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Attorney General Eric Holder announced Thursday that the Obama administration will “very soon” issue some regulations that would make it easier for commercial banks to do business with legal marijuana operations—a seemingly small change, but one that could be seminal in launching legal marijuana into the mainstream.
Currently, state-sanctioned marijuana outfits essentially have no access to normal venues for banking and finance. Banks worry that accepting deposits from legal marijuana operations, or giving them loans, could expose the bank to legal or regulatory action, given the patchwork set of laws that make marijuana illegal on the federal level, even if certain states have legalized it.
This is, naturally, a huge problem for commercial marijuana retailers—how can you launch and run a business without any loans? They also often have to pay bills and employees in cash, which is difficult from a logistical perspective.
But the real trick is what to do with the all the money they make, since banks won’t take it. Some retailers pay armored trucks to ferry the money around to different locations, thought the Drug Enforcement Agency has reportedly been pressuring armored truck companies not to do so. Some merchants deposit the money in a bank without making explicit where it’s from, which puts the money at risk should the bank figure it out. (One merchant in Colorado told The New York Times he sprays his cash with Febreze before depositing it to disguise the odor of marijuana.)
At the University of Virginia on Thursday, Holder cited the problem of undeposited cash and suggested changes are on the way. “You don’t want just huge amounts of cash in these places. They want to be able to use the banking system,” he said. “There’s a public safety component to this. Huge amounts of cash, substantial amounts of cash just kind of lying around with no place for it to be appropriately deposited, is something that would worry me, just from a law enforcement perspective.”
Holder added that “we will be issuing some regulations I think very soon to deal with that issue.” If indeed the government makes the right changes, operating recreational marijuana outlets in states that allow it could become a much more normal, and mainstream, venture. It would also be a milestone in the drug’s growing acceptance in the United States. (Recall that earlier this week The New Yorker released an interview with President Obama in which he called marijuana potentially less dangerous than alcohol “in terms of its impact on the individual consumer.” Regarding new laws in Colorado and Washington that allow recreational marijuana economies, Obama said, “It’s important for it to go forward.”)
But there are of course many potential complications. The New York Times reported that the looming changes may not actually allow banks to accept deposits or extend loans but would simply tell prosecutors not to “prioritize” those cases.
If true, that likely won’t be enough reassurance for banks. How do they know that once they have loans outstanding to marijuana retailers, Ted Cruz won’t be elected president in 2016 and simply change the prosecution directive? “Banks will need a lot of detail from regulators to get the satisfaction and comfort they are looking for,” Richard Riese, senior vice president for regulatory compliance at the American Bankers Association, told the Times.
Moreover, marijuana is still classified by the federal government as an illegal narcotic. That remains the central problem when trying to normalize its commercial usage—but one that some members of Congress are trying to change.
Representative Earl Blumenauer, a Democrat from Oregon, lauded potentially eased banking restrictions as “an important step toward fixing federal policy toward marijuana.” But, he continued, “the next step is removing marijuana from Schedule I of the Controlled Substances Act. I am circulating a letter with my Congressional colleagues to send to the President asking him to do just that.”
Read Next: Katrina vanden Heuvel on why we need to legalize marijuana.
The intense battle between New York Attorney General Eric Schneiderman and Governor Andrew Cuomo over the state’s payout from a settlement with JPMorgan Chase has been resolved—for now.
The two offices will split the first $163 million payment from the bank, which is a result of a national settlement with JPMorgan Chase over fraudulent handling of mortgages leading up to the 2008 financial crisis. As we noted last week, while Schneiderman believed (with some legal backing) that the monies were his to disperse, Cuomo reportedly wanted all of the funds to be in his control.
Housing advocates were concerned that funds under Cuomo’s control would not reach troubled homeowners in the state, and for now those concerns seem to have been addressed—the $81.5 million under the governor’s discretion will be used for housing-related programs.
