Of the 1%, by the 1%, for the 1%

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

Joseph E. Stiglitz
May 2011

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Paul Krugman: Extensive Outsourcing Leads to Trouble

There’s a new article in the March/April edition of the Washington Monthly making the point that the United States needs federal bureaucrats to manage spending, including spending on private contractors, and that understaffing the government — which we’re doing already, and will do more of if the right gets its way — actually increases the deficit. I agree.

“In practice, cutting civil servants often means either adding private contractors or ... resorting to the belief that industries have a deep capacity to police themselves,” John Gravois writes.

“Strange as it may sound, to get a grip on costs, we should in many cases be hiring many more bureaucrats — and paying more to get better ones — not cutting their numbers and freezing their pay.”

Schakowsky tears into Cantor for saying Social Security ‘cannot exist’ in a future America

By Sahil Kapur
Thursday, March 31st, 2011 -- 12:04 pm

WASHINGTON – Democrats continued to take shots at Rep. Eric Cantor (R-VA) days after he made remarks questioning the future of Social Security, as the GOP majority leader insisted his words were over-interpreted.

On a conference call Thursday, Rep. Jan Schakowsky's (D-IL) told reporters that Cantor's remarks were "stunning" and "so completely out of touch" with ordinary Americans.

"Eric Cantor's statement underscores that, now, [Republicans] are willing to turn on seniors by taking away the very bedrock of their financial and health security," Schakowsky said, invoking GOP attempts in 2005 to privatize the Social Security. "Anyone who's paying attention to the policy proposals and actions of the Republican leadership will not be shocked."

Paul Krugman: The Mellon Doctrine

“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.” That, according to Herbert Hoover, was the advice he received from Andrew Mellon, the Treasury secretary, as America plunged into depression. To be fair, there’s some question about whether Mellon actually said that; all we have is Hoover’s version, written many years later.

But one thing is clear: Mellon-style liquidationism is now the official doctrine of the G.O.P.

Two weeks ago, Republican staff at the Congressional Joint Economic Committee released a report, “Spend Less, Owe Less, Grow the Economy,” that argued that slashing government spending and employment in the face of a deeply depressed economy would actually create jobs. In part, they invoked the aid of the confidence fairy; more on that in a minute. But the leading argument was pure Mellon.

U.S. Fed loaned Libya-backed bank billions

By Agence France-Presse
Friday, April 1st, 2011 -- 9:07 am

WASHINGTON — The Federal Reserve lent a Libyan state-backed bank billions of dollars during the financial crisis, documents made public on Thursday have revealed.

The Arab Bank Corporation, which is today 59.3 percent owned by the Libyan government, borrowed in slices as big as $1.175 billion from the US central bank.

U.S. Fed loaned Libya-backed bank billions

By Agence France-Presse
Friday, April 1st, 2011 -- 9:07 am

WASHINGTON — The Federal Reserve lent a Libyan state-backed bank billions of dollars during the financial crisis, documents made public on Thursday have revealed.

The Arab Bank Corporation, which is today 59.3 percent owned by the Libyan government, borrowed in slices as big as $1.175 billion from the US central bank.

The Truth About the Economy That Nobody in Washington or on Wall Street Will Admit: We're Heading Toward a Double Dip

By Robert Reich, RobertReich.org
Posted on April 1, 2011, Printed on April 1, 2011
http://www.alternet.org/story/150466/

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

GOP House leader Eric Cantor calls for the end of Social Security and Medicare

by Gaius Publius on 3/31/2011 11:28:00 AM

Now that's rather straight-forward of him. From NPR Morning Edition (my emphasis):

[NPR reporter Audie] CORNISH: That's House Republican Majority Leader Eric Cantor at a recent speech at the Hoover Institution. Cantor tried to send a clear signal to key voters with concerns about the GOP's plans.

Rep. CANTOR: I mean, just from the very notion that it said that 50 percent of beneficiaries under the Social Security program use those moneys as their sole source of income. So we've got to protect today's seniors. But for the rest of us? For - you know, listen. We're going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be.

Oregon Lottery Pays Big, Corporate Tax Not So Much

David Cay Johnston | Mar. 31, 2011 10:36 AM EDT

The long-running drive in America to push the burden of taxes down the income ladder has reached a new milestone in Oregon, which sends a troubling message for where our country's public finances are headed.

