most impressive things in your book were your dedication to both the National Prayer Breakfast (which spoke at 8 times and your many visits to the sides of wounded warriors!!
I have been reading your autobiography A PROMISED LAND and I have been enjoying it.
Let me make a few comments on it, and here is the first quote of yours I want to comment on:
The financial system was in a meltdown and taking the American economy with it.
As I saw it, the combination of globalization and revolutionary new technologies had been fundamentally altering the American economy for at least two decades…. By 2007, the American economy was not only producing greater inequality than almost every other wealthy nation but also delivering less upward mobility.
I believed that these outcomes weren’t inevitable, but rather were the result of political choices dating back to Ronald Reagan. Under the banner of economic freedom—an “ownership society” was the phrase President Bush used—Americans had been fed a steady diet of tax cuts for the wealthy and seen collective bargaining laws go unenforced. There had been efforts to privatize or cut the social safety net, and federal budgets had consistently underinvested in everything from early childhood education to infrastructure. All this further accelerated inequality, leaving families ill-equipped to navigate even minor economic turbulence.
I was campaigning to push the country in the opposite direction. I didn’t think America could roll back automation or sever the global supply chain (though I did think we could negotiate stronger labor and environmental provisions in our trade agreements). But I was certain we could adapt our laws and institutions, just as we’d done in the past, to make sure that folks willing to work could get a fair shake. At every stop I made, in every city and small town, my message was the same. I promised to raise taxes on high-income Americans to pay for vital investments in education, research, and infrastructure. I promised to strengthen unions and raise the minimum wage as well as to deliver universal healthcare and make college more affordable.
I wanted people to understand that there was a precedent for bold government action. FDR had saved capitalism from itself, laying the foundation for a post–World War II boom.
Clinton and not Reagan was responsible for the 2008 housing bubble crisis because of home buying subsidies! Take a look at this quote from the article below:
The sordid tale begins in 1994, with President Bill Clinton and his National Partners in Homeownership. U.S. politicians long have sought to win votes with homebuying subsidies, but Mr. Clinton took the strategy to new levels. “It was unheard‐of for regulators to team up this closely with those they were charged with policing,” observe the authors.
WALTER WILLIAMS WAS VERY CLEAR IN HIS WRITINGS THAT THE MINIMUM WAGE LAW DROVE UP BLACK UNEMPLOYMENT NUMBERS FOR THE YOUNG PEOPLE.
Walter Williams recently passed away and here are some words about him:
The state, Williams argued, typically forced blacks into hopeless situations, provided ineffective relief, and then blamed the victims for failing to rise above their circumstances, all while consolidating power into elite hands. Seemingly beneficial interventions such as minimum wage laws that priced unskilled blacks out of the labor markets, public housing in crime-ridden projects, and mandatory schooling at terrible public institutions were particularly pernicious because they came wrapped in a rhetoric of beneficence
Obama, all in on free trade
President Obama opposed "free trade" (specifically, NAFTA) when he ran for president in 2008. He campaigned to "renegotiate" the most successful trade agreement in U.S. history. Trade with Mexico tripled under NAFTA. In the end, he did not renegotiate NAFTA. He went on to promote a trade agreement with Colombia negotiated mostly by President George W. Bush.
With his Trans-Pacific Partnership (TPP) negotiations (with 11 other Pacific Rim countries), Obama has totally reversed his 2008 position. He is all-in now on free trade and fast-track authority.
Funny how the real world makes political campaigning look silly compared to real governance and on-the-job-training. Businessman Donald Trump Donald TrumpWhat blue wave? A close look at Texas today tells of a different story Democrats go down to the wire with Manchin Trump's former bodyguard investigated in NY prosectors' probe: report MORE needs to learn that.
More than 21 years ago, on Jan. 1, 1994, NAFTA (between the United States, Canada and Mexico) went into effect. In its first month, the Bureau of Labor Statistics (BLS) counted 122 million Americans working. Unemployment was 6.7 percent for all Hispanic unemployment was 10.2 percent and black unemployment was 12.6 percent.
A revolt of Maya Indians in the southern Mexican state of Chiapas commenced that same day, with NAFTA being an excuse for the communist leaders of the revolt. They joined liberal/conservative American counterparts in objecting to NAFTA despite the United States being the largest market for Chiapas's principal product, coffee. After brief combat, the Mexican government isolated the rebels and the revolt petered out to insignificance.
NAFTA was negotiated by President George H.W. Bush using fast-track authority, which allows the president to negotiate a trade deal and for Congress to vote up or down only, with no amendments allowed. Both houses approved NAFTA in 1993 and it was signed into law by President Clinton. NAFTA had solid support from almost all congressional Republicans and was opposed by most House Democrats.
Opposed to NAFTA were ultraconservatives like Pat Buchanan, a handful of House Republicans like California's (now former) Rep. Duncan L. Hunter, and election spoiler Ross Perot. On the left were the AFL/CIO, Jesse Jackson, liberal groups and a majority of Democratic House members and senators (for the latter, 17 of 34 voted against, 16 voted "for," with one senator not voting). The media labeled the opposition the "Halloween Coalition." Despite his political base's opposition, Clinton called NAFTA an "achievement."
When Clinton left office on Jan. 20, 2001, these were the BLS numbers of jobs, unemployment and weekly wages: Working, 136 million people unemployment was 4.2 percent for all, black unemployment was 7.6 percent and Hispanic unemployment was 5.6 percent. Weekly earnings were $480.89.