Schneiderman’s office, meanwhile, said he will fund the efforts we described last week—programs that are intended to encourage write-downs and modifications of troubled mortgages, and various other methods of outreach and protection to homeowners.
His office, however, did not respond to follow up questions about how the initial vision for the programs would be affected. It seems obvious that, with the funding cut in half to start, things can’t proceed exactly as planned.
Nor is there much clarity about the next several rounds of payments—the state is owed $613 million in total, and the distribution of the remaining payments has yet to be negotiated.
Read Next: Jarrett Murphy on de Blasio’s fighting poverty with sick leave.
When the federal government reached a large settlement with JPMorgan Chase over the securitization of shaky mortgages, advocates for distressed homeowners were pleased that billions of dollars were earmarked for states to resolve claims related to the financial crisis. That money seemed destined to help people who had been adversely affected by the bank’s misconduct.
But in New York, a power play by Governor Andrew Cuomo is endangering some of that relief. The New York Times reported this week that Cuomo wants the money sent to New York from the settlement—$613.8 million—to be diverted to the state’s general fund. Cuomo will announce his budget on Tuesday, and needs revenue to pay for a number of initiatives, from his universal pre-kindergarten program to future tax cuts for businesses.
This has set off a furious battle between Cuomo and New York State Attorney General Eric Schneiderman that has already apparently gotten personal—and how it is resolved will have huge significance for distressed homeowners in the state. It could also have some non-trivial implications for any potential presidential run by Cuomo.
Schneiderman, who co-chairs the federal Residential Mortgage Backed Securities that brokered the settlement, believes he should control the monies. He points to the language of the settlement and a memo from New York Solicitor General Barbara Underwood, which states that “the settlement funds at issue here are not money received for or on behalf of the state. Instead, they are held by the Attorney General for the benefit of others, namely the people who were or will be harmed, directly and indirectly, by the fraud, or by similar frauds.”
Having the attorney general control the funds would be consistent with many past settlements in the state—including when Cuomo himself held that office.
Until now, Schneiderman has not said how he planned to use the funds. But a New York source has provided The Nation with a memo circulating among state officials that outlines what Schneiderman wants to do with the money. Each initiative directs the money to distressed homeowners and troubled parts of the housing market.
The big-ticket item is a New York State Mortgage Relief Incentive Fund. The idea is to persuade commercial holders of underwater or non-performing loans to modify entire pools of those loans, instead of dealing with individual loans one at a time. The fund would provide subsidies for principal reductions, financing for refinancing and loan guarantees in exchange for modifications.
The large dollar amount harnessed by the settlement will allow for subsidies big enough to hopefully persuade banks and other loan holders to take this action en masse, instead of haggling with individual consumers.
Additionally, Schneiderman plans to use the settlement funds to expand a homeowner loan program, currently operating in a pilot phase in New York City. The program will offer loans to homeowners to pay down small debts and obtain loan modifications for troubled mortgages.
Schneiderman also wants to direct the remaining funds to bolster two initiatives that came from the 2012 National Mortgage Settlement—a homeowner protection program that offers counseling to troubled homeowners battling their banks, and a land bank program designed to address the problem of abandoned properties throughout the state.
Housing advocates in the state strongly believe Schneiderman should retain control of the funds. “The money went to the attorney general in New York for specific purposes, in fact was specifically earmarked in the settlement for those purposes, and certainly that’s the spirit of the settlement,” Josh Zinner, co-director of the New Economy Project in New York City, told The Nation. “This is really important because it was the subprime lending practices of Chase and others that led to the financial crash, that led to such devastation in low-income communities and communities of color. It’s really critical that those funds from the settlement are used to help those communities.”
“The notion that these funds would be taken away by the governor, particularly when he’s talking about tax cuts for the wealthy, is problematic in our view,” Zinner added.
Cuomo’s power play here isn’t anything new—when the National Mortgage Settlement was announced in early 2012, more than a dozen states quickly moved to divert the settlement funds to close state budget gaps.
