SACRAMENTO – A 40-year-old private ranch manager from Nevada City, running as an independent party candidate in the 4th Congressional District, will kick-off his campaign here with an old-fashioned “Whistle Stop Tour” Friday starting in Sacramento and ending in Portola, deep in northeastern California.

Ben Emery will hold a news conference FRIDAY, at 9:30 a.m. at the entrance to the Sacramento Train Depot (corner, 4th & I St.) just before leaving on the train tour into the heart of the 4th District.

Emery, who lives and works in the district, accused his opponents of being carpetbaggers, noting incumbent GOP Rep. Tom McClintock is a career politician from Southern California and the Democrat, Clint Curtis, hails from Florida.

“We’ve been listening to Republicans and Democrats talk about changing the system in Washington. But all we get is more of the same. I’m independent of the large special interests who control these politicians, and have mucked up our political system,” said Emery.

“The biggest threat to our country at this moment in history is the money and influence of lobbyists in Washington DC. Our government is broken because it was supposed to be citizen- legislators that made sure the people’s business was taken care of. But today we have career politicians that make sure their large donors are taken care of instead of the people,” he added.

There was a time when everyone took it for granted that unemployment insurance, which normally terminates after 26 weeks, would be extended in times of persistent joblessness. It was, most people agreed, the decent thing to do.

But that was then. Today, American workers face the worst job market since the Great Depression, with five job seekers for every job opening, with the average spell of unemployment now at 35 weeks. Yet the Senate went home for the holiday weekend without extending benefits. How was that possible?

The answer is that we’re facing a coalition of the heartless, the clueless and the confused. Nothing can be done about the first group, and probably not much about the second. But maybe it’s possible to clear up some of the confusion.

By the heartless, I mean Republicans who have made the cynical calculation that blocking anything President Obama tries to do — including, or perhaps especially, anything that might alleviate the nation’s economic pain — improves their chances in the midterm elections. Don’t pretend to be shocked: you know they’re out there, and make up a large share of the G.O.P. caucus.

By the clueless I mean people like Sharron Angle, the Republican candidate for senator from Nevada, who has repeatedly insisted that the unemployed are deliberately choosing to stay jobless, so that they can keep collecting benefits. A sample remark: “You can make more money on unemployment than you can going down and getting one of those jobs that is an honest job but it doesn’t pay as much. We’ve put in so much entitlement into our government that we really have spoiled our citizenry.”

Now, I don’t have the impression that unemployed Americans are spoiled; desperate seems more like it. One doubts, however, that any amount of evidence could change Ms. Angle’s view of the world — and there are, unfortunately, a lot of people in our political class just like her.

But there are also, one hopes, at least a few political players who are honestly misinformed about what unemployment benefits do — who believe, for example, that Senator Jon Kyl, Republican of Arizona, was making sense when he declared that extending benefits would make unemployment worse, because “continuing to pay people unemployment compensation is a disincentive for them to seek new work.” So let’s talk about why that belief is dead wrong.

Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits aren’t quite as desperate as workers without benefits, and are likely to be slightly more choosy about accepting new jobs. The operative word here is “slightly”: recent economic research suggests that the effect of unemployment benefits on worker behavior is much weaker than was previously believed. Still, it’s a real effect when the economy is doing well.

But it’s an effect that is completely irrelevant to our current situation. When the economy is booming, and lack of sufficient willing workers is limiting growth, generous unemployment benefits may keep employment lower than it would have been otherwise. But as you may have noticed, right now the economy isn’t booming — again, there are five unemployed workers for every job opening. Cutting off benefits to the unemployed will make them even more desperate for work — but they can’t take jobs that aren’t there.

Wait: there’s more. One main reason there aren’t enough jobs right now is weak consumer demand. Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That’s why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus. And unlike, say, large infrastructure projects, aid to the unemployed creates jobs quickly — while allowing that aid to lapse, which is what is happening right now, is a recipe for even weaker job growth, not in the distant future but over the next few months.

But won’t extending unemployment benefits worsen the budget deficit? Yes, slightly — but as I and others have been arguing at length, penny-pinching in the midst of a severely depressed economy is no way to deal with our long-run budget problems. And penny-pinching at the expense of the unemployed is cruel as well as misguided.

So, is there any chance that these arguments will get through? Not, I fear, to Republicans: “It is difficult to get a man to understand something,” said Upton Sinclair, “when his salary” — or, in this case, his hope of retaking Congress — “depends upon his not understanding it.” But there are also centrist Democrats who have bought into the arguments against helping the unemployed. It’s up to them to step back, realize that they have been misled — and do the right thing by passing extended benefits.