Clinton claimed to have created 20 million new jobs while he was president. The BLS numbers show us that 14 million more people were working six years after NAFTA went into effect and that black and Hispanic unemployment was slashed almost by half since Jan. 1, 1994.
Objectively speaking, NAFTA's effect on the economy has been far more positive than not. NAFTA opponents had predicted the sky would fall and millions of jobs would disappear.
"The Mexicans are coming, the Mexicans are coming" was the war cry of opponents Perot, Buchanan, Jackson, the AFL/CIO, Hunter (who briefly ran for president) the Mexicans were coming to steal American jobs. They wrongly predicted that millions of jobs would be lost to Perot's "giant sucking sound" from Mexico.
In NAFTA, there was a provision that provided for help and retraining for any American worker whose job was lost to Mexico or Canada. Between Jan. 1, 1994, through 2004, a grand total of 500,000 American workers made claims under that NAFTA provision: 50,000 a year. Contrast that with the increase of 14 million jobs documented by BLS between Jan. 1, 1994 and January 2001. That is a net gain of 13.7 million jobs. That is 2.28 million new jobs a year. The predictions of NAFTA opponents were wrong.
In the current arguments about Obama's Trans-Pacific Partnership, we see and hear the very same arguments used against NAFTA 22 years ago.
For example, businessman Trump (like Perot in 1993) in an ersatz presidential campaign declares that Mexico is the enemy because its automobile industry is booming. Ford, General Motors, Kia, Hyundai, Nissan, Audi and Mercedes-Benz have announced new car manufacturing factories/facilities in Mexico, creating close to 50,000 new high-paying Mexican jobs, plus ancillary jobs throughout the Mexican economy. Trump declares that booming Mexico is at war with the U.S.
Mexico manufactured 2.9 million cars in 2014, with 70 percent going to the U.S. Trump is in for a real shock when he finds out that Mexico is expected to export 5 million cars in 2020. Seventy percent to the U.S.?
General Motors manufactured 678,388 cars in Mexico in 2014 Nissan makes 600 cars a day in its one-year-old Mexican plant, employing 3,000. Almost every single Volkswagen sold in the U.S. is made in Mexico. Audi, Mercedes-Benz and Infiniti are coming to Mexico. A question Trump never asks is: Why is the auto manufacturing industry growing in Mexico? Answer: Mexican auto workers earn 20 percent of their Detroit counterparts, have equal skills, noticeably work harder and have more robotics than yesterday's Detroit.
For every Mexican auto worker and auto parts worker (Mexico is No. 6 in the world in auto parts manufacture) plus ancillary jobs, fewer Mexicans come to the U.S. for jobs. Additionally, that means many more Mexican visitors to California's Disneyland, San Diego's zoo and Sea World as well as Neiman Marcus stores and myriad hotels. Billions of foreign investment dollars are fueling the massive breakout of Mexico's industries that are hiring workers as fast as they apply. That results in billions of dollars being spent by vacationing Mexicans in the U.S. for goods and services and hundreds of billions more in bona fide trade.
If only people like Trump knew or recognized that, they would not oppose President Obama's Trans-Pacific Partnership that will affect over 25 percent of the world's commerce and bring billions of dollars in new trade to the United States.
This piece has been corrected to reflect the actual number of countries in the Trans-Pacific Partnership.
Contreras formerly wrote for Creators Syndicate and the New American News Service of The New York Times.
Barack Obama and Raúl Castro meet in Panama
For the first time in over 50 years, the presidents of the United States and Cuba meet on April 11, 2015. Barack Obama and Raúl Castro, President of Cuba and brother of Fidel Castro, with whom the United States broke off diplomatic contact in 1961, shook hands and expressed a willingness to put one of the world’s highest-profile diplomatic feuds in the past.
President Dwight D. Eisenhower had cut diplomatic ties with Cuba after the Castro-led revolution overthrew a U.S.-backed dictator and installed a regime that was friendly with the Soviet Union. For the next five decades, the U.S. sought to isolate Cuba economically and politically though it failed to get other nations to join its embargo, it did manage to severely hamstring Cuba’s economic development. Fidel Castro stepped down as president in 2008, the same year that Obama was elected. Early in his administration, Obama signed laws and executive orders that eased the U.S. embargo of Cuba and made it easier for Americans to travel to the island nation. Taking over for his brother, Raúl Castro expressed a willingness to reciprocate, and the two shook hands at a memorial service for Nelson Mandela in 2013. That year, officials from the two nations discussed normalizing relations at secret talks facilitated by Pope Francis I in Canada and at the Vatican.
The following April, Castro and Obama met, shook hands, and posed together for photographs in Panama City, Panama. Both leaders stressed their desire to work together, but warned that their meeting was only the beginning of what would have to be a long dialogue. A short time later, the Obama administration removed Cuba from its list of state sponsors of terror, and the diplomatic relationship was officially re-established in July.
‘Kansas guy’ Obama recalls family history in call for expanded child care
LAWRENCE, Kan.— President Obama came to the University of Kansas on Thursday to pitch his new economic policies, arguing, “So we’ve got to make sure that all people have the tools and the support that they need to take advantage of this growing economy.”
Speaking to an enthusiastic crowd of more than 7,000, the president highlighted his family connections to the state — “I’m a Kansas guy” — and argued that the country needs to expand federal support for working parents. Obama has proposed expanding child care to more than 1 million children over the next decade and offering a tax credit of up to $3,000 per child per year.
