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Representative Jesse Jackson Jr. (D-IL) is joined by, left to right, Ralph Nader, Representative Dennis Kucinich (D-OH) and Representative John Conyers (D-MI) at a press conference outside the US Capitol on June 6, 2012, to call for an increase in the minimum wage. Photo by George Zornick.
If today’s minimum wage workers earned the same as their counterparts in 1968, they would receive $10.58 per hour. That, unfortunately, is $3.33 more than the current federal minimum wage.
This would be a serious problem at any time, but it’s particularly relevant now, as the awful economy has forced millions of workers into minimum-wage jobs. (And they’re the lucky ones).
To that end, Representative Jesse Jackson Jr. has introduced the “Catching Up To 1968 Act of 2012.” Within sixty days of being enacted, it would raise the federal minimum wage to $10 per hour, and beginning one year after that, would index it to the Consumer Price Index. For workers that rely on tips, the bill would mandate the cash wage to be 70 percent of the minimum wage and never less than $5.50 per hour.
“We’ve bailed out banks, we’ve bailed out corporations, we’ve bailed out Wall Street, we’ve tried to create sound fundamentals in the economy—now it’s time to bail out working people who work hard every day and they still only make $7.25,” Jackson said this morning at a news conference outside the US Capitol. “The only way to do that is to raise the minimum wage.”
Ralph Nader and Representatives Dennis Kucinich and John Conyers also attended the news conference—a roster of liberal stars if there ever was one. But it’s important to note that raising the minimum wage has often found bipartisan support. Rick Santorum, for example, wrote legislation to increase it, and until recently even Mitt Romney supported tying it to the CPI.
And with 30 million workers receiving minimum wage, it should certainly be a viable political issue. “These are not just liberal workers or progressive workers or conservative workers or libertarian workers,” said Nader. “This is a unifying issue in our country at a time when there are few declared unifying political issues.
“What is missing is a unified drive by elected members of Congress to provide the requisite courage to challenge the merciless oligarchy, which includes the big-box stores like Walmart and McDonalds, and compel them to adjust their pay.”
Kucinich added that it was a tough sell inside the Beltway, but an easy sell outside of it. “We live in a bubble here in Washington, DC. This place is dripping with wealth. Wealth is just cascading into the capital to buy elections,” he said. “But when you get outside Washington, DC, and you get to the cities and the townships and the villages of America, there are people struggling to survive. There are people who can’t make it on $7.25 an hour if they even have a job.”
The federal minimum wage increased in 2007, from $5.15 an hour. There hasn’t been any evidence that it caused businesses to hire less workers, and in fact research has shown that an increase in the minimum wage doesn’t create an increase in unemployment.
The seminal academic work on that topic was done by Alan Krueger, who is now chairman of the White House Council of Economic Advisers. But alas, despite a campaign pledge to raise the minimum wage to $9.50 by the end of 2011, President Obama has been silent and inactive on the issue.
But it’s a great way for the administration to essentially issue a stimulus package without calling it that. People earning $7.25 per hour—that is, $15,080 per year—are already living on the brink of poverty and are extremely unlikely to save the extra $2.75 per hour, but will instead spend it. Raising the minimum wage will pump badly needed spending power into a struggling economy, which would more than offset any corresponding decline in hiring.
Economist Dean Baker recently told the Huffington Post that it was a no-brainer, politically and economically. “I’m hard-pressed to see why we shouldn’t have the same [minimum] wage we did in the late ‘60s” when adjusted for inflation, he said. “This isn’t welfare. By definition, we’re talking about people who are working. It gets a lot of sympathy from the public, and guess what? It's good for the economy right now.”
The investigation into widespread fraud on Wall Street leading up to the financial crisis will now have a proseucting attorney to help the effort. Virginia Chavez Romano,a former assistant US attorney in New York, was hired by Eric Schneiderman, the New York attorney general and co-chair of the task force. She is not an official hire of the working group, but rather will assist Schneiderman in his efforts as co-chair.
Romano participated in the criminal indictments of Credit Suisse employees earlier this year for falsifying prices tied to collateralized debt obligations. This is just the sort of fraud the working group wants to go after, though you can look at Romano’s case history in two different ways.