Cuomo’s challenge—beyond the apparent legal hurdles to reappropriating the money—will be explaining why he wants to divert help away from troubled homeowners in the state. With a potential presidential run coming in 2016, this could become a potent issue among skeptical progressives, particularly since the national housing market is likely to remain problematic.
Read Next: Matt Taylor on Cuomo’s medical marijana proposal.
Somewhere in the US Capitol, a small group of legislators are hashing out a final five-year farm bill. Among many sizeable tasks, the conference committee must reconcile $40 billion in Supplemental Nutrition Assistance Program cuts from the House version with $4 billion in cuts from the Senate version.
Early reports indicate they may have settled on $9 billion in cuts, which presents Democrats with a real conundrum—amidst relentless messaging about a return to the War on Poverty, and heading into an election year where the party plans to make a populist economic pitch to voters, can Democrats in Congress really vote for a bill that cuts $9 billion from food stamps amidst a bad economy?
For some House Democrats, the answer is easy. “I am not going to support a farm bill that increases hunger, period,” Representative Jim McGovern told MSNBC last week. McGovern and some of his colleagues have been blasting food stamp cuts from the outset, and if enough conservative legislators flee the farm bill because the cuts aren’t deep enough, McGovern and his band might be able to derail the farm bill entirely by also withholding support. The SNAP program doesn’t need the farm bill to continue operating; benefits would just continue on autopilot at current levels.
It’s particularly easy for legislators in urban areas to take this approach. “There’s no reason for me to vote for the farm bill. I don’t have an (agricultural) district,” Representative Gene Green told The Nation. He represents Texas’ 29th District, which includes eastern Houston and some first-ring suburbs. Green didn’t vote for the last version of the farm bill because of the SNAP cuts. “I don’t have farmers who need the subsidies,” he said.
But most likely, McGovern and his like-minded colleagues aren’t a big enough group to stop the farm bill and its $9 billion in food stamp cuts. That would take a much larger group of Democrats, like when 172 Democrats opposed June’s version of the farm bill because it cut $20 billion from SNAP. Combined with sixty ultraconservative Republicans who voted no, it was enough to kill the bill by a wide margin.
So how does the mainstream House Democrat feel about these potential cuts? The Nation put that question to several members, including parts of the leadership team, during a roundtable with progressive reporters last week. The upshot: if the early reports are accurate, the farm bill will probably pass. Or at least receive no substantial opposition from Democrats.
Representative Jim Clyburn, the assistant Democratic leader, signaled that he was likely to support the bill—but that $9 billion was the most he could support in cuts. Any more and he would vote no.
He also qualified his answer by saying it depended how the cuts were structured. Reports suggest the $9 billion in cuts are actually realized by eliminating first-dollar food stamp eligibility for people also receiving low-income heading assistance from the federal government. That’s a method the fifteen states and the District of Columbia use to get additional benefits for poor residents.
Clyburn said he could support a bill along those lines. “Now that’s the kind of stuff that’s not getting into the benefits per se,” Clyburn told The Nation. “So what was presented to us is that we can get up to this number [$9 billion] without going any further on the benefits, the actual stamp.”
That’s not quite true—the 850,000 people who get additional food stamp benefits through so-called “Heat-and-Eat” initiatives would lose an average of $90 per month in benefits, according to the Congressional Research Service. But Clyburn is right that, beyond those people, overall food stamp levels would remain the same.
Several other Democrats interviewed by The Nation didn’t take McGovern’s hardline approach, and brushed aside questions of whether this undercut the “new War of Poverty” messaging. They also alluded to the “structuring” of the cuts.
“I haven’t seen the farm bill yet, so it may be something that’s totally unacceptable and unsalvageable,” said Representative Chris Van Hollen, the ranking Democrat on the House Budget Committee. “We should have a big debate on the food nutrition programs, and see exactly how they’re structured.”
