Debt – Radio Free

The World Divided

Dan Lieberman — Fri, 01 Aug 2025 15:00:03 +0000

An interesting news report revealed the discovery of a Russian woman and her two young daughters living in a southern India cave. Earth’s inhabitants ponder how they can escape the madness, and this woman found a simple and agreeable solution. She described a close to nature life — swimming in waterfalls, painting, and doing pottery.

The way the world is going, she and her children might be the precursor of the dwelling habits of the future generations, those who manage to survive the coming nuclear war between the rising bloc of rising nations and decaying bloc of decaying nations, the war between the BRICS and the Pricks.

The BRICS ─ Brazil, Russia, India, China, and South Africa, and five new members — have no “biggest BRIC,” each Bric nation relishes its independence and the group is cemented by their distaste for the offensive Pricks. Fortunately, for the BRICS, their entourage contains China, the new superpower that encourages cooperation rather than domination and has initiated a “Belt and Road” that facilitates free trade throughout the world.

The Pricks — United States, Great Britain, and the European Union — have the United States as their power Prick, which is led by their president, the biggest Prick. In slavish obedience to genocide Israel, the U.S. identifies itself as the Super Prick. This bloc has recently featured severe discord, lack of cooperation, and inauguration of high tariffs that impede global trade. Domination is its focus. with cooperation a temporary means to enable domination.

For one simple reason, the Pricks are finding it difficult to control and use the BRICS for their personal gain ─ the BRICS have economic dominance.

Gross Domestic Product (GDP)
GDP PPP, Int$: 2025

Coming into 2025, the BRICS have a greater share of the economic pie, six times the population digesting the pie, and are growing in principal categories — GDP/PPP, population, and adherents at a faster rate.

The Pricks devalue the Brics by claiming they are a loose and uncoordinated confederation, unable to agree on vital issues. Brazil is accused of harassing former President Jair Messias Bolsonaro and may be subjected to sanctions; Russia is led by an irresponsible tyrant and is heavily sanctioned; India gets a pass despite the heavy-handed tactics toward its Muslim community; China is led by a despotic dictator, and South Africa is guilty of genocide toward its white population.

The Pricks pose themselves as a model of decency and decorum. They have ballot boxes and freedom of speech, which enables their citizens to elect the biggest pricks and then freely criticize their selections by vocal erections. In the U.S. the next presidential election process — fund raising, organization, public relations, the “eye on the prize”— starts shortly after a new president takes office. Winning candidates in elections expend more time and energy in gaining victory and preparing for their next victory than performing their duties during their term in office.

The economic, social, and political advancements of their principal superpowers, China for the BRICS and the United States for the Pricks, determine the success of the BRICS and the Pricks. A brief examination of each nation’s potential to rise in the firmament or descend into chaos tells the story.

The Trump administration shows the hidden failures of the United States pluralistic democracy. The past has no continuity; just the opposite, many of the legislations from previous administrations are discarded. and the country, rather than advancing to a progressed new, returns to a rejected old. One example from Understanding AI:

…. Sen. Hawley asked Donald Trump to cancel a federal loan guarantee for the Grain Belt Express, an $11 billion transmission line that is supposed to carry electricity from Kansas wind farms to homes in Illinois and Indiana. The proposed line would pass through Hawley’s state of Missouri, annoying farmers whose land would be taken by eminent domain.

According to the New York Times, Hawley “explained his concerns to the president, who has repeatedly expressed his distaste for wind power, saying he would not permit any new wind projects during his administration.” Trump then called Energy Secretary Chris Wright, who agreed to cancel a federal loan guarantee for the project, throwing its viability into question.

Impulse overrides soul searching, allegiance to leader is more important than professional education and experience; rash and subjective action replaces careful thought. The America of 2025, with its decaying infrastructure, troubled inner cities, dependence on fossil fuels, continuous problems of crime, drug addiction, health care, and immigration, closely resembles the America of 2010. One big difference ─ adversity and polarization of the population has increased, Americans are at the breaking point with one another. The country, which is rich in resources, has extensive farmland, enjoys suitable and varied climates, and contains an educated and diligent population, is not well managed; it is mismanaged.

The Xi JInping administration shows the hidden success of China’s people’s democracy. The past has continuity; legislations and plans from previous administrations are massaged and enhanced, and the country, rather than remaining stagnant, advances to a new level. Soul searching from millions of cadres provides suggestions for millions of improvements. All leaders have professional education and experience; careful thought displaces rash and subjective action.

The China of 2025, with its continually increasing infrastructure of roads, bridges, tunnels, dams, superhighways, high speed trains, and airline routes that link every remote place in China with central cores, with modern building complexes that replace the shanty towns and provide agreeable living space for an aging population and marginalized rural farmers, with its expanded megacities that are considered technology and planning marvels, and with a unified and obedient population ─ no adversity or polarization here ─ has only a fleeting resemblance to the China of 2010.

Dubbed an engineering marvel, the highly anticipated Raffles City Chongqing project is nearly complete. CapitaLand Group

Sheltering their deficiencies, the Western democracies shift the critical analysis to public relations stunts that highlight the supposed and exaggerated deficiencies of the Chinese system. The Westerners make no effort to learn and understand the workings of China’s political, social, and economic systems. Fabrications are added to the limited “don’t care to know” and conveyed to the public as authorized knowledge. One example is the “debt trap” verbiage, applied to Chinese lending, which began during Sri Lanka’s first debt crisis and has stuck around as an effective means to vilify the PRC.

We have the falsehood. Washington Post (WAPO), “This China has a hand in Sri Lanka’s economic calamity,” analysis by Ishaan Tharoor, July 20, 2022:

One of the major players in Sri Lanka’s calamity is China. Beijing is Sri Lanka’s lone biggest creditor, accounting for some 10 percent of the country’s foreign debt. Between 2000 and 2020, it extended close to $12 billion in loans to the Sri Lankan government, largely for a slate of major infrastructure projects that turned into white elephants — including a costly port facility in the Rajapaksas’ hometown of Hambantota, which was effectively ceded to Chinese control half a decade ago after Sri Lankan authorities recognized they could no longer pay off the loans.

Examination of the Sri Lanka debt crisis exposes the mendacity and viciousness of the WAPO report. Almost every sentence is spurious; China does not engage in “debt trap diplomacy” and has been one lender who makes financial sacrifices that rescues nations from debilitating borrowing.

We have the truth. The Atlantic, “The Chinese ‘Debt Trap’ Is a Myth,” by Deborah Brautigam and Meg Rithmire, February 6, 2021, had already contradicted WAPO statements.

Steep payments on international sovereign bonds, which comprised nearly 40 percent of the country’s external debt, put Sirisena’s government in dire fiscal straits almost immediately. When Sirisena took office, Sri Lanka owed more to Japan, the World Bank, and the Asian Development Bank than to China. Of the $4.5 billion in debt service Sri Lanka would pay in 2017, only 5 percent was because of Hambantota. The Central Bank governors under both Rajapaksa and Sirisena do not agree on much, but they both told us that Hambantota, and Chinese finance in general, was not the source of the country’s financial distress.

There was also never a default. Colombo arranged a bailout from the International Monetary Fund and decided to raise much-needed dollars by leasing out the underperforming Hambantota Port to an experienced company—just as the Canadians had recommended. There was not an open tender, and the only two bids came from China Merchants and China Harbor. Sri Lanka chose China Merchants, making it the majority shareholder with a 99-year lease, and used the $1.12 billion cash infusion to bolster its foreign reserves, not to pay off China Eximbank. The China impressed on our minds is not the China that exists.

The United States moves on fumes, on the energies of its past without renewable energies for an improved future. China moves on constantly reinforced energy, all engines operating at top speed, each day becoming a new future. The Pricks know they will not be able to compete economically with the BRICS. They have a choice of consolidating and working together and maintaining reduced economies, cooperating with the Brics in mutual agreements, or, by the usual United States method, resolving the situation by military action.

The threat of military force alarms and subdues the BRICS. They may be compelled to yield much in order to save all. China, guided by its Mandate of Heaven, “a political and religious doctrine that justifies the rule of an emperor based on virtue and ability to govern,” and which it has extended to relations between all nations, might do what it did in the fifteenth century. At that time, China was, by far, the leading commercial power in the world, and huge Chinese fleets sailed the world for markets for its surplus products. After meeting the imperial powers of France, Great Britain, and the Netherlands and observing their nefarious methods in subduing the Africa and Indian peoples, stripping them of resources, and forcing upon them the products manufactured from the resources, China scuttled its fleet and went into solitary confinement.

The reason for Xi Jinping’s self-sufficiency drive is clear. Save the world from nuclear conflagration and let the rest of the world rot. Pricks always lose and always think they have won.

The post The World Divided first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Revolutionary Third World Leaders Praise China’s World Role

Stansfield Smith — Fri, 18 Jul 2025 15:09:29 +0000

China is a modern superpower, as is the US, but a qualitatively different superpower. The US uses military aggression, coups, and sanctions to impose US corporate interests worldwide. China is a peaceful power that respects national sovereignty, mutual development, and non-interference.

Despite opposing imperialism, a tendency in the Western left is to recycle Western anti-China narratives that liken Chinese trade relations to Western imperial conduct, as in Sri Lanka and the Congo. Others have written of Chinese investments in the Occupied West Bank, and even criticize China for lack of aid to Cuba – clearly not issues the Western powers have problems with.

The US empire has at least 750 military bases in 80 countries. China has just one, in Djibouti – part of a UN mission against piracy. The US has continued wars against other countries on a non-stop basis, while China has invaded no country nor started any wars in close to half a century. The US instigated over 25 coups and coup attempts in Latin America just between 2000 and 2020. China has sponsored no coup attempts on any government. The US imposes blockades and “sanctions” warfare on at least 39 nations. China imposes no sanctions on anyone. The US regularly launches drone attacks on the people of other countries. China has launched no drone attacks on anyone. China is no imperial superpower, but a peaceful one.

China is the outstanding example of a Third World country developing into a superpower despite the West’s centuries-long efforts to torpedo its progress. China engages in “win-win” economic relations with other nations. Its loans and investment are carried out based on equality, consensus and joint benefit, unlike the predatory behavior of the IMF and Western lending institutions. China is helping other countries of the Global South break out of the underdevelopment that colonialism and imperialism have imposed on their countries for 500 years.

Third World Leaders Praise China’s World Role

At present, over 150 countries have chosen to participate in China’s economic program called the Belt and Road Initiative. Nicaraguan President Daniel Ortega explained why:

The People’s Republic of China has brought progress, benefits, development to peoples who were colonized, and later became independent, but who were then subjugated under the boot of the interests of the powers that had colonized them, leaving those peoples in poverty, with people in misery, people going hungry, people in illiteracy, with infant mortality, in Africa, in Asia. And the People’s Republic of China has been developing a policy bringing benefits to developing countries, without setting any conditions… The powers that have been colonialists and neocolonialists, like the US, like Europe… have not stopped being colonialists. They still are neocolonialists. They have not stopped being criminals. They still are criminals. They still are killers.

China’s role in helping other countries to develop has been noted by several anti-imperialist leaders. Fidel Castro rejected the notion that China was an imperial power. “China has objectively become the most promising hope and the best example for all Third World countries. I do not hesitate to say that it is already the main engine of the world economy… The role that China has been playing in the United Nations, including the Security Council, is an important element of balance, progress and safeguard of world peace and stability.” Of the Chinese leader he said, “Xi Jinping is one of the strongest and most capable revolutionary leaders I have met in my life.”

Present Cuban President Diaz-Canel also had high praise for Xi Jinping.

Former Venezuelan President Hugo Chavez likewise said, “one of the greatest events of the 20th century was the Chinese Revolution.” Chavez considered that an alliance with China constituted a bulwark against imperialism — a “Great Wall against American hegemonism… China is large but it’s not an empire. China doesn’t trample on anyone, it hasn’t invaded anyone, it doesn’t go around dropping bombs on anyone.”

Bolivian President Arce said: “We have built bridges of trust between the two countries and maintain a very positive bilateral relationship.” Evo Morales, the former president, said Bolivia and China “maintain a relationship characterized by wide-ranging and diverse cooperation and reciprocity.” China “works in a joined-up way with other countries and benefits the peoples of the world; the opposite to what was imposed on us for decades by the US, where predatory, individualistic and competitive capitalism looted our people’s resources for the benefit of transnational corporations.” “China develops, and helps, invests, without any conditions, just to support our development. China is always ready to cooperate unconditionally.”

Venezuelan President Nicolas Maduro declared, “Between China and Venezuela there is a model relationship, a model of what should be the relationship between a superpower like China, the great superpower of the 21st century, and an emerging, heroic, revolutionary and socialist country like Venezuela… China has inaugurated a new era of the emergence of non-colonialist, non-imperialist, non-hegemonic superpowers.”

Former Ecuadoran President Rafael Correa spoke highly of Chinese aid to the Citizens Revolution. China’s assistance is “an example for Latin America and for the rest of the world.”

Burkina Faso revolutionary President Ibrahim Traoré said Chinese aid was a “testament to a mutually beneficial partnership.”

Even President Prabowo Subianto of Indonesia recently said at the ASEAN summit, “China has consistently defended the interests of developing countries. They consistently oppose oppression, oppose imperialism, oppose colonialism, oppose apartheid, The People’s Republic of China defends liberation struggles in countries that are still oppressed by imperialism and colonialism.”

Recent Western Left anti-China Stories

Yet, despite the testimonies of these anti-imperialist Third World leaders, some progressives still highlight West’s anti-China narratives, such as in Sri Lanka and in the Democratic Republic of Congo.

Sri Lanka

The China debt-trap myth arose from Sri Lanka’s port Hambantota, that China lent money to the country to build the port, knowing Sri Lanka could not make it viable. This led Sri Lanka to default on the loans, and Beijing demanded the port as collateral. Chatham House and The Atlantic, both organs of the ruling elite, debunked this. First, the Hambantota Port project was not proposed by China, but by Sri Lanka. Second, Sri Lanka’s debt crisis resulted not from Chinese lending, but from Western loans. Third, there was no debt-for-asset swap. Rather, China leased the port for $1.1 billion, money Sri Lanka then used to pay down debts to the West. Chatham House concludes, “Sri Lanka’s debt trap was thus primarily created as a result of domestic policy decisions and was facilitated by Western lending and monetary policy, and not by the policies of the Chinese government.”

China in Africa

Liberia’s former minister of public works, W Gyude Moore noted that under European colonialism “there has never been a continental-scale infrastructure building program for Africa’s railways, roads, ports, water filtration plants and power stations…China has built more infrastructure in Africa in two decades than the West has in centuries.”

At the most recent Forum on China–Africa Cooperation in 2024, 53 of the 54 African countries chose to attend. China pledged $50 billion over the next three years on top of the $40 billion already invested.

Dee Knight took up the issue of China’s exploitation in the Democratic Republic of Congo propagandized in the book Cobalt Red. He drew on Isabelle Minnon’s report, “Industrial Turn-Around in Congo?” She wrote, “China has responded to the DRC’s need to have partners who invest in industrialization.” The West had bled Congo dry through debts that prevented its development. China brought large-scale investment on a new basis, combining financing for industrial mining and public infrastructure – roads, railroads, dams, health and education facilities.

Minion stated the result: “After decades of almost non-existent industrial production, the country became and remains the world’s leading producer of cobalt and, by 2023, became the world’s third largest producer of copper.” This “puts an end to the monopoly of certain Western countries and their large companies,” which just plundered the Congo. Furthermore, China cancelled $28 million in interest-free loans, and gave $17 million in support to the DRC.

During the Covid pandemic, China announced that it also forgave 23 interest-free loans for 17 African nations. This is in addition to China’s cancellation of more than $3.4 billion in debt and restructured $15 billion of debt in Africa between 2000 and 2019.

Chinese investments in Israel

Chinese trades with Israel, as with all other countries, to establish mutually beneficial economic relations, to counter the US goal of turning countries against China. China’s trade with Israel is qualitatively different from that of the US, Britain, France, Germany and others since China does not export weaponry to Israel used to slaughter Palestinians and peoples in surrounding countries.

Some have written of Chinese business involvement in the occupied West Bank. The report of the United Nations Special Rapporteur on the Occupied Palestinian Territories Francesca Albanese (which brought US sanctions on her) substantiates one such instance. China’s role contradicts its vote in favor of the 2024 UN General Assembly resolution calling for no trade or investments with Israeli operations in the occupied territories.

Yet China worked hard to unite the divided Palestinian resistance with the recent Beijing Declaration. China has continually denounced the US and Israel in Gaza, upholds the Palestinian right to resist occupation, and has never condemned the October 7, 2023 Hamas breakout attack. China is also a participant in the present The Hague Group calling for “concrete measures” against Israel.

China and Cuba

Some Western leftists have criticized China for lack of support for Cuba, suffering under a now worsening US blockade. However, China is working to build 55 solar installation complexes there this year, covering Cuba’s daytime shortfall, and another 37 by 2028, for a total of 2,000 megawatts. This aid would meet nearly two-thirds of Cuba’s present-day demand. China has long been a partner of Cuba in terms of trade and investment, participating in the Mariel Special Development Zone, and in projects in the production of medicines, biotechnology and agriculture.

China, A Superpower that Supports Third World Development

It is a contradiction that many on the Western left are not supportive of China, given that the US rulers have long called China the primacy threat to imperialist domination.

Recognizing the US’s continued economic and military power, if not superiority, China seeks to avoid a major destructive direct confrontation. China counters the US and Western isolation strategy by fostering a world based on cooperation with all countries, even with the US and its close allies. It focuses on obtaining essential resources for its industry and for economic self-sufficiency to fortify itself in self-defense against the US strategy to isolate it economically and politically, and on meeting countries’ desire for its cheaper goods and investments. As the Third World leaders above say, most of China’s foreign loans are not capitalist investments, but government funds that have been used to free countries from the grip of imperialism.

That has made it impossible for the West to isolate China. In Africa, Asia and Latin America, Chinese investments in schools, roads, railroads, and other needed infrastructure are generally seen as a welcome change from the neglect and underdevelopment imposed by the imperial First World.

Consequently, every year China becomes more and more a world power in relation to the imperialist countries.

China’s significance for the world lies in being a singular example of a Third World country developing despite the West’s goal to thwart its rise. This is a model for other Third World countries that seek to assert their independence of the West and make their own path.

In this process, China, which just 75 years ago, had an illiteracy rate of 80%, has just ended poverty for 800 million people, which no capitalist group of countries ever accomplished. China has achieved the fastest growth in living standards of any country in the world. It achieved this without invading, massacring, colonizing and looting other countries, but peacefully, without threatening any other people, and in cooperation with them.

As Daniel Ortega said:

The self-same ideologues of imperialism state that what worries them is that they see the People’s Republic of China bringing benefits to these Peoples and they feel that there they are losing the power to keep these peoples enslaved…They are upset, outraged, because the People’s Republic of China is making available billions in Africa, in Asia, in Latin America. These are investments for the development of our peoples. They see that as bad for themselves, but why can’t they do the same? Why have they never brought investment with the same conditions that the People’s Republic of China is making available?

The West, with the US at its head, seeks to maintain so-called “Western civilization,” the rule of the white colonizer over the rest of the world. It regards China and Russia as the two major threats to its continued domination and seeks to disable both. China and Russia are drawn into a struggle, where their continued growth, if not existence, is at stake. The more they can neutralize the West’s goal, the more this is a victory for all the oppressed people of the world.

The post Revolutionary Third World Leaders Praise China’s World Role first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Stansfield Smith.

Revolutionary Third World Leaders Praise China’s World Role

Stansfield Smith — Fri, 18 Jul 2025 15:09:29 +0000

Third World Leaders Praise China’s World Role

At present, over 150 countries have chosen to participate in China’s economic program called the Belt and Road Initiative. Nicaraguan President Daniel Ortega explained why:

The People’s Republic of China has brought progress, benefits, development to peoples who were colonized, and later became independent, but who were then subjugated under the boot of the interests of the powers that had colonized them, leaving those peoples in poverty, with people in misery, people going hungry, people in illiteracy, with infant mortality, in Africa, in Asia. And the People’s Republic of China has been developing a policy bringing benefits to developing countries, without setting any conditions… The powers that have been colonialists and neocolonialists, like the US, like Europe… have not stopped being colonialists. They still are neocolonialists. They have not stopped being criminals. They still are criminals. They still are killers.

Present Cuban President Diaz-Canel also had high praise for Xi Jinping.

Former Ecuadoran President Rafael Correa spoke highly of Chinese aid to the Citizens Revolution. China’s assistance is “an example for Latin America and for the rest of the world.”

Burkina Faso revolutionary President Ibrahim Traoré said Chinese aid was a “testament to a mutually beneficial partnership.”

Recent Western Left anti-China Stories

Sri Lanka

China in Africa

Chinese investments in Israel

China and Cuba

China, A Superpower that Supports Third World Development

It is a contradiction that many on the Western left are not supportive of China, given that the US rulers have long called China the primacy threat to imperialist domination.

Consequently, every year China becomes more and more a world power in relation to the imperialist countries.

As Daniel Ortega said:

The self-same ideologues of imperialism state that what worries them is that they see the People’s Republic of China bringing benefits to these Peoples and they feel that there they are losing the power to keep these peoples enslaved…They are upset, outraged, because the People’s Republic of China is making available billions in Africa, in Asia, in Latin America. These are investments for the development of our peoples. They see that as bad for themselves, but why can’t they do the same? Why have they never brought investment with the same conditions that the People’s Republic of China is making available?

The post Revolutionary Third World Leaders Praise China’s World Role first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Stansfield Smith.

The USDA Wouldn’t Let Her Give Up Her House When She Couldn’t Pay Her Mortgage. Instead, It Crushed Her With Debt.

by Sawyer Loftus, Bangor Daily News — Fri, 18 Jul 2025 09:00:00 +0000

by Sawyer Loftus, Bangor Daily News

This article was produced for ProPublica’s Local Reporting Network in partnership with The Bangor Daily News. Sign up for Dispatches to get stories like this one as soon as they are published.

Off a two-lane stretch of U.S. Route 1 in rural Caribou, Maine, sits a white ranch-style house that’s been consumed by weeds and vines.

The house was once the fulfillment of a dream. The owner had purchased it in 2006 through a federal mortgage program designed specifically for people like her: impoverished, first-time homeowners who live in the most rural parts of the United States. The loan, which came directly from the U.S. Department of Agriculture, required no down payment.

But things started going wrong from the day she moved in. First, the basement flooded. Then the furnace stopped working. As major repair costs accumulated over the next six years, the woman’s health deteriorated until she was forced to leave her job as a manager at Kmart. Her disability check was not enough to cover medical expenses and the upkeep required for the house — let alone the $855 monthly mortgage.

So in 2012 she drove to a USDA office 20 miles away and tried to give the house back. She said staff there would not accept her keys, telling her instead to call a toll-free number for help, as agency protocol requires. She left a message and did not hear back. She stopped paying her mortgage and moved out.

Her dream home sat abandoned for more than a decade.

USDA guidance says the agency should act quickly when borrowers fall behind on payments “to minimize any potential loss to the Government and to the borrower.” A prompt sale keeps the government from having to pay the legal and administrative costs associated with foreclosure down the road and may protect the borrower from incurring a major blemish on their credit history.

But that did not happen. Rather, 13 years passed before a sheriff’s deputy knocked on the door of the woman’s public housing apartment in May and served her with foreclosure papers on the now dilapidated ranch home that’s been overtaken by squatters. The government’s delay hurt the value of its investment and left the woman with a bill far greater than the cost of the loan she initially took out — with additional interest and other fees that had accumulated over those years.

The woman, now 68, declined to be interviewed, but her attorney, Tom Cox, said she allowed him to share her experience on the condition that she not be named to protect her privacy.

Since March, the USDA has filed 56 foreclosures in the federal court system against properties purchased with a rural development mortgage, also known as a Section 502 direct loan. All but one were in Maine. The borrowers have been in default for an average of nearly nine years.

As in the case of the Caribou homeowner, the USDA’s delays in those cases have resulted in borrowers racking up more debt because of the interest and fees that piled up in the intervening years, according to a Bangor Daily News and ProPublica examination of the foreclosure cases and interviews with former USDA officials and legal experts.

On average, borrowers in the 55 Maine cases owe $110,000 more than they would have had the agency moved to take possession of the properties when they first defaulted, the Bangor Daily News and ProPublica found. This includes what the USDA calls “preservation and inspection” fees, a broad category on the foreclosure filings that can include home repairs and yard maintenance, among other things.

Borrowers who can’t pay risk having the government garnish their wages or federal benefits such as Social Security. The Caribou woman had her disability checks garnished six times since 2015 to offset her debt before the USDA even foreclosed on her property, according to her lawyer. The best way to keep the government from garnishing federal benefits is to file for bankruptcy, attorneys said.

“It really undermines the concept of giving access to homeownership to a population who might not otherwise have been able to afford it,” said Rhiannon Hampson, former USDA rural development director for Maine who stepped down in January before President Donald Trump was inaugurated. “The irony, with all of these fees piled on, is that they can’t afford to get out of it.”

The recent wave of foreclosure filings in Maine underscores the government’s failure to monitor a mortgage program that since its founding in 1949 has poured tens of billions of tax dollars into giving the poorest Americans a shot at homeownership.

The USDA does not publicly report how often it files foreclosures. U.S. Rep. Chellie Pingree, a Maine Democrat and member of a House appropriations subcommittee overseeing the USDA’s direct loan program, has proposed language in the House agriculture appropriations report for the 2026 fiscal year calling on the agency to regularly report the number of foreclosures and abandoned properties related to the direct loan program. The bill awaits a vote before the full House of Representatives.

The USDA regularly filed foreclosures in Maine prior to the coronavirus pandemic but has rarely done so in recent years, according to Richard H. Broderick Jr., a Maine attorney with whom the agency had contracted to file foreclosures until 2022. Kevin Crosman, the Maine attorney now filing foreclosures on behalf of the USDA, would not comment on why the agency started doing so again.

Reporters visited 12 of the 55 homes in the Bangor Daily News’ core coverage area in May. At least five appeared to be abandoned and in disrepair — with windows boarded up or a sign affixed to the door saying it was being cared for by a New York company — raising doubts that the government will recoup its investments.

The USDA is supposed to take custody of properties purchased with a Section 502 direct loan and begin the foreclosure process when the homeowner becomes incapacitated, dies or has abandoned it, according to the agency’s handbook. Otherwise the properties may languish and lose value.

It really undermines the concept of giving access to homeownership to a population who might not otherwise have been able to afford it.

—Rhiannon Hampson, former USDA rural development director for Maine

Agency guidelines do not specify how soon the government should step in after a loan falls into delinquency, but under federal law, lenders cannot foreclose on a property until borrowers have been in default for 120 days.

Nearly a fifth of the USDA’s 159,208 Section 502 direct loans in its active national portfolio — 30,496 — were delinquent as of March, according to internal agency data obtained by the Bangor Daily News and ProPublica. That rate is double what a 1993 internal agency report said was acceptable. But neither the USDA nor the White House would say why the agency is focusing on foreclosures in Maine. Vermont is the only other state in which the USDA has filed a single foreclosure, according to federal court filings.

The foreclosures started just before Trump’s Justice Department sued the state of Maine in April over its inclusion of transgender athletes in girls’ sports, part of a larger spat between Trump and Maine Gov. Janet Mills. The White House would not say whether the foreclosures are connected in any way to those ongoing conflicts.

The Trump administration is seeking to eliminate the 76-year-old rural homeownership program in the White House’s budget proposal for the 2026 fiscal year. Some of his predecessors, including Barack Obama and George W. Bush, have also sought to cut back the $880 million direct mortgage program, which has bipartisan support in Congress.

A USDA spokesperson said the Trump administration is in the process of reviewing the loans to “understand the magnitude of the problems it has inherited.” The agency noted that in Maine alone, more than 800 properties are considered delinquent and nearly 400 homes are being tracked for foreclosure. The USDA did not respond to additional questions.

“Hopelessly in Debt”

In 2013, months after the Caribou woman had abandoned her property, she received a letter at her new residence from the USDA informing her that she had to pay the government $22,000 in missed mortgage payments and late fees or she’d lose the Caribou home, said Cox, her lawyer. He said she did not pay because she did not want the house anymore. The USDA sent her nearly a dozen letters between 2014 and 2015 claiming foreclosure was imminent, but a decade passed before she was served with foreclosure papers this spring.

A sign on the front door says the property is being maintained by a New York City company, which did not return calls seeking comment. A green tarp stretches across missing sections of the roof. Inside, piles of garbage and feces litter the floor.

The dilapidated state of the house a woman bought with a USDA mortgage in Caribou, Maine (Courtesy of Tom Cox)

A real estate broker who inspected the home in June with Cox estimated the value of the house to be around $40,000, a steep depreciation from the 2006 purchase price of $144,000.

During the time since she abandoned the property, what the woman owes USDA continued to balloon, Cox said.

His client now owes the government $393,463, according to court documents — nearly 10 times what the home is worth. Nearly 60% of that comprises interest that accumulated after she defaulted, as well as $91,304 in “preservation and inspection” fees.

“If the USDA had dealt with this back in 2012, they might have gotten most or all of their money back by selling the home” before it deteriorated, Cox said. “They’re not going to collect it now. It’s a huge waste of government resources and money to let this happen.”

Other USDA borrowers simply continue living in their homes long after they default on their loans, accumulating more debt with each passing year that the government does not move to collect.

It’s a huge waste of government resources and money to let this happen.

—Attorney Tom Cox

Christine Ogden had stopped paying the $465-a-month mortgage for her blue saltbox home in the coastal Maine town of Searsport in 2013, according to court documents. She said she told the USDA at the time to take her home after the agency threatened her with foreclosure if she did not pay.

But it took the government until 2019 to attempt to foreclose upon her property. The case was dismissed in 2020 amid the coronavirus pandemic. Five years later, in April, she received a summons to appear in federal court to start foreclosure proceedings again.

Ogden now owes $203,787 on what had been a $66,200 mortgage, according to court documents. Half of her debt comprises interest that accumulated after she defaulted, as well as other fees she would not have had to pay had the USDA addressed the delinquency sooner, an analysis by the Bangor Daily News and ProPublica found.

Ogden, who has lived rent-free in the house for 12 years, says she is unable to pay the burgeoning debt and does not know what will happen. The foreclosure will hurt her credit, making it harder for her to get another loan or find rental housing, she said.

“I'm 59,” Ogden said. “I’ll be homeless, basically.”

Little Government Oversight

The owners of another property, in Norridgewock in central Maine, also stopped paying their mortgage — and moved out of the house — years before the USDA foreclosed on the home this spring, court records show. The owners have not appeared to live at the property since at least 2014, according to property tax records, and defaulted on their loan in 2019 — but the government did not file for foreclosure until April.

The owners, it turned out, were violating USDA rules by renting out their home. The tenant, who answered the door when a reporter visited in May after the foreclosure was filed in federal court, would not share his name but estimated that he has paid $100,000 in rent to the owners during the 12 years he said he has lived there. USDA guidelines allow borrowers to rent their homes for up to three years, and only under very narrow circumstances.

Properties purchased under the 502 direct loan program are supposed to be the borrower’s permanent residence and not meant to generate income, according to USDA guidelines. Homeowners can rent out their properties only due to certain life events such as if their families outgrow their current home or if they are moving for a job. But the borrower must still pay the mortgage every month.

The USDA says the owners of the Norridgewock home owe the agency $276,191. The homeowners live in Tennessee, according to foreclosure summons and other court records filed this year by the USDA; they did not respond to calls made to phone numbers listed under their names.

USDA staff based in Maine who once were in close touch with borrowers when they ran into financial trouble now have little to no oversight of Section 502 loans. That’s because a major restructuring in the 1990s eliminated many of the county offices that had managed all aspects of the loans and centralized the servicing of these loans to an office in St. Louis, said Leslie Strauss, a senior policy analyst for the Housing Assistance Council, a Washington, D.C.-based nonprofit focused on affordable rural housing.

These changes came on the heels of an internal study in 1991 concluding that centralizing the administration of these loans would result in better service and a lower delinquency rate of about 10%, according to a 1993 report by the U.S. Government Accountability Office. More than three decades later, the delinquency rate for Section 502 direct loans has nearly doubled to 19%.

Hampson, Maine’s former USDA rural development official who now leads economic development for the Gulf of Maine Research Institute, said she had been pushing the agency to allow local staff to regain oversight of borrowers’ financial situations “so that we can go out and monitor what’s going on, so that we aren’t caught by surprise.”

But her effort did not gain traction, Hampson said.

As the foreclosures accumulated in Maine in recent months, the USDA website published an advisory directing struggling Maine borrowers to call the St. Louis office for help. But fewer staff members are available to respond after Trump’s recent cuts to the federal workforce.

As of early May, 1,536 employees — nearly a third of the rural development office — had taken the buyout, according to USDA documents outlining the results of the Trump administration’s two financial incentive offers to quit. Of those, 197 worked in the St. Louis office.

“We can’t afford failure,” Hampson said of the long-delayed foreclosures leading to insurmountable debt. “The onus is on the government to make sure that we’re providing the right kind of safety nets to prevent this sort of thing from happening.”

Michael Shepherd, Sasha Ray and Paula Brewer of BDN contributed reporting. Mariam Elba of ProPublica contributed research.

This content originally appeared on ProPublica and was authored by by Sawyer Loftus, Bangor Daily News.

Trump Judge Blocks CFPB Medical Debt Rule

Newswire Editor — Tue, 15 Jul 2025 14:25:49 +0000

On Friday, a Trump-appointed U.S. District Judge of the Eastern District Court in Texas vacated a Consumer Financial Protection Bureau’s (CFPB) medical debt rule that would have removed medical debt from the credit reports of 15 million Americans. As part of its continuous attacks against the CFPB and the agency’s efforts to lower costs for millions of Americans, the Trump administration had already reversed its position on the rule.

“Judge Sean Jordan, a Trump-appointed judge, joined congressional Republicans in making it easier for the Trump administration to raise costs on millions of Americans. Not only are they dismantling healthcare for 17 million through their big, ugly betrayal, but they’re dooming millions more with low credit scores due to illness and injury. Republicans are holding a grudge against the CFPB and it’s costing Americans money.” —Accountable.US Executive Director Tony Carrk

The medical debt rule would have helped to tackle the staggering $220 billion Americans owe for care received when sick or injured by removing medical debt from credit reports and preventing debt collectors from abusing the credit reporting system to pressure people to pay invalid bills.

Reporting from Accountable.US revealed earlier this year that House Financial Services Committee (HFSC) Republicans accepted a combined $867,000 from trade groups opposed to the CFPB’s medical debt rule. In turn, HFSC Republicans voted to block the rule.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Tennessee Lawmakers and Lenders Said This Law Would Protect Borrowers. Instead It Trapped Them in Debt.

by Adam Friedman, Tennessee Lookout — Thu, 26 Jun 2025 09:00:00 +0000

by Adam Friedman, Tennessee Lookout

This article was produced for ProPublica’s Local Reporting Network in partnership with Tennessee Lookout . Sign up for Dispatches to get stories like this one as soon as they are published.

ProPublica and the Tennessee Lookout are continuing to investigate Harpeth Financial, which owns Flex Loan operator Advance Financial and online sportsbook Action 247. To tell us about the experience you had with either or both companies, call or text reporter Adam Friedman at 615-249-8509.

Jeanette Thomas had just made her first payment on a loan from payday lender Advance Financial when she said the company emailed her with “good news.” She could borrow $206 more.

The solicitation was a relief to Thomas, a 62-year-old grandmother who had already exhausted the $783 disability check she receives each month since her health conditions render her unable to work.

Over the next few months, Thomas made the required minimum payments on what started in 2019 as a $400 loan to buy Christmas presents. But each time she did so, the company invited her to borrow almost all of the payment back, she said, with emails or letters like “Access Your Cash Today” or “You’re Already Approved.”

“They kept trying to rope me in,” Thomas said.

In the months that followed, the company continued to expand her credit, allowing Thomas to borrow close to $1,600 in total. In the emails and letters that Thomas kept, Advance never stated how much it would cost if she continued to reborrow.

Thomas had read her original loan documents warning that the loan carried a high 279.5% interest rate and would be challenging to pay off. But as the loan balance grew, Thomas came to realize she was trapped. By the spring of 2021, Thomas had paid Advance almost $4,000, yet she still owed more than $1,000 and was paying more than $200 a month to cover the interest, depleting the disability checks that were her only source of income.

Until the Flex Loan, reborrowing or rolling over payday loans was against the law. Tennessee lawmakers first banned reborrowing when they passed the state’s payday lending law in 1997. They reaffirmed that protection in 2011 when they updated that law.

When Tennessee lawmakers passed a 2014 law allowing Flex Loans, they included no such provision.

Instead, the bill’s sponsor, current House Speaker Cameron Sexton, said the loans could be better for borrowers because it required them to make a monthly minimum payment that covered all fees, interest and 3% of the principal. This key provision would ensure that borrowers would always be paying down the principal on the loan.

Thomas and more than a dozen borrowers told the Tennessee Lookout and ProPublica that Advance has encouraged them through emails and notifications to borrow back the value of almost all of the payments they made, tearing a hole in the safety net the law tried to put in place.

All but one of the 14 borrowers who spoke to the newsrooms for this story reported having reborrowed at least once as part of their Advance loan. As with Thomas, Advance made them eligible to borrow more shortly after paying, even though they were often making the minimum payments and almost immediately borrowing the money back to cover the cost of the payment they just made. Advance went on to sue 12 of these borrowers once they stopped being able to afford the loan.

Advance Financial sent ads to several borrowers telling them they were eligible to borrow more. (Obtained by Tennessee Lookout and ProPublica. Highlighted and redacted by ProPublica.)

Andrea Heady, 45, was sued by Advance in Knoxville for over $7,300, despite having paid the company nearly double what she ultimately borrowed. She initially took out $750 through a Flex Loan after the hours at her university job were slashed in June 2020.

“I’ve always sent money home to my mom,” who was taking care of Heady’s sister, she said. “It was COVID. My aunt and uncle were very sick, then they passed away and I just needed money.”

Heady said Advance would send her notifications letting her know she could borrow more. One email appeared as a financial statement, but included in bold and large text was the amount she had available to borrow. The statement did not provide a payment schedule, a new loan amount, the total cost of the loan or how long it would take to pay off making minimum payments, information a lender would have been required to provide if she'd been borrowing on a credit card.

Andrea Heady reborrowed on her Flex Loan over a dozen times after receiving notifications from Advance saying that she could borrow more. (Stacy Kranitz for ProPublica)

Heady reborrowed on her Flex Loan over a dozen times over the next 18 months as Advance increased her credit limit seven times. She stopped paying when her monthly payments of $650 equaled a quarter of her paycheck.

Heady hoped the company would forget about her, but it didn’t. In 2024 Advance sued and won a wage garnishment against her. Ultimately, Heady will end up paying Advance over $14,000 on the $3,850 she borrowed.

David Hill, a 36-year-old from Nashville, started by borrowing $175 from Advance in February 2020. Each month he would repay the full borrowed amount, including interest and fees, and reborrow the principal, often on the same or next day. Over 18 months, he reborrowed almost 80 times.

“COVID happened and I was going through financial trouble,” Hill said. “I would get a check and pay it off. But then I would have to borrow it back to have money.”

David Hill received emails from Advance encouraging him to borrow more money, which he ultimately did almost 80 times. (Stacy Kranitz for ProPublica)

Via email, Advance kept increasing his credit limit and encouraging him to borrow more. “Dear David,” started two of the emails, which contained notes like “good news — you have $645 available.” Hill eventually reached a point where he couldn’t afford the minimum payment, totaling over $400 a month.

He stopped paying and the company sued him in 2023 for over $4,700.

The Lookout and ProPublica sent detailed questions to Cullen Earnest, the senior vice president of public policy at Advance Financial. Earnest repeated what he said in a previous statement, that the company has an A+ rating from the Better Business Bureau. He added that the Tennessee Department of Financial Institutions has received just 91 complaints about flexible credit lenders since 2020, representing less than 0.001% of all new flex loan agreements, and that this data reflects the satisfaction of the vast majority of Advance’s customers.

The Tennessee Lookout and ProPublica previously reported that the company has sued over 110,000 Tennesseeans since it began offering the Flex Loan in 2015, making it one of the largest single plaintiffs in the state. One of the subjects in that story reborrowed on her Flex Loan over a dozen times, turning $4,400 in borrowed cash into more than $12,500 in payments to Advance. The company sued her and won a judgment that led to the garnishment of her wages.

Christopher Peterson, a senior official with the federal Consumer Financial Protection Bureau from 2012 to 2016 and a contributor to multiple reports about payday loans, said the agency sought to limit reborrowing on payday and title loans because the desire to borrow again often indicated that borrowers couldn’t afford the loans and would be paying them off forever. That is especially true of the Flex Loan in Tennessee, he said.

“It’s a nasty loan,” he said.

A Better Loan?

The CFPB began targeting high-interest lenders in 2013, releasing a report on the dangers of payday loans and how reborrowing often led to debt traps.

With the threat of federal regulation looming, Advance Financial Chairman Michael Hodges started working with Tennessee lawmakers to create a new type of high-interest loan that would avoid federal oversight, he told the Nashville Business Journal.

In Tennessee’s state House, Advance and other high-interest lenders turned to Sexton to sponsor the legislation.

Sexton was then the majority whip, a position typically reserved for ambitious state House members hoping to travel up the party’s ranks. Sexton also knew banking. He worked at a local bank as a business development executive, a position he still holds today, along with having a seat on its board.

Cameron Sexton, now the speaker of the Tennessee House, sponsored the Flex Loan legislation in 2014. (John Partipilo/Tennessee Lookout)

Starting in the spring of 2014, Sexton began guiding Flex Loan legislation through Tennessee’s state House committees. On the surface, the bill appeared to be a new type of loan with a 24% interest rate, which would be significantly cheaper than the triple-digit interest on payday and title loans. But the actual cost could be found in the bill’s details, which gave lenders the right to charge a 0.7% daily customary fee, which over a year adds another 255.5%.

Official video recordings from legislative committee hearings show that neither legislators nor Sexton discussed reborrowing or the loan’s interest rate.

When Sexton took to the Tennessee House floor in April 2014, his colleagues showed him deference because of his banking experience, said former Rep. Craig Fitzhugh, a rural West Tennessee Democrat and the minority leader at the time, who sponsored the original payday lending legislation in 1997.

During the hearing, Fitzhugh asked Sexton if he thought the soon-to-be-created Flex Loan was “a step up for consumers” compared to payday and title loans. Sexton said that was a “fair statement.”

When a lawmaker asked about the interest rate, Sexton said it was 190% to 210%, which is lower than the actual rate. But Sexton once again assured lawmakers that the minimum payment would reduce the cost of the loan for consumers.

“When you reduce the principal each and every month, obviously you’re decreasing the amount of interest,” Sexton said from the House floor.

The Flex Loan legislation passed the Tennessee House 83-6, with Fitzhugh abstaining from the vote. Fitzhugh said the high-interest lending landscape in Tennessee has only “gotten worse” over the past decade because of Flex Loans.

Rep. Gloria Johnson, a Knoxville Democrat, said she regrets voting for the Flex Loan legislation and feels like proponents of the legislation misled her.

“I definitely would not vote that way today, and would like to work to fix that massive mistake that’s hurt so many Tennesseans,” Johnson said.

A spokesperson for Sexton did not respond to questions from Tennessee Lookout and ProPublica.

Since passing the Flex Loans bill in 2014, Sexton has received over $105,000 in contributions to his campaign and political action committee from Advance Financial and its affiliated PACs, making them one of his largest contributors.

No Money for Food

Over five years after the law passed, Jeanette Thomas walked into an Advance Financial store three weeks before Christmas 2019 and filled out an application.

Thomas said she listed her income, gave them her debit card number and permission to directly charge her bank account the required monthly minimum payment. A borrower isn’t required to put up any assets, like a car or future paycheck, to get a Flex Loan.

Thomas wound up in a debt trap, borrowing again and again to keep herself afloat. The Consumer Financial Protection Bureau had tried to restrict reborrowing to protect consumers from falling into this kind of hole. (Stacy Kranitz for ProPublica)

Unlike some other borrowers, Advance allowed Thomas to pay monthly, instead of biweekly, because that’s how she received her federal disability benefits. Thomas said she suffered physical abuse for decades that left her with a traumatic brain injury.

The company deposited $400 into her account the same day she walked into the store.

At the time of the loan, Thomas had been trying to build a better relationship with her two sons and three grandchildren. She used the money to purchase gift cards, art supplies and toys. She was happy to be able to give her family something for the holidays.

Thomas’ first minimum payment to Advance was due Dec. 31 and was a manageable $51.78. That December had been cold, and when Thomas’ heat bill came in $50 higher than normal, she started to worry.

Then, just two days after her loan payment, Thomas said an unsolicited email arrived from Advance telling her she was eligible to borrow $206 more. Thomas thought she could afford it. Why would Advance loan her money she couldn’t pay back, she said she thought.

What Thomas did not realize was her first bill had only been for a 13-day payment period, meaning she’d been charged less than two weeks of interest. By taking the additional loan for an entire month, her monthly payment would almost triple to $130 per month.

Over the next two months, the company offered her a lifeline, extending her credit limit enough that she could make her payments with the money she’d just borrowed.

Eventually, Advance stopped increasing her credit limit and her monthly payment had increased to $230 a month, almost a third of her disability check.

Thomas cut her spending to the bone, hoping that a few months of payments would get her out of debt. She turned to friends to help pay for food, and to a local church to cover her utility bill.

Thomas said Advance sent her mailers and emails multiple times a month, offering to let her borrow any of the principal she had paid off. She tried to resist, but inevitably, she would have an unexpected expense, like medical bills from a series of mini strokes.

Thomas found herself in the position the CFPB had warned about when it sought to restrict reborrowing. Former CFPB official Peterson, who’s now a law professor at the University of Utah, helped work on the agency’s 2017 payday regulations. At the time, the agency wrote that consumers who reborrowed would inevitably be forced to choose between making an unaffordable payment on the loan or paying for necessities like food or rent.

By May 2021, Thomas could no longer afford to pay. The company kept her loan open and unpaid for 90 days, allowing the interest and fees to accumulate, nearly doubling the amount due to $1,700. Advance then charged Thomas two times in one week, withdrawing $430, or half of her monthly budget.

“I can remember just lying in my bed, stomach hurting and doubled over in pain because I couldn’t get something to eat,” Thomas said.

Not knowing where to turn for help, Thomas filed a complaint with the Tennessee attorney general’s Division of Consumer Affairs. In her complaint, she wrote that Advance “needs to stop abusing their power.”

“Now I cannot pay my rent,” she said.

The state investigated the case and took no action. By October 2022, Advance noted on one of Thomas’s monthly bills that it had “written off” her loan and closed her account. Unlike the other 110,000 Tennesseans who fell behind in their payments, Advance hasn’t sued Thomas, whose federal benefits are protected from garnishment.

The company also agreed in a letter to the state to “cease all communications” with Thomas, but Advance continues to send bills requesting a minimum payment of $226.49.

Thomas continues to receive bills requesting a minimum payment of $226.49 years after closing her account with Advance Financial. (Obtained by Tennessee Lookout and ProPublica. Highlighted by ProPublica.)

Mollie Simon contributed research.

This content originally appeared on ProPublica and was authored by by Adam Friedman, Tennessee Lookout.

Endless Wars, Failing Infrastructure, and a Dying Republic

John W. Whitehead and Nisha Whitehead — Wed, 18 Jun 2025 21:02:59 +0000

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

— President Dwight D. Eisenhower, “Chance for Peace” speech, delivered on 16 April 1953

Seventy years after President Dwight D. Eisenhower warned about the cost of a military-industrial complex, America is still stealing from its own people to fund a global empire.

In 2025 alone, the U.S. has launched airstrikes in Yemen (Operation Rough Rider), bombed Houthi-controlled ports and radar installations (killing scores of civilians), deployed greater numbers of troops and multiple aircraft carriers to the Middle East, and edged closer to direct war with Iran in support of Israel’s escalating conflict.

Each of these “new” fronts has been sold to the public as national defense. In truth, they are the latest outposts in a decades-long campaign of empire maintenance—one that lines the pockets of defense contractors while schools crumble, bridges collapse, and veterans sleep on the streets at home.

This isn’t about national defense. This is empire maintenance.

It’s about preserving a military-industrial complex that profits from endless war, global policing, and foreign occupations—while the nation’s infrastructure rots and its people are neglected.

The United States has spent much of the past half-century policing the globe, occupying other countries, and waging endless wars.

What most Americans fail to recognize is that these ongoing wars have little to do with keeping the country safe and everything to do with propping up a military-industrial complex that has its sights set on world domination.

War has become a huge money-making venture, and the U.S. government, with its vast military empire, is one of its best buyers and sellers.

America’s role in the Russia-Ukraine conflict has already cost taxpayers more than $112 billion.

And now, the price of empire is rising again.

Clearly, it’s time for the U.S. government to stop policing the globe.

The U.S. military reportedly has more than 1.3 million men and women on active duty, with more than 200,000 of them stationed overseas in nearly every country in the world.

American troops are stationed in Somalia, Iraq and Syria. In Germany, South Korea and Japan. In Saudi Arabia, Jordan and Oman. In Niger, Chad and Mali. In Turkey, the Philippines, and northern Australia.

Those numbers are likely significantly higher in keeping with the Pentagon’s policy of not fully disclosing where and how many troops are deployed for the sake of “operational security and denying the enemy any advantage.” As investigative journalist David Vine explains, “Although few Americans realize it, the United States likely has more bases in foreign lands than any other people, nation, or empire in history.”

Incredibly, America’s military forces aren’t being deployed abroad to protect our freedoms here at home. Rather, they’re being used to guard oil fields, build foreign infrastructure and protect the financial interests of the corporate elite. In fact, the United States military spends about $81 billion a year just to protect oil supplies around the world.

America’s military empire spans nearly 800 bases in 160 countries, operated at a cost of more than $156 billion annually. As Vine reports, “Even US military resorts and recreation areas in places like the Bavarian Alps and Seoul, South Korea, are bases of a kind. Worldwide, the military runs more than 170 golf courses.”

This is how a military empire occupies the globe.

For 20 years, the U.S. war machine propped up Afghanistan to the tune of trillions of dollars and thousands of lives lost. When troops left Afghanistan, the military-industrial complex simply shifted theaters—turning Yemen, Iran, and the Red Sea into new frontlines.

Each new conflict is marketed as national defense. In reality, it’s business as usual for the Pentagon’s global footprint, with American soldiers used as pawns in the government’s endless quest to control global markets, prop up foreign regimes, and secure oil, data, and strategic ports—all while being told it’s for liberty.

This is how the military-industrial complex, aided and abetted by the likes of Donald Trump, Joe Biden, Barack Obama, George W. Bush, Bill Clinton and others, continues to get rich at taxpayer expense.

Yet while the rationale may keep changing for why American military forces are policing the globe, these wars abroad aren’t making America—or the rest of the world—any safer, are certainly not making America great again, and are undeniably digging the U.S. deeper into debt.

War spending is bankrupting America.

Although the U.S. constitutes only 5% of the world’s population, America boasts almost 50% of the world’s total military expenditure, spending more on the military than the next 19 biggest spending nations combined.

In fact, the Pentagon spends more on war than all 50 states combined spend on health, education, welfare, and safety.

The American military-industrial complex has erected an empire unsurpassed in history in its breadth and scope, one dedicated to conducting perpetual warfare throughout the earth.

Since 2001, the U.S. government has spent more than $10 trillion waging its endless wars, much of it borrowed, much of it wasted, all of it paid for in blood and taxpayer dollars.

Add Yemen and the Middle East escalations of 2025, and the final bill for future wars and military exercises waged around the globe will total in the tens of trillions.

Co-opted by greedy defense contractors, corrupt politicians and incompetent government officials, America’s expanding military empire is bleeding the country dry at a rate of more than $32 million per hour.

In fact, the U.S. government spent more money every five seconds in Iraq than the average American earns in a year.

Talk about fiscally irresponsible: the U.S. government is spending money it doesn’t have on a military empire it can’t afford.

Even if we ended the government’s military meddling today and brought all of the troops home, it would take decades to pay down the price of these wars and get the government’s creditors off our backs.

As investigative journalist Uri Friedman puts it, for more than 15 years now, the United States has been fighting terrorism with a credit card, “essentially bankrolling the wars with debt, in the form of purchases of U.S. Treasury bonds by U.S.-based entities like pension funds and state and local governments, and by countries like China and Japan.”

War is not cheap, but it becomes outrageously costly when you factor in government incompetence, fraud, and greedy contractors. Indeed, a leading accounting firm concluded that one of the Pentagon’s largest agencies “can’t account for hundreds of millions of dollars’ worth of spending.”

Unfortunately, the outlook isn’t much better for the spending that can be tracked.

A government audit found that defense contractor Boeing has been massively overcharging taxpayers for mundane parts, resulting in tens of millions of dollars in overspending. As the report noted, the American taxpayer paid:

$71 for a metal pin that should cost just 4 cents; $644.75 for a small gear smaller than a dime that sells for $12.51: more than a 5,100 percent increase in price. $1,678.61 for another tiny part, also smaller than a dime, that could have been bought within DoD for $7.71: a 21,000 percent increase. $71.01 for a straight, thin metal pin that DoD had on hand, unused by the tens of thousands, for 4 cents: an increase of over 177,000 percent.

The fact that such price gouging has become an accepted form of corruption within the American military empire is a sad statement on how little control “we the people” have over our runaway government.

Mind you, this isn’t just corrupt behavior. It’s deadly, downright immoral behavior.

Americans have thus far allowed themselves to be spoon-fed a steady diet of pro-war propaganda that keeps them content to wave flags with patriotic fervor and less inclined to look too closely at the mounting body counts, the ruined lives, the ravaged countries, the blowback arising from ill-advised targeted-drone killings and bombing campaigns in foreign lands, or the transformation of our own homeland into a warzone.

The bombing of Yemen’s Ras Isa port by U.S. forces—killing more than 80 civilians—is just the latest example of war crimes justified as national interest.

That needs to change.

The U.S. government is not making the world any safer. It’s making the world more dangerous. It is estimated that the U.S. military drops a bomb somewhere in the world every 12 minutes. Since 9/11, the United States government has directly contributed to the deaths of around 500,000 human beings. Every one of those deaths was paid for with taxpayer funds.

With the 2025 escalation, those numbers will only rise.

The U.S. government is not making America any safer. It’s exposing American citizens to alarming levels of blowback, a CIA term referring to the unintended consequences of the U.S. government’s international activities. Chalmers Johnson, a former CIA consultant, repeatedly warned that America’s use of its military to gain power over the global economy would result in devastating blowback.

The 9/11 attacks were blowback. The Boston Marathon Bombing was blowback. The attempted Times Square bomber was blowback. The Fort Hood shooter, a major in the U.S. Army, was blowback.

The U.S. military’s ongoing drone strikes will, I fear, spur yet more blowback against the American people.

The war hawks’ militarization of America—bringing home the spoils of war (the military tanks, grenade launchers, Kevlar helmets, assault rifles, gas masks, ammunition, battering rams, night vision binoculars, etc.) and handing them over to local police, thereby turning America into a battlefield—is also blowback.

James Madison was right: “No nation could preserve its freedom in the midst of continual warfare.” As Madison explained, “Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes… known instruments for bringing the many under the domination of the few.”

We are seeing this play out before our eyes.

The government is destabilizing the economy, destroying the national infrastructure through neglect and a lack of resources, and turning taxpayer dollars into blood money with its endless wars, drone strikes and mounting death tolls.

The nation’s infrastructure is in shambles. Public schools are underfunded. Mental health care is collapsing. Basic needs like housing, transportation, and clean water go unmet. Meanwhile, government contractors drop bombs on third-world villages and call it strategy.

This isn’t just bad budgeting. It’s moral bankruptcy. A country that can’t care for its own people has no business policing the rest of the world.

Bridges collapse, water systems fail, students drown in debt, and veterans sleep on the streets—while the Pentagon builds runways in the desert and funds proxy wars no one can explain.

Clearly, our national priorities are in desperate need of overhauling.

We are funding our own collapse. The roads rot while military convoys roll. The power grid fails while the drones fly. Our national strength is being siphoned off to feed a war machine that produces nothing but death, debt, and dysfunction.

We don’t need another war. We need a resurrection of the republic.

It’s time to stop policing the world. Bring the troops home. Shut down the military bases. End the covert wars. Slash the Pentagon’s budget. The path to peace begins with a full retreat from empire.

At the height of its power, even the mighty Roman Empire could not stare down a collapsing economy and a burgeoning military. Prolonged periods of war and false economic prosperity largely led to its demise. As historian Chalmers Johnson predicts:

The fate of previous democratic empires suggests that such a conflict is unsustainable and will be resolved in one of two ways. Rome attempted to keep its empire and lost its democracy. Britain chose to remain democratic and in the process let go its empire. Intentionally or not, the people of the United States already are well embarked upon the course of non-democratic empire.

This is the “unwarranted influence, whether sought or unsought, by the military-industrial complex” that President Dwight Eisenhower warned us not to let endanger our liberties or democratic processes.

Eisenhower, who served as Supreme Commander of the Allied forces in Europe during World War II, was alarmed by the rise of the profit-driven war machine that emerged following the war—one that, in order to perpetuate itself, would have to keep waging war.

We failed to heed his warning.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, war is the enemy of freedom.

As long as America’s politicians continue to involve us in wars that bankrupt the nation, jeopardize our servicemen and women, increase the chances of terrorism and blowback domestically, and push the nation that much closer to eventual collapse, “we the people” will find ourselves in a perpetual state of tyranny.

In the end, it’s not just the empire that falls. It’s the republic it hollowed out along the way.

The post Endless Wars, Failing Infrastructure, and a Dying Republic first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by John W. Whitehead and Nisha Whitehead.

Endless Wars, Failing Infrastructure, and a Dying Republic

John W. Whitehead and Nisha Whitehead — Wed, 18 Jun 2025 21:02:59 +0000

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

— President Dwight D. Eisenhower, “Chance for Peace” speech, delivered on 16 April 1953

Seventy years after President Dwight D. Eisenhower warned about the cost of a military-industrial complex, America is still stealing from its own people to fund a global empire.

This isn’t about national defense. This is empire maintenance.

It’s about preserving a military-industrial complex that profits from endless war, global policing, and foreign occupations—while the nation’s infrastructure rots and its people are neglected.

The United States has spent much of the past half-century policing the globe, occupying other countries, and waging endless wars.

War has become a huge money-making venture, and the U.S. government, with its vast military empire, is one of its best buyers and sellers.

America’s role in the Russia-Ukraine conflict has already cost taxpayers more than $112 billion.

And now, the price of empire is rising again.

Clearly, it’s time for the U.S. government to stop policing the globe.

The U.S. military reportedly has more than 1.3 million men and women on active duty, with more than 200,000 of them stationed overseas in nearly every country in the world.

This is how a military empire occupies the globe.

War spending is bankrupting America.

In fact, the Pentagon spends more on war than all 50 states combined spend on health, education, welfare, and safety.

The American military-industrial complex has erected an empire unsurpassed in history in its breadth and scope, one dedicated to conducting perpetual warfare throughout the earth.

Since 2001, the U.S. government has spent more than $10 trillion waging its endless wars, much of it borrowed, much of it wasted, all of it paid for in blood and taxpayer dollars.

Add Yemen and the Middle East escalations of 2025, and the final bill for future wars and military exercises waged around the globe will total in the tens of trillions.

In fact, the U.S. government spent more money every five seconds in Iraq than the average American earns in a year.

Talk about fiscally irresponsible: the U.S. government is spending money it doesn’t have on a military empire it can’t afford.

Unfortunately, the outlook isn’t much better for the spending that can be tracked.

$71 for a metal pin that should cost just 4 cents; $644.75 for a small gear smaller than a dime that sells for $12.51: more than a 5,100 percent increase in price. $1,678.61 for another tiny part, also smaller than a dime, that could have been bought within DoD for $7.71: a 21,000 percent increase. $71.01 for a straight, thin metal pin that DoD had on hand, unused by the tens of thousands, for 4 cents: an increase of over 177,000 percent.

Mind you, this isn’t just corrupt behavior. It’s deadly, downright immoral behavior.

The bombing of Yemen’s Ras Isa port by U.S. forces—killing more than 80 civilians—is just the latest example of war crimes justified as national interest.

That needs to change.

With the 2025 escalation, those numbers will only rise.

The 9/11 attacks were blowback. The Boston Marathon Bombing was blowback. The attempted Times Square bomber was blowback. The Fort Hood shooter, a major in the U.S. Army, was blowback.

The U.S. military’s ongoing drone strikes will, I fear, spur yet more blowback against the American people.

We are seeing this play out before our eyes.

This isn’t just bad budgeting. It’s moral bankruptcy. A country that can’t care for its own people has no business policing the rest of the world.

Bridges collapse, water systems fail, students drown in debt, and veterans sleep on the streets—while the Pentagon builds runways in the desert and funds proxy wars no one can explain.

Clearly, our national priorities are in desperate need of overhauling.

We don’t need another war. We need a resurrection of the republic.

The fate of previous democratic empires suggests that such a conflict is unsustainable and will be resolved in one of two ways. Rome attempted to keep its empire and lost its democracy. Britain chose to remain democratic and in the process let go its empire. Intentionally or not, the people of the United States already are well embarked upon the course of non-democratic empire.

We failed to heed his warning.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, war is the enemy of freedom.

In the end, it’s not just the empire that falls. It’s the republic it hollowed out along the way.

The post Endless Wars, Failing Infrastructure, and a Dying Republic first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by John W. Whitehead and Nisha Whitehead.

Ethiopia: As Things Fall Apart

Thomas C. Mountain — Fri, 13 Jun 2025 14:32:01 +0000

In today’s Ethiopia, ruled by a US backed gangster named Abiy Ahmed, things are falling apart. To start with 75% of the country is out of the government’s control as insurgencies rage. “Prime Minister” Abiy is, in reality, only the Mayor of the capital Addis Ababa with rebel armies ringing the city only 30 miles from its outskirts.

On one side of Addis Ababa is the ethnic Amhara FANO (patriot) fighters. On the other side of Addis Ababa is the Oromo rebels. Being that these two ethnic groups, nations really, are the two largest in Ethiopia you can get an idea of just how desperate the situation the gangster regime of Abiy Ahmed finds itself in.

Inflation is raging with electricity rates having just doubled with food shortages, runaway prices and corruption ruling the roost.

Its not a good time to get seriously sick in Ethiopia because all the doctors have gone on strike demanding enough salaries to survive on. 165 of the top doctors in the country have been arrested with dozens of the top leadership of the medical profession having had to skip town, one jump ahead of the secret police, many taking refuge in next door Eritrea.

All the teachers have also gone on strike, demanding wages that some of them have never received, ever. That’s right, the gangsters who are running what’s left of the Ethiopian government, stopped paying the teachers quite a while back with new hires having never been paid.

Owing billion$ and with little in the way of foreign currency earnings (coffee is he number one income generator) the Abiy gangster regime can’t pay its bills, all too typical of Ethiopia over the decades since 1991. The western banksters at the IMF just promised another “emergency loan” for $260 million, adding on to the many billion$ already owed.

The banksters in the west are talking about having to hold another conference on “debt reduction for Africa” knowing all to well just how impossible it is for those African countries still in their debt bondage to make even their interest payments. As in the past, Ethiopia “debt reduction” is at the top of the forgiveness list, bailing out, once again, their gangster on the beat.

These financial bloodsuckers have been borrowing from their central banks for almost 20 years at little more than 0% interest while making tens of billion$ of “high risk loans” to Ethiopia at interest rates of 7-8% so its hard to feel sorry for them if they have to write of a few billion$ after deducting their “losses” from their tax bill.

The only thing keeping the Abiy regime afloat, able to continue to stave off the growing rebel army’s surrounding it, is the military largess of the United Arab Emirates, whose supply of Chinese drones and bombers leave a trail of death and destruction. But even these, mostly used against civilians, have been unable to stem the tide of rebellion and the circle around Addis Ababa continues to tighten.

You could be excused for being a little doubtful about what I write for almost none of this is making its way into the MSM in the west, or internationally. Hey, its the Horn of Africa, right, about which the world has grown weary of tales of famine, plagues and bloodshed. Even the so called “alternative” media has had little coverage of how things are falling apart in Ethiopia.

So don’t be surprised when, not if, the western backed gangster regime of Ethiopia’s Abiy Ahmed collapses. It could be a lot sooner than most of us expect.

What comes next looks more and more like the original Abyssinian Empire, only renamed “Ethiopia” in the mid-20th century, will tear itself apart into new African nations with names like Oromia, Amhara, Tigray, Afar and several others. We are talking about 120 million people in today’s Ethiopian empire, with the Oromo’s, 50+million strong, Africa’s largest nation and second largest language, being a major part of these changes.

At the forefront of this revolution against Africa’s largest indigenous empire are the Amharas and their army of “FANO/Patriots”, who have recently combined their regional militias as well as their political leadership into one unified force. Amhara nationalism has become so strong the Ethiopian army has stopped training Amhara units because once they have completed their military training they desert en masse with their weapons, slipping of to join the growing FANO armed forces.

The one bright light in this darkness is the role what I have called “the oasis of Africa”, Eritrea, has and will be playing in helping advise and mediate the perils to come. As the saying goes “All roads to peace in the Horn of Africa run through Asmara, Eritrea”, once again. Eritrea will do its duty to its fellow Horn of Africans and continue to shoulder its responsibilities to establish a peace based on mutual respect and cooperation between people in this up to now blighted part of the world. One thing the west doesn’t want is a strong, united, independent Horn of Africa, a strategically critical part of the world. So don’t be surprised when Eritrea starts to bring order to all this chaos the banksters in the west and their minions in the media start to rant and rave, once again spewing vile lies and slanders about Eritrea and trying to make sure that no good deed in Africa goes unpunished.

The post Ethiopia: As Things Fall Apart first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Thomas C. Mountain.

Fatal Decline of the Imperial Power

Dan Lieberman — Mon, 02 Jun 2025 14:45:12 +0000

A previous article, “Challenging China,” described the mixed and managed economy that enables China (PRC) to overcome the economic pressures posed by an overly contentious America. More to it.

China’s mixed and managed economy is designed to match its stage of development and is well managed. The U.S. non-managed economy has no design and does not match its advanced stage of economic development. China uses exports to grow its economy and limit debt. The U.S. runs severe deficits in its trade balance and needs a growing debt to finance the trade deficit and to increase the GDP. The rapidly growing debt portends economic decline, and there is no certified way to escape the predicament. U.S. hegemony and world leadership appears doomed. The sooner the U.S. leaders recognize the dangers and readjust the economy, the less will be the slide. More on this later. Facts and statistics supply the proof that the PRC has successfully met the challenges.

Overly contentious USA

Using sanctions from legislative directives, rather than pursuing cooperative efforts to combat China’s rise to the world’s number one industrial power, the U.S motivates China to become self-sufficient in technological applications, temporarily interrupts China’s advances, and eventually causes havoc to American companies

Citing security concerns, the U.S. Congress, in 2019, passed the National Defense Authorization Act and essentially banned use of telecommunication equipment from 5G network pioneer Huawei and smartphone manufacturer ZTE. In June 2020, the Federal Communications Commission (FCC) designated ZTE a national security threat. The security concerns proceeded from a possibility that the Chinese government could demand the habits of American citizens, similar to the information that Google and a host of advertising firms gather from internet searchers.

Huawei is of more major significance, but ZTE’s shrugging off the sanctions deserves mention. Its steady revenue growth until facing competition from other companies, relates its success.

This telecom company entered the smartphone market in 2010 and now has the 12th spot in the listing of the Largest Smartphone Manufacturers & Brands in the World. ZTE is also the 6th largest supplier in the Global 5G Infrastructure Market.

Huawei, global leader in development of 5G networks and China’s technology powerhouse, reeled from U.S. sanctions and stumbled as a boxer from an unaware punch. Predictions had Huawei barely surviving. Labelled as a company the U.S. could not do with, Huawei is now the company the world cannot do without. Refuting U.S. attempts to restrict its advances, Huawei expanded into new markets, into new industries, and developed unique alternatives to the denied technologies.

After years of “barely surviving,” Huawei is a leading network company on the globe, having constructed approximately 30% of worldwide 5G base stations, and is fourth in global smartphone manufacturing. After losing access to Google’s Android and Oracle’s software, Huawei developed its own operating system, Harmony OS, which has become the second most popular mobile operating system in China and, by 2025, was installed in over 900 million devices.

In 2022, the Commerce Department informed NVidia and AMD to restrict exports of AI-related chips to China, and informed chip equipment makers — Lam Research, Applied Materials and KLA — to restrict sending tools to the PRC for manufacturing advanced chips. China’s tech giant responded by challenging NVidia artificial intelligence dominance with its Ascend 910D AI processor chip, which “reflects China’s strategic push to develop indigenous semiconductor capabilities.” The U.S. did not respond to Huawei’s advance with its own technology advancements and again responded with threats. On May 15, 2025, the Trump administration warned that using Huawei’s AI chips might violate US export laws.

Ignoring U.S. threats, Huawei expanded use of its chips into the automotive industry and set a new standard for smart driving and self-driving technology.

Huawei’s ambitious undertaking includes the introduction of cutting-edge smart vehicles equipped with advanced autonomous driving technologies. The company is leveraging its prowess in artificial intelligence (AI) and big data to enhance vehicle performance and safety features. With a focus on seamless connectivity and user experience, Huawei is positioning itself as a significant player in the highly sought-after smart driving space, previously dominated by traditional automotive giants and tech firms like Tesla.

In August 2023, President Biden issued an Executive Order “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.” The order prohibited U.S. investments in semiconductors and microelectronics, quantum information technologies, and artificial intelligence technologies in China. In November 2024, “The U.S. reportedly ordered TSMC to halt shipments of advanced chips to Chinese customers that are often used in artificial intelligence applications.”

As a result, Xiaomi, a leading smartphone manufacturer, which has expanded into electric SUV car production, developed its 3-nanometre XRing O1 system-on-a-chip (SoC). Following Apple, Qualcomm, and MediaTek, Xiaomi became the fourth tech company in the world to design a 3-nanometer mobile SoC for mass production. A Chinese company can now compete with American companies in selling the unique chips, and Qualcomm, which has been a long-standing supplier of mobile chips to Xiaomi, might have its sales disrupted.

Statistics tell the story

What have all these underhanded means to stifle the Chinese economy accomplished? Statistics in the following table tell the story. The Chinese economy surpassed the U.S. economy in 2022 and is leaving Uncle Sam far behind.

The table shows that China deserves consideration for the title of the world’s greatest economy. Start with the Gross Domestic Product (GDP), a favorite statistic for those who boast of America’s prominence.

The U.S. has a higher GDP than China. China has a higher GDP/PPP. Unlike nominal GDP, which uses current exchange rates, GDP/PPP adjusts for differences in price levels between countries and provides a more realistic measure of the value of goods and services produced. Another consideration is the value given to components of the GDP. Capital, hard goods, and agriculture supply the most needed wants to a community, and their purchases play a more significant role in the economy. The service economy, a paramount feature of the U.S. economy, exaggerates its GDP. One dollar of purchase in goods production requires time for feedback to the manufacturer before other goods are replenished and additional purchases augment the GDP. Purchases in the service economy quickly pass the same money from one service provider to another and elevate the GDP. Industrial output, whether for domestic or foreign use, more appropriately demonstrates the robustness of an economy. China leads the United States in industrial output and demonstrated robustness by becoming the leading manufacturer and exporter of automobiles.

A comparison between two dynamos of each nation, U.S. Tesla and China BYD, automobile manufacturers and innovators that rose rapidly against established competitors, complete the story. BYD, which started at about the same time as Tesla, has surpassed Tesla in automobile sales.

BYD Revenue

Tesla Revenue

More than that, BYD has accomplished what was never considered possible; with a fully charged battery and a full tank of gas, unbiased testing of its new hybrid auto technology showed a driving range of 1,305 miles before charge or fill up. Its fully electric models use advanced sodium ion batteries and, in 5 minutes, can be charged to obtain a 250 mile range. A vertically integrated company, which manufactures its parts and is a leading provider of electric car batteries, BYD sells its autos at the lowest prices in China.

Revisions by BYD include paring the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction to a model that was already the carmaker’s cheapest and one that had garnered global attention for its sub-$10,000 price tag. The Seal dual-motor hybrid sedan (direct competitor to the $37,000 Tesla Model 3) saw the biggest price cut at 34%, or by 53,000 yuan to 102,800 yuan ($14,333). (ED: These may be temporary price cuts.)

Fatal Decline of the Imperial Power

The U.S. cannot compete with or contain China. Using China as a scapegoat for its global economic decline has proved counterproductive. Better for the U.S. to cooperate with the PRC, realistically examine its economy, become aware of its limitations, and take decisive action to prevent a fatal decline.

The hindrances to economic progress is fourfold:

(1) Debt drives the economy and the debt has become unmanageable.
(2) Manufacturers have established offshore facilities to open new markets and to compete more effectively.
(3) Off shore production and having the dollar as an international currency has produced a high trade deficit.
(4) U.S. markets in the Middle East, Africa, and Latin America have eroded.

Debt drives the U.S. economy and, the two charts indicate that without increasing the exorbitant debt, the economy will stagnate.

GDP/PPP

All Sectors Debt

Given a money supply to purchase goods and services, how can production and eventual sales of goods and services advance without increases in the money supply? One way is to increase the velocity of money, which occurred with on-time inventory, credit card purchasing, and computer speedup of financial transactions. These phenomena occurred during past decades and exploded the GDP. Another means is by having a positive trade balance; selling goods externally. If these means are not occurring, and they no longer are, increases in the money supply are required to increase production and sell additional goods.

U.S. goods trade deficit increased in 2024 to a record $1.2 trillion, and, although many economists excuse the trade deficit, saying that,

a trade deficit can only arise if foreigners invest more in the US than Americans invest abroad. In other words, a country can only have a trade deficit if it also has an equally sized investment surplus. The US is able to sustain a large trade deficit because so many foreigners are eager to invest here,

is more a rationalization than a reality. The trade deficit arose because American industry found it more profitable to produce overseas and made the dollar the international currency. As an international currency, the dollar is in demand and its exchange rate is high compared to other currencies. The strong dollar raises the prices of U.S. goods, makes its exports expensive and its imports cheap. Yes, the balance of payments must be equalized, and the dollars return as either purchase of government securities ─ one principal reason for rise in government debt ─ or purchase of U.S. assets. The former has become unwieldly, leading to high interest rates and the latter gives foreign interests increased power in the American system. Having a positive balance of trade reduces government debt and foreign influence.

Government debt is not the total problem. A system that exists by debt is the real problem. For a free wheeling and profit first economy that generates huge trade deficits to grow, the money supply must grow. Because money is created by either bank loans (debt) or Federal Reserve borrowings from the Treasury (debt), all money is debt. For the economy to continually grow, debt must continually grow. Soon, financing the debt and its increasing interest rates will be a difficult problem. Credit will freeze, loans will default, and the money supply will shrink. Boom will become bust. The United States has no choice but to have its economy more managed and align government and industry in common goals that correct the trend to a fatal decline.

Tariffs as a government money raiser and incentive to produce locally will be another tax on the American consumer and will not stimulate private investment in internal production to replace foreign imports. So, why not maintain low priced imports and tax the consumer for another goal ─ government investment in competitive industries. Cooperation between government and industry, rather than free-wheeling economics will enable more rational decisions and predictable operations.

The United States pioneered the global economy but globalization is no longer a perfect fit for the economically mature nation. Markets once lost are usually lost for a long time. Preserving present markets and finding niche markets for specialized goods, which the omnipresent U.S. economy has many, will stabilize exports.

History shows that private industry has never been the source of solutions to economic lapses. Changes in life style and a return to the cohesion and social legislation that characterized the Franklin Delano Roosevelt era might solve the economic, social, and political declines predicted for America’s future. The democratic socialization of America is begging to begin.

The post Fatal Decline of the Imperial Power first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Developing nations face ‘tidal wave’ of debt repayments to China in 2025: report

Tenzin Pema for RFA — Tue, 27 May 2025 21:44:40 +0000

China’s role in developing countries’ finances has transformed from capital provider to chief debt collector as a “tidal wave” of repayments due on loans Beijing extended under its Belt and Road Initiative far outstrip new disbursements, a new report by an Australian think tank showed.

Under the Belt and Road Initiative (BRI), Beijing has disbursed over $1 trillion in loans to more than 150 countries to build a network of roads, airports, railways, telecommunication networks, and seaports to connect China to the rest of the world. Critics have accused China of setting up debt traps and expanding geopolitical and economic influence through BRI.

According to the report by the Lowy Institute, developing countries owe a record $35 billion in debt repayments to China in 2025, with debt servicing costs on projects financed by BRI – which Chinese President Xi Jinping launched with great fanfare in 2013 – set to remain elevated for the rest of the decade.

Around $22 billion, or about two-thirds of the total $35 billion in debt repayments due in 2025, will be made by 75 of the world’s poorest and most vulnerable countries, threatening critical spending for health, education, poverty reduction and climate adaptation efforts, the report said.

“China’s role as a lender has passed a watershed,” wrote Riley Duke, the author of the report titled “Peak Repayment: China’s Global Lending”.

“The nation that was once the developing world’s largest source of new finance has now wholly transitioned to being the world’s largest single destination for developing country debt service payments,” added Duke, research fellow on the Lowy Institute Pacific Aid Map.

New Chinese loan commitments have also remained at around $7 billion per year since 2023, shifting from being a net provider of financing – where it lent more than it received in repayments – to a “net drain,” as repayments now exceed loan disbursements, the report said.

In 2012, China was a net drain on the finances of only 18 developing nations; by 2023, that number has more than tripled to 60.

“China is grappling with a dilemma of its own making: it faces growing diplomatic pressure to restructure unsustainable debt, and mounting domestic pressure to recover outstanding debts, particularly from its quasi-commercial institutions,” wrote Duke.

In this photo released by Xinhua News Agency, an electric multiple unit (EMU) train of the China-Laos Railway -- one of hundreds of projects under the Belt and Road Initiative -- arrives at Yuxi Railway Station in Yuxi in southwestern China's Yunnan Province, Friday, Dec. 3, 2021. (Hu Chao/Xinhua via AP)

(Hu Chao/AP)

Geopolitical leverage

Despite the broader decline in global lending, China continues to finance strategic or “politically significant borrowers,” and remains the largest bilateral lender in seven out of its nine land neighbors. These include Laos, Myanmar, Pakistan, Mongolia, Kazakhstan, Kyrgyzstan, and Tajikistan.

The report said that new loans also feature as a diplomatic dealmaking tool, particularly in getting other countries to adopt Beijing’s “One China” policy, which states that the People’s Republic of China is the sole legitimate government of China, including self-ruling Taiwan as part of its territory.

For example, China announced new financing for several countries, including Honduras, Nicaragua, and Solomon Islands, just months after they officially declared that “Taiwan is an inalienable part of Chinese territory” and switched diplomatic recognition from Taipei to Beijing.

In June 2023, Honduras became the latest Central American country to join BRI, reducing Taiwan’s diplomatic allies in the region to just two – Guatemala and Belize – amid China’s growing economic influence through investments, loans, and trade.

New loan deals have been resilient also for developing countries that are exporters of critical mineral resources or battery metal, such as Indonesia, Argentina, Brazil, and the Democratic Republic of Congo, receiving more than $8 billion in disbursements in 2023, or over a third of China’s total loan outflows for that year, the report said.

“Rising debt-service costs raise questions about whether China could use the repayments for geopolitical leverage,” wrote Duke. “Some argue that China’s lending boom in the 2010s reflected an intentional effort at ‘debt-trap diplomacy’ aimed at pushing countries into debt problems so that geopolitical concessions could later be extracted,” he added.

High-speed train is parked during the opening ceremony for launching Southeast Asia's first high-speed railway, a key project under China's Belt and Road infrastructure initiative, at Halim station in Jakarta, Indonesia on Oct. 2, 2023. (AP Photo/Achmad Ibrahim, File)

(Achmad Ibrahim/AP)

On Tuesday, in response to a query about the key findings in the Lowy Institute report, Chinese government spokesperson Mao Ning told reporters that China’s cooperation on investment and financing with developing countries follows international practice, market principles, and the principle of debt sustainability.

“A handful of countries are spreading the narrative that China is responsible for these countries’ debt,” Mao said. “They ignore the fact that multilateral financial institutions and commercial creditors from developed countries are the main creditors of developing countries and the primary source of debt repayment pressure. Lies cannot cover the truth and people can tell right from wrong,” she added.

Impact of debt burden

Today, China is the largest source of bilateral debt service for developing countries, accounting for more than 30% of all such payments in 2025, according to data reported by debtor governments to the World Bank.

As of 2023, some 3.3 billion people live in countries that spend more on interest payments than on health or education, the report said.

“The high debt burden facing developing countries will hamper poverty reduction and slow development progress while stoking economic and political instability risks,” Duke wrote in the report.

In 54 out of 120 developing countries with available data, debt service payments to China exceed the combined payments owed to the Paris Club — a bloc that includes all major Western bilateral lenders, the report said.

Chinese debt servicing is particularly dominant in Africa but also equals or exceeds that owed to Paris Club members by a majority of countries in South America, the Pacific Islands, South Asia, Central Asia, and Southeast Asia, the report said.

“As Beijing shifts into the role of debt collector, Western governments remain internally focused, with aid declining and multilateral support waning. Without fresh concessional financing or coordinated relief, the squeeze on budgets will tighten further, deepening development setbacks and heightening instability risks,” Duke added.

Edited by Mat Pennington.

This content originally appeared on Radio Free Asia and was authored by Tenzin Pema for RFA.

A 700% APR Lending Business Tied to Dr. Phil’s Son Is Dividing an Alaska Tribe

Wed, 21 May 2025 12:00:00 +0000

by Kyle Hopkins, Anchorage Daily News, and Megan O’Matz and Joel Jacobs, ProPublica

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

Dr. Phil, the powerhouse TV personality, has long dispensed practical advice to anyone hoping to avoid financial ruin — advice he’s shared with his millions of viewers. “No. 1 is avoid debt like the plague,” he’s said.

On other episodes of his syndicated talk show, he’s urged people to pay off their costliest obligations first: “You got to get rid of that high-interest debt.”

Yet for thousands of people mired in debt, Dr. Phil’s eldest son has been part of the problem, an investigation by ProPublica and the Anchorage Daily News found.

Jay McGraw, a TV producer, became involved in the payday lending industry over a decade ago and has been affiliated with a range of financial services businesses, more recently launching a firm that sells used cars online at costly interest rates and targets Texans with low or no credit.

Earlier this year, McGraw settled a federal civil suit that had accused him of playing a key role in CreditServe Inc., a financial technology consulting firm that helps arrange small-dollar consumer loans online — with interest rates that can exceed 700% — via a company owned by a Native American tribe in Alaska.

The tribal lending operation, Minto Money, is based in the log cabin village of Minto, 50 miles northwest of Fairbanks, and has delivered a new revenue stream to the community since its inception in 2018. But it’s also created a rift within the tribe, as some members are appalled by the burdens inflicted on poor and desperate people.

“It’s bringing in a lot of money. But it’s off the misery of the people on the other end who are taking out these loans,” said Darrell Frank, a former chief of the tribe. “That’s not right. That’s not what the elders set this tribal council up for.”

There’s documented harm. As of July 2024, the Federal Trade Commission had received more than 280 consumer complaints about Minto’s lending operations. That total includes complaints forwarded from the Better Business Bureau, where Minto Money holds an “F” rating. Customers who took out loans — which range from $200 to $3,000 — pleaded for relief from onerous terms that allowed Minto Money to claw back the sums multiple times over through automatic bank withdrawals.

Dr. Phil and Jay McGraw attend a ceremony honoring Dr. Phil with a star on the Hollywood Walk of Fame. (Axelle/Bauer-Griffin/FilmMagic)

“This loan is outrageous with interest over 700%!” one person complained to the Better Business Bureau about having paid $4,167 on a $1,200 loan from Minto Money. “I am one step away from filing from bankruptcy.”

A federal suit filed in Illinois in November by five Minto Money borrowers contends that McGraw has provided “tens of millions of dollars” in capital for the loans. CreditServe provides the infrastructure to market, underwrite and collect on them while “the Tribe is merely a front” and shares in only a small percentage of the revenue, according to the suit.

It called McGraw the “enterprise’s principal beneficiary,” asserting that he and CreditServe’s CEO, Eric Welch, have collected “hundreds of millions of dollars of payments made by consumers.”

The suit alleged that McGraw and the other defendants, including Minto Money, violated state usury laws and federal prohibitions against collecting unlawful debt. A confidential settlement resolved the lawsuit in early May but left open the possibility that other Minto Money customers could file similar suits in the future.

A. Paul Heeringa, who is representing McGraw, Welch and CreditServe, wrote in an email to reporters that “our clients cannot comment on any of your questions, or the case generally, other than to say that the allegations in the Complaint are not facts and were not proven to be true, and that our clients categorically deny the allegations.”

CreditServe was set up by a Hollywood lawyer who has represented the McGraws, California records show. Its principal address in the Larchmont Village neighborhood of Los Angeles is a box in a mail shop that also has served as the published address for many other McGraw family companies.

There is nothing in the public record linking Dr. Phil — whose full name is Phil McGraw — to the lending businesses, including CreditServe.

A lawyer for Phil McGraw said McGraw declined to comment for this story but shared a short statement from a spokesperson for Merit Street Media, which airs “Dr. Phil Primetime.”

“Dr. Phil knows his son Jay to be a smart, strong, caring human being and while he does not know his business Dr. Phil supports him 100%,” the statement said. “The suggestion that Jay’s business ignores or is even comparable or relevant to advice from Dr. Phil or Dr. Phil Primetime on Merit Street Media is false and only included in your article as click bait.”

Lori Baker, chief of the Minto tribal government, said in an email that the Minto Village Council had no comment in response to questions about the lending operations and members’ concerns.

Among critics of Minto’s lending operation, the idea that outsiders can’t be trusted is central to their opposition.

One Minto elder who no longer lives in the community worries that strangers are taking advantage of the tribe and its loan customers alike. The elder asked not to be named because of concerns about reprisals for criticizing the lucrative business.

“They are exploiting our village,” the elder said. “It is not right taking from poor people to get yourself rich.”

The full moon sets over homes in Minto, a small community about 50 miles northwest of Fairbanks, Alaska. (Marc Lester/Anchorage Daily News) Distant Partners

Jay McGraw got into the lending business as he branched out from other ventures. Minto got into it to help the people of the village.

By the time the company that would become CreditServe was formed in 2011, McGraw had obtained a law degree, gone into the film production business with his father, pioneered a highly successful daily syndicated medical advice show called “The Doctors” and written a series of self-help books for teens.

More quietly, he ventured into the high-interest lending business. Corporation papers in 2013 listed McGraw as the president of Helping Hand Financial Inc., a company that offered payday loans online at CashCash.com. “Get the CashCash You Need Fast!” the firm’s website exhorted.

The following year, when CreditServe Inc. filed an amendment to its articles of incorporation with the California secretary of state, it showed McGraw as president and secretary. Helping Hand Financial dissolved in 2017, but CreditServe remained in business. In both ventures, McGraw teamed up with Welch.

McGraw is not currently listed in California records as a top officer at CreditServe. But the federal suit in Illinois describes his role as significant. “McGraw and Welch dominate CreditServe and are responsible for all key decisions made by it,” the complaint states.

Welch declined to comment for this story.

He and McGraw are also named on corporation papers for Cherry Auto Finance Inc., formed in 2021, which offers easy financing for used cars online at cherrycars.com, appealing to subprime borrowers. The site posts estimated annual percentage rates of 22.4%.

Just as desperate borrowers turn to unconventional and high-interest loans, a few dozen Native American tribes in dire need of economic rescue have been drawn to the business side of that same industry.

The community of 160 in Minto faces the same challenges as many Native villages in Alaska, which are set in hard-to-reach places on ancestral hunting and fishing lands. Village leaders have struggled to build an economy in a remote place with few jobs, spotty internet and sky-high costs.

In 2018, Doug Isaacson, a non-tribal member working for Minto’s economic development arm, brought Minto an idea that could help the village. Isaacson — the former mayor of North Pole, a city outside Fairbanks that revels in its association with Christmas — suggested that the tribe get involved in the lending business. Tribes in America are in demand as business partners because they can claim that, as sovereign entities, their operations are exempt from state interest rate caps. Critics of such lending partnerships have called them “rent-a-tribe.”

To the tribal council, the lending business sounded like a way to create jobs and bring in much-needed revenue. The household income in Minto is about 30% lower than the statewide median. But groceries are more expensive and gas costs $7 a gallon.

Minto adopted a Tribal Credit Code, stating that “E-commerce represents a new ray of economic hope for the Tribe and its members.”

The Illinois lawsuit contends that on paper, the tribe appears to control the lending operation, but CreditServe provides the key services, including “lead generation, technology platforms, payment processing, and collection procedures.” Most of the money also flows to CreditServe, which has an office in suburban Austin, Texas, according to the suit.

McGraw’s lifestyle stands in sharp contrast to those living in Minto. He owns a lakeside mansion in the Austin area, valued at over $6 million. A real estate listing noted that the gated home features a “glass ceiling, life-size fireplaces, 2nd floor tower and an 85 foot infinity pool & spa overlooking miles of unobstructed views,” with “guest house, elevator tram and boat dock.”

The Instagram pages for McGraw and his wife, a former Playboy model, portray a life of affluence, with photos of excursions to Paris, Napa Valley, the U.S. Virgin Islands, Cabo San Lucas and Palm Beach. There are golf outings and time on a yacht.

In Minto, people live in single-story log homes. They enjoy trapping wolves and beavers, hunting geese and watching school basketball games. Many worry about protecting the land and wildlife.

“Used to see a lot of moose by the village; right now just two,” minutes of a 2020 Minto fish and game advisory committee meeting state. “Global changes have really affected us.”

Minto’s household income is about 30% lower than the statewide median, and gas costs $7 a gallon. (Marc Lester/Anchorage Daily News) Money and Controversy

There are no outward signs in the village of a massive online lending operation. The headquarters listed on the Minto Money business license is the address of the tribe’s two-story lodge, which houses the tribal council offices, a nutrition program for elders, a community gathering space, and rooms rented to tourists and hunters.

The business license is signed by Shane Thin Elk, listed as commissioner of Minto’s financial regulatory body, tasked with oversight of the lending businesses. Thin Elk is a member of a different tribe and doesn’t live in Alaska. Reached by phone, he hung up on a reporter.

The tribe started with a single lending website — Minto Money — and later launched another, Birch Lending. Neither company lends to people in Alaska.

Once it got underway, the lending business took off. The Illinois lawsuit contends that “McGraw, CreditServe, and Welch have collected more than $500 million dollars from consumers” over the last four years.

Minto’s take was small in comparison. Still, it has made a difference.

ProPublica and the Anchorage Daily News obtained documents for Minto Money showing dramatic growth, from $2 million in annual revenue in 2020 to nearly $7 million in 2022. A former tribal lending manager for the operation, Cameron Winfrey, said that in 2024 that figure reached $12 million for all its lending operations.

Minto Money’s and Birch Lending’s websites both warn, “This is an expensive form of borrowing and is not intended to be a long-term financial solution.” (Obtained by ProPublica)

Online lending “has thus far surpassed all expectations and provided enormous benefits to our community,” Winfrey wrote to the Minto Village Council in a January 2024 letter.

In an accompanying report, he listed some of the benefits that the lending business generated. He noted that $1.8 million was distributed to the Village Council in 2023, up about 50% from the prior year. Money went to the Minto library and computer lab as well as community organizations.

Winfrey also wrote that $627,000 was paid out in salaries and benefits in 2023 for employees of the tribe’s economic development corporation, known as BEDCO, and its subsidiaries, which includes Minto Money. He told ProPublica and the Anchorage Daily News that only a few people in Minto work for the lending operation.

Notably, the profit enabled the tribe to do what most tribes cannot: help fix its local school.

Yukon-Koyukuk School District Superintendent Kerry Boyd said the Minto tribe’s economic development corporation offered a surprise windfall when district officials discovered rising material and construction costs for a new gymnasium had increased the price tag by millions of dollars.

The tribe paid more than $3.2 million to finish the new gym, she said. A 2024 letter from BEDCO to the Minto tribal council stated that the money donated to the gym came from lending revenue.

In her more than 16 years running the district, Boyd had never seen such a generous donation. “I said, ‘Wow, this is almost unheard of.”

Students play games in the recently remodeled gym at the Minto School. The gym was funded with a $3.2 million gift from the economic development arm of Minto’s tribal government. (Marc Lester/Anchorage Daily News)

Many residents can’t say for sure where the lending money is going but point to newfound largesse. Folks get their heating fuel tanks filled by the tribal government. Some members receive “hardship” grants. There was money for a youth center. Musical instruments for the worship center. Dogsled races. A holiday party.

Still, some tribal members wonder why more money isn’t spread around. A handful of residents are calling for audits, greater transparency and federal investigations.

Some people thought the lending business would seed other economic development and lead to regular dividend checks. Instead, there is infighting and bitterness about who in the tribe receives the money. The division pits year-round Minto residents against members who live outside the village, in Fairbanks or elsewhere.

“If you don’t live in Minto, you don’t get shit,” said lending opponent Frank, the former chief. He is seeking an audit and a halt to the enterprise.

Once a tribe starts taking in large sums, it’s rare for internal disputes to go public.

“It’s a blessing and a curse,” one tribal member said recently. “We’re blessed that we get all this money, and it’s a curse because with money comes greed.”

“And some people don’t know the difference.”

First image: Lori Baker, chief of the tribal government, speaks to an audience at the Minto Community Hall on the day she was reelected to the position. Second image: People gather for an evening event at the Minto Community Hall. (Marc Lester/Anchorage Daily News) Unhappy Customers and Legal Threats

Isaacson, the non-tribal Alaskan who promoted the idea, has shrugged off concerns about legal problems.

In a 2023 email obtained by reporters, Isaacson wrote, “Lawsuits are the cost of doing business these days.” He noted that “in no century have money lenders ever been revered, but they have always been essential.” (Isaacson told reporters he no longer works on tribal lending operations and could not comment.)

The Minto tribe’s business entities have been sued in federal court by consumers at least 17 times. The tribe has argued that arbitration agreements signed by borrowers, as well as tribal sovereign immunity, protect the businesses from lawsuits. In at least one suit, it expressly denied the characterization of Minto Money as a “rent-a-tribe” operation.

Several federal cases have been dismissed on sovereign immunity grounds, but more often they have settled quickly without reaching the discovery phase that could reveal more details about the lending operation’s structure.

It’s unlikely that the legal risks will end with the private settlement in the Illinois case. Ten days after that settlement, the plaintiffs’ lawyers filed a new federal suit on behalf of three different borrowers, making the same allegations against McGraw, Welch, Minto Money and CreditServe. The latest suit adds a debt collection agency as a defendant.

Across the country, other tribal lending operations have been subject to large settlements in recent years, including a tribe in Wisconsin that also is alleged in federal lawsuits to have partnered with CreditServe, among other outside entities. That tribe, the Lac du Flambeau Band of Lake Superior Chippewa Indians, settled a federal class-action lawsuit in Virginia last year for $1.4 billion in loan forgiveness and $37 million in payments to customers and lawyers on the case. Of that, $2 million came from tribal council members named in the suit, while the rest came from business partners. (CreditServe was not named in the Virginia case or settlement.)

The Consumer Financial Protection Bureau, which already had a spotty record of overseeing high-interest lending, is being gutted by the Trump administration. But a handful of states have pushed back against tribal lenders. In December, in response to complaints, the Washington State Department of Financial Institutions issued a warning advising consumers that Minto Money and Birch Lending are not registered to conduct business in the state. And in late April, the Massachusetts Division of Banks publicly advised borrowers to avoid predatory loans “including from tribal lenders,” listing Minto Money and Birch Lending as examples.

Minto Money already avoids lending in 10 states, primarily where attorneys have acted forcefully to protect consumers, though Massachusetts and Washington are not among the states it shuns.

In recent months, the tribal council consolidated its control over the lending business, removing Winfrey from both his position as Minto Money’s general manager and his seat on the council after a bitter dispute. Tribal leaders criticized his performance.

But Winfrey, who said Minto Money ranked among the country’s top-earning tribal lending businesses during his tenure, believed he was ousted because he had started asking too many questions about where the money was going.

He had planned to pitch the idea of tribal lending to other Alaska villages.

“They need the money,” he said one afternoon in February. But by May, he had met with only one community. Leaders there were wary of the idea, and Winfrey said that he, too, had started having second thoughts.

“They said, ‘Isn’t this a rent-a-tribe thing?’ I flat out said, ‘Yes. That’s exactly what it is.’ ”

The “tribe gets pennies,” he told an Anchorage Daily News reporter. “It should be the other way around, where the tribe gets all the funds and CreditServe gets crumbs.”

Mariam Elba contributed research.

This content originally appeared on ProPublica and was authored by by Kyle Hopkins, Anchorage Daily News, and Megan O’Matz and Joel Jacobs, ProPublica.

President Trump’s Proposal to Eliminate Income Taxes: Can It Be Done?

Ellen Brown — Tue, 13 May 2025 14:13:12 +0000

In February, President Trump said that tariffs would generate so much income that Americans would no longer need to pay income taxes.

The latest plan, according to U.S. Commerce Secretary Howard Lutnick, is to abolish income taxes for people who earn less than $150,000 yearly. That move would affect roughly 75% of workers, according to U.S. Census Bureau data. On its face, this could narrow the wealth gap by boosting disposable income for low- and middle-income households without raising taxes on the wealthy — a politically clever alternative to progressive tax hikes.

Eliminating the burden of income taxes is an exciting proposition, due to savings not just in money but in man-hours — the time spent anguishing over ledgers, forms and receipts. In 2024, according to the Tax Foundation, Americans spent 7.9 billion hours complying with IRS tax filing and reporting requirements. That is equivalent to 3.8 million full-time workers—roughly the population of Los Angeles — doing nothing but tax paperwork for the full year.

The question is, can tariffs and DOGE replace income taxes? If not, how else could the government fund itself? Is a growing debt bubble that is now carrying a $1.2 trillion interest tab, which must continue to expand just to sustain itself, the only alternative?

How Eliminating Middle Class Taxes Would Affect the Budget

In a March 21 article titled “Ending Taxes Below $150,000 Would Lose $10 to $15 Trillion,” the Committee for a Responsible Federal Budget concludes:

Even if enacted in a targeted manner, we estimate such a change would reduce revenue by roughly $10 trillion through 2035 if applied to income taxes only and $15 trillion if applied to employee-side payroll taxes as well. …

If enacted relative to current law, ending taxes on income below $150,000 would boost debt by $12 to $18 trillion with interest, increasing debt-to-GDP to between 145 and 160 percent – compared to 118 percent under current law.… Importantly, Commerce Secretary Howard Lutnick has said the proposal would be contingent on achieving budget balance first.

Dividing the $10 trillion lost over 10 years (2025–2035) gives a $1 trillion loss per year on average, though there may be year-to-year variations. Trump’s team proposes to offset this loss with savings from the Department of Government Efficiency (DOGE) and new tariff revenues, but the math doesn’t look good.

The Prospects from Tariffs and DOGE

Elon Musk’s DOGE has identified significant areas of federal “waste, fraud and abuse,” but the program was originally projected to save $2 trillion by slashing misused funds. At Trump’s cabinet meeting on April 10, Musk said he expects the agency to find $150 billion in savings in fiscal year 2026, a number significantly lower than even the $1 trillion he said in February he was confident DOGE would find.

Tariffs remain Trump’s primary funding mechanism. He has frequently referenced the 19th century, when there was no income tax, and tariffs were the principal source of revenue for the U.S. government. In his Liberation Day speech on April 2, he said, “From 1789 to 1913, we were a tariff-backed nation, and the United States was proportionately the wealthiest it has ever been.” Trump’s particular hero is Pres. William McKinley, whose 1890 tariff of nearly 50% was a high point of the tariff policy.

The problem is that in the 19th century, the U.S. government had far fewer costs. Among other expenses, there was no Social Security, no Medicare and no trillion dollar interest to be paid to investors.

As originally proposed, Trump’s tariffs included a 10–20% universal tariff and up to 60% on Chinese imports. At that rate, the Tax Foundation estimated that the tariffs could raise $1 trillion over a decade ($100 billion/year) after accounting for reduced imports, while the Tax Policy Center put the figure as high as $2.8 trillion ($280 billion/year).

These projections remain speculative, since the results of the trade deals being negotiated are yet to be reported. On April 30, the president stated that negotiations had already resulted in $8 trillion in promised investment in U.S. production, an impressive number, but investments take several years to manifest as new tax income.

For the near term, DOGE cuts at $150 billion per year and tariffs estimated at $280 billion per year would cover less than half the trillion dollar loss projected from middle-class tax cuts. And that is without touching the $1.9 trillion deficit already projected by the Congressional Budget Office, something Commerce Sec. Lutnick said would have to be eliminated before income tax relief could be considered.

The Elephant in the Room

Even if new trade deals manage to cover the full deficit, the unprecedented federal debt will continue to loom. Currently standing at $36.21 trillion, the debt comes with interest payments projected to hit $1.2 trillion in 2025. That works out to $3.3 billion per day. In effect, all of our middle-class income taxes are being spent just to pay interest to bondholders, foreign and domestic.

Interest costs are expected to rise from 9% of federal revenue in 2021 to 23% by 2034, crowding out federal priorities like infrastructure and healthcare. And that assumes bond buyers keep rolling over the debt at current rates. For FY 2025, an estimated $9.2 trillion — fully a quarter of the debt — will come due and need to be refinanced. What if foreign countries, which hold approximately 30% of the debt, decide to invest elsewhere?

The most efficient to fill the trillion dollar hole left in the budget if middle-class income taxes are eliminated might be to take an axe to the trillion dollar interest tab and the federal debt sustaining it. But how?

Even Quantitative Easing Won’t Work to Eliminate the Interest Burden

Many economists think new rounds of quantitative easing (QE) are necessary, as the only way to keep Treasury interest rates low. QE is a maneuver by which Treasury debt is purchased by the Federal Reserve with newly issued bank reserves. The debt could theoretically be eliminated by having the Fed buy the securities as they come due. Assuming $9.2 trillion in debt maturing annually, the whole debt could be moved onto the books of the Fed in about four years, and since the Fed is required to rebate its profits to the Treasury after deducting its costs, this could theoretically eliminate the interest burden. But there are two wrinkles:

(1) The Fed is not allowed to buy federal securities directly from the Treasury. It primarily conducts its open market operations, including QE Treasury purchases, through primary dealers, a select group of large financial institutions designated by the Fed to act as its counterparties in the open market.

(2) Ever since 2008, the Fed has been paying interest on the banks’ reserve balances (IORB), which counts in the costs it deducts from the profits it returns to the Treasury. The rate on IORB set by the Fed is 4.4% as of May 2, 2025, while the average interest rate on the federal debt is approximately 3.3% for the fiscal year-to-date 2025.

Thus if the Fed were to buy $9.2 trillion in federal securities this year, it would receive $9.2 trillion × 3.3% in interest but would have to pay IORB on the same $9.2 trillion at 4.4% to the banks, a net loss to the Fed. In effect, the banks would be receiving the interest rather than the Treasury, unless a couple of laws were changed, and changing them would no doubt meet with heavy resistance from the powerful banking lobby.

Why, you may ask, does the Fed feel it needs to pay interest on bank reserves? Good question. It’s a monetary policy tool designed to curb inflation by setting a floor on the fed funds rate, the rate at which banks lend to each other. Since banks won’t lend at rates lower than they can safely earn from the Fed, it’s a way to keep interest rates high. But the result has been that the banks have simply reduced their lending. Why lend to risky local businesses when they can sit back and collect a safe and ample return from the Fed itself?

It’s a controversial windfall to the banks, to support an interest rate that is itself controversial. But the bottom line is that the Fed is not able to bail out the government from its trillion dollar interest tab. What then is to be done?

A Radical Alternative Whose Time Has Come

Given the president’s predilection for 19th century economics, he could go a bit further back than to President McKinley. Abraham Lincoln, the first Republican president, avoided a crippling national debt by resorting to the funding mechanism of the American colonists: let the government print the money directly, not through a banker-controlled central bank but through the Treasury. The government could buy back its debt with U.S. Notes or “Greenbacks,” as permitted under the Constitution (Article I, Section 8) and declared legal by the Supreme Court. These new currencies could then be used to repurchase maturing Treasury securities debt- and interest-free.

Critics will cry “hyperinflation,” arguing that the newly-issued currency would flood the economy, spiking demand and prices. But if new money is directed to productive investments — for example infrastructure, energy, and healthcare — supply and demand will rise together, stabilizing prices. The Chinese demonstrated this in the 25 years from 1996 to 2025, when their domestic money supply was inflated from 4,840 CNY (Chinese yuan) to 320,526 CNY, or by 5500%; yet the price level remained stable and low. For a fuller explanation with data, see my earlier article here.

To ensure that the Greenbacks finance growth, a national infrastructure bank could channel funds into projects such as affordable housing, high-speed rail, broadband, the power grid and large water and transportation projects. China is again the modern model. It has three giant “policy banks” assigned to implement the policies of the government, including China Development Bank, the world’s largest infrastructure and development bank. A U.S. version could prioritize projects with high economic returns, vetted by transparent, DOGE-like algorithms to prevent waste and cronyism.

We desperately need infrastructure funding, and the current federal budget has no room to adequately address those needs. A viable proposal for a national infrastructure bank, H.R. 4052, currently has 47 cosponsors. The bank would use off-budget financing on the model of the Reconstruction Finance Corporation, the federal financial agency that rebuilt the country’s infrastructure during the banking crisis of the 1930s. For more information, see the NIB Coalition website.

For state and city governments, public banks on the model of the Bank of North Dakota could address local infrastructure needs. See my earlier article here and the Public Banking Institute website.

Prosperity Without Debt

It has been argued that “just printing the money” would jeopardize the federal government’s credit rating. Perhaps, but we wouldn’t need credit if we could create our own, debt-free. To repeat an editorial directed against Lincoln’s debt-free Greenbacks attributed to the 1865 London Times, which may be apocryphal but nevertheless demonstrates the possibilities:

If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.

Lincoln’s Greenback policy was indeed destroyed, along with the president who dared to implement it. But the U.S. government is powerful enough today to pull that “mischievous financial policy” off. A Greenback-funded debt buyback could offer a way to pay down debt without interest costs, while spurring growth through targeted investments monitored through a national infrastructure bank and local public banks to absorb demand productively. In several years, the whole $1.2 trillion interest tab could be slashed from the budget, making our trillion dollar middle-class income tax payments that barely cover that expense unnecessary.

The full budget could even be funded with Treasury-issued Greenbacks, eliminating the need for taxes at all. DOGE has demonstrated the possibilities for monitoring the government’s expenditures transparently and accountably with artificial intelligence. And as AI progressively replaces jobs, the government will need some form of universal basic income to supplement or replace worker salaries, perhaps “Social Security for All.”

Granted, that raises new issues around the privacy and programmability of a government-issued digital currency. But as Cornell Prof. Robert Hockett argues in his book, The Citizens’ Ledger, these can be overcome with cryptographic protections. For people leery of digital government-issued dollars, the Treasury could exercise its constitutional power to issue coins and paper dollar bills. Those are all complicated issues for another article, but the possibilities are provocative. We can escape the debt trap engineered by a private banking system that creates money as debt at interest – and escape the middle-class income taxes paying for that interest – by returning the sovereign power to issue money to the Treasury.

This article was first posted as an original to ScheerPost.com.

The post President Trump’s Proposal to Eliminate Income Taxes: Can It Be Done? first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

This Lender Said Its Loans Would Help Tennesseans. It Has Sued More Than 110,000 of Them.

by Adam Friedman, Tennessee Lookout — Mon, 05 May 2025 08:00:00 +0000

by Adam Friedman, Tennessee Lookout

This article was produced for ProPublica’s Local Reporting Network in partnership with the Tennessee Lookout. Sign up for Dispatches to get stories like this one as soon as they are published.

We are continuing to report on flex loans. Have you been sued by Advance Financial, Harpeth Financial or another flex loan lender? To share your experience, call or text reporter Adam Friedman at 615-249-8509.

Rosita Hansen was working an evening shift at a tubing factory in 2023 when a sheriff’s deputy showed up and handed her a court summons. She was being sued for failing to pay off a loan of $2,050. What confused Hansen was she had already paid a couple thousand more than she borrowed. But now the company, Advance Financial, said she owed more. Between what she’d already paid the company and the lawsuit, Advance stood to receive over $12,500 from Hansen, records show.

Hansen, 57, had taken out the loan in 2021 after her mortgage company threatened to foreclose on her modest three-bedroom house outside Morristown, a small city in East Tennessee. Hansen made enough money to support herself, but after taking in her four grandchildren, she struggled to cover the costs of extra food and school supplies, and she stopped paying her mortgage. That’s when she turned to Advance.

“I was providing for all of them,” Hansen said. “Financially, it was rough.”

Like most borrowers, Hansen could not afford an attorney to handle the suit, but she hoped to work out a payment plan with Advance. When she arrived at the Hamblen County courthouse in Morristown in May 2023, she was directed to a line of half a dozen people waiting to meet with an attorney representing the company.

Across Tennessee, Advance has sued over 110,000 people since 2015, significantly more than any other payday lender, making it one of the largest plaintiffs of any Tennessee-based company collecting debt. In Hansen’s Appalachian county of 66,000, where nearly half the households make less than $50,000, the company has filed one case per every 32 residents over that time, the Tennessee Lookout and ProPublica found.

Advance began filing thousands of lawsuits soon after Tennessee lawmakers approved the Flex Loan, a product pioneered by Advance in Tennessee. The loan’s $4,000 cap is nine times higher than the limit for most payday loans, and the company charges the equivalent of a 279.5% annual interest rate. Before Flex Loans became legal in 2015, payday lenders could only lend $425, and the borrower could never be required to pay back more than $500. Since then, those protections have been eliminated and thousands of borrowers have been defaulting.

Flex Loans only stop growing when they’re completely paid off, when a flex lender declares the loan is in default or when it sues the borrower. If the loans do end up in court, the law allows lenders to recoup attorneys fees — which can’t be done with payday loans — a practice that can add up to a third of the loan amount. Court judgments against customers are often thousands of dollars, with some exceeding $10,000, records show. About 40% of all cases end up with a wage garnishment, court records show.

The consequences of Flex Loans were predicted when the Tennessee legislature legalized them 10 years ago, and the Consumer Financial Protection Bureau wanted to regulate products like Flex Loans when Congress created the agency in 2011. The Trump administration’s efforts to dismantle the CFPB are currently being reviewed by the courts.

Advance has argued that the new product would help consumers by offering them loans that are technically cheaper than a payday loan. It downplayed concerns from consumer advocates that these high-interest loans targeted and trapped low-income borrowers in debt they could never pay off. The company’s leaders made their case just as federal regulators planned to crack down on other Tennessee lenders for making different high-interest loans to people they knew could not pay them back.

After just a few years, evidence started mounting that the loans were exacting a high toll on low-income borrowers while generating huge profits for lenders. Since then, the Flex Loan has buried tens of thousands of Tennesseans such as Hansen in a deep financial hole.

Gabe Kravitz, a consumer finance researcher at The Pew Charitable Trusts, said loans above $1,000 paired with triple-digit interest rates are hard to pay off.

“It gets very expensive very quickly,” he said.

Only a few other states have approved products similar to the Flex Loan but, unlike Tennessee, when other states saw problems with the loans, they acted to rein them in.

Virginia allowed banks to make line-of-credit loans but had never seen the need to cap interest rates as banks competed for customers. But soon after Advance showed up, regulators noticed the company filing thousands of lawsuits. The state attorney general’s office investigated the company for deceptive practices in 2020, ultimately labeling the company as “predatory” and helping to pass legislation to shut down Flex Loan-like products in the state. Advance declined to answer a question about the Virginia attorney general’s investigation. California and North Dakota also passed bills capping interest rates on open-ended lines of credit after Advance and other companies began to operate in those states.

The Lookout and ProPublica sent Advance Financial detailed questions about its operations, including each of the cases cited in the article.

Cullen Earnest, the senior vice president of public policy at Advance Financial, declined to answer specific questions and said he could not discuss individual cases due to privacy concerns. Earnest said in an email that the company has an A+ rating from the Better Business Bureau. He added that the Tennessee Department of Financial Institutions has received just 91 complaints on flexible credit lenders since 2020, representing less than 0.001% of all new flex loan agreements, and that this data reflects the satisfaction of the vast majority of Advance’s customers.

Company records show Hansen made her twice-a-month payments on time, paying over $6,600 in 10 months. The required minimum monthly payments are supposed to act like a safety net, ensuring borrowers pay enough to cover the interest, fees and 3% of the principal.

But many times after Hansen made a payment, the company allowed her to immediately borrow the principal back, which she often did, extending the time it would take to pay off the loan. After almost a year of payments, she still owed more than $3,000.

One Borrower Owed Over $8,000 in Interest and Court Fees Sources: Rosita Hansen’s loan billing statements and court records. (Lucas Waldron/ProPublica)

Hansen said she knew the loan was costly — every loan statement warns, “This is an expensive form of credit. Only borrow what you can afford to pay back” — but she didn’t realize how hard it would be to keep up with the interest and fees.

The loan from Advance only made Hansen’s financial situation worse. As the payments became too much to handle, she lost the house. But the Flex Loan continued to grow, almost doubling in size by the time she received a court summons a year later.

Who Is Advance?

Michael and Tina Hodges started their payday lending business in the 1990s with a few stores in Nashville.

The company, then called Advance Pay Day, steadily expanded, making payday loans and offering products like bus passes, check cashing and money transfers. In 2009, the Hodges told a local news outlet that they wanted to shed the image of a “simple payday advance company,” so the company took on a new name, Advance Financial.

By 2010, Advance had generated a modest $15 million in revenue from about two dozen stores, according to statements it made in news reports at the time.

Not long after, the growing business collided with the Consumer Financial Protection Bureau, a federal regulator Congress created after the banking crisis. The CFPB had started to take aim at high-interest payday lenders, releasing a 2013 report on the dangers of the loans as debt traps. A subsequent agency report found that payday lenders, particularly in Tennessee, relied heavily on offering loans to those who couldn’t afford them. Advance declined to respond to a question about the CFPB report.

Advance Financial lobbied Tennessee lawmakers to approve bigger loans that accumulate higher fees, saying the new offering would be “a little bit more expensive” but arguing it would be good for consumers. (Stacy Kranitz for ProPublica)

Looking for an alternative product that wouldn’t fall under the CFPB’s looming regulations, Advance turned to Tennessee lawmakers, who have power over statewide interest rates. The company hired Earnest, the former top aide for the Tennessee Department of Financial Institutions, which regulates payday lenders. It also opened up a political action committee and began to push lawmakers to allow it to create the Flex Loan.

In a hearing discussing the Flex Loan legislation before its passage, Earnest told a Tennessee Senate committee the new loan was like a line of credit you could get at a bank, acknowledging it would be “a little bit more expensive.”

But the proposal added significant potential costs. To allow lenders to circumvent the state’s interest rate cap, the legislature simply called the interest something else: a “customary fee.” The law would permit flex lenders to charge 24% interest plus a daily fee until the loan is paid off. The fee is calculated by multiplying the loan amount by 0.7%. Over 365 days the fee adds 255.5% to the cost of the loan. Advance’s own documentation tells borrowers that although the state and Advance call it a fee, the federal government sees it for what it is, an interest rate.

The bill passed the state Senate without opposition. In the House, only Democratic state Rep. Mike Stewart spoke against the bill, which passed overwhelmingly and was later signed by Republican Gov. Bill Haslam.

Stewart pointed out the new law allowed companies to recoup attorneys fees in court, something payday lenders had not been allowed to do, and a practice he knew as a lawyer would likely increase the number of lawsuits.

“The legislation was structured to maximize the amount of money they could extract from these debtors,” Stewart, who has since left the legislature, said in an interview.

After legalization of the Flex Loan, Advance Financial’s business boomed. The company expanded to all corners of Tennessee, growing to 105 locations by the end of the 2010s.

As a private company, Advance is not required to release financial information. But Advance and the Hodges were vocal about their success, at least at first. The company self-reported to the Nashville Business Journal in 2019 that it made $392 million, quintupling its revenue from the year before it started offering the Flex Loan, and making more than 25 times as much as it had at the start of the decade. Advance’s revenue no longer appeared on any of the business journals’ lists after 2019.

Those numbers parallel the growth of the flex loan industry in Tennessee. By 2019, all flex lenders across the state had generated about $730 million in operating income, a number that has continued to grow, according to state records. In 2022, the latest available year of data, flex lenders earned $880 million in operating income.

The company is one of the top campaign donors to Tennessee politicians, having spent roughly $2.5 million since 2014. Advance has also spent over $3 million lobbying state lawmakers over the past decade.

The Hodges have also made roughly $10 million in political donations to federal candidates since 2014, including over $3 million to support President Donald Trump’s campaigns. In a 2019 recording obtained by The Washington Post, Hodges told a payday lending industry group his political donations granted him better access to Trump. Hodges told the Post he was an enthusiastic supporter of Trump and never used his status to ask the Trump administration for help.

A Trump-appointed CFPB director rescinded most of the payday lending regulations in 2020.

The new Trump administration has tried to gut the CFPB, but an appeals court on April 28 upheld a lower court ruling preventing the acting CFPB director from firing about 90% of the department’s employees.

Today, Advance’s only product is the Flex Loan.

A Wave of Lawsuits

Before the Flex Loan, court records show that payday lenders like Advance rarely took borrowers to court. The low $500 cap on loan amounts and the prohibition on collecting attorneys fees often made suing people unprofitable.

The Flex Loan law changed all that, unleashing a wave of lawsuits.

Across the 59 counties where electronic court records are available — home to over four-fifths of the state’s roughly 7 million people — Advance has brought one lawsuit for every 50 residents since 2015, according to a data analysis by the Tennessee Lookout and ProPublica.

For Tonya Davis, a single mother who works at a local hospital, Advance waited six years to sue. Tennessee’s debt collection law allows lenders to file a suit within six years and, if the company wins a judgment in court, to pursue the debt for another decade.

Davis lives in Davidson County, where Advance operates more stores than in any other county in Tennessee. Advance has filed over 22,000 lawsuits in Davidson over the decade since it began offering Flex Loans, its highest county total. Its stores in Nashville, which is located in that county, are generally in neighborhoods where households have lower incomes.

Davis said Advance contacted her in 2018, claiming she owed money on a Flex Loan taken out the previous year. Davis said she never borrowed the money and was the victim of identity theft, a claim the company told her it would look into after she told Advance in a phone call that the Social Security number on the account wasn’t hers.

The company never reached back out to her, she said, and for years, she heard nothing from Advance, but in 2024, she received a summons declaring it was suing her for almost $4,800.

Tonya Davis says she never borrowed money from Advance and was a victim of identity theft. The company told her it would look into the matter and then, almost six years later, sued her for $4,785. (Stacy Kranitz for ProPublica)

At the time Davis was caring for her dying mother and missed her court hearing. Because she didn’t appear, Advance won a default judgment against her for the full amount.

Davis could not afford an attorney, so she filed an appeal on her own, but she never got a chance to challenge the judgment. Soon after the hearing began, attorneys for Advance noted that Davis had filed her appeal one day past the filing deadline and the judge denied her appeal.

The company’s default judgment means Davis is required to pay Advance $175 a month.

“I’m not a lawyer,” Davis said in an interview. “I’m trying to do the best I can with what I have. I don’t know anything about this, or I would have paid, but they didn’t even give me the opportunity to present my information.”

Challenging Advance in court can be daunting. When Advance goes to court for a Flex Loan, it wins a majority of the time, in part because borrowers often fail to show up and in part because the company has more legal resources. The company has won over $200 million in judgments since the start of 2015.

Mandy Spears, the deputy director of the Tennessee-based think tank The Sycamore Institute, said in court that lenders have all the advantages because they have lawyers with vast experience in the system.

“It’s just complicated for the average person versus a more sophisticated business or law firm,” she said. “It’s really a gap in knowledge and expertise.”

Many defendants don’t realize that when they fail to appear in court, the company doesn’t have to provide detailed documents proving what a borrower owes.

Tessa Shearon, a 27-year-old mother in McMinnville, thought she paid off her loan with Advance Financial in 2020. When the company sued her almost three years later, she missed her court hearing because she was eight months pregnant and on bed rest. A judge ruled her in default and Advance won a judgment for $4,700.

Tessa Shearon thought she paid off her loan with Advance in 2020. The company sued her three years later. (Stacy Kranitz for ProPublica)

Shearon didn’t keep any documentation after paying off her loan, but she said she reached out to Advance’s lawyer to dispute the lawsuit. The company has not sought to garnish her wages. But she remains in limbo: Under the law, the company can choose to file a wage garnishment any time in the next 10 years to recover the judgment amount.

“My only worry is them attempting to collect,” Shearon said. “I don’t have anything.”

Marla Williams, a consumer law attorney for the Legal Aid Society of Middle Tennessee, is one of a handful of lawyers who’ve helped defend borrowers against Advance.

In several cases, Williams has been able to block wage garnishments and reduce the customary fee the company charges.

Marla Williams is a lawyer who has helped defend borrowers against Advance. (Stacy Kranitz for ProPublica)

Williams said that in a 2024 case, she was able to lower the payments from an unaffordable several hundred dollars a month to around $50 per month, which her client could afford. Advance fought the reduction, but a judge ruled in her favor.

In another case, Williams said Advance tried to charge a borrower thousands of dollars in additional fees months after he stopped paying the loan. After a hearing, which most borrowers without lawyers don’t ask for, a judge reduced the fees, calling the added charges “unconscionable and unjust,” court records show.

Williams said the company often uses aggressive tactics in court, something that she’s observed over the past decade.

“This is their business model,” she said.

Advance declined to discuss its business model or legal strategy.

Sometimes Advance has already made money off the borrower before suing them, as in the case of Hansen. Over 10 months, Hansen paid Advance nearly $2,200 more than she borrowed, records show.

She still owed almost $3,000 when she stopped paying Advance. The company waited around three months before declaring her in default, letting her debt grow before it sued her several months later. With the addition of attorneys fees and court-added interest, the company sued her for $6,000.

Hansen, who asked to use her maiden name because she’s no longer married, lost her home in 2022, moving into an apartment, which she said costs more than her mortgage had.

Hansen said she plans to pay Advance by the summer. A February bonus check, which the company garnished 25% of, has helped.

“I understand it’s every person for themselves, and they’re out to make a buck,” Hansen said about Advance. “But you know what, people out there are struggling every single day, and that’s what they take advantage of.”

How We Tracked Advance Financial’s Lawsuits

For this story, the Tennessee Lookout and ProPublica used online portals to find civil cases in Tennessee General Sessions Courts for the 59 counties where electronic court records are available. More than four-fifths of the state’s population lives in these counties. Our analysis included cases filed and uploaded to the online portals from 2009 through 2024. We filtered the data for cases brought by payday lenders in Tennessee, using company names, and found that Advance was filing significantly more suits than any other payday lender, according to court records.

Advance Financial often uses a related company called Harpeth Financial Services to file lawsuits against borrowers. Not every case listed the type of loan behind the lawsuit, but a pattern emerged: After Advance started offering Flex Loans in 2015, the number of lawsuits it filed significantly increased.

Of the cases in our data that were filed by Advance, over half had a judgment amount awarded, indicating the company won its lawsuit. About three-quarters of the cases filed had information on whether a wage garnishment was or wasn’t filed against a borrower. Our analysis found that among cases where that information was available, 40% included wage garnishment.

Have you taken out a flex loan and struggled to pay it back? Have you been sued by Advance Financial, Harpeth Financial or another flex loan lender?

Reporters at the Tennessee Lookout and ProPublica want to hear from you as they investigate flex loan lenders, who have sued more than 100,000 Tennesseans.

To share your experience, call or text reporter Adam Friedman at 615-249-8509.

Mollie Simon contributed research and Joel Jacobs contributed data reporting.

This content originally appeared on ProPublica and was authored by by Adam Friedman, Tennessee Lookout.

Letter from London: Blessed Are the Young, for They Shall Inherit the National Debt

Peter Bach — Fri, 11 Apr 2025 05:48:05 +0000

It was something Grace Blakeley said that first drew my attention to the little-discussed relationship between young people and trade unions in the UK today.

For those unfamiliar with Blakeley, she’s a prominent economist, writer, and journalist known for her sharp critiques of late capitalism. Alongside her economic commentary, she’s released music, travelled through Central America, moved to Cornwall, and taken up surfing. Her latest book, Vulture Capitalism, is now a bestseller.

What caught my eye recently was a post in which she noted that 50 years ago, young men worried about inflation eating into their wages would have joined a union.

‘Today,’ she said, ‘they put all their savings in crypto and vote for tax cuts in case they become billionaires.’ She added that communities once formed to tackle such issues collectively were systematically dismantled by both major UK political parties. In another interview, she argues Thatcher turned everyone from citizens into consumers. The result? Many young people feel they must face economic challenges alone.

Of course, there’s another possibility: maybe young people simply aren’t ‘joiners’ anymore. But this doesn’t necessarily mean they’re disengaged. A perhaps surprising recent survey by the University of Glasgow’s John Smith Centre (JSC) found that nearly two-thirds of young people (63%) are optimistic about their future, and almost three-quarters (72%) describe themselves as ‘rather or very happy.’ Youth-led protests around the world—such as in Turkey—offer further signs of active engagement. It’s not all doom and gloom.

Still, Blakeley may be right: young people should be more concerned about economic inequality. Financial independence is becoming harder to achieve thanks to high rents, rising council tax, energy bills, and a generally unaffordable cost of living. Post-COVID, there’s also been an uptick in benefit reliance—lifesaving for many, but for a small minority, perhaps demotivating.

The JSC also reports that young men in the UK tend to lean more right-wing than young women. While most young people identify as politically centrist, parties like Reform UK are courting younger male voters, including those drawn to controversial figures like Andrew Tate. In contrast, Blakeley urges young people to take ownership of their political future—pushing for structural reforms like public ownership, stronger labour protections, and wealth redistribution. In theory, these would benefit young workers and union members alike. In practice, however, such policies are often sidelined.

Youth Officer Hollie Gregg as part of the CWU Northern Ireland Telecoms Branch focuses on engaging and representing young workers within the Union. She said recently in Belfast: ‘Young people are more likely to be employed in lower job classifications so more likely to be on lower incomes. Young people are more likely to be victims of sexism, misogyny and sexual harassment. They are often not taken seriously and their voices silenced and their concerns brushed aside. As a trade union movement it is imperative that we are not part of the problem.’

Meanwhile, union membership continues to decline. Between 2010 and 2023, overall membership fell by 4.2%. Some specifics:

+ GMB: -5.23%
+ CWU: -14.46%
+ Unite: -20.76%
+ UNISON saw only a marginal increase of 0.12%.

Unions claim to support young workers—advocating for better pay, safer conditions, and fair treatment. Yet insecure contracts and low wages remain widespread. Many unions campaign against zero-hour contracts and for a higher minimum wage, but these battles are far from won. The Trades Union Congress (TUC) has pushed for a real living wage and argued against age-based pay discrimination. Yet even today, many young workers are still vulnerable to unfair treatment, unsafe workplaces, and even wage theft.

To their credit, unions such as Unite, GMB, and USDAW have fought against unpaid internships and exploitative gig economy jobs. But with leadership in many unions ageing fast, critics argue some senior figures are clinging to six-figure salaries rather than fostering the next generation.

Still, unions offer more than protest. If a young worker is dismissed unfairly, harassed, or underpaid, unions can provide legal representation and support. Many also run workshops, apprenticeships, and mentoring schemes aimed at building careers—not just defending them.

So why aren’t more young people joining? The TUC’s Young Workers Forum offers training and campaigns for fair pay and workers’ rights. Campaigns like HeartUnions and Why Join a Union? aim to raise awareness. But outreach is still uneven. Young workers are online, on campuses, and in gig jobs—unions must meet them there.

Leadership opportunities also matter. Training in activism is common. Training in leadership? Less so. If unions want young people to stay involved, they’ll need to create space at the top.

Some unions already have active youth arms:

+ Unite supports apprentices, trains youth leaders, and fights exploitative contracts.
+ GMB Young Workers campaigns for wage transparency and an end to zero-hour deals.
+ USDAW runs the Stand Up for Young Workers campaign.
+ CWU features high-profile young spokespeople like Chloe Koffman.
+ BFAWU has led fast-food strikes for better pay.
+ UCU defends early-career academics from job insecurity.

Blakeley believes the issue runs deeper than union strategy: she says young people lack a ‘materialist education’—an understanding of political economy and labour history. She herself joined a union while working at Morrisons and continues to champion their potential.

Now, with a Labour government in power after 14 years of Conservative rule, unions may be approaching a moment of renewed relevance. But will young workers see them as a genuine path to economic security—or as a relic of the past?

In the end, it’s not just about protesting unfairness. It’s about building power. And that starts with the decision to join.

The post Letter from London: Blessed Are the Young, for They Shall Inherit the National Debt appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Peter Bach.

Trump’s Tariffs Could Intensify Sri Lanka’s Debt Crisis

Shiran Illanperuma — Thu, 10 Apr 2025 05:45:15 +0000

Photograph Source: AntanO – CC BY-SA 4.0

On Thursday, 3 April, Sri Lankans woke up to the alarming news that the United States, the country’s single largest export destination, would be applying 44% tariffs. These tariffs will hit Sri Lanka just months after it officially exited sovereign default status in December 2024.

President Anura Kumara Dissanayake has appointed an advisory committee consisting of the heads of various government institutions and private sector representatives to study the impact of the tariffs. One of their main concerns should be the impact these tariffs will have on the country’s ability to raise foreign currency to service its considerable external debt, which stood at $55 billion in 2023 (or 65% of its Gross Domestic Product).

The US market accounts for 23% of Sri Lanka’s exports and 38% of its main export item – apparel and textiles. The country’s entire apparel and textile sector – which directly employs around 350,000 workers – was premised on access to the US (and European) market. This was facilitated through quotas assigned by the Multi-Fibre Agreement (1974–1994). For exporters which grew under this trade regime, there is a structural inability to imagine markets beyond the US. The Secretary General of the Joint Apparel Association Forum, the main representative body for apparel and textile exporters, has stated bluntly that ‘We have no alternate market that we can possibly target instead of the US’.