Obama recalled how his grandmother Madelyn Dunham worked on an assembly line in Wichita during World War II when his mother was little — and how the nation provided child care for working mothers across the country back then.
“She was like Rosie the Riveter, Madelyn,” the president said. “So this country provided universal child care because they understood that if women are working, they’re going to need some help — right?”
“These aren’t just nice-to-haves — this is a must-have,” he said of child-care benefits. “So the point is, if we knew how to do this back in 1943 and ’44, and here we are in 2015, what’s the holdup?”
Noting that in 31 states, high-quality child care costs more than a year of tuition at a state university, the president recalled that he and his wife struggled to pay for their daughters’ care when they were younger.
“By the way, this is personal for me,” he said. “ . . . Trying to figure out how to manage child-care costs was extraordinary at the same time that you’re paying back student loans. . . . I don’t want anyone to be day-care poor.”
The president was introduced by Alyssa Cole, a senior majoring in history and African and African American studies who is the single mother of children ages 3, 4 and 7. Cole wrote Obama in 2013 about her struggle to balance getting her education with working and caring for her kids.
“I wrote the letter because I did not want to make the choice among the three,” Cole said. “There were times when I spent my entire paycheck on a week of day care, a cycle that is impossible to maintain.”
In a call with reporters Thursday, White House domestic policy director Cecilia Muñoz noted that federal subsidies are reaching only 1 in 6 eligible children the current program applies to families with incomes below 200 percent of the poverty line, or about $40,000 for a family of three.
“This represents a tremendous increase in the federal child subsidy program,” Muñoz said, adding that broadening the program would cost $80 billion and be paid for out of the $320 billion in new taxes the president has proposed levying on the wealthy and large financial institutions.
The plan would double the average subsidy compared with current law, with some variation between states, and would nearly double the number of children served from 1.4 million to 2.6 million.
Betsey Stevenson, a member of the White House Council of Economic Advisers, said in the press call that the kind of centers Obama’s grandmother took advantage of in the 1940s “served nearly 130,000 children a year.”
Stevenson added that recent studies have shown that children who attended those day-care facilities were, as adults, “more likely to be employed [and] more likely to be working than their peers who did not have access to these centers,” even into their 50s.
The trip to Kansas, a day after Obama visited Idaho for the first time as president, is part of a new effort by the White House to reach out to conservative Americans.
“This is the heartland. This is the middle of the country,” said a senior administration official who spoke on the condition of anonymity to discuss the event before it took place. “The policies the president is talking about, and the values behind them, are based on common sense and should have broad appeal.”
In this liberal college town, however, the president was largely preaching to the converted. Linda Zebley, a retired researcher from KU’s School of Social Welfare and a registered Democrat, said in an interview, “I just love him.”
“I think he’s right to focus on the middle class,” said Zebley, who was sitting with her husband, Steve Flynn. But she added that many members of her family who are from the area are Republican and remain skeptical of Obama’s policies. “So we don’t discuss politics at Thanksgiving dinner.”
Obama acknowledged the state’s conservative stance as he discussed how his mother, Stanley Ann Dunham, and her parents hailed from here.
“Now, that helped me in the caucus here in 2008,” the president said. “It didn’t help me as much in the general election. . . . Listen, I love you — and I might have won sections of Lawrence. That’s possible.”
The president also took aim at partisanship in Washington. While Republicans listened to his policy ideas during the State of the Union address Tuesday, “you know, I didn’t get as much applause from them as I was hoping,” he said, laughing a little.
“You can’t pretend that there’s nothing we can do to help middle-class families get ahead,” he said. “ . . . The answer just can’t be ‘no’ to everything. . . . At some point you’ve got to say ‘yes’ to something.”
Referring to Obama’s economic plan, Cory Fritz, spokesman for House Speaker John A. Boehner (R-Ohio), said, “Republicans are all for increasing access to quality, affordable education, but we don’t need more top-down policies from Washington or new tax hikes on middle-income families saving for their children’s college education.”
Before delivering the speech, Obama stopped by Lawrence’s Community Children’s Center, which started in 1965 with one of the first grants under the Head Start program. The president was eager to talk with the children, ages 3 to 5, asking them, “You guys are working on your letters?”
When one child asked his name, he replied, “I’m Barack.”
“I saw you on my TV,” another said, while a third chimed in, “I saw him on the news.”
“I’ve been on the news sometimes,” the president said.
The children at the center were reading the Dr. Seuss book “The Sneetches,” a parable warning about the perils of discrimination.
“Are these the Sneetches? The star-belly Sneetches? The Sneetches with no stars on ‘thars’? That is one of my favorite stories,” Obama said. “In fact, most of the things I deal with as president would be solved if everybody read about the Sneetches. Because there are some people who think they’re special because they’ve got stars, and some who feel bad because they don’t.”
Presidential Proclamation--Patriot Day and National Day of Service and Remembrance
In the aftermath of the terrorist attacks of September 11, 2001, the American people demonstrated that in times of hardship, the values that define us do not simply endure -- they are stronger than ever. As a Nation, we responded to unthinkable tragedy with an outpouring of service and goodwill. On that dark day, first responders rushed into a burning Pentagon and climbed the stairs of smoking towers on the verge of collapse, while citizens risked their own health and safety to prevent further heartbreak and destruction. As Americans, we came together to help our country recover and rebuild.
Today, we pay tribute to the selfless heroes and innocent victims of September 11, 2001, and we reaffirm the spirit of patriotism, service, and unity that we felt in the days and months that followed. By volunteering our time and unique skills, we can enrich communities across our country, and together, we can strengthen our Nation to meet the challenges of the 21st century.