Van Hollen also noted the large agricultural subsidies said to be included in the conference committee’s bill might also make it unacceptable.
Representative Bill Foster, who retook his seat in 2012 after losing it to a Tea Party Republican in 2010, said he was frustrated by potentially having to vote for food stamp cuts, but wouldn’t commit either way.
“That’s life in the minority. We’re always forced to vote on these very tough compromises. So the question is what is the diameter of the turd that’s in this bill,” he said. “That’s going to be negotiated and they’re going to have a very tough meeting about whether we should just say no and walk away.”
There will be strong arguments made for passing the farm bill in that meeting—obviously from rural Democrats, but perhaps also from defenders of SNAP who worry that if this bill fails, another version could come back with even deeper cuts. That’s certainly fair.
But whether Democrats ultimately assent will mean a lot for the 850,000 low-income Americans who rely on “Heat-and-Eat” programs. And if Democrats do sign on, it might make that economic populism pitch a little bit more complicated.
Read Next: why cutting Social Security benefits is the wrong way to pay for extending unemployment benefits.
Democrats and Republicans in the Senate are haggling over how to offset the cost of an extension of long-term unemployment benefits—and have settled upon one method that advocates are calling needlessly cruel to some disabled Americans.
Republicans have proposed, and Democrats appear to have accepted, a measure that prohibits people from collecting Social Security’s disability insurance at the same time they collect unemployment benefits. This aims to save $100 million per year.
This idea has long been promoted by conservatives, but was also included in President Obama’s most recent budget. It seems to be based, however, on a misunderstanding (willful or otherwise) of how the two programs work. Here’s the conservative Heritage Foundation with a good distillation of the basic premise:
The conditions for eligibility of the two programs are mutually exclusive: The DI program serves individuals who are deemed physically or mentally unable to work; the UI program replaces some of the lost earnings of those who become unemployed but are otherwise able to work. Thus, people should not be allowed to draw from both programs simultaneously.
Sounds good at first blush—why should people be allowed to double dip? But that’s not what some people who draw from both programs are doing.
To even qualify for disability benefits—which is more difficult in the United States than any other developed country—one has to have worked for at least one-fourth of their adult lives, and five of the last ten years. Given that one has to have a severe impairment to qualify for disability insurance, only a minority of people receiving benefits ever work again.
But a small percentage do—and Congress has actually encouraged them to work. It passed a “substantial gainful activity” provision that allows people on disability insurance to still earn up to $1,070 per month and keep their benefits. The idea is to encourage people who are disabled but can still work at least part-time to do so. That helps the economy, and may help that person transition back into full-time employment, if their medical condition at some point allows it.
Now imagine a person in that situation loses his or her part-time job. Shouldn’t he or she be able to collect unemployment benefits as well, especially since they’ve paid into both programs over the years? If Congress adopts this new measure, the answer would be no.
There are a vanishingly small number of people even in this situation—about 117,000 of the nearly 9 million Americans on disability also collect unemployment insurance. The concurrent benefits average $3,300 total each quarter, which hardly affords one a luxurious lifestyle.
But members of both parties are apparently ready to tell this small segment of the population—people who are both disabled and lost a part-time job—that they are receiving too much money. It’s all in the name of “paying for” an unemployment insurance extension which historically has never had offsetting spending cuts attached. As noted, this measure saves in total $100 million each year, or three-thousandths of a percent of the annual federal budget.
Moreover, advocates for Social Security see a disturbing precedent in raiding the program as a means to pay for other initiatives, even if they are worthy ones. “What’s on the table here is a permanent cut to Social Security in exchange for a temporary extension to a badly needed but unrelated program,” said Rebecca Vallas of the National Organization of Social Security Claimants’ Representatives.
There hasn’t been much pushback on the Senate floor to this provision, though Senator Tom Harkin gave a reliably smart and passionate speech on Monday decrying the proposal.