IMF’s Faulty Debt Sustainability Analysis

Trump’s tariffs come in the context of Sri Lanka continuing to struggle to recover from its worst economic crisis since independence. In 2022, Sri Lanka’s economy imploded under the pressure of a combination of factors. First, the country’s tourism and remittance-dependent economy lost billions in foreign currency due to the impact of the pandemic. Second, increases in commodity prices caused by supply chain bottlenecks and the Ukraine-Russia conflict placed a further burden on foreign currency reserves.

The situation led to extreme shortages of essentials, rolling blackouts, and long queues for fuel and cooking gas. In April 2022, Sri Lanka became the first country in the Asia-Pacific to default on external debt since 1999. In the two years since, the country has undergone a painful process of austerity under its 17th International Monetary Fund (IMF) programme, as well as a debt restructuring process that has paid insufficient attention to the country’s ability to generate foreign currency.

The IMF’s debt sustainability analysis focuses almost exclusively on debt as a share of GDP, which is the basis for the debt restructuring agreement made with the country’s lenders. Since the IMF analysis makes no serious distinction between domestic and foreign debt, its prescriptions focus on raising taxes to reduce the budget deficit while ignoring the structural trade deficit. There is no plan to boost Sri Lanka’s ability to earn US dollars and repay the bondholders who own the lion’s share of the country’s debt.

The IMF’s treatment of countries like Sri Lanka is in stark contrast to how the US treated allies like West Germany in the early years of the Cold War. Through the London Debt Agreement of 1953, all of West Germany’s external debts were forgiven. Meanwhile, future debt repayments would only be expected if the country ran a trade surplus, and these repayments were capped at 3% of export earnings.

By comparison, in the ten years leading up to Sri Lanka’s default on external debt (2012–2021), debt repayments amounted to an average of 41% of export earnings. During the same period, Sri Lanka also maintained an annual trade deficit of $8.5 billion. Without significant investment into manufactured exports (and access to markets), the country’s existing debt burden remains a ticking time bomb.

Globalisation and Its Discontents

The Trump administration’s use of the term ‘reciprocal tariff’ is misleading. Reciprocity implies equity, yet the kinds of goods which the US and Sri Lanka trade can hardly be equated. While Sri Lanka exports labour-intensive products such as apparel to the US, it imports capital-intensive products such as machinery and pharmaceuticals. Meanwhile, unlike the US, Sri Lanka does not have the exorbitant privilege of printing the world’s reserve currency.

Sri Lanka’s current pattern of trade, including its industrial monoculture of apparel and textile exports, is itself a product of US-led globalisation. On 18 March, during a speech delivered at the American Dynamism Summit in Washington, US Vice President JD Vance laid out a brutally honest take on the rationale behind that now bygone era of globalisation. ‘The idea of globalisation’, he said, ‘was that rich countries would move further up the value chain, while the poor countries made the simpler things’.

In other words, US-led globalisation was a means to maintain the international division of labour at a time when the US was the world’s sole manufacturing superpower. However, the problem, as Vance said, is that ‘the geographies that do the manufacturing get awfully good at the designing of things’.

In other words, while the US strategy may have worked for countries like Sri Lanka, it did not work for others. China, representing 17% of the world’s population, found ways to navigate globalisation. It did this by incentivising a high rate of fixed investments in infrastructure and industrial capabilities while lifting billions out of poverty and arming them with the skills and knowledge to work in high-technology sectors. For the US, this is unacceptable.

The resort to protectionism by the US signals a tactical, not a strategic, difference with the previous trade regime. The broad goal is still the same: to maintain the international division of labour by preventing the development of productive forces in the Global South. Whether these tariffs will actually work to that effect is another matter entirely. What appears certain is that debt-distressed countries like Sri Lanka will be left in the lurch as the Trump administration makes one last-ditch attempt to protect the interests of US monopolies.

This article was produced by Globetrotter.

The post Trump’s Tariffs Could Intensify Sri Lanka’s Debt Crisis appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Shiran Illanperuma.

McKinley or Lincoln? Tariffs vs. Greenbacks

Ellen Brown — Wed, 09 Apr 2025 08:36:05 +0000

President Trump has repeatedly expressed his admiration for Republican President William McKinley, highlighting his use of tariffs as a model for economic policy. But critics say Trump’s tariffs, which are intended to protect U.S. interests, have instead fueled a stock market nosedive, provoked tit-for-tat tariffs from key partners, risk a broader trade withdrawal, and could increase the federal debt by reducing GDP and tax income.

The federal debt has reached $36.2 trillion, the annual interest on it is $1.2 trillion, and the projected 2025 budget deficit is $1.9 trillion – meaning $1.9 trillion will be added to the debt this year. It’s an unsustainable debt bubble doomed to pop on its present trajectory.

The goal of Elon Musk’s DOGE (Department of Government Efficiency) is to reduce the deficit by reducing budget expenditures. But Musk now acknowledges that the DOGE team’s efforts will probably cut expenses by only $1 trillion, not the $2 trillion originally projected. That will leave a nearly $1 trillion deficit that will have to be covered by more borrowing, and the debt tsunami will continue to grow.

Rather than modeling the economy on McKinley, President Trump might do well to model it on our first Republican president, Abraham Lincoln, whose debt-free Greenbacks saved the country from a crippling war debt to British-backed bankers, and whose policies laid the foundation for national economic resilience in the coming decades. Just “printing the money” can be and has been done sustainably, by directing the new funds into generating new GDP; and there are compelling historical examples of that approach. In fact, it may be our only way out of the debt crisis. But first a look at the tariff issue.

Trump Channels McKinley

Trump said at a 2024 campaign event, “In the 1890s, our country was probably the wealthiest it ever was because it was a system of tariffs.” And in his second inaugural address on January 20, 2025, he said, “The great President William McKinley made our country very rich through tariffs and through talent.”

That may have been true for certain industries, but it did not actually hold for the broader population. The Tariff Act of 1890, commonly called the McKinley Tariff because it was framed by then Representative William McKinley, raised the average duty on imports to almost 50%. The increase was designed to protect domestic industries and workers from foreign competition, but the 1890s were marked by severe economic instability.

The Panic of 1893 plunged the U.S. into a depression lasting until 1897. Unemployment soared to 18.4% in 1894, with over 15,000 businesses failing and 74 railroads going bankrupt. The stock market crashed, losing nearly 40% of its value between 1893 and 1894. Far from being the wealthiest era, this period saw widespread hardship that tariffs not only failed to prevent but exacerbated.

Farmers and factory workers were hit particularly hard. The McKinley Tariff raised the cost of imported goods, squeezing rural and working-class budgets. Farmers faced a deflationary spiral as crop prices plummeted. Real wages for industrial workers stagnated or declined, with purchasing power eroded from high tariffs inflating the prices of consumer goods.

In the 1860s, President Lincoln issued debt-free money in the form of unbacked U.S. Notes or “Greenbacks;” but new issues of Greenbacks were discontinued in the 1870s, and gold was made the sole backing of currency. The resulting economic distress fueled the Greenback movement, which sought a return to the “lawful money” issued by President Lincoln. The Greenbacks were considered lawful because they were issued directly by the government as provided in the Constitution, rather than by private banks.

The Greenback Party faded, but its policies were adopted by the Populist Party and were pursued by a grassroots movement called “Coxey’s Army.” It staged the first-ever march on Washington in 1894, seeking a return to the Greenback solution. The march was considered the plot line for the 1900 classic American children’s story, The Wizard of Oz, with the scarecrow as the farmers, the tin man as the factory workers, the lion as William Jennings Bryan, and Dorothy as populist leader Mary Ellen Lease. Like the powerless Wizard, then-President Grover Cleveland turned the marchers away at the gate. (For a fuller history, see my book, The Web of Debt.)

As with McKinley’s tariffs, President Trump’s tariffs are said by critics to be backfiring, contributing to a dramatic stock market drop and prompting retaliatory tariffs and trade withdrawals from other countries. Economists warn of broader fallout. According to a New York Times analysis on March 9, tariffs and retaliation could slash U.S. GDP growth by a full percentage point in 2025, and households are potentially facing an extra $1,000 annually in costs due to tariff-driven inflation. Internationally, the tariffs have triggered withdrawals and realignments. Reuters highlighted on March 10 that the U.S. stock market had lost $4 trillion in value as recession fears grew, and the S&P 500 lost $1.7 trillion just on April 3.

The Lincoln Alternative

Rather than alienating our trading partners and stressing investors and consumers, Trump could take a page from Abraham Lincoln’s playbook. Lincoln wasn’t opposed to tariffs. Campaigning for the Illinois state legislature in 1832, he said, “My politics are short and sweet, like the old woman’s dance. I am in favor of a National Bank, I am in favor of the Internal improvement system, and a high protective tariff. These are my sentiments and political principles.” The tariffs were intended to protect the country’s fledgling industries from foreign competition, but they needed a national bank to provide the credit necessary to flourish.

President Washington set the model with the First U.S. Bank, which was essentially a national infrastructure and development bank. According to Treasury Secretary Hamilton’s Reports to Congress — the First and Second Reports on Public Credit, the Report on Manufacturing, and the Report on a National Bank — the Bank’s primary purposes were to manage the government’s Revolutionary War debt by turning it into a productive asset, using debt-for-equity swaps to provide capitalization; to issue a uniform national currency; and to provide credit for infrastructure and manufacturing, spurring economic development at a time when capital was scarce.

The Second U.S. Bank followed that model. But President Andrew Jackson declared war on the Bank, and its charter expired in 1836. During the ensuing “Free Banking Era” (roughly 1837 to 1863), the country was left without a national currency or a national bank. Individual banks chartered by states could issue their own banknotes, usually redeemable in precious metals held in reserve by the issuing bank. It was a chaotic system, with the value of the notes varying according to the distance of the customer from the bank. Distance mattered in case the bank ran out of precious metals in a bank run, a common occurrence.

Lincoln didn’t get his national bank, but he did sign the National Banking Acts of 1863 and 1864, which stabilized the chaotic money supply with a single currency backed by precious metals and federal securities; and he avoided trapping the country into a crippling debt at exorbitant interest rates by issuing debt-free Greenbacks to fund the Civil War. With this financing, Lincoln’s government not only won the war but funded major infrastructure and development, including completing the transcontinental railroad that connected the country from coast to coast.

Greenbacks constituted 40% of the national currency in the 1860s. Today, increasing the money supply by 40% would mean adding about $8.8 trillion. Yet this massive money-printing during the Civil War did not lead to hyperinflation. Greenbacks suffered a drop in value as against gold, but according to Milton Friedman and Anna Schwarz in A Monetary History of the United States, 1867-1960, this was not due to printing money. Rather, it was caused by trade imbalances with foreign trading partners on the gold standard. And price inflation abated after the war.

Today’s Treasury Could Follow Lincoln’s Model

The most direct way for the present Treasury to solve its debt problem is to follow our first Republican president and issue currency directly. One possibility is to issue trillion dollar coins. The Constitution provides, “Congress shall have the power to coin money and regulate the value thereof.” That approach and its constitutionality is detailed here. President Lincoln solved his debt crisis with paper U.S. Notes or Greenbacks, a move that was upheld by the Supreme Court.

Economists will cry that money printing on a major scale will result in hyperinflation, devaluing the currency and driving up consumer prices. But that did not occur with the Fed’s QE following the 2008-10 Global Financial Crisis, and the inflation objection can be overcome if the new money is used specifically for expenditures on infrastructure and new goods and services. When supply and demand remain in balance, prices remain stable, and the currency can retain its value.

To economists, “inflation” means an inflated money supply; but “too much money” drives up prices only when “chasing too few goods.” The price of eggs recently doubled, but it wasn’t because the number of customers demanding eggs suddenly doubled. It was because the supply of eggs was radically reduced by the culling of over 20 million egg-laying chickens due to the bird flu scare. The obvious solution is to increase the chicken population. Increase supply to meet demand.

Some Historical and Contemporary Examples

China transformed itself from one of the poorest countries in the world to global superpower in only four decades. Where did it get the money? Mainly, it just issued the yuan, as shown in my last article here. The chart in that article from Trading Economics is now behind a paywall, so here I will use the dates and figures that are still publicly visible on their web page. Citing the People’s Bank of China, it states, “Money Supply M2 in China averaged 93486.82 CNY Billion from 1996 until 2025, reaching an all time high of 320526.31 CNY Billion in February of 2025 and a record low of 5840.10 CNY Billion in January of 1996.” 320526.31 divided by 5840.10 = 54.88, which can be rounded to a factor of 55 or 5500%.

At the same time, the U.S. money supply increased by only 600% ($3647.9 in Jan. 1996 to $21,671 in Feb. 2025). The U.S. money supply is increased by bank lending, so 600% can be considered an average increase from that source over 29 years. That leaves a 4900% increase in the Chinese money supply from “money printing,” through mechanisms explained in my last article. Despite this dramatic increase in “demand,” price inflation remained relatively stable and was actually lower overall than in the U.S. The new money created new GDP, which shot up along with the money supply.

In the U.S. from 1930 to 1945, the money supply approximately doubled to finance economic recovery and the war effort. Consumer prices swung from deflation during the Depression to inflation during World War II, but the overall average remained low. The new money was largely injected through loans from the Reconstruction Finance Corporation, a federal agency that took on the role of an infrastructure bank. The debt to GDP ratio in 1946 reached a high of 121% — as high as in recent years — but it dropped down to a very manageable 31% by 1974, not because the debt was paid down but because GDP increased from the money poured into manufacturing and infrastructure in the 1930s and ‘40s.

Germany began the 1930s literally bankrupt. New money was injected in the form of a labor-backed currency (“Mefo bills”) issued by the government, directed specifically to manufacturing and infrastructure. MEFO bills allowed billions in military and public-works funding, but inflation did not increase.

Contrary Examples

What about the hyperinflation of Weimar Germany in the 1920s, or the Zimbabwe hyperinflation of 2007-09? According to Prof. Michael Hudson, who has studied this issue extensively, “Every hyperinflation in history stems from the foreign exchange markets. It stems from governments trying to throw enough of their currency on the market to pay their foreign debts.” The new money did not go into creating new goods and services. It was used to pay foreign debts in a currency over which the country had no control. This left the domestic currency vulnerable to rampant short selling by speculators, resulting in serious devaluation and hyperinflation.

Commentators often point to the 2020 COVID-19 payments to consumers — the stimulus checks under the CARES Act and subsequent relief packages — as the culprit driving up prices in the following years. The assumption is that demand outstripped supply purely because people had more cash to spend. Personal disposable income did spike by about 10% in 2020; but in a properly functioning economy, higher demand spurs production. That did not happen in the COVID-19 years because supply could not respond.

Nearly 100,000 small businesses were closed permanently due to COVID-19 by mid-2021. Meanwhile, global supply chains were clogged. The Los Angeles and Long Beach ports saw container ship wait times jump from days to weeks, while production was crippled by factory shutdowns in Asia along with labor shortages. A 2024 Brookings analysis concluded that “COVID-19 inflation was a supply shock.” Again the remedy is to increase supply along with demand (money).

How to Ensure that New Money Is Channeled into New GDP

The economic miracles of China, Germany and the U.S. following the Civil War and Great Depression demonstrate that governments can at least double the money supply—sometimes multiplying it manyfold, as in China — without spiking consumer prices, provided new money fuels infrastructure and production to match money supply growth with GDP growth.

In China, this is enabled by a sprawling network of over 2,000 publicly-owned banks, in addition to the three federal policy banks including China Development Bank (CDB). The Big Four national banks are predominantly owned by the central government, through entities that sell shares to private investors but retain government control, while thousands of city and rural banks are controlled by local governments at the county level. These institutions channel credit into local projects, amplifying economic output.

At the national level, China’s three giant policy banks funnel credit into the federal government’s long-range plans for infrastructure and development. This multi-year focus has been called a major advantage of Chinese “command capitalism” over Western “stakeholder capitalism,” in which private companies are required to focus on short-term profits for their stakeholders. However, the United States could form a publicly-owned national infrastructure bank like the CDB with long-range capabilities, on the model of Hamilton’s First U.S. Bank and Roosevelt’s Reconstruction Finance Corporation. The latter was not actually a depository bank but was a federal agency formed by President Hoover, expanded by Roosevelt’s government into a massive credit-generating machine for infrastructure and manufacturing.

HR 4052, titled “The National Infrastructure Bank Act of 2023,” is currently before Congress and has 47 co-sponsors. Like Roosevelt’s Reconstruction Finance Corporation, the bank is designed to be a source of off-budget financing, without adding new costs to the federal budget. For more information, see https://www.nibcoalition.com/.

At the local level, state-owned infrastructure banks could do something similar. Currently our only state-owned bank is the Bank of North Dakota, but it is a very successful model that not only funds state infrastructure and development but generates income for the state and acts as a “mini-Fed” for local banks. For more information, see the Public Banking Institute website.

The U.S. could also issue money directly, as Lincoln did in the 1860s with Greenbacks, and the German government did in the 1930s with Mefo bills, among other examples. The German government avoided speculative exploitation of the funds by issuing Mefo bills as payment for specific industrial output. The British did something similar in the Middle Ages with tally sticks issued as payment for goods and services, a system that lasted over 600 years. Keeping federal payments honest and transparent is possible today with modern IT technology, one of the assigned tasks of the DOGE IT team.The possibilities were framed in an editorial directed against Lincoln’s debt-free Greenbacks, attributed to the 1865 London Times (though not now to be found in its archives):

If that mischievous financial policy which had its origin in the North American Republic during the late war in that country, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe.

Without trade wars or kinetic wars, President Trump is in a position to achieve the vision for which President Lincoln might have taken a bullet, through the time-tested expedients of publicly-issued money and publicly-owned banks.

This article was first posted as an original to ScheerPost.com.

The post McKinley or Lincoln? Tariffs vs. Greenbacks first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

Did France’s Macron demand the US to pay back debt from the Revolutionary War?

Rita Cheng for Asia Fact Check Lab — Tue, 18 Mar 2025 06:32:00 +0000

An image has been circulated in Chinese-language social media posts that claims it shows French President Emmanuel Macron making a speech in which he said that French support to the U.S. to help it gain its independence more than 200 years ago was a loan, not aid, meaning the U.S. must pay interest.

But the claim is false. The image was taken from a televised speech that Macron delivered to the French public on March 5. A review of the speech confirms that he made no such remarks. Keyword searches found no credible reports or statements to back the claim.

The claim was shared on X on March 8, 2025.

“French President Emmanuel Macron said that the fund that France supported 200 years ago to help the United States gain independence was a loan, not aid, and now demand that the Trump administration pay the interest of 150 trillion U.S. dollars,” the claim reads.

The claim was shared alongside an image of what appears to be a televised speech by Macron.

The superimposed text reads: “France says US independence funding was a loan, and is now demanding $150 trillion in interest.”

France played a crucial role in helping the U.S. gain independence from Britain during the American Revolutionary War (1775–1783).

In 1778, France formally allied with the U.S., providing military aid, financial support, and naval power. The French supplied weapons, ammunition, and troops, and their navy played a decisive role in the Battle of Yorktown in 1781, which led to the British surrender.

Historians say the financial burden France incurred helping the U.S. contributed to the outbreak of the French Revolution in 1789.

But the claim that Macron demanded the U.S. to pay interest on funds provided by France is false.

Televised speech

A reverse image search found the same photo of Macron recently posted on online social forum Reddit.

A closer look at the image shows the letters “LCI” embedded in the photo’s upper right frame.

Superimposed text on the image read: “LCI” and “Emission spéciale”.

“LCI” stands for “ La Chaîne Info,” a French free-to-air news channel.

The same claim about the French president was spread on English-language social media.

(Reddit)

A separate keyword search found the image was taken from a televised speech of Macron on March 5.

The record of the speech was published by LCI on its YouTube channel on March 6.

A review of a verbatim French transcript published by the French Presidential Palace and a real-time English interpretation broadcast by the French broadcaster France 24 found that the president made no such statements about the U.S. needing to repay France for its assistance in the Revolutionary War.

Mainstream media reports show that Macron asked European countries to strengthen their defense in the speech.

(Google)

In the speech, Macron called on European countries to independently strengthen their collective defense in the event of U.S. support being withdrawn. He also noted that France was considering expanding its nuclear umbrella to include European allies.

Keyword searches found no credible reports or statements to back the claim.

Translated by Shen Ke. Edited by Taejun Kang.

Asia Fact Check Lab (AFCL) was established to counter disinformation in today’s complex media environment. We publish fact-checks, media-watches and in-depth reports that aim to sharpen and deepen our readers’ understanding of current affairs and public issues. If you like our content, you can also follow us on Facebook, Instagram and X.

This content originally appeared on Radio Free Asia and was authored by Rita Cheng for Asia Fact Check Lab.

How a Connecticut DMV Employee Made Thousands by Selling Towed Cars

by Dave Altimari and Ginny Monk, The Connecticut Mirror — Fri, 07 Mar 2025 10:00:00 +0000

by Dave Altimari and Ginny Monk, The Connecticut Mirror

This article was produced for ProPublica’s Local Reporting Network in partnership with The Connecticut Mirror. Sign up for Dispatches to get stories like this one as soon as they are published.

The silver Jeep Wrangler that showed up at the Connecticut Department of Motor Vehicles inspection station was missing all four of its wheels. Gone, too, were its doors.

“Vehicle is absolutely stripped,” the Connecticut towing company wrote to the state DMV. That was why it was only worth $1,000, the company said on an official form that took advantage of a state law allowing it to sell vehicles it had towed.

Photos submitted by the tow truck company showed the Jeep covered in fresh snow, but strangely, despite it having no doors, there was no snow inside the vehicle, suggesting the doors had recently been removed. The company also failed to mention that when it towed the stolen Jeep after a police stop three weeks earlier, it had stylish rims on its still-attached wheels and an LED light bar above the windshield, and the police wrote that the vehicle had “no visible damage.”

The DMV approved the request to sell the vehicle, and a few months later, the Jeep was posted for sale — not by the tow truck company but on the Facebook page of a longtime DMV employee. The Jeep now had rims, wheels and a light bar like it had when police stopped it.

The DMV employee sold the Jeep to a used car dealer for $13,500. After passing through several more hands, another dealership ultimately sold it to a customer for $28,781.44.

The Connecticut Mirror and ProPublica in January exposed how Connecticut’s laws favor towing companies at the expense of drivers. The state allows tow companies to seek the DMV’s permission to sell some vehicles after 15 days — one of the shortest such windows in the country. The system has resulted in a wide range of abuses with little oversight from the DMV.

The case of the Jeep with the missing wheels, laid out in internal DMV records, is an extreme example of how the DMV has failed to monitor a process that has had severe consequences for some car owners with low incomes. CT Mirror and ProPublica have spoken to dozens of people who had their cars towed and never saw them again. Many said they were never notified that their car would be sold.

Without strong oversight from the agency, someone who works for the DMV found a way to profit off that system without facing any consequences.

The towing company’s sales to the DMV employee went on for several years. It was finally discovered when a document the employee had submitted to obtain the title for one of the vehicles two years earlier came to the attention of the DMV’s investigations unit.

In total, DMV investigators found that from 2015 to at least 2019, the towing company, D&L Auto Body & Towing, in Berlin, Connecticut, sold 15 vehicles to an investment firm owned by a man named Dominik Stefanski, a document examiner then in the DMV’s main office in Wethersfield, outside Hartford.

According to the DMV case report, whenever D&L employees went to the DMV office, they would make eye contact with Stefanski, who would then allow them to cut the habitually long, slow-moving lines. In exchange for this favor, the report said, Stefanski would spend his days off walking the company’s lot selecting vehicles that had belonged to other people only weeks or months prior. D&L would then undervalue the cars on DMV forms, investigators said, allowing Stefanski to buy them cheaply and resell them for a profit.

D&L Auto Body & Towing (Shahrzad Rasekh/CT Mirror)

DMV Commissioner Tony Guerrera declined to answer specific questions about the investigation. But Guerrera, who was deputy commissioner during the investigation and became commissioner in 2023, said after reporters raised questions about the incident, “This issue has been escalated to the Office of Labor Relations for further review and to ensure a thorough assessment.”

In an interview in the doorway of his home, Stefanski denied the investigators’ findings. He said he never let D&L cut the line, and when he was informed that D&L employees told investigators he purchased at least 15 cars from them, he scoffed, “Jesus Christ, probably not.”

The investigators “tried, but nothing came up because they knew they had nothing,” Stefanski said.

D&L issued a statement saying owner Kevin Harrison wasn’t aware of the scheme until DMV investigators asked about it. “The company’s manager at the time acted on his own and thought he was doing the right thing by selling in-operable cars,” the statement said. According to investigators, many of the cars were in good condition. The manager was fired, D&L said.

“D & L Auto Body & Towing, LLC works with the Department of Motor Vehicle to ensure that this type of situation doesn’t happen again,” the statement said.

Ultimately, the DMV didn’t take any action against D&L or Stefanski, and Stefanski still works at the DMV.

The Jeep With the Missing Wheels

D&L first came into possession of the silver Wrangler in January 2018, when the Meriden Police Department called D&L to tow a Jeep that had been stolen from a car dealership in Pennsylvania and located during a traffic stop.

Hector Luis Gonzalez, who was driving the Jeep, said in an interview that he was shocked when officers told him it was stolen. His uncle had bought the Jeep from a car dealer in the Bronx, and he had a title. Gonzalez said he had put a lot of money into the Jeep, purchasing new tires and rims that cost nearly $5,000 and buying a light bar in the front that cost more than $500.

“I bought it from a dealer, so I didn’t expect that the car was stolen,” Gonzalez said.

Once a car is towed, the towing company is supposed to notify the car’s owner within 48 hours. As days pass, storage fees add up, making it expensive for drivers to retrieve their cars. After 15 days, the tower can ask the DMV for permission to sell a car if they deem it to be worth less than $1,500. This gives companies an incentive to place a lower value on vehicles, as they would otherwise have to wait 45 days to sell.

Gonzalez said he called D&L after the car was towed and staff told him that the dealer it had been stolen from had picked it up.

But when investigators reached the dealership, Koch 33 Automotive, two years later, its management said it had no idea the car had been recovered and told DMV officials that the dealer still had an interest in it.

“I have been under the assumption that the vehicle was still considered stolen,” a dealership employee told investigators. The company did not respond to calls seeking comment. The DMV is responsible for verifying the facts on the forms towers submit that state they tried to contact the owner. A vehicle search also should have shown the vehicle was stolen, which would have flagged the potential sale.

Twenty-five days after the tow, D&L submitted a form to the DMV saying that it wanted to sell the Jeep and that it was only worth $1,000.

In theory, the DMV had a way to catch tow truck companies that undervalued cars. Before approving a sale, DMV employees are supposed to check the book value and, if the declared value is lower, request more information as to why the tower believes the car is worth less. In this case, the National Automobile Dealers Association value for the Wrangler was $15,100, according to DMV records.

But D&L was able to get around that by providing photos of the car without doors or wheels. It then brought the Jeep on a flatbed to the DMV, where an inspector noted the missing parts and stamped a form declaring it not legal for road use.

The Jeep Wrangler was shown intact in a photo from a police stop in January 2018, first photo, and with the doors and wheels removed weeks later, second photo. (Obtained by CT Mirror and ProPublica)

Less than four months later, D&L sold the Jeep for $1,400 to JDM Investments, a company that Connecticut secretary of state business filings show was owned by Stefanski.

Under state law, the profits from sales of towed cars are supposed to belong to the vehicle owners. Towing companies have to hold onto the proceeds for a year and turn over any remaining money, after subtracting their fees, to the state.

But towing companies can get around that rule by selling cars for small amounts so there aren’t any profits left once towing and storage fees are deducted.

In the case of the Jeep sold to Stefanski, investigators calculated that there should have been $390 left over, but D&L never paid that to the owner or the state. If it had sold the vehicle for the book value, there would have been about $14,000 in profits.

Dominik Stefanski’s Facebook post advertising the Jeep Wrangler. (Obtained by CT Mirror and ProPublica. Redacted by the Connecticut DMV.)

After the sale, Stefanski, who has worked at the DMV since 1999 and earns $72,000 annually, applied for the vehicle’s title but said he wasn’t ready to register the car. That limited the paper trail: The DMV has no way to track unregistered cars.

Curiously, records uncovered by investigators showed that five days before purchasing the Jeep from D&L, Stefanski had already sold it to a used car dealer, Toria Truck Rental & Leasing of Hartford, which also does business as South Green Automotive, for $13,500.

After selling it to the dealer, Stefanski appeared to help Toria resell the vehicle by listing it on Facebook: “Selling my jeep 2010 only 73k miles clean title asking 23k$.” Two weeks later, the Jeep was sold at a public auto auction for $18,130 to a Groton dealership, which 10 days later sold it to a customer for $28,781, records show.

According to investigators, Toria then sent Stefanski a commission check for over $2,000 for the sales of two cars, including the Jeep.

Toria’s co-owner Edward Michaels said he and another employee, who no longer works for him, met with DMV investigators and they “were cleared.” The DMV did not pursue charges against Toria.

The Abandoned Cadillac

When cars are sold, towing companies have to submit a form called an H-110 that tells the DMV who the new owner of the vehicle is and how much it sold for. But the DMV says it doesn’t have an efficient way to track those. If it did, it might notice trends like a large number of towed vehicles being purchased by the same company.

Four months ago, CT Mirror and ProPublica requested six months’ worth of H-110s under the state public records law. The DMV said it could only search sales by specific vehicle identification numbers.

CT Mirror and ProPublica requested forms on 18 vehicles that tow companies sought to sell. The DMV said it only had that information on two of them: the 2010 Jeep and a 2010 Cadillac Escalade that Stefanski bought from D&L about a year later.

D&L towed the Cadillac from the Econo Lodge in Southington in November 2018. When the tower asked the DMV to sell the car, it wrote that the Cadillac was worth $750 because it had no key and had front end damage. According to the DMV report, the book value of the car was $17,500.

The company sold the Cadillac to JDM Investments five months later for $1,000. Stefanski flipped the car to Toria for $17,500, which sold it at a public auction for $18,300 to a Putnam auto dealer that then sold it to a customer in October 2019 for $23,250.

When it was initially towed, the Cadillac had belonged to Southington resident Daniel Rodriguez, who had left the car in the Econo Lodge parking lot after striking a guardrail on the highway. Rodriguez said in an interview that he had been battling an addiction at the time and “left it there.”

Stefanski posted on Facebook to advertise Daniel Rodriguez’s towed Cadillac. (Obtained by CT Mirror and ProPublica. Redacted by the Connecticut DMV.)

“I was not in the right state of mind, and I just never went back,” Rodriguez said.

Rodriguez said he never heard from any tow company or got any notice that his car was being sold until a DMV investigator contacted him in early 2020 after he’d moved to Texas. He wrote back “requesting any funds that may have been generated as a result of the sale of the vehicle.”

But Rodriguez said he was told by DMV officials it was too late: “Somebody got back to me stating that so much time went by, and I wasn’t allowed any compensation.”

That was incorrect. Because only eight months had passed since the sale, Rodriguez should have been able to claim any proceeds from the towing company. But in this case, there wasn’t any money to claim because of the way the transactions were handled.

Until CT Mirror and ProPublica contacted Rodriguez, he said, no one had told him that his car had been purchased by a DMV employee and that it eventually sold for more than $23,000.

“It’s like a thorn in the rear end,” Rodriguez said.

“They Can’t Do Nothing”

The DMV spent more than a year, starting in February 2020, investigating connections between Stefanski and D&L.

D&L eventually turned over records to investigators that showed it had sold JDM Investments 15 cars. The investigators’ report also showed they interviewed the owner of an auto body shop who admitted that a receipt for $1,071 worth of work on the Jeep was fabricated at Stefanski’s behest.

Stefanski said he didn’t understand the allegation because the DMV would have reviewed the receipt when it issued him the title to the Jeep.

During the investigation, one D&L employee described a conversation the employee had with Stefanski as investigators began to look into the case.

“You’re fucked,” the employee said he told Stefanski.

According to the employee, Stefanski replied that the investigators had questioned him about the Jeep.

“Like an hour after I sold you the Jeep you had it for sale on Facebook,” the D&L employee responded. “You told me you needed all the vehicles for your family but that was bullshit.”

Stefanski just told him not to worry. “I got receipts for everything,” he told the employee, according to the investigators’ records. “Don’t say anything to the officers. I got everything covered. I have representation in the union and they can’t do nothing.”

During Stefanski’s interview with investigators, he denied doing any favors for D&L and told them he needed the cars for a real estate business.

“I told you I don’t flip cars. I realized my business wasn’t working out so I sold it,” Stefanski said.

In an interview with CT Mirror and ProPublica, Stefanski said fixing up cars is his hobby.

The investigators questioned why Stefanski bought multiple vehicles, never registered them and then sold them. Did he realize his business wasn’t working out multiple times? “This makes absolutely no sense,” one investigator said, according to the DMV report.

In January 2021, DMV investigators applied for arrest warrants seeking to charge Stefanski and at least two D&L employees, including its then-manager, with larceny and title fraud.

But then-Assistant State Attorney Evelyn Rojas declined to file charges, citing “prosecutorial discretion” and “insufficient evidence to meet the burden of proof beyond a reasonable doubt.”

“The Department of Motor Vehicles is free to pursue whatever civil remedies it deems appropriate against the defendant and any other involved party,” Rojas wrote in a 2021 memo.

Rojas, who now works at the state attorney general’s office, did not respond to questions about her decision.

The DMV could have issued fines against D&L or even revoked the towing company’s license. The agency could have suspended or tried to fire Stefanski. But the agency did nothing to either of them.

In an interview with reporters, Stefanski maintained that he hadn’t done anything wrong in the transactions when shown a copy of the unsigned arrest warrant investigators had drafted.

“If it was something illegal, then why didn’t they sign it?” Stefanski asked.

CT Mirror and ProPublica obtained Stefanski’s personnel records from 2018-23, and he received glowing reviews from his bosses. No mention was made of the investigation or his role in it.

Stefanski still works as a document examiner, although he’s transferred to the DMV’s New Britain office.

Since the investigation, Stefanski has tried to sell several cars and auto parts on Facebook, including posting an engine from a 2014 Audi for $2,500 in November.

“I don’t understand why I can’t” make these sales, Stefanski said in an interview.

The engine, he said, he got from a buddy.

This content originally appeared on ProPublica and was authored by by Dave Altimari and Ginny Monk, The Connecticut Mirror.

Donald Trump and Depression Economics

Dan Lieberman — Wed, 05 Mar 2025 16:00:23 +0000

Somewhere in the universe is a man known as Donald Trump. He has residences in New York, Palm Beach, Florida, and a white columned house at 1600 Pennsylvania Avenue, Washington, D.C. From these well-furnished bungalows, where supplicants meet to greet, monarch butterfly Trump governs his territory ─ planet earth. When the monarch desires a change in scenery and craves another mansion, he sends his henchman to the selected area, has them arrange an offer that cannot be refused, and gives the area the glitz his personality favors. Donald Trump imagines he is everywhere. He does not realize he is nowhere. Donald Trump is a walking manic- depressive, bringing America to international isolation and national depression — economic and public.

Trump professes a smooth and clever operator, a master of the art of the deal, which is a business term for international diplomacy. He is a frenetic wheeler-dealer, which is a business term for gunboat diplomacy. Before Ukraine’s rare earth minerals begged to be mined by U.S. corporations, there was nothing Donald Trump relished from Ukraine President Zelensky; nice to end the war, but the war is not harming the United States. The war is harming Russia, and there is much the United States can gain from Russia, including rare earth minerals, by having Putin believe the U.S. is not siding with the Kremlin, which includes a truce. Trump has done nothing for the United States and all for Putin by siding with the Russian leader. He could have done much for the United States by pretending to side with Zelensky and eschewing his art of the deal for legitimate international diplomacy

Entrance of the rare earth minerals to the discussion is baffling and contradictory. An agreement by Zelensky to having American construction crews drilling close to the Russian border and American industrialists investing in a nation that Putin wanted neutral would end “peace negotiations.” Russian troops would press on to capture the cherished rocks and align so that citizens from a NATO nation do not operate close to its territory. If Trump coveted the materials, why did he antagonize its owner?Doubts exist of the extent of Ukraine’s possession of the minerals within its non-occupied territory, and if it is physically and economically viable to access and use them. What is this all about? Was Trump setting a trap for Zelensky?

Trump’s response to Zelensky’s statement that “a deal to end the war with Russia was very far away and the war may not end soon, “is strange and alarming. Trump said, “He better not be right about that.” This is not advice from a sympathetic soul. Sounds as if America is in the war and he wants Ukraine to surrender. Trump’s overzealous support of Russia will harvest more than a truce. It allows a sterner position and more severe demands from Russia ─ a Russian proposal that requests Odessa, Kharkiv, and Kyiv incorporated into Bear country. Zelensky wants guarantees that his nation will be protected. That makes sense. Once there is a peace treaty, Ukraine territory is lost, never to be regained. What stops a superior Russia from restarting the conflict and seeing more territory? Not complying with Zelensky’s request is not being sincere about an agreeable peace. The militant charge for peace has no relation with the war, with Putin, and with making America great again. Donald Trump is eager to win the Nobel peace prize and scoundrel, Volodymyr Oleksandrovych Zelensky, is preventing it.

International Isolation

War, as an instrument of U.S. foreign policy, is the U.S. preferred method to advance its hegemony ─ economic warfare against those who can contend the U.S., and military warfare against weaker foes. It is welcoming to learn that war will no longer be the vanguard of U.S. foreign policy. Is it true? Will Trump learn that the U.S military-industrial complex only knows war, that it is a permanent feature of the U.S. psyche? Without war, the constituted U.S. is not a global leader.

Europeans won’t readily invite nation executives who do not listen to others and demand everyone listen to them. The inexperience of those who occupy Trump’s cabinet is anathema to the mostly well-groomed European counterparts. The executives and legislators operate at different levels and correspond at no level. Future communications and relations between the disUnited States and semi-unitedEuropean nations will be difficult.

Trump believes he has sympathetic recognition from Putin and Xi. He has that posture toward them; doubtful he has that posture from them. These leaders are professional statespersons. They exercise care in their relations with leaders who behave erratically, are petulant, not diplomatic, have inconsistent policies, and uncertain direction. They want to be sure they understand with whom they are dealing. The Russian and Chinese leaders may pay lip service to Trump, but will act with caution.

Economic depression

Some of the rash moves by Trump and his official “bull in the China shop,” the Musk ox, have merit and national support. America’s president failed to learn how and why we got here from there before he started making here no more. His knowledge of issues is nil and those advising him reinforce his nilness. Decisions from whims and meager knowledge are coin tossing and not careful decisions. His policies date back to the 1920’s and the result will be same as occurred in the 1920’s ─ depression.

Trump adores private debt and abhors government debt.
Government debt is not the problem. A system that exists by debt is the problem. Government deficit is one of several methods to increase the money supply (debt) and create demand. In times of economic stress, government borrowing exhibits advantages.

(1) Government borrows at lower interest rates than consumers and its debt is easily rolled over.

(2) The government can always pay its debt and cannot go bankrupt. Artful debtors (such as Trump), receiving funds from careless creditors, have gone bankrupt and spiraled the economy into declines.

During the seven years between 1924 and 1930, federal government debt slowly decreased from $395B to $304B. Herbert Hoover eschewed debt and coveted balanced budgets. In 1930, the low debt U.S. began its Great Depression.

Trump wants low taxes

Taxes transfer money between the government and the taxpayers; neither method adds or subtracts money in the economy nor allows more or less available spending to the economy; the purchasing power stays the same; the total purchases of goods and services remain the same; and the GDP remains the same.

Lowering taxes assists the already employed, and that is not the major priority. Who pays taxes ─ the employed. Who receives tax breaks ─ those who pay taxes. In effect, lowering taxes redistributes federal assistance from needy persons to the employed. Which is preferable, redistributing income so the employed have more to spend or redistributing the income so the underemployed have something to spend?

Stimulating the economy by tax breaks is a psychological phenomenon. The talk, exaggerations, promises, and general optimism of tax breaks fashion a more optimistic public, which supposedly stimulates spending, investment, and courage to carry more debt. Creeping in to the debate is another assumption ─ those who have excess funds will invest and stimulate growth. Not considered is they invest in speculative ventures that only churn money or they might purchase imports, which decreases purchasing power in the domestic economy.

GDP has steadily grown, with a few bumps, in the last 70 years, and no relation to lowering of taxes is proven. A government report: Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, Thomas L. Hungerford Specialist in Public Finance, September 14, 2012, concludes:

… results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

Trump‘s economic plans are guided by “achieving increasing concentration of income at the top of the income distribution.”

Tax rates fell from 60 percent for top earners in 1920 to 25 percent in 1924 and slightly lower to 23 percent in 1929. Did the lower taxes help the economy? The Hungerford report indicates otherwise. For sure, the lower taxes did not prevent the Depression and might have contributed to its extension.

Trump craves low interest rates

Optimum interest rates are not arbitrary, they are a calculated tool for the Federal Reserve to delicately regulate the money supply and the economy; lowering rates (increasing money supply) when the economy is heading downward and raising rates (limiting increases in money supply) when the economy is overheated, inflation is rising, and speculation is rampant. Several economists offer a leading factor in the Great Depression as “differences of opinion contributed to the Federal Reserve’s most serious sin of omission: failure to stem the decline in the supply of money. From the fall of 1930 through the winter of 1933, the money supply fell by nearly 30 percent. The declining supply of funds reduced average prices by an equivalent amount. This deflation increased debt burdens; distorted economic decision-making; reduced consumption; increased unemployment; and forced banks, firms, and individuals into bankruptcy.”

Trump wants low interest rates to achieve a short-term gain in the economy and make his record look good; after him, the deluge. He will have speculation, more uncertain private debt, and money leaving the country to seek higher interest rates; all followed by potential economic collapse.

Immigration

The word immigrant irks the pure white American, Donald Trump. A highly industrialized nation with upward mobility requires an increasing work force and consuming population to grow. When encountering a low population growth, immigration is the avenue for revitalizing the economy. Arguing past immigration and not preparing for future immigration is setting the doomsday clock on a capitalist system. Trump is headed for a pyrrhic victory.

Tariffs

In the Trump world, tariffs obtain revenue for the government, which might enable a decrease in income taxes, and give an added opportunity for American industry to compete. The first proposition is obviously false; tariffs raise the price of imported goods and shift the relief of the income tax burden to an equal import tax burden. It is a wash. Stimulating production facilities to discard their mothballs and become alive again is speculation. Tax the imports of one nation and another nation steps in with low price goods.

Canadian and Mexican exports to the United States are highly valued added products. The U.S. ships unfinished products to those nations. They add their labor and resources and ship finished products to the United States. Keeping Canadian and Mexican added value to a minimum is mandatory for U.S. manufacturers. Tariffs augment prices of the imported goods, which, from producer perspective, is equivalent to augmenting the added value. American producers cannot look inward for relief. They must look outward and find labor from other nations that can fabricate the finished products.

And there is always retaliation. Looming in the tariff debate is the spectra of the1930 Smoot-Hawley tariff, “that raised tariffs on over 20,000 imported goods to protect American businesses and farmers during the Great Depression. However, it led to retaliatory tariffs from other countries and significantly decreased international trade, worsening the economic situation.”

Government downsizing

Another bugaboo, from those who rail against inefficiency and free riders, is the swollen government bureaucracy. Government and bureaucracy are one word; always swollen, the government absorbs unemployed whose paychecks circulate in the economy. Their lack of productive activities does little harm. Yes, there are workers who get a free ride. This is bothersome and not resolved by the stampede of a Musk ox.

The government is not a business with a profit and loss sheet. It can downsize but not without consideration that inefficiency it is not an employee fault; at the day of hire, the government owed the hire person proper training, proper supervision, and proper tasks. The correct way to downsize is for departments to submit and defend budgets. After that, attrition and incentives are used to streamline the departments so that all seats are warm and office temperature rises from the heat of the more energetic civil servants.

Depressing and Depression

Depressing to observe the disUnited States thump its chest, while trending into a thinning of its constitution. The heralded phrase of U.S. foreign policy experts, “We had to destroy them in order to save them is mirrored, “We had to destroy ourselves to save ourselves.” Might be just what Americans and the world needs. The Trump era has sputtered before Tesla is able to pass Nissan in U.S. automobile market share. Antagonizing the entire world, especially those who share borders, is the ultimate constraint to a successful America. Replaying 1930 brings back the events of 1930. Trump’s mania, expressed in his outbursts, has been visited upon the American public. Bring back the Prozac, manic depression is now a standard U.S. disease. Trump will soon be seen as another Nicolae Ceausescu, integrated into the disintegrating American dream.

The post Donald Trump and Depression Economics first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Livin’ La Vida Loca

Dan Lieberman — Tue, 04 Feb 2025 15:18:27 +0000

Waking up, day after day, and seeing continuous disasters visited upon the Palestinian people forecasts a day of facing the light at an increasingly dark level. It is impossible to be unaware of the genocide; yet an entire nation reinforces it. The American people are disposed to the sufferings its government inflicts upon others.

Election of an authoritarian to the highest office, who appoints cabinet positions with qualifications that require little experience in government affairs and extensive experience in extramarital affairs, completes the mystification. Elise Stefanik, selected as America’s representative to the United Nations, agrees to the proposition that “Israel has a biblical right to the West Bank.” Shuddering! Doesn’t qualification for a cabinet position require knowledge that the bible does not determine right and that the Earth is round and not flat? Hopefully, UN security guards will bar entry of her and other vocal terrorists into the UN building.

Maintaining the Declaration of Independence and Constitution will be a battle. Refusing to have the Old Testament on a night table and the Ten Commandments on the living room wall will be challenging . Knowing that America is in a dystopia, “livin’ a vida loca,” will be difficult to absorb. These are not the principal problems that prevent America from being great again. The principal problem in the United States is a government that has been unable to resolve its problems. For decades, a multitude of problems have surfaced, talked about, and been ignored. Suggestions for solutions are cast aside as empty words ─ U.S. governments are only interested in donor offerings and contributing lobbyists; attention to the people’s problems is time consuming and not remunerative.

Look at the extensive record of problems, which has been growing for decades and have some obvious solutions. After these crisp answers, I might elaborate on them in forthcoming articles.

(1) Social Security
The ready to collapse Social Security system has present earners paying for retired workers and closely resembles a national pension plan. Instead of having workers and corporations pay FICA taxes, why not collect revenue from income and corporation taxes and finance a real national pension plan?

(2) Gun Violence
Decades of gun violence and shootings in schools have been succeeded by decades of gun violence and shootings in schools. An idea ─ get rid of the guns; nobody will miss them.

(3) Climate Change
In the 1964 presidential contest between Senator Goldwater and President Johnson, Goldwater posed as the “war hawk,” ready to pounce on the North Vietnamese. Johnson’s famous phrase was, “I’ll not have American boys do what Vietnamese boys should do.” After Johnson won the presidency and had “American boys do what Vietnamese boys should do,” Goldwater voters reminded everyone, “They told me if I voted for Goldwater our military intervention in Vietnam would greatly increase. I voted for Goldwater and they were correct.”

In all elections, voters are reminded that voting Republican enhances global warming. In all elections that the Democrats won, those who voted Republican noted that global warming continued to increase.

(4) Government debt
Mention government debt and blood boils ─ another of those internalized issues, courtesy of the mind manipulators. Government debt is the result of problems and not the problem. The problems are (1) Income taxes are too low to finance meaningful government projects; (2) The military spending is too high and; (3) The economy runs on debt and government debt rescues a faltering economy. Give attention to the real problems and government debt will be greatly reduced.

(5) War
Since its official inception in 1789, the United States has attached itself to war in almost every day of its existence. Not widely mentioned and not widely apparent, U.S. forces are still shooting it up in Iraq, Syria, Yemen, and parts of Africa. U.S. arms explode throughout the world. U.S. involvement in the genocide of the Palestinian people is inescapable. Americans do not know they prosper on the degradation of others and they survive well because others do not survive at all. While intending to end all wars, President Trump may learn that the U.S. cannot progress without war; war is a preventive for economic and social collapse in all 50 states.

(6) Immigration
Immigration to the United States has become a political football. Political correctness, catering to voters, and ultra-Right nationalism vs. ultra-Left internationalism have strangled an intelligent and objective analysis of a major issue, which is not immigration. The major issue is that the U.S. has supported oligarchies in Latin American nations. These oligarchies have created significant social and economic problems, which the disenfranchised relieve by fleeing to America’s shores. Uncontrolled emigration to the United States skews nations from their natural growth and conveniently deters them from seeking approaches to resolve their problems. The U.S. contributes to the emigration problem and should resolve the problem and not perpetuate it. Wouldn’t it be beneficial for all countries, including the United States, if the Latinos did not have the urge to emigrate?

(7) International terrorism
The September 11, 2001 attack – the first aerial bombings on American soil – compelled the United States government to wage a War on Terrorism. After more than twenty years of this battle, the U.S. has neither won the war nor totally contained terrorism; just the opposite ─ terrorism has grown in size, geographical extent, and power. Observe Afghanistan, Syria, Pakistan, and all of North Africa. One reason for this contradiction is obvious; the initial source of international terrorism is Israel’s terrorism in the West Bank and Gaza. The U.S. blends its battle against terrorism with preservation of American global interests. Each blended component contradicts the other and creates confusing missions in the U.S. War on Terrorism.

(8) Economy
A roller coaster American economy of accelerated growth and gasping recessions flattened itself with slow but steady growth in the Democratic administrations that succeeded the George W. Bush recession. Now we have Donald J. Trump, who claims he had the greatest economy ever, when all presidents had, in their times, the greatest economy ever, and previous administrations had more rapid growth and captured much more of world production. By proposing lower taxes, lower interest rates, and blistering tariffs, Trump is heading the U.S. into massive speculation, heightened debt, increased inflation, a falling dollar, and a return to a 19th century economy of robber barons, boom-and-bust, financial bankruptcies, and a drastic “beggar thy neighbor” policy. His sink China policy will sink the United States. America will no longer have friendly neighbors and might become the beggar.

(9) Racism
The United States consists of a mixture of several cultures and has no unique culture. People feel comfortable in their own culture and attach themselves to others and to institutions that reflect that culture. In a competitive society, this extends to gaining economic advantage and security by dominating other cultures. Social, political, and economic agendas use racism to promote this strategy and maintain domination.

Competition between cultures, manifested as racism, is built into the American socio-economic system. Political, legal, and educational methods have ameliorated racism and have not abolished its corrosive effects. Slow progress to an integrated and unified culture, decades away, might finally resolve the problem of racism.

(10) Health Care
Health care is posed as a financial problem, insufficient funds to treat all equally. Health care is a socio-economic problem, where statistics show that nations having the most unequal distribution of income have the most maladjusted health care. More equal distribution of income is a key to adequate health care for all.

(11) Political Divide
Connie Morella, previous representative from Maryland’s 8th congressional district, enjoyed saying, “I sit and serve in the people’s house,” a phrase echoed by many congressionals. No people or sitters exist in the “people’s house.” Representatives stand for the special interest groups, Lobbies, and Political Action Committees (PAC) that donate to their campaigns and assure their return to office. The two political Parties stand united against the wants of the other and the political divide leads to political stagnation. Whatever Gilda wants, Gilda does not get. America coasts on a frictionless surface of contracting previous legislation and inaction, which is its preferred method of government.

(12) Foreign Policy
All administrations, the present included, have had foreign policies driven by two words, “empire expansion.” Until now, the U.S. has sought markets and resources and financed the expansion from its own banks. Donald trump seeks expansion by real estate maneuvers and seeks to have foreign sources finance the expansion. This emperor has no clothes and will bankrupt the U.S. in the same manner as he bankrupted his real estate enterprises.

(13) Drug Addiction
The epidemic drug addiction problem summarizes the attention given to most other national problems — despite a century of organized efforts to subdue the problem, “New numbers show drug abuse is getting worse across the country and in every community. Overdose deaths have never been higher and opioids and synthetic drugs are major contributors to the rising numbers.” President Nixon popularized the term “war on drugs,” but his administration’s Comprehensive Drug Abuse Prevention and Control Act of 1970 had an antecedent in the Harrison Narcotics Tax Act of 1914.

Blaming China for supplying fentanyl ingredients to Mexican manufacturers, only one part of the total drug economy, does not change the source of the drug addiction and provides no resolution to the problem. Looking elsewhere, at nations where drug addiction is minor or has been alleviated is a start. Japan has a “strong social stigma against drug use, and some of the strictest drug laws globally; Iceland responded to high rates of teen substance abuse with “a comprehensive program that included increased funding for organized sports, music, and art programs, as well as a strictly enforced curfew for teens;” Singapore’s “notoriously strict drug laws have resulted in some of the lowest addiction rates in the world, including a zero-tolerance approach to drug use and trafficking, with mandatory death penalties for certain drug offenses;” Sweden “combines strict laws with a comprehensive rehabilitation approach in a ‘caring society’ model that emphasizes treatment and social support over punishment. Time Magazine recommends another approach.

…history exposes the truth: the drug war isn’t winnable, as the Global Commission on Drug Policy stated in 2011. And simply legalizing marijuana is not enough. Instead only a wholesale rethinking of drug policy—one that abandons criminalization and focuses on true harm reduction, not coercive rehabilitation—can begin to undo the damage of decades of a misguided “war.”

Skewing the GDP
Replacing a building destroyed in a catastrophe augments the Gross Domestic Product (GDP) in four ways — housing and helping those affected by the catastrophe, responding to mitigating the catastrophe, tearing down the destroyed home, and building a new home. The GDP benefits from the continual and unresolved problems.

Opioid cases generated a cost estimated at $1.5 trillion in the United States for the year 2010.
Gun violence generates over $1 billion in direct health care costs for victims and their families each year.
Climate change during 2011-2020 decade cost $1.5T in losses (Ed: might be debatable).
Health care costs are almost 20 percent of GDP.
The Defense budget for 2025 is $850 billion.

In the disturbing world that is characterizing the United States, a combination of political stagnation, misdirection action, and low level of intellect and knowledge prevents solutions to recurring problems. American nationalists boast about having the highest GDP, not realizing that the boast uses tragedy to disguise more significant tragedies — moral, political, and economic decay of the once mighty USA.

Upside, inside, out
She’s livin’ la vida loca

She’ll push and pull you down
Livin’ la vida loca

Her lips are devil red
And her skin’s the color of mocha
She will wear you out
Livin’ la vida loca

Livin’ la vida loca
She’s livin’ la vida loca.

The post Livin’ La Vida Loca first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Tribal Lenders Say They Can Charge Over 600% Interest. These States Stopped Them.

by Joel Jacobs and Megan O’Matz — Wed, 15 Jan 2025 11:00:00 +0000

by Joel Jacobs and Megan O’Matz

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

A decade ago, strange billboards started showing up, including in New York’s Times Square. They weren’t advertising a product. They were vilifying Connecticut’s then-governor, Dannel Malloy.

And they could be traced to that state’s unusual effort to stop an Oklahoma tribe from offering Connecticut residents short-term consumer loans at exorbitant interest rates.

“Gov. Malloy, Don’t take away my daddy’s job,” read one of the billboards, alongside a picture of a Native American child with braids and traditional garb.

But Malloy was not dissuaded by what he called a “scare tactic.” He said he felt the state’s banking regulations were on his side. The Oklahoma tribe was claiming sovereign immunity as it flouted Connecticut law — charging over 400% interest annually, though the state capped rates on such loans at 12%.

“We knew we could win,” Malloy said. “We knew they were harming people in Connecticut.”

He said he came to believe that the sums Native American tribes were making were paltry compared with the money flowing to the outside investment organizations that had linked themselves to the tribes because of the protections that can come with sovereign status.

Connecticut officials spent years fighting in court, but their eventual victory on behalf of the state’s citizens proved a crucial point about regulation at the local level.

Even as federal authorities have struggled to make an impact on this controversial form of lending, a handful of states have upended the notion that tribes’ sovereign immunity must keep state regulators on the sidelines. The lesson: a little pushback can go a long way.

In addition to Connecticut, five other states — Arkansas, New York, Pennsylvania, Virginia and West Virginia — have been remarkably effective at eliminating most tribal loans, which are made online. A ProPublica review of the fine print on more than 80 tribal lending websites shows that the vast majority of tribal lenders now don’t lend in those states.

And a sample of cases filed in federal bankruptcy court bolsters the findings, with few filers in those states listing tribal lenders as creditors. Complaints, too, funneled to the Federal Trade Commission were minuscule in number in these states in recent years.

The six states tend to have strong consumer protection laws overall. Arkansas’ Constitution, for example, limits consumer loans to 17% interest annually. But, more significantly, the states have had aggressive attorneys, working for public agencies or private law firms, who have stepped in to protect consumers from high rates.

“They’d rather stay out than offer a product at a lower rate,” Connecticut Sen. Matt Lesser said of tribal lenders.

“They saw that Connecticut was aggressive in enforcing the law,” said the senator, who helped pass a bill to make such high-interest loans uncollectable in the state.

Minnesota is the latest state to confront tribal lenders.

Shortly before Thanksgiving, Minnesota’s attorney general filed a consent agreement in federal court in which the president of Wisconsin’s Lac du Flambeau Band of Lake Superior Chippewa Indians promised that their tribal businesses would never again lend to Minnesotans at rates that violate the state’s usury — or lending — laws, which caps many consumer loans at 36% interest annually. The attorney general found LDF companies lending at annual rates between 200% and 800%.

The LDF tribe, which is a leading player in the industry, has said its lending business helps people without access to credit, while the profits provide critical funding for tribal government services. It also has defended a common industry practice of partnering with nontribal entities that conduct many of the day-to-day operations, likening it to outsourcing.

Minnesota Attorney General Keith Ellison succeeded in bringing two enforcement actions in 2024 against tribal lenders catering to Minnesota borrowers. Ellison is one of a handful of state officials bringing cases against usurious lenders. (Charles Krupa/AP Photo)

It was the second enforcement action Minnesota had secured against tribal loan executives in 2024. Earlier in the year, a Montana tribal lending operation agreed to the state’s demands to stop making loans in Minnesota.

Loans from tribal lenders can carry astronomical rates because the operations claim that the tribes’ sovereign immunity allows them to be governed by federal but not state laws. There is no federal interest rate limit, aside from a 36% cap on loans to active-duty military members and their families.

Minnesota Attorney General Keith Ellison’s office had watched case law develop around tribal lending to the point where the state felt assured that it could enforce its interest rate caps against a sovereign entity offering loans to Minnesota residents.

In a March interview with ProPublica, Ellison said his office would share its knowledge with other states looking to crack down on tribal lending. “If people want to talk, we would love to see more enforcement action around the country,” he said.

Yet there are limits to what states can accomplish. Courts have ruled that states can only obtain injunctions to stop collections and prevent future harm, but they cannot collect fines or claw back money already lost by consumers. Their enforcement actions do not prevent tribes from making loans in other states. And they are only able to sue tribal leaders, not the tribes themselves.

Tribal Lending Has Largely Ceased in Six States Note: States are categorized as “all or nearly all” if 85% or more of tribal lending websites indicated that they do not lend in that state as of October. “Most” is defined as 51-84% who do not lend there, “some” is 15-50% and “few or none” is less than 15%. Source: ProPublica review of 81 tribal lending websites that listed states they do not do business in. (Lucas Waldron/ProPublica)

And these legal battles can be lengthy and contentious, as exemplified by what happened in Connecticut.

In October 2014, Connecticut’s banking regulator ordered websites associated with the Otoe-Missouria Tribe of Oklahoma to stop providing loans to Connecticut residents, citing the state’s cap on interest rates and deeming the loans illegal.

The following spring, the Institute for Liberty, a pro-business organization in Washington, D.C., announced a campaign against Malloy. In social media posts, ads and mailings, the institute alleged that Connecticut’s actions were an affront to tribal sovereignty.

It further argued that the enforcement effort against the Oklahoma-based tribe would deprive Native American families of income for health care, education and employment.

But leaders of two Connecticut tribes uninvolved in lending joined state leaders in a press conference to reject the institute’s claims and to call on tribal lenders to stop taking advantage of the state’s consumers. Only a few dozen of the nation’s 574 federally recognized tribes have engaged in online lending.

The Institute for Liberty posted appeals like these on Facebook as part of its campaign against Connecticut’s then-Gov. Dannel Malloy. “What Connecticut is trying to do is to ignore hundreds of years of legal precedent and threatening the basic human rights of tribal people — rights guaranteed by our Constitution,” the institute’s president said in a 2015 press release.

As a political entity organized as a nonprofit, the institute did not have to publicly disclose its donors and so was considered a dark-money group. IRS records available online show its tax-exempt status has lapsed. Andrew Langer, the institute’s president, declined ProPublica’s request for an interview. “I have absolutely no comment,” he said in a phone call.

John Shotton, chair of the Otoe-Missouria Tribe of Indians, said in an email to ProPublica: “We did not financially support the campaign, the Institute for Liberty, or their executive director in any way. We had no knowledge of the campaign before learning about it from media sources.”

The Oklahoma tribe stopped lending in Connecticut but initiated a long court battle. The state Supreme Court ruled in 2021 that the tribe’s chair could not face civil penalties but could be subject to an injunction preventing future lending. The state also issued cease and desist orders to three other tribally affiliated lenders, which exited the state as well.

Forceful actions by state officials in New York and Pennsylvania targeting short-term lending also pushed out tribal operations.

In 2013, the New York Department of Financial Services sent cease and desist letters to dozens of online payday lenders, including some tribal lenders, and warned banks to cut off access to lenders operating in violation of state law. Two tribes sued the state to stop the crackdown, but were unsuccessful.

In 2014, Pennsylvania’s attorney general brought an ambitious case against Think Finance Inc., a hedge-fund-backed financial technology firm that was allied with three tribes. The state alleged that the arrangement was designed to enable Think Finance to profit from abusive loans by evading state lending laws. In court papers, Think Finance denied wrongdoing and said that it was not the actual lender on the tribal loans, arguing that it was providing “perfectly lawful services” to the tribes.

The litigation spurred additional private lawsuits, ultimately leading Think Finance to declare bankruptcy and resulting in multimillion-dollar settlements with borrowers.

“This is a model of how aggressive enforcement by one state can lend itself to nationwide relief for consumers,” Gov. Josh Shapiro, then attorney general, said in a press release.

In a 2019 deposition in a consumer lawsuit, an attorney previously involved in the tribal lending industry provided insight into tribal lenders’ avoidance of states where they may draw attention. Asked why a tribe might be advised not to lend in certain states, he replied “to avoid the headache of having to deal with an AG that was being aggressive.”

The attorney, Daniel Gravel, noted that the companies in the case believed that they were “engaging in perfectly legal activities” but “it wasn’t worth the time and effort of having to deal with state regulators who disagreed with us.”

In certain states, it’s not attorneys general or banking officials who are forcing out tribal lenders. The feat has largely been accomplished by private attorneys bringing consumer lawsuits, including sweeping class-action claims.

Most settlements remain confidential, but ProPublica tallied at least $2.9 billion in canceled loans and more than $360 million in restitution from class-action suits since 2019. The major settlements were all filed in federal courts in Virginia and were largely driven by consumer attorneys there.

The class-action cases are highly complex because of the difficulty in unraveling the layers of entities and people involved, which is why the circle of private lawyers challenging the tribal lending industry is small. In addition, private attorneys can be stymied by arbitration clauses in loan agreements, which aim to prevent consumers from going to court.

“This is rocket science. This is among the most complicated litigation you can do,” said Margot Saunders, a senior attorney with the National Consumer Law Center who has served as an expert witness in cases.

Tribal lenders now largely steer clear of making loans in Virginia.

They also largely avoid neighboring West Virginia, ProPublica found. That state has strong consumer protection statutes, and private attorneys and a previous attorney general have used them effectively in lawsuits against tribally affiliated lenders.

Bren Pomponio, a West Virginia attorney for Mountain State Justice Inc., a nonprofit legal services firm that brought a lawsuit against a tribal lender and its business partners in 2020, said that the past decade of litigation has cut through the “myth” that sovereign immunity enables tribal lenders to charge excessive interest rates.

“They thought they had a model to avoid state law, but they don’t really,” he said.

This content originally appeared on ProPublica and was authored by by Joel Jacobs and Megan O’Matz.

Connecticut DMV and Top Lawmakers Vow to Review Towing Laws

by Ginny Monk and Dave Altimari, The Connecticut Mirror — Tue, 07 Jan 2025 21:30:00 +0000

by Ginny Monk and Dave Altimari, The Connecticut Mirror

This article was produced for ProPublica’s Local Reporting Network in partnership with The Connecticut Mirror. Sign up for Dispatches to get stories like this one as soon as they are published.

The Connecticut Department of Motor Vehicles said Monday the agency would undertake a “comprehensive review” of towing practices in response to an investigation by The Connecticut Mirror and ProPublica. The reporting found that some low-income residents were losing their cars because they couldn’t afford the recovery fees and had a short window to pay before towing companies were allowed to sell their vehicles.

The review comes as the 2025 legislative session opens Wednesday. The leader of the state House of Representatives said he will support efforts this session to lengthen the time period that tow truck companies have to wait before requesting the DMV’s permission to sell people’s vehicles.

“This will be a priority,” said House Speaker Matt Ritter, D-Hartford. “I mean, we are all pretty shocked by it.”

State law allows tow companies to seek permission from the DMV to sell a vehicle worth $1,500 or less just 15 days after towing it — one of the shortest such periods in the country, CT Mirror and ProPublica found.

The investigation, which was published Sunday, detailed how Connecticut’s laws have come to favor tow companies at the expense of owners. In many cases, people’s cars were towed from their apartment complexes not for violating the law, but because their complex-issued parking sticker had expired or they weren’t properly backed into a space.

As towing and storage charges mount, some towing companies set up additional barriers, like only taking cash. Others won’t release cars until they are registered in the person’s name, even if the driver just bought the vehicle and wasn’t required to register it yet under DMV rules.

The investigation found that the 15-day window was sometimes less time than it takes to get a DMV registration appointment and less than the time it takes to get a hearing for a complaint challenging a tow.

When presented with the findings, DMV Commissioner Tony Guerrera said that the 15-day window “strikes the right balance for consumers and towers.”

But on Monday, Guerrera said in a statement that his agency will propose changes to the Legislature to ensure that policies are updated and clear.

“We will undertake a comprehensive review of the issues highlighted in the article and engage in substantive discussions with legislative advocates,” Guerrera said. “Our proactive approach will involve actively participating in the legislative development of proposals to modernize the regulation of tow companies.”

In a statement, a spokesperson for Gov. Ned Lamont said he is “open to reviewing proposed changes to the law.”

Legislative leaders said they are concerned about the impact of the towing law on low-income residents particularly.

Connecticut House Speaker Matt Ritter (Yehyun Kim/The Connecticut Mirror)

“It’s not a friendly system for people who have probably the least amount of time and resources to navigate a tricky system,” said Ritter. “So it really is a double whammy. It’s an unfair policy, and then the only way to undo it requires an inordinate amount of effort and time and resources that a lot of these individuals don’t have.”

State Rep. Roland Lemar, D-New Haven, the upcoming co-chair of the General Law Committee, said he’s already spoken with the DMV, Democratic leadership and the governor’s office about legislation he is drafting that would lengthen the 15-day window before a sale, expand the forms of payment that towing companies are required to take, and prohibit companies from patrolling private parking lots looking for cars to tow. Instead, they would be required to wait for a complaint.

“The tow trucks are just driving around looking for a problem,” he said.

A bill that Lemar proposed in 2023 to require tow companies to accept credit cards, in addition to other measures, passed the legislature’s Transportation Committee. But facing opposition from towing companies and property owners, it wasn’t called on the House floor.

Timothy Vibert, president of the Towing and Recovery Professionals of Connecticut, said towing companies are willing to talk about changes to the laws but that legislators don’t want to address the underlying reason for tows — lots of people driving unregistered and uninsured cars.

“The reason they’re being towed is because they’ve done something wrong,” Vibert said. “Yes, there are some unscrupulous towers out there, and that’s just the way they are, OK? But you can’t change every piece of legislation to push on and make the towers be the fall guy.”

John Souza, president of the Connecticut Coalition of Property Owners, said that 15 days seems like a short window, particularly for some of his tenants who get paid each month through Social Security, but allowing towers to patrol parking lots is helpful for larger apartment buildings. He doesn’t live at the rental properties he owns, he said, so it would be hard for him to call towing companies at all hours of the day.

“As a landlord, I get it,” Souza said. “You have to have rules, and people unfortunately take advantage. If the rules are too slack, people take advantage of them. There’s nothing worse than coming home after a long, hard day and someone’s in your parking space.”

House Majority Leader Jason Rojas, D-East Hartford, said his office quickly researched the issue following the story’s publication and found there’s a longer window for reclaiming minibikes before sale than there is for some vehicles.

“Fifteen days seems like a very short amount of time for anybody to be able to react and kind of do whatever they have to do to try to secure their vehicle before there’s an opportunity for it to be sold,” Rojas said. “For those reasons, and perhaps others too, it merits a look for sure.”

He said the issue “struck a nerve” with him and others because of how important it is to have reliable access to transportation.

House Minority Leader Vincent Candelora, R-North Branford, said he is willing to consider changes to the state’s towing law.

“I’m concerned about the potentially predatory nature of towing practices in Connecticut,” Candelora said. “A number of years ago, I thought we had addressed this issue by requiring the posting of signs and the cost of towing prior to allowing the towing of vehicles, but obviously there seems to be an issue that still needs to be addressed.”

Leadership in the state Senate said they were interested in exploring the issue. Senate President Pro Tempore Martin Looney, D-New Haven, said there’s an “issue here about fairness” that should be examined.

Has Your Car Been Towed in Connecticut? Share Your Story and Help Us Investigate.

This content originally appeared on ProPublica and was authored by by Ginny Monk and Dave Altimari, The Connecticut Mirror.

The Tribal Lending Industry Offers Quick Cash Online at Outrageous Interest Rates. Here’s How It’s Survived.

by Joel Jacobs and Megan O’Matz — Mon, 23 Dec 2024 10:00:00 +0000

by Joel Jacobs and Megan O’Matz

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

More than a decade ago, loan financier Matt Martorello was worried that the golden days for his high-interest lending venture were over.

In an email to his accountants, he detailed how attorneys general in multiple states were sending cease-and-desist letters to the online enterprise he operated with a Native American tribe based in Michigan. Major banks wanted nothing to do with the business, which offered small-dollar loans at exorbitant interest rates far above limits set by many states. Federal regulators were suing his competitors.

The pressure was getting to be too much. Martorello feared the federal government seeking “every $ I have” in restitution, he wrote in the December 2012 email.

He was expecting his firm, then based in the Virgin Islands, to be audited by the U.S. Consumer Financial Protection Bureau and worried about the agency’s ability to put the tribal lending industry out of business. The federal agency was leaning hard on loan operations that formed alliances with tribes to claim sovereign immunity and bypass state laws that protect consumers.

“Bottom line is, this business will simply not exist in 2 to 3 years anything like it does right now,” Martorello wrote.

But none of that came to pass. In the 12 years since, the tribal loans kept flowing, fueling a multibillion-dollar industry built on punishing loan terms aimed at people who can least afford them.

How did the industry survive?

ProPublica found that tribal lending benefited from more than just sovereign immunity.

Powerful allies in the financial sector and payday loan industry, which encompasses all forms of short-term lending, have served as protectors at key junctures. Even as many states kicked out storefront payday and auto title lenders, online tribal lending flourished. Industry lobbyists helped beat back congressional plans for consumer protections, while payday industry lawyers dragged the CFPB to court and hindered the agency.

At the same time, differing approaches over three presidential administrations saw crackdowns on tribal lending excesses rise, then falter. Coming off a successful case that devastated one major tribal-affiliated operator, the Federal Trade Commission’s consumer protection bureau has been sidetracked by competing demands and a 2021 Supreme Court decision that constrained the agency’s ability to recover money from companies.

An FTC staff attorney who handled lending cases across a variety of industries told ProPublica that the agency monitors complaints but “can’t sue every bad actor.”

“We’re a small agency of limited resources. We have to pick and choose where we think we can make the greatest impact,” said Gregory Ashe, the attorney.

A wavering commitment at the federal level provided just enough leeway for the tribes to adapt and thrive. The consequences for consumers have been catastrophic.

Using a sample of personal bankruptcies nationwide over a three-year period, ProPublica found nearly 5% included unpaid high-interest loans linked to tribes. That translates to an estimated 19,000 cases on average per year.

“They gave me the money quick, but they also empty your pockets just as fast,” said Bobbie J. Williams, a sheet-metal worker from Rhode Island and father of four who needed an infusion of cash when he was sick with COVID-19. His 2022 bankruptcy petition included two tribal loans.

Since 2019, ProPublica found, on average more than 1,800 consumer complaints per year are routed to the FTC about these types of loans, which can carry annual percentage rates of over 600%. Complaints came from people in dire need, including single parents, people crushed under medical debt and others trying to stave off homelessness.

Consumer advocates do not expect that the second Trump administration will do anything to crack down on abusive lending practices linked to tribes or any other form of predatory lending. The billionaire Elon Musk, Donald Trump’s close adviser, posted “Delete CFPB” on X in November, signaling that the nation’s primary consumer watchdog could be on the chopping block in the new administration.

“We would like to see more enforcement action by both federal and state authorities,” said Lauren Saunders, associate director of the National Consumer Law Center, which has advocated for tougher measures on payday lenders.

Martorello, who lives in Texas, declined through an attorney to comment for this story, citing “ongoing and pending litigation.” In the email to his accountants, which was later revealed as part of a civil suit, Martorello stressed he was operating legally and acting on the advice of major law firms. “I don’t want you to think that we are doing anything wrong, we certainly are NOT,” he wrote.

With Martorello’s fears about regulation unrealized, the website affiliated with his tribal partners — Big Picture Loans — is still online offering short-term installment loans. The tribe, which split with Martorello, charges APRs between 160% and 699%, it told ProPublica.

“We’ve helped more than 400,000 people experience a smarter way to borrow!” the website boasts.

A Powerful Industry

For more than a decade, U.S. Sen. Jeff Merkley has tried to protect consumers from outrageous lending rates.

Over and over again — seven times in 12 years — the Oregon Democrat has proposed a bill to force internet lenders, including Native American companies, to comply with state interest rate caps and to register with the CFPB. Year after year the effort fails.

On the Senate floor in 2016, he pressed his colleagues for their support, explaining the reality of high-interest online loans. “These payday loans pull families into a vortex of debt from which they cannot escape, and this vortex destroys them financially,” he said.

U.S. Sen. Jeff Merkley argues for his SAFE Lending Act in this 2016 video posted to Facebook. (Sen. Jeff Merkley/Facebook)

Merkley got only 13 co-sponsors that year: all Democrats and one independent, Vermont’s Bernie Sanders. The current version before the Senate has even fewer: 10.

His legislation has never even made it out of committee, a fate he attributes to the considerable influence of “the payday loan industry and big banks,” he told ProPublica in a prepared statement.

Payday lenders spent $4.9 million lobbying Congress in 2023, according to OpenSecrets, an organization that tracks money in politics. That includes $1.3 million laid out by the Online Lenders Alliance, a trade group that includes tribal lenders. “For Tribes involved in consumer lending, these enterprises have become a critical part of their economic development efforts as Tribes rely on business enterprises to provide essential government services to their members,” the Online Lenders Alliance told ProPublica in an email.

“This is a very entrenched industry with a lot of dollars at stake,” said University of New Mexico law professor Nathalie Martin, who has studied tribal lending.

Ellen Harnick, executive vice president of the Center for Responsible Lending, a nonprofit that works to end abusive financial practices, said the payday industry hires high-priced, experienced lobbyists who ingratiate themselves with state and federal lawmakers through campaign contributions, dinner invitations and casual meetings while roaming the halls of power. The access gives them opportunities to argue that high-cost loans are beneficial for people who find it hard to obtain credit.

The result, she said, is that even legislators who would never counsel anyone they love to take on such burdensome debt nonetheless decide, “I’m not going to shut it down.”

Reform measures have been opposed by the Native American Financial Services Association, which represents tribal lenders, and a larger industry group: the American Financial Services Association, which advocates for the consumer credit industry and does not include tribal lenders.

Congressional action is a direct threat to tribal lending because while tribes claim immunity from state laws, they must comply with federal lending laws. Merkley’s bill would have given the federal government a means to force tribes to abide by state interest rate caps. The Online Lenders Alliance is against such caps, arguing they block some consumers from getting smaller loans necessary to make ends meet.

Currently, there is no federal interest rate cap, with one notable exception: Payday lenders cannot charge active-duty service members and their families more than 36% annually.

In every congressional session since 2008, separate from Merkley’s efforts, lawmakers have unsuccessfully sought to extend that cap to all Americans.

Although banks and credit unions generally don’t charge over 36% for credit cards or other products, the larger financial industry has strongly opposed a cap. The U.S. Chamber of Commerce in 2021 also formally opposed the legislation, arguing that it would harm consumers by limiting access to credit. Proponents of the cap say that 36% is high enough to facilitate lending and that unconscionable rates lead to major debt traps.

At times the role of Native Americans in the industry has been used to beat back the 36% cap. At a 2021 hearing, U.S. Sen. Jon Tester, a Montana Democrat, acknowledged the need to protect consumers from “bad actors and unscrupulous practices.” But he said the Senate also had to consider “the sovereignty issue” of Native Americans and the “good-paying jobs” the tribal lending industry provided in his state.

He suggested that the committee “massage this bill” to make it better, fearing that the bill as written could have negative impacts on tribes. The legislation never passed.

Federal Regulators Lose Their Way

The Scott Tucker case, with its tales of lavish spending and colorful deception, temporarily brought attention to some of the questionable practices and partnerships associated with tribal lending.

Tucker controlled AMG Services Inc., an online payday lender that grew into a billion-dollar business. Inside the call center in Overland Park, Kansas, employees were instructed to pretend they were on tribal lands somewhere else in the country. They were given out-of-state weather reports to help play up the ruse in their small talk with customers.

AMG’s success helped fuel Tucker’s splashy lifestyle that included a side venture: Level 5 Motorsports, a professional auto racing team.

But Tucker’s life in the fast lane — complete with luxury homes, a Lear jet, and a fleet of Ferraris and Porsches — came to a screeching halt. In early 2016, a federal grand jury indicted him on charges related to collecting unlawful debts and failing to truthfully disclose loan terms. It claimed he entered into “sham business relationships” with three tribes and “systematically exploited” more than 4.5 million borrowers.

Tucker and his lawyer were convicted of participating in a racketeering enterprise, wire fraud and other charges. A judge sentenced Tucker to 200 months in prison and his lawyer to 84 months.

Tucker’s spectacular downfall, the subject of an episode of TV’s “American Greed,” sent waves of fear around the industry. Federal prosecutors also indicted a Philadelphia-area tribal lender and his lawyer around the same time as Tucker, but then brought no major criminal cases against others in the industry in the years that followed.

“I’m not aware of additional cases, and wouldn’t be able to comment on any ongoing investigations that may or may not exist,” U.S. Department of Justice spokesperson Wyn Hornbuckle told ProPublica.

Scott Tucker, who faced wire fraud and other charges as result of his loan operations, exits a federal court in Manhattan in 2016. No other major criminal cases were brought in later years involving the tribal lending industry. (Brendan McDermid/Reuters)

Earlier in the Obama administration, in an initiative dubbed Operation Choke Point, regulators sought to “choke off” fraud by pressuring bank executives and payment processors to scrutinize their relationships with industries deemed “high risk,” particularly payday lenders.

The effort briefly stalled tribal lending as the companies disabled lenders’ access to customers’ bank accounts, effectively incapacitating their operations.

But Republican lawmakers cried foul, seeing it as an attempt to stifle legal businesses. They hauled regulators into congressional hearings and chastised them. Faced with an uproar, regulators began to back off.

“I view it as tragic that it kind of blew up politically,” said Dru Stevenson, a professor at South Texas College of Law Houston who studied the firestorm around Operation Choke Point.

He believes that although the program’s image suffered from a few overly aggressive officials, if it had run its course, “tribal lending would be in a different place, where it would be less abusive and less exploitative.”

The fallout likely had a long-term effect on enforcement, he said. “There’s too many people at these agencies who lived through the backlash of Operation Choke Point and it’s not worth the risk of having that come up again.”

The Trump administration officially ended Operation Choke Point and set a new, friendlier tone across agencies.

Trump’s appointee to head the CFPB, Mick Mulvaney, wrote in the CFPB’s five-year strategic plan in 2018 that the bureau would refrain from “pushing the envelope,” so as not to trample on the liberties of citizens or interfere with the sovereignty or autonomy of Native American tribes. That year he killed a case against Golden Valley Lending, a tribal lender based in California.

The CFPB, under Trump, also repealed a rule requiring payday lenders to determine whether borrowers had the ability to repay.

Another tribal lending operation in California continued for about a decade before being shut down by the FTC in May 2020 for deceptive practices. By then it had issued 285,700 consumer loans, totaling nearly $60 million. With fees and interest, borrowers had repaid a whopping $175 million. By the time the FTC acted, most of the profits had been spent or transferred overseas by nontribal business partners. The government ultimately returned less than $1 million to borrowers.

Regulation never ramped up again under President Joe Biden. In part that’s because the CFPB was hamstrung by an unfavorable appellate court ruling in a case brought by the payday lending industry that challenged the agency’s constitutionality. In May, the U.S. Supreme Court handed CFPB a major victory, upholding its funding mechanism and, therefore, its existence.

Empowered once again, the CFPB vowed to pursue predatory lenders and restart a dozen or so cases that stalled during the court fight. No tribal lender, however, appeared on that list. The CFPB, via a spokesperson, declined to comment for this story.

Defeated But Defiant

Matt Martorello, the Texas man who in 2012 feared the U.S. government stomping out tribal lending, ended up in court, but not because of any federal action.

A Virginia law firm, Kelly Guzzo PLC, filed a class-action lawsuit on behalf of borrowers in 2017 against Martorello and council members of Michigan’s Lac Vieux Desert Band of Lake Superior Chippewa Indians. Also named in the suit was Big Picture Loans LLC, which is owned by the tribe. The suit challenged the legality of the loans, given Virginia’s longstanding policies capping interest rates, and was followed by additional civil suits across the country.

Big Picture Loans settled in 2020 for $8.7 million in restitution for customers and $100 million in debt relief. Martorello, however, refused to give in.

His company, Eventide Credit Acquisitions LLC, unsuccessfully sued Big Picture Loans and its parent company to prevent it from settling. “It was a massive waste of everyone’s time and money,” the tribe told ProPublica in an email.

The tribe said it has no current relationship with Martorello following the 2016 purchase of a Martorello company that had been servicing its loans.

A judge ruled against Martorello in 2023 and ordered him to pay tens of millions to Virginia borrowers. That same judge also found that Martorello had been the “de facto head” of the tribe’s lending business, a finding he has vigorously disputed.

Earlier this year, Martorello agreed to a $65 million settlement with borrowers across the nation. But he later filed for bankruptcy and couldn’t raise enough money to fund the settlement by an agreed-upon deadline, voiding the deal. His legal battle challenging the 2023 judgment now will continue in a federal appeals court.

Eventide, the company he founded, also has filed for bankruptcy.

As part of that case, it has argued that if online tribal lending was not appropriate and violated state lending laws, then “Congress, the CFPB, and other federal agencies would have shut it down a long time ago.”

To do the best, most comprehensive reporting on this opaque industry, we want to hear from more of the people who know it best. Do you work for a tribal lending operation, either on a reservation or for an outside business partner? Do you belong to a tribe that participates in this lending or one that has rejected the industry? Are you a regulator or lawyer dealing with these issues? Have you borrowed from a tribal lender? All perspectives matter to us. Please get in touch with Megan O’Matz at megan.omatz@propublica.org or 954-873-7576, or Joel Jacobs at joel.jacobs@propublica.org or 917-512-0297. Visit propublica.org/tips for information on secure communication channels.

Mariam Elba contributed research.

This content originally appeared on ProPublica and was authored by by Joel Jacobs and Megan O’Matz.

Laos must appease China or embrace austerity to reduce staggering debt

David Hutt — Sun, 22 Dec 2024 13:52:17 +0000

The communist apparatchiks who run Laos must appease China if they are to stop their national debt crisis from worsening and avoid an outright default.

The IMF’s latest report on Laos, released last month, was particularly damning about the country’s future. Real GDP growth likely peaked this year, at around 4.1 percent, and will slide from 3.5 percent next year down to 2.5 percent by 2029.

In other words, Laos isn’t going to be able to grow itself out of debt anytime soon.

Moreover, debt servicing costs, spending that is not actually paying off the principal on its monumental debt, will rise from around $1.1 billion this year to $1.5 billion next year and peak at $1.8 billion in 2026, the equivalent of a fifth of exports.

Laos cannot even start to comprehend paying off its debt, which because of the country’s inflation crisis fluctuates as a percentage of GDP ratio. It was 131 percent of GDP in 2022, down to 108 percent this year but potentially up to 118 percent in 2025.

The IMF politely suggested that “alternative options to bring debt toward a sustainable level could also be considered,” yet noted that “the authorities’ financing plan…critically relies on the continued extension of debt relief from China.”

Debt deferrals

All that matters for Vientiane, at least for the short term, is that Beijing continues offering debt deferrals.

In 2023, these amounted to $770 million, about 5 percent of Laos’s GDP, according to the IMF. They were worth $222 million in 2020, $454 million in 2021, and $608 million in 2022.

What other options has Laos got?

It won’t turn to the IMF for a bailout, since that will come with political conditions – and half of national debt is owed to China, which doesn’t do debt write-offs.

The money Vientiane owes Beijing is vast for Laos, but peanuts for Beijing.

The International Monetary Fund headquarters in Washington, D.C, Dec. 19, 2016.

(Cliff Owen/AP)

Laos’s debts could be completely forgiven tomorrow and nobody in Beijing would notice. But Chinese lenders don’t like having their pockets pinched and no superpower wants to be seen as a dog being wagged by its tail.

Some people think Vientiane could offer more debt-for-equity swaps, whereby China reduces the debt in exchange for land or mineral rights or a stake in a state company.

However, for all the cries of “debt traps,” it is noticeable that there hasn’t been any major debt-for-equity swap since a Chinese state-owned firm was given majority control of a joint venture (EDL-T) with Electricite du Laos, which effectively handed Beijing Laos’ power grid, including its electricity exports. But that was in 2021!

Few desirable assets

Beijing has presumably browsed and doesn’t fancy anything it sees. As one source told me, “there aren’t enough saleable assets” in Laos for equity swaps to touch the sides of the country’s debt.

Even for natural resources or land, usually a Chinese company will get a multi-decade concession for very low rent. So it makes little sense for Chinese state firms to buy, in the form of a debt swap, what they essentially get for free, since the revenue the Lao government collects will eventually be paid back to the Chinese state.

Nor are swaps all too appealing when it comes to state-run companies.

There’s one reason why Laos’s nationalized companies are so indebted and it isn’t because they’re so well run. Électricité du Laos, the state utility, accounts for perhaps a third of all the state’s debts, for instance.

Laos' Prime Minister Sonexay Siphandone attends the 27th ASEAN-Japan Summit in Vientiane, Laos, Oct. 10, 2024.

(Nhac Nguyen/AFP)

That leaves only debt deferrals, which allow Vientiane to pay back other private creditors and facilitate future loans, all the while avoiding what it must eventually do: massively increase state revenue.

According to the IMF, Laos needs a primary surplus of around 17 percent each year to bring its debt-to-GDP ratio down to a sustainable threshold (35 percent) by 2029.

Next year, Laos will likely run a primary surplus of around 3 percent, per the IMF report. In other words, Vientiane needs to boost revenue or cut expenditure (or both) by more than five-fold.

Austerity is unpopular

But the ruling Lao People’s Revolutionary Party (LPRP) clearly doesn’t think now is the time to dig deeper into the pockets of ordinary people and businesses, especially as economic growth is set to slow in the coming years and the inflation crisis won’t be curbed anytime soon.

Laos cannot dam the emigration flood

Weak governance, poor economy drive the hollowing out of Laos

It would be politically suicidal for Vientiane to considerably raise taxes while the ordinary Loatian has seen his wealth decimated in recent years. In fact, the party has recently committed to higher state spending.

At first blush, Vientiane’s immobility might appear problematic for the current rulers of the communist party whose jobs are in the line ahead of a reshuffle at the National Congress in early 2026.

That’s especially the case for Prime Minister Sonexay Siphandone, who naturally gets the most flak. Party grandees will retreat into conclaves most of next year to make these decisions, and appeasing China will be a key consideration.

Yet, while the Lao public is incensed by just how appallingly their rulers have managed the economy, the powers that be understand no-one has any real idea of how to get out of this mess other than austerity during a devastating economic crisis.

This isn’t something to be admitted publicly in a one-party state. Neither is admitting that the task of austerity is essentially being kicked to the next generation of party apparatchiks, who will have to suffer the consequences.

George Orwell once remarked that “it is a feeling of relief, almost of pleasure, at knowing yourself at last genuinely down and out…It takes off a lot of anxiety.”

Likewise, the current LPRP leadership must feel a certain freedom from knowing that there’s only one way out of its predicament: Keep appeasing Beijing and keep up the debt deferrals.

David Hutt is a research fellow at the Central European Institute of Asian Studies (CEIAS) and the Southeast Asia Columnist at the Diplomat. He writes the Watching Europe In Southeast Asia newsletter. The views expressed here are his own and do not reflect the position of RFA.

This content originally appeared on Radio Free Asia and was authored by David Hutt.

How to Appeal Insurance Denials, Abolish Medical Debt, and Fight for Medicare for All

Democracy Now! — Fri, 20 Dec 2024 13:35:12 +0000

We continue to look at the U.S. health insurance industry and how patients can fight back against their providers with advocate Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York and co-founder of the Health Care for All New York campaign. She says her advice for patients is to always appeal denials and to seek outside help when possible, including advocacy groups like hers and external review boards. She also stresses that much of the chaos of the U.S. health system is due to corporate greed. “Everyone has an incentive to charge more,” says Benjamin. “If we had Medicare for All, we wouldn’t be paying as much, and we would probably have much better health outcomes.”

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Biden can still cancel billions in student debt

Democracy Now! — Tue, 17 Dec 2024 20:00:04 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Astra Taylor: “It’s Still Not Too Late for Biden to Deliver Debt Relief”

Democracy Now! — Tue, 17 Dec 2024 13:34:35 +0000

We speak with organizer Astra Taylor of the Debt Collective, which is urging President Joe Biden to cancel more student debt, including for older debtors, before the end of his term. According to the White House, the administration has approved $175 billion in student debt relief for nearly 5 million borrowers over the past four years, but advocates say Biden can still do more in his final weeks as president. “This is a Titanic moment for the Biden administration. They have crashed into the authoritarian iceberg of the Trump administration, and it is their duty to fill as many lifeboats as possible,” says Taylor. She faults the administration for insisting on a case-by-case approach to debt relief instead of canceling debt for larger swaths of debtors, including many with “ironclad claims,” urging the White House to use all the legal tools at its disposal.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Tribal Lender Exits Minnesota Amid Allegations of Illegally High Interest Rates

by Megan O’Matz and Joel Jacobs — Fri, 06 Dec 2024 10:00:00 +0000

by Megan O’Matz and Joel Jacobs

A new settlement that will end a payday-like loan operation in Minnesota puts additional pressure on a Native American tribe that has been on the defensive for its high borrowing rates across the country.

The Lac du Flambeau Band of Lake Superior Chippewa Indians has been telling customers that its practices are allowable, but that stance has become harder to maintain. Shortly before Thanksgiving, the Wisconsin tribe agreed to settle a civil suit filed by Minnesota Attorney General Keith Ellison alleging that LDF broke state law, which requires reasonable lending rates, by charging Minnesotans between 200% and 800% annual interest. The state also claimed LDF had violated statutes on consumer fraud, deceptive trade and false advertising.

In the consent decree, LDF’s top official denied the allegations but formally agreed to stop lending to people in Minnesota unless the tribe adheres to the state’s strict usury laws and other regulations, including licensing requirements.

Tribal Council President John Johnson Sr., the lone defendant in the case, also promised that the tribe’s lending arm would forgive all outstanding loans to Minnesotans, estimated to be worth more than $1 million. A judge must still approve the consent agreement.

“I will not allow Minnesotans to be exploited by predatory lenders,” Ellison said in a press release announcing the settlement.

Johnson did not return calls or emails seeking comment. He is board president of the LDF Business Development Corp., which runs a variety of tribal companies, including its lending operation.

Previously, Johnson has said LDF’s lending practices are transparent and its collection methods are fair and ethical. “In offering unsecured loans, we consciously embrace the risk involved, reflecting our commitment to aid those facing urgent financial needs,” Johnson said in an April email to ProPublica.

The move by Minnesota to cut off lending companies controlled by LDF comes shortly after ProPublica reported extensively in August and September on LDF’s loan operations, finding that over the past decade, the tribe has grown to become one of the leading players in the tribal lending industry. Its loans contribute to the debt people shoulder throughout the country. A ProPublica analysis found companies owned by the LDF tribe showed up as a creditor in roughly 1 out of every 100 bankruptcy cases sampled nationwide.

The Minnesota attorney general’s office reported in its federal court filing that the state had received many consumer complaints about LDF Holdings, the tribe’s lending arm, that described extreme hardship caused by “continuing demands for payment of excessive interest.”

It gave the example of a Burnsville resident who took out a $1,398 loan from the LDF company Lendumo in December 2023 at an annual percentage rate of 795%. The loan snowballed to $8,593.

After Minnesota authorities reached out to LDF on behalf of the borrower, LDF argued that the loan was legal and not subject to state law, but Lendumo resolved the complaint “as a courtesy” — though not before demanding an additional $389, court records state.

“These are the highest, most nefarious APRs that we see,” said Anne Leland Clark, executive director of Exodus Lending, a nonprofit in Minnesota that refinances payday loans for borrowers using tax dollars and private donations. About a quarter of the loans they have refinanced since 2015 are tribal loans, she said.

This summer, in a class-action lawsuit out of Virginia, tribal council leaders agreed to a landmark settlement that cancels $1.4 billion in outstanding loans nationwide and provides $37.4 million in restitution and attorney fees. LDF officials will pay $2 million of that, while the remainder is to be paid by nontribal partners involved in five of the tribe’s lending firms. A final approval hearing is scheduled for Dec. 13.

Despite the national settlement and the action in Minnesota, Johnson has not signaled that the tribe will exit the lucrative lending business or alter its practices. ProPublica previously determined that LDF entered the loan business in 2012 and set up at least two dozen lending companies and websites, some of which remain active today.

LDF works with outside firms to operate businesses offering short-term installment loans. Unlike traditional payday loans, these are not due by the next pay period; typically, they are repaid over months in installments via automatic bank deductions.

One defunct website associated with LDF, Lendgreen, was the subject of a 2023 U.S. Supreme Court ruling that held that tribes must abide by the U.S. Bankruptcy Code, including provisions protecting debtors from continued collection efforts and harassment during the restructuring process.

Only a few dozen of the country’s 574 federally recognized tribes engage in online lending. Those that do often see it as an economic boon for their community, bringing in much-needed revenue for tribal government operations, which have limited options for expansion in their often-remote areas of the country.

LDF grew its footprint, ProPublica found, by partnering with multiple outside managers and financiers. Revenue data is not public, but historically, in the tribal lending model of payday lending, these outsiders have taken the lion’s share of the profits, according to lawsuits.

Lac du Flambeau Tribal President John Johnson Sr., the lone defendant in Minnesota’s suit over the tribe’s lending practices (Angela Major/WPR)

In a prior email to ProPublica, Johnson described LDF’s lending operation as an engine for community improvement. “The importance of our business extends far beyond simple economics; it is interwoven with the very fabric of our community, supporting a myriad of vital services,” Johnson wrote.

LDF and other tribal lenders contend that they are able to offer loans at exorbitant rates because of Native American tribes’ sovereign rights and immunities.

LDF’s loan documents have included provisions waiving Minnesota law, according to the state’s lawsuit, and improperly limited consumers’ rights to challenge repayment demands, falsely claiming Minnesota law doesn’t apply because of sovereign immunity.

The attorney general’s office also cited a letter from LDF Holdings to a borrower that stated: “the loan is not subject to state law and the [LDF lender] is not required to be licensed with any state. Your loan is legal.”

The tribe has stressed that it follows tribal law and federal law, which has no interest rate cap except for active-duty military members and their families.

States are not powerless, however, to address the issue.

Courts have ruled that while states cannot pursue tribes for monetary damages, they can sue the executives in charge and obtain injunctions stopping future harm.

“The truth is that out-of-state businesses and businesses incorporated under the laws of other sovereigns must comply with Minnesota law when transacting business in Minnesota,” Ellison wrote.

The LDF settlement is the second enforcement action by Ellison directed at tribal lenders operating in Minnesota.

In February, his office obtained a settlement agreement with top lending executives of the Fort Belknap Indian Community in Montana. It, too, bars the tribe — which denied any wrongdoing — from making future loans in Minnesota. Calling itself an industry leader, the Fort Belknap operation revealed in an annual report that it had processed more than 300,000 loans nationwide in 2021. The tribe’s economic development arm, which legal filings show gets most of its revenue from lending, reported more than $180 million in revenue that year.

In an interview with ProPublica in March, Ellison said other states with strong usury laws could follow Minnesota’s lead. “I hope other states do look at what we did and take note.” He declined to be interviewed for this story.

Minnesota strengthened its usury laws with legislation that took effect in January 2024 governing small-dollar loans. It eliminated a sliding scale of set fees and imposed a stricter APR cap: 36% in many instances, but 50% for licensed lenders that conduct an analysis on whether a borrower can repay.

Johnson told the attorney general’s office that the tribe had stopped originating new loans to Minnesotans as of Dec. 31, 2023, a day before the law took effect, according to the consent decree.

This content originally appeared on ProPublica and was authored by by Megan O’Matz and Joel Jacobs.

#2. A “Vicious Circle” of Climate Debt Traps World’s Most Vulnerable Nations

Kate Horgan — Tue, 03 Dec 2024 17:07:07 +0000

Low-income countries are disproportionately impacted by poverty and climate-related disasters. Many of the developing nations most vulnerable to climate change are also “operating on increasingly tight budgets and at risk of defaulting on loans,” Natalia Alayza, Valerie Laxton, and Carolyn Neunuebel reported for the World Resources Institute in September 2023.…

The post #2. A “Vicious Circle” of Climate Debt Traps World’s Most Vulnerable Nations appeared first on Project Censored.

This content originally appeared on Project Censored and was authored by Kate Horgan.

Multipolar World Order, Leading Role of Emerging Economies, and Western Debt: Key Takeaways from Putin’s BRICS Address

RT — Thu, 24 Oct 2024 14:06:00 +0000

President of Russia Vladimir Putin during an expanded meeting of BRICS leaders during the 16th BRICS summit in Kazan. © Sputnik / Stanislav Krasilnikov

Russian President Vladimir Putin addressed a meeting of leaders at the BRICS Summit in Kazan on Wednesday. In his speech, he focused on the growing role and prospects of the economic group, and warned about the risks to the global economy from Western sanctions and protectionist policies.

Putin also announced Russia’s initiatives within the BRICS framework, including the formation of a grain exchange and a new investment platform.

Here are the key takeaways from the president’s address.

Multipolar world order being formed

World trade and the global economy as a whole are undergoing significant changes, the Russian president told the extended-format BRICS meeting. The center of business activity is gradually shifting towards developing markets, he added. “A multipolar model is being formed, which is launching a new wave of growth, primarily due to the countries of the Global South and East – and, naturally, the BRICS countries.”

Leading role of BRICS

The BRICS economies have been demonstrating “sufficient stability” due to responsible macroeconomic and fiscal government policies, the Russian leader said, noting accelerated growth rates are expected in the medium term. Putin cited preliminary estimates that average BRICS country economic growth in 2024-2025 will be 3.8%, compared to global figure of 3.2-3.3%.

The BRICS countries’ share of global GDP in terms of purchasing power parity (PPP) will amount to 36.7% by the end of 2024 and will continue to expand, Putin predicted. Meanwhile, the share of the Group of Seven (G7) leading Western economies is projected to account for slightly above 30%.

“The trend for the BRICS’ leading role in the global economy will only strengthen,” Putin said, citing population growth, capital accumulation, urbanization, and increased labor productivity, accompanied by technological innovations as key factors.

West’s unilateral sanctions and debt burden

The Russian president warned of a potential new global crisis, citing the growing debt burden in developed countries, unilateral sanctions, and protectionist policies as key threats. “These factors are fragmenting international trade and foreign investment, particularly in developing nations,” Putin said.

He also pointed to high commodity price volatility and rising inflation, which are eroding incomes and corporate profits in many countries. Putin’s remarks also highlighted concerns over escalating geopolitical tensions and their impact on global economic stability.

New BRICS investment platform as a powerful tool

The Russian leader said that to fully realize the potential of the BRICS countries’ growing economies, the member states should intensify cooperation in areas such as technology, education, resources, trade and logistics, finance, and insurance, as well as increasing the volume of capital investment many times over.

“In this regard, we propose creating a new BRICS investment platform, which would become a powerful tool for supporting our national economies and would also provide financial resources to the countries of the Global South and East,” Putin said.

BRICS-based grain exchange

The Russian leader proposed a common BRICS grain exchange to protect trade between members from excessive price volatility. BRICS countries are “among the world’s largest producers of grain, vegetables, and oilseeds,” he noted. Such a bourse could be expanded to trade in other major commodities such as oil, gas and precious metals, Putin said.

The initiative is aimed at protecting national markets from negative external interference, speculation and attempts to cause artificial shortages of food products, according to Putin.

AI alliance of BRICS

Putin also proposed a BRICS AI alliance to regulate the technology and prevent its illegal deployment. “In Russia, the business community has adopted a code of ethics in this area, which our BRICS partners and other countries could join,” Putin noted.

Other proposals

The president also spoke about increasing transport connectivity between BRICS countries, saying this could provide additional opportunities for growth and diversification of mutual trade.

“Such promising projects as the formation of a permanent BRICS logistics platform, preparation of a review of transport routes, opening of an electronic communications platform for transport, and establishment of a reinsurance pool are being discussed,” Putin said.

The issues related to the transition of the global economy to low-emission development models are very important, according to the Russian president. The BRICS contact group on climate and sustainable development is closely involved in this work and will continue to counteract attempts by some countries to use the climate agenda to eliminate competitors from the market, he said. “We consider the initiatives on the BRICS partnership on carbon markets and the climate research platform to be promising,” Putin concluded.

The post Multipolar World Order, Leading Role of Emerging Economies, and Western Debt: Key Takeaways from Putin’s BRICS Address first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by RT.

What No One Tells You About Car Loan Deferments

by Byard Duncan, Ryan Gabrielson and Lucas Waldron — Thu, 12 Sep 2024 09:05:00 +0000

by Byard Duncan, Ryan Gabrielson and Lucas Waldron

This story works best on ProPublica's website, where you can use our free Car Loan Deferment Calculator. You can also read our investigation into Exeter Finance and get in touch with ProPublica reporters to share your own experience.

Have you taken out a car loan and struggled to pay it back? You’re not alone. Borrowers like you owe more than $1.6 trillion in auto debt, and many are falling behind. Your lender might have given you the option to move payments to a later date, also known as a “deferment” or “extension.”

We’ve collected advice from borrowers, consumer finance experts, auto dealers and more to help people make more-informed choices about deferring car payments. Our reporting shows lenders aren’t always up front about how much these deferments will cost you in the long run.

In 2018, one lender got into trouble for allegedly misleading borrowers about them. We found another company, Exeter Finance, using similar extension practices, driving struggling people deeper into debt. These deferments especially affect those with bad credit, who often must pay sky-high interest rates to borrow money.

Exeter Finance responded to our story saying it is “fully committed to transparency in its lending practices” and follows all relevant laws. But in dozens of interviews, people told us they did not understand how much more they would owe after they took deferments. At the end of their terms, some ended up with thousands of dollars in unexpected charges. Some defaulted and lost their cars anyway.

“If I would have known,” said Chassidy Smith, an Exeter borrower living in Georgia who received six extensions in the course of her five-year auto loan, “I probably would have done something different.”

What’s ProPublica? Why should I trust your research?

We (Byard Duncan and Ryan Gabrielson) are reporters at ProPublica, a nonprofit news organization. We write stories that hold powerful institutions accountable. We’ve been reporting on car loans for more than a year. In that time, we reviewed thousands of pages of lawsuits and complaints, and we spoke to dozens of borrowers, consumer finance experts, auto lending specialists, former Exeter Finance employees and more. All of our stories are rigorously fact-checked, nonpartisan and free to read. We do not profit in any way off of tools such as our loan extensions calculator. See our Code of Ethics for more.

The Car Loan Deferment Calculator

To calculate what you could owe at the end of your car loan, all you need is your contract, your monthly statement and the dates that you received deferments. Click here to use the free car loan deferment calculator on ProPublica’s website.

This is a screenshot of the calculator. Click here to use the calculator on ProPublica's website. (Development by Chris Zubak-Skees for ProPublica. Design by Lucas Waldron.) Where to find information about your car loan:

Contract: If you don’t have a hard copy of your auto loan contract, you should be able to download a digital one from your lender’s website.

An excerpt of an Exeter borrower’s contract. (Obtained by ProPublica)

Dates of deferments: This should be the months covered by the deferments. Lenders sometimes send you written notices when they grant you deferments. You can also contact your lender’s customer service team and ask if you don’t remember.

Monthly statement: Our auto loan calculator is most accurate when you use your loan’s interest rate, which can be slightly different from the APR, or annual percentage rate. You’ll sometimes find the true interest rate on your monthly billing statement.

Got more questions? There’s no shame in feeling overwhelmed by the process. Even the experts sympathize.

“Auto transactions are notoriously complex and confusing,” said Rosemary Shahan, president and founder of Consumers for Auto Reliability and Safety, an advocacy organization. “There is nothing in life that prepares you for that transaction. It’s unlike any other transaction you ever enter into.”

Here are answers to some of the most common questions about car loan extensions that came up in our reporting.

Frequently Asked Questions about Car Loan Deferments What is a car loan deferment?

A car loan deferment is when a lender allows you to postpone one or more payments to a later date. Some borrowers said they chose to defer car payments when they faced unexpected expenses, like an illness, hurricane or death in the family. Others simply couldn’t afford their loans. Not all lenders allow you to defer payments, and different lenders have different rules. Some, for example, require you to make a certain number of on-time payments in a row before they will grant you a deferment.

Ask your lender what its specific deferment policies are. Get them in writing if you can.

What’s the difference between a deferment and an extension?

There is no difference. In fact, the Consumer Financial Protection Bureau, a federal watchdog agency, uses the terms interchangeably. “Deferment,” “deferral” and “extension” all mean basically the same thing: You’re pushing one or more loan payments to a later date.

How do car loan deferments work?

To understand what deferments do, you first have to understand how car loan interest is supposed to work.

Most car loans use a “simple interest” formula. This means that although you usually make a car payment once per month, you technically owe a little bit of interest for every single day of the loan. As a result, paying late can cause you to owe more later on.

On the other hand, paying early can reduce your balance faster. Imagine you won the lottery tomorrow and paid off the whole loan immediately. That would save you money because you’d pay a lot less in interest over time.

Let’s say you have a $15,000 loan with a hefty 25% interest rate that you will pay back over 72 months.

If you pay exactly on time, a typical daily simple interest car loan will look like this:

Note: This chart assumes that the borrower always paid on time and did not accrue late fees. (Lucas Waldron/ProPublica)

When you start off, more of your payment will count toward interest than principal (the amount you owe excluding interest) each month. That’s normal. Over time, this dynamic switches: By the loan’s endpoint (also known as its “maturity date”), you’ll pay mostly principal until you owe nothing at all. Then you get the title and own the car outright.

Deferments can change this equation. Let’s say you move a $404 monthly payment to the end of your loan several years from now. If your lender charges interest on the extension, as many do, you will owe more than $404 at the end of the loan: You will have to pay higher interest charges for the rest of the loan, so your remaining payments won’t be enough to eliminate your debt. You will still owe hundreds, or even thousands, of dollars.

Note: This chart assumes that the borrower always paid on time and did not accrue late fees. (Lucas Waldron/ProPublica)

This leaves some people with a “balloon payment” — a large lump sum, due when your loan term ends. These balloon payments caught a lot of Exeter borrowers we spoke to by surprise and caused them financial pain.

Who decides if I can defer a car payment?

It’s important to remember that the company selling you the car is often different from the company that will be collecting the payments. In fact, several experts told us that If you decide to take out a loan, you’re under no obligation to choose financing at the dealership, even if you buy the car there.

If you’re making monthly car payments, there’s a good chance the dealer “assigned” the contract to an auto lender like Exeter Finance (or Santander Consumer USA or Capital One) after you signed on the dotted line. The lender is the entity you’re now paying back — and the one that might grant you a deferment.

Will deferred car payments cost me money?

Deferments can cost you more money in the long run, but the exact amount is not always obvious to borrowers. As mentioned above, deferments provide a temporary break from monthly payments. But if interest continues to accrue during that reprieve, you will end up paying higher interest charges and then owing more in a lump sum at the end. For Exeter borrowers who received multiple extensions, the final payment totaled thousands of dollars.

Should I take a deferment on my car loan?

Consumer finance experts told us it depends on several factors. Overall, you should think about it in terms of your broader financial health.

“It’s not just the cost of the monthly payment — it’s all of this other stuff,” said Dara Duguay, CEO of the nonprofit Credit Builders Alliance. “Can you afford gas? If — and especially if — gas is going to fluctuate up and down?”

“It’s tempting to just say, ‘Oh yeah, let’s just add it to the end,’” said John Van Alst, director of the National Consumer Law Center’s Working Cars for Working Families project. But “if the numbers weren’t working before — unless something’s changed — there’s a real chance the numbers aren’t going to work as you continue to go forward.”

Some borrowers told us they regretted their decisions to accept deferments. Some didn’t. But nearly everyone we spoke to wished they’d had more information.

“I would have tried to make arrangements” like making extra payments, said Natosha Smith, an Exeter borrower living in Georgia whose eight car loan extensions led to a balloon balance of roughly $6,000. “I honestly did not understand the full complexity of the situation.”

What questions should I ask before taking a deferment?

If you’re considering deferring a car payment, experts say you need to get as much information about the cost as possible.

Pamela Foohey, a University of Georgia law professor who studies subprime lending, said lenders would ideally give borrowers a table explaining what they will owe each month until the end of the loan. She said the table should lay out “exactly what is going to be paid, broken down by principal and interest.”

Foohey also recommended asking for:

Your new loan maturity date.
An explanation of any fees or penalties.
Any changes to your monthly payment amount.
A breakdown of what will be going to principal versus interest for all future payments.

Get familiar with your other financial obligations, too, said Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling. Ask yourself: Will I have to skimp on necessities to stay in the car? Is the deferment to cure a one-off problem, or am I postponing payment because the car wasn’t affordable in the first place?

“Do a budget,” Coleman advised. “Know what your expenses are and whether or not an extension is necessary. Maybe you’re able to make some adjustments in other parts of your budget, where you don’t have to get this extension.”

Will deferring a car payment hurt my credit?

In most cases, deferments do not negatively affect your credit score. This is because they are not the same as late payments. Instead, they represent a mutual agreement between you and your lender. But be aware that you can hurt your credit by failing to restart payments when they become due again — or by failing to pay off your balloon balance.

I can’t make my car payment. What can I do besides deferring a payment?

You may have options. Experts we spoke to said the first thing to do is call your lender. Different banks have different repayment policies, and trying to adjust your agreement proactively is often a good bet.

“View the extension offer as the beginning of a negotiation,” Foohey said. “It is not the thing that you absolutely have to take.”

The CFPB also lays out a few options to avoid deferring a car payment:

Ask to change the date your payment is due each month. For some people, paying off a car loan consistently is all about timing. If it’s more convenient for you to be billed right after you receive a paycheck, tell your lender that. Ask if they can change your due date to better match the rhythm of your income.
Request a payment plan. Rather than extend your loan, some lenders will allow you to pay a smaller monthly payment for a while, then increase your bill totals later to balance things out. If you choose to do this, make sure to ask your lender for a written breakdown of how the payment plan will work and how it would change the interest charges.
Refinance your loan. Refinancing means looking for a bank that will buy the debt from your auto lender and continue working with you at a lower interest rate. Working out an arrangement like this can bring down both your monthly payment and the total amount you’ll owe in the long term. But be aware that refinancing often requires a steady payment history or good credit.

There are also lots of credit counseling nonprofits across the U.S. that can help advise you.

The Credit Builders Alliance has more than 600 members and a handy map to find one near you.
The National Foundation for Credit Counseling is the country’s oldest nonprofit “dedicated to improving people’s financial wellbeing.”

What should I do if I can’t afford to pay back interest on my deferment?

If you’ve made a lot of on-time payments in a row, there’s a chance you’ve improved your credit score along the way. In that case, consumer finance experts say it’s worth reaching out to a bank or credit union to see if they might refinance your loan.

Not everyone can do this, though. Once the true cost of car loan deferments became clear to some of the borrowers we interviewed, they saw no choice but to let their car be repossessed. Repossessions and late payments hurt your credit score, and damaged credit can keep you from getting a low interest rate on your next car loan.

One silver lining: If you surrender your car, it’s possible you won’t end up owing the total remainder of the loan. That’s because after a lender auctions it off, they’re usually required to charge you only the difference between what you owe and what they got at auction. But beware: If your loan remainder was bigger than the car’s actual value, there’s a chance you could still owe a sizable chunk of change after this.

I think my lender didn’t give me information they were supposed to. Is there anything I can do?

First, you can try to work something out with them. According to CFPB, “Companies can usually answer questions unique to your situation and more specific to the products and services they offer. Keep all the documents, messages, voicemails, and records of your interactions with the dealer or lender.”

If that doesn’t work, you have the right to file a complaint to state and federal regulators.

The CFPB accepts complaints here.
You can use this database to find your attorney general’s contact information. In addition to fielding complaints, your attorney general can sometimes help answer questions about your state’s car loan laws.
If you’d like to find an attorney with affordable fees, CFPB maintains a state-by-state list of them here.
CFPB also has a searchable “know your rights” database that answers lots of questions about car loans.
Finally, if you want to understand the federal laws that apply to your car loan, the National Automobile Dealers Association has an easy-to-understand primer.

AAuto contracts often include class-action lawsuit waivers and arbitration provisions. These can make it hard for people to sue lenders.

For this reason, a lot of recent legal action against auto lenders has come from the CFPB and state attorneys general. When those agencies sue a company, it can sometimes result in a monetary settlement for people harmed. It can also wipe away borrowers’ debt and prevent their cars from getting repossessed.

Common Car Loan Terms

Amortization: The process of reducing a debt through regular payments.

Amount financed: The amount of money you've borrowed.

Amount of payments: What you'll owe each time a payment is due.

Annual percentage rate: The cost of your loan, including interest rate and fees. It's usually expressed as a percentage.

Balloon payment: A one-time, lump sum charge including any money you still owe on principal or fees, due at your loan's maturity date. This is typically the result of extensions and late payments.

Debt-to-income ratio: The amount of money you owe for housing, credit card and all other loan payments divided by the amount of money you make each month (before taxes).

Down payment: The up-front payment you put down when you buy your car. The more you can put down, the cheaper your loan will be in the long run.

Extension/deferment: A postponement of one or more payments on your car loan.

Finance charge: The total dollar amount of interest you'll owe if you make every payment on time.

Interest: The cost of borrowing money. This is usually a percentage of the unpaid debt that accumulates on a daily, monthly or annual basis.

Loan term: The amount of time it will take to completely pay off your loan. Usually measured in months: 48-, 60- and 72-month terms are common.

Loan-to-value ratio: The amount you borrowed to purchase the car divided by the car's current value.

Negative equity: When the amount you owe to your lender exceeds the value of your car. This is also called being "upside-down" or "underwater" on your loan.

Number of payments: This usually equals the number of months your loan will last. Occasionally, car loan payments are due every two weeks. You can make sure by checking for the term "monthly" under "When Payments Are Due" in your Truth-in-Lending Disclosures.

Principal: The total dollar amount you borrowed, and have not yet repaid, before interest is calculated. If you bought a car for cash, you'd be paying just the principal.

Refinancing: The process of taking out a new loan — sometimes with your current lender, sometimes with a new one — to pay for your existing one. People often refinance to get more favorable terms, like a lower APR.

Repossession: When a lender seizes your vehicle because you've missed several payments, typically the equivalent of four months. Lenders have different rights of repossession in different states.

Total of payments: The combination of the amount of money you borrowed and what you'll owe in interest on the loan.

Total sale price: The total of payments plus the down payment you made.

Help ProPublica Investigate the World of Subprime Car Loans

More and more people are struggling to pay back loans on their used cars. Our journalists want to hear from the people who know the industry best. Click here to get in touch with ProPublica reporters.

Development by Chris Zubak-Skees. Research by Sophia Kovatch.

This content originally appeared on ProPublica and was authored by by Byard Duncan, Ryan Gabrielson and Lucas Waldron.

One of the Nation’s Largest Auto Lenders Told Customers, “We’re Here to Help.” Then It Took Their Money and Their Cars.

by Ryan Gabrielson and Byard Duncan — Thu, 12 Sep 2024 09:00:00 +0000

by Ryan Gabrielson and Byard Duncan

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

This story is part of a partnership with Scripps News.

Jessica Patterson tensed as she tore open the letter from Exeter Finance. “This notice is being sent to you concerning your default,” the company wrote.

She didn’t need to keep reading to know she was in trouble.

It was January 2018. Seven months earlier, she’d borrowed $14,786.07 to purchase a silver Kia Rio. The interest rate was sky high — 25.17% — and the $402 monthly payment was more than a quarter of her take-home pay. But she needed the car to keep her job and support her three young children. For months she had skimped on groceries, eaten at soup kitchens and even skipped Christmas gifts to pay the car loan. But most of the time it wasn’t enough, and now Exeter was threatening to seize the Kia.

Panicked, she dialed the number in the letter. Can we work something out, Patterson asked.

Exeter’s response came easily, she recalled. It offered to extend her loan.

The company would simply move the December and January payments to the end of her five-year payment schedule, the representative told her, adding two months to the loan’s term. “It was instant relief,” Patterson said.

The extension seemed to be a courtesy from Exeter in a time of need. In fact, the company’s disclosures at the time stated “Extension fee: $0.00.”

The pause in payments, however, was anything but free. What Patterson didn’t know, and what she said Exeter didn’t tell her, was that every penny of her next five payments would go to the interest that built up during the reprieve. That meant she didn’t pay down the original loan balance at all during that time.

While the extension allowed her to keep her car, it added about $2,000 in new interest charges, which the lender did not clearly disclose.

Jessica Patterson at home with her husband and four kids in Olathe, Kansas (Greg Kahn, special to ProPublica)

Patterson’s experience with Exeter was not unusual. A ProPublica investigation has found that it’s an integral part of how the company runs its business.

Exeter is one of the largest auto lenders in the nation, specializing in high-interest loans to people with histories of not paying bills or defaulting on debt, a practice known as subprime lending. The company, which has more than 500,000 active loans and a partnership agreement with CarMax, the country’s largest used car retailer, casts itself as a provider of second chances. “We’re here to help,” it says on its website. In reality, Exeter’s practices often do the opposite.

When the company allows a borrower to skip payments, it typically adds thousands of dollars in new interest charges to the customer’s debt. Dozens of customers told ProPublica that Exeter didn’t tell them about the added costs.

When it’s time to make their final payment, many are faced with a huge bill, which they often can’t afford to pay.

Click here to find out how much used car loan extensions could cost with our free calculator tool.

At that point, Exeter often repossesses a car and sends the bill to a debt collector, regulatory records show. In some cases, the company makes more money on loans that default than on ones in which borrowers pay on time, ProPublica found.

Critics, including some former employees, say the company’s practices are predatory. “I really hated extensions once I found out what they did to people,” said Tyhara Ross, who worked at Exeter for nearly nine years. “You think you’re getting something for nothing, and you’re not.”

Exeter’s top executives declined to be interviewed for this story, and the company did not answer detailed written questions. Instead, it issued a statement that said it’s “fully committed to transparency in its lending practices” and “has no reason to mislead customers.”

“Exeter’s mission is to enable Americans who otherwise may not be able to access financing the opportunity to own their own vehicle so they can go to work and take care of their families,” the company said. “We take that mission seriously as well as our commitment to our customers.”

It’s difficult to track just how many extensions Exeter gives out; the company is not required to report detailed numbers. But publicly available data shows they’re fundamental to Exeter’s business model. Lenders often describe extensions in the context of financial emergencies, like when a borrower loses their job, or national crises, like the COVID-19 pandemic. Exeter hands them out “like candy,” according to three former employees who worked in the company’s collections operation.

To examine Exeter’s practices and their effect on borrowers, ProPublica analyzed data on more than 10 million auto loans included in bonds issued in the past five years.

At first blush, Exeter’s portfolio looks dire: A majority of its loans — more than 200,000 — are at least three payments behind schedule — a degree of delinquency that is roughly twice that of any other subprime lender in the data. Many companies would be preparing to count those loans as losses, send them to a collection agency and repossess the cars.

But Exeter has turned what would otherwise be a financial crisis into a profit center. Each time the company grants an extension, it resets the clock and reclassifies the loan as being on schedule. ProPublica found that Exeter has done this as many as 12 times over the course of a 72-month loan, with borrowers continuing to make payments in hopes of catching up. Regulatory records show many customers paid the equivalent of the full loan or more, only to see their cars repossessed.

Federal law prohibits lenders from engaging in “unfair, deceptive or abusive acts,” and the chief enforcer of that law, the Consumer Financial Protection Bureau, took action against Santander Consumer USA, the nation’s largest subprime lender, in 2018 for practices similar to Exeter’s, such as offering loan extensions without clearly disclosing the financial impacts. CFPB forced Santander to pay nearly $12 million in restitution and penalties. But the agency hasn’t taken enforcement action against Exeter. Meanwhile, annual complaints to the CFPB about the company have grown threefold in the past five years, with nearly 900 in 2023.

Extensions that hide the consequences from borrowers “are taking a loan that is not working and ensuring that it’s just not going to work for a little longer,” said Pamela Foohey, a University of Georgia law professor who has written extensively about subprime lending.

Exeter said it made “voluntary revisions” in 2019 “to the way it communicates about extensions to ensure customers are fully informed on the costs,” notably in the scripts its agents use when talking to borrowers. It also said it created a dedicated team that year to handle extensions “with a focus on transparency to customers.”

“Customers are told clearly that interest will continue to accrue during an extension and are given the true cost of the interest accrual so that customers can make a decision on whether to choose an extension,” the company said.

But none of the customers that ProPublica spoke to said that was what they experienced. In fact, more than 20 borrowers told us they were not provided a dollar amount of what their extensions would cost before they agreed to them. “I just felt like that was so wrong,” said Natosha Smith, a former Exeter borrower living in Georgia.

She received eight extensions over the course of her loan. Each time, Smith said, an Exeter employee explained that it added additional months to the end of her loan term. Smith said she expected to pay a little extra interest, something akin to her $425 monthly payment. Instead, the cost was more than 10 times that.

“You guys have gotten double what this vehicle is worth, and you still want to take another $6,000 from me?” Smith said of Exeter. “I was appalled. I couldn’t believe it.”

When asked why it did not provide Smith and others with the exact cost of their extensions, Exeter amended its statement, saying, “Customers who request an extension are given the option before accepting the extension to immediately speak with an agent who can provide the cost of the interest that will accrue during the extension period. Some customers choose not to be transferred to an agent to receive the explanation.”

Neither Smith nor other borrowers could recall being given this option.

Loans With Extensions Result in Inflated Final Payments

The monthly payment for a 72-month, $15,000 loan with a 25% interest rate is $404. But with two extensions early in the loan, the borrower’s final payment will be more than six times higher.

Note: These charts assume that the borrower always paid on time and did not accrue late fees. (Lucas Waldron/ProPublica) Targeting Struggling Buyers

Exeter has always specialized in the subprime market. But in the late 2010s, the company went after customers with poor credit more aggressively than it had in the past. It accepted borrowers with even lower credit scores, lent them more money — as much as $50,000 per loan — and gave them longer to repay it. Some agreed to schedules stretching longer than six years, making the loans more costly.

“We’re not your father’s Exeter Finance,” the company proclaimed in a 2019 blog post aimed at wooing new business from dealerships.

It also increased its prices.

ProPublica’s analysis shows that Exeter charges the highest interest rates of any lender in the publicly available data. Since 2020, the average interest rate for an Exeter car loan jumped from 19% to nearly 22%, regulatory records show.

Exeter Charged Higher Interest Rates Than Other Subprime Lenders

Rates for borrowers with the lowest credit scores were nearly 30%.

Note: Each circle represents the mean interest rate for all loans by that lender at that credit score between 2019 and 2023. Circles are generated only when the lender made at least 50 loans to borrowers with that credit score. The chart displays only lenders with at least half as many subprime loans as Exeter. Source: ProPublica analysis of U.S. Securities and Exchange Commission and Finsight.com data. (Lucas Waldron/ProPublica)

Exeter’s loan volume exploded, bond data shows. And as borrowers got into trouble, the lender’s collections workers were rewarded with bonuses for getting loans out of delinquency, according to three former employees. Extensions were a common tool to accomplish that. Exeter denied the allegation, saying, “customer service agents are not incentivized or rewarded with compensation related to granting extensions.”

Either way, Exeter financial records show the number of loans with five or more extensions rocketed 80% between 2016 and 2018.

The company attributed part of a more recent uptick in extensions to the COVID-19 relief bill that Congress passed during the pandemic in 2020, saying the legislation “encouraged compassion from lenders.”

That “compassion,” however, led to confusion and anger among borrowers who began filing complaints with state attorneys general. ProPublica examined nearly 200 of them and found the most common problems involved how much of their payments went to interest and why they still owed so much.

The company has drawn the scrutiny of regulators in at least three states. In 2019, the attorneys general of Massachusetts and Delaware settled lawsuits against Exeter alleging it had violated consumer protection laws. The company said the settlements had nothing to do with extensions and contained no admission of illegality. The Georgia attorney general’s office confirmed it is now investigating Exeter, though it declined to provide more detail. Exeter declined to comment on the investigation.

The CFPB declined to answer questions about Exeter’s practices and its oversight of the company. Chris Kukla, a CFPB program manager supervising the auto finance industry, said that in general “it’s important for everybody to understand what’s going on in the transaction.”

“All the information should be shared," he added.

For years, Exeter failed to provide specific information in its written notices. They did not explain that a borrower’s next payments would first be applied to the interest from extensions, which would delay repayment of the original loan balance, known as the principal. These omissions were identical to those that federal regulators had targeted in their case against Santander years earlier, according to three consumer finance experts who reviewed them.

The company said it updated those disclosures in late 2021 but declined to provide copies or details about the changes.

Notices sent to borrowers earlier this year, reviewed by ProPublica, said that an extension would increase the borrowers’ interest charges as well as the amount of their final payment. However, the notices did not include the actual dollar amount. If borrowers wanted to know more, the letter directed them to call a toll-free number.

One employee said that lack of disclosure was intentional.

“The object was for the agent to keep the customer in the car no matter what,” said Ross, the former Exeter employee who worked with borrowers struggling to make their payments. “That’s the end game. Because as long as that customer stays in that car, guess what? They are getting that interest. And the interest brings them more money.”

Lender of Last Resort

A faded Carmax plate on the front of Patterson’s car (Greg Kahn, special to ProPublica)

Jessica Patterson encountered Exeter like tens of thousands of consumers do each year: via CarMax, which uses Exeter to make loans when borrowers don’t qualify for CarMax’s in-house financing.

In the spring of 2017, Patterson sat at a circular table in her local CarMax just outside Kansas City, Kansas, with $200 in her pocket. Around her was an open sales room nearly as deep and wide as a football field.

A salesperson had shown her a Kia Rio with low mileage and zero frills. At $15,000, it was “the best that I could do for what I had,” Patterson recalled.

As a receptionist at a hearing aid sales center, she made $12 an hour, below the federal poverty line. She’d just moved her family out of a domestic violence shelter and into a basement apartment of their own. Their life felt fragile.

Like most subprime customers, her credit history was rife with unpaid bills. The debts were mostly from her ex-husband, she said.

The CarMax employee said she had good news, though: Exeter would lend Patterson the full amount needed to buy the Kia. Then the employee read the loan terms aloud. A six-year loan. A 25.17% interest rate. A monthly payment of $402.63. That would be a quarter of Patterson’s take-home pay, almost twice what consumer finance experts recommend.

She asked whether there were cheaper offers. None of the other companies were willing to give Patterson a loan, said the employee, who turned her computer monitor so Patterson could see. “Exeter was the only one there,” she said. According to rating agency reports, CarMax is the single largest source of Exeter’s business — responsible for some 50,000 loans per year.

Patterson agreed to the terms. To get to work and get her kids to school, she needed a car. Turning down the loan felt like giving up.

Exeter contacted her employer and landlord to confirm the details in her application. It knew how much money Patterson would get in her upcoming paychecks, how much would automatically go out and how little room for error she had.

For its part, CarMax said it is not involved with the loans Exeter and other lenders sell to its customers and declined to answer specific questions about its partnership with Exeter.

“Each of CarMax’s finance sources performs its own underwriting, servicing, and collection activity,” the dealership chain said in a written statement. “CarMax cannot speak to details about how our finance sources manage repossessions or extend financing.”

Truth in Lending?

The top of Patterson’s contract had a box detailing just how much she would pay over six years — a requirement of the federal Truth in Lending Act. It said she’d pay Exeter more than $14,000 in interest, almost as much as she would pay for the Kia itself.

While it would be tight, Patterson thought she could budget for the loan.

Within months, though, she fell behind. In January 2018, Patterson took her first two extensions. She used the time to reorder her finances so she could resume payments.

To save on food, she drove her family to free church dinners every Wednesday and Thursday night. Donations from a nearby food bank allowed them to keep grocery bills at a bare minimum.

Patterson sent payments to Exeter for February and March. But by late spring, she was in trouble again, resorting to sending a few hundred dollars at a time. By the fall, she was on the verge of default.

She called the lender’s collections department and asked for a third extension. The lender granted it over the phone without question, Patterson said.

Exeter agents could see the exact cost of the added interest on their screens during calls like this, but they did not share it with borrowers, said Clair Groves, who worked in Exeter’s collections department in 2019. The company does not include specific price information in the scripts it requires agents to read when giving an extension, Groves said, and urges them to finish calls in less than three minutes, leaving little time to provide more information.

Exeter did not respond to questions about Patterson’s account or Groves’ statements.

