Where's the Outrage?

There’s no better example of how things have changed since 9/11 than the latest terrorist threat warning tonight. Before September 11th we, the American people, never heard such a warning. Spokesmen for Department of Homeland Security stated that there has been a “specific, credible but unconfirmed” threat against the United States. President Obama was briefed about the threat early this morning. Now, in the post-9/11 era, we know that Al Qaeda likes these important dates. Everybody in Homeland Security is keenly aware that Al Qaeda would like to try to attack inside the United States on the anniversary of the 9/11 attacks.

I would like to take you to Kuala Lumpur, Malaysia in early January of 2000. Through various means, the intelligence community became aware of a high-level terrorist/Al Qaeda meeting in Malaysia. Nawaf al-Hazmi and Khalid al-Mihdhar (together these terrorists retrained passengers on Flight 77 which was thrown into the Pentagon) were two of the participants of this meeting. The NSA and the CIA were already aware of the existence of both men. Both participated in the holy war in Bosnia. Both pledged allegiance to Osama bin Laden sometime in 1998. For reasons that I’ve never been able to understand, our intelligence services allowed the Malaysian intelligence service to monitor this meeting. The Malaysian intelligence service was unable to place a listening device in the meeting. We were able to get pictures that were relayed to us from the Malaysian intelligence service. It is now known that the bombing of the USS Cole was discussed at this Malaysian meeting. Had we had a listening device in the meeting, it is possible that we could have thwarted that terrorist plot. It is also reasonable to assume that the attacks of 9/11 were also discussed, although I have not been able to collaborate this in any of my reading.

So the CIA has this information on al-Hazmi and al-Mihdhar. Somehow, when this meeting in Kuala Lumpur breaks up, the US intelligence service loses all track of al-Hazmi and al-Mihdhar. It’s never been clearly explained what the CIA did with the photographs of al-Hazmi and al-Mihdhar. It is clear that the CIA knew that they were terrorists. But the CIA did not alert the Immigration and Naturalization Service (responsible for border security at that time) and they did not alert the State Department, who had the largest active list of terrorist suspects. As far as I can tell, they didn’t share this information with anyone. Furthermore, one would figure that the CIA, after finding out that they missed out on this once-in-a-lifetime terrorist summit, would have gotten some agents over to Kuala Lumpur to watch the condominium where the meetings had taken place. Had they done so, they would’ve found Zacharias Moussaoui, who was arrested prior to the 9/11 attacks and was thought to be the 20th hijacker.

In late January of 2000, al-Hazmi and al-Mihdhar turn up in Los Angeles. More on this later.

We have been told that a lot of the errors that occurred before 9/11 have been fixed. We have been told that there is increased communication between our security agencies. So, with 9/11 looming, I truly hope that they have fixed these things.

Check out NYT’s special section on 9/11. Very nice.

Tags: 9-11, Al Qaeda, Bush Administration, Terrorism by ecthompson md
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• One thing you can say about the media is that they will always find something to go bonkers about. They have completely forgotten about the earthquake in Virginia and are now focused on the hurricane that is projected to hit North Carolina sometime on Friday. They are also in a tizzy over Steve Jobs’ resignation. It is clear that Apple Computers is not to be the same company without Steve Jobs. He was the one that had the drive, the determination and the vision to create the products that we now associate with Apple Computers. In my opinion, his greatness was in creating a user interface that was beautiful to look at and easy to use.

Irene:

• Senator Bernie Sanders has introduced a bill in the Senate to strengthen Social Security. We need more of this.
• One of the things that is great about writing your own memoir is that you can say whatever it is you want to say. I know that everybody’s been on the edge of their seat waiting on former Vice President Dick Cheney to write his memoir. Well, the wait is over. By the way, how is he staying out of jail?
• The CIA is editing and re-editing a new book on 9/11. The FBI’s is written by a former FBI agent, an Arab-speaking counterterrorism agent. Ali Soufan should be a name well known to those who have followed the events of 9/11 very closely. He testified in Congress about the torture techniques that were used by the CIA. He stated, without hesitation, that they were unnecessary and counterproductive. If the CIA does not edit the book to death, I’m looking forward to the publication.
• J.P. Morgan has been fined. They basically broke US sanctions with regards to Iran, Cuba and Sudan. The fine was only $88 million.
• Fox News shuts down Karl Rove when he begins to describe Sarah Palin as thin-skinned.  I wonder what that’s all about.
• Robert Reich is calling for a protest on Labor Day. Marches instead of parades. I’m down with that.
• There’s a growing dissatisfaction against companies who seem to be discriminating against unemployed workers. Please follow the link. This is important.
• The Bush tax cuts are still contributing significantly to our debt. The CBO has the latest numbers.
• Mark Thoma tackles the question concerning why the Fed is hesitant to do more to help our economy.

Tags: Bush Administration, Economy, Foreign Affairs, Senate by ecthompson md
1 Comment »

When my father was really disgusted with something, his favorite phrase was to say whatever that was bothering him and then add “my foot” to it. Currently there’s a trend in Washington and in the lapdog media to say that we need austerity measures. A lot of this comes from the problems that are going on in Europe, where Greece is getting bailed out for the second time. As I mentioned earlier today, we are Greece.

There are several good articles which discuss some of our economic doldrums. First we have Paul Krugman. His input is always valuable and insightful.

I’m not the only one making this point, but when you hear Republicans saying that what we need to do to create jobs is slash government spending and cut government payrolls, that’s exactly what has been happening for the past year, as the Obama stimulus has faded out.

It is clear to me that these austerity measures aren’t working.

Matthew Yglesias from TP has a different look at this issue.

Here’s another look at the fates of the public and private sectors during the recession. Since the overall scale of private sector employment is much larger than the government sector (and rightly so), it’s difficult to get a chart that shows anything if you look at the raw numbers. So instead, this lines indexes both sectors to where they were in January 2009 when Obama took over:

To me, Republicans are simply reciting something they’ve recited for over 60 years. They hate government. They want to shrink government at all costs. The recession is a good excuse. They sold this bag of goods to the public, but, in reality, government is the problem. Let’s break down the numbers a little better. Let’s look at the number of government employees since the end of WWII.