In the days to come, I ask all Americans to join together in serving their communities and neighborhoods in honor of the victims of the September 11 attacks. Today and throughout the year, scores of Americans answer the call to make service a way of life -- from helping the homeless to teaching underserved students to bringing relief to disaster zones. I encourage all Americans to visit Serve.gov, or Servir.gov for Spanish speakers, to learn more about service opportunities across our country.
As we join in serving causes greater than ourselves and honoring those we lost, we are reminded of the ways that the victims of 9/11 live on -- in the people they loved, the lives they touched, and the courageous acts they inspired. On Patriot Day and National Day of Service and Remembrance, we pledge to carry on their legacy of courage and compassion, and to move forward together as one people.
By a joint resolution approved December 18, 2001 (Public Law 107-89), the Congress has designated September 11 of each year as "Patriot Day," and by Public Law 111-13, approved April 21, 2009, the Congress has requested the observance of September 11 as an annually recognized "National Day of Service and Remembrance."
NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, do hereby proclaim September 11, 2011, as Patriot Day and National Day of Service and Remembrance. I call upon all departments, agencies, and instrumentalities of the United States to display the flag of the United States at half-staff on Patriot Day and National Day of Service and Remembrance in honor of the individuals who lost their lives on September 11, 2001. I invite the Governors of the United States and the Commonwealth of Puerto Rico and interested organizations and individuals to join in this observance. I call upon the people of the United States to participate in community service in honor of those our Nation lost, to observe this day with appropriate ceremonies and activities, including remembrance services, and to observe a moment of silence beginning at 8:46 a.m. Eastern Daylight Time to honor the innocent victims who perished as a result of the terrorist attacks of September 11, 2001.
IN WITNESS WHEREOF, I have hereunto set my hand this ninth day of September, in the year of our Lord two thousand eleven, and of the Independence of the United States of America the two hundred and thirty-sixth.
Indyk, Martin S. et al. “Scoring Obama’s Foreign Policy: A Progressive Pragmatist Tries to Bend History.” Foreign Affairs , vol. 91, no. 3, 2013, pp. 29–43. www.jstor.org/stable/23217964. Accessed 6 November 2016.
Lieberthal, Kenneth, and Wang Jisi. “Addressing US-China strategic distrust.” Brookings Institution , Mar. 2012, https://www.brookings.edu/wp-content/uploads/2016/06/0330_china_lieberthal.pdf. Accessed 6 November 2016.
Rudd, Kevin. “Beyond the Pivot: A New Road Map for U.S.-Chinese Relations.” Foreign Affairs , vol 92, no.2, 2013, pp. 9-15, https://www.foreignaffairs.com/articles/china/2013-02-11/beyond-pivot. Accessed 6 November 2016 .
Ross, Robert S. “The Problem with the Pivot.” Foreign Affairs , vol. 91, no. 6, Nov/Dec2012, pp. 70-82. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=82763798&site=ehost-live.
Tong, James. “China’s Rise.” POL SCI 159A Government and Politics of China: Chinese Revolution and Age of Mao Zedong, University of California, Los Angeles, 7 March 2015, Public Affairs, Los Angeles, IN. Lecture.
Wang, Chi. Obama’s Challenge to China: The Pivot to Asia. Ashgate Publishing, 2015.
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Robert Kuttner and Michael Hudson on the Obama Administration’s $789 Billion Economic Stimulus Package and $2.5 Trillion Bank Recovery Plans
Both the House and Senate are set to vote today on the $789 billion economic stimulus package. The vote follows weeks of political wrangling that culminated in compromise legislation struck on Wednesday. The final size of the package is less than what both the House and Senate originally passed and far smaller than what many economists say is needed. But it still marks the nation’s largest economic rescue program since Franklin Roosevelt launched the New Deal. [includes rush transcript]
Related StoryStory Mar 19, 2020 Joseph Stiglitz: Trump’s “Trickle-Down” Economic Plans Are Not Enough to Meet Coronavirus Challenge
JUAN GONZALEZ : Both the House and Senate are set to vote today on the $789 billion economic stimulus package. The vote follows weeks of political wrangling that culminated in compromise legislation struck on Wednesday. The final size of the package is less than what both the House and Senate originally passed and far smaller than what many economists say is needed. But it still marks the nation’s largest economic rescue program since Franklin Delano Roosevelt launched the New Deal.
The final bill includes $507 billion in spending programs and $282 billion in tax relief. Independent Senator Joseph Lieberman hailed it as a bipartisan achievement.
JUAN GONZALEZ : House Democrats have voiced criticism that the final legislation more closely resembles the less-expensive measure approved by the Senate. $20 billion in education funding was cut, along with $30 billion for state governments to prevent reductions in social services to the poor and unemployed. But some key boosts to social programs were preserved, including a $20 billion allotment for food stamps.
Most Republican lawmakers have opposed the stimulus. The partisan divide extended to the White House Thursday, when Senator Judd Gregg of New Hampshire withdrew his nomination as Commerce Secretary. The Republican, Gregg, cited what he called “irresolvable conflicts” with the economic stimulus plan.
SEN . JUDD GREGG : Well, I want to begin by thanking the President for considering me for the position of Secretary of Commerce. This was truly a great honor, and I had felt that I could bring some very positive and instructive things to this administration and was looking forward to that. However, as we proceeded down the road here since the nomination was made, it’s become clear to me that &mdash you know, I’ve been my own person for thirty years. I’ve been a governor, and I’ve been a congressman, I’ve been a senator, made my own decisions, stood for what I believe in. You know I’m a fiscal conservative, as everybody knows, fairly strong one.