While it’s terrific to go after mispricing CDOs—this is really at the heart of the crisis—Credit Suisse itself was not charged in that case, but rather relatively lower-level employees were indicted. If the working group is now interested in actually going after institutions for this behavior and Romano can help, great. If we’re just going to see indictments of folks on the trading desk, that’s generally not the sort of prosecutions that force systemic change on Wall Street.
But Romano’s hiring is no doubt another step forward, and it shouldn’t go unnoted that she has experience prosecuting criminal cases of financial fraud. The addition of Romano comes after Matthew Stegman was hired as coordinator in May and also on the heels of an all–working group meeting in Washington late last week.
That meeting drew over 250 agents, analysts and investigators from several states and law enforcement agencies to the Securities and Exchange Commission headquarters.
I spoke with Acting Associate Attorney General Tony West during the meetings, and he said there is definitely forward momentum. “We’ve been discussing a number of cases that are ongoing, a number of investigations that have been going on for some time, as well as new targets, new areas of opportunity, new legal theories that we want to bring to bear to certain specific factual scenarios, specific targets—and it’s proving to be quite a productive meeting,” he said.
I asked West if criminal prosecutions were being discussed at the meetings, and he said they are “very much a part of this working group” and added that “we will not be deterred from pursuing wrongoing by individuals or insitutions.” But he also sounded cautious notes about the difficulty of actually winning.
“I sometimes wish that we could do what you see on TV in terms of these courtroom dramas and just say ‘something is wrong’ and then get a conviction,” West said. “If you’re talking about these cases, you’re talking about fraud that you have to prove in a criminal case beyond a reasonable doubt, you have to prove criminal intent—that someone intended to mislead someone, you have to prove there was a misrepresentation, a lie, that someone lied and that lie mattered, it was material, and they intended to deceive whoever it was they were deceiving.
“That can be quite tricky in these cases where so much of what went on was siloed so that people were necessarily separated and the process was broken up, but that’s not deterring us from looking for criminal violations of the law, looking for fraud,” West said. “But wherever we find it, whether it’s criminal or civil, we’re going to pursue it.”
Meanwhile, the Department of Justice is on the defensive about its record of prosecuting financial fraud, which no doubt raises the stakes for the RMBS group. The heat is coming from an unlikely source this time: Republican Senator Chuck Grassley.
In March, Grassley criticized DOJ officials in a hearing for the department’s “terrible” record of prosecuting high-ranking Wall Street officials and institutions. DOJ later responded that it had brought “thousands of mortgage fraud cases over the past three years, and secured numerous convictions against CEOs, CFOs, board members, presidents and other executives of Wall Street firms and banks for financial crimes.”
This is news to pretty much everyone, so Grassley demanded a list. He just received that list today—past the deadline he gave, as JD Supra notes—and while it was extensive, it didn’t break down any specific cases of mortgage fraud, because DOJ said it “does not maintain [such] statistical data.”
Absent from the list, in any case, was any high-profile prosecution of Wall Street mortgage fraud that led to the financial crisis, because it doesn’t exist. Grassley said the response “substantiates my suspicion” that it “isn’t going after the big banks, big financial institutions or their executives.” The RMBS working group certainly has the power to change that, and despite some clearly positive developments, it still remains to be seen when—or if—it will.
This story has been updated to reflect the fact Romano is not an official working group hire per se, but will help Schneiderman as a co-chair.
Occupy Our Homes engaged in a dramatic faceoff this morning with US Marshals and local police in northeast Washington D.C., less than a mile from the US Capitol building. About thirty Occupiers arrived at the home of Dawn Butler around 8 am, in the 900 block of Maryland Ave NE, to block a looming eviction—and what followed left one Occupier and one US Marshal in the hospital.
Butler doesn’t own the home, but has rented it since 2006. Her landlord fell behind on her mortgage payments while sick with cancer, and the property was foreclosed on—but D.C. law says tenants have the first right of purchase on a home where the landlord loses the title. Butler claims she has repeatedly tried to buy the home but has been repeatedly ignored or thwarted by JP Morgan Chase and a local foreclosure firm.
An eviction notice came last night, and this morning the protesters showed up to help. They constructed a barrier of plastic milk crates at the front door of the property, barred the front gates and sat down in protest along the front steps.