It really doesn’t look like we’ve had significant growth in the federal government since the mid-1960s. Let’s look at the shape of the curve. There’s no significant uptick. The curve is basically flat. Now, let’s compare this to the population growth of the United States since 1970.

So, as we can see, our population has significantly increased over the last several decades yet the size of our federal government has remained relatively stagnant. Let’s drill down a little bit more on the size of our government, because this is exactly what Republicans have been harping on for years.

The number of federal workers actually increased during the Reagan administration and the Bush administration. Let me say that again. The number of federal workers increased during the Reagan years. Yet, we’ve been told time and time again how Ronald Reagan shrank the size of government. This is a lie. As a matter fact, this data clearly shows that Bill Clinton shrank the size of government significantly during his administration. Look at the size of government under George W. Bush. It did not shrink in size. We hired more government employees under his reign.

So, the take-home lesson from these graphs is twofold. First, we have been shrinking the size of government and that has not helped our economy get started. As a matter fact, we have more people unemployed because of it. Secondly, Republican administrations have not shrunk the size of government like they told us.

Tags: Bush Administration, Domestic Issues, Economy, Party Politics by ecthompson md
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The Nation’s Greg Mitchell reminds us that May first is the anniversary of George Bush landing on the aircraft carrier USS Abraham Lincoln. Remember how the media and the GOP swooned over the swaggering George W. Bush? Now, in retrospect, what exactly did president George W. Bush accomplish? More from Greg Mitchell:

May 1 marks the eighth anniversary of Mission Accomplished Day, or as it might better be known, Mission Accomplished (Not) Day. Coming on a weekend, there werre even fewer mentions of this in the national media than last year, and Keith Olbermann is not on the air to update the once-normal close to his telecast when he marked exactly how many days since Bush declared victory (you do the math).

In my favorite antiwar song of this war, “Shock and Awe,” Neil Young moaned: “Back in the days of Mission Accomplished/ our chief was landing on the deck/ The sun was setting/ behind a golden photo op.” But as Neil added elsewhere: “History is a cruel judge of overconfidence.”

Nowhere can we see this more clearly than in the media coverage of the event. Even today, eight years later, the often “overconfident” reporting from Baghdad and Kabul sometimes takes your breath away. At least two US soldiers have been killed in Iraq this week so far, and over 45,000 or our troops remain there today. (For a full accounting of costs of all sorts, go here.) So let’s return to the days of Mission Accomplished…

On May 1, 2003, Richard Perle advised, in a USA Today Op-Ed, “Relax, Celebrate Victory.” The same day, President Bush, dressed in a flight suit, landed on the deck of the USS Abraham Lincoln and declared an end to major military operations in Iraq—with the now-infamous “Mission Accomplished” banner arrayed behind him.

Chris Matthews on MSNBC called Bush a “hero” and boomed, “He won the war. He was an effective commander. Everybody recognizes that, I believe, except a few critics.” He added: “Women like a guy who’s president. Check it out. The women like this war. I think we like having a hero as our president. It’s simple.”

PBS’ Gwen Ifill said Bush was “part Tom Cruise, part Ronald Reagan.” On NBC, Brian Williams gushed, “The pictures were beautiful. It was quite something to see the first-ever American president on a—on a carrier landing.” (more…)

Tags: Bush Administration, Iraq by ecthompson md
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This is a transcript of Barack Obama’s speech. The video of the President’s speech is here.

East Room

11:35 P.M. EDT

THE PRESIDENT: Good evening. Tonight, I can report to the American people and to the world that the United States has conducted an operation that killed Osama bin Laden, the leader of al Qaeda, and a terrorist who’s responsible for the murder of thousands of innocent men, women, and children.

It was nearly 10 years ago that a bright September day was darkened by the worst attack on the American people in our history. The images of 9/11 are seared into our national memory — hijacked planes cutting through a cloudless September sky; the Twin Towers collapsing to the ground; black smoke billowing up from the Pentagon; the wreckage of Flight 93 in Shanksville, Pennsylvania, where the actions of heroic citizens saved even more heartbreak and destruction.

And yet we know that the worst images are those that were unseen to the world. The empty seat at the dinner table. Children who were forced to grow up without their mother or their father. Parents who would never know the feeling of their child’s embrace. Nearly 3,000 citizens taken from us, leaving a gaping hole in our hearts.

On September 11, 2001, in our time of grief, the American people came together. We offered our neighbors a hand, and we offered the wounded our blood. We reaffirmed our ties to each other, and our love of community and country. On that day, no matter where we came from, what God we prayed to, or what race or ethnicity we were, we were united as one American family.

We were also united in our resolve to protect our nation and to bring those who committed this vicious attack to justice. We quickly learned that the 9/11 attacks were carried out by al Qaeda — an organization headed by Osama bin Laden, which had openly declared war on the United States and was committed to killing innocents in our country and around the globe. And so we went to war against al Qaeda to protect our citizens, our friends, and our allies.

Over the last 10 years, thanks to the tireless and heroic work of our military and our counterterrorism professionals, we’ve made great strides in that effort. We’ve disrupted terrorist attacks and strengthened our homeland defense. In Afghanistan, we removed the Taliban government, which had given bin Laden and al Qaeda safe haven and support. And around the globe, we worked with our friends and allies to capture or kill scores of al Qaeda terrorists, including several who were a part of the 9/11 plot. [Read more →]

Tags: Al Qaeda, Bin Laden, Bush Administration, Obama administration by ecthompson md
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Okay, we are gonna form two lines – the first line is for all those who want big government. The second line is for all those that want smaller government. Which line are you going to get into? As usual, I can’t go along to get along. I think the question is a false dichotomy. What is a small government going to do? Can a small government pay out adequate Medicare and Medicaid benefits? Can a small government make sure that the children’s health insurance programs cover all kids in need? Can only big government do that? If I get arrested for “eyeballing” in the Deep South can small government protect me? Is it possible to get any liberal or any conservative to define how much smaller government has to be before it can be defined as small government? When did our government become big government? What did the government start doing in the late 50′s or early 60′s which allowed folks to define it as big government?

