|Posted by Jerrald J President on September 17, 2018 at 10:15 AM||comments (0)|
This is what a "REAL GANGSTER" looks like. By JJP
What We Need to Fight the Next Financial Crisis
Congress has taken away some of the tools that were crucial to us during the 2008 panic. It’s time to bring them back.
By Ben S. Bernanke, Timothy F. Geithner and Henry M. Paulson Jr.
Mr. Bernanke is a former chairman of the Federal Reserve. Mr. Geithner and Mr.
Ten years ago, the global economy teetered in the face of a classic financial panic, the most dangerous type of financial crisis. In a financial panic, investors lose confidence in all forms of credit, retreating to the safest and most liquid assets, like Treasury bills. The prices of risky assets collapse, and new credit becomes unavailable, with dire consequences for workers, homeowners and savers.
The seeds of the panic were sown over decades, as the American financial system outgrew the protections against panics that were put in place after the Great Depression. Depression-era safeguards, like deposit insurance, were aimed at ensuring that the banking system remained stable, but by 2007 more than half of all credit flowed outside banks. Financial innovations, like subprime mortgages and automated credit scoring, helped millions to buy homes, but they also facilitated unwise risk-taking by lenders and investors.
Most dangerously, trillions of dollars of risky credit were financed by uninsured, short-term funding. This made the financial system vulnerable to runs — not by ordinary bank depositors, as in the 1930s, but by pension funds, life insurance companies, and other investors. A Balkanized and antiquated regulatory system made identifying these risks difficult and provided policymakers with limited authority to respond when the panic erupted.
The underlying performance of the broader economy before the crisis was troubling as well. Productivity growth was slowing, wages were stagnating, and the share of Americans who were working was shrinking. That put pressure on family incomes even as inequality rose and upward social mobility declined. The desire to maintain relative living standards no doubt contributed to a surge in household borrowing before the crisis.
Henry Paulson, Ben Bernanke and Timothy Geithner worked with regulators and other officials to stabilize the American economy during the 2008 financial crisis.CreditMatthew Cavanaugh/European Pressphoto Agency
Although we and other financial regulators did not foresee the crisis, we moved aggressively to stop it. Acting in its traditional role as lender of last resort, the Federal Reserve provided massive quantities of short-term loans to financial institutions facing runs, while cutting interest rates nearly to zero. The Treasury Department stopped a run on money market funds by providing a backstop for investors. The Treasury also managed the takeover of the mortgage giants Fannie Mae and Freddie Mac, and worked with the Fed to try to prevent the collapse of large, systemically important financial firms. The Federal Deposit Insurance Corporation guaranteed bank debt and protected depositors.
But the powers of the regulators alone proved inadequate. Congressional action made it possible for two presidents, one Republican and one Democratic, working with regulators, to prevent the collapse of the financial system and avoid another Great Depression. Most importantly, Congress provided capital to the banking system, allowing for the normalization of credit flows. Congress also provided support for housing and mortgage markets and authorized a powerful fiscal stimulus. The economy began to grow again in mid-2009, and the funds deployed by Congress were recovered with substantial profit to the taxpayer. Policymakers certainly didn’t get everything right. But compared to most other countries, America’s post-2008 recovery started sooner, was completed faster and was built on healthier foundations.
Are we ready for the next crisis? In some respects, yes. Reforms of financial regulation have helped make the system more resilient, making a crisis less likely to occur. Banks and other key financial institutions are financially stronger, and the gaps in regulatory oversight have largely been closed. Regulators are more attuned to systemwide risks. Our main concern is that these defenses will erode over time and risk-taking will emerge in corners of the financial system that are less constrained by regulation.
the next financial crisis
Even if a financial crisis is now less likely, one will occur eventually. To contain the damage, the Treasury and financial regulators need adequate firefighting tools. After the crisis, Congress gave regulators some promising new authorities to help them manage the failure of an individual financial institution, tools we did not have in the fall of 2008 when we faced the collapse of the investment bank Lehman Brothers. The so-called orderly liquidation authority, for example, which was passed as part of the Dodd-Frank Act in 2010, could help regulators unwind a failing firm in a manner that could be less damaging to the system as a whole.
But in its post-crisis reforms, Congress also took away some of the most powerful tools used by the FDIC, the Fed and the Treasury. Among these changes, the FDIC can no longer issue blanket guarantees of bank debt as it did in the crisis, the Fed’s emergency lending powers have been constrained, and the Treasury would not be able to repeat its guarantee of the money market funds. These powers were critical in stopping the 2008 panic.
From a political perspective, Congress’s decision to limit these crisis-fighting tools was predictable. Many of the actions necessary to stem the crisis, including the provision of loans and capital to financial institutions, were controversial and unpopular. To us, as to the public, the responses often seemed unjust, helping some of the very people and firms who had caused the damage. Those reactions are completely understandable, particularly since the economic pain from the panic was devastating for many.
The paradox of any financial crisis is that the policies necessary to stop it are always politically unpopular. But if that unpopularity delays or prevents a strong response, the costs to the economy become greater. We need to make sure that future generations of financial firefighters have the emergency powers they need to prevent the next fire from becoming a conflagration. We must also resist calls to eliminate safeguards as the memory of the crisis fades. For those working to keep our financial system resilient, the enemy is forgetting.
Ben S. Bernanke, a fellow at the Brookings Institution, was chairman of the Federal Reserve from 2006 to 2014. @BenBernanke
Timothy F. Geithner, president of the private equity firm Warburg Pincus, was Secretary of the Treasury from 2009 to 2013.
Henry M. Paulson Jr., chairman of the Paulson Institute, was Secretary of the Treasury from 2006 to 2009.
|Posted by Jerrald J President on August 28, 2018 at 6:50 PM||comments (0)|
The discretionary budget is $1.203 trillion. More than half goes toward military spending, including the Department of Veterans Affairs and other defense-related departments. To quote the late great 2Pac "They got money for WARS , but can't feed the POOR". By JJP
U.S. Federal Budget Breakdown
The Budget Components and Impact on the US Economy
In Fiscal Year 2019, the federal budget will be $4.407 trillion. The U.S. government estimates it will receive $3.422 trillion in revenue. That creates a $985 billion deficit for October 1, 2018 through September 30, 2019.
Spending is in three categories: Mandatory, which is at $2.739 trillion; Discretionary at $1.305 trillion; and Interest on the National Debt, $363 billion. This article provides a detailed breakdown of each. You can also find links to past budgets at the end.
US Tax Time
Most of the government's revenue comes from you. Photo: David Freund/Getty Images
The federal government will receive $3.422 trillion in revenue. Most of the taxes are paid by you, either through income or payroll taxes:
Income taxes contribute $1.622 trillion or 49 percent of total receipts.
Social Security, Medicare, and other payroll taxes add $1.238 trillion or 36 percent.
Corporate taxes supply $225 billion or 7 percent.
Excise taxes and tariffs contribute $152 billion or 4 percent.
Earnings from the Federal Reserve's holdings add $55 billion or 2 percent. Those are interest payments on the U.S. Treasury debt the Fed acquired through quantitative easing.
Estate taxes and other miscellaneous revenue supply the remaining 2 percent.
It's estimated that each taxpayer works until late April each year to pay for all federal revenue collected. That's Tax Freedom Day. Can you think of any other purchase you make for which you've worked as hard and long?
The government will spend $4.407 trillion. Most of this, about 62 percent of expenditure, pays for mandated benefits such as Social Security, Medicare, and Medicaid.
Interest on the U.S. debt is $363 billion. The U.S. Treasury must pay it to avoid a U.S. debt default. The United States has been fortunate because interest rates have been low. A worldwide flight to safety increased demand for Treasury notes, lowering rates. Now that the global economy is strengthening, Treasury yields are rising. So will interest payments. Interest on the $21 trillion debt is already the fastest growing federal expense.
The remaining 38 percent of the budget pays for everything else. It's called discretionary spending. The U.S. Congress changes this amount each year. It uses the president's budget as a starting point.
Mandatory spending is $2.739 trillion. Social Security is by far the biggest expense at $1.046 trillion. Medicare is next at $625 billion, followed by Medicaid at $412 billion.
Social Security costs are currently covered 100 percent by payroll taxes and interest on past payroll taxes that have been invested. Until 2010, there was more coming into the Social Security Trust Fund than being paid out. Thanks to interest on investments, the Trust Fund is still running a surplus. But, the Trust Fund’s Board estimates that this surplus will be depleted by 2036. Social Security revenue, from payroll taxes and interest earned, will cover only 77 percent of the benefits promised to retirees.
Medicare is already underfunded. Medicare taxes don't pay for all benefits, so this program relies on general tax dollars to pay for a portion of it. Medicaid is 100 percent funded by the general fund
The discretionary budget is $1.203 trillion. More than half goes toward military spending, including the Department of Veterans Affairs and other defense-related departments. The rest must pay for all other domestic programs. The largest are Health and Human Services, Education, and Housing and Urban Development.
There is an emergency fund of $111.4 billion that's not included in the budget process. Most of that, amounting to $88.9 billion, goes to Overseas Contingency Operations to pay for wars.
Military spending was budgeted at $886 billion. The biggest expense is the Department of Defense base budget at $597.1 billion. Overseas Contingency Operations will cost $88.9 billion.
Military spending also includes $181.3 billion for defense-related departments. These include Homeland Security, the State Department, and Veterans Affairs. These departments also receive emergency funding of $18.7 billion. That pays for the war on terror costs triggered by the 9/11 attacks. These include ongoing costs from the war in Iraq and the Afghanistan war.
Congress approved a spending bill of $892.7 billion. It includes $616.9 billion for the DoD base budget, $69 billion for the OCO, and $21.9 billion for the National Nuclear Security Administration within the Department of Energy.
The Capitol building stands behind caution tape
The budget deficit will be $985 billion. That's the difference between $3.422 trillion in revenue and $4.407 trillion in spending. The article on “Deficit by President” shows which U.S. president racked up the highest expenses. A look at the deficit by year will reveal trends in the country’s annual deficits.
How the Deficit Contributes to the National Debt
deficit vs debt
Each year's deficit adds to the debt. Photo: Image Source/Getty Images
Each year, the deficit adds to the U.S. debt. This anticipated tax slows economic growth. It’s like driving a car with the brakes on. It raises interest rates, as investors demand more return. They become hesitant to purchase Treasurys because they fear not being repaid.
Now that the economy has recovered, deficit spending is not necessary. Congress should create a budget surplus to reduce the national debt burden. But it isn’t being done because politicians, who slice popular programs, usually find themselves cut out from the next election.
Congress created the budget process. First, the Executive Office of Management and Budget prepares the budget. The president submits it to Congress on or before the first Monday in February. Congress is supposed to respond with spending appropriation bills that go to the president by June 30. The president has 10 days to reply.
Most important, the deadline for budget approval is September 30. If it isn't approved, the government can shut down, as it did in January 2018 and in 2013. To avoid that, Congress usually passes a continuing resolution. It keeps the government running at spending levels of the last budget. Since the FY 2010 budget, Congress has only followed the budget process twice.
|Posted by Jerrald J President on August 28, 2018 at 6:40 PM||comments (0)|
No; Especially for those who live in America By JJP
The US Carried Out 674 Military Operations in Africa Last Year. Did You Hear About Any of Them?
The US military publicly insists its presence in Africa is negligible. Is that why they call it an American “battlefield” behind closed doors?
For three days, wearing a kaleidoscope of camouflage patterns, they huddled together on a military base in Florida. They came from US Special Operations Command (SOCOM) and US Army Special Operations Command, from France and Norway, from Denmark, Germany, and Canada: 13 nations in all. They came to plan a years-long “Special Operations-centric” military campaign supported by conventional forces, a multinational undertaking that—if carried out—might cost hundreds of millions, maybe billions, of dollars and who knows how many lives.
Ask the men involved and they’ll talk about being mindful of “sensitivities” and “cultural differences,” about the importance of “collaboration and coordination,” about the value of a variety of viewpoints, about “perspectives” and “partnerships.” Nonetheless, behind closed doors and unbeknownst to most of the people in their own countries, let alone the countries fixed in their sights, a coterie of Western special ops planners were sketching out a possible multinational military future for a troubled region of Africa.
From January 13th to 15th, representatives from the United States and 12 partner nations gathered at MacDill Air Force Base in Tampa for an exercise dubbed Silent Quest 15-1. The fictional scenario on which they were to play out their war game had a ripped-from-the-headlines quality to it. It was an amalgam of two perfectly real and ongoing foreign policy and counterterrorism disasters of the post-9/11 era: the growth of Boko Haram in Nigeria and the emergence of the Islamic State, also known as the Islamic State of Iraq and the Levant or ISIL. The war game centered on the imagined rise of a group dubbed the “Islamic State of Africa” and the spread of its proto-caliphate over parts of Nigeria, Niger, and Cameroon—countries terrorized by the real Boko Haram, which did recently pledge its allegiance to the Islamic State.
Silent Quest 15-1 was just the latest in a series of similarly named exercises—the first took place in March 2013—designed to help plot out the special ops interventions of the next decade. This war game was no paintball-style walk in the woods. There were no mock firefights, no dress rehearsals. It wasn’t the flag football equivalent of battle. Instead, it was a tabletop exercise building on something all too real: the ever-expanding panoply of US and allied military activities across ever-larger parts of Africa. Speaking of that continent, Matt Pascual, a participant in Silent Quest and the Africa desk officer for SOCOM’s Euro-Africa Support Group, noted that the United States and its allies were already dealing with “myriad issues” in the region and, perhaps most importantly, that many of the participating countries “are already there.” The country “already there” the most is, of course, Pascual’s own: the United States.
In recent years, the United States has been involved in a variety of multinational interventions in Africa, including one in Libya that involved both a secret war and a conventional campaign of missiles and air strikes, assistance to French forces in the Central African Republic and Mali, and the training and funding of African proxies to do battle against militant groups like Boko Haram as well as Somalia’s al-Shabab and Mali’s Ansar al-Dine. In 2014, the United States carried out 674 military activities across Africa, nearly two missions per day, an almost 300% jump in the number of annual operations, exercises, and military-to-military training activities since US Africa Command (AFRICOM) was established in 2008.
Despite this massive increase in missions and a similar swelling of bases, personnel, and funding, the picture painted last month before the Senate Armed Services Committee by AFRICOM chief General David Rodriguez was startlingly bleak. For all the American efforts across Africa, Rodriguez offered a vision of a continent in crisis, imperiled from East to West by militant groups that have developed, grown in strength, or increased their deadly reach in the face of US counterterrorism efforts.