Extension practices like Exeter’s, experts say, undermine the utility of the Truth in Lending law, which aimed to eliminate financial surprises for consumers.

“If you can manipulate the payment schedule in such a way that makes the original disclosures meaningless, that’s a huge problem,” said Erin Witte, consumer protection director at the Consumer Federation of America.

For Patterson, the true cost of the extensions would become clear only after she remarried two and a half years later. Her new husband, Andrew Patterson, had found the Exeter loan odd. He had bought a more expensive car from the same dealership, but because he qualified for a loan from CarMax directly, his monthly payments were far lower. He decided to take a closer look.

The numbers on her statements were staggering, he said. Even when she made payments consistently, so much money went to interest that she barely made a dent in the original debt. If they made the 20 remaining payments, there was still no way they’d be able to pay off the car.

Using her loan statements, ProPublica calculated that Patterson had paid Exeter $17,097 over three years. About 80% of that had gone to interest, leaving her with more than $11,000 in debt.

“Just let them repo it,” Andrew told his wife.

The lender seized the Kia in the fall of 2021 and auctioned it off for $13,800. Exeter collected more from Patterson’s failed loan than it would have if she’d paid on schedule.

Patterson’s new husband, Andrew, helped her get out of the Exeter loan by letting the company repossess the vehicle. (Greg Kahn, special to ProPublica) A Giant Bill, Then Repossession

ProPublica’s analysis found that nearly a quarter of Exeter loans from 2020 and 2021 — more than 65,000 — ended like Patterson’s did, with borrowers stopping repayment early.

For people who take extensions and make it to the end of their loan, a large final payment typically awaits.

That news was crushing for Don Weaver, a disabled veteran living in Louisiana. In 2015, Exeter lent him $15,607.29 to buy a 7-year-old GMC Envoy. Over the next seven years, the company granted him 12 extensions by phone, Weaver said. Each time, the agent assured him he was “current,” he recalled.

The extensions had helped him navigate choppy economic waters, he said. He lived off VA disability payments, and unexpected expenses like a busted lawn mower or worn-down brake pads often made his $393.14 monthly payment difficult.

In September 2022, after Weaver had paid Exeter $29,125 — $819 more than his loan contract outlined — the company told him he still owed more than $9,000.

“I couldn’t get heads or tails about how much of that was actual payments and how much of that was fees,” Weaver said.

When he couldn’t pay, Exeter repossessed the Envoy, and today, a collections company is pursuing him for the $5,800.73 he still owes.

Don Weaver, at his home in Baton Rouge, Louisiana, with the car he bought after Exeter repossessed his previous one (Greg Kahn, special to ProPublica)

Although their loan outcomes were different, both Weaver and Patterson felt certain that local authorities should know about their experiences. Exeter “has a huge role in allegedly financing unfair, subprime auto loans,” Patterson wrote to Kansas Attorney General Derek Schmidt in November 2021. “They are a predatory company.”

Weaver’s complaint was strikingly similar, citing the settlements Exeter had entered into with Massachusetts and Delaware: “They had to pay millions back to consumers due to predatory practices,” he wrote to Louisiana Attorney General Jeff Landry. “I am wondering if that is happening to me.”

Kansas simply forwarded Patterson’s complaint to Exeter, which responded with a letter claiming that all the contract terms were properly disclosed; five extensions were granted “at Jessica’s request.” Months after it repossessed her Kia, Exeter added, it stopped pursuing her, “as a courtesy,” for the $51.63 she still owed.

Louisiana regulators didn’t press Exeter in Weaver’s case, either. After receiving a similar explanation from the lender, the attorney general’s office ended its inquiry, encouraging Weaver to hire a lawyer if Exeter’s response “does not result in a satisfactory outcome for you.”

The attorney general’s office confirmed that it did not investigate Weaver’s case. Landry, who is now governor of Louisiana, did not respond to requests for comment. The Kansas attorney general’s office also declined to comment.

In the fall of 2022, even with the bill collector after him, Weaver still needed a car. So, he headed to a nearby CarMax to start the process over. When the employee ran his information, he was told that Exeter had approved him for another loan.

“You’re telling me you got to charge me this extra interest and all this because I’m a bad risk,” Weaver said, “but you’re willing to risk it again?”

This time, he declined the offer.

Help ProPublica Investigate the World of Subprime Car Loans

Disclosure: The private equity firm Warburg Pincus owns a controlling stake in Exeter. Mark Colodny, one of the firm’s managing directors, is a member of ProPublica’s board.

Jeff Ernsthausen and Mollie Simon of ProPublica and Carrie Cochran and Patrick Terpstra of Scripps News contributed reporting.

This content originally appeared on ProPublica and was authored by by Ryan Gabrielson and Byard Duncan.

Harris unveils economic plan in first policy speech, proposes measures to tackle high prices and medical debt – August 16, 2024

KPFA — Fri, 16 Aug 2024 18:00:00 +0000

Comprehensive coverage of the day’s news with a focus on war and peace; social, environmental and economic justice.

A U.S. official says mediators are preparing for a possible cease-fire and hostage-release deal in Gaza, in a sign that mediators believe an agreement to end the 10-month Israel-Hamas war might be imminent.
In her first policy speech today, Vice President Kamala Harris focused on the economy, calling for proposals to combat high prices for food, housing, and prescription drugs, while also proposing child tax credits and pledging to work with states to cancel medical debt.
This week, the United Nations highlighted several international health concerns, including a panel discussion on the newly declared global emergency of mpox and a warning from the organization’s chief administrative officer about a potential polio epidemic in Gaza.
Ukrainian President Volodymyr Zelenskyy said Thursday that his country’s troops had taken full control of Sudzha, the largest Russian town to fall to Ukraine’s forces since their cross-border incursion more than a week ago.
California Governor Gavin Newsom signed new legislation into law today, which he says will help to stop retail crime in the state.

The post Harris unveils economic plan in first policy speech, proposes measures to tackle high prices and medical debt – August 16, 2024 appeared first on KPFA.

This content originally appeared on KPFA - The Pacifica Evening News, Weekdays and was authored by KPFA.

Who Owns America?

John W. Whitehead and Nisha Whitehead — Tue, 13 Aug 2024 22:23:36 +0000

The politicians are put there to give you the idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought and paid for the Senate, the Congress, the state houses, the city halls. They got the judges in their back pockets and they own all the big media companies, so they control just about all of the news and information you get to hear… They spend billions of dollars every year lobbying. Lobbying to get what they want. Well, we know what they want. They want more for themselves and less for everybody else… It’s called the American Dream, ’cause you have to be asleep to believe it.”

— George Carlin

Who owns America?

Is it the government? The politicians? The corporations? The foreign investors? The American people?

While the Deep State keeps the nation divided and distracted by a presidential election whose outcome is foregone (the police state’s stranglehold on power will ensure the continuation of endless wars and out-of-control spending, while disregarding the citizenry’s fundamental rights and the rule of law), America is literally being bought and sold right out from under us.

Consider the facts.

We’re losing more and more of our land every year to corporations and foreign interests. Foreign ownership of U.S. agricultural land has increased by 66% since 2010. In 2021, it was reported that foreign investors owned approximately 40 million acres of U.S. agricultural land, which is more than the entire state of Iowa. By 2022 that number had grown to 43.4 million acres. The rate at which U.S. farmland is being bought up by foreign interests grew by 2.2 million acres per year from 2015 to 2021. The number of U.S. farm acres owned by foreign entities grew more than 8% (3.4 million acres) in 2022.

We’re losing more and more of our businesses every year to foreign corporations and interests. Although China owns a small fraction of foreign-owned U.S. land at 380,000 acres (less than the state of Rhode Island), Chinese companies and investors are also buying up major food companies, commercial and residential real estate, and other businesses. As RetailWire explains, “Currently, many brands started by early American pioneers now wave international flags. This revolution is a direct result of globalization.” The growing list of once-notable American brands that have been sold to foreign corporations includes: U.S. Steel (now Japanese-owned); General Electric (Chinese-owned); Budweiser (Belgium); Burger King (Canada); 7-Eleven (Japan); Jeep, Chrysler, and Dodge (Netherlands); and IBM (China).

We’re digging ourselves deeper and deeper into debt, both as a nation and as a populace. Basically, the U.S. government is funding its existence with a credit card, spending money it doesn’t have on programs it can’t afford. The bulk of that debt has been amassed over the past two decades, thanks in large part to the fiscal shenanigans of four presidents, 10 sessions of Congress and two wars. The national debt (the amount the federal government has borrowed over the years and must pay back) is more than $34 trillion and will grow another $19 trillion by 2033. Foreign ownership makes up 29% of the U.S. debt held by the public. Of that amount, reports the Peter G. Peterson Foundation, “52 percent was held by private foreign investors while foreign governments held the remaining 48 percent.”

The Fourth Estate has been taken over by media conglomerates that prioritize profit over principle. Independent news agencies, which were supposed to act as bulwarks against government propaganda, have been subsumed by a global corporate takeover of newspapers, television and radio. Consequently, a handful of corporations now control most of the media industry and, thus, the information dished out to the public. Likewise, with Facebook and Google having appointed themselves the arbiters of disinformation, we now find ourselves grappling with new levels of corporate censorship by entities with a history of colluding with the government to keep the citizenry mindless, muzzled and in the dark.

Most critically of all, however, the U.S. government, long ago sold to the highest bidders, has become little more than a shell company, a front for corporate interests. Nowhere is this state of affairs more evident than in the manufactured spectacle that is the presidential election. As for members of Congress, long before they’re elected, they are trained to dance to the tune of their wealthy benefactors, so much so that they spend two-thirds of their time in office raising money. As Reuters reports, “It also means that lawmakers often spend more time listening to the concerns of the wealthy than anyone else.”

In the oligarchy that is the American police state, it clearly doesn’t matter who wins the White House, because they all work for the same boss: a Corporate State that has gone global.

So much for living the American dream.

“We the people” have become the new, permanent underclass in America.

We’re being forced to shell out money for endless wars that are bleeding us dry; money for surveillance systems to track our movements; money to further militarize our already militarized police; money to allow the government to raid our homes and bank accounts; money to fund schools where our kids learn nothing about freedom and everything about how to comply; and on and on.

This is no way of life.

It’s tempting to say that there’s little we can do about it, except that’s not quite accurate.

There are a few things we can do (demand transparency, reject cronyism and graft, insist on fair pricing and honest accounting methods, call a halt to incentive-driven government programs that prioritize profits over people), but it will require that “we the people” stop playing politics and stand united against the politicians and corporate interests who have turned our government and economy into a pay-to-play exercise in fascism.

Unfortunately, we’ve become so invested in identity politics that label us based on our political leanings that we’ve lost sight of the one label that unites us: we’re all Americans.

The powers-that-be want us to adopt an “us versus them” mindset that keeps us powerless and divided. Yet as I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the only “us versus them” that matters is “we the people” against the Deep State.

The post Who Owns America? first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by John W. Whitehead and Nisha Whitehead.

We’re in debt to the Earth. How can we repay it?

Syris Valentine — Mon, 12 Aug 2024 08:45:00 +0000

On Christmas Day, 1971, for the first time in Homo sapiens’ roughly 300,000 years of hobbling about, humanity’s demands on the Earth exceeded what the planet can provide in a year. That practice has continued, and worsened, for the last half century.

Since the early 2000s, the nonprofit Global Footprint Network has calculated what it calls “Earth Overshoot Day,” the date on which we outstrip our resources each year. At present, human society consumes resources at a rate that would take 1.75 Earths to sustain. So, from August 1 of this year onward, everything we consume adds to our collective debt. In the language of ecological economists: We’re in overshoot.

The date itself is a handy construct, meant to illuminate a larger problem — in reality, the Earth does not reset each year. In the science of planetary accounting, overshoot is more like charging groceries to a credit card after you already blew your monthly budget shopping online. It can’t go on forever. Eventually, those bills come due.

The debt we accrue manifests in three main ways: Waste accumulates, resources deplete, and ecosystems degrade. As these impacts grow, Earth’s ability to regenerate diminishes — what that means in the long run remains unclear, but seems likely that the consequences will grow more severe as our debts mount. “We still do live off the land,” said David Lin, the chief science officer at the Global Footprint Network. Modern life makes that easy to forget — removed, as most are, from the touch and scent of soil and crop. The concept of overshoot was, in a sense, developed to remind us of the demands we place on the land.

Two researchers at the University of British Columbia, Mathis Wackernagel and William Rees, created a metric called the ecological footprint in the early 1990s, and along with it the idea of overshoot. They intended for this to be a “comprehensive sustainability metric,” encompassing not just a single dimension like greenhouse gas emissions, but the full scope of human impacts on the planet. Wackernagel went on to co-found the Global Footprint Network to track and, hopefully, end the overshoot his metric had revealed.

Today, York University’s Ecological Footprint Initiative has taken over responsibility for aggregating and maintaining all the data required to track, estimate, and project, for every nation around the world, the metrics that can be used to understand and correct overshoot. These metrics include ecological footprint — which describes the cumulative impact, including carbon emissions, of humanity’s urban and industrial activities like logging, fishing, farming, building, and mining — and biocapacity, which reflects the abilities of forests, fish stocks, soils, landscapes, and mountainsides to recover from human demands. Comparing these two metrics determines if we’re in overshoot territory, and if we are, how bad it is.

Crunching these numbers is no simple task. “We stitched together about 47 million rows of input data to generate the system” said Eric Miller, the environmental economist who directs the Ecological Footprint Initiative, with results going as far back as 1961.

From those tables, the Global Footprint Network and Miller’s team show not just how much we have blown past our planetary budget this year, but also a running total of our debt. And while the date of Overshoot Day has remained comparably stable for the past decade, the debts keep piling up. At the moment, the Global Footprint Network estimates that our debt totals 20.5 Earth-years. So, were all human activity to cease at this moment, the planet would not finish repairing itself from all the harms we’ve done to it until 2045.

" data-credit="Global Footprint Network"/>

A graph showing how Earth Overshoot Day has shifted since 1971.
Global Footprint Network

Miller noted that discussing things in terms of ecological footprint and overshoot both helps quantify the problem of overconsumption and creates the space to discuss comprehensive solutions to the overlapping ecological crises confronting the planet. It “implies not only reducing absolute emissions,” Miller said, “but also changing the way we use lands and waters.” For instance, it can help us understand how certain climate solutions, like biofuels for aviation, might solve one problem — namely, carbon emissions — while introducing others, like harvesting crops to feed planes instead of people.

From the viewpoint of the ecological footprint, climate change is not the core crisis. Instead, it is merely a symptom of overshoot, in which the waste gases of our overactive industries stockpile in the atmosphere and warm the planet. Biodiversity loss is another symptom of overshoot. As are soil degradation, deforestation, water scarcity, and more.

Yet, though the United Nations climate secretariat has published blog posts about Earth overshoot, the subject has yet to appear in international agreements or national policies. The various commitments that have been drafted and adopted at international, national, state, local, and even corporate levels have placed the emphasis on planet-warming pollution. “So, understandably,” said Miller, “the world is a bit more gripped with the question of greenhouse gas emissions.”

But only attempting to fight the symptoms of overshoot didn’t make sense to Phoebe Barnard, a global change scientist affiliated with the University of Washington. “We all need to be talking about the root causes and becoming aware of them so we can work on them,” she said. She co-founded a nonprofit called the Stable Planet Alliance with two colleagues to focus on the issue of ecological overshoot, as well as the behaviors and practices that have created the problem.

“We think that the Earth is put here as a food pantry for humanity, or that resources are there for our private profit,” Barnard said, “rather than as gifts that the Earth has given us.”

Barnard and her colleagues argue that tackling overshoot requires addressing harmful behaviors and beliefs, like the pursuit of perpetual growth and profit.

Sacred Economics: Shylock as Anti-Christ

Eric Walberg — Wed, 07 Aug 2024 14:30:42 +0000

Money vs the gift
Sacred Economics 100
Deconstructing the Story of Self/ the World
Life without prisons

Marx’s ‘death knell’ of capitalism, revolution, was the first answer to capitalism’s ills, after which the state would wither away, and we would live in a utopian bliss. The 20th century put paid to that vision, as revolution, as most revolutions do, disappointed, mostly unravelled, and predatory capitalism took hold again. Are we stuck with a system that’s quickly leading us to the cliff edge with seemingly no turning back?

Happily, no, and happily no need for messy revolution, though there is already growing hardship from (and growing resistance to) our economic system’s gross injustices, insanities. The transition to a new economic logic is already underway, and we can all help nurse it into reality. In Sacred Economics: Money, Gift and Society in the Age of Transition (2021), Charles Eisenstein draws on anthropology and the prophetic writings of 20th century social critics to provide the way, hidden in plain sight. To return to the gift economy, to get rid of usury, debt money. For 90% of human history, that was how we lived, not in a mindset of artificial scarcity, where even the wealthiest pinch pennies, but one of abundance, where selfishness was despised, and ‘trade’ was a way of fostering peace, not ‘war by other means’.

Basically an ecological communism, where moneyS are based on real wealth and prices include all the environmental costs of your product. We have to make most of nature (land, water, air) a ‘commons’ again, as in feudal times when most land was commons, under the authority of lords but not an alienable commodity to be bought or sold.

Eisenstein picks up where Marx left off, or rather he takes out the rhetorical flourishes and puts the economy back into ecology, and in the process, establishes the underlying laws of the human-nature nexus. The Law of Return the most fundamental: Everything you consume is consumed somewhere else in nature. The uroboros. Pioneer species pave the way for keystone species, which provide microniches for other species and circle back to benefit pioneer species as they move into new territories. Actually a tautology but one that we’ve ignored until violating its logic has brought us to the brink of catastrophe.

Uroboros vs Sorcerer’s apprenticeMoney vs the gift

First, chuck out your guns-and-butter Eco 101 text. We must look at not-so-innocent words like money, interest, profit, investment, goods&services, and put them to work for us and the world, not against us and the world.

The real human economy for at least 100,000 years was a gift economy, with daily life needs, division of labor, ensured through tradition rather than a punch-clock and cash. Money was originally used ceremonially, in a complex system of exchange to ensure trust between tribes, and as tribute. Social currencies were for consolidating relations (marriages, funerals, blood money, intertribal peace).

With the rise of agriculture, money transformed, secularized, as a form of credit (tallies of loans denominated in common unit of account, periodically settled by deliver of commodities). This conflation quickly led to debt peonage i.e., slavery, and the demotion of women. Behind every ledger is a man with a sword/gun. The world was no longer sacred, and man part of it, worshipping it. Our spiritual connection with nature was sundered, our spirit thin and now identified with gold-as-fetish, not with God. A king-god must be carried aloft, high above lowly earth. Man became divorced from nature, culminating in Descartes’ lonely ‘I’. We were already transforming nature 4,000 years ago, creating empires, replacing ‘sinless’ God with ‘sinless’ gold, a lethal case of misplaced concreteness.

This ushered in the Age of Separation – spirit-matter, mind-body, human-nature. This Story of Self/ World, the Ascent of Humanity,¹ as Eisenstein called his earlier book dealing with this separation. It starts with the farming virtues of hard work, thrift, accumulation, but also the darker master-slave relation where slaves were often debtors who would never be able to pay. That isn’t in the Storybooks. Instead we have the story of isolated individuals rationally maximizing ‘utility’ (pleasure, which is still unmeasurable).

This Story as depicted in economics textbooks makes a bizarre kind of sense in a scientistic, timeless Newtonian world of atoms, but it has nothing to do with how we live our lives. What is it but a denial of spirituality, embodied mind, humanity itself? So the ‘ascent’ is a delusional one from the start, actually the opposite, as we see all around us today. If this is the crowning achievement of science, we would be healthier, happier in some (almost any) precapitalist society, absent money, certainly absent money as a hoarded store-of-value, and interest, a pointless and dangerous attempt to annihilate time-space. Of course, this is impossible. We live in space-time. You can’t go back in time, and the ‘space’ is already taken. We are long overdue for a Story that reflects us-in-the-world. Heidegger calls that dasein.

Reimagining our economy means first of all gaining control over our simple, elegant, now global money system which lets you do everything, everywhere, all at once. i.e., the antithesis of ceremonial money, which was attached to time, place, giver and receiver, as part of reinforcing that traditional way of life, with money as a sacred binding force. Now, instead of a simple, functional broom, we have the sorcerer’s apprentice. A hammer to kill a fly. Unnecessary power over everything, everywhere, all at once, which imprisons us in unreal fantasies and requires prisons for trigger-happy types.

Key reforms immediately suggest themselves:

Return us to localized, ritualized methods of exchange. Reinvent the fly swatter to deal with fly problems. That looks ridiculous to our individualistic mindset, captivated by the supercharged power of money, gold-as-god. Most precapitalist societies worshipped the sun as god, or all of nature. What we can call ‘the collective West’, formerly the imperialist power, latched on to gold as the ideal money by the 15th century, when Europeans travelled the Earth, invading and stealing wealth, especially gold, wherever it was found. That obsession marks the great divide in human history, total war of conquest of the planet, fittingly symbolized by gold. Inert, eternal, beautiful, heavy (i.e., important).

Following on the Law of Return, internalize all costs of whatever you produce/ consume. Right down to working conditions in the DVD factory in Bangladesh if that’s where your DVD player is made. Immediately it is clear that the majority of what we now produce and consume won’t make sense anymore. You will produce and consume more and more locally as the Age of Transition gets under way.

Eisenstein (and Keynes) argue that the short reign of gold as THE currency (1870–1932 and 1944–1971) was perhaps a necessary stage in our maturing as a species, but that it has outlived its purpose and, as we have witnessed over the past century, has already been replaced, though it is still a totem, a fetish that we secretly worship, many convinced that a return to the gold standard would solve all our problems. The fetishism is now secularized and represents the vast fortunes of Wall Street as if in a separate, disembodied realm. We need to take money off its pedestal, to invent new forms of money that will encourage good hoarding (of the commons) not the bad version (destruction of the commons).

The conquerors laughed at the cowrie shells that Polynesians carried thousands of miles by canoe to ‘trade’, seemingly senselessly, with other tribes. Or the wampum beads of Turtle Island natives. Even the most warlike tribes lived more or less peacefully, with their interactions centered on this ritual giving, before ‘we’ arrived with guns and declared total war of conquest on the world, inspired by gold.

It proved easy to unravel the complex, ritualistic societies outside Europe, once the Europeans launched their world war in search of gold for their very special and lethal money. ‘We’ ruined the complex web of world culture (just like we destroyed the anti-capitalist Soviet Union), and are quickly ruining what’s left of nature and now humanity itself, with total all-out war (not our low-grade ‘cold wars’) threatening like a Damocles sword over all our heads. And it is our very bloody form of money, or rather its pretend substitute, electronic money) that now governs a godless, global reality on the brink. Goethe’s (and Disney’s) sorcerer’s apprentice.

But our neurotic fetish is also responsible (everything is connected and money has been our hammer for everything) for the explosion of knowledge in the past five centuries. As we clear-cut the precious legacy of the our social evolution, the dazzling mini-civilizations everywhere on Earth, our scribes, anthropologists (or better, morticians) document(ed) the fast-dying remains of precapitalist civilizations, their (to us) bizarre customs, revealing discoveries about precapitalist societies every bit as marvelous as the potato, rubber trees and other gifts. ‘We’ quickly adopted the potatoes etc as they were profitable, ‘produced’ more gold, adapted to our industrial ‘civilization’, and wiped out the giver, the keeper of that miracle food.

As for the cultural wealth of those other civilizations, who cares? If they don’t make more gold, they are the enemy to be conquered or eliminated. Even the great thinkers of the 19th century, Hegel, Darwin, Marx assumed that these ‘primitive’ societies would be wiped out. But thanks to our morticians, we have salvaged some of what we realize now are precious gifts from the past. Most important of these human cultural artifacts is the gift culture, the social glue that let humanity prosper for millennia with destroying their world, Earth.

We must return to the gift, our traditional way of relating to nature and each other, but at a higher level. Thatcher’s TINA. There is no alternative. Just as tribes and nations have a cyclical rise and fall and, transformed, rise again as a new civilization, so does mankind’s trajectory from hunter-gatherer to agriculture to industry to information age, also have a grand overarching cycle, returning to the natural order after our spectacular but lethal bursts of creative innovation, which took us so far from the natural order.

Sacred Economics 100

Law: Everything is sacred. In the first place, money. Money has magical qualities, the power to alter human behavior and coordinate human activity. The simplest way to inspire belief is to appeal to our instinct of self preservation, ‘me first’. So ‘greed’ is a kind of default attribute for money, a lowest-common-denominator money, supposedly appealing to our natural state. Like a person stuck at the level of a two-year-old, ‘ME!’ is then our belief system, which our money reflects, urging us to hoard, take by force.² And what better than using an inert metal that never decays? So gold.

But this was much later. Hunter-gatherers actually grew up without gold, not stuck at the ‘terrible twos’, never ‘greedy’. Their money was constantly exchanged as part of their foreign relations. They couldn’t hoard anything and didn’t need to. Any accumulation was seasonal. They lived in abundance and shared everything, treated everything as a gift, promoting generosity and gratitude, not greed and war. So they had no need of this base money, our money.

We have learned that early humans did not see themselves as apart, above nature. They were part of a complex world of man-nature, matter-spirit, where everything is sacred. Everything. including our consciousness is a gift. For Muslims this is our God-given nature, fitra. We dismiss this worldview of the world as a huge gift as a charming metaphor, but the gifters were serious.

For atheists this is a problem. Who to thank? For me, my existence alone is enough proof of a higher order reality. If I’m right, then I should be thanking God every second of the day and night. Sufis strive for that mindset. For Muslims, praying 5 times a day is a religious duty. And the implication is you must treat every gift with respect. Use it and leave nature as rich and beautiful as it was before. So the Alberta tarsands, a huge toxic wound on the beautiful gift of the land and resources, is sacrilege. The guilty parties are traitors to our heritage and deserve the highest punishment. Instead, we laud them and give them billions of dollars to poison more of our gifts. ARGH.

Some things are more sacred than others (thunderstorms, waterfalls, rainbows, orchids), that were there to remind us of the sacredness of all things. With the rise of agriculture and greed money, we became progressively more divorced from nature, culminating in our modern economy, where gold is valued above all else, though, apart from sitting in vaults, hoarded for its magically quality, it is useful only as ornament. Ditto mankind as a kind of secular embodiment of gold, the supreme living creature as ‘golden boy’, is valued above all else to the point of destroying all else.

The rot really set in with Descartes’ disembodied soul, divorced from the body, observing but not participating in the world, which is run by a robotic Newtonian watchmaker god. As if Descartes was intuiting what the best Story of the Self was for our Story of the World, modern capitalism, governed by the abstract, now secular spirit, money. Your soul, mind is outside of science and not that interesting in a materialist, secular world anyway.

Shakespeare, writing at the birth of the new secular, capitalist order, made the usurer Shylock the archetype for the new man of finance: cruel, ruthless, paranoid, greedy. Shakespeare’s most compelling villain. The Merchant of Venice is the only play focusing on the economics of society, on an abstract idea, usury. Shylock loses everything including his daughter, who steals her inheritance and converts to Christianity. The play was problematic from the start, Jessica seen as a schemer betraying her father. Philosemitism runs deep in Britain, a product of the Protestant Reformation and the condoning of usury as good for business.

Shakespeare wanted us to detest the usurer, but already usury was an integral part of the now accelerating commercial and industrial revolutions. His audiences had usurers among them, and the immortal words of Shylock and Portia calling for tolerance and mercy have been emphasized, without Shakespeare’s anti-capitalist message. It took Marx and a century of anti-capitalist revolution for Jessica’s rejection of Shylock’s clear villainy to be appreciated for what it is, Shakespeare’s genius at penetrating to the heart of the new order and warning us. The answer is there in the rejection of usury, the demonetization of hoarded wealth, i.e., Jessica’s jewels revert to baubles, not capital, Christianity (still outlawing usury in the 17th century) the already ineffectual antidote to the usury of the Jew.

Paradox: Even as we realize the evil of usury/ interest, we outlaw criticism of Jewry for its adoption of usury as the basis of Jewish world power, such is the power of money. It force-feeds us illusions and forces us to spout lies to maintain the system. For all that, The Merchant of Venice is Shakespeare’s most popular play in Israel. (Only Jews in their Jewish state are free to be ‘anti-semitic’.)

Marx argued that money has become a world power, and, as the practical Jewish spirit, has become the practical spirit of the Christian nations, which became the spirit of the capitalist age. A Jew himself, he identified the Jewish practice of usury as the source of the evils of the day, and assumed Jews would disappear as a persecuted race once usury was abolished. He wrote before the secrets of past civilizations had been documented and jumped to ‘revolution’ and a very abstract communism as the one-size-fits-all answer. Another hammer to kill a fly.

We have built our lives as autonomous individuals worshipping this secular, material god, rather than the traditional spiritual god. We see the world crumbling before our eyes, we know the culprit, but, like a druggie, we just keep looking for our next fix, our disembodied soul no help at all.

So first, rewrite our economic textbooks, demystifying money. Money’s ‘natural’ purpose is to connect human gifts to human needs. Now money is based on artificial scarcity and rationality. Nothing about gifts, abundance. Our thinking too must change, though the change is just a reversion to our naturally/ socially evolved generosity and gratitude, adult emotions that we have suppressed as we live out our ‘terrible twos’, still dressed in diapers, unable to metabolize what we take from nature in a civilized way.

Deconstructing the Story of Self/ the World

Our Story of Self as autonomous individuals governed by instinct (mistakenly called greed) breaks down with observed reality. We are all found under the proverbial cabbage leaf. Our lives are given to us. A gift. Let that sink in. We are walking miracles! So our default is gratitude. Even in our Age of Separation, we still honor our parents for the gift of life, which we can never repay in money. That is the truth of our existence.

I still need to pause and reread that. We are so totally programmed to blot out that essential truth. Our new Story of the Self and consequently our Story of the World must start there. Life as a gift, ‘the gift of life’, gratitude to parents, responsibility to pass on the gift of life and the gifts of nature to the next generation (natives think in terms of seven generations). No wonder ancient religious thinkers said God made the world, and gave it to us to enjoy, i.e., gave us reflective consciousness. So the basic ‘units of account’ in economics should be humility and gratitude not selfishness and egotism.

The Big Bang is like God’s humongous gift – everything for nothing. As if the universe was created for us to see and reflect on (and be thankful for). Does any of this sound like today’s Eco 101? It starts with separate selves competing for scarce resources to maximize self-interest. Our bankers create money and divvy it out to profit-maximizers, so that we can maximize our utility in this world of efficiency.

This turns out to be as depressing and destructive as it sounds. It is a neurosis-inducing Story of the People, robotic, defying our natural emotions. Ditto with the Story of the World, on the surface rational and profitable, but with scarcity and fear lurking at the unconscious level. Barter and comparative advantage in a Hobbesian brutish and nasty world. New stories, please!

Rule of the gift: What comes to you is not kept for oneself unless one cannot do without it.

Rule of the gift: Everything is related, so economic relations are mutual, we always owe someone/ nature for our taking. Toaripi, Arabic, Chinese, German, Japanese have only one word for borrowing/ lending. The Arabic din means religion and debt. The Lord’s prayer used to be ‘forgive us our debts, as we forgive other’ until capitalism got a hold of it and changed that to ‘trespasses’.

Modern money transaction are closed, no obligation, at most a ‘money-back’ guarantee, but the buck stops there. The gift is open-ended, a relationship between participants. With a gift, you give some of yourself. Now you are just sell a ‘good’, which could be bad, and which has nothing to do with you.

Even today we go all soft in ceremonies of giving presents, without the hard edge of money involved. The gift still embodies something special that money kills – the sense of uniqueness and relatedness (the self expanding to whole community) that we all know we are, not the diminished robotic self that buys and sells as the ‘greatest good’.

Law: In the money economy, more for me is less for you. Zero-sum game. In the gift economy: more for me is also more you. Positive-sum game. I.e., those who have give to those who need. Gifts cement the mystical reality of participation in something greater than oneself. Axioms of rational self-interest do not apply, as the self has expanded to include some of the other.

There is no need to distinguish between work and play, business and personal relationships. Think hunter-gatherer: you do what you have to each day which takes a few hours, all the time social networking, telling Stories. Work and play are one. Economics was linked to cosmology, religion, psyche. You, John, need x from me. So you give me wampum, which means: ‘John met the needs of others in the past and earned gratitude.’ So I can give John’s wampum later when I am gifted by someone. The Story of the gift. Now, instead of giving me wampum, I get money, which no longer satisfies the need-gratitude problem, which has no story behind it. There’s no one to thank, not even God. Today, especially not God.

When the division of labor exceeds the tribal or village level, there is the need to extend the range of our gifts. Yes, trade, progress. Comparative advantage. Eco 101. By facilitating trade, we reward efficiency in production. Money facilitates trade and should enrich life.

So what happened that turned trade-as-nice-novelty into a weapon of mass destruction, destroying entire nations through boycotts, enriching others obscenely? Now money is the source of anxiety, hardship, polarization of wealth. The US boycotts, sanctions a third of the world for daring to disobey orders, killing as many as actual warfare and bombing.

Paradox. Dollar bills still show deified presidents, ‘out of many one’, ‘in God we trust’. Not. We need a true Story of wholeness and harmony, return to the hunter-gatherer, our most successfully evolved social organism, at a higher level.

Our ‘gifts’, given by God have some of Him in them. Prometheus’s fire, the Apollonian gift of music, agriculture, all ‘made in His image’. We have the desire to develop those gifts and give from them (from Him) to the world. Nothing beats the joy of giving.³ You are playing God in the best sense. Rational self-interest does not apply in our interactions with others. Just our innate generosity. You can’t live a fulfilled life without developing those gifts, sharing them with others. But our gifts are mortgaged to the demands of money, survival. We fret about the ‘cost of living’, we are ruled by the specter of scarcity.

Where did this ‘scarcity’ in a world of plenty come from? It invaded our epistemology of i/ biology with ‘selfish genes’, ii/ socio-biology with competing selves. It is more a projection of our own capitalist culture of artificial scarcity than an understanding of nature. Recent advances in biology shows that nature gives primacy to cooperation, symbiosis, merging of organisms into larger wholes, with competition playing a secondary role. And there is no stasis in nature. Everything is always in motion, evolving, living/ dying. The world is alive.

Nature is both complex and radically simple. Human nature is the same. In nature headlong growth is sign of immature ecosystems, followed by renewed interdependency, symbiosis, cooperation, always returning, recycling of resources. Ditto human societies. We have lived through a few centuries of wild, uncontrolled exploitation of nature and this is coming to an end even as I write. Money is already frayed and will continue to unravel as our lives take on more and more the properties of gift, as we return to our true nature, our fitra. The economy will shrink, our lives will grow. What a rousing, cliff-hanger Story of Transition this will make.

Law: In a dynamic system, there is no equilibrium but a state of controlled disequilibrium, infinitely complex.

Life without prisons

Our Stories’ economics axioms: scarcity + rational maximization of self-interest. Result: Wealth makes you greedy. We need prisons to prevent greedy people from being too greedy.

Money’s basic function is to facilitate exchange, connect human gifts with needs, from each according to his ability to each according to her needs. That’s right. Communism. But also any religion worth its salt. And ‘we’ turned money into a corrosive agent of scarcity. Starvation a constant for much of the world, though there’s more than enough for everyone, and most people want to help, but can’t because there’s no money in it.

Indigenous Turtle Islanders from the start shook their heads at their dangerous visitors. They had no problem of greedy people (though the Europeans saw their disdain for things as sacrilegious), no need for prisons. None voluntarily joined the Europeans’ cruel, arbitrary society of violence and slavery. Many whites ‘went native’, enjoying the freedom and beauty of moneyless society and had to be dragged back or killed. No room for traitors.

Basically, capitalist society was/is a system of warfare, a zero-sum game where the natives lived life as a positive-sum game. Captured debtors and thieves like POWs, requiring prisons. Natives understood that if you have a good community, you don’t need prisons, or (today) a complicated maze of private daycare at $10,000+ a year (nice prisons to control your children).

Natives were so busy enjoying life, they don’t have time to get bored. No one got ‘bored’ before the word was invented in 1760 at the dawn of assembly lines, mass production urban ghettoes devoid of community, no contact at all with nature.

‘Bedouins can sit for hours in the desert, feeling the ripples of time, without being bored.’⁴ Boredom, the yearning for stimulation, distraction, for something (rather than a relation) to pass the time. Life is not about things, but relations. But we are isolated automatons in our Story of Self. We don’t need relations, but as a result we are stuck with things to soothe the existential pain of separation, lack of relations. Camus.

Now we get bored in an instant. We demand to be entertained. Reality is boring, alien. Media is more real.

As for economic growth, the mantra promising greater happiness, really just means the economy, the commons, life in general, is more and more monetized, colonized, producing lots of things to soothe us. But when everything is monetized, a scarcity of money makes everything scarce, even when drown in a sea of ‘goods’. Nothing has changed in the real world, but now you starve. Magic.

‘Evergreen’ container ship blocked Suez Canal for a week in 2021

From Perpetual sacrifice

by William Wordsworth

Men, maidens, youths,
mother and little children, boys and girls,
enter, and each the wonted task resumes
within this temple, where is offered up
to Gain, the master idol of the realm,
perpetual sacrifice.

Wow. Buddhism sees spiritual value in suffering, but that’s in pursuit of enlightenment. To commit someone to ‘perpetual sacrifice’, wage slavery, in the service of profit is about as low as you can go. We have reached the physical limits of our Stories, where abundance is cloaked in artificial scarcity, where the engine of growth is greed. How did our natural impulse of giving, generosity, turn into its opposite? Greed doesn’t make sense, even in the context of real scarcity. We naturally share especially in times of danger. We need scarcity to penetrate into our minds, emotions, so we will discard, repress our higher impulses, our social instincts, honed over millennia, in favor of the more primitive self-preservation instinct we are taught to call ‘greed’. Greed must be built into our Story of Self, and taught in schools and universities, so that there are no traitors to the cause.

Contrary to Eco 101 wishful thinking, there is no biological gene to maximize reproduction of a self-interested, economically rational actor. Greed is not written into our biology, but is a symptom of the perception of scarcity. In a psychology experiment a group of poor vs rich were given $1000 to share. Guess who is more generous? That’s right, the poor. You knew that ‘instinctively’, 2 times more generous! When you’re rich, anxiety is always there, scarcity just a step away. It’s not greed makes you wealthy, but wealth makes you greedy. I.e., they are so ‘invested’ in their wealth, they can’t let go. Pity poor Midas.

ENDNOTES:

The post Sacred Economics: Shylock as Anti-Christ first appeared on Dissident Voice.

1 Charles Eisenstein, The Ascent of Humanity: Civilization and the Human Sense of Self , p21, 2007.

2 But children quickly move beyond that, naturally sharing when they’ve had enough.

3 Readers joke I intentionally get lost on my biking adventures to feast on the selfless generosity of strangers.

4 Ziauddin Sardar, Cyberspace as the darker side of the West, 2000.

This content originally appeared on Dissident Voice and was authored by Eric Walberg.

Black Farmers Celebrate "Historic" $2 Billion Payout for USDA Discrimination, Still Seek Debt Relief

Democracy Now! — Tue, 06 Aug 2024 15:08:25 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

“Historic”: Black Farmers Celebrate $2 Billion Payout for USDA Discrimination, Still Seek Debt Relief

Democracy Now! — Tue, 06 Aug 2024 12:47:13 +0000

We look at the historic $2 billion payout by the U.S. Department of Agriculture to farmers who experienced systemic discrimination when applying to the USDA’s farm loan programs. The U.S. Commission on Civil Rights has documented how USDA administrators routinely denied loans to Black farmers and other farmers of color for many decades, contributing to a massive decline in the amount of Black-owned farms in the United States. “This is a very, very historic payout for Black farmers,” says John Boyd, a fourth-generation Black farmer and founder of the National Black Farmers Association, who notes the application to receive the payout was 40 pages long. He says the group is also still fighting for a related $5 billion debt relief program. “I want people to know this is a big win, and don’t never, ever give up. The arc of justice bends slow; it bends slower for Black people, but I never gave up.”

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Unless You Have Something to “Sell” …

William Manson — Sun, 21 Jul 2024 20:26:47 +0000

Let us first dispense with a misleading (and superannuated) word: “society.” You and I, mere human beings scrambling to survive, inhabit a marketplace. From the moment we step outside our door, figuratively speaking, contractual and civil laws circumscribe each and every interaction we have with our fellow citizens/consumers. (I’m mindful that, with the absolute governance of private property, this “door” is likely to belong to the mortgage bank rather than us.)

Having left this sanctuary, what should we do? Aside from public areas set aside for recreation, we are to–buy or to sell. But what can we sell? Our mere physical labor, aside from low-wage grunt work in warehouses and such, has little or no market–value. Granted, one can become an apprentice to a carpenter or plumber or roofer, and, with minimal formal training, perhaps eventually make an adequate income. Or perhaps, by walking dogs, mowing lawns, babysitting, working a cash-register–all low-wage jobs which rarely generate a living wage. Meanwhile, the clock is ticking: mortgage payments, taxes and insurance premiums, stomachs unrelenting in their daily demands, children who will need that roof and food and “education.”

We need marketable skills; i.e., technical expertise which, given the ever-accelerating changes in computer and related technologies, will require up-to-date training. Young people, aware of this elemental fact, embark on degree programs (borrowing, say, $100K with accrued interest to pay for it), and may end up with business training in finance, marketing, information technology, accounting, and so forth. They have bought such expensive training in the expectation that, finally, they will be able to sell their skill-set (if not themselves) to some anonymous corporation.

Such corporations, tens of thousands of them, are the true inhabitants of the milieux: legal entities which shield the major share-holders from civil (and often criminal) liability for harm, not only to the hapless human beings who sell them their skilled labor, but even more to those millions who buy their thousands of products. Such products, only a small percentage of which are necessary and/or beneficial to “consumers,” are relentlessly marketed through algorithmic calculations 24 hours a day–so that the human person, already habituated to selling her labor (rather than living freely), has also become habituated to the constant stream of subtle “prompts” to buy, buy, buy (rather than enjoying free sensibility and creative thought).

Each and every day, the beleaguered individual, no matter how consciously in denial of her status as both pre-obsolescent technician and disposable commodity, marches on. Her primary motivation? Vague hopes about a financially secure future–to continue this treadmill of children’s college costs, retirement, medical bills, and so forth. In fact, after 20 or more years of such steadfast effort, she may attain the ultimate: ownership of her dwelling, on a 40’ x 60’ plot of land (in what is still anachronistically called a “neighborhood”). Of course, such “neighbors,” informing the newcomer for her own good, insist upon certain standards of appearance and upkeep of this box-with-a-roof, in order to ensure increasing property-values of their adjacent properties. Finally, In “retirement,” the old person can withdraw into her castle, no longer forced to work alongside persons she detests or face the daily stress of the traffic-choked commute.

Each corporation, designed to increase share-value for its primary owners, externalizes as many costs as possible: exorbitant student loans for attainment of mandated skill-sets required for initial and continued “employability,” transport, office attire, and so on. To survive (especially with low-cost housing rapidly disappearing), the individual is drilled to be ambitious for upward “success” in this aptly named “rat race.”

One option remains: although each person may be compelled to accept outrageously one-sided, demoralizing conditions for employment (i.e., the purchase of her labor-skills), she is not forced to buy. What if one chooses to remain…a philosopher, composer, or radical intellectual? One will find very few “buyers” indeed for what one has to offer. Unfortunately, to paraphrase Oscar Wilde, today’s media-addled populace seems to know “the price of everything, and the value of nothing.”

And so, the creative outsider chooses to remain outside, or on the fringes, of this all-encompassing marketplace. If she offers real truth, beauty and wisdom, but finds exceedingly few “buyers,” she nonetheless attains the perspicacious insight that her inner freedom is, in fact, realized through non-participation in a commercialized, dehumanizing milieu which trains, conditions, and degrades the countless millions of persons who are pushed onto the “work/spend treadmill” from which there is no escape-switch.

The post Unless You Have Something to “Sell” … first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by William Manson.

Foreigners murdered in Bangkok hotel due to debt dispute, Thai police say

By Pimukk Rakkanam for RFA — Wed, 17 Jul 2024 06:10:00 +0000

The foreigners whose bodies were found by staff at Bangkok’s luxury Grand Hyatt Erawan hotel on Tuesday evening had been murdered, Thai police said at a news briefing Wednesday.

Traces of poison were found in cups in the room where the three men and three women, two of whom were Vietnamese Americans and four Vietnamese nationals, were found.

“We found cyanide in the teacups. One of them was definitely the culprit,” Police Maj. Gen. Noppasin Punsawat, Bangkok deputy police chief said, adding that CCTV cameras showed no one else had entered the room.

Noppasin said he believed the murders were sparked by a business dispute between U.S. citizens Sherine Chong, 56, and Dang Hung Van, 55, and the other four. He said Chong was given an equivalent of 10 million baht (US$278,000) to invest in the construction of a hospital in Japan but was suspected of cheating her partners after the project made no progress.

“This case is about personal conflict, no trans-border criminals were involved,” he said.

Police identified the four Vietnamese citizens as a couple: Pham Hong Thanh, 49, and Nguyen Thi Phuong, 46, who they believe had been cheated by Chong, along with Nguyen Thi Phuong Lan, 47, and Tran Dinh Phu, 37.

A seventh person, thought to have been part of the group, returned to Vietnam on July 10, police said.

Family grieves Burmese woman killed in Bangkok mall shooting

Thailand backs away from Chinese police patrol plan amid furor

Hotel security staff entered Suite 502 from the back door after the group failed to check out on Tuesday. The front door to the room had been locked from the inside. Police said the bodies had probably been there for around 24 hours, although they are still waiting for the results of an official autopsy.

The FBI and Vietnamese officials are working alongside Thai police to track the group’s movements and interview any witnesses, Noppasin said.

Thailand’s Prime Minister Srettha Thavisin visits the Grand Hyatt Erawan Hotel in Bangkok, where six people were found dead on July 16, 2024. (Chalinee Thirasupa/Reuters)

Vietnam’s ambassador to Thailand Pham Viet Hung met with Thai Prime Minister Srettha Thavisin on Tuesday to discuss the case, Vietnamese media reported.

The U.S. State Department said it was aware of the deaths of two of its citizens.

“We offer our sincere condolences to the families on their loss. We are closely monitoring the situation and stand ready to provide consular assistance to those families,” spokesman Matthew Miller said at a briefing in Washington.

After visiting the scene Tuesday night, Thai prime minister Srettha ordered a swift investigation to avoid any negative impact on tourism.

The 380-room Grand Hyatt Erawan is in the upscale Ratchaprasong district, an area popular with tourists. It is just down the street from the high-end Siam Paragon shopping mall where, last October, a 14-year old Thai boy shot dead two women from China and Myanmar and injured five other people.

Edited by Mike Firn and Taejun Kang.

This content originally appeared on Radio Free Asia and was authored by By Pimukk Rakkanam for RFA.

Kenya Protests: Police Abduct Activists as Pres. Ruto Rejects Tax Bill Linked to Foreign Debt Crisis

Democracy Now! — Thu, 27 Jun 2024 15:27:36 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Kenya Protests: Police Abduct Activists as Pres. Ruto Rejects Tax Bill Linked to Foreign Debt Crisis

Democracy Now! — Thu, 27 Jun 2024 12:11:33 +0000

Anti-government protests in Kenya are continuing after President William Ruto made a dramatic reversal Wednesday, announcing he would not sign the finance bill that sparked a nationwide uprising, and would instead send the bill back to Parliament. At least 23 people were killed and dozens more injured when police fired live rounds, rubber bullets and tear gas at protesters who stormed Kenya’s Parliament building. We speak to a writer and activist based in Nairobi who asked to remain anonymous out of fear for her safety. She says many in the youth-led movement have been “abducted” during the police crackdown on demonstrations, which are now calling for Parliament to be dissolved and new elections to be held. We also hear from Mamka Anyona, a Kenyan international finance and development expert, who breaks down the financial crisis that led to the mass unrest. The contested finance bill deploys a tax hike in an attempt to repay $80 billion in foreign loans, largely from the International Monetary Fund and the World Bank. But critics say mismanagement and corruption have led to high inflation and unemployment, and characterize both the bill and the loans themselves as undemocratic decisions reached without constituent approval. ”It has all ended up creating this tinderbox,” Anyona says.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Why Does the Government Borrow When It Can Print?

Ellen Brown — Thu, 20 Jun 2024 00:58:41 +0000

In the first seven months of Fiscal Year (FY) 2024, net interest (payments minus income) on the federal debt reached $514 billion, exceeding spending on both national defense ($498 billion) and Medicare ($465 billion). The interest tab also exceeded all the money spent on veterans, education, and transportation combined. Spending on interest is now the second largest line item in the federal budget after Social Security and the fastest growing part of the budget, on track to reach $870 billion by the end of 2024.

According to the Congressional Budget Office, the federal budget deficit was $857 billion in the first seven months of fiscal year 2024. In effect, the government is borrowing at interest to pay the interest on its debt, compounding the debt. For the lender, it’s called “the miracle of compound interest” – interest on interest compounds exponentially. But for the debtor, it’s a curse, compounding like a cancer to the point of devouring assets while still growing the debt. As Daniel Amerman, a chartered financial analyst, writes in an article titled “Could A Compound Interest Wildfire Threaten U.S. Solvency?”:

[T]he greatest debt-related threat to the solvency of the United States government and the value of the dollar could be the fact that the U.S. isn’t actually making any net principal or interest payments on its debt.

That is, the U.S. government is borrowing money to make the interest payments, even as it borrows to roll over the principal payments – even as it borrows still more to fund the general spending which is in excess of taxes collected.

This creates the risk of a potential compounding and acceleration of interest payments on that debt. …

In other words, the US government is effectively insolvent, absent some major changes. Which is exactly why we need to anticipate that there will be major changes.

The Committee for a Responsible Budget similarly concludes, “Without reforms to reduce the debt and interest, interest costs will keep rising, crowd out spending on other priorities, and burden future generations.” In fact, we are that future generation. The chickens have come home to roost. According to USDebtClock.org, the debt is now $34.8 trillion. Estimates are that we would need to tax everyone at a rate of 40%, without deductions, to balance the budgets of our federal and local governments, an obvious nonstarter. Reforms are necessary, but of what sort?

Why Does the Government Borrow Its Own Currency?

This question was asked of economist Martin Armstrong, who responded:

The theory was that if you borrowed rather than printed money, you were NOT increasing the existing money supply, and therefore, in theory, it would not be inflationary.

That would be true if the debt were paid back, but today the government does not repay the debt but just keeps rolling it over, paying off old bonds as they come due with new bonds – currently at higher interest rates. Armstrong concludes:

We borrow, which is worse than printing because we have to pay interest on constantly rolling the debt. This year, we will spend about $1 trillion on interest, the total national debt when Reagan took office in 1981 .…

Had we printed the money instead of borrowing, it would have been less inflationary and the capital would have created more jobs instead of investing in government debt which has only funded the Neocons’ wildest dreams [which he explained as “establishing military bases everywhere”]. [Emphasis added.]

A report issued by the Grace Commission during the Reagan Administration concluded that at that time, most federal income tax revenues went just to pay the interest on the government’s burgeoning debt. A cover letter addressed to President Reagan stated that a third of all income taxes were consumed by waste and inefficiency in the federal government. Another third of any taxes actually paid went to make up for the taxes not paid by tax evaders and the growing underground economy, a phenomenon that had blossomed in direct proportion to tax increases. The report concluded:

With two-thirds of everyone’s personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.

As Thomas Edison observed in 1921:

If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is that the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way.

It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people.

It is cheaper to print money outright than to borrow money at interest that is never repaid. The Greenbackers who marched on Washington in 1897 were right. We should be printing the money – not for speculative ventures (“unearned income”) but for productive endeavors. The Greenbackers sought a return to the system in which Lincoln’s government issued U.S. Notes or Greenbacks directly, in order to avoid a crippling debt to British bankers. They were marching for the economic producers — the farmers and factory workers, represented by the Scarecrow and Tin Man in The Wizard of Oz, which took its plot from that first-ever march on Washington.

Won’t just printing the money result in hyperinflation? Not necessarily. Price inflation results from too much money chasing too few goods. When the money is used to create new goods and services, prices remain stable. This was demonstrated by the Chinese when they increased the money supply by a factor of 1800% (18 times) in the 23 years between 1996 and 2020. The new money went toward infrastructure and other forms of productivity, increasing GDP at the same rate; and price inflation remained consistently low during that period.

But hindsight is 20/20. What can be done now about the ballooning federal debt and interest bill?

Possible Treasury Solutions

Hypothetically, the Treasury could buy back its debt. But under our current system, this would have to be done with more debt, at even higher interest rates. In fact, the Treasury is doing that now, but in modest proportions and for a different purpose. Its goal is to create a liquid market in long-term Treasuries, the sort of bonds that Silicon Valley Bank was forced to sell at a deep discount, generating insufficient funds to ward off the massive run on its deposits in March 2023. Nearly 200 banks were found to be in similar straits and equally vulnerable to runs. However, it would be counterproductive for the Treasury to buy back major portions of its debt with more debt at higher interest, which would just compound the debt and the interest burden.

Alternatively, it could issue 35 trillion-dollar coins.

The idea of minting large denomination coins to solve economic problems was evidently first suggested by a chairman of the Coinage Subcommittee of the U.S. House of Representatives in the early 1980s. He pointed out that the government could pay off its entire debt with some billion-dollar coins – effectively just “printing” or “coining” the money. The Constitution gives Congress the power to coin money and regulate its value, and no limit is put on the value of the coins it creates. Of course, today these would need to be trillion dollar coins.

In legislation initiated in 1982, however, Congress chose to impose limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.

In 2013, an attorney named Carlos Mucha, blogging under the pseudonym Beowulf, proposed issuing a platinum coin to capitalize on this loophole; and with the endless gridlock in Congress over the debt ceiling, it got picked up by serious economists as a way to checkmate the deficit hawks. Philip Diehl, former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender:

In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years … under power expressly granted to Congress in the Constitution (Article 1, Section 8).

Minting trillion dollar coins evokes images of million-mark notes filling wheelbarrows. But as economist Michael Hudson observes:

Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.

Prof. Randall Wray explained that the coin would not circulate but would be deposited in the government’s account at the Fed, so it could not inflate the circulating money supply. The budget would still need Congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full employment without creating price inflation (since supply and demand would rise together). After that, it would need to tax — not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.

If issuing 35 coins worth a trillion dollars each seems too radical, the Treasury could issue just one trillion-dollar coin annually, earmarked specifically to cover the interest. A similar hybrid approach worked for the Pennsylvania colonists when they formed their first government-owned bank in the early 18th century. Other colonies were issuing “Colonial scrip,” but it was easier to issue the scrip than to tax it back, and they typically issued too much, inflating the money supply and devaluing the currency. The Pennsylvania colonists formed a “land bank” and issued money as loans to the farmers at 5% interest. To cover the interest not created in the original loans, the government was able to issue paper scrip directly to fund its own budget. As a result, Pennsylvania became the most productive economy in the colonies.

What About Tapping Up the Federal Reserve?

The Fed is in a position to issue money interest-free, not as the bank-created deposits circulating as our M2 money supply, but as the reserves needed by banks to meet interbank transfers and withdrawals. When the Fed buys federal securities, it is mandated to return the interest to the Treasury after deducting its costs.

In 2011, Republican presidential candidate Ron Paul proposed dealing with the debt ceiling by simply voiding out the $1.7 trillion in federal securities then held by the Fed. As Stephen Gandel explained Paul’s solution in Time Magazine, the Treasury pays interest on the securities to the Fed, which returns 90% of these payments to the Treasury. Despite this shell game of payments, the $1.7 trillion in U.S. bonds owned by the Fed is still counted toward the debt ceiling.

Paul’s plan: “Get the Fed and the Treasury to rip up that debt. It’s fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed.”

Congressman Alan Grayson, a Democrat, also endorsed this proposal.

But since June 2022, the Fed has not been buying securities but has been selling those it already has, reducing its balance sheet in an effort to fight price inflation by shrinking the money supply through “quantitative tightening.” The central bank is considered “independent” of Congress, but arguably Congress could revise the Federal Reserve Act to require the Fed to buy federal securities.

A Financial Transaction Tax

Barring those alternatives, another possibility is a very small financial transaction tax. In a 2023 book titled A Tale of Two Economies: A New Financial Operating System for the American Economy, Wall Street veteran Scott Smith argues that we are taxing the wrong things – income and physical sales. In fact, we have two economies – the material economy in which goods and services are bought and sold, and the monetary economy involving the trading of financial assets (stocks, bonds, currencies, etc.) – basically “money making money” without producing new goods or services.

Drawing on data from the Bank for International Settlements and the Federal Reserve, Smith shows that the monetary economy is hundreds of times larger than the physical economy. The budget gap could be closed by imposing a tax of a mere 0.1% on financial transactions, while eliminating not just income taxes but every other tax we pay today. For a financial transactions tax (FTT) of 0.25%, we could fund benefits we cannot afford today that would stimulate growth in the real economy, including not just infrastructure and development but free college, a universal basic income, and free healthcare for all. Smith contends we could even pay off the national debt in 10 years or less with a 0.25% FTT.

Are these proposals too radical? Perhaps, but existential crises call for radical solutions.

• This article was first posted as an original to ScheerPost.com.

The post Why Does the Government Borrow When It Can Print? first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

Tunisia: Imprisonment for debt

Human Rights Watch — Mon, 10 Jun 2024 06:35:07 +0000

This content originally appeared on Human Rights Watch and was authored by Human Rights Watch.

Debt Relief Still Feels Out of Reach for Many Students

Candace Milner — Thu, 16 May 2024 05:55:58 +0000

Photograph by Nathaniel St. Clair

College is expensive — and for most Americans, higher education is still largely unaffordable.

The cost of college continues to rise at rates that salaries and income aren’t keeping up with. This is especially true for low-income and working-class students who must depend on alternative ways to fund their education like grants, scholarships, and — most notoriously — loans.

Students and their parents depend on loans to access college and the economic mobility that comes with it. According to an Urban Institute Study, 70 percent of students who get a bachelor’s degree incur student loan debt by graduation.

Students whose families already have less wealth, including students of color, are especially impacted. And Black women, who struggle to overcome wage gaps at every education level, are more burdened by student loan debt than any other demographic.

First-generation students have a harder time repaying student loans because they have more debt and fewer safety nets in place after college. Additionally, the parents in many low- and middle-income families take out loans to cover the education of their children, creating intergenerational student debt burdens.

During his campaign, President Biden promised to bring Americans relief through widespread student debt cancellation.

He recently announced a new plan aimed at making good on this promise by tackling runaway interest for borrowers who owe more than they originally borrowed, canceling loans for borrowers who’ve been in repayment for two or more decades, automating relief for existing forgiveness programs, and canceling loans for borrowers who were scammed by fraudulent institutions.

Most recently, the administration canceled $6 billion in student loan debt for borrowers who attended and were misled by a former for-profit college group, The Art Institutes.

But while Biden’s plans bring hope for borrowers, many young borrowers aren’t seeing enough relief.

More than half of student loan debt in the U.S. is held by people who belong to the Millennial and Gen. Z generations. Under Biden’s proposed rule, these younger borrowers — who haven’t yet been in repayment for 20 years and who don’t qualify for current Public Service Loan Forgiveness or Income-Driven Repayment Plans — can’t access debt relief.

Biden has signaled that his administration understands this and that he will release a plan to provide relief to borrowers experiencing hardship. This plan will target borrowers at high risk of defaulting on their student loans and families with expenses that make it harder to pay back loans, like medical debt or child care.

As young borrowers wait patiently for the hardship rule to be finalized and to learn exactly what will and will not be included in it, one thing remains clear: Needing student loans to pay for education is a hardship. Borrowers shouldn’t be forced to decide between paying back mountains of student loan debt and reaching other financial milestones like buying a home, saving for retirement, or growing their family.

As we applaud the important strides Biden is making to ensure Americans are no longer stifled by student loan debt, we must remember that the true goal is to cancel all student loans and to ensure younger borrowers get relief until we reach that ultimate goal.

The post Debt Relief Still Feels Out of Reach for Many Students appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Candace Milner.

Trumpanomics vs. Bidenomics: Will Inflation and Debt Get Worse? Ft. Bloomberg’s Stephanie Flanders

Laura Flanders & Friends — Fri, 10 May 2024 17:22:39 +0000

This content originally appeared on Laura Flanders & Friends and was authored by Laura Flanders & Friends.

Australian author leads silent protest over ‘blood debt’ owed to Papuans

APR editor — Sun, 21 Apr 2024 08:24:26 +0000

Asia Pacific Report

An Australian author and advocate, Jim Aubrey, today led a national symbolic one minute’s silence to mark the “blood debt” owed to Papuan allies during the Second World War indigenous resistance against the invading Japanese forces.

“A promise to most people is a promise,” Aubrey said in his open letter marking the debt protest — “unless that promise is made by the Australian government.”

After the successes of Australian and US troops against the Japanese in New Guinea, the Allies continued the advance through what was then Dutch New Guinea then on to the Philippines.

READ MORE: Other West Papua reports

The first landing was at Hollandia (now Jayapura) in April 1944, which involved the Australian navy and air force.

Aubrey said in his letter:

“The Australian government’s WWII remembrance oath to Papuan and Timorese allies by the RAAF in flyers dropped over East Timor and the island of New Guinea — ‘FRIENDS, WE WILL NEVER FORGET YOU!’ — is in reality one of history’s most heinous bastard acts in war
and diplomacy.

“Betrayal is the reality of this blood debt and includes consecutive Australian governments’ treachery and culpability as a criminal accomplice and accessory to six decades of the Indonesian government’s crimes against humanity.

“Barbarity that shames us! Genocide, ethnocide, infanticide, and relentless ethnic cleansing.

Aubrey, spokesperson for Genocide Rebellion and the Free West Papua International Coalition, said that he and supporters were commemorating the Second World War “Papuan sacrifice for us” — Australian and American servicemen and women — four days before ANZAC Day without inviting Prime Minister Anthony Albanese or any government minister [and] without inviting US President Biden.

“To have them with us on this special solemn occasion, while honouring the fact that many of us — children and grandchildren – would not be here if it were not for Papuan courage, loyalty, and sacrifice so steadfastly given to our forebears, would be dishonourable.

‘Heartless complicity’
“We condemn outright their heartless complicity and premeditated exploitation of Papuans in their time of peril. A blood debt not honoured by a single Australian government or US administration!

Author Jim Aubrey salutes the Morning Star flag of West Papuan independence earlier today . . . “A blood debt not honoured by a single Australian government or US administration.” Image: Genocide Rebellion

“Lest We Forget . . . six decades of providing the Republic of Indonesia with an environment of impunity for crimes against humanity — 500,000 victims in Western New Guinea, 250,000 in East Timor [now Timor-Leste after the 1999 liberation].

“Future historians will teach their undergraduates that Australian governments did forget! That Australian governments also contravened Commonwealth and State criminal codes by helping the Indonesian government prevent the legal decolonisation of Western New Guinea and achieve their subsequent unlawful annexation; and by concealing and destroying evidence of the 1998 Biak Island Massacre.

“It is not only a matter of honour and truth, it’s personal. I have only just discovered that my father and my uncle were Australian servicemen in the Pacific Theatre campaigns across New Guinea.

“Honourable Australians and Americans, however, only need to know our duty of care and our international obligations cannot be compromised for political and economic plunder. The victims of crimes against humanity deserve the support and the protection they are by law, by right, and decency entitled to.

“Pacific Island nations look to the East for a relationship of integrity in their international affairs. Who can blame them with Australian governments track record of treachery, dishonour, and their demeaning elitism and history in the genocide of indigenous peoples.”

This content originally appeared on Asia Pacific Report and was authored by APR editor.

Property and Debt in Ancient Rome

Michael Hudson — Wed, 17 Apr 2024 06:05:10 +0000

Photograph Source: Jfabrix101 – CC BY-SA 4.0

Traditional societies usually had restrictions to prevent self-support land from being alienated outside of the family or clan. By holding that the essence of private property is its ability to be sold or forfeited irreversibly, Roman law removed the archaic checks to foreclosure that prevented property from being concentrated in the hands of the few. This Roman concept of property is essentially creditor-oriented, and quickly became predatory.

Roman land tenure was based increasingly on the appropriation of conquered territory, which was declared public land, the ager publicus populi. The normal practice was to settle war veterans on it, but the wealthiest and most aggressive families grabbed such land for themselves in violation of early law.

Patricians Versus the Poor

The die was cast in 486 BC. After Rome defeated the neighboring Hernici, a Latin tribe, and took two-thirds of their land, the consul Spurius Cassius proposed Rome’s first agrarian law. It called for giving half the conquered territory back to the Latins and half to needy Romans, who were also to receive public land that patricians had occupied. But the patricians accused Cassius of “building up a power dangerous to liberty” by seeking popular support and “endangering the security” of their land appropriation. After his annual term was over he was charged with treason and killed. His house was burned to the ground to eradicate memory of his land proposal.

The fight over whether patricians or the needy poor would be the main recipients of public land dragged on for twelve years. In 474 the commoners’ tribune, Gnaeus Genucius, sought to bring the previous year’s consuls to trial for delaying the redistribution proposed by Cassius. He was blocked by that year’s two consuls, Lucius Furius and Gaius Manlius, who said that decrees of the Senate were not permanent law, “but measures designed to meet temporary needs and having validity for one year only.” The Senate could renege on any decree that had been passed.

A century later, in 384, M. Manlius Capitolinus, a former consul (in 392) was murdered for defending debtors by trying to use tribute from the Gauls and to sell public land to redeem their debts, and for accusing senators of embezzlement and urging them to use their takings to redeem debtors. It took a generation of turmoil and poverty for Rome to resolve matters. In 367 the Licinio-Sextian law limited personal landholdings to 500 iugera (125 hectares, under half a square mile). Indebted landholders were permitted to deduct interest payments from the principal and pay off the balance over three years instead of all at once.

Latifundia

Most wealth throughout history has been obtained from the public domain, and that is how Rome’s latifundia were created. The most fateful early land grab occurred after Carthage was defeated in 204 BC. Two years earlier, when Rome’s life and death struggle with Hannibal had depleted its treasury, the Senate had asked families to voluntarily contribute their jewelry or other precious belongings to help the war effort. Their gold and silver was melted down in the temple of Juno Moneta to strike the coins used to hire mercenaries.

Upon the return to peace the aristocrats depicted these contributions as having been loans, and convinced the Senate to pay their claims in three installments. The first was paid in 204, and a second in 202. As the third and final installment was coming due in 200, the former contributors pointed out that Rome needed to keep its money to continue fighting abroad but had much public land available. In lieu of cash payment they asked the Senate to offer them land within fifty miles of Rome, and to tax it at only a nominal rate. A precedent for such privatization had been set in 205 when Rome sold valuable land in the Campania to provide Scipio with money to invade Africa.

The recipients were promised that “when the people should become able to pay, if anyone chose to have his money rather than the land, he might restore the land to the state.” Nobody did, of course. “The private creditors accepted the terms with joy; and that land was called Trientabulum because it was given in lieu of the third part of their money.”

Most of the Central Italian lowlands ended up as latifundia cultivated by slaves captured in the wars against Carthage and Macedonia and imported en masse after 198. This turned the region into predominantly a country of underpopulated slave-plantations as formerly free peoples were driven off the land into overpopulated industrial towns. In 194 and again in 177 the Senate organized a program of colonization that sent about 100,000 peasants, women and children from central Italy to more than twenty colonies, mainly in the far south and north of Italy.

The Gracchi and the Land Commission

In 133, Tiberius Gracchus advocated distributing ager publicus to the poor, pointing out that this would “increase the number of property holders liable to serve in the army.” He was killed by angry senators who wanted the public land for themselves. Nonetheless, a land commission was established in Italy in 128, “and apparently succeeded in distributing land to several thousand citizens” in a few colonies, but not any land taken from Rome’s own wealthy elite. The commission was abolished around 119 after Tiberius’s brother Gaius Gracchus was killed.

Civil War and Landless Soldiers

Appian describes the ensuing century of civil war as being fought over the land and debt crisis:

“For the rich, getting possession of the greater part of the undistributed lands, and being emboldened by the lapse of time to believe that they would never be dispossessed, absorbing any adjacent strips and their poor neighbors’ allotments, partly by purchase under persuasion and partly by force, came to cultivate vast tracts instead of single estates, using slaves as laborers and herdsmen, lest free laborers should be drawn from agriculture into the army. At the same time the ownership of slaves brought them great gain from the multitude of their progeny, who increased because they were exempt from military service. Thus certain powerful men became extremely rich and the race of slaves multiplied throughout the country, while the Italian people dwindled in number and strength, being oppressed by penury, taxes and military service.”

Dispossession of free labor from the land transformed the character of Rome’s army. Starting with Marius, landless soldiers became soldati, living on their pay and seeking the highest booty, loyal to the generals in charge of paying them. Command of an army brought economic and political power. When Sulla brought his troops back to Italy from Asia Minor in 82 and proclaimed himself Dictator, he tore down the walls of towns that had opposed him, and kept them in check by resettling 23 legions (some 80,000 to 100,000 men) in colonies on land confiscated from local populations in Italy.

Sulla drew up proscription lists of enemies who could be killed with impunity, with their estates seized as booty. Their names were publicly posted throughout Italy in June 81, headed by the consuls for the years 83 and 82, and about 1,600 equites (wealthy publican investors). Thousands of names followed. Anyone on these lists could be killed at will, with the executioner receiving a portion of the dead man’s estate. The remainder was sold at public auctions, the proceeds being used to rebuild the depleted treasury. Most land was sold cheaply, giving opportunists a motive to kill not only those named by Sulla, but also their personal enemies, to acquire their estates. A major buyer of confiscated real estate was Crassus, who became one of the richest Romans through Sulla’s proscriptions.

By giving his war veterans homesteads and funds from the proscriptions, Sulla won their support as a virtual army in reserve, along with their backing for his new oligarchic constitution. But they were not farmers, and ran into debt, in danger of losing their land. For his more aristocratic supporters, Sulla distributed the estates of his opponents from the Italian upper classes, especially in Campania, Etruria and Umbria.

Caesar likewise promised to settle his army on land of their own. They followed him to Rome and enabled him to become Dictator in 49. After he was killed in 44, Brutus and Cassius vied with Octavian (later Augustus), each promising their armies land and booty. As Appian summarized: “The chiefs depended on the soldiers for the continuance of their government, while, for the possession of what they had received, the soldiers depend on the permanence of the government of those who had given it. Believing that they could not keep a firm hold unless the givers had a strong government, they fought for them, from necessity, with good-will.” After defeating the armies of Brutus, Cassius and Mark Antony, Octavian gave his indigent soldiers “land, the cities, the money, and the houses, and as the object of denunciation on the part of the despoiled, and as one who bore this contumely for the army’s sake.”

Empire of Debt

The concentration of land ownership intensified under the Empire. By the time Christianity became the Roman state religion, North Africa had become the main source of Roman wealth, based on “the massive landholdings of the emperor and of the nobility of Rome.” Its overseers kept the region’s inhabitants “underdeveloped by Roman standards. Their villages were denied any form of corporate existence and were frequently named after the estates on which the villagers worked, held to the land by various forms of bonded labor.”

A Christian from Gaul named Salvian described the poverty and insecurity confronting most of the population ca. 440:

“Faced by the weight of taxes, poor farmers found that they did not have the means to emigrate to the barbarians. Instead, they did what little they could do: they handed themselves over to the rich as clients in return for protection. The rich took over title to their lands under the pretext of saving the farmers from the land tax. The patron registered the farmer’s land on the tax rolls under his (the patron’s) own name. Within a few years, the poor farmers found themselves without land, although they were still hounded for personal taxes. Such patronage by the great, so Salvian claimed, turned free men into slaves as surely as the magic of Circe had turned humans into pigs.”

The Church as a Corporate Power

Church estates became islands in this sea of poverty. As deathbed confessions and donations of property to the Church became increasingly popular among wealthy Christians, the Church came to accept existing creditor and debtor relationships, land ownership, hereditary wealth and the political status quo. What mattered to the Church was how the ruling elites used their wealth; how they obtained it was not important as long as it was destined for the Church, whose priests were the paradigmatic “poor” deserving of aid and charity.

The Church sought to absorb local oligarchies into its leadership, along with their wealth. Testamentary disposition undercut local fiscal balance. Land given to the Church was tax-exempt, obliging communities to raise taxes on their secular property in order to maintain their flow of public revenue. (Many heirs found themselves disinherited by such bequests, leading to a flourishing legal practice of contesting deathbed wills.) The Church became the major corporate body, a sector alongside the state. Its critique of personal wealth focused on personal egotism and self-indulgence, nothing like the socialist idea of public ownership of land, monopolies, and banking. In fact, the Crusades led the Church to sponsor Christendom’s major secular bankers to finance its wars against the Holy Roman Emperors, Moslems, and Byzantine Sicily.

This article was produced by Human Bridges.

The post Property and Debt in Ancient Rome appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Michael Hudson.

Tyranny by the Numbers: The Government Wants Your Money Any Way It Can Get It

John W. Whitehead and Nisha Whitehead — Tue, 09 Apr 2024 22:30:38 +0000

The government wants your money.

It will beg, steal or borrow if necessary, but it wants your money any way it can get it.

This is what comes of those $1.2 trillion spending bills: someone’s got to foot the bill for the government’s fiscal insanity, and that “someone” is the U.S. taxpayer.

The government’s schemes to swindle, cheat, scam, and generally defraud taxpayers of their hard-earned dollars have run the gamut from wasteful pork barrel legislation, cronyism and graft to asset forfeiture, costly stimulus packages, and a national security complex that continues to undermine our freedoms while failing to making us any safer.

Americans have also been made to pay through the nose for the government’s endless wars, subsidization of foreign nations, military empire, welfare state, roads to nowhere, bloated workforce, secret agencies, fusion centers, private prisons, biometric databases, invasive technologies, arsenal of weapons, and every other budgetary line item that is contributing to the fast-growing wealth of the corporate elite at the expense of those who are barely making ends meet—that is, we the taxpayers.

According to the number crunchers with the Committee for a Responsible Federal Budget, in order to spend money it doesn’t have on programs it can’t afford, the government is borrowing roughly $6 billion a day.

Basically, the U.S. government is funding its existence with a credit card.

Let’s talk numbers, shall we?

The national debt (the amount the federal government has borrowed over the years and must pay back) is more than $34 trillion and will grow another $19 trillion by 2033.

The bulk of that debt has been amassed over the past two decades, thanks in large part to the fiscal shenanigans of four presidents, 10 sessions of Congress and two wars.

It’s estimated that the amount this country owes is now 130% greater than its gross domestic product (all the products and services produced in one year by labor and property supplied by the citizens).

In other words, the government is spending more than it brings in.

The U.S. ranks as the 12th most indebted nation in the world, with much of that debt owed to the Federal Reserve, large investment funds and foreign governments, namely, Japan and China.

Interest payments on the national debt are more than $395 billion, which is significantly more than the government spends on veterans’ benefits and services, and according to Pew Research Center, more than it will spend on elementary and secondary education, disaster relief, agriculture, science and space programs, foreign aid, and natural resources and environmental protection combined.

According to the Committee for a Reasonable Federal Budget, the interest we’ve paid on this borrowed money is “nearly twice what the federal government will spend on transportation infrastructure, over four times as much as it will spend on K-12 education, almost four times what it will spend on housing, and over eight times what it will spend on science, space, and technology.”

In ten years, those interest payments will exceed our entire military budget.

This is financial tyranny.

We’ve been sold a bill of goods by politicians promising to pay down the national debt, jumpstart the economy, rebuild our infrastructure, secure our borders, ensure our security, and make us all healthy, wealthy and happy.

None of that has come to pass, and yet we’re still being loaded down with debt not of our own making while the government remains unrepentant, unfazed and undeterred in its wanton spending.

Indeed, the national deficit (the difference between what the government spends and the revenue it takes in) remains at more than $1.5 trillion.

If Americans managed their personal finances the way the government mismanages the nation’s finances, we’d all be in debtors’ prison by now.

Despite the government propaganda being peddled by the politicians and news media, however, the government isn’t spending our tax dollars to make our lives better.

We’re being robbed blind so the governmental elite can get richer.

In the eyes of the government, “we the people, the voters, the consumers, and the taxpayers” are little more than pocketbooks waiting to be picked.

“We the people” have become the new, permanent underclass in America.

Consider: The government can seize your home and your car (which you’ve bought and paid for) over nonpayment of taxes. Government agents can freeze and seize your bank accounts and other valuables if they merely “suspect” wrongdoing. And the IRS insists on getting the first cut of your salary to pay for government programs over which you have no say.

We have no real say in how the government runs, or how our taxpayer funds are used, but we’re being forced to pay through the nose, anyhow.

We have no real say, but that doesn’t prevent the government from fleecing us at every turn and forcing us to pay for endless wars that do more to fund the military industrial complex than protect us, pork barrel projects that produce little to nothing, and a police state that serves only to imprison us within its walls.

If you have no choice, no voice, and no real options when it comes to the government’s claims on your property and your money, you’re not free.

It wasn’t always this way, of course.

Early Americans went to war over the inalienable rights described by philosopher John Locke as the natural rights of life, liberty and property.

It didn’t take long, however—a hundred years, in fact—before the American government was laying claim to the citizenry’s property by levying taxes to pay for the Civil War. As the New York Times reports, “Widespread resistance led to its repeal in 1872.”

Determined to claim some of the citizenry’s wealth for its own uses, the government reinstituted the income tax in 1894. Charles Pollock challenged the tax as unconstitutional, and the U.S. Supreme Court ruled in his favor. Pollock’s victory was relatively short-lived. Members of Congress—united in their determination to tax the American people’s income—worked together to adopt a constitutional amendment to overrule the Pollock decision.

On the eve of World War I, in 1913, Congress instituted a permanent income tax by way of the 16^th Amendment to the Constitution and the Revenue Act of 1913. Under the Revenue Act, individuals with income exceeding $3,000 could be taxed starting at 1% up to 7% for incomes exceeding $500,000.

It’s all gone downhill from there.

Unsurprisingly, the government has used its tax powers to advance its own imperialistic agendas and the courts have repeatedly upheld the government’s power to penalize or jail those who refused to pay their taxes.

While we’re struggling to get by, and making tough decisions about how to spend what little money actually makes it into our pockets after the federal, state and local governments take their share (this doesn’t include the stealth taxes imposed through tolls, fines and other fiscal penalties), the government continues to do whatever it likes—levy taxes, rack up debt, spend outrageously and irresponsibly—with little thought for the plight of its citizens.

To top it all off, all of those wars the U.S. is so eager to fight abroad are being waged with borrowed funds. As The Atlantic reports, “U.S. leaders are essentially bankrolling the wars with debt, in the form of purchases of U.S. Treasury bonds by U.S.-based entities like pension funds and state and local governments, and by countries like China and Japan.”

Of course, we’re the ones who have to repay that borrowed debt.

For instance, American taxpayers have been forced to shell out more than $5.6 trillion since 9/11 for the military industrial complex’s costly, endless so-called “war on terrorism.” That translates to roughly $23,000 per taxpayer to wage wars abroad, occupy foreign countries, provide financial aid to foreign allies, and fill the pockets of defense contractors and grease the hands of corrupt foreign dignitaries.

Mind you, that’s only a portion of what the Pentagon spends on America’s military empire.

The United States also spends more on foreign aid than any other nation, with nearly $300 billion disbursed over a five-year period. More than 150 countries around the world receive U.S. taxpayer-funded assistance, with most of the funds going to the Middle East, Africa and Asia. That price tag keeps growing, too.

As Forbes reports, “U.S. foreign aid dwarfs the federal funds spent by 48 out of 50 state governments annually. Only the state governments of California and New York spent more federal funds than what the U.S. sent abroad each year to foreign countries.”

Most recently, the U.S. has allocated nearly $115 billion in emergency military and humanitarian aid for Ukraine since the start of the Russia invasion.

As Dwight D. Eisenhower warned in a 1953 speech, this is how the military industrial complex continues to get richer, while the American taxpayer is forced to pay for programs that do little to enhance our lives, ensure our happiness and well-being, or secure our freedoms.

This is no way of life.

Yet it’s not just the government’s endless wars that are bleeding us dry.

We’re also being forced to shell out money for surveillance systems to track our movements, money to further militarize our already militarized police, money to allow the government to raid our homes and bank accounts, money to fund schools where our kids learn nothing about freedom and everything about how to comply, and on and on.

There was a time in our history when our forebears said “enough is enough” and stopped paying their taxes to what they considered an illegitimate government. They stood their ground and refused to support a system that was slowly choking out any attempts at self-governance, and which refused to be held accountable for its crimes against the people. Their resistance sowed the seeds for the revolution that would follow.

Unfortunately, in the 200-plus years since we established our own government, we’ve let bankers, corporate turncoats and number-crunching bureaucrats muddy the waters and pilfer the accounts to such an extent that we’re back where we started.

Once again, we’ve got a despotic regime with an imperial ruler doing as they please.

Once again, we’ve got a judicial system insisting we have no rights under a government which demands that the people march in lockstep with its dictates.

And once again, we’ve got to decide whether we’ll keep marching or break stride and make a turn toward freedom.

But what if we didn’t just pull out our pocketbooks and pony up to the federal government’s outrageous demands for more money?

What if we didn’t just dutifully line up to drop our hard-earned dollars into the collection bucket, no questions asked about how it will be spent?

What if, instead of quietly sending in our tax checks, hoping vainly for some meager return, we did a little calculating of our own and started deducting from our taxes those programs that we refuse to support?

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, we’re no longer living the American dream.

We’re living a financial nightmare.

The post Tyranny by the Numbers: The Government Wants Your Money Any Way It Can Get It first appeared on Dissident Voice.

This content originally appeared on Dissident Voice and was authored by John W. Whitehead and Nisha Whitehead.

Climate Debt Trap, A “Vicious Circle” for Vulnerable Nations

Vins — Mon, 08 Apr 2024 22:48:15 +0000

Many of the developing nations most vulnerable to climate change are “operating on increasingly tight budgets and at risk of defaulting on loans,” Natalia Alayza, Valerie Laxton, and Carolyn Neunuebel reported for the World Resources Institute in September 2023. They describe the pattern—which has been worsened by the pandemic and…

The post Climate Debt Trap, A “Vicious Circle” for Vulnerable Nations appeared first on Project Censored.

This content originally appeared on Project Censored and was authored by Vins.

China’s state-owned developer vows to cut debt as financial woes rise

By RFA Staff — Fri, 29 Mar 2024 05:40:12 +0000

China’s troubled state-owned property giant Vanke Group says it will cut debt by 100 billion yuan (US$13.8 billion) in the next two years, as sales plunged and profit nearly halved in 2023 amid a deepening crisis in the sector.

But Zhu Jiusheng, Vanke’s chief executive officer, pointed out in an earnings press conference on Friday that the company’s fundamental capabilities, without giving specifics, have not changed, despite the short-term “challenges and pressure.”

The recent downgrade of its credit rating by global rating agency Moody’s to “junk”, in fact dealt “relatively limited impact,” he said, according to Chinese state-owned media reports.

Conversely, Vanke’s long-term partnership with 26 banks has established “our allies in risk prevention.”

Still, with or without allies, Vanke reported a 11 percentage point increase to a net debt ratio of 55% last year. Furthermore, 73% of its assets are financed by creditors, albeit a 3.7 percentage point decline from 2022, making the company highly leveraged. A below 50% level is usually considered healthy.

The State Council, or China’s cabinet, also asked 12 banks to provide a financing lifeline of as much as 80 billion yuan to Vanke two weeks ago.

This bucked the broader policy to let insolvent developers take their own downward course, which has compounded a spiraling crisis in the sector, once a major economic growth driver.

Analysts attributed Beijing’s rare intervention to Vanke’s state-held background – its largest shareholder is the Shenzhen Metro Group. But the move is in line with Chinese President Xi Jinping’s policy of advancing state enterprises and a retreat of the private sector.

Other distressed and privately-owned real estate firms Evergrande Group and Country Garden Holdings have been left to their own devices.

The Hong Kong High Court issued a liquidation order in January for Evergrande, which has been drowned in more than US$300 billion in debt.

A similar fate looms for Country Garden which received a liquidation petition from one of its creditors in Hong Kong. Its total liabilities are close to US$200 billion.

Country Garden said in a filing to the Hong Kong stock exchange on Thursday that it missed the deadline to release its 2023 annual results.

Hong Kong-listed companies are required to disclose their financial results three months after the end of the financial year and Thursday was the deadline, ahead of the Easter weekend holiday in the city. Evergrande has not disclosed its results either.

Meanwhile, from Vanke’s view point, Zhu said bankers are concerned about three factors – where the capital was deployed in the past financial year, which projects to finance, and adequacy of cash flow.

“Once these three questions are answered, the financing channels and banks’ supportive attitude become affirmative and the strength of their support will be adequate,” he added.

According to Zhu, Vanke has secured 16.9 billion yuan in additional funding for 42 projects across 22 Chinese cities under Beijing’s “white list” of approved projects that financial institutions should back.

Edited by Taejun Kang and Mike Firn.

This content originally appeared on Radio Free Asia and was authored by By RFA Staff.

In debt and desperate, misled Vietnamese seek political asylum in Australia

By RFA Vietnamese — Sun, 24 Mar 2024 03:03:28 +0000

After four months in limbo about his refugee status and heavily in debt, Hung has some advice for anyone from Vietnam planning to work in Australia on a tourist visa:

“If you are keen on coming to Australia, you’d better choose a legal way,” said the part-time laborer from Hanoi, who was duped into paying an immigration service company to apply for an entry visa on his behalf.

“Arriving with a student or skilled labor visa is OK, but you should think twice about using a tourist visa,” he said.

For years, Hung made ends meet in Hanoi on a monthly income of 10 million dong (US$400), but was unable to build any savings due to the high cost of living in Vietnam’s capital.

After hearing stories of other Vietnamese landing good-paying jobs while visiting Australia, Hung, who spoke to RFA Vietnamese using a pseudonym due to security concerns, decided to travel the 5,000-odd kilometers (3,100 miles) southeast to try his luck.

He hoped to earn a better salary Down Under – where minimum wage workers earn AU$70,000 (US$48,000) a year, or 14 times the average income in Vietnam – and save money to improve his living standard back home.

Vietnamese who are unable to obtain work visas for Australia are eligible for a Work and Holiday Visa, which allows people to work while traveling in the country for up to one year.

Applicants must be between the ages of 18 and 30, have no criminal record and provide evidence that they have completed at least two years of undergraduate study. They must also show that they can support themselves financially while in Australia and have attained a certain level of English proficiency.

In debt and desperate

Hung, who did not disclose his age, had no employer to sponsor a work visa and was unable to meet either the education or English proficiency requirements for a Work and Holiday Visa. But a Vietnamese immigration services company told him that he could legally work in Australia as a tourist.

Australian tourist visas have a significantly lower barrier to obtain. They are good for three months and can be extended to a full year in special circumstances. However, entrants are not eligible to work during their visit.

Unfamiliar with the application process, Hung took on debt to pay 100 million dong (US$4,000) – a substantial amount for the average Vietnamese laborer – to the immigration services company to handle his visa, as well as purchase an airline ticket, and he flew to Australia in July 2023.

Hung had hoped to live and work in Australia for up to two years, to pay off what he had borrowed in getting there and to build wealth. Instead, by October, his tourist visa was about to expire and he had only accrued more debt while supporting himself for three months in a nation with a vastly higher cost of living.

Increasingly desperate, Hung sought help from fellow Vietnamese through social media, and was advised to apply for an Australian Onshore Protection Visa (Subclass 866) as a political refugee, which would allow him to stay in Australia for longer and work legally.

He paid someone AU$1,000 (US$650) to prepare his application, went to the local immigration department to be fingerprinted, and was granted a bridging visa (BVE 050) that allows him to lawfully reside in the country while awaiting a decision on his status.

While Hung will be required to present evidence of his asylum claim, it is unclear when he will be called for an interview, due to the large backlog of applications.

Topping the list for asylum seekers

According to the Australian Department of Home Affairs, 2,905 Vietnamese nationals applied for the Australian Onshore Protection Visa in 2023, making them the largest ethnic group to do so and accounting for 12% of the total number of applicants.

Vietnamese topped the list of asylum applicants in Australia, beating out Indians and Chinese, in each of the last five months of 2023, and ranked second in three other months last year.

Thai officers talk to Vietnamese and Cambodian refugee and asylum seekers in Bangkok, Aug. 28, 2018 after rounding up more than 160 who are believed to be at risk of persecution if they are returned to their homelands. Refugee applications to the Australian Embassy in Vietnam, also sent from Thailand and Australia, tend to increase after political upheavals, says one immigration attorney. (AP)

Many of them end up in situations like Hung’s, nervously awaiting a verdict on their claim to learn whether they will be granted residential status or forced to return home.

The bridging visa does not expire and grants holders the right to work and access a national health insurance assistance program so that they can receive medical care in Australia.

However, if asylum status is denied, the bridging visa will be automatically canceled within 28 days, and the holder will be required to leave the country. Those denied status have the right to appeal the decision with an immigration court.

The chances of being awarded political asylum in Australia are fairly low. In 2023, the Australian Department of Home Affairs processed nearly 1,000 asylum applications, of which only 53, or 5.6%, were approved.

The stakes are considerably higher for applicants who have fled persecution in Vietnam, where the one-party communist state brooks no dissent. Being forced to return home can often mean a jail sentence, or worse.

‘Extraordinary surge’ in applications

Vietnamese-Australian immigration attorney Le Duc Minh told RFA that his law firm has helped many “genuine” Vietnamese political asylum seekers successfully apply for status in Australia.

But he acknowledged that he regularly hears stories like Hung’s from people who ended up in debt after trying to work illegally in the country.

“Some people simply ask me, ‘Please find a way for me to stay longer to earn money and pay off my debts. I borrowed hundreds of millions of dong in Vietnam to make this trip. I cannot go home empty-handed,’” he said.

Minh said he was surprised by what he called an “extraordinary surge” in applications by Vietnamese for political asylum in Australia in the second half of 2023.

He said that refugee applications tend to increase after political upheavals or government crackdowns on rights activists, but described last year as “very politically stable” in Vietnam. There were no mass demonstrations and most of the arrests were only of prominent activists and outspoken individuals on social media.

Instead, Minh posited, last year’s surge was likely the result of “large-scale fraudulent activities” in Vietnam, including individuals and companies providing false information about work opportunities for foreigners in Australia in order to sell them forged documents and useless services.

He cited an advertisement from one company claiming that applicants could take advantage of a program in Australia that would allow them to “take agricultural jobs without any expertise or English skills.”

After arriving in Australia only to learn that they would be unable to work or pay off their debts, most feel that they have no other choice but to double down, with applying for political asylum as their only option to stay in the country.

Supporting legitimate claims

Immigration attorney Kate Hoang, the former president of Australia’s Vietnamese community, stressed that “not all asylum applicants [from Vietnam] are those who want to extend their stay.”

Many, she said, were targeted by Vietnam’s government for speaking out about social injustices and were lucky just to have been able to travel to Australia to seek asylum at all.

Hoang urged the Australian government to make changes to the way it processes asylum visas to prevent those without legitimate claims from exploiting the system.

Meanwhile, Hung’s future remains uncertain as he awaits the ruling on his asylum application, and he has come to regret his journey to the southern continent.

“I paid a huge amount of money to come here, so I now have no choice but to work hard to pay off my debts, and I’ll probably just have to return home with nothing to show for it,” he said. “If I could make the decision again, I would never have gone.”

Translated by Anna Vu. Edited by Joshua Lipes and Malcolm Foster.

This content originally appeared on Radio Free Asia and was authored by By RFA Vietnamese.

Debt Forgiveness in the Bronze Age

Michael Hudson — Mon, 11 Mar 2024 06:00:49 +0000

Photo by Alice Pasqual

When interest-bearing commercial and agrarian debt came to be incorporated into civilization’s economic structure in the third millennium BC, it was accompanied by clean slates that liberated bondservants and restored to debtors the rights to the crops and land that creditors had taken. By the second millennium BC in Babylonia these royal “restorations of order” became customary proclamations rescuing debtors whose family members had been reduced to bondage or who had lost their land to foreclosing creditors.

Anthropologists have looked at surviving tribal enclaves for ideas of how the Bronze Age takeoff may have been managed. But no tribal communities in today’s world possess the outward-reaching dynamics of Mesopotamia during its commercial takeoff, which occurred in many ways that are alien to modern ways of thinking. The documentation describes an approach operating on different principles from those that most modern observers assume to have been primordial and universal.

The Character of Bronze Age Debt That Made Royal Clean Slates Necessary

The dynamics of interest-bearing debt are different from those of tribal gift exchange and related reciprocity obligations. Monetary credit arrangements bear a specific interest rate, and the date of payment is specified in advance rather than left open-ended. That requires debts to be recorded in writing and formally witnessed. Creditors may take foreclosure measures for non-payment, leading to the debtor’s bondage or the loss of land rights.

Civilization’s earliest written records, from Sumer in the third millennium BC, provide the best evidence for civilization’s monetized debt relations “in the beginning.” Two categories of debt existed, each associated with its own designated monetary commodity. Business obligations owed by traders and entrepreneurial managers were denominated in silver, above all those associated with foreign trade. The agrarian economy operated on credit denominated in barley units, assigned a value equal to the silver shekel in order to strike a common measure.

Money Loans and Long-Distance Trade

Rules for money loans described in scribal training exercises are found almost exclusively in the commercial sphere, especially in connection with long-distance trade. These loans were denominated in silver at the equivalent of a 20 percent annual rate of interest, doubling the principal in five years. Under normal conditions merchants were able to pay this rate to their creditors and keep a profit for themselves. Lenders shared in the mercantile risk, taking what in effect was an equity position. If caravans were robbed or ships and their cargoes lost at sea through no fault of the merchant, the debt was voided. There is no indication that payment of such mercantile debts led to problems requiring royal intervention.

Interest-bearing debt had initially arisen in the commercial sphere, taking the form of advances of assets by the large public institutions to entrepreneurial recipients, enabling them to make an economic gain in commerce and land management. But throughout all antiquity the most problematic debts disrupting the economy’s fiscal and social balance were in the agrarian sphere. The original objective of charging interest to sharecroppers and other cultivators, however, can hardly have been to reduce them to bondage or to expropriate them from their self-support land. Their labor was needed for the agrarian economy to function.

Agrarian Debt and Land-Rental Agreements

Rural usury and the consequent widespread forfeiture of lands seem to have derived from advances of land, animals, and tools to sharecroppers (or their manager intermediaries) by temples and palaces. Sharecropping land and agricultural inputs were advanced for a rent of one-third of the (optimistically) estimated normal crop yield 1. Interest was charged on arrears of this rent and other agrarian obligations not settled at harvest-time. The interest rate charged on these carry-over debts was the same as the sharecropping rental rate: one-third. Even arrears for unpaid debts for food or credit for other needs, such as priestly social services, were charged interest at the rate of one-third of the sum owed, simply mirroring the sharecropping rental return for creditors.

Arrears on agrarian obligations must have been infrequent, given the ever-present risk of crop failure preventing anticipated crops payments from being paid. Researchers Alfonso Archi and Piotr Steinkeller show that agrarian interest rates denominated in barley are attested by the middle of the third millennium BC. Officials, collectors for the palaces and temples, and merchants often acted in their own private capacity to make interest-bearing loans to cultivators in arrears for arrears of fees owed to the large institutions.

Rural usury thus emerged as well-to-do “big men” charged for arrears owed to the palace and temples, also lending food and other necessities to distressed cultivators. But agrarian interest-bearing debt, especially usury charged to borrowers in need, was always denounced as socially unfair. The question therefore arises as to just how such charges originated in the first place.

Few types of barley debt involved actual loans of money. What often are called “loan documents” should more literally be termed “debt records” or simply “notes of obligation.” Even in the commercial sphere with its debts denominated in silver, textiles, and other handicrafts that temple and palace workshops consigned to merchants for trade were recorded as debts. And when contractual work was to be performed, craftsmen gave customers tablets of obligation when they were given materials to make into a finished product.

The basic contractual formulae were well established by the end of the third millennium BC. Debt tablets state the sum owed, the due date, and the names of witnesses, with the appropriate seals. Additional stipulations might include the pledges involved, guarantees by individuals who stood surety, and the interest rate to be charged (often to accrue only if the debt were not paid on time). Some documents were given a title citing the reason why the debt was established.

Agrarian debts mostly arose on rental agreements on land advanced by public institutions to intermediaries, who then subleased it to sharecroppers. Near East researcher Johannes Renger describes how land and workshops were administered directly by palace officials in Ur III (2111-2004 BC), but by the Old Babylonian period (2000-1600 BC) the palace franchised the management of its fields and date orchards, herds of sheep, brick-making workshops, and other handicrafts to “entrepreneurs” as Palastgeschäfte, “royal enterprises.” These managers were entitled to keep whatever they could produce or collect above and beyond the amount stipulated by their contract with the palace, but if the sums they collected fell short, their arrears were recorded as a debt and they were obliged to pay the difference out of their own resources.

The rate of interest payable by cultivators on such debt arrears was, as described above, one-third, being the same as the rate charged for advances of sharecropping land. Cultivators were also charged this one-third rate of interest for unpaid arrears of charges for advances to buy food or beer or meet emergency needs on credit. If they lacked the means to pay out of whatever assets they had, they had to work off the debt charges in the form of their labor service or that of their family members (daughters, sons, wives, or house-slaves), and ultimately they had to pledge their land rights.

How Agrarian Debt Transformed Land Tenure

Barley debts had an annual character reflecting the crop cycle, falling due upon harvest. The accrual of such debts did not reflect a parallel growth in the cultivator’s ability to pay out of their harvest. Creditors obtained work at harvest-time by extending loans whose interest was paid in the form of labor service, as labor-for-hire was not generally available in this epoch.

In addition to their labor, debtors were obliged to pledge their family members as bondservants, followed by their land rights. Self-support land had traditionally been conveyed from one generation to the next within families, not being freely disposable outside of the family or neighborhood. Land transfers did occur when families shrank in size and transferred their cultivation rights to distant relatives or neighbors. But starting with rights to its crop usufruct, subsistence land was pledged and relinquished to outsiders after 2000 BC.

Debtor families initially were left on the land after they lost their crop rights, but were forced off the land as the new appropriators turned to less labor-intensive cash crops such as dates. Debtors often ended up as members of rootless bands or mercenaries after the middle of the second millennium BC. Instead of crop and land rights being lost only temporarily—being returned to their original owners by royal edicts that restored the status quo ante2—such forfeitures became irreversible by the first millennium BC, especially in Greece and Italy to the west.

The Logic of Canceling Rural Debts and Reversing Land Forfeitures

An inability to meet obligations was inherent in the risks to which agrarian life was subject throughout antiquity: drought, flooding, infestation, or an outbreak of disease, capped by military disruptions. The problem confronting rulers was how to prevent debts from mounting up to the point where they threatened to expropriate the community’s corvée labor and fighting force, dooming debt-ridden realms to defeat by outsiders. If the indebted rural citizenry were to survive along customary lines, priority could not be given to creditors.

Mesopotamian rulers countered the rural debt problem not by banning interest outright, but by annulling barley debts. To restore the means of self-support, rulers issued edicts “proclaiming justice,” decreeing economic order and “righteousness.” These proclamations date from almost as early as interest-bearing debt is attested, starting in Sumer with Lagash’s rulers Enmetena circa 2400 BC and Urukagina and 2350 BC. Much as commercial debts were forgiven when the merchandise was lost through no fault of the merchant, Hammurabi’s laws (§48) provided that cultivators would not be obliged to pay their crop debts if the storm-god Adad flooded their field and the crop was lost. The operative principle was that debtors should not lose their economic liberty by being held liable for “acts of God.” And inasmuch as most barley debts were owed to the palace or royal officials, it was easy for rulers to cancel them. Letting officials and merchants keep the crops and labor of debtors would have deprived rulers of their ability to collect the customary royal fees and land rents for themselves and to obtain corvée labor and military service.

There was no modernist thought that the dynamics of interest-bearing debt might be self-stabilizing by letting “market forces” proceed unimpeded. There was no thought of Adam Smith’s Deist god designing the world to run like clockwork, with checks and balances automatically maintaining equilibrium without any need for intervention by kings or priestly sanctions. Not even the wealthy voiced the ideology of modern free-market fundamentalism arguing that society’s wealth and revenue would be maximized by letting it pass into the hands of the richest and most aggressively self-serving individuals reducing hitherto free families to bondage.

Notes.

1 Although not clear from the records, it seems likely that agricultural inputs were advanced as part of a “package” with the land for a total rental of one-third of the crop.

2 The classic studies of these edicts are F.R. Kraus, Königliche Verfügungen in altbabylonischer Zeit (Leiden, 1984); Jean Bottéro, “Désordre économique et annulation des dettes en Mesopotamie à l’époque paléo-babylonienne,” Journal of the Economic and Social History of the Orient, vol. 4 (1961): pp. 113-164; J.J. Finkelstein, “Ammisaduqa’s Edict and the Babylonian ‘Law Codes,’” Journal of Cuneiform Studies, vol. 15 (1961): pp. 91-104; “Some New misharum Material and Its Implications,” in Assyriological Studies, no. 16 (1965); Studies in Honor of Benno Landsberger on His Seventy-Fifth Birthday: pp. 233-246; “The Edict of Ammisaduqa: A New Text,” Revue d’Assyriologie et d’Archéologie Orientale, vol. 63 (1969): pp. 45-64; and the works of Igor Diakonoff and Dominique Charpin.

This article was produced by Human Bridges.

The post Debt Forgiveness in the Bronze Age appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Michael Hudson.

Hong Kong’s bad debt on the rise in bleak economy

By Gigi Lee for RFA Cantonese — Mon, 26 Feb 2024 07:37:31 +0000

In a further sign of Hong Kong’s economic woes, the city’s biggest banks are recording a surge in overdue loans amid the broader contraction of tens of billions of dollars in corporate lending.

The downtrend is collectively reflected in the annual results disclosed by Hang Seng Bank, Bank of East Asia (BEA) and Standard Chartered Bank, where the impact of the domestic real estate market, high interest rates and poor market conditions have led to an increase in “defaults” and overdue repayments. Loans to industrial and commercial entities, small and medium-sized enterprises and venture capital accounted mainly for the business decline.

At the same time, petitions for compulsory liquidation of companies have rebounded, reaching 67 cases alone in January, representing a 63% jump from the previous month and fast approaching the peak of the COVID-19 epidemic four years ago.

Analysts pointed out that this reflects lack of confidence in the Hong Kong market – China’s international financial center – where investors are fearful to invest while some others struggle to repay credit. Banks could face increasing pressure as the number of bankruptcies and liquidations may have yet to emerge.

The annual financial results of Hang Seng, BEA and Standard Chartered showed that while overall performance has improved, their loan books, an indication of demand, have shrunk. The amount of local corporate loans for Hang Seng and East Asia fell more than 3%, with Standard Chartered’s dropping a bigger 7.6%, due to reduction in property investment, trade, small and medium-sized enterprises and venture capital were the “hardest hit areas.”

Hang Seng’s industrial and commercial loans slid 13% on the year and BEA’s portfolio slipped 6.2%. Loans for Standard Chartered which classified lending under “corporate, commercial and institutional,” “individual, private and small and medium-sized enterprises” and “venture capital business” dropped 4.9%

The banks said they were more cautious in approving loans in light of the economic uncertainty and a high interest rate regime.

Financial commentator Ngan Po Kong said the banks’ performance shows a decrease in investment demand and activities, underpinned by weak investor confidence.

As banks act prudently and the high interest rate environment reduces loan demand, it means a reduction of funds in the market, which Ngan pointed out, could be seen as a sign of the negative prospect, eroding public confidence to invest.

In addition, the results of the three banks also reflected the deterioration of non-performing loans due to the impact of the domestic housing crisis,where prices have been falling.

Among them, Hang Seng and BEA’s loans that were overdue for three months or more surged by more than 60% last year, which was mainly dragged down by the sharp increase in impaired loans that were overdue for more than six months. Correspondingly, their “total impaired loans” ratio, an indicator of bad debt, has also worsened, widening about 0.3%. The ratios were 2.83% and 2.69% for Hang Seng and BEA, respectively.

A man walks past a closed restaurant covered with advertisements for space rental, following the COVID-19 outbreak, in Hong Kong. (Tyrone Siu/Reuters)

Integrated economic destiny

Hong Kong has suffered a prolonged “economic winter” in recent years. Vacant shophouses in major commercial districts of Tsim Sha Tsui and Mongkok are on the rise. According to industry statistics, the vacancy rates of street-level shops and office buildings in core areas are as high as 9.7% and over 16%, respectively.

Because the Hong Kong market has shifted to focus primarily on the mainland Chinese market in recent years, banks and the city’s stock and property markets have been dragged down by China’s real estate crisis, Ngan said. With both economies “fatedly connected,” “property prices and stock markets have fallen together,” leading to bankruptcies in Hong Kong to rise.

“Some analysts in the accounting industry point out that the bankruptcies will not peak until the middle of this year,” he said, adding that Hong Kong’s economic recovery lies in the rebound of China’s.

“The mainland has introduced many tactics lately, including lowering reserve requirements and reducing loan interest rates. I think it will take some time to see whether they are effective, and we cannot conclude that the economy has bottomed out and will recover soon.”

The Hong Kong Official Receiver’s Office announced that there were 753 personal bankruptcy petitions in January 2024, up 11.5% from December and a staggering 50% from the year-earlier period. In the same month, there were a total of 67 compulsory company liquidation petitions, an increase of 63.4% on the month and 48.8% from a year ago, closing in on the 68 cases in May 2020 and April 2022 when the waves of COVID-19 outbreak peaked in Hong Kong.

Translated by RFA staff. Edited by Taejun Kang.

This content originally appeared on Radio Free Asia and was authored by By Gigi Lee for RFA Cantonese.

Pacifica Evening News 02-21-24 President Biden announces student debt relief plan for 150 thousand borrowers.

KPFA — Wed, 21 Feb 2024 18:00:19 +0000

President Biden announces student debt relief plan for 150 thousand borrowers.
House Republicans continue impeachment probe of President Biden’s links to his family’s businesses.
Wikileaks founder Julian Assange to find out next week whether he can be extradited from UK to US on spy charges.
Bay Area peace activists call on Democrats Joe Biden and Senator Alex Padilla to back permanent ceasefire in Gaza.
G20 summit kicks off in Brazil, climate change and global strife are on the agenda.

The post Pacifica Evening News 02-21-24 President Biden announces student debt relief plan for 150 thousand borrowers. appeared first on KPFA.

This content originally appeared on KPFA - The Pacifica Evening News, Weekdays and was authored by KPFA.

Engaging China: A New Vision for a Western Global Debt Restructuring

Gökçenur Bay — Fri, 05 Jan 2024 06:53:45 +0000

Image by Christian Lue.

In the ever-evolving sphere of global finance, China’s approach to debt relief and restructuring marks a clear departure from Western norms and introduces a nuanced strategy that deserves a closer examination.

Western nations frequently express concerns over China’s hesitance to engage in multilateral frameworks like the G20 Common Framework. This criticism may stem more from a misunderstanding than from China’s actual disinterest. Assertions of China’s financial dealings being opaque and a “barrier” to multilateral mechanisms often fail to acknowledge China’s rise as the main creditor to developing nations. Its steadfast commitment to bilateral lending, although met with skepticism in the West, is central to China’s alternative strategy. At the heart of this approach are contention points that no party is willing to relinquish easily.

As China assumes the role of “lender of last resort”—a position historically held by the IMF and the U.S.—geopolitical and economic tensions gain prominence. China’s refusal to adhere to the traditional collective debt relief rules has undoubtedly challenged the status quo, making the Paris Club’s norms appear increasingly obsolete. This is evident as developing countries, like Ethiopia, turn directly to China for assistance, indicating a shift in preference and highlighting the slow progress under traditional frameworks. Such developments signal a potential seismic shift in managing debt crises as established norms are reconsidered.

Actions speak louder than words, especially when evaluating China’s role as a creditor and its commitment to debt relief. The emphasis should be on tangible actions and results rather than on rhetoric. Beijing’s decision to restructure loans under the G20 framework for Zambia’s debt relief is significant, showing a move toward multilateralism and recognizing previous limitations. Yet, a consensual solution requires all creditors to be open to losses or concessions. China’s urging for multilateral development banks, including the World Bank, to join debt relief efforts for Zambia suggests a real desire to improve the system. The traditional exclusion of such institutions from restructuring talks, despite their considerable role in accruing debt, complicates matters further.

It is important to note that while Western governments are critical of China’s stance on debt forgiveness, they themselves have been hesitant to provide such relief in the past. Their reluctance to create a fully functional, predefined sovereign bankruptcy mechanism casts doubt on the consistency of their critiques of China.

China’s non-participation in the sovereign debt regime, particularly its absence from the Paris Club, leaves a gap that diminishes the regime’s effectiveness, more so when China is a major contributor to the regime, albeit on a partial basis. Efforts to build new and lasting institutions are yet to be validated. The Paris Club’s lack of cohesion among bilateral creditors presents significant challenges to the IMF in managing debt crises, as it complicates negotiations for countries heavily indebted to China, causing delays that can exacerbate their financial crises.

The slow pace of debt restructuring, illustrated by Zambia’s situation, underscores the urgent need for a more collaborative and efficient approach to sovereign debt management, involving major creditors like China.

In the specific case of Zambia, China’s adherence to the DSSI allowed for the postponement of payments totaling $8.2 billion in 2020 and 2021. However, the lack of coordination among private creditors, wary of information gaps, and the opaque nature of Chinese loans, posed significant challenges. Even after more details on Zambia’s debts to China came to light following the 2021 elections, bondholders remained cautious, doubting whether China would provide substantial debt relief.

China is actively seeking “comparability of treatment,” a principle outlined in the Common Framework terms. To alleviate Western concerns over potential “free-riding” by China, it is crucial to integrate Chinese systems into the multilateral sovereign debt structure. A more constructive approach than forcing China to comply strictly with OECD and Paris Club standards would be to reconcile the differing U.S. and Chinese systems, avoiding a “Common Framework Cold War.”

Such reconciliation is vital given the significant differences between the two systems, particularly in understanding the appropriate policies for debt-distressed states and the role of austerity or further borrowing in resolving debt crises. The current state of U.S.-China relations should not hinder a broader level of information sharing and cooperation.

With China’s growing influence, debt-laden nations might find solace in the diminishing role of the IMF’s conditionalities. A more effective approach, as suggested by Ray Dalio, may involve restructuring debts over a more extended period or outright cancellation. This should be coupled with measures to stimulate nominal economic growth, such as incurring more debt or printing money. African countries, in particular, need increased fiscal capacity to invest in sustainable development.

On the other hand, China is at a juncture with its refinancing strategies, showing a preference for deferment or rescheduling over the new money approach it has traditionally employed. Building greater cooperation, supported by the private sector and high-level political backing beyond creditor committees, is essential for successful refinancing. This is especially important given China’s hesitance to adopt the common practice of debt write-offs, although it has done so for interest-free loans. Creating a sustainable path for debt restructuring requires a unified effort, acknowledging China’s evolving role, leveraging its willingness to operate within multilateral frameworks, addressing the challenges within the Common Framework, and promoting cooperative solutions that consider the needs of indebted nations and the necessity for responsible and sustainable fiscal practices.

The post Engaging China: A New Vision for a Western Global Debt Restructuring appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Gökçenur Bay.

Global Debt Is Beyond Control

Mel Gurtov — Thu, 04 Jan 2024 06:32:01 +0000

The Washington Consensus

The debt of developing countries is at “crisis” levels, the World Bank has just said. Supporting that view is a New York Times story December 16 headlined “The Debt Problem is Enormous, and the System for Fixing It is Broken.”

The article goes on to explain: “The foundational ideology — later known as the ‘Washington Consensus’ — held that prosperity depended on unhindered trade, deregulation and the primacy of private investment. Nearly 80 years later, the global financial architecture is outdated, dysfunctional and unjust.”

Indeed, the world is awash in government debt, led by the US, Japan, and China, which together account for about half the total. But great powers have many options for handling indebtedness. Small, economically weak countries do not.

What the Times account hints at, but never directly confronts, is the concentrated power of the Washington Consensus. It reflects American and European economic predominance—not just a consensus of the World Bank and International Monetary Fund (IMF) leaderships, in which the US has always had sole veto power, but also the US Treasury Dept. and the global network of financial centers that stretches from New York and Chicago to Frankfurt and Zurich.

Predominance means the ability to dictate terms of loans. Over many years, World Bank and IMF decisions have aimed to condition loans to poor and middle-income countries on their openness to private investment, free trade, and deregulation of state-run agencies—roads, railways, banks, key industries.

Openness translates to opportunities for Western capital to penetrate developing-world economies, often resulting in the hollowing out if not elimination of local private and state-owned business.

Large borrowers must also deal with high interest rates. To ensure repayment, the World Bank and IMF preach austerity: Governments should slash social welfare programs to pay down the debt. Any family deeply in debt would understand the terrible choice facing governments here: Stay on good terms with the bankers by eliminating or reducing subsidies to the poor on food, health care, and fuel.

Consequently, António Guterres, secretary general of the United Nations, says in the Times article: “Even the most fundamental goals on hunger and poverty have gone into reverse after decades of progress.”

A Human Development Crisis

The global debt crisis is really not a new problem, just one that is surging again. As the Times explains: “Pounded by the Covid-19 pandemic, spiking food and energy prices related to the war in Ukraine, and higher interest rates, low- and middle-income countries are swimming in debt and facing slow growth.”

But the Times leaves out the China factor—the billions of dollars in loans to poor countries that cannot possibly be repaid. Sub-Saharan Africa, with about $140 billion in loans, stands out here: Of the top 15 countries that have received China’s loans, only one (Bolivia) is outside that region.

China proclaims that its loans, mainly under the Belt and Road Initiative, come without demands for austerity and with lower interest rates. The BRI has been well received in a number of countries.

But there is no free lunch here and—to mix metaphors—strings are attached, hence the “debt trap.” Recipients of Chinese loans may have to pay back with access to ports and rail lines, extraction of mineral and other resources, use of Chinese labor, damage to the environment, and adherence to Chinese policy views on (for example) human rights and Taiwan.

The debt crisis is one symptom of a development crisis, in which far too many countries do not have the financial resources to support decent conditions of living, from health and food security to environmental protection. Moreover, these countries often are the victims of rich countries’ behavior, as in the case of climate change.

As one source points out, the richest one percent of the world’s population, representing 80 million people, account for about half of global carbon emissions, while the poorest 50 percent, with 3.9 billion people, account for about eight percent of carbon emissions.

Top Down or Bottom Up Models?

For as long as I can remember, the typical solution to the debt problem has been to give developing countries seats at the table where decisions are made, and to convert loans into grants. A seat at the table might help if the major players, starting with the US, were ever persuaded to reduce their voting power.

Even then, it is the loan conditions—the amount of money available, the high interest rates, requirements of local regulations, and terms of repayment—that would still depend on the good graces of the major financial institutions. And those institutions, to put it mildly, don’t believe in being charitable.

As for providing grants rather than loans, well, that day is long gone and would be very difficult in today’s competitive environment to recover. Foreign aid from nearly all countries, particularly in the form of direct grants, has been on the downslide for many years.

The Times report is weakest in failing to report on bottom-up approaches to development in the human interest. Giving aid or loan relief means dealing exclusively with governments that may be corrupt, excessively bureaucratic and incompetent, dominated by the military, and authoritarian—in any of these cases, giving low priority to human security.

Channeling funds to NGOs with successful experiences promoting human development is far more likely to help than providing unworthy governments with debt relief. There are plenty of grassroots development programs that work—for example, in microfinance.

Kiva is one: It provides small loans at very low interest to villagers, usually women, who are eager to start small businesses. The real choice for international financial organizations comes down to this: Do you want to bail out governments or empower people?

This content originally appeared on CounterPunch.org and was authored by Mel Gurtov.

DTE Energy Facing Oversight of “Hardship-Inducing” Debt Collection Practices

by Sarah Alvarez, Outlier Media — Tue, 26 Dec 2023 11:00:00 +0000

by Sarah Alvarez, Outlier Media

This article was produced for ProPublica’s Local Reporting Network in partnership with Outlier Media. Sign up for Dispatches to get stories like this one as soon as they are published.

DTE Energy, Michigan’s largest utility, will be required to publicly disclose information about how often it sells struggling customers’ old debt to third-party collectors following revelations that it does so far more often than other utilities in the region.

The Michigan Public Service Commission this month ordered DTE to start reporting information about debt sales every year. The utility, however, fended off an effort to end the practice altogether, according to commission documents.

In response to the decision, Chris Lamphear, DTE’s head of corporate communications, said in an email, “We will share information with the Commission on the timetable they request, though we have no plans for a sale at this time.”

A 2022 investigation by Outlier Media and ProPublica detailed how DTE sold customer debt from closed accounts for pennies on the dollar over a period of nine years. Jefferson Capital Systems, a company that bought the debt, has sued Detroiters, garnished paychecks and income tax returns and put liens on homes. The last time DTE sold debt, Outlier and ProPublica found, was 2017.

The company’s debt sale practices were unusual, our investigation found. We surveyed the 11 other investor-owned electric utilities that each serve at least 400,000 customers in the Great Lakes states of Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin. All of them, including Consumers Energy, Michigan’s second-largest utility company, said they do not sell debt. Five of the utilities also said they do not directly sue their customers over debt. The ones that do said they do so only on rare occasions.

Commissionstaff then explored the issue while weighing a rate increase request from DTE, which provides power for Detroit and southeast Michigan. A brief submitted by commission staff in the rate case said the debt sales resulted in “hardship-inducing collection tactics” affecting the utility’s most financially vulnerable customers and suggested that DTE stop selling uncollectible accounts.

The staff was also concerned that DTE’s debt sales allowed for “double recovery.” In other words, according to the staff, some debt is recovered by the third party that buys it even as the utility factors uncollected debt into its calculations for rate increases affecting all customers.

DTE disputed that debt sales would allow for a double recovery, and an administrative law judge involved in the case only acted on one part of the staff request: the need for DTE to regularly report on any third-party debt collection.

The commission made the final decision and will now require annual reports from DTE on debt sales for the previous five years detailing the number of accounts sold to a third party for collection, the amount of debt associated with those accounts and how much money the company made from the sales.

Commission officials declined to comment. Spokesperson Matt Helms said by email the commission was “letting the order speak for it.”

Jackson Koeppel, the founder of an environmental justice organization called Soulardarity, which often testifies in DTE rate cases that go before the commission, said the reports are a “good start.” But Koeppel wants to see commissioners go further.

“The commission needs to put a nail in the coffin of this cruel practice,” he said. “We also need to talk about what is going to be done to help these people who are still dealing with the effects of the debt that has already been sold,” he said.

Jefferson Capital has not commented on its arrangement with DTE or its collection tactics despite numerous attempts by reporters to contact a spokesperson.

Iris Foster-Ray, a Detroit resident still struggling to pay off debt DTE sold to Jefferson Capital in 2017, is hoping no one else will have to go through the stressful, costly process she experienced.

Iris Foster-Ray is still struggling to pay off debt DTE sold to Jefferson Capital in 2017. (Nick Hagen for ProPublica)

Over the years, she has had her paychecks garnished. She said that she now has a payment plan where she owes Jefferson Capital $150 a month and that her income tax refund was garnished two years ago. There is a lien on her house as well.

“DTE shouldn’t have sold the account,” said Foster-Ray, who failed to pay her utility bill during a time when her family was dealing with high medical bills. “If you are behind on any utilities, there should be help because you need heat, and you need water to live.”

Stephanie Johnson testified in a 2022 DTE rate case about how Jefferson Capital came after her for about $5,000 in old debt she built up years ago when she fell behind on one of the utility’s shut-off protection payment plans. Jefferson Capital sued her during the height of the COVID-19 pandemic. The case was finally closed in October, according to court records.

“I am so grateful that I was able to lend my voice to this and share my experience and that it had an effect on DTE not selling people’s debt going forward,” Johnson said.

Most months, tens of thousands of DTE customers can’t afford their bills and have their electric accounts shut off by the company.

Some of those accounts remain closed and are written off by DTE as uncollectible debt. The utility disconnected 162,128 electric accounts for nonpayment through the end of September this year, the last month for which data collected by the MPSC is available. That number is about 30,000 less than for the same period last year.

“We perform significant outreach every day to connect our at-risk customers to financial aid and prevent an interruption of service, which is a last resort we always strive to avoid,” Lamphear said.

This content originally appeared on Articles and Investigations - ProPublica and was authored by by Sarah Alvarez, Outlier Media.

Laos’ national debt now larger than its GDP – and could get even bigger

By RFA Lao — Thu, 21 Dec 2023 21:15:21 +0000

Laos’ national debt has risen to 112 percent of its gross domestic product, a critical level that could grow even bigger as the country struggles with high inflation, a weak currency and low foreign investment, officials from the World Bank and Asian Development Bank said.

Public debt reached US$18.7 billion at the end of 2022 and could rise to 125 percent of GDP soon, the World Bank said in a Dec. 13 report.

Just over half of that is owed to China, which helped Laos build the US$6 billion Lao-China High Speed Railway as part of its Belt and Road Initiative. Other major Chinese investments in roads and hydropower dams have contributed to the debt.

The Lao government is negotiating to restructure its debt to China and recently postponed a debt payment of $1.2 billion, according to the ADB official.

“That’s a lot of money. The country couldn’t keep up with the payment of both capital and interest,” the official said. “Financial management is ineffective. The country is receiving big blows and suffering from it.”

Service payments on its debt – the regular payments required by loan issuers that include interest and principal – could rise to 39 percent of GDP, the World Bank said.

Besides attracting more investment, Laos needs to boost tourism numbers and find a way to raise the production of domestic goods for export, the World Bank report said.

“The Lao economy is facing many challenges,” said a Vientiane-based World Bank official who requested anonymity for safety reasons.

Negotiations with Thai banks and others

Tourism isn’t recovering from the COVID-19 pandemic and small- and medium-sized businesses are suffering, he told Radio Free Asia on Wednesday.

The government has been trying to improve tax collection, has started to crack down on corruption and has reduced spending in some areas, according to the ADB official.

The Ministry of Finance has also begun renegotiations with the World Bank, ADB and some Thai financial institutions – all of whom could be inclined to give Laos new favorable terms because of their own interest in developing Laos’ economy, the ADB official said.

Prime Minister Sonexay Siphandone told lawmakers in June that the government “is determined to control and solve the debt problem,” partly through debt restructuring.

Debt payments started to become a worrisome issue for the government in 2019, a ministry official told RFA.

“We have a lot of debt that has been accumulating for many years,” he said. “But our government has been taking action to control it.”

Some 8 percent of Laos’ debt is owed to ADB, 7 percent to the World Bank and 6 percent to Thai institutions, according to the World Bank.

A Laotian who lives in Vientiane said the government has failed to monitor and inspect the roads and dams that were supposed to move the country’s economy forward.

“Many projects aren’t up to standards,” he said. “For example, many newly built roads are broken a year later.”

Translated by Max Avary. Edited by Matt Reed and Malcolm Foster.

This content originally appeared on Radio Free Asia and was authored by By RFA Lao.

Poll Shows Student Debt Policy May Be Killing Biden

Ari Rabin-Havt — Thu, 21 Dec 2023 17:06:56 +0000

Joe Biden’s 2024 campaign comes at a unique moment for the economy and how the electorate perceives it.

Looking at the economy through the standard macroeconomic lens, everything points in a positive direction. Unemployment remains below 4 percent for the longest stretch of time in 50 years, and inflation has retreated without the pain of a recession many predicted. Yet many voters, including those in key demographics Biden needs to win, are not experiencing the economy in the same way.

At the beginning of the Biden administration, the Covid-19 pandemic resulted in a massive increase in America’s social safety net culminating in the passage of the American Rescue Plan at the start of Biden’s term. Americans received direct cash benefits from the government, health insurance was heavily subsidized, unemployment benefits were expanded, student loan payments paused, and the child tax credit sent cash to nearly every American family, lifting millions from poverty. That’s aside from the direct checks periodically ballooning people’s checking accounts, leading to the largest reserve of savings among consumers in American history.

All of these programs, however, have since disappeared. The spending from programs subsequently passed by Congress is far more abstract to the general public, making it more difficult for voters to explicitly credit Biden. Infrastructure spending is critical, but the waters get muddied as Republicans who voted against the bill often show up at ribbon cuttings and issue press releases when projects break ground in their districts. Funding provided by the CHIPS Act is even more opaque to most Americans. The last two years have seen a transition from direct to indirect benefits.

Could the ending of these benefits, granted during the pandemic as part of the American Rescue Plan and other legislation that have since sunsetted, been overturned by the Supreme Court, rolled back, or ended by Congress be causing Biden’s weakness among certain key demographic groups — young voters in particular?

In other words: Have voters experienced a political rug pull, causing them to move away from Biden? During a crypto “rug pull,” the scammer abandons a project and runs off with their investor’s money. During a political “rug pull,” a benefit that a voter had is taken away. The taxpayers who were benefiting now feel poorer than when they started because they are forced to cover a shortfall once covered by the government.

To test this premise of whether “rug pull” voters exist, it made the most sense to look at student loan recipients. More than 43 million people hold student debt. Student loan repayments were first paused during the Covid-19 pandemic. Biden famously issued an executive order to cancel $10,000 of each borrowers’ debt. Republicans sued to block it, and the Supreme Court struck down his plan. A Republican-led Congress, as part of the deal to raise the debt ceiling, forced the administration to restart loan payments this fall.

And by looking at student debt, while taking the survey, respondents would not be required to recall whether or not they received a benefit. Instead, they simply were being asked to disclose a fact about their current financial situation: whether or not they have student debt.

As part of an omnibus poll conducted by Positive Sum Strategies, a Democratic-leaning firm, I asked whether respondents currently had student loan debt, who they voted for in 2020, and who they planned to vote for in 2024. These questions were separated in the survey from political questions about Joe Biden, Donald Trump, or the 2024 presidential election to avoid questionnaire bias.

The results give an initial indication about the impact of student loans on voters under 45: As of November 30, voters burdened with student debt under the age of 45 prefer Trump over Biden by 3 percentage points. Voters who do not have student debt choose Biden by 9 points.

Graphic: The Intercept/Data: Positive Sum Strategies

(Biden canceled $132 billion in student loan debt debts for 3.6 million people in the past three years; many in this group would be included in the group with no student debt, which marginally favored Biden.)

The first objection to drawing any conclusion from this data might be around the characteristics of the different cohorts. Maybe there’s something about holding student debt — related to wealth or education status, perhaps — that makes a person more likely to vote for Trump, meaning the fact of the debt itself is just a coincidence. Correlation but not causation, as they say.

Perhaps. But that didn’t hold true in 2020, when the two groups voted in nearly identical ways. Voters with no student debt in 2020 favored Biden 47-27 percent, while voters with the debt preferred him by 45-29 percent. While Biden won 45 percent of voters with student debt in 2020, he’s winning just 31 percent of them now. Most have not gravitated to Trump: The former president carried 29 percent of young people with student debt in 2020 but only wins 34 percent now.

Graphic: The Intercept/Data: Positive Sum Strategies

Among all voters, the pattern suggests that age plays a key role in voting as opposed to currently owing student debt (e.g. young people are more likely to have student debt). The fact that the effect is strongest when controlling for age (examining only those under the age of 45) strengthens the thesis.

Graphic: The Intercept/Data: Positive Sum Strategies

The simplest explanation for this decline among young voters is, from 2020 to 2023, voters did not have to make their student loan payments. With an average student loan payment of hundreds of dollars per month, this amounted to a substantial deduction in borrowers’ monthly income and a worsening of their personal economic condition.

It should also be noted that both young voters with debt and without debt increased their support of Trump by 5 points, suggesting this issue has not yet driven a shift from Biden to Trump, but rather from Biden to undecided.

Of course, this analysis does not mean the student debt payment restart alone drove the shift in general attitude attitudes. Those who would be swayed by a similar phenomenon, however, are also those who would feel the sting of the other rug pulls acutely, as well, from the child tax credit and beyond. Further research should be conducted into those who received other benefits that have disappeared in the last two years.

With 11 months until the 2024 election, Biden could win back “rug pull” voters over the course of the campaign. However, while the Biden White House and Democrats place the blame for the student loan restart squarely at the feet of former House Speaker Kevin McCarthy and congressional Republicans, most Americans are simply not in the weeds enough to understand these explanations. (Data suggests the adage holds true: If you are explaining, you are losing.)

While this data is not conclusive, it does suggest that the Biden campaign needs to do substantive work to bring these voters back into the fold.

Positive Sum Strategies conducted an omnibus poll on November 29-30, 2023. The online sample consisted of 1,238 respondents weighted to education, gender, race, respondent quality, and 2020 election results. The margin of error is +/- 3.9.

Join The Conversation

This content originally appeared on The Intercept and was authored by Ari Rabin-Havt.

The National Debt, Tax Farming and Patent Monopolies

Dean Baker — Thu, 21 Dec 2023 06:34:54 +0000

It increasingly looks like the Fed and the Biden administration have nailed the notoriously difficult soft landing, with inflation rapidly falling towards the Fed’s 2.0 percent target and the unemployment rate still under 4.0 percent. All the signs are that the economy will continue to grow and create jobs at a healthy pace in 2024 and that inflation will remain moderate for the foreseeable future.

With near-term economic prospects looking pretty damn good, we can be sure that the deficit hawks will soon be coming out of the woodwork. We can count on being regaled with talk of unprecedented levels of debt and deficits. We will hear of the need for cutting Social Security and Medicare, or cries for the creation of another deficit commission, which is the backdoor way of cutting Social Security and Medicare.

Since we all know what’s coming, we should arm ourselves with knowledge of tax farming. You’re probably wondering what tax farming is, and what it has to do with our current debt and deficit situation. In an odd way, it can tell us a great deal about how we should think about our deficits and especially our debt.

Tax farming was the practice of selling off the right to collect a specific tax. It was a common practice in pre-revolutionary France and in many other countries in prior centuries. The idea was that the government set a tax, say a customs duty on the goods that came through a specific port, and then sold off the right to collect the tax to a specific person. This gave the government an immediate infusion of cash, although it meant that it did not have access to the future revenue from the tax.

We actually still have similar practices. For example, back in 2008, Chicao’s then mayor, Richard M. Daley, sold off the right to collect revenue from city parking meters for the next 75 years for $1.16 billion. This gave Daley money to pay the bills in 2008 but cut off a stream of revenue to the city for the next seven and a half decades.

