Quantcast

George Zornick | The Nation

  •  
George Zornick

George Zornick

Action and dysfunction in the Beltway swamp. E-mail tips to george@thenation.com

Bush Tax Cuts Are the Elephant in the Super-Committee Room

The size of federal deficit is often in the eye of the beholder.

When Congressional Budget Office director Douglas Elmendorf testified before the super-committee yesterday this week, he laid out three different ways to measure the problem: the committee could use a “current law” baseline, which assumes the planned expiration of the Bush tax cuts beginning in 2013, and a 30 percent reduction in payments to Medicare providers, which is scheduled to happen at the end of this year. Or the committee could use an “alternative fiscal scenario” baseline, which assumes Congress acts to extend the Bush tax cuts and stalls the Medicare provider cuts. Thirdly, the committee could basically make up its own baseline that tweaks the others to perceived political reality in whatever way it deems reasonable.

But here’s the thing: if the “current law” baseline is used, the deficit problem virtually disappears. The expiration of the Bush tax cuts—which, remember, were sold as temporary reductions that would direct a large surplus back to (largely wealthy) taxpayers—would alone create over $4 trillion in revenue.

During yesterday’s hearing, there was a rather remarkable exchange in which Representative Chris Van Hollen got Elmendorf to admit that, indeed, if the super-committee adjourned immediately, and if Congress left Washington for the next ten years—thus letting the tax cuts expire—the deficit would actually be reduced by a far greater amount than anything the super-committee is aiming to achieve:

This underscores the oft-repeated point that the Bush tax cuts are the largest current policy driver of the deficit. Even former Federal Reserve Chair Alan Greenspan believes they should be rescinded—that’s what he told a Senate panel yesterday.

In his testimony, Elmendorf laid out the cold reality: given the large number of baby boomers due to retire within the next ten years, and given the budget-busting tax-cuts, something has to give.

“I think really the fundamental question for you is not how we got here, but where you want the country to go, what role do you and your colleagues want the government to play in the economy and the society?” he told the committee. “If you want a role that has benefit programs for older Americans, like the ones we’ve had in the past, and that operate for the rest of the government like the ones we’ve had in the past, then more tax revenue is needed than under current tax rates.”

“On the other hand, if one wants those tax rates, then one has to make very significant changes in spending programs for older Americans,” he continued.

Those are crucial choices, and given the comments from the super-committee’s austerity hawks during Elmendorf’s testimony, we know their answer—cut away. Democrats like Van Hollen, meanwhile, will try to preserve government benefit programs with more revenue.

That is a debate worth having—but let’s not pretend there’s some kind of deficit crisis. If Congress just does nothing, the deficit will wither away.

CBO to Super-Committee: Increase the Deficit!

Code Pink protests behind CBO head Douglas Elmendorf

Credit: Reuters Pictures / Jonathan Ernst

The head of the non-partisan Congressional Budget Office testified before the super-committee on deficit reduction on Tuesday, and while he outlined the basic math behind the nation’s long-term debt problem, he had a surprising message: don’t be afraid to make the deficit bigger over the next couple years, while the nation battles recession.

Douglas Elmendorf, the CBO director, said that given the massive Bush tax cuts, which severely throttled the federal government’s revenue stream, and given the large number of baby-boomers who will be on Medicare—combined with skyrocketing health costs—something has to give.

“Citizens will either have to pay more for their government, accept less in government services and benefits, or both,” he said.

But Elmendorf was also frank about the depths and danger of the current recession—and how it’s creating a much bigger deficit. He noted that the largest contributor to the government’s current red ink is a $5 trillion output gap, and that the costs of that gap are “borne unevenly, falling disproportionately on people who lose their jobs, who are displaced from their homes, or who own businesses that fail.”

He then urged the committee to make sure that whatever they do, it doesn’t actually have a real effect any time soon. “Immediate spending cuts or tax increases would represent an added drag on the weak economic expansion,” he said.

“In our analysis, to provide the greatest boost to the economy now would be to cut taxes or increase spending in the immediate term, then in longer term cut spending or increase taxes,” Elmendorf added. He repeatedly suggested approving policies that “would widen the deficit now but reduce it later in the decade.”

This, of course, roughly mirrors what Obama proposed in his American Jobs Act—an increase in spending in areas like infrastructure and aid to state governments, along with reductions in payroll taxes. It’s possible that the super-committee could actually enact certain parts of that plan in their final report.

But many of the committee’s austerity-obsessed Republicans weren’t hearing it. Representative Jeb Hensarling, a co-chair of the committee, said that slashing spending and reducing the deficit was in itself stimulative.

“We have a spending-driven debt crisis,” Hensarling said. “Deficit reduction will be a jobs plan.”