It seems to me that it is incredibly subjective to try to define these terms, yet conservatives will argue that the government is too big. When Reagan escalated the arms race by pouring billions of dollars into Star Wars and growing the size of government, was the government too big then? Most conservatives would say no. Most would argue that Reagan’s escalation of the size of government resulted in the collapse of the Soviet Union and therefore this was a great outcome for the United States. Okay, but was that big government? You can’t get a straight answer from conservatives on this point. If you delve further into the question by looking at the presidency of George W. Bush and ask about the invasions of Afghanistan and Iraq and the unchecked spending that was associated with this, was this big government? You get a sheepish look from conservatives, but again you can’t get a straight answer. When the Patriot Act was passed and we found out that the government obtained new powers, was this big government? Some conservatives may say yes. When the FISA law was rewritten to include wiretaps of overseas e-mail and telephone conversations, was this big government? Some conservatives would say yes. Neither one of these last two actions really grew the size of government, but all the sudden the definition changed from size to scope.

If we ask conservatives about George W. Bush’s bailout of Wall Street when we threw trillions of dollars at just a handful of companies and asked them to stabilize the economy, was this big government? Again, many conservatives would say yes. So, this is the root of the problem. This is the root of the angst. It has to do with breaking free market principles, which to some conservatives are sacrosanct. Let’s not pretend that it’s more than it is. It is conservatives’ unhappiness about the fact that free-market principles were not followed. Okay. I’m sorry you’re not happy.

I need a government that’s big enough and bold enough to stimulate the economy and get us out of this recession (see the above graph). I need a government that’s going to be able to protect my rights whether I’m white, black, Indian-American or whatever. I need a government that can help protect my food supply. I shouldn’t have to be wary of every hamburger and every leaf of spinach that I eat. I need the government to keep a manufacturing line so that my food supply is safe. I should be able to swim in a local stream without worrying about its spontaneously catching on fire. I should be able to breathe the air in cities like Atlanta, Los Angeles, Denver and New York without worrying about flareups of asthma and other respiratory diseases because of smog and other pollutants in the atmosphere. I need my government to be big enough and bold enough to prevent a national Ponzi scheme with home mortgages. I need my government to be big enough and bold enough to insist that companies pay a living wage. I need my government big, bold and efficient. Cut waste. Don’t cut effectiveness.

If you’d like to see what small government looks like, think about what we’ve seen in Colorado.

Below is a graph of government consumption and investment as a percentage of potential GDP. This graph really makes it look like Reagan ushered in the era of big government. It also makes it look like a Democrat, President Bill Clinton, shrank the size of government. Wow.

Paul Krugman has more.

Tags: Bush Administration, Congress, Economy, Obama administration by ecthompson md
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This is simply a game to these guys (CNN). The game goes like this – let’s invite somebody big on the show like Donald Rumsfeld, Vice President Cheney or former president George W. Bush. The guys at CNN have read their books. We know they are completely unapologetic for a war which was started on false pretenses. We know, from reading their books, that not one of them significantly questioned the intelligence. (There were several books which clearly revealed that the White House was pumping up the intelligence [read the book Hubris for an excellent read].) Instead, they pushed the intelligence. It was Dick Cheney and Scooter Libby who went down to CIA headquarters and personally sifted through raw intelligence. They would find raw snippets of intelligence and then ask the CIA why this or that was not in the official report. We knew Curveball was fabricating at the time. The Germans didn’t trust him or believe him. This is fact. For Donald Rumsfeld to weasel around and say anything different is simply nauseating. But this is the game. The announcer, Candy Crowley in this case, it really doesn’t matter who, will ask the question in multiple different ways trying to “get at the truth.” Yet, we would all have to be born yesterday to think that Donald Rumsfeld did not know the questions beforehand. Donald Rumsfeld is as skilled as anybody at this word game. CNN knows this. Yet, they want to get “great ratings.” So, they book Donald Rumsfeld. They (CNN) get increased ratings. Donald Rumsfeld sells more books and we, the American people, get the shaft. We get absolutely no meaningful information from this interview.

The whole thing is a charade. It is a waste of our time. Why isn’t this guy in jail somewhere?

Tags: Bush Administration, Iraq by ecthompson md
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Let’s go back in history. Let’s go back to those dark days of 2001 and 2002. These were days after an airliner crashed in Pennsylvania, an airliner crashed into the Pentagon and, of course, the twin towers fell. America wanted revenge. We wanted blood. Sure, the attacks were launched from Afghanistan but as Donald Rumsfeld said, there aren’t any good targets in Afghanistan. So, the administration decided to go after a long-time nemesis, Iraq. The administration decided that we needed overwhelming evidence that Iraq was not only a threat to its neighbors but a threat to us, here in America. They need to convince us that Iraq was an immediate threat. The Bush administration went after us in a multiple different ways in a coordinated media blitz. First of all, and most scary, they needed a nuclear threat. Iraq was trying to obtain yellowcake uranium from Niger. Secondly, and this dovetails into the uranium story, Iraq was buying these high-grade aluminum tubes which “could only be used to centrifuge high-grade uranium.” Thirdly, an Iraqi official met with Al Qaeda in Prague. This was the Al Qaeda connection. This connected Iraq to our source of rage, the attacks on September 11th. Finally, we had the mobile biological labs. These were all lies, but that’s the beauty of the Bush administration. It wasn’t just one lie, but several lies, which took us years to unravel.