Originally posted by Ellen Brown at www.webofdebt.com/articles on May 21, 2010

For over a decade, accountant Walter Burien has been trying to rouse the public over what he contends is a massive conspiracy and coverup, involving trillions of dollars squirreled away in funds maintained at every level of  government.  His numbers may be disputed, but these funds definitely exist, as evidenced by the Comprehensive Annual Reports (CAFRs) required of every government agency.  If they don’t represent a concerted government conspiracy, what are they for?  And how can they be harnessed more efficiently to help allay the financial crises of state and local governments?    

The Elusive CAFR Money
Burien is a former commodity trading adviser who has spent many years peering into government books.  He notes that the government is composed of 54,000 different state, county, and local government entities, including school districts, public authorities, and the like; and that these entities all keep their financial assets in liquid investment funds, bond financing accounts and corporate stock portfolios. The only income that must be reported in government budgets is that from taxes, fines and fees; but the investments of government entities can be found in official annual reports (CAFRs), which must be filed with the federal government by local, county and state governments.  These annual reports show that virtually every U.S. city, county, and state has vast amounts of money stashed away in surplus funds.  Burien maintains that these slush funds have been kept concealed from taxpayers, even as taxes are being raised and citizens are being told to expect fewer government services.  

Burien was originally alerted to this information by Lt. Col. Gerald Klatt, who evidently died in 2004 under mysterious circumstances, adding fuel to claims of conspiracy and coverup.  Klatt was a an Air Force auditor and federal accountant, and it’s not impossible that he may have gotten too close to some military stash being used for nefarious ends.  But it is hard to envision how all the municipal governments hording their excess money in separate funds could be complicit in a massive government conspiracy.  If that is not what is going on, however, why such an inefficient use of public monies? 

A Simpler Explanation
When I was invited to speak at a conference of Government Finance Officers in April, I got a chance to ask that question.  The friendly public servants at the conference explained that maintaining large “rainy day” funds is simply how local governments must operate.  Unlike private businesses, which have bank credit lines they can draw on if they miscalculate their expenses, local governments are required by law to balance their budgets; and if they come up short, public services and government payrolls may be frozen until the voters get around to approving a new bond issue.  This has actually happened, bringing local government to a standstill.  In emergencies, government officials can try to borrow short-term through “certificates of participation” or tax participation loans, but the interest rates are prohibitively high; and in today’s tight credit market, finding willing lenders is difficult.  

To avoid those dire straits, municipal governments will keep a cushion of from 20%  to 75% more than their budgets actually require.  This money is invested, but not necessarily lucratively.  For example, one finance officer said that her city had just bid out $2 million as a 30-day certificate of deposit (CD) to two large banks at a meager annual interest of 0.11%.  It was a nice spread for the banks, which could leverage the money into loans at 6% or so; but it was a pretty sparse deal for the city.   

Meanwhile, Back in California
That was in Missouri, but the figures I was particularly interested were for my own state of California, which was struggling with a budget deficit of $26.3 billion as of April 2010. Yet the State Treasurer’s website says that he manages a Pooled Money Investment Account (PMIA) tallying in at nearly $71 billion as of the same date, including a Local Agency Investment Fund (LAIF) of $24 billion. Why isn’t this money being used toward the state’s deficit? The Treasurer’s answer to this question, which he evidently gets frequently, is that legislation forbids it. His website states:

“Can the State borrow LAIF dollars to resolve the budget deficit?

No. California Government Code 16429.3 states that monies placed with the Treasurer for deposit in the LAIF by cities, counties, special districts, nonprofit corporations, or qualified quasi-governmental agencies shall not be subject to either of the following:

(a) Transfer or loan pursuant to Sections 16310, 16312, or 16313.
(b) Impoundment or seizure by any state official or state agency.”

The non-LAIF money in the pool can’t be spent either. It can be borrowed, but it has to be paid back. When Governor Schwarzenegger tried to raid the Public Transportation Account for the state budget, the California Transit Association took him to court and won. The Third District Court of Appeals ruled in June 2009 that diversions from the Public Transportation Account to fill non-transit holes in the General Fund violated a series of statutory and constitutional amendments enacted by voters via four statewide initiatives dating back to 1990.

In short, the use of these funds for the state budget has been blocked by the voters themselves. Bond issues are approved for particular purposes. When excess funds are collected, they are not handed over to the State toward next year’s budget. They just sit idly in an earmarked fund, drawing a modest interest.  

