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De Participatie Samenleving 36

Washington's Millionaire Boyz Club

Saturday, 11 January 2014 11:59By Michael Winship, Moyers & Company | News Analysis

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(Photo: Andrew / Flickr)Over the holidays, I was watching that old Marilyn Monroe comedy “How to Marry a Millionaire” on Turner Classic Movies (okay, I have no life). This week, a new report suggests (to me, at least) that if Hollywood were to produce a remake of that 1953 film, the variety of now politically incorrect tactics Ms. Monroe and her friends deploy to land a well-to-do partner could be reduced to one: start dating a member of Congress.

An analysis of personal financial disclosure data by the non-partisan Center for Responsive Politics reveals that “for the first time in history” a majority of senators and representatives are millionaires:

“Of 534 current members of Congress, at least 268 had an average net worth of $1 million or more in 2012, according to disclosures filed last year by all members of Congress and candidates. The median net worth for the 530 current lawmakers who were in Congress as of the May filing deadline was $1,008,767 -- an increase from last year when it was $966,000. In addition, at least one of the members elected since then, Rep. Katherine Clark (D-Mass.), is a millionaire, according to forms she filed as a candidate. (There is currently one vacancy in Congress.)”

This is up from the previous year, when approximately 48 percent of the members had a median net worth of at least a million, and represents, according to the Center, “a watershed moment at a time when lawmakers are debating issues like unemployment benefits, food stamps and the minimum wage, which affect people with far fewer resources, as well as considering an overhaul of the tax code.”

According to the Center’s executive director Sheila Krumholz, "Despite the fact that polls show how dissatisfied Americans are with Congress overall, there's been no change in our appetite to elect affluent politicians to represent our concerns in Washington. Of course, it's undeniable that in our electoral system, candidates need access to wealth to run financially viable campaigns, and the most successful fundraisers are politicians who swim in those circles to begin with."

Yes, indeed. Her comments come as the Center also reports that candidates’ campaign committees already have raised $446 million for the 2014 midterm elections with incumbents raking in more than ten times the amount of their challengers. The midterms already are shaping up as the most expensive ever, coming in the wake of the 2012 elections’ orgy of splurging, much of it in hefty checks from anonymous big spenders whose wallets have been freed by Citizens United and other court decisions.

When it comes to the personal billfolds of Congressional incumbents, overall, Democrats slightly edge out Republicans with a medium net worth just a few thousand above the million mark (in the Senate, GOP members do a little better than Dems; in the House, it’s the opposite).

Returning to the top spot after a year in the number two position is the powerful and publicity-obsessed Republican House member Darrell Issa of California, chairman of the House Oversight Committee, scourge of the IRS and car alarm magnate, whose average net worth in 2012 was $464 million. He took back the #1 title from Republican Congressman Michael McCaul of Texas, whose wife Linda is the daughter of Clear Channel Communications Chairman Lowry Mays.

As for their most popular investments, 74 members reported owning shares in defense contractor and appliance maker General Electric, which shelled out $4.6 million in campaign contributions during the 2012 election cycle and spent more than $21 million on lobbying in 2012. Second on the list was Wells Fargo – 58 members have shares. Its 2012 campaign contributions were almost $3.8 million, lobbying was another $6.8 million. Other top ten stock picks include Microsoft, Procter & Gamble, Apple, Bank of America, JPMorgan Chase, IBM, Cisco Systems and AT&T, each of which makes sure to throw campaign cash at those members who help grease the skids. Would that there was such a stimulus program for the rest of us!

However, the Center notes, “real estate was the most popular investment for members of Congress. Their investments in real estate in 2012 were valued at between $442.2 million and $1.4 billion.”

So it’s like they say in the real estate business about making money: it’s all about location, location, location. Especially if your location is Capitol Hill.

(You can read the complete list of members, their assets and favorite investments here: http://bit.ly/1gl3JyX)

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

MICHAEL WINSHIP

Michael Winship is senior writer of the new weekly public affairs program, "Moyers & Company," airing on public television. Check local air times or comment at www.BillMoyers.com.

http://www.truth-out.org/news/item/21159-washingtons-millionaire-boyz-club

De Participatie Samenleving 35

Now We Know: JPMorgan Chase Is Worse Than Enron

Saturday, 11 January 2014 09:12By Richard Eskow, Campaign for America's Future | News Analysis

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(Photo: Thomas Hawk / Flickr)It's beginning to look as if JPMorgan Chase has had a hand in every major banking scandal of the last decade. In fact, it's the Zelig of Wall Street crime. Take a snapshot of any major bank fraud and chances are you’ll see JPMorgan Chase staring out at you from the frame.