What is neat about the practice of tax farming is that the loss of revenue does not appear as debt on the ledgers. Obviously, if we are doing long-term projections of the city’s finances we would have to take account of the lost revenue stream, but the money the city got for selling the right to collect revenue from parking meters does not appear as a loan and add to the city’s debt. Nor do the payments going to the parking meter company count as an expenditure by the city, as would be the case with interest on a loan, so they do not directly add to the deficit from that side.

If we were looking at the city of Chicago’s budget the way we typically look at the federal budget, selling off the revenue from the parking meters was an absolutely brilliant move. The city effectively got a $1.16 billion loan without adding to its debt. That means the people yelling about an exploding debt or rising debt to GDP ratios would have nothing to say on this one. The debt did not rise.

Similarly, we don’t have to pay interest on this loan. That means when we are complaining about the rising interest burden, and how interest is becoming the largest item in the federal budget, we’re good with the parking meter deal. There are no interest payments here.

From Parking Meters to Government-Granted Patent Monopolies

I trust that even economists can understand how selling off the revenue from parking meters was effectively a loan to the city, but we managed to keep it off the books so that it doesn’t give deficit hawks anything to complain about. It turns out that government-granted patent and copyright monopolies are largely the same story.

At the most basic level, a patent monopoly or its cousin, copyright monopoly, is a way that the government pays people to do things. In the case of a patent monopoly, we are paying people to innovate. We tell them if they develop a new product or process, the government will give them a monopoly for a period of time, so that they can charge much more than the free market price. With copyrights, we are paying them to do creative work, like write a book, sing a song, or make a movie, or develop software. (Due to changes in the law in the 1990s, software is eligible for both patent and copyright protection.)

In this sense, these monopolies are different from the parking meter revenue sale, but in a way that should get the deficit hawks even more concerned. The parking meter revenue sale did not involve any direct economic activity, except for the relatively small number of people involved in negotiating the deal and transferring the money. It did not add $1.16 billion to GDP in 2008.

By contrast, patent and copyright monopolies actually do directly stimulate economic activity. We are giving out these monopolies precisely because we want people to spend time and money innovating and doing creative work. They do add to GDP.

This should matter a great deal to people worried about deficits. Remember, the problem with a large deficit is that it creates too much demand in the economy. The economy can’t produce enough to meet the demand being created by the deficit. This means that either we get inflation, or the Fed has to raise interest rates to reduce demand.

If government-granted patent and copyright monopolies are boosting demand, that should make us every bit as concerned as if the government was boosting demand with a large deficit. Incredibly, the deficit hawks literally never say a word about the demand created as a result of patent and copyright monopolies.

Patent and Copyright Monopolies and Government Debt

The value of these government-granted monopolies also doesn’t appear on the books as part of the government-debt. This means, incredibly, that we could double the length of all patent and copyright monopolies (even retroactively to ones already granted, as we have done repeatedly with copyrights) and not add a dollar to the government debt.

The payments that result from these monopolies are similar to the payments made to the parking meter company or the tax farmers. They are effectively taxes imposed on the population, although they are not collected by the government.

And these taxes can be very large. In the case of prescription and non-prescription drugs alone, these implicit taxes likely cost us close to $500 billion a year, as we pay over $600 billion for drugs that would likely cost less than $100 billion if sold in a free market. That comes to over $4,000 a year for an average family. If we add in the higher costs for medical equipment, computers, software and a range of other items, we are almost certainly looking at implicit taxes of well over $1 trillion a year. In other words, real money.

If we think of how these implicit taxes affect the economy, it is similar to how the parking meter payments affect the economy of the city of Chicago. They amount to money pulled out of people’s pockets. That makes them less well off directly and also less able to bear the burden of other taxes.

In the case of prescription drugs, there is the additional issue that a large share of the patent rents are actually paid by the government. Roughly a third of drug spending directly comes from the federal government through Medicare, Medicaid and other government programs. Another 15 percent is paid by state and local governments.

This makes the deficit hawks’ decision to ignore patent and copyright monopolies all the more absurd. If the government borrowed another $120 billion a year to replace the patent supported research done by the pharmaceutical industry, they would all be yelling and screaming about the big increase in the deficit. (This would be in addition to the more than $50 billion in annual research spending already supported by the National Institutes of Health and other government agencies.) But they would completely ignore the future savings from being able to buy drugs at the free market price rather than the patent-protected price. That may make sense in Washington, but not for anyone who actually cares about the future of the economy.

Government-Granted Patent and Copyright Monopolies Are Part of the Debt, or You’re Not Serious

The basic story here is that we have to recognize that granting patent and copyright monopolies are a way that the government pays for things. They are an alternative to direct spending. We have to recognize their economic impact if we want to do serious accounting of debts and deficits. The fact that their impact is almost universally ignored speaks to the seriousness of the current debate.

This first appeared on Dean Baker’s Beat the Press blog.

The post The National Debt, Tax Farming and Patent Monopolies appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Dean Baker.

“Developing Countries” are Trapped in a New Debt Crisis : How Can This be Explained?

Eric Toussaint — Wed, 20 Dec 2023 06:50:18 +0000

Photo by Alice Pasqual

The latest World Bank report on the debts of “developing countries”, published on December 13, 2023 [1], reveals an alarming fact: in 2022, developing countries as a whole spent a record US$ 443.5 billion to pay for their external public debt. The 75 low-income nations that are eligible for loans from the International Development Association (IDA), a World Bank organization that provides loans to the world’s poorest nations, paid a record US$ 88.9 billion to its creditors in the same year, 2022. These 75 nations have an unprecedented total external debt of US$ 1,100 billion, which is more than twice as much as it was in 2012. As per the press release from the World Bank, the nations in question experienced a 134% increase in their foreign debt between 2012 and 2022, which was greater than the 53% increase in their gross national income (GNI).

The WB adds:

“Surging interest rates have intensified debt vulnerabilities in all developing countries. In the past three years alone, there have been 18 sovereign defaults in 10 developing countries—greater than the number recorded in all of the previous two decades. Today, about 60 percent of low-income countries are at high risk of debt distress or already in it.”

The World Bank is therefore sounding the alarm: a new debt crisis has begun. Vast quantities of money are being used to pay off debts, rather than addressing the increasing needs of hundreds of millions of people who desperately need support. According to another World Bank report quoted by the Financial Times [2], between 2019 and 2022, over 95 million more people have fallen into extreme poverty.

The World Bank acknowledges that in 2022 private lenders began to turn off the tap of credit to developing countries, while squeezing the lemon to get the most repayments. In fact, according to the WB, new loans granted by private lenders to public authorities in developing countries fell by 23% to 371 billion dollars, their lowest level in ten years. On the other hand, these same private creditors collected $556 billion in repayments. This indicates that they collected $185 billion more in loan repayments in 2022 than they disbursed. According to the World Bank, this is the first time since 2015 that private creditors have received more funds than they injected into developing countries.

The World Bank does not provide an explanation for this since doing so would require questioning the economic model and system that it supports and believes to be the only viable choice. It would also entail unmistakably placing the blame at the feet of the Western European and North American central banks, and consequently at the hands of the leaders of the main Western powers that control the World Bank and the IMF.

How can we explain how the weakest links in the global capitalist system are being affected by the current debt crisis?

This is the first time since 2015 that private creditors have received more funds than they injected into developing countries

We must examine the preceding 15 years in order to comprehend the current predicament.

From 2010-2012, the gradual reduction in interest rates in the North reduced the cost of debt in the South. The central banks of the most industrialized countries lowered interest rates to 0%. The aim of this policy was to keep the financial markets afloat in particular and large private companies in general. It was also intended to make public debt in the North easier to manage and refinance. This policy of very low-interest rates practised by the major capitalist powers encouraged the financing of spending through debt and led to a sharp increase in both public and private debt in the North and South of the planet. It has also reduced the cost of refinancing for developing countries. The governments of developing countries, including the poorest, were given a dangerous sense of security by this low-cost financing, the influx of capital from the North seeking better returns in the face of low-interest rates in the North, and high export earnings (because the price of raw materials exported from the South to the North remained high). Sub-Saharan African nations in poverty that had never had the chance to print and sell their sovereign debt on global financial markets were able to quickly find purchasers for their debt. Investment funds and banks in the North bought the securities of the South because they offered a better yield than US Treasury securities, Japanese, German, French or other European countries’ securities, all of which were close to 0% or no higher than 2 to 3%.

Without difficulty, poor countries have issued and sold their external debt on the international markets. Rwanda serves as a prime example. It is one of the world’s poorest nations, still scarred from the genocide of 1994, yet for the first time in its history, it was able to issue sovereign debt securities and sell them on Wall Street. This was the case in 2013, 2019, 2020 and 2021. Senegal was also able to issue six international bonds between 2009 and 2021, in 2009, 2011, 2014, 2017, 2018 and 2021. Ethiopia, also a very poor country, was able to issue an international bond in 2014. Benin had access more recently and issued 3 bonds on the international markets in 2019, 2020 and 2021. Côte d’Ivoire, which emerged from a civil war just a few years ago, also issued bonds every year from 2014 to 2021, even though it is also a highly indebted poor country. Other examples include Kenya (2014, 2018, 2019, 2021), Zambia (2012, 2014, 2015), Ghana (2013 to 2016, 2018 to 2021), Gabon (2007, 2013, 2015, 2017, 2020, 2021), Nigeria (2011, 2013, 2014, 2017, 2018, 2021, 2022), Angola (2015, 2018, 2019, 2022) and Cameroon (2014, 2015, 2021). This is unprecedented in the last 60 years. This reflects a very special international situation: financial investors in the North were flush with cash, and with interest rates very low in their region, they were on the lookout for attractive returns. Senegal, Zambia and Rwanda were promising yields of 6-8% on their securities, so they attracted financial companies looking to temporarily invest their cash, even if the risks were high. The governments of poor countries became euphoric and tried to convince their populations that happiness was just around the corner, even though the situation could dramatically turn the other way around. The world press reported that Afro-optimism will triumph over Afro-pessimism [3]. African leaders boasted of their success stories, attributed to their ability to adapt to neoliberal globalisation and open markets. They got plaudits from the World Bank, the IMF, and the African Development Bank (AfDB). However, these governments have amassed up huge debt without seeking input from the people. The financial situation drastically worsened when central banks decided to start raising interest rates in 2022.

From the 2020s, the downward spiral towards another major debt crisis

The combination of the pandemic, the effects of the war in Ukraine, inflation and interest rate rises by the central banks of the most industrialized countries triggered a new debt crisis in all the countries of the South

The combination of the pandemic, the effects of the war in Ukraine, inflation and interest rate rises by the central banks of the most industrialized countries triggered a new debt crisis in all the countries of the South. Since 2020 and especially 2022, we have been in a new situation, a new debt crisis of enormous proportions caused by four shocks to global capitalism. These are all shocks that are exogenous to the poorest countries. Firstly, the coronavirus pandemic, which has caused massive deaths around the world, widespread lockdowns, disruption of supply chains and so on.

Secondly, the economic crisis was exacerbated by the pandemic. It has undermined the economies of developing countries, from Latin America to Asia and Africa. The suspension of air travel notably hurt nations like Cuba and Sri Lanka, whose economies relied heavily on tourism.

The present sovereign debt crisis was brought about by the combination of these two shocks. Governments had to raise public spending to combat the pandemic, but at the same time, their economies entered recessions, which reduced tax collections. Thus, sovereign debt skyrocketed.

The third shock was Russia’s invasion of Ukraine in February 2022. This immediately triggered massive speculative rises in the price of cereals such as wheat. Given that grain stocks in Russia and Ukraine did not decline during the early months of the conflict, we may reasonably refer to a speculative rise. Grain costs skyrocketed. After that, exports were banned, which reduced supply and raised prices even further until a deal was made to let shipments to start again. The agreement in question was terminated at the close of July 2023. Along with oil and gas, the cost of chemical fertilizers has also increased.

Globally, prices have skyrocketed, especially in nations where the majority of food, fuel, and fertilizer are imported. The populations of Asian and African nations that were already severely impacted by the recession bore the brunt of inflation. A significant number of people found it difficult to keep up with the growing costs of fuel and food.

The fourth and certainly most important shock was the unilateral decision by the US Federal Reserve, the European Central Bank and the Bank of England to raise interest rates. In the United States, the Fed raised rates from close to 0% to over 5%, the Bank of England and the Bank of Canada followed suit, while the European Central Bank raised rates to 4.5%.

These increases have had a devastating effect on the countries of the South. Countries such as Zambia and Ghana, which were considered to be success stories, went into suspension of payments. Investment funds, which had bought sovereign bonds in these countries, realized that the rise in interest rates in the North meant that they could obtain a higher rate of return by buying such bonds in the United States, Europe and Great Britain. Thus, we witnessed a financial capital repatriation from the South to the North.

Worse still, the investment funds told the countries of the South that if they wanted to refinance their debt, they would have to pay interest rates of between 9% and 15%, and in some cases as high as 26% (as in the case of Zambia and Egypt [4]), otherwise the funds would not buy their bonds. While the countries had no choice but to accept, many of them have no way of making their payments at such high rates. A fresh sovereign debt crisis is the outcome.

In contrast to the goals set forth by the Bretton Woods institutions and the purported advantages of capitalism, the gap between developing and wealthy nations has grown even more between 2008 and 2023

The World Bank admits that rising interest rates have a detrimental effect, but it is cautious to avoid criticizing the central bankers of the nations that control the two Bretton Woods institutions.

The World Bank does not recommend that the governments of indebted countries protect themselves by declaring a coordinated suspension of debt payments. Under international law, however, they have every right to do so. In fact, they can invoke the fundamental change in circumstances caused by external shocks from the North, in particular the unilateral decision by the central banks of North America and Western Europe to radically raise interest rates.

In the event of a fundamental change in circumstances and external shocks, there is no obligation to continue to perform a borrowing contract and to continue to repay the debt.

Nor does the World Bank assume its responsibilities. It was the World Bank, along with the IMF, that encouraged the countries that are now in debt to take out as many new loans as possible and to open up their economies as much as possible, thereby weakening them in the face of the external shocks that have occurred in the space of three years.

If we adopt a long-term perspective and evaluate the operations of the World Bank and the IMF, which were established in 1944—nearly 80 years ago—we can only come to the conclusion that these two international organizations, whose goal was to support stable development and full employment, have entirely failed. A significant study that the IMF released in 2023 admits failure with devastating clarity. Indeed, in its April 2023 World Economic Outlook, the IMF states that it will take 130 years for developing countries to halve the gap between their per capita income and that of developed countries. 130 years to halve the gap between developing countries’ per capita income and that of rich countries! This comes at a time when humanity is facing immediate, shorter-term threats to its existence, due to the ecological crisis that has reached extreme proportions. To top it all off, the IMF estimated that it would take 80 years to close the relevant gap in its April 2008 World Economic Outlook.

The conclusion is straightforward: in contrast to the goals set forth by the Bretton Woods institutions and the purported advantages of capitalism, the gap between developing and wealthy nations has grown even more between 2008 and 2023.

We should also mention the structural adjustment policies that have led to the privatization of health systems in the South, and greater dependence of these countries on imported cereals, inputs and other products. These policies, which have been bludgeoned for more than 40 years, have completely disarmed the countries of the South from coping with external shocks such as the COVID-19 pandemic or the global rise in the price of cereals.

Two centuries ago, at the start of the capitalist industrial revolution, the difference in per capita income between what are now called developing and developed countries was very small. Today’s victorious capitalism on a global scale has increased the gap between nations as never before. Not to mention the gap within each nation, whether in the South or the North, between the richest 1% and the bottom 50%.

It is high time to dissolve the World Bank and the IMF and build another international architecture that respects human rights and nature. It’s high time we got rid of the capitalist system and embarked on an ecosocialist, internationalist, feminist revolution…

Footnotes

[1] Source : Developing Countries Paid Record $443.5 Billion on Public Debt in 2022
Read the full report here.

[2] Martin Wolf, The global economy holds up yet limps on, October 11, 2023.

[3] Africa : the debt trap and how to get out of it

[4] The evolution of yields on 10-year sovereign bonds is available here: http://www.worldgovernmentbonds.com/country/puertorico/ It shows that the yield on 10-year bonds in Zambia and Egypt has reached 26%, that of Turkey 25%, that of Kenya 18.5%, and that of Pakistan and Uganda 16%.

The post “Developing Countries” are Trapped in a New Debt Crisis : How Can This be Explained? appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Eric Toussaint.

Israel’s latest weapon against Palestine is Egypt’s debt

Alfons Pérez, Nicola Scherer — Mon, 18 Dec 2023 14:06:10 +0000

Will Egypt agree to take in the Palestinian population expelled from Gaza in exchange for the cancellation of its external debt?

This content originally appeared on openDemocracy RSS and was authored by Alfons Pérez, Nicola Scherer.

Debt, Democracy & Disarray: Astra Taylor on “The Age of Insecurity”

The Laura Flanders Show — Fri, 15 Dec 2023 18:13:50 +0000

This content originally appeared on The Laura Flanders Show and was authored by The Laura Flanders Show.

#18 – Debt Crisis Looms for World’s Poorest Nations

Shealeigh — Sun, 26 Nov 2023 08:18:33 +0000

The world’s poorest countries will pay 35 percent more in debt interest bills in 2023 than they did in 2022 due to costs associated with the COVID-19 pandemic and a…

The post #18 – Debt Crisis Looms for World’s Poorest Nations appeared first on Project Censored.

This content originally appeared on Project Censored and was authored by Shealeigh.

#18 – Debt Crisis Looms for World’s Poorest Nations

Shealeigh — Sun, 26 Nov 2023 08:18:33 +0000

The world’s poorest countries will pay 35 percent more in debt interest bills in 2023 than they did in 2022 due to costs associated with the COVID-19 pandemic and a…

The post #18 – Debt Crisis Looms for World’s Poorest Nations appeared first on Project Censored.

This content originally appeared on Project Censored and was authored by Shealeigh.

Another brick wobbles in China’s Great Wall of debt

By Chris Taylor for RFA — Thu, 12 Oct 2023 10:21:37 +0000

As China’s economic miracle has unraveled over the past several years, property giant Country Garden Holdings appeared to be an unassailable fortress redoubt.

Rival Evergrande tried to restructure its debt, failed, and now its founder, Hui Ka Yan, once the richest man in China, is under house arrest. But Country Garden, until very recently, was considered safe as houses.

On Tuesday the walls of the Country Garden redoubt crumbled, as the property giant missed a HK$470 million (US$60 million) loan repayment and issued a statement on the Hong Kong Stock Exchange warning that it wasn’t going to be able to repay all of its creditors – not even those that had extended it a grace period.

The company has about US$200 billion in liabilities and close to US$10 billion in debt, it said in the Tuesday statement.

“I think it’s not so much ‘final straw’ as ‘high profile symbol’ of the structural reversal in China’s property market bust. But it’s also possible that because of that, confidence in this fragile market will be further undermined,” said George Magnus, research associate at the China Centre, Oxford University, and the School of African and Oriental Studies in London.

“The knock-on effects of a property bust in a market that’s as big as China’s are going to be remarkable,” added Magnus.

“There simply isn’t anything that can compensate [for the problem] because nothing – least of all Xi’s new productive forces – is sufficiently big. It’ll keep the Chinese economy on a low-growth path with all the attendant consequences for unemployment, absent a major program of market reforms, which Xi is opposed to.”

Chinese President Xi Jinping is famously opposed to “welfarism,” which he reportedly equates with laziness.

A person rides a scooter past a construction site of residential buildings by Chinese developer Country Garden, in Tianjin, China Aug. 18, 2023. Credit: Reuters

Markets have found some solace in announcements emanating out of Beijing, suggesting that stimulus is on the way, but analysts are skeptical even though Hong Kong and Shanghai stocks rallied on Thursday, after China’s investment fund had bought a stake in the country’s banking giants.

Bill Bishop of the widely read Sinocism newsletter commented, “The relatively small investment by Huijin in the four banks – 477 million RMB, about USD $65 million – is not meaningful financially,” adding that the investment fund Huijin had bought similar stakes in the past with the probable aim of achieving a short-term boost to stock values.

‘All the money in the world’

“They'll respond with some stimulus but there isn’t enough money in the world to make a difference,” said Anne Stevenson-Yang, founder and research director at J Capital Research,

“Consider,” she said: “If they lend an extra 1 trillion yuan (US$137 billion) – and bank lending is around 90% of financing in this economy – you get less than a 1% boost in credit.

“Basically, so what?”

Oxford’s Magnus agreed.

“The speculation is that the central government will use its own balance sheet to announce a stimulus program of about 1 trillion yuan or about 0.7% GDP to breathe new life into the economy,” he said.

“If it goes, as in the past, towards infrastructure and real estate projects, it’ll spur activity in the short term but leave China’s structural malaise worse.

“What China needs is household demand and income stimulus, but this has been studiously avoided so far – and it’s not the CCP’s way.”

Stevenson-Yang said, “We’re not going to see a bank failure, because they [the Communist Party] can control that. But the whole shadow sector has collapsed or is collapsing, and that erases a lot of personal wealth.

“And local services are going away,” she added in a reference to the belt-tightening forced on local governments, which have even been reducing civil service salaries to make ends meet.

Michael Pettis, Carnegie Endowment economist, writing on X, formerly known as Twitter, pointed out that there may be hidden liabilities for the banking sector with as-yet unknown consequences.

“Mounting damage to banks’ balance sheets from the property meltdown could also make stabilizing other parts of the economy more difficult,” Pettis said.

“This is likely to be what causes the most long-term damage to the economy … There is likely to be a lot more exposure in less direct forms. That’s because after three decades of soaring prices, it would be astonishing if Chinese banks didn’t have a lot of indirect exposure to the property market, partly reflected for example in the RMB 3.4 trillion in supplier trade payables estimated by Gavekal,” he wrote referring to research by Gavekal Research.

The firm predicted that China’s property sector owes 3.4 trillion yuan in trade payables to their suppliers.

“The major damage to the economy caused by a property sector collapse usually occurs not directly through the property sector but indirectly, through wealth effects and, above all, the impact on the banking system,” said Pettis.

“With one of the biggest property sectors in history, and perhaps the most expensive real estate bubble since Japan in the 1980s, I’d be really surprised if we were near the end of the adjustment process.”

Stability above all

In its Tuesday statement Country Garden admitted, referring to its inability to meet debt commitments, “Such non-payment may lead to relevant creditors of the group demanding acceleration of payment of the relevant indebtedness owed to them or pursuing enforcement action.”

A Chinese flag flutters in front of the logo of China Evergrande Group seen on the Evergrande Center in Shanghai, China September 22, 2021. Credit: Reuters

Property developer Evergrande’s collapse led to widespread “mortgage strikes” and protests China-wide in 2021 and 2022. The fear in Beijing is that Country Garden, which is heavily invested in third- and fourth-tier cities, where the economic crisis is at its worst, will lead to yet more protests.

“The first and utmost priority of Xi and the CCP [Chinese Communist Party] is to maintain power, which means maintaining order and stability,” said Australia-based political commentator and former Chinese diplomat Han Yang.

“Xi can't afford to let disgruntled home buyers and contractors go out on the streets to protest.”

As to whether Country Garden and other property developers can deliver on their commitments and maintain social stability, Magnus said, “Well, it and its peers might be able to deliver if the government keeps them liquid and able to function.

“[But] they’ve got to have the working capital to complete construction and deliver.

“I’m pretty sure that Beijing won’t want to risk hacking off the fabled middle class whose savings and aspirations are now at risk. Then again, Evergrande proposed a restructuring that the government has now blocked.”

He added, “It all looks very messy right now.”

Yang is equally ambivalent about how the situation will play out.

“I guess theoretically Beijing could bail out Evergrande and Country Garden, but then what's next? What about the other over-leveraged developers and banks?” he said.

“The long-term outlook of the asset bubble is grim.”

Said Magnus, “The government can of course try to spread the pain – and its relaxation of housing regulations plus rumored stimulus could provide temporary relief – but what we are now seeing is a mirror image of all the things that propelled a 20-year boom.”

Edited by Mike Firn and Elaine Chan.

This content originally appeared on Radio Free Asia and was authored by By Chris Taylor for RFA.

The Contradictions of Ronald Reagan’s America

Dan Lieberman — Thu, 05 Oct 2023 15:00:43 +0000

As the memory of President Ronald Reagan’s administration recedes, estimation of his deeds grows, and for good reason. A cursory look at his end-of-office stats impresses the casual observer — 67% increase in GDP, from $3 trillion in 1981 to $5 trillion in 1988, net job addition of about 18 million, reduction in the unemployment rate from 7.5% to 5.5%, at that time, one of the longest peacetime expansions in U.S. history, and inflation rate falling from 13.5% to 4.1%. Reagan served with a Democratic Congress and it is difficult to determine whose actions and policies determined outcomes. Was he more a bystander than an active participant in the downfall of the Soviet Union? Statistics show that during his administration the United States started on its road to continuous monetary and trade deficits.

Placing Reaganomics in its realistic context displaces Republican rhetoric that extols the Great Communicator as the model for presidential performance. President Reagan had enviable accomplishments for which he deserves praise, the most significant being the dignity he brought to the office, the trust and stability he gave the American people, and his manner of communicating and connecting with the populace.

Reaganomics had four simple principles — reduce government spending, reduce income and capital gains marginal tax rates, reduce government regulation, and control the money supply to reduce inflation. Containing the Soviet Union and preventing the spread of communism dominated foreign policy.

Reduce Government Spending

The top graph shows federal debt increasing from $998 billion to $ 2.6 trillion during Reagan’s reign. The lower graph has total credit outstanding also almost tripling from $5 trillion to $14 trillion during the same period.

True, it was a Democratic Congress that initiated the federal deficit, but this occurred during his administration and he had some executive power to lower it.

Reagan’s administration’s fiscal policy directly opposed his stated objectives and those of the GOP. Credit throughout the nation and federal deficits started a fast rise in debt that determined America’s future economies.

Tax Reduction

The 40th president of the United States reduced income and capital gain taxes. Objectively, income tax rates determine the transfer of money between the government and taxpayers. Neither direction, taxes up or taxes down, adds or subtracts money to the economic system or allows more or less available spending to the economy; purchasing power stays the same, which means the total purchases of goods and services remain the same.

Individual workers and taxpayers benefit from tax cuts. Stimulating the entire economy with income tax breaks is a psychological phenomenon. The exaggerations, promises, and optimism generated by tax breaks fashion a more optimistic public that incorrectly assumes the cuts stimulate additional spending to an already combined consumer and government spending. Creeping into the debate are other false assumptions — those who have excess funds will purchase domestic goods, invest, and stimulate growth. Not considered is that individuals might purchase imports and invest in speculative ventures that only churn money, both decreasing available purchasing power in the domestic economy. Reagan’s tax cutters were also against government deficits and did not realize that the former leads to the latter.

New York Times, March 6, 2018, “In Blow to Trump, America’s Trade Deficit in Goods Hits Record $891 Billion.”

Money from the tax cuts helped Americans buy more imported goods than ever in 2018. In addition, to finance the tax cuts, the government needed to borrow more dollars, some of which came from foreign investors.

GDP has steadily grown, with a few bumps, and no relation to the lowering of taxes has been proven. A government report: Taxes and the Economy: An Economic Analysis of the Top Tax Rates since 1945, Thomas L. Hungerford Specialist in Public Finance, September 14, 2012, concludes:

The top income tax rates have changed considerably since the end of World War II. Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income distribution are currently at their lowest levels since the end of the second World War. The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced, lower top tax rates may be associated with greater income disparities.

To fund government programs, Reagan signed tax increases into law every year Huge increases in FICA and signing of the Tax Equity and Fiscal Responsibility Act, the “largest peacetime tax increase in American history,” describe Reagan’s ambivalence to tax reductions. If the budget was balanced, then a reasonable conclusion could relate the growth of GDP to a cut in taxes. The economic stimulus due to deficit spending and credit, coupled with the reduction of oil prices and interest rates, probably played more significant roles in the GDP rise.

Note that the graph of GDP coincides with the previous curves of credit outstanding and government debt. All these parameters started their huge increases during the Reagan administration.

Deregulation

True to his word, Reagan offered some deregulation. Was it beneficial?
The Garn–St. Germain Depository Institutions Act of 1982, which deregulated savings and loan associations and allowed banks to provide adjustable-rate mortgages, contributed to the savings and loan crisis of the late 1980s. William A. Niskanen, a member of Reagan’s Council of Economic Advisers has written that deregulation had the “lowest priority” of the items on the Reagan agenda.” Reagan “failed to sustain the momentum for deregulation initiated in the 1970s” and he “added more trade barriers than any administration since Hoover.”

Inflation

Reagan’s policies for controlling the money supply to reduce inflation were contradictory. Paul Volcker, who chaired the Federal Reserve from August 1979 through August 1987, resolved the anomaly.

It always seemed to me that there is a kind of common sense view that inflation is too much money chasing too few goods. You could oversimplify it and say that inflation is just a monetary phenomenon. There are decades, hundreds of years, of economic thinking relating the money supply to inflation, and people to some extent have that in their bones. So I think we could explain what we had to do to stop inflation better that way than simply by saying that we’ve got to raise interest rates. It was also true that we had no other good benchmark for how much to raise interest rates in the midst of a volatile inflationary situation. Then in October [1982], or whenever it was, the money supply (by some measures) was increasing again rather rapidly. We had a tough explanation to make, but I thought we had come to the point that we were getting boxed in by money supply data that was, in any event, strongly distorted by regulatory changes and bank behavior. We came to the conclusion that it was not very reliable to put so much weight on the money supply any more, so we backed off that approach.”

Decreasing income taxes and increasing the money supply by lowering interest rates and running deficits are not the recommended means to reduce inflation. So, why did inflation get tamed — chalk it up to greatly lowered oil prices and cheap imports from rising Japan and the rejuvenated China.

Reduced Unemployment

We come to the most often cited success of Reagan’s policies; an increase of 18 million jobs, but where? All of them were in the non-manufacturing sectors. The Bureau of Labor Statistics, shown below, reports 11 million growth in the service industries, 4.5 million in wholesale and retail trade, and 2 million in the financial industry.

Any employment increase is welcoming and significant. Few of these industries are export industries and are, in effect, supported by the surplus income of manufacturing workers. Banks don’t normally lend to consumers to buy hamburgers, and going to a doctor doesn’t increase assets. Services, trade, and finance create intangible assets and not the tangibles that have defined prices.

This leads to Reagan’s greatest failure; during an era of global prosperity, and while Japan and Germany enhanced their export industries, America started its monotonically increasing deficit in its surplus account. The graph below shows that 1983 was a fatal year for the United States; the year it became a global debtor nation.

During the Reagan decade, Japan’s current account balance went from a record deficit of $10.7 billion in 1980 to a record surplus of $87 billion in 1987 before declining to $57.1 billion in 1989. Similarly, the Federal Republic of Germany, after experiencing deficits during 1979–81, had its current accounts balance rebound to about a DM 9.9 billion surplus in 1982 and increase to DM 76.5 billion in 1986.

While Reagan talked mellifluously, the world’s principal nations trade (including an emerging China) flowed with honey. Examine all the graphs and tables and the conclusion becomes obvious: Reagan’s administration policies increased federal and private debt at exponential rates, decreased manufacturing employment, and turned a positive current account into an ever-mounting negative.

Cold War

Reagan talked tough and acted tough — excoriating the Soviet Union, militarily challenging Moscow by greatly increasing the defense budget, and covertly helping Pakistan intelligence in supplying arms to the Afghan Mujahedeen. His 1983 NSC National Security Decision Directive 75 stated that” a central priority of the U.S. in its policy toward the Soviet Union contains, and over time, reverses Soviet expansionism.” The directive noted: “The U.S. must rebuild the credibility of its commitment to resist Soviet encroachment on U.S. interests and those of its Allies and friends, and to support effectively those Third World states that are willing to resist Soviet pressures or oppose Soviet initiatives hostile to the United States, or are special targets of Soviet policy.” None of these pursuits intended to overthrow the Soviet Union, all were long-term, and did not provide mechanisms to end the Cold War.

The Reagan administration approached the 1986 Reykjavik Summit meeting as an informal exploratory session with a limited agenda and found Soviet leader, Mikhail Gorbachev proposing dramatic reductions in strategic arms. Gorbachev led the negotiations between the two governments and led the Soviet Union into disintegration. An end to the Cold War automatically followed. Reagan’s involvement in the proceedings was more as an observer who did not discourage Gorbachev and refrained from interfering rather than a direct participant who engineered the outcome. He was not in office when Russian President, Boris Yeltsin, on December 8, 1991, signed the Belovezha Accords with President Kravchuk of Ukraine, and Chairman Shushkevich of Belarus, “recognizing each other’s independence and creating the Commonwealth of Independent States (CIS) to replace the Soviet Union.”

Step away from Reagan’s relation to the decline of the Soviet Union and step forward to examine his policy of preventing communist expansion and his foreign policy initiatives appear troubling.

Nicaragua ─ Use of the illegal sale of arms to Iran to fund the Contra rebels in Nicaragua was a major scandal.
El Salvador ─ Despite the atrocities committed by the El Salvador governments, which Reagan never persuaded the Central American government to halt, he provided the Salvadoran government with substantial military aid and advisors.
Guatemala ─ Reagan attempted to justify his shipments of military hardware to the repressive Rios Montt regime by claiming that Guatemala’s human rights conditions were improving. In May 2013, Ríos Montt was found guilty of genocide against Mayan Indian groups by a Guatemalan court. He was sentenced to 80 years in prison, 50 years for genocide, and 30 years for crimes against humanity.
Grenada ─ Reagan misstated the construction of a civilian airport by Cuban laborers as a military airport for delivery of military hardware to Angolan rebels and used that as an excuse to invade defenseless Grenada and overthrow the leftist government. Casualties from the unnecessary invasion ─ 24 Cuban laborers killed and 59 wounded, the Grenadian Army suffered 21 killed and 58 captured, and 24 Grenadian civilians died during the operation. The United Nations General Assembly condemned the invasion as “a flagrant violation of international law” by a vote of 108 to 9.
Angola ─ China originally assisted Jonas Savimbi and his National Union for the Total Independence of Angola (UNITA), which espoused Maoist thoughts. A later UNITA modified itself and aligned with Western capitalism, bringing Reagan to militarily support UNITA in its struggle with the communist-oriented Popular Movement for the Liberation of Angola (MPLA). U.S. support for UNITA prolonged the conflict and caused havoc.
Afghanistan ─ Reagan’s CIA’s assistance to the fundamentalist insurgents through Pakistani intelligence, in a Civil war that was not part of the Cold War, and where the U.S. had no interest, proved fatal to America. Reagan’s assistance to Pakistani intelligence enabled the Taliban victory and the organization of al-Qaeda. Enough said.
Philippines — The Reagan administration aligned itself with Dictator Ferdinand Marcos, through all his assassination of opponents, repression, corruption, and election rigging until military and government leaders abandoned Marcos.
Libya ─ Libyan leader Muammar Gaddafi did not ingratiate himself with Ronald Reagan, The tit-for-tat invectives and hostile actions exploded into Reagan ordering full-scale bombings by the U.S. air force of Libyan territory. By a vote of 79 in favor to 28 against with 33 abstentions, the United Nations General Assembly adopted a resolution that “condemns the military attack perpetrated against the Socialist People’s Libyan Arab Jamahiriya on 15 April 1986, which constitutes a violation of the Charter of the United Nations and of international law.”
Beirut ─ President Reagan sent U.S. troops to Lebanon as part of a peace-keeping force, dispatched to assist Lebanese armed forces in the “departure from Beirut of armed PLO personnel and to assist in the transition of authority to the Lebanese government in Beirut.” Troubles for the American-backed regime of President Amin Gemayel led US warships to shell Syrian and Druze militia positions outside Beirut, which Reagan explained as a military intervention to prevent the Middle East from being “incorporated into the Soviet bloc.” Several months later a bombing of the U.S. barracks in Beirut killed 241 U.S. Marines. Four months later, after one of the biggest debacles in U.S. history, Reagan ordered all U.S. forces to leave Lebanon.
Iran Air Flight 655 ─ On July 3, 1988, surface-to-air missiles, fired by USS Vincennes, shot down a scheduled passenger plane over Iran’s territorial waters in the Persian Gulf and killed all 290 people on board. Excuses of misidentification intensified criticism of Reagan’s orders that sent U.S. military into war zones where they were not wanted or needed. As usual, Reagan used the Soviet bogeyman as a superficial reason for sending a U.S. warship close to Iran’s shores. President Reagan said that “increasing the American naval force and protecting the tankers are necessary to defend the principle of free navigation and to prevent the Soviet Union, which is leasing tankers to Kuwait, from establishing itself as a gulf power.”

Conclusion

President Ronald Reagan had a vision that serves one sector of today’s Republican Party, a vision of self-reliance, limited government, stout defense, and world leadership toward freedom. His administration contradicted that vision, using big government to expand the economy, expand the defense budget, and engage in useless assistance to anti-communist tyrants who crippled their defenseless peoples and stained America’s image as a democratic and peace-loving nation. Federal debt and trade deficits gained impetus during the Reagan presidency. A pledge to balance the federal budget never materialized in any of his eight years in office.

The Gipper can take some credit for propelling an already declining Soviet Union into total decline. The most significant contribution to the political environment of the time was himself. The nation was more united during his tenure in office, exhibiting bipartisan cooperation and not displaying the antagonisms, adversities, and lack of cohesion that characterize 21stcentury America. He connected with the populace, performed with dignity, and portrayed an optimism that energized the public. The contradictions he personally displayed mirrored the contradictions of his policies ─ at times Ronald Reagan seemed disengaged and disenchanted with his surroundings, but his private notes, policy directives, speech writings, and alertness when the U.S. was challenged indicate he was deeply involved in governing the United States of America. Similar to Ronald Reagan, the results of the governing are contradictory and depend upon perspective.

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

NACC Ignores Huge Australian War Crimes & Carbon Debt

Gideon Polya — Wed, 04 Oct 2023 15:18:06 +0000

Australian National Anti-Corruption Commission NACC ignores huge Australian War Crimes & Carbon Debt

I have made 5 huge successive Submissions to the newly formed Australian National Anti-Corruption Commission (NACC). However my 2 most serious Submissions – on horrendous Australian war crimes (Submission #2: 6 million Afghan avoidable deaths from deprivation under Australian and US Alliance occupation in gross violation of Articles 55 and 56 of the Fourth Geneva Convention) and on horrendous, planet-threatening Carbon Debt (Submission #3: an enormous $5 trillion fraud perpetrated on Australian children, grandchildren and future generations) – were rejected by the NACC on the basis that the NACC had “not been able to identify a clear allegation of corrupt conduct as defined by the National Anti-Corruption Commission Act (2022). As a result, the Commission is unable to take any further action in this matter”. My 5 Submissions are summarized below with the rejected Submissions asterisked.

(1). “Submission To National Anti-Corruption Commission: Australian Labor Government’s Lying For Apartheid Israel”. On a bipartisan Coalition Opposition and Labor Government basis, Zionist-subverted and US-beholden Australia is second only to the US as a fervent a supporter of Apartheid Israel and hence of the evil crime of Apartheid that is condemned by the International Convention on the Suppression and Punishment of the Crime of Apartheid. Departure from fervent support for the Zionist-subverted US and for Apartheid Israel means potential political oblivion for Coalition and Labor MPs noting that Australian Federal MPs receive huge remuneration. MPs and governments should not lie and benefit from lying (fraud and corruption) and should not lie in the interest of inimical foreign governments (treason). Apartheid Israel and its Zionist agents have damaged Australians, Australian institutions and Australia in numerous serious ways. However the Australian Labor Government lies for Apartheid Israel in 15 matters.

*(2). “Submission To Australian National Anti-Corruption Commission Over Huge But Ignored Australian War Crimes”. Variously as UK or US lackeys Australians have invaded about 85 countries with 30 of these invasions being genocidal. In the last 80 years (i.e. within living memory) Australia has violated all circa 80 Indo-Pacific countries variously through occupation and invasion (most countries), complicity in US regime-changing coups (8 countries), and through disproportionate climate criminality (impacting all countries). The Brereton Report found that 39 Afghans had allegedly been unlawfully killed by Australian soldiers. However successive Australian Governments and their public servants have grossly violated Articles 55 and 56 of the Fourth Geneva Convention by criminally rejecting their unequivocal demand for Occupier provision to the Conquered Afghan Subjects of life-sustaining food and medical services “to the fullest extent of the means available to it”. Now 6,000,000 (Afghans passively murdered over 20 years by the US Alliance including Australia) / 39 (Afghans allegedly unlawfully killed by Australian soldiers) = 154,000 i.e. the passive mass murder of 6,000,000 Afghans (mostly women and children) by Australian and US Alliance politicians is 154,000 times worse than the alleged unlawful killing of 39 Afghans by Australian soldiers. Of course all war crimes should be thoroughly investigated and the perpetrators tried and punished, but in my opinion no Australian soldier should be tried for any of these 39 alleged unlawful killings of Afghans before the politicians complicit in the 154,000 times greater war crime (the passive mass murder of 6,000,000 Afghans) are exposed and tried. The same argument applies to horrendous avoidable deaths from deprivation in the Australia-complicit WW2 Bengali Holocaust (6-7 million Indian avoidable deaths, 1942-1945) and Iraqi Holocaust (3 million avoidable deaths, 1990-2011).

*(3). “Submission To Australian National Anti-Corruption Commission: Corporations & Governments Ignore Huge Carbon Debt”. Australia is among world-leading climate criminal countries in 16 areas. Corporations, governments and Mainstream media conspire to fraudulently and corruptly ignore Australia’s huge and inescapable Carbon Debt that totals (in USD) about $5 trillion, is increasing at up to about $0.7 trillion each year, and at $69,000 per head per year for under-30 year old Australians. The Carbon Debt of the World is $250 trillion and increasing at $13 trillion each year. This is appalling intergenerational injustice because this ever-increasing and inescapable Carbon Debt will have to be paid by our children, grandchildren and future generations. The damage-related Carbon Price is about $200 per tonne CO2-equivalent but the global applied average is merely $2 per tonne CO2-equivalent. A general principle of national law and the Natural Law is that people are recompensed in full for damage done to them by others but this is rejected in relation to deadly Carbon Pollution by a greedy, fraudulent, corrupt, and traitorous Australian Mainstream (except notably for the science-informed and humane Australian Greens). Carbon Pollution from carbon fuel burning kills about 7 million people each year but the previous Coalition Government’s response to the IMF demand to adopt a modest $75 per tonne CO2-equivalent Carbon Price to save 4 million lives by 2030 was a simple “No”. The present climate criminal Labor Government ignores Australia’s huge exported greenhouse gas (GHG) pollution and supports over 100 new coal and gas extraction projects. Australia has 0.33% of the world’s population but its annual Domestic plus Exported GHG pollution is 5.4% of the World’s total annual GHG pollution. In the absence of requisite action (atmospheric pollution by GHGs is increasing at record high rates) the direst expert prediction is that 10 billion people will die this century in a worsening Climate Genocide en route to a sustainable population in 2100 of only 1 billion people.

(4). “Submission To Australian National Anti-Corruption Commission: Huge & Fraudulent University Fees Exposed”. Education is a basic human right and all education should be free for all. However the commodification and corporatizing of higher education has meant that free university education presently only obtains in about 25 countries. Australian universities charge impoverished local and overseas students hugely excessive tuition fees whereas Accredited Remote Learning (ARL) can deliver top quality, reading-based courses and accrediting examinations essentially for free. All societies and nations need to have a large complement of expert scholars and scientists for a variety of economic, health, national security and national prestige reasons – however why should impoverished, circa 20 year old undergraduate students have to pay for this? Tertiary education provision in Australia can be vastly cheaper off-campus than on-campus. Thus off-campus university education can be essentially cost-free by simply involving students reading prescribed texts and addressing other teaching materials, with qualifications established by expert accrediting examinations. This indeed was the de facto off-campus scheme during the Covid-19 Pandemic except that huge full fees were dishonestly applied to local and overseas students. The student debt from fees presently totals A$74 billion, a massive fraud perpetrated on Australian students, and indeed one of the biggest frauds in Australian history.

(5). Submission To Australian National Anti-Corruption Commission, NACC: Mainstream Media Lying”. Australian Mainstream media (MSM), including the publicly-funded ABC (the Australian Broadcasting Corporation), and the dominant US Murdoch empire media have an appalling and ongoing record of lying by omission and lying by commission. Lying by omission is far, far worse than repugnant lying by commission because the latter at least permits public refutation and public debate (subject, of course, to the will of MSM gate-keepers). Democracy ideally requires an informed electorate but driven by ever-increasing wealth inequity Western democracies (including Australia) have become kleptocracies, plutocracies, Murdochracies. lobbyocracies, corporatocracies and dollarocracies in which Big Money corruptly purchases public perception of reality, votes, more political power and hence more private profit. Although individual journalists can have certain opinions and biases, lying by omission and lying by commission by media is fraud and corruption when perpetrated for personal gain, and treason when perpetrated in the interests of inimical foreign governments such as those of Apartheid Israel and pro-Apartheid America. Experience of Australian MSM mendacity over many decades instructs that the serious examples of fraud, corruption and treason in my 5 Submissions will be resolutely ignored by cowardly and mendacious Australian MSM presstitutes. Australia can be saved from fraudulent MSM in part by (a) publicly exposing and listing all MSM falsehoods on the Web, and (b) banning foreign MSM ownership.

For details and documentation see Gideon Polya, “Australian National Anti-Corruption Commission Rejects Submissions Re Huge Australian War Crimes and Carbon Debt,” Countercurrents, 2 October 2023.

This content originally appeared on Dissident Voice and was authored by Gideon Polya.

“The Great Taking”: How They Can Own It All

Ellen Brown — Tue, 03 Oct 2023 23:04:06 +0000

“’You’ll own nothing and be happy’? David Webb has gone through the 50-year history of all the legal constructs that have been put in place to technically enable that to happen.” [Oct 2 interview titled “The Great Taking: Who Really Owns Your Assets?”]

The derivatives bubble has been estimated to exceed one quadrillion dollars (a quadrillion is 1,000 trillion). The entire GDP of the world is estimated at $105 trillion, or 10% of one quadrillion; and the collective wealth of the world is an estimated $360 trillion. Clearly, there is not enough collateral anywhere to satisfy all the derivative claims. The majority of derivatives now involve interest rate swaps, and interest rates have shot up. The bubble looks ready to pop.

Who were the intrepid counterparties signing up to take the other side of these risky derivative bets? Initially, it seems, they were banks –led by four mega-banks, JP Morgan Chase, Citibank, Goldman Sachs and Bank of America. But according to a 2023 book called The Great Taking by veteran hedge fund manager David Rogers Webb, counterparty risk on all of these bets is ultimately assumed by an entity called the Depository Trust & Clearing Corporation (DTCC), through its nominee Cede & Co. (See also Greg Morse, “Who Owns America? Cede & DTCC,” and A. Freed, “Who Really Owns Your Money? Part I, The DTCC”). Cede & Co. is now the owner of record of all of our stocks, bonds, digitized securities, mortgages, and more; and it is seriously under-capitalized, holding capital of only $3.5 billion, clearly not enough to satisfy all the potential derivative claims. Webb thinks this is intentional.

What happens if the DTCC goes bankrupt? Under The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, derivatives have “super-priority” in bankruptcy. (The BAPCPA actually protects the banks and derivative claimants rather than consumers; it was the same act that eliminated bankruptcy protection for students.) Derivative claimants don’t even need to go through the bankruptcy court but can simply nab the collateral from the bankrupt estate, leaving nothing for the other secured creditors (including state and local governments) or the banks’ unsecured creditors (including us, the depositors). And in this case the “bankrupt estate” – the holdings of the DTCC/Cede & Co. – includes all of our stocks, bonds, digitized securities, mortgages, and more.

It sounds like conspiracy theory, but it’s all laid out in the Uniform Commercial Code (UCC), tested in precedent, and validated by court rulings. The UCC is a privately-established set of standardized rules for transacting business, which has been ratified by all 50 states and includes key provisions that have been “harmonized” with the laws of other countries in the Western orbit. The UCC makes boring reading and is anything but clear, but Webb has diligently picked through the obscure legalese and demonstrates that the amorphous “they” have it all locked up. They can take everything in one fell swoop, without even going to court. Ideally, we need to get Congress to modify some laws, beginning with the super-priority provisions of the Bankruptcy Law of 2005. Even billionaires, notes Webb, are at risk of losing their holdings; and they have the clout to take action.

About The Great Taking and Its Author

As detailed in the introduction, “David Rogers Webb has deep experience with investigation and analysis within challenging and deceptive environments, including the mergers and acquisitions boom of the 80’s, venture investing, and the public financial markets. He managed hedge funds through the period spanning the extremes of the dot-com bubble and bust, producing a gross return of more than 320% while the S&P 500 and the NASDAQ indices had losses. His clients included some of the largest international institutional investors.”

A lengthy personal preface to the book not only establishes these bona fides but tells an interesting story concerning his family history and the rise and fall of his home city of Cleveland in the Great Depression.

As for what the book is about, Webb summarizes in the introduction:

It is about the taking of collateral (all of it), the end game of the current globally synchronous debt accumulation super cycle. This scheme is being executed by long-planned, intelligent design, the audacity and scope of which is difficult for the mind to encompass. Included are all financial assets and bank deposits, all stocks and bonds; and hence, all underlying property of all public corporations, including all inventories, plant and equipment; land, mineral deposits, inventions and intellectual property. Privately owned personal and real property financed with any amount of debt will likewise be taken, as will the assets of privately owned businesses which have been financed with debt. If even partially successful, this will be the greatest conquest and subjugation in world history.

You might have to read the book to be convinced, but it is not long, is available free on the Net, and is heavily referenced and footnoted. I will try to summarize his main points, but first a look at the derivatives problem and how it got out of hand.

The Derivative Mushroom Cloud

A “financial derivative” is defined as “a security whose value depends on, or is derived from, an underlying asset or assets. The derivative represents a contract between two or more parties and its price fluctuates according to the value of the asset from which it is derived.”

Warren Buffett famously described derivatives as “weapons of financial mass destruction,” but they did not start out that way. Initially they were a form of insurance for farmers to guarantee the price of their forthcoming crops. In a typical futures contract, the miller would pay a fixed price for wheat not yet harvested. The miller assumed the risk that the crops would fail or market prices would fall, while the farmer assumed the risk that prices would rise, limiting his potential profit.

In either case, the farmer actually delivered the product, or so much of it as he produced. The derivatives market exploded when speculators were allowed to bet on the rise or fall of prices, exchange rates, interest rates and other “underlying assets” without actually owning or delivering the “underlying.” Like at a race track, bets could be placed without owning the horse, so there was no limit to the potential number of bets. Speculators could “hedge their bets” by selling short — borrowing and selling stock or other assets they did not actually own. It was a form of counterfeiting that not only diluted the value of the “real” stock but drove down the stock’s price, in many cases driving the company into bankruptcy, so that the short sellers did not have to cover or “deliver” at all (called “naked shorting”). This form of gambling was allowed and encouraged due to a number of regulatory changes, including the Commodity Futures Modernization Act of 2000 (CFMA), repealing key portions of the Glass-Steagall Act separating commercial from investment banking; the Bankruptcy Law of 2005, guaranteeing recovery for derivative speculators; and the lifting of the uptick rule, which had allowed short selling only when a stock was going up.

Enter the DTC, the DTCC and Cede & Co.

In exchange-traded derivatives, a third party, called a clearinghouse, ensures that the bets are paid, a role played initially by the bank. And here’s where the UCC and the DTCC come in. The bank takes title in “street name” and pools it with other “fungible” shares. Under the UCC, the purchaser of the stock does not hold title; he has only a “security entitlement”, making him an unsecured creditor. He has a contractual claim to a portion of a pool of shares held in street name, assuming there are any shares left after the secured creditors have swept in. Webb writes:

In the late 1960’s, something called the Banking and Securities Industry Committee (BASIC) had been formed to find a solution to the “paperwork crisis.” It seemed the burdens of handling physical stock certificates had suddenly become too great, so much so, that the New York Stock exchange had suspended trading some days. “Lawmakers” then urged the government to step into the process. The BASIC report recommended changing from processing physical stock certificates to “book-entry” transfers of ownership via computerized entries in a trust company that would hold the underlying certificates “immobilized.”

Thus was established the Depository Trust Company (DTC), which began operations in 1973, after President Nixon decoupled the dollar from gold internationally. The DTC decoupled stock ownership from paper stock certificates. The purchasers who had put up the money became only “beneficial owners” entitled to interest, dividends and voting rights, leaving title of record in the DTC. The Depository Trust and Clearing Corporation (DTCC) was established in 1999 to combine the functions of the DTC and the National Securities Clearing Corporation (NSCC). The DTCC settles most securities transactions in the U.S. Title of record is with DTC’s nominee Cede & Co. Per Wikipedia:

Cede and Company (also known as Cede and Co. or Cede & Co.), shorthand for “certificate depository”, is a specialist United States financial institution that processes transfers of stock certificates on behalf of Depository Trust Company, the central securities depository used by the United States National Market System, which includes the New York Stock Exchange, and Nasdaq.

Cede technically owns most of the publicly issued stock in the United States. Thus, most investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede. Securities held at Depository Trust Company are registered in its nominee name, Cede & Co., and recorded on its books in the name of the brokerage firm through which they were purchased; on the brokerage firm’s books they are assigned to the accounts of their beneficial owners. [Emphasis added.]

Greg Morse notes that the dictionary definition of “cede” is to “relinquish title.” For more on “beneficial ownership,” see the DTCC website here.

“Harmonizing” the Rules

The next step in the decoupling process was to establish “legal certainty” that the “anointed” creditors could take all, by amending the UCC in all 50 states. This was done quietly over many years, without an act of Congress. The key facts, notes Webb, are these:

Ownership of securities as property has been replaced with a new legal concept of a “security entitlement”, which is a contractual claim assuring a very weak position if the account provider [bank/clearing agent] becomes insolvent.
All securities are held in un-segregated pooled form. Securities used as collateral, and those restricted from such use, are held in the same pool.
All account holders, including those who have prohibited use of their securities as collateral, must, by law, receive only a pro-rata share of residual assets.
“Re-vindication,” i.e. the taking back of one’s own securities in the event of insolvency, is absolutely prohibited.
Account providers may legally borrow pooled securities to collateralize proprietary trading and financing.
“Safe Harbor” assures secured creditors priority claim to pooled securities ahead of account holders.
The absolute priority claim of secured creditors to pooled client securities has been upheld by the courts.

The next step was to “harmonize” the laws internationally so that there would be no escape, at least in the Western orbit. Webb learned this by personal experience, having moved to Sweden to escape, only to have Swedish law subsequently “harmonized” with the “legal certainty” provisions of the UCC.

“Safe Harbor” in the Bankruptcy Code

The last step was to establish “safe harbor” in the 2005 Bankruptcy Code revisions – meaning “’safe harbor’ for secured creditors against the demands of customers to their own assets.” Webb quotes from law professor Stephen Lubben’s book The Bankruptcy Code Without Safe Harbors:

Following the 2005 amendments to the Code, it is hard to envision a derivative that is not subject to special treatment. The safe harbors cover a wide range of contracts that might be considered derivatives, including securities contracts, commodities contracts, forward contracts, repurchase agreements, and, most importantly, swap agreements. …

The safe harbors as currently enacted were promoted by the derivatives industry as necessary measures . . . The systemic risk argument for the safe harbors is based on the belief that the inability to close out a derivative position because of the automatic stay would cause a daisy chain of failure amongst financial institutions. The problem with this argument is that it fails to consider the risks created by the rush to close out positions and demand collateral from distressed firms. Not only does this contribute to the failure of an already weakened financial firm, by fostering a run on the firm, but it also has consequent effects on the markets generally . . . the Code will have to guard against attempts to grab massive amounts of collateral on the eve of a bankruptcy, in a way that is unrelated to the underlying value of the trades being collateralized.

A number of researchers have found that super-priority in bankruptcy for derivatives actually increases rather than decreases risk. See e.g. a National Bureau of Economic Research paper called “Should Derivatives be Privileged in Bankruptcy?” Among other hazards, super-priority has contributed to the explosion in speculative derivatives, threatening the stability of national and global markets. For more on this issue, see my earlier articles here and here.

What to Do?

Webb does not say much about solutions; his goal seems to be to sound the alarm. What can we do to protect our assets? “Probably nothing,” he quoted a knowledgeable expert in a recent webinar. “We just have to stop them.” But he did point out that even the assets of the wealthy are threatened. If the issue can be brought to the attention of Congress, hopefully they can be motivated to revise the laws. Congressional action could include modifying the Bankruptcy Act of 2005 and the UCC, taxing windfall profits, imposing a financial transaction tax, and enforcing the antitrust laws and Constitutional property rights. As for timing, Webb says just the movement in interest rates, from 0.25% to 5.5%, should have collapsed the market already. He thinks it is being held up artificially, while “they” get the necessary systems in place.

Where to save your personal monies? Big derivative banks are risky, and Webb thinks credit unions and smaller banks will go down with the market if there is a general collapse, as happened in the Great Depression. Gold and silver are good but hard to spend on groceries. Keeping some emergency cash on hand is important, and so is growing your own food if you have space for a garden. Short-term Treasuries bought directly from the government at Treasury Direct might be the safest savings option, assuming the government doesn’t wind up in bankruptcy itself.

Meanwhile, we need to design an alternative financial system that is equitable and sustainable. Promising components might include publicly-owned banks, product-backed community cryptocurrencies, a land value tax, and a financial transaction tax.

A neoliberal, financialized economy of the sort we have today produces little and leaves the workers in debt. Goods and services are produced by the “real” economy; finance is just superstructure. Derivatives do not now produce even the security for which they were originally intended. A healthy, enduring economy must produce real things and exchange them fairly for the wages earned by labor.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

Government Debt is Not the Problem

Dan Lieberman — Sat, 23 Sep 2023 17:22:27 +0000

Polarization of the American public reflects the polarization of its political Parties, both of whom strive for ascendancy by demeaning, contradicting, and formulating proposals to wrong the other; each Party wrongs itself and the American public.

The recent and periodic arguments concerning the proposed federal budget, an entrance for initiating threats to “close the government,” highlight how both political sides of Congress wrongly portray the fiscal deficits that have become implicit in federal budgets. Two wrongs do not make a right, and, in this case, they have caused misunderstandings and problems.

Start with the Republican Party

Republicans refuse to admit that an expanded money supply is required to support the increased economic activity of a growing economy and increase the Gross Domestic Product (GDP ). This does not mean that an increase in money supply will increase GDP; the implication is otherwise ─ a given money supply is required to sustain a definite GDP. If production exceeds the money supply for purchasing the goods and cannot be cleared, prices will be cut and deflation will develop. A simple and accepted equation that describes the quantity theory of money certifies this proposition:

GDP = Money Supply x Velocity of Money

With the Velocity of Money constant, GDP cannot increase unless the Money Supply increases, and the Money Supply cannot increase without either banks issuing credit or the Federal Reserve purchasing government notes and bonds, both of which increase total national debt.

More appropriately:

GDP = Consumer spending + Business Investment + Government Spending + (Exports – Imports)

The United States has been running trade deficits for decades, and a portion of government spending equalizes the trade deficit.

TRADE BALANCE

A more significant figure is the Current Account, which is the sum of the trade balance (exports minus imports of goods and services), net factor income (interest and dividends) and net transfer payments (such as foreign aid). If the Current Account is positive, it adds purchasing power to the economy. Since the current account has been in negative for decades, it has been a subtractive figure and an equivalent purchasing power has been transferred out of the economy. The government issues debt to foreign nations and returns the purchasing power to the nation.

CURRENT ACCOUNT

The Republican Party has become the Party vocally rebelling against “big government.” Vocally is the correct word; in practice, Republican administrations have favored deficit spending ─ look at the record.

The federal debt grew slowly until the Ronald Reagan (RR) administration, in 1982, radically increased the slope of the debt curve and used deficits to recover from a recession and continue prosperity. This is the same Ronald Reagan who is credited with the phrase, “the government is not the solution but the problem,” and “believed that reducing the role of the government would lead to increased economic growth, which in turn would lead to higher revenues that would help pay down the national debt.” During RR’s time in office, the national debt almost tripled, going from $1.14T to $ 3.00T. His Republican successor, George H.W. Bush, continued the rising debt trend until Democrat President Bill Clinton ran surpluses. Republican George W. Bush reversed Clinton’s cautious policies and again rapidly increased the federal debt.

After the severe 2008 economic crisis, the Federal Reserve and Treasury Department forced the government into rescue plans that greatly increased the national debt and these plans continued through Democrat Obama, Republican Trump, and Democrat Biden administrations. The reasons for the escalated debt are apparent from an examination of the constituents of public debt.

Of the $30T debt, referenced to June 2021, only about $10T was held by American citizens; about $8T was in the hands of foreign creditors, and $6T was held by the Federal Reserve Bank. Intra-government holdings ─ debt between government agencies ─ of $6T, which is not a public problem, completes the total government debt. This breakdown shows that the fiscal policies are not responsible for the elevated debt; the need for elevated debt is responsible for the fiscal policies that drive the elevated budget.

The principal components of the debt are obligations to foreign institutions, including governments, which results from the negative trade balance ─ $850B in 2022 ─ and from Federal Reserve monetary policies of promoting maximum employment, stable prices, and moderate long-term interest rates. From its Open Market Operations, the Federal Reserve accumulated a debt of $6T.

The causes of the negative trade balance are the consumer eagerness for imported goods and the lack of growth of U.S. exports. Due to the pause in consumer purchases during the COVID-19 emergency lockdown, exports had a brief spurt after the lifting of the lockdown and then remained stagnant. This is not a direct government problem; it is a direct problem of a private industry that cannot increase exports, competitively combat imports, and reduce the trade deficit. Private industry shifts the problem to the government, which is forced to retrieve the dollars that leave the country by selling debt.

The Federal Reserve opted to print money and finance debt in order to stimulate the economy during the sub-mortgage loan crisis in 2008 and the Covid crisis, and the federal government became a recipient of that debt. If the Republican Party is serious about reducing the debt, it would examine its sources, which are the negligence of private industry to compete with foreign products and the failure of the Federal Reserve to reduce its balance sheet.

The manner in which former Republican President, Donald Trump, approached the trade deficit demonstrated a lack of knowledge in understanding government debt and how to reduce it. Trump raised tariffs on Chinese imports, which made imports more costly to the American consumer and increased the trade deficit, which led to additional government debt.

The Republican endeavors to reduce the federal budget and slow the increase in debt have merit but it is being done without thought and only for political reasons. Each year some debt is repaid and the money supply accordingly shrinks. With a current account deficit showing no sign of returning to positive territory, to maintain the GDP, new debt must replace retired debt. If private borrowing cannot do more than keep debt constant, the GDP might remain constant. Lacking an increase in private debt, government debt moves GDP to positive growth. Far-right enthusiasts extol the capitalist system and belittle the government debt that anchors the capitalist system in a positive direction.

The chart shows GDP growing as a combination of consumer and government debt. In 1995, to prevent inflation, a sharp rise in consumer debt initiated a pause in government debt. The opposite occurred in 2008, when a drop in consumer debt prompted a massive uptick in government debt.

Continue with the Democratic Party

The U.S. has low unemployment, a more than-marginal economy, and high inflation. The Republicans have a good point: Inflation has too much money chasing too few goods, so why should the government run a deficit to invigorate the economy and provoke more inflation? Analyzing the budget is beyond the scope of this article. Cutting the budget is not beyond the scope of budget makers. A sharp eye with a sharp pencil can do it. If not, what’s wrong with a tax hike, except, of course, it might harm the Party’s election prospects.

Quote Oliver Wendell Holmes: “A good catchword can obscure analysis for fifty years.” Without proof, the Republican Party and Grover Norquist’s Americans for Tax Reform have pushed catchy expressions into our lexicon, casually and with absolute conviction. Two of the most prominent are:

Lowering income tax rates benefits the economy.
Raising income tax rates harms the economy.

These beliefs, which derive from the assumption that if present income tax rates are decreased then total spending in the economy will increase, are shibboleths and not supported by analysis or facts. A simple analysis exposes the fallacies of both expressions.

Taxes transfer money between the government and the taxpayers; neither method adds or subtracts new money nor allows more or less available spending to the economy; in both scenarios, the purchasing power stays the same. The spending may contain different goods and services, but the total purchases of goods and services are identical. Actually, lowering taxes can be detrimental to the economy, while raising taxes may provide definite benefits.

Raising taxes transfers funds from the consumer to the government.
The government assembles huge funds that allow the development and purchase of products, such as airplanes from Lockheed. The manufacturer hires workers to produce the aircraft. The total wages paid to the workers almost match the raised taxes. Spending by the new wage earners ripples through the economy, and, in its final appearance, will almost match the reduced consumer spending of the taxed individuals. Employment, production, and GDP (airplane purchases)have increased ─ give an advantage to tax increases.

Lowering taxes does the opposite; forcing the government to purchase fewer goods and services. The money and spending remain with the already employed and do not incentivize additional employment. Because lowering taxes lowers government revenue, budget considerations might demand an increase in budget deficits.

Lowering taxes mainly assists the already employed, and that is not the major priority. Who pays taxes ─ the employed. Who receives tax breaks ─ those who pay taxes. In effect, lowering taxes redistributes federal assistance from needy persons to the employed. Which is preferable, redistributing income so the employed have more to spend or redistributing the income so the underemployed have something to spend?

Conclusion

Maybe the Biden administration has a good reason for the estimated $1.8T deficit in the 2024 budget, but the present inflation rate of 3.67% encourages a cautious look at increasing demand and pumping an oversupplied economy. Evidently, the Dems fear that the high interest rates will induce a drop in private demand for credit, decrease spending, and trigger a recession. The politicos concluded that the risk of damaging election prospects is higher than the risk of accelerated inflation and getting elected comes before public need.

The last sentence describes the operations of both political Parties ─ their needs come before citizen needs and their policies are designed to benefit themselves. The GOP fails to understand the meaning of government debt and the Dems refuse to use it wisely.

Perceived as a financial evil that corrodes the American government, the green albatross of ongoing federal deficits is an essential element of the free enterprise system ─ a partner to all other debts in an economic order that runs on debt. National debt has a decisive role in maintaining the welfare capitalist system ─ ballast to keep the system floating and reserve energy to prevent it from total collapse. This anti-hero is a prominent savior of free enterprise and those who rail against temporary government deficits without examining its benefits are negligent in their understanding of a capitalist economy and guilty of pushing the economic system into ultimate decline.

Government Debt is not the Problem.
Government legislators are the problem,

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Astra Taylor says Biden’s new SAVE plan is “yet another tweak" to the student debt crisis

Democracy Now! — Tue, 12 Sep 2023 15:51:18 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

“Capitalism Is an Insecurity Machine”: Astra Taylor on Student Debt & Our Radically Unequal World

Democracy Now! — Tue, 12 Sep 2023 14:57:26 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

“Capitalism Is an Insecurity Machine”: Astra Taylor on Student Debt & Our Radically Unequal World

Democracy Now! — Tue, 12 Sep 2023 12:45:47 +0000

As the COVID-19 era pause on federal student debt payments comes to an end and some 40 million Americans will resume payments next month, we speak with Debt Collective organizer Astra Taylor about Biden’s new Saving on a Valuable Education, or SAVE, plan and her organization’s new tool that helps people apply to the Department of Education to cancel the borrower’s debt. Taylor also discusses her new book, The Age of Insecurity: Coming Together as Things Fall Apart, in which she writes, “How we understand and respond to insecurity is one of the most urgent questions of our moment, for nothing less than the future security of our species hangs in the balance.” She notes organizing is about “the alchemy of turning our vulnerabilities, turning our oppression, turning our insecurities into solidarity so that we can change the structures that are undermining our self-esteem and well-being.”

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Fiji owes $374.9m to Exim Bank, but China says ‘no strings’ attached to aid

APR editor — Sat, 02 Sep 2023 22:00:06 +0000

By Shayal Devi in Suva

Fiji owes the Export-Import (Exim) Bank of China about $374.9 million, states the Ministry of Finance’s government debt report for the third quarter of 2022/2023.

This comes as China has drawn a spate of criticism regarding the motivations behind its assistance to Pacific island countries.

The Chinese Embassy in Fiji says all assistance provided has been based on the requests of Pacific Island countries aimed to make people’s lives better.

Fiji’s total debt stands at $9.6 billion, and Fiji’s debt to China amounts to about 3.8 percent of total debt, and 10.5 percent of external debt.

In response to the claims, the Chinese Embassy in Fiji issued a statement saying China was committed to providing all possible assistance to other developing countries within the framework of South-South co-operation.

The statement also said the country never attached any “political strings” and fully respected the wishes and needs of recipient countries.

“Since the 1980s, China has been assisting Fiji in many areas on the basis of the Fijian government requests, including building roads, bridges, jetties, schools, hospitals, stadiums, hydropower stations and many other facilities,” the statement read.

“China often takes into account the debt-paying ability and solvency of recipient countries, so avoiding creating too high a debt burden to recipient countries.”

The embassy also stated all relevant projects were conducted with careful feasibility studies and market research to ensure they delivered the desired economic and social benefits.

“It’s clear that China’s foreign loans is reasonable and helpful, not the cause of the debt crisis of any other countries.”

Shayal Devi is a Fiji Times reporter. Republished with permission.

This content originally appeared on Asia Pacific Report and was authored by APR editor.

More Banks to Fail? Not in North Dakota

Ellen Brown — Sat, 02 Sep 2023 03:59:10 +0000

U.S. banks are again in the crosshairs. Standard and Poor’s has downgraded five new middle-tier banks and put three others on negative outlook. This follows sweeping downgrades earlier in August by Moody’s, which cut credit ratings on 10 banks and placed four of the 15 largest U.S. banks on review for possible downgrade. As with the banks going into receivership earlier this year, concerns include interest rate risk due to unrealized losses from long-term securities.

Meanwhile, the U.S. government itself has been downgraded by Fitch Ratings, which questions the government’s ability to finance its nearly $33 trillion federal debt. Just the interest on the debt is approaching $1 trillion annually — one third of the government’s federal income tax receipts — while the military budget is closing in on another $1 trillion, devouring over half the discretionary federal budget. That leaves virtually none to cover the nearly $6 trillion that, according to the American Society of Civil Engineers, is needed to repair America’s broken infrastructure, among other neglected service needs.

While economists disagree on the overall economic outlook, conditions seem to be deteriorating across the board. Congress cannot agree on a budget, with threats of another government shutdown October 1 when the new fiscal year begins. The moratorium on student debt also ends on October 1, with 45% of borrowers saying they expect to go delinquent on their student loan debts. Credit card debt is at the highest level ever recorded, surpassing $1 trillion; with the average rate of interest at a new all-time record of 20.63 percent, and delinquencies surging dramatically. One trillion dollars in corporate debt is rolling over at much higher interest rates this year; layoffs and empty offices are decimating the commercial real estate market; and elevated interest rates are jeopardizing the home mortgage market, among other debt crises.

Where North Dakota Shines

One state, however, has escaped all this unscathed. North Dakota has the fastest growing GDP per capita in the country; and North Dakota banks are thriving, backstopped by the nation’s only state-owned bank. (“Who knew?” said Kevin O’Leary in a recent Fox News news clip.) According to the latest annual report of the Bank of North Dakota, “The Bank set a record net income of $191.2 million in 2022, up $47 million from 2021. Our asset size set a record as well — $10.2 billion. The return on investment was a healthy 19%. Standard & Poor’s (S&P) affirmed BND’s credit rating as A+/Stable.”

The BND has been called the nation’s safest bank. Its stock cannot be short-sold, since it is not publicly traded; the bank cannot go bankrupt, because by law all of the state’s revenues are deposited in it; and it will not suffer a run, since the state, being the principal bank depositor, would not “run” on itself. Compare JP Morgan Chase, the nation’s largest bank, considered among the country’s safest because it is “too big to fail.” JPM has over $1 trillion in uninsured deposits, the type most likely to “run” or be pulled in a crisis, and it has total deposits of $2.38 trillion. The FDIC insurance fund now has a balance of only $116.1 billion – only 5% of JPM’s deposits. JPM also has major counterparty risk in the derivatives market, a multi-trillion-dollar global bubble called by the Bank for International Settlements a “ticking time bomb.” JPM has $61 trillion in total derivatives, or $628 billion in netted derivatives, five times those of Credit Suisse which went insolvent last spring. Credit Suisse had to be bought by the giant Swiss bank UBS to avoid a derivatives implosion among “globally systemically important banks,” of which Credit Suisse was one.

Not just the BND but North Dakota’s local banks are very safe. The BND acts as a “mini-Fed” for them, helping with liquidity, capitalization, and regulation. It provides correspondent banking services, an active Fed Funds program, check clearing, cash management services, loan guarantees, and other banker’s bank services. No local banks have been in trouble this year (or, in fact, during this century), but if they were to suffer a bank run, the BND would be there to help. According to its former CEO Eric Hardmeyer, the BND has a pre-approved Fed Funds line set up with every bank in the state; and if that is insufficient for liquidity, the BND can simply buy loans from the troubled local bank as needed.

Replicating the Model

Advocates in other states are working to replicate the BND model or variations of it, with some very promising business plans forthcoming. One analysis recently published by the Center for New York City Public Affairs at the New School measures the projected economic impact of a local New York City public bank, based on a business model put forth by local advocates. The analysis focuses on job creation, affordable housing development and preservation, and community development lending during the bank’s five-year start-up phase, the time projected to achieve a full lending portfolio. The authors concluded:

In just its five-year start-up phase, a New York City public bank has the potential to create thousands of jobs, while constructing and renovating nearly 20,000 units of affordable housing, directing over a billion dollars to climate infrastructure investments, and expanding the capacity of the city’s CDFI community banks and credit unions to meet the needs of low- and middle-income New Yorkers. …

By partnering with CDFI banks and credit unions and other responsible lenders, the public bank could enable these institutions to increase their lending by over $5.8 billion. Besides financing affordable housing and community development and climate infrastructure, the public bank’s loans would allow CDFIs to increase their capacity with respect to mortgage and consumer lending. … Loans for mortgages and small businesses will build wealth and ensure that a larger share of the City’s money keeps circulating in New York’s working-class communities. Public bank lending of $4.55 billion is estimated to create approximately 70,600 jobs in its start-up phase.

Other states pursuing legislation in 2023 involving the establishment of public banks include California, Oregon, Washington State, New Mexico, Massachusetts, Pennsylvania and New Hampshire. At the federal level, a much needed solution to the infrastructure crisis is a national infrastructure bank, proposed in HR 4052. We have faced these crises before and have come out the stronger for them. Alexander Hamilton dealt with what appeared to be an insurmountable sovereign debt crisis by establishing the First Bank of the United States as an infrastructure and development bank in 1791. That model was followed by Roosevelt’s government in pulling the country out of the 1930s Great Depression, and it can help put our economy on a more solid footing today.

• This article was first posted on ScheerPost

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

Environmentalists Owe an Enormous Debt to Julian Assange

Mitchel Cohen — Wed, 23 Aug 2023 05:50:41 +0000

Environmentalists throughout the world owe an enormous debt of gratitude to political prisoner Julian Assange, the founder and publisher of Wikileaks — and most of them don’t know it. It wasn’t only secret recordings pertaining to war and crimes-against-humanity that Wikileaks published, based on the heroic work of Chelsea Manning who downloaded thousands of secret More

The post Environmentalists Owe an Enormous Debt to Julian Assange appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Mitchel Cohen.

Vox’s Student Loan ‘Expert’ Is Paid by Debt Collectors

Luca GoldMansour — Fri, 11 Aug 2023 21:25:10 +0000

Vox (8/7/23) should admit that student loan cancellation would be a costly policy for some of its writer’s funders.

Vox (8/7/23) published a piece arguing that “the White House should admit that student debt forgiveness isn’t happening,” and instead make sure that borrowers are prepared for loan repayments to begin again in October. But it failed to disclose that the author is on the student loan industry’s payroll.

The Debt Collective, the nation’s first debtor’s union, noted on Twitter (8/7/23) that the author, Kevin Carey, works for a corporate-backed think tank funded in part by the student loan industry, and has worked to undermine student debt cancellation for over a decade.

As a result, Carey’s argument that cancellation is futile, and that the White House’s efforts should be focused on helping students restart payments and avoid delinquency, reeks of feigned sympathy. It calls to mind the white moderate from MLK’s “Letter from Birmingham Jail,” who despite claiming to support the civil rights movement, “paternalistically” advised African Americans to wait for a “more convenient season” to achieve them.

Don’t try to cancel

New America’s Kevin Carey

Carey praises the White House’s new income-driven repayment plan, but claims that in order to connect these services with the millions of borrowers who may not know their payments have restarted, the Biden Administration must end its flirtation with cancellation, which he argues diverts focus and represents a “confused” communications strategy.

Making sure borrowers know what their repayment options are is a worthy cause, but at no point does Carey provide any real evidence that these two goals are incongruous. Instead, the article is riddled with phrases emphasizing the need for an “all-out effort” and “relentless focus,” seemingly hoping to convince the reader through repetition that trying to cancel student debt would be a hopeless distraction.

In reality, given the current circumstances, an “all-out effort” to help student borrowers would look more like what the Biden administration is doing, and what borrowers and advocates say they want, and less like what the creditor shill is asking for. Hence the multi-faceted approach.

Carey states that the Debt Collective is “actively discouraging their many followers from enrolling in repayment plans.” This is false. Instead, what advocates like the Debt Collective object to is taking tools off the table that help borrowers, like cancellation, especially given the rarity of an administration open to canceling student debt.

Obvious conflict of interest

Washingtonian (6/24/18) reported that when New America’s Barry Lynn was organizing a conference on corporate concentration, his boss Anne-Marie Slaughter complained, “Just THINK how you are imperiling funding for others.”

Carey is vice president of “education policy and knowledge management” at New America, and director of the think tank’s Education Center. The group is noted for it coziness with its corporate sponsors (Washingtonian, 6/24/18)–once firing a researcher, Barry Lynn, after he publicly criticized Google, a major donor. “We’re an organization that develops relationships with funders,” CEO Anne-Marie Slaughter told staffers by way of explaining his termination.

As the Debt Collective highlighted on Twitter, another one of New America’s funders is the ECMC Foundation, the nonprofit branch of the Educational Credit Management Corporation–a debt collector for the Education Department. Another funder is the Lumina Foundation, whose deep pockets originate from the student loan industry.

That Carey’s job is funded by corporations that stand to lose so much from Biden’s cancellation of federal student loans deserves a disclosure from Vox. Instead, the closest readers get is Casey noting that when asked for comment, a loan cancellation activist told him to “shill for student loan companies elsewhere”—followed by his ludicrous rebuttal that student loan companies “haven’t made federal student loans since 2010.”

This is perhaps supposed to absolve Carey of having a vested interest in payments restarting. But this is not the same as saying that these corporations don’t make money off these loans, which they do when they collect them. ECMC in particular has a well-documented history of using “ruthless” tactics for collecting loans (New York Times, 1/1/14; Mother Jones, 8/23).

It’s no surprise, then, that the main thrust of Carey’s argument, that the White House cannot walk and chew gum at the same time—that it can’t both help student borrowers avoid delinquency when payments restart in October and pursue its Plan B strategy to get debt cancellation through the Supreme Court—is exactly what ECMC and Lumina would be hoping for.

To not only neglect to disclose this obvious conflict of interest but to instead obfuscate and pretend it couldn’t exist—all in the name of preventing student borrowers from much needed relief—is a failure of the highest order. As the Debt Collective tweeted, “Kevin Carey knows who butters his bread, and he writes as ‘a student loan expert’ for Vox promoting the status quo.”

ACTION ALERT: You can send messages to Vox here (or via Twitter: @voxdotcom). Please remember that respectful communication is the most effective. Feel free to leave a copy of your message in the comments thread.

The post Vox’s Student Loan ‘Expert’ Is Paid by Debt Collectors appeared first on FAIR.

This content originally appeared on FAIR and was authored by Luca GoldMansour.

Shankar Narayan on Facial Misrecognition, Braxton Brewington on Student Debt Abolition

Fairness & Accuracy In Reporting — Fri, 11 Aug 2023 15:48:43 +0000

CounterSpin230811.mp3

New York Times (8/6/23)

This week on CounterSpin: Why was Detroit mother Porcha Woodruff, eight months pregnant, arrested and held 11 hours by police accusing her of robbery and carjacking? Because Woodruff was identified as a suspect based on facial recognition technology. The Wayne County prosecutor still contends that Woodruff’s charges—dismissed a month later—were “appropriate based upon the facts.” Those “facts” increasingly involve the use of technology that has been proven wrong; the New York Times report on Woodruff helpfully links to articles like “Another Arrest and Jail Time, Due to a Bad Facial Recognition Match,” and “Wrongfully Accused by an Algorithm.” And it’s especially wrong when it comes to—get ready to be surprised—Black people.

Facial recognition has been deemed harmful, in principle and in practice, for years now. We talked in February 2019 with Shankar Narayan, director of the Technology and Liberty Project at the ACLU of Washington state. We hear that conversation this week.

Transcript: ‘Face Surveillance Is a Uniquely Dangerous Technology’

CounterSpin230811Narayan.mp3

Newsweek (8/7/23)

Also on the show: Listeners may know a federal court has at least for now blocked Biden administration efforts to forgive the debt of student borrowers whose colleges lied to them or suddenly disappeared. The White House seems to be looking for ways to ease student loan debt more broadly, but not really presenting an unapologetic, coherent picture of why, and what the impacts would be. We talked about that with Braxton Brewington of the Debt Collective in March 2022. We’ll revisit that conversation today as well.

Transcript: ‘Student Debt Hurts the Economy and Cancellation Will Improve Lives’

CounterSpin230811Brewington.mp3

Plus Janine Jackson takes a quick look at recent press coverage of Trumpism.

The post Shankar Narayan on Facial Misrecognition, Braxton Brewington on Student Debt Abolition appeared first on FAIR.

This content originally appeared on FAIR and was authored by Fairness & Accuracy In Reporting.

Shankar Narayan on Facial Misrecognition, Braxton Brewington on Student Debt Abolition

Fairness & Accuracy In Reporting — Fri, 11 Aug 2023 15:48:43 +0000

CounterSpin230811.mp3

New York Times (8/6/23)

Transcript: ‘Face Surveillance Is a Uniquely Dangerous Technology’

CounterSpin230811Narayan.mp3

Newsweek (8/7/23)

Transcript: ‘Student Debt Hurts the Economy and Cancellation Will Improve Lives’

CounterSpin230811Brewington.mp3

Plus Janine Jackson takes a quick look at recent press coverage of Trumpism.

The post Shankar Narayan on Facial Misrecognition, Braxton Brewington on Student Debt Abolition appeared first on FAIR.

This content originally appeared on FAIR and was authored by Fairness & Accuracy In Reporting.

Foolishness, Hypocrisy, the GOP and the IRS

Gerald E. Scorse — Thu, 10 Aug 2023 14:24:53 +0000

Take your pick from two definitions of modern-day Republicans: foolish hypocrites or hypocritical fools. When it comes to America’s $32 trillion federal deficit, each one is as fitting as the other. They’re hypocrites for saying one thing and doing another. They’re fools because the actions they take are driving the deficit ever higher.

Let’s listen to the words Republicans mouth. Let’s look at the laws they pass and propose. Let’s zero in on their special ways of spending—and spurning—tax dollars.

Off we go, into a world of debt created by the party that claims to be concerned about debt.

Just a couple months back, House Speaker Kevin McCarthy and the GOP created a debt ceiling crisis. McCarthy and President Biden ultimately forged an agreement to avoid a U.S. default, but it didn’t impress Republican presidential candidate Ron DeSantis. “After this deal,” DeSantis warned, “our country will still be careening toward bankruptcy.”

Not two weeks later, the GOP-led House was doing everything it could to turn DeSantis into a prophet. With classic hypocrisy, it “released a plan that would slash taxes for corporations and the wealthy” and cost the government $240 billion over the next decade. With classic foolishness, it went all out to cut double-digit billions from Biden’s long-term funding for the Internal Revenue Service (IRS). Altogether, via three separate cuts, the GOP proposed slashing more than $21 billion from the IRS allocation.

Surprise, surprise: Short-changing America’s tax collection agency won’t save a penny. In fact, it’ll likely cost about $120 billion.

It’s simple arithmetic: In fiscal 2022, “the IRS collected $72.4 billion through enforcement programs, a return on investment (ROI) of about $6 to $1.” The real ROI is almost certain to be greater, since the $6 to $1 ratio doesn’t include the deterrence effect—the additional billions that come in because audit-fearing taxpayers file more honest returns.

Republicans actually delight in starving the IRS. Here’s Rep. Dave Joyce, an Ohio representative, making GOP happy talk a while back: “I know that when we were in the majority [from 2010 – 2018]…we took great pleasure in cutting the amount of money that was going to the IRS every year.”

They’re in the majority again, taking great pleasure again, and their foolishness has become more costly than ever. A new paper by tax experts and former Treasury officials Natasha Sarin and Mark J. Mazur addressed the ever-higher costs and what keeps pushing them up.

As the authors point out, “about 15% of the taxes that are owed are not voluntarily remitted and ultimately not collected.” That’s led to an annual tax gap of $600 billion—a gap that directly reflects the gutting of IRS budgets. Audit rates have been declining every year since 2010, the agency is operating with 22 percent fewer people, and it’s been forced to stick with outmoded systems and equipment.

It’s plain common sense that more money for the IRS can cut that $600 billion gap. It’s especially true when the audits focus on high-income taxpayers.

The agency’s return of $6 for every $1 spent, cited earlier, was an overall figure. According to a study published just last month, “an additional $1 spent auditing taxpayers above the 90^th percentile [i.e., the top 10 percent] yields more than $12 in revenue.” Audits of high-income taxpayers do cost more money, “but the additional revenue more than offsets the costs.”

The 12:1 return includes the deterrence effect, and it’s humongous: deterrence raises an estimated three times as much revenue from high-income taxpayers as the initial audits.

Getting back to the federal deficit, the GOP is far from alone in its hawkishness. The latest long-term projections from the nonpartisan Congressional Budget Office (CBO) “reveal deep structural problems… that will keep the debt on an unsustainable path and diminish the opportunities and choices of future generations.”

Republicans, though, are in a class all by themselves at minimizing federal revenues. They expand the deficit by penny-pinching the IRS. They cost the Treasury trillions with tax cuts for people who don’t need them. They resist and vote down every Democratic effort to make the rich pay “their fair share”.

All of which makes them hypocritical fools or foolish hypocrites: take your pick.

Addendum: Newly-released figures underscore the folly of playing politics with IRS budgets. The agency collected $38 million in unpaid taxes from certain high-income taxpayers in the past few months, an average of roughly $215,000 per case. The revenue came in through an initiative paid for with the first infusion of new agency funding. “It just shows you,” said IRS Commissioner Daniel Werfel, “how much money is out there in delinquent taxes.”

This content originally appeared on Dissident Voice and was authored by Gerald E. Scorse.

China’s last property giant left standing delays debt repayments

By Chris Taylor for RFA and Hwang Chun-mei for RFA Mandarin — Thu, 10 Aug 2023 06:43:19 +0000

Lauded by Beijing as a model business, Country Garden, a 31-year-old too-big-to-fail property developer, is showing signs of succumbing to the same cash-strapped suffocation that has blanketed China’s once vibrant real estate sector.

On Monday, Country Garden Holdings Co. failed to pay U.S.$22.5 million in interest due on debt securities with a total value of $1 billion.

“Prices of the two bonds, which were scheduled to mature in 2026 and 2030, plunged to less than 8 cents on the dollar, according to Tradeweb,” said one report. “Such levels indicate that investors are expecting the company to default.”

When bonds trade far below their face value, traders interpret it as meaning the bond holders don’t expect to get all their money back.

Country Garden still has a 30-day grace period to pay its coupons, before its bondholders can call it as in default, but its Hong Kong-listed shares fell 14% on Tuesday amid a broader selloff of China property stock.

A company spokesperson told the Wall Street Journal that the company was unable to make its interest payments due to deteriorating sales and a liquidity crunch.

Chinese flags are seen near the logo of the China Evergrande Group on the Evergrande Center in Shanghai, China, September 24, 2021. Credit: Reuters

In late 2021, property developer China Evergrande collapsed under accumulated debts, sending the global economy briefly into a spiral and leading to protests in China by would-be homeowners who claimed to have been defrauded on off-plan homes that were never built or completed.

After a short-lived bounce back early this year, China’s property market, in line with consumer spending in general, has drifted back into the doldrums. Along with Evergrande, major developers such as Sunac China Holdings, have defaulted, sending the entire real estate market into a deep slump.

Fortunes at stake

The fortune of Yang Huiyan, the chair of Country Garden and formerly the richest woman in Asia, has slumped by 84% since June 2021 – including a tumble of 8.2% on Tuesday alone, according to the Bloomberg Billionaires Index.

The billionaire’s fortune has been whittled away from a peak of U.S.$28.6 billion to U.S.$5.5 billion today – the “biggest decline among the ultra-rich tracked by Bloomberg’s wealth index over that period.”

But the real threat, say China-based analysts, is an official default by Country Garden, which could be a further nail in the coffin of a sector that has traditionally driven some 25% of China’s economic activity.

Wide-scale debt default

Wang Guochen, an assistant researcher at the First Research Division of the Chung Hua Institute for Economic Research, told RFA Mandarin in an interview on Tuesday that, according to a review by his institute of 100 real estate companies in China, “all of them are more or less involved in debt default.”

The buzz term, said Wang, is “lack of confidence.” He added that people aren’t buying like they used to due to high levels of unemployment and tightened household incomes.

“How can you talk about buying a house if your household income is reduced and you are worried about unemployment?” he said.

“As for the developers, they build homes that nobody wants and then find themselves unable to service their debts.”

Widely-read Chinese blogger “Public Relations Circle” wrote that the problem for Country Garden is that the developer is focused on third- and fourth-tier cities, which means it operates on a greater scale than most of its rivals and likely on tighter margins.

“It’s said that Country Garden has more than 3,000 projects, while Evergrande only has around 700, and that means a lot more undelivered properties than even Evergrande is facing,” the blogger wrote.

The logo of Chinese developer Country Garden is pictured at the Shanghai Country Garden Center in Shanghai, China August 9, 2023. Credit: Reuters

Wang Guochen compares China’s response to the real estate slump to a “bomb defusal” mission in a movie.

Any slight misstep could prematurely trigger an explosion, which potentially leads to paralysis, said Wang.

“In the case of Evergrande, state-owned enterprises didn’t take over and the government didn’t write off Evergrande’s bad debts. In the meantime, it and other property developers like Country Garden continued making speculative housing investments.”

Real estate accounts for a quarter of China’s GDP, said Wang, adding that it was so important that it was not simply crucial to stimulating the economy but to stabilizing the economy and avoiding widespread public discontent.

“The goal should be to avoid both financial collapse and stabilize housing prices so as to not fan the flames of public discontent,” said Wang.

Edited by Mike Firn and Taejun Kang.

This content originally appeared on Radio Free Asia and was authored by By Chris Taylor for RFA and Hwang Chun-mei for RFA Mandarin.

Argentina Will Use the Swap with China to Pay the IMF

Dongsheng News — Sat, 05 Aug 2023 18:04:45 +0000

This week’s News on China.

• Argentina will pay the IMF in yuans
• Yuan overtakes the dollar in China’s bilateral trade
• Floods in the north of the country
• Cunchao, the rural soccer phenomenon

This content originally appeared on Dissident Voice and was authored by Dongsheng News.

Fitch Downgrades US Debt Rating

Farooque Chowdhury — Sat, 05 Aug 2023 16:10:37 +0000

On Tuesday, Fitch Ratings, one of the leading three US credit rating agencies, announced: US’ long-term foreign-currency issuer defaulting rating would be downgraded. Among other factors pushing this downgrading, Fitch cited issues with governance, rising deficits and a looming recession.

Fitch, on an earlier occasion, put the US on watch for a potential downgrade. At that time, it warned: The US could soon lose its AAA score due to an inability to pay its bills, within a matter of days.

Reports by CNN and other leading parts of the US media said:

Fitch downgraded its US debt rating on Tuesday afternoon from the highest AAA rating to AA+, citing “a steady deterioration in standards of governance.”

The downgrade follows lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking US’ first default.

The January 6 insurrection in the Capitol centering presidential election result was also a major contributing factor in the downslide.

January 6th incident

In a meeting with Biden administration officials, the US media reports said, representatives from Fitch repeatedly highlighted the January 6 incident as a significant concern as it relates to US governance, a person familiar with the matter told CNN.

However, Fitch did not mention the incident in their full report on the downgrade; and Fitch did not immediately respond to CNN’s request for comment.

US debt’s luster lost

According to the reports, the rating cut suggests US debt has lost some of its luster, with potential reverberations on a lot – from the mortgage rates US citizens pay on their homes to contracts carried out all across the world. The move could cause investors to sell US Treasuries, leading to a spike in yields that serve as references for interest rates on a variety of loans.

High, growing government debt burden

Explaining its rationale for the downgrade, the US media reports said:

Fitch pointed to “the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.”

Deterioration in governance

Fitch said the decision was not just prompted by the latest debt ceiling standoff but rather “a steady deterioration in standards of governance over the last 20 years” regarding “fiscal and debt matters.”

Fitch predicted a growing government deficit, noting that the US debt-to-GDP ratio was currently at 100.1%, two and a half times higher than the AAA-rated countries’ median of 39.3%. Fitch also cited the US Fed’s recent credit rate hikes, “weakening business investment, and a slowdown in in consumption” to predict a “mild recession” in the fourth quarter of 2023 and the first quarter of 2024.

Fitch’s Version

Fitch Ratings said on August 1, 2023):

Fitch Ratings has downgraded the United States of America’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’. The Rating Watch Negative was removed and a Stable Outlook assigned. The Country Ceiling has been affirmed at ‘AAA’.

For the second time, international credit rating agency Fitch has downgraded the US federal government’s credit rating, citing dismal economic expectations.

Fitch said the downgrading is based on “expected fiscal deterioration over the next three years.”

Fitch mentions following key rating drivers:

Ratings downgrade: The rating downgrade of the US reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.

Erosion of governance: In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025. The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process. These factors, along with several economic shocks as well as tax cuts and new spending initiatives, have contributed to successive debt increases over the last decade. Additionally, there has been only limited progress in tackling medium-term challenges related to rising social security and Medicare costs due to an aging population.

Rising GG deficits: We expect the general government (GG) deficit to rise to 6.3% of GDP in 2023, from 3.7% in 2022, reflecting cyclically weaker federal revenues, new spending initiatives and a higher interest burden. Additionally, state and local governments are expected to run an overall deficit of 0.6% of GDP this year after running a small surplus of 0.2% of GDP in 2022. Cuts to non-defense discretionary spending (15% of total federal spending) as agreed in the Fiscal Responsibility Act offer only a modest improvement to the medium-term fiscal outlook, with cumulative savings of US$1.5 trillion (3.9% of GDP) by 2033 according to the Congressional Budget Office. The near-term impact of the Act is estimated at US$70 billion (0.3% of GDP) in 2024 and US$112 billion (0.4% of GDP) in 2025. Fitch does not expect any further substantive fiscal consolidation measures ahead of the November 2024 elections.

Fitch forecasts a GG deficit of 6.6% of GDP in 2024 and a further widening to 6.9% of GDP in 2025. The larger deficits will be driven by weak 2024 GDP growth, a higher interest burden and wider state and local government deficits of 1.2% of GDP in 2024-2025 (in line with the historical 20-year average). The interest-to-revenue ratio is expected to reach 10% by 2025 (compared to 2.8% for the ‘AA’ median and 1% for the ‘AAA’ median) due to the higher debt level as well as sustained higher interest rates compared with pre-pandemic levels.

GG Debt to Rise: Lower deficits and high nominal GDP growth reduced the debt-to-GDP ratio over the last two years from the pandemic high of 122.3% in 2020; however, at 112.9% this year it is still well above the pre-pandemic 2019 level of 100.1%. The GG debt-to-GDP ratio is projected to rise over the forecast period, reaching 118.4% by 2025. The debt ratio is over two-and-a-half times higher than the ‘AAA’ median of 39.3% of GDP and ‘AA’ median of 44.7% of GDP. Fitch’s longer-term projections forecast additional debt/GDP rises, increasing the vulnerability of the U.S. fiscal position to future economic shocks.

Medium-term fiscal challenges unaddressed

Fitch said:

Over the next decade, higher interest rates and the rising debt stock will increase the interest service burden, while an aging population and rising healthcare costs will raise spending on the elderly absent fiscal policy reforms. The CBO projects that interest costs will double by 2033 to 3.6% of GDP. The CBO also estimates a rise in mandatory spending on Medicare and social security by 1.5% of GDP over the same period. The CBO projects that the Social Security fund will be depleted by 2033 and the Hospital Insurance Trust Fund (used to pay for benefits under Medicare Part A) will be depleted by 2035 under current laws, posing additional challenges for the fiscal trajectory unless timely corrective measures are implemented. Additionally, the 2017 tax cuts are set to expire in 2025, but there is likely to be political pressure to make these permanent as has been the case in the past, resulting in higher deficit projections.

Exceptional Strengths Support Ratings: Several structural strengths underpin the US’ ratings. These include its large, advanced, well-diversified and high-income economy, supported by a dynamic business environment. Critically, the US dollar is the world’s preeminent reserve currency, which gives the government extraordinary financing flexibility.

Economy to slip into recession: Tighter credit conditions, weakening business investment, and a slowdown in consumption will push the US economy into a mild recession in 4Q23 and 1Q24, according to Fitch projections. The agency sees U.S. annual real GDP growth slowing to 1.2% this year from 2.1% in 2022 and overall growth of just 0.5% in 2024. Job vacancies remain higher and the labor participation rate is still lower (by 1 pp) than pre-pandemic levels, which could negatively affect medium-term potential growth.

Fed tightening: The Fed raised interest rates by 25bp in March, May and July 2023. Fitch expects one further hike to 5.5% to 5.75% by September. The resilience of the economy and the labor market are complicating the Fed’s goal of bringing inflation towards its 2% target. While headline inflation fell to 3% in June, core PCE inflation, the Fed’s key price index, remained stubbornly high at 4.1% yoy. This will likely preclude cuts in the Federal Funds Rate until March 2024. Additionally, the Fed is continuing to reduce its holdings of mortgage backed-securities and US Treasuries, which is further tightening financial conditions. Since January, these assets on the Fed balance sheet have fallen by over USD500 billion as of end-July 2023.

ESG – Governance: The US has an ESG Relevance Score (RS) of ‘5’ for Political Stability and Rights and ‘5[+]’ for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in Fitch’s proprietary Sovereign Rating Model. The U.S. has a high WBGI ranking at 79, reflecting its well-established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.

Fitch mentions rating sensitivities:

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

–Public Finances: A marked increase in general government debt, for example due to a failure to address medium-term public spending and revenue challenges;

–Macroeconomic policy, performance and prospects: A decline in the coherence and credibility of policymaking that undermines the reserve currency status of the US dollar, thus diminishing the government’s financing flexibility.

Fitch’s proprietary Sovereign Rating Model (SRM) assigns the US a score equivalent to a rating of ‘AA+’ on the Long-Term Foreign-Currency IDR scale.

Fitch’s sovereign rating committee did not adjust the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR.

Macro: Fitch removed the + 1 notch to reflect the deterioration of the GDP volatility variable and sharp spike in inflation following the pandemic and its aftermath. The economic volatility and inflation impacts on the SRM have begun to revert towards historical levels and no longer warrant a positive Qualitative Overlay (QO) notch.

US protests the downgrade

The White House and the US Treasury Department raised objections on the decision by Fitch to downgrade US long-term rating from AAA to AA+.

White House press secretary told reporters: “We strongly disagree with the decision.” She claimed: It “defies reality”, as President Joe Biden has led the US economy to a “robust recovery”.

US Treasury Secretary Janet Yellen “strongly disagreed” with Fitch’s decision. She said: It was “arbitrary and based on outdated data” and that US Treasury securities remained the world’s “preeminent safe and liquid asset.”

Earlier, China’s credit rating agency downgraded US

In the later part of May 2023, China’s leading credit rating agency Chengxin International Credit Rating (CCXI) downgraded its sovereign credit score for the US by one nick.

The CCXI, US’ Moody-China’s Zhixiang Information Management Consulting joint venture, lowered the US to AAg+ from AAAg, having placed it on review for a further downgrade, according to a statement released on Thursday.

At that time, the CCXI’s statement said:

“The intensification of political divisions between the two parties in the United States has increased the difficulty of resolving the debt-ceiling issue. Even if a consensus is reached, the brinkmanship would pose uncertainty to the US government’s policy path and dampen economic confidence, which could trigger further volatility in the US politics and economy.”

The US debt has already puffed up to more than $31 trillion.

What would have happened – the way the imperialist media machine and its local-level orderlies started shouting – had the downgrading-declaration was in case of some other country, for example, China, Russia, Mexico, Bangladesh, or other similar state?

What does it mean by the words: steady deterioration in governance, and which is going over the last 20 years, and how would have the imperialist media and imperialism’s proxy sepoys sold sounds in their market of politics based on that assessment?

Doesn’t these say: Something is rotten in the state of the Empire, in politics, in economy, in democracy that it practices?

Shouldn’t those faults there be welded before delivering democracy-sermons, one sort of interference, to others, as these conditions appearing tattered take away moral standing for delivering sermon to others?

Note: All cited parts, direct or indirect, even if not with quotation marks, are from relevant reports.

This content originally appeared on Dissident Voice and was authored by Farooque Chowdhury.

Fitch Downgrades US Debt Rating

Farooque Chowdhury — Sat, 05 Aug 2023 16:10:37 +0000

Reports by CNN and other leading parts of the US media said:

Fitch downgraded its US debt rating on Tuesday afternoon from the highest AAA rating to AA+, citing “a steady deterioration in standards of governance.”

The downgrade follows lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking US’ first default.

The January 6 insurrection in the Capitol centering presidential election result was also a major contributing factor in the downslide.

January 6th incident

However, Fitch did not mention the incident in their full report on the downgrade; and Fitch did not immediately respond to CNN’s request for comment.

US debt’s luster lost

High, growing government debt burden

Explaining its rationale for the downgrade, the US media reports said:

Deterioration in governance

Fitch’s Version

Fitch Ratings said on August 1, 2023):

For the second time, international credit rating agency Fitch has downgraded the US federal government’s credit rating, citing dismal economic expectations.

Fitch said the downgrading is based on “expected fiscal deterioration over the next three years.”

Fitch mentions following key rating drivers:

Medium-term fiscal challenges unaddressed

Fitch said:

Fitch mentions rating sensitivities:

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

–Public Finances: A marked increase in general government debt, for example due to a failure to address medium-term public spending and revenue challenges;

Fitch’s proprietary Sovereign Rating Model (SRM) assigns the US a score equivalent to a rating of ‘AA+’ on the Long-Term Foreign-Currency IDR scale.

Fitch’s sovereign rating committee did not adjust the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR.

US protests the downgrade

The White House and the US Treasury Department raised objections on the decision by Fitch to downgrade US long-term rating from AAA to AA+.

Earlier, China’s credit rating agency downgraded US

In the later part of May 2023, China’s leading credit rating agency Chengxin International Credit Rating (CCXI) downgraded its sovereign credit score for the US by one nick.

At that time, the CCXI’s statement said:

The US debt has already puffed up to more than $31 trillion.

Doesn’t these say: Something is rotten in the state of the Empire, in politics, in economy, in democracy that it practices?

Note: All cited parts, direct or indirect, even if not with quotation marks, are from relevant reports.

This content originally appeared on Dissident Voice and was authored by Farooque Chowdhury.

Resisting the Debt System

Ashley Smith — Fri, 28 Jul 2023 05:52:40 +0000

The first thing to say is that China, despite all the hype, is not the main creditor for the Global South. Private creditors like investment funds and big banks hold more than 50 percent of the developing countries’ sovereign debt. The other holders are the multilateral predators including the World Bank, IMF, and traditional imperial powers in the Club of Paris.

China has now established itself as a new creditor. Its state banks, state-owned enterprises, and private enterprises have dramatically increased their loans to the Global South, becoming holders of large amounts of sovereign debt.

Unlike the World Bank and IMF, however, China does not impose neoliberal conditionalities and structural adjustment programs. But let’s be clear, it is not philanthropy. It is a new capitalist superpower locked in competition against the United States, the European powers, and Japan.

As such, it uses its loans to advance its interests. It funds countries to develop industries to export raw materials to China, open their markets to Chinese companies, and secure their allegiance geopolitically.

Amid the new debt crisis, the IMF and World Bank have told China to reduce its holdings and renegotiate them. China has responded by saying that it already is forgiving some debt, restructuring it, and postponing payments. They are doing so to get indebted countries to follow their foreign policy dictates.

For instance, China has convinced fifteen to twenty countries in Africa to renounce recognition of Taiwan and force Taipei to close its embassies. As a result, there is only one country in the continent that recognizes Taiwan as an independent country.

At the same time, China has exposed the hypocrisy of the World Bank and IMF’s pretension to debt cancellation. It has pointed out that while the international financial institutions forgive portions of debt, they never abolish it. It has thus called the other powers’ bluff and exposed all their debt renegotiation as a charade.

China is right. Take the example of Congo. The IMF and World Bank claimed to have stopped the country’s repayment on its debt, but they are lying. In reality, they have set up a trust in which imperialist powers like France, Belgium, and the Netherlands deposit funds for Congo. The IMF and World Bank then draw funds from that trust for payments on their loans.

China has also objected to the imbalance of power in the IMF and World Bank. They have highlighted that the United States still holds more than 15 percent of the votes, enabling Washington to effectively control both of them. By contrast, China, despite its status as the world’s second largest economy, has only 6 percent. So, it has made the reasonable demand for the redistribution of voting power.

Frustrated with Washington’s refusal to abide by its request, China along with Brazil, Russia, India, China, and South Africa have established the BRICS Bank—the New Development Bank. It is headquartered in Shanghai and its new president is the former president of Brazil, Dilma Rousseff. China claims that it is an alternative to the World Bank and IMF. It is not. It funds exactly the same kind of extractivist projects that Western capital has backed in the developing world.

Despite opening this multilateral bank, China’s main way of granting loans to countries is not through it, but through its state banks, state companies, and private corporations. Why? Because China knows, just like the United States, that while multilateral banks are useful, the best way to control countries is through bilateral financial relations. So, China’s banks and corporations remain central to their international lending operations.

It is following the strategy established by the United States with the Marshall Plan after the Second World War. Washington provided grants and loans to countries in a bilateral fashion to fund reconstruction and secure its geopolitical influence against the Soviet Union. China is doing the same to secure allegiance from the Global South and compete with the old imperialist powers.

While we should call attention to it, we must avoid any demonization of China. It is no worse than the United States, France, or Britain.

The movement for debt cancellation is in a difficult situation. We were inspired by Castro’s call for abolition of the debt and have campaigned for it ever since. We have made the demand central to global discussions but have also suffered some profound setbacks like Syriza’s capitulation to the European Central Bank and international financial institutions in 2015.

Over the thirty year period from 1985 to 2015, we have seen massive waves of struggle, reaching a high point through the Global Justice Movement of the early 2000s through 2008 when Ecuador under Rafael Correa suspended its debt repayments. In 2000, we organized 30,000 people to march against the World Bank in Washington and mobilized similar numbers against other summits of the international financial institutions and great powers.

Since Syriza’s capitulation and Correa’s turn to the right, the movement for cancellation has been more difficult, with some exceptions like Argentina, where hundreds of thousand people have protested in the streets against the IMF. But in general, states have balked at canceling their debt and our movement has not been able to build popular mobilization on the scale of the early 2000s.

At the same time, CADTM has actually expanded our organization and capacity. For example, a big Mexican coalition of more than twenty organizations just affiliated with us. It includes people from unions as well as the people from the Zapatistas, feminist groups, peasant organizations, ex-Maoists, Trotskyists, and others critically supporting Andrés Manuel López Obrador’s so-called progressive government.

We have a very active organization in the U.S. colony of Puerto Rico and have built a large network in North Africa called the North African Network for Food Sovereignty. In addition to our long-established organizations in the French-speaking countries of western Africa, we just added new ones in eastern Africa, welcoming a group in Kenya, a pivotal English-speaking country in the struggle against debt.

As a result, we now have affiliates in over thirty countries. In general, the organizations are not massive, but they are militant and activist in nature. And our website receives over 200,000 million hits a month.

We are bringing all our affiliates together in a counter-summit this October against the next assembly of the World Bank and IMF in Marrakesh, Morocco. It will be challenging to organize because of the repressive nature of the monarchy that rules the country. We have an organization there called ATTAC-CADTM Morocco that will host the counter-summit.

But, in an indication of the difficulties we face, ATTAC-CADTM Morocco has no legal status and one of its members was sentenced to six years in jail for activism and has already served three of those years. So, we anticipate that the monarchy will try to interfere with our counter-summit with both manipulation and repression.

The monarchy has already set up a fake civil society organization that has called for an alternative summit to the IMF and World Bank. In reality, it is a counter-summit against our counter-summit.

The fake civil society organization calls it an alternative summit for a reason. They have invited leaders of the IMF and World Bank to participate in a dialogue. They want to work with the international financial institutions, not challenge them. So, those participating in that summit will receive aid in attending and be welcomed by the monarchy to Morocco.

Despite this competition, we think we will be successful in organizing our counter-summit, because up until now the monarchy has balked at repressing foreigners. Of course, we expect them to create problems for us, interfering with our ability to secure venues, but not open repression.

In fact, we will use the counter-summit to help our comrades who have been repressed and jailed by the monarchy. We will launch a campaign to free all the political prisoners in the country. So, we are enthusiastic and confident to pose a challenge to the monarchy, IMF, and World Bank.

This content originally appeared on CounterPunch.org and was authored by Ashley Smith.

China Railway Completes 453 km/h Train Tests

Dongsheng News — Sun, 16 Jul 2023 20:11:27 +0000

This week’s News on China.

• CATL develops and researches electric batteries in Germany
• More support measures for the real estate sector
• Clean energy targets achieved 5 years ahead of schedule
• China Railway completes 453 km/h train tests

This content originally appeared on Dissident Voice and was authored by Dongsheng News.

The Federal Debt Trap: Issues and Possible Solutions

Ellen Brown — Sat, 15 Jul 2023 05:45:16 +0000

“Rather than collecting taxes from the wealthy,” wrote the New York Times Editorial Board in a July 7 opinion piece, “the government is paying the wealthy to borrow their money.”

Titled “America Is Living on Borrowed Money,” the editorial observes that over the next decade, according to the Congressional Budget Office (CBO), annual federal budget deficits will average around $2 trillion per year. By 2029, just the interest on the debt is projected to exceed the national defense budget, which currently eats up over half of the federal discretionary budget. In 2029, net interest on the debt is projected to total $1.07 trillion, while defense spending is projected at $1.04 trillion. By 2033, says the CBO, interest payments will reach a sum equal to 3.6 percent of the nation’s economic output.

The debt ceiling compromise did little to alleviate that situation. Before the deal, the CBO projected the federal debt would reach roughly $46.7 trillion in 2033. After the deal, it projected the total at $45.2 trillion, only slightly less – and still equal to 115% of the nation’s annual economic output, the highest level on record.

Acknowledging that the legislation achieved little, House Speaker Kevin McCarthy said after the vote that he intended to form a bipartisan commission “so we can find the waste and we can make the real decisions to really take care of this debt.” The NYT Editorial Board concluded:

Any substantive deal will eventually require a combination of increased revenue and reduced spending …. Both parties will have to compromise: Republicans must accept the necessity of collecting what the government is owed and of imposing taxes on the wealthy. Democrats must recognize that changes to Social Security and Medicare, the major drivers of expected federal spending growth, should be on the table. Anything less will prove fiscally unsustainable.

The Elephant in the Room

Omitted was any mention of trimming the defense budget, which currently accounts for more than half of the federal government’s discretionary spending and nearly two-thirds of its contract spending. Rep. Ro Khanna (D-CA), who cast the sole dissenting vote on the recent $886 billion defense budget in the House Armed Services Committee, has detailed some of the Pentagon’s excesses. For decades, he writes, legacy military contractors have charged the federal government exorbitant sums for everything from fighter jets to basic hardware. Lockheed Martin, for example, has used its monopoly on F-35 fighter jets to profit from maintenance that only they can provide, with the work needed to support and upgrade existing jets projected to cost taxpayers over $1.3 trillion. TransDigm, another contractor responsible for supplying spare parts for the military, was found to be charging the Pentagon more than four times the market price for their products.

Rep. Khanna concludes, “Keeping America strong starts at home. It means ensuring access to quality, affordable healthcare and education, strengthening our economy with good-paying jobs, and giving Americans the tools they need to pursue the American Dream.… Bloated military spending is not the answer.… We can’t continue to sign a blank check to price-gouging defense contractors while Americans struggle here at home.”

In an address to the UN Security Council on Ukraine aid on June 29, 2023, Max Blumenthal added fuel to those allegations. He said:

Just June 28th, as emergency crews work to clean up yet another toxic train derailment in the United States, this time on the Montana River, further exposing our nation’s chronically underfunded infrastructure and its threats to our health, the Pentagon announced plans to send an additional $500 million worth of military aid to Ukraine….

This policy, … which sees Washington prioritize unrestrained funding for a proxy war with a nuclear power in a foreign land … while our domestic infrastructure falls apart before our eyes, exposes a disturbing dynamic at the heart of the Ukraine conflict – an international Ponzi scheme that enables Western elites to seize hard-earned wealth from the hands of average U.S citizens and funnel it into the coffers of a foreign government that even Transparency International ranks as consistently one of the most corrupt in Europe.

The U.S. government has yet to conduct an official audit of its funding for Ukraine. The American public has no idea where their tax dollars are going. And that’s why this week we at the Grayzone published an independent audit of U.S. tax dollar allocations to Ukraine throughout the fiscal years 2022 and ’23.

Among other dubious payments they found were $4.5 million from the U.S. Social Security Administration to the Kiev government, and $4.5 billion from USAID to pay off Ukraine’s sovereign debt, “much of which is owned by the global investment firm BlackRock. That amounts to $30 taken from every U.S citizen at a time when 4 in 10 Americans cannot afford a $400 emergency.”

The Black Hole of the Pentagon Budget

The Pentagon failed its fifth budget audit in 2022 and was unable to account for more than half of its assets, or more than $3 trillion. According to a CBS News report, defense contractors overcharged the Defense Department by nearly 40-50%; and according to the Office of the Inspector General for the Defense Department, overcharging sometimes reached more than 4,000%. The $886 billion budget request for FY2024 is the highest ever sought.

Following repeated concerns about fraud, waste and abuse in the Pentagon, in June 2023 a bipartisan group of senators introduced legislation to ensure the Defense Department passes a clean audit next year. The Audit the Pentagon Act of 2023 would require the Defense Department to pass a full, independent audit in fiscal 2024. Any agency within the Pentagon failing to pass a clean audit would be forced to return 1% of its budget for deficit reduction.

Sen. Bernie Sanders (I-Vt.) observed that the Pentagon “and the military industrial complex have been plagued by a massive amount of waste, fraud, and financial mismanagement for decades.… [W]e have got to end the absurdity of the Pentagon being the only agency in the federal government that has never passed an independent audit.”

Sen. Chuck Grassley (R-Iowa) said the Pentagon “should have to meet the same annual auditing standards as every other agency…. From buying $14,000 toilet seats to losing track of warehouses full of spare parts, the Department of Defense has been plagued by wasteful spending for decades. … Every dollar the Pentagon squanders is a dollar not used to support service members, bolster national security or strengthen military readiness.”

But defense audits have been promised before and have not been completed. In 2017, Michigan State University Prof. Mark Skidmore, working with graduate students and with Catherine Austin Fitts, former assistant secretary of Housing and Urban Development, found $21 trillion in unauthorized spending in the departments of Defense and Housing and Urban Development for the years 1998-2015. As reported in MSUToday, Skidmore got involved when he heard Fitts refer to a report indicating the Army had $6.5 trillion in unsupported adjustments (or spending) in fiscal 2015. Since the Army’s budget was then only $122 billion, that meant unsupported adjustments were 54 times the spending authorized by Congress. Thinking Fitts must have made a mistake, Skidmore investigated and found that unsupported adjustments were indeed $6.5 trillion.

Four days after Skidmore discussed his team’s findings on a USAWatchdog podcast, the Department of Defense announced it would conduct its first-ever department-wide independent financial audit. But it evidently failed in that endeavor. As Bernie Sanders observes, the Pentagon has never passed an independent audit. It failed its fifth audit in 2022. Whether it will pass this sixth one, or whether the audit will lead to budget cuts, remains to be seen. The Pentagon budget seems to be untouchable.

Tackling the Other Elephant: The Interest Monster

If the sacrosanct military budget cannot be trimmed, what about that other massive budget item, interest on the federal debt? Promising proposals for clipping both the interest and the debt itself were made in conjunction with earlier debt ceiling crises. In November 2010, Dean Baker, co-director of the Center for Economic and Policy Research in Washington, wrote:

There is no reason that the Fed can’t just buy this debt (as it is largely doing) and hold it indefinitely. If the Fed holds the debt, there is no interest burden for future taxpayers. The Fed refunds its interest earnings to the Treasury every year. Last year the Fed refunded almost $80 billion in interest to the Treasury, nearly 40 percent of the country’s net interest burden. And the Fed has other tools to ensure that the expansion of the monetary base required to purchase the debt does not lead to inflation.

In 2011, Republican presidential candidate Ron Paul proposed dealing with the debt ceiling by simply voiding out the $1.7 trillion in federal securities then held by the Fed. As Stephen Gandel explained Paul’s solution in Time Magazine, the Treasury pays interest on the securities to the Fed, which returns 90% of these payments to the Treasury. Despite this shell game of payments, the $1.7 trillion in US bonds owned by the Fed is still counted toward the debt ceiling. Paul’s plan:

Get the Fed and the Treasury to rip up that debt. It’s fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed.

Congressman Alan Grayson, a Democrat, also endorsed this proposal.

Taxing the Bubble Economy

In a July 8, 2023 article on Naked Capitalism titled “The United States’ Financial Quandary: ZIRP’s Only Exit Path Is a Crash,” economist Michael Hudson points to the speculative bubbles blown by the Fed’s Zero Interest Rate Policy, dating back to the Great Recession of 2008-09. The result is a Ponzi scheme, says Hudson, and there is no way out but to write down the debt or let the economy crash.

According to Fed insider Danielle DiMartino Booth, it is those speculative bubbles that Fed Chair Jerome Powell has attempted to pop with the drastic interest rate hikes of the last year, eliminating the “Fed Put,” the presumption that the Fed will always come to the rescue of the speculative market. That tack actually seems to be working; but the approach has resulted in serious collateral damage to mainstream businesses and the productive economic base. (See my earlier article here.)

Another way to trim the fat from the “financialized” economy is a small financial transactions tax. That solution was also discussed in an earlier article (here), drawing on a 2023 book titled A Tale of Two Economies: A New Financial Operating System for the American Economy by Wall Street veteran Scott Smith. He argues that we are taxing the wrong things – income and physical sales. We actually have two economies – the material economy in which goods and services are bought and sold, and the monetary economy involving the trading of financial assets (stocks, bonds, currencies, etc.) – basically “money making money” without producing new goods or services.

Funding Infrastructure through a National Infrastructure Bank

Another way to fund critical infrastructure without tapping the federal budget is through a 1930s-style work-around on the model of Roosevelt’s Reconstruction Finance Corporation. HR 4052, a proposal for a national infrastructure bank on that model, is currently before Congress and has widespread support. The proposed bank is designed to be a true depository bank, which can leverage its funds as all banks are allowed to do: with a 10% capital requirement, it can leverage $1 in capital into $10 in loans.

For capitalization, the bill proposes to follow the lead of Alexander Hamilton’s First U.S. Bank: shares in the bank will be swapped for existing U.S. bonds. The shares will earn a 2% dividend and are non-voting. Control of the bank and its operations will remain with the public, an independent board of directors, and a panel of carefully selected non-partisan experts, precluding manipulation for political ends.

America achieved its greatest-ever infrastructure campaign in the midst of the Great Depression. We can do that again today, and we can do it with the same machinery: off-budget financing through a government-owned national financial institution.

Granted, these proposals are not likely to be implemented until we are actually facing another Great Depression, or at least a Great Recession; but Michael Hudson and other pundits are predicting that outcome in the not-too-distant future. It is good to have some viable alternatives on the table for consideration when, as in the 1930s, politicians are compelled to seek them out.

• First published on ScheerPost.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

Is Student Debt a Crime Against America’s Future?

Thom Hartmann — Wed, 12 Jul 2023 05:51:43 +0000

Image Source: DonkeyHotey – CC BY 2.0

Six Republicans on the Supreme Court just killed President Biden’s student loan debt forgiveness program.

Republicans, predictably, are giddy, celebrating another Supreme Court victory in which, on behalf of their neofascist billionaire owners, they’re again “owning the libs.”

They’re ecstatic that poor and working class people — particularly Black women who, as ABC News noted, “hold nearly two-thirds of the nearly $2 trillion outstanding student debt in the U.S.” — will find it ever harder to climb into the middle class, which increasingly requires a college degree.

When you search on the phrase “student debt forgiveness” one of the top hits that comes up is a Fox “News” article by a woman who paid off her loans in full.

“There are millions of Americans like me,” the author writes, “for whom debt forgiveness is an infuriating slap in the face after years of hard work and sacrifice. Those used to be qualities we encouraged as an American culture, and if Biden gets his way, we’ll be sending a very different message to the next generation.”

This is, to be charitable, bullsh*t.

Forgiving student debt is not a slap at anybody; it’s righting a moral wrong inflicted on millions of Americans by Ronald Reagan and his morbidly rich Republican buddies.

Student debt is evil.

It’s a crime against our nation, hobbling opportunity and weakening our intellectual infrastructure. It maintains and in many cases rigidifies the racial and class caste systems today’s Americans inherited from our eras of slavery and indenture.

Combine this decision with the six Republicans on the Court ending affirmative action and legalizing discrimination this term and it’s clear this is exactly what the rightwing billionaires who put them on the Court and support their lavish vacations and lifestyles want.

Many, if not most, of the people in today’s billionaire class have supported — and fought for — such a caste system since the founding of America, and in every other country around the world, since time immemorial. It’s literally the history of western civilization from ancient Greece and Rome, the stories of kings and conquistadors, and the “Robber Barons” of America’s gilded age.

They really don’t care about improving the lives of everyday Americans; their philosophy is, “I got mine; screw you.” Educated themselves, they’ve always worked to “pull up the ladder” behind them and thus maintain their elite status.

As history shows, this harms countries in real and measurable ways.

Every nation’s single biggest long-term asset is a well-educated populace, and student debt diminishes that.

Every other advanced democracy on the planet understands this.

That’s why student debt at the scale we have in America literally does not exist anywhere else in the rest of the developed world.

American students, in fact, are going to college for free right now in Germany, Iceland, France, Norway, Finland, Sweden, Slovenia, and the Czech Republic, because pretty much anybody can go to college for free in those countries and dozens of others.

“Student debt?” The rest of the developed world doesn’t know what you’re talking about.

Student debt also largely didn’t exist in modern America before the Reagan Revolution. It was created by Republicans here in the 1980s — intentionally — and if we can overcome Republican opposition we can intentionally end it here and join the rest of the world in once again benefiting from an educated populace.

Forty years on from the Reagan Revolution, student debt has crippled three generations of young Americans: over 44 million people carry the burden, totaling a $2+ trillion drag on our economy that benefits nobody except the banks earning interest on the debt and the politicians they pay off.

But that doesn’t begin to describe the damage student debt has done to America since Reagan, in his first year as governor of California, ended free tuition at the University of California and cut state aid to that college system by 20 percent across-the-board.

After having destroyed low income Californians’ ability to get a college education in the 1970s, Reagan then took his anti-education program national as president in 1981.

When asked why he’d taken a meat-axe to higher education and was pricing college out of the reach of most Americans, he said, much like Ron DeSantis might today, that college students were “too liberal” and America “should not subsidize intellectual curiosity.”

It was the 1980s version of today’s “war on woke.”

On May 1, 1970, Governor Reagan announced that students protesting the Vietnam war across America were “brats,” “freaks” and “cowardly fascists,” adding, as The New York Times noted at the time:

“If it takes a bloodbath, let’s get it over with. No more appeasement!”

Four days later four were dead at Kent State, having been murdered by national guard riflemen using live ammunition against anti-war protesters.

Before Reagan became president, states paid 65 percent of the costs of colleges, and federal aid covered another 15 or so percent, leaving students to cover the remaining 20 percent with their tuition payments.

It’s why when I briefly attended college in the late 1960s — before Reagan — I could pay my tuition working a weekend job as a DJ at a local radio station and washing dishes at Bob’s Big Boy restaurant on Trowbridge Road in East Lansing.

That’s how it works — at a minimum — in most developed nations, although in many northern European countries college is not only free, but the government pays students a stipend to cover books and rent.

Here in America, though, the numbers are pretty much reversed from pre-1980 as a result of Reaganommics, with students now covering about 80 percent of the costs. Thus the need for student loans here in the USA.

As soon as he became president, Reagan went after federal aid to students with a fanatic fervor. Devin Fergus documented for The Washington Post how, as a result, student debt first became a thing across the United States during the early ‘80s:

“No federal program suffered deeper cuts than student aid. Spending on higher education was slashed by some 25 percent between 1980 and 1985. … Students eligible for grant assistance freshmen year had to take out student loans to cover their second year.”

It became a mantra for conservatives, particularly in Reagan’s cabinet. Let the kids pay for their own damn “liberal” educations.

Reagan’s college educated Director of the Office of Management and Budget, David Stockman, told a reporter in 1981:

“I don’t accept the notion that the federal government has an obligation to fund generous grants to anybody who wants to go to college. It seems to me that if people want to go to college bad enough then there is opportunity and responsibility on their part to finance their way through the best way they can. … I would suggest that we could probably cut it a lot more.”

After all, cutting taxes for the morbidly rich was Reagan’s first and main priority, a position the GOP holds to this day. Cutting education could “reduce the cost of government” and thus justify more tax cuts.

Reagan’s first Education Secretary, Terrel Bell, wrote in his memoir:

“Stockman and all the true believers identified all the drag and drain on the economy with the ‘tax-eaters’: people on welfare, those drawing unemployment insurance, students on loans and grants, the elderly bleeding the public purse with Medicare, the poor exploiting Medicaid.”

Reagan’s next Education Secretary, William Bennett, was even more blunt about how America should deal with the “problem” of uneducated people who can’t afford college, particularly if they were African American:

“I do know that it’s true that if you wanted to reduce crime,” Bennett famously said, “you could — if that were your sole purpose, you could abort every black baby in this country, and your crime rate would go down.”

These doctrines became an article of faith across the GOP and remain so to this day, as we saw last week with the Republicans on the Supreme Court ending affirmative action.

Reagan’s OMB Director David Stockman told Congress that students were “tax eaters … [and] a drain and drag on the American economy.” Student aid, he said, “isn’t a proper obligation of the taxpayer.”

This was where, when, and how today’s student debt crisis was kicked off in 1981.

Before Reagan, though, America had a different perspective.

Both my father and my wife Louise’s father served in the military during World War II and both went to college on the GI Bill. My dad dropped out after two years and went to work in a steel plant because mom got pregnant with me; Louise’s dad, who’d grown up dirt poor, went all the way for his law degree and ended up as Assistant Attorney General for the State of Michigan.

They were two among almost 8 million young men and women who not only got free tuition from the 1944 GI Bill but also received a stipend to pay for room, board, and books. And the result — the return on our government’s investment in those 8 million educations — was substantial.

The best book on that time and subject is Edward Humes’ Over Here: How the GI Bill Transformed the American Dream, summarized by Mary Paulsell for the Columbia Daily Tribune:

“[That] groundbreaking legislation gave our nation 14 Nobel Prize winners, three Supreme Court justices, three presidents, 12 senators, 24 Pulitzer Prize winners, 238,000 teachers, 91,000 scientists, 67,000 doctors, 450,000 engineers, 240,000 accountants, 17,000 journalists, 22,000 dentists and millions of lawyers, nurses, artists, actors, writers, pilots and entrepreneurs.”

Free education literally built America’s middle class.

When people have an education, they not only raise the competence and vitality of a nation; they also earn more money, which stimulates the economy. Because they earn more, they pay more in taxes, which helps pay back the government for the cost of that education.

In 1952 dollars, the GI Bill’s educational benefit cost the nation $7 billion. The increased economic output over the next 40 years that could be traced directly to that educational cost was $35.6 billion, and the extra taxes received from those higher-wage-earners was $12.8 billion.

In other words, the US government invested $7 billion and got a $48.4 billion return on that investment, about a $7 return for every $1 invested.

In addition, that educated workforce made it possible for America to lead the world in innovation, R&D, and new business development for three generations.

We invented the transistor, the integrated circuit, the internet, new generations of miracle drugs, sent men to the moon and reshaped science.

Presidents Thomas Jefferson and Abraham Lincoln knew this simple concept that seems so hard for Reagan and generations of Republicans since to understand: when you invest in young people, you’re investing in your nation.

Jefferson founded the University of Virginia as a 100% tuition-free school; it was one of his three proudest achievements, ranking higher on the epitaph he wrote for his own tombstone than his having been both president and vice president.

Lincoln was equally proud of the free and low-tuition colleges he started. As the state of North Dakota notes:

“Lincoln signed the Morrill Act on July 2, 1862, giving each state a minimum of 90,000 acres of land to sell, to establish colleges of engineering, agriculture, and military science. … Proceeds from the sale of these lands were to be invested in a perpetual endowment fund which would provide support for colleges of agriculture and mechanical arts in each of the states.”

Fully 76 free or very-low-tuition state colleges were started because of Lincoln’s effort and since have educated millions of Americans including my mom, who graduated from land-grant Michigan State University in the 1940s, having easily paid her minimal tuition working as a summer lifeguard in her home town of Charlevoix, Michigan.

Every other developed country in the world knows this, too: student debt is rare or even nonexistent in most western democracies. Not only is college free or close to free around much of the developed world; many countries even offer a stipend for monthly expenses like our GI Bill did back in the day.

As mentioned earlier, thousands of American students are currently studying in Germany at the moment for free. Hundreds of thousands of American students are also getting free college educations right now in Iceland, Denmark, Norway, Finland, Sweden, Slovenia, and the Czech Republic, among others.