What’s Wrong with This Picture?
California’s budget problems have caused its credit rating to be downgraded to just above that of Greece, driving the state’s interest tab skyward. In November 2009, the state sold 30-year taxable securities carrying an interest rate of 7.26%. Yet California has never defaulted on its bonds. Meanwhile, the too-big-to-fail banks, which would have defaulted on hundreds of billions of dollars of debt if they had not been bailed out by the states and their citizens, are able to borrow from each other at the extremely low federal funds rate, currently set at 0 to .25% (one quarter of one percent). The banks are also paying the states quite minimal rates for the use of their public monies, and turning around and relending this money, leveraged many times over, to the states and their citizens at much higher rates. That is assuming they lend at all, something they are increasingly reluctant to do, since speculating with the money is more lucrative, and investing it in federal securities is more secure.

Private banks clearly have the upper hand in this game. Local governments have been forced to horde funds in very efficient ways, building excessive reserves while slashing services, because they do not have the extensive credit lines available to the private banking system. States cannot easily incur new debt without voter approval, a process that is cumbersome, time-consuming and uncertain. Banks, on the other hand, need to keep only the slimmest of reserves, because they are backstopped by a central bank with the power to create all the reserves necessary for its member banks, as well as by Congress and the taxpayers themselves, who have been arm-twisted into repeated bailouts of the Wall Street behemoths.

How the CAFR Money Could Be Used Without Spending It
California, then, is in the anomalous position of being $26 billion in the red and plunging toward bankruptcy, while it has over $70 billion stashed away in an investment pool that it cannot touch. Those are just the funds managed by the Treasurer. According to California’s latest CAFR, the California Public Employees’ Retirement Fund (CalPERS) has total investments of $360 billion, including nearly $144 billion in “equity securities” and $37 billion in “private equity.” See the State of California Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2009, pages 83-84.

This money cannot be spent, but it can be invested -- and it can be invested, not just in conservative federal securities, but in equity, or stocks. Rather than turning this hidden gold mine over to Wall Street banks to earn a very meager interest, California could leverage its excess funds itself, turning the money into much-needed low-interest credit for its own use. How? It could do this by owning its own bank.

One state already does this -- North Dakota. North Dakota is also the only state projected to have a budget surplus by 2011. It has not fallen into the Wall Street debt trap afflicting other states, because it has been able to generate its own credit.

An investment in the State Bank of California would not be at risk unless the bank became insolvent, a highly unlikely result since the state has the power to tax. In North Dakota, the BND is a dba of the state itself: it is set up as “the State of North Dakota doing business as the Bank of North Dakota.” That means the bank cannot go bankrupt unless the state goes bankrupt.

The capital requirement for bank loans is a complicated matter, but it generally works out to be about 7%. According to Standard & Poor’s, the worldwide average risk-adjusted capital ratio stood at 6.7 per cent as of June 30, 2009. However, some major U.S. banks were much lower: Citigroup's was 2.1 per cent; Bank of America’s was 5.8 per cent. At 7%, $7 of capital can back $100 in loans. Thus if $7 billion in CAFR funds were invested as capital in a California state development bank, the bank could generate $100 billion in loans.

This $100 billion credit line would allow California to finance its $26 billion deficit at very minimal interest rates, with $74 billion left over for infrastructure and other sorely needed projects. Studies have shown that eliminating the interest burden can cut the cost of public projects in half. The loans could be repaid from the profits generated by the projects themselves. Public transportation, low-cost housing, alternative energy sources and the like all generate fees. Meanwhile, the jobs created by these projects would produce additional taxes and stimulate the economy. Commercial loans could also be made, generating interest income that would return to state coffers.

Building a Deposit Base
To start a bank requires not just capital but deposits. Banks can create all the loans they can find creditworthy borrowers for, up to the limit of their capital base; but when the loans leave the bank as checks, the bank needs to replace the deposits taken from its reserve pool in order for the checks to clear. Where would a state-owned bank get the deposits necessary for this purpose?  

In North Dakota, all the state’s revenues are deposited in the BND by law. California has expected revenues for 2010-11 of $89 billion, and the Treasurer’s website reports that as of June 30, 2009, over $18 billion was held on deposit as demand accounts and demand NOW accounts (basically demand accounts carrying a very small interest). These deposits were held in seven commercial banks, most of them Wall Street banks: Bank of America, Union Bank, Bank of the West, U.S. Bank, Wells Fargo Bank, Westamerica Bank, and Citibank. The $64 billion or so left in the Treasurer’s investment pool could also be invested in State Bank of California CDs. Most of the bank CDs in which it is invested in now are  Wall Street or foreign banks. Many private depositors would no doubt choose to bank at the State Bank of California as well, keeping California’s money in California. There is already a movement afoot to transfer funds out of Wall Street banks into local banks.