“Transregional terrorists and criminal networks continue to adapt and expand aggressively,” Rodriguez told committee members. “Al-Shabab has broadened its operations to conduct, or attempt to conduct, asymmetric attacks against Uganda, Ethiopia, Djibouti, and especially Kenya. Libya-based threats are growing rapidly, including an expanding ISIL presence… Boko Haram threatens the ability of the Nigerian government to provide security and basic services in large portions of the northeast.” Despite the grim outcomes since the American military began “pivoting” to Africa after 9/11, the United States recently signed an agreement designed to keep its troops based on the continent until almost midcentury.
For years, the US military has publicly insisted that its efforts in Africa are negligible, intentionally leaving the American people, not to mention most Africans, in the dark about the true size, scale, and scope of its operations there. AFRICOM public affairs personnel and commanders have repeatedly claimed no more than a “light footprint” on the continent. They shrink from talk of camps and outposts, claiming to have just one baseanywhere in Africa: Camp Lemonnier in the tiny nation of Djibouti. They don’t like to talk about military operations. They offer detailed information about only a tiny fraction of their training exercises. They refuse to disclose the locations where personnel have been stationed or even counts of the countries involved.
During an interview, an AFRICOM spokesman once expressed his worry to me that even tabulating how many deployments the command has in Africa would offer a “skewed image” of US efforts. Behind closed doors, however, AFRICOM’s officers speak quite a different language. They have repeatedly asserted that the continent is an American “battlefield” and that—make no bones about it—they are already embroiled in an actual “war.”
According to recently released figures from US Africa Command, the scope of that “war” grew dramatically in 2014. In its “posture statement,” AFRICOM reports that it conducted 68 operations last year, up from 55 the year before. These included operations Juniper Micron and Echo Casemate, missions focused on aiding French and African interventions in Mali and the Central African Republic; Observant Compass, an effort to degrade or destroy what’s left of Joseph Kony’s murderous Lord’s Resistance Army in central Africa; and United Assistance, the deployment of military personnel to combat the Ebola crisis in West Africa.
The number of major joint field exercises US personnel engaged in with African military partners inched up from 10 in 2013 to 11 last year. These included African Lion in Morocco, Western Accord in Senegal, Central Accord in Cameroon, and Southern Accord in Malawi, all of which had a field training component and served as capstone events for the prior year’s military-to-military instruction missions.
AFRICOM also conducted maritime security exercises including Obangame Express in the Gulf of Guinea, Saharan Express in the waters off Senegal, and three weeks of maritime security training scenarios as part of Phoenix Express 2014, with sailors from numerous countries including Algeria, Italy, Libya, Malta, Morocco, Tunisia, and Turkey.
The number of security cooperation activities skyrocketed from 481 in 2013 to 595 last year. Such efforts included military training under a “state partnership program” that teams African military forces with US National Guard units and the State Department-funded Africa Contingency Operations Training and Assistance, or ACOTA, program through which US military advisers and mentors provide equipment and instruction to African troops.
In 2013, the combined total of all US activities on the continent reached 546, an average of more than one mission per day. Last year, that number leapt to 674. In other words, US troops were carrying out almost two operations, exercises, or activities—from drone strikes to counterinsurgency instruction, intelligence gathering to marksmanship training—somewhere in Africa every day. This represents an enormous increase from the 172 “missions, activities, programs, and exercises” that AFRICOM inherited from other geographic commands when it began operations in 2008.
|Posted by Jerrald J President on August 28, 2018 at 6:35 PM||comments (0)|
Meet the new Conquer, same as the old Conquer. By JJP
The U.S. is waging a massive shadow war in Africa, exclusive documents reveal
Six years ago, a deputy commanding general for U.S. Army Special Operations Command gave a conservative estimate of 116 missions being carried out at any one time by Navy SEALs, Army Green Berets, and other special operations forces across the globe.
Today, according to U.S. military documents obtained by VICE News, special operators are carrying out nearly 100 missions at any given time — in Africa alone. It’s the latest sign of the military’s quiet but ever-expanding presence on the continent, one that represents the most dramatic growth in the deployment of America’s elite troops to any region of the globe.
In 2006, just 1 percent of all U.S. commandos deployed overseas were in Africa. In 2010, it was 3 percent. By 2016, that number had jumped to more than 17 percent. In fact, according to data supplied by U.S. Special Operations Command, there are now more special operations personnel devoted to Africa than anywhere except the Middle East — 1,700 people spread out across 20 countries dedicated to assisting the U.S. military’s African partners in their fight against terrorism and extremism.
“At any given time, you will find SOCAFRICA conducting approximately 96 activities in 20 countries,” Donald Bolduc, the U.S. Army general who runs the special operations command in Africa (SOCAFRICA), wrote in an October 2016 strategic planning guidance report. (The report was obtained by VICE News in response to a Freedom of Information Act request and is published in its entirety below.) VICE News reached out to SOCAFRICA and U.S. Africa Command (AFRICOM) for clarification on these numbers; email return receipts show an AFRICOM spokesperson “read” three such requests, but the command did not offer a reply.
“Africa’s challenges could create a threat that surpasses the threat that the U.S. currently faces from conflict in Afghanistan, Iraq, and Syria.”
The October 2016 report offers insight into what the U.S. military’s most elite forces are currently doing in Africa and what they hope to achieve. In so doing, it paints a picture of reality on the ground in Africa today and what it could be 30 years from now.
That picture is bleak.
“Africa’s challenges could create a threat that surpasses the threat that the United States currently faces from conflict in Afghanistan, Iraq, and Syria,” Bolduc warned. He went on to cite a laundry list of challenges with which he and his personnel must contend: ever-expanding illicit networks, terrorist safe havens, attempts to subvert government authority, a steady stream of new recruits and resources.
Bolduc indicated his solution was the “acceleration of SOF [special operations forces] missions [filling] a strategic gap as the military adjusts force structure now and in the future.” Translation: U.S. commandos “in more places, doing more” in Africa going forward.
At the same time, Bolduc says the U.S. is not at war in Africa. But this assertion is challenged by the ongoing operations aimed at the militant group al-Shabaab in Somalia, which operates often in all-but-ungoverned and extraordinarily complex areas Bolduc calls “gray zones.”
In January, for example, U.S. advisers conducting a counterterrorism operation alongside local Somali forces and troops from the African Union Mission in Somalia “observed al-Shabaab fighters threatening their safety and security” and “conducted a self-defense strike to neutralize the threat,” according to a press release from AFRICOM.
A U.S. Army Green Beret patrols with Nigerian soldiers during a training exercise in February. (Photo by Staff Sgt. Kulani Lakanaria)
Earlier this month, in what AFRICOM described as “an advise-and-assist operation alongside Somali National Army forces,” Navy SEAL Kyle Milliken was killed and two other U.S. personnel were injured during a firefight with al-Shabaab militants about 40 miles west of Somalia’s capital, Mogadishu. The battle occurred shortly after President Donald Trump loosened Obama-era restrictions on offensive operations in Somalia, thereby allowing U.S. forces more discretion and leeway in conducting missions and opening up the possibility of more frequent airstrikes and commando raids.
“It allows us to prosecute targets in a more rapid fashion,” Gen. Thomas Waldhauser, the AFRICOM commander, said of the change. In April, the U.S. military reportedly requested the locations of aid groups working in the country, an indication that yet a greater escalation in the war against al-Shabaab may be imminent.
“Looking at counterterrorism operations in Somalia, it’s clear the U.S. has been relying heavily on the remote-control form of warfare so favored by President Obama,” said Jack Serle, who covers the subject for the London-based Bureau of Investigative Journalism.
Recently, the U.S. has augmented this strategy, working alongside local Somali forces and African Union troops under the banner of “train, advise, and assist” missions and other types of “support” operations, according to Serle. “Now they partner with local security forces but don’t engage in actual combat, the Pentagon says. The truth of that is hard to divine.”
U.S. operations in Somalia are part of a larger continent-spanning counterterrorism campaign that saw special operations forces deploy to at least 32 African nations in 2016, according to open source data and information supplied by U.S. Special Operations Command. The cornerstone of this strategy involves training local proxies and allies — “building partner capacity” in the military lexicon.
“Providing training and equipment to our partners helps us improve their ability to organize, sustain, and employ a counter violent extremist force against mutual threats,” the SOCAFRICA report says.
As part of its increasing involvement in the war against Boko Haram militants in the Lake Chad Basin — it spans parts of Nigeria, Niger, Cameroon, and Chad — for example, the U.S. provided $156 million to support regional proxies last year.
In addition to training, U.S. special operators, including members of SEAL Team 6, reportedly assist African allies in carrying out a half dozen or more raids every month. In April, a U.S. special operator reportedly killed a fighter from Joseph Kony’s Lord’s Resistance Army during an operation in the Central African Republic. U.S. forces also remain intimately involved in conflict in Libya after the U.S. ended an air campaign there against the Islamic State group in December. “We’re going to keep a presence on the ground… and we’re going to develop intelligence and take out targets when they arise,” Waldhauser said in March.
“We believe the situation in Africa will get worse without our assistance.”
Though Bolduc said special operators are carrying out about 96 missions on any given day, he didn’t specify how many total missions are being carried out per year. SOCAFRICA officials did not respond to several requests for that number.
The marked increase in U.S. activity tracks with the rising number of major terror groups in Africa. A 2012 version of SOCAFRICA’s strategic planning documents also obtained by VICE News lists five major terror groups. The October 2016 files list seven by name — al-Qaida in the Lands of the Islamic Magreb, ISIS, Ansar al-Sharia, al-Murabitun, Boko Haram, the Lord’s Resistance Army, and al-Shabaab — in addition to “other violent extremist organizations,” also known as VEOs. In 2015, Bolduc said that there are nearly 50 terrorist organizations and “illicit groups” operating on the African continent.
Terror attacks in sub-Saharan Africa have skyrocketed in the past decade. Between 2006 and 2015, the last year covered by data from the National Consortium for the Study of Terrorism and Responses to Terrorism at the University of Maryland, attacks jumped from about 100 per year to close to 2,000. “From 2010 to the present,” Bolduc says in the report, “VEOs in Africa have been some of the most lethal on the planet.”
“Many of Africa’s indicators are trending downward,” he writes. “We believe the situation in Africa will get worse without our assistance.”
Colby Goodman, the director of the Washington, D.C.–based Security Assistance Monitor, pointed to some recent tactical gains against terror groups, but warned that progress might be short-lived and unsustainable. “My continuing concerns about U.S. counterterrorism strategy in Africa,” he said, “is an over-focus on tactical military support to partner countries at the expense of a more whole-government approach and a lack of quality assessments and evaluations of U.S. security aid to these countries.”
|Posted by Jerrald J President on August 28, 2018 at 6:30 PM||comments (0)|
Don't ever forget who the PRESIDENT was when these military operations began! President Obama...The face of White Supremacy does not always have a White face. By JJP
U.S. expands secret intelligence operations in Africa
OUAGADOUGOU, Burkina Faso — The U.S. military is expanding its secret intelligence operations across Africa, establishing a network of small air bases to spy on terrorist hideouts from the fringes of the Sahara to jungle terrain along the equator, according to documents and people involved in the project.
At the heart of the surveillance operations are small, unarmed turboprop aircraft disguised as private planes. Equipped with hidden sensors that can record full-motion video, track infrared heat patterns, and vacuum up radio and cellphone signals, the planes refuel on isolated airstrips favored by African bush pilots, extending their effective flight range by thousands of miles.
About a dozen air bases have been established in Africa since 2007, according to a former senior U.S. commander involved in setting up the network. Most are small operations run out of secluded hangars at African military bases or civilian airports.
The nature and extent of the missions, as well as many of the bases being used, have not been previously reported but are partially documented in public Defense Department contracts. The operations have intensified in recent months, part of a growing shadow war against al-Qaeda affiliates and other militant groups. The surveillance is overseen by U.S. Special Operations forces but relies heavily on private military contractors and support from African troops.
The surveillance underscores how Special Operations forces, which have played an outsize role in the Obama administration’s national security strategy, are working clandestinely all over the globe, not just in war zones. The lightly equipped commando units train foreign security forces and perform aid missions, but they also include teams dedicated to tracking and killing terrorism suspects.
The establishment of the Africa missions also highlights the ways in which Special Operations forces are blurring the lines that govern the secret world of intelligence, moving aggressively into spheres once reserved for the CIA. The CIA has expanded its counterterrorism and intelligence-gathering operations in Africa, but its manpower and resources pale in comparison with those of the military.
U.S. officials said the African surveillance operations are necessary to track terrorist groups that have taken root in failed states on the continent and threaten to destabilize neighboring countries.
A hub for secret network
A key hub of the U.S. spying network can be found in Ouagadougou (WAH-gah-DOO-goo), the flat, sunbaked capital of Burkina Faso, one of the most impoverished countries in Africa.
Under a classified surveillance program code-named Creek Sand, dozens of U.S. personnel and contractors have come to Ouagadougou in recent years to establish a small air base on the military side of the international airport.
The unarmed U.S. spy planes fly hundreds of miles north to Mali, Mauritania and the Sahara, where they search for fighters from al-Qaeda in the Islamic Maghreb, a regional network that kidnaps Westerners for ransom.
The surveillance flights have taken on added importance in the turbulent aftermath of a March coup in Mali, which has enabled al-Qaeda sympathizers to declare an independent Islamist state in the northern half of the country.
Elsewhere, commanders have said they are increasingly worried about the spread of Boko Haram, an Islamist group in Nigeria blamed for a rash of bombings there. U.S. forces are orchestrating a regional intervention in Somalia to target al-Shabab, another al-Qaeda affiliate. In Central Africa, about 100 American Special Operations troops are helping to coordinate the hunt for Joseph Kony, the Ugandan leader of a brutal guerrilla group known as the Lord’s Resistance Army.
The results of the American surveillance missions are shrouded in secrecy. Although the U.S. military has launched airstrikes and raids in Somalia, commanders said that in other places, they generally limit their involvement to sharing intelligence with allied African forces so they can attack terrorist camps on their own territory.
The creeping U.S. military involvement in long-simmering African conflicts, however, carries risks. Some State Department officials have expressed reservations about the militarization of U.S. foreign policy on the continent. They have argued that most terrorist cells in Africa are pursuing local aims, not global ones, and do not present a direct threat to the United States.