JUAN GONZALEZ : Gregg is Obama’s second Commerce pick to withdraw from nomination, following New Mexico Governor Bill Richardson.
Meanwhile, more federal aid for the nation’s banking system is likely on the horizon. In a new report, New York University economist Nouriel Roubini estimates financial firms stand to lose up to $3.6 trillion on troubled loans and devalued assets. Echoing other economists, Roubini concludes the US banking system is “effectively insolvent.”
AMY GOODMAN : For more on the economy, we’re joined now by two guests. Here at the firehouse studio, Michael Hudson, Distinguished Research Professor at University of Missouri, Kansas City. A former Wall Street economist, he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire. His latest article, “Obama’s Awful Financial Recovery Plan.” It’s online at counterpunch.org.
Joining us from Washington, D.C., Robert Kuttner, journalist and economist, co-founder and co-editor of The American Prospect magazine, as well as Distinguished Senior Fellow at the think tank Demos. His latest book is called Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency.
Michael Hudson, let’s begin with you here in New York. Why do you think that Obama’s financial recovery plan is “awful”?
MICHAEL HUDSON : Because it’s not leading to recovery at all. It’s now up to $12 trillion. It’s a giveaway to the banks, to the creditors, without a single penny for actual debt reduction. And I had thought that at least half a percentage point, $50 billion, was going to be to write down troubled mortgage debtors, but it turns out that not a penny of mortgage debt is going to be written down. When the banks have lent more money than a mortgage owes, with 38 percent, the government is going to create its own debt to come in and make up the difference, so the debt is going to continue to grow exponentially, and it’s way beyond the ability of the economy to pay. If people have to pay the amount of debt that they have now, there won’t be any money to buy goods and services, companies will not sell as much, they’ll invest less, they’ll hire less, and they’ll continue to downsize.
And what’s happened is that this is the greatest transfer of wealth really in American history. It’s doubled the American debt. The closest parallel I can think of is William the Conqueror’s conquest of England. He came with a military band, conquered the land and imposed taxes over the whole land, basing it all on the Domesday Book, what &mdash the rent could be squeezed out. In this case, the rip-off has been non-military. The bankers have done insider dealing to get the government to give them or guarantee them $12 trillion of bad loans they’ve made, many of them fraudulent.
And then they’re trying to blame the poor for all this, as if the poor are somehow exploiting the rich by taking out more loans than they can pay. Yesterday, Senator McCain said &mdash he warned that all of this debt was going to be paid by the future generation, and we’re exploiting them. But that’s not how to think of it at all. When you have a debt that goes to a future generation, you have taxpayers paying to bondholders, just like in the nineteenth century you had the western states paying to the eastern states. So what you’ve done is given $12 trillion to the richest one percent &mdash or ten percent of the population, and you’ve indebted the economy and the government to them for the next hundred years. You’ve created a new class of ruling families.
And Obama has &mdash by doing this, he’s broken with every president in history. Whenever the debts have exceeded the ability to pay, they’ve been written down to the ability to pay, either through bankruptcy or through conscious government write-down. But instead of writing down the debts, he says the creditors are not going to lose money, despite what Mr. Roubini said. They may have lost money, but they will be made whole by the government. And that’s crazy. That’s why every economic chart you see, there will be a gradual rise and then a sudden collapse. Everything is turned into a vertical fall. Prices, international shipping, employment, profits, they’ve all hit a wall. And there’s no way that the economy can recover when people have to pay interest and amortization instead of buying goods and services, or companies will have to pay their junk bond holders instead of investing in new equipment.
JUAN GONZALEZ : Let me ask Robert Kuttner &mdash I don’t know if your analysis is as pessimistic of the recovery package. But also, I’d like to ask you why, if everyone agrees that the heart of the original trigger for this crisis was the mortgage crisis, is the &mdash the helping out of homeowners continues to be pushed back in the response to it?
ROBERT KUTTNER : Well, my analysis is somewhat different from Mr. Hudson’s analysis. I don’t think this adds up to $12 trillion, and we can have a little debate about that. But I do think that the plan does not go nearly far enough and, in some respects, is just completely wrongheaded.
I think you have to divide what needs to be done into three areas. Number one, we need to refinance mortgages directly so that aid goes directly to homeowners, and the banks and the bondholders who profited from these Mafia loans take the hit, and homeowners stay in their homes. That’s what Roosevelt did in the ’30s with the Home Owners’ Loan Corporation, where the government refinanced mortgages directly. So that’s the first big problem. They haven’t done anything, and the approach they’re taking, when they do get around to it, is wrong, because it bails out bondholders and bankers rather than homeowners.
Secondly, the stimulus is too small by about a factor of three. Just to take one example, state and local governments are going to be out of revenues to the tune of $400 to $500 billion over the next two years. The money in the stimulus package, about $140 billion. So, you know, these are layoffs of teachers and police and fire and cuts in programs that are completely needless. All the government has to do is write a check, and state and local services can continue.
The biggest problem of all is the Geithner plan to try and bring hedge funds and private equity companies with loans from the Federal Reserve as a way of propping up banks. It’s resuscitating the same system that got us into this mess. It’s totally wrongheaded. All of the economists who I respect, from Joe Stiglitz to Paul Krugman to Nouriel Roubini, all argue that, sooner or later, we’re going to have to nationalize the banks, clean out the bad assets, make the bad actors take a hit, replace corrupt management, and clean the slate so that we start out with new &mdash with viable banks that can get the credit system operating again. And the longer we defer that with more pyramid schemes financed by the Fed or the Treasury or the taxpayers, the deeper the hole is.
