Republicans Continue War on EPA

I have to believe that the rank and file right-winger really has no idea of the benefits of having an effective Environmental Protection Agency.

These guys hunt, fish, breathe air, drink water and enjoy good health, right?

That’s why it is so frustrating to see them piling on the EPA at every opportunity:

Springtime for Toxics

Paul Krugman takes them to task for their war on the environment:

With everything else that has been going on in U.S. politics recently, the G.O.P.’s radical anti-environmental turn hasn’t gotten the attention it deserves. But something remarkable has happened on this front. Only a few years ago, it seemed possible to be both a Republican in good standing and a serious environmentalist; during the 2008 campaign John McCain warned of the dangers of global warming and proposed a cap-and-trade system for carbon emissions. Today, however, the party line is that we must not only avoid any new environmental regulations but roll back the protection we already have.

Krugman is speaking specifically about recently passed but long-overdue EPA regulations on mercury.

Republicans, who allegedly carry the fiscally conservative banner are showing their true colors on this one:

In fact, the benefits of reduced fine particle pollution account for most of the quantifiable gains from the new rules. The key word here is “quantifiable”: E.P.A.’s cost-benefit analysis only considers one benefit of mercury regulation, the reduced loss in future wages for children whose I.Q.’s are damaged by eating fish caught by freshwater anglers. There are without doubt many other benefits to cutting mercury emissions, but at this point the agency doesn’t know how to put a dollar figure on those benefits.

Even so, the payoff to the new rules is huge: up to $90 billion a year in benefits compared with around $10 billion a year of costs in the form of slightly higher electricity prices. This is, as David Roberts of Grist says, a very big deal.

And it’s a deal Republicans very much want to kill.

Unfortunately, the GOP pathological phobia of short-term costs explains a lot about the current state of the nation, from their shortsighted view of taxation and infrastructure investment, to their view of Wall Street regulation.

Along with Krugman, I celebrate the new rules and hope they are a harbinger for a move to hold industry accountable for the real harm they do — to health and the economy.

-Chris

Related articles

• What if Republicans Closed the E.P.A.? (dotearth.blogs.nytimes.com)
• E.P.A. Issues Rule Limiting Mercury Emissions (green.blogs.nytimes.com)
• How to tally up the benefits from EPA’s mercury rule. (washingtonpost.com)
• EPA requires limit on mercury emissions from power plants (cnn.com)

What Obama Should Run On In 2012

 

Robert Reich takes Obama at his word regarding his recent speech in Kansas:

Reich lays out a great plan to restore stability to the economy, fight the deficit and put people back to work:

An Offer to the President

Bullet points:

• Raise the tax rate on the rich to what it was before 1981
• Raise capital gains taxes to the same level
• Tax financial transactions
• “Use the bulk of this money to create good schools, give our kids access to a college education, and build a world-class infrastructure, so all our children have a chance to get ahead”
• Resurrect the Glass-Steagall Act, that used to separate commercial from investment banking
• Cap the size of Wall Street’s biggest banks and break up the biggest
• Require the big banks that got bailed out to modify the mortgages of millions of Americans now under water, who owe more than their homes are worth

Says Reich:

The top 1 percent has an almost unprecedented share of the nation’s wealth and income yet the lowest tax rate in 30 years. Meanwhile, America faces colossal budget deficits that have already meant devastating cuts in education, infrastructure, and the safety nets we depend on. The rich must pay their fair share. Income in excess of $1 million should be taxed at 70 percent – the same rate as before 1981.

I agree with Reich. If he even does half of these things, my support of Obama would change from hesitantly pulling the lever for the less of two evils to actually encouraging others to vote for him.

I’m less convinced than Reich that Obama is willing to take on any of these proposals and fight for them.

-Chris

Occupy Ports

The Occupy movement has recently moved into a new phase, and I have been watching to see what comes out of it.  

Although I have approved of many of the actions and goal of the movement I’m ambivalent about yesterday’s move to close down West Coast ports.