Oregon now gets substantially more revenue from state-sponsored gambling than from its corporate income tax.

The Oregon Office of Economic Analysis, the state agency that forecasts revenue and expenses, said that for the 2011-2013 biennium, the lottery should net the state almost $1.1 billion compared with just under $900 million from the corporate income tax. And while corporate tax revenue should grow as the economy recovers, the lottery will continue to bring in more through at least 2017, the most distant year the forecast covers.

States broke? Maybe they cut taxes too much

By Tony Pugh | McClatchy Newspapers

WASHINGTON — In his new budget proposal, Ohio Republican Gov. John Kasich calls for extending a generous 21 percent cut in state income taxes. The measure was originally part of a sweeping 2005 tax overhaul that abolished the state corporate income tax and phased out a business property tax.

The tax cuts were supposed to stimulate Ohio's economy and create jobs. But that never happened once the economy tanked. Instead, the changes ended up costing Ohio more than $2 billion a year in lost tax revenue; money that would go a long way toward closing the state's $8 billion budget gap for fiscal year 2012.

Shame on Michelle Rhee

by Diane Ravitch

A new report shows student testing irregularities in D.C. under the leadership of star education reform advocate Michelle Rhee. Education expert Diane Ravitch blasts Rhee’s misguided approach. Plus, Dana Goldstein says the report is no surprise.

The corporate education reform movement has had no more visible star than Michelle Rhee, the former chancellor of the District of Columbia Public Schools. After she left office last fall, she formed a new political organization to raise $1 billion to advocate for the changes she believes in. She has been advising some of the nation's most conservative governors to fight the teachers' unions and rely on standardized tests to fire or reward teachers.

Her credibility was her alleged success in lifting up test scores in the low-performing public schools of the nation's capitol during her nearly four years in charge.

Huckabee: All Americans Should Be Forced at Gunpoint to Listen to David Barton

Chris Rodda
Wed Mar 30, 2011 at 03:52:56 PM EST

While most eyes were on the Conservative Principles Political Action Committee conference in Iowa on Saturday, many of us who follow the religious right were more interested in another conference, also held in Iowa, on Thursday and Friday. This other conference was the Rediscover God in America conference, where all the same potential 2012 Republican presidential hopefuls that appeared at the Saturday's Conservative Principles PAC conference told us what they really think -- that America should be governed by biblical law.

Sure, there was a lot of talk about important issues like the economy at the Conservative Principles PAC conference, but it was at the Rediscover God in America conference that we learned that all of our economic policies should be based on the Bible. And who did we learn this from? None other than Christian nationalist pseudo-historian David Barton, who kicked off the conference with a lengthy presentation of his usual historical hogwash. Then, one by one, as the potential Republican presidential candidates took the podium to let the audience full of pastors know just how Christian they are, each began by gushing about what a great historian and good friend David Barton is.

The Social Security Scam: How Media-Driven Misdirection is Being Used to Hijack Your Future

By Josh Hilgart, New Deal 2.0
Posted on March 30, 2011, Printed on March 31, 2011
http://www.alternet.org/story/150438/

As the budget battle rages in Washington, calls to cut Social Security benefits are ramping up. Pundits pushing ‘conventional wisdom’ say that doing so is prudent for a nation facing large deficits. This solution is endorsed by congressional majorities, along with virtually every talking head on television (with varying degrees of rhetorical eagerness or caution, depending on party affiliation). The assumption that deficit reduction can be achieved through cuts to Social Security benefits is so ubiquitous that most Americans would be dumbfounded to learn that this assumption is totally false.

Tax Revenues: Awful, Any Way You Look at the Numbers

David Cay Johnston | Mar. 28, 2011 11:27 AM EDT

When society is in the midst of major economic and policy changes, the alligators in the swamp keep us focused on the immediate, so we don't notice as the water slowly rises or drains away.

But we now have so much evidence showing the trend in tax revenues, and the incomes on which they rely, that the awful facts should be obvious. I sure thought so when I wrote my February 28 column. A letter from Kip Dellinger suggests otherwise (Tax Notes, Mar. 21, 2011, p. 1495).