Heavily armed US Marshals, however, made quick work of the protester’s blockade. They forcibly removed both men and women, often picking them up by the head or neck. One Occupier suffered what appeared to be a serious concussion and was unconscious on the ground for several minutes and later taken to Howard University Hospital in an ambulance.
Once the steps were cleared, the Marshals ripped down the milk crates and the front door of the house along with it, while simultaneously battling the protesters. Here’s some brief video I shot from the sidewalk and adjoining front lawn:
One Marshal, shown briefly in the video, had a bloodied face from the falling crates and door debris. One protester was briefly handcuffed and then released.
After the fracas, movers, guarded by Marshals, emptied the contents of the house onto the curb, where it was later picked up by a moving truck and held for Butler. There’s no word yet as to Butler’s legal situation—she was in court this morning as the protest was going on, while her mother stood watch over the confrontation.
Today’s awful jobs report reveals that only 69,000 jobs were added in May—and revised the March and April jobs reports downwards by 49,000 jobs, meaning there was a net increase of only 20,000 jobs.
While it’s not always wise to make a big deal out of a single jobs report, there’s a clear downward trend (spiral?) happening here. December, January and February saw the addition of over 200,000 jobs. Then March dipped to 120,000 and April saw 115,000 (pre-revision), and now we’ve sunk down even further—69,000 new jobs doesn’t even keep pace with population growth. Whatever sluggish recovery may have been underway seems to have stalled out.
Like every other recent jobs report, we saw the public sector shedding jobs—13,000 last month. The only real growth was in service-sector jobs; everywhere else was flat or fell. Construction lost 28,000 jobs, accounting services lost 13,000, and the leisure and hospitality sector lost 9,000. There were 95,000 new jobs for women and 26,000 fewer jobs for men.
As you’ll inevitably hear all day, this is terrible news for Barack Obama and good news for Mitt Romney. But the real political story here is how terribly Washington is responding to this jobs crisis, to the extent it is at all.
Firstly, the Federal Reserve Board of Governors is charged with macroeconomic stabilization, with a specific mandate to fix unemployment. It has done next to nothing in recent months, though the addition of two governors after a Senate stalemate was broken might, maybe make things move faster.
Next, the government could and should take advantage of ridiculously low lending rates to borrow money and goose the economy through infrastructure spending, direct hiring of workers, aid to state governments, and so on. But austerity-driven Republicans and timid Democrats make this unforeseeable, as Felix Salmon describes:
The 2012 election should be a referendum between two visions of America. On the left, Obama should say that we’re in a jobs crisis, and that he’s going to do everything in his power to get people back to work—by employing them directly, if need be. On the right, Romney can say that job creation should be left to US companies, despite the fact that those companies are signally failing to increase their payrolls despite their record-high profits. And then the public can choose which side they want to vote for.
Sadly, the lines won’t be drawn nearly that cleanly: Obama is bizarrely reluctant to talk about anything which rhymes with “stimulus”. As a result, the current dysfunction—and horribly weak jobs market—is likely to persist for far too long.
Finally, if the government isn’t going to help the unemployed, it should at least resist screwing them even harder. But alas, because of a deal Congress reached in February, by the end of June, unemployed workers in twenty-four states will no longer be eligible for benefits under the Emergency Unemployment Compensation program. By the end of August, the federal-state Extended Benefits program will expire in thirty-five states, which will effectively end benefits for over 500,000 workers.
In short, it’s as clear as ever that not only does the United States have a jobs crisis on its hands but a dismal political crisis as well.
For another take on the jobs report, read Bryce Covert's Jobs Report Shows How Romneynomics Would Hurt the Recovery.
Last week, New York attorney general Eric Schneiderman took his plea for more resources for the Residential Mortgage-Backed Securities working group to the Wall Street Journal. “Do I want more resources, and want things to go faster? Yes, Am I asking for more? Yes. Do I believe we’ll get that? Yes.”
This is a request Schneiderman has made frequently in recent weeks—he said the same thing to the Congressional Progressive Caucus in late April. Over at the New York Times, Peter Henning sees this as an ominous sign. “His statement is hardly a ringing endorsement of the working group’s effort because it is a common refrain to blame a lack of resources for the absence of any real progress on cases,” Henning writes.