Similarly, Sen. Rob Portman tried to get Elmendorf to agree that European countries that embrace austerity budgeting perform better and recover faster than those that don’t. Elmendorf refused, and cited a recent International Monetary Fund study that found austerity increases unemployment while also lowering wages.

The committee’s liberals, meanwhile, repeatedly stressed that the policies over the past ten years that created the current deficit shouldn’t be part of whatever solution the super-committee comes up with.

“We embarked upon two wars, one of which was dubious at best. Using credit cards, we instituted two tax cuts, totaling $544 billion, which were tilted in favor of millionaires and billionaires,” said Representative James Clyburn.

“To know where to go with the work that we have to do, you have to know from where we came,” said Representative Xavier Becerra, a member of the House progressive caucus. “A select few in this country enjoyed the additional government spending that occurred in those ten years, while the rest of Americans are being confronted with paying the tab.”

However the super-committee decides to act, time is short. The deadline for the super-committee to report a plan is November 23, but Elmendorf shaved three weeks off that deadline on Tuesday when he told the committee that the CBO will need a plan in the first week of November in order to score it by the deadline—something both parties will certainly want.

Ralph Nader on 9/11 and the National Security State

The prolonged September 11 remembrances have largely wrapped up—the weekend saw everything from current and former presidents remembering the tragedy to the garish commercials featuring Budweiser Clydesdales bowing before Ground Zero.

But as the rest of Washington moved on, Ralph Nader and a panel of experts who saw much of the fallout from September 11 up close held a panel in northwest DC to talk about how the government responded to the tragedies—and how that response continues to undermine crucial democratic institutions.

Nader was joined by retired Col. Lawrence Wilkerson, a former State Department chief of staff and outspoken critic of the Iraq War; the ACLU’s Michael German, a former FBI agent who left the agency in 2004 and has spoken out against post-9/11 intelligence abuses; and constitutional lawyer Bruce Fein, who led the American Bar Association’s astonishing and largely unnoticed rebuke of President George W. Bush’s legal abuses while Bush was still in office.

The message was simple: the September 11 attacks were tragic, but the expansive and disproportional government reaction is the continuing threat. Wilkerson cited commonly used statistics that annual highway deaths far exceed the toll on September 11, and that the United States has spent well over $2 trillion on the response to attacks that cost Al Qaeda about $500,000 to execute.

Wilkerson focused on the Iraq War, one of the largest—and most disastrous—foreign policy consequences of the September 11 attacks, and one that Wilkerson saw up close. He told of Colin Powell’s initial decision to scrap any mention of an Iraqi role in September 11, which lasted less than a day before the intelligence community presented Powell with “new” and supposedly definitive evidence that Saddam Hussein’s government was assisting Al Qaeda, which Powell indeed included in his speech.

“As far as I can tell, the director of central intelligence…lied to the United States secretary of state,” Wilkerson said. “I cannot see any other conclusion, from both my own experience as it was out in Langley [home of the CIA] for six days and six nights, with [CIA Director] George Tenet and John McLaughlin, his deputy, literally on my elbow most of the time.”

“I either have to come to the conclusion that they were ordered to do it and did it like faithful loyal soldiers, or I have to come to the conclusion that they were utterly incompetent, or I have to conclude that it was a little bit of all and some lying thrown in,” Wilkerson said. “My experience with government tells me that latter conclusion is probably closer to the truth.”

(Before he began his remarks, he recounted the military campaigns he helped lead as an Army colonel in the late 1980s and early 1990s, Wilkerson—who has been an outspoken critic of the war since 2005—mused that “it never crossed my mind for a second that I’d be sitting at a podium with Ralph Nader.”)

German, who worked as an FBI agent on many post-9/11 terrorism cases, spoke eloquently about the increasing encroachment of the national security state, and the “take-the-gloves-off” approach that began with the Patriot Act but continues unabated.

“When the intelligence community fails, the only way to address that is to give them more authority. When they succeed, it’s justification for giving them more authority,” German said. “So that national security ratchet only turns in one direction, and it’s very difficult for us to get rights that are given up back again.”

The Patriot Act was reauthorized earlier this year, despite haggling over some provisions. But it’s not the Congressional modifications or lack thereof that matter. German pointed to an overlooked but vitally important speech by Senator Ron Wyden this spring, in which Wyden—a member of the Senate Select Committee on Intelligence—talked about the “Secret Law” provision of the Patriot Act.

That provision essentially says that the government can interpret the Patriot Act however it wants, and that interpretation to this day remains secret—and Wyden said if the public knew the government’s interpretation, as he presumably does, there would be “outrage.”

Fein, an deputy attorney general under President Ronald Reagan and a frequent critic of both Bush and Obama’s national security legal policies, urged action.