The OWS to this point has raised awareness and changed the debate in this country from “how much should we cut from poor people?” to “how much should we tax the rich”.  It’s a move in the right direction. Finally, someone with the courage to tell the emperor he has no clothes!

Yes, there are fringe elements of OWS that I truly despise (as there is with almost every truly grassroots protest movement).

But worse than the OWS fringe are the folks who oppose the movement by pretending not to understand why they are there or craft a strawman version of OWS that is an anti-capitalist movement bent on installing socialism in America.

I’m not familiar with that movement and would be no part of it.

That said, closing the ports may not be the best way to “put it to the man”.

Andrew Leonard at Salon.com apparently agrees:

The costs of a port shutdown

The problem however, with attempting to target the 1 percent with a port shutdown is that the 1 percent are the best situated to ride out any extended shutdown. There’s no way to avoid it. Shutting down “Wall Street on the Waterfront” would have some serious collateral damage. The immediate impact of any port stoppage would be felt by the workers who transport the goods from ports to their final destinations, the retail outlets where those goods are sold, the workers at those outlets, and of course, anyone involved directly in the export trade. California, a state that still sports an unemployment rate above 11 percent would be particularly devastated by a port shutdown that lasted any meaningful amount of time. Goldman Sachs would hardly notice.

Laura Conaway at the Maddow Blog also reports that the move has bought bad press:

Judging from the local paper in Portland, Oregon, I’d say the Occupy movement lost a PR round yesterday. The Oregonian reports that Occupiers made a “target” of a relatively small family-owned company when it jammed the Port of Portland. One trucker told the paper, “Everybody’s got their right to protest — I just won’t get paid if I can’t pick up the load. I’m just a guy trying to make a living.”

You could kind of see this coming. The local alt-weekly, the mighty Willamette Week, previewed the occupation with this from the Longshore and Warehouse local.

“If I wanted to shut down the port, I could do it without Occupy. I don’t need ’em,” says Jeff Smith, president of ILWU‘s Columbia River District Council. “This is a question for the Occupy movement: Why would I want to send my people home? Why would I take a job away from somebody?

“I don’t get what they’re thinking. It’s my job to put people to work. I’ve got jobs for ’em, so I’m going to put ’em to work. And I’m going to take some of Wall Street’s money.”

I understand the point of the attempted shutdown, but I think the Occupy movement should focus their energies on crafting policy proposals and occupation of foreclosed homes.

In order to gain wider acceptance, protesters need to concentrate on actions that help rebuild and stabilize the economy, and bring attention to and rail against the injustices that have been part of the system for far too long.

-Chris

Related articles

• Longview port shuts down after Occupy protest (seattletimes.nwsource.com)
• Occupy protesters block West Coast ports (latimes.com)
• Occupy aims to shut down West Coast ports – live coverage (guardian.co.uk)
• Occupy Portland protesters block work at three Port of Portland terminals (oregonlive.com)

Financial Transaction Tax

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There are a lot of very good reasons to institute a Financial Transaction Tax (FTT).

A small (0.05 to 0.1 percent for each transaction) FTT would generate billions in profit which could be used to make up the deficit in this country.

A few months ago former French foreign minister Philippe Douste-Blazy wrote an NYT opinion piece about the recent European Commission proposal of an FTT to help alleviate the crisis there:

To Ease the Crisis, Tax Financial Transactions

Douste-Blazy chairs Unitaid and is also a special adviser to the United Nations secretary general on innovative financing, so he has an interest in generating revenue to help poorer countries affected the economic downturn.

A similar tax has already been instituted in Britain. It brings in $6 billion annually — with no measurable effect on the market.

Not surprisingly, the main argument against the FTT is that it would inhibit “market efficiency”.

Science Fiction author David Brin says — so? Referring to Douste-Blazy’s op-ed, he makes an interesting point.

Read the article. But note that it does not mention the top reason for such a tax! That it might benefit real human investors by slowing finance and equity trading back down to the speed of human thought.