This brings us to Curveball. The first time I remember reading about Curveball was in Richard Clarke’s book, Against All Enemies. Richard Clarke described curveball as a pathological liar. He was an Iraqi citizen in German custody. The Germans didn’t trust his information. The Americans did not have the ability to directly question Curveball. Yet, somehow, this guy’s wild fantasies were uttered as fact by the Bush administration. It appears that Curveball has surfaced. He has admitted, his lies but it is too late now. Tens of thousands, if not hundreds of thousands, of people have died. We’ve spent hundreds of billions of dollars and have really nothing to show for it. Saddam Hussein is dead. The sons of Saddam Hussein are also dead. Now, all of this destruction isn’t Curveball’s fault. The Bush administration is to blame for ginned up lies. If it hadn’t been Curveball they would have found someone else’s lies to push onto a gullible American public.

From TPM:

Rafid Ahmed Alwan al-Janabi, codenamed “Curveball” by German and American intelligence officials, now admits he made up tales of mobile biological weapons trucks and clandestine weapons factories in Iraq, information that was used by the Bush White House to press the case for war. He also says he’d do it again.

“Maybe I was right, maybe I was not right,” Janabi told The Guardian. “They gave me this chance. I had the chance to fabricate something to topple the regime. I and my sons are proud of that and we are proud that we were the reason to give Iraq the margin of democracy.”

In a series of meetings with the Guardian in Germany where he has been granted asylum, he said he had told a German official, who he identified as Dr Paul, about mobile bioweapons trucks throughout 2000. He said the BND had identified him as a Baghdad-trained chemical engineer and approached him shortly after 13 March of that year, looking for inside information about Saddam’s Iraq.”I had a problem with the Saddam regime,” he said. “I wanted to get rid of him and now I had this chance.”

In his crucial speech to the U.N. in the run-up to the war in 2003, Secretary of State Colin Powell quoted intelligence information supplied by Janabi as justification for the Bush administration’s case against Iraq. Years later, reports would show that many within the CIA were expressing serious doubts about Curveball’s credibility at the time.

Tags: 9-11, Bush Administration, Iraq by ecthompson md
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I hope everyone had a safe and merry Christmas!

• Just spent some quality time at the Asheville airport. It’s about half as much fun as you think it is… maybe less.
• President Barack Obama called the owner of the Philadelphia Eagles to congratulate him on giving Michael Vick a second chance. I just wonder if you or I get fired for doing something stupid whether somebody will take a chance on us. I hope so.
• When you are in panic mode you probably don’t make your best decisions. The federal government was in panic mode two years ago when they decided to come up with the Troubled Asset Relief Program (TARP). It should be no surprise to anyone that the program has not worked all that well. It turns out that many of the banks that were bailed out back in 2008 seem to need a little more bailing out only two years later. Bankers wasting our money, are you surprised?
• Mike Singletary, the former head coach of the San Francisco 49ers, was fired last night. The season isn’t over. The 49ers clearly had a disappointing season, yes, but to fire him now was simply classless. What difference would one week make? The season ends next week.
• The GOP is not in step with America. Their arrogance will probably be their downfall.
• New analysis of the extension of unemployment insurance and the tax cuts is available. The extension of the unemployment insurance is stimulative to the economy. The tax cuts are not.

Tags: Bush Administration, Economy, Obama administration, Party Politics by ecthompson md
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It appears that someone is going down. We just don’t know who. Now, before conservatives start yelling that this investigation is “proof” that the Obama administration is hostile to Big Business, this investigation was started three years ago. Get out your calculators. That was during the Bush administration.

From WSJ (may need a subscription):

The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say.

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide “expert network” services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge. (more…)

Tags: Bush Administration, Business, Obama administration by ecthompson md
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Questions (from the Daily Kos):

1. What was the average monthly private sector job growth in 2008, the final year of the Bush presidency, and what has it been so far in 2010?
2. What was the Federal deficit for the last fiscal year of the Bush presidency, and what was it for the first full fiscal year of the Obama presidency?
3. What was the stock market at on the last day of the Bush presidency? What is it at today?
4. Which party’s candidate for speaker will campaign this weekend with a Nazi reenactor who dressed up in a SS uniform?

Answers:

1. In 2008, we lost an average of 317,250 private sector jobs per month. In 2010, we have gained an average of 95,888 private sector jobs per month. (Source) That’s a difference of nearly five million jobs between Bush’s last year in office and President Obama’s second year.
2. In FY2009, which began on September 1, 2008 and represents the Bush Administration’s final budget, the budget deficit was $1.416 trillion. In FY2010, the first budget of the Obama Administration, the budget deficit was $1.291 trillion, a decline of $125 billion. (Source) Yes, that means President Obama has cut the deficit — there’s a long way to go, but we’re in better shape now than we were under Bush and the GOP.
3. On Bush’s final day in office, the Dow, NASDAQ, and S&P 500 closed at 7,949, 1,440, and 805, respectively. Today, as of 10:15AM Pacific, they are at 11,108, 2,512, and 1,183. That means since President Obama took office, the Dow, NASDAQ, and S&P 500 have increased 40%, 74%, and 47%, respectively.
4. The Republican Party, whose candidate for speaker, John Boehner, will campaign with Nazi re-enactor Rich Iott this weekend. If you need an explanation why this is offensive, you are a lost cause.

Tags: Bush Administration, Obama administration, Party Politics by ecthompson md
19 Comments »

Times-Picayune

I would like to say that I will come up with something brilliant never before said about New Orleans and Hurricane Katrina. I wish that were true. There have been endless books investigating the Hurricane Katrina tragedy from multiple angles. David Brinkley’s book, the Great Deluge, maybe the most complete. New Orleans’s own daily newspaper, the Times Picayune, has done a magnificent job at relentlessly chasing down details. Finally, Spike Lee’s documentary, When the Levees Broke, personalizes some of the pain and suffering.