You asked the question, why we’re not doing it right. The problem is political. On the one hand, Obama has hired a lot of Bob Rubin’s protégés, who aren’t even advocating the right policy. On the other hand, the Republicans are stonewalling him across the board. And so people like Susan Collins, senator from Maine, who are pretty conservative get to block this thing. The only way to end this blockage is for Obama to go to the country and to become a lot more radical, because the times demand radical solutions.
AMY GOODMAN : We’re talking to economists Robert Kuttner and, here in New York, Michael Hudson. We’ll be back with them in a minute.
AMY GOODMAN : Our guests are two economists. Robert Kuttner joins us from Washington, D.C. His latest book is Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency. Michael Hudson is also with us. He’s here in New York. He has also written many books. His latest article, though, is “Obama’s Awful Financial Recovery Plan.” Juan?
JUAN GONZALEZ : Yeah, Michael Hudson, I’d like to ask you &mdash- Robert Kuttner just mentioned the whole issue of the Obama administration attempting to bring in private equity firms to help bail out the system. But isn’t part of the problem of these private equity funds, hedge funds, that they are even less transparent than your average corporation, which at least is filing SEC reports and has boards of directors and has to respond to shareholders to some degree? These are even more of the problem of lack of transparency that we’ve had in the financial system generally.
MICHAEL HUDSON : Well, AIG insurance company has been given $135 billion by the US government to pay hedge fund bets that it was on the wrong side of. Now, to invest in a hedge fund, you have to sign a document with the Securities and Exchange Commission saying you have over a million dollars to lose, and you can lose all your money, and it’s not going to affect your life, that you can take the risk, and you’ll be OK if you lose it all. That’s what you have to do to get a hedge fund.
These are the people who Obama is rescuing, not the people who have less than a million dollars and who really have risked their life in buying the houses, the homes, and losing their jobs. He’s protecting the people who could lose all their money, and they’d function, and not protecting the people who actually need help. That’s the irony of all this.
And it’s almost unprecedented that someone who was elected with an overwhelming mandate for change should then feel that he has to depend on Republicans, whereas you had George Bush come in with maybe a half a percentage point victory and say he has a mandate to make the most sweeping changes in history. There’s a complete disconnect there.
AMY GOODMAN : So how does he get it passed in the Senate then?
MICHAEL HUDSON : How did -&mdash
AMY GOODMAN : How would he get his plan passed in the Senate then, if he doesn’t bring some Republicans on board?
MICHAEL HUDSON : A president is able to use a bully pulpit. He had a lot of public &mdash enormous public support. He could have gone to the people, like Roosevelt did, and said, “Here is my plan, and I’m going to protect the workers and American industry who are productive. I’m not going to support the extractive sector.” And instead, he talked as if he was supporting labor, he talked as if he was supporting industry, but all the money he’s been given &mdash has been given to essentially Wall Street and, as Mr. Kuttner said, to Mr. Rubin’s protégés.
And if you want to see a kind of scenario where this is leading, you can look at what Mr. Rubin did in Russia and the Baltic countries and the post-Soviet economies. Right now, they’re all broke, and there’s no visible means of support. And in a way, you could say that countries like Latvia represent a foretaste of what we will be moving towards if the program isn’t drastically inverted to help the actual economy instead of the financial claims on the economy. Finance is extracting the income from the economy, not producing it, and they’re the people who are getting the benefit and getting the guarantees.
AMY GOODMAN : What’s a zombie bank?
MICHAEL HUDSON : Well, it’s very funny. A zombie bank is supposed to be a bank that has negative equity. And the word “zombie” comes basically from parasitology. Everybody &mdash people often say the financial sector is a parasite extracting. But a parasite does more than that. It doesn’t just take nourishment from the host it takes over the host’s brain, so the host thinks it’s actually part of the host’s body and, in fact, it’s its child, and it nurtures it. And the financial sector represents itself as being part of the economy. Mr. Geithner, two days ago, said that we can’t have a recovery of the economy without making the banks healthy and whole and profitable. And that’s just the wrong thing.
We can’t have a recovery in the economy until we let the banks take the losses and we let the hedge funds essentially take their losses. There was no need to give $135 billion to AIG , which yesterday was raided by Britain’s office of serious crimes for financial fraud, when the US government refused to move against it for fraud. It’s paying the fraudsters instead of paying the victims, and then it’s blaming the victims as if somehow the bank’s a zombie instead of the bank turning the economy into a zombie economy run by insiders in Washington giving themselves what Bloomberg Financial said was $9 trillion two months ago and two days ago an added two-and-a-half trillion, which, to me, makes up $12 trillion, rounding off.
JUAN GONZALEZ : Robert Kuttner, I’d like to ask you &mdash a couple of days ago, the top bankers in the country testified before Congress. I was struck that there was a similar type of testimony conducted by the top bankers in Britain recently before Parliament. The difference was that all of the British bankers are basically out of jobs. They were testifying after losing their jobs, whereas the American bankers, except for John Thain at Merrill Lynch, most of them still have their jobs. Your sense of how the banking CEOs are being dealt with in this country?