Republican policies of starving education and cranking up student debt have made US banks a lot of money, but they’ve cut America’s scientific leadership in the world and, since the institution of trickle-down Reaganomics, stopped three generations of young people from starting businesses, having families, and buying homes.

The damage to working class and poor Americans, both economic and human, is devastating. Even worse for America, it’s a double challenge for minorities.

And now the Supreme Court has essentially told our young people who weren’t members of the “Lucky Sperm Club” with wealthy or legacy parents that they’re simply out of luck. And, as noted, the GOP is celebrating.

Which raises the question: how gullible do these Republicans think their voters are?

Marjorie Taylor Greene wrote on Twitter that student loan forgiveness was “completely unfair.” She’s the same Republican congresswoman who had $183,504 in PPP loans forgiven, and happily banked that government money without a complaint.

Republican members of Congress, in fact, seem to be among those in the front of the debt-forgiveness line with their hands out, even as billionaires bankroll their campaigns and backstop their lifestyles.

As the Center for American Progress noted on Twitter in response to a GOP tweet whining that, “If you take out a loan, you pay it back”:

Member —— Amount in PPP Loans Forgiven
Matt Gaetz (R-FL) – $476,000
Greg Pence (R-IN) – $79,441
Vern Buchanan (R-FL) – $2,800,000
Kevin Hern (R-OK) – $1,070,000
Roger Williams (R-TX) – $1,430,000
Brett Guthrie (R-KY) – $4,300,000
Ralph Norman (R-SC) $306,250
Ralph Abraham (R-AL) – $38,000
Mike Kelly (R-PA) – $974,100
Vicki Hartzler (R-MO) – $451,200
Markwayne Mullin (R-OK) – $988,700
Carol Miller (R-WV) – $3,100,000

Every single one of these Republican members of Congress has echoed Greene’s criticism of student debt relief or supported efforts to block it. Every one eagerly welcomed forgiveness of their Covid-era debts.

So, yeah, Republicans are complete hypocrites about forgiving loan debt, in addition to pushing policies that actually hurt our nation (not to mention the generations coming up).

Ten thousand dollars in student debt forgiveness would have been a start, but if we really want America to soar, we need to go away beyond that.

Just like for-profit health insurance, student loans are a malignancy attached to our republic by Republicans trying to increase profits for their donors while extracting more and more cash from working-class families.

If Democrats can regain control of the House and hold the Senate and White House in 2024, they must not only zero-out existing student debt across our nation but revive the post-war government support for education — from Jefferson and Lincoln to the GI Bill and college subsidies — that the Reagan, Bush, Bush, and Trump administrations have destroyed.

Then, and only then, can the true “making America great again” begin.

This article was produced by Economy for All, a project of the Independent Media Institute.

This content originally appeared on CounterPunch.org and was authored by Thom Hartmann.

"Time Is of the Essence": Astra Taylor on Student Debt Relief Setback at SCOTUS, Biden’s Plan B

Democracy Now! — Wed, 05 Jul 2023 14:39:10 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

“Time Is of the Essence”: Astra Taylor on Student Debt Relief Setback at Supreme Court, Biden’s Plan B

Democracy Now! — Wed, 05 Jul 2023 12:42:49 +0000

The Supreme Court has blocked President Biden’s student debt relief plan, which sought to cancel up to $20,000 in individual loans, adding up to over $400 billion of federal student debt. The decision comes as a major blow to some 40 million qualified borrowers. Biden has announced his administration will pursue a “new path” for debt relief. “It was a blow to debtors,” says Astra Taylor, organizer with the Debt Collective and advocate for debt abolition. “It was a blow to anyone who cares about democracy.” Taylor says the ruling raises major concerns over the constitutional jurisdiction of the Supreme Court, and explains why groups like the Debt Collective are placing the moral culpability of debt onto creditors.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Fiji’s 2023 Budget: Major spending and projects but high debt ‘on watch’

APR editor — Sat, 01 Jul 2023 08:23:51 +0000

By Rachael Nath, RNZ Pacific journalist

The Fiji government has announced its “rebuilding our future together” Budget with a spend of FJ$4.3 billion (NZ$3.2 billion) to address the high cost of living and pay for the hefty bill racked up by the former FijiFirst administration and the global pandemic, coupled with multiple tropical cyclones and the effects of Russia’s war on Ukraine.

Deputy Prime Minister and Minister of Finance Professor Biman Prasad said the focus of the budget was navigate the country from its economic crisis to provide a better standard of living for its people.

Professor Prasad said the deficit was higher than he wanted and nearly 25 percent of the budget would go to servicing debt.

READ MORE: Other Fiji economy reports

“We have too much government debt for the size of our economy and that remains one of our biggest challenges. We must continue to carefully manage our revenue spending.”

He said the budget “stabilises revenue and debt level and puts the country on a sustainable path”.

Financial summary
Total government expenditure for the 2023/2024 Budget is $4.3 billion with a projected revenue of $3.7 billion — a deficit of $639 million. Fiji starts July with a debt-to-GDP ratio of almost 88.8 pecent.

Here’s a list of the major spending and projects:

Tax policies
Increases

Value Added Tax increases to 15 percent on most food, with the intension to pump an estimated $446m into the economy.
5 percent increase to the excise tax on alcohol and tobacco.
The excise on carbonated/ sugar-sweetened beverages will be increased from 35 cents per litre to 40 cents per litre.
A domestic excise of 40c per kilogram or per litre, and import excise of 15 percent, will be introduced on carbonated drinks, ice cream, sweet biscuits, snacks, and sugar confectionery.
Motor vehicle import excise duty will increase on all new and used passenger vehicles by an additional 5 percent.
The corporate tax rate will increase from the current 20 percent to 25 percent.
New companies eligible for reduced corporate tax for listing on the South Pacific Stock Exchange will have their tax rate increased from the current 10 percent to 15 percent. This will be for new companies and only for a period of seven years. These corporate tax rate increases will add about $73.5m in revenue.
Departure Tax will increase from the current $100 to $125 effective from August 1 and will further increase by an additional $15 to $140 effective from January 1, 2024. This will add a total of $30m towards overall tax revenues.

Reductions

21 basic food items continue to attract zero VAT with the inclusion of prescribed medicine to the list.
Reduction in fiscal duty from 32 percent to 15 percent on canned mackerel (except canned tuna), corned mutton, corned beef and beef products, canned tomatoes, prawns and duck meat.
Fiscal duty on sheep/lamb meats will be reduced to zero. For beef meat the duty is being reduced from 32 percent to 15 percent.
Reduction in import excise on chicken portions such as wings, drumsticks, feet, thighs, etc from 15 percent to 0 percent.
Concession on smartphones will be removed and replaced with a fiscal duty of 5 percent.

Education

Education gets the highest allocation in this budget – $845m.
Biman Prasad announced all Tertiary Scholarship and Loans Service debt — $650m owed by more than 50,000 students — is written off. But it comes with the caveat that these students will have to save a bond. The bond savings will be years of study multiplied by 1.5, and those who choose not to save the bond will have to pay the equivalent cost amount.
The rebranded Fijian scholarship scheme will have a total budget of $148.2m.
The salaries budget for the Ministry of Education increased to $322.6m, to cover existing teachers and 179 new teaching and non-teaching positions.
There is $8.9m for salary upgrades for teachers completing qualifications for higher pay.
$5.7m for the rural and maritime teaching allowance budget.
Free education and transport assistance to ECE, primary and secondary school students, with a total funding allocation of more than $100m.
There is also money for back to school support, and maintenance and upgrading of schools.
Investment in the technical colleges, working together with existing service providers, including the newly established Pacific Polytech.
A revamp the apprenticeship scheme in the next few months and also review the NTPC Levy and how best to support and fund skill upgrades in the workforce.
Tertiary institutions get $103.3m, the grant for the University of the South Pacific is restored, and they have allocated extra money towards clearing the USP outstanding grants.
There is also an extra $500,000 for Sangam Institute of Technology to accommodate additional nursing students, “in light of the current shortage”.

Health and disability

Health Ministry is allocated a budget of $453.8m, a significant increase of $58.7m from the previous budget.
Salaries and wages budget for the Health Ministry has increased to $126.4m.
This will cater for 250 intern nurses to move up to become registered nurses; 237 new intern nurses; 46 nursing assistants; 50 nursing aides; 40 midwives; 94 medical laboratory scientists; and additional support staff in various hospitals and non-medical officers for the Fiji Pharmaceutical & Biomedical Services to strengthen capacity and improve procurement efficiency.
Nursing assistant and nurse aide positions have been created to support the nurses’ focus on their core role, where these aides and assistants will take over the non-clinical responsibilities like making the bed, getting the consumables etc. The government is also providing $11.6m for the upgrade of nurses’ salaries and overtime.
$63m has been allocated for public health programmes, Emergency Radiology and Laboratory Services, procurement of drugs, consumables, medicines, and purchase of bio-medical equipment and accessories.
$2.5m is allocated for the Kidney Dialysis Treatment Subsidy. The allocation has been increased by $1m from this year’s level to cater for the increase in the dialysis subsidy from the current $150 per session to $180.
$16.4m is allocated for the upgrade and maintenance of urban hospitals and institutional quarters, permanent walkway for the maternity hospital at CWM, purchase, installation and replacement of ICT equipment, and a major interior upgrade of Labasa hospital.
From August 1, only patients with a combined household income of $30,000 or less per annum can qualify for the free services at private practitioners.

Tourism

Tourism Fiji is allocated an operating grant of $7m and to support new marketing strategies an increased Marketing Grant of $30m is provided in the new financial year.

Infrastructure, roads and water

$200m has been allocated for the maintenance of hospitals, health centres, schools, public buildings, government quarters, roads and bridges and water infrastructure.
The water sector will have an increased budget of $250.8m. This is a major increase of almost $60m compared to the current budget.
$51.2m has been allocated for the completion of the Viria water project. The total cost of the project is approximately $400m.
Government is working with the Asian Development Bank for a major institutional revamp of the Water Authority, including governance, investment planning, asset management, infrastructure replacement and upgrade, review of water tariffs, investment in people and improving customer service management. This will cost over $500m to replace the 40-year-old pipe system which is leaking underground.
An increased allocation of $100.6m is allocated for road maintenance.
Fiji Roads Authority is allocated a budget of $387.6m which comprises $14.7m for operations and $372.9m for capital expenditure.
In the last eight years, a total of around $3.1b was spent by the road authority without any strategic plan, without much priority and without proper costing.
$82.2m for the Transport Infrastructure Investment Sector Project financed through Asian Development Bank and World Bank loans of US$100m and US$50m, respectively.
Public Works, Meteorological Service and Transport Ministry is allocated a sum of $98.3m.
Government has also re-established the Public Works Department (PWD) to improve the state of rural roads around the country with an initial setup cost of $5m.

Social welfare and pension

Ministry of Women, Children and Social Protection funding allocation has increased from $147.7m to $200.2m.
More than 90,000 thousand people on social welfare will directly benefit from increased monthly allowances of 15 and 25 percent.
$100,000 is allocated to cater for the establishment of a new Department of Children.
$19.9m has been allocated for the Child Protection Allowance. This is an increase of $6.2m.
The Family Assistance Scheme is allocated a budget of $45.6m. This is an increase of $11.5m from the current financial year. A total of 26,000 households are expected to be assisted in this financial year.
$43million is allocated to cater for disability allowance, bus fare subsidy for elderly and disabled, electricity subsidy to households below $30,000 income and insurance for social welfare recipients. Over 100,000 people are expected to benefit from this.
Those aged 70 years and above, and on the social pension system, will receive a 25 percent increase in allowances. This means the monthly allowance will increase from $100 a month to $125 a month effective August 2023. Those between the age of 65 to 69 years will have their monthly allowances increased from $100 to $115.
The social pension scheme is allocated a large budget of $78.2m, an increase of $23.2m to cater for the needs of 54,200 senior citizens.
Effective from August 2023, the 1,500 FNPF pensioners who had their pension rates reduced by the military regime will be able to access the Government social pension allowance of $125 if they are above the age of 70 or $115 if they are between 60 to 69 years.

Civil service and cutbacks

Review of the current minimum wage rate to be done in the next financial year.
The government is working together with the workers’ representatives to review the overall pay and benefits of the civil servants.
In the next six to nine months, government will review the civil service remuneration and pending the review, the salary structure of the civil service will be readjusted to be commensurate with the work the civil servants are doing for the nation.
Government ministers have taken a 20 percent pay cut; they are significantly cutting down ministerial travel allowances put in place by the previous government.
Travel allowance of the Prime Minister, the current 250 percent per diem loading, will be reduced to 100 percent.
Ministers will have their top-up reduced from 200 percent to 50 percent.
For assistant ministers the top-up will be reduced from the current 100 percent to 25 percent.
Apart from these major reductions, Government will remove “all the exorbitant incidental allowances that are currently provided”.

Culture and arts

Ministry of iTaukei Affairs, Culture, Heritage and Arts has been allocated a budget of $38.6m, a major increase of $23.2m from this year’s allocation
To strengthen iTaukei administration and provincial councils, a grant of $10.8m is allocated to fund the 14 provincial councils, including $4.3m to fund the salaries and wages of 182 provincial council officers and other operational expenses of around $6.1 million.
The Turaga-ni-Koro monthly allowance will be increased from $100 to $150 per month for all 1,181 Turaga-ni-Koro for which a total sum of $2.1 million is allocated.
The Mata-ni-Tikina quarterly allowance will be increased by $150 per quarter, which is equivalent to an increase of $50 per month for the 262 Mata-ni-Tikina.
$4m is allocated for iTaukei Land Development to help landowners with the development of their land for commercial purposes.
To recognise and support the Turaga-ni-Yavusa in decision-making and Vanua administration, a monthly allowance of $100 has been allocated for 648 Turaga-ni-Yavusa under the Vanua Leadership Allowance with a sum of around $800,000.

Agriculture and Sugar

Ministry of Agriculture and Waterways is allocated a budget of $95.2 million in this budget which is an increase of $37.3 million.
For the first time, the government will be providing weedicide and fertilizer subsidy for non-sugar crops which includes rice, ginger, dalo, and cassava, with a funding of $1m to boost production of these crops.
The Ministry of Multi-Ethnic Affairs and Sugar Industry is allocated a sum of $51.7m in the new financial year, of which $49.7m is for the sugar unit.
With the aim to increase cane production from current production of 1.6m tonnes to 1.9m tonnes by 2024 season, a sum of $11m is allocated for the Sugar Development and Farmers Assistance Program, New Farmers and Lease Premium Assistance, Weedicide Subsidy, Farm Incentive Program and Cage Bins.

Fisheries, land and SME

Ministry of Fisheries and Forestry is allocated a budget of $41.6m. This will support the expansion of aquaculture, shrimp farming, seaweed Development Programme, Multi-Species Hatchery, construction of ice plants and the supply of tilapia fingerlings and prawn frys to farmers in the Western Division.
Ministry of Lands and Mineral Resources is allocated a budget of $30.1m to enable the Ministry to continue effectively and efficiently administer and regulate the land and mineral resource sector
Ministry of Trade, Co-operatives and Small Medium Enterprises and Communications is allocated a budget of $116.5m in the next financial year, an increase of $25.3m from this year’s allocation.

Fiji Prime Minister Sitiveni Rabuka (left) and Deputy PM and Finance Minister Professor Biman Prasad. Image: Sitiveni Rabuka/Twitter

This content originally appeared on Asia Pacific Report and was authored by APR editor.

Fiji’s 2023 Budget: Major spending and projects but high debt ‘on watch’

APR editor — Sat, 01 Jul 2023 08:23:51 +0000

By Rachael Nath, RNZ Pacific journalist

Professor Prasad said the deficit was higher than he wanted and nearly 25 percent of the budget would go to servicing debt.

READ MORE: Other Fiji economy reports

“We have too much government debt for the size of our economy and that remains one of our biggest challenges. We must continue to carefully manage our revenue spending.”

He said the budget “stabilises revenue and debt level and puts the country on a sustainable path”.

Here’s a list of the major spending and projects:

Tax policies
Increases

Value Added Tax increases to 15 percent on most food, with the intension to pump an estimated $446m into the economy.
5 percent increase to the excise tax on alcohol and tobacco.
The excise on carbonated/ sugar-sweetened beverages will be increased from 35 cents per litre to 40 cents per litre.
A domestic excise of 40c per kilogram or per litre, and import excise of 15 percent, will be introduced on carbonated drinks, ice cream, sweet biscuits, snacks, and sugar confectionery.
Motor vehicle import excise duty will increase on all new and used passenger vehicles by an additional 5 percent.
The corporate tax rate will increase from the current 20 percent to 25 percent.
New companies eligible for reduced corporate tax for listing on the South Pacific Stock Exchange will have their tax rate increased from the current 10 percent to 15 percent. This will be for new companies and only for a period of seven years. These corporate tax rate increases will add about $73.5m in revenue.
Departure Tax will increase from the current $100 to $125 effective from August 1 and will further increase by an additional $15 to $140 effective from January 1, 2024. This will add a total of $30m towards overall tax revenues.

Reductions

21 basic food items continue to attract zero VAT with the inclusion of prescribed medicine to the list.
Reduction in fiscal duty from 32 percent to 15 percent on canned mackerel (except canned tuna), corned mutton, corned beef and beef products, canned tomatoes, prawns and duck meat.
Fiscal duty on sheep/lamb meats will be reduced to zero. For beef meat the duty is being reduced from 32 percent to 15 percent.
Reduction in import excise on chicken portions such as wings, drumsticks, feet, thighs, etc from 15 percent to 0 percent.
Concession on smartphones will be removed and replaced with a fiscal duty of 5 percent.

Education

Education gets the highest allocation in this budget – $845m.
Biman Prasad announced all Tertiary Scholarship and Loans Service debt — $650m owed by more than 50,000 students — is written off. But it comes with the caveat that these students will have to save a bond. The bond savings will be years of study multiplied by 1.5, and those who choose not to save the bond will have to pay the equivalent cost amount.
The rebranded Fijian scholarship scheme will have a total budget of $148.2m.
The salaries budget for the Ministry of Education increased to $322.6m, to cover existing teachers and 179 new teaching and non-teaching positions.
There is $8.9m for salary upgrades for teachers completing qualifications for higher pay.
$5.7m for the rural and maritime teaching allowance budget.
Free education and transport assistance to ECE, primary and secondary school students, with a total funding allocation of more than $100m.
There is also money for back to school support, and maintenance and upgrading of schools.
Investment in the technical colleges, working together with existing service providers, including the newly established Pacific Polytech.
A revamp the apprenticeship scheme in the next few months and also review the NTPC Levy and how best to support and fund skill upgrades in the workforce.
Tertiary institutions get $103.3m, the grant for the University of the South Pacific is restored, and they have allocated extra money towards clearing the USP outstanding grants.
There is also an extra $500,000 for Sangam Institute of Technology to accommodate additional nursing students, “in light of the current shortage”.

Health and disability

Health Ministry is allocated a budget of $453.8m, a significant increase of $58.7m from the previous budget.
Salaries and wages budget for the Health Ministry has increased to $126.4m.
This will cater for 250 intern nurses to move up to become registered nurses; 237 new intern nurses; 46 nursing assistants; 50 nursing aides; 40 midwives; 94 medical laboratory scientists; and additional support staff in various hospitals and non-medical officers for the Fiji Pharmaceutical & Biomedical Services to strengthen capacity and improve procurement efficiency.
Nursing assistant and nurse aide positions have been created to support the nurses’ focus on their core role, where these aides and assistants will take over the non-clinical responsibilities like making the bed, getting the consumables etc. The government is also providing $11.6m for the upgrade of nurses’ salaries and overtime.
$63m has been allocated for public health programmes, Emergency Radiology and Laboratory Services, procurement of drugs, consumables, medicines, and purchase of bio-medical equipment and accessories.
$2.5m is allocated for the Kidney Dialysis Treatment Subsidy. The allocation has been increased by $1m from this year’s level to cater for the increase in the dialysis subsidy from the current $150 per session to $180.
$16.4m is allocated for the upgrade and maintenance of urban hospitals and institutional quarters, permanent walkway for the maternity hospital at CWM, purchase, installation and replacement of ICT equipment, and a major interior upgrade of Labasa hospital.
From August 1, only patients with a combined household income of $30,000 or less per annum can qualify for the free services at private practitioners.

Tourism

Tourism Fiji is allocated an operating grant of $7m and to support new marketing strategies an increased Marketing Grant of $30m is provided in the new financial year.

Infrastructure, roads and water

$200m has been allocated for the maintenance of hospitals, health centres, schools, public buildings, government quarters, roads and bridges and water infrastructure.
The water sector will have an increased budget of $250.8m. This is a major increase of almost $60m compared to the current budget.
$51.2m has been allocated for the completion of the Viria water project. The total cost of the project is approximately $400m.
Government is working with the Asian Development Bank for a major institutional revamp of the Water Authority, including governance, investment planning, asset management, infrastructure replacement and upgrade, review of water tariffs, investment in people and improving customer service management. This will cost over $500m to replace the 40-year-old pipe system which is leaking underground.
An increased allocation of $100.6m is allocated for road maintenance.
Fiji Roads Authority is allocated a budget of $387.6m which comprises $14.7m for operations and $372.9m for capital expenditure.
In the last eight years, a total of around $3.1b was spent by the road authority without any strategic plan, without much priority and without proper costing.
$82.2m for the Transport Infrastructure Investment Sector Project financed through Asian Development Bank and World Bank loans of US$100m and US$50m, respectively.
Public Works, Meteorological Service and Transport Ministry is allocated a sum of $98.3m.
Government has also re-established the Public Works Department (PWD) to improve the state of rural roads around the country with an initial setup cost of $5m.

Social welfare and pension

Ministry of Women, Children and Social Protection funding allocation has increased from $147.7m to $200.2m.
More than 90,000 thousand people on social welfare will directly benefit from increased monthly allowances of 15 and 25 percent.
$100,000 is allocated to cater for the establishment of a new Department of Children.
$19.9m has been allocated for the Child Protection Allowance. This is an increase of $6.2m.
The Family Assistance Scheme is allocated a budget of $45.6m. This is an increase of $11.5m from the current financial year. A total of 26,000 households are expected to be assisted in this financial year.
$43million is allocated to cater for disability allowance, bus fare subsidy for elderly and disabled, electricity subsidy to households below $30,000 income and insurance for social welfare recipients. Over 100,000 people are expected to benefit from this.
Those aged 70 years and above, and on the social pension system, will receive a 25 percent increase in allowances. This means the monthly allowance will increase from $100 a month to $125 a month effective August 2023. Those between the age of 65 to 69 years will have their monthly allowances increased from $100 to $115.
The social pension scheme is allocated a large budget of $78.2m, an increase of $23.2m to cater for the needs of 54,200 senior citizens.
Effective from August 2023, the 1,500 FNPF pensioners who had their pension rates reduced by the military regime will be able to access the Government social pension allowance of $125 if they are above the age of 70 or $115 if they are between 60 to 69 years.

Civil service and cutbacks

Review of the current minimum wage rate to be done in the next financial year.
The government is working together with the workers’ representatives to review the overall pay and benefits of the civil servants.
In the next six to nine months, government will review the civil service remuneration and pending the review, the salary structure of the civil service will be readjusted to be commensurate with the work the civil servants are doing for the nation.
Government ministers have taken a 20 percent pay cut; they are significantly cutting down ministerial travel allowances put in place by the previous government.
Travel allowance of the Prime Minister, the current 250 percent per diem loading, will be reduced to 100 percent.
Ministers will have their top-up reduced from 200 percent to 50 percent.
For assistant ministers the top-up will be reduced from the current 100 percent to 25 percent.
Apart from these major reductions, Government will remove “all the exorbitant incidental allowances that are currently provided”.

Culture and arts

Ministry of iTaukei Affairs, Culture, Heritage and Arts has been allocated a budget of $38.6m, a major increase of $23.2m from this year’s allocation
To strengthen iTaukei administration and provincial councils, a grant of $10.8m is allocated to fund the 14 provincial councils, including $4.3m to fund the salaries and wages of 182 provincial council officers and other operational expenses of around $6.1 million.
The Turaga-ni-Koro monthly allowance will be increased from $100 to $150 per month for all 1,181 Turaga-ni-Koro for which a total sum of $2.1 million is allocated.
The Mata-ni-Tikina quarterly allowance will be increased by $150 per quarter, which is equivalent to an increase of $50 per month for the 262 Mata-ni-Tikina.
$4m is allocated for iTaukei Land Development to help landowners with the development of their land for commercial purposes.
To recognise and support the Turaga-ni-Yavusa in decision-making and Vanua administration, a monthly allowance of $100 has been allocated for 648 Turaga-ni-Yavusa under the Vanua Leadership Allowance with a sum of around $800,000.

Agriculture and Sugar

Ministry of Agriculture and Waterways is allocated a budget of $95.2 million in this budget which is an increase of $37.3 million.
For the first time, the government will be providing weedicide and fertilizer subsidy for non-sugar crops which includes rice, ginger, dalo, and cassava, with a funding of $1m to boost production of these crops.
The Ministry of Multi-Ethnic Affairs and Sugar Industry is allocated a sum of $51.7m in the new financial year, of which $49.7m is for the sugar unit.
With the aim to increase cane production from current production of 1.6m tonnes to 1.9m tonnes by 2024 season, a sum of $11m is allocated for the Sugar Development and Farmers Assistance Program, New Farmers and Lease Premium Assistance, Weedicide Subsidy, Farm Incentive Program and Cage Bins.

Fisheries, land and SME

Ministry of Fisheries and Forestry is allocated a budget of $41.6m. This will support the expansion of aquaculture, shrimp farming, seaweed Development Programme, Multi-Species Hatchery, construction of ice plants and the supply of tilapia fingerlings and prawn frys to farmers in the Western Division.
Ministry of Lands and Mineral Resources is allocated a budget of $30.1m to enable the Ministry to continue effectively and efficiently administer and regulate the land and mineral resource sector
Ministry of Trade, Co-operatives and Small Medium Enterprises and Communications is allocated a budget of $116.5m in the next financial year, an increase of $25.3m from this year’s allocation.

Fiji Prime Minister Sitiveni Rabuka (left) and Deputy PM and Finance Minister Professor Biman Prasad. Image: Sitiveni Rabuka/Twitter

This content originally appeared on Asia Pacific Report and was authored by APR editor.

Sanders Statement on Supreme Court Overturning Student Debt Cancellation

Newswire Editor — Fri, 30 Jun 2023 17:52:39 +0000

Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions Committee, issued the following statement Friday after the right-wing majority of the U.S. Supreme Court moved to block President Biden’s action to cancel student debt for 40 million Americans:

Today’s 6-3 Supreme Court decision is a devastating blow for tens of millions of low-income and working class Americans who were hoping for relief from the severe financial stress they face due to a mountain of student debt.

Thirteen years ago, in the disastrous Citizens United decision, the Supreme Court ruled that billionaires can legally buy elections. Today, the Supreme Court has made it clear that they will continue doing everything possible to protect the big money interests against the needs of struggling working families. This right wing ideology is consistent with their recent decisions: denying women the right to control their own bodies, ending affirmative action, attacking LGBT rights and limiting the government’s ability to address climate change.

Justice Kagan is absolutely correct when she wrote in her dissenting opinion that “this case should have been open-and-shut” in favor of the Biden Administration, the “Court’s first overreach in this case is deciding it at all,” and that the Supreme Court should “stay away from making this Nation’s policy about subjects like student-loan relief.”

In my view, if right-wing Supreme Court justices want to make public policy they should quit the Supreme Court and run for political office. Frankly, I do not think their extremist views will gain much traction with the average American voter.

Today, I am urging the Biden Administration to implement a Plan B immediately to cancel student debt for tens of millions of Americans who are struggling to pay the rent, put food on the table, and pay for the basic necessities of life.

Despite this legally unsound Supreme Court decision, the President has the clear authority under the Higher Education Act of 1965 to cancel student debt. He must use this authority immediately.

If Republicans could provide trillions of dollars in tax breaks to the top one percent and profitable corporations, if they could cancel hundreds of billions in loans for wealthy business owners during the pandemic when Trump was President and if they could vote to spend $886 billion on the Pentagon, please don’t tell me that we cannot afford to cancel student debt for working families.

The American people understand that we cannot continue to crush our young generation with a mountain of debt for doing the right thing – getting a college education.

As the Chairman of the Senate Committee on Health, Education, Labor, and Pensions, I will do everything I can to make sure that the more than 40 million Americans who are drowning in student debt get the relief that was promised to them as soon as possible.

Lastly, the time is long overdue for the Supreme Court to do what every other branch of the judiciary does. They must establish a code of ethical standards so that justices cannot secretly accept lavish financial gifts from billionaire patrons.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

ACLU Comment on Supreme Court’s Ruling Against Student Debt Relief Plan

Newswire Editor — Fri, 30 Jun 2023 17:28:45 +0000

The Supreme Court today struck down the Biden administration’s student debt relief plan, which would have allowed eligible borrowers to cancel up to $20,000 in debt. An estimated 43 million people were eligible to participate in the debt relief program.

ReNika Moore, director of the ACLU’s Racial Justice Program, had the following reaction:

“The Supreme Court ended this term with two major blows to economic and educational opportunity for students of color in America. The court’s decisions on affirmative action and student loan debt effectively deliver a one-two punch to millions of Americans, locking them out of economic opportunity and worsening wealth inequality in this country. Higher education should be accessible to everyone, regardless of economic status or background.

“This ruling against student debt relief hurts all borrowers, but particularly borrowers of color. The volatile economic effects of COVID-19 forced many families to use existing assets like their home equity or family support as a safety net, but Black and Latino borrowers have far fewer financial resources to fall back on.

“We urge the Biden administration and the Department of Education to move quickly to explore other pathways to ease the debt load on student loan borrowers once payments resume after a pandemic-related pause, including new executive action under the Higher Education Act, a law that allows for student loan relief for certain groups.”

The American Civil Liberties Union joined the Lawyers’ Committee for Civil Rights Under Law and 20 other organizations in filing an amicus brief in January 2023 urging the Supreme Court to uphold the student debt relief program as lawfully enacted.

Rulings:

https://www.supremecourt.gov/opinions/22pdf/22-535_i3kn.pdf

https://www.supremecourt.gov/opinions/22pdf/22-506_nmip.pdf

These cases are part of the ACLU’s Joan and Irwin Jacobs Supreme Court Docket.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Supreme Court Strikes Down Biden’s Student Loan Debt Relief Program, Showing Americans Just How Political the Court Has Become

Newswire Editor — Fri, 30 Jun 2023 15:29:02 +0000

Stand Up America’s Director of Political Affairs, Reggie Thedford, issued the following statement after the Supreme Court struck down President Biden’s student loan debt relief program in Biden v. Nebraska. The court dismissed a second case, U.S. Department of Education v. Brown, determining that the plaintiffs did not have standing.

“The Supreme Court’s callous decision precisely illustrates not just how far removed the Court is from everyday Americans’ needs and financial circumstances, but also how deeply politicized the Court has become.

“Many Americans are still rebuilding their finances in the wake of the devastating COVID-19 pandemic. President Biden’s student debt relief program would have provided significant financial relief to over 40 million of the most vulnerable borrowers—many of whom are people of color or first generation college students who don’t have the privilege of support from wealthy families.

“Today’s ruling is the latest in a series of partisan decisions from a Supreme Court bent on carrying out the MAGA agenda at the expense of the economic security of working Americans. If we don’t take action, this ultra-conservative Court will continue delivering blow after devastating blow to hardworking, everyday Americans. Congress should pass the Judiciary Act to help restore balance to this corrupt and out of control Court.”

Stand Up America’s nearly 2 million members across the country have driven nearly 190,000 constituent emails and made nearly 7,000 calls urging their members of Congress to support the Judiciary Act.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Groundwork Collaborative Condemns SCOTUS’ Student Debt Relief Decision, Calls on President Biden to Act

Newswire Editor — Fri, 30 Jun 2023 15:25:50 +0000

Today, the Supreme Court ruled in a 6-3 decision to end President Biden’s student debt relief plan, which would have provided up to $10,000 of relief for borrowers who meet income requirements and up to $20,000 for Pell Grant recipients.

Lindsay Owens, Groundwork Collaborative’s Executive Director, reacted to the ruling with the following statement:

“Thanks to the Supreme Court’s ruling, millions of workers and families are now staring down student loan payments this fall with no relief in sight. Revoking the promise of student debt relief punishes people who are already struggling in our economy.
“No one should have to choose between paying their rent and making their student loan payments. President Biden must exhaust all options to deliver student loan relief before millions of Americans are forced to restart payments this September.”

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Time for Plan B on Student Debt

Bernie Sanders — Fri, 30 Jun 2023 05:50:29 +0000

Today’s 6-3 Supreme Court decision is a devastating blow for tens of millions of low-income and working class Americans who were hoping for relief from the severe financial stress they face due to a mountain of student debt. Thirteen years ago, in the disastrous Citizens United decision, the Supreme Court ruled that billionaires can legally More

The post Time for Plan B on Student Debt appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Bernie Sanders.

SCOTUS Rejects Radical GOP Vote-Rigging "Theory," Could Still End Affirmative Action & Debt Relief

Democracy Now! — Wed, 28 Jun 2023 14:26:32 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

SCOTUS Rejects Radical GOP Vote-Rigging “Theory,” Could Still End Affirmative Action & Debt Relief

Democracy Now! — Wed, 28 Jun 2023 12:12:40 +0000

The Supreme Court’s term is ending this week with rulings on several blockbuster cases. On Tuesday, voting rights advocates welcomed a decision in a major election law case that preserved checks and balances in elections. In a 6-3 decision, the justices dismissed the so-called independent state legislature theory that state lawmakers have nearly unlimited power to make rules for federal elections. This ruling will “empower state courts around the country to block gerrymanders, to police the legislatures and to keep legislators from trying to entrench themselves or advance their party with these egregious maps,” says Michael Waldman, president and CEO of the Brennan Center for Justice. Now the country awaits the Supreme Court’s decisions on affirmative action and student debt, which Waldman calls “hugely consequential.” Waldman’s new book is The Supermajority: How the Supreme Court Divided America.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

The Fall of the West

Paul Larudee — Mon, 26 Jun 2023 16:00:50 +0000

In his bestselling book of 1987, The Rise and Fall of Great Powers, historian Paul Kennedy chronicles the rise of western power and its world dominance from 1500 to the present. He reports that the rise was not due to any particular event, nor even an unusual series of events. It was, in fact, neither foreseen nor even recognized until it was already well under way, although it may be accurately ascribed to multiple factors, which Kennedy discusses. The same may be said of the ongoing fall of western power.

Although the decline of the West is rapidly becoming more evident to informed observers of current events, the start of that decline is less easy to pinpoint, in part because it seemed less inevitable and more reversible until quite recently. Was the high point the Austro-Hungarian Empire? Victorian England? The U.S. Eisenhower administration? Some might date it from the dissolution of the USSR in 1991, marking the beginning of the truncated “New American Century.”

That “century” appears to be ending in the manner of so many other powers that fill the pages of Kennedy’s book – through imperial overreach, excessive military spending, lagging economic productivity and competitiveness, and failure to invest in the physical, technical and human resources necessary to remain a dominant power. In short, the West is flagging.

The signs for this are too evident to ignore. The industrial base of the West is withering. Post-WWII, the U.S. dominated because it was the only major industrial power to survive unscathed, and its investment in western Europe and Japan increased the wealth of all three. Over the last half of the 20th century, however, these economies began to shift much of their industry to countries with cheaper labor and more efficient production, such that by the 21st century much of their manufacturing capability had vanished, and they became mainly consumer societies.

2023 has become a watershed year for the power shift, due to dramatic western weaknesses exposed by the Ukraine war. The war revealed that a relatively modest economy (Russia) had the capability to outproduce the U.S. and all the NATO countries combined in war materiel. The U.S. “arsenal of democracy” and its European partners proved unable to provide more than a fraction of the weapons and ammunition that Russia’s factories produced. Ukrainian soldiers supplied by NATO countries found themselves vastly outnumbered in tanks, artillery, missiles, unmanned and manned aircraft, and even the latest hypersonic and electronic weapons that were arrayed against them in seemingly limitless supply. The U.S. and European NATO partners could only cobble together small numbers of incompatible weapons from their diminishing inventories, and make promises of future deliveries after months or years.

But the U.S. and its allies were not counting on physical weapons alone. They weaponized the U.S. dollar, through seizures of Russian accounts in U.S., European and other banks totaling more than $300 billion, and through application of economic sanctions, including expulsion of Russian banks from the SWIFT dollar trading system. This also backfired.

First, Russia retaliated by seizing U.S. and European assets within Russia, in equal or greater amounts. Second, they “pivoted east,” negotiating new trading partnerships with China, India and other countries. Third, they and their new partners, including other targets of U.S. sanctions, began to develop financial agreements to displace or reduce the use of SWIFT. Even countries that had heretofore not been threatened with asset seizure or economic sanctions, like Brazil, South Africa, and Saudi Arabia, joined these agreements, in order to expand their trading base, and as insurance against use of the USD for financial pressure or threats. The result was that the Russian economy proved astonishingly resilient – moreso even than many of the NATO countries. The Russian GDP fell by less than 2% in 2022 and is expected to rise by up to 2% in 2023, despite the war and sanctions. Russia has opted for a sustainable but inexorable war with less than 1/6 the casualties of Ukraine. Visitors report that it hardly feels like a country at war. The annual St. Petersburg Economic Forum attracted 17,000 participants from 130 countries and concluded 900 deals and contracts worth 3.9 trillion rubles ($46 billion).

The decline of Europe was further illustrated by the consequences of the US bombing of the Nordstream gas pipelines in September, 2022, and the sanctions on Russian natural gas and petroleum products imposed by NATO. Together, these ended the competitiveness of the European economies, which had hitherto thrived on accessibility to cheap Russian fuel. As predicted by Radek Sikorsky, MEP, this meant

… double-digit inflation, skyrocketing energy prices, and electricity shortage, … Germany will be deindustrialized, … German industries, scientists and engineers will move to the US, who will generously accept them.

And Europe will be set back a couple of decades. Already, most European countries — France, Italy, Spain etc. — have had zero growth in GDP-per-capita for more than a decade. Add in inflation, the standard of living will soon be down 30-40%.

In effect, the U.S. had defeated its NATO “partners” (mainly Germany) and cannibalized their industries for the sake of its own benefit, potentially short-lived.

But the United States believed that its mighty dollar could offset its faded industry and increasingly toothless military – that it could be printed in unlimited amounts without losing value, and could become its most powerful weapon. The history of this dollar began in 1971, when President Richard Nixon announced that, in effect, the U.S. dollar would no longer be backed by gold, but rather by whatever the dollar could purchase in the U.S., i.e. by the U.S. economy itself. This became widely accepted because a) the U.S. was the world’s largest economy, b) the two great international regulatory financial institutions, the World Bank and the International Monetary Fund, were also based on the dollar, and c) nearly all the world’s countries outside of the Soviet Union and other socialist societies used the dollar as the reserve currency for their own money. In addition, the world shed fixed exchange rates, with their troublesome periodic revaluations, for floating rates, which generally made the changes more gradual and more stable for the major currencies, and especially the dollar.

The effect of so many dollars circulating so widely was to invest most of the world in protecting its value. The more a country’s non-dollar currency became based on the dollar as its reserve currency, the more the incentive for that country to defend the dollar. Later, as the U.S. began to lose its industry, it came to depend on this value to maintain its economy. It marketed its debt to other countries and “persuaded” other countries to fund U.S. bases on their territories for the purpose of “mutual defense.” This is part of the reason the U.S. now has more than 800 military bases worldwide. Although the U.S. national debt is, at time of writing, more than $33 trillion, the U.S. Treasury and the Federal Reserve Board seem to think that they can continue to unload it without limit onto other countries.

Decision makers in the U.S. seem to think that they have found the goose that lays the golden egg: when they need more money, they have only to borrow indefinitely and market their IOUs to buyers, many of whom don’t really have the option of saying no. Thus, for example, it used unlimited borrowing to fund without hesitation a very costly Ukraine war by more than $100 billion in 2022 alone, while denying basic services to its own citizens.

But borrowing is not the only way that the U.S. raises funds. Given the stability of the dollar, many countries store or invest them in the U.S. But when a country has a disagreement with the U.S., or chooses a leadership or policies not approved by the U.S., the U.S. is not above confiscating those funds. In 2011, this is what it did with $32 billion of Libyan funds, the largest but by no means the only such confiscation of another nation’s funds at that time. Since then, similar confiscations have occurred with Iran, Venezuela, Syria, Afghanistan and other nations. Eclipsing Libya, however, was the confiscation of Russia’s $300 billion by the U.S and its mostly NATO allies, an estimated $100 billion of it by the U.S. alone.

Recently, however, other countries are becoming wary of the U.S. and choosing other options that reduce their participation in what they view as a Mafia-style protection racket as well as their placement of assets in places where they could be confiscated in case of disagreement. As noted earlier, a growing number of countries are opting to either bypass the dollar-based SWIFT system, or to complement it with new agreements where goods are paid in another currency or with multiple currencies. Even Saudi Arabia has begun accepting payment in Chinese Yuan and paying Russia in rubles. In addition, China and other countries have decided to limit or reduce their USD exposure. So far, this has had no appreciable effect on the value of the USD. But if the dollar starts to become less desirable, it may become a questionable investment, in which case the U.S. risks losing its status as a world power – even a modest one. At that point, having demolished German and other European access to cheap fuel, the U.S. will join the rest of the west in its decline, leaving the rising economies of China, India, Brazil, Russia and other countries in Asia, Latin America and possibly Africa to displace them.

Is the Dollar overvalued? By the laws of supply and demand, one could argue that it is not. But it is a fair question when the supply is enormous and growing, and the demand is artificial and coerced. What will happen when the dollar’s near monopoly as an exchange medium ends? The dollar has not always been the preeminent tool for pricing international transactions. At the turn of the 20th century, the British pound sterling was literally the gold standard. But the British economy was fading, and the pound continued to fall against both gold and the USD. Now, although it is still a major currency, it is a mere shadow of its former self. If or when the many dollars worldwide come home to claim their true value, we may discover that they buy little more than castles of sand.

When world power has shifted elsewhere, the U.S., Great Britain, Germany, France and the entire West may come to depend for glory upon their historical and cultural treasures, like the ones of other bygone civilizations that western tourists once visited so widely.

This content originally appeared on Dissident Voice and was authored by Paul Larudee.

NY Dems Pass Medical Debt Relief as Progressives Push to Expand Healthcare to Undocumented Residents

Democracy Now! — Wed, 21 Jun 2023 14:36:33 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

NY Dems Pass Medical Debt Relief as Progressives Push to Expand Healthcare to Undocumented Residents

Democracy Now! — Wed, 21 Jun 2023 12:13:31 +0000

In New York, a battle is brewing over a bill called Coverage for All that would use a surplus of federal funds to pay people who are undocumented to enroll in the state’s Essential Plan under the federal Affordable Care Act, potentially granting 250,000 people access to healthcare. Immigrant advocates are rallying for the bill’s inclusion in a two-day special legislative session despite Democratic Governor Kathy Hochul’s resistance, calling the bill a chance for the state to “make history.” We speak to its sponsor, New York Assemblymember Jessica González-Rojas, as well as Elisabeth Benjamin, co-founder of the Health Care for All New York campaign, about the Coverage for All bill, the growing crisis of medical debt, the end of COVID-era Medicaid protections, and the larger fight for universal healthcare.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

WaPo Mad That Debt Ceiling Deal Didn’t Cut Social Security

Conor Smyth — Thu, 15 Jun 2023 20:43:27 +0000

The Washington Post (6/1/23) holds that the debt deal was “minor” because its cuts come from “a relatively small range of discretionary budget items, rather than structural change to the real drivers of debt and deficits: health care and retirement programs.”

If there’s one thing the Washington Post doesn’t like about the debt ceiling deal—which expanded work requirements for food stamp recipients (FAIR.org, 6/9/23) and took a knife to social spending more broadly—it’s that it didn’t cut Social Security.

As the editorial board (6/1/23) lamented, following the passage of the debt ceiling bill in the House of Representatives:

Most of the projected roughly $1 trillion in savings over 10 years comes from proposed spending caps on a relatively small range of discretionary budget items, rather than structural change to the real drivers of debt and deficits: healthcare and retirement programs.

In other words, why are we doing these little tweaks when we should be screwing over seniors?

This is the message the Post has been promoting for the last few months. With a looming showdown over the debt ceiling, the paper owned by one of the world’s richest men saw an opportunity. While various commentators were pushing the Biden administration to attempt to side-step negotiations and unilaterally bypass the debt ceiling, the Post evidently thought to itself, why not take advantage of this situation to remind Congress that it needs to cut Social Security? ‘Cause, you know, the elderly are a real pain in the budget.

On March 9, the Post editorial board kicked off a new series with an article (3/9/23) headlined “The United States Has a Debt Problem. Biden’s Budget Won’t Solve It.”

The premise was suspect from the start: If the US does have a debt problem, it’s really hard to see it. This is how Mark Copelovitch, a professor of political science at the University of Wisconsin-Madison, explained the situation a couple of years ago (emphasis in original):

Let’s assume for the moment that the CBO [Congressional Budget Office] projections are accurate. In that case, in 30 years, US debt will reach 195% of GDP. In other words, there is some possibility that the US debt level, three decades from now, will be less than that of Greece now and more than 50% of GDP below the level that Japan has sustained, with absolutely no difficulty, for the last decade. If these countries can sustain debt levels 50–150% higher than our current levels, then the question of whether we can do so has already been answered. Indeed, it does not even need to be asked.

Nevertheless, the premise that the federal government has a debt problem is so taken for granted in corporate media that the Post felt little need to defend its claim. Instead, it turned its attention to criticizing the shortcomings of Biden’s proposed budget. This plan would generate around $3 trillion in net savings over the next decade, primarily through higher taxes on the rich. In response, the Post’s wise council muttered in unison: Not enough! Their preferred savings would be closer to $8 trillion. And, the council announced, they would be gifting the readership with “the solutions…in an upcoming series of editorials.”

Sparing the super-rich

The Washington Post (3/16/23) proposes “fixing” Social Security in ways that won’t be painful at all to the very wealthy.

The first two pieces focused on the programs the board later faulted the debt ceiling bill for failing to cut: Social Security and Medicare.

For Social Security, the Post (3/16/23) outlined a plan to keep the program solvent for the next 75 years. According to data from the Congressional Budget Office, this could be fully accomplished by hiking taxes on high earners. Gradually removing the cap on payroll taxes, which currently prevents taxation of earnings over $160,200, would plug around 72% of the projected shortfall through 2096. And a tax on investment income would cover another 56% of the shortfall, meaning the two together would cover costs with money left over.

But why would Jeff Bezos’ paper argue for plugging the deficit through higher taxes on himself and his buddies? Instead, the Post editorial opted for some more modest tax increases—most amusingly, subjecting 90% (rather than the current 84%) of wages to payroll taxation, which would hike taxes somewhat on higher earners, but would mostly leave the wealthiest be.

Meanwhile, the Post was quite pleased to offer up some benefit cuts. The most impactful would be to slow benefit growth for the top half of earners (so hitting the top 50%—as of 2021, anyone with a wage over $37,586—with cuts, rather than more seriously targeting the rich). But two others would reduce spending substantially as well.

First, raising the retirement age—which is a misnomer, because what is being proposed is not changing the age at which you can retire; instead, you would be able to retire over the same range of ages, only with a lower benefits at each age (Extra!, 12/12). This is more accurately described as “cutting benefits.”

As the Social Security retirement age has been rising, US life expectancy has been dropping (People’s Policy Project, 2/27/23).

And, though the Post references gains in life expectancy in its advocacy for increasing the retirement age, life expectancy in the US has actually been falling even as the official age of retirement has been rising. In 2000, when the “full retirement age” was 65, people in the US lived an average of 76.8 years. Over the next 21 years, as that retirement age approached the target of 67 years, life expectancy dropped to 76.4 years. This hasn’t prompted calls in establishment media for lowering the retirement age, however.

Second, the Post would tie cost-of-living adjustments, which shield benefits from the effects of inflation, to a different measure of inflation, called chained-CPI (FAIR.org, 12/19/12). Using this measure would mean benefits would be increased more slowly over time, leading to cuts for all Social Security recipients, with the oldest recipients being hurt the most. This would harm not just seniors but the millions of disabled workers who rely on Social Security as well.

These cuts are, of course, completely unnecessary. But pushing Congress to inflict unnecessary hardship is a celebrated tradition at the Post (FAIR, 2/24/23).

Hands on Medicare

The Washington Post (3/23/23) calls for “modest sacrifice from beneficiaries”—and quietly rejects Biden’s proposed tax increase on income over $400,000 that would require a modest sacrifice from its owner.

The Post’s suggested reforms to Medicare are less objectionable, though the headline leaves something to be desired (3/23/23): “A Fiscally Responsible Government Cannot Keep Its Hands Off Medicare.”

The main cost savings come from reforming Medicare Advantage (the insurance industry carve-out within Medicare), cracking down on excess payments to hospitals, and applying an investment tax to a broader base. Some savings do come from increasing Medicare beneficiaries’ cost-sharing burden, but the added hardship here doesn’t come close to that of the cuts to Social Security benefits.

What’s notable is that the Post never once mentions Medicare for All in its discussion of containing healthcare costs, though transitioning to this sort of system would be much more effective at containing costs than anything the Post outlines. One study conducted by Yale epidemiologists “found that Medicare for All would save around 68,000 lives a year while reducing US healthcare spending by around 13%, or $450 billion a year.” If we’re talking about cutting costs, why’s that not in the discussion?

The best support is less support

Social Security and Medicare may have been at the top of the list of the Post’s targets. But the board didn’t stop there. Its next piece (4/3/23) took the bold step of calling for cuts to veterans’ disability benefits. As the board put it, “If we owe our veterans every support, we also owe them a measure of fiscal responsibility.” In other words, we owe our veterans every support, including less support.

Veterans weren’t too pleased with this editorial, with one writing in a letter to the editor (4/6/23):

Go ahead—tell the soldier who is missing both legs that it’s just too expensive to compensate him for his disability. Tell the Marine with burns over 60% of her body that her service-connected disability is hurting the national debt.

The next piece (5/4/23) called for reducing subsidies to wealthy farmers, not an unreasonable request, but not one with much of an impact on the national debt either. The Post cobbled together a little over $100 billion worth of savings in this piece, or about 1/72th of the $7.2 trillion in total savings it wants to see.

The board followed that up with an editorial (5/25/23) advocating cuts to the military budget, in welcome contrast to another major newspaper’s recent whining (Wall Street Journal, 6/2/23) about reducing it. Exactly how much the Post wants to cut is unclear, but the piece does seem to suggest savings in the range of several hundred billion dollars.

‘Looking in the wrong place’

The Washington Post (5/31/23) says that “budget experts across the political spectrum” agree that we need to cut Social Security—citing a senior fellow at the Manhattan Institute as its lone example.

In the final installment (5/31/23) of its series before the signing of the debt ceiling legislation, the Post expressed its frustrations with the shortcomings of the negotiations between Republicans and Democrats. Its first paragraph contained the core message:

The top expenses worsening the national debt in the years to come are the rising costs of Social Security, Medicare and interest. Unfortunately, President Biden and congressional leaders refuse even to discuss these key drivers.

As the Post opined further down, Social Security and Medicare are precisely the sort of programs “where the bulk of the change should occur.”

That doesn’t mean the Post sees no room for changes to other spending—it puts forward other ideas for cuts in this piece, including rescinding student debt forgiveness—but the board is clear on the point that this is not where the real meat is. The headline says it all: “Politicians Keep Looking in the Wrong Place to Fix the Debt Problem.”

This sort of reasoning—that growth in the national debt means we need to cut Social Security—doesn’t have any basis in hard economic truths. It’s the reflection of the pro-rich ideology of a paper owned by a billionaire. More than that, though, it’s a predictable outgrowth of the sort of rhetoric pushed by the media more broadly.

The New York Times, for instance, has repeatedly emphasized that Social Security and Medicare will be the major factors in federal debt going forward (FAIR.org, 5/17/23).

After legislators cemented a deal to raise the debt limit, the Times ran an article (6/2/23) with the headline “The Debt-Limit Deal Suggests Debt Will Keep Growing, Fast,” which reported, “Early in the talks, both parties ruled out changes to the two largest drivers of federal spending growth over the next decade: Social Security and Medicare.” Would it be at all surprising if a person read this piece and got the impression that spending on retirement benefits is out of control?

The Times at least has Paul Krugman (3/10/23) to point out that the rising costs of these programs can be addressed without cutting benefits. But at Bezos’ paper, calls for cuts are on full blast. Because if money can’t buy happiness, it can at least buy a media outlet dedicated to defending your wealth.

ACTION ALERT: You can send a message to the Washington Post at letters@washpost.com, or via Twitter @washingtonpost.

Please remember that respectful communication is the most effective. Feel free to leave a copy of your message in the comments thread here.

The post WaPo Mad That Debt Ceiling Deal Didn’t Cut Social Security appeared first on FAIR.

This content originally appeared on FAIR and was authored by Conor Smyth.

Austerity and Illusions: The Debt Ceiling Deal

Peter LaVenia — Fri, 09 Jun 2023 05:56:33 +0000

Photograph Source: wandererwandering – CC BY 2.0

Reaction to the debt ceiling deal made between the Democratic and Republican parties has generated a misunderstanding as to the role of the deal itself, those of the parties themselves and their leadership. As there is no serious organized Left in the United States, let alone a class-conscious movement of the working class, the interpretation of the debt deal will inevitably be colored by the image of the deal proffered by the media and the parties themselves. Politics in the twenty-first century has been completely subsumed into, as Debord argued, the spectacle, but its victory is so complete that it is a lazy one at that. Our task, then, is to examine the reality of the deal and the social relations between the actors and party organizations.

The broad contours of the deal reflect the use of the debt ceiling as a tool for austerity: non-defense discretionary spending is held flat for FY 2024 and held to 1% growth in FY 2025, with topline federal spending held to 1% annual growth for the next six years. Flat and then low growth, especially in times of inflation, is in reality a massive cut to the already threadbare social safety net. SNAP benefit work requirements are cruelly extended to age 55, the student loan payment freeze will end, IRS funding is slashed, billions in COVID funds clawed back, and it speeds up construction of the ecocidal Mountain Valley Pipeline. Interestingly, CNN described the real winners: corporate America. Defense contractors, fossil fuel companies, and the tax sector, along with Wall Street more generally, were bullish on the deal.

On a very surface level, of course the victors are the capitalist class. This is an important, if readily apparent, fact. The social role of the debt ceiling deal, however, is as significant as the winners and losers. That role is a reaction to the social gains made by the working class during the first two years of the pandemic. It is the second prong of reaction by the bourgeoisie and its political representatives; the first being the nearly immediate pushback against even minor restraints on the carceral state during the anti-police violence social uprisings of 2020 sparked by the murders of George Floyd and Brianna Taylor.

The interrelationship between the two prongs cannot be ignored or discounted. Although there were some modest reforms across the country, there were no serious limits placed on police or prosecution in 2020. What was important was the mass outpouring of rage and consciousness raising about the carceral state that could have become an extended mass movement for social change. Media hysteria, immediately debunked by even casual scholarship, bleated about rising violent crime levels (though not far more serious white-collar crime); the undercurrent of racism intermixed with suburban petty-bourgeois angst about the urban working class and the potential restraint on the police – which have always stood as a bulwark of class and racial supremacy in the United States – was used effectively by a bourgeois state loathe to relinquish an effective tool of repression. It is no wonder that the representatives of the capitalist class, the Democratic and Republican parties, were largely united in rolling back the even modest gains made during 2020.

We should see the debt ceiling deal in the same context. Pandemic aid measures passed during 2020 and 2021, done out of necessity to prevent economic collapse and social explosion, created a modern social welfare state in the United States. By all measures, poverty fell by nearly 50% in those two years, and childhood poverty was cut in half. Stimulus checks, SNAP benefits, and expanded unemployment insurance, combined with momentary foreclosure and eviction moratoria and free, efficient socialized health care provision around COVID-19 temporarily transformed the life of working-class Americans. The political will to implement measures long known to be beneficial and on sufficient scale to be so suddenly appeared from the highest levels of a panicked capitalist class that needed a moderately secure and healthy working class to continue commodity production and consumption during a worldwide pandemic.

There was, of course, immediate screeching from a portion of the business sector that the new social safety net had made it impossible to find workers (besides those that had died or become permanently incapacitated due to COVID). Power had shifted, even modestly, in the direction of the American working class, which no longer had to choose to work for meager wages in alienating and exploitative conditions. This led to the two important, and for the American ruling class unacceptable, changes: the first was a rapid rise in wages across-the-board, and the second, perhaps more dangerous shift was broad expansion of government social spending which had proven incredibly effective in full view of the public and which had been done with few or no means-tests but on the basis of cross-societal access to those social programs.

The debt ceiling deal, then, is absolutely linked to the final rollback of the 2020-21 expansion of the social welfare state. Biden and the Democratic Party had already allowed the vast majority of pandemic-era social welfare programs to lapse; the debt deal between Biden and McCarthy only codified what the American capitalist class has wanted since the economy stabilized – the evisceration and historical erasure of the social safety net expansion. The debt deal makes it impossible for even those programs that remain to meet the needs of a terribly impoverished US working class. For not only would robust government social spending and provision of social programs have potentially emboldened working Americans, but it would have created an example that might have been expanded or replicated (actual socialized healthcare provision, social housing, universal basic income, etc.). The cost (nearly $1 trillion), which could have been easily met by deficit spending and higher taxes on the wealthy (or cuts to the almost $1 trillion-a-year military budget), must also have worried a ruling class that is especially sensitive to tax increases. It had to go; it went with the final handshake between Biden and McCarthy.

It remains to explicate the second part of this grand spectacle: that of how the actions of the parties should be understood. Biden and the Democrats are portrayed as naïve bumblers, McCarthy as beholden to his party’s hard right. Both allegedly compromised and got a deal that neither loves, but that both are willing to live with. Much of the Democratic Party “left” and the Republican right-wing voted against the deal, along with some Appropriations Committee members displeased with the imposition on their purview.

Party organizations and their role in the maintenance of the bourgeois state and the social relationships of society are largely misunderstood. It is in this context that the general public, at least those mildly Democratic partisans, can claim to believe in the myth of the bumbling party when it is in power. That is, Biden and the Democratic Congressional leadership somehow accidentally missed chances to raise the debt limit last fall and were forced to accept this compromise by Speaker McCarthy. Or, conversely, that McCarthy is a weak Speaker and this is proven by the need for Democratic votes to put the debt ceiling deal over the top (a 347-117 vote in the House, with 165 Democrats and 149 Republicans voting Yes).

As I have shown, the capitalist class wanted to reverse, or at least halt, the expansion of the social welfare state (in the form of non-discretionary funded programs) engendered by the COVID pandemic. The combination of allowing programs to expire and hard caps now imposed by the debt ceiling have and will thoroughly do so. The Democratic Party did not simply forget to raise the debt ceiling; as the esteemed political scientist Thomas Ferguson pointed out long ago, the boundaries of movement for a political party on an issue or issues are where their investor (class) base will allow them to be. While political parties are not mechanical representations of class or donor will and have independent interests (such as being re-elected), they are indeed responsive to the desires of major backers. The choice by the Democratic Party to not put the debt ceiling on the agenda in 2022 was either done with the express or tacit approval of the economic elite.

This is why Biden never seriously considered attempting to use the 14^th Amendment, asking the Treasury Dept. to mint a trillion-dollar coin, issuing consol bonds, or allowing the US to default on some of its payments: the capitalist class was not interested in allowing this to occur, and the Democratic Party apparatus would not gain anything by angering their paymasters. This is also why the debt ceiling has never been abolished (even though only Denmark has a similar law on the books): neither party wants to remove the potential to use the debt ceiling as a cudgel, and their class backers like having it in their arsenal.

Similarly, all the theater on the part of Kevin McCarthy belied the fact that enough Democrats and Republicans would unite as per the wishes of their leadership – and as such American business interests – to pass a debt ceiling deal, allowing for the so-called Democratic “left” and the Republican right-wings to vote as they pleased. McCarthy remains in charge of the House even though the most reactionary members of his party are seemingly displeased at his compromise.

It is also important to note that political parties are more than just state managers; they fulfill a social role in crafting partisan identities, managing the behavior of partisans, and, in the context of the United States, preventing an independent working-class political party from forming and articulating a class agenda. Arguments over the debt ceiling and alleged Democratic ineptitude mean even weak partisans will not bother to ask questions as to why the debt ceiling exists at all, why Democrats never seem to fight very hard against the interests of the ruling class.

It is also worth noting that the so-called left within the Democratic Party, which calls itself social-democratic, is at best a strange form of college-educated precariat with pretentions of being cultural managers (and more often than not they are fully petty-bourgeois with no links to the working class); it is hardly affected by social program cuts and more than willing to remain within a ruling class party that might one day craft policy to aid their careers. Interestingly, much of the “culture wars” in this century have been between those attempted culture managers and their conservative culture manager counterparts on the Republican side (who represent an older, whiter, less college-educated culture).

The working class, and class exploitation, have not disappeared, of course, but neither the Democrats or Republicans have any interest in allowing an independent class consciousness to develop, and the general direction of late capitalism has atrophied historic centers of working-class power to the point of near dissolution. The debt ceiling deal is a further imposition on the vast majority of working-class Americans, but after the deal, very little to challenge it seems to be in the offing.

This content originally appeared on CounterPunch.org and was authored by Peter LaVenia.

Next Time, Abolish the Debt Ceiling

Karen Dolan — Fri, 09 Jun 2023 05:51:50 +0000

The Fiscal Responsibility Act of 2023, the debt ceiling deal President Biden signed into law recently, served its primary purpose: avoiding default on our nation’s debt, which would have plunged the economy into chaos. President Biden also skillfully repelled the worst of the House Republicans’ demands, which included slashing social programs and government services by 60 percent. More

The post Next Time, Abolish the Debt Ceiling appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Karen Dolan.

Debt Ceiling Nonsense

Jim Kavanagh — Thu, 08 Jun 2023 06:00:05 +0000

“Could the Treasury skip the rigamarole and pay its bills without bonds? Economically, sure. Why doesn’t it? Well, the Fed has regulations governing “overdrafts” — but apart from these, the answer is plain: to do so would expose the ‘public debt’ as a fiction, and the debt ceiling as a sham.”

– James K. Galbraith

It is infuriating to watch this “debt ceiling” charade play out again, and terribly depressing to see so many self-identified leftists accepting, and bargaining within, the ridiculous, fictional framework that guarantees their perpetual defeat within a never-ending cycle of such nonsense.

Just about everybody—certainly everybody with any “progressive” inclinations—recognizes what a tiresome farce this is. We all know the “debt ceiling” is the atavistic remnant of a 1917 gold-standard-era law that was ignored until Newt Gingrich dug it up in 1995 to start the now-perennial stunt cycle; that it exists in no other country besides Denmark, where it is set astronomically high precisely to avoid making it a political weapon; that it is used hypocritically by Republicans as a political weapon against Democratic presidents, to cut social spending and attack “entitlements” (Social Security and Medicare); that it enables a ludicrous, blatantly unconstitutional “do-over” by which right-wing legislators, who were unable to get the social program cuts they want through normal Congressional votes, try to force the Executive to stop spending that the Congress has already authorized, etc. (For a nice critique of the constitutional pretzel-twisting the Republicans are engaged in, see Robert Hockett’s Stop the Charade: The Federal Budget Is Its Own ‘Debt-Ceiling’.)

Did I say “Republicans”? We all know, too, that the Democrats, who constantly moan and groan about the reactionary absurdity of the debt ceiling, refused to abolish it, even when they had a supermajority (Did someone say: “codifying Roe”?), and will always end up caving to the “fiscal cliff” blackmail.

When, during the last lame-duck session, some progressives called for using reconciliation to raise the debt ceiling precisely to preempt the extortion that’s happening now, Democratic senator Dick Durbin demurred, because “It takes too much time.” When a group of House Democrats led by Pennsylvania Rep. Brendan F. Boyle suggested eliminating the statutory debt limit altogether (the proper thing to do), Joe Biden’s response was firm: “You mean, just say we don’t have a debt limit? No. That would be irresponsible.”

It’s almost as if both parties like—or think it’s necessary—to have this sword of Damocles hanging over the federal government’s social programs.

Biden, who has spent forty years calling to freeze/cut Social Security and Medicare and praising austerity hawks like Paul Ryan, does believe eliminating the debt limit would be “irresponsible”—i.e., agrees with the fundamental premises of the right-wing Republicans. He follows in the footsteps of Barack Obama, who, as a Senator in 2006, when it discomfited a Republican president, voted against raising the debt ceiling, saying: “America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit”—i.e., agreeing with the fundamental premises of right-wing Republicans.

Five years later, when the shoe was on his presidential foot, Obama, having embraced “entitlement reform” and Paul Ryan’s “serious … entirely legitimate proposal” for austerity, explained his senatorial vote thusly:

I think that it’s important to understand the vantage point of a senator versus the vantage point of a president. When you’re a senator, traditionally what’s happened is, this is always a lousy vote. Nobody likes to be tagged as having increased the debt limit – for the United States by a trillion dollars. As president, you start realizing, you know what, we, we can’t play around with this stuff. …And so that was just an example of a new senator making what is a political vote as opposed to doing what was important for the country. And I’m the first one to acknowledge it.

(Amazing, isn’t it, how, by claiming “the first one to acknowledge it” prize, Obama makes an admission that he acted out of political opportunism as opposed to doing what he considers “important for the country” seem so inconsequentially banal.)

So, not only was Obama as hypocritical as right-wing Republicans in his partisan weaponization of the debt limit, he and Biden and virtually all Democrats are as committed as right-wing Republicans to the necessity and importance of the debt limit, and to the notion that those—including Democrats—who cannot respect it are “failing”: “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills.”

The fundamental point is that the Clintons, Obama, Biden, and all the “moderates” and virtually all Democrat and independent “progressives” agree with the Republicans that borrowing (along with taxes) is necessary for the government to “pay its own bills.” That’s why Hakeem Jeffries finds consideration of a spending freeze—cuts to social programs, in effect—”inherently reasonable”; that’s why Biden has been preaching for decades about the need to ~~save~~ ~~reform~~ freeze/cut Social Security and Medicare; because, well, they just have to, or the government won’t be able to “pay its own bills.” Indeed, Obama would have, with pride in doing what was “important for the country,” thrown those social programs over the “fiscal cliff” in his “Grand Bargain,” if he hadn’t been blocked by right-wing Republicans who were too stubborn to accept any tax increase—a stance for which we should be grateful.

And now, we have the Democrats to thank (more Republicans voted against it) for passing a debt ceiling deal that “pares back federal spending by at least an estimated $234 billion over the next two years…at the cost of massive automatic spending cuts that both sides see as too steep.”

It’s a deal that betrays student loan holders and imposes gratuitously cruel and fiscally meaningless work requirements on SNAP recipients, while explicitly ensuring that the growing costs for “overseas contingency operations [i.e., war] … and certain other funding,” remain explicitly “not…constrained.” It’s a deal that cements the precedent of allowing a minority congressional faction to hold the economy and government operations hostage whenever. Oh, and it “barely dents” the “debt.”

Well-intentioned progressives see all this and say: “Why don’t they raise taxes? The Democrats are betraying us by cutting spending instead of raising taxes to enable the government to “pay its bills”—in this case, the debt bill.” Here’s David Sirota:

In fact, according to the Washington Post, Biden’s opening “pitch” to McCarthy was right along that standard left-ish line: “A proposal to raise the debt ceiling that didn’t just slash spending but also generated new revenue, particularly through tax increases targeting the wealthy.”

But there is no problem here that can be, or is being, solved by spending cuts or tax increases. Squeezing people who have about $9 a day ($281 per month max SNAP benefit) to buy food is not going pay the government’s bills. And no tax increase is going to pay infinitely expanding “overseas contingency operations” bills, or the ever-growing non-discretionary spending (Social Security and Medicare) bills, or the $6 trillion dollars the government created in 2020-21—i.e., the $50 trillion+ “debt” expected by the end of the decade.

The problem here is not whether to cut spending and/or raise taxes to pay the government’s debt; the problem is thinking that spending or taxes has anything to do with the government’s debt. And everybody—Democrat or Republican, left, right, or center—who continues to promote that idea is part of the problem. Because they all agree with the framework given in this New York Times “debt ceiling” explainer:

What is the debt ceiling?

The debt ceiling, also called the debt limit, is a cap on the total amount of money that the federal government is authorized to borrow via U.S. Treasury securities… to fulfill its financial obligations. Because the United States runs budget deficits, it must borrow huge sums of money to pay its bills. [my italics]

If this is correct, then Obama and Biden and Jeffries and Ryan and McCarthy are right: it is “reasonable”—indeed, necessary—to consider spending cuts as part of an important-for-the-country solution, no matter what tax increases you want to insist on.

But it is not correct. The second sentence of the NYT explainer is false—the USG does not have to, and does not, borrow money “to pay its bills,” and the second sentence does not follow (there is no “because”) from the first.

In regard to the second point: The “debt limit/ceiling” itself says nothing about spending. It sets a maximum amount the government is authorized to borrow via selling Treasury securities. It does not explicitly set a maximum amount the Congress is authorized to spend via legislation. Nor does it require or authorize the government to “default” on, stop making, payments that are extant legal obligations mandated by legislation the Congress itself passed.

It’s prima facie constitutionally ridiculous to think that any legislation could authorize such a default. Could a law Congress passed in 1917 require it, in 2023, to ignore all the budgetary legislation it has passed in the intervening years? That absurd notion has been invented by enemies of social programs to create an infinite series of Groundhog Day “do-overs” where legislators get to renege on popular legislation they have passed, while pretending it’s not because they oppose the programs but only because they have to “pay the government’s bills.”

But what does limiting the government’s authorization to borrow going forward have to do with the government’s legal obligation to spend what it has already authorized? To pay recipients what they are legally entitled to?

And please understand what “borrow” means here: selling Treasury securities. Why can’t the government stop selling Treasury securities (I’m all for it!) and keep on spending as authorized and obligated by law?

Because there’s an assumption—an implicit policy—that is not part of the 1917 “debt limit” law, but upon which it rests, that if the government’s tax receipts don’t equal the spending authorizations it has made, it “must borrow”—must make up the difference by selling Treasury securities—in order to “fulfill its financial obligations” and pay its bills, But that assumption is wrong.

I repeat, and ask you, dear reader, to stop and think whether you agree or not: That assumption is wrong. It’s politically persistent, but it’s economically wrong. As Galbraith says: “Could the Treasury skip the rigamarole and pay its bills without bonds? Economically, sure.”

Indeed, that assumption has been known to be wrong for decades, and was flatly contradicted by a Chairman of the New York Fed, Beardsley Ruml, in 1946: Because the U.S. is a country “whose currency is not convertible into gold or into some other commodity…our Federal Government has final freedom from the money market in meeting its financial requirements.”

Economically, there was some reason for that assumption in 1917, when “everybody knew” that our monetary system was based on the gold standard, and spending was constrained by the need to control the ratio of currency in circulation to gold—which was the real money and something the government did not create and had to get from somewhere else.

That reason no longer exists. See what it says on that lovely $100,000 bill that’s my headline image (It’s a receipt for a quantity of gold) and what it doesn’t say on the dollar bill in your pocket (It’s a receipt for…a dollar). As Galbraith says, the notion that the government needs to borrow money is “an anachronism… based on the idea that the government must raise money from elsewhere, before it spends.”

But the implicit assumption and policy persist—in the form of the household paradigm, where the government, like a household, must get its money from somewhere outside of itself to “pay its bills.” It persists in the minds of the masses of people because they have been thoroughly ideologized to accept it as a natural fact, and it persists in the hands of the few people who oversee the actual money system we have because they benefit from everyone else clinging to that anachronistic framework, which hides the progressive potential of that system. It persists so that we will continue to argue, irrelevantly, about raising taxes and/or cutting spending to “pay the bills.”

Please read James Galbraith’s words above carefully: the “debt ceiling” is a sham because the “public” debt is a fiction. The solution to this problem is not to cut spending or to raise taxes; it’s to recognize that there is no problem. There is no “debt ceiling” problem because there is no “debt” problem that has anything to do with spending or taxes or “paying bills.” Bargaining about how to solve the fictional “public debt” problem is as ridiculous as arguing about how many dollars can fit on the head of a pin (or in a “Tax the Rich” gown).

Please, please, take a moment or two to register and think about—not just give it an obligatory nod and pass over—the fact that makes such bargaining ridiculous: We have a fiat money system, which means the federal government creates money. And it creates money by spending. No matter what circuitous route they take to get various places, all—every single one—of the interest-free dollars in every nook and cranny of the economy, including your pocket, has been created by the federal government and spent into the economy. There is no place else they can come from.

Ask yourself, and give a minute or two to think through the answer: Why, and from whom, would the institution that creates dollars have to borrow them? The answer is obvious: It doesn’t. And that answer—also obviously, if you give it a moment more thought before retreating to the comfort of the conventional framework—abolishes the fiction of “public debt” and the sham “debt ceiling” that derives from and depends on that fiction. If you could create dollars, would you have to go around borrowing dollars from someone else? Really, think about that.

Please understand what “borrow” means here for the federal government, which is nothing like what it means for your household to use a credit card. Ordinary households borrow money they don’t have and can’t create because they need to use it immediately for some purpose. When the Fed sells a Treasury bond, it takes money that it has created and already exists, money that’s held in what’s effectively a “lender’s” checking account, and moves it into what’s essentially a CD account, where it sits for a specified time and is used for nothing. The government does not spend that money; it holds it.

The entire amount of the principal of all that Treasury bond “debt” sits in those “CD” accounts, could right now be, and will at the end of the bond’s term be, transferred instantly back into the lender’s checking account. The government “pays back” those bonds by moving the extant money back into a checking account, along with the new interest money it creates.

The purpose of selling these bonds is not to get money for the government to spend, it’s to prevent spending, to hold money out of the economy for a while. These bonds are used not as a funding source but as an anti-inflationary offset. They are explicitly used as the favored tool against inflation, whether related to government spending or not. The cost of that—the reward the government pays the bondholders for not spending money for a while, and the only new money created in the transaction, is the interest paid. That is, indeed, a lot of new money created—which means selling the bonds just defers and tends to increase inflation.

If you could create dollars, would you go around borrowing dollars from someone else, so that you could hold them in your pocket for a while and then create and pay that person more dollars for that service? Really, think about that. Because you do that, through (what’s ostensibly) “your” government, which obscures the real process in a “pay the bills” fiction.

The whole rigmarole of the government borrowing money it doesn’t need for the spending it has already approved, by selling Treasury bonds, is a relic of the gold-standard age and an unnecessary gift to the wealthy, sold to us under the false pretense that it’s necessary to “fulfill its financial obligations.”

The need to borrow is half the “public debt” fiction; the need to tax is the other. It’s an anachronism that “the government must raise money from elsewhere, before it spends,” and “elsewhere” includes taxes. For the same reason—because it creates money—the federal government does not need to borrow money to “pay its bills” (and does not actually use the money it “borrows” for that purpose), it does not need to collect money from taxes to enable its spending (and does not use the taxes it collects for that purpose).

First of all, spending precedes and is the source of taxes, not the other way around. It’s not tax and spend; it’s spend, then tax. Taxes are a portion of that money the federal government has already created and spent into the economy—there’s nowhere else taxable money comes from—that it takes back. It’s a good thing only a portion is taken back—creating a “deficit”—or there would be no interest-free dollars left anywhere in the economy, including your pocket. The federal government’s deficit is the economy’s surplus, a good thing.

There are very good reasons to levy taxes. To enable spending is not one of them. Ruml again, in 1946: “The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.” (The managers of our monetary system all know this. The Fed chairmen—Greenspan, Bernanke—keep telling us this. Leftists should listen.)

Taxation is not a collection plate, where everybody “chips in” money that the government needs but does not have; it’s a drain valve, through which the government removes excess money that it has created and spent into the economy.

A primary purpose of levying taxes—progressively, surtaxing the rich—is to limit inequality. We need to surtax the rich not because the government needs their money to pay its bills, but because they are too rich, and that excess wealth gives them excess power that inevitably undermines democracy. That’s a social purpose, not an economic need. A conservative Fed chairman understood this in 1946. You’d think today’s leftists and socialists might:

[A] principal purpose of federal taxes is to attain more equality of wealth and of income than would result from economic forces working alone. The taxes which are effective for this purpose are the progressive individual income tax, the progressive estate tax, and the gift tax. What these taxes should be depends on public policy with respect to the distribution of wealth and of income. … These taxes should be defended and attacked it terms of their effects on the character of American life, not as revenue measures.

Instead of constantly arguing about whose taxes to raise how much to meet a revenue need that doesn’t exist, leftists should start with proposing that there should be no income tax on lower (than median?) income levels, and that the most regressive and burdensome taxes on working people— payroll taxes—be eliminated. People “chip in” by working to produce goods and services of value (and “value” is not to be confused with money). It’s ridiculous and unnecessary to require anybody who was paid just enough to have a decent life for the work they have done, for the value their labor helped to create, to “chip in,” “tighten their belt,” or “contribute” money to a government that can literally create an infinite amount of it.

Then, yes, argue for extremely high rates of taxation on upper tiers of income—at least the 94% highest marginal rate in place in 1946, which was understood and accepted by Fed Chair Ruml and most of the country as not a revenue but a wealth-equalization measure. Nothing but ignorance of how the monetary system works, and/or cowardice about their own persuasive powers, and/or contempt for their working-class audience prevents leftists from making that argument today.

Leftists who continue to argue about taxes within the collection plate theory are avoiding arguing and giving the real justification for very high taxes only on the rich: Nobody earns $100 or $50 million a year; nobody’s labor creates that much value in a year. Nobody deserves to hoard that much of the public money the federal government has created and spent into the economy. Why not take 94% or more of every dollar over $3 million—as we did with the equivalent ($200,000) in 1946? Not for the false economic purpose of revenue, but the real social purpose of limiting inequality. It’s not a matter of asking the wealthy to “contribute” some of the public money they’ve appropriated; it’s a matter of taking it. Nobody’s belt will be too tight.

Leftists who are reluctant to argue for that had better give up trying to argue for socialism.

Leftists should refuse to engage in adjusting the elements of an activistic, regressive tax system based on the false premise that taxes pay the government’s bills, and instead propose a truly progressive tax structure based on how our monetary system actually works.

We also levy taxes to prevent an inflationary excess of money in the economy. In this respect, taxes, like bonds, offset, not enable, spending. Again, if there’s an excess money supply that needs to be drained, we surtax the rich because, as the man said, that’s where the excess money is. You don’t address inflation by limiting the spending of people who have barely enough money to buy the necessities of life; you do it by retrieving the excess money from the wealthy, who use it for their private jets, precious gems, and Met Gala gowns.

The fundamental point, from which all of this follows, is that Maggie Thatcher is exactly wrong: There is no such thing as “taxpayer” money; there is only public money. Neither ‘taxpayers” nor “lenders” are the source of the money used for—actually created by—federal spending.

Leftists have to realize that by accepting the “taxpayer money” framework, and the notion that taxes and borrowing are necessary to enable spending, they are accepting the whole anti-social Thatcherite paradigm in which private wealth is the source of public wealth. Somehow, in a polity where the federal government creates money, it has to go to the wealthy to borrow or collect the money for all public programs? If that’s true, we owe every public good to the quantitatively ranked contributions of “taxpayers” and “lenders.” Which means we depend on the wealthy and must keep them around. That’s the framework you place yourself in, and help reproduce for everybody, every time you use the term “taxpayer money” or argue for raising taxes to pay bills. Really, think about that.

There is an alternative framework out there, which comports with the facts of our monetary system, has been explained a number of times, avoids all this nonsense, and is actually kind of obvious. That most leftists continue to avoid it is another sign of what a weak, confused, self-destructive “left” we have.

Leftists who do not recognize that the federal government creates money and does not need borrowing or taxes to “pay the government’s bills” are helping to reproduce the “public debt” fiction and the perennial “debt ceiling” crises that flow from it, which they know will always end badly for progressive social programs.

Everyone who wants to defend and promote progressive social programs should understand what a grim fairy tale it is and stop engaging in it. Those who think adding a “tax the rich” prince to the “borrow money” frog can make it a happily-ever-after story, are perpetuating our imprisonment in the private money market castle from which, we were told long ago, we can be free.

Really, think about that.

This content originally appeared on CounterPunch.org and was authored by Jim Kavanagh.

Winners and Losers in the Debt Ceiling Deal

Nick Licata — Wed, 07 Jun 2023 05:26:58 +0000

The leadership of both the Democrat progressive wing and the Republican reactionary wing voted against passing the legislation to allow the debt ceiling to be raised.

However, most of the progressive D’s held back their votes until it was clear that the deal would pass. Their vote was a symbolic protest vote. That was not true for the Rs opposing the settlement. They were prepared to hold another vote past Yellen’s claimed deadline.

In the end, the pragmatic legislators from both parties carried the victory of passing the settlement to allow the debt ceiling to be lifted. They may have studied history more than their right and left-wing caucuses. Polls from the Republican-driven shutdowns in 2011 and 2013 showed that over three-quarters of the population opposed a government shutdown, and certainly a default, over accepting something less than perfect in the budget.

Democrats rightly argued that when Congress passed all the appropriation bills in 2022, any negotiation would be a retreat from prior commitments.

However, those bills were passed with the Ds controlling the Senate and the House. If they had the votes, the Rs would have blocked appropriation bills until they were seriously compromised. It was inevitable that a vote to raise the debt ceiling would be contested after the November elections, considering that the Rs were expected to control at least one of the chambers.

So, who can out on top in this negotiation? First and foremost, the nation’s economy. Even though the Feds could have continued paying interest on their loans, they would have had to take drastic actions to shift cash from services to pay them. For instance, the Feds could close the national parks as people headed into them as summer begins. That would have been a black eye for the Rs if they were the lead party voting against raising the ceiling. But, McCarthy and mainline Rs did not want that hanging around their neck come the next election day.

More importantly, even if the Feds continued to pay interest on their loans, the capital market would dive, and future interest costs would jump since the US could not provide a dependable rate of return on their loans.

If the R’s House Freedom Caucus and the Progressives had gotten enough votes to kill the negotiated treatment, even without a default, the disruption would have been a repeat of the budget crisis in 2011. That is when just the threat of a government shutdown raised federal borrowing costs by $1.3 billion in 2011, according to the nonpartisan Government Accounting Office (GAO).

That figure would have wiped out about 90% of what the negotiated settlement would have cut from Biden’s budget over the next ten years. However, this approach would have no budget cuts that the Rs could point to as a victory – it left them in a no-win situation.

Consequently, the Republicans did not have a winning strategy. But the Democrats had only a thin advantage because Biden’s Presidency would be seen as failing to negotiate a timely settlement. Speaker Keven McCarthy and President Joe Biden had to convince their respective parties that their agreement achieved their most critical priorities.

Biden had to sway the Democrats that he was protecting their ambitious environmental, tax, and social benefits from massive cuts. Meanwhile, McCarthy had the heaver lift, since his right flank, under the leadership of the House Freedom Caucus, had set specific objectives that could only be met with massive cuts to Biden’s budget.

When comparing the two parties’ key objectives, the Democrats blunted the Republican’s fiscal attack with only minor cuts. The R’s right wing in the house clearly understood that they had failed to eviscerate Biden’s budget since 88 percent of the House Freedom Caucus voted against the negotiated deal.

And while the Ds’ Progressive Caucus leadership opposed the agreement, only 34 percent of their membership voted against it. And in the Senate, only 17 of the 48 Republicans voted for the deal, while only five of the Democrats voted against it.

House Freedom Caucus member Representative Chip Roy tweeted a comparison of what the Rs wanted and what they got from the final settlement. He listed the Republicans’ demands passed in the House that McCarthy presented to Biden in their meetings.

Despite his inflammatory descriptions, Roy’s assessment of the settlement provides a candid appraisal of how far the Rs were from achieving their goals. The following were the Republican objectives that Biden parried.

R – Cut $131 billion to annual spending next year and shrink the Feds bureaucracy to pre-Covid growth for ten years.

Instead, they got a 2-year freeze in spending. But $22 billion of the supposed cuts affecting the IRS and social programs would be diminished by shifting unspent COVID reserve funds and additional revenues generated by an expanded IRS that received 80% of the increased funds Biden initially requested.

R -Require strong work requirements for social programs SNAP, TANF & Medicaid.

None were made to Medicaid. And the requirements for the other two programs were mitigated through exemptions, and the provision could be phased out. To the Rs’ surprise, their insertion in the agreement to impose work requirements on older Americans receiving food stamps was unlikely to save money. That’s because people experiencing homelessness, veterans, and some former foster youth were exempted. Thus, the food stamp rolls expanded by 78,000 people monthly and increased federal spending by $2.1 billion, according to CBO.

R – Rescind the $80 billion for allowing IRS to hire enough agents to make up for past reductions and focus on collecting past due money owed to the Feds from the wealthiest taxpayers.

The agreement reduced the IRS increase in funds to $60 billion. As a result, IRS retains 98% of its funding for expansion and future IRS spending. In addition, the Biden Administration can shift much of that $20 billion IRS cut to next year to discretionary spending, which funds many social programs, making them receive the same amount they get now.

R – Reclaim $50 billion in unobligated, unspent COVID funding

Only $22 billion is reclaimed.

R – Reduce energy permitting requirements

Permitting will be fast-tracked for IRA-subsidized energy and batteries. There has been bipartisan support for comprehensive permitting reform, including clean energy advocates wanting to give the Federal Energy Regulatory Commission more authority to site transmission lines to access renewables.

R – Cut Biden’s entire student loan bailout

Student loan forgiveness is retained, but loan repayments will no longer be suspended, requiring payments to be paid in two months.

Bottom Line

Biden did not get the budget that Congress had previously approved. But he did manage to avoid a government shutdown and defaulting on government loans. The cuts to his budget will impact lower-income residents, worsen environmental conditions like air and water quality and continue a tax system that contributes wealth accumulation to a smaller portion of the population in the future.

Democrats are undoubtedly disappointed, but that is slight in comparison to the Republicans’ dissatisfaction with what they were hoping to achieve. The Ds will have concrete benefits to show voters in the coming elections. The Rs will have to lean again on framing an increased debt load as a burden on future generations. That will be a more challenging task, not providing visible, tangible advantages to voters today.

This content originally appeared on CounterPunch.org and was authored by Nick Licata.

David Sirota: Working Class Will Be "Deeply Harmed" by Biden’s "Big Win" on Debt Ceiling

Democracy Now! — Mon, 05 Jun 2023 14:01:40 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

David Sirota: Working Class Will Be “Deeply Harmed” by Biden’s “Big Win” on Debt Ceiling

Democracy Now! — Mon, 05 Jun 2023 12:13:42 +0000

President Joe Biden on Saturday signed a debt ceiling deal into law that averts a catastrophic default by the United States through January 1, 2025, hailing it as a “big win” for the country. Critics say the agreement protects wealthy corporations and tax dodgers while imposing new cuts on key social programs and expanding work requirements for some recipients of food stamps. The legislation has also been called a “dirty deal” by climate activists because it rolls back environmental regulations and fast-tracks the approval of the Mountain Valley Pipeline through West Virginia and Virginia, a pet project of powerful Democratic West Virginia Senator Joe Manchin. “The working class of this country was deeply harmed by this bill,” says investigative journalist David Sirota of The Lever. He also faults Democratic leaders for not raising the debt ceiling after the midterm elections, when the party still had control of Congress. “What you see is a picture of a party that wanted this outcome,” says Sirota.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

The Debt Limit Bill: Yet Another Triumph for Bipartisanship

Jon Schwarz — Sat, 03 Jun 2023 10:00:00 +0000

The U.S. Capitol in Washington, D.C., on June 2, 2023.

Photo: Nathan Howard/Bloomberg via Getty Images

This weekend, President Joe Biden is expected to sign a bill raising the federal debt limit for approximately two years. It passed the House 314-117, with 149 of the yes votes coming from Republicans and 165 from Democrats. The bill passed the Senate 63-36. Forty-four Democratic senators voted for it, along with 17 Republicans and two independents.

The New York Times concludes that, compared with previous Congressional Budget Office forecasts, it will cut federal spending by $55 billion in 2024 and $81 billion in 2025. Moody’s Analytics estimates that, thanks to the bill, there will be 120,000 fewer jobs at the end of 2024 than there would be without it. According to the CBO, cuts to Internal Revenue Service enforcement will lead to tax revenues falling to the degree that it will actually increase the deficit on net, thereby accomplishing the exact opposite of the bill’s purported aim.

All this — plus the fact that the Biden administration is rewarding the GOP for taking the world economy hostage, thereby guaranteeing Republicans will do it again as soon as possible — is the bad news. The good news here is that it’s bipartisan!

Why didn’t the Democrats raise the debt limit without spending cuts during the lame duck period after the 2022 midterms, when they still controlled the House and Senate? They may not have had the votes, but we’ll never know because they didn’t even attempt it. As Senate Majority Leader Chuck Schumer explained at the time, “The best way to get it done — the way it’s been done the last two or three times — is bipartisan.”

Then, when the debt limit bill passed the House with the cuts, a White House statement celebrated that the vote was “bipartisan” in the headline and then mentioned it two more times in three paragraphs of text.

President Biden: "My fellow Americans, when I ran for president I was told the days of bipartisanship were over. That Democrats and Republicans could no longer work together, but I refused to believe that, because American can never give into that was of thinking." pic.twitter.com/IWPbbkGHCc
— CSPAN (@cspan) June 2, 2023

This posturing makes sense, since Americans constantly say we love the concept of bipartisanship. A 2021 CNN poll found that 87 percent of us feel attempts at bipartisanship in Congress are a good thing. This includes 92 percent of Democrats and 77 percent of Republicans, thereby making this sentiment about bipartisanship itself bipartisan.

So now’s a good time to look back at some of the other great bipartisan achievements of the past few decades. An optimist will see these as all-too-rare occasions when Democrats and Republicans put their differences aside, reached across the aisle, and worked together to get things done. A realist may suspect these are examples of both Democrats and Republicans wanting to screw regular people in service of their donors, and only having the courage to do it because the other side was willing to hold their hand and jump with them — so neither party could be blamed.

The Commodity Futures Modernization Act of 2000

In the last days of the Clinton administration, the House passed the Commodity Futures Modernization Act 292-60. One hundred and fifty-seven Democrats voted for it, together with 133 Republicans. The Senate passed it under unanimous consent.

By exempting many financial instruments from regulation, this extremely bipartisan bill helped lay the groundwork for the 2008 financial meltdown and the subsequent near-depression. In 2013, Bill Clinton privately spoke about his desperate attempts to stop the act from passing. This was all lies: His administration had enthusiastically lobbied for it.

2001 Authorization for Use of Military Force

Public Law 107-40, signed on September 18, 2001, by President George W. Bush, is certainly the most bipartisan act of the 21st century. The bill gave Bush the authorization “to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons.” Every Democrat and Republican voting said yes to it with the solitary exception of Democratic Rep. Barbara Lee of California.

The executive branch predictably seized this power to go hog wild. The 2001 AUMF has been used as justification by Bush, Barack Obama, and Donald Trump for military action in 12 countries including Afghanistan, plus drone strikes and regular bombing in seven.

About 3,000 people died on September 11, 2001. All in all, the war on terror is estimated to have caused 4.5 million deaths, a ratio of 1,500 to 1.

Authorization for Use of Military Force Against Iraq Resolution of 2002

Two hundred and fifteen Republicans and 81 Democrats voted in October 2002 to give Bush the power to invade Iraq. In the Senate, 48 Republicans and 29 Democrats voted yes.

Bush fired Larry Lindsey, the director of his National Economic Council, for saying the U.S. might have to spend as much as much as $200 billion on the war. It will eventually cost America at least $2.4 trillion.

American Jobs Creation Act of 2004

In October 2004, Congress passed a bill including a corporate tax holiday — i.e., an opportunity for multinational U.S. companies that had been holding cash overseas (so it couldn’t be taxed) to bring that cash back to America at an ultra-low tax rate. It was totally bipartisan, with 207 Republicans and 73 Democrats voting for it in the House, plus 44 Republicans and 25 Democrats voting yes in the Senate.

The rationale for the bill, as is clear from its name, was that this was going to create tons of great American jobs. In reality, lots of the money (from this and other Bush tax cuts) went to bigger paychecks for corporate executives. Meanwhile, the prime beneficiaries of the bill actually cut their U.S. payroll. Bill Clinton later said that Bush “got so mad that he signed the five and three-quarter percent repatriation bill and, he said, none of it was reinvested.”

Budget Control Act of 2011

The GOP previously used the debt limit to take the economy hostage in 2011, after taking back control of Congress during the 2010 midterms during Obama’s first administration. The crisis was resolved by the passage of the Budget Control Act, with 174 Republicans and 95 Democrats voting for it in the House. In the Senate, more Democrats (47) voted yes than Republicans (27).

With the economy still reeling from the quasi-depression of 2007 to 2009, the $1 trillion-plus in cuts to discretionary spending mandated by the Budget Control Act kept the economy weak and millions of Americans desperate for years to come. The Budget Control Act and the Commodity Futures Modernization Act each deserve a kind of half-sack for the presidency of Donald Trump.

So there you have it: five triumphs of bipartisanship. Depending on how you calculate it, together these alone have cost the U.S. perhaps $15 trillion, in addition to causing an incalculable amount of human suffering, here and overseas. The debt limit bill can’t hope to be in this league, of course. But there’s always more bipartisanship to come tomorrow.

Join The Conversation

This content originally appeared on The Intercept and was authored by Jon Schwarz.

Another Look at the Financial Transactions Tax

Ellen Brown — Fri, 02 Jun 2023 23:14:25 +0000

Photo by Mika Baumeister on Unsplash

A small financial transactions tax could correct a number of maladies in our economic system, from the federal debt crisis to the widening wealth divide to the rampant financialization of the economy, while eliminating taxes on income and sales.

The debt ceiling crisis has again brought into focus the perennial gap between what the government spends and what it accumulates in taxes, and the virtual impossibility of closing that gap by increasing taxes or negotiating cuts in the budget.

In a 2023 book titled A Tale of Two Economies: A New Financial Operating System for the American Economy, Wall Street veteran Scott Smith shows that we would need to tax everyone at a rate of 40%, without deductions, to balance the budgets of our federal and local governments – an obvious nonstarter. The problem, he argues, is that we are taxing the wrong things – income and physical sales. In fact, we have two economies – the material economy in which goods and services are bought and sold, and the monetary economy involving the trading of financial assets (stocks, bonds, currencies, etc.) – basically “money making money” without producing new goods or services.

A radical change in the tax structure may seem unlikely any time soon, due to the inertia of Congress and the overweening power of the financial industry. But as economist Michael Hudson and other commentators observe, the U.S. has reached its limits to growth without some sort of debt write down. Federal interest expense as a percent of tax revenues spiked to 32.9% in the first quarter of 2023, and it will spike further as old securities at lower interest rates mature and are replaced with new ones at much higher interest. A financial reset is not only necessary but may be imminent. Promising proposals like Smith’s can lead the way to a much-needed shift from serving “capital” to serving productivity and the broader public interest.

A Look at the Numbers

The material economy is roughly measured by the annual Gross Domestic Product (GDP), which for the U.S. had reached $25.6 trillion by the third quarter of 2022. (Michael Hudson observes that even GDP, as currently measured, is largely composed of non-productive financial services.) GDP is defined by spending, which depends on income. Collectively, Americans earned $21 trillion in 2021. The monetary economy is defined as the total amount of money that changes hands each year. Smith draws his figures from data that the Federal Reserve publishes annually in the Bank for International Settlements’ Red Book. The Red Book is not all-inclusive; it leaves out such payments as commodity trading, various options, crypto currency trades, and exchange-traded funds. But even its partial accounting shows $7.6 quadrillion in payments – more than 350 times our national collective income. Smith includes this chart:

Bank for International Settlements, (Data on cashless payments, payment systems, service providers, counterparties, clearing houses, and central security depositories). Click on the United States, https://www.bis.org/statistics/rpfx22.htm?m=2617 (Data on OTC FX and IR derivative), https://stats.bis.org/statx/srs/table/d1 (Data on XT futures and options), https://stats.bis.org/statx/srs/table/d11.2. (Data on OTC FX Instruments), Federal Reserve Bank of New York, (Data on XT Derivatives), Cboe Global Markets, (Data on stock market volumes). All data is the latest available. Most categories are for 2020, some categories are for 2021 and 2022.

Smith comments:

Most of these payments have little to do with what we regard as the real economy— the purchase of goods and services and the supply chain. Our GDP represents less than 0.33% of the payments in our economy. Once we see the big picture, the solution is obvious. We should tax payments instead of our income.

He calculates that U.S. spending by federal, state and local governments will total around $8.5 trillion in 2023. Dividing $7,625 trillion in payments by $8.5 trillion in government spending comes to a little more than 0.001, or a tenth of a percent (0.1%). Taxing payments at 0.1% could thus eliminate every tax we pay today, including social security (FICA) taxes, sales taxes, property taxes, capital gains taxes, estate taxes, gift taxes, excise taxes and customs taxes. With a 0.25% FTT, “If you have a net worth of $20 million or less, you would come out ahead. And if you make $500 million per year, you will finally be paying your fair share of taxes – $1.25 million!”

Bridging the Wealth Gap

The financial transaction tax is not a new concept. The oldest tax still in existence was a stamp duty at the London Stock Exchange initiated in 1694. The tax was payable by the buyer of shares for the official stamp on the legal document needed to formalize the purchase. Many other countries have imposed FTTs, including the U.S. — some successfully and some not. In January 2021, U.S. Rep. Peter DeFazio reintroduced The Wall Street Tax Act, which was accompanied in March 2021 by a Senate bill introduced by Sen. Brian Schatz. According to a press release on the Schatz bill, the tax “would create a 0.1% tax on each sale of stocks, bonds, and derivatives, which will discourage unproductive trading and redirect investment toward more productive areas of the economy. The new tax would apply to the fair market value of equities and bonds, and the payment flows under derivatives contracts. Initial public offerings and short-term debt would be exempted.” Schatz stated:

During the pandemic, Wall Street has cashed in on high-risk trades that add no real value to our economy and leave working families behind. We need to curb this dangerous trading to reduce volatility in the markets and encourage investment that can actually help our economy grow. By raising the price of financial transactions, we can make our financial system work better while bringing in billions in new revenue that we can reinvest in our workers and our communities.

Scott Smith concurs, noting that millions of people were forced into poverty during the first two years of the pandemic. In the same two years, the 10 richest men in the world doubled their fortunes and a new billionaire was minted every 26 hours. Much of this disparity was fueled by fiscal and monetary policy aimed at relieving the effects of the pandemic and of the 2008-09 banking crisis. Smith writes:

Our burgeoning monetary economy has fueled the rise of securitization, private equity, hedge funds, the foreign exchange market, commodity trading, cryptocurrency, digital assets, and investments in China. Quantitative easing further fanned these flames, driving up the price of financial assets. All such assets are monetary equivalents, and, thus, inflating the price of such assets balloons the money supply.

What many lauded as a robust economy was really monetary inflation. This makes it more difficult for the next generation to start life. Monetary inflation moves a select few out of the middle class, making them newly rich, while relegating many more to being poorer.

… The trading of financial assets in the monetary economy represents the majority of the payments in the economy, eclipsing payments related to wages or the purchase of goods or services. Thus, it would be wealthy individuals and institutions, such as hedge funds, that would shoulder most of the burden of a payment tax.

Predictably, the Wall Street Tax Act has gotten pushback and has not gotten far. But Smith says his proposal is different. It is not adding a tax but is replacing existing taxes – with something that is actually better for most taxpayers. He has asked a number of hedge fund managers, day traders, private equity fund managers, and venture capital managers if a quarter-point tax would impact their businesses. They have shrugged it off as not significant, and have said that they would certainly prefer a payments tax to income taxes.

Responding to the Critics: The Sweden Debacle

Among failed FTT attempts, one often cited by critics was undertaken in Sweden in the 1980s. As reported by the Securities Industry and Financial Markets Association (SIFMA):

There were negative capital markets impacts seen in the great migration of trading volumes across multiple products to London, equity index returns fell, volatility increased and the interest rate options markets essentially disappeared.

But as argued by James Li in a podcast titled “The Truth About a Financial Transaction Tax“:

Sweden’s tax policy … had an obvious, massive loophole, which is that Swedish traders could migrate to the London Stock Exchange to avoid the tax — which they did, until it was eventually abolished. On the other hand, the UK’s financial transaction tax has been much more successful. In 1694, King William III levied a stamp duty on all paper transactions, and a version of that levy still exists today, taxing many stock trades at 0.5 percent. Unlike the defunct Swedish tax, it applies to trades of shares of any UK company, regardless of where traders are based.

Again, Smith argues that the challenges met by other transaction tax proposals have arisen because they were being proposed as an additional tax. A payment tax in lieu of personal and corporate income taxes takes on a whole different character. He argues that big firms, rather than moving offshore to avoid a payments tax, would move to the U.S., since the tax rate in other nations would be much higher. Without a corporate or income tax, the U.S. would be the most favored tax haven in the world.

He adds that an exit tax could be a good idea: any money leaving the U.S. could be taxed at a 5% rate. That would discourage people from wiring money to an offshore exchange. But incoming money would not be taxed, encouraging foreign money to come to the U.S. to stay long-term, where it would be taxed less than elsewhere.

The Alleged Threat to Retirees

James Li’s favorite myth about a financial transactions tax is that it would be devastating for Main Street investors. He cites a report from the Modern Markets Initiative on the effects of the tax on savings and retirement security. A Business Wire headline on the report warns, “Latest Data from Modern Markets Initiative Shows the Financial Transaction Tax Would Threaten the Retirement Savings of Millions of Americans.” Among other claims is that a financial transactions tax would cost “$45,000 to $65,000 in FTT over the lifetime of a 401(k) account, or the equivalent of delaying the average individual’s retirement by approximately two years.” How that calculation was made is not included in the article, which refers the reader to the report. Li looked it up, and says on his podcast that it was highly misleading:

[T]he study stated that under this type of tax, for every $100,000 of assets in a 401(k) plan, the saver would owe $281 dollars in FTT taxes in a given year; and then over a 40-year time horizon paying in at $281 a year at 7% annual growth – the average for pension funds – that this would yield a total value of $64,232 after 40 years.

… [What they were] actually saying is, “If you put $100,000 a year into your 401(k), you would be paying approximately $281 in taxes for that $100,000; and if you had instead invested that money every year in a fund with 7% interest, that amount would add up to about $64,000 after 40 years.”

… I don’t know about you, but I can’t put $100,000 in my 401(k) plan every year. Very few people can. A more accurate estimate on how this would actually impact the average retirement savings is to look at the median income, which is around $52,000 a year, with an estimated $5,000 contribution into a 401(k) annually, which is around 10% of your gross pay based on commonly accepted financial planning advice. So the average person would only pay about $13 in FTT taxes in a given year.

These people are extremely tricky and their logic is also extremely flawed, because we pay taxes all the time. It’s like saying, “Oh, if I didn’t have to pay an income tax, I would be able to put all that money away and be up like a million bucks when I retire.”

Similar arguments are made concerning potential losses from FTTs to pension funds and the stock market. SIFMA contends, “What’s bad for the capital markets is bad for the economy,” stating “The capital markets fund 65% of economic activity in the U.S.” Perhaps, but the money paid for shares of stock traded in the stock market does not go to the corporations issuing the stock. It goes to the previous shareholders. Only the sale of IPOs – initial public offerings – generates money for the corporation, and this money is typically exempted from FTTs. Trades after that are simply gambling, hoping to sell at a higher price to the “greater fool.”

Killing the Parasite That Is Killing the Host

In the 2015 book Killing the Host – How Financial Parasites and Debt Destroy the Global Economy, Michael Hudson calls “finance capitalism” a parasite that is consuming the fruits of “industrial capitalism” – the goods and services traded in what Smith calls the material economy. Pam Martens writes in a review of Hudson’s book that this “blood-sucking financial leech [is] affixed to your body, your retirement plan, and your economic future.”

But it is not actually the pension funds that are doing most of the financialized trades or that would get taxed on those trades. It is their asset managers – including BlackRock and Vanguard, both of which lost money overall in 2022. If the asset managers can’t make money in the financialized economy, perhaps it would be better for the pension funds to move to more productive investments – from “finance capitalism” to “industrial capitalism.”

Publicly-owned banks mandated to serve the public interest would be good options if we had them. As the economy falters, the public banking movement is picking up steam, part of a much-needed shift towards an economy that puts the public interest above private profits.

This content originally appeared on Dissident Voice and was authored by Ellen Brown.

For Media, Giving in to Debt Limit Blackmail Was a Triumph of Bipartisanship

Julie Hollar — Fri, 02 Jun 2023 21:31:03 +0000

When Congress passed the debt ceiling deal hammered out by President Joe Biden and House Majority Leader Kevin McCarthy, centrist media celebrated.

If we had anything like a responsible White House press corps, we never would have gotten to this point. Treating the Republican gambit—demanding deeply unpopular policy measures in exchange for allowing the government to pay off debts Congress had already authorized—as anything other than economic hostage-taking gave it the legitimacy the party needed to stick with it without fear of massive political blowback (CounterSpin, 5/5/23).

Instead, the press corps we have gave three cheers for bipartisanship.

‘Complaints on either side’

NPR (6/1/23): “For one night, the pragmatists won.”

NPR‘s Domenico Montanaro (6/1/23) hailed the compromise in a piece headlined, “Don’t Believe the Hype: Low-Key Lawmakers Helped Avert a Debt Ceiling Crisis.” A paean to “pragmatists,” the article argued that

it will be those who eschewed the wings of their parties—which have some of the most vocal, attention-getting members—who averted a potentially calamitous, first-ever US debt default.

Call them perhaps the Silent Middle Majority.

Montanaro offered a both-sides framing of the deal:

There were plenty of well-founded complaints on either side—on the left, worries about increased work requirements that could hurt people in poverty, nervousness about the environmental impact of sped-up energy permits; on the right, continued head-shaking about what they see as out-of-control spending and debt, now topping $30 trillion.

But in the end, two-thirds of House Republicans and more than three-quarters of Democrats voted for the bill for a total tally of 314–117.

It’s an analysis that simply assumes the validity of the premise that some sort of deal needed to be worked out to begin with: If a hostage-taker complains that their demands have only partially been met, how well-founded is that complaint?

And on top of the false premise, Montanaro has to stretch to make both sides’ “complaints” seem at all comparable, matching the left’s “worries” and “nervousness”—about harming people and the environment—to the right’s “what they see as” problems. But there’s solid research behind the “worry” that work requirements exacerbate hardship (CBPP, 3/15/23), and speeding up energy permits is intended to increase fossil fuel production (American Prospect, 6/2/23), which is precisely what must be halted to stave off the worst of climate change outcomes.

And however much right-wing politicians shake their heads about the debt, it’s journalists’ duty to point out the disingenuousness of a party that runs up debt via tax cuts, and then pretends to favor fiscal responsibility when it comes time to pay the bills (FAIR.org, 1/25/21).

‘Far-right and hard-left…in revolt’

New York Times (5/29/23): “Some economists say the economy could use a mild dose of fiscal austerity right now.”

The New York Times also luxuriated in the outpouring of bipartisanship, with chief White House correspondent Peter Baker (5/28/23) reporting that Republicans’ success in holding the economy hostage “bolsters President Biden’s argument that he is the one figure who can still do bipartisanship in a profoundly partisan era.” He added, though, that the deal “comes at the cost of rankling many in his own party who have little appetite for meeting Republicans in the middle.”

Another piece, by congressional reporter Catie Edmondson (5/31/23), presented the deal as “a broad bipartisan coalition” in support of “a critical vote to pull the nation back from the brink of economic catastrophe”:

With both far-right and hard-left lawmakers in revolt over the deal, it fell to a bipartisan coalition powered by Democrats to push the bill over the finish line, throwing their support behind the compromise in an effort to break the fiscal stalemate that had gripped Washington for weeks.

When the Times reports that the “far right” and “hard left” both oppose something, that’s a sure sign that the paper thinks it’s a good thing. Another front-page piece in the paper, by Jim Tankersley (5/29/23), went out of its way to argue that not only was it good that the White House made a deal, but that, all in all, it was a good deal:

Economists say the agreement is unlikely to inflict the sort of lasting damage to the recovery that was caused by the 2011 debt ceiling deal—and, paradoxically, the newfound spending restraint might even help it.

“The economy could actually use a mild dose of fiscal austerity right now,” Tankersley reported economists were saying; the cuts will throw people out of work, so the Federal Reserve won’t have to. In the 23rd of 25 paragraphs, after presenting the Republican argument that the deal “will help the economy by reducing the accumulation of debt,” the reporter acknowledged that the cuts “will affect nondefense discretionary programs, like Head Start preschool, and…new work requirements could choke off food and other assistance to vulnerable Americans.”

‘Centrists’ vs. ‘fringes’

The Washington Post (5/30/23) reported that “Biden and McCarthy have each struggled at times to balance governing responsibly with appeasing their party’s base voters”—making it clear that it thought giving in to McCarthy’s threats to torpedo the economy was the responsible thing to do.

The Washington Post (5/30/23) seemed practically giddy at the deal: “A Washington Surprise: Centrists Push Back Against Fringes in Debt Deal.”

In the piece, White House bureau chief Toluse Olorunnipa found a way to equate Republicans willing to blow up the economy if they weren’t given policy concessions—ones they didn’t think they could achieve through legislation—with Democrats who insisted that government debts simply had to be paid:

For weeks, conservative Republicans warned House Speaker Kevin McCarthy not to back down from sweeping spending cuts, saying anything else would be an unforgivable betrayal. Liberals implored President Biden to abandon the debt ceiling talks altogether, insisting the Constitution enabled him to simply ignore Republican demands.

But in the end, the two leaders opted for a middle-of-the-road settlement, aiming to coalesce center-right and center-left lawmakers around the idea that an imperfect deal was preferable to a historic default that could devastate the economy. It was the first significant test for the Biden/McCarthy era of divided government, and if a theme emerged, it was the unmistakable reassertion of the political center.

“Both sides were initially sounding very ardent about an inflexible position,” said presidential historian Douglas Brinkley. “Yet both sides ultimately blinked—and that is what American politics is all about.”

Winners and losers

In all of the coverage, one consistent theme was the compulsion to declare winners and losers. Some outlets picked one side or the other: “House Passes Debt Ceiling Bill in Big Win for McCarthy,” judged the Hill (5/31/23), and USA Today (6/2/23) similarly had “McCarthy Gets Win Passing Debt Deal.” “Apostle of Bipartisanship: Why US Debt Ceiling Deal Was a Victory for Joe Biden,” explained the British Guardian (6/1/23), while the Washington Post (6/1/23) had a more confusing “Biden Won on the Debt Ceiling. Why Doesn’t He Want It to Look That Way?”

USA Today (6/1/23) acknowledged in passing that the deal would hurt people with student loans and those who need nutritional assistance, among others—but they won too, apparently.

Others declared both dealmakers victorious. Politico‘s popular Playbook newsletter (6/1/23) ran with “How McCarthy and Biden Both Won the Debt Deal.” The Washington Post (6/1/23) simply offered the two sides’ own declarations: “Sidestepping Crisis, Biden and McCarthy Claim Victory in Debt Deal.” Another USA Today piece (6/1/23) made the bold claim, “Debt Ceiling Plan Passes Senate. Who Wins? Everyone, and Here’s Why.”

In a different twist, CNN (5/30/23) offered its perspective on which companies were “winners” in the deal—leading off with Equitrans Midstream, the lead developer of the Mountain Valley Pipeline project that Sen. Joe Manchin forced into the agreement.

It also included lending company SoFi, which would profit from an end to the student loan repayment freeze included in the deal, and H&R Block and TurboTax, which are expected to benefit from the deal’s cuts to the IRS. This curtailment will likely stymie the agency’s plan to develop a free electronic tax filing system, which would have rendered those tax preparers’ offerings much less profitable.

CNN‘s “winners” begin to suggest who some of the “losers” are in this deal. It preserves tax cuts for the wealthy and funding for the Pentagon, while cutting the rest of discretionary funding, forcing more work requirements on recipients of public assistance, fast-tracking fossil fuel projects and weakening environmental protections—all great for corporations and wealthy political donors, and terrible for most people. But both major parties agreed to inflict this damage—and that in itself makes it good news for establishment media.

The post For Media, Giving in to Debt Limit Blackmail Was a Triumph of Bipartisanship appeared first on FAIR.

This content originally appeared on FAIR and was authored by Julie Hollar.

350.org Responds to U.S. Congress’ Egregious Debt Ceiling Bill “Compromise”

Newswire Editor — Fri, 02 Jun 2023 17:35:48 +0000

Following negotiations to avoid reaching the debt “ceiling” of federal spending, US leaders proposed a debt ceiling bill that majorly limits environmental protections and social programs while fast-tracking the completion of the Mountain Valley Pipeline (MVP). On Thursday night, Congress passed the bill, despite fierce opposition from environmental and frontline leaders.

350.org unequivocally condemns the passing of the bill and stands with the Black, Brown, Indigenous, and poor white communities who have, once again, been deemed expendable for the sake of profit and “bipartisanship.” We stand with the people of Appalachia, a region which has consistently been used as a sacrifice zone.

Sadly, the approval of the MVP was far from the only environmental blow to historically marginalized communities: Congress, under the guise of the desperate need to raise the debt limit, took this opportunity to enact their so-called “permitting reform” in a “dirty deal” redux that severely guts NEPA’s environmental oversight of fossil fuel infrastructure projects.

In this moment of grief and reckoning, we will continue to fight to hold Biden accountable on his failed promises to be a climate champion, and we share this statement from our partners at POWHR, on the forefront of the fight to stop the Mountain Valley Pipeline.

Denali Nalamalapu, Communications Director of the Protect Our Water, Heritage, Rights Coalition (POWHR) responded:

“Our global movement to stop the Mountain Valley Pipeline is stronger than ever. While we are outraged and devastated in this unprecedented moment, we will never stop fighting this unfinished, unnecessary, and unwanted project. Our hearts are broken but our bonds are strong.”

On June 8th, people from around the country will gather in front of the White House to demand President Biden stop the Mountain Valley Pipeline.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Debt Ceiling Legislation Avoids Economic Catastrophe, But Will Cause Other Harms

Newswire Editor — Fri, 02 Jun 2023 16:01:17 +0000

The legislation that the Senate approved by a vote of 63 to 36 could put 750,000 older adults at risk of losing federal nutrition aid, deepening the nation's hunger crisis. It also enshrines an end to the student loan payment pause before the U.S. Supreme Court has ruled on the Biden administration's student debt cancellation plan.

Most alarming, from the perspective of climate campaigners, is the measure's provisions weakening the bedrock National Environmental Policy Act (NEPA) and expediting construction of the Mountain Valley Pipeline, a 300-mile fracked gas project that could have the emissions impact of dozens of new coal-fired power plants.

"These provisions are a win for polluters, and the elected officials in their pocket," said Alice Madden, policy and political director at Greenpeace USA.

One of the fossil fuel industry's top allies in Congress, Sen. Joe Manchin (D-W.Va.), reportedly helped Republicans push the White House to include the Mountain Valley Pipeline language in the final legislation.

Democratic Sen. Tim Kaine of Virginia, a state that the Mountain Valley Pipeline would run through, put forth an amendment that aimed to strike the pipeline approval language. But his effort fell short on Thursday, with 20 Democrats and two Independents—Sens. Kyrsten Sinema of Arizona and Angus King of Maine—joining Republicans in voting down the amendment.

A separate amendment from Sen. Jeff Merkley (D-Ore.) targeting the NEPA provisions, which would allow for speedier construction of fossil fuel projects by imposing new restrictions on the environmental review process, didn't get a vote.

\u201cThere is underpublicized, outrageous language in the debt ceiling bill that does deep damage to America's bedrock environmental law, including letting corporations write their own environmental impact statements.\n\nI'm filing an amendment to focus attention on this travesty.\u201d
— Senator Jeff Merkley (@Senator Jeff Merkley) 1685654021

"By voting for a dirty deal that fast-tracks the Mountain Valley fracked gas pipeline and guts bedrock environmental laws, Congress betrayed people and the planet," said Collin Rees, U.S. program manager at Oil Change International. "These provisions, which are totally unrelated to the national debt, will turn historically underserved and environmental justice communities into sacrifice zones."

“We applaud the bold leaders in Congress who voted to strip the Mountain Valley Pipeline from the Fiscal Responsibility Act and put people over polluters," Rees said. "We will continue to stand with frontline communities opposing this dirty project, and we will not back down. This pipeline will not be built."

Denali Nalamalapu, communications director of the Protect Our Water, Heritage, Rights Coalition, echoed that message.

"Our global movement to stop the Mountain Valley Pipeline is stronger than ever," said Nalamalapu. "While we are outraged and devastated in this unprecedented moment, we will never stop fighting this unfinished, unnecessary, and unwanted project. Our hearts are broken but our bonds are strong."

"The pipeline itself is an assault against a sustainable planet. We must recognize that fossil gas is just as damaging as coal. Pretending otherwise is leading us to climate catastrophe."

The Mountain Valley Pipeline has been tied up in litigation for years, delaying construction as the project's owners struggle to obtain the permits necessary to run the fracked gas infrastructure through waterways and wetlands. Last month, as Common Dreamsreported, the Biden administration handed the pipeline's backers a huge victory by granting approval for the project to cross the Jefferson National Forest.

The debt ceiling legislation, formally titled the Fiscal Responsibility Act of 2023, would run roughshod over local and national opposition to the pipeline, ordering federal agencies to issue all permits necessary for the project's completion.

The bill, which now heads to President Joe Biden's desk, also states that "no court shall have jurisdiction to review any action taken" by federal agencies to clear the way for the pipeline—and any dispute over that provision will be under the "exclusive jurisdiction" of the U.S. Court of Appeals for the District of Columbia.

"This profoundly undermines the integrity of our judiciary," Merkley said Thursday. "For Congress to—by law—move a court case from one jurisdiction to another, to provide a special favor to a powerful corporation, is fundamentally corrupt. This is a line we should never cross."

"The pipeline itself is an assault against a sustainable planet," the senator added. "We must recognize that fossil gas is just as damaging as coal. Pretending otherwise is leading us to climate catastrophe."

In the wake of Thursday's vote, climate advocates are planning a June 8 rally in front of the White House to demand that Biden do everything in his power to stop the Mountain Valley Pipeline.

"By backing Manchin's Dirty Deal, the Biden administration has signaled they are willing to sacrifice Appalachians for their own political gain," organizers said. "This is Biden's pipeline. He can stop MVP just like he stopped Keystone XL. He can reclaim his climate legacy by stopping all new fossil fuel projects."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Biden/McCarthy Debt Ceiling Agreement Betrays Virginia and Frontline Communities, Putting People and Climate at Risk

Newswire Editor — Fri, 02 Jun 2023 15:25:27 +0000

Thursday, the U.S. Senate voted to approve the debt ceiling agreement and against an amendment to remove provisions that fast-track approval for the Mountain Valley Pipeline (MVP). The MVP is a proposed 303-mile fracked-gas pipeline that would run through West Virginia and southwest Virginia and result in as much carbon pollution annually as 26 coal-fired power plants. Its approval was inserted into the agreement as a political favor from President Joe Biden to Senator Joe Manchin (D-WV) in return for his vote for the 2022 Inflation Reduction Act.

An amendment to remove the MVP provisions was introduced by Senator Tim Kaine (D-VA) in the Senate and Congresswoman Jennifer McClellan (D-VA) in the House of Representatives, and supported by the entire Virginia Democratic delegation, but neither effort was successful.

The Fiscal Responsibility Act, which now awaits the President’s signature, declares that completion of the MVP “is required in the national interest.” It requires the U.S. Army Corps of Engineers to issue all permits within 21 days of the law’s enactment and hamstrings other government agencies, bypassing their long-established environmental review processes. Finally, it prohibits courts from reviewing all pending and future permits for MVP. The bill also undercuts the National Environmental Policy Act (NEPA), undermining decades of environmental protections, and requires the President to approve a laundry list of fossil fuel projects every year through 2030.

Victoria Higgins, Virginia Director for the Chesapeake Climate Action Network, stated:

“First, I want to express our heartfelt gratitude to Senator Kaine and Congresswoman McClellan for championing the effort to remove MVP from this bill. Today, we are grieving for the families in southwest Virginia who have fought this pipeline tooth and nail for eight years. Their home should not be sacrificed as a political favor. We are grieving for ourselves, and especially our young people, for whom this represents a huge step backwards in our urgent fight against climate change. Their future should not be a bargaining chip. And we are grieving for our lands and waters, cherished places which will now be less protected.

"But let us be clear: more than anything, we are furious. We feel betrayed by the Biden administration, who transparently traded the people and land of Southwest Virginia for a vote. The President’s commitment to climate and environmental justice is merely rhetoric if he continues to approve massive new fossil fuel infrastructure and reduce and sidestep community and judicial review. We’re equally furious at the Republicans who threatened to drive our economy off the cliff to pursue their political ends. We will not take this lying down. Our fight against the Mountain Valley Pipeline is not over.”

Chesapeake Climate Action Network has been involved in the fight to stop the Mountain Valley Pipeline since 2015 through organizing and legal action. With our partners, CCAN successfully defeated attempts to build the Atlantic Coast Pipeline and the Chickahominy Gas Plant and Pipeline in Virginia, as well as numerous other fossil fuel infrastructure projects.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Ro Khanna: Avoiding Default Was Necessary, But Debt Deal Was Passed at Expense of “Most Vulnerable”

Democracy Now! — Fri, 02 Jun 2023 15:14:17 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Fake Debt Crisis Fueled Same Old Greed-Driven Agenda

Newswire Editor — Fri, 02 Jun 2023 13:44:08 +0000

People’s Action today released the following statement from Executive Director Sulma Arias in response to the debt ceiling deal passed by Congress to end Republican hostage-taking during negotiations:

"We are fighting for stronger, healthier communities in which everyone has what they need to thrive, regardless of race, ZIP code, or background. We will not forget that Speaker McCarthy manufactured this debt ceiling crisis to reward corporate lobbyists for the fossil fuel industry and to drive the same old cruel, greed-driven agenda: putting corporate profits and fossil fuel companies over the wellbeing of our communities.

“Senator Manchin’s giveaways to polluting fossil fuel companies in this deal will damage the health and safety of poor and working people in the paths of these projects. And they will contribute to the climate crisis and make us all less safe. It’s well past time for President Biden and Congress to stop backing harmful fossil fuel projects.

“We will remember this next November and will elect candidates who will fight for us, not greedy corporations.”

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Rep. Ro Khanna: Avoiding Default Was Necessary, But Debt Deal Was Passed at Expense of “Most Vulnerable”

Democracy Now! — Fri, 02 Jun 2023 12:13:17 +0000

After a contentious battle with the Republican House majority, President Biden and Congress have agreed on a bipartisan deal suspending the debt ceiling until January 1, 2025. Among other concessions to Republicans, the deal caps domestic spending below the current rate of inflation, allows for larger increases to the military budget, implements new work requirements for social programs and fast-tracks the approval and construction of the controversial 300-plus-mile-long fracked gas Mountain Valley Pipeline through West Virginia and Virginia. Our guest, California Congressmember Ro Khanna, is among a number of progressive Democrats who voted against the legislation. He calls it a “punch in the gut to climate activists” that “came on the backs of the poor, of students, of the most vulnerable, of women.”

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Skeletons and Debt Ceilings

Jerry Long — Fri, 02 Jun 2023 05:49:56 +0000

Few people may know that the body of 18th century English philosopher Jeremy Bentham is propped on a chair in a glass display case at University College London. His fully clothed skeleton and waxen head serve as an eerie greeter to anyone who enters the Student Centre. Fewer still may know that the motives for More

The post Skeletons and Debt Ceilings appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Jerry Long.

Capital and Interest: Heaven’s Debt Ceiling

David Yearsley — Fri, 02 Jun 2023 04:37:47 +0000

Martinus van Reymerswaele, Parable of the Unjust Steward (c. 1540), Kunsthistorisches Museum, Vienna.

Leader of the Republican revolt against suspension of the debt ceiling just passed in the House of Representatives, Rep. Chip Roy of Texas is a self-professed man of faith. One does not have to scratch the surface of his discourse to strenuously in order to hear it as a jeremiad against fiscal trespass as moral trespass.

Debt and sin are synonymous in Christian thought and liturgy: “forgive us our debts, as we forgive our debtors” runs the Lord’s Prayer as recited by evangelicals. Is it a coincidence that red is the of color sin, negative numbers on the balance sheet, and the Republican Party—not to mention Donald Trump’s face?

From the Indulgences sold by Pope Julius II to build St. Peter’s in the sixteenth century, to the High Priest of Reaganomics David Stockman, a one-time student at Harvard Divinity School in the 1980s, theology and economics have been two sides of the same coin. “Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s,” said Jesus, inspecting a Roman denarius presented him by the Pharisees.

Nearly three centuries ago Johann Sebastian Bach also grappled with money and sin through music. Bach composed his Debt Cantata within the span of a few days, leading its first performance on the July 29^th, 1725 in Leipzig, almost exactly twenty-five years before his own death, also to be thought of (by him) as his final reckoning before the Great Accountant.

The Gospel for that Sunday in the church calendar was taken from the thirteenth chapter of Luke. This passage relates the Parable of the Unjust Steward in which a manager is accused by his rich employer of squandering the goods entrusted to him. The manager then proceeds to cut deals with the wealthy man’s debtors on the theory that once fired, the manager will need a place to stay, and decides to forgive some of these debts without informing his boss. The parable has caused more than a little confusion and consternation among interpreters, especially those who attempt the difficult task of explaining Jesus’s apparent endorsement of duplicitous financial dealings, while he simultaneously argues for a downward redistribution of wealth. Many wealthy Christians like to skip over the passage’s closing line: “No servant can serve two masters …Ye cannot serve God and mammon.” Bach did no skipping on this one. He musically depicted this dictum with unmatched ferocity.

The fiscal parable from Luke was an alluring one for Bach’s librettist, Salomo Franck. Franck had been the court poet in Weimar when Bach had been employed there between 1708 and 1717. The two had begun to collaborate in earnest in 1714, when Bach was elevated from the position of court organist to that of Konzertmeister. In this new capacity was charged with producing one cantata every month (as opposed to one a week in Leipzig). Aside from being a man of letters, Franck was also director of the ducal mint in Weimar, which helps explain the frequent appearance of monetary images in his poetry. Franck provided the text for another of Bach’s fiscally-oriented Weimar cantatas, Nur Jedem das Seine (BWV 163) (To Each His Own), which treats the touchy subject of taxes, and includes a moving central aria in which the human heart is likened to a coin to be minted by God. Bach had left the Weimar court some eight years before writing his Debt Cantata in July of 1725 to become Director of Music in the much larger city of Leipzig. Also something of a coin collector, Bach may have returned to Franck’s vivid text because the poet had died just two weeks before. The cantata, which treats the big themes of money and death, might be heard not simply as an expansive musico-poetic interpretation of Luke’s Gospel, but also as a tribute to Bach’s former collaborator and fellow numismatist.

The cantata begins with the upper and lower strings chasing each other breathlessly through the orchestral introduction before the brimstone bookkeeper of a bass incessantly repeats his demand that the listener “Thue Rechnung” — “Make an accounting,” or, more colloquially, “pay up.”

In the opera house this music would have suggested a storm at sea; in the church it is a tornado that sweeps through the ledger of the soul. The music becomes still more frantic with the “word of thunder” that demands payment by the Almighty in a voice that “crumbles cliffs” and “freezes the blood,” the latter image brilliantly evoked by Bach through a long-held note low in the bass’s register. The ultimate payment will come at death when the Banker in the Sky evaluates all “goods, body, and spirit.” The Day of Reckoning is itself a financial metaphor, and to be in debt to Him is to be terrified of damnation.

This bracing aria is followed by a grimly restrained tenor recitative conducted in a kind of bureaucratic language. The music tries to remain icily objective, yet it can’t always contain the angst below its boasts of “office and position.” Explicit reference is made to the Unjust Steward: when God takes an unstinting look at the accounts and the “selfish squandering” of His gifts, His response will be austere, angry. Perhaps suggesting the slow and earnest accounting to come, two oboes d’amore sustain their sonority throughout the twists and turns of the harmonies, like a pair of unfailingly assiduous comptrollers.

The unstinting look at moral finances continues in the ensuing aria: “Kapital und Interessen” (Capital and Interest). In his Bach biography, the humanitarian doctor, organist, and scholar Albert Schweitzer,

clearly put off by Franck’s penchant for talking about money in a sacred context, dismissed the aria as unworthy of Bach. I hear it differently. The unison oboes d’amore offer up a courtly dance suggesting the easy, leisure-filled life of the “capitalists,” defined in 18th-century Germany as someone who lives off his rents and investments. The music is smooth, untroubled but also insinuating, with the oboes sometimes elegant to a fault. However rich one is, there is always an accounting to come:

Capital and interest,
My debts large and small
Must one day be reckoned.
Everything that I owe is written in God’s book
as if with steel and diamonds.

The ledger of eternity is not calculated with computers and obscure financial instruments, but cut through with heavy, screaming machinery, perilously high for the bass voice. The cufflinked capitalist will have to bare his soul and his tax returns. The Last Judgement is the Final Audit.

In strident tenor tones, the next recitative enjoins sinful debtors to come before the Great Creditor in the knowledge that He will cancel all debts through the “blood of the Lamb.” Luther’s reformist theology rejected good works as the path to heaven (the notion that made it possible to extract vast revenues from Catholic believers to build St. Peter’s, for example), claiming instead that faith alone guaranteed salvation. Nonetheless, good works could be taken as a sign of underlying faith, and the closing sentence of the recitative urges earthly altruism:

However, since you know
That you are a steward,
Be careful and not forgetful,
To use money wisely,
To help the poor,
Then you shall, when time and life end,
Rest securely in the courts of heaven.

The recitative relaxes into soothing arioso that evokes the calmed conscience of the Good Steward.

These noble words usher in the impassioned soprano/alto duet that is the climax of the cantata, one that urges a rejection of money-making for its own sake:

Heart, rend the chains of Mammon,
Hands, sow goodness!

The suave oboes are now silenced. A minor-mode descending bass-line, its contours long a symbol of death and despair, pulls down the spirit. This bass-line tries to escape the inexorable gravity of the chains of Mammon with upward ascending figures—artful shrieks. But the chains are too strong. Above this remorseless descent, gulping for air from above, the two vocal parts battle towards the good. Their crying, upward-fighting arpeggios dramatize the desire to “rend the chains” even as the close, enmeshed suspensions between the voices portray the unbreakable strength of Mammon’s shackles.