Foreclosure fraud, investor fraud, cheating customers, market manipulation, LIBOR … and now, the coup de grâce to JPM’s tattered reputation: a $2 billion fine for closing its eyes and covering up as Bernie Madoff literally bilked widows and orphans, along with a lot of other families and charities. (Here's a list of investors.)

Does Jamie Dimon, the bank’s CEO, still think people don’t say enough nice things about him? Do his friends?

More importantly, how does the largest bank in the country (measured in assets) get away with being worse than Enron? That one’s easy: By being the largest bank in the country.

Guilty as Sin

JPMorgan Chase was hit with a “deferred prosecution agreement” for criminal behavior in this latest settlement, which basically means they won’t be prosecuted as long as they honor the agreement and keep admitting to their own wrongdoing. As the New York Times notes, this kind of arrangement is “nearly unheard-of for a giant American bank,” is “typically employed only when misconduct is extreme,” and “underscores the magnitude of the case against JPMorgan.”

According to publicly available information, the case against JPMorgan Chase is extremely damning. Even after highly suspicious facts came to light about the Madoff operation, JPM continued to package and sell Madoff-fed funds to its customers. It failed to report him to the authorities even after concluding that he was engaged in massive fraud.

No wonder JPM tried to block investigators from probing its handling of the Madoff account. According to Newsweek, the Justice Department even shielded the bank from obstruction charges.

Worse Than Enron

There’s no question about it: JPMorgan Chase is worse than Enron. It’s true that Enron’s energy market manipulations were horrible. Enron executives and employees deprived people of their life savings, drove up the price of a vital public utility, and concealed their crimes with all the wiliness of history’s worst master conspirators.

But JPMorgan Chase did everything Enron did – and much, much more. Consider:

A few weeks ago JPM paid $13 billion to settle well-documented charges of massive and widespread foreclosure fraud. Although that was the largest fine paid by a corporation in American history, there’s a compelling argument that it should have been larger – as much as 22 times larger.

JPM paid $296.9 million for lying to investors about the payment status – and hence, the investment quality – of its mortgage-backed securities.

JPM paid more than a third of a billion dollars to settle charges that it bilked customers by charging them for credit monitoring services it never provided.

JPM agreed to pay between $1.8 billion and $4.5 billion, depending on how you tally the cost, for illegally foreclosing on American families and throwing them out of their homes.

JPM paid another $56 million for cheating active-duty service members and their families, and for illegally foreclosing on them as well.

JPM paid $228 million for rigging the bidding for 93 municipal bond transactions in 31 states. (You know those cities that supposedly can’t honor their pension agreements with retired workers? That’s the kind of client they cheated here.)

JPM paid $410 million to settle charges related to its rigging of electricity prices, which is what Enron did.

JPM has paid multiple fines and settlements over the “London whale” case, in which traders sought to manipulate market prices, engaged in unlawful “reckless conduct” (while CEO Dimon bragged about the bank’s risk management and “fortress balance sheet”), then unlawfully concealed their behavior. There is no evidence that any investigation sought to determine how high the cover-up went. We do know that Dimon told investors the case was “a tempest in a teapot” after privately being told that losses were running in the billions.

JPM paid $1.2 billion for colluding with credit card companies and other institutions to rig merchants’ credit prices.

JPM has paid two major fines for illegally investing with customers’ money.

Den of Thieves

All in all, JPMorgan Chase has paid $20 billion in fines in the last year alone. But none of these fines were personally charged to the executives who committed the crimes. Instead, they were paid by shareholders – some of whom were also bilked by the executives in question.

What’s more, most (if not all) of these fines are tax-deductible. That means that taxpayers will take a hit for JPM’s criminality. Even the Enron guys didn’t think of that.

Do some good people work at JPMorgan Chase? Of course. I have a couple friends there myself, and they’re honorable people. But they’re living in a nest of fraudsters. Either CEO Dimon thinks that’s just fine, or he’s not competent enough to clean the place out and should be fired forthwith.

It's Who You Know …

How does the JPM Gang get away with all of this fraud? One simple answer is: Access. Political access. Even Bernie Madoff had it. The Madoff family was heavily involved in SIFMA, the Securities Industry and Financial Markets Association, a trade group with deep Washington DC connections. (Madoff’s brother Peter was honored by SIFMA in 2006.)

Dimon’s DC connections, of course, are the stuff of legend. They extend to members of both parties. Until scandal completely scarred the bank’s reputation, Dimon was routinely referred to as “the President’s favorite banker.” And as a high-powered Wall Street lawyer, Attorney General Eric Holder undoubtedly crossed paths with Dimon many times.

Our leaders insist that those personal connections carry no weight in their decision-making process. People are free to form their own opinions about that. The argument is also made, as the Attorney General did in a rare moment of candor, that some banks can’t be indicted because that would put them in danger – which, in turn, would pose a systemic risk to the global economy.