I’m not really convinced that Schneiderman is already priming the pump for defeat—it seems just as plausible he’s trying to spark some action, publically and inside Washington, to give the task force the juice it needs. (Though Henning does make some valid points elsewhere that what the RMBS working group has done points away from any criminal prosecutions and towards civil settlements).
But what resources, exactly, might Schneiderman be able to count on? What should progressives invested in the outcome push for?
The Department of Justice asked for a $55 million funding increase for “investigating and prosecuting financial and mortgage fraud” in its Fiscal Year 2013 budget request. We noted last month that the House did not include this money in the appropriations bill it passed.
Prospects are brighter in the Senate, however. In April, the Senate Appropriations Committee passed out a bill funding Commerce, Justice and Science that did include the $55 million increase. It passed by a 27–2 vote. The committee’s report details what this would be used for:
The Committee strongly supports the Department’s efforts to go after the schemers and scammers who prey on hardworking American families, and destabilize our neighborhoods and financial markets. The recommendation provides the requested increase of $70,680,000, for a total of $747,352,000, to combat economic fraud and white collar crime. Within this amount, the Committee provides the requested increase of $55,000,000 and 328 new positions, including 40 new Federal Bureau of Investigation [FBI] agents, 184 new attorneys, 49 new in-house investigators, 31 new forensic accountants, 16 new paralegals and 8 new support staff. These funds and positions will be disbursed among the FBI, the U.S. Attorneys [USAs], and the Department’s legal divisions to investigate and prosecute the most complex financial fraud, such as securities and commodities fraud and investment scams, and mortgage foreclosure schemes.
The bill now goes to the full Senate for a vote, and it seems unlikely to me that money is stripped out—someone would have to propose and pass an amendment. But since the House version doesn’t include the money, the conference committee would have final say, and it’s anyone’s guess whether the funding survives. It’s also possible the whole process blows up (again) and Congress does nothing but pass continuing resolutions that just carry over the 2012 funding into 2013—meaning no $55 million increase.
However, even if it passes, there are a couple caveats. For one, the money isn’t specifically earmarked to the RMBS working group. But the timeline is the real catch here. Schneiderman has repeatedly said he wants to have some major action over the next several months, before the end of the summer. This is important because statutes of limitations are expiring every day.
And the political moment has an expiration date too—the midst of an election is a good time to push for more aggressive Wall Street accountability. We’ve noted that polling shows significant risk for President Obama if people think he’s soft on Wall Street; even independents in purple states think that’s already the case and don’t like it. During the campaign season the White House can effectively be pressured to help the investigation along and give it what it needs. That calculus may change after the election—and if Romney wins, forget about it.
The Congressional appropriations process is simply too slow to deliver resources now, when it counts. I wouldn’t expect any bills to be passed and signed before mid-to-late summer anyhow, if it even happens, and then you have the grindingly slow process for hiring in the federal bureaucracy. It’s hard to see the $55 million making a real impact on the working group before the end of the calendar year.
It’s not that the funding doesn’t matter—it does, and if the working group brings some cases this year, it will definitely need the extra resources for trials down the road.
But with Schneiderman repeatedly saying he needs more resources, and with any cavalry from Congress sure to ride in late, the administration must dedicate or redirect existing resources to fully support the working group. That’s the only way to support the RMBS during the crucially important weeks and months to come.
Late last week, I spoke with Representative Dennis Kucinich, D-OH, about the recently passed National Defense Authorization Act, specifically the provisions on Iran, and more broadly about the politics that repeatedly allow the country to seek war even after recent exercises proved to be disastrous. This conversation is edited slightly for length and clarity.
GZ: I’d like to talk a little bit about the NDAA, which passed recently. You said on the House floor that it made a war with Iran basically a US policy.
DK: The language of the NDAA is a prescription for war. Now, John Conyers was able to get an amendment accepted that says “this is not an authorization of war.” But what the bill does almost makes the Conyers amendment moot. It puts in place all of the preparations for war. It sets in place ships in the Persian Gulf, planes in the region with munitions, plans to target Iran. And so you can say “well, it’s not authorized.” But lacking an authorization for war hasn’t stopped this particular president from being able to elect intervention or aggression. And so the language in the NDAA opened the door for aggression against Iran by permitting very specific preparations for an attack.