Before Hurricane Katrina, Hurricane Georges hit the Gulf Coast in 1998 and narrowly missed New Orleans. This hurricane revealed several problems. City, state and federal officials met in 1999 in order to plan an adequate response. The state of Louisiana formally wrote FEMA and requested a planning exercise in August of 2000. It took four years before the exercise actually happened. In July 2004, Hurricane Pam began. There were over 300 participants in this five-day exercise. Hurricane Pam, by all accounts, was a realistic category three hurricane with sustained winds up to 120 mph. Using simulations from the National Weather Service and the US Army Corps of Engineers, the participants simulated over 20 inches of rain falling in parts of southern Louisiana. The storm surge topped the levees. The simulation assumed that over 300,000 people could not get out of the city in spite of mandatory evacuations. They also assumed that over half million buildings would’ve been destroyed. Over 100,000 people were injured and 60,000 killed. This was serious.

After the simulation, an after action report was filed. The most remarkable thing about this after action report is the number of areas where the letters TBA (to be announced) up here in the report. The report is incomplete. Large responsibilities have not been decided. In football, there is a saying, “You play like you practice.” In this case, the simulation showed huge gaps in our response. In reality, there is huge gaps in our response. In my opinion, any serious look at Katrina must start with a look at Hurricane Pam and the inter-agency problems that Pam revealed.

Tags: Bush Administration, Katrina by ecthompson md
8 Comments »

I wish this started with the Bush Adminstration, but it didn’t. This started in earnest during the Clinton Administration. Not only was everyone supposed to be able to own a home, those Americans who own homes were sitting on a “gold mine.” Almost instantly your home transformed from a long-term investment into your own private piggy bank which you can raid at any time for any reason. You remember the commercials. Home equity loans were as easy as signing your name. You could use them for anything, including vacations, buying a new boat or a new car, etc…

While there should be no surprise to anyone that home equity loans are defaulting an alarming rate. Americans simply don’t have the money. With home values continuing to decline, the equity behind these home equity loans are also falling. Billions of dollars are evaporating.

Our homes were never designed to be our own ATM machine.

From NYT:

During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.

The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and the collateral in the homes backing the loans has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up. (more…)

Tags: Bush Administration, Economy by ecthompson md
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I found this on Morningstar.com. I thought that it was worth commenting on.

5 Big Econ - July 2010 [ 0:01 ] Play Now | Play in Popup | Download

I’d like to take a few moments and go over these five big statements of the week.

• Let’s start with this report from Moody’s.com. This report attempts to analyze the unprecedented steps that were taken both by the Federal Reserve, Congress and the Bush/Obama administrations in order to stabilize the economy. They use a modeling technique in order to stimulate the economy. They estimate that 8.5 million jobs have been saved. They also estimate that the Gross Domestic Product would be approximately 11.5% lower without the intervention. Wow! Basically, they’re saying that government intervention worked to avoid the Great Depression 2.0. Now, I know that this will not be the last word on this. I find this paper very fascinating. For those who are interested in the economy, please read the whole paper.
• Just as in the United States, Europe has performed their stress tests on their financial institutions and found that the vast majority of their financial institutions are fiscally sound. From a political standpoint, what else could they have found? Just for a moment, imagine that the European Union announced that the majority of their banks were unable to stand a significant stress. The panic that would ensue would cause distress and the banks will collapse. The purpose of the stress test is to calm the fears of investors.
• There should be no surprise to anybody that the housing market remains depressed. In my opinion, the housing market has overbuilt and will take several years to alleviate that oversupply. In the meantime, there will not be much building. As I mentioned earlier, the economy has to find another fuel to drive economic engine. The housing sector just can’t do it anymore. This is why I have been pushing green energy.
• The Democrats are unable to push through comprehensive climate change legislation. There’s almost no Republican support. The conservative Democrats have too much to lose by supporting such legislation. In my opinion, Democrats need to split up this legislation into small pieces. Small portions can pass.
• British Petroleum has put Tony Hayward up on the shelf. They haven’t really fired him. With the amount of money he is getting, it’s hard to say that he’s really been demoted. He has just been removed from public view. To be honest, Tony Hayward is not the problem. The problem is a sense of entitlement that many of these executives have. The chairman of BP had the nerve to say that they look out for the “little people.” Really? Instead of feeling lucky or deep sense of humility for running a multibillion dollar corporation and taking home a multimillion dollar salary, they seem put out and upset that one of their wells has contaminated the Gulf of Mexico. It is not the person, but the culture that is the problem.

Tags: Bush Administration, Economy, Obama administration, Senate by ecthompson md
2 Comments »

I just don’t remember folks taking to the streets and complaining about Bush’s tax cuts for the rich. I don’t remember the Tea Party folks getting all upset because these tax cuts weren’t paid for. Republicans, for the most part, were happy to vote for tax cuts for the rich with no offsets. Unemployment benefits, though, now that’s another story.

From CBPP:

The biggest changes in tax policy enacted under President George W. Bush were the 2001 and 2003 tax cuts, often referred to as the “Bush tax cuts” but formally named the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003.

What Are Their Main Features?
The 2001 and 2003 tax cuts reduced the top four marginal income tax rates (see table), as well as the tax rate on capital gains and dividends. They also phased out the estate tax, repealing it entirely in 2010.

Bush Tax Cuts

In addition, the tax cuts included three components often referred to as “middle-class” tax cuts, though many higher-income families benefit from them as well. One provision created a new bottom income tax rate of 10 percent for some of the income previously taxed at a 15 percent rate. Another provision increased the Child Tax Credit from $500 to $1,000 per child and made many low-income working families eligible for the credit. The third provision was “marriage penalty relief” — a set of changes that reduced taxes for some married couples.
Nearly all of the tax cuts are scheduled to expire at the end of 2010.

How Much Do They Cost?
The 2001 and 2003 tax cuts added about $1.7 trillion to deficits between 2001 and 2008. Because they been financed by borrowing — which increases the national debt — this figure includes the extra interest costs resulting from that additional debt.