ROBERT KUTTNER : Well, they’re being coddled. I mean, if you look at Citigroup, the Treasury has put in $45 billion of direct equity capital into Citigroup. It’s guaranteed another $306 billion of toxic assets. You can buy all of Citigroup for about $25 billion. So the taxpayers effectively own it. What the government ought to do is exercise the rights of ownership, go in there, put a majority of public appointees on the board, get rid of existing management. I think in the case of Citigroup, the best thing you could do is break it up, because it is a zombie bank in the sense of it being insolvent. And most of the large banks are insolvent. Their debts exceed their capital. And what Geithner is doing, he’s trying to just disguise this by one more effort to double down using the same kind of financial razzle dazzle that got us into this trouble. So it would be much cleaner to put these banks into receivership.
And if that sounds radical, it is radical, but it’s important to keep in mind that the FDIC , which is the one agency that’s behaved responsibly in this whole mess, the FDIC does this every day of the week. If a bank that has FDIC insurance goes bust, the FDIC goes in, they shut the thing down, they fire incumbent management, the shareholders lose everything, they take it over as a publicly owned bank. The biggest case of this was a bank called IndyMac in California, one of the worst of the subprime malefactors. And the FDIC went in, and they took it over. They put 150 people in to run it. And now they’re gradually selling it back to private owners. So you could do this with the biggest banks, and I think you need to do it with the biggest banks. It does nothing but defer the day of reckoning and dig the hole deeper to pretend that an insolvent bank can somehow be kept on life supports with more and more infusions of taxpayer money.
AMY GOODMAN : Economist Michael Hudson?
MICHAEL HUDSON : Mr. Kuttner is quite right to single out Citibank and the large banks. What the newspapers call a subprime problem is really a big bank problem. Almost all of this negative equity is concentrated in four or five, maybe ten, of the very biggest banks.
And what have they done with the bailout money? They’ve gone and bought the small and healthy banks, infecting the small healthy banks with their philosophy of salesmanship. Now, on the way over here, at Heathrow Airport, they had the British investigation in Parliament on the BBC television in the lounge. And it turned out that the heads of every one of these British banks who were fired were salesmen. None of them were bankers. They were into just selling. And when I was on Wall Street, that was my experience. They had stopped doing research. They had stopped doing analysis. And what they wanted were people who could sell bonds and sell mutual funds. And the whole idea has turned into salesmanship.
For Citibank, their practice for years was what they called stretching the envelope. And what that means is breaking the law and daring the government to try to move against it, by saying, “If you move against this, if you close us down or prosecute us for stretching the envelope,” such as when Citibank bought &mdash merged with the insurance company in violation of the Glass-Steagall Act, “then we’ll bring the whole economy down in a crisis.” And they’re holding the economy hostage in order to extract this money from the government. That’s the real problem. That’s what frightens the senators, and I’m sure that’s what frightens Mr. Obama, that these guys are threatening to wreck the economy if we don’t give them everything they want.
JUAN GONZALEZ : And, Robert Kuttner, from the perspective of ordinary Americans who are dealing with not only losses of jobs and the situation with the &mdash so many homes now worth less than the mortgages that are out on them, I was struck recently by some of these major banks increasing the interest rates on their credit cards. Now, here you have interest rates in the United States at an all-time low, yet banks like Citibank are charging 21 percent interest on the credit card. They’re increasing the interest rates. How can ordinary Americans have an impact on trying to get the leaders in Washington and the Obama administration to change some course now in this &mdash in their efforts to develop a rescue package?
ROBERT KUTTNER : Well, ordinary Americans should be kicking and screaming. There should be ceilings on what banks can charge on credit cards, like they were in the old days when you had usury laws.
You know, banking, done properly, is very simple. Someone applies for a loan a loan officer assesses the credit worthiness of that borrower, puts an interest rate on the loan. And the banking system is almost like a public utility. It’s not a big drain on the real economy. It supplies capital and credit to the real economy. And when you get these exaggerated, convoluted schemes that are bets on bets on bets, you create the kind of leverage that then comes crashing down when you have something like subprime. So I think the historic task of this administration is a radical simplification of the banking system so that the banking system doesn’t need to charge 23 and 30 percent on credit cards to try and recoup the loss that it made gambling on subprime bonds.
AMY GOODMAN : I want to ask about the stimulus package. It’s supposed to be voted on today. It is the nation’s largest economic rescue program since FDR . Is it big enough? And talk about the Judd Gregg, as well, Michael Hudson, the [inaudible] &mdash-
MICHAEL HUDSON : Well, in any rescue program, the first question is, who’s being rescued? And who’s being rescued are apparently the very wealthy, not the people who one would think is being rescued. And then, how are they being rescued? They’re being rescued by making the lower income brackets pay to the higher income brackets. So this sort of turns everything, the usual Progressive Era idea, upside-down. It’s a regressive idea. And it almost makes you wonder whether America is becoming a failed economy. Mr. Kuttner was right, quite right, when he said you have to transform banking. And if you don’t transform banking along the lines that he and I seem to agree on, then the economy will fail. It’s that serious.
AMY GOODMAN : Robert Kuttner, your response to the economic stimulus plan? Do you think it’s big enough?
ROBERT KUTTNER : I think it’s important that Mr. Hudson and I and your listeners and viewers keep straight the difference between the banking rescue and the stimulus package, which are two very different pieces of legislation. I think it was a real political blunder to put them forward in the same week, because people tend to confuse them.