The potential for creating a popular backlash can be seen across the Red Sea, where an escalating campaign of U.S. drone strikes in Yemen is angering tribesmen and generating sympathy for an al-Qaeda franchise there.
In a response to written questions from The Washington Post, the U.S. Africa Command said that it would not comment on “specific operational details.”
“We do, however, work closely with our African partners to facilitate access, when required, to conduct missions or operations that support and further our mutual security goals,” the command said.
Surveillance and intelligence-gathering operations, it added, are “simply a tool we employ to enable host nation militaries to better understand the threat picture.”
Uncovering the details
The U.S. military has largely kept details of its spy flights in Africa secret. The Post pieced together descriptions of the surveillance network by examining references to it in unclassified military reports, U.S. government contracting documents and diplomatic cables released by WikiLeaks, the anti-secrecy group.
Further details were provided by interviews with American and African officials, as well as military contractors.
In addition to Burkina Faso, U.S. surveillance planes have operated periodically out of nearby Mauritania. In Central Africa, the main hub is in Uganda, though there are plans to open a base in South Sudan. In East Africa, U.S. aircraft fly out of bases in Ethiopia, Djibouti, Kenya and the Indian Ocean archipelago of the Seychelles.
Army Gen. Carter F. Ham, the head of U.S. Africa Command, which is responsible for military operations on the continent, hinted at the importance and extent of the air bases while testifying before Congress in March. Without divulging locations, he made clear that, in Africa, he wanted to expand “ISR,” the military’s acronym for intelligence, surveillance and reconnaissance.
“Without operating locations on the continent, ISR capabilities would be curtailed, potentially endangering U.S. security,” Ham said in a statement submitted to the House Armed Services Committee. “Given the vast geographic space and diversity in threats, the command requires increased ISR assets to adequately address the security challenges on the continent.”
Some of the U.S. air bases, including ones in Djibouti, Ethiopia and the Seychelles, fly Predator and Reaper drones, the original and upgraded models, respectively, of the remotely piloted aircraft that the Obama administration has used to kill al-Qaeda leaders in Pakistan and Yemen.
“We don’t have remotely piloted aircraft in many places other than East Africa, but we could,” said a senior U.S. military official, who spoke on the condition of anonymity to discuss intelligence matters. “If there was a need to do so and those assets were available, I’m certain we could get the access and the overflight [permission] that is necessary to do that.”
Most of the spy flights in Africa, however, take off the old-fashioned way — with pilots in the cockpit. The conventional aircraft hold two big advantages over drones: They are cheaper to operate and far less likely to draw attention because they are so similar to the planes used throughout Africa.
The bulk of the U.S. surveillance fleet is composed of single-engine Pilatus PC-12s, small passenger and cargo utility planes manufactured in Switzerland. The aircraft are not equipped with weapons. They often do not bear military markings or government insignia.
The Pentagon began acquiring the planes in 2005 to fly commandos into territory where the military wanted to maintain a clandestine presence. The Air Force variant of the aircraft is known as the U-28A. The Air Force Special Operations Command has about 21 of the planes in its inventory.
In February, a U-28A crashed as it was returning to Camp Lemonnier in Djibouti, the only permanent U.S. military base in Africa. Four airmen from the Air Force Special Operations Command were killed. It was the first reported fatal incident involving a U-28A since the military began deploying the aircraft six years ago.
Air Force officials said that the crash was an accident and that they are investigating the cause. Military officials declined to answer questions about the flight’s mission.
Because of its strategic location on the Horn of Africa, Camp Lemonnier is a hub for spy flights in the region. It is about 500 miles from southern Somalia, an area largely controlled by the al-Shabab militia. Lemonnier is even closer — less than 100 miles — to Yemen, where another al-Qaeda franchise has expanded its influence and plotted attacks against the United States.
Elsewhere in Africa, the U.S. military is relying on private contractors to provide and operate PC-12 spy planes in the search for Kony, the fugitive leader of the Lord’s Resistance Army, a group known for mutilating victims, committing mass rape and enslaving children as soldiers.
Ham, the Africa Command chief, said in his testimony to Congress in March that he was seeking to establish a base for surveillance flights in Nzara, South Sudan. Although that would bolster the hunt for Kony, who is wanted by the International Criminal Court, it would also enable the U.S. military to keep an eye on the worsening conflict between Sudan and South Sudan. The two countries fought a civil war for more than two decades and are on the verge of war again, in part over potentially rich oil deposits valued by foreign investors.
Other aviation projects are in the offing. An engineering battalion of Navy Seabees has been assigned to complete a $10 million runway upgrade this summer at the Manda Bay Naval Base, a Kenyan military installation on the Indian Ocean. An Africa Command spokeswoman said the runway extension is necessary so American C-130 troop transport flights can land at night and during bad weather.
About 120 U.S. military personnel and contractors are stationed at Manda Bay, which Navy SEALs and other commandos have used as a base from which to conduct raids against Somali pirates and al-Shabab fighters.
About 6,000 miles to the west, the Pentagon is spending $8.1 million to upgrade a forward operating base and airstrip in Mauritania, on the western edge of the Sahara. The base is near the border with strife-torn Mali.
The Defense Department also set aside $22.6 million in July to buy a Pilatus PC-6 aircraft and another turboprop plane so U.S.-trained Mauritanian security forces can conduct rudimentary surveillance operations, according to documents submitted to Congress.
Crowding the embassy
The U.S. military began building its presence in Burkina Faso in 2007, when it signed a deal that enabled the Pentagon to establish a Joint Special Operations Air Detachment in Ouagadougou. At the time, the U.S. military said the arrangement would support “medical evacuation and logistics requirements” but provided no other details.
By the end of 2009, about 65 U.S. military personnel and contractors were working in Burkina Faso, more than in all but three other African countries, according to a U.S. Embassy cable from Ouagadougou. In the cable, diplomats complained to the State Department that the onslaught of U.S. troops and support staff had “completely overwhelmed” the embassy.
In addition to Pilatus PC-12 flights for Creek Sand, the U.S. military personnel in Ouagadougou ran a regional intelligence “fusion cell” code-named Aztec Archer, according to the cable.
Burkina Faso, a predominantly Muslim country whose name means “the land of upright men,” does not have a history of radicalism. U.S. military officials saw it as an attractive base because of its strategic location bordering the Sahel, the arid region south of the Sahara where al-Qaeda’s North African affiliate is active.
Unlike many other governments in the region, the one in Burkina Faso was relatively stable. The U.S. military operated Creek Sand spy flights from Nouakchott, Mauritania, until 2008, when a military coup forced Washington to suspend relations and end the surveillance, according to former U.S. officials and diplomatic cables.
In Ouagadougou, both sides have worked hard to keep the partnership quiet. In a July 2009 meeting, Yero Boly, the defense minister of Burkina Faso, told a U.S. Embassy official that he was pleased with the results. But he confessed he was nervous that the unmarked American planes might draw “undue attention” at the airport in the heart of the capital and suggested that they move to a more secluded hangar.
“According to Boly, the present location of the aircraft was in retrospect not an ideal choice in that it put the U.S. aircraft in a section of the airfield that already had too much traffic,” according to a diplomatic cable summarizing the meeting. “He also commented that U.S. personnel were extremely discreet.”
U.S. officials raised the possibility of basing the planes about 220 miles to the west, in the city of Bobo Dioulasso, according to the cable. Boly said that the Americans could use that airport on a “short term or emergency basis” but that a U.S. presence there “would likely draw greater attention.”
In an interview with The Post, Djibril Bassole, the foreign minister of Burkina Faso, praised security relations between his country and the United States, saying they were crucial to containing al-Qaeda forces in the region.
“We need to fight and protect our borders,” he said. “Once they infiltrate your country, it’s very, very difficult to get them out.”
Bassole declined, however, to answer questions about the activities of U.S. Special Operations forces in his country.
“I cannot provide details, but it has been very, very helpful,” he said. “This cooperation should be very, very discreet. We should not show to al-Qaeda that we are now working with the Americans.”
Discretion is not always strictly observed. In interviews last month, residents of Ouagadougou said American service members and contractors stand out, even in plainclothes, and are appreciated for the steady business they bring to bars and a pizzeria in the city center.
In April 2010, one American, in particular, drew attention. A U.S. contractor who had been assigned to support the surveillance missions in Ouagadougou was flying home from Africa on leave when he announced that he had been “in Ouaga illegally” and was carrying dynamite in his boots and laptop.
As the contractor, Derek Stansberry, mumbled other incoherent stories about allegedly top-secret operations, he was grabbed by U.S. air marshals aboard the
Paris-to-Atlanta flight. No explosives were found, but the incident drew international attention.
Stansberry, who did not respond to a request for comment, was found not guilty by reason of temporary insanity; he said he was overstressed and had overdosed on the sleep aid Ambien.
A photograph on his Facebook page around the time of the incident showed him posing in the cockpit of a Pilatus aircraft. The caption read: “Flying a PC-12 ain’t that hard.”
|Posted by Jerrald J President on August 28, 2018 at 6:25 PM||comments (0)|
Yet not one individual went to jail. By JJP
The Financial Crisis Cost Every American $70,000, Fed Study Says
America never made up the growth it lost in the 2008 global financial crisis and the recession it triggered. A decade later, U.S. households are still counting the cost.
Gross domestic product remains well below what its 2007 trend would have implied and it’s unlikely the economy will ever make up that lost ground, according to research from the Federal Reserve Bank of San Francisco published Monday. The hit will cost the average American $70,000 in lifetime income, they estimate.
“Without the large adverse financial shocks experienced in 2007 and 2008, the behavior of GDP would have been very different,” Regis Barnichon and his co-authors write. They find that the hit to growth was persistently 7 percentage points deeper than it would have been in the mild recession that they think would have occurred without the financial meltdown. “This is a large number.”
They arrive at the lifetime income loss by taking per-capita GDP in 2007 and discounting at an annual 5 percent rate to calculate its present value.
|Posted by Jerrald J President on August 21, 2018 at 10:45 AM||comments (0)|
This isn't going to change unless we wake up and realize we've been "PIMPED"! By JJP
The chief executives of America’s top 350 companies earned 312 times more than their workers on average last year, according to a new report published Thursday by the Economic Policy Institute.
The rise came after the bosses of America’s largest companies got an average pay rise of 17.6% in 2017, taking home an average of $18.9m in compensation while their employees’ wages stalled, rising just 0.3% over the year.
'CEOs don't want this released': US study lays bare extreme pay-ratio problem
The pay gap has risen dramatically, with some fluctuations, since the 1990s. In 1965 the ratio of CEO to worker pay was 20 to one; that figure had risen to 58 to one by in 1989 and peaked in 2000 when CEOs earned 344 times the wage of their average worker.
CEO pay dipped in the early 2000s and during the last recession, but has been rising rapidly since 2009. Chief executives are even leaving the 0.1% in the dust. The bosses of large firms now earn 5.5 times as much as the average earner in the top 0.1%.
The astronomical gap between the remuneration of workers and bosses has been brought into sharper focus by a new financial disclosure rule that forces companies to publish the ratio of CEO to worker pay.
Last year, McDonald’s boss Steve Easterbrook earned $21.7m while the McDonald’s workers earned a median wage of just $7,017 – a CEO to worker pay ratio of 3,101 to one. The average Walmart worker earned $19,177 in 2017 while CEO Doug McMillon took home $22.8m – a ratio of 1,188 to one.
But the average is skewed by outliers, particularly the tech companies, where the CEO founders may own large chunks of the company but not take home much in compensation, relatively speaking.
Amazon’s boss, Jeff Bezos, the world’s richest man, was paid close to $82,000 last year and his total compensation including security was about $1.7m in 2017 while the average Amazon worker earned $28,446 – a ratio of 59 to one for his entire package and just three to one counting salary only.
But neither man is waiting on his monthly paycheck. Bezos’s personal fortune now tops $154bn while Zuckerberg’s is close to $66bn, according to Forbes.
The compensation bonanza was driven by stock-related components of CEO compensation such as stock awards or the opportunity to cash in stock options, said Lawrence Mishel, a distinguished fellow at the Economic Policy Institute.
But the rise in their compensation can not be explained entirely by rising stock markets. CEO rewards have outstripped both stock prices and corporate profits, EPI found. Between 1978 and 2017 CEO compensation has increased by 979%. Over the same period the S&P 500 Index of the US’s largest companies grew 637%. The typical workers’ pay package rose just 11.2% over the same time frame.
Accidents at Amazon: workers left to suffer after warehouse injuries
“Over time I think there has been a loosening of norms.” said Mishel. “Everyone wants to believe their CEO is one of the best, so they look around and see what everyone else is being paid and then they pay them a lot more. They think everyone is better than average.”
The outsize pay packets have had a direct impact on people down the corporate ladder, Mishel claims. “The redistribution of wages to the top 5%, but particularly the top 1%, affected the wage growth of the bottom 90%.
“As a mathematical matter, had there not been the redistribution upward – to the top 5%, but which is mostly about to the top 1% – the wages of the bottom 90% could have grown twice as fast as it actually did.”
|Posted by Jerrald J President on August 21, 2018 at 10:40 AM||comments (0)|
Yet America voted for Donald J Trump. Think about? By JJP
Top CEOs Make 300 Times More than Typical WorkersPay Growth Surpasses Stock Gains and Wage Growth of Top 0.1 Percent
The chief executive officers of America’s largest firms earn three times more than they did 20 years ago and at least 10 times more than 30 years ago, big gains even relative to other very-high-wage earners. These extraordinary pay increases have had spillover effects in pulling up the pay of other executives and managers, who constitute a larger group of workers than is commonly recognized.1 Consequently, the growth of CEO and executive compensation overall was a major factor driving the doubling of the income shares of the top 1 percent and top 0.1 percent of U.S. households from 1979 to 2007 (Bivens and Mishel 2013; Bakija, Cole, and Heim 2012). Since then, income growth has remained unbalanced: as profits have reached record highs and the stock market has boomed, the wages of most workers, stagnant over the last dozen years, including during the prior recovery, have declined during this one (Bivens et al. 2014; Gould 2015) .
In examining trends in CEO compensation to determine how well the top 1 and 0.1 percent are faring through 2014, this paper finds:
Average CEO compensation for the largest firms was $16.3 million in 2014. This estimate uses a comprehensive measure of CEO pay that covers chief executives of the top 350 U.S. firms and includes the value of stock options exercised in a given year. Compensation is up 3.9 percent since 2013 and 54.3 percent since the recovery began in 2009.