This figure also includes the cost of “patching” the Alternative Minimum Tax to keep the tax from hitting millions of upper-middle-class households, a problem the tax cuts helped cause. (See Policy Basics: The Alternative Minimum Tax.)

Over the next decade (2009-2018), making the tax cuts permanent would cost $4.4 trillion, assuming that the tax cuts remain deficit-financed.

Whom Do They Benefit The Most?
A very large share of the value of the tax cuts flows to high-income taxpayers. In fact, the top 1 percent of households — a group with incomes over $450,000 in 2008 — would receive 31 percent of the tax cuts’ benefits over the next ten years if the tax cuts were made permanent.

Tags: Bush Administration, Economy by ecthompson md
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It was just four years ago when hundreds of thousands of other progressives, including myself, were pleading with America to restore democratic rule. That was all we needed. The Democrats in charge of this topsy-turvy world would turn right side up. Democrats, who wad railed against the wars in Iraq and Afghanistan, said they hated the war but had to vote for it. They convinced us that all we needed to do was change the man in charge. Vote George Bush out and Barack Obama in. Then, everything would be okay. Well, not so much. Unemployment is hovering at approximately 10%. I’ve been trying to come up with a scenario in which we can get unemployment down to 5% with,in a couple of years, but I just don’t see that happening. We are stuck. We can’t get unemployment benefits renewed because Republicans and some Democrats are dead set against unemployment benefits without offsets. Why is it that tax cuts never need offsets but unemployment benefits do?

From Dean Baker: Unemployment insurance provides the sort of boost to demand that the economy desperately needs. That is why neutral parties such as the congressional budget office or economist Mark Zandi, a top adviser to John McCain’s presidential bid, always list unemployment benefits as one of the best forms of stimulus.

Republicans give two reasons for opposing benefits. First, they claim that benefits discourage people from working. Second, they object that the Democrats’ proposal will add to the national debt.

On the first point there is a considerable amount of economic research. Most indicates that in periods when the economy is operating near its capacity, more generous benefits may modestly increase the unemployment rate. However, they are less likely to have that effect now. The reason is simple: the economy does not have enough jobs. The latest data from the labour department shows that there are five unemployed workers for every job opening.

In this context, unemployment benefits may give some workers the option to remain unemployed longer to find a job that better fits their skills, but they are unlikely to affect the total number of unemployed. In other words, a $300 weekly unemployment cheque may allow an experienced teacher the luxury of looking for another teaching job, rather than being forced to grab a job at Wal-Mart.

However, if the teacher took the job at Wal-Mart, then this would simply displace a recent high-school graduate who has no other job opportunities. That might be a great turn of events in Republican-econ land, but it does not reduce the overall unemployment rate, nor does it benefit the overall economy in any obvious way.

The other argument the Republicans give is that these bills would add to the national debt. For example, the latest extension of unemployment benefits would have added $22bn to the debt by the end of 2011. This means that the debt would be $9,807,000,000 instead of $9,785,000,000 at the end of fiscal 2011, an increase of the debt-to-GDP ratio from 65.3% to 65.4%.

It is possible that Congressional Republicans, who were willing to vote for hundreds of billions of dollars of war expenditures without paying for them, or trillions of dollars of tax cuts without paying for them, are actually concerned about this sort of increase in the national debt. It is possible that this is true, but not very plausible.

Currently, I’m looking for somebody to be in charge of Congress. I’m looking for the Senate to be something other than a wasteland where bills go to die. I’m looking for someone to push the Senate out of its malaise. It is nice to stand in the well of the Senate and make speeches about fiscal responsibility and the recklessness of the Democrats. It’s another thing to propose a real viable solution. To stand around and say that tax cuts are the answer is to be devoid of your senses.

From TPM: “…there’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”

The CBO and other budget experts strongly disagree. And Democrats want to preserve the Bush tax cuts for people making less than $200,000-$250,000 a year — but only for them. Allowing them to expire for wealthier people would raise hundreds of billions of dollars over 10 years, which could allow them to offset the spending Republicans currently decry.

However, the GOP’s top budget guy, Sen. Judd Gregg (R-NH), disagrees. He said Kyl’s prescription — offset spending with tax increases or program cuts, but treat tax cuts differently — is exactly right. “It makes a lot of sense, because, you know, when you’re raising taxes you’re taking money out of peoples’ pockets,” said Gregg when asked by TPMDC. “When you’re spending money, you’re spending money that is — it’s not the same thing because it’s growing the government. So I tend to think that tax cuts should not have to be offset.”

This is exactly what I’m talking about. It is impossible to reason with an ideologue. Many in Congress would not know how to formulate a logical argument even if they had a hour-long lesson with Plato. They got elected because they believed in or would tow the party line. I’m not talking about just Republicans. I’m talking about Democrats also. We have to figure out a way to make Congress work for us. We have to make our congressmen resistant to PACs and responsive to us and to logical arguments. How much would you give for our Congressmen and Congresswomen? More than a nickel?

Tags: Bush Administration, Congress, Economy, Taxes by ecthompson md
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Obama recently talked about immigration reform:

A friend of mine has written an interesting post (funny and not serious) on immigration. His political ideology is clearly to the right of center. He is a businessman who has done well and unfortunately has bought into a lot of the rhetoric of the Right. He and many others in the conservative movement have charged that Obama has no intention of protecting Arizona and other states from economic refugees. (This is the term that I use for illegal immigrants because it more precisely defines why they’re here and why they’ve been allowed to stay here). The attack on the Obama administration has come from a two-pronged approach — First, the president has failed to protect the country from a growing threat. Secondly, he does not listen to us, the American people, who have cried out to have something done.

Let’s take the second allegation first. My friend has followed the lead of other conservatives and has looked at polls. Polls? Conservatives are suggesting that the president should not lead, but instead should follow American public opinion. I love this myopic view of American political life. It was less than four years ago when these same conservatives were telling us that we needed to follow Bush and not look at the polls. As a matter fact, just before the invasion of Iraq, a country that did not attack us was never a threat to us, Americans favored continued weapons inspections by a vast majority over a military invasion. It was okay for President Bush to ignore the polls, but Barack Obama must follow them.