Would that necessarily be a good thing? The concocted rationalization you will hear, in opposition to this proposal, is called “market efficiency.” According to what’s become a bona fide cult, any process or innovation that allows ever-smaller increments of trade to happen ever-faster is “efficiency,” and that will automatically lead to better allocation of society’s capital, and thus a skyrocketing economy.

This is wrong in many ways, starting with the pure fact that the flourishing of fast-cybernetic trading has directly correlated with the steepest decline in the health of capital markets in a century. Indeed, the increase in market volatility that we have seen lately, with sudden spikes in apparently random directions, can be generally attributed to this trend.

According to Brin and Wall Street Analyst Peter Cohan, approximately 70 percent of the volume of trading done on the Stock Exchange is performed by “flash traders” — computers that buy and hold stocks for approximately 11 seconds before selling them again.

These trades, based on increasingly complex algorithms developed from studies of human psychology are often counterintuitive and increase market volatility.

It is becoming less and less clear why markets plunge and soar.

But that’s not the final and most terrifying argument Brin makes:

Take those high-speed trading systems we’ve been discussing. They are growing incredibly sophisticated, at a very rapid rate, absorbing and incorporating models of human psychology, with one goal in mind. To appraise and predict behavior patterns in order for the program to track and to pounce on opportunities for predatory trading. Competitive ferocity is the only criterion for success. Indeed, if you were to even propose inserting balancing factors like ethics or morality or accountability into such a project, you’d at-minimum be laughed down and probably fired.

Moreover, these systems are receiving billions in funding (including their own new transatlantic fiber cable) entirely in secret. There are no public agencies involved. No third party observers. No Congressional oversight committees. No supervision whatsoever. Laboratories developing new genetic strains of wheat are under closer accountability than cryptic Wall Street think tanks that may unleash the first fully autonomous AI… programmed deliberately to have only the behavior patterns, goals, attitudes and morality of parasites.

And so we see the ultimate reason to demand the Transaction Fee. At a low level – say 0.1% – it would never bother a private citizen who is optimizing his portfolio on E-Trade, especially if each trader gets a hundred or so “freebies” that come exempt from the tax. But it would remove the horrific incentives that Wall Street “geniuses” now feel compelled by, to invest in these monstrous, hyper-fast trading programs that swamp the market in a blizzard of uncountable mosquito bites.

The fee (which could also help balance our budget) can be tuned to give that human a fighting chance and to discourage the very worst kind of artificial intelligence from leaping upon our necks out of the dark.

Defeat Skynet. Institute the FTT!

-Chris

Related articles

• Time for a financial transactions tax (cbsnews.com)
• Bill Nighy: Robin Hood Tax Can Still be Agreed at the G20 (huffingtonpost.co.uk)

Again, The CRA Did NOT Cause the Crash!

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Via The Dish:

Barry Ritholtz posts the compelling argument that if the Community Reinvestment Act (CRA) was a prime factor in the subprime mortgage crisis, why did the majority of defaults happen in areas not usually served by CRA loans?

Examining the big lie: How the facts of the economic crisis stack up

For example, if the CRA was to blame, the housing boom would have been in CRA regions; it would have made places such as Harlem and South Philly and Compton and inner Washington the primary locales of the run up and collapse. Further, the default rates in these areas should have been worse than other regions…What occurred was the exact opposite: The suburbs boomed and busted and went into foreclosure in much greater numbers than inner cities. The tiny suburbs and exurbs of South Florida and California and Las Vegas and Arizona were the big boomtowns, not the low-income regions. The redlined areas the CRA address missed much of the boom; places that busted had nothing to do with the CRA.

Michael Bloomberg recently revived this big lie by pinning the blame on Fannie and Freddie to draw attention away from his masters on Wall Street.

But the meme that the big bad government forcing innocent huge banks to loan to poor minorities was the central cause of the collapse is completely unsupported by the facts.

It’s a lie.

-Chris

Related articles

• Bloomberg: Don’t Blame Banks for Mortgage Crisis (outsidethebeltway.com)
• What Caused the Crash? (andrewsullivan.thedailybeast.com)

Bonuses for What?