As of Tuesday afternoon, it seems as if the entire unemployment extension bill may go off the rails, and so people collecting both disability and unemployment benefits may be spared—for now. But there’s clearly bipartisan interest in this idea.
Read Next: George Zornick on how senators from states with the highest unemployment rates are trying to kill the unemployment insurance bill.
Federal settlements with bad corporate actors often have misleading, inflated dollar amounts attached. For example, the recent mega-settlement between JPMorgan Chase and the Justice Department for mortgage-backed security abuses before the 2008 crash was billed as a $13 billion deal, but right off the top, $4 billion was actually from an earlier settlement with the Federal Housing Finance Agency. Only $2 billion of the remaining penalties applied to after-tax profits, meaning that the bank could write off the rest as a loss for tax purposes. On top of that, the bank was allowed to credit many things it would have done anyway in the regular course of business as payments under the settlement. The final penalty amount paid by JPMorgan is sure to be much less than $13 billion.
This isn’t a new phenomenon. Remember the Exxon-Valdez disaster? After the company was finally ordered to pay $500 million, it took a $200 million tax deduction and ended up forking only over three-fifths of the original amount.
A lot of these arrangements happen out of the public eye—long after federal officials have heralded their supposedly tough approach to corporate crime. But now, Senators Elizabeth Warren and Tom Coburn plan to introduce a bill forcing federal agencies to be honest about how much they’re really making the corporations pay.
The Truth in Settlements Act places a number of demands on federal enforcement agencies when it comes to specificity and transparency of settlements over $1 million. Among the provisions:
Written public statements from federal agencies that reference the settlement amount must specify how much of it is potentially tax-deductible, “so that the public can easily assess the potential tax implications.”
Public statements from enforcement agencies must also explain what type of conduct would qualify as a credit towards the total settlement amount, so the public can see how much of the penalty is truly extraordinary.
On the other end, corporations that settle with enforcement agencies must state in their SEC filings whether they have deducted any settlement penalties from their taxes, so as to increase public awareness of the true amount.
One way that the government could avoid these restrictions is by deeming settlements “confidential.” It can do so now without offering any explanation as to why.
But the Warren-Coburn bill would change that, too—it would require federal enforcement agencies to provide an explanation for all confidential settlements, and to release aggregate statistics each year about the number of confidential versus non-confidential settlements, plus the dollar amounts involved. It would also direct the Government Accountability Office to examine how often federal agencies are making settlements confidential, and recommend any necessary changes.
Warren has been pushing the executive branch to get tougher on corporate crime since coming to the Senate, and this bill is yet another avenue for that approach. “Increased transparency will shut down backroom deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for strong and effective enforcement that benefits the public interest,” she said in a statement.
No doubt the deeply conservative Senator Coburn is an unusual partner for Warren, but it dovetails with his long-standing interest in government transparency and the federal ledger. “Our bill gives taxpayers the transparency tools they need to access real information and numbers regarding enforcement settlements,” he said.
Read Next: while the banks are negotiating favorable settlements, the rest of America is living in a low-wage nation.
In the timeless tradition of Washington, former Defense Secretary Robert Gates will soon release a memoir bashing some former colleagues and revisting the major policy debates of his tenure. The headline of the New York Times preview of the book nicely encapsulates the really big news here: “Obama Lost Faith in His Afghan Strategy, Book Asserts.”
According to the Times:
Mr. Gates says that by 2011, Mr. Obama began expressing his own criticism of the way his strategy in Afghanistan was playing out.
At a pivotal meeting in the situation room in March 2011, Mr. Gates said, Mr. Obama opened with a blast of frustration over his Afghan policy—expressing doubts about Gen. David H. Petraeus, the commander he had chosen, and questioning whether he could do business with the Afghan president, Hamid Karzai.
“As I sat there, I thought: The president doesn’t trust his commander, can’t stand Karzai, doesn’t believe in his own strategy and doesn’t consider the war to be his,” Mr. Gates writes. “For him, it’s all about getting out.”