The banking rescue put forward by Mr. Geithner is a complete disaster. The problem with the stimulus package is not that it helps the wrong people. For the most part, it helps the right people. But it’s too small by a factor of about two-thirds, because the stimulus package is about two-and-a-half percent of GDP per year for two years. The economy is declining at the rate of about five percent of GDP . I mentioned before the state and local government figures, where state and local government is out about three times the revenue that the stimulus package is going to replace. So I think some of the things in the stimulus package are absolutely admirable: down payments on high-speed rail, on clean energy, on infrastructure repair, on food stamps, on unemployment compensation, on public health. But the problem is, even though $789 billion is a huge amount of money, given the scale of this collapse, it’s too small to do the job.
And I think in order to have any effect of any significance, they’re going to have to come back again by April, May, June, maybe as part of the budget process, and put even more money into it. And it is going to take an incredible persuasion job by the chief executive to persuade the American people that you need to spend another trillion, another trillion and a half. And you need to recapitalize the banks, but to do it right, by nationalizing them, but that’s going to take more money, too. And if you think of the controversy that he faced in getting a $789 billion package through Congress, imagine what’s going to happen when he comes back and says, “By the way, we need another trillion and a half.” And he has to be damn sure that that money doesn’t go to bankers, that it goes to ordinary Americans.
AMY GOODMAN : What about Judd Gregg? What’s the politics of this, Robert Kuttner?
ROBERT KUTTNER : Well, this was a miscalculation, a blunder. I think it’s an example of Obama’s excessive tendency to bend over backwards to be bipartisan. And, you know, sometimes when you bend over backwards, things happen that you can’t repeat in family broadcasting. And I think that’s what the Republicans are doing to Mr. Obama. So he’s going to have to do this with Democrats, and he’s going to have to make it embarrassing for Republicans to block him.
Republican senators and congressmen have people -&mdash and congresswomen have people in their districts who are hurting, too, just as much as Democratic legislators have people who are hurting. If he goes to the country, the way he did in Elkhart the other day or the way he did in Peoria, and spins out a narrative that ties the suffering of ordinary people to the failed policies that we need to reverse, he can really move public opinion. And he’s got to resolve to do that, and he’s got to think much bigger.
Obama Attacks Trump by Stretching the Truth About His Own Administration
Former President Barack Obama took a shot at his successor, President Donald Trump, on Wednesday while touting his own administration’s handling of the swine flu pandemic.
In an appearance on the Crooked Media “Pod Save America” podcast, Obama engaged in some revisionist history while discussing his and Democratic presidential nominee Joe Biden’s handling of the 2009-2010 H1N1 pandemic.
Obama told the podcast’s host — his former speechwriter, Jon Favreau — that minority and young voters should avoid voting for the president’s re-election.
In his appeal to these voters, Obama favorably compared his administration’s handling of the H1N1 outbreak with Trump’s handling of the coronavirus pandemic.
“Well, let’s take some examples just from this year. We know that COVID-19 disproportionately affects minorities. So those voters you just described, they’ve got a member of their family who may have been killed by COVID or disabled by COVID,” he said, according to a transcript of the podcast.
The former president then blamed Trump for job losses that followed the pandemic response of local and state governments, which included prolonged shutdowns in some areas of the country.
“One thing we know is that just basic competence can end up saving lives,” Obama said. “And so, you know, one thing I would say to anybody who’s skeptical about what government can do generally is to just take the example of when we were in office.”
He added, “You might not have been happy with everything I did, all my policy choices. I didn’t eliminate poverty in America. But when we had a pandemic or the threat of pandemic, we had competent people in place who would deal with it.
“And that’s an example of the kind of thing that government can do and we’ve seen it do. And that, I think, is important.”
Of course, as Vice President Mike Pence pointed out during last week’s vice presidential debate with Biden’s running mate, Sen. Kamala Harris of California, the swine flu pandemic was arguably mishandled, as tens of millions of Americans were infected.
Vice President @Mike_Pence: We know what failure looks like and it’s how the Obama-Biden administration handled Swine Flu#VPDebate pic.twitter.com/CVzIGmXHsr
— Team Trump (Text VOTE to 88022) (@TeamTrump) October 8, 2020
Pence said, “Sixty million Americans contracted the swine flu.”
“[Biden’s] own chief of staff Ron Klain would say last year that it was pure luck, that they did ‘everything possible wrong.’ And we learned from that,” the vice president said.
Indeed, according to NBC News, Klain did say in May 2019 at a biosecurity summit, “We did every possible thing wrong — 60 million Americans got H1N1.”
“It is purely a fortuity that this isn’t one of the great mass casualty events in American history,” he said. “It had nothing to do with us doing anything right. It just had to do with luck.”
Of course, the novel coronavirus gripping the globe is much more severe than the H1N1 virus strain.
The Centers for Disease Control and Prevention’s data on the swine flu pandemic seems to side with Pence, Klain and other critics of the Obama administration’s handling of the public health crisis.
The CDC noted, “From April 12, 2009 to April 10, 2010, CDC estimated there were 60.8 million cases (range: 43.3-89.3 million), 274,304 hospitalizations (range: 195,086-402,719), and 12,469 deaths (range: 8868-18,306) in the United States due to the (H1N1)pdm09 virus.”
Despite a “complex, multi-faceted and long-term” response that lasted longer than a year, per the CDC, tens of millions of Americans were stricken ill, and the virus caused 12,469 deaths in the U.S. despite being mild in comparison with COVID-19.
An estimated 7.9 million Americans have contracted the coronavirus as of Thursday, according to Johns Hopkins University, which pales next to the nearly 61 million U.S. cases of H1N1 from 2009 to 2010.
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