“It’s a psychological deterioration in our political culture that has infected the entire way in which we approach the rule of law and who we are as a country. And it’s really up to us to change it,” Fein said. “We can blame presidents for seeking to aggrandize power, that’s to be expected. And we can even blame the invertebrate Congress…. We need to get away from that mentality, and the only way it’s going to happen is if we the people make a protest.”

After the speech, I spoke with Nader about his message to Americans about September 11:

How to Really Win the Future

President Obama appeared before Congress on Thursday and urged members to pass the American Jobs Act, a $447 billion package that includes more unemployment benefits, an extended payroll tax cut, money for repairing schools and crumbling infrastructure, rehiring teachers and first responders, job training for the long-term unemployed and tax breaks for companies that hire new workers.

Many of these measures would indeed help the ailing economy, and the speech was a success on several measures. Paul Krugman called the plan “significantly bolder and better” than he expected. As Ari Berman noted, Obama delivered a heartening defense of the government’s role that might start to steer the conversation away from tired Tea Party tropes about harmful stimulus and federal intervention. The president also made some modest political headway that slightly brightens hope for some actual progress: House Speaker John Boehner said some ideas in the package “merit consideration,” and Republican Governor Rick Snyder of Michigan voiced support for Obama’s plan.

But the American Jobs Act falls short in two paradoxical ways: the plan is still too ambitious for Congressional Republicans, and at the same time doesn’t go far enough. Despite Boehner’s kind words, it still probably won’t pass the Republican House of Representatives. And even if it did, many economists say it still wouldn’t be enough to spur a true economic recovery.

So what else is needed? Below I’ve gathered a list of jobs proposals from several economic thinkers and legislators. They range from things Obama can do right now without Congress, to things he perhaps should have included in the American Jobs Act, to pie-in-the-sky ideas that would never pass but are useful to bring into conversation.

Write down mortgage debt: As the editors point out in this week’s editorial, “Go Big, Mr. President,” debt forgiveness on home loans would be highly stimulative. Millions of Americans are underwater on their homes, and thus cannot save much money and don’t have much buying power. The New Bottom Line, a national campaign of labor/liberal groups and grassroots networks, estimates that writing down underwater mortgages to market value would pump $71 billion a year into the economy and create 1 million jobs. Banks would take a hit, but on loans that probably won’t be paid back anyhow—and since many toxic loans are now federally backed, the government can help engineer a massive write-down. (Obama may still favor some kind of refinancing push, though the details are still vague).

Green jobs: Four members of the Congressional Progressive Caucus—Representatives Barbara Lee, Keith Ellison, Lynn Woolsey and Raul Grijalva—wrote on Politico that a good jobs act “should advance the green industrial revolution that will likely define the economy of tomorrow, and make major investments in US infrastructure.” Obama did include some green jobs ideas in his speech, like weatherization and money to invest in energy-efficient retrofits. China’s ability to produce cheap solar panels hinders efforts here, as evidenced by the recent bankruptcies of several US solar panel companies, but there are plenty of other areas for investment. A Brookings Institution study this summer found that green jobs account for only 2 percent of workers nationwide. The key to growing the US solar industry may be not in manufacturing but training and certification for workers to install a massive network of solar-powered energy. And for every job created by the solar industry, between 1.8 and 2.8 other jobs are created.

Trade and tax reform: Last night, Obama urged Congress to pass trade deals with South Korea, Panama and Colombia. That’s actually not likely to create many jobs—and may even have the opposite effect. But as long as he’s talking trade, Obama could take action to shrink the nation’s swollen trade deficit. As US multinationals move jobs overseas, the United States has borrowed $6.3 trillion to pay for excessive imports and will add another $500 billion this year. Obama could propose higher taxes for companies that ship jobs overseas—he’s pushed it before. He could also introduce new rules to cap the rising trade deficit, and institute emergency tariffs on countries that don’t participate.

Immigration reform: Contrary to conventional wisdom, increased immigration doesn’t hurt unemployment—it may actually help it. A study by two professors at the University of California, Davis, called ““Immigration, Offshoring and American Jobs,” found that increased immigration actually mitigates offshoring by US companies. Hiring low-wage immigrant workers in the United States makes many companies less likely to offshore—the study found that when immigration is rising as a share of employment in the economic sector, offshoring tends to fall. That means that other related jobs, including high-skill managers and technicians, also remain in the country.

More government jobs: A big factor in high unemployment is the loss of government jobs: more than 500,000 have been lost since Obama took office. Last week’s zero jobs report reflected a slight increase in private sector jobs but a complimentary loss in public sector jobs that washed out the gain. The American Jobs Act’s proposed infrastructure bank might provide some additional jobs, and that’s good—but Obama shouldn’t stop there. A growing popular campaign to “save the American Dream” is pushing legislation that would devote $227 billion over two years to projects that generate 2.2 million jobs—something Republicans probably wouldn’t pass, but let them explain why. If Republicans demand new funding for the jobs, there are always taxes on speculative Wall Street trading. Dashing the federal salary freeze wouldn’t be a bad idea either.