From 1978 to 2014, inflation-adjusted CEO compensation increased 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s annual compensation over the same period.
The CEO-to-worker compensation ratio, 20-to-1 in 1965, peaked at 376-to-1 in 2000 and was 303-to-1 in 2014, far higher than in the 1960s, 1970s, 1980s, or 1990s.
In examining CEO compensation relative to that of other high earners, we find:
Over the last three decades, compensation for CEOs grew far faster than that of other highly paid workers, i.e., those earning more than 99.9 percent of wage earners. CEO compensation in 2013 (the latest year for data on top wage earners) was 5.84 times greater than wages of the top 0.1 percent of wage earners, a ratio 2.66 points higher than the 3.18 ratio that prevailed over the 1947–1979 period. This wage gain alone is equivalent to the wages of 2.66 very-high-wage earners.
Also over the last three decades, CEO compensation increased more relative to the pay of other very-high-wage earners than the wages of college graduates rose relative to the wages of high school graduates.
That CEO pay grew far faster than pay of the top 0.1 percent of wage earners indicates that CEO compensation growth does not simply reflect the increased value of highly paid professionals in a competitive race for skills (the “market for talent”), but rather reflects the presence of substantial “rents” embedded in executive pay (meaning CEO pay does not reflect greater productivity of executives but rather the power of CEOs to extract concessions). Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on output or employment.
Critics of examining these trends suggest looking at the pay of the average CEO, not CEOs of the largest firms. However, the average firm is very small, employing just 20 workers, and does not represent a useful comparison to the pay of a typical worker who works in a firm with roughly 1,000 workers. Half (52 percent) of employment and 58 percent of total payroll are in firms with more than 500 or more employees. Firms with at least 10,000 workers provide 27.9 percent of all employment and 31.4 percent of all payroll.
CEO compensation trends
Table 1 presents trends in CEO compensation from 1965 to 2014.2 The data measure the compensation of CEOs in the largest firms and incorporate stock options according to how much the CEO realized in that particular year by exercising stock options available. The options-realized measure reflects what CEOs report as their Form W-2 wages for tax reporting purposes and is what they actually earned in a given year. This is the measure most frequently used by economists.3 In addition to stock options, the compensation measure includes salary, bonuses, restricted stock grants, and long-term incentive payouts. Full methodological details for the construction of this CEO compensation measure and benchmarking to other studies can be found in Mishel and Sabadish (2013).
CEO compensation, CEO-to-worker compensation ratio, and stock prices, 1965–2014 (2014 dollars)
CEO annual compensation (thousands)* Worker annual compensation (thousands) Stock market (adjusted to 2014) CEO-to-worker compensation ratio***
Private-sector production/nonsupervisory workers Firms’ industry** S&P 500 Dow Jones
* CEO annual compensation is computed using the "options realized" compensation series, which includes salary, bonus, restricted stock grants, options exercised, and long-term incentive payouts for CEOs at the top 350 U.S. firms ranked by sales.
** Annual compensation of the workers in the key industry of the firms in the sample
*** Based on averaging specific firm ratios and not the ratio of averages of CEO and worker compensation
Source: Authors' analysis of data from Compustat's ExecuComp database, Federal Reserve Economic Data (FRED) from the Federal Reserve Bank of St. Louis, the Current Employment Statistics program, and the Bureau of Economic Analysis NIPA tables
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CEO compensation reported in Table 1, as well as throughout the rest of the report, is the average compensation of the CEOs in the 350 publicly owned U.S. firms (i.e., firms that sell stock on the open market) with the largest revenue each year. Our sample each year will be fewer than 350 firms to the extent that these large firms did not have the same CEO for most of or all of the year or the compensation data are not yet available. For comparison, Table 1 also presents the annual compensation (wages and benefits of a full-time, full-year worker) of a private-sector production/nonsupervisory worker (a group covering more than 80 percent of payroll employment), allowing us to compare CEO compensation with that of a “typical” worker. From 1995 onward, the table identifies the average annual compensation of the production/nonsupervisory workers in the key industries of the firms included in the sample. We take this compensation as a proxy for the pay of typical workers in these particular firms.
The modern history of CEO compensation (starting in the 1960s) is as follows. Even though the stock market, as measured by the Dow Jones Industrial Average and S&P 500 index, and shown in Table 1, fell by roughly half between 1965 and 1978, CEO pay increased by 78.7 percent. Average worker pay saw relatively strong growth over that period (relative to subsequent periods, not relative to CEO pay or pay for others at the top of the wage distribution). Annual worker compensation grew by 19.5 percent from 1965 to 1978, only about a fourth as fast as CEO compensation growth over that period.
CEO compensation grew strongly throughout the 1980s but exploded in the 1990s and peaked in 2000 at around $20 million, an increase of more than 200 percent just from 1995 and 1,271 percent from 1978. This latter increase even exceeded the growth of the booming stock market—513 percent for the S&P 500 and 439 percent for the Dow. In stark contrast to both the stock market and CEO compensation, private-sector worker compensation increased just 1.4 percent over the same period.
The fall in the stock market in the early 2000s led to a substantial paring back of CEO compensation, but by 2007 (when the stock market had mostly recovered) CEO compensation returned close to its 2000 level. Figure A shows how CEO pay fluctuates in tandem with the stock market as measured by the S&P 500 index, confirming that CEOs tend to cash in their options when stock prices are high. The financial crisis in 2008 and the accompanying stock market tumble knocked CEO compensation down 44 percent by 2009. By 2014, the stock market had recouped all of the ground lost in the downturn and, not surprisingly, CEO compensation had also made a strong recovery. In 2014, average CEO compensation was $16.3 million, up 3.9 percent since 2013 and 54.3 percent since 2009. CEO compensation in 2014 remained below the peak earning years of 2000 and 2007 but far above the pay levels of the mid-1990s and much further above CEO compensation in preceding decades.
CEO compensation (in millions of 2014 dollars)S&P 500 Index (adjusted to 2014 dollars)S&P 500 Index (adjusted to 2014 dollars)CEO compensation (in millions of 2014 dollars)19701980199020002010051015202505001,0001,5002,0002,500
The alignment of CEO compensation to the ups and downs of the stock market casts doubt on any explanation of high and rising CEO pay that relies on the rising individual productivity of executives, either because they head larger firms, have adopted new technology, or other reasons. CEO compensation often grows strongly simply when the overall stock market rises and individual firms’ stock values rise along with it (Figure A). This is a marketwide phenomenon and not one of improved performance of individual firms: most CEO pay packages allow pay to rise whenever the firm’s stock value rises and permit CEOs to cash out stock options regardless of whether or not the rise in the firm’s stock value was exceptional relative to comparable firms. Over the entire period from 1978 to 2014, CEO compensation increased about 997 percent, a rise almost double stock market growth and substantially greater than the painfully slow 10.9 percent growth in a typical worker’s compensation over the same period.
It is interesting to note that growth in CEO pay in 2014 was not driven by large increases in pay for just a few executives or just those with the highest pay. Figure B shows the growth in CEO pay when compensation is ranked and computed by CEO compensation fifths. CEO compensation rose across the board, and in fact grew the most in the bottom and second fifth—11.1 and 7.9 percent, respectively—between 2013 and 2014.
Note: CEO annual compensation is computed using the "options realized" compensation series, which includes salary, bonus, restricted stock grants, options exercised, and long-term incentive payouts for CEOs at the top 350 U.S. firms ranked by sales.
The increase in CEO pay over the past few years reflects improving market conditions driven by macroeconomic developments and a general rise in profitability. For most firms, corporate profits continue to improve, and corporate stock prices move accordingly. It seems evident that individual CEOs are not responsible for this broad improvement in profits in the past few years, but they clearly are benefiting from it.
This analysis makes clear that the economy is recovering for some Americans, but not for most. The stock market and corporate profits have rebounded following the Great Recession, but the labor market remains sluggish. Those at the top of the income distribution, including many CEOs, are seeing a strong recovery—compensation up 54.3 percent— while the typical worker is still experiencing the detrimental effects of a stagnant labor market: compensation for private-sector workers in the main industries of the CEOs in our sample has fallen 1.7 percent since 2009.
Trends in the CEO-to-worker compensation ratio
Table 1 also presents the trend in the ratio of CEO-to-worker compensation to illustrate the increased divergence between CEO and worker pay over time. This overall ratio is computed in two steps. The first step is to construct, for each of the largest 350 firms, the ratio of the CEO’s compensation to the annual compensation of workers in the key industry of the firm (data on the pay of workers in any particular firm are not available). The second step is to average that ratio across all the firms. The last column in Table 1 is the resulting ratio in select years. The trends prior to 1995 are based on the changes in average CEO and economywide private-sector production/nonsupervisory worker compensation. The year-by-year trend is presented in Figure C.
Ratio of CEO compensation to top incomes and wages5.842.540.1% wage earners ratio1947–1979 average: 3.180.1% household income ratio1947–1979 average: 1.111960198020000246810
Presumably, CEO relative pay has grown further since 2013. The data in Table 1 show that CEO compensation rose 3.9 percent between 2013 and 2014. (Unfortunately, data on the earnings of top wage earners for 2014 are not yet available for a comparison to CEO compensation trends.) If CEO pay growing far faster than that of other high earners is a test of the presence of rents, as Kaplan has suggested, then we would conclude that today’s executives receive substantial rents, meaning that if they were paid less there would be no loss of productivity or output. The large discrepancy between the pay of CEOs and other very-high-wage earners also casts doubt on the claim that CEOs are being paid these extraordinary amounts because of their special skills and the market for those skills. Is it likely that the skills of CEOs in very large firms are so outsized and disconnected from the skills of others that they propel CEOs past most of their cohorts in the top tenth of a percent? For everyone else the distribution of skills, as reflected in the overall wage distribution, tends to be much more continuous.
What about the average CEO?
A relatively new critique of examining the pay of CEOs in the largest firms, as we do, is that such efforts are misleading. For instance, American Enterprise Institute scholar Mark Perry (2015) says the samples of CEOs examined by the Associated Press, the Wall Street Journal, or our earlier work “aren’t very representative of the average U.S. company or the average U.S. CEO,” because “the samples of 300–350 firms for CEO pay represent only one of about every 21,500 private firms in the U.S., or about 1/200 of 1% of the total number of U.S. firms.” Perry notes, “According to both the BLS and the Census Bureau, there are more than 7 million private firms in the U.S.” Perry considers the pay of the average CEO, $187,000, to be a much more important indicator.
This is a clever but misguided critique. Amazingly, roughly sixteen percent of the CEOs in Perry’s preferred measure are in the public sector. Those in the private sector include CEOs of religious organizations, advocacy groups, and unions. One wonders why Perry is not critical of the Bureau of Labor Statistics’ measure of CEO pay, since BLS reports that there are only 207,660 private-sector CEOs, far short of the 7.4 million there would be if each private firm had one. The shortfall of CEOs in the BLS data is understandable, however, once one recognizes that the average firm has only 20.2 workers (Caruso 2015, Appendix Table 1). The 5.2 million firms with fewer than 19 employees, averaging four employees per firm, probably do not have a CEO, nor probably do 2 million of the 2.4 million firms with more than 19 employees.
The reason to focus on the CEO pay of the largest firms is that they employ a large number of workers, are the leaders of the business community, and set the standards for pay in the executive pay market and probably do so in the nonprofit sector as well (e.g., hospitals, universities). No agency reports how many workers work for very large firms. We do know from Census data (Caruso 2015, Appendix Table 1) that the 18,219 firms in 2012 with at least 500 employees employed 51.6 percent of all employees and their payrolls accounted for 58.1 percent of total payroll (wages times employment). County Business Patterns data provide a breakout of the 964 firms (just 0.017 percent of all firms) with at least 10,000 employees; these large firms provide 27.9 percent of all employment and 31.4 percent of all payroll. In other words, the CEO of the “average U.S. company” about which Perry purports to be interested does not correspond to the CEO of the firm where the “average” or median worker works. This is further confirmed by a new study that reports that the median firm, ranked by employment, has roughly 1,000 workers while the average firm has about 20 (Song et al. 2015).
Executives and managers comprise a large portion of those in the top 1 percent of income and the top 1 percent of wage earners. The analysis of tax returns in Bakija et al. (2012) shows the composition of executives in the households with the highest incomes; our tabulation of American Community Survey data for 2009–2011 shows that 41.2 percent (the largest group) of those heading a household in the top 1 percent of incomes were executives or managers. Thus, we know that highly paid managers are the largest group in the top 1 percent and the top 0.1 percent, measured in terms of either wages or household income, and so there are plenty of good reasons to be interested in the pay of executives of large firms. Moreover, the pay of CEOs in the largest firms has grown multiples faster than the wages of other very high earners and hundreds of times faster than the wages these CEOs provide to their workers.
It is sometimes argued that rising CEO compensation is a symbolic issue with no consequences for the vast majority. However, the escalation of CEO compensation and executive compensation more generally has fueled the growth of top 1 percent incomes. In a study of tax returns from 1979 to 2005, Bakija, Cole, and Heim (2010), studying tax returns from 1979 to 2005, established that the increases in income among the top 1 and 0.1 percent of households were disproportionately driven by households headed by someone who was either a nonfinancial-sector “executive” (including managers and supervisors and hereafter referred to as nonfinance executives) or a financial-sector executive or other worker. Forty-four percent of the growth of the top 0.1 percent’s income share and 36 percent of the top 1 percent’s income share accrued to households headed by a nonfinance executive; another 23 percent for each group accrued to financial-sector households. Together, finance workers and nonfinance executives accounted for 58 percent of the expansion of income for the top 1 percent of households and 67 percent of the income growth of the top 0.1 percent. Relative to others in the top 1 percent, households headed by nonfinance executives had roughly average income growth, those headed by someone in the financial sector had above-average income growth, and the remaining households (nonexecutive, nonfinance) had slower-than-average income growth. These shares may actually understate the role of nonfinance executives and the financial sector since they do not account for the increased spousal income from these sources.7
We have argued above that high CEO pay reflects rents, concessions CEOs can draw from the economy not by virtue of their contribution to economic output but by virtue of their position. Consequently, CEO pay could be reduced and the economy would not suffer any loss of output. Another implication of rising executive pay is that it reflects income that otherwise would have accrued to others: what the executives earned was not available for broader-based wage growth for other workers. (Bivens and Mishel 2013 explore this issue in depth.)