While the new state-owned bank is waiting to accumulate sufficient deposits to clear its outgoing checks, it can do what other startup banks do – borrow deposits from the interbank lending market at the very modest federal funds rate (0 to .25%).

To avoid hurting California’s local banks, any state monies held on deposit with local banks could remain there, since the State Bank of California should have plenty of potential deposits without this money. In North Dakota, local banks are not only not threatened by the BND but are actually served by it. The BND partners with them, engaging in “participation loans” that help local banks with their capital requirements.
 
Bringing It All Back Home
We have too long delegated the power to create our money and our credit to private profiteers, who have plundered and exploited the privilege in ways that are increasingly being exposed in the media. Wall Street may own Congress, but it does not yet own the states. We can take the money power back at the state level, by setting up our own publicly-owned banks. We can “spend” our money while conserving it, by leveraging it into the credit urgently needed to get the wheels of local production turning once again.

First published here 7/6/2005 

1. What do the Social Security trust funds consist of?

The Social Security trust funds are United States Treasury bonds. These bonds are issued by the U.S. Treasury to raise money to pay for budget deficits. The total value of all outstanding Treasury bonds is the national debt. The Social Security trust funds own part of the national debt.

The trust funds have been accumulating Treasury bonds since the mid-1980s because Congress, at the recommendation of Alan Greenspan and Ronald Reagan, decided to collect more in taxes than were needed to pay current benefits. That decision was made in order to build up reserves against the retirement of the baby boomers. As workers, baby boomers have been accumulating Treasury bonds to help pay for their retirement.

Figure 1 shows how the total national debt increased from March 1994 through March 2005 and who owns the Treasury bonds that constitute the national debt. The total national debt did not grow steadily over this period. In the seven years between 1994 and 2001, the national debt increased by a little more than a trillion dollars. In the four years since 2001, it has increased by two trillion dollars. When budget deficits were small or there were surpluses (as in the late 1990s), debt grew little. When they were large (as in recent years), total national debt rose rapidly.

Source: U.S. Department of Treasury, Ownership of Federal Securities, Table OFS-2, available online at
http://www.fms.treas.gov/bulletin/b25ofs.doc.


In contrast to the growth of total national debt, between 1994 and 2005, the Social Security trust fund holdings of Treasury bonds (see the bottom segment of the bars in Figure 1) increased at a steady pace. But in spite of the steady increase in Social Security trust fund purchases of Treasury bonds, the trust funds still own less than a quarter of the total debt. Other federal agencies, and, in recent years, foreign central banks each own more of the debt than the Social Security trust funds. Private U.S. investors (pension funds, mutual funds, wealthy individuals), the owners of more than half of the debt in 1994, today own only 23 percent, about the same as the Social Security system. In recent years, Treasury bonds have not been an attractive investment for those with private wealth to invest.

2. How have we benefited from the Social Security trust funds?

To date, the Social Security trust funds have accumulated about $1.7 trillion worth of U.S. Treasury bonds. This means that the Treasury has had to borrow less from other lenders to finance our budget deficits. Consequently, the Treasury has not had to raise the rate of interest on its bonds to attract private investors, and it has had to rely less on foreign lenders such as the Central Banks of China and Japan. Private investors have put their saving into assets such as stocks, corporate bonds, and housing instead of Treasury bonds, which has led to construction of new buildings and purchases of new equipment in the United States, contributing to economic growth.

3. How secure are the Treasury bonds in the trust funds?

Any bond represents a promise by the borrower to pay the lender. In the past, some private borrowers and even nations have defaulted on their debts. Enron, Pan Am, Polaroid, and Bethlehem Steel went bankrupt. Debt issued by Argentina and Ecuador can be purchased for far less than its face value because many investors doubt that it will be repaid. And bonds issued by the Confederate States of America are suitable for framing, but for little else; they will never be repaid.

The United States, too, could default on its debt. The country could lose a war or a plague could decimate the population. Or our government could simply announce "We will no longer honor our promises to the Central Bank of China or the Federal Reserve Bank or the Social Security trust funds or anybody unlucky enough to have trusted us at our word."

How likely is it that the U.S. government would renege on its promises to its creditors? One way to determine the likelihood of such a thing happening is to see how Treasury promises are valued in financial markets. After all, debt issued by Argentina and Ecuador are available at fire sale prices in international financial markets. Is any debt issued by the U.S. Treasury similarly discounted? Absolutely not. Markets treat promises by the Treasury as essentially risk free. What is more, it would be quite impossible for the Treasury to announce "we are only defaulting on this portion of our national debt" without infecting all markets in which Treasury debt is sold. It is as if a person were to say "only my left leg has gangrene; the rest of me is fit and healthy."