Action by the Fed: Also on Thursday, Federal Reserve Chairman Ben Bernanke hinted the Fed might take more aggressive action to address unemployment. That’s a very good thing. More quantitative easing would certainly be welcome, but there are other things the Fed could do—like participate in the aforementioned mortgage write-down, or provide off-budget financing for Obama’s proposed infrastructure bank.

 

Richard Cordray Goes to Capitol Hill, but Addresses Deaf Republican Ears

In what was surely one of the stranger Senate confirmation hearings in recent history, President Obama’s nominee to head the Consumer Financial Protection bureau, Richard Cordray, testified Tuesday before the Committee on Banking, Housing and Urban Affairs.

Unlike most nomination hearings, which focus on the merits of the nominee, the committee could not agree on whether the position itself should exist. Forty-four Senate Republicans sent a letter to President Obama in May that demanded a five-person board with appointees from both parties run the CFPB, instead of a single director.

Tuesday, only two of the committee’s Republicans showed up to the hearing—Senator Richard Shelby, the ranking member, and Senator Bob Corker. Shelby declined to even question Cordray, blasted the hearing in his opening statement as “premature” and said “we do not believe that the committee should consider any nominee to be the director of the CFPB until reforms are adopted to make the bureau accountable to the American people.”

Shelby, who has taken $6.2 million from the financial sector during his career, and his fellow Republicans are demanding not only to remove the position of director but to force the CFPB to submit a budget to Congress and accept additional veto powers from other bank regulators. The Republican line of attack is that, without these regulations, the CFPB will be a runaway regulatory train straight out of Glenn Beck’s nightmares.

“The director will be virtually free of any constraints on his authority during his five-year term. No one person should have so much unfettered power over the American people,” Shelby said during the hearing. “It blatantly violates the spirit of our democratic system of government…. unless the Bureau is reformed, it is only a matter of time before this concentration of power is abused or misused to the detriment of American consumers and the economy.”

Senator Sherrod Brown said he consulted the Senate historian, who could not come up with a similar case of one party opposing not the nominee but the very office to which he or she was appointed. Brown and the other Democrats urged a quick confirmation for Cordray, and hammered on the point that the structure of the CFPB was already put up for a vote and decided in 2010, and so Cordray should receive an up or down vote on his own merits.

“Now is not the time to undermine an agency that a bipartisan majority in Congress created,” Brown said. “It is not the time to play a dangerous game with the financial security of millions of families and businesses.”

Senator Jack Reed lamented that consumer voices were “seldom heard in Washington,” and added that “as we go forward, we are trying to ensure that we do not replicate the crisis of 2008—that we do not have financial collapse.”

For his part, Cordray offered somewhat vanilla testimony about his resume and life story. He made overtures to the financial sector by pledging not to automatically regulate via lawsuits, which he called “a very slow, wasteful and needlessly acrimonious way to resolve a problem.” But he added that “if people are ignoring or evading consumer protections laws—and seeking to gain an unfair advantage over their law-abiding competitors—then litigation is an essential tool, and we will use it judiciously.”

As Ari Berman has outlined, the $3 trillion financial services industry is waging a fierce battle against the CFPB, which for some in the business community amounts to a “holy jihad.” Cordray will likely clear the Democrat-controlled Banking Committee, but will surely face a Republican filibuster after that.

Like this blog post? Read it on The Nation’s free iPhone App, NationNow.

Fear, Inc.: America's Islamophobia Network

At this time last year, as the ninth anniversary of the September 11 attacks approached, the country was gripped by a pernicious debate over a “mosque” (really, an Islamic cultural center) near Ground Zero in New York City.

Pushback against the project actually began months earlier and was led by a group called Stop Islamization of America, which launched “Campaign Offensive: Stop the 911 Mosque!” in May 2010. The group’s founder, Pamela Geller, charged that “this is Islamic domination and expansionism. The location is no accident. Just as Al-Aqsa was built on top of the Temple in Jerusalem.” The group’s co-director, Robert Spencer, helped Geller organize rallies and protest campaigns aimed at a lower Manhattan community board, which reported getting “hundreds and hundreds” of calls and e-mails from around the world as a result of the well-funded and highly coordinated campaign.