Let’s stipulate first that this is just Gates’s assessment of Obama from afar—though, of course, much closer than any of us ever get.
But if it is accurate, it is a massive revelation. Gates says Obama lost faith in the surge, but also in the fundamentals of the war, like whether he could deal with Karzai. According to Gates, these doubts were deep enough that Obama and ultimately wanted to disown the entire war effort and “get out.”
But he didn’t. This is where the real scandal exists. Since March of 2011, when this meeting occurred and when the defense secretary made a personal assessment the president lost faith in the Afghan mission, thousands and thousands of troops continued to be deployed. And 781 of them died.
Did Obama personally believe the war was a lost cause throughout this time? Did he sign each letter of condolence to the families knowing that the loss was for naught?
There are more immediate implications as well. The White House is strongly pushing for a long-term security agreement with Afghanistan that could keep as many as 15,000 US troops in the country to “2024 and beyond.” These troops would still be allowed to engage in combat missions. In other words, the longest and least-popular war in American history would drag on.
Is this happening despite the commander in chief himself being one of the 82 percent of Americans who opposes the war? How can that be?
So far, many Beltway scribes are focusing on much more trivial matters, like what Gates said about Hillary Clinton and Joe Biden and how that relates to the 2016 presidential primary. Never mind that. The true scandal is a war that may drag on even though the people in charge have lost faith.
Read Next: Nick Turse asks why US Special forces are deployed in over 100 countries.
After a long holiday break, Congress returns to Washington on Monday ready to tackle a heavy legislative agenda—and the first order of business is a vote on a bill to extend long-term unemployment benefits for three months. Though the outcome is still far from settled, Republicans appear ready to vote the bill down, despite widespread unemployment problems in their own states.
The bill has one Republican co-sponsor, Senator Dean Heller of Nevada, who represents a state with the second-highest percentage of residents who have been jobless for more than six months. If that’s the formula for getting GOP support, then there shouldn’t be any problem. Note the area of the country with the highest levels of long-term unemployment, which I have helpfully highlighted:
In eight Southern states—Florida, Georgia, Mississippi, Alabama, South Carolina, North Carolina, Tennessee and Kentucky—the long-term jobless rate is quite high compared to much of the rest of the country. Of the sixteen senators representing those states, fourteen are Republicans (with one Democrat in both North Carolina and Florida.)
That means not only higher numbers of constituents being hurt by the benefit lapse, but a bigger hit to the state economy—Democrats on the House Ways and Means Committee estimate $400 million in economic activity was lost in the first week without benefits, and Harvard economist Lawrence Katz puts that number at $1 billion. That damage is naturally concentrated more heavily in states where more people are missing benefit checks.
So Democrats should have no trouble finding just four more Republicans to vote for a benefit extension, right?
Alas, many of those very senators are already on the record against an extension.
Many of those states are deep, deep red—so even though polls show substantial, bipartisan support for extending the emergency unemployment program, and though many local media outlets are aggressively covering the issue, the senators in question have little to fear.
There are certainly enough senators remaining who might deliver the needed “yes” votes—say, someone like Republican Mark Kirk in Illinois, which is a blue state with a high level of long-term unemployment.
And maybe that will work. But if it doesn’t, there are larger perils for the Republican party—Democrats are reportedly ready to once again embrace economic populism as a campaign message this year, and if Republicans block a meager benefit extension for those hardest hit by the recession, they play into Democratic hands.
That should worry all GOP senators, regardless of where they’re from. Voting against a benefit extension may not hurt Senator Jeff Sessions too badly in Alabama, but it may do real damage to his chances of being in the majority at this time next year.
Read Next: Take action! Demand that Congress renews longterm unemployment benefits.