The fact that a default on any part of the national debt is almost unthinkable is underlined by the reaction of financial markets when former Treasury Secretary Paul O'Neill and President Bush announced in speeches that the Social Security trust funds are nothing but paper. If markets really believed that the U.S. government would fail to redeem its bonds, there would have been an immediate rise in the risk premium on Treasury bonds, with interest rates spiking upward. But nothing happened. Everybody knows: it is only political talk.

4. Where will the money come from when the Treasury must redeem the bonds in the Social Security trust funds?

The U.S. government gets funds in three ways. It can look for increased revenues (through higher taxes). It can look to cut expenses (through lower spending). Or it can borrow by issuing new Treasury bonds. Replacing old bonds with new bonds is called "rolling over the debt," and it is done every day by households, businesses, and governments.


The ability of the government to service its obligations to the Social Security trust funds (that is, to future retirees) is inseparable from its ability to service the entire national debt. The question is not whether the Treasury will be able to repay the 22 percent of the national debt that is owed to the Social Security trust funds. The real question is whether the entire national debt, the sum of all the borrowing from all lenders, is getting out of control. Will the federal government be able to tax and borrow and scrimp in the future to meet its commitments?

One way to evaluate our nation's debt burden is to see what is happening to the size of the national debt relative to the nation's ability to pay. This ability to pay is closely tied to income, that is to the size of our national economy. Is our debt growing relative to our income? Figure 2 shows the answer to this question for the past half century.

Source: Economic Report of the President 2005 Table B-78, available online at http://a257.g.akamaitech.net/7/257/2422/17feb20051700/www.gpoaccess.gov/eop/2005/B78.xls.

The surprising message of Figure 2 is that every Democratic president (Kennedy-Johnson, Carter, and Clinton) left office with the ratio of national debt to income below where it was at the beginning of his administration, while the last three Republican administrations (Reagan, George H.W. Bush, and George W. Bush) have presided over explosive growth of the national debt relative to national income. Since 1960, Republican administrations have added 38 percentage points to the national debt/GDP ratio, while Democratic administrations have subtracted 23 percentage points from that ratio. This record stands on its head all the clichés about who is fiscally responsible.

Ultimately, the ability of the Treasury to keep its promises to pay bondholders what they are owed depends on government's ability to control its taxation and spending policies, in other words, to keep the entire national debt manageable relative to the size of the economy.


There is no special obligation or special problem posed by the Social Security trust funds. That debt is part of the national debt. The nation's ability to honor its commitments to its seniors is part of the larger effort to honor its commitments to all bondholders.

In historical perspective, the national debt relative to the nation's ability to pay is lower today than it was in the early 1950s (coming off the Second World War), but it is much higher than it was in the 1970s. Over the past three decades, Republican administrations have issued new debt much faster than the economy has grown. To meet its commitments to all its creditors, including the Social Security trust funds, future U.S. governments will have to control the fiscal policies that have produced such huge deficits-such rapid growth of the national debt. Will they? For the next few years, with the administration repeatedly asking for supplementary appropriations to fund the wars in Iraq and Afghanistan while striving to make the tax cuts permanent, it seems unlikely. Any decline in the national debt/GDP ratio would represent the first such decline under a Republican president since 1974.

There is no special problem of meeting the Treasury's obligations to the Social Security trust funds. The fundamental problem is the larger one of servicing the national debt. And the solution lies in controlling federal deficits.

Original Blog Post

COCHABAMBA, Bolivia—Here in this small Andean nation of 10 million people, the glaciers are melting, threatening the water supply of the largest urban area in the country, El Alto and La Paz, with 3.5 million people living at altitudes over 10,000 feet. I flew from El Alto International, the world’s highest commercial airport, to the city of Cochabamba.

Bolivian President Evo Morales calls Cochabamba the heart of Bolivia. It was here, 10 years ago this month, that, as one observer put it, “the first rebellion of the 21st century” took place. In what was dubbed the Water Wars, people from around Bolivia converged on Cochabamba to overturn the privatization of the public water system. As Jim Shultz, founder of the Cochabamba-based Democracy Center, told me, “People like a good David-and-Goliath story, and the water revolt is David not just beating one Goliath, but three. We call them the three Bs: Bechtel, Banzer and the Bank.” The World Bank, Shultz explained, coerced the Bolivian government, under President Hugo Banzer, who had ruled as a dictator in the 1970s, to privatize Cochabamba’s water system. The multinational corporation Bechtel, the sole bidder, took control of the public water system.