There’s a double game going on here. One is, you talk about the need for diplomacy. And talks can sometimes be nebulous. But there’s nothing nebulous about aircraft carriers, about jet fighters, about powerful munitions that are being put in place to stage an attack. You don’t do that just for an exercise. That, in and of itself, can be seen as an act of aggression. That’s a threat to attack. Under the UN Charter you can’t even threaten another nation with an attack. And the UN charter has essentially been swept aside, where threats have become a matter of style now.
[This bill] is self-defeating. They help to bring about that which they pretend to fear. We need a coherent national defense which relies on diplomacy and not aggression. We aren’t there right now. We need to stop putting the gun on the table and telling people “let’s talk,” because no nation with any self-respect would negotiate under those terms.
House Resolution 568 [“Expressing the sense of the House of Representatives regarding the importance of preventing the Government of Iran from acquiring a nuclear weapons capability”] also has some people concerned. Why?
It presupposes that Iran has a nuclear weapons program, which it does not. And it thwarts any efforts at diplomacy.
It seems like “capability” is vaguely defined there, so it could impede some of the talks that are going on in Baghdad.
Capability could mean any country which produces nuclear power. You could start to bring in Japan, Brazil, other countries. What are we doing here? We’re setting a new standard for the level of nuclear weapons which says that if you have a program to develop nuclear power, ipso facto, it is a nuclear weapons program in the making. It’s just not so. But beyond all that, the question that is continually begged is why isn’t America leading the way toward total abolition of nuclear weapons. Then the effort of the world community would be not to pick winners and losers but to help all of humanity win by eliminating the weapons that we fear one country having and yet are comfortable with others having it.
This hard-line approach seems to only be getting more intense. Where is this heading?
It’s a very dangerous time. We forget that 100 million people died in conflicts in the twentieth century, most of them innocent civilian non-combatants. In his novel The Fall of Giants, Ken Follett brilliantly depicts how countries just slip into war. We’re sliding towards a very big war. We think it can’t happen. But we need to suspend our disbelief and come into resonance with the reality that when you prepare for war, you get war.
When you think about it, why would a nation with the unparalleled, uncontestable, unchallengeable military power that the United States has—why would we have to threaten anyone? When you have real power you don’t threaten. People know what your capabilities are. At this point I think we’ve done it all wrong, and we have to keep working for peace. I don’t want to predict there will be a war. But we need to stop acting as though we’re getting ready for war and we need to start communicating that we’re preparing for peace.
And what might be a good way to change this? It’s not clear because we’re operating now under a president who ran on an ostensibly peaceful platform, certainly compared to his opponent, and we’re winding down conflicts. While some may obviously disagree, there isn’t really any existential threat to the country right now—yet all this continues. How do you foresee changing minds?
We need to go back to 9/10/2001, before our transit into a world of endless fear. As part of our journey we need to have a very open, honest discussion in the context of a national effort at truth and reconciliation. Because we have proceeded to so distort the meaning in this country as to our choices to defend America, which impacts international policy and domestic policy. A slaughter of innocents abroad, a diminishing of civil rights at home—we need to go back to truth telling in America to talk about what were the precedents of 9/11, how can we recreate America without fear. And the only way we can do that is to really understand what happened, why it happened, the effect that it’s had on the country, the wrong choices that have been made, who’s responsible for those choices, calling them forward to get them to admit that they made a mistake, having those who cashed in on it held accountable—we really need to do that. We will not ever get out of this never-ending war against terror unless we start to tell the truth. Until we do that, whoever’s in the White House may not matter that much.
Does it strike you as strange that while there seems to be a near-universal agreement amont the public that the Iraq War was a misadventure and a mistake, that so quickly we’re back making these threats and preparations after seeing, knowing, what kind of tragedy lies ahead?
It can be unanimously agreed upon that it was a misadventure and a mistake. But the only ones that have really paid a price for it are the innocent people, perhaps a million innocent people in Iraq, who lost their lives. Millions more whose lives were damaged possibly beyond repair, a nation which was basically laid ruined, and American soldiers by the thousands who lost their lives or received permanent injuries—and their families. But let me tell you who didn’t pay the price. George Bush, Dick Cheney, Donald Rumsfeld, Paul Wolfowitz, the neocons—Richard Perle. All of these hawks who had a plan to go after Iraq after 9/11 even though Iraq didn’t have anything to do with 9/11. They never paid a price. The politicians who went out front and supported the war, Democrats and Republicans alike, who burnished their images by being hawks. And then when the entire adventure disintegrated into a fiasco, are still ought after for their sage advice on world affairs. The New York Times and Washington Post, who helped beat the drum for war, they really haven’t paid a price. So actually war is politically profitable, financially profitable, morally depraved.