There are policy options for curtailing escalating executive pay and broadening wage growth. Some involve taxes. Implementing higher marginal income tax rates at the very top would limit rent-seeking behavior and reduce the incentives for executives to push for such high pay. Legislation has also been proposed that would remove the tax break for executive performance pay that was established early in the Clinton administration; by allowing the deductibility of performance pay, this tax change helped fuel the growth of stock options and other forms of such compensation. Another option is to set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation. Other policies that can potentially limit executive pay growth are changes in corporate governance, such as greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
|Posted by Jerrald J President on August 21, 2018 at 10:30 AM||comments (0)|
Do you really think this was intended for "Working Class People=White Blue Collar Workers)? Think about. By JJP
The racial redlining in Michigan’s Medicaid work requirements
There are a lot of problems with work requirements for Medicaid.
They aren’t necessary because the majority of people who can work, work already; they would increase the ranks of the uninsured; and despite what supporters think, they wouldn’t actually pull people out of poverty but could further hurl them into it.
But there’s also another big issue: Medicaid work requirements could increase racial disparities in health care.
Last week, the Michigan Senate passed legislation that instructs the state to apply for a federal waiver for Medicaid, so that Michigan can require people work 30 hours a week before before receiving heath insurance. But as Detroit Free Press Nancy Kaffer first reported, some people will be exempt from the requirements.
If someone lives in a county where unemployment is over 8.5 percent, they don’t have to prove they’re working to get medical help. While on its surface, this doesn’t seem like a horrible idea, the threshold actually ends up exempting counties that are rural and predominantly white, while counties with large Black communities still have to meet the requirements.
Most of the 17 counties with unemployment exceeding 8.5 percent also happen to be represented by Republicans — including a bill co-sponsor, state Sen. Wayne Schmidt, according to Great Lakes Beacon’s Danielle Emerson. ThinkProgress reached out to Schmidt’s office for comment but they did not immediately respond.
People living in cities with large Black populations — many of which also have large unemployment rates among Black communities — still have to meet the requirements, like Detroit and Flint.
“Detroiters living in poverty, with a dysfunctional transit system that makes it harder to reach good-paying jobs, won’t qualify for that exemption,” writes Kaffer. “The same is true in Flint and the state’s other struggling cities.”
This is especially damning for Flint, a city still recovering from a public health crisis that left residents with poisonous levels of lead in their tap water. And that crisis was a result of the state government disregarding the health of poor, Black residents.
Gov. Rick Synder (R) opposes work requirements and will likely veto the bill should the House pass it. But this situation isn’t limited to Michigan.
In a Washington Post op-ed, Centers for Medicare and Medicaid (CMS) administrator Seema Verma advocated for exemptions for Medicaid work requirements, noting that states should account for “local economic conditions that may impact an individual’s ability to find work.”
This could mean similar racial redlining happens in other states.
Certain populations, and in this case along racial lines, could be required to work while others are exempt — and not only from work or job training but burdens associated like paperwork. “Because of the demographics, you could have situations where the populations required to work are disproportionately African American,” George Washington University professor Sara Rosenbaum told Vox earlier this year.
We’ve already seen something similar happen in Kentucky with its Medicaid work requirements. The state’s 80-hours-per-month work rules goes into effect in July, but it does not apply to eight rural, majority white counties: Bell, Clay, Harlan, Knox, Leslie, Letcher, Perry, and Whitley counties.
A Kentucky government spokesperson told ThinkProgress in January they are exempting these areas from the “community engagement” requirement, so as not to influence the outcomes of an existing food assistance program these counties are participating in. These counties are exempt until 2019. Meanwhile, the work requirement is slated to first roll out in northern Kentucky, which includes Jefferson County where a larger share of Black Kentuckians live.
Intended or not, these are the risks associated with work requirements — and it’s important to consider as a lot of states are implementing this rule in state Medicaid programs. As people drop health insurance, existing health care disparities are further entrenched.
|Posted by Jerrald J President on August 21, 2018 at 10:10 AM||comments (0)|
Yes , f your part of the PLUTOCRACY; but if your not your screwed. By JJP
Are Stock Buybacks Starving the Economy?
A new report finds that big companies could have given their workers thousands of dollars’ worth of raises with the money they spent on their own shares.
Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.
Their new paper contributes to a growing body of research that might help explain why economic growth is so sluggish, productivity so low, and increases in worker compensation so piddling, even as the stock market is surging and corporate profits are at historical highs. Companies are working overtime to make their owners richer in the short term, more so than to improve their longer-term competitiveness or to invest in their workers.
Can a corporation have a soul?
Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration. (The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.) In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal. Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone.
The new Roosevelt Institute and NELP research examines public firms in three major but notoriously low-wage industries— food production, retail, and restaurants—weighing buybacks against worker compensation. Unsurprisingly, Tung and Milani found that companies were aggressive in purchasing their own shares. The restaurant industry spent 140 percent of its profits on buybacks from 2015 to 2017, meaning that it borrowed or dipped into its cash allowances to purchase the shares. The retail industry spent nearly 80 percent of its profits on buybacks, and food-manufacturing firms nearly 60 percent. All in all, public companies across the American economy spent roughly three-fifths of their profits on buybacks in the years studied. “The amount corporations are spending on buybacks is staggering,” Milani said. “Then, to look a little deeper and see how this could impact workers in terms of compensation, was staggering.”
How much might workers have benefited if companies had devoted their financial resources to them rather than to shareholders? Lowe’s, CVS, and Home Depot could have provided each of their workers a raise of $18,000 a year, the report found. Starbucks could have given each of its employees $7,000 a year, and McDonald’s could have given $4,000 to each of its nearly 2 million employees.
“Workers around the country have been pushing for higher wages, but the answer is always, ‘We can’t afford it. We’d have to do layoffs or raise prices,’” Tung said. “That is just not true. The money is there. It’s just getting siphoned out of the company instead of reinvested into it.”
The report examines the period just before President Donald Trump’s $1.5 trillion tax cut came into effect, leading to an even greater surge of buybacks and thus an even greater surge of new wealth for the owners of capital, as wages have continued to stagnate. The tax legislation cut both the top marginal corporate tax rate from 35 to 21 percent—dropping the estimated effective tax rate on profitable businesses to just 9 percent, well below the effective tax rate for households—and encouraged firms to bring money back from overseas.
Trump’s trickle-down mythmaking begins
What did publicly traded corporations do with that money? Buy back shares and issue dividends, mostly. There was strong anecdotal evidence that that would be true even before the law passed. At a Wall Street Journal CEO confab held last fall, the former Trump economic adviser Gary Cohn asked a room of executives, “If the tax-reform bill goes through, do you plan to increase your company’s capital investment? Show of hands.” Most participants sat still, prompting Cohn to ask, “Why aren’t the other hands up?” Surveys showed that corporations were planning to shunt money to shareholders, rather than putting it into research, mergers and acquisitions, equipment upgrades, training programs, or workers’ salaries.
Since then, analyses from investment banks and researchers have estimated that 40 to 60 percent of the savings from the tax cut are being plowed into buybacks. One analysis of companies on the Russell 1000 Index—which consists of big firms, much like the Standard & Poor’s 500 does—found that companies directed 10 times as much money to buybacks as to workers. As such, Milani and Tung said they expect the math on corporate spending on shareholders versus workers to become even more exaggerated in the coming years.
Not all economic and financial analysts see buybacks as problematic. “Far from being starved of resources, S&P 500 companies are at near-peak levels of investment and have huge stockpiles of cash available for even more,” argue Jesse M. Fried and Charles C. Y. Wang in the Harvard Business Review. “The proportion of income available for investment that went to shareholders of the 500 over the past 10 years was a modest 41.5 percent—less than half the amount claimed by critics.” Plus, if buybacks merely transferred money from businesses to investors who then reallocated that money to other, more dynamic businesses, the overall effect on the economy might be muted.
But more and more analysts disagree. Larry Fink, who runs BlackRock, a huge money-management firm, has argued that buybacks are bad for companies and even bad for democracy. “Society is demanding that companies, both public and private, serve a social purpose,” he wrote in an open letter. “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
Analysts argue that buybacks hurt corporate America, American workers, and American growth in a few ways. For one, buybacks are a sign of short-termism among executives, the argument goes, boosting shareholder value without boosting the underlying value, profitability, or ingenuity of a given firm. Companies do not get better because of buybacks; it is just that shareholders get richer. In an exhaustive financial analysis of buybacks, the consultancy McKinsey found that companies would generally be better off issuing dividends or increasing investment instead. Buybacks also might distort earnings-per-share calculations and other measures of profitability and value.
A related issue is that buybacks draw money away from investment; a dollar spent repurchasing a share is a dollar that cannot be spent on new machinery, an acquisition, entry into a new market, or anything else. Researchers at Deloitte point out that buybacks and dividends have soared as a share of GDP, whereas investment in equipment and infrastructure has remained unchanged. And new research by Germán Gutiérrez and Thomas Philippon of New York University suggests growing business concentration, a lack of competition, and short-term thinking on the part of investors have all contributed to firms “spend[ing] a disproportionate amount of free cash flows buying back their shares,” fostering an environment of “investment-less growth.”
Then there is the effect on workers. Chief executive officers are the workers who benefit the most from buybacks, Milani and Tung argue, given that they are often primarily compensated with stock. On the other hand, salaried, hourly wage, and contract employees generally get nothing when companies buy their own shares. With the purchasing power of the minimum wage low, unions all but defunct in the private sector, and less and less competition among employers, workers have no recourse to demand more money, even if there is plenty to be distributed to them. Buybacks have perhaps thus helped stoke the extraordinary levels of income and wealth inequality the country has seen in the past 30 years, and particularly since the Great Recession. (Milani and Tung are careful not to draw a causal relationship between stagnant worker pay and rising buybacks, but other analysts have.)
Corporate executives are making way more money than anybody reports
Both by increasing inequality and reducing corporate investment, and thus productivity gains, buybacks might be bad for the overall economy, too. A high-inequality economy is one with less consumer spending and demand across the board, thus one with a lower GDP. A low-investment economy is a more sclerotic and less innovative one, and thus one with a lower GDP.
The growth of buybacks and growing research on the perils they pose has increased interest in regulatory or legal action to bar or limit them. Tung and Milani argue that companies should be required, as they were before the 1982 rule change, to provide dividends rather than purchase shares with their cash. “Issuing cash dividends (regular or special) has a less predictable and manipulative impact on a company’s stock price—and thus is less prone to gaming by executives or activist investors for their own gain,” they write. “Dividends also do not have the same potential as buybacks to mask the market and balance sheet impacts of increasing executives’ stock-based compensation.”
Democratic Senators Elizabeth Warren of Massachusetts, Tammy Baldwin of Wisconsin, Cory Booker of New Jersey, and Chris Van Hollen of Maryland, among other legislators, have also put forward legislation targeting the practice, raising the prospect that the rules could change if and when Democrats take back power. “The surge in corporate buybacks is driving wealth inequality and wage stagnation in our country by hurting long-term economic growth and shared prosperity for workers,” Baldwin said in a release. “We need to rewrite the rules of our economy so it works better for workers and not just those at the top.”
In the meantime, corporate boards are poised to spend hundreds of billions more on their own shares, benefiting executives along with the mostly wealthy Americans who own stock. Just this week, Caterpillar, for instance, said it plans to spend $1 billion buying back shares in the latter half of this year, before kicking off a new $10 billion round on buybacks starting in January. It is also in the midst of laying off hundreds of workers.
|Posted by Jerrald J President on August 10, 2018 at 7:45 PM||comments (0)|
This means Grandma and Grandpa's Medicaid/Social Security Check and all other social programs they paid into gets the AX. By JJP
Why America’s return to $1 trillion deficits is a big problem for you
The federal government is on track to have a $1 trillion deficit in 2020 — and to continue running yawning deficits for years to come, the nonpartisan Congressional Budget Office predicted Monday.
It’s a report that should make Americans concerned, especially younger ones.
On a basic level, this means the U.S. government is spending way more money than it brings in. This is not a new problem. The United States has been running a deficit every year since 2002, but the situation is about to get really ugly. The country has never run this high of a deficit during good economic times. If spending keeps up at this pace (and there is every indication that it will), President Trump and his successors are going to have less flexibility to pump up the economy during a downturn or even a crisis.
“This is unprecedented,” said Justin Bogie, senior policy analyst on fiscal affairs at the conservative Heritage Foundation.
It doesn’t mean the economy or stock market will crash tomorrow. The United States is able to run such high deficits because the U.S. Treasury turns around and sells U.S. debt to investors around the world. Right now, a lot of people want to buy U.S. government bonds, even though America already has $15 trillion in debt owned by the public. But the problem is no one knows when people might say enough is enough and stop buying U.S. debt — or demand much higher rates of return.
Even if the nightmare scenario doesn’t materialize, deficits are a drag on the economy. Investors opt to buy government debt instead of making the type of private investments that create jobs or raise wages, economists warn.
The White House's spending priorities for 2018 renege on President Trump's many promises to lower the deficit and keep Medicare and Medicaid spending without cuts. (Jenny Starrs/The Washington Post)
Didn’t Obama run a $1 trillion deficit? Some may recall that the U.S. government ran trillion-dollar deficits each year from 2009 to 2012, but that was during a terrible economic period when America (and much of the world) was trying to climb back from the global financial crisis and ensuing recession. The government spent heavily to try to revive the economy.
Now growth is healthy, unemployment is extremely low (4.1 percent) and confidence is strong. In times like these, the U.S. government has almost always narrowed the budget deficit — or even runs a surplus, as it did from 1998 to 2001, the end of the dot-com boom. But instead of improving the government’s budget situation, Congress is going the opposite direction and adding to it.
“We are running up the national credit card when everything is going our way economically,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “It shows Congress has lost any will to make hard choices to fix near-record debt levels we’re already facing.”
What it means for you. To underscore how large the debt is getting, the CBO notes that by 2028, the debt held by the public will be at the highest level (as a percent of the U.S. economy) since World War II.
A day of reckoning is likely to come at some point where the United States will have to raise taxes or cut benefits and programs that many people have come to rely on — or some combination of both.
Many Americans under 50 are likely to face some pain from this, and the under-35 population will likely be especially hard-pressed to pay more to the government while getting back far less than their parents and grandparents did. Spending on everything from Social Security to roads, research and schools could potentially decline.
How worried should I be? The U.S. government hasn’t tested that level of debt — where debt held by the public equals the entire size of the U.S. economy — in the modern era. That’s why so many economists, from the left and right, have been warning Congress and the White House to act now before it gets that bad.