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Time has an article in posted on January 22, 2011 by Zachary Karabell titled The Big Bad Bankers, and Their Bonuses, Are Back.

The money quote:

“There was a period of remorse and apology for banks. I think that period needs to be over.”

This is from Barclay’s head Bob Diamond. He is expected to take home a $13 million bonus this year. Because he deserves it.

His shareholders have received meager dividends (if any) since 2008.

Goldman Sachs employees won’t go hungry either. The bank’s fourth-quarter earnings may have been hurt by weak trading results, but it is still hugely profitable. Like many other Wall Street firms, Goldman responded to public outrage over its billions in profits by adopting a lower profile when it comes to bonuses, instructing its executives to take more of their pay in deferred stock grants rather than cash and conducting internal reviews (the result of one such 63-page tome can be abbreviated to “We didn’t really do anything wrong”).

This is the kind of thing I reflect on when I get the talking point from the right that most rich people worked hard and deserve the amount of money they make.

Most is incorrect.

The blatant examples of compensation with no accountability and no ties to actual performance are the rule, rather than rare aberrations.

They are making money by holding tightly on to their capital and lending almost nothing to anyone. They deserve multi-million dollar bonuses for that?

Huge banks have their fingers in every aspect of our diverse economy. Unfortunately, their failure would inevitably lead to economic collapse. They are, indeed, too big to fail.

Three firms alone — Bank of America, JPMorgan Chase and Citibank — now control as much as 30% of all deposits in the U.S.

But the arrogance and swaggering irresponsibility exhibited by these asshats makes me wonder if letting the big bankers fail might not be a blessing — a clearing of the slate to rebuild on a stronger, better-regulated foundation.

It’s apparent these giants of finance haven’t learned a damn thing, so it’s likely we’ll get a chance to test this out.

I agree with Karabell’s proposed solutions to this mess:

The bottom line is that the financial reforms of the past year need to be revisited. One solution would be to break up large banks into discrete parts, creating a new Wall Street of boutique banks without as many conflicts of interest. If we aren’t prepared to do that (and there’s a good chance we aren’t, given the likely cuts in pay and staff that would impede regulators and other public-sector workers), we need to create incentives and mandates to lend. Period. It would have been easy to make those part of the bailouts of 2008 and 2009; now it will require carrots like allowing banks more latitude in accounting for bad loans. That will be seen as extending another hand to already flush banks. Unfortunately, it may be a price we need to pay.

-Chris

Related Articles

• Barclays boss Bob Diamond to overhaul bonuses (dailymail.co.uk)

Mortgage Foreclosures Explained

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Paul Krugman does another bang up job explaining a complicated issue in yesterday’s New York Times.

This time it’s the mortgage foreclosure mess:

The Mortgage Morass

Seems that many on the right think that the lack of documentation for foreclosures (much of which was lost in the relay of mortgages from banker to banker) is no big deal and we should take it on faith that when the banks say someone has defaulted on the provisions of their loan, we should believe them.

We shouldn’t. Krugman explains:

This is very, very bad. For one thing, it’s a near certainty that significant numbers of borrowers are being defrauded — charged fees they don’t actually owe, declared in default when, by the terms of their loan agreements, they aren’t.

Krugman properly nails the Obama Administration for its obeisance to Wall Street:

True to form, the Obama administration’s response has been to oppose any action that might upset the banks, like a temporary moratorium on foreclosures while some of the issues are resolved. Instead, it is asking the banks, very nicely, to behave better and clean up their act. I mean, that’s worked so well in the past, right?

As mentioned in the piece, there are some good ideas on how to deal with this mess:

…the Center for American Progress has proposed giving mortgage counselors and other public entities the power to modify troubled loans directly, with their judgment standing unless appealed by the mortgage servicer. This would do a lot to clarify matters and help extract us from the morass.

Of course, this will happen over the screeching undead bodies of the greedy bankers who caused this mess in the first place.

So it won’t happen.

It may be naive thinking on my part, but wouldn’t it be better to have someone in their home, paying a mortgage than to foreclose and try to get only a fraction of the value back in this terrible market?