Geller and Spencer’s cause was loudly trumpeted by large right-wing media outlets, notably the New York Post and Fox News Channel, both News Corp. properties. The religious right quickly joined; Dr. Richard Land of the Southern Baptist Convention called the project “unacceptable” because “the people who perpetrated the 9/11 attack were Muslims and proclaimed they were doing what they were doing in the name of Islam.” Soon, politicians were also on board: Newt Gingrich denounced the proposal and argued that although the cultural center was seemingly benign, “some radical Islamists use terrorism as a tactic to impose sharia, but others use nonviolent methods—a cultural, political, and legal jihad that seeks the same totalitarian goal even while claiming to repudiate violence.”

By late summer, as September 11 approached, the “debate” had gone completely mainstream—Geller was invited to appear on CNN, and President Obama was forced to take a position. (Actually, two positions: he voiced support for the project before walking it halfway back).

At one point in August, more than two-thirds of Americans opposed the project. It was a stunning victory for Geller, Spencer, and the xenophobic right, but also an excellent case study of how they operate. According to a comprehensive new report by the Center for American Progress, anti-Islam efforts like this are no vast right-wing conspiracy: rather, it’s a “rather small, tightly networked group of misinformation experts,” operating on $40 million in funding from just seven organizations.

The report, titled “Fear, Inc.,” names five “experts” who generate a huge amount of misinformation about Islam. They are:
   • Frank Gaffney at the Center for Security Policy
   • David Yerushalmi at the Society of Americans for National Existence
   • Daniel Pipes at the Middle East Forum
   • Spencer, of Jihad Watch and Stop Islamization of America
   • Steven Emerson of the Investigative Project on Terrorism

Meanwhile, seven foundations have donated no less than $40 million to Islamophobic think tanks like these over the past ten years. They are:
   • Donors Capital Fund
   • Richard Mellon Scaife foundations
   • Lynde and Harry Bradley Foundation
   • Newton D. & Rochelle F. Becker foundations and charitable trust
   • Russell Berrie Foundation
   • Anchorage Charitable Fund and William Rosenwald Family Fund
   • Fairbrook Foundation

In extensive detail, the report describes how this small group of donors fund a cluster of think tanks that promote rank Islamophobia, and how their misinformation is spread through a network of conservative media and grassroots organizers like Geller. The important context here is that anti-Islam sentiment is growing in the decade since the September 11 attacks: an ABC News taken last year in the wake of the Ground Zero mosque debate showed 49 percent of Americans had a negative view of Islam, compared with just 39 percent in October 2002.

The biggest contributor to these efforts, by far, is the Donors Capital Fund, which has given over $20.7 million to groups like Emerson’s Investigative Project on Terrorism and the Clarion Fund—in fact, Donors Capital Fund fully funded the Clarion Fund’s distribution of the DVD “Obsession: Radical Islam’s War Against the West,” which went to over 28 million swing-state voters before the 2008 presidential election.

Donors Capital Fund is a philanthropic organization run by a number of conservative heavyweights. The board includes members of the American Enterprise Institute, the Heritage Foundation and Stephen Moore of the Wall Street Journal.

The report does unearth a few new facts about the Islamophobia network, but many other parts were already known—the New York Times, for example, has already detailed Yerushalmi’s efforts at getting “anti-Shariah” laws passed in statehouses across the country. But the report’s real strength is in demonstrating exactly how small—and effective—this network is.

“It’s not a lot of people, it’s not a lot of organizations, it’s not a lot of money. It is amazing what these people have accomplished,” Eli Clifton, one of the report’s authors, said in a press call Friday.

Faiz Shakir, a vice president at CAP and also a co-author, said the report is “trying to end Islamophobia. If we are to end it we have to identify who are they key motivators and drivers of this hate industry. We have to give a path for those who want to divorce themselves from the Islamophobia industry the opportunity to do so.”

When the report was released on Friday, the targets responded with charaterstic and near-cartoonish zeal; Horowitz said CAP “has joined the Muslim Brotherhood,” and Spencer accused the authors of belonging to the “Islamic supremacist propaganda machine.” 

The full report can be viewed here. (Full discloure: I worked at the Center for American Progress from August 2010 to April 2011).

State Department Issues Flawed Blessing of Keystone XL

The State Department released its final environmental impact assessment of the Keystone XL pipeline Friday, and it’s just as bad as some feared—perhaps worse. The report concludes, as did two prior versions, that there would be “no significant impact“ on natural resources near the pipeline route, while also downplaying the potential for increased greenhouse gas emissions.

In a conference call with reporters, Assistant Secretary in the Bureau of Oceans and International Environmental and Scientific Affairs Dr. Kerri-Ann Jones stressed that “this is not the rubberstamp for this project. The permit that is required for this process has not been approved or rejected at all.”