And yet nobody in the Administration is claiming that this is a problem, much less proposing solutions. Solutions are available: the breakup of systemically risky institutions or the indictment of individuals and not of institutions.

Unfortunately, nobody in the government seems very interested in solutions. They just keep making these deals, even when the malefactors involved are much, much worse than Enron.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

De Participatie Samenleving 34

The $17 Trillion Delusion: The Absurdity of Cutting Social Security to Reduce the Debt

Saturday, 11 January 2014 09:11By Marty Wolfson, Dollars & Sense | Op-Ed

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(Photo: Pete Souza / White House)President Obama boasted last week that he had signed legislation to lift "the twin threats" to our economy of government shutdown and default. But what was done to fix the problem of growing debt that leads Washington to repeatedly raise the debt ceiling?

Nothing. In fact, by Friday, the U.S. debt had rocketed past $17 trillion.

What does this mean?

At $17 trillion, this number has passed total U.S. gross domestic product (GDP), the measure of all that is produced in the economy.

Since Obama took office, the national debt has increased from about $10.6 trillion to more than $17 trillion—a 60 percent increase.

... Meanwhile, entitlement spending—the key driver of spending and debt—remains unaddressed.

—from "Debt Hits $17 Trillion," The Foundry: Conservative Policy News Blog from the Heritage Foundation, October 21, 2013

Shortly after the ceiling on federal debt was raised on October 17, 2013, the conservative Heritage Foundation notified its readers that the outstanding debt of the United States had “rocketed past $17 trillion,” and that “entitlement spending—the key driver of spending and debt—remains unaddressed.” The three assumptions in that statement—that the true measure of our debt is $17 trillion, that the cause of the buildup of debt is entitlement spending, and that therefore the appropriate policy to “address” this problem is to cut Social Security benefits and other “entitlements”—are endorsed by many politicians and policy pundits in Washington. But they’re all wrong as economic analysis and disastrous as policy recommendations.

Seventeen trillion dollars certainly sounds like a big, scary number, especially when national debt clocks tell us that this translates into more than $53,000 for every person in the United States. But we shouldn’t be focusing on that number.

The $17 trillion figure is a measure of “gross debt,” which means that it includes debt owed by the U.S. Treasury to more than 230 other U.S. government agencies and trust funds. On the consolidated financial statements of the federal government, this intragovernmental debt is, in effect, canceled out. Basically, this is money the government owes itself. What is left is termed “debt held by the public.” It is this measure of debt that is relevant to a possible increase in interest rates due to competition for funding between the private and public sectors. It is also the category of government debt used by the Congressional Budget Office and other analysts. (Of course, the full economic significance of any debt measure needs to be considered in context, in relationship to the income available to service the debt.) The total debt held by the public is $12 trillion.

The Social Security Trust Fund owns $2.7 trillion of the $5 trillion of Treasury securities held in intragovernmental accounts. In fact, Social Security is the largest single owner of Treasury securities in the world, surpassing even China’s significant holdings of $1.3 trillion.

Social Security accumulated all these Treasury securities because of the way that its finances are organized. Social Security benefits to retirees (and to the disabled) are paid for by a payroll tax of 12.4 % on workers’ wages (with 6.2% paid by the worker and 6.2% paid by the employer), up to a limit, currently $113,700. If, in any year, Social Security revenue is greater than what is needed to pay current retiree benefits, the surplus must, by law, be invested in Treasury securities (most of which are “special obligation bonds” issued only to the Social Security Trust Fund).

Since 1983, workers have been paying more in Social Security taxes than what was needed to pay retiree benefits. A special commission, appointed by President Reagan and chaired by future Federal Reserve Chair Alan Greenspan, recommended several changes to increase the revenue received by the Social Security Trust Fund. Most prominent among these changes was an increase in the payroll tax rate to its current level of 12.4%, although the Commission also recommended reductions in benefits, including a gradual increase in the retirement age from 65 to 67. The effect of the changes would be to create significant surpluses in the Social Security Trust Fund. The thinking was that, if in the future payroll taxes fell below benefits, the Trust Fund could draw upon the accumulated surpluses to pay benefits.

Therefore the $2.7 trillion of Treasury securities held by the Trust Fund came about not because entitlements are out of control and the government has been forced to borrow to meet retiree benefits, but rather because future retirees have paid more taxes than necessary to meet benefit obligations. Workers have essentially been prepaying into the Trust Fund in order to provide for their future benefits.

So it makes no sense to try to solve the supposed problem of too much government debt by cutting benefits for current and future Social Security recipients. These workers were asked to help keep Social Security solvent by paying increased payroll taxes. As a result, the gross federal debt increased. It would be totally unfair and irrational to cut benefits now because these workers had sacrificed in the past. That would be hitting them with a double burden, the second burden of benefits cuts incurred because there was the first burden of overpaying payroll taxes into the Trust Fund.