On Social Security, Beware the False Progressives

By Daniel Marans

Created 03/29/2011 - 4:14pm

Halloween has come early this year for Wall Street Democrats who are busy disguising their plans to gut Social Security as "progressive"--and smearing Social Security while they're at it. Exhibit A: financial executive Robert Pozen [1], whose 2005 Social Security proposal [2] was so "progressive" it earned the support of none other than George W. Bush.

Pozen recently took to the pages of the Washington Post [1] to admonish progressives to "lead the charge" on Social Security "reform" (read: cuts). Pozen is certainly not the first pseudo-Democrat to champion benefit cuts under the progressive banner. But what makes Pozen's approach so novel is why he thinks progressives should get behind Social Security "reform." Unlike his colleagues at Third Way [3], who erroneously took progressives to task in January for not even recognizing that in 27 years Social Security will have a modest financial shortfall, Pozen hardly even mentions the solvency question.

North Carolina bill would prohibit cities from upgrading Internet access

The Republican-dominated North Carolina State Assembly this week approved a bill that would prohibit communities from upgrading their internet access, forcing individual municipalities into a private monopoly of managed broadband services by companies like Time Warner and Comcast.

Both firms have been restricting the amount of bandwidth users can consume, even though bandwidth itself is not a tangible, meter-able commodity.

Why I didn't sign deficit letter

By: Joseph E. Stiglitz
March 28, 2011 05:24 AM EDT

I was asked to sign the letter from a bipartisan group of former chairmen and chairwomen of the Council of Economic Advisers that stresses the importance of deficit reduction and urges the use of the Bowles Simpson Deficit Commission’s recommendations as the basis for compromise.

The letter’s signatories believed that their support would show that there was a core to scientific economics that crosses ideological boundaries. While I agree there is a core set of principles to which all card-carrying economists would (or should) subscribe — resources are limited, incentives matter — I did not sign.

The Collapse of Globalization

Posted on Mar 27, 2011

By Chris Hedges

The uprisings in the Middle East, the unrest that is tearing apart nations such as the Ivory Coast, the bubbling discontent in Greece, Ireland and Britain and the labor disputes in states such as Wisconsin and Ohio presage the collapse of globalization. They presage a world where vital resources, including food and water, jobs and security, are becoming scarcer and harder to obtain. They presage growing misery for hundreds of millions of people who find themselves trapped in failed states, suffering escalating violence and crippling poverty. They presage increasingly draconian controls and force—take a look at what is being done to Pfc. Bradley Manning—used to protect the corporate elite who are orchestrating our demise.

We must embrace, and embrace rapidly, a radical new ethic of simplicity and rigorous protection of our ecosystem—especially the climate—or we will all be holding on to life by our fingertips. We must rebuild radical socialist movements that demand that the resources of the state and the nation provide for the welfare of all citizens and the heavy hand of state power be employed to prohibit the plunder by the corporate power elite. We must view the corporate capitalists who have seized control of our money, our food, our energy, our education, our press, our health care system and our governance as mortal enemies to be vanquished.

Corporate Media Takes a Side on the Debate Over "Entitlements"

Michael Corcoran | Wednesday 30 March 2011

Pundits and politicians have often said that the thought of cutting Social Security and Medicare are, as Chris Cillizza of The Washington Post described them, the "third rails of American politics. Nobody wants to touch them." This, Cillizza argues, is an unfortunate trend, since chopping these staples to the United States ever-thinning safety net, is the "obvious fix" to our nation's budget problems. "The simple solution is to make cuts to two large government entitlement programs: Social Security and Medicare," he notes.

Despite this often repeated claim that cutting Social Security and Medicare is never discussed in American politics, in reality, the media is relentless in its perpetuation of the myth that cuts to these programs are needed - and right away. In recent months, the media has served to amplify the ideological claims of elites that use the recession - caused by large financial institutions' reckless behavior - as an excuse to further burden the nation's poor and elderly, even as the rich continue to benefit from massive tax breaks and bailouts. The question the media pose is not whether Social Security and Medicare should be cut, but when and how. But there is no debate as to who should sacrifice to balance the budget: the poor and the elderly.

Koch-Backed Right-Wing Group Goes After More Professors, Asking for Emails on Unions and ... Rachel Maddow?

Union busters have long relied on scare tactics to boost anti-worker legislation -- fear, threats and intimidation are standard fare for politicians trying to weaken labor laws, and can be effective if they're holding, say, your family's food stamps over your head.