And we have a culture which is so sated with violence that we will accept war on the installment plan in our own communities. And we buy it as official policy writ large in attacking nations that have no quarrel with us. So this is a cultural problem. It is a problem of our times. And at the root of it is fear. It’s irrational, mindless, fear that paradoxically has nothing to do with who we are as Americans, because the American people by and large are not fearful people. But the fear has been used to cause the American people to support a continuation of wars and military spending that is absolutely adverse to the practical aspirations of everyone in this country with the exception of the people who make money off of it.
We tried war, we tried aggression, we tried intervention. None of it works. Why don’t we try peace, as a science of human relations, not as some vague notion—as everyday work. As diplomacy, as respect, as understanding the essential interconnectedness of all people, that we’re really one. This dichotomous thinking that causes us to think of people as others instead of aspects of undivided human unity is what causes our dilemma.
It was an incredibly warm winter in the nation’s capital—March was the warmest on record, capping five straight months of above-average temperatures. And I’m looking at a forecast now calling for a high of ninety-five degrees on Saturday, even before June hits.
Yet policymakers here are reluctant (let’s phrase it generously) to take serious action to combat the underlying problem of climate change. There have been some positive steps—like the EPA’s proposal to limit carbon pollution from new power plants and the delay and possible termination of the Keystone XL pipline—but many frustrating failures as well. It’s been years since any serious effort was made at climate change legislation. I can’t remember the last time Obama spoke about it, and his campaign is not promising much of anything in that regard. In fact, this morning’s New York Times describes in detail how Obama is eager to expand oil drilling off the coast of Alaska.
Perhaps if policymakers were more keenly attuned to the negative externalities of climate change—the bad effects beyond just breaking out your shorts a little earlier than usual—more serious action might be possible. Bill McKibben, in an excellent article for The Nation earlier this year, noted that rising temperatures will have devastating effects on plants, soil and the agricultural industry; dried-out forests mean more massive wildfires; mild winters lead to more disease-spreading ticks.
But there’s a human cost as well: more than many realize, the human body is extremely sensitive to heat, and higher temperatures mean many more deaths across the country. A new report from the National Resources Defense Council estimates that by the end of the century, 150,000 additional Americans will die from excessive heat caused by climate change if the problem isn’t arrested.
Assuming that by the year 2100 carbon pollution doubles, which it’s projected to do absent any policy changes, the report looks at how many Extreme Heat Events there would be in American cities. EHEs are when a location’s temperature, dew point, cloud cover, wind speed and surface atmospheric pressure combine to create unhealthy conditions for human beings, particularly the young, elderly and infirm. The report is based on two peer-reviewed studies in meteorological journals.
Louisville, Kentucky, is projected to be the worst hit, with 19,000 excess deaths projected by the end of the century. Detroit and Cleveland are the next on the list, with 17,900 and 16,600 excess deaths respectively.
The toll in other cities:
Baltimore: 2,900 deaths
Boston: 5,700 deaths
Chicago: 6,400 deaths
Columbus: 6,000 deaths
Denver: 3,500 deaths
Los Angeles: 1,200 deaths
Minneapolis: 7,500 deaths
New York: 1,127 deaths
Philadelphia: 700 deaths
Pittsburgh: 1,200 deaths
Providence, RI: 2,000 deaths
St. Louis: 5,600 deaths
Washington, D.C.: 3,000 deaths
A complete list is here. It’s a sobering wake-up call to the suffering that awaits if carbon pollution isn’t slowed down.
Without much fanfare, the Residential Mortgage-Backed Securities working group leaked the name of its “lead coordinator” to Politico this week—Matthew Stegman, an assistant US Attorney in California, will serve as essentially an executive director and coordinate the disparate parts of the multi-agency, multi-state investigation.