Long-term unemployment benefits expired on December 28, meaning an absence of checks this week for more than 1 million jobless Americans. That’s bad news for them, of course—but also the rest of us. According to a new analysis from the minority staff of the House Ways and Means Committee released Friday, $400 million was drained from state economies this week alone thanks to the lapse.
Unemployment benefits are one of the more effective forms of stimulus because the money is badly needed and thus spent right away. The Congressional Budget Office says 200,000 jobs will be lost this year if the benefits are not restored, and this week the damage began.
Big states were obviously the hardest hit, naturally: nearly $65 million came out of the California economy in one week alone, according to the analysis. And of course, states represented by Republicans who oppose the extension each suffered some economic harm. Senator John Cornyn twice blocked a vote on an unemployment insurance extension before the holiday recess, and his home state of Texas lost $21.8 million this week.
Yet Republicans, so far, have not expressed any desire to extend the benefits. “Every week that Republicans fail to act tens of thousands of additional long-term unemployed Americans lose this vital lifeline as they look to get back on their feet after the worst recession in generations, and the economy in each state is taking a hit,” said Representative Sander Levin, the ranking member on Ways and Means.
Senator Harry Reid has promised a vote early next week on a bill by Senators Jack Reed and Dean Heller to extend the benefits for three months, with no offsetting spending cut, so that a longer-term bill can be worked out. But Heller is the only known Senate GOP sponsor to date, and House Speaker John Boehner has said he doesn’t want any bill without a pay-for attached.
If that bill fails, Democrats have a couple options this month: an extension of benefits could perhaps be folded into either the farm bill, which is in conference negotiations, or into the several omnibus spending bills that need to be finalized soon. In those latter two cases, Republicans would no doubt extract some sort of price from Democrats for extended benefits, but perhaps a solution is still possible.
But, again, Republicans seem to have other plans. House majority leader Eric Cantor announced Thursday his plans for the new year: yet another vote to modify Obamacare, this time adding new security requirements to the health insurance exchanges. The White House has said there is no danger of breaches, and some observers, like Steve Benen, think Cantor’s bill is simply a ploy to scare people away from the exchanges.
In any case, while Cantor fiddles around with his messaging bill on Obamacare (which will never be signed into law), his home state of Virginia lost $2.8 million in economic activity this week, as 9,700 people lost benefits. That’s going to be hard to justify as time goes on, both for Cantor and his colleagues.
Read Next: Allison Kilkenny on student debt.
There’s a certain buzz in Washington that correcting income inequality is back on the agenda—big speeches are made, think tanks launched, strenuously worded columns published. But in practice, this means exactly nothing (yet) for economically challenged Americans.
In fact, this year has seen Washington actively make the fortunes of many middle- and low-income Americans worse: federal pensions will get slashed, food stamps have been cut (and will be cut again) and vital long-term unemployment insurance will expire. And forget about anything proactive like raising the minimum wage.
Tuesday afternoon, Senator Tom Harkin took to the Senate floor and gave one of the more bracing speeches of the year, in which he called out the “benign neglect” of Congress towards Americans with “tough lives.”
I would encourage you to read or watch the entire speech (especially if you, say, work in the office of a Republican House member) but allow me to quote from it at length here first. It’s a message that essentially escaped notice this week, but if historians are looking back on this awful gilded period in American history, they would likely identify a voice of sanity amidst all the madness.
“We used to agree that if you worked hard and played by the rules, you should be able to earn enough to support your family and keep a roof over your head, put some money away for a rainy day, and have a secure retirement.
“We used to agree that if you lose your job through no fault of your own, especially at a time of chronic unemployment, you should have some support while you’re looking for new work. We used to agree—on both sides of the aisle—that no child in this country should go to bed hungry at night.
“But in recent years, it has been alarming to see how these fundamental principles and values are being attacked in our public discourse. For many, the new attitude is ‘you’re on your own.’ And if you struggle, even if you face insurmountable challenges, it’s probably your own fault.
“There is a harshness, born of a benign neglect, toward those Americans who have tough lives, are ill-educated, marginally employed, or just down on their luck.