“The bigger the debt, the bigger the chances of a fiscal crisis,” CBO Director Keith Hall said Monday. “When do you start to fix a thing like this? The longer you wait, the more draconian the measures have to be to fix the problem. That’s the biggest warning.”
One of the places the U.S. government typically looks at first to cut back on is so-called “discretionary spending,” which means spending on education, housing for the poor, veterans benefits, scientific research, roads and bridges and other infrastructure, etc. The problem is that the CBO forecasts that, a decade from now, America’s interest payments alone will exceed discretionary spending on all nonmilitary items combined. That means it’s going to be harder and harder to find money in the budget to cut because the government can’t stop paying interest (unless it wants to default, which would likely trigger even worse economic consequences).
Why do we have this problem? The United States, like many advanced economies, has an aging population (the share of people over age 65 is double what it was half a century ago). That means more spending on programs for the elderly, such as Social Security, Medicare and Medicaid. It also means fewer workers with jobs who are paying taxes to support all the older Americans. That’s a major driver of the deficits, but on the campaign trail, Trump said he would not touch Social Security or Medicare.
House Speaker Paul D. Ryan (R-Wis.) made a name for himself as a deficit hawk, but now has supported a tax plan and a spending bill that are ballooning the national debt. (Jenny Starrs/The Washington Post)
The government’s other major expenditure is on defense, part of maintaining its military supremacy. The Trump administration has pushed for large increases to military spending, seeking to build it up again after modest declines at the end of the Obama administration.
While Trump campaigned on reducing the debt, he and the GOP-led Congress have made the deficit worse in the past year, according to the CBO calculations. The massive tax cut, especially for corporations, is expected to cut government revenue by $1.3 trillion over the next decade, the CBO says. After taking into account rising interest rates, the tax bill passed in December will cost the country $1.9 trillion over that time period.
Then there’s the budget bill Congress just passed. It increased spending by about 10 percent for both the military (a GOP priority) and domestic programs (a Democratic priority).
The CBO added it up: What Trump and Congress have done since June is “estimated to make deficits $2.7 trillion larger than previously projected” in the next decade, the CBO wrote in its report.
What can be done about it? Various bipartisan coalitions over the years, most notably the Simpson-Bowles panel in 2010, laid out a path to address the debt that was attractive to many centrists: Make most Americans wait longer before they can collect Social Security. Raise taxes a bit (this could be anything from raising the Social Security or Medicare tax to imposing a tax on carbon or a special millionaires tax), and look for ways to trim Medicare and Medicaid spending by striking harder deals with providers and/or limiting some types of treatments.
These are not popular changes. But neither is getting into an economic crisis because the U.S. government has overspent so much for so long. Or facing a situation where millennials and younger generations have to pay off the debts of their parents and grandparents.
The Social Security Trust Fund for older Americans is projected to run out of money in 13 years, according to the latest CBO estimates. After that, the Social Security program will still have some money coming in, but not enough to pay full benefits for everyone. The Highway Trust Fund is expected to go broke by 2022, and the Social Security disability insurance program fund would be insolvent by fiscal year 2025, the CBO says, unless Congress takes action.
Some conservatives have argued for steeper cuts to social programs, while progressives tend to eye big cuts to military spending.
Congress and the Obama administration agreed in 2013 to what was known as “budget sequestration.” The idea was to impose mandatory caps on both social and defense spending that would go in place unless both parties came together on a long-term budget deal. The two sides never reached a deal, and so the caps went into place, driving down deficits during the final years of the Obama era.
Balanced-budget amendment? Another solution that has been floated is a balanced-budget amendment. Republicans in Congress plan to vote on it this week, although almost no one expects it to pass. It’s likely a symbolic vote for some lawmakers who want to try to show they are doing something to rein in the debt.
Many states have these, and there are calls to see if it’s possible to do one at the federal level, although it would require a change to the U.S. Constitution, a difficult process. It would also eliminate some aid to the economy in times of crisis. During and after the Great Recession, many states had to pull back spending sharply, cutting money for schools and, in some cases, having to lay off workers at a time when so many Americans were already struggling to find work. This situation can exacerbate downturns.
While many agree something needs to be done to get America’s budget back to a healthier level, even the so-called “budget hawks” look at the vote this week and shake their heads.
“Every person who supports the balanced budget amendment should be required to actually put forward a budget that balances,” said MacGuineas. “Congress certainly made terrible policy choices in past couple of months, starting with the gallingly irresponsible tax cut.”
|Posted by Jerrald J President on August 10, 2018 at 7:30 PM||comments (0)|
The American people are finally waking up to this corporate scheme to undermine wages. Right to work means, less money PERIOD! By JJP
Missouri Blocks Right-To-Work Law
Voters in Missouri have overwhelmingly rejected a right-to-work law passed by the state's Republican-controlled Legislature that would have banned compulsory union fees — a resounding victory for organized labor that spent millions of dollars to defeat the measure.
With about 98 percent of the precincts reporting, the "no" vote on Missouri's Proposition A, which supported the law, was running about 67 percent, with nearly 33 percent voting "yes."
In 2017, the right-to-work law passed Missouri's Republican Legislature and was signed by then-Gov. Eric Greitens. However, union organizers gathered enough signatures to keep it from going into effect pending the results of a statewide referendum. The rejection of Proposition A effectively kills the law.
"It's a truly historic moment," said Mike Louis, president of the Missouri AFL-CIO. "Tonight we celebrate, but tomorrow we're getting back to work. We're going to take this energy and momentum and build more power for working people across Missouri."
Currently, 27 states and Guam have laws allowing employees in private-sector unionized workplaces to opt out of union membership and union fees.
(In a case involving public-service employees, the U.S. Supreme Court ruled in June that unions cannot require workers to pay union dues or fees.)
As The Associated Press notes, "At issue are so-called fair-share fees, which are less than full dues but are intended to cover unions' nonpolitical costs such as collective bargaining. Unions say it's fair for people to pay the fees, because federal law requires them to represent even those employees who don't join. But supporters of right-to-work laws counter that people should have the right to accept a job without being required to pay a union."
The St. Louis Post-Dispatch reports:
"Voters in rural and urban areas all showed strong support for scrapping the law. In St. Louis City, with 100 percent of precincts reporting, 88 percent of voters landed on the 'no' side.
"Labor-friendly parts of southeast Missouri also showed strong opposition to the law, with more than three-fourths of voters in Iron, Reynolds, St. Francois and Ste. Genevieve counties voting to shoot down right to work."
The Post-Dispatch reports that even deep-red St. Charles County saw nearly 72 percent of voters rejecting the measure.
Missouri went heavily for Donald Trump in the 2016 presidential election and the rejection of right to work — a core Republican aim — could have wider political implications.
According to the AP, "unions powered an opposition effort that had spent more than $15 million as of late July, well over three times as much as various groups that support right-to-work. Advertisements generally have focused on economics, with supporters claiming right-to-work would lead to more jobs and opponents claiming it would drive down wages."
|Posted by Jerrald J President on August 10, 2018 at 7:20 PM||comments (0)|
This list is why America is hated globally. By JJP
Overthrowing other people’s governments: The Master List By William Blum
Instances of the United States overthrowing, or attempting to overthrow, a foreign government since the Second World War.
(* indicates successful ouster of a government)
China 1949 to early 1960s
East Germany 1950s
Iran 1953 *
Guatemala 1954 *
Costa Rica mid-1950s
British Guiana 1953-64 *
Iraq 1963 *
North Vietnam 1945-73
Cambodia 1955-70 *
Laos 1958 *, 1959 *, 1960 *
Ecuador 1960-63 *
Congo 1960 *
Brazil 1962-64 *
Dominican Republic 1963 *
Cuba 1959 to present
Bolivia 1964 *
Indonesia 1965 *
Ghana 1966 *
Chile 1964-73 *
Greece 1967 *
Costa Rica 1970-71
Bolivia 1971 *
Australia 1973-75 *
Angola 1975, 1980s
Portugal 1974-76 *
Jamaica 1976-80 *
Chad 1981-82 *
Grenada 1983 *
South Yemen 1982-84
Fiji 1987 *
Nicaragua 1981-90 *
Panama 1989 *
Bulgaria 1990 *
Albania 1991 *
Afghanistan 1980s *
Yugoslavia 1999-2000 *
Ecuador 2000 *
Afghanistan 2001 *
Venezuela 2002 *
Iraq 2003 *
Haiti 2004 *
Somalia 2007 to present
Honduras 2009 *
Libya 2011 *
Ukraine 2014 *
|Posted by Jerrald J President on August 10, 2018 at 7:15 PM||comments (0)|
Those tax cuts are working just fine America aren't they? By JJP
6 in 10 Americans don't have $500 in savings
If you were suddenly hit with a $500 unexpected bill, would you be able to cover it?
If the answer is no, you're not alone.
Nearly six in 10 Americans don't have enough savings to cover a $500 or $1,000 unplanned expense, according to a new report from Bankrate.
Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude. A little more than 20% said they would put it on a credit card, the report said, while 20% would cut their spending and 11% would turn to friends and family for financial assistance.
"This is a persistent American problem of how you should handle your finances and spending," said Jill Cornfield, retirement analyst for Bankrate.
But at least the number has improved. Last year, only 37% of Americans reported having enough savings to cover an expense of $500 or more.
Millennials were the most financially prepared to handle monetary headwinds with 47% of those aged 18-29 saying they could dip into savings to cover an unplanned expense, a substantial increase from 33% in 2014.
Personal finance experts tend to stress the importance of having an emergency fund to cover unanticipated expenses to avoid long-term financial damage.
"If you aren't set up to tap cash for something, it can derail you financially if you put it on credit card," said Cornfield. "The original expense can bloom because of interest."
Almost half of the 1,003 adults surveyed reported they or a family member faced a major financial expenditure in the past year.
"If you are human, have a pet, kids, a house or a place to live, something is going to happen that will cost you money," said Cornfield.
Creating a cash cushion can seem like an unrealistic task, especially for those living paycheck to paycheck. But Cornfield said there's usually some wiggle room in a budget to cut back.
"There are ways to track your spending and look where your money is going and find the holes and gaps," she said. "There are places you can cut back: daily coffee, alcohol, vacations, some people take several vacations, maybe cut back on one," said Cornfield.
|Posted by Jerrald J President on August 10, 2018 at 7:10 PM||comments (0)|
But when you turn on your idiot box(Television) your told the economy is doing GREAT. By JJP
Only 39% of Americans have enough savings to cover a $1,000 emergency
Whether it's a broken water heater, an unexpected medical bill or a car wreck, emergencies happen to everyone. But a startling number of Americans are unprepared to cope with them, money-wise.
According to Bankrate's latest financial security index survey, 34 percent of American households experienced a major unexpected expense over the past year. However, only 39 percent of survey respondents said they would be able to cover a $1,000 setback using their savings.
"While tapping savings to pay off an emergency was the most common response, more than a third of Americans would sink into one type of debt or another, potentially harming their financial security," Bankrate says in the report.
Using a credit card was the second most popular answer, with 19 percent of respondents saying they'd deal with an emergency with plastic and pay it off over time.
The numbers aligned with respondents' annual incomes. "Lower wage earners, those making less than $30,000 a year, were twice as likely to use some form of borrowing than savings, while households making more than $50,000 were more apt to use cash," Bankrate says.
A similar 2016 GOBankingRates survey found that 69 percent of Americans had less than $1,000 in total savings and 34 percent had no savings at all.
The simple solution to keep an unexpected expense from bankrupting you or putting you into debt is to build an emergency fund. But that doesn't always take precedence as Americans focus on staying on top of bills, paying off debt and working toward other financial goals.
However, even if you're in the red, it's still smart to put some money away. Personal finance expert Dave Ramsey says building a $1,000 emergency fund is the first "baby step" toward getting free from debt, because something is always bound to go wrong, no matter how careful you are.
"Car blows up. Transmission goes out. You bury a loved one. Grown kids move home again. Life happens, so be ready," Ramsey writes in "The Total Money Makeover." "This is not a surprise."
Building a solid emergency fund first is crucial because it prevents a twist in the track from completely derailing the journey, Ramsey explains.
"I discovered that people would stop their whole Total Money Makeover because of an emergency — they felt guilty that they had to stop debt reducing to survive," he writes. "If you use debt after swearing off it, you lose the momentum to keep going."
Although the $1,000 cushion is a good start, most experts recommend socking away at least three to six months' worth of living expenses in a fully funded rainy day account.
And Suze Orman, financial expert and former CNBC host, pushes for even more. Orman recommends putting away between eight and 12 months worth of living expenses to feel truly secure.
"Go back to 2007… You lost your job, you lost everything, you were working on this tech thing and all the startups went down," she said at the eMerge Americas conference in 2017. "Nobody had any money to invest, nobody wanted to touch anything, nobody wanted to IPO because the markets were going down and you couldn't find anything to do. Think it took you just three months to find another job? Think it took you six months to find another job?"
She goes on: "It's not just about the economy. What if you get sick? What if you're hit by a car? What if something happens crazy in this world? We live in the craziest world I've ever seen in my life right now. And the only way you can take craziness out of that if for you to make yourself secure."
|Posted by Jerrald J President on August 10, 2018 at 6:55 PM||comments (0)|
The Chickens are Coming Home Too Roost! By JJP
‘Too Little Too Late’: Bankruptcy Booms Among Older Americans
For a rapidly growing share of older Americans, traditional ideas about life in retirement are being upended by a dismal reality: bankruptcy.
The signs of potential trouble — vanishing pensions, soaring medical expenses, inadequate savings — have been building for years. Now, new research sheds light on the scope of the problem: The rate of people 65 and older filing for bankruptcy is three times what it was in 1991, the study found, and the same group accounts for a far greater share of all filers.
Driving the surge, the study suggests, is a three-decade shift of financial risk from government and employers to individuals, who are bearing an ever-greater responsibility for their own financial well-being as the social safety net shrinks.
The transfer has come in the form of, among other things, longer waits for full Social Security benefits, the replacement of employer-provided pensions with 401(k) savings plans and more out-of-pocket spending on health care. Declining incomes, whether in retirement or leading up to it, compound the challenge.
Cheryl Mcleod of Las Vegas filed for bankruptcy in January after struggling to keep up with her mortgage payments and other expenses. “I am 70, and I am working for less money than I ever did in my life,” she said. “This life stuff happens.”