What threat? (Like an Al Qaeda threat or a Soviet Union take over the world kind of threat?) Economic refugees have been allowed to pour into our country because it’s beneficial to business. Both Democrats and Republicans have had opportunities to stem the tide but they have failed. Why? It isn’t like these economic refugees are a solid voting block for Republicans or Democrats — they can’t vote! Therefore, they have no political power. The businesses that hire them — they have the political power. Whether it is agriculture, construction or the restaurant industry, a large segment of our economy depends on cheap labor. Cheap labor is like crack to business. They simply cannot get enough of it. If they can’t find enough cheap labor here in the United States, they will move manufacturing to Mexico, Thailand or China. We have seen this. We all know this to be true yet, for some reason, conservatives are bashing Obama for something that was already in place before he took office.

Of course, this brings me to President George W. Bush. He was in office for eight years. Where were the calls for his impeachment over his immigration policy? (He didn’t develop one until he was in office for over seven years.) During the go-go years of the housing bubble, millions of immigrants poured into this country and most conservatives said nothing. Why? Immigration was a problem then and it’s a problem now.

Conservatives want it both ways. They want the federal government to spend money on things that they want money spent on and they still want to shrink the size of government. The Obama administration has deported more economic refugees in this first year than any other administration in history. The Obama administration has set aside over $400 million to strengthen border security and hire more border agents. Conservatives whine about Barack Obama being weak but when he stands up and says the Constitution has given border security to the federal government, conservatives whine about states’ rights. Which is it? Defend the constitution or not?

Fixing the problem with immigration is easy. For the most part, economic refugees come here to get jobs. Clamp down and increase fines on businesses that hire economic refugees. Continue to enforce the current laws. If economic refugees cannot get jobs, they will not come here. This is extremely simple and it will work, but there is no political will on Capitol Hill to do this. The business lobby is too strong. If Congress begins to listen to the people instead of the lobbyists and comprehensive, meaningful immigration reform is passed, we will have one less hurdle in order to completely fix this problem. This last hurdle is clearly the toughest. What do you do with economic refugees who are already here in the United States? To me, the answer does not matter. We just have to come up with an answer. No matter what the answer is someone is going to be furious.

The problem is that conservatives are not serious. Once conservatives walk into the offices of the American Chamber of Commerce and demand that they began to clamp down on members who are hiring economic refugees, then I’ll believe that they are serious. Once the American Chamber of Commerce comes out and openly denounces businesses that are hiring these illegal immigrants, then we will have a chance to get meaningful comprehensive immigration reform passed through Congress and signed by President Barack Obama.

Tags: Bush Administration, Immigration, Party Politics by ecthompson md
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On the Right side of the country, it has become a full-time job to bash president Obama. Before he was elected, their job was to support anything and everything President George W. Bush did. Towards the end of the Bush presidency, they just didn’t seem to have the same zeal about defending the president. With the election of Barack Obama, the old spark is back. It’s just like the way they relentlessly attacked Clinton and never admitted that he submitted a balanced budget, never gave him credit for turning around the deficit. They just kept bashing him. They’re doing the same with the president. Let’s look at today’s example –

From TP:

As the Washington Independent’s Spencer Ackerman sarcastically noted, Shahzad’s guilty plea is “obviously another crucial failure for a law-enforcement-based response to terrorism.” Indeed, Shahzad’s guilty plea puts the National Review’s Andrew McCarthy in an awkward spot. Just this morning — hours before the announcement of the guilty please — McCarthy gleefully declared the failure of the law enforcement approach, citing the Department of Justice’s failure to secure a guilty plea:

Now comes word from the U.S. attorney’s office for the Southern District of New York that Shahzad has been indicted.[...]

Attorney General Eric Holder has been telling anyone who would listen that Shahzad is cooperating and providing valuable information. Civilian due process has been no obstacle at all, Holder insists: no problem posed by Miranda, the appointment of counsel, the prospect of providing discovery, and the dynamics of plea-bargaining. Yet it is highly unusual to indict a cooperator, precisely because it is so strategically disadvantageous to the government. When someone is cooperating, the standard practice is to strike a deal, complete with a cooperation agreement and a guilty plea, in what is known as a “criminal information,” rather than to file an indictment. [...]

An indictment, on the other hand, is the throwdown moment in a criminal case, the opening bell for the first round of a prize fight. It signals that the parties have been unable to work out an agreement and are in an antagonistic posture.

Unfortunately for McCarthy, his eagerness to bash President Obama put him on the wrong side of the facts by about five hours. Of course, this probably won’t stop McCarthy from making up another reason for why the Obama administration has botched this terrorism prosecution.

Tags: Bush Administration, Legal, Obama administration, Terrorism by ecthompson md
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Bush and the size of government

A couple of days ago, one of my commenters correctly mentioned that conservatives want a smaller government and that conservatives have no desire to eliminate government. I can agree with both of these statements. The problem is that conservatives have no desire for government to look out for the people, whereas I believe that liberals see government as a counterbalance to the excesses of business.

The good news is that we can follow conservative philosophy for nearly 100 years. Conservatives like to write. The 1935 book, Our Enemy, the State, written by Albert Nock, is an excellent example of conservatism at its best. The things he writes seem almost exactly like Ronald Reagan. “Wherever the state is, there is a felony.” This is right out of Reagan-speak. He wailed against the New Deal as a “coup d’état.” He talked about the people ripping off the hard-working few — rich businessmen.

We can even go back to the 1880s and 1890s to see an example of conservatism at its best. Look at the combination of the Interstate Commerce Commission and the Federal Trade Commission. (The trend may have started earlier, but I cannot find any specific documentation of this.) Richard Olney was a staunch conservative and railroad lawyer who was appointed to be Attorney General. He made his name by attacking the Sherman Antitrust Act. Now he’s been placed in a position where he can actually appoint people either to enforce or not enforce the law. He chose the latter. The essence of conservatism, as I see it, is summed up in the famous letter he wrote to his old railroad boss.