What’s more, the strategy the Heritage Foundation advocates would make the alleged problem they are claiming to address even worse. That’s because cutting benefits would mean that payroll taxes would more easily meet retiree benefits, and so the surplus accumulating in the Social Security Trust Fund would be greater. Since the Trust Fund is required by law to invest its surpluses in Treasury securities, a greater surplus translates into more bonds being accumulated by the Trust Fund, and therefore a higher gross federal debt (assuming that Treasury borrowing from other sources remains the same). So cutting Social Security benefits in order to reduce a $17 trillion debt would produce the contradictory result that that debt would be even higher than it would have been without the benefit cuts.

Despite the 1983 changes to Social Security, the Trustees, the board that oversees Social Security, stated in their 1995 annual report that the 75-year projection of Social Security finances was no longer in “close actuarial balance” and that the long-range deficits should be “addressed.” In 2002, they began to be more specific: “Bringing Social Security into actuarial balance over the next 75 years could be achieved by either a permanent 13-percent reduction in benefits or a 15-percent increase in payroll tax income, or some combination of the two.”

Of course, the assumptions used by the Trustees, their policy approach, and the need for benefit cuts are all a matter of dispute. However, had benefits been cut by 13% beginning in 1996, total reductions would have totaled $1.2 trillion by 2012. So the Trust Fund would have accumulated that much more in Treasury securities, and the gross debt would actually have increased to $18.2 trillion.

In reality, the bonds in the Social Security Trust Fund are primarily a political accounting device to remind us that we as a society have promised a certain level of benefits to Social Security retirees. It is true that at some point the Trust Fund will most likely need to redeem the bonds in order to pay full benefits to retirees. And it is true that the government will need to raise the funds to do this, either by borrowing from the public (selling Treasury bonds) or through increased tax revenue. But this is the case because we promised benefits to these retirees, not because there is a certain level of bonds in the Trust Fund. The benefits would be due retirees whether or not there are bonds in the Trust Fund.

So the real issue is whether or not society will keep its commitment to retirees. The agenda of those who say we have to cut benefits is really that they don’t want to meet this commitment. We should recognize that this is their agenda, and not let them hide behind the smokescreen of supposedly out-of-control federal debt.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

MARTY WOLFSON

Marty Wolson teaches economics and is the director of the Higgins Labor Studies Program at the University of Notre Dame.

Native Advertising

Flashing Too Little Editorial Integrity

Saturday, 11 January 2014 09:15By Jim Hightower, OtherWords | Op-Ed

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Attention, class. Here’s today’s new word: “Native advertising.”

OK, that’s two words. But it’s one concept, and it has nothing to do with indigenous peoples.

Rather, it’s a phrase sprung on us by the wonky wordsmiths of Internet media, who also refer to it as “brand content.” Translated, this means that these particular web pages on news sites aren’t articles. They’re paid advertising.

But the advertisers are pushing news outlets not to be too explicit about distinguishing between genuine news items and ad hustles.

How? Money, of course.

In today’s web publications — from such newbies as BuzzFeed to the digital versions of mainstays like The New York Times — there’s a blurring of the line between the publications’ legitimate journalistic content and the faux “stories” that are provided by marketers and designed to look like real articles from non-biased news sources.

For readers and viewers, the questions are obvious: Whose stuff is this, and what can I trust?

The best ethical response by online publishers would be to draw a bright line around all “branded content.” Perhaps they could add some flashing neon lights and honking horns to announce: “This is an ad.”

But no.

While Internet publishers say they seek journalistic integrity, they’re hungrier still for advertisers’ dollars, so their game is to flash just enough integrity without losing the bucks.

That’s a losing game for integrity. Media analyst Bob Garfield notes that the effectiveness of native advertising depends on it being confused with editorial content.

Eliminate the confusion, and the ethical failure diminishes, he says. But “what will also diminish, to near vanishing point, is the readership of those adverts.”

Any media so dependent on corporate money that it resorts to deceiving its audience is — in a word — “dependent.” Also, untrustworthy.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

JIM HIGHTOWER

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

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zondag 12 januari 2014

De Participatie Samenleving 36

Washington's Millionaire Boyz Club

MICHAEL WINSHIP

De Participatie Samenleving 35

Now We Know: JPMorgan Chase Is Worse Than Enron

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De Participatie Samenleving 34

The $17 Trillion Delusion: The Absurdity of Cutting Social Security to Reduce the Debt

MARTY WOLFSON

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Native Advertising

Flashing Too Little Editorial Integrity

JIM HIGHTOWER

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