As the study, from the Consumer Bankruptcy Project, explains, older people whose finances are precarious have few places to turn. “When the costs of aging are off-loaded onto a population that simply does not have access to adequate resources, something has to give,” the study says, “and older Americans turn to what little is left of the social safety net — bankruptcy court.”
“You can manage O.K. until there is a little stumble,” said Deborah Thorne, an associate professor of sociology at the University of Idaho and an author of the study. “It doesn’t even take a big thing.”
The forces at work affect many Americans, but older people are often less able to weather them, according to Professor Thorne and her colleagues in the study. Finding, and keeping, one job is hard enough for an older person. Taking on another to pay unexpected bills is almost unfathomable.
Bankruptcy can offer a fresh start for people who need one, but for older Americans it “is too little too late,” the study says. “By the time they file, their wealth has vanished and they simply do not have enough years to get back on their feet.”
The Gift of Menopause
The data gathered by the researchers is stark. From February 2013 to November 2016, there were 3.6 bankruptcy filers per 1,000 people 65 to 74; in 1991, there were 1.2.
Bankruptcy filings per 1,000 people, by age
Source: The Federal Reserve’s survey of consumer finances, via the Consumer Bankruptcy Project
Not only are more older people seeking relief through bankruptcy, but they also represent a widening slice of all filers: 12.2 percent of filers are now 65 or older, up from 2.1 percent in 1991
The jump is so pronounced, the study says, that the aging of the baby boom generation cannot explain it.
Although the actual number of older people filing for bankruptcy was relatively small — about 100,000 a year during the period in question — the researchers said it signaled that there were many more people in financial distress.
“The people who show up in bankruptcy are always the tip of the iceberg,” said Robert M. Lawless, a law professor at the University of Illinois and another author of the study.
The next generation nearing retirement age is also filing for bankruptcy in greater numbers, and the average age of filers is rising, the study found.
Given the rate of increase, Professor Thorne said, “the only explanation that makes any sense are structural shifts.”
Ms. Mcleod said she had managed to get by for a while after separating from her husband several years ago. Eventually, though, she struggled to make ends meet on her income alone, and she fell behind on her mortgage payments.
She collects a small Social Security check and works at an adult day care center for people with intellectual disabilities and mental health problems. For $8.75 an hour, she makes sure clients participate in daily activities, calms them when they are irritated and tries to understand what they need when they have trouble expressing themselves.
“When I moved here from Los Angeles, I was wondering why all of these older people were working in convenience stores and fast-food restaurants,” she said. “It’s because they don’t make enough in retirement to support themselves.”
Ms. Mcleod said she hoped that filing for bankruptcy would help her catch up on her mortgage so she could stay in her home. “I am too old to move out of here,” she said. “I am trying to stay stable.”
Income ranges in thousands
For about one in three older people who receive Social Security benefits, their monthly check accounts for 90 percent of their income, according to the Social Security Administration. Spending by those over 65 by income is based on Medicare beneficiaries, most of whom are 65 and over; the remainder are younger and disabled. | Source: Kaiser Family Foundation
The bankruptcy project is a long-running effort now led by Professor Thorne; Professor Lawless; Pamela Foohey, a law professor at Indiana University; and Katherine Porter, a law professor at the University of California, Irvine. The project — which is financed by their universities — collects and analyzes court records on a continuing basis and follows up with written questionnaires.
Their latest study —which was posted online on Sunday and has been submitted to an academic journal for peer review — is based on a sample of personal bankruptcy cases and questionnaires completed by 895 filers ages 19 to 92.
The questionnaire asked filers what led them to seek bankruptcy protection. Much like the broader population, people 65 and older usually cited multiple factors. About three in five said unmanageable medical expenses played a role. A little more than two-thirds cited a drop in income. Nearly three-quarters put some blame on hounding by debt collectors.
[The Times’s guide to retirement savings answers your questions about financing life after you stop working.]
The study does not delve into those underlying factors, but separate data provides some insight. The median household led by someone 65 or older had liquid savings of $60,600 in 2016, according to the Employee Benefit Research Institute, whereas the bottom 25 percent of households had saved at most $3,260.
That doesn’t provide much of a financial cushion for a catastrophic health problem. Older Americans typically turn to Medicare to pay their medical bills. But gaps in coverage, high premiums and requirements that patients shoulder some costs force many lower-income beneficiaries to spend more of their own income on those bills, the Kaiser Family Foundation found.
By 2013, the average Medicare beneficiary’s out-of-pocket spending on health care consumed 41 percent of the average Social Security check, according to Kaiser, which also estimated that the figure would rise.
More people are also entering their later years carrying debt. For many of them, at least some of the debt is a mortgage — roughly 41 percent in 2016, compared with 21 percent in 1989, according to an Urban Institute analysis.
And those who are carrying debt into retirement are carrying more than members of earlier generations, an analysis by the Employee Benefit Research Institute found.
Perhaps not surprisingly, the lowest-income households led by individuals 55 or older carry the highest debt loads relative to their income. More than 13 percent of such households face debt payments that equal more than 40 percent of their income, nearly double the percentage of such families in 1991, the employee benefit institute found.
Older Americans’ finances are also being strained by the needs of those around them.
A little more than a third of the older filers who answered the researchers’ questionnaire said that helping others, like children or older parents, had contributed to their seeking bankruptcy protection. Marc Stern, a bankruptcy lawyer in Seattle, said he had seen the phenomenon again and again.
Some parents, Mr. Stern said, had co-signed loans for $10,000 or $20,000 for adult children and suddenly could no longer afford them. “When you are living on $2,000 a month and that includes Social Security — and you have rent and savings are minuscule — it is extremely difficult to recover from something like that,” he said.
Others had co-signed their children’s student loans. “I never saw parents with student loans 20 or 30 years ago,” Mr. Stern said.
“It is not uncommon to see student loans of $100,000,” he added. “Then, you see parents who have guaranteed some of these loans. They are no longer working, and they have these student loans that are difficult if not impossible to pay or discharge in bankruptcy, and these are the kids’ loans.”
Keith Morris, chief executive of Elder Law of Michigan, which runs a legal hotline for older adults, said the prospect of bankruptcy was a regular topic for his callers.
“They worked all of their lives, and did what they were supposed to do,” he said, “and through circumstances like a late-life divorce or a death of a spouse or having to raise grandkids, have put them in a situation where they are not able to make the bills.”
For Lawrence Sedita, a 74-year-old former carpenter now living in Las Vegas, the problems began when he lost his health insurance about two years ago. He said he had been on disability since 1991, when a double pack of 12-foot drywall fell on his head at work.
After his union, the New York City District Council of Carpenters, changed the eligibility requirements for his medical, dental and prescription drug insurance, he lost his coverage.
Mr. Sedita, who has Parkinson’s disease, said his medical expenses had risen exponentially. (A spokesman for the union declined to comment.)
A medication that helps reduce the shaking — a Parkinson’s symptom — rose to $1,100 every three months from $70, Mr. Sedita said. “I haven’t taken my medicine in three months since I can’t afford it,” he added.
He said he and his wife, who has cancer, filed for bankruptcy in June after living off their credit cards for a time. Their financial difficulty, he said, “has drained everything out of me.”
Doris Burke and Alain Delaquérière contributed research. Graphics by Karl Russell.
|Posted by Jerrald J President on August 8, 2018 at 3:50 PM||comments (0)|
As if you thought they where working on your behalf? By JJP
Federal Reserve policies favor the rich
The Federal Reserve's most recent stimulus is expected to boost home prices and the stock market, but what if you're too poor to invest in either?
The Fed unveiled its third round of stimulus last week. The massive bond-buying initiative, called quantitative easing, aims to prop up the economy through a few key channels -- namely the housing market and the stock market.
Both of those channels skew in favor of Americans who are already in solid financial standing, and it seems the wealthier you are, the more you have to gain.
"Quantitative easing is a blunt tool and cannot really target specific areas of the economy, aside from mortgage rates. Even then, it tends to help the wealthy spectrum of the income distribution," said Sung Won Sohn, economics professor at Cal State Channel Islands.
First, by lowering mortgage rates, the Fed hopes to encourage more home sales and ultimately boost home prices. More home equity and less expensive home loans also put more money in consumers' pockets.
But with banks still skittish about lending, only borrowers with the highest credit scores and large down payments can qualify for the lowest rates. That's limited the effects of lower rates on the housing market.
"Because of ongoing restrictions in the supply of mortgage credit to customers with less than perfect credit records, the impact of lower mortgage rates on housing is probably less powerful than normal," said William Dudley, president of the Federal Reserve Bank of New York, in a speech Tuesday.
Only 67% of Americans own their homes, and the number is heavily skewed toward the wealthy. Among the poorest fifth of American households, most are renters. Only 37% own homes, according to Fed data from 2010.
Second, the Fed's low interest rate policies also tend to encourage investors to search for higher yields in stocks or riskier assets, leading to big gains in the stock market. The S&P 500 rallied 25% in the six months after the Fed's previous stimulus plan was announced
That's been a boon for those who have most of their wealth in investments. But only 50% of Americans have stock holdings. Of those earning less than $20,000 a year, only 13% own stocks.
But the Fed's intention isn't to help the rich get richer. The main goal, according to Fed chief Ben Bernanke, is to help the middle class by creating more jobs.
"This is a Main Street policy because what we are about here is trying to get jobs going," Bernanke said at a press conference last week.
"If people feel that their financial situation is better because their 401(k) looks better for whatever reason, their house is worth more, they are more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing to hire and to invest," he said.
|Posted by Jerrald J President on July 29, 2018 at 8:00 AM||comments (0)|
" The median wealth held by black families with a college degree and student loans by the time the head of household is 65 years old, she said, is about $61,000, versus roughly $422,000 for white families under the same circumstances."
White College Graduates Are Doing Great With Their Parents' Money
Higher education alone can't bridge the wealth gap that separates black Americans from their white peers.
The numbers are staggering: White Americans with a college degree are on average three times as wealthy as black Americans with the same credential, and in families whose head of the household is employed, white families have 10 times the wealth of black ones. One estimate on the conservative end suggested that this wealth gap could take two centuries to close.
And the thing about wealth, says Tatjana Meschede, a researcher at the Institute on Assets and Social Policy at Brandeis University, is that it’s “sticky”: It tends to stay with a family. That has serious repercussions for how much money people accumulate over the course of their lives, regardless of whether they attend college—something that is usually thought to make a significant difference financially.
A forthcoming study from Meschede and Joanna Taylor, also a researcher at Brandeis, in the American Journal of Economics and Sociology, makes the point clearly. Building on a 2017 study of theirs that examined wealth accumulation among college graduates—as well as “intergenerational financial transfers,” like when a parent helps a recent college grad out with rent or, say, gives her $1,000 a month to spend on whatever she pleases—the two looked specifically at how family inheritances, which are usually larger and tend to come all at once, factor into building and maintaining wealth.
The two researchers focused specifically on inheritances among families where at least one parent has a college degree. They looked at families like this in order to test the notion that higher education is a great equalizer.
The differences that they found between black and white families were stark. “Among college-educated black families, about 13 percent get an inheritance of more than $10,000, as opposed to about 41 percent of white, college-educated families,” Taylor said in a release announcing the new research. More specifically, white families that receive such an inheritance receive, on average, more than $150,000 from the previous generation, whereas that figure is less than $40,000 for black families.
Meschede and Taylor focused on inheritances of more than $10,000 because, they say, these qualify as “transformative” assets—meaning, they could significantly alter the course of a life. As Mark Huelsman, a policy analyst at Demos, an advocacy group, tweeted earlier this week after seeing Meschede and Taylor’s study, “the average family inheritance to a white college grad can pay off the average undergrad debt balance”—more than $30,000—“and have enough left over for a 20 percent down [payment] on a $575,000 home.” (And that’s assuming the inheritor has student debt to begin with.)
That head start on wealth provides lifelong momentum, Taylor told me in an interview. The median wealth held by black families with a college degree and student loans by the time the head of household is 65 years old, she said, is about $61,000, versus roughly $422,000 for white families under the same circumstances.
Getting a college degree can, in some cases, help close the income gap—meaning annual earnings—and, as I have written, can do wonders for socioeconomic mobility. But the enduring legacy of slavery, and centuries of de jure and de facto segregation have led to a wealth gap that is practically insurmountable. As my colleague Ta-Nehisi Coates wrote in 2014, the wealth gap “puts a number on something we feel but cannot say—that American prosperity was ill-gotten and selective in its distribution.”
There have been proposals, including systems of reparations such as baby bonds for black families that are scaled to family wealth, to get kids started on an equal level. Those ideas seem to be on the right track—a college degree alone certainly can’t make up the difference.
|Posted by Jerrald J President on July 29, 2018 at 7:55 AM||comments (0)|
I wonder why RICO wasn't used on the privately owned "Banking System"; which robbed American citizens in 2008? I think you know the answer. By JJP
New York Gang Prosecutions Use Conspiracy Charges to Criminalize Whole Communities
Defendants like Carletto Allen are not supposed to go to trial. The 23-year old Bronx man was already in jail on a pending gun charge when hundreds of NYPD officers and federal agents from the Department of Homeland Security, the Drug Enforcement Administration, and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives stormed a public housing project in the neighborhood where he lived with his grandmother and arrested dozens of his friends and neighbors.
The April 2016 raid, which authorities boasted was the “largest gang takedown in New York City history,” ended in 88 arrests and 120 indictments on federal conspiracy charges. The defendants — mostly young black and Latino men in their late teens or early 20s, whom police had surveilled for the better part of a decade — were listed in two separate indictments by their names and a variety of street aliases. Prosecutors said they were affiliated with two rival gangs connected to eight homicides that had occurred in the area since 2009, including that of a 92-year-old woman struck in her home by a stray bullet.
Like Allen, several of the defendants in the case were already behind bars at the time of the raid, some serving time after having been convicted in state court of the same crimes now being pursued by federal prosecutors. As The Intercept reported at the time, the Bronx raid, which followed a similar 2014 raid in Manhattan that led to 103 indictments, marked a shift by police and prosecutors toward mass conspiracy cases that see dozens of arrests and indictments quickly resolve in guilty pleas.
Defendants in these kinds of cases, often from New York City’s poorest neighborhoods, can’t afford to hire attorneys. The conspiracy charges they face — in the Bronx case, under the Racketeer Influenced and Corrupt Organizations Act, or RICO, a federal law passed in 1970 to combat the Mafia — are broad and hard to fight, because proving individuals “conspired” with others accused of crimes is easier for prosecutors than proving they committed that crime. Threatened with draconian sentences, almost all defendants in these situations agree to plea deals — usually getting years rather decades in prison, and scoring prosecutors dozens of easy convictions.