The coordinator job has been of high concern to many progressive activists; they see it as crucial for keeping a complex investigation focused and smoothing out conflicts between different agencies. There was an early push for Representative Brad Miller to fill that role, and he was interviewed but not selected—because, he believes, the RMBS working group was afraid of industry blowback.
So what to make of Stegman? Some progressive groups were pleased. “Matthew Stegman is a career prosecutor who has put white-collar criminals behind bars,” said Nish Suvarnakar, Campaign Manager for the Campaign for a Fair Settlement. “That’s encouraging, but Americans won't be satisfied until the Wall Street bankers who initiated the foreclosure crisis are convicted for their crimes.”
Indeed, Stegman was already a member of a California-based mortgage fraud task force—though I’m not as certain his accomplishments there are necessarily exciting. I turned up a number of cases put forward by Stegman since being on the task force, but they are for fairly low-level fraud: for example, people who offered homeowners refinance loans that didn’t exist, and then forging the paperwork. There were not any prosecutions of major California financiers or banks, but rather investigations of mostly two-bit hucksters.
Many progressives are concerned that the task force, if it does anything, will only indict low-level financial fraud and fail to get at the root of the stuff that “blew up the economy,” in the words of Schneiderman earlier this year. I’m not sure Stegman’s appointment would assuage those concerns as someone like Miller would. That said, Stegman isn’t doing the actual investigating—that’s left to the task force members and their offices—and will simply guide the process. It’s good that (after almost five months) somebody is serving in that capacity.
But the Politico story had another troubling nugget:
A government source working on housing issues said the unit is struggling in part because of a lack of commitment from the White House since its roll out in the State of the Union, citing a leadership vacuum since DOJ Associate Attorney General Thomas Perrelli left the Obama administration in February.
“It’s not happening at the level that it should be happening,” the source said. “There’s no person with juice at the federal level that is banging heads and making sure things are happening the way they should.”
Task force members pushed back on that notion in the story, but it’s certainly cause for concern. If the RMBS working group is serious about going after major financial institutions—and bringing cases with penalties that would amount to almost the market capitalization for some banks—it’s going to need all the White House support it can get.
Proponents of the Keystone XL pipeline have two central arguments: that the project will create jobs and lower gas prices. That would make it a wonderful undertaking—if either claim were true.
On the jobs front, the Cornell Global Labor Institute estimates the project would create only 2,500 to 4,650 short-term construction jobs—not the “hundreds of thousands” of jobs claimed by House Speaker John Boehner.
And as we’ve noted, Keystone XL will ultimately raise gasoline prices in the United States. While Boehner has said, “We want lower gas prices for the American people” by completing the project, that simply isn’t the case.
Here’s a more detailed explanation of why that won’t be, courtesy of a new, in-depth report from the National Resources Defense Council.
If you’ve filled up a car in a foreign country, you probably noticed that it used diesel. The United States is one of the few countries to use primarily gasoline—it provides two-thirds of the fuel for our ground transportation network. Conversely, on the international markets, diesel accounts for about two-thirds of the ground transportation fuel.
For many years, while America was at the top of the consumption pyramid and everyone was driving around in SUVs and minivans, gasoline commanded the highest prices. But in recent years, increasing demand in diesel-using countries areas like Europe, China, India and Latin America—combined with better fuel-efficiency standards in the United States—pushed up the price of diesel fuel. By 2004, average diesel prices exceeded gasoline prices.
This shift impacted domestic oil production facilities greatly. For not much cost, refineries can restructure their operations to increase their diesel yield, which necessarily decreases their gasoline production. Refineries on the Gulf Coast largely moved to do this, since they had access to international markets through ocean shipping routes. But refineries in the land-locked Midwest don’t really have access to those international markets, and so focus more on gasoline production for domestic consumers.
In fact, Midwestern refineries sell 99 percent of their product to US customers. Gulf Coast refineries, meanwhile, produce more than half of the country's gasoline and diesel exports and are shifting rapidly to more diesel production:
Next, it’s important to note two things about the existing pipeline network from Canada: one, it provides crude oil at discounted prices to Midwestern refineries. Two, it’s bigger than Canada needs—in fact, Canadian oil production is only half of what the pipelines are able to carry.