In one of the most recent examples of this, right-wing think tanks are going after universities and professors for emails that might mention anything regarding the mass protests across the Midwest.

Could the U.S. be headed for a second sub-prime crash?

Average credit score of consumers approved for auto loans has shrunk every month since the first quarter of 2010

By Kyle Daly | 03.29.11 | 12:13 pm

The most succinct and uncontroversial explanation as to just how the recession began is that a massive surge in foreign capital in the early 2000s sent banks scrambling for investment opportunities and they found them by offering more loans to more people. This meant opening loans to consumers with a higher risk of not being able to pay them back — those being the sub-prime mortgages, which became a very familiar term in the early days of the recession. We’re still living through what happened next. And yet amazingly, data indicate that as corporations begin to recover, lenders in some markets are starting to return to the very pre-recession practices that created the crash in the first place.

The Deficit Hawks Target Nurses and Firefighters

Many people might think that the country's problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest one percent of the population has increased its share of national income by almost 10 percentage points (Excel spreadsheet). This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years.

To put this in context, the size of this upward redistribution to the richest one percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest one percent of the population.

The Real Story of Our Economy: Why Our Standard of Living Has Stalled Out

By Les Leopold, AlterNet
Posted on March 23, 2011, Printed on March 30, 2011
http://www.alternet.org/story/150343/

Do public sector workers earn more than private sector workers? Who cares? This boneheaded question has us fighting over the crumbs. (And the answer is no -- all credible studies show that when you account for educational levels, the total compensation packages are about the same.)

The real question is: Why have most workers seen their standard of living stall over the last generation?

Book Review: Epic Recession - How Did It Happen, How Bad Will It Get?

In the not-too-distant past, bankers, financiers, and investors could do no wrong. They were the wizards of Wall Street, ushering in a new era of economic expansion. But by 2006, it became very clear that their magic was just an illusion. The reality? Millions of homeowners were defaulting on their mortgages, millions of pensioners were watching their 401k's evaporate, and millions of workers were losing their jobs.

Investors and bankers didn't fare nearly as badly. They just shut down their old hustles, moved on down the road, and reopened for business as if nothing had happened.

Throughout this period, billionaire Warren Buffet's advice to investors was exercised in full force - " The first rule is to not lose money. The second rule is to not forget rule number one." - and backed up by the US Treasury.

Paul Krugman: American Thought Police

Recently William Cronon, a historian who teaches at the University of Wisconsin, decided to weigh in on his state’s political turmoil. He started a blog, “Scholar as Citizen,” devoting his first post to the role of the shadowy American Legislative Exchange Council in pushing hard-line conservative legislation at the state level. Then he published an opinion piece in The Times, suggesting that Wisconsin’s Republican governor has turned his back on the state’s long tradition of “neighborliness, decency and mutual respect.”

So what was the G.O.P.’s response? A demand for copies of all e-mails sent to or from Mr. Cronon’s university mail account containing any of a wide range of terms, including the word “Republican” and the names of a number of Republican politicians.

REPORT: From Poll Taxes To Voter ID Laws: A Short History of Conservative Voter Suppression

Thursday, ThinkProgress reported that the Ohio House had approved the most restrictive voter id law in the nation — a bill that would exclude 890,000 Ohioans from voting. Earlier this week Texas lawmakers passed a similar bill, and voter id legislation — which would make it significantly more difficult for seniors, students and minorities to vote — is now under consideration in more than 22 states across the country

Maestro Nurtures a New Too-Big-to Fail Crisis: Simon Johnson

By Simon Johnson - Mar 27, 2011

Bloomberg Opinion

Just tell the government to back off and all will be fine.

That’s what former Federal Reserve Chairman Alan Greenspan seems to say in “Activism,” an article published in the Spring issue of International Finance available on the Council on Foreign Relations’ website.

“Current government activism is hampering what should be a broad-based robust economic recovery,” he writes.

If we follow his advice this time, and if his line of reasoning prevails in the 2012 presidential election, we’ll stumble again into another boom-bust-bailout crisis.

What Really Happened to the 1960s: How Mass Media Culture Failed American Democracy

By Edward P. Morgan, University Press of Kansas
Posted on March 27, 2011, Printed on March 28, 2011
http://www.alternet.org/story/149866/

The following is an excerpt from What Really Happened to the 1960s: How Mass Media Culture Failed American Democracy by Edward P. Morgan (University Press of Kansas).