“The Commission, as it functions have now been limited by the courts, is, or can be made, of great use to the railroads. It satisfies the popular clamor for government supervision of the railroads, at the same time that that supervision is almost merely nominal. Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. It does becomes a sort of barrier between the railroad corporations and the people and the sort of protection against nasty and crude legislation hostile to railroad interests… the part of wisdom is not to destroy the Commission, but to utilize it.” – From Thomas Frank’s The Wrecking Crew

Therefore, over the last 30 years, we’ve seen examples of this throughout Republican administrations. James Watt was an attorney who made his living attacking environmental protections and touting the EPA as being unconstitutional. Reagan appointed him Secretary of the Interior (the EPA is under the Department of the Interior). Although James Watt was the most egregious example, there are literally hundreds of examples throughout the Reagan and Bush administrations. The Securities and Exchange Commission was headed by somebody who did not believe in regulating Wall Street. The agency was packed with like-minded individuals. The Justice Department filled the Civil Rights division with lawyers who did not believe the 1964 Civil Rights Act was constitutional. The Justice Department actually decreased the funding to this department while Bush was in office.

The examples of conservatives using the government as a tool for business and de-funding agencies which could not align with their vision of the function of government are simply too numerous to name. The one thing that modern conservatives like Grover Norquist have done is make government work for them, make government work for business. The quickest way to become a millionaire during the Bush administration, besides winning the lottery, was winning a government contract. Privatization was the way to go. The brilliance of the conservative strategy was to sell privatization to the American people. The sales pitch was that government was inherently inefficient and that business was efficient. Therefore, if we could get the government to work more like a private business then everything would be great. The only thing that would be better would be to privatize portions of the government. This is what happened during the Bush administration.

So, in conclusion, my commenter was 100% right when he said that conservatives do not want to eliminate government totally. Conservatives simply want government to work for big business.

Tags: Bush Administration, Business by ecthompson md
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Conservatives, as the economy began to melt down quickly in 2008, began to target one of the programs that they truly hated, the Community Reinvestment Act. They pointed to this one program, which started back in the Carter administration, as the root of all evil. The conservative argument goes something like this — the community reinvestment act asked banks to lend more money to minorities and Americans who lived in impoverished areas. Therefore, the banks were forced to hand out riskier mortgages. This whole operation was funded through a mandate of Fannie Mae and Freddie Mac. So, with Fannie and Freddie pumping money into the mortgage financial system and bankers being “forced” to lend money to people who were obviously not qualified, there’s no surprise that these mortgages ultimately failed in a spectacular fashion.

This tale is like many tales that come out of the conservative movement. There is a shred of truth located deep within the story. Unfortunately, there is only a shred of truth. First, it is important to understand how the mortgage industry works. I thought, if I go to the bank, Friendly Bank, and I’m approved for a loan, Friendly Bank gives me the money to purchase a house. I thought that the loan stayed at Friendly Bank. I was wrong. That’s the way loans worked in the old days. Now, Friendly Bank will take my loan and do one of two things — sell the loan to another financial institution or package the loan with other loans and then sell that to a financial institution. This is where mortgage securitization comes in, along with derivatives and collateralized debt obligations and much more craziness. Fannie and Freddie worked in the secondary markets. It is true that Fannie and Freddie injected liquidity into the housing market. They are able to buy qualified loans (notice the word “qualified”) from banks and then pass those loans on to other financial institutions. “The riskiest mortgages, however — the ones that were pushing the housing bubble to dizzying heights — were simply off-limits to Fannie and Freddie.” (From Simon Johnson’s book 13 Bankers, p 145.) Fannie and Freddie were barred by law from handling these risky subprime mortgages.

When you look at the subprime mortgages that were issued at the height of the craze, between 2004 and 2006, Fannie and Freddie only sold approximately 24% of those loans. In 2006, 84% of subprime mortgages were issued by private lending institutions. These loans were then passed on to other private institutions, bypassing Fannie and Freddie. Although Fannie and Freddie Miami have wanted to get into the fray, they were unable to participate. “Private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market.” Over 66% of these loans stayed in the private sector.

This reason that conservatives continue to push a story that they know is not true is because the truth is very scary to them. The truth is capitalism worked the way it was supposed to work. Capitalism is about greed. Capitalism is about looking out for your own interest. This is exactly what these private investment banks did. The point of the federal government is to constrain the excesses of capitalism. Put another way, people always look for ways to make money. If there are no regulations, then people will make money any way that they can. Some will even rip off their own grandmother to make an extra dollar. Alan Greenspan and Henry Paulson (and almost everybody on the Bush financial team and unfortunately, this includes most of Obama’s financial whiz’ also) believed in self-regulating markets. They believed that the purer the market was, the better the market would regulate itself. Unfortunately, they did not factor in one of the most important things in human nature — greed and deception. No investor will always have all of the information. Financial institutions have intentionally created an atmosphere where they hold most of the cards. They only reveal the cards they want you to see; therefore, no investor is fully informed.

So, in summary, Fannie and Freddie did not cause the economic meltdown. The Community Reinvestment Act did not fuel the economic meltdown. There was a climate of deregulation, mortgage derivatives and collateralized debt obligations, which were designed to hide risk and were sold to investors as safe. These mortgage securities were stamped with triple-A ratings,duping investors into thinking that they were safe. Because the primary lender had the ability to pass off loans to someone else, there was less worry about the quality of those primary loans. There you have the cycle. You have a nearly infinite supply of investors who want low risk, yet high yield investment opportunities. These mortgage-backed securities were sold as exactly that — low risk and high yield. Unfortunately, for all of us, they were not low risk. Not even close.

Tags: Bush Administration, Business, Economy by ecthompson md
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