This is ultimately why prices will go up if Keystone XL is built—the pipeline goes directly from Canada to the Gulf Coast, bypassing the Midwest, which will no longer get the discounted crude. And since Canada already doesn’t have more oil than it can transport, this means a trade-off to the amount of crude headed to the Midwest.
The NRDC report indicates that if Keystone is built, Midwestern refineries will produce 80,000 fewer barrels per day—which means reducing the gasoline available to US consumers by 1.2 billion barrels per year. There is no way that doesn’t lead to higher gas prices.
In fact, that’s part of the TransCanada business plan. The increased supplies to the Midwest have lead TransCanada to sell its crude at a $3 discount—which Keystone would then eliminate. Based on the company’s own analysis, this would increase the cost of crude by up to $27 billion per year.
This is an energy product almost uniquely designed not to lower prices, though that wasn’t really the intent. They simply want to ship the oil to more expensive international markets—which are so big that the additional Canadian crude won’t lower prices, and even if it did, OPEC would likely act to counter that. Meanwhile, US refineries get less crude and thus prices go up.
And this doesn't even take into account the environmental consequences of harvesting more dirty tar sands oil. From any angle, this seems like a terrible deal.
On several key votes over the past few years, Nuclear Regulatory Commission chair Gregory Jaczko was the lone voice for tougher industry standards—and now he has resigned, following an intense character assassination campaign.
Jaczko put out a generous and neutral statement this morning: “After an incredibly productive three years as Chairman, I have decided this is the appropriate time to continue my efforts to ensure public safety in a different forum,” he said. “This is the right time to pass along the public safety torch to a new chairman who will keep a strong focus on carrying out the vital mission of the Nuclear Regulatory Commission.”
But that belies a much uglier history. You may recall that late last year, Republicans hauled Jaczko before Congress to answer questions about his supposed brutish behavior as chairman: intimidating and bullying staff, particularly female members, and keeping the other commissioners out of the loop.
But Representative Ed Markey, for whom Jaczko used to work, put together a report on the turmoil that painted a different picture. Instead of uncovering abusive behavior—which still hasn’t been documented—Markey’s staff detailed how in the wake of the Fukushima disaster in Japan, the four other NRC commissioners teamed up to slow down safety responses being designed by Jaczko. It also found “high levels of suspicion and hostility directed at the chairman” from the other four commissioners.
The charge was led by commissioner William Magwood, who spent many years in the nuclear industry—including for the same company that ran the Fukushima Daiichi plant in Japan, as Huffington Post’s Ryan Grim reported at the time. Magwood’s point person, Grim notes, was a then-GOP Senate staffer who is now the top nuclear industry lobbyist.
The supposed turmoil made public by Magwood and the other commissioners was eagerly taken up by Congressional Republicans during those December hearings. “I think you should resign,” Representative Jason Chaffetz, a Tea Party favorite from Utah, told Jaczko after a rapid-fire series of questions during which he repeatedly cut off Jaczko mid-reply. “If you’re going to do the right thing for this country and this commission, you should step down.”
Now, he has. And Republicans eagerly danced on his grave today. “Dr. Jaczko’s troubling behavior as chairman of the Nuclear Regulatory Commission had clearly resulted in a hostile work environment for women that ran counter to acceptable norms of workplace equality and that threatened to undermine the mission of the NRC itself,” said Senate Minority Leader Mitch McConnell in a statement.
“The resignation of Chairman Jaczko will close an ugly chapter and allow the Nuclear Regulatory Commission to focus on its mission—ensuring the safe operations of the nation’s nuclear plants,” said Representative Darrell Issa.
But not everybody was pleased. Vermont Senator Bernie Sanders called out the smear campaign in a statement: “For his efforts to hold the nuclear industry accountable, Chairman Jaczko was subjected to repeated personal attacks made by some of his colleagues and pro-industry advocates in Congress,” Sanders said. “I am extremely disappointed he is leaving the Commission.”
Public interest groups were outraged as well. “News today of Nuclear Regulatory Commission Chair Gregory Jaczko’s pending resignation is a terrifying example of industries trying to wreak havoc on those who regulate them—and winning,” said Tyson Slocum of Public Citizen. “Jaczko sought to create tougher rules for the nuclear industry in the wake of Japan’s Fukushima disaster last year. But the nuclear industry wanted Jaczko gone from Day One. Jaczko stood alone.”