The Past as Prologue: Distorted History— Declining Democracy

History always constitutes the relation between a present and a past. Consequently fear of the present leads to a mystification of the past....If we “saw” the...past, we would situate ourselves in history. When we are prevented from seeing it, we are being deprived of the history which belongs to us. —John Berger, Ways of Seeing, 1977

With the destruction of history, contemporary events themselves retreat into a remote and fabulous realm of unverifiable stories, uncheckable statistics, unlikely explanations and untenable reasoning. For every imbecility presented by the spectacle, there are only the media’s professionals to give an answer. —Guy De Bord, Comments on the Society of Spectacle, 1988

The democratic ideal...is that the people are capable of and ought to be making their own history....The reason that democracy persists as an ideal at all is that people at times have transcended their everyday lives in order to make history. —Richard Flacks, Making History, 1988

Forty years after the tumultuous year of 1968 ushered in an era of political backlash and market liberalization, Americans turned out in record numbers and elected Barack Obama as the first African American president. At the precise moment the national networks could officially declare Obama the winner, NBC anchor Brian Williams observed, “We have news. There will be young children in the White House for the first time since the Kennedy generation. An African American has broken the barrier as old as the republic; an astonishing candidate, an astonishing campaign. A seismic shift in American politics.” As Williams continued, viewers watched campaign supporters’ jubilant celebration in, of all places, Chicago’s Grant Park, where forty years earlier a phalanx of Chicago policemen, with billy clubs flailing, charged into a crowd of antiwar protesters in one of the sixties era’s pivotal events.

4 Biggest GOP Lies About Jobs (And Why Obama Must Repudiate Them)

By Robert Reich, Robert Reich's Blog
Posted on March 23, 2011, Printed on March 28, 2011
http://www.alternet.org/story/150348/

And if all others accepted the lie which the party imposed – if all records told the same tale – then the lie passed into history and became the truth. – George Orwell, 1984 (published in 1949)

House Majority Leader Eric Cantor was in the Bay Area on March 21 (specifically, at Stanford’s Hoover Institute where he could surround himself with sympathetic Republicans) to tell this whopper: “Cutting the federal deficit will create jobs.”

It’s not true. Cutting the deficit will creates fewer jobs. Less government spending reduces overall demand. This is particularly worrisome when, as now, consumers and businesses are still holding back. Fewer government workers have paychecks to buy stuff from other Americans, some of whom in turn will lose their jobs without enough customers.

Time for Plan B: Our Civilization Is on the Edge of a Systemic Breakdown

By Scott Thill, AlterNet
Posted on March 26, 2011, Printed on March 28, 2011
http://www.alternet.org/story/150385/

"How many failing states before we have a failing global civilization?" asks environmental pioneer Lester Brown in Plan B: Mobilizing to Save Civilization, premiering March 30 on PBS as part of its continuing Journey to Planet Earth series. It's a Gordian knot of a question with no simple answer and nothing but complex, demanding solutions, fearsomely put forth as the fate of humanity totters in the balance.

Based on Brown's book of the same name, Plan B is likely the scariest horror film that was ever disguised as a documentary, despite its calm narration from superstar Matt Damon. That's because the acclaimed environmentalist has deeply studied the variety of environmental and geopolitical tipping points we are fast approaching, and found that we're headed for a seriously dark dystopia if we don't turn civilization as we know it around, and fast. A catastrophic confluence of food and water shortages, overpopulation and pollution, collapsed governments and communities and more natural disasters than Roland Emmerich can dream up await us on the other side of Plan A, which Brown calls "business of usual."

No merit in merit pay for teachers

The latest fad in education is performance-related pay. It didn't work in England in the 1700s, and it doesn't work in the US now

Walt Gardner
guardian.co.uk, Sunday 27 March 2011 13.00 BST

At wit's end over the tortoise pace of school reform, taxpayers constitute a perfect audience for self-styled reformers who claim to have the solution for failing schools. The latest panacea being peddled by these modern-day Elmer Gantrys is merit pay for teachers.

The pitch is straightforward: education is no different from any other policy area in what shapes behaviour. Paying teachers strictly on the basis of their classroom performance will result in positive outcomes for students.