“It used to be that we only heard such harsh rhetoric from talk radio partisans trying to attract ratings. Sadly, now it has become part of our everyday conversation here in the United States Congress. We hear how minimum wage workers don’t deserve a fair wage because they are not worth $10.10 an hour. We hear that unemployed workers should be cut off from unemployment insurance because they are becoming ‘dependent.’ But they are trying to support their families on $310 a week on average—and that ranges from $193 on average in Mississippi to $490 on average in Massachusetts.
“At a time when there are three job seekers for every job, we hear that it’s critical to take away food assistance from millions of individuals so that, supposedly, they will learn the redemptive power of work—as if young mothers working service jobs, laid off factory workers delivering newspapers, and unemployed families receiving SNAP benefits need to be lectured by members of the House of Representatives about work.
“What has happened to respect for the people who do the work and want to work in our country? What happened to our values—the basic moral truth—that people shouldn’t go hungry in the richest country in the world?
“And how did we get to the point where many of us value the work of day-traders pushing paper on Wall Street, but ignore the contributions of the people who work in day care centers, educate our children, and care for our elderly in the twilight of life? What about their value?
Harkin is right in this last bit—just looking at the record shows Congress clearly does value the work of the financial sector over most everyone else. For just one small example, consider the budget bill slated to pass only hours after Harkin spoke. While it cuts the pensions of federal workers and doesn’t include any extension of long-term unemployment benefits, it did manage to exclude a non-binding measure simply expressing a sense of Congress that maybe big banks shouldn’t be so big that their failure endangers the economy.
On this and so many other examples (think the airport waiting line carve-out from sequestration), the policy priorities of the wealthy tend to win out in Washington, as Marty Gilens, a professor of politics at Princeton, has demonstrated convincingly:
But that wasn’t the thrust of Harkin’s speech. Time and again he went after the ideology that those relying on government benefits are in the wrong, and unworthy of help—at times targeting his colleagues by name.
“Senator Paul, for example, said last week that he didn’t support an extension of the federal unemployment program. He said: ‘When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed…group in our…economy, and…while it seems good, it actually does a disservice to the people you’re trying to help.’
“A ‘disservice?’ Frankly, I don’t understand at all this kind of myopia, this harshness.”
Almost to reinforce Harkin’s point, less than twenty-four hours later a Republican House member suggested that poor children should sweep the floor in exchange for their subsidized lunch.
It’s this attitude Harkin condemned, and ended with words from a woman in Colorado and a plea for compassion:
“Let me close with one more statement from a real worker whose life will be improved if we here in Congress will step up and support the people who do the work in our country. She has a lesson for us here in Washington. Jackie Perkins works at a restaurant in Denver, CO, and she says:
‘You’re talking about real people.… You can sit in your ivory tower in the legislature and talk about economics and numbers and…jobs, but what you don’t understand is…there are real jobs…and real workers who have families that they need to support, and raising the minimum wage helps me support myself and my family and to advance…and to achieve the American dream.’
I believe in Jackie’s dreams and those of all hard-working Americans. As we look ahead to Christmas and the New Year, I hope that all my colleagues here will take time over the holiday to think about all the blessings we have been given, all we should be thankful for. And I hope we put ourselves in the shoes of those working people, who just want to build a better life for themselves and their children. Think about the minimum-wage retail worker who works hard running the cash register, standing all day, but can’t afford to shop in her own store. Think of the unemployed worker who must go to the local food bank because he can’t find a job and can’t afford Christmas dinner.
We have a duty to make sure the people who do the work in this country get a fair chance to aspire to the American Dream. When we return from the holidays I urge all of my colleagues to support a strong food assistance program, a richly deserved and long-overdue increase in the minimum wage, and an extension of federal unemployment insurance. And let’s have a new year that’s filled with less harshness and a little bit more compassion and understanding for our fellow Americans.
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