But the environmental concerns are clearly the main objection to Keystone XL, and the report is widely seen as removing one of the final roadblocks to the project. Environmental groups were quick to blast the results. “The U.S. State Department’s final report on the Keystone XL today is an insult to anyone who expects government to work for the interests of the American people,” the Sierra Club said in a statement.

On the issue of pipeline spills, the State Department report assesses that “there could be from 1.18 to 1.83 spills greater than 2,100 gallons per year” for the entire project. It helpfully adds that “crude oil spills are not likely to have toxic effects on the general public.”

While that many spills might already sound risky, the real number is likely much higher than what the State Department calculated. First, as the report itself notes, there have already been fourteen spills along the existing Keystone pipeline since it began operating in June 2010.

In addition, the first independent analysis of the pipeline project, released last month by Dr. John Stansbury at the University of Nebraska, came up with much more ominous results. Stansbury calculated a potential for ninety-one spills over the next fifty years.

He also lays out a scenario that most certainly would involve “toxic effects on the general public.” If a worst-case spill were to occur at the Platte River crossing, for example, benzene—a human carcinogen—would travel unabated down the Missouri River for several hundred miles and affect the drinking water for hundreds of thousands of people in cities like Lincoln, Omaha and Nebraska City in Nebraska and St. Joseph and Kansas City in Missouri.

Similarly, Stansbury estimates that a worst-case spill in the Sandhills region of Nebraska would contaminate 4.9 billion gallons of drinking water.

It’s important to note that the State Department assessment relies upon assumptions that the Keystone XL pipeline will operate with a fairly high degree of efficiency and safety—more than the rest of the industry. If that somehow happens, the company alone will be responsible for that high standard, because federal regulators are currently incapable of adequately inspecting pipelines that carry tar sands.

The Department of Transportation’s Cynthia Quarterman recently admitted to Congress that the DOT’s Pipeline and Hazardous Materials Safety Administration had not evaluated the risks of tar sands pipelines and she did not know if current safety regulations could address them.

Beyond spills, there’s also the issue of greenhouse gas emissions, which the Environmental Protection Agency estimates to be over 80 percent higher for tar sands than normal crude oils. While the State Deparment report acknowledges that “current projections suggest that the amount of energy required to extract all crude oils is projected to increase over time,” it also says the greenhouse gas emissions from the tar sands might stay flat or even decrease over time.

This analysis relies on industry claims that it will develop refining methods that emit fewer greenhouse gases. Numerous analyses have predicted much higher greenhouse gas emissions from tar sands development. NASA climate scientist James Hansen has written that “if the tar sands are thrown into the mix, it is essentially game over” for reversing climate change.

Again, even the EPA predicts higher-than-normal greenhouse gas emissions from tar sands refining, and it’s important to note that the EPA openly criticized the last environmental impact statement from the State Department, which isn’t much different than the final version.

Despite claims that a final decision is yet to be made, today’s environmental impact assessment virtually guarantees the State Department will approve the project by the end of the year. But environmental activists are not discouraged—and are placing their bets on President Barack Obama.

Bill McKibben, who has been leading the civil disobedience outside the White House, said “we knew from past experience that State might do something like this, which is why we’ve always said it’s going to be Obama’s call. They can’t get the climate science right, but maybe they can get the politics right.”

Civil Disobedience on Tar Sands Continues, Amid Ominous Signs From Administration

A prolonged civil disobedience campaign outside the White House that opposes a major oil pipeline from the “tar sands” of Canada is now in its sixth day, and 322 people have been arrested.

The Keystone XL pipeline from Alberta to the Gulf of Mexico would carry 900,000 barrels per day of crude oil refined from bitumen in the Canadian soil. Aside from the ravaging impacts of extraction, the process contributes anywhere from twice to three times as much greenhouse gases as normal crude refining, and there’s serious potential for leaks in the transcontinental pipeline.

The State Department, which is now conducting an environmental review, will then decide by the end of the year whether to issue a “certificate of national interest,” which would allow the pipeline project to go forward.

 As the arrests build, so too does the movement’s support. Yesterday, every major environmental group in the country came out in opposition to the pipeline in a joint letter. The groups, ranging from the Sierra Club to Greenpeace, have often clashed on climate strategy in the Obama era, so the support is particularly notable. “On an issue as complicated as climate, there will often be disagreements over tactics and goals—just recall the differences over the Senate climate bill this time last year,” environmentalist and protest organizer Bill McKibben, said. “But there are some projects so obviously dangerous that they unify everyone, and the Keystone XL pipeline is the best example yet.”

The protests have brought a fair amount of mainstream media coverage to the issue, culminating in a strong New York Times editorial earlier this week, urging the State Department to “acknowledge the environmental risk of the pipeline and the larger damage caused by tar sands production.”