Anyway, this is yet another datapoint indicating the claims that Obama is the first American Socialist President — Not so much.

-Chris

Related Articles

• Why We Need Government Regulation To Protect Americans (alan.com)
• Editorial: The Foreclosure Crises (nytimes.com)

The Wealthy Cry

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Yesterday’s Paul Krugman piece in the New York Times references an amazing article that was published in New York Magazine last year.
“The Wail of the 1%” details the beginning of the prolonged tantrum being thrown by the parasites on Wall Street over having part of their bonuses taken away. This, in light of the taxpayers bailing them out to the tune of billions of dollars. 

These are not people who are about to be homeless, or facing medical bills they cannot pay. They do, however, possess a hubristic sense of entitlement — and are ready to go to war for their “principles.” 

A typical expression of outrage from the Wall Street set? 

“No offense to Middle America, but if someone went to Columbia or Wharton, [even if] their company is a fumbling, mismanaged bank, why should they all of a sudden be paid the same as the guy down the block who delivers restaurant supplies for Sysco out of a huge, shiny truck?” e-mails an irate Citigroup executive to a colleague. 

The condescension toward working Americans is choice. Read the article. It’s incredible. 

They felt picked on and embarrassed at the looks they got when wearing their expensive suits in public. 

They were outraged and betrayed that the former Wall Street executives in Obama Administration didn’t go to bat for them.

Boo-fricken-hoo. 

Another passage that illustrates the mindset: 

The argument that Obama has in fact done a great deal to help Wall Street—to the tune of trillions of dollars—doesn’t have much truck with these critics. “If you really take a look at what Obama is promising, it’s frightening,” says Nicholas Cacciola, a 44-year-old executive at a financial-services firm. “He’s punishing you for doing better. He doesn’t want to have any wealth creation—it’s wealth distribution. Why are you being punished for making a lot of money?” As a Republican corporate lawyer puts it: “It’s the politics of envy, and that’s very dangerous.” 

Great argument. Wealth creation. So, if you follow that logic, since these giants of moving paper around in shadowy markets made inordinate amounts of cash, we should all be doing great, right? After giving the bankers billions of taxpayer dollars, the level of gratitude is amazing.
Now, Krugman writes, this chutzpah has spread outside of Wall Street: 

For one thing, craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.
At the same time, self-pity among the privileged has become acceptable, even fashionable. 

The popular sentiment is that “it’s my money, and I have the right to keep it”. Oh, and they deny they are rich, despite annual salaries of $400,000 to $500,000.
There’s no sense that taxes are the price to pay for all the infrastructure and stability that allows them to ply their trade.
So, when you hear their fevered complaints of class warfare, remember that they are on the ones bringing it. To keep things in perspective, ponder this: The whiners are winning. 

Update: Robert Reich has a post from yesterday about framing this debate: “The Defining Issue: Who Should Get the Tax Cut – The Rich or Everyone Else?”

It’s a winning issue for Democrats, and it makes good economic sense:

The rich spend a far smaller portion of their money than anyone else because, hey, they’re rich. That means continuing the Bush tax cut for them wouldn’t stimulate much demand or create many jobs.

The rest is well worth reading.

-Chris 

Related Articles

• Op-Ed Columnist: The Angry Rich (nytimes.com)

Warren To Help Create Post She Won’t Get

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The Huffington Post is reporting that Elizabeth Warren will be tapped by the White House to head up the creation of the Consumer Financial Protection Bureau.

This is bad news, judging by the vehement opposition to her being anywhere near the proposed oversight of Wall Street Shenanigans.

It means that they are trying to appease the liberal base while keeping her out of the running to actually head the newly formed body.

Update: Okay, maybe I was reflexively cynical about this initially. It’s possible that Obama is just trying to avoid a fight with the Republicans and will eventually install her as the permanent director. We’ll see.

-Chris

Related Articles

• They Must Really Not Want Her (talkingpointsmemo.com)
• Elizabeth Warren: Rumors indicate an interim appointment to CFPB Director slot (crooksandliars.com)