On Sunday, I walked around the Plaza Principal, in central Cochabamba, with Marcela Olivera, who was out on the streets 10 years ago. I asked her about the movement’s original banner, hanging for the anniversary, that reads, in Spanish, “El agua es nuestra, carajo!”—“The water is ours, damn it!” Bechtel was jacking up water rates. The first to notice were the farmers, dependent on irrigation. They appealed for support from the urban factory workers. Oscar Olivera, Marcela’s brother, was their leader. He proclaimed, at one of their rallies, “If the government doesn’t want the water company to leave the country, the people will throw them out.”

Marcela recounted: “On the 4th of February, we called the people to a mobilization here. We call it ‘la toma de la plaza,’ the takeover of the plaza. It was going to be the meeting of the people from the fields, meeting the people from the city, all getting together here at one time…. The government said that that wasn’t going to be allowed to happen. Several days before this was going to happen, they sent policemen in cars and on motorcycles that were surrounding the city, trying to scare the people. And the actual day of the mobilization, they didn’t let the people walk even 10 meters, and they started to shoot them with gases.” The city was shut down by the coalition of farmers, factory workers and coca growers, known as cocaleros. Unrest and strikes spread to other cities. During a military crackdown and state of emergency declared by then-President Banzer, 17-year-old Victor Hugo Daza was shot in the face and killed. Amid public furor, Bechtel fled the city, and its contract with the Bolivian government was canceled.

The cocaleros played a crucial role in the victory. Their leader was Evo Morales. The Cochabamba Water Wars would eventually launch him into the presidency of Bolivia. At the United Nations climate summit in Copenhagen, he called for the most rigorous action on climate change.

After the summit, Bolivia refused to support the U.S.-brokered, nonbinding Copenhagen Accord. Bolivia’s ambassador to the U.N., Pablo Solon, told me that, as a result, “we were notified, by the media, that the United States was cutting around $3 million to $3.5 million for projects that have to do with climate change.” Instead of taking U.S. aid money for climate change, Bolivia is taking a leadership role in helping organize civil society and governments, globally, with one goal—to alter the course of the next major U.N. climate summit, set for Cancun, Mexico, in December. Which is why more than 15,000 people from more than 120 countries have gathered here this week of Earth Day, at the People’s World Conference on Climate Change and the Rights of Mother Earth. Morales called for the gathering to give the poor and the Global South an opportunity to respond to the failed climate talks in Copenhagen.

Ambassador Solon explained the reasoning behind this people’s summit:

“People are asking me how this is coming from a small country like Bolivia. I am the ambassador to the U.N. I know this institution. If there is no pressure from civilian society, change will not come from the U.N. The other pressure on governments comes from transnational corporations. In order to counteract that, we need to develop a voice from the grass roots.”
 
Denis Moynihan contributed research to this column.

Amy Goodman is the host of “Democracy Now!,” a daily international TV/radio news hour airing on more than 800 stations in North America. She is the author of “Breaking the Sound Barrier,” recently released in paperback and now a New York Times best-seller.

The experiment has failed and it’s time to go back to what built the strongest and largest middle class in world history. From the 1940’s to the 1970’s our government set the rules of the economy in favor of America and its citizens. The rules were set up so companies would reinvest capital back into the American economy, technology, and its workers. America was the manufacturing superpower and had a blue-collar middle class that could survive on a single-income home. With this single income we could afford to own a home, have health care, send our kids to college or trade school, take vacations, and have a pension for retirement with relatively low debt. Today two-income homes can’t afford many of these things and are waste deep in debt, and an increasing number of people are over their head in debt. It is all about the incentives, which changed in 1981 with the economic strategy of what was called Supply Side or Trickle Down economics. 

This new economic strategy promised to bring more investment into the American economy and jobs. The first step was to cut taxes for the investment class (top 1%), allowing them to keep more of their money so they could invest back into the economy creating more jobs: the trickle-down effect. The next step was to deregulate or stop enforcing rules, to allow more efficient production and help increase the supply of goods. In this sense, supply-side theory has worked. Productivity in America has steadily increased over these 30 years. The theory went on to suggest that excess goods would then drop the prices, creating more demand by having more affordable goods.

What has happened is the capital that was originally reinvested back into the American economy, technology, and its workers have gone to a few administrators and CEOs. In 1980 a CEO made on average 40 times as much as the company’s lowest paid worker. Today that number is well over 500 to 1, and in some industries this ratio can be 5,000 to 1. The executives then invest the money into Wall Street for quick short-term personal profits instead of where the capital was created, in their company and workers. This results in bubble economies of boom and bust cycles. It also created a new very wealthy and powerful class in America that has corrupted our government. In 1980 there were about 500 lobbyists in Washington, D.C., and today there are as many as 40,000 lobbyists donating to campaigns and legally influencing/ bribing elected officials. 