As always the moral injunction matters most in the final reckoning of death, and here the duet becomes somewhat sweeter, almost consoling, but for the stabs of the bass-line and occasional slashes of the vocal figures:

Make my deathbed soft,
Build me a solid house
Which will last forever in heaven
When the goods of earth turn to dust.

There is no duet that is more harrowing in all of Bach’s oeuvre. The classic performance of it is from Nicholas Harnoncourt and the Concentus Musicus of Vienna with two boys, Christian Immler and Helmut Wittek, as soloists. Theirs is a powerful rebuttal of the claim that such pieces exceed the abilities of Bach’s Leipzig boys, and it is worth listening to again in light of the now-favored view that only male falsettists sang the treble arias of Bach’s demanding sacred music. The pure, determined, but slightly unstable voices of Immler and Wittek imbue the duet, even when it makes consoling overtures, with electrifying terror.

Appropriately, in the cantata’s final placid chorale, there is no talk of money and debt, but only of faith in God at the moment of death. Bach’s own financial house, it has to be admitted, was not in great shape when he calmly departed his cramped Leipzig quarters in the last days of July, 1750 for the spacious apartments of heaven, vaulting his widow and two young daughters into much straitened circumstances. (By contrast, Bach’s second son C. P. E. Bach, was a man made wealthy through the sale of his own printed music. He was also a fastidious bookkeeper when it came to what was owed him by publishers and subscribers. I like to think of him as CPA Bach.)

On that Sunday in July of 1725 the Leipzig rich had something to ponder (if they were listening) as they sat in the front of the church in their rented seats, while the poor milled around at the back of the church.

Like the parable on which it is based, Bach’s Debt Cantata invites diverse interpretations, even as it unambiguously demands that you listen not to the financiers and politicians but to your conscience.

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This content originally appeared on CounterPunch.org and was authored by David Yearsley.

Congress Caves to GOP Blackmail over Debt Ceiling, Throwings Frontline Communities Under the Bus

Newswire Editor — Fri, 02 Jun 2023 04:05:39 +0000

The Congressional Review Act (CRA) resolution, which House Republicans approved last week with the help of Democratic Reps. Jared Golden (Maine) and Marie Gluesenkamp Perez (Wash.), passed the Senate by a margin of 52-46. Democratic Sens. Michael Bennet (Colo.) and Mark Warner (Va.) didn't vote. The White House has vowed to veto the measure.

Passage of the legislation elicited a firestorm of criticism from progressive advocates and lawmakers.

"Forty-five million people with student loan debt will never forget when politicians, led by Republican extremists, went out of their way to push millions of working families, including their own constituents, into economic catastrophe by passing this reckless CRA resolution," Student Borrower Protection Center (SBPC) executive director Mike Pierce said in a statement.

"The American people are watching and expect President Biden to keep his promise to veto this horrendous bill."

The Biden administration's popular move to erase up to $20,000 in student debt for millions of federal borrowers with individual incomes below $125,000 and to improve the income-driven repayment (IDR) program is currently on hold as the U.S. Supreme Court considers a pair of deeply flawed legal challenges. A decision in the case is expected sometime this month, but right-wing lawmakers are doing everything in their power to sink the president's relief initiative regardless of how the high court rules.

Last week, the SBPC and the American Federation of Teachers warned of the "ruinous impact" H.J. Res. 45 would have on millions of working-class households nationwide, with AFT president Randi Weingarten condemning it as "an immoral clawback of the absolute worst kind."

In addition to blocking the potential cancellation of up to $20,000 in student debt per eligible borrower as well as money-saving changes to the IDR program, the CRA resolution would nullify the seventh and possibly eighth extensions of the federal student loan payment freeze first enacted by President Donald Trump in response to the Covid-19 pandemic. As a result, it would retroactively undo several months of already-canceled payments and waived interest charges, immediately leaving tens of millions of people past due on their loans.

Furthermore, the CRA resolution seeks to reinstate the student debt of more than 260,000 public service workers whose loan balances have been wiped clean since September 2022. If that were to happen, a combined debt burden of nearly $20 billion, which amounts to more than $72,000 per person, would be put back on the shoulders of teachers, nurses, first responders, and others who recently finished making 10 years of qualifying payments under the Public Service Loan Forgiveness program that was enacted on a bipartisan basis in 2007 and streamlined by the Biden administration in 2021.

"Despite right-wing proponents' attempts to gaslight their own colleagues and the American people on the impact of this bill, this effort would push hundreds of thousands of public service workers back into debt and require the government to charge tens of millions of borrowers for interest that has already been canceled," said Pierce. "If enacted, it will cause irreparable damage to an already severely broken student loan system and undermine Americans' trust in our government."

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning in the debt despair of our nation's student loan crisis," he added. "The American people are watching and expect President Biden to keep his promise to veto this horrendous bill and deliver on his promise of student loan debt relief once and for all."

\u201cRepublicans in the Senate + Dem Senators Manchin, Sinema and Tester just voted to kill student debt relief and *raise* student debt balances by retroactively adding interest.\n\nTester, Sinema and Manchin are all up for re-election in 2024 and will have to explain their votes.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685644460

Ahead of a Wednesday vote to bring H.J. Res. 45 to the Senate floor, Sen. Elizabeth Warren (D-Mass.) said that "Republicans in Congress have shown time and time again that they'd much rather deliver relief to giant corporations and protect tax cheats than help working Americans whose biggest sin was trying to get an education."

On Thursday, the Massachusetts lawmaker called the bill's passage "shameful," and expressed confidence that Biden "will veto" it. Congress doesn't appear to have the two-thirds majority in each chamber needed to override a veto.

\u201cSenate Republicans just voted to block @POTUS' student debt relief plan, force millions to immediately pay back paused student loans & claw back relief from public servants. It's shameful. Thankfully we have President Biden who cares about working people & will veto this.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1685644466

Ahead of Thursday's vote, Sen. Patty Murray (D-Wash.), a senior member and former chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, stressed that "this Republican bill wouldn't only rip away relief for borrowers who qualify under the president's plan."

"This CRA could impact the pause on loan payments and cause major problems for borrowers who have received relief through the Public Service Loan Forgiveness and income-driven repayment programs," Murray continued. "That means these Republican efforts could create the perfect storm for more than 260,000 public service workers who have already earned relief."

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning."

"If Republicans were to get their way and pass this bill into law," she added, "people across the country would have relief they are counting on snatched away from them, plans they have made upended, less money in their pockets, and monthly payments not just abruptly restarted—but maybe even abruptly jacked up by hundreds of dollars."

Sen. Ed Markey (D-Mass.), a member of the HELP committee, echoed that sentiment.

"Republicans' cruel attempt to stand in the way of President Biden's plans to provide relief to tens of millions of Americans suffering under the crushing weight of student loan debt is damaging to our economy and wildly out of touch with the financial realities facing working families," said Markey.

"The loan forgiveness the president is proposing would mean the difference between buying a home, starting a business, and getting an economic leg up for nearly 50 million working and middle-class Americans, particularly for borrowers of color and their families," he concluded. "If you kicked Republicans in the heart, you'd break your toe."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Congress Caves to GOP Blackmail over Debt Ceiling, Throwings Frontline Communities Under the Bus

Newswire Editor — Fri, 02 Jun 2023 04:05:39 +0000

Passage of the legislation elicited a firestorm of criticism from progressive advocates and lawmakers.

"The American people are watching and expect President Biden to keep his promise to veto this horrendous bill."

\u201cRepublicans in the Senate + Dem Senators Manchin, Sinema and Tester just voted to kill student debt relief and *raise* student debt balances by retroactively adding interest.\n\nTester, Sinema and Manchin are all up for re-election in 2024 and will have to explain their votes.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685644460

\u201cSenate Republicans just voted to block @POTUS' student debt relief plan, force millions to immediately pay back paused student loans & claw back relief from public servants. It's shameful. Thankfully we have President Biden who cares about working people & will veto this.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1685644466

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning."

Sen. Ed Markey (D-Mass.), a member of the HELP committee, echoed that sentiment.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Congress Caves to GOP Blackmail over Debt Ceiling, Throwings Frontline Communities Under the Bus

Newswire Editor — Fri, 02 Jun 2023 04:05:39 +0000

Passage of the legislation elicited a firestorm of criticism from progressive advocates and lawmakers.

"The American people are watching and expect President Biden to keep his promise to veto this horrendous bill."

\u201cRepublicans in the Senate + Dem Senators Manchin, Sinema and Tester just voted to kill student debt relief and *raise* student debt balances by retroactively adding interest.\n\nTester, Sinema and Manchin are all up for re-election in 2024 and will have to explain their votes.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685644460

\u201cSenate Republicans just voted to block @POTUS' student debt relief plan, force millions to immediately pay back paused student loans & claw back relief from public servants. It's shameful. Thankfully we have President Biden who cares about working people & will veto this.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1685644466

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning."

Sen. Ed Markey (D-Mass.), a member of the HELP committee, echoed that sentiment.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Biden’s Debt Deal is Capitulation on Climate Action and Environmental Protections

Newswire Editor — Fri, 02 Jun 2023 04:01:03 +0000

Passage of the legislation elicited a firestorm of criticism from progressive advocates and lawmakers.

"The American people are watching and expect President Biden to keep his promise to veto this horrendous bill."

\u201cRepublicans in the Senate + Dem Senators Manchin, Sinema and Tester just voted to kill student debt relief and *raise* student debt balances by retroactively adding interest.\n\nTester, Sinema and Manchin are all up for re-election in 2024 and will have to explain their votes.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685644460

\u201cSenate Republicans just voted to block @POTUS' student debt relief plan, force millions to immediately pay back paused student loans & claw back relief from public servants. It's shameful. Thankfully we have President Biden who cares about working people & will veto this.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1685644466

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning."

Sen. Ed Markey (D-Mass.), a member of the HELP committee, echoed that sentiment.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Debt Ceiling Deal Stains Biden’s Legacy on Climate, Environmental Justice

Newswire Editor — Fri, 02 Jun 2023 03:59:44 +0000

Passage of the legislation elicited a firestorm of criticism from progressive advocates and lawmakers.

"The American people are watching and expect President Biden to keep his promise to veto this horrendous bill."

\u201cRepublicans in the Senate + Dem Senators Manchin, Sinema and Tester just voted to kill student debt relief and *raise* student debt balances by retroactively adding interest.\n\nTester, Sinema and Manchin are all up for re-election in 2024 and will have to explain their votes.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685644460

\u201cSenate Republicans just voted to block @POTUS' student debt relief plan, force millions to immediately pay back paused student loans & claw back relief from public servants. It's shameful. Thankfully we have President Biden who cares about working people & will veto this.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1685644466

"Today's vote makes crystal clear exactly who stood up and fought to protect the economic livelihoods of millions of people with student loan debt—and who schemed to keep them drowning."

Sen. Ed Markey (D-Mass.), a member of the HELP committee, echoed that sentiment.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Why the debt deal will hurt student loan borrowers

Democracy Now! — Thu, 01 Jun 2023 19:30:00 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

"Turning His Back on Student Debtors": Biden’s Debt Deal Ends Freeze on Loan Payments for Millions

Democracy Now! — Thu, 01 Jun 2023 14:01:57 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

“Turning His Back on Student Debtors”: Biden’s Debt Deal Ends Freeze on Loan Payments for Millions

Democracy Now! — Thu, 01 Jun 2023 12:53:28 +0000

Advocates for student debt relief are raising the alarm over a controversial part of the bipartisan deal to raise the U.S. debt ceiling that would end the freeze on student loan repayments by the end of August. The moratorium has been in place since 2020. Meanwhile, the fate of the Biden administration’s plan to forgive up to $20,000 in student debt for borrowers is going to be decided by the Supreme Court, where it is likely to face skepticism from the conservative majority. “This is President Biden turning his back on student debtors,” says Braxton Brewington, press secretary of the Debt Collective.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

A Dirty Debt Deal: Biden Blasted for Backing Fast-Track Approval of Mountain Valley Pipeline

Democracy Now! — Wed, 31 May 2023 14:17:15 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

A Dirty Debt Deal: Biden Blasted for Backing Fast-Track Approval of Mountain Valley Pipeline

Democracy Now! — Wed, 31 May 2023 12:13:10 +0000

As lawmakers push through the bipartisan deal to raise the debt limit, it is being called a “dirty debt ceiling deal” by opponents because it includes language meant to speed completion of the Mountain Valley Pipeline. The controversial $6.6 billion pipeline would go through Virginia and West Virginia and carry 2 billion cubic feet of fracked gas across more than a thousand streams and wetlands in Appalachia. Over 750 frontline communities and environmental justice organizations oppose its construction, but the project has long had the backing of powerful West Virginia Senator Joe Manchin, the biggest recipient of fossil fuel money in Congress. “They can’t build this pipeline and follow the law,” says Maury Johnson, a West Virginian who lives in the path of the massive pipeline and says approval of the deal would show corporations they can simply “throw a bunch of money to politicians” in order to overcome environmental concerns and local opposition from residents.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

The Biden-McCarthy Debt Ceiling Deal: Neoliberal Fiscal Policy Continues

Jack Rasmus — Wed, 31 May 2023 05:55:03 +0000

Photograph Source: The White House – Public Domain

Over the weekend, US House of Representatives speaker McCarthy and president Biden announced a tentative agreement on raising the debt ceiling. The deal—almost certain to pass Congress later this week—represents a typical Neoliberal fiscal policy deal.

Ever since neoliberal capitalism policies were introduced under president Carter in the late 1970s, and subsequently expanded dramatically under Reagan, Neoliberal fiscal policy has been characterized by accelerating Pentagon & war spending; simultaneous cutting of business-investor taxes; acceptance of consequent escalating budget deficits—and in turn US national debt levels; and the use deficit/debt to cap and reduce social program spending.

That Neoliberal fiscal policy mix of tax-spending-deficit policies mix clearly defines the recent McCarthy-Biden deal.

In the roughly two year agreement, extending from the present to the end of February 2025, Pentagon spending will rise by 11% in the 2024 fiscal year which begins October 1, 2023. That 11% is estimated at $885 billion. A further increase in Pentagon spending will certainly take place the following fiscal year, commencing October 1, 2024, but the deal doesn’t say how much further rise in Pentagon spending is projected for that second year.

Pentagon vs. Defense Spending

It’s important to understand that the $885 billion in Pentagon spending is not exactly the same as US defense spending. Around $200 billion more in defense related spending occurs in US government departments in addition to the Pentagon.

For example: all the oil costs for the US military (the largest single consumer of fossil fuels in the world) comes out of the Energy Dept. budget. Veterans benefits spending for past wars comes out of that dept. Then there’s CIA’s spending on mercenary and its own field forces. So too for the State Dept. which finances similar covert military activities. Part of Homeland Security costs can be considered defense. And then there’s the so-called ‘black budget’ of secret US military weapons development that never even gets reported in publications of the US budget or by the US press. That’s been estimated around $75 billion a year. So actual, total annual US Defense spending—in contrast to Pentagon spending alone—is probably around $1.1 trillion a year.

Taxation & the National Debt

Economists estimate that tax revenues, or lack thereof, are responsible for about 60% of deficits and therefore the debt (which is just the accumulation of annual deficits). Tax revenues are reduced as result of tax cutting and/or reduced revenues as a result of slow economic growth when recessions occur—or when post-recession recoveries are weak.

The McCarthy-Biden deal prohibits raising business-investor taxes the next two years. Businesses and investors will thus be assured that their Trump era $4.5 trillion in tax cuts, December 2018-28, will continue. Estimates of the cost of the lost tax revenues caused by the 2018 Trump tax cuts, from 2023 through 2028, will be about $2.7 trillion thus contributing significantly to a further rise in the national debt by 2025.

A Short History of US Debt Trajectory 1980-2025

That the McCarthy-Biden deal has nothing to do with the national debt is obvious from the fact two more years of US deficits, and thus the national debt, are expected to continue to rise by $4 trillion—up from the current $31.4 trillion level. US government debt levels will therefore exceed $35 trillion by the time the next ‘debt ceiling negotiations’ occur. However, neoliberal capitalism is not concerned about rising debt levels per se. (Which means it is not at all traditional ‘liberalism’ in the historical sense of that term).

During the era of US neoliberal capitalism, which extends from 1978-79 to the present, US national debt has accelerated. When Reagan took office in 1981 it was less than $1 trillion. By 2001 it had risen to approximately $6 trillion. Starting 2001 the national debt accelerated sharply under George W. Bush, as Mideast war spending escalated and Bush era taxes were cut by $3.8 trillion simultaneously.

The US national debt further accelerated under Obama. When the latter assumed office in January 2009, the national debt was around $10 trillion. Obama then cut taxes and introduced spending totaling around $787 billion in his 2009 fiscal stimulus program. He subsequently then extended the Bush tax cuts another two years in December 2010, to 2012, when they were to expire in December 2010 after their initial 10 year period. That two year extension cost another $803 billion. Then, outdoing himself, starting in 2013 Obama once again extended the Bush era tax cuts, permanently this time, at an estimated additional lost tax revenue cost of $5 trillion.

Obama thus cut taxes, composed about 80% of cuts for businesses and investors, more than $6 trillion. The tax cuts, the slow economic recovery from the great recession that also reduced US tax revenues, and the $787 billion (plus another $50 billion or so for ‘cash for clunkers autos’ and first time home buyers assistance) spending in his 2009-10 fiscal stimulus programs, resulted in the US debt rising to about $18 trillion when Obama left office in January 2017.

Then came Trump’s $4.5 trillion additional tax cuts passed in December 2017, followed by year one (2020) of the Covid economic shutdowns and spending all of which pushed the national debt level to about $22 trillion when Trump left office.

The collapse of the economy in 2020-21 driving down tax revenues, the further tax cuts in 2020 through 2022, the continuing of Trump’s 2018 tax cuts, the bailing out of businesses in the various Covid economic stimulus bills of 2020-21, the roughly $3 trillion spent on households’ assistance during Covid, the mere 1% GDP growth in 2022 (December 2021 to December 2022) that depressed tax revenues, the funding of the Ukraine war ($200 billion in 2022-23), and Biden’s roughly $1.65 trillion spending on three business investment stimulus bills of 2022 (Infrastructure, Semiconductor & Manufacturing subsidy, and the energy industry misnamed ‘Inflation Reduction Acts), and the steady rise in interest on the debt from less than $300 billion in 2019 to estimated $600 billion in 2023—all converged to accelerate the national debt to its $31.4 trillion current level.

It is perhaps not coincidental that the tentative debt ceiling agreement (the 79ths in US history by the way, extends only to 2025. That’s when the $4.5 trillion Trump tax cuts of 2018 come up for a vote in Congress on whether to make them permanent instead of expiring in 2028. So we can expect another even more contentious debt ceiling crisis déjà vu in about two years.

The McCarthy-Biden Social Program Spending Cuts

As with all neoliberal fiscal policy measures, the deal’s 11%+ Pentagon-Defense spending increase—combined with the absence of any tax hikes in the deal—has meant cuts to social program spending.

The main cut in discretionary social programs is the agreement to freeze all 2024 fiscal year spending at 2023 levels, and in 2025 to allow a mere 1% increase in such spending.

On Monday, May 30 House Speaker McCarthy publicly bragged, when measured in dollar terms, the deal results in $2.1 trillion in social program spending reduction. Biden says it’s ‘only’ $1 trillion. The New York Times estimates the two year deal amounts to a cut in total discretionary spending—defense and non-defense—is 18%. However, since the Pentagon gets a 11% (plus more in 2025) increase, the net discretionary non-defense spending cuts are likely in the 20%-25% range.

Total available funds for discretionary social program spending—like education, transport, health, etc.—in the 2024 fiscal year is capped at $704 billion. But it’s really only $583 billion after $121 billion spending on Veterans is taken out of the $704 billion total non-defense. The US considers Vet spending as spending on social programs but it should be considered Defense spending.

The $583 billion for discretionary non-defense spending contrasts with the $886 billion for the Pentagon alone. Or $1 trillion for Pentagon and Vets. (And still more for other ‘defense’ costs distributed in other departments of the US government).

In other terms of the deal involving discretionary social program/non-defense spending:

An estimated $30 billion in unspent Covid funds is cut. That’s another de facto $30 billion taken out of the economy.

In environment policy, fossil fuel companies are now able to expedite reviews and obtain licenses quicker. And West Virginia Senator, Joe Manchin, gets billions in funding for his gas pipeline in his state.

Republicans get an initial ‘bite of the apple’, as they say, in work requirements for single adults as a precondition for receiving food stamp benefits. The prior age rule for work requirement was raised from 50 to 54, with exemptions for veterans and the disabled. McCarthy did not get his additional work requirement rule for recipients of Medicaid.

Biden gets to keep his $60 of his $80 billion to hire IRS agents. $20B is redirected to other spending. That means only 7200 more agents will be hired during the deal’s two years. The research arm of Congress, the Congressional Budget Office, has estimated if more agents were not hired then continuing tax avoidance and tax fraud would reduce tax revenues by $204 billion. (The CBO has also estimated that failure to raise taxes by ending Trump’s 2018-28 $4.5T tax cuts for business and investors results in a loss of $2.7 trillion in US government tax revenues).

Biden compromised with McCarthy as well on the subject of student loan forgiveness. In addition to preventing any student loan forgiveness, McCarthy wanted immediate restoration of student loan payments plus retroactive back interest added to loans during the Covid period moratorium. In exchange for McCarthy dropping these draconian proposals, Biden agreed to resume student loan payments this August 2023.

Deficits and Debt Continue

Previously it was noted that Neoliberal fiscal policy is fundamentally unconcerned with annual deficits and a rising national debt. That’s no less true in the current debt ceiling deal.

McCarthy may brag that the agreement amounts to a $2.1 trillion reduction in non-defense spending over two years due to the freeze and 1% caps. But the truth is that the annual deficits will continue to rise in the $1.5T to $2T per year range. Independent estimates are the US debt will continue to rise by $4 trillion by the end of the deal. That’s more than $35 trillion by the end of fiscal year 2025. Interest on that debt that year will rise to approximately $600 billion, up from less than $3 trillion in 2019.

The causes are obvious: No rescinding of Trump’s 2018 tax cuts (which the CBO estimates will add $2.7 trillion to the debt). Continued below historic average US GDP growth which reduces tax revenues as well. Third, an ever-rising Pentagon and Defense spending trajectory, as the US funds the Ukraine war while preparing for another, even bigger one in west Asia with China before the end of the decade.

Debt Ceiling As Political Theater

The US has raised the debt ceiling 78 times before the current negotiation. This writer has argued the recent negotiations are just a ‘debt ceiling dance’ and predicted it too will be raised, a 79^th time. And it has.

It’s virtually certain the deal will be approved by both the US House and Senate and signed by Biden by next weekend at the latest. McCarthy’s margin in the House was a mere 217-215 vote in support of his initial proposals. By agreeing to a two year non-defense spending freeze and 1% caps—or in other words a $2.1 trillion and 18% discretionary spending cut—Biden clearly gave in far more than he needed to. One would have to conclude McCarthy and the Republicans came out ahead in the negotiations.

The House will vote on the deal on Wednesday, June 1, 2023 and will likely pass it. The Senate will take a little longer but will pass it as well by the weekend. Biden will sign by the weekend. Thereafter, both sides will ‘spin’ the deal and exaggerate their claims. They’ll both hide behind a claim that the economic sky would have fallen in had they not agreed. A dubious claim at best.

Then the real negotiations will begin. For the political theater surrounding the debt ceiling negotiations was in fact an attempt to renegotiate the Biden 2024 budget that commences next October 1, 2023. McCarthy simply used the debt ceiling issue to cut programs early. And he’ll come back for a second ‘bite of the apple’ at the end of this summer.

And if Biden’s negotiating performance during the debt ceiling negotiations is any indicator, he’ll get even more concessions from Biden

This content originally appeared on CounterPunch.org and was authored by Jack Rasmus.

Environmental groups slam ‘poison pills’ in debt ceiling bill

Joseph Winters — Tue, 30 May 2023 22:14:52 +0000

As President Joe Biden and House Speaker Kevin McCarthy try to sell Congress on their proposal to raise the debt ceiling, environmental groups are crying out against provisions that would push forward a controversial pipeline project and weaken a bedrock environmental law.

The deal is a “disaster for people and the planet,” the nonprofit Friends of the Earth said in a statement. The organization’s director of government and political affairs, Ariel Moger, called it a “surrender to Big Oil and Republican hostage-takers.”

The main purpose of the so-called Fiscal Responsibility Act of 2023 is to raise the debt ceiling, a congressionally mandated limit on the amount of money the Treasury can borrow to fund its operations and pay its creditors. The U.S. government has never before failed to make a debt payment on time, and economists say a default — which is projected to occur on June 5 if Congress doesn’t raise the ceiling — would cause widespread financial chaos and spark a global economic recession.

Congress has voted to raise the debt ceiling 78 times since 1960. Doing so allows the U.S. to continue paying for programs that Congress has already approved, but debt ceiling negotiations have gotten more contentious in recent years as congressional budget hawks try to win spending cuts in exchange for their support. This year’s proposal, which Biden and McCarthy announced on Sunday after months of negotiations, would lift the debt ceiling through the end of Biden’s first term in office. The bill includes some spending cuts to appease congressional Republicans, but it also contains environmental “poison pills” that opponents say have nothing to do with the national debt.

One such provision would require the Army Corps of Engineers to approve all remaining permits for the Mountain Valley Pipeline, a 303-mile project to carry natural gas from West Virginia to Virginia. The bill would also protect the permits from judicial review.

Although the conservative Democratic Senator Joe Manchin has argued that the pipeline is needed for “energy and national security,” experts say this need has never been demonstrated. Instead, a coalition of environmental advocates warn that pushing the project forward could cause some 89 million metric tons of greenhouse gas emissions annually — about as much as 19 million passenger cars — while also harming low-income communities and communities of color in its path. The pipeline has already faced numerous permitting roadblocks due to water quality violations.

“This is a desperate company building a failing pipeline that has some sympathetic ears in Congress,” said Russell Chisholm, managing director of Protect Our Water, Heritage, Rights, a coalition of environmental groups in Appalachia. He said panic over the debt ceiling was a “completely manufactured crisis” that lawmakers were exploiting at the expense of frontline communities.

“I really feel they’re trying to shift the blame for this looming deadline, this looming ‘catastrophe,’ over onto people who object to having their lives thrown away in the name of raising the debt ceiling,” Chisholm said.

Senator Tim Kaine, a Democrat from Virginia, has signaled he intends to file an amendment to remove the Mountain Valley Pipeline provision from the debt ceiling bill, although it’s unclear whether the amendment will get a vote.

Green groups are also concerned about changes to the National Environmental Policy Act, or NEPA, in the debt ceiling deal. Since 1970, NEPA, sometimes called the “Magna Carta” of U.S. environmental laws, has required federal agencies to conduct an environmental review before greenlighting major projects. The proposed changes would put time limits on that review process — a move that critics say could expedite fossil fuel infrastructure, although the White House has argued it could help move forward clean energy proposals.

Chisholm said the faster timeline for environmental reviews would make it harder for communities to weigh in on proposed infrastructure projects near their homes. It takes time to educate the public and turn them out for public comment periods, he said — especially in rural areas without fast internet.

Other provisions of the debt ceiling proposal would restart federal student loan repayments; implement work requirements for people who get food stamps through the Supplemental Nutrition Assistance Program; and rescind $1.4 billion in funding for the Internal Revenue Service, out of a total of $80 billion provided by the Inflation Reduction Act. White House officials said the deal would take another $20 billion from the Internal Revenue Service and put it toward other nondefense programs.

Environmental advocates including Chisholm called on lawmakers to reject the bill and “do their jobs.”

“We need a clean debt ceiling bill, period,” Chisholm said. “Raise the debt ceiling, pass a clean bill, and stop targeting the most vulnerable people in this country.”

This story was originally published by Grist with the headline Environmental groups slam ‘poison pills’ in debt ceiling bill on May 30, 2023.

This content originally appeared on Grist and was authored by Joseph Winters.

350.org Responds to U.S. Congress’ Egregious Debt Ceiling Bill “Compromise”

Newswire Editor — Tue, 30 May 2023 19:47:45 +0000

If passed, the repayment pause enacted early in the Covid-19 pandemic and extended eight times—saving borrowers hundreds of billions of dollars in payments and interest—would be terminated 60 days after June 30, 2023 unless another extension is "expressly authorized" by Congress.

House Speaker Kevin McCarthy (R-Calif.)—who attended California State University, Bakersfield when tuition and fees were an inflation-adjusted $1,982—wasted little time touting the provision as he made the media rounds over the weekend, declaring in a Fox News appearance that the "pause is gone" if the debt ceiling bill passes.

Debt relief campaigners responded with alarm.

"This has huge and catastrophic financial implications for 50 million+ people," the Debt Collective, the nation's first debtors' union, wrote on Twitter.

The Biden White House had already pledged to end the student loan repayment pause 60 days after the Supreme Court decides the fate of student debt cancellation or 60 days after June 30—whichever comes first.

The debt ceiling agreement codifies that pledge into law, potentially complicating the White House's ability to authorize another pause if the Supreme Court agrees with the right-wing challengers' deeply flawed legal case and strikes down the administration's debt cancellation plan.

The Debt Collective pointed to that possibility late Monday, noting that the Biden administration "was gearing up to resume payments because they were going to simultaneously cancel lots of debt—20 million accounts zeroed out."

"Because of Covid's impact, the Biden admin said returning to repayment needed to be coupled with relief," the group wrote. "If SCOTUS rules student debt relief is legal, Biden can say he took action on student debt—the second-largest household debt in the country. The problem is, WE DON'T KNOW what SCOTUS will rule. We're still waiting. Basically this debt ceiling deal puts the cart before the horse."

"The debt-ceiling bill agreement reached by lawmakers is deeply harmful to millions of American families—the worst thing for borrowers would be a sudden and startling restart of payments."

Education Secretary Miguel Cardona insisted that, under the new agreement, the Biden administration would still retain the "ability to pause student loan payments should that be necessary in future emergencies."

But the Debt Collective warned that it could take the Biden administration weeks or months to implement another pause if it decided one was needed. The administration could also choose not to try to implement another freeze even if millions struggle to make payments.

"What if payments begin and millions—literally millions—of people default on their debt?" the Debt Collective asked. "What if seniors get their Social Security checks garnished en masse?"

\u201cThere's many more reasons to extend the pause, and absolutely no reason to let Republicans push Biden in a corner. Biden will try to tell you this is the fault of Republicans and there was nothing he could do. \n\nThat won't be true. It isn't true. The provision should go.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1685396895

Due to funding shortfalls, the Education Department doesn't expect to have the capacity to begin collecting student debt payments again until October.

The financial firm Jefferies estimates that once federal student loan repayments begin, they will cost roughly 45 million borrowers a combined $18 billion per month, potentially having a significant impact on the broader U.S. economy in addition to placing major strain on individuals and families.

The average federal student loan payment in the U.S. is around $400 per month—though the Biden administration is working to finalize rules aimed at lessening that financial burden.

Natalia Abrams, president and founder of the Student Debt Crisis Center, said in a statement Monday that "it is imperative that lawmakers prioritize the wellbeing of millions of Americans by keeping payments paused until comprehensive and permanent debt cancellation is delivered."

"The debt-ceiling bill agreement reached by lawmakers is deeply harmful to millions of American families—the worst thing for borrowers would be a sudden and startling restart of payments," said Abrams. "Not only does it unnecessarily codify the end of pandemic relief measures that are still desperately needed, but it also sends a disheartening message that the ongoing efforts to assist borrowers are being rolled back before permanent relief promised by the Biden administration has been delivered."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Congress Urged to Pass Clean Debt Ceiling Bill

Newswire Editor — Tue, 30 May 2023 15:19:50 +0000

"Afghanistan, Nigeria, Somalia, South Sudan, and Yemen remain at the highest concern level," the report states. "Haiti, the Sahel (Burkina Faso and Mali), and the Sudan have been elevated to the highest concern levels; this is due to severe movement restrictions of people and goods in Haiti, as well as in Burkina Faso and Mali, and the recent eruption of conflict in the Sudan."

"Pakistan, the Central African Republic, Ethiopia, Kenya, the Democratic Republic of the Congo, and the Syrian Arab Republic are hot spots with very high concern, and the warning is also extended to Myanmar," the publication continues. "Lebanon, El Salvador, and Nicaragua have been added to the list of hunger hot spot countries, since the September 2022 edition. Malawi, Guatemala, and Honduras remain hunger hot spot countries."

\u201c\ud83d\udd34 Acute food insecurity set to worsen in 18 #HungerHotspots across 22 countries - \ud83c\udd95 @FAO @WFP report warns.\n\nBurkina Faso, Haiti, Mali, the Sudan have been elevated to the highest alert level to join Afghanistan, Nigeria, Somalia, South Sudan & Yemen.\n\n\ud83d\udc49https://t.co/0BDI7Eg8aT\u201d
— FAO Newsroom (@FAO Newsroom) 1685352200

The document stresses that worsening conditions in the hot spots occur in the context of a "global food crisis," so "the countries and situations covered in this report highlight the most significant deteriorations of hunger expected in the outlook period" but do not represent all nations facing high levels of acute food insecurity.

"Conflict will disrupt livelihoods—including agricultural activities and commercial trade—as people are either directly attacked or flee the prospect of attacks, or face movement restrictions and administrative impediments," the report states. "New emerging conflicts, in particular the eruption of conflict in the Sudan, will likely drive global conflict trends and impact several neighboring countries."

"The use of explosive ordnance and siege tactics in several hunger hot spots continues to push people into catastrophic levels of acute food insecurity," the document adds, "highlighting the critical role of humanitarian access in preventing the worst outcomes of hunger."

The new report notably came as the WFP announced that on Saturday, six weeks since the fighting broke out in Sudan—displacing nearly 1.4 million people—the U.N. program was able to begin distributing food assistance to the thousands affected by the conflict in and around the capital Khartoum.

"This is a major breakthrough. We have finally been able to help families who are stuck in Khartoum and struggling to make it through each day as food and basic supplies dwindle," said Eddie Rowe, WFP's country director in Sudan, in a statement.

"We have been working round-the-clock to reach people in Khartoum since the fighting began," Rowe added. "A window opened late last week which allowed us to start food distributions. WFP must do more, but that depends on the parties to the conflict and the security and access they realistically guarantee on the ground."

\u201c\ud83c\udd95BREAKTHROUGH: The first distributions of WFP food assistance took place in #Khartoum, Sudan for thousands of people trapped since fighting broke out six weeks ago. \n\nThe distributions come in the last days of a ceasefire set to expire Monday.\u201d
— World Food Programme (@World Food Programme) 1685382400

Along with armed conflict, drivers of the deterioration in the report's focal regions include economic issues and the climate emergency. The publication points out that last year, "economic risks were driving hunger in more countries than conflict was," and "the global economy is expected to slow down in 2023—amid monetary tightening in advanced economies—increasing the cost of credit."

"Weather extremes, such as heavy rains, tropical storms, cyclones, flooding, drought, and increased climate variability, remain significant drivers in some countries and regions," the document explains, noting that experts anticipate El Niño conditions—or the warming of sea surface temperatures across the tropical Pacific Ocean—in the months ahead, "with significant implications for several hunger hot spots."

The report emphasizes that "urgent and scaled‑up assistance" in all hot spots "is essential to avert a further deterioration of acute food insecurity and malnutrition," and in some cases, "humanitarian actions are critical in preventing further starvation and death."

\u201cHUNGER HOTSPOTS: \n\n\ud83d\udd34A new report warns urgent assistance is required to protect lives and livelihoods and increase access to food.\n\n\ud83d\udd34The report identifies 18 regions where people are at the most risk of extreme hunger and malnutrition.\n\n\ud83d\udd17https://t.co/HOFGtpjJ5i\u201d
— World Food Programme (@World Food Programme) 1685355300

Agency leaders echoed the publication's call to action. Cindy McCain, WFP's executive director, said in a statement that "not only are more people in more places around the world going hungry, but the severity of the hunger they face is worse than ever."

"This report makes it clear: Ae must act now to save lives, help people adapt to a changing climate, and ultimately prevent famine," McCain declared. "If we don't, the results will be catastrophic."

FAO's director-general, Qu Dongyu, stressed that "business-as-usual pathways are no longer an option in today's risk landscape if we want to achieve global food security for all, ensuring that no one is left behind."

"We need to provide immediate time-sensitive agricultural interventions to pull people from the brink of hunger, help them rebuild their lives, and provide long-term solutions to address the root causes of food insecurity," he said. "Investing in disaster risk reduction in the agriculture sector can unlock significant resilience dividends and must be scaled up."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Debt Deal Raises Military Spending & OKs WV Pipeline While Introducing Work Rules for Food Stamps

Democracy Now! — Tue, 30 May 2023 14:47:15 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Debt Deal Raises Military Spending & OKs WV Pipeline While Introducing New Work Rules for Food Stamps

Democracy Now! — Tue, 30 May 2023 12:14:43 +0000

President Joe Biden and House Speaker Kevin McCarthy are urging lawmakers to support a deal to suspend the debt ceiling until January 1, 2025, in order to prevent the United States from defaulting on its debt for the first time in history. The two leaders reached a tentative agreement over the Memorial Day long weekend, but it must still be approved by Congress before a June 5 deadline, when the government is expected to run out of money to pay its bills. Both progressive lawmakers and members of the far-right House Freedom Caucus have expressed some opposition to the deal, which calls for nondefense discretionary spending to remain mostly flat while boosting military spending by about 3%. New work requirements would be established for some recipients of federal aid programs, and it cuts funding to the IRS and lifts a moratorium on student loan payments in place since the pandemic. The deal also speeds up the approval and construction of the proposed $6.6 billion Mountain Valley Pipeline in Virginia and West Virginia. We speak with Lindsay Owens, executive director of the Groundwork Collaborative and a former policy adviser to Senator Elizabeth Warren.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Debt Ceiling Bill Spells Disaster for People and the Planet

Newswire Editor — Mon, 29 May 2023 17:46:42 +0000

Erdoğan—who was seen handing out cash to supporters at a polling station in an apparent violation of Turkish election law—mocked his opponent's loss outside the president's home in Istanbul, saying, "Bye, bye, bye, Kemal" as the winner's supporters booed, according to Al Jazeera.

\u201cInstead of congratulating Erdogan, EU leaders should ask about the backsliding democratic and human rights. \n\nTurkey is already 103rd of 167 countries on democracy index, and we know Erdogan wants to take it further down...\u201d
— Guy Verhofstadt (@Guy Verhofstadt) 1685354462

"The only winner today is Turkey," Erdoğan declared as he prepared for a third term in which his country faces severe economic woes—inflation has soared and the lira is at a record low against the U.S. dollar—and is struggling to recover from multiple devastating earthquakes earlier this year.

However, in Turkish Kurdistan—whose voters, along with a majority of people in most of Turkey's largest cities favored Kılıçdaroğlu—people expressed fears that the government will intensify a crackdown it has been waging for several years.

Ardelan Mese, a 26-year-old cafe owner in Diyarbakir, the country's largest Kurdish-majority city, called Sunday's election "a matter of life and death now."

"I can't imagine what he will be capable of after declaring victory," Mese said of Erdoğan in an interview with Reuters.

After initially courting the Kurds by expanding their political and cultural rights, Erdoğan returned to the repression that has long characterized Turkey's treatment of a people who make up one-fifth of the nation's population, while intensifying a war against the Kurdistan Workers' Party (PKK), a far-left separatist group that Turkey, the United States, and other nations consider a terrorist organization.

\u201cKurds fear that an Erdogan victory "could reinforce a crackdown the state has been waging against them for years, alarmed by a surge in nationalist rhetoric ahead of Sunday's vote." https://t.co/aAhHVqjmf4\u201d
— Kenneth Roth (@Kenneth Roth) 1685018787

"Erdogan's victory will consolidate one-man rule and pave the way for horrible practices, bringing completely dark days for all parts of society," Tayip Temel, the deputy co-chair of Turkey's second-largest opposition party, the center-left and pro-Kurdish Peoples' Democratic Party (HDP)—which backed Kılıçdaroğlu—told Reuters.

Human rights defenders—many of whom have chosen or been forced into exile—also sounded the alarm over the prospect of a third Erdoğan term.

"If the opposition wins there will be space, even possibly limited, for discussions for a common future. With Erdoğan, there is no civic or political space for democracy and human rights," Murat Çelikkan, a journalist who founded human rights groups including Amnesty International Turkey, said in an interview with Civil Rights Defenders just before Sunday's runoff.

Çelikkan called Erdoğan a "very authoritarian, religious, pro-expansionist conservative."

"Turkey, according to judicial statistics, has the largest number of terrorists in the world, because the prosecutors and judges have an inclination to use anti-terror laws arbitrarily and lavishly," he continued. "There are tens of thousands of people who are being trialed or convicted by anti-terror laws. Thousands of people insulting the president."

\u201cToday #Turkey is holding a presidential election runoff. But what is at stake?\n\nRead the interview with Murat \u00c7elikkan, human rights defender from Turkey, about possible impact of the election outcome on #HumanRights:\n\nhttps://t.co/7a8HTEELUp\u201d
— Civil Rights Defenders (@Civil Rights Defenders) 1685253600

"Nowhere in Turkey you can make a peaceful demonstration and protest," Çelikkan added. "The security forces directly attack and detain you. The minister of interior targets and criminalizes LGBTI+ people on a daily basis."

LGBTQ+ Turks voiced fears for their future following a campaign in which Erdoğan centered homophobia in his appeals to an overwhelmingly Muslim electorate and repeatedly accused Kılıçdaroğlu and other opposition figures of being gay. During his victory speech Sunday evening, Erdoğan again lashed out at the LGBTQ+ community while excoriating Kılıçdaroğlu for his campaign pledge to "respect everyone's beliefs, lifestyles, and identities."

Erdoğan vowed in his speech that gays would not "infiltrate" Turkey and that "we will not let the LGBT forces win." At one point during his address, an Al Jazeera interpreter stopped translating a 45-second portion when the president called members of the opposition gay.

\u201cDuring his victory speech President Erdo\u011fan repeated: \u201cWe will not let the LGBT forces win!\u201d. \n\nHe then emphasised \u201cLGBT cannot infiltrate among us. We will be reborn. The family is sacred for us. The violence against women is forbidden and haram for us, no one can resort to this\u2026\u201d
— \u2022 (@\u2022) 1685309623

Ilker Erdoğan, a 20-year-old university student and LGBTQ+ activist, told Agence France-Presse that "I feel deeply afraid."

"Feeling so afraid is affecting my psychology terribly. I couldn't breathe before, and now they will try to strangle my throat," he added. "From the moment I was born, I felt that discrimination, homophobia, and hatred in my bones."

Ameda Murat Karaguzu, a project assistant at an unnamed pro-LGBTQ+ group, told AFP that she has been "subjected to more hate speech and acts of hate than I have experienced in a long time."

Karaguzu blamed Erdoğan's government for the increasing hostility toward LGBTQ+ Turks, adding that bigots are keenly "aware that there will be no consequences for killing or harming us."

Ilker Erdoğan struck a defiant tone, telling AFP that "I am also part of this nation, my identity card says Turkish citizen."

"You cannot erase my existence," he added, "no matter how hard you try."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Debt Ceiling Bill Spells Disaster for People and the Planet

Newswire Editor — Mon, 29 May 2023 17:46:42 +0000

\u201cInstead of congratulating Erdogan, EU leaders should ask about the backsliding democratic and human rights. \n\nTurkey is already 103rd of 167 countries on democracy index, and we know Erdogan wants to take it further down...\u201d
— Guy Verhofstadt (@Guy Verhofstadt) 1685354462

Ardelan Mese, a 26-year-old cafe owner in Diyarbakir, the country's largest Kurdish-majority city, called Sunday's election "a matter of life and death now."

"I can't imagine what he will be capable of after declaring victory," Mese said of Erdoğan in an interview with Reuters.

\u201cKurds fear that an Erdogan victory "could reinforce a crackdown the state has been waging against them for years, alarmed by a surge in nationalist rhetoric ahead of Sunday's vote." https://t.co/aAhHVqjmf4\u201d
— Kenneth Roth (@Kenneth Roth) 1685018787

Human rights defenders—many of whom have chosen or been forced into exile—also sounded the alarm over the prospect of a third Erdoğan term.

Çelikkan called Erdoğan a "very authoritarian, religious, pro-expansionist conservative."

\u201cToday #Turkey is holding a presidential election runoff. But what is at stake?\n\nRead the interview with Murat \u00c7elikkan, human rights defender from Turkey, about possible impact of the election outcome on #HumanRights:\n\nhttps://t.co/7a8HTEELUp\u201d
— Civil Rights Defenders (@Civil Rights Defenders) 1685253600

\u201cDuring his victory speech President Erdo\u011fan repeated: \u201cWe will not let the LGBT forces win!\u201d. \n\nHe then emphasised \u201cLGBT cannot infiltrate among us. We will be reborn. The family is sacred for us. The violence against women is forbidden and haram for us, no one can resort to this\u2026\u201d
— \u2022 (@\u2022) 1685309623

Ilker Erdoğan, a 20-year-old university student and LGBTQ+ activist, told Agence France-Presse that "I feel deeply afraid."

Ameda Murat Karaguzu, a project assistant at an unnamed pro-LGBTQ+ group, told AFP that she has been "subjected to more hate speech and acts of hate than I have experienced in a long time."

Karaguzu blamed Erdoğan's government for the increasing hostility toward LGBTQ+ Turks, adding that bigots are keenly "aware that there will be no consequences for killing or harming us."

Ilker Erdoğan struck a defiant tone, telling AFP that "I am also part of this nation, my identity card says Turkish citizen."

"You cannot erase my existence," he added, "no matter how hard you try."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Sierra Club Calls on Congress to Reject the Bad Debt Limit Deal

Newswire Editor — Mon, 29 May 2023 17:44:54 +0000

\u201cInstead of congratulating Erdogan, EU leaders should ask about the backsliding democratic and human rights. \n\nTurkey is already 103rd of 167 countries on democracy index, and we know Erdogan wants to take it further down...\u201d
— Guy Verhofstadt (@Guy Verhofstadt) 1685354462

Ardelan Mese, a 26-year-old cafe owner in Diyarbakir, the country's largest Kurdish-majority city, called Sunday's election "a matter of life and death now."

"I can't imagine what he will be capable of after declaring victory," Mese said of Erdoğan in an interview with Reuters.

\u201cKurds fear that an Erdogan victory "could reinforce a crackdown the state has been waging against them for years, alarmed by a surge in nationalist rhetoric ahead of Sunday's vote." https://t.co/aAhHVqjmf4\u201d
— Kenneth Roth (@Kenneth Roth) 1685018787

Human rights defenders—many of whom have chosen or been forced into exile—also sounded the alarm over the prospect of a third Erdoğan term.

Çelikkan called Erdoğan a "very authoritarian, religious, pro-expansionist conservative."

\u201cToday #Turkey is holding a presidential election runoff. But what is at stake?\n\nRead the interview with Murat \u00c7elikkan, human rights defender from Turkey, about possible impact of the election outcome on #HumanRights:\n\nhttps://t.co/7a8HTEELUp\u201d
— Civil Rights Defenders (@Civil Rights Defenders) 1685253600

\u201cDuring his victory speech President Erdo\u011fan repeated: \u201cWe will not let the LGBT forces win!\u201d. \n\nHe then emphasised \u201cLGBT cannot infiltrate among us. We will be reborn. The family is sacred for us. The violence against women is forbidden and haram for us, no one can resort to this\u2026\u201d
— \u2022 (@\u2022) 1685309623

Ilker Erdoğan, a 20-year-old university student and LGBTQ+ activist, told Agence France-Presse that "I feel deeply afraid."

Ameda Murat Karaguzu, a project assistant at an unnamed pro-LGBTQ+ group, told AFP that she has been "subjected to more hate speech and acts of hate than I have experienced in a long time."

Karaguzu blamed Erdoğan's government for the increasing hostility toward LGBTQ+ Turks, adding that bigots are keenly "aware that there will be no consequences for killing or harming us."

Ilker Erdoğan struck a defiant tone, telling AFP that "I am also part of this nation, my identity card says Turkish citizen."

"You cannot erase my existence," he added, "no matter how hard you try."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Sierra Club Calls on Congress to Reject the Bad Debt Limit Deal

Newswire Editor — Mon, 29 May 2023 17:44:54 +0000

\u201cInstead of congratulating Erdogan, EU leaders should ask about the backsliding democratic and human rights. \n\nTurkey is already 103rd of 167 countries on democracy index, and we know Erdogan wants to take it further down...\u201d
— Guy Verhofstadt (@Guy Verhofstadt) 1685354462

Ardelan Mese, a 26-year-old cafe owner in Diyarbakir, the country's largest Kurdish-majority city, called Sunday's election "a matter of life and death now."

"I can't imagine what he will be capable of after declaring victory," Mese said of Erdoğan in an interview with Reuters.

\u201cKurds fear that an Erdogan victory "could reinforce a crackdown the state has been waging against them for years, alarmed by a surge in nationalist rhetoric ahead of Sunday's vote." https://t.co/aAhHVqjmf4\u201d
— Kenneth Roth (@Kenneth Roth) 1685018787

Human rights defenders—many of whom have chosen or been forced into exile—also sounded the alarm over the prospect of a third Erdoğan term.

Çelikkan called Erdoğan a "very authoritarian, religious, pro-expansionist conservative."

\u201cToday #Turkey is holding a presidential election runoff. But what is at stake?\n\nRead the interview with Murat \u00c7elikkan, human rights defender from Turkey, about possible impact of the election outcome on #HumanRights:\n\nhttps://t.co/7a8HTEELUp\u201d
— Civil Rights Defenders (@Civil Rights Defenders) 1685253600

\u201cDuring his victory speech President Erdo\u011fan repeated: \u201cWe will not let the LGBT forces win!\u201d. \n\nHe then emphasised \u201cLGBT cannot infiltrate among us. We will be reborn. The family is sacred for us. The violence against women is forbidden and haram for us, no one can resort to this\u2026\u201d
— \u2022 (@\u2022) 1685309623

Ilker Erdoğan, a 20-year-old university student and LGBTQ+ activist, told Agence France-Presse that "I feel deeply afraid."

Ameda Murat Karaguzu, a project assistant at an unnamed pro-LGBTQ+ group, told AFP that she has been "subjected to more hate speech and acts of hate than I have experienced in a long time."

Karaguzu blamed Erdoğan's government for the increasing hostility toward LGBTQ+ Turks, adding that bigots are keenly "aware that there will be no consequences for killing or harming us."

Ilker Erdoğan struck a defiant tone, telling AFP that "I am also part of this nation, my identity card says Turkish citizen."

"You cannot erase my existence," he added, "no matter how hard you try."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Biden’s Debt Ceiling Deal Betrays the Environment and Clean Energy

Newswire Editor — Mon, 29 May 2023 17:43:15 +0000

The Mountain Valley Pipeline (MVP) has previously been denied multiple permits by courts due to concerns about its effects on water quality and environmental justice for the communities it would run through from West Virginia to southern Virginia, but under the bill, the U.S. Army Corps of Engineers would be required to issue all remaining permits within 21 days. The bill also attempts to prohibit judicial review of the permits by any government agency.

According to one analysis by Oil Change International, the MVP—a pet project of right-wing Sen. Joe Manchin (D-W.Va.)—would emit the equivalent of more than 89 million metric tons of carbon, equal to the emissions of 26 coal plants.

"Changes to environmental laws and favors to fossil fuel companies have no place in a bill to raise the debt ceiling."

Although President Joe Biden previously said he would not negotiate with Republicans about raising the debt ceiling—which Congress has voted to do 78 times since 1960, mostly under Republican presidents—he is now supporting a deal which includes a dramatic rollback of the National Environmental Policy Act (NEPA) in addition to the MVP approval.

The bill limits the environmental reviews that can take place under NEPA for projects that are under the "substantial" control of the federal government, making it easier for future projects to move forward even if frontline communities raise concerns about oil spills, pollution, and other public health and safety risks, as many have regarding the MVP.

"Changes to environmental laws and favors to fossil fuel companies have no place in a bill to raise the debt ceiling," said Chelsea Barnes, director of government affairs and strategy at Appalachian Voices.

Ariel Moger, government and political affairs director at Friends of the Earth, noted that Manchin "has done as much as Republicans to sabotage the Democratic agenda" by refusing to back Biden's signature domestic agenda, the Build Back Better Act, in 2021.

Despite this, Moger said, Manchin has "been rewarded" while "MAGA extremists" have been given legislation "filled with polluter giveaways and devastating spending limitations."

"This agreement is far from a compromise," she added. "It's a surrender to Big Oil and Republican hostage-takers in Congress. Democrats should vote NO on this disgraceful deal and force a vote on a clean debt limit increase."

Biden and Manchin have claimed the MVP is essential for energy security, and the bill text includes claims that the project "will reduce carbon emissions and facilitate the energy transition," despite Oil Change International's finding that methane gas leakage, pipeline operations, and the burning of the gas delivered by the pipeline would add "tens of millions of tons of greenhouse gas (GHG) pollution to the atmosphere every year for decades to come."

The legislation includes "too many lies to even begin correcting" about the pipeline, said Grace Tuttle, advocacy director for the Protect Our Water, Heritage, Rights (POWHR) Coalition.

\u201cThere's too many lies to even begin correcting in this bill text. Congratulations to Republicans AND Democrats for continuing Appalachia's role as a sacrifice zone. Shame on @POTUS. Cruelty is the point, and this nation is the cruelest of them all. #StopMVP\u201d
— Grace Tuttle (@Grace Tuttle) 1685320485

"The debt deal insists that building Manchin's pet MVP pipeline is 'in the national interest' and will cut global warming emissions," said 350.org co-founder and author Bill McKibben. "These things simply aren't true."

Jamie Henn, co-founder of 350.org and director of Fossil Free Media, noted that Biden's approval of the MVP comes months after his administration allowed the construction of the massive Willow project, a ConocoPhillips oil drilling operation in Alaska which could send roughly 280 million metric tons of carbon emissions into the atmosphere by 2050—even as scientists and energy experts warn that keeping planetary heating below 2°C by then will be impossible if fossil fuel projects continue.

"Support for Biden's climate record plummeted among young people after his approval of the Willow project," said Henn. "Greenlighting the Mountain Valley Pipeline will drive it down even further."

\u201cSupport for Biden\u2019s climate record plummeted among young people after his approval of the Willow Project. \n\nGreen lighting the Mountain Valley Pipeline will drive it down even further. \n\nHe needs youth turnout in 2024. This ain\u2019t the way to get it. https://t.co/Za9wIDZZME\u201d
— Jamie Henn (@Jamie Henn) 1685323662

With the Fiscal Responsibility Act, said Jean Su, energy justice program director at the Center for Biological Diversity, "Biden has allowed Sen. Manchin and Republicans to hold the government hostage to ram through the climate-killing Mountain Valley Pipeline, dramatically roll back bedrock environmental laws that give voice to frontline communities, and sabotage agencies whose job is to protect the environment and working families."

"Congress should reject these poison pills," she said, "and pass a clean debt ceiling bill."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Biden’s Debt Ceiling Deal Betrays the Environment and Clean Energy

Newswire Editor — Mon, 29 May 2023 17:43:15 +0000

"Changes to environmental laws and favors to fossil fuel companies have no place in a bill to raise the debt ceiling."

Despite this, Moger said, Manchin has "been rewarded" while "MAGA extremists" have been given legislation "filled with polluter giveaways and devastating spending limitations."

The legislation includes "too many lies to even begin correcting" about the pipeline, said Grace Tuttle, advocacy director for the Protect Our Water, Heritage, Rights (POWHR) Coalition.

\u201cThere's too many lies to even begin correcting in this bill text. Congratulations to Republicans AND Democrats for continuing Appalachia's role as a sacrifice zone. Shame on @POTUS. Cruelty is the point, and this nation is the cruelest of them all. #StopMVP\u201d
— Grace Tuttle (@Grace Tuttle) 1685320485

"Support for Biden's climate record plummeted among young people after his approval of the Willow project," said Henn. "Greenlighting the Mountain Valley Pipeline will drive it down even further."

\u201cSupport for Biden\u2019s climate record plummeted among young people after his approval of the Willow Project. \n\nGreen lighting the Mountain Valley Pipeline will drive it down even further. \n\nHe needs youth turnout in 2024. This ain\u2019t the way to get it. https://t.co/Za9wIDZZME\u201d
— Jamie Henn (@Jamie Henn) 1685323662

"Congress should reject these poison pills," she said, "and pass a clean debt ceiling bill."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

US debt deal nears, but Asia will look on warily

Alex Willemyns for RFA — Fri, 26 May 2023 18:18:00 +0000

After weeks of brinkmanship, American lawmakers may finally be approaching a deal that would raise the U.S. government’s “debt ceiling,” allowing it to pay its debts – held in the trillions of dollars by world governments and pension funds alike – on time.

Such a last-minute deal would ensure Washington’s divisive politics once again avoids torching the global economy by blowing up what is widely considered the world’s safest long-term asset: the debt issued by the U.S. Treasury, backed by the immense American tax base.

That would prevent the worst possible spillover of wrangling between Democrats and Republicans across global borders. But much damage to America’s reputation, experts say, will have already been done.

U.S. foes, in particular, would be pleased with the reminder of the indivision that can paralyze Washington, said Ryan Hass, the Michael H. Armacost Chair in Foreign Policy at the Brookings Institution.

“The debt ceiling standoff is an early Christmas present for China and Russia,” Hass told Radio Free Asia. “They both seek to portray the United States as being hobbled by internal divisions and generating dysfunction that does harm to the rest of the world.”

Cascading financial ruin

Such a depiction could have a devastating impact on America’s reputation across Asia, given the deep economic consequences it could cause if those holding the “safe” asset end up shortchanged.

Japan, according to Treasury data, is the world’s largest holder of U.S debt, with more than US$1.1 trillion, followed closely by China itself, which claims some $860 billion. Taiwan holds the tenth-most, at $235 billion, while India holds $232 billion and Singapore $187 billion.

In 17th place, South Korea, meanwhile, holds about $106 billion.

Russian President Vladimir Putin and Chinese President Xi Jinping attend a gala concert dedicated to the 70th anniversary of the establishment of diplomatic relations between Russia and China in the Bolshoi Theater in Moscow, Russia, June 5, 2019. (Sergei Ilnitsky Pool via AP)

Any failure on behalf of the U.S. government to pay some of its debts to those countries would cause cascading financial damage, as key economic actors themselves wind up unable to pay debts on time.

But even if the debt limit is increased, the now nearly annual exercise of uncertainty and brinkmanship will chip away at the perceived reliability of long-term U.S. debt repayment and likely cause financial planners around the world to further diversify their holdings.

Credit-rating agency Fitch this week put U.S. debt’s coveted Triple-A rating, which lets the United States borrow money at the lowest price, on “negative watch,” citing the “increased political partisanship” in Washington it said was constantly putting repayment at risk.

The agency noted Treasury Secretary Janet Yellen has estimated the U.S. government would run out of money to pay its debts on Thursday, June 1, if Congress does not raise the debt ceiling and approve Treasury’s ability to issue more debt to pay those now coming due.

“The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness,” Fitch said in a Wednesday report.

“The failure to reach a deal to raise or suspend the debt limit by the x-date would be a negative signal of the broader governance and willingness of the U.S. to honor its obligations in a timely fashion, which would be unlikely to be consistent with a 'AAA' rating, in Fitch's view.”

Chaos is priced-in

Still, not everyone is sure the debt-ceiling fight will cause significant desecration of America’s centrality to the global financial system.

Some pundits, for instance, argue a short-term default would in fact perversely lead to higher world demand for U.S. debt, because in the absence of any alternative asset in a time of global chaos, it would still be viewed – in relative terms, at least – as the world’s safest asset.

Others have noted that China – the only economy big enough to offer an alternative to U.S. debt as an asset – would, as its second-largest holder, be as financially devastated as anyone by a default

But even then, Washington’s allies would understand by now that things will never get that far, with the intense last-minute politicking widely viewed as par-for-course for American democracy, said Denny Roy, a senior fellow at the East-West Center in Honolulu.

“Generally, U.S. friends and allies in the region understand that the U.S. has a vibrant two-party system and that sometimes partisan disputes can result in threats of risky actions,” Roy told RFA. “The danger is other countries, both friends and foes, believing that U.S. politics has become so dysfunctional it might affect U.S. reliability. “

Roy said, though, that the second-order effects could be severe, with the world seeing how domestic politics can hobble U.S. foreign policy.

“Now we see President Biden pulling out of a planned Quad meeting in Sydney,” he said. “If the region sees U.S. internal politics regularly disrupting U.S. foreign policy, this will erode U.S. leadership.”

Pivot from Asia

Australian Prime Minister Anthony Albanese earlier this month canceled a meeting of the Quad – a loose alliance of Australia, Japan, India and the United States aimed at counterbalancing China – at the Sydney Opera House after Biden said that he would skip it.

Biden instead had to fly back to Washington to engage in discussions with House Speaker Kevin McCarthy, and the leaders of the four Quad nations instead met briefly on the sidelines of the G-7 summit in Hiroshima. Albanese told reporters he understood Biden’s reasons, but days later announced he planned to soon pay a visit to Beijing.

In the end, Indian Prime Minister Narendra Modi, too, made the trip to Sydney anyway, appearing beside Albanese at a packed-out concert venue for a public-relations coup, with Biden’s absence conspicuous.

The Australian prime minister likened his Indian counterpart to U.S. rock sensation Bruce Springsteen, who played at Biden’s January 2021 inauguration and in March received the Medal of Arts from Biden.

“Modi is ‘The Boss,’” Albanese told a packed concert venue.

Systemic risk

The real risk of the debt-ceiling debacle, then, may be what the indivision in Washington tells allies and foes alike about a polarized American political system’s ability to maneuver in times of crisis.

Ja Ian Chong, a professor of international relations and expert in Chinese foreign policy at the National University of Singapore, said that the debt-ceiling fracas had blown-up months of efforts by Republicans and Democrats to depict themselves as unified on Asia foreign policy.

“The debt ceiling dispute calls into question U.S. commitment and resoluteness about maintaining its presence in Asia,” Chong told RFA, noting that U.S. foreign policy on China had become “the only or one of the few areas with bipartisan agreement in the United States.”

The Rotunda of the U.S. Capitol Building is seen with a statue of George Washington in the foreground, in Washington, May 17, 2023. Lawmakers say they’re near a deal to pay America’s debts, but the fight to get there has aired much dirty laundry. (J. Scott Applewhite/AP)

At best, Chong said, if such a dispute can “disrupt President Biden’s visit to Papua New Guinea and Australia, this suggests that there isn’t even enough bipartisan support for this [foreign policy] agenda.”

But a worse explanation, he added, is that there is bipartisan support in areas like countering China, but “it is not sufficient to overcome serious domestic partisan differences” due to the quirks of U.S. democracy.

With so much at stake for debt-holders across America and Asia alike, he said, the argument that the near-annual exercise in brinkmanship over the key global asset was just politics was starting to wear thin.

“Of course, there is a claim that this could be politics as usual or electioneering ahead of next year’s presidential election,” Chong said. “Onlookers from Asia are not going to pay attention to these details.”

This content originally appeared on Radio Free Asia and was authored by Alex Willemyns for RFA.

Patriotic Millionaires Slam Biden, GOP on Rollback of IRS Funding in Pending Debt Limit Deal

Newswire Editor — Fri, 26 May 2023 17:38:35 +0000

Yesterday, reports emerged that President Biden may agree to roll back $10 billion in IRS funding as part of a deal with Republicans to raise the debt limit.

In response, Morris Pearl, the Chair of the Patriotic Millionaires and a former managing director at BlackRock, Inc., released the following statement:

"A debt ceiling agreement that cuts IRS funding would be an embarrassing disgrace for both the GOP and President Biden.

House Republicans have been holding the global economy hostage because they claim that the federal debt is too big. But at the first opportunity, they are happy to scrap most of their cuts to limit the ability of the IRS to go after wealthy tax cheats, a move that would actually increase the debt by $120 billion.

The mask is off. This deal proves that the one thing the modern GOP cares about more than anything else is making sure rich people don’t have to pay taxes.

But we can’t blame the GOP for the fact that President Biden put this on the table in the first place. As Biden himself said many times, the agency desperately needs these funds to crack down on wealthy tax cheats and ensure that rich people start paying what we rightfully owe the country in taxes.

Biden shouldn’t be negotiating with McCarthy and his cronies in the first place over paying for things that we’ve already bought in the budget that was approved last year – you cannot negotiate with economic terrorists. To give into their demands over IRS funding at the eleventh hour is simply beyond the pale.

There is still time, albeit not much, for Biden to come to his senses and back out of this disgraceful IRS rollback. Agreeing to IRS funding cuts as a bargaining chip in debt ceiling negotiations would be an enormous stain on Biden’s legacy. If he wants to protect his reputation and our country, he should refuse to budge an inch on the debt ceiling and use his constitutional authority under the 14th Amendment to bypass this entire manufactured crisis."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Revolving Door Project Reacts to Biden’s Debt Ceiling Cave & the Media’s Incompetent Coverage

Newswire Editor — Fri, 26 May 2023 15:08:21 +0000

n response to the emergence of the structure of a potential deal between President Biden and Speaker McCarthy, Revolving Door Project Executive Director Jeff Hauser issued the following statement:

“There are three aspects to the substance and coverage of this debate that have been infuriating.”

“First, the notion that `modest cuts’ to spending are inconsequential. As we’ve sought to make clear in the past few weeks—indeed, the past several years—any deal is a disaster since most government departments and agencies are currently severely underfunded. `Non-defense discretionary spending’ is a bloodless way to refer to the agencies required to ensure clean air, safe food, safe workplaces, and protect Americans from all forms of corporate abuse. These agencies bore the brunt of the Obama-Boehner budgets, were thrashed further by the kleptocratic administration of President Trump, and have seen their purchasing power undercut by inflation. These agencies require redoubled investment rather than capricious cuts, and it is the role of the media to make the reality of the work these agencies do clear to the public that depends upon them.”

“Second is the role of inflation. Spending in fiscal year 2023 was negotiated in calendar 2022, and the nominal amounts negotiated in the fall of 2022 are now going to become ceilings for spending throughout most of 2025 even as it’s likely that inflation will undercut the budget’s actual spending power by 7-10 percent. Additionally, the population of the United States is likely to increase by approximately 1 percent over that time. As such, `flat spending’ implies a further reduction in real government funding per person after a decade of Obama-Boehner austerity, followed by Trump’s assaults on the administrative state. This deal would be a catastrophe for government capacity, and coverage that ignores the role of inflation (hardly a low profile issue in 2023!) is wildly and indefensibly misguided.”

“Third, the notion that the President was trapped under the gun of McCarthy is ridiculous. Because the debt ceiling is an unconstitutional, incoherent excuse for a law and because there is an active lawsuit from the National Association of Government Employees, Biden’s status as a hostage merely reflects an advanced case of Stockholm Syndrome. As many have argued (e.g., read here and here), Biden has a wide number of ways out from the debt ceiling and no legal way to implement it. As we have been emphasizing, the National Association of Government Employees lawsuit is sound, and indeed, has been all but endorsed by the President himself. President Biden and Attorney General Garland have no reason to defend the nonsense which is the debt ceiling, besides a vague sense of formality and tradition driven by elite political etiquette that Republicans have long since abandoned. The media needs to quit deferring to the debt ceiling’s political theater and engage more with the essentially uncontroverted legal experts pointing out that it cannot be implemented in a constitutional manner.”

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Economist Stephanie Kelton on the Debt Limit, a Potential Catastrophe We’re Risking for No Reason

Deconstructed — Fri, 26 May 2023 10:00:00 +0000

Ever since Congress created a federal debt limit, it has managed to raise it before U.S. borrowing reached the limit. For the first time, it looks as though that may not happen, and the government could conceivably default on its obligations. Today on Deconstructed, Jon Schwarz is joined by the economist Stephanie Kelton to talk about the history that brought us to this moment, why both political parties may take us over this ridiculous and dangerous brink together, and what it all means for now and the future.

Transcript coming soon.

Join The Conversation

This content originally appeared on The Intercept and was authored by Deconstructed.

There’s No Debate About the Debt, Only Political Priorities

Peter Certo — Fri, 26 May 2023 05:51:11 +0000

Photograph Source: Jay Tamboli – CC BY 2.0

The news sure makes it sound like President Biden and Republicans have been haggling over the national debt. But that’s not what’s really happening — not at all.

President Biden wants to spend more money and run up the deficit, the story goes. Republican House Speaker Kevin McCarthy wants to rein the Democrats’ “addiction to spending” and reduce the debt.

This is wrong — enormously so — for several reasons.

She’s right!

Republican tax cuts for the rich have been the single largest driver of the federal deficit over the last two decades. The Bush and Trump tax cuts together are responsible for 57 percent of the increase in our ratio of debt to GDP, the Center for American Progress found — and 90 percent outside of emergency spending during the recession and pandemic.

The other major driver of debt? Unfunded wars and military spending.

So Republicans rejected a budget proposal that would bring down the deficit. And they rejected addressing either the high-end tax cuts or out of control military spending that drives the debt — in fact, they’re pushing for more debt in both categories.

What does that leave? The barely one-third of discretionary spending that covers education, corporate regulation, scientific research, many anti-poverty programs, and other worthwhile items.

And unless they get those cuts, they’ve threatened to default on America’s debt by refusing to raise the debt ceiling.

The debt ceiling doesn’t reduce the debt by one dime — it only determines whether we pay the debts we already owe. Republicans raised it three times under Trump without complaint even as he ran up one of the biggest deficits in history.

Defaulting would do nothing about the debt — but it would destroy millions of jobs, wipe out trillions of household wealth, and send interest rates skyrocketing for home, car, and credit card loans.

The current debate has nothing at all to do with debt. It’s about whether we invest in programs the American people count on — or if we kneecap those programs to fund more tax cuts for rich people and handouts to military contractors.

Let’s choose wisely.

This content originally appeared on CounterPunch.org and was authored by Peter Certo.

The True Meaning of Debt

Dan Lieberman — Thu, 25 May 2023 23:29:30 +0000

In debating the validity of raising the debt limit, the United States Congress has not carefully analyzed the reasons for government debt and the meaning of all debt. The true meaning of debt has the modern capitalist system as a debt-driven system. All new money supply is debt and the money supply is the energy that sustains the Gross Domestic Product (GDP). Historically, without expansion in the available money supply (debt), the capitalist system stagnates and withers.

Demystifying the mystery of debt starts with postulates ? accepted concepts that form a starting position for reason and discussion. The modern capitalist system has these postulates:

Postulate #1 – In an industrialized closed system*, all new money, used as a medium of exchange, is debt.
Postulate #2 – In an industrialized closed system, with all other factors constant, the capitalist system cannot expand its Gross Domestic Product (GDP)** without expansion of debt.

*A closed economic system has only internal trade; the system with international trade adds another factor.
**The Service component of the GDP can expand, independent of the money supply. In an industrialized economic system, manufacturing ? goods production ? is more important than services.

Is all new money debt?

As of May 2023, new money can be added to the money supply by only two means:

(1) Bank loans, in which the bank creates money to satisfy the debt. As the debt is repaid, the currency is retired from the money supply.

(2) The Federal Reserve (Fed) purchases of treasury securities, in which the Treasury Department essentially prints money to finance the government debt. By selling the securities, the Fed retires the fiat currency.

(3) Cryptocurrency has limited potential as money for use as a medium of exchange. Except for a few cases, insignificant compared to the money supply, cryptocurrency is not a medium of exchange.

Postulate #1 is correct, all new money is debt.

The Federal Reserve defines the monetary system as the sum of currency in circulation (M1) and deposits held by banks and other depository institutions (financial institutions that obtain their funds mainly through deposits from the public, such as commercial banks, savings and loan associations, savings banks, and credit unions) in their accounts at the Federal Reserve (M2).

As of February 2023, Investopedia has M2, the monetary supply, at $21.062 trillion, of which $2.31 trillion was previous currency in circulation and does not need to be repaid. Within the $21.062 trillion is $8.56 trillion on the Federal Reserve Balance sheet, which entered the economy during the Fed’s program of quantitative easing – purchases of government bonds.

Can the economy expand without expanding debt?

Three simple equations enter into the discussion:
Note: For those who are bothered by equations, this short presentation is light and the next few lines can be skipped.

Gross Domestic Product (GDP) = C + G + I + NX,

where C is the consumption of goods and services, G is government spending, I is capital investment, and NX is the trade balance.

This equation has been simplified into another accepted equation.

GDP = Money Supply (M) x Velocity of Money (V)

Velocity of Money is a measure of how rapidly (on average) money changes hands in the economy. If the velocity of money increases, then for each dollar spent, the economy produces a larger amount of nominal GDP.

From this, we have the Quantity Theory of Money
M×V=P×Y = GDP

where P= average price level and Y = output.

If output (Y) increases and velocity of money is constant, the money supply will have to increase to keep the price level from decreasing (deflation).

An increase in the money supply (M) without an increase in output (Y) causes the price level to change (inflation) by the same proportion as the change in the money supply.

An increase in output (Y) at a stable price and a constant velocity of money can only occur if the money supply increases.

Postulate #2 is correct.

The following graphs show how the money supply and GDP track each other and monotonically grow together.

Figure 1

Figure 2

The United States economy, rather than being a free market economy, has been a free money economy, which progresses primarily by credit. Almost all of the money supply is debt, and all new money arrives from debt. The debt is not malicious; it is the prime force for moving the economy and is usually backed by assets. Consumer loans that create debt are backed in the form of intended purchases of hard goods — automobiles, houses, and appliances. Construction loans build fixed assets — housing complexes, office buildings, facilities, and businesses. As debt plus interest is retired, new debt must replace it or the money available for purchase of goods and services will lessen, the GDP will decline, and deflation will occur. On the flip side, rapid expansion of the money supply, if not matched by equal production of goods and services, produces inflation. This occurred from the Fed’s quantitative easing. Until 2022, the Fed’s quantitative easing maintained low-interest rates but did not stimulate the economy and contributed to asset inflation, especially in the housing and stock markets. Beginning in 2022, with Covid-19 receding, increased demand met production shortages, money moved out of the stock market and into demand, and the Fed’s swelling of the money supply stimulated inflation.

Progressive economists consider government debt as playing a leading role in advancing Capitalism. Conservative economists approach excessive government debt as the Dark Destroyer, an economic nuclear bomb, gathering force, and prepared to destroy the financial system. It will be shown that present federal government debt need not be a danger to the financial system, that its magnitude is exaggerated, and that without government debt, the economic system would have collapsed a long time ago.

Government Debt

Conservative economists and much of the public rail against expansion of government debt, claim it crowds out private debt, punishes future generations, and serves little purpose. These economists fail to recognize the significance and benefits of government debt.

(1) Compared to government debt, individual consumers, and businesses use relatively small amounts of credit for specific purposes. The government gathers huge amounts of money to support large expenditures for Social Security, and Medicare, defense, highway maintenance, building construction, research, and education. Entire industries — defense, armaments, electronics, shipbuilding, aviation, transportation, space exploration — and parts of some industries — airlines, plastics, chemical, metallurgical, Internet — owe their existence and prosperity to government subsidies, developments, funds, and contracts.

Airplane designs and manufacture are direct outgrowths of defense industry warplanes. Airline growth relied upon government subsidies for mail and freight deliveries and airport construction. Transportation industries benefitted from federal construction of interstate highways and massive land grants and bond subsidies to railroad companies. Government assistance enabled the free enterprise economy to escape from total collapse several times.

(2) Missing from the discussion of government debt is that the debt is only about 1/3 of the total debt and the private debt has more serious implications than the public debt. The following graphs exhibit the public and private debt.

Figure 3

Figure 4

Government borrows at much lower interest rates than private agencies and its debt can be easily rolled over. Lending to consumers and businesses incurs risks that affect the banking system. Recessions are never caused by too much government debt; they are caused by private financial arrangements, often due to overextension of debt and bankruptcies that harm creditors.

(3) Because the money supply drives the economy, when private credit and spending stagnate, the government employs deficit spending to stimulate the economy. This has occurred during several recessions.

Figure 5

Figure 6

The graphs show the extent that the stimulus plan, which originated from the 2008-2009 recession, had to reach to prevent a free fall in GDP. Consumer debt had been growing at 0.5 to one trillion dollars each year. The coupling of the consumer debt with annual federal deficits, which averaged 0.3 trillion dollars for several years, and a subsequent deleveraging in consumer debt of 0.5 trillion dollars forced the Federal Reserve, acting as a lender of last resort, to purchase government securities. The purchases added about 1.2 trillion dollars to the money supply, replaced the loss in purchasing power, and reversed the GDP decline. Due to low tax rates and a declining economy, government revenues could not cover the budget increases, and large government deficits occurred.

(4) Deficits have grown mostly during Republican administrations. Previous graphs 3 and 5 show that, beginning in 1982, the conservative Reagan administration ran huge deficits to escape the 1981 recession and enable the economy to keep growing. During Reagan’s presidency, “the US national debt almost tripled from $700 billion in 1980 to nearly $2 trillion in 1988, rising from 26% to 41% of US GDP. “

Republican George W, Bush escalated the debt during his administration, while Democrat Bill Clinton kept the debt low and even had surpluses during his reign. The jump in government debt during the Obama administration was mainly due to the Federal Reserve Bank’s response to the severe 2008-2009 recession, and its purchase of government securities in order to increase the money supply and lower interest rates.

(5) The government debt is not as troubling as the numbers indicate.
The following figure delineates the composition of the government debt.

FIGURE 7

Intra-government agency debt is not shown. This debt is what one agency of the government owes to another agency and is mainly debt held in government trust funds, such as Social Security. The latter debt arises from surplus social security assets that cannot remain idle and are circulated by the government, which wisely borrows from the fund and spends the money. Intra-government agency debts represent assets to one federal agency and liabilities to another federal agency and have no net effect on the government’s overall finances. In 2021, intragovernmental debt totaled $6.25 trillion.

The June 2021 Federal Reserve Holdings of almost $6 trillion is due to the Fed Open Market Operations for stimulating the economy and maintaining low-interest rates. The Fed is responsible for acquiring and extinguishing that debt.

Foreign holdings of about $8 trillion of government debt come from the need to equalize the balance of payments. Because the balance of payments between nations is “zero,” the dollars accumulated by the foreign exporters are either kept as reserves, purchase U.S. assets, or used to acquire American government debt. The government debt retrieves dollars that left the shores and assures they do not return to inflate and purchase U.S. fixed assets. Failure of U.S. companies to increase exports and balance them with imports is the reason for this debt. If companies increase exports and consumers reduce imports, the debt will be reduced.

This leaves about $10 trillion in government debt and 11 percent of the total debt that is publicly held. This debt is owned by ultra-conservative investors — private and state pension funds, credit unions, associations, institutions, and individual investors who want to keep their money in a safe and fairly liquid investment. By allowing safe investment opportunities and making certain that a portion of the money supply circulates in the economy, publicly-held government debt serves a major purpose.

Most troubling and rarely mentioned is the growth of debt in the financial industry. This industry had little debt until the Reagan administration. Since then, it has grown rapidly and become the largest private sector for debt issuance. Acting as a shadow banking system, the financial sector sidetracks the money supply into speculation and revolving investment. It uses debt as leverage to earn money, and, except for the Covid-19 years, has grown and grown.

Figure 7

(6) Increased taxes can reduce deficit spending and halt the accumulation of more debt. Raising taxes transfer funds from the consumer to the government.

The government buys a product, such as airplanes from Lockheed. The manufacturer hires workers to produce the aircraft. The total wages paid to the workers almost match the raised taxes. Spending by the new wage earners ripples through the economy, and, in its final appearance, will almost match the reduced consumer spending of the taxed individuals. Consumer spending stays the same, but money circulates through other channels.

Lowering taxes mainly assists the already employed, and that is not the major priority. Who pays taxes – the employed. Who receives tax breaks – those who pay taxes. In effect, lowering taxes redistributes federal assistance from needy persons to the employed. Which is preferable, redistributing income so the employed have more to spend or redistributing the income so the underemployed have something to spend?

Stimulating the economy with tax breaks is a psychological phenomenon. The talk, exaggerations, promises, and general optimism of tax breaks fashion a more optimistic public, which supposedly stimulates spending, investment, and courage to carry more debt. Creeping into the debate is another assumption – those who have excess funds will invest and stimulate growth. Not considered is they might invest in speculative ventures that only churn money or might purchase imports, which decreases purchasing power in the domestic economy.

GDP has steadily grown, with a few bumps, in the last 70 years, and its relation to the lowering of taxes has not been demonstrated. A government report: Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945, Thomas L. Hungerford Specialist in Public Finance, September 14, 2012, concludes:

The top income tax rates have changed considerably since the end of World War II. Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The average tax rate faced by the top 0.01% of taxpayers was above 40% until the mid-1980s; today it is below 25%. Tax rates affecting taxpayers at the top of the income distribution are currently at their lowest levels since the end of the second World War. The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced-lower top tax rates may be associated with greater income disparities.

Managing the Debt

If we ignore services, in the GDP equation,

Gross Domestic Product (GDP) = C + G + I + NX

only NX, the trade balance, can grow without additions to the money supply. This is unlikely in the near future, and will never be very positive. Growing GDP means growing the money supply and growing debt. The problem is not government debt or any other debt; the problem is the capitalist economy has not been able to grow without increasing debt. Solving the problem starts with facing the truth, which is that the economy is the cause of its debt problem and will forever be subjected to calamities arising from excessive debt.

What needs to be done?

Start with reorienting priorities so that the GDP is not the salient feature that describes the economy. Full employment, a sustainable economy, improved distribution of wealth, and increased standard of living become precedents in a fully matured economy.

(1) Turn the economy away from being overly credit driven. This means slower and more even growth, maybe a constant GDP, in which new credit replaces due credit and the debt remains constant. Climate change, energy shortages, and economic sustainability are politely requesting slowed growth. With the economy at an all-time high, unemployment at an all-time low, an excessive money supply, and most Americans satiated with cars, homes, computers, smartphones, play stations, 72-inch televisions, and multitudes of other consumer products, economic growth is no longer a high priority. How much junk do we need in our backyards?

(2) Use productivity to lower prices. The GDP will remain constant but the standard of living will increase. Liberal economists have erred in soliciting higher wages with increased productivity. The higher wages lead to inflation and reductions in the workforce. Lower prices have the same effect as higher wages and benefit the entire population.

(3) Continue government deficit spending, permitting money to circulate in the economy, and raise income and corporate taxes to pay for the interest and discounts on the debt. Because the government can roll over the debt, its debt will remain constant. This may be a simple solution for the congressional impasse in deciding the debt ceiling. Pledge that the deficit spending will only contain the principal of the debt subscription and all interest and discounts will be covered by the balanced portion of the budget.

(4) If it prevents increasing debt, Congress should not fear raising taxes. Taxes transfer private spending to public spending and the purchasing power, total spending, money supply, and total demand remain the same.

(5) Stimulate manufacturing industries to compete with imports and assist industries that augment exports. Discourage imports.

(6) Legislate away rampant financial speculation that prevents money from circulating in the economy. Laws are available to accomplish that purpose.

(7) Encourage the population to think small. Big difference between borrowing money to purchase either a BMW iX M60 for $110,900 or a Toyota Corolla LE for $21,700. Big difference between purchasing a six-bedroom, five-bath home for $4 million or a four-bedroom, three-bath home for one million dollars.

(8) Re-distribute wealth. Getting money into the pockets of those who lack money lessens the reliance on debt to satisfy needs. Admittedly, some unbalance in wealth distribution is beneficial, allowing for the accumulation of funds for investment.

Conclusion

Excessive debt has risen from greed, from the desire to elevate prosperity by pumping the economy with as much free money as possible. Debt, even at much lower figures, has constantly anguished the public. The money supply, which is not entirely but mostly accumulated debt, regulates the economy and therefore, needs its own regulation — making sure it does not become too large to cause inflation or too small. to cause recession. Understanding the true meaning of debt leads to understanding how best to regulate debt.

Running into debt isn’t so bad. It’s running into creditors that hurts.

— Unknown

This content originally appeared on Dissident Voice and was authored by Dan Lieberman.

Response to Republicans attempting to attach dirty deal to must-pass debt ceiling legislation

Newswire Editor — Thu, 25 May 2023 19:22:57 +0000

"We write to you as Indigenous grandmothers, mothers, aunties, daughters, sisters, and relatives. We are of the Great Lakes, where our sacred food manoomin (wild rice) grows on water," the letter states. "We hold a responsibility to protect our water, our ecosystems, and our cultural lifeways for the next seven generations."

\u201c\ud83d\udce2 Today, Indigenous Women's Treaty Alliance, WECAN & 150+ groups are sending an urgent message to @POTUS @JoeBiden to respect Indigenous rights, protect the Great Lakes, and #ShutDownLine5 before it is too late!\n\nLearn more \ud83d\udc49https://t.co/ifb6MwCdfa\u201d
— WECAN, International (@WECAN, International) 1685020571

Manoomin "is fundamental to the physical, spiritual, and cultural survival of the Bad River Band of Lake Superior Chippewa," the letter's signers explained. "Our sovereignty and treaty-protected rights to hunt, fish, and gather food and medicine are all at risk. Diverse fish populations spawn in the Bad River Watershed. These fish are economically and culturally vital to the Bad River Band, Red Cliff Band of Lake Superior Chippewa, and the entire region."

Treaty rights and manoomin were at the center of Indigenous-led opposition to replacing Line 3, another Enbridge pipeline running from Canada through the Great Lakes region. Despite fierce resistance from Indigenous, climate, and environmental activists, the Biden administration declined to block Line 3's replacement, which went online in October 2021.

"An oil disaster would permanently devastate the exceptional ecology of the watershed, the wild rice, and fish populations," the new letter continued. "At the Bad River Reservation, recent flooding has eroded one riverbank to within 11 feet or less of Line 5's centerline, creating an immediate threat."

\u201cWe've filed final arguments with the Bay Mills Indian Community over the proposed Line 5 tunnel project. Enbridge wants to dig a pipeline tunnel beneath the Straits of Mackinac. This untested project could lead to an explosion & oil in the Great Lakes. https://t.co/ngY5H38Jkc\u201d
— Earthjustice (@Earthjustice) 1684782060

Last September, U.S. District Judge William Conley found that Enbridge was trespassing on lands belonging to the Bad River Band of Lake Superior Chippewa in northwestern Wisconsin, and profiting off Line 5 at the tribe's expense. However, Conley said earlier this month that since the tribe cannot prove that an "emergency" exists along the flooded riverbank, he is unlikely to order Enbridge to shut down the pipeline.

"This is a nearly 70-year-old pipeline running almost two decades past its engineered lifespan," the new letter stresses. "Erosion from receding waters or the next rainfall could cause a 'guillotine rupture'—a vertical break causing oil to gush from both sides, poisoning the Bad River watershed and Lake Superior."

As the Oil & Water Don't Mix coalition explained:

Nearly 23 million gallons of oil daily flow through two aging pipelines in the heart of the Great Lakes, just 1.5 miles west of the Mackinac Bridge. Constructed during the Eisenhower administration in 1953, the two 20-inch-in-diameter [pipelines]... lie exposed at the bottom of the Straits of Mackinac—a busy shipping channel...
Line 5 has spilled 33 times and at least 1.1 million gallons along its length since 1968.
The pipelines in the Straits of Mackinac cross one of the most ecologically sensitive areas in the world. The Great Lakes are home to 21% of the world's fresh surface water. The pristine straits area supports bountiful fisheries, provides drinking water to thousands of people, and anchors a thriving tourism industry with historic and beautiful Mackinac Island right in the center.

In November 2020, Michigan Gov. Gretchen Whitmer moved to revoke Line 5's easement, with a shutdown order coming the following May. However, Enbridge ignored Whitmer's order and kept running the pipeline.

\u201c#Line5 is only a few yards away from causing catastrophe in #Wisconsin Bad River and @LakeSuperior. #ShutDownLine5 for the ecosystem and all who rely on it! https://t.co/C0GErPs3xB\u201d
— Oil & Water Don't Mix (@Oil & Water Don't Mix) 1684358132

"Revoking the presidential permit and forcing Enbridge to cease Line 5's operations is consistent with your administration's directives for climate, nation-to-nation relations, and environmental justice. It is also consistent with the knowledge we share that the Great Lakes—one-fifth of the world's surface freshwater at a time of growing water scarcity—are invaluable treasures that must be protected, regardless of political pressures, special interests, and short-term profits," the new letter argues.

"Water is life," the signers added. "We are... calling on you to protect essential water, as well as wild rice, fisheries, and cultural survival."

Jannan J. Cornstalk, a citizen of Little Traverse Bay Bands of Odawa Indians and director of the Water is Life Festival, said in a statement Thursday that "our very lifeways and cultures hang in the balance as Line 5 continues to operate illegally in Indigenous territories and water."

"These are our lifeways—when that water is healthy enough that rice is growing—that not only benefits our communities, but that benefits everybody up and downstream," Cornstalk added. "Allowing Line 5 to continue to operate is cultural genocide, and the Biden administration must listen and shut down Line 5. That water is our relative, and we will do whatever it takes to protect our water, our sacred relative."

\u201cStanding Up for Water, Land and Climate: Meet 10 Indigenous Women Fighting the Line 5 Pipeline - Ms. Magazine https://t.co/kOKlE6w5JM\u201d
— Kelly Sheehan (@Kelly Sheehan) 1665619048

Aurora Conley of the Bad River Ojibwe and Anishinaabe Environmental Protection Alliance said: "I am calling on the Biden administration to shut down Line 5 immediately. Our territories and water are in imminent danger, and we do not want to see irreversible damage to our land, water, and wild rice."

"We do not want our lifeways destroyed," Conley added. "The Ojibwe people are here in Bad River because of the wild rice. A rupture from this oil spill will irreversibly harm the Great Lakes and wild rice beds. This is unacceptable. We will not stand for this. Shut down Line 5 now."

Carrie Chesnik of the Oneida Nation Wisconsin and founder of the Treaty Land Trust, asserted that "we have an opportunity here to shut down the Line 5 pipeline, and protect what we all hold dear."

"We all have the responsibility and agency to act in a good way, to care for the land and waters," she continued. "What our communities have known for a long time is that the water is hurting, Mother Earth is hurting, and pretty soon we won't have clean water for our kids, for future generations."

"As a Haudenosunee woman, an auntie, daughter, and sister, I have an inherent responsibility to the water and our children," Chesnik added. "Every single one of us has agency and a responsibility to take action, honor the treaties, and protect Mother Earth. It is the time to be brave and courageous."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Amid Debt Ceiling Debate: VA Cuts Passed by House Give Corporate Dems Political Cover

Steve Early - Suzanne Gordon — Thu, 25 May 2023 05:56:21 +0000

Photograph Source: KOMUnews – CC BY 2.0

When the new House majority passed its grab bag of government spending cuts last month, setting up an on-going game of chicken with the White House over any federal debt limit increase, they also directed their fire at essential services for military veterans, a constituency long courted by their own party. Included in the “Limit, Save, Grow Act of 2023,” was a proposed 22% reduction in funding for the Department of Veterans Affairs (VA).

Right-wing Republicans scrambled to provide political cover for themselves by insisting that “our budget cutting plan doesn’t harm veterans.” Instead, claimed Mike Bost, a former Marine from Illinois who now chairs the House Veterans Affairs Committee, his conservative colleagues were just trying to force a long-overdue discussion of whether VA funding is “actually helping veterans.”

Fortunately, a VA patient, elected to Congress last year, took the House floor to accuse the Republican majority of passing a “B.S. plan” that’s “an absolute betrayal and a disgrace.” As former Navy Officer Chris Deluzio (D-PA) noted, House Republicans are “threatening to blow up our economy and to push us into default unless we agree to cuts to the VA and veterans, and to so much else. There is not a single protection, not a single one for veterans in their bill. …Millions of veterans are going to be screwed by this plan. They won’t get the care they’ve earned, and they will have to wait longer for benefits.”

Deluzio’s fiery speech generated much media attention and set the tone for other Democrats, like Joe Biden and California Congressman Mark Takano, who have weighed in, with similar criticism of GOP hypocrisy. Democratic Party consultants and strategists are, no doubt, already sketching out the kind of attack adds—focusing on Republican support for VA benefit cuts—that will be aired to help the White House woo the “vet vote” away from right-wing candidates next year, who need to be defeated for myriad reasons.

A Timely Smokescreen

That forthcoming paid media blitz will have one downside. It will further obscure the fact that current threats to veterans’ programs are not just coming from the House majority or conservative Republicans in the Senate like Jerry Moran (R-Kan.) Biden himself is harming, rather than helping, veterans by undermining public provision of their care. Nevertheless, Moran, along with former Democrat Kyrsten Sinema, has just introduced a “Veterans Health Empowerment, Access, Leadership, and Transparency for our Heroes (HEALTH) ACT of 2023, that would force the administration to expand VA privatization even further.

As this political collaboration illustrates, the incremental defunding of direct care for nine million veterans has always been a bi-partisan project. From Obama to Trump and now Biden, three different presidential administrations have embraced the idea that turning VA patients into customers of the private healthcare industry is better public policy than strengthening the nation’s largest public healthcare system and best working model of socialized medicine.

VA outsourcing has greatly accelerated since a coalition of conservative Republicans and corporate Democrats passed the VA MISSION Act of 2018. As implemented by Donald Trump—and, now, Biden himself–this legislation diverts more than $30 billion a year from the agency’s direct care budget and showers that money on private medical practices and for-profit hospitals often less well prepared to treat veterans. This is an amount roughly equivalent to the VA funding shortfall that would result from House Speaker Kevin McCarthy’s biggest legislative achievement so far—the above-mentioned “Limit, Save, Grow Act of 2023.”

Due to the MISSION ACT, the VA has been partially converted into a Medicare-style payer of bills submitted by outside vendors, with many of the same paperwork hassles, lax quality controls, and opportunities for fraud and abuse. The powerful private interests which gained this lucrative new federal revenue stream are fighting to preserve and expand it. They include some of the same companies who are undermining traditional Medicare coverage by enlisting more than half of all seniors in Medicare Advantage plans, with active assistance from the Trump and Biden Administrations.

“Healthy Competition” Or Disadvantaging the VA?

As a House Veterans Affairs Committee hearing revealed in 2022, VA spending on private sector care increased by 116 percent in the years after passage of the MISSION Act, while funding for VA medical center staff grew by only 32 percent. Since Chris Deluzio joined the committee in January of this year, he has been a rare House Democrat willing to question where this disastrous trend is headed. At a recent hearing, attended by VA Secretary Denis McDonough, Deluzio said he was “proud to receive my healthcare at the VA,” noting that many research studies have confirmed its higher quality and cost-effectiveness relative to the private sector.

In an exchange with McDonough, Deluzio pointed out the continuing disparity between Biden Administration budget allocations for in-house vs. outsourced care for his fellow veterans. He then invited McDonough to “walk me through why we are seeing that growth on the one side and what is constraining the VA’s ability to do more within VA facilities?” Per usual, McDonough hid behind the disingenuous claim that his hands are tied by Congress.

In reality, since January, 2021, the VA Secretary has failed to replace administrative rules, promulgated under Trump, which implemented the MISSION Act in ways that required the VA to refer patients to millions of appointments outside its own system, where wait times have often been longer. In a report to Congress last September, McDonough made the alarming, but accurate, prediction that the “VA is rapidly approaching a point where one-half of all care” will be outsourced. In the same document, he acknowledged that in-house care is cheaper, faster, of higher quality, and preferred by veterans themselves. But McDonough insists that his agency and its 1.2 million private contractors are, nevertheless, engaged in a form of “healthy competition” that’s beneficial to patients, providers, and taxpayers.

Front-line care-givers strongly disagree with this assessment. Several thousand responded to a survey conducted last year by the American Federation of Government Employees (AFGE), the largest VA union. In a March, 2023 report called Disadvantaging the VA, they warned that their ability to care for veterans has been seriously compromised by Biden’s continuation of Trump Administration policies and personnel practices. Survey respondents reported service cut-backs, facility closing threats, lack of new hiring, and resulting staffing shortages, exacerbated by a disruptive shift of thousands of healthcare professionals from providing direct care to monitoring the problematic performance of private sector providers.

As the AFGE-backed report argues, “even within the statutory constraints of the MISSION Act, Secretary McDonough can promulgate new regulations that would prioritize medical necessity, quality, and timeliness of care, above all else,” as the basis for patient referrals outside the VA. As in the past (ie before Obama, Trump, and Biden), individual veterans could still be “sent outside the system if appropriate care was unavailable inside it.”

The Sinema-Moran Bomb

That course correction will never occur if Senator Sinema, a Veterans Affairs Committee member with 500,000 veterans among her constituents in Arizona, builds momentum for further privatization via her proposed Veterans HEALTH Act. Under the guise of expanding “veteran choice,” it would open the flood-gates for out-sourcing in new and even more destructive ways because it “would codify and expand the existing criteria for determining when a veteran is eligible for [non-VA] care…” Among the endorsers of this legislation are longtime proponents of VA privatization like the Koch Brothers-funded Concerned Veterans for America and the Trump-connected Independence Fund, plus the American Legion and the Veterans of Foreign Wars.

The conservative Legion and VFW both let their own members down five years ago when they pressured Congress to pass the MISSION Act, a surrender to corporate healthcare interests documented in our recent book, Our Veterans. Unlike these old-line organizations, smaller progressive advocacy groups like Common Defense and Veterans for Peace have challenged VA privatization and related bi-partisan assaults on social programs for all poor and working-class Americans. Two years ago, for example, Common Defense challenged Sinema’s ties to the healthcare and pharmaceutical industries, two major beneficiaries of VA outsourcing.

Five former members of the military, serving on her own veterans’ advisory council resigned in protest and their action was amplified in a seven-figure ad buy. Air Force veteran Sylvia Gonzalez Andersh was among those blasting the Senator for “answering to big donors rather than your own people.”

Common Defense members and other Arizona voters betrayed by Sinema are now rallying behind Congressman Ruben Gallego, a 43-year old Marine combat veteran, who is her likely Democratic opponent next year. The son of immigrants from Columbia and Mexico and a member of the Congressional Progressive Caucus, Gallego launched his campaign in January at an event with fellow veterans at a Legion post in Guadalupe, Arizona. In that announcement and other interviews, he linked his own struggles with post-traumatic stress disorder to his decision to enter politics and fight for expanded healthcare access through public programs like Medicare and the VA. “The rich and the powerful, they don’t need more advocates,” Gallego says. “It’s the people who are trying to decide between groceries and utilities who need a fighter for them.”

This content originally appeared on CounterPunch.org and was authored by Steve Early - Suzanne Gordon.

How "non-stop wars" grew the U.S. debt

Democracy Now! — Wed, 24 May 2023 19:30:02 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Jeffrey Sachs: Bipartisan Support of War, from Iraq to Ukraine, Is Helping Fuel U.S. Debt Crisis

Democracy Now! — Wed, 24 May 2023 14:12:32 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Jeffrey Sachs: Bipartisan Support of War, from Iraq to Ukraine, Is Helping Fuel U.S. Debt Crisis

Democracy Now! — Wed, 24 May 2023 14:12:32 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Jeffrey Sachs: Bipartisan Support of War, from Iraq to Ukraine, Is Helping Fuel U.S. Debt Crisis

Democracy Now! — Wed, 24 May 2023 12:15:03 +0000

The United States faces a default on its debt in early June if a deal on the debt ceiling is not reached between the Biden administration and Republicans in Congress before then. House Speaker Kevin McCarthy is pushing for sweeping budget cuts and new work requirements for recipients of government programs, including Social Security, Medicare, Medicaid and SNAP. Notably, however, neither Republicans nor Democrats are proposing cuts to one of the biggest drivers of the nation’s debt: the massive U.S. military budget. “We’ve got to get this military-industrial lobby under control, but it’s hard to do, because it’s a bipartisan affair,” says our guest, economist Jeffrey Sachs, whose recent article is headlined “America’s Wars and the US Debt Crisis.”

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

The Debt Burden and the Burden of Copyright and Patent Monopolies

Dean Baker — Wed, 24 May 2023 04:54:18 +0000

The debt whiners are out in full force these days as we face the risk of default at the start of next month. We hear them complain endlessly about the burden we are imposing on future generations. If we imagine for a moment that any of these people actually care about the future (anyone hear of global warming?), we should ask why none of them ever says anything about the burden of patent and copyright monopolies?

This may be too simple for great minds, but the granting of patent and copyright monopolies is a mechanism that the government uses to pay for innovation and creative work. It is an alternative to direct government spending. The government could directly pay companies for innovating and producing movies, writing books, and performing music, but instead it gives these companies monopolies that allow them to charge far more than the free market price for the duration of a patent or copyright.

In the case of prescription drugs, pharmaceutical companies will often charge ten or even 100 times the free market price of a drug for the period in which it holds a patent monopoly. This means that a drug that might sell for $10-$20 a prescription, instead sells for hundreds or thousands of dollars per prescription. There is a similar story with a wide range of other items, like medical equipment, seed, fertilizers, and pesticide. Patent monopolies make items expensive, that would otherwise be cheap.

The same is true of copyright. We could costlessly copy and transfer books, music, movies, software and many other types of creative work over the web, if it were not for the copyright monopolies granted by the government.

We can debate the merits of patents and copyrights as government mechanisms for financing innovation and creative work, but we can’t deny that they impose a large cost. Arguably, the higher prices we pay as a result of these monopolies comes to over $1 trillion a year, close to half of all after-tax corporate profits.

In the case of prescription drugs alone, patent monopolies and related protections will likely cost us over $400 billion this year. We will spend over $550 billion for drugs that would probably cost us less than $100 billion in a free market without government granted patent monopolies (National Income and Product Accounts, Table 2.4.5U, Line 121). By contrast, we are projected to spend $663 billion in interest payments on the debt. If we added in the higher costs due to patent and copyright monopolies on other items, it would almost certainly dwarf the interest payments on the debt.

It is bizarre that people who endlessly obsess about the burden of the debt literally never talk about the burdens created by government-granted patent and copyright monopolies. This failure to address this massive burden created by government policy might cause one to question the sincerity of their concern about the burden of the debt.

This first appeared on Dean Baker’s Beat the Press blog.

This content originally appeared on CounterPunch.org and was authored by Dean Baker.

Steering the Titanic into the Iceberg

Bill Scheuerman and Sid Plotkin — Wed, 24 May 2023 00:45:05 +0000

Patty Chayefsky’s film Network, an acid-laced spoof of capitalist media, reaches its climax when Chairman Arthur Jensen, leader of the fictional mega-corporation CAA, thunders his disapproval to the crazed but wildly popular anchorman, Howard Beale. Encouraging his viewers to protest CAA’s unpatriotic merger deal with Saudi Arabian capitalists, Jensen accuses Beal of having “meddled with the primal forces of nature.” Jensen proceeds to instruct his economically naïve employee that Beale is an old man who “thinks in terms of nations and peoples,” when in fact such things no longer exist. “There is only one holistic system of systems” proclaims Jensen, “the international system of currency which determines the totality of life on this planet.”

Of course, that currency is but the fuel that drives the real system that governs our planet, capitalism. Since the end of W.W.II the sanctity of that “currency” – it’s “security blanket” – has been the backing of US Treasury notes by US economic and military power. How then dare Joe Biden and Kevin McCarthy meddle with these “primal forces” by haggling over a debt extension bill? The security of US debt is no mere trifle. It is serious business. Capitalism, after all, is a system that thrives on fostering economic insecurity. It promotes an ever-present anxiety that most of us must live with every day – fear of having nothing to live on but income from jobs that can suddenly disappear. This is a precarity daily visited upon most of the planet’s population. But it is important to remember that capital visits insecurity upon itself too. Its repeated financial crises, rooted in the illusory values in which it trades, as we have shown in a previous essay, erupt suddenly, without warning. The awful abyss of economic catastrophe is omnipresent in capital’s ever-fluctuating values. In this nerve-rattling context, the apparent solidity of the US Treasury note – that is, the global impression of US power – is a factor of grievous importance. Yet now each day’s headlines describe harrowing negotiations between President Joe Biden and House Speaker Kevin McCarthy over legislation to extend a congressionally imposed debt-ceiling. If they fail to agree, the US will renege on required interest payments. The US will be in default and capital’s security blanket shredded.

The debt crisis is remarkable not only for being a self-inflicted wound. Debt extensions have been routine congressional moves for decades. They have only become hostage-taking situations in the last two decades of heightened partisan polarization. We’ll return to that point in a moment. But another aspect of the debt extension crisis deserves notice too – the totality and immediacy of its impact. For comparison, think of the nation’s recent electoral crises. Neither in the month-long uncertainty of the 2000 presidential election nor amidst the insanity of Trump’s refusal to yield in 2020 was Americans’ daily life affected in any material way. Political crisis did not translate into economic crisis. The debt extension crisis is very different. It threatens to unsettle capitalist expectations in ways that will almost certainly launch interest rates upward, undermine financial markets, de-stabilize investment, and fuel a major recession; or, given the current shakiness of the banking system, something worse, a repeat of the 2007-2008 financial collapse. No American, not even the billionaires, can be safely secured against the unpredictable knock-on effects of a US credit failure. Why then would politicians like Biden and McCarthy deliberately steer the Titanic into the iceberg?

The conventional answer is that the debt-crisis is simply a politically manufactured show. It’s an exercise in conspicuous gamesmanship designed to demonstrate to their respective “bases” how tough the party leaders can be on their bitter rivals. But it’s all really a charade. Each side knows a deal will be made in the nick of time. Pumping fear of failure in the media allows each side to justify the inevitable concessions that will assuredly anger segments of each party’s base.

But there is a less facile and more disturbing answer. And that is the reality of growing irrationality and failure in the US political system brought on by the paralyzing effects of partisan polarization. Arthur Jensen aside, there are still “nations,” and one matters a lot: the US. Polarization is a complex phenomenon. It reflects a host of US social and ideological cleavages. But as in 2011, when a similar debt-extension fight led to a stock market plunge estimated by the New York Times to cost $2.4 trillion in household wealth, failure to raise the debt limit before June 1 will damage every American family and millions more globally. In a real sense, the sustained abdication of governance by America’s vaunted two-party system is threatening the stability of capitalism in massively more immediate and dangerous ways than any Left movement ever has.

As the brilliant theorist Franz Neumann once observed, the capitalist state has always been as strong as it needed to be to assure capital’s viability. But the erratic behavior of mainstream politicians over the last two decades has significantly weakened the national government. As Business Week put it, “The US is undermining its status as an economic superpower” — and it is doing so willfully as its party leaders play “chicken” with capital’s US provided security blanket. No wonder that global central banks now hold less than 60% of their currency reserves in US dollars. Political irrationality in the hegemon — political leaders meddling with “the primal forces of nature” — is not supposed to be a significant variable in the calculations of capital. But today it is. Because this is a political crisis that will not leave society to itself. It will quickly translate itself into one whale of a planetary economic crisis.

This content originally appeared on Dissident Voice and was authored by Bill Scheuerman and Sid Plotkin.

WSJ Worries Debt Limit Fight Could Jeopardize Military Contractors’ Profits

Conor Smyth — Mon, 22 May 2023 22:04:28 +0000

Wall Street Journal (5/12/23): “The drama in Washington this spring reflects a deeper political impasse that risks crimping military-spending growth in future budget negotiations.”

The Wall Street Journal is very concerned about the effects of the debt limit fight…on military contractors. In an article (5/12/23) headlined “Debt-Ceiling Fight Weighs on Defense Industry,” the paper reported, “If the US defaults on its debt and is unable to pay all its bills this summer, the pain will fall squarely on the defense industry.”

A default could disrupt payments to military contractors, the Journal pointed out, and even a temporary suspension of the debt ceiling for several months “would raise the likelihood the Defense Department will have to make do with a temporary budget known as a continuing resolution.” This would likely “inflate the costs of military programs, delay the launch of new ones and prevent production increases.” In short, weapons producers might feel a momentary pinch after years of war profits.

But, given the unlikelihood of outright default, the more concerning scenario for the Journal has to do with budget talks. The piece noted that, as the largest item on the discretionary side of the federal budget—which excludes social programs like Social Security and Medicare, which are funded on an ongoing basis—military spending could soon find itself on the chopping block. And who’s taking the pain? Your friendly old drone supplier:

Concerns that military spending could be cut—or, at best delayed—in a debt-ceiling fight have weighed heavily on investor sentiment toward the biggest military contractors. Shares in Lockheed Martin are down this year more than 7%, with General Dynamics and Northrop Grumman off 15% and 20%, respectively.

Dear God, no! We must take action to address the “‘wall of worry’ among investors”!

All the valiant fighters for justice are concerned. We hear from a congressional representative who castigates Republicans who “play chicken with the full faith and credit of our country” and “jeopardize our national security.” Then an Air Force secretary is brought in to sound the alarm about the strategic harms of failing to fund the military.

Where are the voices opposed to increased military spending, who represent the majority of the US public rather than the minority of war profiteers? Probably off playing hackysack. The Journal evidently couldn’t reach them.

The cost of cuts

The Journal article featured an image of a weapons display for Lockheed Martin, whose stock is “down this year more than 7%.”

There’s a hint of hope, though! The piece notes:

While Republicans are seeking a spending freeze, many members have voiced support for a larger increase in the military budget, though it would come at the cost of cuts in other areas.

What these other areas would be remains unspecified. But let’s take a look. According to a recent analysis by the New York Times (5/8/23), if the military budget, along with veterans’ health and the border patrol, are spared from cuts, each remaining area of the discretionary budget would have to be cut in half to satisfy the Republican spending caps. That includes Health and Human Services, Housing and Urban Development, the Department of Education, the Department of Justice, the Department of Labor and the Environmental Protection Agency, among others.

It’s beyond absurd to exclude this context, and instead hand-wring about the area of the discretionary budget that appears least likely to face cuts—and, by any reasonable account, the most able to survive them.

Again, as the Washington Post (4/26/23) has reported, “Republicans have promised to focus…cuts on federal healthcare, education, science and labor programs, while sparing defense.”

An article by military analyst William Hartung from last month in Forbes (4/26/23) likewise opened:

House Speaker Kevin McCarthy (R-Calif.) announced the outlines of a possible Republican budget plan last week, and the big winner was the Pentagon [emphasis added]. Even as McCarthy called for a freeze in the federal discretionary budget at Fiscal Year 2022 levels as a condition for raising the debt ceiling—a move that he promised Freedom Caucus members when they grudgingly supported his election as speaker in January—he signaled that the Department of Defense would not be impacted.

This is a completely different story from the one that the Wall Street Journal has chosen to promote, and one that has far more basis in reality.

But let’s raise a glass to Raytheon. May they get through these tough times and thrive. If there’s one thing the world is lacking, it’s enough weapons contracts for war profiteers.

ACTION ALERT: You can send a message to the Wall Street Journal at wsjcontact@wsj.com (or via Twitter: @WSJ) Please remember that respectful communication is the most effective. Feel free to leave a copy of your communication in the comments thread.

The post WSJ Worries Debt Limit Fight Could Jeopardize Military Contractors’ Profits appeared first on FAIR.

This content originally appeared on FAIR and was authored by Conor Smyth.

The Justice Department Should Not Defend The Legal Incoherence That Is The Debt Ceiling

Newswire Editor — Mon, 22 May 2023 15:54:45 +0000

On Friday, May 19, the National Association of Government Employees filed an emergency motion in their lawsuit against President Joe Biden and Treasury Secretary Janet Yellen. NAGE urged the Massachusetts District Court to issue a preliminary injunction holding that the debt ceiling violates the separation of powers and Presentment Clause set forth in Articles I and II of the U.S. Constitution.

Revolving Door Project Executive Director Jeff Hauser said: “Attorney General Merrick Garland must refuse to defend the unconstitutional legal incoherence that is the debt ceiling. The Justice Department should file papers supporting the National Association of Government Employees’ request, and should do so as soon as possible. There is no justification for the Biden administration to dither when an active lawsuit demands immediate response.”

“NAGE’s argument is sound, and indeed, has been all but endorsed by the President himself. Garland has no reason to defend the nonsense which is the debt ceiling, besides a vague sense of formality and tradition driven by elite political etiquette. The cost of prioritizing tradition for tradition's sake would be irreparable harm to the U.S. and global economies, caused by a first-ever U.S. default as soon as June 1—or else complete capitulation to the ultra-MAGA faction of the House Republican caucus that marionettes Kevin McCarthy.”

“While President Biden may be willing to keep channels open until the very last minute with nihilistic, bad-faith Republican lawmakers, the Justice Department’s obligation is to the Constitution, which is unequivocal: the president cannot pick and choose what congressionally appropriated obligations to meet, and the debt of the United States shall not be questioned. Garland may be constitutionally reluctant to seek the spotlight, but this crisis threatens the stability of the nation, and indeed, the global economy. He should not prioritize his own sense of formality over the language of the Constitution he swore to uphold.”

The Justice Department must file an answer to NAGE’s lawsuit by June 6. Treasury Secretary Janet Yellen has estimated that the nation may breach the debt ceiling on June 1.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

The Debt Limit Is Just One of America’s Six Worst Traditions

Jon Schwarz — Sat, 20 May 2023 10:00:00 +0000

The dome of the U.S. Capitol is reflected, on Jan. 6, 2022 in Washington, D.C.

Photo: Anna Moneymaker/Getty Image

Imagine that your family has a generations-long tradition that requires that for every 10th dinner, you search your neighbors’ trash cans like raccoons and eat whatever garbage you find.

Usually none of you asks why you do this. It’s just what you learned from your parents. But occasionally someone does some family research and finds out it originated in the early 1800s, when your great-great-great-great-great-great grandfather explained in his diary that he was creating this custom “so every feventh child will expire from famonella.” And you have to admit this still works, since every now and then one of your children dies from food-borne illness. Yet you keep on eating the garbage.

This is what American politics is like, except we have dozens of these aged traditions whose purpose is actively malevolent or simply serves no purpose at all. They nonetheless cling like barnacles to our life in the 21st century. We just can’t get our act together to get rid of them.

The debt ceiling plaguing Washington politics — and, potentially, poisoning the rest of us — is just one of at least six of these abominable ideas.

The Debt Limit

Believe it or not, the debt ceiling is an improvement on what the United States used to do. Congress once required the executive branch to get its permission to do any borrowing whatsoever and in fact, often specified all the details — i.e., how long the bonds would take to mature, what interest rate it would pay, etc.

This was a terrible way to run a country and to its credit Congress over the decades after World War I changed this awful system into another, slightly less awful one. Now Congress just limits the total borrowing by the government and lets the Treasury Department take care of the details.

But it still makes no sense. Congress has already ordered the executive branch to spend money on certain activities and also levy certain taxes. It’s contradictory and silly for Congress to also say that the government can only borrow a certain amount of money to make up whatever difference between the spending and taxes it itself has required.

It’s also dangerous. No one knows exactly what will happen if the debt limit is breached, and the Biden administration then fails to use the various options it has to keep paying the bills. But it definitely would be extremely unpleasant.

In the past, this danger has never manifested in reality, for good reason. A debt limit imbroglio would immediately cause the most pain to the financial and corporate interests traditionally represented by the Republican Party. As some people have observed, the GOP’s refusal to raise the debt limit unconditionally is like a crazed man pointing a gun at his head and saying, “Give me what I want, or I’ll shoot!”

But there are two problems with this metaphor. First, a strong faction of the Republican Party appears to have convinced itself that shooting itself in the head wouldn’t hurt that much. Second, the rest of the country is the GOP’s metaphorical conjoined twin. If that faction decides to commit suicide, it’s going to cause severe problems for us too.

Pretty much the only other country that has created this pointless problem for itself is Denmark. I lived there briefly when I was 6 years old, and while they broadcast American shows on TV, they didn’t have ads to accompany them and just filled up the extra time with footage of goldfish swimming around in a bowl. Keeping the debt limit will inevitably lead us down the path to this kind of horrifying socialism.

The Electoral College

The U.S. right constantly proclaims that the Electoral College is a sign of the enduring wisdom of our founders, who created it to give smaller rural states a voice in the choice of the president.

This means that they must also believe the Founding Fathers were dolts with absolutely no idea what they were doing. Of the first five presidents, four of them were from Virginia, and all four served two terms. Meanwhile, the only exception, John Adams from Massachusetts, was in office for just four years. This means that during the first 36 years of presidents, the chief executive was a Virginian for 32 of them. And during this period, Virginia was either America’s biggest or second-biggest state.

However, America’s founders were not in fact incredibly incompetent. The actual rationale for the Electoral College was explained by James Madison in 1787 at the Constitutional Convention. Madison said he believed the best way to choose a president would be by popular vote, which “would be as likely as any that could be devised to produce an Executive Magistrate of distinguished Character.”

But “there was one difficulty however of a serious nature attending an immediate choice by the people.” This was, Madison said, the fact that Southern states generally had stricter limits on which men could vote, and more of their population was enslaved. This meant that the South “could have no influence in [a popular] election” and so would never support a Constitution that used this method. Hence the Electoral College kludge was necessary to get the U.S. off the ground.

The Senate

Madison, however, was by no means all-in on democracy. As he also said at the Constitutional Convention, he believed that for the new country to endure, part of the government had to represent the “invaluable interests” of large, rich landowners and make sure the rabble couldn’t vote to take their wealth away. Part of the structure they were creating in Philadelphia, Madison believed, “ought to be so constituted as to protect the minority of the opulent against the majority. The senate, therefore, ought to be this body.”

The Constitution originally ordained that senators would be elected by state legislatures. This was altered by the 17th Amendment, and senators have been popularly elected since 1913. Nonetheless, Madison’s scheme continues to work surprisingly well, with the Senate still being the place where the political hopes of Americans go to die.

One solution here would be for the California legislature to wait until Democrats control the federal House and Senate. Then California could separate itself into 68 heavily gerrymandered blue states with Wyoming-sized populations. Congress could admit all the new states and their 136 Democratic senators into the union — and then easily block any red states from trying something similar. This would be totally constitutional and be worth it just to get the U.S. right to stop talking about the wisdom of the founders.

The Filibuster

The Senate is inherently against popular democracy. But those running it have long believed that it isn’t anti-democracy enough and so have supported the supermajority requirements of the filibuster. Between 1917 and 1994, 30 bills were stopped from passage thanks to the filibuster. Half of these were civil rights measures, including anti-lynching measures, the Civil Rights Act of 1957, and attempts to outlaw poll taxes. This is why in 2020, Barack Obama called the filibuster a “Jim Crow relic.” But neither he nor any prominent Democrats has put much energy into getting rid of it.

“First Past the Post” Voting

The way voting generally works in the U.S. is that whoever gets the most votes wins. This is simple, easy to understand, and bad. It naturally creates a two-party duopoly, since each party can accurately harangue any miscreants within its ranks tempted to vote for a third party that they will simply act as spoilers — i.e., if they vote for their first-choice candidate, they’re merely making it more likely that their last-choice candidate will win.

There are several excellent solutions to this problem, including instant-runoff voting and — for House elections on a state and federal level — multimember districts. The problem here is that both the Democratic and Republican parties love the current setup and are not interested in creating more competition for themselves just because it would be good for America.

Most political commentators don’t have the courage to tell you this, but I do: All of our current suffering is the fault of the Florida Panhandle.

The Florida Panhandle

Geographically and culturally, the Florida Panhandle makes no sense. On any sensible map, it would belong to Alabama. But it’s part of Florida thanks to ancient colonial struggles between the United Kingdom, Spain, and France — struggles that happened before there even was a United States.

If Florida didn’t have its conservative panhandle, Al Gore would have easily beaten George W. Bush in Florida in the 2000 election and become president. The Bush administration resolutely ignored all the warnings from its intelligence agencies about the coming 9/11 attacks, but Gore almost certainly would have taken the threat seriously enough to disrupt the terrorist plot. No 9/11, no Iraq War. And no Bush presidency, no majority on the Supreme Court for Citizens United and the ensuing catastrophic surge of cash into the U.S. political system. Moreover, the 2007-2008 economic disaster would probably not have occurred or would have been significantly less severe.

Instead the Florida Panhandle gave us our current country, which is constantly going haywire. It also gave us Errol Morris’s documentary “Vernon, Florida,” originally titled “Nub City,” about a small town where many residents have amputated their own limbs in order to collect dismemberment insurance.

So that’s thaT: six ghastly political ideas that do nothing but torment us. We’re currently experiencing this with the debt ceiling and may soon feel it to a far greater degree. Yet we don’t have it in us to get rid of any of them. It’s enough to make you think the most powerful force in human society isn’t the normal candidates like money or sex, but inertia.

Join The Conversation

This content originally appeared on The Intercept and was authored by Jon Schwarz.

NYT Fearmongers Debt as GOP Holds Economy Hostage

Conor Smyth — Wed, 17 May 2023 20:49:28 +0000

In a recent op-ed for the New York Times (3/10/23), the economist and longtime Times columnist Paul Krugman gave readers “a pro tip”:

Anyone who makes alarmist claims about debt by talking about trillions of dollars as opposed to, say, percentages of gross domestic product, is engaged in scare tactics, not serious discussion.

It would be great if his own paper would listen to him.

Republican hostage-taking

Things you don’t need to know about the debt, according to the New York Times (5/2/23): how big it is compared to the US economy, or to other nations’ debt burdens.

Instead, the Times has been engaged in outright fearmongering over the size of the US federal debt over the past several months. This at the same time that the Republican Party has taken the economy hostage, in order to exact wildly unpopular cuts to government programs.

In a rerun of Obama-era fights, Republicans are using their majority in the House to refuse to raise the debt ceiling. As the Times (5/2/23) has acknowledged:

Lifting the debt limit does not actually authorize any new spending—in fact, it simply allows the United States to spend money on programs that have already been authorized by Congress.

Failing to raise the ceiling risks default, which could potentially bring economic disaster, and also appears to directly violate the 14th Amendment of the Constitution, which states, “The validity of the public debt of the United States…shall not be questioned.”

In the midst of this political battle, with one party using unconstitutional methods and the threat of economic catastrophe to try to kick people off social programs, a responsible paper of record might want to avoid mindlessly promoting a key premise of the economic terrorists: that government debt is a serious problem that we should be very concerned about.

That’s a lot of money, huh?

For the New York Times (3/9/23), Joe Biden is trying to “recapture the more centrist identity that long defined him” by being “increasingly focused on deficit reduction.”

But who said the Times was responsible? In April, over a third of the articles that the paper ran as part of its coverage of the political battle over the debt limit featured the scary raw number for the US federal debt: $31 trillion. Only one included reference to debt as a percentage of GDP. The story was similar in March, when five of 14 articles referenced the raw number or projections for that number, and only two articles mentioned the debt-to-GDP figure, or projections for that figure.

Some pieces that did not include the $31 trillion number nevertheless repeatedly alluded to the addition of trillions to the debt. In one case, the Times (3/9/23) described Biden as

cast[ing] himself as a new-generation Franklin D. Roosevelt pressing for a modern-day New Deal, with large-scale spending on climate change, social welfare programs and student debt relief that will add trillions of dollars to the national debt in years to come.

In another (3/31/23), it referenced

the tax cuts signed by President Donald J. Trump in 2017, which his administration said would pay for themselves, but which independent evidence showed added trillions to the national debt.

No context was provided for what “trillions” more in debt actually means. Basically all the reader gets is, That’s a lot of money, huh?–plus the insinuation, Probably not great, don’t you think? This approach may balance both sides—Hey, they’re both blowing a hole in the budget!—but it’s far from Krugman’s benchmark for responsible reporting.

‘No good, hard governance anymore’

The New York Times (4/18/23) is nostalgic for the days when Republicans asserted that “benefit cuts to Social Security and Medicare [are] absolutely vital to the nation’s future.”

When additional context was added, it was not always helpful for anything other than inducing debt-phobia. One particularly egregious article (4/18/23) accompanied its mention of the $31 trillion figure with a warning of “a herd of elephants coming over the horizon,” with this herd represented in part by rising interest payments on the national debt. It noted that in the first half of the current fiscal year, “interest payments rose from $219 billion to $308 billion, a 41% leap that put debt servicing nearly on par with military spending.” Scary! (Maybe a little less scary when you learn that “nearly on par” means two-thirds as large as next year’s proposed military budget.)

The piece, by Jonathan Weisman, was littered with debt-scolding, with the subhead reading, “After a decade of rising deficits and soaring debt, the top White House contenders, Donald Trump and Ron DeSantis, show little interest in battling over the nation’s finances.” It quoted fiscal hawks, who variously lamented that “there is no good, hard governance anymore,” and that “it’s clearly good politics to recast yourself as the defender of Social Security and Medicare. It’s just bad for the country.”

Curiously, no policy expert opposed to gutting the federal budget made an appearance.

Even in the one April article (4/21/23) that discussed debt as a percentage of GDP, the framing was designed to stoke fear:

Even if the entire estimated savings from the [Republican spending] plan came to pass, it would still leave the nation a decade from now with total debt that was larger than the annual output of the economy—a level that [House Speaker Kevin] McCarthy and other Republicans have frequently labeled a crisis.

No debt crisis in sight

Paul Krugman (New York Times, 5/4/23): “Creating a global depression because we’re afraid of looking silly would be utterly irresponsible.”

Whether that level of debt is actually a crisis was not up for discussion. Maybe the Times thinks that’s besides the point. But without such a discussion, readers can easily leave with the assumption that government debt is a serious problem, and with the notion that something drastic must be done, and soon.

As Krugman (5/4/23) has put it, though, “What’s odd about this potential crisis is that it has nothing to do with excessive debt.” In the same op-ed (3/10/23) cited above, he elaborated:

If we do look at debt as a percentage of GDP, it’s indeed high, but not outside ranges that other countries have managed without crisis…. Britain spent large parts of both the 19th and 20th centuries with debt well above current US levels, but without experiencing a severe debt crisis.

Likewise, if we look at American public debt over time, we see that it is still below the record levels it reached in the 1940s. It’s projected to bump past the domestic record by 2028, but there’s little reason to think that will lead to a crisis, besides one ginned up by the right for obviously political reasons. Writing in February (Project Syndicate, 2/9/23) of the projected rise in debt levels over the next decade, Barry Eichengreen, a Berkeley economist who recently co-authored the book In Defense of Public Debt, observed:

This increase is by no means catastrophic…. Cutting essential public programs now to address a debt problem that won’t even begin to materialize for a decade would be shooting ourselves in the foot.

In any case, the debt-to-GDP ratio could easily be stabilized or reduced by raising taxes and controlling healthcare costs, as Krugman recommends.

The federal debt is set for a gradual rise over the next decade, not exactly the uncontrolled explosion that some are warning of.

‘Ticking time bomb’?

The New York Times (5/8/23) says a solution to the debt ceiling crisis will “most likely include the partial reversal of legislative victories won during Mr. Biden’s first two years,” because asserting that the debt ceiling is unconstitutional risks “financial volatility.”

The New York Times editorial board, interestingly, has taken a different approach to describing the federal debt than the paper’s reporters, writing in a recent editorial (5/8/23), “The federal debt totals about $24.6 trillion, equal to roughly 94% of the nation’s gross domestic product, a high level by historical standards.”

It’s notable that the actual number for debt as a percentage of GDP showed up here, given that it didn’t even show up in the one April article featured in the Times’ database of debt limit coverage that referenced the measure. But perhaps more significant is that the Times chopped down the raw figure for the federal debt from the one that has shown up repeatedly in the paper’s news articles. One article (4/21/23) last month, for instance, had opened:

Speaker Kevin McCarthy of California has repeatedly said that he and his fellow House Republicans are refusing to raise the nation’s borrowing limit, and risking economic catastrophe, to force a reckoning on America’s $31 trillion national debt.

“Without exaggeration, America’s debt is a ticking time bomb that will detonate unless we take serious, responsible action,” he said this week.

Now we hear from the Times editorial board that the debt is not $31 trillion, but $24.6 trillion. It turns out that both numbers are correct—the difference is that the first is the one used to determine the legal debt limit, while the second number excludes debt that the government owes to itself, which gives a better sense of the actual debt burden. It would be reasonable to cite either one, or both, in a discussion of the debt limit. Even-handed coverage might cite both numbers equally. The approach of the Times news section, however, is to constantly elevate the larger number, the one that lends itself to more effective fearmongering.

The point is not that people would get such a better sense of the scale of the debt if they read $24.6 trillion rather than $31 trillion. It’s that there’s clearly a more and a less responsible way of presenting the size of the debt. The way the Times editorial presents it doesn’t give all the context you would need if you wanted to inform your readership of what’s going on with the debt, and whether it’s sustainable. But it’s worlds apart from an article that opens with a massive number and no context, followed by an unchallenged description of the debt as “a ticking time bomb.”

‘Ruling out cuts’ to safety net

The New York Times (4/21/23) chides the Republican Party for its “lowering of ambitions” in not calling for even deeper cuts in spending.

Unfortunately, the Times’ news section has often preferred to throw out big numbers without context rather than giving a fuller picture to its readers. Times reporter Jim Tankersley has been a prime offender here. In the same April piece (4/21/23) that opened with the $31 trillion figure, Tankersley followed up McCarthy’s description of the debt as a “ticking time bomb” with the line, “But the bill Mr. McCarthy introduced on Wednesday would only modestly change the nation’s debt trajectory.” Further down, he continued that the spending cuts proposed by McCarthy

are a far cry from Republicans’ promises, after they won control of the House in November, to balance the budget in 10 years. That lowering of ambitions is partly the product of Republican leaders’ ruling out any cuts to the fast-rising costs of Social Security or Medicare, bowing to an onslaught of political attacks from Mr. Biden.

Notice the framing here: The costs of Social Security and Medicare are “fast-rising.” And a political opponent’s attacks are preventing Republicans from going after those costs.

Unmentioned? The costs of Social Security and Medicare are not unsustainable. According to Congressional Budget Office data from February, Social Security is fairly paltry in comparison to similar programs in many European countries—5.1% of GDP in 2023, versus 14.8% of GDP in spending on public pensions in France in 2019. The projected level of spending for Social Security by 2050? 6.4% of GDP. Gasp!

Medicare costs, meanwhile, are projected to rise from 3.1% to 5.4% of GDP over the same period. One way of viewing this: The combined cost of the two programs in 2050 doesn’t even match the cost of the French government’s public pension system in 2019 (relative to each country’s economic output).

Moreover, Biden’s defense of these programs is certainly tying Republicans’ hands, but so is public opinion. Medicare and Social Security are, and have historically been, incredibly popular (FAIR.org, 4/12/23). There’s a reason why both programs are known as third rails in American politics. Why not acknowledge that this is not a simple matter of red versus blue, but the US public versus those who would take away their retirement benefits?