(The media coverage was far less than what it could be, however, given the import of the issue—NASA’s James Hansen has said that if tar sand oil makes a massive entry into the market, it’s “game over” for efforts to stop catastrophic climate change. And as Mother Jones environmental reporter Kate Sheppard mused on Twitter today, “Can you imagine how much more coverage this would get if 272 tea partiers had been arrested?”)

Nevertheless, the industry has taken note of the protests. The American Petroleum Institute has repeatedly bashed the Times editorial, and ThinkProgress’ dogged Chamber of Commerce chronicler Lee Fang noticed the Chamber hitting back too.

Unfortunately, the administration has not yet acknowledged the mass civil disobedience. And more troublingly, reports suggest and approval of the pipeline is likely.

A State Department spokesperson told The Nation when asked about the protests that “The State Department continues to assess the proposal for the Keystone XL pipeline project. We consider the input and feedback from the publican important part of the determination process.” The White House would similarly not acknowledge the action outside the gates, telling The Nation only that “The State Department is assessing the project on behalf of the federal government. That process is ongoing, including receiving important input from the public and stakeholders.”

The State Department may be trying to throw some cold water on the movement, however—according to a curiously timed leak to the Washington Post yesterday, the State Department’s environmental review, scheduled to be released by the end of the month, “will remove a major roadblock to construction” of the Keystone XL pipeline.

According to the source, the review is expected to affirm the State Department’s earlier finding that the project will have “limited adverse environmental impacts.” (A University of Nebraska study has found this evaluation to be deeply flawed).

But there’s still nine days of civil disobedience left—and many more willing to be arrested.  

Civil Disobedience on Tar Sands Begins Outside the White House

The largest act of civil disobedience by environmentalists in decades began outside the White House this morning, as more than seventy activists were arrested at the north gates during a protest against the Keystone XL pipeline, which if approved by the administration would carry 900,000 barrels of oil per day from Alberta, Canada to the Gulf of Mexico.

The activists, who sat down at the gates at 11 am holding large banners reading “Climate change is not in our national interest,” were warned three times by US Park Police to move along, and were handcuffed and removed after they refused. More than 2,000 people have pledged to be arrested outside the White House every day until September 3, in daily installments of seventy-five to 100 people.

The Keystone Pipeline would carry oil gouged from the “tar sands” of Alberta—areas where soil is thick with bitumen, which can be refined into synthetic crude oil. The process is environmentally devastating. Parts of Alberta have already been ravaged by the extraction, and the refining process involved creates twice the greenhouse gases as producing a normal barrel of crude.

Since the pipeline would cross an international border, the State Department has jurisdiction and is completing an environmental assessment of the project, which could be released this week. The White House will have ninety days to decide whether to grant a permit for the pipeline. The grassroots group 350.org, which includes many Nation writers, has called for a campaign of nonviolent direct action aimed at persuading the administration to deny the permit.

The Alberta tar sands represent the second-largest repository of oil in the world, and climate scientists are horrified with the prospect of pumping that much carbon into the atmosphere. Environmentalist Bill McKibben, who led today’s action, noted that if all of the oil were extracted overnight it would increase the carbon in the earth’s atmosphere from 393 parts per million to 550 parts per million—a devastating increase. NASA climate scientist James Hansen recently wrote that since phasing existing carbon emissions out is already an enormous task, “if the tar sands are thrown into the mix, it is essentially game over.”

Beyond the climate concerns, there’s the issue of pipeline safety—Keystone XL would traverse the entire country, from Montana to the Gulf of Mexico. Anyone unconcerned with potential pipeline failures should note the recent incident underneath the Yellowstone River, where an Exxon pipeline ruptured and spilled over 1,000 barrels of crude into the river.

There are, of course, massive financial interests behind the construction of Keystone XL. Tar sands commercials are ubiquitous on television, particularly during news programming. The industry, led by the American Petroleum Institute, has launched an enormous advertising and lobbying push.

McKibben rallied the activists in Lafayette Park moments before the action began, and noted the enormous amount of money on the other side of the fight.

“There is enormous pressure coming down on the White House from the fossil fuels industry. These are the richest people. They are the most powerful people on our planet. They usually win,” McKibben said. “We have to find a different currency to work in. Our currency today and for the next two weeks is our bodies and our creativity and our spirit. And that’s all we’ve got to put up against all that money, and we will find out if it’s enough.”

Since Congress is not involved in this decision, the White House is the decisive chokepoint for the Keystone XL project—Obama doesn’t have to tangle with industry-friendly members of Congress. McKibben told reporters in Lafayette Park that “it is really the environmental test for Barack Obama, really in the course of his first term.”