Ross Perot was correct in 1992 about the “Giant Sucking Sound” of American jobs leaving the country because of Free Trade Agreements. 
 
In the 1990’s, with the new rules of economics, CEO’s and their lobbyists influenced our government to openly embrace Free Trade in the guise of America companies selling their goods to the world market. What wasn’t mentioned to the American people in these trade agreements was that the U.S. handed over its economic sovereignty to mediators such as the World Trade Organization. We no longer can set our own tariffs or protect U.S. jobs because of these agreements, and that is why our jobs are leaving the country. When this happens American workers are forced to compete with Communist China and their oppressed work force and other oppressed third-world countries that don’t have the external costs of adequate work conditions, living wages, health care, pensions, and most of all, environmental standards.  

The result of our shift from demand-side to supply-side economics created a wage/ productivity gap. In the United States’ strong middle-class era, wages created demand and productivity increased as the demand went up. As wages went up so did demand, and this created more jobs. Wages in the U.S. for 30 years have remained stagnant while productivity has increased, creating a huge gap of too many goods and not enough money to buy them. It was filled with easy credit and low interest rates. The Federal Reserve has kept interest rates amazingly low for this entire period, creating an economy based on credit, not wages. In the last few years the credit bill has come due with interest, and the American economy has become a house of cards with no way of paying it back. 

The experiment of supply-side economics and free trade has failed miserably and created monopoly capitalism. We need to go back to sane economic and trade policies that protect America and its jobs.

As Americans, we all know that Wall St. greed, recklessness and illegal behavior has brought our own and the world economy to its knees. In April 2010, continuing obstructionist partisan behavior, US Senate Minority leader Mitch McConnell (R-KY) along with the other 40 Republican Senators sent a letter to Senate Majority leader Harry Reid endorsing Wall St. behavior by rejecting any financial reform that will be proposed by the Democratic majority. On the floor of the Senate, Republicans are making irrelevant talking points written by Frank Luntz, a political consultant and pollster, long before the proposed bill was written. This is typical of the obstructionist Republican minority of the 111th congress who is shattering its own previous record from the 110th with filibusters and holds on any significant legislation or appointments made by the Democratic majority. It has become perfectly clear the minority party is willing to let America to continue its downward spiral in order to win seats in the 2010 election. 
 
The Democrats are proposing a half measure that is a good first step but doesn’t alienate the campaign cash cow of the financial sector too much. In 2009 the financial sector lobbyists spent $300 million on both the republican and democratic parties. If this wasn’t appalling enough, over 3,000 Wall St lobbyists, 250 of them former members of congress, roam the halls of the capital building influencing 535 member of congress. This is a ratio almost 6 to 1. Instead of doing what is needed for the country, the majority party is willing to propose half measures to ensure campaign funding in the next election. We have a two party system that works to the benefit of special interests not the interests of the American people.

How did the banks get such unbridled freedom? Between the years of 1998 and 2008, the financial sector showered congress with $5 billion in campaign donations and lobbying efforts. The two primary pieces of legislation were the Gramm-Leach-Bliley Act of 1999 and the, Commodities Futures and Modernization Act (CFMA) of 2000, which contained the Enron loophole. Our so-called representatives passed the deregulating legislation and then stepped out of the way and let the market regulate itself.
 
The Gramm-Leach-Bliley Act allowed investment banks, such as Goldman Sachs, to gamble with FDIC insured lending banks’ money after dismantling the Great Depression Glass-Steagall Act of 1933. This is why AIG had to be bailed out.

In addition CFMA of 2000, created a whole new unregulated market of commodities called derivatives. According to Ellen Brown in her book, “Web of Debt”,  “a mere handful of very big banks is responsible for a massive investment scheme known as "derivatives," which now tallies hundreds of trillions of dollars. To put hundreds of trillions of dollars into perspective the US GDP is roughly $15 trillion and the world’s GDP is around $60 trillion. 

Small and medium businesses are not able to expand, produce real products, and create new jobs at the moment because these big banks are not investing in the American economy, after being bailed out by the US taxpayer, but continue with more schemes and derivative betting. One such scheme is taking the audit-proof Federal Reserve 0% interest loans and reinvesting the money into government bonds that pay 3-5% in interest, posting massive profits and giving themselves billions in bonuses. 

Tell Congress to: 

• Audit the Federal Reserve
• Repeal the Gramm-Leach-Bliley Act 
• Repeal CFMA of 2000 
• Resurrect Glass-Steagall to its full power

Tell the White House to:

• Enforce Sherman Anti Trust laws on monopolies in every industry but especially the financial sector. Too big to fail companies are too big to exist.