“The government doesn’t have to do a lot of heavy lifting to prove that there was an alleged agreement between two people,” said Anthony Posada, supervising attorney with the Community Justice Unit at Legal Aid Society. “I think it’s very telling of the strategy that’s being used,” he added. “By using a statute that has very severe penalties, you sort of do this thing where you overcharge. … Large amounts of bail are set on people. And when you have bail set on you, you are more likely to take a plea, you are more likely to plead guilty to something, rather than to fight the matter.”
Prosecutors rely on that. Trying every single individual charged in connection with a mass raid would take years and cost the government millions. For the system to run efficiently, defendants can’t go to trial, and most don’t. Nationwide, 94 percent of felony convictions at the state level and 97 percent at the federal level are the result of plea bargains.
“Police and prosecutors know that people don’t go to trial and don’t fight these cases,” said Marne Lenox, an attorney at the NAACP Legal Defense and Educational Fund who worked at the Bronx Defenders at the time of the raid. “And for many of these individuals, the risk is far greater than the reward; once you get into federal court, you are facing mandatory minimums.”
Ninety-seven of the 103 individuals charged after the 2014 Manhattan raid — on state charges — entered guilty pleas. Of the 120 defendants charged following the Bronx raid, 110 have pleaded so far. Some 111 defendants had court-appointed attorneys, according to a recent presentation on the Bronx indictments by Babe Howell, a professor at the CUNY School of Law, and Priscilla Bustamante, a graduate student in critical psychology at CUNY Graduate Center. The U.S. Attorney’s Office for the Southern District of New York, which brought federal charges against those indicted in the Bronx raid, declined to comment.
Eastchester Gardens in the Bronx on June 22, 2016. The public housing complex was raided by an array of local and federal agencies in April 2016.Photo: Elijah Hurwitz for The Intercept
Resisting the Pressure to Plea Out
Despite the pressure to plead guilty, Allen didn’t stick to the script. He is one of only two defendants in the Bronx case who chose to go trial. The second, Donque Tyrell, was tried last month on seven charges, including “aiding and abetting murder in aid of racketeering.” On Wednesday, a jury convicted him on all counts.
As Allen learned, tempting fate — and challenging the system — comes at a premium.
According to John Kenney, one of Allen’s attorneys, at the time of the raid, Allen had been in jail for just over a year after he was caught selling small quantities of marijuana to a police informant — “nickel bags on a corner,” as Kenney told The Intercept. Officers who were watching the transaction pulled Allen out of the car he was sitting in and said they found a gun in his pocket. Allen admitted that he sold marijuana but testified that the gun was in the pocket of a jacket on the car’s back seat, and not his. The officer who testified about the gun had substantiated complaints with the NYPD’s Internal Affairs Bureau and the Civilian Complaint Review Board, and he had been sued at least six times over excessive force, false imprisonment, and malicious prosecution, settling each time — but prosecutors successfully blocked the defense from discussing the officer’s history at trial, on the grounds that it did not impact his “credibility.”
After the raid, Allen was moved to a federal jail downtown and saw his pending state charges balloon into federal counts of racketeering narcotics conspiracy, narcotics possession, and a firearms offense. In the mass indictment, his name was listed among dozens of “members and associates” of the “Big Money Bosses” gang, which prosecutors described as a “criminal organization” responsible for a string of serious crimes, including murder.
As they did following similar raids in other communities, prosecutors held a meeting with residents arguing that all the arrests were justified. “The lead prosecutor on the case would come out with the other detectives that investigated the matter, and they’d speak to community members in a very brief, sort of matter-of-fact way,” said Posada, whose group held forums for communities impacted by the raids. “This is what we did, and we did it in a very surgical way, and we refer to this as precision policing: We are precise in what we do so that we only get the worst and the worst out of the neighborhood.”
“The NYPD and the District Attorney’s Office tout these raids and the resulting large-scale indictments as an effective policing tool,” said Lenox. “But in truth, that’s an incredibly sanitized narrative that ignores the substantial harm that these takedowns inflict on communities of color and exaggerates the danger that arrested individuals pose to society.”
“The majority of people who are arrested in these takedowns are actually accused of having committed only low-level offenses and being engaged in low-level conduct,” she added. “But prosecutors rely on these conspiracy statutes to demonize individuals who commit petty offenses by implicating them in violent crime.”
NYPD and the FBI bust an alleged gang-related drug ring following a massive police raid at three public housing developments across East Harlem on April 19, 2016. Large raids of public housing complexes have become a staple of New York City policing.Photo: Marcus Santos/NY Daily News via Getty Images
Residents strongly objected to the narrative painted by prosecutors in the Bronx. Everyone living in a housing project was “associated” to everyone else, they argued, and the indictments accused dozens of people of crimes committed by a handful. “Are you going to lock up every black boy or Spanish boy who lives around here?” the mother of two young men arrested in the raid told The Intercept at the time. Still, with nearly all defendants taking pleas, nobody could challenge prosecutors’ allegations in court.
Like dozens of the men charged with him, Allen was offered a deal that would grant him close to time served — about three years at the time of the offer, according to Kenney. The attorney tried to convince him that taking the plea was in his best interest, but Allen rejected the idea and asked for a new attorney. In court, again over his attorneys’ objections, he insisted on testifying.
But if Allen had hoped trial would give him an opportunity to challenge the premise of a mass gang conspiracy, he was mistaken. “They didn’t try that case,” said Kenney. “They dropped everything except the marijuana and the gun.”
“They said, We’re not going to pursue murder, and all these other things, and narcotics sales except marijuana. We’re not talking about bank robbery; we’re not going to talk about all these things that were part of the conspiracy,” he added. “They just struck it from the indictment, so we never really got to the point.”
“They didn’t even allege he was a member of the gang,” he added, “which means they didn’t have any evidence.”
In their closing remarks, Allen’s attorneys tried to distinguish between the crimes he was accused of and the unproven allegations of a conspiracy, the very existence of which was never tested in court. “There is no evidence that you can rely upon … to suggest that he behaved in any way, shape, or form to promote the activities of that group in whatever shape or form that so-called BMB group existed,” attorneys told the jury, according to court transcripts. “Is it a [crime] to take a photograph that shows up on Facebook with a classmate of yours or a schoolmate of yours? Does that make him a member of a conspiracy?”
In the end, Allen was convicted of racketeering conspiracy, narcotics conspiracy, narcotics distribution, and a firearms offense. He faces up to a decade in prison, with a mandatory minimum of five years.
Allen, who is incarcerated at the Metropolitan Correctional Center in Manhattan while awaiting sentencing, could not be reached for comment. His mother, Martha Allen, declined to talk about the case. “He gets slammed for the audacity of asking for his trial,” said Howell, the CUNY professor, who has studied the case. “If the police brought Carletto Allen all by himself to the federal prosecutor and said, We want to prosecute him for having a gun while selling marijuana in the street, they would look at this and say, That is not a federal case.”
The irony of Allen facing up to a decade in federal prison in connection with an incident stemming from a marijuana sale is that legalization is gaining fast traction in New York state and has become a central issue in the upcoming gubernatorial election. In New York City, where black and brown residents are arrested for marijuana possession at 10 times the rate of white residents, Mayor Bill de Blasio recently ordered police to stop arresting people for smoking marijuana in public. But the “gang” label — which critics say police and prosecutors use indiscriminately and without transparent criteria — precludes sympathy.
“The irony is that some people are taken aback by Trump’s comments about gang members as animals,” Josmar Trujillo, an organizer with the Coalition to End Broken Windows, told The Intercept referring to the president’s comment about members of the MS-13 gang. “In the most progressive city in America, the policies that actually treat people like animals and dehumanize them happen every day.”
“Mayor de Blasio has made gang policing one of his cornerstones of criminal justice reform; he talks about precision policing alongside boasts about the number of stop-and-frisks going down,” Trujillo added. “What he doesn’t mention is that this is exactly the point: He has shifted from low-level street harassment to high-level, complex, federally assisted arrests and prosecutions that actually much more impact and devastate communities of color.”
“I don’t see the point of bringing a RICO case against a guy who’s selling marijuana,” said Kenney, Allen’s attorney, calling his client’s ordeal “a case of massive overcharging.”
Still, he warned of the risks that defendants incur when challenging the system. “The reason people plead guilty is because it makes sense.”
|Posted by Jerrald J President on July 29, 2018 at 7:50 AM||comments (0)|
All around America same ole song, "DEBT"! By JJP
Mortgage, Groupon and card debt: how the bottom half bolsters U.S. economy
By almost every measure, the U.S. economy is booming. But a look behind the headlines of roaring job growth and consumer spending reveals how the boom continues in large part by the poorer half of Americans fleecing their savings and piling up debt.
A Reuters analysis of U.S. household data shows that the bottom 60 percent of income-earners have accounted for most of the rise in spending over the past two years even as the their finances worsened - a break with a decades-old trend where the top 40 percent had primarily fueled consumption growth.
With borrowing costs on the rise, inflation picking up and the effects of President Donald Trump's tax cuts set to wear off, a negative shock - a further rise in gasoline prices or a jump in the cost of goods due to tariffs - could push those most vulnerable over the edge, some economists warn.
That in turn could threaten the second-longest U.S. expansion given consumption makes up 70 percent of the U.S. economy's output.
To be sure, the housing market is far from the dangerous leverage reached in 2007 before the crash. With unemployment near its lowest since 2000 and job openings at record highs, people may also choose to work even more hours or take extra jobs rather than cut back on spending if the money gets tight.
In fact, a growing majority of Americans says they are comfortable financially, according to the Federal Reserve's report on the economic well-being of U.S. households published in May and based on a 2017 survey.
Yet by filtering data on household finances and wages by income brackets, the Reuters analysis reveals growing financial stress among lower-income households even as their contribution to consumption and the broad economy grows.
The data shows the rise in median expenditures has outpaced before-tax income for the lower 40 percent of earners in the five years to mid-2017 while the upper half has increased its financial cushion, deepening income disparities. (Graphic: tmsnrt.rs/2LdUMBa )
It is this recovery's paradox.
A hot job market and other signs of economic health encourage rich and poor alike to spend more, but tepid wage growth for many middle-class and lower-income Americans means they need to dip into their savings and borrow more to do that.
As a result, over the past year signs of financial fragility have been multiplying, with credit card and auto loan delinquencies on the rise and savings plumbing their lowest since 2005.
Myna Whitney, 27, a certified medical assistant at Drexel University's gastroenterology unit in Philadelphia, experienced that firsthand.
Three years ago, confident that a steady full-time job offered enough financial security, she took out loans to buy a Honda Odyssey and a $119,000 house, where she lives with her mother and aunt.
Since then she has learned that making $16.47 an hour - more than about 40 percent of U.S. workers - was not enough.
"I was dipping into my savings account every month to just make all of the payments." Whitney says. With her savings now down to $900 from $10,000 she budgets down to toilet paper and electricity. Cable TV and the occasional $5 Groupon movie outings are her indulgences, she says, but laughs off a question whether she dines out.
"God forbid I get a ticket, or something breaks on the car. Then it's just more to recover from."
Stephen Gallagher, economist at Societe Generale, says stretched finances of those in the middle dimmed the economy's otherwise positive outlook.
"They are taking on debt that they can't repay. A drop in savings and rise in delinquencies means you can't support the (overall) spending," he said. An oil or trade shock could lead to "a rather dramatic scaling back of consumption," he added.
Some economists say that without the $1.5 trillion in tax cuts enacted in January spending, which has grown by around 3 percent a year over the past few years, could already be stalling now.
In the past, rising incomes of the upper 40 percent of earners have driven most of the consumption growth, but since 2016 consumer spending has been primarily fueled by a run-down in savings, mainly by the bottom 60 percent of earners, according to Oxford Economics.
Yet it is the first time in two decades that lower earners made a greater contribution to spending growth for two years in a row.
"It's generally really hard for people to cut back on expenses, or on a certain lifestyle, especially when the context of the economy is actually really positive," said Gregory Daco, Oxford's chief U.S. economist. "It's essentially a weak core that makes the back of the economy a bit more susceptible to strains and potentially to breaking."
JOBS NOT RAISES
While the Fed expects the labor market to get even hotter this year and next, policymakers have been perplexed that wages do not reflect that.
With inflation factored in, average hourly earnings dropped by a penny in May from a year ago for 80 percent of the country's private sector workers, including those in the vast healthcare, fast food and manufacturing industries, Bureau of Labor Statistics figures show.
"It stinks," says Jennifer Delauder, 44, who runs a medical lab at Huttonsville Correctional Center in West Virginia. In seven years her hourly wage has risen by about $2 to $14.
She took on two part-time jobs to help pay rent, utilities and a student loan. But she still sometimes trims her weekly $15 grocery budget to make ends meet, or even gathers broken fans, car parts, and lanterns to sell as scrap metal. A $2,000 hospital bill early this year wiped out her savings.
Even so, Delauder, a grandmother, recently signed papers for a mortgage of up to $150,000 on a house. "I'm paying rent for a house. I might as well pay for a house that I own," she said.
Hourly wages for lower- and middle-income workers rose just over 2 percent in the year to March 2017, compared with about 4 percent for those near the top and bottom, while spending jumped by roughly 8 percent.
That reflects both higher costs of essentials such as rent, prescription drugs and college tuition but also some increased discretionary spending, for example at restaurants.
Economists say one symptom of financial strain was last year's spike in serious delinquencies on U.S. credit card debt, which many poorer households use as a stop-gap measure. The $815-billion market is not big enough to rattle Wall Street, but could be an early sign of stress that might spread to other debt as the Fed continues its gradual policy tightening.
More borrowers have also been falling behind on auto loans, which helped bring leverage on non-mortgage household debt to a record high in the first quarter of this year.
While painting a broadly positive picture, the Fed's well-being survey also noted that one in four adults feared they could not cover an emergency $400 expense and one in five struggled with monthly bills. This month the central bank reported to Congress that rising delinquencies among riskier borrowers represented "pockets of stress."
That many Americans lack any financial safety net remains a concern, New York Fed President John Williams told Reuters in an interview last month. "Even though the overall picture is pretty good, pretty solid, or strong," he said, "this is a problem that continues to hang over half of our country."