Many of the activists wore buttons from the Obama 2008 presidential campaign, which climaxed in Denver at the Democratic National Convention, where Obama famously marked the moment “when the rise of the oceans began to slow and our planet began to heal.” McKibben predicted that “if Barack Obama mans up and says ‘no’ to this thing, it will send a surge of electricity through all of the people who voted for him three years ago. It’ll be the reminder of why we were so enamored with this guy in 2008.”

When the arrests began, the activists—including McKibben, FireDogLake founder Jane Hamsher, Lt. Dan Choi, and Vermont Law School professor Gus Speth—repeated chants of “Hey hey, ho ho, Keystone XL’s got to go” and “Ain’t no power like the power of the sun, because the power of the sun don’t stop.”

They were handcuffed with zip ties, led one-by-one into a tent set up by the US Park Police, processed and loaded into the back of a large van as tourists watched. The arresting officers gave the activists water over the course of the two-hour process, which took place in the sweltering late-summer heat of Washington. Several activists noted that if Keystone XL isn’t stopped, the hottest weather is surely yet to come.

A Terrible, Horrible, No Good, Very Bad Week for Standard & Poor's

It’s been a really rough week for Standard & Poor’s. As we noted Wednesday, the Securities and Exchange Commission is “reviewing” the rating agencies’ recent decision to downgrade the federal government’s credit rating, which is totally inconsistent with actual economic indicators of the country’s ability to pay its debt. The Senate Banking Committee is “gathering information” into that decision as well.

Yesterday, the New York Times reported that the Department of Justice has been probing Standard & Poor’s for its role in blessing toxic mortgage-backed securities in the years leading to the financial crisis those instruments ultimately caused. The investigation could “accelerate the shift away from the traditional ratings system,” the Times notes.

The Justice probe focuses on whether managers at Standard & Poor’s deliberately kept high ratings for mortgage-backed securities, despite the advice of some of the company’s analysts, in order to preserve income from the very trading firms that trafficked in the dangerous tranches. According to the Times, investigators are questioning witnesses who might have heard Standard & Poor’s managing director David Tesher warned employees: “Don’t kill the golden goose.”

Senator Al Franken wrote an opinion piece for CNN today highlighting another bit of evidence: a 2006 e-mail from a Standard & Poor’s official, which said: “Let's hope we are all wealthy and retired by the time this house of cards falters.”

As experts are trying to piece together why Standard & Poor’s made a clearly political, and clearly not economic, decision to downgrade the federal debt, it’s crucially important to include the context of these ongoing investigations.

While nobody else knows what is driving Standard & Poor’s to act, it is easy to see how it might believe the downgrade helps them—first, because while under attack for being blind to the mortgage-backed securities, they can now appear tough-minded about a debt crisis, which while again isn’t economically present, is taken seriously by many DC policymakers.

Moreover, by issuing the downgrade and striking a blow against the administration, Standard & Poor’s may be hoping to paint any ongoing investigations as retribution. If that’s the strategy, it’s starting to work. The lead of an ABC News story on the Justice investigation, for example, asks if the downgrade has made Standard & Poor’s “a lightning rod for critics and regulators.” The Washington Post similarly characterizes the investigation as “likely to add to the political firestorm created by the downgrade.”

But the house of cards is faltering outside of Washington, too. Municipalities across the country are abandoning Standard & Poor’s after being downgraded themselves, often unfairly. Municipalities have been asking Standard & Poor's and other agencies to rate their finances since around 1994, essentially as a public relations move following a major financial crisis in Orange County, California.  

In just the past week, the City of Los Angeles; Manatee County, Florida; and San Mateo County, California, have all dropped Standard & Poor’s after being downgraded. “We found the whole process of the downgrade flawed,” the treasurer of San Mateo County told the Wall Street Journal. The county will save $20,000 annually by not paying Standard & Poor's, and won't sign up with another rating agency in the near future.

Standard & Poor's downgraded those municipalities because they held US Treasury bonds, so it flowed from the original flawed federal downgrade. But some recent downgrades have been even more unfounded—for example, Standard & Poor’s issued a recent downgrade report on the county of Manassas Park, Virginia, citing in part increased salaries for public employees.

There are two small problems: Manassas Park is a city, not a county, and they haven’t increased salaries in two years. Local officials pointed this out, but the downgrade was not retracted. (City officials told the Wall Street Journal they are not dropping Standard & Poor’s, however).

In any case, it’s particularly galling for some local officials who saw their municipality downgraded by Standard & Poor’s, even if the assessment is technically fair. Local finances are often in trouble precisely because they are still holding toxic mortgage-backed securities that Standard & Poor’s dubbed safe earlier in the decade. For example, Manatee County is still holding about $1 million in toxic debt—something Standard & Poor’s cited in its recent decision to downgrade the county’s rating. 

Like this blog post? Read it on The Nation’s free iPhone App, NationNow.
Syndicate content