‘Fiscal responsibility’

The New York Times (2/15/23) reported that “some were dismayed” that Biden did not heed the “sober warnings from the experts” by calling for cuts to Social Security and Medicare.

Perhaps because Tankersley is quite fond of peddling concern over the costs of these programs. An article of his published in February (2/15/23), towards the start of the current round of debt ceiling drama, for example, bore the headline, “As Lawmakers Spar Over Social Security, Its Costs Are Rising Fast.” Its second paragraph read:

Mr. Biden has effectively steered a debate about fiscal responsibility away from two cherished safety-net programs for seniors [Social Security and Medicare], just as those plans are poised for a decade of rapid spending growth.

Noting that Republicans have agreed not to touch these programs during negotiations over the debt limit, Tankersley observed that the “debate will exclude the primary spending-side drivers of future federal debt and deficits.” He went on to present some dizzying statistics meant to impress the size of the spending on readers without actually informing them of much of anything:

On Wednesday, the budget office predicted Social Security spending would grow by two-thirds over the coming decade. That’s more than double the expected growth rate for spending on the military and on domestic programs like education and environmental protection….

Medicare is a smaller program but poised to grow even faster, at three times the rate of military and other discretionary spending over the next decade, according to the May forecasts.

The cost of these programs as a percentage of GDP was nowhere to be found.

Tankersley then pointed out that Obama agreed with the fiscal hawks in his 2011 State of the Union Address when he called for a bipartisan solution to Social Security (read: cuts to Social Security). The piece continued:

Some were dismayed that Mr. Biden—and Republican lawmakers—did not follow a similar path at his own State of the Union this month. “The sober warnings from the experts is quite a contrast to the gleeful cheers from bipartisan policymakers at the State of the Union for doing nothing,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which advocates federal debt reduction.

Was a progressive expert brought in to balance the budget hawk? Of course not. That would give the views of the majority of the public far too much representation.

A new path forward

A New York Times graphic (5/8/23) helpfully shows how much of the discretionary budget would have to be cut under the Republican plan.

Articles in the New York Times’ news section haven’t uniformly conformed to debt-scolding. A recent article (5/8/23) outlined in detail the severe and unpopular cuts that the Republican spending proposal would require, and even included a graph showing recent trends and future projections for public debt as a percentage of GDP. An earlier piece (3/6/23) did something similar, and even provided a longer time frame for the debt-to-GDP graph, though little additional context was included.

What would be great to see from the Times going forward, as the US approaches the X-date when the government can no longer delay dealing with the debt limit and may in fact default, would be far more serious reporting that provides readers with the context necessary to evaluate debt and spending figures. And to be clear, this would involve more than just giving debt as a percentage of GDP; that’s not some magical number that tells you all you need to know, though mentioning it is more useful than saying $31 trillion over and over.

The paper’s history doesn’t offer much hope, but it’s encouraging that its editorial board, in sharp contrast to the board of close rival the Washington Post (FAIR.org, 2/24/23), has refrained from an all-out assault on social spending in recent months, as is the fact that one of the paper’s core columnists has remained clear-eyed on this issue. At the end of the day, Times reporters probably don’t want to be remembered for having enabled Republican hostage-taking, so maybe they should start writing like it.

ACTION ALERT: You can send a message to the New York Times at letters@nytimes.com (Twitter: @NYTimes). Please remember that respectful communication is the most effective. Feel free to leave a copy of your communication in the comments thread.

The post NYT Fearmongers Debt as GOP Holds Economy Hostage appeared first on FAIR.

This content originally appeared on FAIR and was authored by Conor Smyth.

Smart Ass Cripple: The Medicaid Work Requirement Horrors in the Debt Ceiling Deal

Mike Ervin — Wed, 17 May 2023 15:12:24 +0000

Republicans want to resurrect a Trump-era Medicaid measure that cut coverage for thousands of people.

This content originally appeared on The Progressive — A voice for peace, social justice, and the common good and was authored by Mike Ervin.

Who Ya Gonna Get to Hammer Nails and Wire up your Internet?

Paul Haeder — Wed, 17 May 2023 13:40:50 +0000

I know, I know, every time I get onto the Zoom Doom thing with the Chronicle for Higher Education, the entire experience is dirty beyong dirty. Today, it was more bizarro people yammering about “talent search challenges for getting people to go into higher education.”

Three women went into their experiences recruiting and screening potential college hire-ons. The language coming from these people belies the vapidity of our times. Now, well, one woman said, “we have 30 people applying for one job, compared to a few years ago when 300 applied for one job.” I almost puked.

This entire “thing” was all about HR-speak, and the shallowness of their conversation and the Dystopian proposals they lay out are just signs of the shifting baseline disorder times.

They are happy about hybrid work, about kicking down the useless 9 to 5 timeframe for work, and are happy that work can be done at home, 8 am to 8 pm, or later, if need be.

Then, two males came on, and they are the Linked-In creeps, which sponsors these talks. Microsoft, now, owns Linked-In. Linked-In does staffing/hiring now, and alas, many of the universities and colleges are using hiring and staffing services like Linked-In to do the real work of hiring and screening.

One of the fops stated that colleges are way behind the times, technologically, and that getting courses and admin work on line, in hyper-remote ways, is the only way forward. You know, these monsters who believe the bricks and mortar campuses are just dinosaurs.

Yikes, here it is: The Talent Crisis in Higher Education

This is just one of a million types of superficial and back ass wards thinking, or unthinking comments:

Online schools are mushrooming everywhere these days, and it’s not that hard anymore to tell the genuine ones from the diploma mills. A number of online institutions have established strong brand names and reputations for themselves, and even with traditional brick and mortar big guns like MIT jumping on the online education bandwagon, it stands to reason that place-based higher education is losing the importance and prestige it once held.

The death of brick and mortar colleges will likely be long, slow, and painful, but here are ten reasons why we should consider speeding up the process and abolishing them right now:They’re way too expensive for most people.

Yeah, so throw the baby out with the bathwater:

[The German phrase] had its first written occurrence in Thomas Murner’s (1475-1537) versified satirical book Narrenbeschwörung (1512), which contains as its eighty-first short chapter entitled “Das kindt mit dem bad vß schitten” (To throw the baby out with the bath water) a treatise on fools who by trying to rid themselves of a bad thing succeed in destroying whatever good there was as well. In seventy-six rhymed lines the proverbial phrase is repeated three times as a folkloric leitmotif, and there is also the first illustration of the expression as a woodcut depicting quite literally a woman who is pouring her baby out with the bath water […].

Instead of stepping back, reforming, retrofitting, stopping the lunacy of capitalism eating everything, including those babies in the bathwater, we have these creeps, lowly ones, middlings, who have bought into the Fortune Magazine lies of — “we have to just accelerate AI-AR-VR-CGI-Twinning-Robotics since the cat’s out of the bag, and we will just have to deal witht he negative consquences of a Dystopian, anti-human, anti-community world.”

Well, they don’t quite say it that way, but you read my last Substack, so enjoy these liars: You Never Can Pick Your Poison in Capitalism

This is how “THEY” think:

Or, they go to France and talk about their Power with Twitter: Fucking double dose of creepy.

Ahh, it’s just given, like gravity, or the H and O times two in Water. The billionaires are stupid but gods,

Ahh, so this is how the disrupters work, and that Chronicle Zoom Doom just shows how co-opted these HR and Hiring Creeps and the Admin Class are. Well, let’s see. Hmm, face to face, bricks and mortar and using typewriters, no phones and tablets and laptops allowed, I can teach a shit load of great things, outside and in the community with paper and pencil:

This is a foregone conclusion, no? Death of education, death of ethics, death of philosophy, death of families, death of agency, death of freedoms and rights, but we can lie, steal, plagiarize and pollute.

No need to read between the lines with this student’s arrogance and self-importance. He’s lying too, since he pushes the supposed step by step process of ChatGPT (fucking another polluted term in our language) helping him with a paper. Ahh, it is plagiarizing, for sure, and, bam, the arrogance. Not that college teachers do not need huge kicks in the butt, and the liberal arts, well, major lashes to the butt. But that’s not the point here:

Look at any student academic-integrity policy, and you’ll find the same message: Submit work that reflects your own thinking or face discipline. A year ago, this was just about the most common-sense rule on Earth. Today, it’s laughably naïve.

There’s a remarkable disconnect between how professors and administrators think students use generative AI on written work and how we actually use it. Many assume that if an essay is written with the help of ChatGPT, there will be some sort of evidence — it will have a distinctive “voice,” it won’t make very complex arguments, or it will be written in a way that AI-detection programs will pick up on. Those are dangerous misconceptions. In reality, it’s very easy to use AI to do the lion’s share of the thinking while still submitting work that looks like your own. Once that becomes clear, it follows that massive structural change will be needed if our colleges are going to keep training students to think critically.

The common fear among teachers is that AI is actually writing our essays for us, but that isn’t what happens. You can hand ChatGPT a prompt and ask it for a finished product, but you’ll probably get an essay with a very general claim, middle-school-level sentence structure, and half as many words as you wanted. The more effective, and increasingly popular, strategy is to have the AI walk you through the writing process step by step. You tell the algorithm what your topic is and ask for a central claim, then have it give you an outline to argue this claim. Depending on the topic, you might even be able to have it write each paragraph the outline calls for, one by one, then rewrite them yourself to make them flow better.

As an example, I told ChatGPT, “I have to write a 6-page close reading of the Iliad. Give me some options for very specific thesis statements.” (Just about every first-year student at my university has to write a paper resembling this one.) Here is one of its suggestions: “The gods in the Iliad are not just capricious beings who interfere in human affairs for their own amusement but also mirror the moral dilemmas and conflicts that the mortals face.” It also listed nine other ideas, any one of which I would have felt comfortable arguing. Already, a major chunk of the thinking had been done for me. As any former student knows, one of the main challenges of writing an essay is just thinking through the subject matter and coming up with a strong, debatable claim. With one snap of the fingers and almost zero brain activity, I suddenly had one. (source)

Ahh, now, Homer, the gods, the entire poem, now how do teachers teach it and shepherd thinkers across all disciplines to look at the work? Oral fucking poems, man, and so, the hard work is getting bricks and mortar colleges to get under the skin of this concept: Homer’s Iliad chronicles the ten year siege of Troy, and Odyssey chronicles one man’s ten year attempt to return home after Troy.

Ahh, war, war mongers, battles, existential battles, what does heroism and tragedy mean in today’s world? What do we miss as modern readers of an oral poem? What sort of elements of modern history tie into Homer’s works? You can’t return home, or can you, and what is home in an atomized, broken, capitalistic, denuding, neutering/spaying society? You get the picture.

So, I was outside with the cable guy. Man in his thirties, and we talked about fiber optics, and I watched him install fiber (thin as a human hair) and splicing it to the current five line telephone line so we can have faster modems and more junk and stuff coming down the pipeline.

He looks like a rugged Val Kilmer, and he is from Albuquerque, having moved out here when he was 20 after his father died of cancer and Hep C, after getting a blood transfusion after a saw accident. “They didn’t screen blood back then, so he got Hep C, and liver damage and liver cancer.”

Dead at 58, and so the mom and young son moved to Yachats, of all places.

The work he does is with both copper and fiber optics. I watched the machine, the splicing, the ins and outs of the process. The machine, splicer, is computerized, fragile to the rain out here. We were talking about what happened fiber optic wise after Puerto Rico’s hurricane that the systems — phone, communication — were devastated and my Val Kilmer said spicers — fiber optics splicers, people — were getting $80 a splice, not an hour. Some of the independent contractors were splicing lines at 300 a day. Imagine that bill, imagine that.

“Look at me, with no college education. I like this job, and, the rain is worth it, and while I miss New Mexico’s food, I am happy with the scenery here.”

Alas, I asked about a son or daughter, and he stated he and his wife have a son, five, diagnosed with Autism, and while he’s getting more verbal in the schema of things and he’s sort of getting a few more social skills/cues, there is a daily trial and tribulation tied to getting the boy into some form to meet the fucker up neural normal world.

[Photos: Puerto Rico before the stupid USA’s Trump brought paper towels.]

In the midst of an active hurricane season, Puerto Rico has suffered yet again. Thanks to Fiona, which crashed into the territory a few days before Ian hit Florida, we were without critical services like electricity, water, hospitals and fuel supplies. Fiona’s destruction was a sharp reminder of the life-threatening effects of Hurricane Maria, which caused $90 billion in damage five years ago. More than 30 people died because of Fiona and as we recover from yet another destructive hurricane, our leaders have ignored the planning and preparedness lessons made clear by Maria.

After Maria, the U.S. federal and Puerto Rico local governments promised an increased level of resilience by strengthening existing infrastructures following the usual central-planning approach and solutions. But Hurricane Fiona has been yet another reminder that our strategy to build resilience in Puerto Rico is wrong, and that the leaders who espouse it are making decisions based on a philosophy that centers on the wrong things. They are rebuilding 20th-century electric grids, and water, sanitation and other infrastructure as they were before Maria hit; this will not work. Private companies cannot be relied on to provide resilient infrastructures. Rethinking how we approach planning and preparedness will make the archipelago a more viable place that benefits Puerto Rican people without straining budgets. (source)

Ahh, the privateers, the merchants of death, the merchants of debt, private companies, and then, what, $80 for each fiber optic splice? This is fucking lunacy.

And, so, colleges are shooting themselves in the foot, hand, neck, head, brain, and this country of unlimited and blank check to the UkroNaziLandians and now for more and more $$$ to the merchants of death CEOs and offensive weapons and gear and etc. and more satellite and softare and computing war gear, we are not getting the homes fixed or built.

Ahh, these pencil necks, these Linked-In do nothings, rad digital and on-line gods, know nothing about the world:

Despite the slowing of immigration inflow to the U.S., the share of foreign-born workers in the US construction labor force has been rising since the housing recovery began. Immigrant workers now account for close to one in four workers, a record high share that was reached for the first time in 2016. The story behind the rising share of immigrants in the construction labor force during the housing recovery is twofold – an unusually slow, delayed and reluctant return of native-born workers and a much faster and robust comeback of immigrant workers. Close to 1.7 million native-born workers left the construction labor force during the housing downturn, and the vast majority on a net basis, over 1 million, had not returned to the industry as of 2018. In sharp contrast, the number of immigrant workers in construction has now returned to the 2006 level.

The share of immigrants is even higher in construction trades, reaching 30%. Concentration of immigrants is particularly high in some of the trades needed to build a home, like carpenters, painters, drywall/ceiling tile installers, brick masons, and construction laborers – trades that require less formal education but consistently register some of the highest labor shortages in the NAHB/Wells Fargo Housing Market Index (HMI) surveys and NAHB Remodeling Market Index (RMI).

In some states, reliance on foreign-born labor is even more pronounced. Immigrants comprise close to 40% of the construction workforce in California and Texas. In Florida, New Jersey and New York, close to 37% of the construction labor force is foreign-born and in Nevada, one out of three construction industry workers come from abroad. (source)

Notice the verbiage — jobs that “require less formal education.” What does that mean? Formal education equates to what, college, trade school, apprenticeships?

So, my Val Kilmer cable guy from New Mexico said he started off young thinking he’d be the next YouTube star, and then he tried working on cellular phones, and even the call centers, but he is happy now with Pioneer Cable.

From the 2010 Virginia Festival of the Book in Charlottesville, Virginia, Matthew Crawford discussed his book, Shop Class as Soulcraft: An Inquiry Into the Value of Work.

Link.

The satisfactions of manifesting oneself concretely in the world through manual competence have been known to make a man quiet and easy. They seem to relieve him of the felt need to offer chattering interpretations of himself to vindicate his worth. He can simply point: the building stands, the car now runs, the lights are on. Boasting is what a boy does, because he has no real effect in the world. But the tradesman must reckon with the infallible judgment of reality, where one’s failures or shortcomings cannot be interpreted away. His well-founded pride is far from the gratuitous “self-esteem” that educators would impart to students, as though by magic.

— Matthew B. Crawford, Shop Class as Soulcraft: An Inquiry Into the Value of Work

I suppose it all boils down to the masters controlling destinies, and no matter how powerful the urge is to be Matthew and have a motorcycle shop, we are in a Brave New World where the billionaires and the Fourth Industrial Revolutionaires and WEF-ers, want control, man, control. Here, from Matthew Ehret’s latest: “Roosevelt vs. Keynes’ New Deal and the Battle of Bretton Woods” Believe it or not, this piece ties into indirectly how we are being shaped by perverse people, whose roots go back. Contrast Keynes and Churchill with FDR.

Galton’s eccentric, sceptical, observing, flashing, cavalry-leader type of mind led him eventually to become the founder of the most important, significant and, I would add, genuine branch of sociology which exists, namely eugenics.

-John Maynard Keynes on Galton’s Eugenics, Eugenics Review, 1946

I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place.

– Winston Churchill to the Peel Commission, 1937

There never has been, there isn’t now, and there never will be, any race of people fit to serve as masters over their fellow men… We believe that any nationality, no matter how small, has the inherent right to its own nationhood.

– Franklin Delano Roosevelt, March 1941

They who seek to establish systems of government based on the regimentation of all human beings by a handful of individual rulers call this a new order. It is not new and it is not order.

– Franklin Roosevelt

This content originally appeared on Dissident Voice and was authored by Paul Haeder.

ProsperUS Calls on Biden, Congress to Raise the Debt Limit and “Stop Shielding Wealthy, Big Corporations”

Newswire Editor — Tue, 16 May 2023 15:51:58 +0000

Examining the 100 top-selling drug products in Medicare Part D—which covers prescription medicines—and Medicaid, the report estimates that Big Pharma's antitrust violations "increased Part D gross spending by 14.15%, or $14.82 billion, and increased Medicaid gross drug spending by 9.05%, or $3.15 billion, in 2019 for the top 100 drugs in each."

Assuming that pharmaceutical companies' antitrust violations similarly affected retail brand drug spending, the report estimates that "U.S. patients and payers spent an additional $40.07 billion on pharmaceuticals in 2019."

“American families are paying far too much for prescription drugs, in large part due to rampant corporate lawlessness," said Erik Peinert, research manager and editor at the American Economic Liberties Project.

The report highlights 10 illegal anticompetitive schemes that U.S. pharmaceutical companies deploy to juice their profits and keep prices high, including horizontal collusion, patent fraud, no-generics agreements, and sham citizen petitions aimed at convincing regulators to delay approval of potential competitor drugs.

"This report documents the many ways Big Pharma is manipulating and breaking the law to expand corporate profits at the expense of patients and taxpayers," said Peinert. "The Federal Trade Commission has begun fighting back, but it needs more assistance from Congress and other agencies to crack down on these illegal practices and deliver for patients."

Shortly following the new report's release, the FTC sued to stop the biopharmaceutical giant Amgen from acquiring Horizon Therapeutics, warning that "rampant consolidation in the pharmaceutical industry has given powerful companies a pass to exorbitantly hike prescription drug prices."

\u201c\ud83d\udea8BIG: Our new report with @IMAKglobal finds Big Pharma\u2019s antitrust violations cost Americans a whopping $40 BILLION on branded pharmaceuticals in 2019.\n\nYou can read the report below, but here\u2019s some additional context and policy solutions.\ud83d\udc47\ud83e\uddf5\nhttps://t.co/FfsRoYm4QM\u201d
— American Economic Liberties Project (@American Economic Liberties Project) 1684244370

The researchers behind the report offer several specific examples of how large pharmaceutical companies have used their power and dominance of certain markets to push up prices.

The nation's insulin market, they argue, "has been distorted by multiple overlapping anticompetitive schemes in recent years," including the "illegal listing" of products and "collusion" among top manufacturers in violation of RICO law, as well as "exclusionary rebates to drive patients toward brand products and away from substantially cheaper authorized generic versions."

The groups estimate that Medicare Part D and Medicaid "would have spent approximately 50% less on three of the four major insulin brands (Levemir, Novolog, Lantus) in 2019 but for the anticompetitive strategies used by the major insulin manufacturers."

The report also accuses AbbVie and Allergan—which the former acquired in 2020—of engaging in a "sustained, consistent pattern of illegally blocking generic and biosimilar competition in violation of the antitrust laws."

In the case of Bystolic, a blood pressure medicine, "Allergan entered illegal pay-for-delay agreements to prevent and delay generic competition" for the drug before 2019.

The groups estimate that Part D and Medicaid would have spent 90% less on Bystolic and its generic equivalents in 2019 had Allergan not entered the pay-for-delay agreement, which the FTC says cost U.S. consumers and taxpayers $3.5 billion a year in the form of higher drug prices.

The report also points to a whistleblower lawsuit alleging that Janssen Pharmaceuticals—which is owned by Johnson & Johnson—committed patent fraud to prolong its monopoly on Zytiga, a prostate cancer drug.

"The patent system is at the root of enabling many of the antitrust violations we identified and which are leading to higher drug prices," said Tahir Amin, an executive director of I-MAK.

To combat the pharmaceutical industry's abuses and lower costs for patients, the American Economic Liberties Project and I-MAK recommended that lawmakers and regulators act to completely ban pay-for-delay agreements, modify patent laws to "ensure that drug companies cannot use bad-faith patent strategies to perpetually extend monopolies," and ramp up penalties for antitrust violations, among other changes.

"Until Congress and the United States Patent and Trademark Office ensure stricter standards that would prevent the granting of many of the types of patents that are leading to these violations in the first place," Amin said, "Americans can expect to see their drug prices continue to rise."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

Meet the Federal Judge Who Could Decide Whether or Not the US Defaults

Miles Mogulescu — Tue, 16 May 2023 11:52:50 +0000

As the possibility of a government default on the national debt which could tank the global economy looms, the National Association of Government Employees (NAGE) has sued the government in the U.S. District Court in Massachusetts claiming that the debt ceiling law is unconstitutional and unenforceable. According to its complaint, NAGE asks the court to “declare that the Debt Limit Statute is presently unconstitutional and of no force and further seeks to enjoin [President Biden and Treasury Secretary Yellen] from refusing to borrow to meet the operations of government approved by Congress and the debts and obligations that also must be paid pursuant to the Fourteenth Amendment…”

If NAGE prevails in the District Court prior to the so-called "X-Date" being reached, President Biden and Secretary Yellen would be obligated to issue new debt to meet government expenses, even if President Biden refuses to give into Republican hostage-taking and Congress does not act to increase the debt ceiling. It is possible (but by no means certain) that such a ruling could be overturned by the Court of Appeals or the U.S. Supreme Court, if the Biden administration appeals. But the Biden administration could also accept a favorable ruling from the District Court ruling and decline to appeal.

The Massachusetts Federal District Court has eleven judges, so NAGE couldn’t shop for a sympathetic judge the way Republicans did with Texas anti-abortion extremist Judge Matthew Kaczmaryk. However, of these eleven judges, nine were appointed by Democrats, one by George H.W. Bush and one by George W. Bush. Of the judges on the First Circuit Court of Appeals which covers Massachusetts, all are Democratic appointees. The NAGE suit was randomly assigned to District Court Judge Richard G. Stearns, a Clinton appointee.

Since this case is so consequential, I thought it would be helpful to research an intelligence report on Judge Stearns.

Early in his career, Stearns worked for liberal Democrats. In 1972-73 he was special assistant to Sen. George McGovern who ran for President on an anti-war platform, only to lose (badly) to Richard Nixon. From 1975-76 Stearns was a speechwriter for Tip O’Neill who at the time was Lieutenant Governor of Massachusetts and later was a legendary Speaker of the House. From 1979-80 he was director of delegate operations for the presidential campaign of Sen. Ted Kennedy.

A Rhodes scholar, Stearns was literally a “FOB,” a friend of Bill [Clinton] whom he roomed with at Oxford. In 1993, he was reportedly President Clinton’s top choice to replace William Sessions as FBI Director, but withdrew after facing criticism for his liberal leanings and opposition from then-Attorney General Janet Reno.

If may or may not be determinative to Stearns, but in 2011 when President Obama faced a Republican threat of default if he didn’t agree to budget cuts, Stearns’ Oxford roommate, former President Clinton, said that if he were still President—"if it came to that"—he would raise the debt ceiling using powers granted under the 14th amendment of the Constitution. "I think the Constitution is clear and I think this idea that the Congress gets to vote twice on whether to pay for [expenditures] it has appropriated is crazy," Clinton said in an interview with The National Memo columnist Joe Conason. Obama didn’t listen to Clinton’s advice and cut a debt reduction deal with Republican Speaker of the House John Boehner, which many believe slowed the recovery from the 2008 economic meltdown, and may even have helped Trump become president.

A review of Stearns’ long career as a federal judge doesn’t reveal any biases or prejudices and he appears to be a pretty down-the-middle jurist who decides cases based on the law and the facts as he sees them.

He doesn’t seem to have ruled on significant constitutional issues during his tenure so it’s hard to get a read on his constitutional philosophy. A review of his “most noteworthy decisions” in The Almanac of the Federal Judiciary reveals that most of his noteworthy opinions were on relatively technical legal grounds and there don’t seem to be any opinions on hot-button issues like abortion, gun regulation, climate change, or voting rights.

Stearns is quoted as saying “Rigid insistence on the rule of law as a value that transcends all others, even at the risk of collective suicide is (as Justice [Robert H.] Jackson famously warned) simply too high a price to pay.” [emphasis added] This view would seem to align Stearns’ judicial philosophy with that of recently retired Justice Stephen Breyer, a moderate liberal and a vocal opponent of originalism/textualism. Breyer was a pragmatist whose decisions were partly guided by the real-life consequences to the people affected by his decisions. If Judge Stearns approaches constitutional interpretation similarly to Justice Breyer, he might be inclined to overrule the Debt Limit law as a “collective suicide pact.”

The Almanac quotes a number of lawyers who’ve argued before Judge Stearns evaluating his judicial temperament. “He’s very smart and a high quality jurist.” “He’s extremely competent and a smart guy.” “He has excellent legal abilities.” “He’s a studious fellow and he’s careful in his rulings.” “He’s a brilliant man who really works hard to come up with the right decision.”

Having served as a Massachusetts and Federal prosecutor from 1976-1990, Stearns is seen as slightly, but not egregiously, more sympathetic to the government than the defense in criminal cases. According to criminal defense lawyers, “In general he favors the government, but I don’t feel if I get a case with him I’m going to be treated unfairly.” Civil practitioners say “He has no leanings either way.” “He’s right down the middle.”

Judge Stearns has served as a rule of law advisor to the U.S. Departments of State and Defense and to NATO. He lectures frequently on issues involving the rule of law, nuclear proliferation, counterterrorism, and judicial reform in the United States, the United Kingdom, Southern and Eastern Europe, and elsewhere.

After the NAGE suit was filed but before Judge Stearns was assigned the case, Professor Laurence Tribe (with whom I’ve consulted recently about the debt ceiling) said that how quickly the suit moves through the legal system depends, in part, “on which federal district judge gets the suit. It could move extremely quickly.” Based on Judge Stearns’ record, and given the imminence of the X-Date, there’s reason to hope he’ll move it quickly. Tribe also thinks “it is possible that the Treasury Department would welcome this suit…[t]he ceiling is not a permissible bargaining tool for Congress to employ because it threatens to destroy the economy and hold the president hostage.”

It’s impossible to predict with any certainty how Judge Stearns will rule on the NAGE debt ceiling suit. But given this intelligence report, if I were NAGE’s attorney and this were a jury trial, I wouldn’t mind having somewhat like Stearns on the jury.

This content originally appeared on Common Dreams and was authored by Miles Mogulescu.

Progressives Say It Would Be ‘Devastatingly Foolish’ for Biden to Let GOP Bully Him Over Debt Limit

Jake Johnson — Mon, 15 May 2023 19:27:16 +0000

With President Joe Biden set to meet congressional leaders again on Tuesday as the so-called X-date nears, progressive watchdogs and commentators are warning the White House against caving to any of the Republican Party's spending demands, arguing that concessions would reward the GOP's debt ceiling hostage-taking, further embolden far-right lawmakers, and harm vulnerable Americans.

"GOP leaders have sent a wildly exploitative ransom note to the public. The administration should not accept its terms," Jeff Hauser, executive director of the Revolving Door Project, said in a statement Monday, pointing to the " many executive branch pathways" Biden can explore if House Republicans refuse to accept a clean debt ceiling increase before June 1—the day the U.S. Treasury Department may no longer be able to meet the federal government's payment obligations.

"The White House should be clear about the specific and steep costs to the American people of cutting government services and expediting fossil fuel extraction while limiting democratic community dissent," Hauser continued, pointing to the safety net cuts and Big Oil giveaways in the House GOP's proposed solution to the debt ceiling impasse.

"Heading into the 2024 election, with democracy itself yet again on the ballot, it would be devastatingly foolish to show the world that the president of the United States can be bullied."

"This is President Biden's moment to prove that protecting America's wellbeing is more important to him than his self-image as a Senate wheel-and-dealer," added Hauser. "These are not good-faith negotiations. Heading into the 2024 election, with democracy itself yet again on the ballot, it would be devastatingly foolish to show the world that the president of the United States can be bullied."

Progressives' concerns over Biden's willingness to stand firm in the face of GOP brinkmanship and, if necessary, fully utilize his executive authority to avert a debt default have grown in recent days amid reports that White House officials are "privately aiming for a two-year deal that would lift the debt limit and impose new limits on discretionary spending," as Politicoput it last week.

Republicans are pushing for 10 years of spending caps, an extreme demand that harks back to the GOP's approach during the 2011 debt ceiling standoff. Biden was vice president and the Obama White House's lead negotiator during that fight, which ended with a law that badly hindered the U.S. economy's recovery from the Great Recession.

Analysts and federal officials have warned that the GOP's latest austerity push could have similarly destructive consequences, resulting in steep cuts to critical government agencies and programs—from rental assistance to food aid. The U.S. Department of Housing and Urban Development said in March that the GOP's call for a federal spending freeze would make it "impossible to stave off mass evictions."

Ceding at all to the GOP on federal spending would be "a disastrous move," The American Prospect's Ryan Cooper argued Monday in the latest edition of the publication's "X-Date" newsletter.

"Politically, it reinforces the precedent that Republicans can extract concessions through legislative terrorism, and by signaling weakness and timidity in the Democratic leadership, it will further enable GOP extremism," Cooper wrote. "If Republicans control either chamber of Congress next time the ceiling is hit—a high likelihood given how bad the Senate map is in 2024—then they’re virtually certain to take the debt ceiling hostage again."

Moreover, Cooper noted the possibility that spending cuts "would suck hundreds of billions of dollars out of an economy that is already plainly softening, thanks to high interest rates and instability in the banking system."

"A ton of austerity might just be the thing that tips America into a recession during an election year," he continued, "with Biden, a willing negotiator in this process, on the ballot."

In addition to negotiating broad spending levels, Biden told reporters Sunday that he's prepared to examine Republican proposals on work requirements for recipients of federal aid. Analysts have warned that the GOP's work requirement plans would boot millions off of Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

\u201cPretty striking: Biden says he\u2019s waiting to hear GOP proposal on work requirements, per pool report (h/t @TonyRomm).\u201d
— Jeff Stein (@Jeff Stein) 1684116402

With June 1 rapidly approaching, there's little public evidence that an agreement between the Biden administration and Republicans is imminent.

While the White House said late last week that staff meetings "have been productive over the past few days," House Speaker Kevin McCarthy (R-Calif.)—who won his party leadership post by agreeing to use the debt ceiling as leverage to pursue far-right policy goals—declared Monday that he believes the two sides are "far apart" in the ongoing debt ceiling talks.

The Washington Postreported Monday that White House negotiators recently gave Republican leaders "a list of proposals to reduce the deficit by closing tax loopholes."

"Republican negotiators rejected every item," according to the Post.

With House Republicans refusing to accept a condition-free debt limit increase or the White House's budget proposals, pressure has been mounting for the Biden administration to pursue unilateral solutions.

Biden himself said last week that he "has been considering" invoking the 14th Amendment, which states that "the validity of the public debt of the United States... shall not be questioned."

Some constitutional scholars—including Harvard law professor Laurence Tribe—have encouraged Biden to take that route if needed, though the president and members of his administration have expressed concerns over legal challenges that would be sure to follow.

Sen. Elizabeth Warren (D-Mass.) said Sunday that "the 14th Amendment is not anyone's first choice."

"The first choice is that the Republicans raise the debt ceiling because the United States government never, ever, ever, ever defaults on its legal obligations," Warren added. "But if Kevin McCarthy is going to push the United States over a cliff, then it becomes the president's responsibility to find an alternative path."

This content originally appeared on Common Dreams and was authored by Jake Johnson.

Biden Will Show He Can Be Bullied If He Caves To Republican Debt Demands

Newswire Editor — Mon, 15 May 2023 16:15:27 +0000

"We should be able to make our own decisions about our lives, bodies, and futures," said Johnson in a statement Monday. "The unrelenting attacks on our basic freedoms—including through the courts—demand that we reform our federal court system. Abortion rights, voting rights, LGBTQ+ rights, our democratic institutions, and so much more are at stake."

Johnson spoke toMSNBC's "Inside With Jen Psaki" on Sunday about Planned Parenthood's decision to join the court expansion movement, as other rights groups including NARAL Pro-Choice America, Latino Victory, and Newtown Action Alliance have in recent weeks.

The group was pushed toward its decision, she said, as U.S. District Judge Matthew Kacsmaryk ruled last month that mifepristone, a pill used in medication abortions, should be taken off the market.

"The reality is, the court now has been fully captured in so many areas," Johnson said. "The fact that you have, again, this lone Texas judge, that can now bring cases, you can form shop there, bring cases to the Fifth Circuit, which is also conservative and up to the Supreme Court now, which has a conservative supermajority... And that is a way to circumvent the way in which popularly elected decisions are made."

"We need to see expanded courts, from the lower courts all the way up to the Supreme Court," she added. "We need to see term limits. We need to see ethical reforms."

\u201cNEWS: @PPact is endorsing Supreme Court expansion.\n\n"The way in which the system has been captured requires us to engage in structural reform." -- @alexismcgill tells @jrpsaki\u201d
— Demand Justice (@Demand Justice) 1684083423

Planned Parenthood's decision to join the court expansion movement, which has been led by groups including Demand Justice and Take Back the Court, comes as right-wing Supreme Court justices, particularly Justice Clarence Thomas, have faced intense criticism over alleged ethics violations. Recent reports have pointed to evidence that Thomas has for years received financial gifts from Texas Republican megadonor Harlan Crow without disclosing those financial ties as required by federal law, and Justices Neil Gorsuch and John Roberts have also faced scrutiny about their failure to disclose financial transactions and payments.

"It's really important to call for structural reforms that sustain progress," said Johnson. "It would be one thing to call for a justice to step down for whatever reason, but the reality is that the way in which the system has been captured requires us to engage in structural reform in a different way."

On social media, Johnson said Planned Parenthood's "expanded position" on the courts reflects an expansion of its "commitment" to protecting reproductive rights.

\u201cAs we continue to face unrelenting attacks on our basic freedoms, Planned Parenthood refuses to accept that our courts can only exist as they do now. Our expanded position only expands our commitment to you.\n\nhttps://t.co/ws38by9Io0\u201d
— Alexis McGill Johnson (@Alexis McGill Johnson) 1684089002

Demand Justice called Planned Parenthood's decision "an inflection point for the Supreme Court reform movement."

"The endorsement of key groups in the progressive ecosystem like Planned Parenthood shows just how far this campaign has come," said Brian Fallon, executive director of the group. "The public has awoken to the dangers of a captured, corrupt judiciary and is demanding solutions. The composition of the court will obviously not be changed overnight, but the consensus about the need for bold, sweeping reforms is growing by the day, and the salience of the court as a political issue has never been higher."

Sarah Lipton-Lubet, president of Take Back the Court, said Planned Parenthood's joining of the movement shows how court expansion has become "a mainstream progressive policy goal with the support of more than 60 members of Congress and some of the most respected and powerful abortion rights champions in our movement."

"A few short years ago, we were told court expansion was a pipe dream," said Lipton-Lubet. "With support from groups boldly advocating at the state level to leading national organizations, our movement is growing stronger every day. The right-wing extremists on the Court can try to rip our rights away, but we're fighting back even stronger—and we're going to win."

The Supreme Court has been expanded seven times in the past. Reform advocates also called for an addition of seats of lower federal courts to reflect growth in population, diversity, and the number of cases that judges hear.

"It won't be easy and it won't happen overnight but we WILL expand the Supreme Court," said Doug Lindner, senior director of judiciary and democracy for the League of Conservation Voters. "We WILL protect our abortion rights and our climate from these extremists. And we WILL pass on a vibrant, multiracial democracy to the next generation."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

ABC/WaPo Poll Creates Illusion of Public Opinion on Debt Ceiling

David W. Moore — Fri, 12 May 2023 19:15:02 +0000

According to a recent ABC News/Washington Post poll (5/5/23), Americans are about evenly divided on who they would blame—Republicans in Congress or President Biden—“if the debt limit is not raised and the government goes into default.”

The poll is an egregious example of manufacturing rather than measuring public opinion. As it is structured, the poll cannot accurately represent the views of the US public on the debt ceiling. Instead, it reflects the manipulation of opinion that is built into the questionnaire design.

The questionnaire included just two substantive questions on the issue of the debt ceiling:

Q.1 Congress typically passes legislation on a regular basis to pay its debts. Without this step, the government could default on its debt. Do you think Congress should…?

1. Allow government to pay debts ONLY if Biden agrees to cut spending (26%)
2. Issues of debt payment and federal spending should be handled separately (58%)
3. No opinion (16%)

Q. 2 If the debt limit is not raised and the government goes into default, who would you mainly blame for that –

1. Biden (36%)
2. Republicans in Congress (39%)
3. Both equally (16%)
4. Neither (3%)
5. No opinion (5%)

Tainting the sample

Washington Post (5/5/23)

Note that the poll did not attempt to measure how many respondents had even heard of the issue before being asked about it in the poll. The journalists clearly understood that the debt ceiling issue is pretty arcane, that relatively few Americans really understand why it exists, and thus haven’t formed a meaningful opinion about it.

Rather than allow the poll to reflect that public lack of engagement, the journalists instead designed questions that would give the opposite impression—an illusion that the vast majority of Americans understand the issue and have an opinion about it.

The pollsters gave their respondents a very brief and biased statement about the debt ceiling, and then immediately asked them to give their opinion—based on what they had just heard.

A national sample of adults in a poll, typically about 1,000 or so respondents, is designed to represent the larger US adult population of about 260 million people. When pollsters provide information to the sample of adults, that group can no long be seen as representative of the larger US population. Why? Because the larger population has not been given exactly the same information as the adults in the sample. The respondents have information, however brief or distorted it might be, that the rest of Americans have not received. It is simply incorrect to generalize findings based on such a tainted sample to the larger population.

Deflecting responsibility

ABC (5/5/23)

Apart from this fatal flaw, the first question in the polls asks what “Congress” should do, when the issue is not “Congress,” but Republicans in Congress. Think how differently the tone would be if the question were:

Do you think the Republicans in Congress should allow government to pay its debts ONLY if Biden accepts cuts in spending, or should they treat the issues of debt and federal spending separately?

Even with the biased wording, the poll showed two-to-one support for treating the issue separately.

Still, the first question set up the conflict as though it were a simple issue of spending cuts (never specified), which of course is not the case. The issue is much more complicated because of the nature of the debt ceiling itself, which does not affect future spending, but only paying back money that the government has already spent.

With the issue simplified to a meaning that distorts what the issue really is about, the second question is a master of manipulation. It asks in a passive voice: “If the debt limit is not raised, who would you blame?”—rather than: “If Republicans in Congress refuse to raise the debt limit, who would you blame?” It’s not “Congress” more widely, it’s the Republicans in the House who are refusing to raise the debt limit. The question implicitly spreads the responsibility, sidestepping the actual point of confrontation.

Ignoring the crucial conflict

Probably the most important conflict in this issue is the actual spending cuts the House Republicans are demanding. If the pollsters had wanted to give respondents information, they could have described the size of the cuts specified in the House bill, as well as a general description of where the cuts would be made—and then asked respondents if they approved of those cuts as a condition for raising the debt ceiling.

Once specific cuts are mentioned, it is highly likely the number of respondents who disapprove of such cuts would be in the majority. Still, even that approach would inevitably be biased, as not all details could be included.

The only way to get a clean read of public opinion is to be sure that pollsters differentiate among respondents who have a meaningful opinion and those who don’t, and to ask objective questions without giving respondents any information about the issue.

The result would likely show that a large segment of the public, possibly even a majority, is—at this time—unengaged on the issue, and would admit they had no opinion. But that’s not the reality the news media want to acknowledge. Apparently, it’s more interesting to create the illusion of a widely informed and engaged public than to acknowledge how little most people really know about the debt ceiling.

The post ABC/WaPo Poll Creates Illusion of Public Opinion on Debt Ceiling appeared first on FAIR.

This content originally appeared on FAIR and was authored by David W. Moore.

The GOP Has a Very Anti-American Agenda

Steven Harper — Fri, 12 May 2023 15:13:08 +0000

If you vote for a Republican, you’re selecting someone who—once elected—is unlikely to support your views on the issues that matter to you most. Instead, here’s what you’re choosing:

Guns

The vast majority of Americans favor simple and effective gun control measures. They want:

universal background checks and “red flag” laws that would alert law enforcement to gun owners with serious mental health issues;
a national database for gun ownership;
laws requiring gun owners to store their weapons in a safe storage unit; and
the prohibition of semi-automatic rifles—weapons of war that killers have used in the seven deadliest mass shootings of the last decade.

But elected Republicans oppose all of those measures.

Attacks on Women’s Rights

The vast majority of Americans want to preserve a woman’s right to control her own body.

But elected Republicans unite to enact legislation that outlaws abortion altogether—even for rape, incest, or the health of the mother—or that moves the period of any permissible abortion ever closer to the date of conception and before a woman even knows she’s pregnant.

Stated simply, if you vote for a Republican, you’re probably voting against your personal preferences for the nation.

The Debt Ceiling

Americans want a functional government that doesn’t face a financial crisis every time Republicans decide to hold the nation hostage to their unpopular demands. When Donald Trump was president, neither party in Congress created a debt-limit crisis.

But with President Joe Biden in the White House, elected Republicans have:

abandoned all pretense of “fiscal responsibility”—a perennial GOP rhetorical talking point;
threatened to crash the U.S. economy into recession or worse, create chaos in global markets, increase the nation’s borrowing costs that will increase future federal deficits, and jeopardize America’s international financial credibility; and
united in opposing an increase in the nation’s debt ceiling—despite Congress’ bipartisan authorization of the expenditures that created the debt in the first place and the U.S. Constitution’s command that the “public debt of the United States, authorized by law, shall not be questioned.”

Cult of Trump

Most Americans want honest, courageous, and hard-working leaders with personal integrity.

But elected Republicans refuse to condemn their leading candidate for the 2024 presidential nomination, notwithstanding:

his adjudicated liability for sexual abuse and defamation;
his indictment on charges that he paid off a porn star in his effort to win the presidency in 2016;
criminal investigations involving his unlawful retention of highly classified documents and his obstruction of government efforts to retrieve those materials; and
state and federal criminal investigations surrounding his attempt to subvert the 2020 election and obstruct the peaceful transfer of power. Although videos of the deadly assault on law enforcement personnel on January 6 are irrefutable, Trump has pledged to pardon the insurrectionists who have been imprisoned for serious felonies.

Threats to Democracy

Most Americans want the United States to remain a democracy. Our forebears fought and died in wars to secure and defend it. In the immediate aftermath of the insurrection, congressional Republicans blamed Trump for the January 6 riot. They described it as a heinous and unprecedented attack on the U.S. government.

But now elected Republicans pretend that it never happened, calling the insurrectionists “ tourists” engaged in “peaceful protest.”

Restricting Voting Rights

Most Americans want to make voting easier. After all, it is the bedrock of any democracy.

But elected Republicans pursue voter suppression with a vengeance—literally. Committed to the opposite of democracy, they enact legislation that makes casting a ballot more difficult for those who are likely to vote against them.

Skewed Government Priorities

Most Americans support higher taxes on the rich.

But elected Republicans oppose taxes on the wealthiest Americans, while urging reductions in government spending that target, among other vulnerable groups, veterans, Social Security recipients, Medicare beneficiaries, poor mothers, and infants.

Climate Change

Most Americans want the government to take seriously the existential threat of climate change.

But elected Republicans ignore or ridicule it, while promoting activities that contribute to the destruction of the planet.

Culture Wars

Most Americans despise the polarization that has infected the body politic.

But elected Republicans use culture wars—including the rejection of science—to promote illiteracy and ignorance across a range of issues, deepening the schisms among us. In addition to the topics listed above, here are two more examples:

Your Vote Should Matter

Stated simply, if you vote for a Republican, you’re probably voting against your personal preferences for the nation.

You’re voting against democracy, which is supposed to honor voters’ desires.

You’re voting for those who claim to care what you think, but use such rhetoric to seduce you.

You’re voting for people whose sole agenda is the acquisition and retention of power. Other than Speaker Kevin McCarthy’s (R-Calif.) desire to retain his slim, four-person GOP majority in the House of Representatives, there’s no reason for him or any true party leader to tolerate the continuing presence of Rep. George Santos (R-N.Y.), who was a disgrace long before his recent federal indictment for fraud, money laundering, theft of public funds, and false statements.

Eventually, the actions of elected Republicans betray them—and most of their supporters. But until it’s personal and GOP voters actually feel the impact, they won’t care.

Because in America today, that’s what it means to be a Republican voter.

This content originally appeared on Common Dreams and was authored by Steven Harper.

What does climate change have to do with the debt ceiling crisis?

Jake Bittle — Fri, 12 May 2023 10:30:00 +0000

As President Joe Biden tangles with Republican lawmakers over whether to raise the nation’s debt ceiling, a key question looms over the negotiations: When, exactly, will the U.S. government run out of money? No one knows the answer, but one factor is making it harder to pin down: climate change. A barrage of climate-fueled disasters has slowed down the pace of federal tax collection, pushing the government closer to an unprecedented default on its debt this summer.

There are countless factors that determine how much tax revenue the federal government receives on any given day, but one major factor this year is climate change. The past year saw more than a dozen billion-dollar disasters in as many states, and the Internal Revenue Service has offered tax relief to residents of these states, giving them an extra few months to file their taxes. The worst-affected states include Florida and California, which suffered respectively from Hurricane Ian and a series of “atmospheric river” storms this winter. Together the two states account for more than a quarter of federal revenues.

Because millions of taxpayers have been able to delay their filings due to disasters, the federal government is receiving less money than it otherwise would at this time of year. In ordinary circumstances, this wouldn’t be a problem, since the government borrows money to make up for an uneven balance between tax revenue and spending, usually by issuing bonds. But because the U.S. has reached its self-imposed debt ceiling — an arbitrary limit on how much of that borrowing the government can do — the fate of the global economy depends on how much cash the Treasury receives over the next few weeks.

This limit was established around a century ago, and Congress has raised it dozens of times, typically without controversy. But in recent years Republicans have seized on debt ceiling authorization as a high-stakes way to extract concessions that they don’t have the votes to pass through Congress.

Since assuming control of the House of Representatives this year, Republicans have refused to endorse the customary debt ceiling increase unless Biden agrees to cuts in federal spending that have already been appropriated by Congress. Though the exact conditions that will satisfy enough Republicans to vote for an increase are unclear, a variety of controversial options are on the table — including a repeal of the Inflation Reduction Act, the climate law intended to keep the U.S. in line with its Paris Agreement targets.

The U.S. reached the current debt limit in January. Since then, the Treasury Department has been paying daily bills using only the cash it has on hand. If lawmakers don’t raise the debt ceiling soon, the Treasury will run out of cash and have no choice but to default on its debt. This would have disastrous and unprecedented consequences: Veterans and Social Security recipients would miss payments, borrowing costs for credit cards and mortgages could jump, and global financial markets would enter a tailspin.

Biden and House Speaker Kevin McCarthy met this week to discuss a debt ceiling increase, but a big problem for both sides is that no one knows for sure when the Treasury will run out of cash. Treasury officials have said that a default could arrive as early as June 1, but the federal government is so large that it’s impossible to predict how much money it will receive from taxes any given day. The best that officials can do is give a ballpark estimate of when the so-called “x-date” of default will arrive. Federal disaster declarations have made that prediction even more difficult.

“The disaster declarations are playing a heightened role [in determining the x-date] because they are shifting normal revenue patterns of the government and spreading them across the year, as opposed truncating them into tax season,” said Rachel Snyderman, a senior associate director for economic policy at the Bipartisan Policy Center, a nonprofit think think that has been studying the debt ceiling timeline.

If lawmakers had started negotiating a debt limit increase earlier in the year, Snyderman said, this uncertainty wouldn’t be a big deal. But with the “x-date” now potentially just weeks away, the ups and downs of federal revenue collection have become extremely important.

A few extra days of revenue could mean the difference between a safe resolution and a chaotic default: If the government can make it to June 15 without running out of money, it will receive a large chunk of cash from quarterly tax filings, which should stabilize revenue for a few weeks. Then, at the end of June, the Treasury will be able to access another $143 billion in borrowing authority, which could help stave off default until the beginning of August.

But if May tax revenues remain lower than projected, the government will never reach that mid-June revenue influx at all. Without a debt limit increase, an “x-date” is inevitable, but the revenue delays could push that date earlier and earlier, heightening the risk of default.

“Shifting the breach date a few days one way or the other is important this close to the finish line,” said John Buhl, a spokesperson for the Tax Policy Center, a nonpartisan think tank.

Though they are hardly the biggest factor in the debt ceiling crisis, this is why the disaster delays matter: By failing to raise the debt limit, Congress has made the government vulnerable to every little bump in tax revenue — and climate change has created quite a few bumps.

This story was originally published by Grist with the headline What does climate change have to do with the debt ceiling crisis? on May 12, 2023.

This content originally appeared on Grist and was authored by Jake Bittle.

The Sadistic GOP’s Debt Limit Ploy vs. the People

Ralph Nader — Fri, 12 May 2023 05:52:46 +0000

Raising the federal debt limit over the years has secured unconditional routine Congressional passage and was endorsed by presidents Ronald Reagan and Donald Trump. After all, it allows the U.S. Treasury to pay past and existing bills, not expand future spending. Routine, that is, until the recent arrival of the mad-dog Republicans with their monetized More

The post The Sadistic GOP’s Debt Limit Ploy vs. the People appeared first on CounterPunch.org.

This content originally appeared on CounterPunch.org and was authored by Ralph Nader.

‘The Debt Ceiling Is a Completely Pointless Contrivance’ – CounterSpin interview with Chris Lehmann on debt ceiling

Janine Jackson — Thu, 11 May 2023 23:32:02 +0000

Janine Jackson interviewed The Nation‘s Chris Lehmann about the debt ceiling for the May 5, 2023, episode of CounterSpin. This is a lightly edited transcript.

CounterSpin230505Lehmann.mp3

Janine Jackson: Corporate news media provide better and worse explanations of various issues, of course, but there are some issues where elite media’s explanation leaves you somehow more ignorant than you were before you read it.

New York Times (4/26/23)

The debt ceiling, and what media insist is a partisan showdown around it, is one of those issues. If you are disturbed by reporting that misconstrues an issue, where that misunderstanding can lead to people losing their healthcare, you have company in our next guest.

Chris Lehmann is DC bureau chief for The Nation, as well as contributing editor at the Baffler and the New Republic. He joins us now by phone from the DC area. Welcome to CounterSpin, Chris Lehmann.

Chris Lehmann: Hi, Janine. Thanks so much for having me. It’s great to be here.

JJ: Before we get to corporate media’s funhouse mirror version, can you start us with some information about what the so-called debt ceiling is, and the role that it has played in reality, historically?

CL: Yeah, the pithiest definition of the debt ceiling, I think, is a completely pointless contrivance that has outlived whatever usefulness it may have once had, if it ever did.

It was ginned up in 1918, in response to the deficit spending of the US entering into the First World War. That was the time before Keynesianism existed, and there was a frantic perceived need to tamp down on deficit spending, that proved to be largely, as I say, pointless.

And the pointlessness of it was firmly demonstrated during the Great Depression, and the Second World War’s mobilization of the American economy, and the post-war boom in the American economy. So that we now exist in a world where the United States is the only major industrialized nation that has this dumb boundary on what it can spend. Literally no other country in the world deals with this.

It’s also clearly unconstitutional. There is in the 14th Amendment of the Constitution what’s known as the Public Debt Clause, which just flat-out states, “The validity of the public debt of the United States…shall not be questioned.”

Chris Lehmann: “What they really want out of all this is to basically hold the American economy hostage, so that they can extort…key spending cuts.”

So what’s frustrating, living in Washington as I do, and seeing versions of this showdown play out time and again, for what are crass and venal partisan reasons, there is no reason for any of this to be happening.

The right likes to claim that they are originalists when it comes to constitutional language. So here is constitutional language, saying you are weaponizing the spending process for what are nihilistic policy ends.

What they really want out of all this is to basically hold the American economy hostage, so that they can extort, from the opposition in Congress and the White House, key spending cuts that their donor base really wants, but that are vastly unpopular with the American public.

There are things like an accelerated work requirement for Medicaid. There are things like deep cuts to the Veterans Administration’s social service funding. There are things like rollbacks of IRS and antitrust enforcement. It is just a wishlist for the far right that is being smuggled in under the color of an alleged “both sides” showdown over how much we should be spending. It is all made up.

I’m clearly at a point where I’m just exhausted at the approach of this ritualized conflict, and the media’s, in my view, just unbelievably negligent handling of the issues.

JJ: Because when you look at coverage, it makes it sound as though our hands are tied.

CL: Right? There’s nothing anyone can do.

New York Times (2/1/23)

JJ: Yeah. And so there’s basic, it’s not an ideological—I mean, it is ideological—but there are basic definitional problems with the way that media are talking about this.

So when the New York Times says, “But eventually, the United States will need to either borrow more money to pay its bills, or stop making good on its financial obligations,” well, that’s not how that works, right?

CL: No, that’s exactly right. And, again, this is all being ginned up as a crisis for political gain on the right. And if the media could just report that, which is the truth, we would have a different follow-on conversation, instead of this airy, make-believe fantasy that somehow there’s going to be a grand bargain, where both sides will compromise and the golden mean will prevail.

It is stunning to me that we went through all of this in the Obama administration, when there was the “fiscal cliff,” and there was the approach of the debt ceiling. There was language that made it sound like we were in some film noir B-movie: We were going to be kidnapped and thrown over the fiscal cliff. And it was all just for an organized ideological assault on social spending from the right. It’s exactly the same thing now.

Guardian (1/5/23)

Kevin McCarthy is doing the bidding of the Freedom Caucus, which, we all remember from January, tried to block his path to the speakership, and extorted all these concessions, and this is one of the key ones that they got. He’s forcing a confrontation with the Biden White House over the debt ceiling so that they can try to get all of these, again, unpopular cuts to spending that they will not run on.

So it’s both fundamentally opportunistic and venal, and it’s deeply dishonest, and the press goes along with that dishonesty in a way that is just frankly infuriating.

JJ: I’m going to bring you back to elite media, and their ironclad framing that they won’t be moved off of, in a second.

But I just wanted to tease one other thing out, which is that coverage often implies, or at least does nothing to dissuade a reader from a “family budget” analogy, or like you using your credit card, thinking that debt is something you bought, but couldn’t pay for. So that even if this list of things that might be cut—social safety net programs, military salaries, etc.—well, “that’s terrible, but you’ve got to be fiscally responsible.” And that’s pathological. I mean, that’s just deceitful.

The Nation (1/23/23)

CL: At least when the debt ceiling was originally introduced, American leaders had the excuse that Keynesian economics had not existed, and it hadn’t been tried. But the American economy functions in a very different way from any household economy.

And what happens in a downturn is that demand freezes, because credit is now prohibitively expensive; banks are failing, the rest of it. And so that is where the government comes in and “primes the pump.”

And the other thing to note is all this spending was fine when it was approved during the first Covid emergency under the Trump administration. Congress suspended the debt ceiling for all that.

So, again, you just connect all the dots here, and we are not in anything like economic crisis conditions. The economy is functioning at something close to full employment, and the only crises are concerning banks that were overexposed on bad debt in Silicon Valley, and now are facing higher interest rates that the Fed has exacted.

None of that is going to be remotely addressed or solved by cuts to spending extorted under the debt ceiling.

It’s also—not to get too nerdy and wonky here—it’s notable that as FDR and the New Deal were combating the Great Depression by priming the pump with government spending, FDR and his Treasury secretary had a brief flirtation with fiscal austerity in 1937, and tried to balance the budget, and another recession promptly ensued.

So this is not to say that would be the case necessarily here, but it is to say that, again, this model of “we have to tighten our belts and keep the debit and credit column in perfect alignment” wreaks havoc in macroeconomics, in a way that the model of the household spending and credit card limits just does not apply, and it’s often dangerous to apply.

JJ: And then “we” are not ever tightening “our” belts. It’s really only some people who are feeling the brunt of this.

CL: That’s the other thing, is this is a party that has lavished tax cut after tax cut to the One Percent, and exacted fiscal discipline on everyone else.

New York Times (1/20/23)

JJ: Let me just ask you, finally—we’ve been talking about it all along—but when the New York Times says in covering this, “The bad news: Democrats and Republicans are divided.”

I mean, I don’t even know where to start, but elite media’s fealty to this phantasm of bipartisanship, whatever it means: Speak to that, but maybe in terms of, what would better coverage look like?

CL: Yeah, as I was saying before, better coverage would just report the truth, which is: one political party is using an outmoded mechanism to extort cuts to spending that it cannot legitimately put forward for public scrutiny and win. So there are lots of ways of making that point.

I think there’s also a big failing on the part of the Democrats here, of just not taking the weapons that are at their disposal. It’s very easy for Janet Yellen, the secretary of the Treasury, when the debt ceiling comes on June 1 or thereabouts, to just say we’re going to ignore it, it doesn’t matter.

Similarly, the Biden administration could cite the Public Debt Clause of the 14th Amendment and say, look, if we are not honoring the country’s debts, we are in violation of the Constitution. Make the Republicans be the party of both cruel Dickensian fiscal austerity and abuse of the Constitution’s powers.

So it’s not all the failing of the press, but it is significantly the failing of the press.

The Republican Party does not have a case here, and our elite media, of course, function as a for-profit industry. It’s owned by the people who want this kind of austerian budget process that benefits the wealthy. So, of course, its material interests are going to be reflected in how it covers matters of economic policy.

JJ: All right, then. We’ve been speaking with Chris Lehmann. He’s DC bureau chief at The Nation. You can still find his piece, “The Media Can’t Get Enough of the Debt Ceiling,” at TheNation.com. Chris Lehmann, thank you so much for joining us this week on CounterSpin.

CL: Thank you, Janine.

The post ‘The Debt Ceiling Is a Completely Pointless Contrivance’ appeared first on FAIR.

This content originally appeared on FAIR and was authored by Janine Jackson.

It’s Time For Democrats to Declare War Over the Debt Ceiling

Steven Day — Thu, 11 May 2023 14:26:13 +0000

Sometimes confronting political opponents calls for a soft touch — for nuance. And sometimes you just need to kick ass.

When it comes to the GOP’s use of the debt ceiling as a weapon of extortion, even kicking ass isn’t a strong enough response. The only response likely to be effective is a full-bore-political war. And in the words of Ulysses S. Grant, “No terms except an unconditional and immediate surrender can be accepted.” Every day that passes without Democrats absolutely clobbering Republicans for deliberately imperiling the economic security of every American constitutes political malpractice. And the time to change course is quickly running out.

In fairness, Democrats are saying a lot of the right things. Where they are falling short is in failing to elevate the issue. Too many Americans are still oblivious to the Sword of Damocles the GOP is dangling above their heads. That needs to change.

Every day that passes without Democrats absolutely clobbering Republicans for deliberately imperiling the economic security of every American constitutes political malpractice. And the time to change course is quickly running out.

The occasional statements being offered by the president and congressional Democrats aren’t going to do the job. America faces a very real, and completely unnecessary, risk of economic Armageddon. If it occurs it will be due entirely to the reckless conduct of the GOP. In a situation like this the usual political pablum won’t do. You can’t sweet talk the congressional Republicans into being reasonable. And you won’t get the public to understand the complexities of the issue without raising the volume of the discussion.

What needs to be done is to grab hold of the issue and tie it around the GOP’s neck. Make them own it. Make sure the public understands what is at stake and who will bear the responsibility if things go wrong. That’s not only smart politics. Absent successful application of the “constitutional option,” this is the only strategy, short of capitulation, that stands any realistic chance of preventing default.

Joe Manchin notwithstanding, there is no middle ground here. No compromise. Paying even a small part of the GOP’s ransom constitutes trying to buy off an extortionist, something that never works. If Republicans gain anything by this stunt, they will have all the motivation they need to repeat it every time the debt limit needs adjustment.

It’s fine to negotiate over the budget. That’s an inherent feature of divided government. But when it comes to the constitutional duty to pay the nation’s debts, there is nothing to bargain about. Congress authorized the expenditures and having done so it becomes its constitutional duty to make the payments on the bill.

The United States is facing a showdown — a high stakes “game” of political chicken. We are watching two metaphorical cars barreling toward each other at high speed, waiting to see which of the two drivers “chickens out” and veers off to avoid the head-on collision. But there’s a problem. One of the two drivers has gone stark raving mad. Every indication is that Republicans are not going to give way. And Democrats can’t.

Both sides seem to be guessing the other guy will veer out of the way in the nick of time. But a lot of people are missing the X factor — the fact a significant percentage of Republicans in Congress are actually happy with the thought of our country defaulting.

We are watching two metaphorical cars barreling toward each other at high speed, waiting to see which of the two drivers “chickens out” and veers off to avoid the head-on collision. But there’s a problem. One of the two drivers has gone stark raving mad.

How can anyone, even the crazies in the Freedom Caucus, want to see something happen that will do massive harm to our economy and standing in the world? Remember, we are talking about the Republican Party — not your grandfather’s Republican Party — the one that exists today. Why do so many Republicans secretly (and some not so secretly) want an economic meltdown that would hurt millions of Americans? You know the answer. They don’t care. The Republican Party of today isn’t interested in solving the nation’s problems. They don’t want political power to do great things for the country. They want power for its own sake, end of story.

They haven’t exactly been coy about their willingness to do anything necessary to gain power. They’ve made it inescapably clear they’re ready to destroy our democracy.

Sure, they will enjoy using that power to reward the super-wealthy and to torture their foes, but those are just fringe benefits. It’s the power itself that’s important to them.

And if throwing our economy into a tailspin, thereby harming millions of Americans, is what it takes for them to get that power, so be it.

They haven’t exactly been coy about their willingness to do anything necessary to gain power. They’ve made it inescapably clear they’re ready to destroy our democracy. They’ve made it equally clear they have no qualms with the use of violence if that gets them what they want. Why would anyone question they will happily throw half the country into the poorhouse if doing so works to their political advantage?

These people are playing for keeps. An authoritarian-minded political party, such as the GOP, only needs to get complete control of the government one time and they will be positioned to institute changes that will make it all but impossible for them to ever be peacefully removed from power. We have seen the Republican Party do this at the state level in several battleground states, where they have used extreme gerrymandering to effectively lock-in perpetual control of state legislatures.

Show the bastards there’s a steep political price they’ll have to pay if they insist on playing this dangerous game.

You would think causing another Great Depression would hurt them politically. But not if they can redirect the public’s anger at Democrats. And history is on their side. If the economy crashes due to a default on the national debt, it will happen on Joe Biden’s watch. Voters have traditionally blamed the incumbent president for bad economic news. Most voters aren’t political junkies who study the details of public issues. All they know is that they’re hurting. It’s easy to blame the guy in charge.

And it won’t help matters that GOP politicians know they can count on the major media to play the bothsides-ism game, further confusing the public’s perception on where to place the blame.

That’s why the time to strike is now, before the damage is done. Democrats need to go into campaign mode. Get surrogates out before the public talking about the recklessness of what the GOP is doing. Flood television screens with political-style ads making the same points. In other words, get out front of the problem for once. Get the truth into the public’s minds before the GOP’s spin masters go to work. Show the bastards there’s a steep political price they’ll have to pay if they insist on playing this dangerous game.

This is the best chance we have of getting the GOP to back off. And if they won’t, it at least helps to make sure the blame falls where it should.

This content originally appeared on Common Dreams and was authored by Steven Day.

The Sadistic GOP’s Debt Limit Ploy vs. the People

Ralph Nader — Thu, 11 May 2023 12:21:57 +0000

Routine, that is, until the recent arrival of the mad-dog Republicans with their monetized brains indentured to the war-making military industrial complex and Wall Street speculators gambling with other people’s savings.

It wouldn’t have mattered if the Democrats campaigned in 2022 as did vigorous New Deal Democrats instead of campaigning like willing servants of corporate cash and political/media consultants conflicted with their corporate clients. Imagine, in New York, a state controlled by a Democratic Governor and Democratic state legislature, Republicans won four U.S. House seats previously held by the blundering Democrats. The GOP could have been vanquished. (See, winningamerica.net).

Instead, the GOP squeaked through with a tiny majority to take over the U.S. House and let some 30 off-the-wall “crazies” turn the screws on their Speaker Kevin McCarthy. He hails from impoverished and neglected Bakersfield, California.

Fearing the crazies might dislodge him, McCarthy has accepted many of their cruel budget cuts as a condition of lifting the debt limit. Failing to raise the debt limit will result in an unprecedented default by the U.S. Treasury sometime in the early summer. Taken together, the GOP cuts represent a congealed and vicious assault against defenseless Americans. Of course, the avaricious plutocrats, with their hands deep in Uncle Sam’s pockets, have been shielded from any financial pain by the demands of these ruthless Republicans.

Congressional history has rarely witnessed such a corrupt, cruel and explicit drive to turn the delegated sovereignty of the people against the citizenry.

The Republican-demanded cuts totally exclude the vast, bloated military budget, which amounts to over half of the entire federal government’s operational budget, and doesn’t reduce the huge corporate welfare giveaways and bailouts. Republicans leave intact the huge gaping tax escapes for super-wealthy individuals and giant corporations. The latter bonanza implicitly rejects Biden’s revenue producing proposals to eliminate some of Trump’s 2017 tax cuts for the very rich like Trump’s family.

A partial litany of the latest heartless GOP horrors that will result from the budget cuts they are anticipated to propose include:

Reduced funding for nutrition programs for children; reduced Social Security benefits; increased processing delays from past GOP cuts in processing disability benefit decisions and retirement claims; cuts in Pell Grant award levels meant for about 6.6 million low-income college students; damage to federal child-care programs; and the potential elimination of some 170,000 Head Start program slots.

Fewer safety inspections of workplaces (by the already financially starved OSHA) fewer inspections of the railroads, and nursing homes. Tens of thousands of people could lose access to federally funded treatment for opioid addiction. Millions of people would not receive federal student loan forgiveness.

The GOP demands budget cuts to the health and safety agencies that protect the American people, including the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), the Federal Aviation Administration’s (FAA) air traffic control system, the National Highway Traffic Safety Administration’s (NHTSA) programs for auto safety and the Federal Emergency Management’s (FEMA) emergency rescue programs.

The GOP message, camouflaged in attacks on the federal “bureaucracy,” is “hell for the people, but swell for the plutocracy.” Cutting the huge giveaways to the avaricious fat cats is off the table.

The first bill passed by the House GOP in January was to continue aiding and abetting giant tax evaders by repealing $80 billion over ten years that allows the budget starved IRS to go after the tax outlaws and promptly answer individuals’ phone calls.

Ironically, with all the verbal sparring between Republicans and Democrats, nary a peep has come from either party over the Federal Reserve’s trillions of dollars in printed money (called quantitative easing) to juice the stock market and subsidize the banks.

Even though the GOP is doing all this brazenly, mostly out in the open, the Democratic Party is unable or unwilling to use the powerful language and penetrating messaging essential to exposing the impact the GOP fangs will have on people where they live, work and raise their families. Imagine what FDR and Truman would have done.

The Democrats spend vast sums on television and radio ads with unmemorable self-anthems. They have the money to expose the GOP’s viciousness. What is the problem? Is campaign cash muzzling them? Could it be too many smug Party apparatchiks not being replaced with vigorous progressive strategists and communicators?

Are there too many safe gerrymandered seats, like those occupied by the GOP? Would more tough, young primary challengers change the debate? How about more animated, engaged voters? Could third-party competition wake up the slumbering politicians who refuse to listen to progressive citizen groups? Is there too much concentration of power within the House and Senate in just two so-called leaders? All of the above?

What’s your take readers?

There is another way for the Democrats to defeat the extortion effort by the GOP’s dangerous extremists who are playing hostage with American lives and livelihoods. Focus intensely on six or seven Republicans in the House who either are in Districts won by Biden or have expressed saner views on this gridlock. Focus also on those House Republican members who are retiring. All that the Democrats need is a switch of six votes to get the increase in the debt limit approved, leaving the GOP to wallow in its unprecedented viciousness.

This content originally appeared on Dissident Voice and was authored by Ralph Nader.

‘Debt Limit Chicken’ Is a Direct Result of Anti-Democratic US House Elections

Jessica Corbett — Thu, 11 May 2023 00:19:49 +0000

Amid rising fears that Republican lawmakers could soon force a catastrophic U.S. default, Fix Our House on Wednesday released a report arguing that "Congress lacks the incentive structure necessary to responsibly handle crucial tasks like raising the debt limit."

The release comes between a pair of meetings at the White House. After sitting down with House Speaker Kevin McCarthy (R-Calif.), House Minority Leader Hakeem Jeffries (D-N.Y.), Senate Majority Leader Chuck Schumer (D-N.Y.), and Senate Minority Leader Mitch McConnell (R-Ky.) on Tuesday, President Joe Biden told reporters they plan to come together again on Friday.

Biden and congressional Democrats are calling for a clean bill and stressing that GOP lawmakers took action on the debt ceiling three times under former President Donald Trump. However, House Republicans continue to hold the global economy hostage, demanding massive spending cuts that would affect working families—as demonstrated by their recent passage of the so-called Limit, Save, Grow Act, which would increase the debt limit by $1.5 trillion or until March 31, 2024, whichever comes first.

Some fearful of a default—or even coming precariously close to one, given warnings that the deadline could be as soon as June 1—have pushed the president to take unilateral action, but Biden on Tuesday downplayed perhaps the most popular option: invoking part of the 14th Amendment to the U.S. Constitution to keep paying the nation's bills.

"Just like in 2011 and 2013, Washington will hopefully find a way to avoid disaster. Whatever happens, one thing is certain: Brinkmanship and crises aren't random accidents in our democracy—they are inevitable outcomes of an electoral system that incentivizes and rewards them," states the report from Fix Our House, which advocates for proportional representation.

\u201cIn an uncompetitive district, the consequences of compromise can be career-ending, while grandstanding is likely to play better with the crucial ideological base.\n\nThanks to our broken system of single-member districts, 90% of districts are uncompetitive.\u201d
— Fix Our House (@Fix Our House) 1683744781

The report—Debt Limit Chicken: Why Washington Plays Games With Disaster—criticizes "the winner-take-all election rules that make performative conflict easy and compromise difficult" along with calling for the creation of "a more functional electoral system that would disincentivize Congress from playing death-defying stunts with the full faith and credit of the U.S."

"The overwhelming majority of congressional districts are not competitive between the two parties," the report explains.

Citing another recently released Fix Our House publication, the document details that "90% of House elections last fall were decided by a margin greater than five percentage points. About 83% had a margin greater than 10 points. Landslides are normal; the average margin of victory in 2022 was 27.7% for Democrats and 30.2% for Republicans."

Although both parties have been accused of gerrymandering, since Republicans won narrow control of the House in the wake of redistricting last November—leading to a 222-213 divide in the lower chamber—experts have highlighted how current political maps served the GOP, and may continue to do so if they are not challenged in court.

The new report includes a section dedicated to the "five families" of the fractured House GOP: the Republican Study Committee, Republican Main Street Caucus, Republican Governance Group, Freedom Caucus, and Problem Solvers Caucus.

"As with the rest of the House, the overwhelming majority of the members of the five families don't face competitive general elections," the publication points out. "The average margin of victory for the members of each major caucus was a blowout election."

\u201cOnly the @ProbSolveCaucus has a substantial percentage of its GOP members come from competitive districts.\n\nThese representatives have an electoral incentivize to build coalitions that include voters beyond their party -- and they're incentivized to act accordingly in Washington.\u201d
— Fix Our House (@Fix Our House) 1683744781

"In uncompetitive districts, the potential to be primaried is a much greater concern than a general election challenge," Fix Our House Co-Founder Lee Drutman said in a statement Wednesday. "That motivates representatives to focus on pleasing their voting base and disincentivizes compromise for fear of appearing too weak on 'the enemy."

"This problem is unique to America's outmoded system of single-member districts," Drutman added, "and it's only getting worse as urban-rural polarization makes it even harder to draw competitive districts."

As the report puts it, "gerrymandering is a huge problem," but it is not the only barrier to having 435 competitive districts.

"Rural voters are increasingly trending more to the right, and urban voters more to the left," the document says. "Voters are increasingly moving to places that better reflect their ideology. Red areas are getting redder, and blue areas are getting bluer."

"Even if the most fair-minded saints were drawing our congressional district maps, we would still have mostly uncompetitive districts," the report stresses. "And within the current system that we use to elect Congress, nothing can be done about it."

The report also emphasizes that "winner-take-all single-winner districts are not inevitable, and they are not in the Constitution."

In fact, "the Constitution specifically empowers Congress with the ability to change how its elections work, something Congress has done many times," the publication continues, urging federal lawmakers to pursue proportional representation.

Used by 80% of the world's democracies, proportional representation "disincentivizes binary conflict and showmanship and instead incentivizes coalition-building and compromise," the report states.

As the document explains:

Put simply, proportional representation is a system where a political party's share of votes in an election determines how many seats it holds in the legislature. Instead of each district electing one representative, a state divides into larger regions that each elect several representatives. The size of Congress—435 members—can be increased, or it can remain the same.
In a proportional system, voters can support multiple candidates, and each party wins seats in proportion to its share of the votes cast. For instance, if a region elects three representatives and the vote is 65% for Republicans and 35% for Democrats, it would elect two Republicans and one Democrat.

The existing U.S. system incentivizes "the us-vs-them conflict at the heart of the debt limit issue," the report concludes. "Thanks to the ever-escalating doom loop of polarization and dysfunction, the problem is worse than ever and will only grow more intractable. If we want to address this systemic problem, we need to look at systemic solutions."

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Struggling with debt, local governments across China call for help from Beijing

By Cheryl Tung for RFA Cantonese — Wed, 10 May 2023 19:07:51 +0000

Authorities in the southwestern province of Guizhou have hired a state-owned debt management company, as analysts warned of a potential financial crisis sparked by “domino-like” bankruptcies among local authorities.

China Cinda Asset Management has sent a panel of experts to the province in a bid to “prevent and defuse various risks and offer stronger financial services,” to the local government and state-owned enterprises, the company announced in a WeChat post cited by the state-run China Daily newspaper on April 25.

Cinda specializes in the “reform and risk mitigation of small and medium-sized financial institutions,” acquiring their distressed debt assets and investing in trusts, default bonds, judicial auction funds, according to a March 29 report in the same newspaper.

The company facilitates “local government-led regional bailout and risk mitigation of large real estate groups” and mergers and acquisitions of “high-quality real estate enterprises,” the paper said, adding that it had already intervened in the central province of Henan, where it set up a 10-billion yuan bailout fund for the purpose of bailing out property developers.

Official figures released ahead of the National People’s Congress showed that China’s public revenue totaled more than 20 trillion yuan last year, while expenditure topped 26 trillion yuan, an increase of 6.1% on the previous year, finance minister Liu Kun told a March 1 news conference in Beijing.

Lockdowns, quarantines and testing

Local governments have been hit by the triple whammy of increased pandemic spending while absorbing tax reductions, exemptions and early tax refunds, as the ongoing downturn in the real estate industry has led to a sharp drop in land transfer fees, which once accounted for 40% of local fiscal revenues, analysts have told Radio Free Asia in recent interviews.

Financial analysts have estimated that around one-third of public expenditure last year went on the rolling lockdowns, mass quarantines and compulsory daily COVID-19 testing programs of ruling Chinese Communist Party leader Xi Jinping’s zero-COVID policy, which ended in December.

A man walks past an advertisement displaying currencies, including China’s yuan, the U.S. dollar and the Euro at a money exchange in Hong Kong on July 26, 2011. Credit: Tyrone Siu/Reuters

The policy has left local governments struggling with an ever-mounting debt burden, prompting officials to borrow more to pay back old debts, and to raid the coffers of medical insurance funds to make ends meet, resulting in cuts to medical benefits and mass protests in major cities in February, they said.

Bloomberg cited official data in a Feb. 27 report as saying that at least 17 of China's 31 provinces and municipalities are facing severe fiscal deficits, with local borrowing exceeding 120% of income, which the Ministry of Finance set as a “warning level” for local government debt in 2020.

Guizhou, with a population of nearly 40 million, recently issued a rare public appeal to the central government for assistance, despite warnings from Beijing in January that there would be no bailouts, sparking fears that it could be the first Chinese province ever to go bankrupt.

The government announced on its website on April 11 that its financial and fiscal research teams had visited a number of cities to discover the extent of the problem, and concluded that there is a “significant and urgent” problem that “can’t be effectively resolved by this government alone.”

Local governments struggle

Commentators saw the report as tantamount to a direct appeal to Premier Li Qiang for central government support.

“I think we’re going to see a domino effect, as more provinces in the southwest follow Guizhou’s lead and start sending out warning signals about bankruptcy,” Beijing-based financial analyst Si Ling told RFA in a recent interview.

“Local governments declaring bankruptcy could affect public opinion, and put pressure on China’s central government, namely the State Council and the Ministry of Finance,” he said.

He said if the financial crisis spreads to richer regions of China, such as the Pearl River and Yangtze River delta regions, it could spark an international sell-off of China’s sovereign debt.

“If one local government after another goes bankrupt, then even the central government and the People’s Bank of China won’t be able to buy up the piles of sovereign debt that will be sold off on international money markets,” Si said.

An aerial view of the Beipanjiang Bridge across the Beipanjiang valley in Shuicheng county in southwest China’s Guizhou province on Dec. 29, 2016. Credit: Pu Chao/Xinhua via AP

There are already signs that other governments are also struggling, with two county governments in the southwestern province of Yunnan recently announcing they had set up special task forces to address mounting debt.

Authorities in Yunnan’s Tongchong county said on April 24 that they could barely make their payroll given the current schedule of repayments.

Financial commentator Si Ling said the fact that local governments like those in Yunnan are openly talking about the problem suggests they have reached the end of the line.

“Economic recession has undermined the ability of governments to pay back their loans,” Si said. “When the financial crisis breaks, it will affect everyone.”

“Local debt crises and huge debt burdens, governments going bankrupt, all of that could really happen, and happen all at once in an overwhelming way,” he warned. “The Chinese government won’t be expecting it, because it has never happened before.”

China’s local government debt exceeds U.S.$9 trillion (about 61.55 trillion yuan), and continues to increase, according to a recent Reuters report.

‘No choice but to borrow’

Yunnan resident Xiao Tai, who gave only a nickname for fear of reprisals, said the local government in his local region of Xishuangbanna is in debt to the tune of 16 billion yuan, and is already falling behind on wages to civil servants.

“Everyone is in debt,” he said. “The central government is rich, and so are the banks, but ordinary people and local governments have no money.”

He said many people in China, faced with a tanking economy, poor job prospects or unpaid wages, are being forced to borrow just to survive.

“Ordinary people used to be afraid of owing tens of thousands of yuan, but now they have no choice but to borrow hundreds of thousands,” he said. “If they don’t borrow, they will have nothing to live on.”

He said moves are afoot where he lives to get property developers to build heavily subsidize housing for civil servants in lieu of wages, and to issue supermarket vouchers to enable people to buy daily necessities, staving off public unrest over unpaid wages.

But he said much of the central government funding allocated to the region as part of “poverty alleviation” schemes had disappeared. “There are many reasons why there is no local fiscal revenue, and the biggest of them is corruption,” Xiao Tai said.

Translated by Luisetta Mudie. Edited by Matt Reed.

This content originally appeared on Radio Free Asia and was authored by By Cheryl Tung for RFA Cantonese.

The Very Specific Ways the GOP Budget Will Deeply Harm Hundreds of Millions of Americans

Hannah Story Brown — Wed, 10 May 2023 14:26:25 +0000

There are a lot of things you could say about the GOP’s proposed plan to reduce the deficit. But if we want to be more expansive than just calling it “batshit crazy” and washing our hands of the whole clown show, as we think Biden can and should,then we could point out that the GOP plan is an expression of profound hostility to the idea of a federal government that serves anyone besides war profiteers.

Their proposal illustrates the party’s commitment to a government that fails Americans in many important ways, because the party’s only strategy to preserve power is to harness people’s anger and fear. How better to make people fear that things will be taken away from them than by actually taking things away, and then diverting the blame?

The Republican-proposed cuts to discretionary spending would harm millions of people, invariably causing losses of health, home, life, and opportunity. I’ll dig into the specifics below. A helpful visual representation of the proposed cuts from The New York Times estimates that the GOP plan would cut discretionary spending across the board by an average of 18 percent. But the GOP is also claiming that they would spare defense, veterans’ health and border security from those cuts. If you exclude military spending from cuts, then all the other federal departments and agencies would have their budgets cut by 51 percent. At that point, you might as well throw in the towel, because public services are as good as dead.

The Republican-proposed cuts to discretionary spending would harm millions of people, invariably causing losses of health, home, life, and opportunity.

Forget about avoiding the worst effects of climate change. Forget about public infrastructure projects. Forget about federal student aid. Forget about clean air and clean water and cleaning up contaminated lands. Forget about space exploration. Forget about loans for farmers. Forget about food and workplace safety inspections. Forget about growing union power. Forget about cracking down on corporations when they jack up prices or steal wages or spill a bunch of toxic chemicals in your town or oil in the sea. The U.S. government would pretty much solely be an insurance company with a massive army, as no doubt the founding fathers intended. Right?

Now, there’s no good reason for Biden to concede to these agents of chaos masquerading as serious people. Several legal scholars have spent considerable amounts of time charting the least-harmful path out of this thicket. Most recently, eminent legal scholar Laurence Tribe joined the chorus calling for the U.S. to ignore the debt ceiling and continue to pay its bills. But while the GOP’s plan deserves no serious consideration, it is worth talking about how budget cuts harm federal departments and agencies, and by extension, the public.

There’s no good reason for Biden to concede to these agents of chaos masquerading as serious people.

For so many people, the executive branch is basically a black box: its internal mechanisms mysterious, its value unclear. Earlier this spring, 21 federal departments wrote letters laying out explicitly what 22 percent budget cuts would do to their work. (22 percent is the White House Office of Management and Budget’s estimate of the first year of budget cuts under the GOP plans, with the cuts growing deeper each year.) Among other things, these letters make the case for the value of federal agencies to the American people in franker terms than we usually get from the spokespeople of the administrative state.

So, according to the agencies themselves…

The Harms of the GOP Budget Cuts Include:

The firing of 1,800 food inspectors who conduct mandatory food inspections would cause a shortage of meat, poultry, and eggs available for consumers, and estimated lost production volumes of more than 11.5 billion pounds of meat, 11.1 billion additional pounds of poultry, and over 590 million pounds of eggs, equivalent to a loss of over $89 billion for the industry. It would also cause over $2.2 billion in lost wages for furloughed industry employees.

Funding cuts would have “dramatic impacts” on western states impacted by drought, including by undermining ongoing programs that support 489 dams and 338 reservoirs delivering water to more than 31 million people and 1 of every 5 western farmers. In just one example, spending cuts would increase the likelihood that the water levels in Lake Mead decline to the point that water allocations from the reservoir are no longer possible, and people could lose power from inadequate amounts of water passing over dams. About 25 million people rely on the water from Lake Mead.

Funding cuts at Health and Human Services would cause, among many other impacts, over a million households to be unable to afford to heat their homes; a million elderly adults to no longer receive meals they depend on; and hundreds of thousands of children to lose critical early childhood care that’s often necessary for their parents to be able to work.

Reducing funding for fighting wildfires on public lands by nearly 40 percent across the fire programs, and cutting as many as 1,754 of the 4,468 full-time firefighting positions at Interior, would have devastating ecosystem impact and increase the danger to people in high fire-risk areas. An additional 2,200-2,700 wildland firefighters with the Forest Service would also be furloughed.

Funding cuts would cut off over one million women, infants, and children from a supplemental nutrition program; non-breastfeeding postpartum women, unhoused and migrant individuals, and children would be the first to lose benefits.

Funding cuts would allow more species to go extinct, as the Fish and Wildlife Service’s implementation of the Endangered Species Act is already significantly underfunded and “does not keep pace with current demand” for species to receive critical protections to avoid extinction.

About $156 million in back wages for 135,000 private sector workers would not be recovered because the Labor Department’s Wage and Hour Division would have to reduce its compliance actions, investigations, and targeted inspections.

Alaskan Natives whose lands are contaminated by arsenic, asbestos, lead, mercury, pesticides, and various petroleum products would lose a significant new program intended to clean up this contamination.

Funding cuts to a rental assistance program that serves approximately 1.3 million families would represent a “historically unprecedented loss of existing affordable housing, a breach of federal contracts, and a repudiation of decades of long-term bipartisan federal investment.” Cuts would likely lead to tens of thousands of evictions.

Funding cuts to the Education Department would impact an estimated 25 million children by cutting more than 60,000 teachers and aids from classrooms serving low income students. It would also decrease aid to all 6.6 million Pell Grant recipients and eliminate Pell Grants for 85,000 students, eliminate FWS financial support for approximately 11,000 students, and eliminate Work-Study financial support for approximately 85,000 students, among other impacts.

And all of this doesn’t even include the damage that the GOP is intending to do to the U.S.’s only piece of climate legislation.

Among the many things you could say about the GOP’s proposed plan to reduce the deficit, then, you could say that it is senselessly cruel, wildly irresponsible, and embarrassingly uninformed.

All of this doesn’t even include the damage that the GOP is intending to do to the U.S.’s only piece of climate legislation.

You could say that it targets the most vulnerable Americans, whether that means vulnerability to wildfires and drought and rising seas, or vulnerability to food and housing insecurity, or to environmental hazards or pollutants, or systemic barriers to education and workplace access, or to wage theft or unsafe working conditions.

You could even say that any child in our underfunded public school system could do better, fairer, and more discerning math. And unlike our political media, children would probably be more likely to cover this calamity as a serious story with real-world impact, rather than assessing it primarily within the context of Biden’s re-election campaign, Kevin McCarthy’s efforts to maintain Speaker, and the stock market.

This content originally appeared on Common Dreams and was authored by Hannah Story Brown.

The Sadistic GOP’s Debt Limit Ploy vs. the People

eweisbaum — Wed, 10 May 2023 13:02:33 +0000

By Ralph Nader May 10, 2023 Raising the federal debt limit over the years has secured unconditional routine Congressional passage and was endorsed by presidents Ronald Reagan and Donald Trump. After all, it allows the U.S. Treasury to pay past and existing bills, not expand future spending. Routine, that is, until the recent arrival of…

This content originally appeared on Ralph Nader and was authored by eweisbaum.

The GOP Debt Ceiling Threat to Social Security Is Real

Richard Eskow — Wed, 10 May 2023 11:12:01 +0000

In a May 4 article about the so-called debt ceiling crisis, the New York Times made this declaration about the looming showdown between House Republicans and the White House:

“The only point of agreement so far is on the one thing Mr. Biden and Mr. McCarthy consider off limits in budget talks: Social Security and Medicare ...”

These programs are sometimes called “entitlements,” a term that has taken on pejorative overtones in right-wing rhetoric. A better term is “mandatory spending,” since Congress has established rules for funding them. Biden’s defense of these programs, and McCarthy’s newfound diffidence toward them, reflect their enormous popularity with voters across the political spectrum. So they’re safe, right?

Not so fast.

Recent History

House Republicans have already slashed Social Security’s administrative budget. Now they’re demanding additional cuts that would make it more difficult – or impossible – for many people to collect the benefits they’ve earned. And if they carry out their threat to let the federal government default, 65 million current beneficiaries will stop receiving Social Security payments. They include the elderly, widows and widowers, disabled people, and orphaned children.

We’ve seen this kind of play before, and there are plenty of billionaire-funded think tanks that would be happy to work out the policy and public relations details.

Republicans want to cut these programs. They discussed those cuts on a video feed before last year’s election, even as they admitted that honesty about their position would amount to “political suicide.” As one House Republican said, they would “all get thrown out of office [if] we told the truth.”

On the Democratic side, it’s true that the Biden White House has staked out a very different position than the Clinton and Obama administrations. It has said it won’t accept any mandatory spending cuts. White House spokesperson Andrew Bates even dismissed the “bipartisan commission” approach, a backdoor way to cut benefits, as a "death panel for Medicare and Social Security.”

Biden’s break with his predecessors – including the one he served as vice president – is gratifying, but his staff and the Democratic policy establishment are heavily weighted toward the same misguided thinking. That leaves an opening for the sort of “compromise” that is unpopular with voters but beloved by elites.

The Power and the Politics

House Speaker Kevin McCarthy’s proclamations reflect two political realities. One is that his party’s position is extremely unpopular. The other is that its likely 2024 standard bearer, Donald Trump, has said he wants Social Security cuts off the table.

Trump, who is using the issue to distinguish himself from Ron DeSantis and other potential primary rivals, said that “under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security.’’ He also said the Florida governor is “trying to destroy Social Security and Medicare.” A pro-Trump super PAC’s ad asserted that DeSantis “has his dirty fingers all over senior entitlements.”

This is the same rhetoric Trump deployed in 2016, and it’s not to be believed. Trump called for benefit cuts in 2000, 2012, and, most importantly, in his proposed budgets as president. “Oh, we’ll be cutting,” Trump said of mandatory spending programs, “but we’re also going to have growth like you’ve never had before.”

Sure we will, pal.

For his part, Biden has broken dramatically with his own past positions. “Raising the cap, raising the retirement age for people who are now 30 years old, raising the tax on Social Security, cutting benefits,” Biden said in 2005. “They’re all things that have to be discussed, quite frankly.”

It’s a long road from there to calling bipartisan commissions “death panels.” What happened? Outside activists led the charge against Social Security and Medicare cuts, and for expanding both programs. Bernie Sanders’ candidacy galvanized Democratic opinion on the issue, which Biden is reflecting today. It’s smart politics on Biden’s part.

But voter preference is not the only driving force, or even the primary one, in a political system influenced by large contributions and favorable coverage from the mainstream media. That’s why presidents Clinton and Obama openly discussed mandatory-spending cuts, and why Obama created a “bipartisan” deficit commission that was heavily weighted toward the benefit-cutting crowd.

The “Grand Bargain” Scenario

How could the bad thing happen?

Biden will come under immense pressure to compromise as the government moves closer to default. The media is already trying to box him in on the issue; the headline for that Times article, for example, is “In Debt Limit Talks, Biden and Republicans Start Far Apart.”

Biden has said he won’t negotiate over the debt limit, although he also says he’s willing to discuss future spending. That may seem like a distinction without a difference, but it’s still odd that the Times is calling these meetings "debt limit talks." Is that because it’s what insiders are calling them, or because that’s what they want them to become?

Biden could find himself being pressed on all sides – by Democratic advisors, big donors, and media pundits alike – to compromise on big-ticket mandatory spending programs. House Republicans would love to cut an anti-Social Security, anti-Medicare deal. Despite McCarthy’s demurrals, the GOP remains ideologically opposed to those programs.

How would such a deal work, exactly? The most important task would be to provide political cover for the parties involved. Unfortunately, there’s a precedent for that, too, in the so-called “Grand Bargain” discussions of 2011. President Obama went eyeball-to-eyeball with Republican House Speaker John Boehner over the debt ceiling that year – and blinked. Tea Party Republicans sank their “Grand Bargain,” fortunately, but the result was the Budget Control Act of 2011.

That law mandated nearly a trillion dollars in budget cuts over the following ten years. It also created a congressional “super committee” on deficit reduction comprised of six Republicans and six Democrats. With today’s Republicans even further to the right than 2011’s, and with a profusion of “Blue Dog” Democrats willing to cut these programs, that kind of committee would be a far riskier proposition than it was back then.

Trigger Happy

Lastly, the Budget Control Act created a mechanism called “sequestration” that would trigger across-the-board federal spending cuts if Congress allocated more spending than agreed upon in this measure. Social Security and Medicaid were exempted from these automatic cuts in 2011, but Medicare was not. House Republicans have moved even further to the right, so there’s no guarantee that would be true today.

When it comes to Social Security and Medicare, sequestration could be the perfect solution for politicians who fear blowback (which is to say, all of them). Rather than directly cut popular programs, they could create “automatic” triggers that fire at some unspecified future date while leaving no fingerprints behind. We didn’t do it, they could say; the triggers did.

It would be like that Agatha Christie story where all the suspects committed the murder. If everyone did it, who takes the blame?

Conclusion

Sound paranoid? Maybe, or maybe I’m post-traumatic from covering the 2011 negotiations. But I don’t think so. We’ve seen this kind of play before, and there are plenty of billionaire-funded think tanks that would be happy to work out the policy and public relations details.

That makes this the right time to call out Republicans for threatening to disrupt Social Security while strangling its administrative budget, and to push back on the billionaire-donor demands and big-media narratives that threaten what remains of the social contract.

This content originally appeared on Common Dreams and was authored by Richard Eskow.

The Debt Ceiling Debate is a Massive Deception of the American Public

Richard D. Wolff — Wed, 10 May 2023 06:01:49 +0000

Future historians will likely look back at the debt ceiling rituals being reenacted these days with a frustrated shaking of their heads. That otherwise reasonable people would be so readily deceived raises the question that will provoke those historians: How could this happen?

The U.S. Congress has imposed successive ceilings on the national debt, each one higher than the last. Ceilings were intended to limit the amount of federal borrowing. But the same U.S. Congress so managed its taxing and spending that it created ever more excesses of spending over tax revenues (deficits). Those excesses required borrowing to cover them. The borrowings accumulated to hit successive ceilings. A highly political ritual of threats and counterthreats accompanied each rise of the ceiling required by the need to borrow to finance deficits.

It is elementary economics to note that if Congress raised more taxes or cut federal spending—or both—there would be no need to borrow and thus no ceiling on borrowing to worry about. The ceiling would become irrelevant or merely symbolic. Further, if taxes were raised enough and spending cut enough, the existing U.S. national debt could be reduced. That situation has happened occasionally in U.S. history.

The real issue then is that when borrowing approaches any ceiling, the policy choices are these three: raise the ceiling (to borrow more), raise taxes, or cut spending. Of course, combinations of them would also be possible.

In contrast to this reality, U.S. politics deceives by constricting its debate. Politicians, the mainstream media, and academics simply omit—basically by refusing to admit or consider—tax increases. The GOP demands spending cuts or else it will block raising the ceiling. The Democrats insist that raising the ceiling is the better choice than cutting spending. Democrats threaten to blame the GOP for the consequences of not raising the debt ceiling. They paint those consequences in lurid colors depicting U.S. bondholders denied interest or repayment, Social Security recipients denied their pensions, and government employees denied their wages. The unspoken agreement between the two major parties is to omit any serious discussion of raising taxes to avoid hitting the debt ceiling. That omission entails deception.

Here are some tax increases that could help solve the problem by avoiding any need to raise the debt ceiling. The social security tax could be applied to all wage and salary incomes, not only those of $160,000 or less as is now the case. The social security tax could be applied to nonwage income such as interest dividends, capital gains, and rents. The corporate profits tax could be raised back to what it was a few decades ago: near or above 50 percent versus the current 37 percent rate. A property tax could be levied on property that takes the form of stocks and bonds. The current property tax in the United States (levied mostly at the local level) includes land, houses, automobiles, and business inventories, while it excludes stocks and bonds. Perhaps that is because the richest 10 percent of Americans own roughly 80 percent of stocks and bonds. The current property tax system in the United States is very nice for that 10 percent. Another logical candidate is the federal estate tax which a few years ago exempted under $1 million of an estate from the tax, but now exempts over $12 million per person (over $25 million per couple). That exemption makes a mockery of the idea that all Americans start or live their lives on a level playing field where merit counts more than inheritance. The U.S. could and should go back from that tax giveaway to the richest. There are many more possible tax increases.

Of course, there are strengths and weaknesses entailed in raising every tax, positive and negative consequences. But the exact same is true of raising the debt ceiling and thereby increasing the U.S. national debt. Likewise cutting spending has its pluses and minuses in terms of pain and gain. There is no logical or reasonable basis for excluding tax increases from the national debate and discussion about raising the debt ceiling and thereby the national debt.

It is rather the shared political commitments of both major parties that require and motivate the exclusion. There is no reason for U.S. citizens to accept, tolerate, endorse, or otherwise validate the debt ceiling deception perpetrated against us.

Nor is the debt ceiling deception alone. The previous national debate over responding to inflation by having the Federal Reserve raise interest rates provides another quite parallel example. That debate proceeded by debating the pros and cons of interest rate increases as if no other anti-inflationary policy existed or was even worth mentioning. Once again elementary economics teaches that wage-price freezes and rationing have been used against inflations in the past—including in the United States—as alternatives to raising interest rates or alongside them. U.S. President Nixon in 1971 used wage-price freezes. U.S. President Roosevelt used rationing during World War II. But the government, Federal Reserve, major media, and major academic leaders carried on their recent policy debates as if those other anti-inflationary tools did not exist or were not worth including in the debate.

Wage-price freezes and rationing have their strengths and weaknesses—just as tax increases do—but once again the same applies to raising interest rates. No justification exists for proceeding as if alternative options are not there. The U.S. national debate over fighting inflation was deceptive in the same way that the debate over the debt ceiling is.

Nor is the deception any less if it is covered by a claim of “realism.” Those who grasp elementary economics enough to know that tax increases could “solve” the debt ceiling issue become complicit in the deception by invoking “realism.” Since the two major parties are jointly subservient to corporations and the rich, they rule out tax increases on them. It thus becomes “realistic” to exclude that option from the debt ceiling debate. What is best for corporations and the rich thus gets equated to what is “realistic.” It is worth remembering that throughout history ruling classes have discovered, to their shock and surprise, that the ruled can and often do quickly alter what is “realistic.”

The debt ceiling deceptions favor corporations over individuals and the richest individuals over the rest of us. In our thinking and speaking too, the nation’s class structure and class struggles exhibit their influential power. The mainstream debt ceiling debate deceives by lying by omission rather than commission.

This article was produced by Economy for All, a project of the Independent Media Institute.

This content originally appeared on CounterPunch.org and was authored by Richard D. Wolff.

The Debt Ceiling Debate is a Massive Deception of the American Public

Richard D. Wolff — Wed, 10 May 2023 06:01:49 +0000

This article was produced by Economy for All, a project of the Independent Media Institute.

This content originally appeared on CounterPunch.org and was authored by Richard D. Wolff.

Biden ‘Considering’ 14th Amendment But Downplays Using It to End Debt Limit Fight

Jessica Corbett — Wed, 10 May 2023 00:40:13 +0000

After meeting with congressional leaders at the White House Tuesday afternoon, U.S. President Joe Biden told reporters he has been "considering" invoking the 14th Amendment to the Constitution to avert a catastrophic default, but he also suggested that doing so won't solve the current battle with House Republicans.

With Treasury Secretary Janet Yellen and others warning that the U.S. could face its first-ever default as soon as June 1, some legal experts and members of Congress have promoted unilateral action by Biden—such as minting a $1 trillion coin or citing the 14th Amendment, which says in part that the validity of the public debt "shall not be questioned," to justify continuing to pay the nation's bills even if GOP lawmakers won't raise the official borrowing limit.

"I have been considering the 14th Amendment" and Laurence Tribe "thinks that it would be legitimate," Biden said Tuesday evening, describing the Harvard University professor emeritus as "a man I have enormous respect for" and "who advised me for a long time."

"But the problem is, it would have to be litigated," the president said of the strategy, which Tribe advocated for in an opinion piece for The New York Times on Sunday. Biden later added that "I don't think that solves our problem now."

\u201cPresident Biden on #DebtCeiling: "I have been considering the 14th amendment."\u201d
— CSPAN (@CSPAN) 1683673302

The president signaled that he is looking into asking the federal judiciary to weigh in on the 14th Amendment debate "months down the road," after settling the ongoing dispute with House Speaker Kevin McCarthy (R-Calif.).

House Republicans last month passed their so-called Limit, Save, Grow Act, which would raise the debt ceiling by $1.5 trillion or until March 31, 2024, whichever comes first, but also impose dramatic spending cuts that would affect working families. Senate Majority Leader Chuck Schumer (D-N.Y.) has called the legislation "dead on arrival."

Both McCarthy and Schumer were at the White House for Biden's 4:00 pm ET meeting, along with House Minority Leader Hakeem Jeffries (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.).

Biden, who unveiled his budget blueprint in March, said that "I told congressional leaders that I'm prepared to begin a separate discussion about my budget and spending priorities, but not under the threat of default."

\u201cThe @HouseGOP's MAGA Debt Default plan checks off the wishlists of their most extreme members, the ultra-wealthy, and big corporations.\u201d
— Accountable.US (@Accountable.US) 1683673866

Schumer said after the meeting that "we explicitly asked Speaker McCarthy, would he take default off the table. He refused. President Biden said he would; Leader Jeffries said he would; of course, I said I would, but he wouldn't take it off the table."

"The bottom line is very simple: There are large differences between the parties," he continued, flanked by Jeffries. "If you look at what President Biden had proposed and you look at what Speaker McCarthy has proposed, they're very, very different. We can try to come together on those, in a budget and appropriations process, but to use the risk of default—with all the dangers that has for the American people—as a hostage and say it's my way or no way, or mostly my way or no way, is dangerous."

McConnell claimed that "the United States is not going to default; it never has and it never will," but also made clear that Senate Republicans aren't interested in a clean debt limit increase and stressed that Biden and McCarthy must reach an agreement.

McCarthy, meanwhile, said that "everybody in this meeting reiterated the positions they were at. I didn't see any new movement."

According to Biden, the meeting attendees' staffs will continue to communicate this week and another meeting is set for Friday.

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Amid Growing Calls to Resign, Feinstein Heads Back to Capitol Hill

Jessica Corbett — Tue, 09 May 2023 22:18:34 +0000

Faced with mounting calls to resign due to the impact of her extended absence, U.S. Sen. Dianne Feinstein headed to Washington, D.C. on Tuesday after being away since late February while recovering from shingles.

The San Francisco Chroniclereported that the California Democrat "boarded a chartered private plane" and "could return to the Senate as early as Tuesday evening." Feinstein spokesperson Adam Russell confirmed her departure to the newspaper.

Senate Majority Leader Chuck Schumer (D-N.Y.) said in a statement that "I'm glad that my friend Dianne is back in the Senate and ready to roll up her sleeves and get to work. After talking with her multiple times over the past few weeks, it's clear she's back where she wants to be and ready to deliver for California."

\u201cThat sound you hear is Chuck Schumer breathing a huge sigh of relief \u2014 for now\u201d
— Jessica Taylor (@Jessica Taylor) 1683659737

Feinstein, who is 89, has already said she will retire at the end of the current term, and three California Democrats in the U.S. House—Reps. Barbara Lee, Katie Porter, and Adam Schiff—have launched campaigns for next year's primary.

Demands for Feinstein to step down early have been building since last spring, when the Chroniclereported that based on interactions with the senator, some of her colleagues were concerned she is mentally unfit to continue serving. During her recent absence, Feinstein has missed 91 floor votes.

The missed votes, Democrats' narrow control of the chamber, and the GOP's refusal to let Schumer temporarily replace Feinstein on the Senate Judiciary Committee so the panel can advance President Joe Biden's judicial nominees, have fueled fresh calls for her to resign—including from some members of Congress.

Ahead of the news of Feinstein's return on Tuesday, former Labor Secretary Robert Reich—who described himself as "one of her personal friends as well as one of her constituents"—wrote that "as someone in his late 70s, let me be clear. I'm not suggesting an age limit on public service. I'm only suggesting vigilance."

Feinstein "has accomplished many worthy things since she was first elected to the Senate in 1992," Reich noted, detailing some of them. "She has said she will retire at the end of 2024, but too much damage is being done in the interim. If she can no longer perform her duties, it is now time for her to step down."

"The three-month absence hurt our agenda, and time will tell on the future."

Congressman Ro Khanna (D-Calif.)—who is co-charing Lee's 2024 campaign and recently called for Feinstein's resignation—said in a statement Tuesday that he is "very glad" the senator "is feeling better and hopeful that she will be able to fulfill her duties upon her return."

"The people of California deserve strong representation and a senator who can vote to advance President Biden's judicial nominees and protect Americans' fundamental rights," he added. "The three-month absence hurt our agenda, and time will tell on the future."

The senator's return "will put two nominees in the spotlight, in part because Feinstein's absence is not the only vote holding them up," Politiconoted, pointing to Biden's nomination of Michael Delaney for the 1st U.S. Circuit Court of Appeals and Julie Su for labor secretary.

Feinstein also comes back to a Congress engaged in a battle over raising the debt ceiling amid estimates that the U.S. government could run out of money to pay its bills as soon as June 1. After meeting with Biden and other congressional leaders at the White House Tuesday, House Speaker Kevin McCarthy (R-Calif.)—who is threatening a catastrophic default unless Democrats agree to huge spending cuts that would impact working people—said that "I didn't see any new movement."

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Coalition of 85+ Progressive Organizations Release Statement Ahead of Tuesday Debt Limit Meeting

Newswire Editor — Tue, 09 May 2023 16:52:29 +0000

"It's bad news," study author Eric Rignot, a University of California, Irvine (UCI), glaciologist, told the AP. "We know the current projections are too conservative."

"This is an order of magnitude larger than expected for grounding lines on a rigid bed."

The Petermann Glacier is a massive glacier in Northwest Greenland that contains enough ice to raise sea levels by a little more than a foot, the study authors noted. It is one of four Greenland ice masses that make up "the largest threat for rapid sea-level rise from Greenland in the coming decades" since they drain into the ocean below sea level.

Up until recently, however, the glacier was relatively stable, gaining about as much mass each year as it lost. That began to change in 2016, when the center of its grounding line began to edge backward at a rate of 0.6 miles per year.

A glacier's grounding line is the place where it moves from being supported by land to floating on the ocean, and it's this feature of Petermann that is the focus of the new study. The scientists from UCI, NASA's Jet Propulsion Laboratory at the California Institute of Technology, the University of Houston, Finland's Iceye mission, China's Tongji University, the German Aerospace Center, and the Italian Space Agency used satellite radar data to learn that the grounding line was moving significantly with the tides.

"Petermann's grounding line could be more accurately described as a grounding zone, because it migrates between 2 and 6 kilometers [approximately 1.2 to 3.7 miles] as tides come in and out," lead author Enrico Ciraci, a UCI assistant specialist in Earth system science and NASA postdoctoral fellow, said in a statement. "This is an order of magnitude larger than expected for grounding lines on a rigid bed."

This movement, in turn, accelerated ice melt.

"These ice-ocean interactions make the glaciers more sensitive to ocean warming," Rignot explained.

Between 2016 and 2022, the grounding line retreated by more than two miles. During that time, the warmer ocean water melted a 669-foot tall cavity at the bottom of the glacier. The melt rates around the cavity for 2020-21 were 50% greater than the melt rates for 2016-19, and, during 2022, the cavity stayed open the entire year.

What's especially concerning to the study authors is that what happens in Petermann may not stay in Petermann.

"These dynamics are not included in models," Rignot said.

If they were included, it could double sea-level rise projections, the study authors observed.

Hélène Seroussi, a glaciologist at Dartmouth College who was not involved with the study, cautionedThe Washington Post that models for ice melt and sea-level rise would not incorporate these findings overnight, since scientists still need to determine how many glaciers they really apply to. However, Seroussi acknowledged that the measurements were unprecedented.

"The melt rates reported are very large, much larger than anything we suspected in this region," Seroussi said.

Andreas Muenchow of the University of Delaware, a scientist who studies Petermann Glacier but was also not a part of the study, further told the Post that the high melt rates were observed over a relatively small area.

"My main takeaway is that models need to be improved," Muenchow said.

This content originally appeared on Common Dreams and was authored by Newswire Editor.

‘Freedom From Medical Debt’ Campaign to Launch With Virtual Town Hall

Jessica Corbett — Mon, 08 May 2023 23:24:05 +0000

"I'm 72 and now live with my daughter after losing everything because of medical bills. I had $250K saved up for retirement and then disaster hit—several bouts of cancer and a stroke in 2009."

That's the story of Arizonan D'Anne MacNeil, a patient advocate and member of Our Revolution—which is working with U.S. Rep. Ro Khanna (D-Calif.), Sen. Bernie Sanders (I-Vt.), the National Consumer Law Center, and Tzedek D.C. on a new campaign.

The "Freedom From Medical Debt" initiative launches Monday with a virtual town hall at 8:30 pm ET.

\u201cAmericans hold $195 billion in medical debt. It should be 0. \nDon\u2019t miss our LIVE Town Hall to End Medical Debt with US Rep. @RoKhanna and Our Revolution patient advocates, hosted by me, LIVE this Monday, 5/8, 8:30 pm ET!\nhttps://t.co/iiAJf2AuF6\u201d
— Joseph Geevarghese (@Joseph Geevarghese) 1683209883

"I wouldn't owe anything if hospitals didn't gouge patients," said Mary Willis of Texas. "The cost of an MRI in the hospital was eight times the cost of an outpatient MRI and 80 times outsourced MRIs. I owe over $8,000."

The virtual town hall is set to feature similar stories—including that of Washingtonian Kristin Noreen, who "barely survived" being hit by a vehicle while on her bicycle in 2010. After enduring a brain injury and having her hand amputated and reattached, Noreen is still paying off medical bills and for pain treatments not covered by insurance.

Fellow patient advocate and Our Revolution member Elizabeth McLaughlin of Indiana, who received a $20,000 bill for an emergency visit in 2015, also plans to join the town hall, along with Khanna.

"We need to strategize for legislation Bernie Sanders and I are doing and figure out how we finally end medical debt in this country," Khanna said in a Monday video promoting the event. The lawmakers have worked together for years; Khanna co-chaired Sanders' 2020 presidential campaign and both support Medicare for All, for which the senator has long led the fight on Capitol Hill.

In a Saturday email about the town hall, Our Revolution—which came out of Sanders' 2016 presidential run—said that as the senator and Rep. Pramila Jayapal (D-Wash.) "prepare to reintroduce Medicare for All in Congress, we are organizing people struggling with medical debt to speak up and fight for healthcare justice."

\u201cNo one should go bankrupt because they can\u2019t pay their doctor bills. Yet medical debt is the number #1 cause of bankruptcy in the US and nearly 100,000,000 people carry medical debt.\u201d
— Ro Khanna (@Ro Khanna) 1683580725

The Hill, which first reported on the town hall, noted that in addition to backing Khanna and Sanders' forthcoming bill, patient advocates are hoping to pressure President Joe Biden "to use executive action to help stop price gouging for vulnerable patients, end a variety of predatory debt collection tactics, and ensure that people seeking medical assistance have financial aid and free or reduced-price care available."

Highlighting that "medical debt is the number one reason for personal bankruptcies in the United States," Our Revolution executive director Joseph Geevarghese told the outlet, "We can stop that and the president has the power."

As part of the campaign "calling for Congress and the president to deliver systemic solutions to this massive healthcare injustice," organizers have launched a website to collect medical debt stories and hope to get at least one from every congressional district.

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Biden Can ‘Absolutely’ Invoke 14th Amendment Over Debt Ceiling, Says Raskin

Jessica Corbett — Mon, 08 May 2023 20:47:08 +0000

As congressional leaders prepare for a Tuesday meeting at the White House, Congressman Jamie Raskin, a constitutional scholar, affirmed Sunday that if GOP lawmakers won't raise the debt ceiling without major spending cuts, President Joe Biden can invoke the 14th Amendment to keep borrowing and avert a catastrophic first-ever U.S. default.

Section 4 of the 14th Amendment to the U.S. Constitution says in part, "The validity of the public debt of the United States, authorized by law... shall not be questioned."

Asked whether the president could and should use that part of the amendment to combat Republican efforts to hold the global economy hostage, Raskin (D-Md.) told MSNBC's Jen Pskai—Biden's former press secretary—that "I think he has that authority under these circumstances, absolutely, because the Congress has put him in a constitutionally untenable position."

\u201c.@jrpsaki Do you think President Biden has the authority to invoke the 14th Amendment to raise the debt ceiling on its own? \n\n@RepRaskin: "I think he has that authority under these circumstances, absolutely. The Congress has put him in a constitutionally untenable position."\u201d
— Inside with Jen Psaki (@Inside with Jen Psaki) 1683483272

"If he decides to default for the country, he's... violating the Constitution, because the 14th Amendment says you can't do that," Raskin said of Biden, pointing to a New York Times opinion piece by Harvard University professor emeritus Laurence Tribe.

Tribe—whose previous students include Raskin along with former President Barack Obama, U.S. Attorney General Merrick Garland, and Supreme Court Justices John Roberts and Elena Kagan—detailed why he has changed his mind on the debt limit argument.

"The question isn't whether the president can tear up the debt limit statute to ensure that the Treasury Department can continue paying bills submitted by veterans' hospitals or military contractors or even pension funds that purchased government bonds," he wrote Sunday. "The question isn't whether the president can in effect become a one-person Supreme Court, striking down laws passed by Congress."

Tribe continued:

The right question is whether Congress—after passing the spending bills that created these debts in the first place—can invoke an arbitrary dollar limit to force the president and his administration to do its bidding.
There is only one right answer to that question, and it is no.
And there is only one person with the power to give Congress that answer: the president of the United States. As a practical matter, what that means is this: Mr. Biden must tell Congress in no uncertain terms—and as soon as possible, before it's too late to avert a financial crisis—that the United States will pay all its bills as they come due, even if the Treasury Department must borrow more than Congress has said it can.

Praising Tribe's piece for the Times, Rep. Ro Khanna (D-Calif.) tweeted early Monday: "The Treasury has the [constitutional] obligation to pay our debts and spend the money Congress has already directed it to do. It really is that straightforward."

Treasury Secretary Janet Yellen warned in a letter to House Speaker Kevin McCarthy (R-Calif.) last week that "our best estimate is that we will be unable to continue to satisfy all of the government's obligations by early June, and potentially as early as June 1."

Appearing on ABC's "The Week" Sunday, Yellen confirmed the timeline she laid out for the speaker is "still our current thinking" and explained that "we've been using extraordinary measures for several months now, and our ability to do that is running out."

While acknowledging that Biden said Friday he was not yet ready to invoke the 14th Amendment, ABC's George Stephanopoulos asked Yellen if it was still a possibility. She would not explicitly address whether the White House is considering the move, instead stressing that "our priority is to make sure that Congress does its job."

"There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills," Yellen said. "And we should not get to the point where we need to consider whether the president can go on issuing debt. This would be a constitutional crisis."

\u201cTwelve years ago, then-President Obama closed the door on using the 14th Amendment to resolve a Republican-imposed debt ceiling crisis. President Biden, however, is leaving that door wide open. (via MaddowBlog) https://t.co/srUQmMkREf\u201d
— MSNBC (@MSNBC) 1683570644

Led by McCarthy, House Republicans last month passed their so-called Limit, Save, Grow Act, which would raise the debt ceiling by $1.5 trillion or until March 31, 2024—whichever comes first—but also impose dramatic cuts that would notably impact lower-income households. Senate Majority Leader Chuck Schumer (D-N.Y.) has repeatedly called the bill "dead on arrival."

House Minority Leader Hakeem Jeffries (D-N.Y.) and fellow Democrats are working on a "discharge petition" effort to force a vote on a clean bill raising the debt limit, but doing so would require support from at least five Republicans, which is unlikely.

In a Monday letter to Schumer, 43 GOP senators made clear that they are "united behind the House Republican conference in support of spending cuts and structural budget reform as a starting point for negotiations on the debt ceiling."

Meanwhile, Schumer, Jeffries, and other Democratic leaders on Monday released an updated version of their recent report warning that Republicans forcing a default would be catastrophic, "but even the threat of breaching the debt ceiling can have serious economic consequences for families."

Biden is set to meet with McCarthy, Jeffries, Schumer, and Senate Minority Leader Mitch McConnell (R-Ky.) Tuesday "for what he called a separate negotiation on fiscal policy—even though it is effectively linked to the debt limit drama," the Timesnoted Monday.

The newspaper added:

White House officials said this weekend that Mr. Biden has been publicly and privately adamant that he will not bargain with Republicans over raising the limit. "Let's get it straight: They're trying to hold the debt hostage to get us to agree to some draconian cuts, magnificently difficult and damaging cuts," Mr. Biden told a meeting of cabinet members and other economic officials on Friday.

Citing three unnamed sources with knowledge of internal conversations, The Washington Postreported Monday that White House officials see unilateral actions—from invoking the 14th Amendment to minting a platinum coin worth $1 trillion—as "risky choices that could cause lasting economic damage" but also "do not want to take the proposals completely off the table."

The National Association of Government Employees (NAGE), which represents about 75,000 federal employees, cited the 14th Amendment in a federal lawsuit filed Monday that seeks to have the debt limit law declared unconstitutional.

NAGE's complaint, which names Biden and Yellen as defendants, argues the debt limit statute "is unconstitutional because it puts the president in a quandary to exercise discretion to continue borrowing to pay for the programs which Congress has heretofore duly authorized and for which Congress has appropriated funds or to stop borrowing and to determine which of these programs the president, and not the Congress, will suspend, curtail, or cancel altogether."

The filing adds that NAGE "seeks to protect all its members from additional extraordinary measures as well as major spending-related actions that will necessarily be taken without approval of Congress and that result in layoffs, furloughs, requirements for unpaid work, and loss of funding of the pensions and retirement plans of its members."

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

The Healthcare Long March: Why Exposing Evils of Medical Debt Doesn’t Fix the Problem

John Canham-Clyne — Mon, 08 May 2023 20:32:44 +0000

CT Mirror (2/2/23)

Connecticut Gov. Ned Lamont proposed on February 2 to purchase and forgive roughly $2 billion in medical debt owed by state residents. Along with similar proposals in other jurisdictions, the plan offers desperately needed relief from stress and fear to thousands of people who are struggling to pay their current outstanding medical bills. Unfortunately, these programs will do nothing to prevent millions more Americans from falling into the country’s healthcare financial meat grinder.

Meanwhile, three major credit reporting agencies have decided to expunge paid-off medical debts and outstanding debt less than $500 from credit reports, and provide people a year’s grace period before adding new medical debt to credit reports.

Like the debt forgiveness proposals, these credit decisions follow a wave of national publicity about the horrors of healthcare debt. In recent years, major news outlets, including the New York Times (e.g., 11/8/19, 9/24/22), Guardian (6/27/19), ProPublica (e.g., 6/14/21), National Public Radio (13/21/22), Kaiser Health News (9/10/19, 12/21/22) and CBS (4/28/21) have dug into the nightmares faced by tens of millions of Americans—both uninsured and with insurance—as they try to pay for the treatments and medicines they need to lead healthy lives.

Compelling and consistent

This New York Times headline (11/8/19) could have just as easily run in 2003 as in 2019.

The stories are heartrending. Families’ lives wrecked financially by bill collectors and lawyers. Sick and injured patients’ health deteriorating due to mountains of debt and stress, with some providers even refusing follow up care until bills are paid. They highlight a set of corporate billing and collections policies and practices that turn a visit to a doctor or hospital into a years-long hell.

Such investigations touch on common themes, including hospitals suing patients en masse:

“Ballad, which operates the only hospital in Wise County and 20 others in Virginia and Tennessee, filed more than 6,700 medical debt lawsuits against patients last year.” (New York Times, 11/8/19)
“The hospital that pursued Mr. Bushman, a 295-bed not-for-profit facility called Carle Foundation Hospital, is one of several that has at times employed debt collection tactics that are shunned by many other creditors. It has filed hundreds of lawsuits.” (Wall Street Journal, 10/30/03)

Hospitals layering large interest payments on top of already crushing debt, and collecting through tactics like garnishing wages and seizing bank accounts:

“Barrett, who has never made more than $12 an hour, doesn’t remember getting any notices to pay from the hospital. But…Methodist Le Bonheur Healthcare sued her for the unpaid medical bills, plus attorney’s fees and court costs.
“Since then, the nonprofit hospital system affiliated with the United Methodist Church has doggedly pursued her, adding interest to the debt seven times and garnishing money from her paycheck on 15 occasions.”Barrett, 63, now owes about $33,000, more than twice what she earned last year.” (Guardian, 6/27/19)
“Tolson said she went to Yale-New Haven…to be treated for a staph infection. She had to stay at the hospital for eight days and got a bill for $9,000. She told the hospital she didn’t have a job or insurance and was told to seek welfare assistance. Because her husband had a small income, she didn’t qualify for state or federal assistance, she said.”She tried on several occasions to set up payment plans, but even with a job she wasn’t able to meet the payment schedule, she said. Her bank account was frozen, and when she called to discuss the problem the hospital’s agents were unwilling to budge on the issue, she claims.”‘I told them “I’m not working,” and they said “you should have thought about that then,”’ Tolson said. “Her bill is now $14,000.” (Connecticut Post, 12/17/03)

Hospitals threatening and taking patients’ homes through liens and foreclosures:

“Heather Waldron and John Hawley are losing their four-bedroom house in the hills above Blacksburg, Va. A teenage daughter, one of their five children, sold her clothes for spending money. They worried about paying the electric bill. Financial disaster, they say, contributed to their divorce, finalized in April.”Their money problems began when the University of Virginia Health System pursued the couple with a lawsuit and a lien on their home to recoup $164,000 in charges for Waldron’s emergency surgery.” (KHN, 9/10/19)
“Still, the hospital administers strong legal medicine for cases of minor financial wounds. It presses for foreclosure for debts a fraction of a house’s worth. It pursued a $2,889.12 debt against a couple in Westville all the way to foreclosure, by which time fees and interest pushed the debt to $6,517.64.” (New Haven Advocate, 4/17/03).

Nonprofit hospitals failing to offer patients charity care, sometimes in violation of state law or the hospital’s own internal charity care policies:

“Harriet Haffner-Ratliffe, 20, gave birth to twins at a Providence hospital in Olympia, Wash…. She was eligible under state law for charity care.”Providence did not inform her. Instead it billed her almost $2,300. The hospital put her on a roughly $100-a-month payment plan.” (New York Times, 9/24/22)
“The lawsuit also accused the hospital of failing to inform needy patients that the financial assistance was available and hiring aggressive collection agencies to go after patients who had not paid their bills.” (New Haven Register, 2/19/03)

Patients skipping care or having providers refuse care due to debt:

“After a year of chemo and radiation…Penelope Wingard finally heard the news she’d been praying for: Her breast cancer was in remission. But with relief immediately came worry about her finances.”Wingard had received Medicaid coverage through a temporary program for breast cancer patients. When her treatment ended, she became uninsured.”Bills for follow-up appointments, blood tests and scans quickly piled up. Soon, her oncologist said he wouldn’t see her until she paid down the debt.” (KHN, 12/21/22)
“During Michael’s past admissions to the hospital, Margaret says, she asked staff members if there was some way to discount or waive the charges—figuring that Christ Medical, a nonprofit institution sponsored by religious organizations, might be inclined to help. But the answer, she says, was always no. So, as the hospital bills piled up on the dining table, Margaret lay awake at night, wondering how the family would crawl out from under the debt. On that April morning, as Michael kept insisting that it was ‘just the flu,’ she suspected that it was something more serious. But Michael wouldn’t let her take him to the ER, and eventually Margaret headed to work. When she returned that night, she found him on the floor, dead.” (New York Times, 12/19/04)

The stories are compelling, consistent and comprehensive, exposing in detail the devastating consequences of a healthcare system that forces patients—some uninsured, others with inadequate health insurance—to assume unmanageable financial burdens for needed medical treatment. Based on analysis of large volumes of public records and interviews with dozens of victims, they include follow-up reporting on actions taken by hospitals in response to publicity, and legislative and legal actions in support of debtors. In short, everything good investigative journalism should be.

Except for one problem: The second example in each pair above is 20 years old.

An evergreen problem

The first examples are drawn from work by the New York Times, Guardian and Kaiser Health News (KHN, recently rebranded as KFF Health News), which recently teamed up with National Public Radio for a series called “Diagnosis: Debt.” Along with the 2019–20 “Profiting from the Poor” investigative series published jointly by ProPublica and MLK50: Justice Through Journalism, these stories are part of a wave of recent medical debt coverage.

Wall Street Journal (3/13/03)

The second quotes, indistinguishable in the suffering of the profiled patients and the issues addressed, are from 2003–04, including a Wall Street Journal series by reporter Lucette Lagnado (3/13/03, 3/17/03, 4/1/03, 6/10/03). Lagnado’s work began in Connecticut, where Paul Bass, editor of the weekly New Haven Advocate, had dug into court records to reveal aggressive legal practices by Yale-New Haven Hospital in 2001. Lagnado spent months tracking down debtors and examining the same public records that form the basis for the latter-day stories.

Then as now, follow-up stories show embarrassed individual hospital systems forgiving the debts of people named in the stories and many other current debtors, then usually promising to reduce the ferocity of their collection tactics (Wall Street Journal, 4/1/03; New Haven Register, 3/19/04; ProPublica, 7/30/19; KHN, 9/10/19; ProPublica, 9/24/19).

MLK50 (4/28/20)

Lagnado’s work in 2003 was recognized at the time by the Annenberg School of Journalism at USC as one of three finalists for the 2004 Selden Ring Award for Investigative Reporting.

Sixteen years later, MLK50 founding editor Wendi C. Thomas won the Selden Ring Prize for her series jointly published with ProPublica. The two organizations shared a 2020 Loeb award for local reporting and a bronze medal from the Barlett & Steele Awards for Investigative Journalism, given by the Walter Cronkite School at Arizona State University. The same year, Kaiser Health News’ Jay Hancock and Elizabeth Lucas were Pulitzer Prize finalists for investigative reporting for their healthcare debt work.

Medical debt, it turns out, is an evergreen problem, a perpetual source of torment for patients, prizes for reporters, and controversy over incremental, poll-tested policy changes that for two decades have failed to stem the flood tide of medical debt that is drowning millions of people. These gradualist approaches have, however, succeeded in deflecting attention from the only real solution to the problem—a national health insurance system like Medicare for All that would cover everyone, all the time, without holes in coverage that lead to catastrophic personal debt.

Community outrage

Quinton White (Wall Street Journal, 4/1/03)

Lagnado’s 2003 series appeared during campaigns against abusive medical debt collection in several states, including Illinois, California, Washington and Connecticut, where Lagnado’s initial iconic profile of Quinton White (Wall Street Journal, 3/13/03) chronicled his 20-year struggle with debt from his wife’s treatment at Bridgeport Hospital.

White suffered nearly all the indignities hospitals impose on indebted patients. By the time Lagnado found him, White had seen the hospital attach a lien to his house and drain most of his bank account. Interest ballooned the debt; White had paid $16,000 of the original $18,740 over the years, but the Yale New Haven Health System, which had acquired Bridgeport Hospital in 1996, was pursuing him for an additional $39,000 in remaining principal, interest and fees.

Prompted by community outrage at the tactics described by Lagnado, and in a series of reports from the nonprofit Connecticut Center for a New Economy (CCNE), local labor unions, a church-based grassroots movement, Yale University public interest lawyers and hospital patients built a campaign to take on Yale-New Haven and the statewide hospital industry.*

Four lawsuits, a series of demonstrations with hundreds of people, a grassroots lobbying campaign and ongoing media coverage yielded progress. The Connecticut General Assembly passed a law cutting interest on medical debt to 5% and requiring hospitals to inform patients of available financial assistance and to stop collections against eligible patients. The law limited billing of uninsured patients to the actual cost of their care, and required hospitals to report on their collection activity. Under intense local pressure, Yale-New Haven Health went further than the new state law, settling lawsuits by removing thousands of property liens and forgiving more than 20,000 accounts worth millions of dollars in outstanding debt.

The final lawsuit against Yale-New Haven was a class action focused on the practice of billing uninsured patients at wildly inflated “sticker prices”. Filed a year and a half after Lagnado’s first article, it was one of dozens brought against nonprofit hospital systems nationwide in 2004 by members of the Not-for-Profit Litigation Group, led by trial lawyer Richard “Dickie” Scruggs, one of the lead attorneys in the 1990s tobacco litigation. From the middle of 2004 through 2005, Scruggs’ firm drew blanket coverage across the US, with more than 200 local stories in more than 30 states, according to a search of the Nexis database.

Historical amnesia

New York Times (2/16/23): Medical debt “began emerging as a much more striking issue last year.”

However, by the spring of 2006, Scruggs’ suits had largely failed, and he would soon find himself in prison for bribing a judge in an unrelated case. With local hospitals agreeing to policy changes in Illinois and Connecticut, medical debt coverage shrank.

The issue didn’t go away, of course; it simply attracted less media attention. However, according to veteran New York Times healthcare reporter Reed Abelson (2/16/23), concern about medical debt appeared mysteriously in 2022: “The inability to afford medical tests and treatment, a perennial concern in the United States, began emerging as a much more striking issue last year.” Perhaps Abelson, who has covered healthcare since 2002, forgot Jonathan Cohn’s 5,000-word New York Times Magazine essay (12/19/04) from 2004, prompted in part by the Scruggs class action cases.

Telling the stories of millions of Americans whose lives have been ruined and even shortened by medical debt is an honorable exercise, and the spate of recent reporting does include a few new details. In particular, MLK50’s Wendi Thomas (6/27/19) interviewed judges who decide debt cases, giving readers a new level of detailed, often chilling insight into the attitudes of people who sometimes casually help attorneys for hospitals and collection agencies destroy patients’ families.

Judge Betty Thomas Moore ordered a woman whose 11-year-old nonverbal autistic son wears diapers and eats only pureed foods to pay $130 a month instead of $30. The judge reasoned that her son and his two older brothers “could sacrifice so that their mother could pay more.”

History of failure

Beyond painful details and inspiring victories, most articles that offer a broader frame for the issue are plagued by bad habits common to corporate journalism: historical amnesia, a bias for treating individuals as “consumers” with primary responsibility for their own problems, and ideological blinders.

NPR (4/14/22): “There’s still the issue of consumers being able to afford to pay for healthcare. “

As they have for 20 years, most policy-focused stories about medical debt lean heavily toward regulatory initiatives or legislative actions to take the sharp edges off of debt collection, or offer advice on how to avoid or manage medical debt (NPR, 4/14/22; KHN, 10/17/19; KRWG, 4/6/21). To the extent that wrap-up stories acknowledge the need for Americans to be covered by health insurance, reporters assume the only way forward is to build on the supposed successes of the Affordable Care Act through tiny increments of change. They treat Medicare for All, or any other credible scheme to cover all Americans with comprehensive health insurance, as an impossibility for the foreseeable future.

Unfortunately, regulating medical debt collection tactics has an easily documented history of failure as healthcare policy. The 2003 Connecticut law, described by Lagnado (6/10/03) as “a breakthrough patient-protection bill,” addressed several of the key issues highlighted in reporting on healthcare debt. Yet the federal Consumer Financial Protection Bureau (CFPB) reported that as of December 2020, 10% of Connecticut adults whose accounts the agency tracks had medical debt on their credit reports, with an average balance of $1,407 and a median of $508.

The CFPB acknowledges that its data significantly understates the scale of the issue, because a lot of medical debt either never appears on credit reports, or is reported as general credit card debt. An analysis of the CFPB data shows that an average of 14% of American credit reports have medical debt on them. The Kaiser Health News/NPR collaboration kicked off with the publication of a Kaiser Family Foundation poll showing that 41% of adults in the US, or 100 million Americans, have medical debt.

Burdened despite ‘breakthrough’

So despite “breakthrough” legislation and additional internal policy changes at the state’s largest health system, people in Connecticut remain so burdened with medical debt two decades after a “breakthrough” that public officials feel the need to publicize the problem and take action.

Meriden, Conn., Record Journal (12/10/22)

In December 2022, US Sen. Chris Murphy (D.-Conn.), who was the Senate co-chair of the state’s Public Health Committee when the 2003 law passed, held a listening session on medical debt to allow people to air their suffering. Two months later, Connecticut’s governor promised to spend public money to retire as much as $2 billion in residents’ debts.

Murphy and his Senate colleague Chris Van Hollen (D.–Md.) have introduced the Strengthening Consumer Protections and Medical Debt Transparency Act, to “protect consumers from medical debt.” Most of the proposal is lifted from 20-year-old laws in Connecticut and other states: capping interest at 5%, reporting on collection activity, determining the patient’s insurance status before collecting, requiring itemized bills. The bill would also give patients an additional six months after providers have determined their insurance and charity care eligibility before facing aggressive collections tactics.

Similar laws in other states simply have not stopped medical debt from gnawing at the economic security and health of millions of families. In the CFPB analysis, Connecticut has only the 16th lowest percentage of credit reports with medical debt. The report includes a table of states that have policies to require hospital charity care or restrain aggressive collection tactics. Some of those states are among those with the lowest percentage of indebted patients; others, like New Jersey, Illinois, Maine and New Mexico, are not. Of course, what does line up with low levels of medical debt is health insurance. The CFPB study (3/1/22) notes that “medical debt is also more common in the Southeastern and Southwestern US, in part because states in those regions did not expand Medicaid coverage.” Indeed, 29 of the 30 states with the lowest percentage of credit reports with medical debt have adopted some form of Medicaid expansion.

These laws do ease some existing patients’ terror and stress, by banning or reducing the use of horrifying tactics like wage garnishment, bank executions, foreclosure and even actual arrests for missing court dates. In the end, they don’t eliminate that stress, and won’t address the core failure of the US healthcare system to cover everyone with guaranteed health insurance.

Here’s a simple sentence you’ll rarely read in corporate media: The Affordable Care Act has failed. Its only measurable effect has been to shift a small percentage of the population from being uninsured to the ranks of the underinsured.

According to the Commonwealth Fund, when the ACA passed in 2010, 56% of American adults age 19–64 were covered for the entire year with insurance good enough not to consider them underinsured. In 2022, 57% of Americans were similarly covered. After 12 years, millions of column inches and endless television news hours, there is little discernible difference in the core protections available to Americans against illness, injury, early death and, yes, medical debt.

The Commonwealth Fund underestimates the scale of underinsurance: 32% of adults who were “insured all year, not underinsured” in 2022 reported problems getting access to healthcare because of cost. However, taking Commonwealth’s definitions at face value, at the current rate of progress, every single American adult can expect to be “insured all year, not underinsured” in about 515 years.

How to cope with the Kafkaesque

Fox Business (3/3/21) notes that its advice to medical debtors is “sponsored by Credible—which is majority owned by our parent, Fox Corporation.” Credible is a “leading consumer finance marketplace” that “delivers a differentiated and personalized experience that enables consumers to compare instant, accurate pre-qualified rates from multiple financial institutions.”

Not to worry. Major media outlets have us covered for the next five-plus centuries. Most US news sources, medical self-help websites, and even credit-reporting agencies Experian and Equifax have an article or two filled with advice for patients on fighting back against medical debt.

If medical debt has crimped your reading budget, look for former ProPublica reporter Marshall Allen’s Never Pay the First Bill: And Other Ways to Fight the Healthcare System and Win in your local public library. Or you can head over to his Allen Health Academy website, featuring a self-help curriculum called “The Never Pay Pathway.” For $3 a month, you get 16 videos on-demand, a certificate of completion and monthly newsletter. Coming soon, for $5 a month, you can get an app and a checklist for tracking your progress negotiating with your creditors, and for $7, companies get access to an employer-support forum, and workers who have debt (presumably because of the company’s lousy health insurance) can join a Facebook support group.

The guidance has changed little in two decades: Study your insurance plan if you have one, to understand your deductibles and copays. Review your bills for inaccuracies. If you’re uninsured, apply for Medicaid or other public insurance programs, and ask your hospital for financial help. Fight your insurer if they don’t pay what they’re supposed to. Negotiate your total hospital debt down, bargain a lower interest rate, and set up a payment plan that you can afford. If you get sued, show up in court, prepared with a proposed payment plan. And so on.

If it works, this is good advice. Most hospitals still bill uninsured patients at inflated prices. The vast majority of medical bills do contain errors. Patients frequently can negotiate to lower their total debt and interest rates dramatically and get on a payment plan. Hospitals do have charity care policies, however stingy or generous.

The limits of consumer empowerment

But consumer empowerment only goes so far. A study by Stanford Graduate School of Business professor Jeffrey Pfeffer found that US adult workers already spend more than 13.7 million hours a week on the phone with their health insurance administrators. Some of that time is spent dealing with health insurance problems involving medical debt. However, most medical debt empowerment articles urge patients to research, review and negotiate discounted debt with hospitals, doctors and other providers.

KFF Health News (7/1/22): ” Do not expect this to be an easy process.”

So, to “get rid of medical debt—or avoid it in the first place,” according to the headline on a widely circulated story by NPR reporter Yuki Noguchi (KHN, 7/1/22), patients must expect to spend even more time on the phone, studying bills, reading laws, regulations and policies, writing letters and going to court. In a nation where people have to work two or three jobs to make ends meet, it’s not clear when they are supposed to find the time to read (assuming they’re fluent in English), make phone calls, gather their personal information and trudge off to the hospital to prove they’re worthily poor enough not to deserve torture.

For the story, KHN and NPR “spoke with patients, consumer advocates, and researchers to glean their hard-won insights on how to avoid or manage medical debt.” Noguchi walked patients through the US healthcare nightmare step by step, from subscribing to an insurance plan through fending off collections lawyers, with empowering advice for each step.

In real life, patients often can’t shop for hospitals like groceries or a new appliance. Patients go where their doctors have admitting privileges, get treated in facilities that are in their insurance network, or wind up in whichever emergency room an ambulance takes them to. If, after shopping, their discounted bills still far exceed their ability to pay, then what? Without real wealth or a high income, uninsured and underinsured people have relatively few choices that actually protect them from healthcare debt.

Neither NPR nor any other outlet offers data on the efficacy of consumer empowerment as policy. If every single “consumer” dutifully followed every bit of advice, would the number of debtors shrink from 100 million to 10 million? 50 million? 95 million?

And when these tactics do “work,” it’s not clear how much help they provide. KFF’s own survey (6/16/22) found that half of American adults couldn’t pay a $500 medical expense right away, and 19% would never be able to pay it off. In the end, if you can’t afford $500, how valuable is bargaining a $30,000 debt down to $10,000?

Without comprehensive health insurance coverage, patients will wind up back in debt, or sicker and in more pain because they avoid care. MLK50’s Thomas (ProPublica, 6/27/19) framed her interviews with Memphis judges in part through the story of Raquel Nelson, who received treatment from the United Methodist Church-affiliated Methodist Le Bonheur Healthcare system. Methodist’s lawsuit was Nelson’s third time as a medical debt defendant.

Limiting future torture

“Is Your Town Next?” the New York Times headline (12/29/22) gushes. But the subhead acknowledges it’s just “a short-term solution.”

This issue haunts reporting on what the New York Times (12/29/22) calls “a new strategy to address the high cost of healthcare.” RIP Medical Debt, a nonprofit organization founded by former debt collections executives, is working with public and private institutions like churches, state and local governments, and even a local ABC affiliate, using their own money to purchase outstanding debt and retire it.

Most of this debt has already been written off as uncollectible by providers and sold to third party collectors, allowing RIP to buy it at a few cents on the dollar. In Connecticut, Governor Lamont proposes to give RIP Medical Debt $20 million in federal American Rescue Plan funds to retire up to $2 billion in debt.

Ohio State Rep. Michele Grim, quoted in the Times story as a Toledo city councilor who helped organize a partnership between the city and RIP Medical Debt to cancel medical debts, told FAIR in a Zoom interview:

This is the only country in the world that lets its citizens go bankrupt because of medical debt. States and locals see this as the simplest thing we can do, because we can’t fix our broken healthcare system.

Toledo internist John Ross, a Franklin County Board of Health commissioner and past president of Physicians for a National Health Program, strongly supports the Ohio initiative, but also noted that ARP funding is a one-off. Without continued sources of financing, many of the current debtors whose debt will be forgiven, and thousands of others who lack adequate health insurance, will soon be burdened again by debt: “The next wave of debt is building as we speak.”

RIP Medical Debt typically doesn’t buy debt until patients, providers and insurers have had a chance to pursue other sources of payment. That process usually takes about 18 months, according to RIP Medical Debt CEO Allison Sesso. Thus, at its very best, the Times “strategy to address high healthcare costs” boils down to this: If a local government scrapes together some money, and if your local hospital is willing to work with RIP medical debt, indebted patients may only need to spend 18 months struggling with medical bills—although once their current debts are paid, the next time they get sick, the cycle starts over. When the bar is low enough, even an unfunded possibility of limiting future torture to a year and a half looks like a victory.

RIP Medical Debt leaders understand the limitations of their model. In an email exchange with FAIR, CEO Allison Sesso wrote:

We know that RIP Medical Debt is not a holistic solution, but a stopgap that nonetheless provides a financial and emotional respite to our constituents. We understand both that debt relief matters to the individuals we help and that what we are doing is not fundamentally solving the problem.

Distorted landscape

New York Times (2/20/20): “It actually isn’t much of a surprise that nonprofit hospitals are often more profitable than for-profit hospitals.”

In reality, local residents have already paid these debts many times over. Nearly 60% of acute care hospitals in the US are private tax exempt “charitable” organizations, whose mission statements typically include a commitment to caring for the poor, sick and injured. The “mission” entitles them not to pay federal, state and local property, income or sales taxes.

In 2006, the Cook County assessor estimated that nonprofit hospitals owned between $4.3 and $4.5 billion worth of exempt commercial real estate in the county, representing up to $241 million in local property tax revenues, likely much higher today. Yet cash-strapped city governments are now spending public money to pay for debts incurred in these already heavily subsidized hospitals.

Speaking from personal experience, it’s hard to imagine a more gratifying reporting outcome than seeing a powerful hospital corporation forgive suffering patients’ debts, or announce changes in policies toward all patients who can’t afford care. In 2019, Virginia Gov. Ralph Northam and the president of the University of Virginia publicly committed to changing UVA Health’s policies, the day after KHN’s expose (9/10/19) on the hospital system’s lawsuits and collections tactics.

However, by ignoring the history of failed, narrowly targeted reforms; covering gimmicky strategies and pouring effort into the kind of consumer self-help that NGOs have been publishing how-to guides about for decades (e.g., Hospital Debt Justice Project, 2003); and indulging in ritual defenses of the Affordable Care Act, news organizations leave their audiences with distorted impressions of the policy landscape, undermining the power of their own high-impact reporting.

Giving politicians cover

Jennifer Bosco, staff attorney at the National Consumer Law Center, told NPR (4/14/22):

Ultimately, I think the problem of medical debt isn’t going to go away unless at some point in our country’s future, we adopt some sort of single payer or Medicare-for-All system. But I think that’s very much a blue-sky idea at this point.

Apparently it’s a popular blue sky idea. In its story on RIP Medical Debt, the Times (12/29/22) noted that polling by Tulchin Research, the American Association of Political Consultants’ 2022 Democratic Pollster of the Year, found that “65% supported ‘Medicare for all’ and 68% supported expanding Medicaid.”

It will remain a blue-sky idea as long as media keep giving politicians cover with the idea that urgently addressing the incremental Next Bad Thing will make a difference. Three years ago, the bad thing du jour was “surprise billing.” Surprise bills happen when an empowered consumer carefully studies the rules of their health plan and goes to a hospital in their insurance network, but unknowingly gets treated by a doctor that isn’t in their network, then gets socked with a huge bill that their insurer doesn’t want to pay.

Consumer Reports (2/10/22)

KFF polled the issue and found that 65% of people were concerned about surprise bills. Surprise bills affect insurers as much as individuals, so Congress passed the No Surprises Act, spawning a round of updates to consumer empowerment websites, and warnings about how the Act didn’t quite get rid of all surprise bills.

People don’t get surprise medical bills because doctors are greedy, or because private equity firms bought some emergency physician practices, or because empowered consumers didn’t check their network carefully enough. Americans get surprise bills because they have insurance networks. They have to go to “in-network” providers because, unlike other wealthy nations, Americans don’t have a right to healthcare, providers don’t have an obligation to treat people who need it except in emergencies, and US healthcare prices are set in secret negotiations between powerful private actors.

Insurers, doctors and hospitals wield network membership and rates as weapons in a high-stakes battle over market power. For empowered consumers covered through their jobs, this means that every year during open enrollment—assuming their health plan is even still offered by their boss—they get to “choose” whether to keep it, by poring over long lists of doctors and hospitals to see if they can still avoid bankruptcy while visiting the people who have healed and comforted them for years.

They often can’t. In 2017, Morning Consult found that 15% of Americans had a doctor leave their network in just the previous 12 months, meaning they’d have to pay more—often much more—to continue their care with that doctor (Fierce Healthcare, 3/17/17).

The new Next Bad Thing

None of KHN/NPR ‘s takeaways (6/16/22) are new, or required a year to unearth.

Medical debt coverage now frames deductibles as the Next Bad Thing. NPR and KHN (6/16/22) gave readers of their Diagnosis Debt series “Five Quick Takeaways from a Yearlong Investigation of Medical Debt in America.” There really are only four takeaways, as the first two basically say it’s a big problem. Two others are that medical debt is hard to pay off, and that “debt and illness are linked.” The final takeaway glances off the core issue:

The KHN/NPR investigation finds that despite more people having health insurance—as a result of the Affordable Care Act—medical debt is pervasive. There is a reason: Over the past two decades, health insurers have shifted costs onto patients through higher deductibles, at the same time that the medical industry has steadily raised the prices of drugs, procedures and treatments. The 2010 healthcare law didn’t curb that.

Nothing in the five takeaways is new, or required a year to unearth. Deductibles have grown much faster than inflation over the past two decades, which KHN’s reporters presumably know, since the primary source for the information is KHN’s own parent organization, the annual employer surveys done by the Kaiser Family Foundation—as FAIR (9/8/17) reported six years ago . More than a third of American adults have been telling the Commonwealth Fund (2003–18, 2020, 2022) that they skipped or delayed needed medical care in the past year due to costs since Lucette Lagnado first knocked on Quenton White’s door in 2003.

By itself, limiting or eliminating deductibles is meaningless unless all of the tools for patient abuse are taken out of the industry’s hands. If deductibles are limited or disappear, patients can expect higher premiums, higher copays and heavier coinsurance. They will likely face even more intense shifts in their lists of “in-network” providers, as insurers try to wring profits from the market to make up for any minor losses.

Timid sources, compromised coverage

Bernie Sanders (KFF Health News, 2/8/23): “What I ultimately would like to accomplish is not going to happen right now.”

To some extent, corporate media debt reporting is constrained by its chosen sources. Democratic politicians don’t want to talk about universal coverage schemes; even Sen. Bernie Sanders says “we ain’t gonna get” Medicare for All (KHN, 2/8/23). NGOs like the National Consumer Law Center accept and repeat the “blue sky” expectation, even though Medicare for All and Medicaid expansion poll as well as limiting surprise bills, and very close to debt relief (KFF, 2/28/20; New York Times, 12/29/22).

The NGOs that track medical debt and related trends reflect the conventional wisdom of what is politically possible. The Kaiser Family Foundation is a respected agenda-setting organization. When the authors of KFF’s Issue Brief (11/3/22) headlined “Hospital Charity Care: How It Works and Why It Matters” get to “Looking Ahead” at policy options, they offer a parody of Washington policy wonkery, with ideas appearing passively out of the ether:

In the context of ongoing concerns about the affordability of hospital care and the growing burden of medical debt, several policy ideas have been floated at the federal and state level to strengthen hospital charity care programs.

Evidently whoever “floats” ideas in Washington—apparently not KFF—is under the impression that universal, comprehensive health insurance doesn’t apply as a solution to medical debt.

However, there are plenty of suggestions for encouraging or even requiring more hospital “charity.” The link-heavy two paragraphs include all the usual ideas, like reporting requirements and higher poverty thresholds for mandated charity care. There’s even a clever “floor and trade” suggestion, “where hospitals would be required to either provide a minimum amount of charity care or subsidize other hospitals that do so.”

The closest thing to actual solutions are vague hints:

State and federal policymakers have also considered several other options to reduce medical debt or increase affordability more generally, such as by expanding Medicaid in states that have not already done so, reducing healthcare prices through direct regulation or other means, and increasing consumer protections against medical debt.

Direct price regulation, a standard feature of national healthcare systems around the world, triggers furious industry opposition. If KFF can find such a politically controversial idea “floating” somewhere, why can’t an idea with 65% polling support, and 120 voting cosponsors in the US House of Representatives at the time the piece was written (H.R. 1976), float past the authors? Like so many other sources, KFF seems firmly committed to achieving universal coverage—sometime in the next five centuries.

Assumed political impotence

What if in addition to not suing their patients for debts, as ProPublica (6/30/19) suggests, nonprofit hospitals directed their efforts toward creating a healthcare system that covers everybody?

The most extraordinary aspects of the current wave of medical debt coverage are the assumed political impotence of the public, and the low expectations of reporters and NGO sources. Hospitals spend massive amounts of money lobbying against their own patients’ interests. When a major investigation is published, nonprofit systems are vulnerable, and NGOs and local community leaders can often shape the terms of the response.

An embarrassed Methodist Le Bonheur system in Memphis announced a 30-day review of its charity care policies, prompting a ProPublica/MLK50 article (6/30/19) headlined “Stop Suing Patients, Advocates Advise Memphis Nonprofit Hospital System”:

During the past month, MLK50 consulted with consumer advocates and legal experts around the country about how Methodist could reform its policies. For many, the top priority was to stop the lawsuits. Close behind, they said, was for the hospital to expand its financial assistance policy to include poor people who have health insurance but can’t afford their deductibles or co-pays.

Not a single quoted expert said anything like:

Of course they should stop suing people. But the very best thing Methodist Le Bonheur could do for its patients is withdraw from the American Hospital Association and spend what they were paying in dues to lobby for Medicare for All, or some other form of genuine national health insurance. Not only is it disgraceful that a supposed charitable hospital is suing patients and garnishing their wages, but they’re using money brutally extracted from impoverished patients to stop the government from guaranteeing those patients actual health insurance that would keep them out of debt forever.

Similarly, if just a small percentage of the 100 million Americans with medical debt emailed their most recent collections letter to their senators and representatives once a month, with the simple message “National health insurance now,” that’s millions of messages. It takes less time than suing your hospital, and would certainly get congressional attention—it might even crash congressional servers. Five minutes. Once a month. Yet the only advice given to readers is “empowerment” to negotiate on their own with a multi-billion dollar corporation.

A simple story

Americans pay much more for healthcare and yet die much sooner than citizens of other wealthy countries (Wikimedia Commons, 3/11/22).

One of the few reporters who took the time to look at the history of medical debt in the US is KHN’s Dan Weissmann, who runs the Arm and a Leg podcast. Weissmann did a multipart series on the history of medical debt, pegged to an interview with former attorney Dickie Scruggs. The series offers a good look at the history of medical debt campaigns, but again the framing is absurdly narrow. Weissmann introduces Scruggs as the lawyer “Who Helped Start the Fight for Charity Care,” as if hospital charity is a goal that listeners should be satisfied with.

In 2005, after local patients filed lawsuits against hospitals, the Bergen (New Jersey) Record editorial board (6/13/05) described the actual “fight”:

America’s healthcare system is broken. The only way to completely fix it is a single-payer system, one that would end the inequities that cause people like Mr. Osso to be charged three and four times the rates that insurance companies or Medicare and Medicaid are charged.

Two decades of failed reforms later, the idea of actually covering everyone in the US stimulates talk of a policy Long March in elite media. RIP Medical Debt CEO Allison Sesso told FAIR “that no one entity can change such a complex and opaque system as US healthcare…. RIP’s help is immediate—this matters because policy and systems change can take years.”

US health care may be nightmarishly complex for patients and the people who heal and comfort them, but US healthcare policy is quite simple. There are two “entities,” comprising exactly 536 people, who could eliminate current and future medical debt tomorrow. Functioning models all over the world cover the conditions described in the stories above without turning patients into debt peons, at a fraction of what is spent in the US. The people with the power to do it just refuse to. End of story.

*Disclosure: I was a source for reporting on debt in Connecticut. At the time, I was a researcher for the hospitality workers’ union now known as UNITE HERE, collaborating with staff of the Service Employees International Union (SEIU). As noted in many stories, a member of our team, SEIU researcher Grace Rollins, researched and wrote the CCNE reports, and shared our materials with Lagnado and other reporters. I participated in planning for the rallies, and assisted with lobbying for the legislation that passed in 2003.

The post The Healthcare Long March: Why Exposing Evils of Medical Debt Doesn’t Fix the Problem appeared first on FAIR.

This content originally appeared on FAIR and was authored by John Canham-Clyne.

What the Debt Limit Fight Is Actually About

Jon Schwarz — Sat, 06 May 2023 09:00:54 +0000

A group of Senate Republicans hold a news conference to pass the House GOP legislation that would raise the debt limit and cut federal spending, outside the U.S. Capitol on May 3, 2023, in Washington, D.C.

Photo: Chip Somodevilla/Getty Images

It’s hard to believe I’m typing these words, but there’s a genuine chance Congress may fail to pass an increase in the debt limit. That would mean the U.S. might then in turn default on its debt sometime in June.

No one knows what would happen at that point, because it’s completely unprecedented. But it almost certainly would be deeply unpleasant, with huge job losses, unpredictable bits of the economy imploding, and knock-on effects in other countries that will make them both fear and hate us for decades. It would be the kind of massive self-inflicted wound that can be pulled off only by empires in their dotage.

Congress has veered close to this disaster in the past. But I’ve always believed that it would be impossible for it to actually happen, because the Republican Party’s funders on Wall Street and in corporate America understood how much damage it would do — not just to the country in general, which they don’t care about, but also to them specifically — and wouldn’t allow it.

I still believe that’s the most likely outcome, fingers crossed. However, the GOP donor class, never fans of reality to start with, has been drifting further and further into the fever swamps where the party’s politicians and base live. Many of the right’s ultra-wealthy used to understand the world well enough to act in their own best interest. Some still do. However, that minority now has far less power than billionaires who are as glued to Fox News as the party’s rank-and-file are. And these billionaires are suffering from the same cognitive impairment Fox causes all of its devotees.

And this brain-damaged community has a coherent worldview: that for the survival of America, they must destroy the “administrative state” — aka the New Deal, aka everything people like about the federal government, such as Social Security or regulations that stop chemical companies from dumping poison in your drinking water. Meanwhile, normal Americans have no idea the right has this planned, or even what those words mean.

Any non-hard-right reading of history suggests that the New Deal, and the basic infrastructure of U.S. politics it created, was a compromise that allowed human beings to live with capitalism. The only alternatives in the 1930s were (on the right) some form of fascism that would keep capitalism but eliminate democracy, or (on the left) dismantling capitalism and trying something wholly different.

The U.S. right has now come to the conclusion that this compromise was a disastrous mistake, one that they now hope to start to correct by manufacturing this crisis. Grover Norquist, founder and president of Americans for Tax Reform and a key right-wing strategist said in 2001, “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.” Right on time, they see a key opportunity to begin fulfilling Norquist’s dream.

This perspective not always enjoyed popularity within the Republican Party. Dwight Eisenhower famously wrote this to his older brother in 1954:

The Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. … Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. … Their number is negligible and they are stupid.

You can judge for yourself whether people like this are stupid, but it’s inarguable that their number is no longer negligible. Indeed, today Eisenhower would be considered a terrifying Woke Marxist by much of the Republican Party. Newsmax would run 37 segments exposing his damning admission to his brother that “the policies of this Administration have not been radically changed from those of the last.” In other words, he was starting from the same essential premises as New Deal Democrats.

That is no longer the case; GOP leaders do want radical change and believe they can get it. As former Vice President Mike Pence recently said, “I think the day could come where we can replace the New Deal with a Better Deal.” Strategists like Steve Bannon vow to conduct the “deconstruction of the administrative state.” The kinds of spending cuts demanded by the bill passed by the House would be a powerful first step to disemboweling the administrative state of taxes and regulation that have oppressed us for so long.

Reaching Bannon’s ultimate goal would mean a return to pre-New Deal politics, with Americans once again facing the kind of vicious predatory capitalism that can only exist when democracy is severely hobbled: It’s underappreciated that the glory days of this form of capitalism took place when most adults couldn’t vote. This is what Peter Thiel had in mind when he decried “the extension of the franchise to women” and explained that freedom for capital was incompatible with democracy.

The right’s thinkers have managed to convince its most prominent politicians that this is the way to go. Florida Gov. Ron DeSantis, for instance, has constantly fulminated about the administrative state in his embryonic presidential campaign. They all either don’t understand the implications of what they’re pushing for, or do understand it but are sincere authoritarians. In any case, they feel they have no choice, since what Republicans like Eisenhower considered normal politics is in fact the road to some kind of apocalypse. If U.S. continues within the New Deal framework, they think, it will inevitably lead us to a totalitarian future, with starving Americans trapping rats to eat and all 5-year-olds being forced to undergo sex reassignment surgery. As Tucker Carlson recently told the Heritage Foundation, probably the most powerful think tank on the right, what they now face “is not a political movement. It’s evil.”

This sounds absolutely bonkers, and it is. But that doesn’t change the fact that a significant chunk of the U.S. right believes it. Some do understand that a U.S. default would cause a significant dose of pain. But they believe this is necessary to avoid the far greater pain currently headed our way, when Bill Gates will personally vaccinate everyone at gunpoint every three days. Indeed, in private moments they probably tear up at their own courage, perceiving themselves as true patriots willing to make this sacrifice for the greater good.

They also understand that any suffering by regular people would likely redound to their political benefit. After all, the Democratic Party has itself been trumpeting the awful consequences of the national debt for the past 30 years. Bill Clinton announced in his 1996 State of the Union address that “the era of big government is over.” In Barack Obama’s 2011 State of the Union address, he told us “we have to confront the fact that our government spends more than it takes in. That is not sustainable.” Just last fall, the Biden White House proudly declared they’d achieved “the largest ever decline in the federal deficit.” All the Republicans want to do now is to negotiate to restore the kind of fiscal sanity that the Democrats have endorsed since the 1990s. How can Joe Biden refuse?

The Biden administration apparently did have a plan to deal with this situation. It was to close their eyes and hope it was still 2011. The Washington Post quotes a top Obama official from that time — during a previous debt limit standoff — as saying their playbook had been “really getting business leaders in key districts to lobby their congressman to tell them how important it was that the U.S. doesn’t default on its debts.” However, “This is not the Republican Party of George W. Bush or his father. Most of them do not care if Fortune 100 CEOs are freaking out.” Finding this out has apparently flummoxed the Biden team and left them with no other ideas except trying the same thing again.

It would be nice to believe Biden has a secret team ready to spring into action and execute one of the potential bold solutions if the debt limit isn’t increased in time. However, no journalists or pundits close to the White House have been able to locate much sign of this. The most that appears to be happening is fervent debate within the Biden administration over whether they could claim the 14th Amendment of the Constitution requires them to ignore the debt limit and continue borrowing money — i.e., a debate that, given the obvious trajectory of the GOP, they should have settled two seconds after Republicans took the House in the 2022 midterms. The possibility that the people at the summit of power have no credible plan to ward off onrushing catastrophe seems impossible, unless you are familiar with all of human history.

So get ready. One political faction has decamped to a fantasy world. Meanwhile, the other faction is living in another fantasy world in which the first faction hasn’t done this. Things here in the reality of our fading empire may be about to get pretty dicey.

This content originally appeared on The Intercept and was authored by Jon Schwarz.

Chris Lehmann on Debt Ceiling Myths, Kyle Wiens on Right to Repair’s Moment

Fairness & Accuracy In Reporting — Fri, 05 May 2023 15:44:17 +0000

CounterSpin230505.mp3

(The Nation, 4/28/23)

This week on CounterSpin: Economist James Galbraith wrote a few months ago: “It is in the nature of articles about the debt ceiling that no matter how often one tries to set the record straight, nothing ever gets through.” Elite media’s fundamental misrepresentation of the debt ceiling would be troubling enough if it were just a bad history lesson. But current Republican brinkmanship could have devastating impacts for millions of people—along with the harm to public understanding of what’s actually going on. We hear concerns about the process and the coverage from Chris Lehmann, DC bureau chief at The Nation, and contributing editor at the Baffler and the New Republic.

CounterSpin230505Lehmann.mp3

IFixit.com

Also on the show: The right to fix the things you buy is the sort of thing you wouldn’t think would be controversial here in “the land of the free.” Corporations’ attempts to prevent people from fixing their cellphone or tractor or wheelchair ought to be seen as the overreach it is. But for years, news media have presented the right to repair as a voice in the wilderness, up against benevolent companies’ efforts to do best by us all. That’s changing, with legislative moves around the country. Right to repair is having a “watershed moment,” one advocate says, adding that there are still “a lot of opportunities for mischief.” We get an update from Kyle Wiens, co-founder and CEO of the online repair community iFixit.

CounterSpin230505Wiens.mp3

Plus Janine Jackson takes a quick look at the New York Times‘ Iran error.

CounterSpin230505Banter.mp3

The post Chris Lehmann on Debt Ceiling Myths, Kyle Wiens on Right to Repair’s Moment appeared first on FAIR.

This content originally appeared on FAIR and was authored by Fairness & Accuracy In Reporting.

Bombshell Report Exposes Key Argument Against Student Debt Relief as ‘Categorically False’

Jake Johnson — Wed, 03 May 2023 17:57:46 +0000

The argument at the center of Republican officials' case against President Joe Biden's student debt cancellation plan is "categorically false," according to an explosive new report released Tuesday by the Roosevelt Institute and the Debt Collective.

With debt relief for tens of millions of people hanging in the balance, the GOP state officials who brought the case told Supreme Court justices in late February that they have legal standing to challenge the Biden administration's student debt cancellation plan because if it took effect, it would "cut MOHELA's operating revenue by 40%."

MOHELA is Missouri's state-created higher education loan authority, and the supposed financial harms it would suffer under the student debt cancellation plan are critical to the right-wing officials' case. If the Republican plaintiffs can't prove that MOHELA—which is not itself a plaintiff in Biden v. Nebraska—would suffer concrete harm from student debt cancellation, their case falls apart.

According to the new report by the Roosevelt Institute and the Debt Collective, not only would MOHELA not be harmed by the Biden administration's student debt relief plan—it would actually see its direct loan revenue rise if the plan is enacted.

"Our new research examining this claim suggests that MOHELA's year-over-year revenue from direct loans will actually increase substantially, even after debt relief," the report states. "Assuming President Biden's proposed cancellation goes through, we estimate that MOHELA will service more than twice the number of accounts it serviced at the beginning of the Covid payment pause. It will also earn nearly twice as much revenue servicing federal direct loans as it has in any year prior to cancellation."

The groups said their findings were bolstered by internal MOHELA documents that they obtained through a public records request. MOHELA's "own internal impact analysis," the report notes, "shows it would make more revenue the first year after cancellation is processed than it did in 2022 or any prior year."

"The entire premise of the lawsuit against student debt relief rests on the idea that 43 million student debtors shouldn't get relief for which they were already approved because one of the corporations contracted by the government to collect student debt, and thus the state of Missouri, will be financially harmed in the process," the report concludes. "Our analysis reveals this assertion to be false. In contrast, MOHELA will earn higher revenue than ever before, even after cancellation is administered—contradicting the plaintiffs' argument and calling into question their claims to standing."

Thomas Gokey, a co-founder of the Debt Collective and an author of the report, told The Lever on Tuesday that "it's really hard to stop student debt cancellation because you need to find someone who is harmed by it" to establish standing to sue.

"And the truth is, nobody is actually harmed by student debt cancellation," said Gokey. "It benefits everybody. It benefits people who don't have student debt."

\u201cNEW: The lawsuit against student debt relief claimed student loan servicer MOHELA would lose financial revenue and harm the state of Missouri.\n\nWe FOIA'd MOHELA's financial documents and this is simply false. After cancelation, MOHELA will earn *more* revenue than ever before.\u201d
— The Debt Collective \ud83d\udfe5 (@The Debt Collective \ud83d\udfe5) 1683031420

Biden v. Nebraska, one of two student debt cancellation cases currently before the Supreme Court, has been placed on a fast track, meaning that "the Republican attorneys general trying to stop student debt cancellation for 43 million borrowers have at no point been obliged to verify the basic facts of this case," the Roosevelt Institute and the Debt Collective stressed.

"As a result, the Supreme Court risks making a ruling affecting millions of people's lives without essential, accurate information," the progressive groups said.

The report also highlights that, as part of its contract with the Department of Education, "MOHELA agreed not to 'object to or protest [Federal Student Aid's] allocation or reallocation of existing borrower loans, and further waives and releases all current or future claims against [FSA]... regarding its current allocation decisions and methodology for existing borrower loans.'"

"Maybe that's why MOHELA never joined the lawsuit," The American Prospect's David Dayen suggested in his write-up of the new report. "But none of that matters to this Supreme Court. They are on the verge of accepting a standing argument of a fake plaintiff who never joined the case, based on an assertion of harm that in the final analysis is actually a benefit, while ignoring a signed contract that flatly prohibits the fake plaintiff from suing at all."

"I know we're in a post-fact era, but this is really something," Dayen continued. "If the court doesn't pay careful attention to this report, more than 40 million student borrowers could experience continued financial hardship because the justices would rather violate numerous principles of jurisprudence than let Joe Biden help anyone. The conservatives on the court are obviously not mathematicians or experts in student debt servicing or financing. But they don't appear to be judges, either, at least in the sense of following the law."

This content originally appeared on Common Dreams and was authored by Jake Johnson.

Here’s why the GOP debt ceiling plan will cost you money | The Marc Steiner Show

The Real News Network — Wed, 03 May 2023 16:00:22 +0000

This content originally appeared on The Real News Network and was authored by The Real News Network.

Debt Ceiling: Economist James K. Galbraith Warns GOP Proposal Would Gut Social Safety Net

Democracy Now! — Wed, 03 May 2023 14:48:30 +0000

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

Debt Ceiling: Economist James K. Galbraith Warns GOP Proposal Would Gut Social Safety Net

Democracy Now! — Wed, 03 May 2023 12:29:34 +0000

U.S. Treasury Secretary Janet Yellen has warned Congress that the United States could run out of money to pay its bills by June 1 unless lawmakers raise the debt ceiling. House Republicans last week narrowly passed a bill to raise the debt ceiling, but only in exchange for sweeping spending cuts to numerous programs, including student debt relief, food assistance, Medicaid and renewable energy. Democrats, meanwhile, are pushing for a vote to raise the debt ceiling without imposing cuts, even as the constitutionality of the debt ceiling has been questioned by some legal scholars. For more on the debt ceiling, recent bank failures and other economic news, we speak with James Galbraith, economist and professor at the University of Texas at Austin.

This content originally appeared on Democracy Now! and was authored by Democracy Now!.

House Dems Unveil Hail Mary Plan to Defuse GOP’s Debt Ceiling ‘Ticking Time Bomb’

Kenny Stancil — Tue, 02 May 2023 21:19:59 +0000

House Democrats on Tuesday unveiled their closely held plan to force a vote on a debt ceiling hike "without extreme conditions," a remote bid to prevent the chamber's GOP majority from unleashing an unprecedented and severely damaging U.S. default.

Less than 24 hours after Treasury Secretary Janet Yellen warned that the federal government may not be able to meet its financial obligations beyond June 1 unless Congress raises or suspends the nation's arbitrary borrowing limit before then, House Minority Leader Hakeem Jeffries (D-N.Y.) announced a so-called "discharge petition" effort to "avert the Republican-manufactured default crisis."

The rarely used gambit compels floor action on legislation backed by a majority of House lawmakers. Democrats are seeking to force a vote on a fresh bill to increase the debt ceiling over the objections of Speaker Kevin McCarthy (R-Calif.), who controls the floor and has demanded trillions of dollars in devastating spending cuts in exchange for the GOP votes needed to avoid a worldwide economic disaster.

As The Hill reported:

The discharge petition—an obscure mechanism empowering 218 lawmakers to pass bills the speaker refuses to consider—is almost never successful, because it requires members of the ruling party to defy their own leadership.
Democrats, with 213 members, would need to find five Republicans willing to sign on. And some Republicans are already warning that it'll never happen, especially after GOP leaders last week were successful in passing a debt ceiling package through the lower chamber.

"They're not going to get any Republicans," Rep. Scott Perry (R-Pa.), head of the far-right Freedom Caucus, told the outlet. "We already passed our bill."

The so-called Limit, Save, Grow Act passed last week by House Republicans would raise the debt ceiling, but only in conjunction with measures to slash the nation's already tattered social safety net, weaken efforts to crack down on wealthy tax cheats, repeal clean energy investments, and more.

Senate Majority Leader Chuck Schumer (D-N.Y.) has said the bill is "dead on arrival" in the upper chamber. President Joe Biden—who was vice president in 2011 when GOP lawmakers weaponized the debt ceiling to impose austerity and hurt the nation's credit score in the process—has also refused to entertain Republicans' plot to treat the global economy as a bargaining chip to advance attacks on programs that benefit working-class households.

According to The Hill: "Some moderate Republicans have already floated a willingness to join Democrats on a discharge petition if Congress inches too close to a federal default with no resolution in sight. Rep. Brian Fitzpatrick (R-Pa.), a co-chair of the centrist Problem Solvers Caucus, said earlier in the year that he might do so—'if that's necessary.'"

The challenge before House Democrats, in the words of Steven Harper, is to find "five rational Republicans willing to save the U.S. economy."

In a "Dear Colleague" letter sent to House Democrats on Tuesday, Jeffries wrote:

A dangerous default is not an option. Making sure that America pays its bills—and not the extreme ransom note demanded by Republicans—is the only responsible course of action. Since 1960, the debt ceiling has been extended or revised 78 separate times—49 under Republican administrations and 29 under Democratic presidents.
Most recently, under former President [Donald] Trump, Democrats voted three times to raise the debt ceiling without gamesmanship, brinksmanship, or partisanship. For the good of the country, extreme MAGA Republicans must do the same.

"House Democrats are working to make sure we have all options at our disposal to avoid a default," Jeffries added.

The newly revealed strategy was quietly hatched in January when Rep. Mark DeSaulnier (D-Calif.) introduced "The Breaking the Gridlock Act" and kept confidential until now.

In the wake of Yellen's warning, Rep. Jim McGovern (D-Mass.), the top-ranked Democrat on the House Rules Committee, introduced a "special rule" on Tuesday, during a pro forma session held while the House was in recess.

"The next step in the process is filing a discharge petition, which will start the signature-gathering process," The Hill explained. "The petition, however, cannot be filed for seven legislative days after the special rule is introduced, meaning the earliest signatures can begin to be collected is on May 16."

According toThe New York Times, McGovern's "open-ended rule would provide a vehicle to bring Mr. DeSaulnier’s bill to the floor and amend it with a Democratic proposal—which has yet to be written—to resolve the debt limit crisis."

As the newspaper reported:

The strategy is no silver bullet, and Democrats concede it is a long shot. Gathering enough signatures to force a bill to the floor would take at least five Republicans willing to cross party lines if all Democrats signed on, a threshold that Democrats concede will be difficult to reach. They have yet to settle on the debt ceiling proposal itself, and for the strategy to succeed, Democrats would likely need to negotiate with a handful of mainstream Republicans to settle on a measure they could accept.
Still, Democrats argue that the prospect of a successful effort could force House Republicans into a more acceptable deal.

Rep. Jasmine Crockett (D-Texas) described the discharge petition as "an extraordinary action to address the extraordinarily disastrous position Speaker McCarthy has put our country in."

"By using the debt ceiling as a ticking time bomb hanging over the heads of the American people," Crockett continued, "Republicans are threatening to send our country into a full recession if they don't get to check off every box on their extreme conservative wishlist."

"Republicans are treating this debt ceiling negotiation as a hostage situation—with the American people as the hostages," she added. "In response, House Democrats are taking action to bring a clean bill raising the debt ceiling to the floor and end this game of high-stakes political chicken."

According to the Times:

House Democratic leaders have for months played down the possibility of initiating a discharge petition as a way out of the stalemate. They are hesitant to budge from the party position, which Mr. Biden has articulated repeatedly, that Republicans should agree to raise the debt limit with no conditions or concessions on spending cuts.
But behind the scenes, they were simultaneously taking steps to make sure a vehicle was available if needed.
The discharge petition process can be time-consuming and complicated, so Democrats who devised the strategy started early and carefully crafted their legislative vehicle. Insiders privately refer to the measure as a "Swiss Army knife" bill—one that was intended to be referred to every single House committee in order to keep open as many opportunities as possible for forcing it to the floor.

The American Prospect's executive editor, David Dayen, warned on social media that "the timing of a discharge petition is such that this needed to start at the beginning of the Congressional session; probably too late now."

In the absence of congressional action, Yellen—who has supported proposals to permanently eliminate the federal government's borrowing cap as most countries around the world have done—still has the authority to avert an economic calamity by minting a trillion-dollar platinum coin.

On Monday, former Labor Secretary Robert Reich urged Biden to "play hardball by ignoring" the GOP. As legal experts have argued, the 14th Amendment to the U.S. Constitution prohibits "fiscal obstructionism," and even the right-wing-controlled U.S. Supreme Court, some observers predict, would likely support the Biden administration.

This content originally appeared on Common Dreams and was authored by Kenny Stancil.

Yellen Gives Hard Deadline for GOP to End Economic Hostage Situation

Jessica Corbett — Mon, 01 May 2023 22:13:53 +0000

After months of taking "extraordinary measures" to prevent a first-ever U.S. default, Treasury Secretary Janet Yellen on Monday warned that "our best estimate is that we will be unable to continue to satisfy all of the government's obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time."

Amid calls for a clean bill to raise the nation's arbitrary borrowing limit to avert a default that economists say could be catastrophic for the U.S. and global economies, House Speaker Kevin McCarthy (R-Calif.) and 216 other Republicans last week passed what critics called a "debt ceiling scam" containing "extreme, harmful cuts against average Americans to protect billionaire tax breaks."

McCarthy went ahead with the vote despite Senate Majority Leader Chuck Schumer (D-N.Y.) warning that the House GOP's so-called Limit, Save, Grow Act is "dead on arrival" in the upper chamber, elevating concerns that congressional Republicans will continue risking a global economic crisis in hopes of forcing Democrats to agree to massive spending cuts.

"Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments," Yellen wrote to McCarthy on Monday, noting that "it is impossible to predict with certainty the exact date when Treasury will be unable to pay the government's bills."

\u201cIs this bad?\nIt feels bad.\nhttps://t.co/1yHTfu7kw8\u201d
— Thornton McEnery (@Thornton McEnery) 1682973300

"We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," she added. "If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests."

As Yellen sent her notice to McCarthy, Schumer circulated a dear colleague letter declaring that with the vote last week on what Democrats have rebranded the Default on America (DOA) Act, "House Republicans sent a hard-right ransom note to the American people."

Pledging that "the Senate will show the public what this bill truly is" with "hearings to expose the true impact of this reckless legislation on everyday Americans," Schumer added:

Speaker McCarthy has surrendered to the far-right extremist members of his caucus and the DOA is their crown jewel. In backrooms, they pulled together a slew of unpatriotic and harmful policies that would take the country backwards. The DOA would cut critical funding to nearly all sectors of American life meaning fewer jobs, higher costs, and leaving policemen, first responders, border patrol, and our brave veterans all hanging out to dry. The DOA would repeal the historic green energy tax credits from the Inflation Reduction Act, threatening over $150 billion in investments and 18,000 jobs that have been announced since Democrats passed that bill. The DOA would hamper our international standing by gutting funding for critical State Department programs and cutting-edge research facilities and sending jobs overseas.
Let's be perfectly clear: The Republican Default on America Act does nothing to actually resolve the looming debt crisis, and it has no hope of ever becoming law. If anything, the MAGA House Republicans' actions have increased the likelihood of default. It locks the House into an unacceptable and extreme position that pulls us even further apart. If Speaker McCarthy was a serious good-faith negotiator, he would not have let extremists take him hostage and move this debate in the wrong direction.

After reiterating that "the real solution is bipartisan support for a clean bill to increase the debt limit," Schumer concluded that "a reckless Republican-forced default could plunge the country into a deep and painful recession and destabilize the global economy. We will do everything we can to protect the American people and prevent a default."

Meanwhile, President Joe Biden also called out GOP leadership on Monday, saying during a National Small Business Week event that "we pay our bills, and we should do so without reckless hostage-taking from some of the MAGA Republicans in Congress."

Citing two unnamed sources, Politico reported Monday evening that Biden has invited McCarthy, House Minority Leader Hakeem Jeffries (D-N.Y.), Schumer, and Senate Minority Leader Mitch McConnell (R-Ky.)—who has said the speaker and president need to reach an agreement—to "meet at the White House on May 9 to discuss the impending breach of the U.S. debt limit."

In a joint statement Monday, Schumer and Jeffries urged Republicans to "put aside partisan interests and do what is right and necessary for the American people," emphasizing that "we do not have the luxury of waiting until June 1 to come together, pass a clean bill to avoid a default, and prevent catastrophic consequences for our economy and millions of American families."

\u201cBiden's gotta mint the coin or declare the debt ceiling unconstitutional. no way out https://t.co/3WgXZN2TGe\u201d
— ryan cooper (@ryan cooper) 1682973388

Earlier Monday, former Labor Secretary Robert Reich noted that Biden "rightfully says that raising the so-called debt ceiling should not be negotiable" and offered the president some advice: "Ignore McCarthy and the Republican radicals."

"Mr. President, your oath to uphold the Constitution takes precedence. As the supreme law of the land, the Constitution has greater weight than the debt ceiling," Reich wrote. "If House Republicans refuse to raise the debt ceiling, you are obligated by the U.S. Constitution and your oath of office to ignore the debt ceiling and continue to pay the debts of the United States."

"The Republicans want to lure you into a cynical game, Mr. President," he added. "The nation needs you to play hardball by ignoring them."

This post has been updated with a joint statement from Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries.

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

To Solve the Climate Crisis, It’s Time to Talk About Canceling Debt

Teresa Anderson — Mon, 01 May 2023 00:58:50 +0000

As climate activists, we are used to banging our heads against brick walls.

Amid the need to rapidly move away from fossil fuels, deforestation and destructive export agriculture, we’re used to marshalling the full weight of scientific evidence, moving testimony, ethical arguments, persuasive advocacy and creative campaigning to pushing for changes needed to save the planet. Unfortunately, we’re also accustomed to governments ignoring us, and scaling up climate-harming activities instead.

But why do so many governments make such apparently irrational decisions when the climate crisis is on their doorstep, their own citizens are losing out, and the weight of evidence is telling them to act?

The answer might surprise you.

One of the biggest factors preventing governments in the Global South from taking climate action is barely discussed at conferences and debates meant to find solutions to the planet’s existential crisis.

It is time for us to talk about debt. Especially now, with the Spring Meetings of the World Bank and the International Monetary Fund (IMF) held recently and economic policy options for Global South countries under the spotlight. If we want countries to have the freedom to take action that is in their interests, we must understand that the World Bank, the IMF and private banks based in wealthy countries are preventing climate progress.

How? Because of their unhealthy obsession with debt repayments from the Global South at any cost.

This extortionate debt which hangs over the heads of many countries is forcing them to make difficult choices in order to pay that debt back. Indonesia, for example, is paying back loans equivalent to more than 40 percent of its gross domestic product (GDP), a key factor leading it to cut down rainforests to make way for money-making palm oil plantations. The need to repay external debt worth more than 80 percent of GDP has also been a factor in Brazil’s prioritising of soybean exports over the protection of the Amazon. And an external debt equivalent to 101 percent of GDP is why Mozambique has been trying to expand its coal and gas production in recent years.

This type of external debt almost always needs to be repaid in US dollars or other foreign currencies. So even when countries would benefit from supporting smallholder farmers, agroecology and small and medium-sized businesses, many have been forced to shape their economies around destructive fossil fuel and large-scale industrial agribusiness exports, in order to earn the dollars needed for debt repayment.

And the difficult decisions continue, with many countries spending more on servicing their debt than on education and health. Even though many have paid back their original loan amounts, a combination of rising interest rates, successive currency devaluations, fluctuating global commodity prices and the destructive impacts of climate change have kept the debt repayment finish line perpetually out of reach.

Indeed, sometimes the climate crisis has forced countries to take on more loans at even higher interest rates.

Even worse, loans from the World Bank and the IMF almost always come with rules attached – that countries privatise their public services, cut public spending, and go gung-ho into producing export commodities. These “conditionalities” and the power wielded by these institutions are worsening the climate crisis, and undermining countries’ capacity to take climate action through investing in green technologies, resilience or recovery from disasters.

Sniffing the climate winds of change, the IMF and the World Bank are now desperately attempting a makeover, and trying to present themselves as responsible climate leaders. But in reality, the IMF has advised more than 100 countries to expand their fossil fuel infrastructure, while the World Bank has spent $14.8bn supporting fossil fuel projects and policies since the Paris Agreement was signed. Their claims of being responsible climate leaders do not hold up to any scrutiny.

New research by ActionAid finds that 93 percent of countries most vulnerable to the climate crisis are in debt distress, or at significant risk of debt distress. This reflects a vicious cycle in which climate impacts put countries into debt, but that debt accelerates the climate crisis and leaves countries even more exposed to its impacts. And so the cycle continues.

All this points us towards a clear conclusion: that the global debt crisis is a major barrier to climate action and that debt cancellation can be a highly effective climate solution.

A proposal from last year called the Bridgetown Initiative, conceived by the prime minister of Barbados, Mia Mottley, is gathering momentum and putting the climate spotlight on debt and the role of international finance institutions. This initiative was initially seen as a progressive opportunity to overhaul the global financial system and put a stop to the harm that the World Bank and the IMF are doing to the climate and climate-vulnerable countries.

The agenda is still evolving, but there are concerns that despite some progressive elements, other components would drive countries deeper into debt. Proposals on the table suggest that these international financial institutions could merely tweak their ways, and channel even more loans to climate-affected countries while branding this as “climate finance” for adaptation and mitigation.

Given that rich countries have the greatest historical responsibility for causing the climate crisis, it is only right that they contribute their fair share of funds as grants, to support lower-income countries that are already suffering from the impact of climate change.

International loans must not be allowed to masquerade as “climate finance”, and rich countries must not be enabled to wriggle out of their own obligations to contribute real funds. If we want to address the climate crisis, debt cancellation — rather than yet more spiralling debt — must be at the top of the agenda.

This content originally appeared on Common Dreams and was authored by Teresa Anderson.

Sanders Calls on Biden to Fight for Working People as GOP Wages ‘War’ in Debt Limit Proposal

Julia Conley — Sun, 30 Apr 2023 19:20:38 +0000

U.S. Sen. Bernie Sanders on Sunday said President Joe Biden and the Democratic Party must do everything in their power to defend middle- and low-income people in potential budget negotiations, after the Republicans said they will raise the country's debt limit only in exchange for cuts to green jobs, food assistance, healthcare, and other social services that millions of Americans depend on.

Sanders spoke to CNN's "State of the Union" about the debt ceiling days after the GOP introduced the so-called Limit, Save, Grow Act, which would raise the country's borrowing limit to avoid an unprecedented default on its debt obligations and threaten the U.S. and global economies—but also includes cuts to Medicaid, the Supplemental Nutrition Assistance Program, the Social Security Administration, and Internal Revenue Service funding meant to prevent tax-dodging by the richest Americans, among other programs.

"What the Republicans are saying in their budget proposal is that, at a time of massive income and wealth inequality, when the richest people are becoming much richer, while working-class people are struggling, what they want to do is to cut programs for nutrition, for education, for healthcare," said the Vermont independent senator.

Sanders noted that the GOP proposed cuts over the next decade to non-military spending, but nothing to reduce the Pentagon budget, which ballooned to $858 billion this year.

"I think we can move toward cutting military spending," said Sanders. "I'm certainly open to demanding that the largest corporations in this country and the wealthiest people start paying their fair share of taxes."

He added that he is willing to address "waste" within the federal government, Democrats should ensure the legislation won't "go to war against the working class of this country, lower-income people."

"Don't tell kids that they can't afford to go to college or cut back on public education in America," he said. "We have already too much inequality in America. Let's not make it worse."

He added that the Democrats "can start negotiating tomorrow," but reiterated the president's position that raising the arbitrary debt limit to protect against a default is non-negotiable.

[embedded content]Senator Bernie Sanders' Interview On CNN's State Of The Union(FULL)www.youtube.com

Rep. James Clyburn (D-S.C.) on Saturday repeated Senate Majority Leader Chuck Schumer's (D-N.Y.) statement that the package will be "dead on arrival" in the Senate, and said House Speaker Kevin McCarthy (R-Calif.) is well aware that the proposal is "a joke" that was only passed out of the Republican-controlled House to drive Biden and the Democrats to the negotiating table.

Economists say lawmakers have until at least early June to hammer out a deal to avoid a debt default.

On CNN, Sanders suggested that fighting for working people and low-income households to keep their healthcare, food assistance, and other essential services could be the first step in ensuring Biden wins a second term "in a landslide" in 2024.

"What I do believe is, the Democrats and the president have got to be stronger on working-class issues," said Sanders. "They have got to make it clear that we believe in a government that represents all, not just the few, take on the greed of the insurance companies, the drug companies, Wall Street, all the big money interests, and start delivering for working-class people."

Biden announced he is running for reelection last week, and Sanders endorsed the president's run soon after.

"Look, it is no great secret—I ran against Biden," said Sanders on Sunday. "No great secret that he and I have strong differences of opinion. But... if you believe in democracy, you want to see more people vote, not fewer people vote, I think the choice is pretty clear, and that choice is Biden."

This content originally appeared on Common Dreams and was authored by Julia Conley.

Debt Ceiling Reminder for Democrats: ‘You Can’t Negotiate With Terrorists’

Brett Wilkins — Fri, 28 Apr 2023 20:58:45 +0000

U.S. progressives escalated their warnings this week as they accused House Speaker Kevin McCarthy of holding the debt limit "hostage" in service of the GOP's pro-billionaire agenda, while urging President Joe Biden and Senate Democrats to firmly oppose GOP legislation linking any debt ceiling increase to painful spending cuts targeting poor and working people.

As the clock ticks toward what would be an unprecedented and catastrophic U.S. debt default, McCarthy (R-Calif.) and House Republicans are hoping to force Biden to the negotiating table to discuss their newly passed Limit, Save, Grow Act, which progressive watchdog Accountable.US warned, if passed, would inflict "extreme, harmful cuts against average Americans to protect billionaire tax breaks."

"It's not a good faith negotiation if one side has a gun to the hostage's head."

Although the bill would raise the federal government's arbitrary borrowing limit in order to avert default, it would also limit non-military domestic spending over the next 10 years while enacting fossil fuel-friendly energy policies, restricting regulations, imposing work requirements for social programs, blocking President Joe Biden's student debt relief plan, and rescinding Internal Revenue Service (IRS) funds earmarked for fighting tax-dodging by ultra-wealthy and corporate tax cheats.

"Kevin McCarthy and the House GOP are holding the federal [government] and the U.S. Constitution hostage," Talking Points Memo founder and editor-in-chief Josh Marshall tweeted Friday. "They have issued a series of demands and said that if their demands are not met they will force the U.S. government into bankruptcy for the first time in almost 250 years."

\u201cIt\u2019s worth reminding everyone over and over in the coming days what most establishment reporters will not or cannot. Kevin McCarthy and the House GOP are holding the federal govt and the US constitution hostage. They have issued a series of demands and said that if their \u2026\u201d
— Josh Marshall (@Josh Marshall) 1682699246

"Here's how they plan to do it," Marshall continued:

Congress already passed a law requiring Joe Biden to spend money to run the federal government. The GOP House now proposes to make it illegal for President Biden to get the money he needs to buy the things Congress passed a law forcing him to buy. This isn't budget-making. It's just more parliamentary terrorism. It will crater the U.S., crater the global economy, violate the U.S. Constitution and imperil the U.S.' privileged role in the global order.

"But you will hear lots of reporters say that since Kevin McCarthy has now sent out a list of demands from the bank vault where he's holding the hostages that he's done the responsible thing and Joe Biden must negotiate with him because McCarthy is acting in 'good faith,'" Marshall wrote.

"There's no such thing as good faith hostage-taking," he added. "There's no responsible way to engage in parliamentary terrorism."

"You can't negotiate with terrorists," Marshall stressed. "There's an actual budget process where these questions get hashed out. That's for next years budget. It's not a good faith negotiation if one side has a gun to the hostage's head. We shouldn't let anyone forget that's what's happening."

Marshall's tweets echoed remarks by other progressives.

"What the Republicans are doing is they're taking our economy and the global economy hostage," Rep. Ilhan Omar (D-Minn.) told HuffPost on Thursday. "I think that there is time to have budget negotiations and have those conversations but they should not be tied to raising the debt ceiling."

\u201cKevin McCarthy and the GOP are threatening to crash the economy if Biden doesn\u2019t go along with their massive cuts to veterans benefits and green energy programs. People think they\u2019d never risk that kind of damage to the US economy. People are wrong.\n\nhttps://t.co/vI9CUf86PI\u201d
— Thom Hartmann (@Thom Hartmann) 1682689254

Senate Majority Leader Chuck Schumer (D-N.Y.) said earlier this week that the GOP bill will be "dead on arrival" in the upper chamber.

Likewise, Biden said Wednesday that he is open to talks with McCarthy, "but not on whether or not the debt limit gets extended."

"That's not negotiable," the president added.

This content originally appeared on Common Dreams and was authored by Brett Wilkins.

Omar Says Debt Limit Bill Shows GOP Only Cares About Rewarding ‘Billionaire Friends’

Jake Johnson — Fri, 28 Apr 2023 10:43:20 +0000

Rep. Ilhan Omar argued Thursday that the House GOP's newly passed debt ceiling legislation further demonstrates Republican lawmakers' unwavering "commitment to transferring wealth from the working class to their billionaire friends."

"They don't care about the deficit," Omar (D-Minn.) wrote on Twitter, citing the massive cost of tax cuts for the rich approved by congressional Republicans under former Presidents Donald Trump and George W. Bush. One recent analysis estimated that the Trump and Bush tax cuts have "added $10 trillion to the debt since their enactment and are responsible for 57% of the increase in the debt ratio since 2001."

Omar, who has warned that the Republican bill would eliminate childcare access for thousands of kids in her state, also pointed to the measure's steep proposed cuts to Medicaid, federal food assistance, and Internal Revenue Service (IRS) funding aimed at cracking down on rich tax dodgers.

According to the Congressional Budget Office, the Republican bill's cuts to IRS funding would add $114 billion to the deficit by undermining tax enforcement—largely offsetting the "savings" Republicans are attempting to achieve by imposing punitive work requirements on recipients of Medicaid and nutrition assistance.

\u201cGOP cuts:\n$120B from Medicaid and food assistance\n$71B from tax cheat enforcement\n$271B from clean energy\n\nCost of the Bush + Trump tax cuts:\n$10 trillion\n\nThey don\u2019t care about the deficit. They care about transferring wealth from the working class to their billionaire friends.\u201d
— Ilhan Omar (@Ilhan Omar) 1682626465

Progressive economists and analysts have offered similar critiques of the House GOP bill, which is opposed by the Biden White House and dead on arrival in the Democratic-controlled Senate—though Republicans are hoping to squeeze some of their provisions into final debt ceiling legislation by using the threat of a disastrous default as leverage.

In a blog post earlier this week, Josh Bivens and Samantha Sanders of the Economic Policy Institute dismissed as "laughable" House Speaker Kevin McCarthy's (R-Calif.) claim that the Republican proposal "would put the United States on a path to 'fiscal responsibility' and lower inflation.

"The biggest driver of deficits for the last 20 years has been a steady trend toward ever-larger tax cuts for corporations and the richest U.S. households," Bivens and Sanders wrote. "No one who actually wants to reduce the federal deficit should be looking to do that on the backs of the poorest and most vulnerable Americans."

"This is the next milestone in House Republicans' attempt to play a game of dangerous political brinkmanship with the U.S. economy, trying to force through harmful and deeply unpopular federal spending cuts in exchange for increasing the debt limit," they added. "This approach recklessly flirts with bringing on the economic catastrophe of a government default in the short term."

Sharon Parrott, president of the Center on Budget and Policy Priorities, said in a statement that the bill "represents failed trickle-down economics at its worst."

"The bill would make severe cuts—$3.6 trillion over the next decade—to the part of the budget that funds childcare and preschool, schools, college aid, housing, medical research, transportation, and many other national priorities," Parrott noted. "Even as the bill makes these drastic, damaging cuts, it protects the wealthy from paying what they owe in taxes by repealing IRS funding enacted in the Inflation Reduction Act."

Speaking to HuffPost on Thursday, Omar said President Joe Biden is right to oppose any legislation that connects sweeping spending cuts to a necessary debt limit increase.

"What the Republicans are doing is they're taking our economy and the global economy hostage," said Omar. "I think that there is time to have budget negotiations and have those conversations but they should not be tied to raising the debt ceiling."

This content originally appeared on Common Dreams and was authored by Jake Johnson.

Would the Right-Wing Supreme Court Actually Back the Far-Right GOP Effort to Tank the US Economy?

Thom Hartmann — Thu, 27 Apr 2023 17:42:05 +0000

Kevin McCarthy is playing with fire, and he’s on very shaky constitutional grounds.

He believes that he can hold hostage payments for goods bought and services already provided to the federal government — debts of the United States — in exchange for forcing the Biden administration to go along with draconian cuts to veterans benefits, food stamps (SNAP benefits), Medicaid, the Inflation Reduction Act (particularly its subsidies for green energy), and the permanent establishment of Trump’s massive tax cuts for billionaires.

Republicans started using the so-called “debt ceiling” — based on a law passed back in 1917 — as a cudgel to beat up Democratic presidents in 1995 during the Clinton administration. It was one of Newt’s “bright ideas.”

Clinton and Obama went along with the GOP, but now their demands have become so extreme that President Biden is threatening a veto (if the bill even gets through the Senate, which it probably won’t).

They’re doing this based on the 1917 Second Liberty Bond Act which established a ceiling for US government debt, a ceiling that’s been breached through amendment over 90 times in the past century.

The act gave the government the authority to issue Liberty Bonds to the public to help finance World War I, but put a cap on how much debt could be incurred through that issuance and other government functions. Today we call that the “debt ceiling.”

Just from 1962 to 2011 it was raised 74 times, including 18 times under Reagan, 8 during Clinton, 7 during Bush, 5 times during Obama’s presidency, and 4 times during Trump’s four years in office.

In the years since Gingrich, when Republicans are in the White House the debt ceiling is routinely raised. When Democrats are in the White House and Republicans control one or more houses of Congress, they hold it hostage — really, holding the full faith and credit of the United States hostage — in exchange for cuts in social programs and lower taxes for billionaires.

The last time House Republicans seriously threatened the full faith and credit of the United States this way was during Obama’s presidency in 2011 (they almost never do this when a Republican is in the White House, per Jude Wanniski’s “Two Santas” theory of politics).

That single 2011 stunt — just having House Republicans walk us up to the edge of default, resulting in a downgrade of our nation’s credit rating — cost working people trillions and caused widespread and long-lasting pain.

As the Treasury Department noted in 2013, looking back on that 2011 experience when Republicans held out until the last minute:

“In 2011, U.S. debt was downgraded, the stock market fell, measures of volatility jumped, and credit risk spreads widened noticeably; these financial market effects persisted for months. …
“The S&P 500 index of equity prices fell about 17 percent in the period surrounding the 2011 debt limit debate and did not recover to its average over the first half of the year until into 2012.
“Between the second and third quarter of 2011, household wealth fell by $2.4 trillion…”

The US government has never, in our country’s entire history, defaulted on its debt. Neither, in recent history, have most other advanced democracies. Debt default is very much a Third World kind of thing.

That’s why the US dollar and US government treasuries are at the core of the international financial system: we have always been considered the most reliable debtor, with the most stable currency and structurally sound economic system, in the world.

If the GOP takes us into default — even for a matter of hours — the consequences will be dire.

CBS News reports that Moody’s Analytics’ Chief Economist Mark Zandi says it would wipe out as many as 6 million jobs and destroy $15 trillion in household wealth. Unemployment would rapidly spike, he notes, to at least 9 percent, and the stock market would fall by a third.

We’ve known how bad it could become for a while. The Treasury Department, back in 2013, noted that:

“In the event that a debt limit impasse were to lead to a default, it could have a catastrophic effect on not just financial markets but also on job creation, consumer spending and economic growth—with many private-sector analysts believing that it would lead to events of the magnitude of late 2008 or worse, and the result then was a recession more severe than any seen since the Great Depression.
“Considering the experience of countries around that world that have defaulted on their debt, not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation.”

Most Americans are not at all enthusiastic about Republicans in Congress causing economic damage that “could last for more than a generation,” although McCarthy yesterday seemed almost giddy waving about that threat.

But there may be a way out.

The Second Liberty Bond Act and the subsequent acts that followed or amended it have only been narrowly tested for constitutionality before the Supreme Court. And it failed that test. In the opinion of many constitutional scholars, it’s patently unconstitutional and unenforceable.

The 14^th Amendment to our Consitution, written and ratified after the Civil War, has a section that deals with the federal government paying its debts. It’s there, in part, because the Civil War had threatened the confidence of both the nation and the world around America’s ability to pay its bills.

Section 4 of the 14^th Amendment says:

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

It was first tested in a dispute about payment of government debt, a $10,000 Liberty Bond that the holder, Mr. Perry, wanted redeemed with an additional $7,000 to cover changes in the value of gold.

This led to the 1935 Supreme Court ruling in Perry v United States, explicitly stating that the federal government must pay its debts as incurred.

The syllabus of the case states:

“11. Section 4 of the Fourteenth Amendment, declaring that, ‘The validity of the public debt of the United States, authorized by law, ...shall not be questioned,’ is confirmatory of a fundamental principle, applying as well to bonds issued after, as to those issued before, the adoption of the Amendment; and the expression ‘validity of the public debt’ embraces whatever concerns the integrity of the public obligations.
“The Joint Resolution of June 5, 1933, is a direct violation of §4 of the Fourteenth Amendment, expressly limiting the delegated powers of Congress, and making the public debt of the United States inviolable at the hands of Congress.”

The body of the decision itself goes even deeper into asserting that our government must pay its debts:

“When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments. …
“In Lynch v. United States, 292 U. S.571, 580, with respect to an attempted abrogation by the Act of March 20, 1933 (48 Stat. 8, 11) of certain outstanding war risk insurance policies, which were contracts of the United States, the Court quoted with approval the statement in the Sinking-Fund Cases, supra, and said:
“’Punctilious fulfillment of contractual obligations is essential to the maintenance of the credit of public as well as private debtors. No doubt there was in March, 1933, great need of economy. In the administration of all government business economy had become urgent because of lessened revenues and the heavy obligations to be issued in the hope of relieving widespread distress.
“‘Congress was free to reduce gratuities deemed excessive. But Congress was without power to reduce expenditures by abrogating contractual obligations of the United States. To abrogate contracts, in the attempt to lessen government expenditure, would be not the practice of economy, but an act of repudiation.’” (emphasis mine)

The simple fact is that the Trump and Biden administrations have made obligations to pay for goods and services ranging from military hardware to Social Security, and McCarthy and his buddies in the Republican Party are trying to force a default on those debts.

Such a default, according to Treasury Secretary Janet Yellen and numerous finance experts, would be disastrous, perhaps even shaking the worldwide economy. America has never defaulted on her debts, and such a default could take decades to recover from.

It could throw America and the world into a depression as bad or worse than the Republican Great Depression of the 1930s.

President Biden is demanding that Congress pass a “clean” debt ceiling increase “without conditions.” It’s extremely unlikely McCarthy — weak as he is, with multiple members of the Sedition (“Freedom”) Caucus actually arguing that default would be a good thing because it would teach Democrats a lesson — will be able to get such a clean bill through the House.

As Tennessee’s Congressman Tim Burchett said:

“We just tell the world we’ve reached a limit. The consequences, of course, are shutting the government down.”

So far, because we’ve already hit the debt ceiling, Treasury Secretary Yellen has been “moving money around” to pay the most urgent bills, but the end of that road is just weeks away. Without congressional action, the next step would be default.

But what if the president were to call a press conference and say:

“The Constitution requires America to pay her bills. I fully intend to do that.”

If President Biden were to call McCarthy’s bluff and simply restart fully paying America’s bills, ignoring the Liberty Bond Act and the debt ceiling, Republicans will almost certainly sue him before the Supreme Court, which has original jurisdiction in disputes between the Executive and Legislative branches.

And under normal and rational circumstances, the Court would do what it did in 1935 and order the bills paid, citing the 14^th Amendment’s fourth section as the basis for the decision.

These are not, however, normal and rational times, and this is not a normal and rational court. Clarence Thomas and Brett “Beerbong” Kavanaugh have both publicly declared a desire for revenge against Democrats, and Alito and Gorsuch are both visibly pissed off about their integrity being questioned.

Still, I believe it’s unlikely the Court would side with Congressional Republicans and force America into default (a similar lawsuit was tossed out in 2016, but for lack of standing).

This has the potential to get wild. Get some popcorn, but also buckle up tight…

This content originally appeared on Common Dreams and was authored by Thom Hartmann.

Patriotic Millionaires Slam House GOP Debt Ceiling Plan for Protecting Rich Tax Cheats while Hurting Poor Families

Newswire Editor — Thu, 27 Apr 2023 02:09:41 +0000

Earlier this evening, Republicans in the US House of Representatives voted to pass a debt ceiling plan that contains substantial cuts to virtually all areas of discretionary spending for the federal government.

Morris Pearl, chair of Patriotic Millionaires and former managing director at BlackRock, issued the following statement in response:

"The new House debt ceiling plan proves that the GOP really only cares about the rich. In a desperate attempt to cut the debt as much as possible, Kevin McCarthy and his allies have passed a bill that would impose draconian cuts on vital programs like veteran care, nutrition assistance for women, infants, and children, and food programs like Meals on Wheels. Even though they're apparently willing to cripple the federal government, there's one thing they won't do - make the rich pay taxes. In a budget all about "saving money," there's one notable change that would actually cost the government $120 billion - repeal of additional IRS enforcement funding. The House GOP just told America that they believe it is more important to make sure rich tax cheats can get away with breaking the law than it is to make sure poor families have access to food and health care. The cost of repealing the IRS funding is nearly exactly equal to the savings from imposing harsh work requirements on programs like SNAP and Medicaid. This isn’t a genuine attempt to balance the federal budget, it’s just another extremist step by the GOP to cut critical social services in order to protect the wealth of tax cheats in the top 1%."

This content originally appeared on Common Dreams and was authored by Newswire Editor.

‘MAGA Economic Sabotage’: 217 House Republicans Pass Debt Ceiling Bill With Harmful Cuts

Jessica Corbett — Wed, 26 Apr 2023 23:59:16 +0000

A wide range of advocacy groups and Democratic lawmakers on Wednesday fiercely denounced Republicans in the U.S. House of Representatives for narrowly passing their "debt ceiling scam" containing "extreme, harmful cuts against average Americans to protect billionaire tax breaks."

The so-called the Limit, Save, Grow Act was unveiled last week by GOP House Speaker Kevin McCarthy (Calif.) and passed 217-215, with just four Republicans—Reps. Andy Biggs (Ariz.), Ken Buck (Colo.), Tim Burchett (Tenn.), and Matt Gaetz (Fla.)—joining Democratic opponents and three lawmakers not voting.

Although the House GOP bill would raise the federal government's arbitrary borrowing limit, averting a first-ever default that would be catastrophic for the U.S. and global economies, the legislation would also cap spending over the next decade, impose fossil fuel-friendly energy policies, restrict regulations, add work requirements for social programs, block President Joe Biden's contested student debt relief plan, and repeal Internal Revenue Service (IRS) funds intended to reduce tax-dodging.

\u201c217 Republicans just voted for a debt ceiling bill that would:\n\n-kick millions of healthcare\n-allow wealthy to cheat taxes\n-gut veterans benefits \n-block student loan forgiveness \n-cut food assistance/Meals on Wheels \n-shrink cancer research\n-slash opioid treatment\u201d
— Sawyer Hackett (@Sawyer Hackett) 1682547026

Senate Majority Leader Chuck Schumer (D-N.Y.) has already said the bill is "dead on arrival" in the upper chamber and Biden has also slammed Republicans' attempted cuts, but given the risks of both the proposal and a potential default, critics still shared their outrage over the vote.

"Nearly every Republican in the U.S. House just voted to slash the already inadequate funding of the Social Security Administration (SSA)," said Social Security Works executive director Alex Lawson in a statement.

"Cuts to SSA are cuts to Social Security, and we will hold every single one of these members accountable," he added. "This vote shows that Republicans are united in support of cutting Social Security, while Democrats are united in support of a clean debt limit increase with no cuts to Social Security or any other benefits."

Also noting that the "dangerous" bill includes SSA cuts, whihc would force office closures and layoffs, delaying services for seniors, Alliance for Retired Americans executive director Richard Fiesta asserted that "a political party's budget reflects its values, and clearly the GOP does not value older Americans."

"The bill also slashes food assistance for more than 1 million low-income seniors—many of whom rely on government food programs to get their only meal of the day," he said. "It will cut oversight of nursing homes, putting thousands of the most vulnerable seniors at risk of living in alarming and unsanitary conditions. This is reckless and irresponsible."

"In addition, this bill jeopardizes millions of Americans' multiemployer pensions that are guaranteed by the Pension Benefit Guaranty Corporation," Fiesta continued. "Finally, it would lead to the eviction of at least 430,000 low-income families from Section 8 housing, 80% of which are headed by seniors."

\u201cThe House of Representatives JUST passed a harmful debt ceiling proposal attacking health care coverage for people with low incomes. \nLet\u2019s be clear: attacks on Medicaid could cut off vital sexual and reproductive health care for MILLIONS.\u201d
— Planned Parenthood Action (@Planned Parenthood Action) 1682547812

Climate Action Campaign director Margie Alt charged that "with this vote, House Republicans showed us who they're really looking out for—the Big Oil companies and other corporate polluters whose profits they enhanced at the expense of the health and livelihoods of everyday Americans."

The Republican proposal would reverse some the Inflation Reduction Act's progress on jobs and environmental justice, and "ironically, the consequences would fall most heavily on red states," Alt noted. "In addition to a public health and environmental tragedy, this bill will create economic disaster. Every second we delay acting on climate costs Americans in lives lost, economic harm, and environmental degradation."

Earthjustice vice president of policy and legislation Raúl García argued that Wednesday's vote shows "Speaker McCarthy is willing to cave to the most extremist voices in his party to further their anti-clean energy and pro-polluter agenda."

"It's not a serious proposal, but instead a litany of damaging policies aimed at sacrificing the health and safety of our communities and catering to polluting industries," García said. "It's shameful that McCarthy and House Republicans are willing to hold our economy hostage, force the federal government into default, and sacrifice the creation of countless jobs in their districts at the behest of their corporate donors."

Leading up to the vote, the bill's opponents have pointed out that while House Republicans claim cuts are necessary for any bill that allows additional debt, in 2017, GOP lawmakers passed and then-President Donald Trump signed a law to provide corporations and rich individuals with tax breaks, which the Congressional Budget Office estimated would increase the federal deficit by nearly $2 trillion over a decade.

\u201cBREAKING: House Republicans just voted to pass McCarthy's debt ceiling disaster\u2014cutting Medicaid, SNAP, veterans care, Social Security Administration funding, child care, and more while protecting tax breaks for the wealthy and corporations.\n\nShame.\u201d
— Americans For Tax Fairness (@Americans For Tax Fairness) 1682545793

"The MAGA House majority demands everyday Americans, from veterans to seniors to children, brace for harmful cuts while they protect every cent of the debt-ballooning Trump tax breaks for billionaires and corporations," declared Kyle Herrig, president of Accountable.US, after the bill passed the chamber.

"House Republicans even lined up to gut resources needed to crack down on wealthy tax cheats, a foolhardy move that actually adds over $100 billion to the debt," he stressed, flagging the IRS cuts. "MAGA extremists insist millions of Americans give up health and food security, good-paying manufacturing jobs, and public safety at the same time they shamelessly propose trillions more in new tax giveaways for big corporations that never trickle down to anyone else and fuel the deficit."

"The MAGA majority offers nothing but a lose-lose proposition: harmful cuts that leave everyday Americans worse off—or a default crisis that crashes the economy, disrupts Social Security checks, and skyrockets interest rates on car loans and mortgages," Herrig added. "That's no choice—that's MAGA economic sabotage."

According to Patriotic Millionaires chair Morris Pearl, who also slammed the "draconian cuts" to social programs and IRS rollback, "The new House debt ceiling plan proves that the GOP really only cares about the rich."

"The new House debt ceiling plan proves that the GOP really only cares about the rich."

"The House GOP just told America that they believe it is more important to make sure rich tax cheats can get away with breaking the law than it is to make sure poor families have access to food and healthcare," Pearl said. "This isn't a genuine attempt to balance the federal budget, it's just another extremist step by the GOP to cut critical social services in order to protect the wealth of tax cheats in the top 1%."

Democrats in both chambers of Congress on Wednesday renewed demands for raising the debt limit without any attached policies.

"Republicans just passed a bill that would kill jobs, take away federal benefits for millions, and make everyday life for Americans more expensive. This is completely unworkable," said Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.). "Let's pass a clean debt ceiling increase."

Blasting the bill as "a ransom note to the American people to suffer the Republican radical, right-wing agenda or suffer a catastrophic default," Schumer pledged Wednesday evening that "Democrats won't allow it."

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Montana House bars transgender lawmaker from House floor for remainder of legislative session; House Republicans narrowly approve bill to raise the debt ceiling in exchange for deep cuts; Oakland Education Association authorizes a strike: The Pacifica Evening News, Weekdays – April 26, 2023

KPFA — Wed, 26 Apr 2023 18:00:00 +0000

Comprehensive coverage of the day’s news with a focus on war and peace; social, environmental and economic justice.

Montana House Republicans bar transgender Democrat Zooey Zephyr from House floor for rest of the legislative session
House Republicans pass bill to raise the debt limit in exchange for deep spending cuts President Biden won’t approve
Former advice columnist E. Jean Carroll weeps as she recounts her alleged rape by Donald Trump to a New York jury
Transit advocates unveil five billion dollar package to save public transit systems facing insolvency — or deep cuts
Oakland Education Association authorizes a strike — while a state lawmaker proposes a 50% hike in teacher and staff salaries statewide
Biden Administration files legal brief appealing lower court ruling striking down abortion drug mifepristone

Image: Zooey Zephyr from website of National Democratic Training Committee

The post Montana House bars transgender lawmaker from House floor for remainder of legislative session; House Republicans narrowly approve bill to raise the debt ceiling in exchange for deep cuts; Oakland Education Association authorizes a strike: The Pacifica Evening News, Weekdays – April 26, 2023 appeared first on KPFA.

This content originally appeared on KPFA - The Pacifica Evening News, Weekdays and was authored by KPFA.

McCarthy’s GOP Cruelly Targets Most-Vulnerable With Sabotage of US Economy as Ransom

Samantha Sanders — Wed, 26 Apr 2023 17:13:10 +0000

This week, Speaker of the House Kevin McCarthy plans to hold a vote on a bill that would raise the nation’s debt limit, but only in conjunction with extraordinarily steep spending cuts and new barriers to accessing income support programs. This is the next milestone in House Republicans’ attempt to play a game of dangerous political brinkmanship with the U.S. economy, trying to force through harmful and deeply unpopular federal spending cuts in exchange for increasing the debt limit. This approach recklessly flirts with bringing on the economic catastrophe of a government default in the short term.

Speaker McCarthy’s proposal would slash spending across federal programs for the next decade, cutting federal resources for everything from child care programs to environmental protection safeguards. If these deeply unrealistic spending cuts actually came to pass, the human toll would be enormous, and economic growth would be deeply damaged.

The McCarthy proposal also resurfaces a completely inaccurate but alarmingly persistent conservative claim: the idea that government anti-poverty programs are unnecessarily generous, bloated, and are keeping people out of the workforce who should otherwise be supporting themselves entirely through income earned in the labor market. The proposal seeks to severely restrict access to Medicaid health coverage and food stamps by imposing onerous requirements to prove that recipients are working or looking for work. Past evidence about these types of burdensome reporting requirements shows clearly that they will not actually lead to increased employment but will deprive vulnerable families of vital support.

Income support programs are not keeping people out of the workforce

The implicit claim that the U.S. labor market is hobbled by a too-generous welfare state is awfully hard to see in the data. Job growth in 2021 and 2022 hit its highest two-year stretch in the nation’s history. The unemployment rate is currently at a near-historic low. The prime-age employment-to-population ratio hit its highest point in March 2023 in more than 20 years. In general, many low-wage workers have seen the benefits of a tight labor market in the pandemic recovery, as employers have raised wages to attract and retain workers. In short, when jobs are available, workers have rushed to fill them. And while food assistance programs and other safety net supports are a vital lifeline to keep many out of poverty, the benefits are nowhere near enough on their own to fully support the cost of living for many families. Where has the idea come from that there’s an urgent need to address these supposedly too-comfortable benefits keeping people out of the workforce?

The premise of adding more onerous work and reporting requirements is also based on an inaccurate picture of who currently receives federal assistance through these programs. As the Center on Budget and Policy Priorities recently noted, nearly two-thirds of adults with Medicaid already work. Since the early 2000s, many safety net and income support programs have actually shifted toward requiring proof that recipients are also working or looking for work, but the gains of this shift have been near-impossible to see in terms of increased employment. Since 1990, all new investments in safety net spending have gone toward families with at least some labor market earnings. Those who are unable to find or do work under the current requirements are already in extremely difficult circumstances, and taking away the few safety net supports they have available would be economically devastating.

Those who are unable to find or do work under the current requirements are already in extremely difficult circumstances, and taking away the few safety net supports they have available would be economically devastating.

The U.S. safety net is in serious need of reforms, but not because of inaccurate claims that its excess generosity keeps people out of work. Public spending in the United States as a share of GDP is extremely low relative to other rich nations, and we spend far less to fight poverty than other comparatively wealthy countries. Low-income people already spend a ridiculous amount of energy attempting to prove and maintain their eligibility for these modest supports.

Imposing additional “work requirements” would restrict access to Medicaid and food stamps

Burdensome work reporting requirements are about making the benefits system more sluggish and difficult to access, and do nothing to boost employment. Existing reporting requirements already impose too-high a bureaucratic burden to accessing needed help. Passing these more burdensome requirements being called for by Speaker McCarthy would require people in need of assistance to devote even more of their bandwidth to dealing with forms and make-work bureaucratic tasks, rather than spending that time and energy looking for good work in meaningful and productive ways. The solution should be to reduce the amount of “means-testing” required and to make programs more readily accessible, not to restrict them further.

The biggest problem with the U.S. safety net is that our programs don’t help as many people, or as effectively, as they should.

Further, Speaker McCarthy’s claims that this proposal would put the United States on a path to “fiscal responsibility” and lower inflation are laughable. The biggest driver of deficits for the last 20 years has been a steady trend toward ever-larger tax cuts for corporations and the richest U.S. households. No one who actually wants to reduce the federal deficit should be looking to do that on the backs of the poorest and most vulnerable Americans.

The strongest “incentive” that people have to enter or reenter the workforce already exists—they need income to survive and provide for themselves and their families. If they’re not already working but want to, there is likely a very good reason. Many people simply can’t afford or access quality child care, or quality care for other family members, and need to take on those responsibilities themselves rather than entering the paid workforce. People with disabilities may struggle to find jobs that accommodate their needs appropriately, or that provide adequate health coverage. Many can’t find jobs with the fair and predictable scheduling they need. Others may stay out of the workforce because of a persistent lack of economic opportunities available in their neighborhoods, towns, or cities—a lack of opportunity often caused by systemic public and private disinvestment in communities of color or rural areas.

Any policymaker serious about getting people who want to work into the workforce should be looking to address these problems, rather than taking away lifelines to food and health care.

This content originally appeared on Common Dreams and was authored by Samantha Sanders.

GOP Debt Limit Bill Could Put Over 10 Million at Risk of Losing Medicaid: Analysis

Jake Johnson — Mon, 24 Apr 2023 19:00:50 +0000

The House GOP leadership's newly released debt ceiling legislation would have potentially devastating impacts on Medicaid recipients across the United States, putting more than 10 million low-income people at risk of losing health coverage under the program.

That's according to a detailed analysis of the bill published Monday by the Center on Budget and Policy Priorities (CBPP), which noted that the Republican legislation "would take Medicaid health coverage away from adults aged 19-55 who do not have children in their household and who aren't able to document that they are working or to secure an exemption."

"This builds on a failed policy that Arkansas temporarily applied, which resulted in large numbers of people losing coverage and no impact [on] employment outcomes," CBPP warned. "Like the Arkansas policy, the McCarthy proposal would require monthly verification of employment and require many people to navigate a complicated system and provide proof that may be difficult to get to secure an exemption."

"More than 10 million people in Medicaid expansion states would be at significant risk of having their health coverage taken away because they would be subject to the new requirements and could not be excluded automatically based on existing data readily available to states," the think tank continued. "When people lose Medicaid, they lose access to preventive and acute care as well as medications and other therapies for managing chronic conditions, such as diabetes or depression. Losing access to healthcare can lead to serious health consequences and financial strain, making it harder for people to engage in the workforce successfully."

The bill, touted by House Speaker Kevin McCarthy (R-Calif.) in a floor speech last week, would also impose even more strict work requirements on Supplemental Nutrition Assistance Program (SNAP) recipients—the majority of whom already work.

"Under the bill, people unable to document employment could lose both SNAP and Medicaid," CBPP observed.

CBPP has previously estimated that SNAP work requirements floated by Republicans would strip federal food benefits from more than 10 million people, including millions of children.

\u201c@ParrottCBPP These policies would make deep cuts in a host of national priorities; leave more people hungry, homeless, and without health coverage; and make it easier for wealthy people to cheat on their taxes.\n\nhttps://t.co/WxUY6CiADX\u201d
— Center on Budget (@Center on Budget) 1682351728

A fact sheet that the Republican leadership released alongside the new legislation estimates that the proposed work requirements would save the federal government up to $120 billion over the next decade.

But the document doesn't mention that the bill's repeal of Internal Revenue Service (IRS) funding would cost the federal government around $114 billion in revenue over 10 years, almost completely offsetting any potential savings from the punitive work requirements.

The bill would also slash federal spending across the board by reverting it to fiscal year 2022 levels and capping spending growth at 1% per year for the next decade. In exchange, the measure would only lift the debt ceiling through March 31, 2024 at the latest.

"Cutting a broad swath of public services—from schools, childcare, and public health to environmental protection and college aid—and making it harder for people to afford the basics while permitting more tax cheating and cutting taxes for the wealthy is failed trickle-down economics at its worst," CBPP argued. "This agenda would narrow opportunity, deepen inequality, and increase hardship."

Growing warnings about the ramifications of the GOP-backed work requirements come as some far-right House Republicans—led by Rep. Matt Gaetz (R-Fla.)—are complaining that the new rules in the Republican bill aren't strict enough, potentially complicating party leaders' efforts to hold a vote this week.

NBC News reported Monday that Gaetz has "demanded 'more rigor' on work requirements for recipients of Medicaid and other safety net programs before he'll get on board."

"Specifically, he wants recipients to work 30 hours per week, up from 20 hours in the McCarthy plan," the outlet noted.

Congressional Democrats and President Joe Biden have voiced opposition to the Republican bill, characterizing it as an attack on the vulnerable and a gift to rich tax dodgers.

"Most Medicaid recipients already work," Rep. Gwen Moore (D-Wis.) tweeted Sunday. "The GOP's proposed work requirements are unnecessary and cruel, and would take away health insurance from millions of people."

This content originally appeared on Common Dreams and was authored by Jake Johnson.

By the Numbers: McCarthy’s Plan to Kick 10 Million or More People Off Medicaid

Gideon Lukans — Sun, 23 Apr 2023 15:25:42 +0000

A Republican proposal led by House Speaker Kevin McCarthy would take Medicaid coverage away from people who do not meet new work-reporting requirements. The McCarthy proposal would apply to all states, but in practice it would heavily impact people covered by the Affordable Care Act (ACA) Medicaid expansion. Of this group, more than 10 million people in Medicaid expansion states would be at significant risk of losing coverage under the McCarthy proposal. This group would be subject to the new Medicaid requirement, and they are not part of a group that states could readily identify in existing data sources and exclude from burdensome reporting. The McCarthy proposal could jeopardize coverage for millions more, by prompting some states to drop the ACA Medicaid expansion or dissuading states that have not yet taken the expansion from adopting it.

Nationwide, we estimate that over 10 million Medicaid expansion enrollees — more than 1 in 5 of all Medicaid enrollees in expansion states — would be at risk of losing Medicaid coverage under the policy in McCarthy’s debt limit bill, using 2019 (pre-pandemic) data. Some 74 percent of all expansion enrollees and 21 percent of all Medicaid beneficiaries in the states that have adopted the expansion would be subject to the new requirements and, thus, at risk of losing coverage.

People in every expansion state would be affected, with the share of total Medicaid enrollees at risk ranging from 15 to 37 percent. (See Table 1 and Methodology.) Because we use 2019 data, the national estimate does not include the nine states that expanded coverage after that date and therefore very likely understates the number of enrollees at risk. If those states were included, it would likely add upward of 1 million more enrollees at risk of losing coverage.

While not all of those at risk under McCarthy’s proposal would lose coverage, many would, including people who are working or are eligible for an exemption but would be disenrolled due to administrative burdens and red tape.^[2] This was the experience in Arkansas, which is the only state that briefly took people’s Medicaid coverage away for not meeting work-reporting requirements, until a federal court halted the program following massive coverage losses. In just seven months of implementation, some 18,000 people — 1 in 4 subject to the requirements — lost coverage. Moreover, research found that the new requirements had no impact on employment outcomes. The McCarthy Medicaid provision draws heavily from the failed Arkansas experiment but is harsher in some respects, applying to somewhat older adults, for example.

The more than 10 million estimate (looking just at the states that had expanded Medicaid prior to 2019) does not fully account for the sweeping impact the Medicaid work-reporting requirement could have. For example, while the bill directs states “whenever possible” to use electronic data sources to verify whether people meet the criteria for continued Medicaid coverage, the extent to which this would protect people from losing coverage or from onerous reporting would depend on implementation decisions at both the federal and state level.

Proponents of the new requirements argue that they give states an option to take Medicaid coverage away from people who don’t comply with the new work-reporting requirement. This is misdirection at best.

The bill terminates federally funded Medicaid coverage for those who don’t meet the work-reporting requirements. In theory, states could provide fully state-funded coverage to those whose federal Medicaid coverage is taken away, but with the federal government currently covering 90 percent of the cost of coverage for expansion enrollees, states are exceedingly unlikely to continue coverage for large numbers of people who don’t meet the requirement. (It is worth noting that states did not provide state-funded coverage for this group prior to the ACA’s expansion, though they were able to do so.)

Moreover, administering these new requirements would be complicated for state and local governments, which would have to pick up a significant portion of the costs associated with implementing the complex systems to verify work, determine who meets automatic exemption criteria (such as those with children), and assess applications for exemptions based on criteria, such as an illness, that the state doesn’t know through its eligibility system.

States also would have to absorb the costs associated with higher caseload churn — that is, people losing coverage and then having to reapply or seek to have their coverage reinstated, all processes that require caseworker staff time. And uncompensated care costs would increase because people have lost coverage, adding further to the costs that states and safety net health care providers would have to pick up.

Without a doubt, adding work-reporting requirements to Medicaid would cause many low-income adults to lose coverage due to bureaucratic hurdles and would leave people without the health care they need, including life-saving medications, treatment to manage chronic conditions, and care for acute illnesses. People’s access to health care and other basic supports, such as housing, food, or child care, should not hinge on whether they meet a work-reporting requirement or successfully navigate a complicated system to either report work hours or claim an exemption.^[3]

McCarthy Medicaid Provision Builds on Failed Arkansas Experiment

The Arkansas plan, implemented in 2018, required that Medicaid expansion enrollees aged 19-49 document at least 80 hours of work or other qualifying activities (e.g. job training, volunteering) per month.^[4] Exemptions were available for various groups including pregnant people, certain types of caregivers, and people with certain health conditions, but qualifying for these exemptions required that enrollees successfully navigate the reporting system or that the state use available data to determine exemption status. As a result, more than 18,000 people (about one-quarter of those subject to the requirements) lost coverage in just seven months, before a federal court blocked the policy.^[5]

The McCarthy plan is similar to Arkansas’ but applies to a broader set of Medicaid enrollees. First, it applies to enrollees aged 19-55, a wider age range that includes more older adults. Second, it is not explicitly limited to Medicaid expansion enrollees, unlike the Arkansas policy. While all states would have to set up new processes to validate exemptions, we assume that because existing state data sources could readily be used to exempt the bulk of Medicaid enrollees who are not part of the expansion group, the impact would be largely on expansion enrollees.^[6] Third, some groups exempt under the Arkansas plan, including postpartum people, people identified as “medically frail,” and people receiving unemployment benefits, are not exempt under the McCarthy plan.

A KFF study estimated that under a nationwide Medicaid work-reporting requirements policy similar to policies implemented in Arkansas and proposed by other states, most people losing coverage would be complying with or exempt from the requirements but would be disenrolled due to administrative burdens and red tape.^[7] Using conservative assumptions about disenrollment based on a survey of the research literature, the study found that 62 to 91 percent of those losing coverage would be people who qualify as eligible under the policy. Coverage losses would be concentrated among those eligible because the overwhelming majority of Medicaid enrollees already meet the requirements or an exemption criterion, yet they would still be at risk due to the bureaucratic complexity of reporting and proving exemption status.

Overall, between 1.4 and 4 million people would have lost Medicaid coverage if Medicaid work-requirements were imposed in 2016, the KFF study estimated.^[8] This estimate is roughly in line with the Congressional Budget Office’s projection that a nationwide policy similar to Arkansas’ would result in a reduction in Medicaid enrollment of 2.2 million adults per year for the 2023-2031 period.^[9]

Our analysis is not a projection of the number of people who will lose coverage, but rather shows that more than 10 million people would be subject to these requirements and, thus, at risk of losing coverage from a policy that would erect burdensome requirements to report work or claim exemptions. A large share of the 10 million people subject to the requirements would have to navigate complex work-reporting and verification systems each month while others would have to navigate the exemption process periodically to retain coverage.

Research suggests that some populations would be especially harmed by these work-reporting requirements, including people with disabilities, women, people who are experiencing homelessness, and people with mental health conditions or substance use disorders.^[10] Even though exemptions would apply to some in these groups, states often lack the capacity to hire sufficient staff to respond to people’s questions or manage work-reporting systems and the exemption process. People who have fewer transportation options or live in rural areas,^[11] face language or literacy barriers, are in poor health or have limited mobility, or have limited internet access^[12] would face particular barriers to understanding the new requirements and navigating reporting systems, applying for exemptions, and collecting the verification needed to prove that they meet an exemption criterion.

There is no upside to Medicaid work-reporting requirements. Research has not found any impact of the requirements on employment,^[13] and data from Arkansas show that few enrollees engaged in new work-related activities.^[14] Instead, work-reporting requirements strip health coverage from people with low incomes — most of whom are already meeting or exempt from the requirements — leading to gaps in care that damage their health and financial security and make it harder for them to find or keep a job.^[15]

In this paper and in Table 1 below, we estimate the number of Medicaid expansion group enrollees at risk of losing coverage using administrative data on Medicaid expansion enrollment for 2019, combined with American Community Survey (ACS) data and state enrollment policies.

We use 2019 Medicaid expansion group enrollment to avoid including the large increase in Medicaid enrollment that began in 2020 as a result of the requirement that Medicaid provide continuous coverage during the public health emergency. This continuous coverage requirement ended on March 31, 2023, and while estimates of coverage loss during the unwinding of the requirement are highly uncertain, enrollment declines are potentially large.^[16] By using 2019 data, we avoid overstating our estimates of expansion enrollees at risk in each state once unwinding is complete.

TABLE 1
Estimated Number of Medicaid Expansion Enrollees Whose Coverage Would Be at Risk Under McCarthy Medicaid Work-Reporting Requirements Proposal
	Number of Medicaid expansion enrollees at risk of losing coverage	Share of all Medicaid enrollees
Alaska	40,000	19%
Arizona	316,000	17%
Arkansas	156,000	19%
California	2,673,000	22%
Colorado	290,000	24%
Connecticut	226,000	24%
Delaware	46,000	22%
District of Columbia	96,000	37%
Hawai’i	81,000	26%
Illinois	562,000	21%
Idaho	Data not available	Data not available
Indiana	204,000	15%
Iowa	132,000	22%
Kentucky	269,000	21%
Louisiana	287,000	18%
Maine	Data not available	Data not available
Maryland	235,000	19%
Massachusetts	288,000	17%
Michigan	464,000	19%
Minnesota	153,000	15%
Missouri	Data not available	Data not available
Montana	60,000	24%
Nebraska	Data not available	Data not available
Nevada	137,000	24%
New Hampshire	36,000	20%
New Jersey	411,000	26%
New Mexico	174,000	21%
New York	1,287,000	21%
North Dakota	15,000	17%
Ohio	421,000	15%
Oklahoma	Data not available	Data not available
Oregon	316,000	33%
Pennsylvania	519,000	18%
Rhode Island	55,000	19%
Utah	Data not available	Data not available
Vermont	47,000	29%
Virginia	Data not available	Data not available
Washington	371,000	21%
West Virginia	101,000	19%
Total	10,470,000	21%
Adopted expansion but not yet implemented:
North Carolina	Data not available	Data not available
South Dakota	Data not available	Data not available

Methodology

As stated above, our estimates are based on a combination of administrative data on Medicaid expansion enrollment, ACS data, and state enrollment policies.

Because our data are based on 2019 (pre-pandemic) Medicaid expansion enrollment, they do not include expansion enrollees at risk in states that expanded in 2019 or later, including Idaho, Maine, Missouri, Nebraska, Oklahoma, Utah, and Virginia. We also cannot produce expansion group estimates for North Carolina and South Dakota, which have enacted but not yet implemented expansion. Our national total estimate is therefore likely to understate the number of enrollees at risk. Finally, by shifting costs to states, the McCarthy proposal could result in some states deciding to drop the ACA Medicaid expansion, jeopardizing coverage for millions more. Similarly, these new requirements could dissuade some states that have not yet adopted the expansion from doing so.

We consider Medicaid expansion enrollees aged 19-55 and exclude from this group people who live with dependent children aged 0-17. States should be able to exclude this group automatically (without requiring them to apply for an exemption) using existing administrative data, so they are less likely to be at risk.

We do not estimate other exemptions or work status because these individuals would be more likely than parents to have to report their employment or earnings monthly or to apply for and submit documentation to receive an exemption. Research indicates that most people who would lose coverage under work-reporting requirements would be disenrolled despite working or qualifying for an exemption due to the complexities of proving that they are working or meet an exemption criterion.

Publicly available administrative data on Medicaid expansion enrollees do not include detailed enrollee characteristics. We therefore use data from the U.S. Census Bureau’s American Community Survey as well as state-level eligibility rules to estimate the share of expansion enrollees who are aged 19-55 and who do not have dependent children in each state.

Please see original at CBPP for complete endnotes and more detailed breakdown of the data.

This content originally appeared on Common Dreams and was authored by Gideon Lukans.

Giving Away the Game, Gaetz Says McCarthy ‘Picked Up’ Far-Right’s Debt Ceiling Plan

Jake Johnson — Fri, 21 Apr 2023 19:03:43 +0000

Far-right House Republicans are reportedly "thrilled" with the debt ceiling legislation that Speaker Kevin McCarthy unveiled earlier this week.

That's likely because, according to Rep. Matt Gaetz (R-Fla.), McCarthy (R-Calif.) simply "picked up the House Freedom Caucus plan and helped us convert it into legislative text."

"And it shows," replied the progressive watchdog group Accountable.US.

Gaetz, one of a number of far-right Republicans who led a revolt against McCarthy's speakership bid earlier this year, told reporters Thursday that "if you held this plan and the plan that the House Freedom Caucus laid out some weeks ago and held them up to a lamp, you would see a lot of alignment."

Titled the Limit, Save, Grow Act of 2023, the legislation would revert federal spending back to fiscal year 2022 levels and cap annual spending growth at 1% over the next decade—central demands of the hardline House Freedom Caucus members who threatened to deny McCarthy the speaker's gavel in January.

Last month, the House Freedom Caucus outlined a more detailed proposal that would claw back unspent coronavirus pandemic funds, repeal clean energy tax credits and other elements of the Inflation Reduction Act, block President Joe Biden's stalled effort to cancel up to $20,000 in student loan debt per borrower, and impose new work requirements on recipients of Medicaid and federal food assistance that could kick millions off the lifesaving programs.

The Limit, Save, Grow Act would do all of the above and more, a fact that helps explain the bill's largely positive reception among far-right Republicans—though some, such as former House Freedom Caucus chair Rep. Andy Biggs (R-Ariz.), want the bill to attack aid programs more aggressively.

As Semafor reported, Biggs "expressed openness to voting for the bill" but said he "wanted to see even stricter rules around food stamps."

"That's who is really in charge of the MAGA majority," the progressive advocacy group Indivisible said of the House Freedom Caucus.

Citing Gaetz's comment to reporters, Accountable.US argued the GOP's debt ceiling bill is "a MAGA wishlist, not a serious proposal."

\u201cMAGA Republican, @RepMattGaetz, admitted that @HouseGOP leadership "just picked up the House Freedom Caucus plan and helped us convert it into the legislative text."\n\nThis budget is a MAGA wishlist, not a serious proposal. \n\nhttps://t.co/jGK3gwDgmZ\u201d
— Accountable.US (@Accountable.US) 1682023380

If passed—an unlikely scenario given opposition from congressional Democrats and the Biden White House—the Republican bill would increase the debt limit by $1.5 trillion or suspend the ceiling until next March, setting up another high-stakes standoff in early 2024, a presidential election year.

Congressional Democrats rejected the legislation as a nonstarter, pointing to the massive impact it would have on federal programs related to housing, education, healthcare, climate, and other critical areas.

Last month, the U.S. Department of Housing and Urban Development warned that roughly 640,000 families would lose rental assistance if its budget was reverted to fiscal year 2022 levels. The U.S. Department of Agriculture, meanwhile, estimated that 1.2 million people would lose access to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) under the Republican proposal.

"These caps are cuts," Rep. Rosa DeLauro (D-Conn.), the top Democrat on the House Appropriations Committee, said in a statement on Wednesday. "They would ensure that resources for critical programs 10 years from now remain below the levels in effect today. That's 10 years of cuts for less than one year of preventing a default."

Analysts stressed that the cuts to social programs would be even steeper under the GOP plan if it exempts the bloated Pentagon from its austerity spree.

Republicans have two options to make their math work, according to Bobby Kogan, senior director of federal budget policy at the Center for American Progress.

Option one, Kogan noted, is "the entire discretionary budget is cut 28% by 2033 due to McCarthy's caps—including a 28% cut to defense and [Veterans Affairs] Medical Care." The second option is shielding the military budget and inflicting "a 58% cut to all else," leaving "most essential services destroyed."

"This is a ludicrous demand," Kogan argued. "McCarthy's position is that, unless both the president and Congress accede to his very specific and extreme demands, he will force the government to illegally default on its statutory obligations—such as payments to disabled veterans and [Social Security] recipients."

Ezra Levin, co-executive director of Indivisible, said the House GOP leadership's proposal is "a reflection of just how totally controlled by the fringes of his caucus McCarthy is."

"It's just as bad as we expected," said Levin. "Literally take food off the table of millions of families just trying to get by? Help the ultra-wealthy and big corporations get away with cheating on their taxes? Strip away healthcare from children, veterans, and seniors? Saddle millions with crushing student debt? Pull the plug on new clean energy jobs? That's your big pitch to the American people?"

"It'd be funny if it wasn't so serious," Levin added.

This content originally appeared on Common Dreams and was authored by Jake Johnson.

The Republican Party of Death Content to Let Poverty Kill at Will

Thom Hartmann — Fri, 21 Apr 2023 11:06:03 +0000

Kevin McCarthy has a keen new idea about what he thinks he can get out of Democrats in Congress in exchange for Republicans authorizing the government to pay the trillions in debt that Donald Trump racked up in his four years in office.

In exchange for lifting the so-called debt ceiling, McCarthy wants Biden and congressional Democrats to throw millions of families off food stamps (SNAP) and end even the possibility of any help to low-income young people unable to pay off student loans.

He claims this is because the federal government can't afford to help out students or hungry Americans. Nonetheless, his caucus is also pushing a new $1.8 trillion cut to the already-hobbled estate tax, paid exclusively by "lucky sperm club" children of the morbidly rich when they inherit fortunes they didn't lift a finger to create.

You'd think that discovering over a quarter-million Americans every year die from current poverty, and an additional 406,000 die every year from long-term or "cumulative" poverty, would move the GOP.

Ironically, this proposal came out the same week that The Journal of the American Medical Association published a new study finding that poverty is the fourth largest killer of Americans.

And by poverty, they're not just talking about the profoundly poor or homeless: For the purposes of this study they defined poverty as everybody living on less than the 50% median of income in the nation.

The study was unambiguous, noting:

"Current poverty was associated with greater mortality than major causes, such as accidents, lower respiratory diseases, and stroke. In 2019, current poverty was also associated with greater mortality than many far more visible causes—10 times as many deaths as homicide, 4.7 times as many deaths as firearms, 3.9 times as many deaths as suicide, and 2.6 times as many deaths as drug overdose."

The outlook for people who've spent at least the past 10 years living below the U.S. median income level is even more grim. The researchers refer to this as "cumulative poverty:"

"Cumulative poverty was associated with approximately 60% greater mortality than current poverty. Hence, cumulative poverty was associated with greater mortality than even obesity and dementia. Heart disease, cancer, and smoking were the only causes or risks with greater mortality than cumulative poverty."

Concluding that "poverty should be considered a major risk factor for death in the U.S.," the researchers noted that the situation is probably even worse than what they were able to easily measure:

"[O]ne limitation of this study is that our estimates may be conservative about the number of deaths associated with poverty."

You'd think that discovering over a quarter-million Americans every year die from current poverty, and an additional 406,000 die every year from long-term or "cumulative" poverty, would move the GOP.

After all, they control the poorest states in the nation, so this hits their constituents harder than it does the electorate of Democratic politicians. This hits right smack in the middle of where Republican politicians live.

But ever since five corrupt Republicans on the Supreme Court first legalized political bribery in 1976 and 1978, paving the way for the Reagan Revolution, the GOP has abandoned Eisenhower's embrace of unionization and anti-poverty programs to instead suck up to the morbidly rich and the corporations they control.

Just in the past six years, Republicans have:

Repeatedly fought efforts to raise the $7.25 minimum wage (which would be over $15 if inflation-adjusted and over $25 if adjusted for worker productivity gains).
Blocked passage of the Protecting the Right to Organize (PRO) Act, which would give workers the right to join a union by simply signing a card, all while putting forward new legislation to block gig workers from unionizing.
Cut funding for school lunches by about 40%.
Refused to extend the Child Tax Credit, which lifted millions of families with kids out of poverty during the pandemic.
Denied healthcare to low-incoming working families in almost a dozen GOP-controlled states by refusing to expand Medicaid.
Sued the Biden administration all the way to the Supreme Court to stop Democrats' efforts to reduce the burden of student debt by a paltry $10,000.
Responded to the slaughter of schoolchildren in Tennessee by proposing legislation making it impossible for grieving parents to sue gun manufacturers and sellers.
Challenged legislative efforts by Democrats to slow down climate change by citing bullshit phony science promoted by the fossil fuel industry and Marjorie Taylor Greene.
Demanded cuts in social security and propose raising the retirement age to 70 for people currently under 50.
Supported the ongoing privatization of Medicare through George W. Bush's corrupt Medicare Advantage private insurance scam.

President Biden's $1.9 trillion American Rescue Plan expanded child tax credits and access to Medicaid in 2021, lifting an estimated 12 million people, including 5.6 million children, out of poverty. As Center on Budget and Policy Priorities (CBPP) economists noted:

"[T]he Rescue Plan may turn out to be the most effective single piece of legislation for reducing annual poverty since 1935."

When Republicans refused to go along with an extension of the program last year, however, childhood and general poverty both shot back up, proving that poverty in America isn't some mystical or even natural force, but a policy choice embraced by the GOP.

The so-called "party of life" doesn't, it turns out, give a damn about actual human life

When confronted with the option of cutting or even ending poverty in America (and the homelessness and crime attendant to it) or adding trillions to the money bins of the morbidly rich, Republicans choose the latter every time.

Biden's policies brought Trump's 14.7% unemployment rate all the way down to 3.6%, lifting millions of families out of poverty. Now, however, Trump appointee and lifelong Republican Jerome Powell has dedicated his efforts at the Fed to jacking unemployment back up (while doing nothing at all about out-of-control corporate price gouging) just in time for the 2024 election.

As Senator Ron Wyden said yesterday:

"Republicans manufactured this [debt ceiling] crisis, and Speaker McCarthy's proposal to get out of it would destroy jobs, worsen healthcare, increase hunger, hurt the climate, and make millions of American families poorer."

The so-called "party of life" doesn't, it turns out, give a damn about actual human life unless it has a net worth over a half billion dollars.

This content originally appeared on Common Dreams and was authored by Thom Hartmann.

Memo Exposes Renewable Energy Trade Group’s Close Ties to Fossil Fuel Industry

Kenny Stancil — Thu, 20 Apr 2023 22:38:31 +0000

The American Clean Power Association has been billed as "the nation's top renewable energy trade group," but lurking beneath its green luster is a dirty reality.

That's according to the Revolving Door Project, which published a memo on Thursday to expose what is calls ACP's "close ties to the fossil fuel industry and an 'all of the above' energy agenda that allows for massive new fossil fuel development and environmental damage, as long as clean energy also benefits."

While ACP "does represent many clean energy companies, it is also a conglomeration of executives and corporations that are directly and indirectly tied to (and benefit from) the fossil fuel industry," states the memo.

"America needs a strong political force fighting for renewable energy, but American Clean Power doesn't fit the bill."

To take just one recent and prominent example of ACP's pro-fossil fuel advocacy, the group has lobbied for H.R. 1, the so-called "Lower Energy Costs Act" passed last month by House Republicans. Progressives have condemned the legislation they call the "Polluters Over People Act"—a sprawling package of 15 separate bills and two resolutions primarily aimed at deregulating fossil fuel production and exports—as a "giveaway to Big Oil" that threatens to exacerbate the climate and biodiversity crises while saddling U.S. households with higher energy bills.

In addition, prior to the introduction of H.R. 1, ACP championed permitting reform bills proposed last year by Senate Republicans and corporate Democratic Sen. Joe Manchin of West Virginia—a coal profiteer and Congress' top recipient of fossil fuel industry cash in the 2022 election cycle.

Other key findings of the 19-page memo include:

ACP's board has over a dozen members with fossil fuel ties;
ACP's annual conferences were sponsored by a number of fossil fuel entities;
Apparent member groups of ACP include Shell, Ameresco, Duke Energy, Exelon, Lockheed Martin, BlackRock, and Amazon;
ACP operates a "Clean Power PAC" that has received and contributed to many fossil fuel-tied entities;
Current ACP CEO Jason Grumet co-founded the fossil fuel-friendly Bipartisan Policy Center and influenced the 2005 Energy Policy Act as executive director of the National Commission on Energy; and
Former ACP CEO (2020-22) Heather Zichal is a revolver and has a long professional history of advancing fossil fuel interests in the name of clean energy.

Because of ACP's green public image, many people were shocked last month when Grumet, the organization's CEO, released a statement praising H.R. 1.

"The Lower Energy Costs Act contains important provisions and reforms that will help advance clean energy in the United States," said Grumet. "This legislation would create a predictable and timely federal permitting framework which is critical to the future development of America's vast clean energy resources."

Senate Majority Leader Chuck Schumer (D-N.Y.) has described H.R. 1 as "dead-on-arrival." In the off chance it does reach the Oval Office, President Joe Biden—hardly a friend to the climate justice movement, according to green groups—has vowed to veto what the White House characterizes as "a thinly veiled license to pollute" that "would take us backward."

ACP, meanwhile, has had nothing critical to say about the legislation. In Grumet's words, "We look forward to working with Congress to build on this important effort."

Revolving Door Project, for its part, was not surprised by Grumet's vocal support of the package and unveiled its new memo as ACP "holds a lobby week" in Washington, D.C. "to push for a set of permitting reforms that have been criticized as being too friendly to the fossil fuel industry at the expense of environmental justice communities and climate action across the country."

Sen. Shelley Moore Capito (R-W.Va.) said Tuesday at the launch of the U.S. Chamber of Commerce's "Permit America to Build" campaign that the Senate Committee on Environment and Public Works will hold a hearing on permitting reform on April 26 and plans to hold additional hearings in May.

With House Speaker Kevin McCarthy (R-Calif.) and the GOP's deficit hawks threatening to withhold their support for raising the nation's arbitrary debt ceiling unless congressional Democrats and Biden agree to their reactionary policy agenda, Capito said that trying to force through all of H.R. 1—legislation the Congressional Budget Office estimates would increase the federal deficit by $2.4 billion from 2023-33—"is a bite of the apple a little bit too big, but if we can narrow down to meaningful permitting reform that might be enough to satisfy some folks."

Revolving Door Project warned Thursday that as GOP operatives pressure Senate Democrats in particular to support legislation designed to "loosen federal permitting rules for fossil fuel projects and allow industry to cut through communities without proper public input, ACP has been an enthusiastic cheerleader for their efforts."

Grumet, for instance, spoke at the same event as Capito earlier this week. Notably, Sen. Sheldon Whitehouse (D-R.I.) recently described the U.S. Chamber of Commerce as "the number one political obstruction in the path of climate progress."

"Supporting an 'all-of-the-above' energy strategy to expand fossil fuels is like pushing for healthier school lunches with a side of cigarettes."

In a Thursday statement, Revolving Door Project's climate research director Dorothy Slater said that "it's easy to take American Clean Power at face value—it would be nice if it was actually the strong industry voice for clean and renewable energy it claims to be."

"But ACP is not that," Slater continued, "and the media has a responsibility to be skeptical about the truthfulness of ACP's intentions considering the economic well-being of its members and leadership is so closely tied to the continuance of the fossil fuel era."

Responding to the memo's findings, Collin Rees, United States program manager at Oil Change International, stressed that "America needs a strong political force fighting for renewable energy, but American Clean Power doesn't fit the bill."

"Supporting an 'all-of-the-above' energy strategy to expand fossil fuels is like pushing for healthier school lunches with a side of cigarettes," said Rees. "Congress and the White House must ignore ACP's fossil fuel boosterism, reject Manchin and the GOP's dirty energy packages, and support renewable energy to help people, not polluters."

That message was echoed by Jean Su, director of the Center for Biological Diversity's energy justice program.

"Despite its name, American Clean Power is yet another fossil fuel lobbying group trying to trick people into believing its greenwashing," said Su. "Any political leader who claims to care about the planet's future should shun this organization and work with groups truly fighting for just, renewable energy."

"It's disgraceful that we need a report to expose this group and its mendacity," she added, "but thank goodness for it."

This content originally appeared on Common Dreams and was authored by Kenny Stancil.

McCarthy Finally Unveils ‘Republican Default Disaster’ Bill

Jessica Corbett — Wed, 19 Apr 2023 23:51:05 +0000

Again rebuffing calls from people across the United States, congressional Democrats, and President Joe Biden for a clean debt limit hike, GOP House Speaker Kevin McCarthy on Wednesday officially unveiled a 320-page bill full of proposed cuts.

McCarthy (R-Cailf.) explained on the House floor that the so-called Limit, Save, Grow Act, formally led by Budget Committee Chair Jodey Arrington (R-Texas), would raise the debt ceiling by $1.5 trillion or until March 31, 2024—averting a first-ever default, which would be disastrous for the U.S. and global economies.

Echoing McCarthy's Monday speech to Wall Street, the bill would also cap federal spending at fiscal year 2022 levels, limit spending growth to 1% annually, impose work requirements for social programs, block Biden's contested student debt relief plan, restrict federal rule-making, claw back unspent Covid-19 money, force through the House GOP's pro-polluter energy package, and repeal funding for Internal Revenue Service agents as well as electric vehicle and renewable tax credits.

"What Speaker McCarthy proposed today would harm millions of families and devastate our economic recovery."

While the GOP speaker tried to paint the proposal as "responsible," Democrats and progressive campaigners argued that it's anything but, warned of the consequences it would have for the American people and the planet, and renewed demands for a clean bill.

"Kevin McCarthy is treating our nation's financial standing like a hostage situation in order to hand Big Polluters whatever they want," declared Friends of the Earth government and political affairs director Ariel Moger. "We cannot listen to Republicans who are willing to threaten financial catastrophe rather than passing a clean bill that raises the debt limit."

Summarizing the House GOP's measure, Social Security Works tweeted, "The #RepublicanDefaultDisaster plan: Crash the economy unless Democrats agree to MASSIVE CUTS to programs seniors, people with disabilities, and working families rely on to survive."

\u201cEvery Democrat in Congress must stand united to stop the #RepublicanDefaultDisaster.\n\nIf your Rep is one of the so-called "Problem Solvers", call and tell them that only a clean debt limit increase is acceptable. \n\nNo closed door commissions to cut our earned benefits!\u201d
— Social Security Works (@Social Security Works) 1681944813

As Common Dreams exclusively reported earlier Wednesday, Social Security Works is among a couple dozen groups that sent GOP and Democratic leaders in Congress a letter demanding a clean debt ceiling increase, stating that "there are real disagreements among elected officials about the role of government, budgetary matters, and tax policy. We understand that and welcome a robust debate and seeing where the American people stand. There's a time and place for that debate. This is not that time."

In a statement after McCarthy's speech, ProsperUS coalition spokesperson Claire Guzdar similarly said that "Congress should move immediately to prevent federal default and eliminate the debt ceiling as a hostage for House Republicans to take in their crusade to cut needed investments."

"What Speaker McCarthy proposed today would harm millions of families and devastate our economic recovery," Guzdar added. "Anyone who is truly concerned about the deficit and debt should be looking to the wealthiest Americans and biggest corporations to pay their fair share."

\u201cSpeaker McCarthy's bill is not a serious plan to avoid a national default and would kick hundreds of thousands of Americans out of their jobs \u2014 all while protecting wealthy tax cheats. There is no reason to jeopardize the U.S. economy with this legislation going nowhere.\u201d
— Elizabeth Warren (@Elizabeth Warren) 1681937016

Liz Zelnick, director of the Economic Security and Corporate Power program at Accountable.US, pointed out that amid mounting fears of a default in recent months, "Speaker McCarthy has wasted precious time trying to corral the MAGA House majority over which economic hostage demands to make in exchange for not manufacturing a default crisis."

"MAGA extremists can't even agree on which Americans to punish more in the process as they shamelessly propose trillions of dollars in new deficit-exploding tax breaks for profiteering corporations and their billionaire donors," she stressed. "Not a single House Republican has said big corporations should contribute a dime more toward their supposed debt 'concerns.' And the speaker has certainly not won over the public with his lose-lose proposition: either cuts that leave Americans with less economic, retirement, and health security—or a default that crashes the economy and disrupts benefits for seniors and veterans."

"If the speaker doesn't want to go down as the first to usher in a catastrophic default that will crater the economy and deprive seniors of Social Security," Zelnick charged, "he should immediately put a clean bill on the floor allowing the nation to pay its bills."

Top Democrats also called out McCarthy, with Senate Majority Leader Chuck Schumer (D-N.Y.) noting in a floor speech Wednesday that "months and months after he proposed making deep cuts as a condition, as brinkmanship, as hostage-taking, to just simply make sure that we avoid default—even now he is still short of the support he needs to pass a debt ceiling bill, because the chasm is too big between moderates and the hard-right extremists who are glad to see the economy taken hostage in exchange for their priorities."

"If Republicans drop their hostage-taking and approach Democrats in good faith, the default crisis can be resolved," Schumer said. "But if Speaker McCarthy does not change course, he will be leading America into default of not paying our debts for the first time."

After declaring that "this disaster of a plan is a nonstarter," Senate Budget Committee Chair Sheldon Whitehouse (D-R.I.) called out MAGA Republicans for "holding our economy hostage to service their wealthy donors" and vowed congressional Democrats "will never give into the demands of hostage-takers."

\u201cBREAKING: @POTUS is calling out Republicans for their plan to threaten default unless they can slash services for working families and give the rich and corporations more tax cuts.\n\n\u201cIt\u2019s the same old trickle-down dressed up in MAGA clothing.\u201d #RepublicanDefaultDisaster\u201d
— Americans For Tax Fairness (@Americans For Tax Fairness) 1681929594

Meanwhile, just after McCarthy's speech, Biden told members of the International Union of Operating Engineers Local 77 in Accokeek, Maryland that "you and the American people should know about the competing economic visions of the country that are really at stake right now."

"I'm here in this union hall with you," the president noted. "Just two days ago, the speaker of the House, Kevin McCarthy, went to Wall Street to describe the MAGA economic vision for America."

"Folks, here's what's really dangerous: MAGA Republicans in Congress are threatening to default on the national debt... unless we do what they say... unless I agree to all these wacko notions they have," Biden said.

Defaulting would be "worse than totally irresponsible," he added, highlighting that working people, the middle class, and seniors would pay the price for putting the entire economy at risk.

This content originally appeared on Common Dreams and was authored by Jessica Corbett.

Senior Groups Tell Kevin McCarthy to ‘Release His Hostage’ and Back Clean Debt Ceiling Hike

Jake Johnson — Wed, 19 Apr 2023 17:31:39 +0000

An alliance of senior advocacy groups, progressive organizations, and labor unions demanded Wednesday that Congress quickly approve legislation to increase the debt limit without any conditions, warning the House GOP's pursuit of steep spending cuts is risking an "economic calamity" and imperiling key benefits.

In a letter shared exclusively with Common Dreams, Social Security Works, MoveOn, Indivisible, and nearly 30 other organizations implored Democratic and Republican congressional leaders "in the strongest possible terms to swiftly pass a clean debt limit bill."

"There are real disagreements among elected officials about the role of government, budgetary matters, and tax policy," the letter reads. "We understand that and welcome a robust debate and seeing where the American people stand. There's a time and place for that debate. This is not that time. The entire economy and the financial security of every working family is at stake."

The letter, also signed by the Alliance for Retired Americans and the AFL-CIO, comes days after House Speaker Kevin McCarthy (R-Calif.) said in a speech on Wall Street that his caucus is assembling and preparing to vote on legislation that would lift the debt ceiling for roughly a year while slashing federal spending and imposing punitive new work requirements on recipients of Medicaid and federal nutrition assistance.

But it's unclear whether McCarthy will even have enough votes to get such a measure through the GOP-controlled House, given that Democrats are unanimously opposed and some far-right Republicans have already criticized the outlined package, claiming it wouldn't cut spending aggressively enough.

"Kevin McCarthy is holding the debt limit hostage, and can't even get his caucus to agree on a ransom demand," Alex Lawson, executive director of Social Security Works, told Common Dreams. "He is endangering the benefits that seniors rely on to survive, just to score political points."

"The only solution," Lawson added, "is for McCarthy to release his hostage and work with Democrats to pass a clean debt limit."

"Only a clean debt limit bill is standing up for seniors and working families."

If Congress doesn't raise the debt ceiling—an arbitrary borrowing limit that progressives want abolished—the U.S. is expected to default on its debt sometime this summer, an outcome that experts say would be devastating for the U.S. and global economies.

A default could also have major implications for Social Security and Medicare, potentially causing payment delays and other disruptions.

In a memo released earlier this year, the National Committee to Preserve Social Security and Medicare (NCPSSM)—a signatory to Wednesday's letter—warned that "if Congress fails to raise or suspend the debt limit and allows the government to default on its legally binding financial obligations, an economic catastrophe would likely result and payment of Social Security, Medicare, and Medicaid benefits would be jeopardized."

"The Treasury Department must have cash to pay benefits when they are due," the group explained. "Every month, the Treasury Department is required by law to make over $90 billion in payments to the 65 million retirees, disabled workers, widows, widowers, children, and spouses who receive Social Security benefits. The Treasury may not have enough incoming revenue to make those payments without the authority to cash in these securities."

"Absent the legal authority to borrow beyond the current ceiling," NCPSSM added, "Social Security, Medicare, Medicaid, and other payments will not be made on time and in full unless Congress approves an increase in the debt limit."

\u201cIt's long past time for \n@SpeakerMcCarthy and @HouseGOP to prioritize protecting seniors, families, and people with disabilities over political gain! \n\n#BackOffOurBenefits\u201d
— Social Security Works (@Social Security Works) 1681754240

House Republicans have previously floated plans to raise the Social Security retirement age—a move that would cut benefits across the board—but McCarthy insisted Monday that his caucus would not touch Social Security and Medicare in their debt limit proposal, which has yet to be finalized.

In their letter on Wednesday, the senior advocacy coalition recalled that "at this year's State of the Union, everyone stood up and clapped in agreement with President Joe Biden, signifying that they stand up for seniors and working people who rely on Social Security and Medicare."

"Only a clean debt limit bill is standing up for seniors and working families," the groups argued. "Certainly, cutting Social
Security or Medicare as a condition for raising the debt ceiling is not standing up for seniors. Nor is cutting Medicaid, SNAP, housing assistance, energy assistance, or any of the other myriad domestic programs that our families, retirees, and communities depend on to make ends meet."

"More fundamentally, risking an economic recession and threatening the financial security of every working family in this country would be a failure of Congress to fulfill its duty," the letter continued. "Congress raised the debt limit repeatedly without conditions during President Trump's four years in office. It should take that same step now, without delay. This should not be political. Rather, it is simply part of the job that everyone in Congress chose to seek."

On Wednesday morning, the bipartisan Problem Solvers Caucus released a plan to avert a U.S. default if the House GOP refuses to agree to a clean debt limit increase by this summer.

The proposal would suspend the debt ceiling through December 31 and "establish an independent commission—modeled after a Pentagon panel that determines which military bases to close—to recommend a package to stabilize the debt and deficit, which would be voted on by Congress," Axios reported.

The White House quickly threw cold water on the proposal, with press secretary Karine Jean-Pierre saying that "our position continues to be not to negotiate... over a default."

Social Security Works tweeted that the White House is "absolutely right," calling the Problem Solvers Caucus' framework "a terrible plan" and cautioning that "a 'fiscal commission' is code for cutting Social Security and Medicare behind closed doors."

"Congress must pass a clean debt limit increase, with NO CUTS to Social Security, Medicare, Medicaid, or any other program," the group wrote.

This content originally appeared on Common Dreams and was authored by Jake Johnson.

Fiscal Insanity: The Government Borrows $6 Billion a Day, and We’re Stuck with the Bill

John W. Whitehead and Nisha Whitehead — Mon, 17 Apr 2023 00:14:05 +0000

We’re not living the American dream.

We’re living a financial nightmare.

The U.S. government is funding its existence with a credit card.

The government—and that includes the current administration—is spending money it doesn’t have on programs it can’t afford, and “we the taxpayers” are the ones being forced to foot the bill for the government’s fiscal insanity.

According to the number crunchers with the Committee for a Responsible Federal Budget, the government is borrowing roughly $6 billion a day.

As the Editorial Board for the Washington Post warns:

The nation has reached a hazardous moment where what it owes, as a percentage of the total size of the economy, is the highest since World War II. If nothing changes, the United States will soon be in an uncharted scenario that weakens its national security, imperils its ability to invest in the future, unfairly burdens generations to come, and will require cuts to critical programs such as Social Security and Medicare. It is not a future anyone wants.

Let’s talk numbers, shall we?

The national debt (the amount the federal government has borrowed over the years and must pay back) is $31 trillion and will grow another $19 trillion by 2033. That translates to roughly $246,000 per taxpayer or $94,000 for every single person in the country.

The bulk of that debt has been amassed over the past two decades, thanks in large part to the fiscal shenanigans of four presidents, 10 sessions of Congress and two wars.

In other words, the government is spending more than it brings in.

The U.S. ranks as the 12th most indebted nation in the world, with much of that debt owed to the Federal Reserve, large investment funds and foreign governments, namely, Japan and China.

Interest payments on the national debt are estimated to top $395 billion this year, which is significantly more than the government spends on veterans’ benefits and services, and according to Pew Research Center, more than it will spend on elementary and secondary education, disaster relief, agriculture, science and space programs, foreign aid, and natural resources and environmental protection combined.