The question is will our so called representatives stand with working people who are hurting or with Wall St. banks who were responsible for crashing our economy, millions of foreclosed homes, and millions of American jobs lost. Wall St. needs to be reintroduced to the United States of America as a part of the productive economy that helps make America strong once again.

Not many in the two major parties will talk about such measures because a big chunk of their future campaign funding will come from these same exact companies and people. Until we control the funding of our campaigns we will continue to be unrepresented in Washington DC.

I wrote this Op Ed after attending townhall meetings in Grass Valley. At this point in time the Tea Party movement was still referred to as Tea Baggers. It was originally published on December 1, 2009.

Tea Baggers have it correct but wrong
December 1, 2009
by Ben Emery

The recent Tea Party movement is a populous one that has great justification. I went to both Town Hall meetings in Grass Valley and passed out flyers and spoke to many Tea Baggers. We agreed on just about all the problems with the country but disagreed on just about all the solutions because of one underlying problem — the confusion of cause and effect.

The downfall of our country didn't happen in the last year or two, but in the last 30 years. What we are experiencing today is the product of the biggest threat to democracy in America — the accumulation of wealth, power and corporate personhood.

The founders of our country fought against such a country where a small few controlled so much of the country's wealth and the government's policies. The Tea Party movement is correct in blaming our government for the downfall we are experiencing. But our government was set up for “We The People” to be the government and “We” have elected and supported the neutering of our powers to control our own policies, which threatens democracy and breeds fascism.

The Boston Tea Party was in fact a rebellion against a corporate tax cut. Grass Valley Tea Baggers (GVTB) insisted it was about “no taxation without representation,” but that was the reaction to the Stamp Act of 1765 and carried through the revolution. The Boston Tea Party was, in essence, American colonists saying “Hell No” to Wal-Mart, Exxon, Goldman Sachs and other major corporations of the period. East India Trading Company was one of the first of these types in modern history. The Tea Act allowed EITC to undercut the local tea shops in the American colonies, putting them out of business. It works much like a big corporation today that receives huge tax breaks and land subsidies, giving them an unfair advantage over mom and pop shops who can't compete and eventually go out of business.

Since the Ronald Reagan's administration, we have been told that the private sector knows best and “We The People” are the enemy — the nine scariest words in the English language are “I'm from the government and I'm here to help.” So we elect those who campaign against government and they, in turn, show us how bad government can be run.

In 1980, America was No. 1 in the world in exports of finished goods, importer of raw materials and the biggest lender in dollars to foreign nations.

Today, America is No. 1 in importer of finished goods/ exporting raw materials and the biggest debtor nation in world history.

Before the modern conservative movement or supply-side economics, our national debt was manageable. In 1980, America had a national debt of $909 billion, mainly leftover debt from the Vietnam War. The Carter administration had reduced our national debt by 3.2 percent over four years while increasing the U.S. GDP by 9.4 percent.

From Jimmy Carter's first fiscal year records to George W. Bush's first term fiscal records, we have seen the Democratic administrations increase federal spending by 10 percent, national debt by 4.2 percent, and GDP by 12.6 percent.

Compared to Republican administrations, we experienced increases in federal spending of 12.1 percent, national debt of 36.4 percent, and GDP by 10.7 percent. We are in debt almost $12 trillion today. The Reagan/ Bush administrations are responsible for 92 percent of it — just over $11 trillion.

As of 2009 “We The People” have almost no control over our government and need to balance a budget and pay our way out of this crippling deficit.

“Drill Baby Drill” was the ongoing mantra of the summer of 2008 and then Senator Obama did say he would consider it if the compromise would help him achieve the long-term goal of reduction of fossil fuels. I guess I chose to ignore that or had no other choice since the McCain camp wanted to drill everywhere. I’ve heard it described that President Obama was everybody’s inkblot test. We saw our biggest hopes or our worst fears in then Senator Obama. Well, President Obama on March 31, 2010 announced drilling off the east coast and has ordered an environmental study of Bristol Bay in Alaska.

I wrote an Op Ed piece during the last legs of the 2008 campaign cycle about the benefits or lack of benefits of offshore drilling. The money spent on fossil fuel exploration could be invested in the real answer to the future of energy use in America with solar, wind, geo-thermal, tidal, and possibly most important, energy reduction.

I took the color commentary out of the piece and left the meat of the article. We are a couple years out but I doubt the facts have change that much.

Facts about Oil and Gas Drilling





The following facts on oil and gas companies along with their land and drilling permits can be found at resourcescommittee.house.gov/images/Documents/drilling_facts.pdf. 


 

1. More than 91 million acres of public lands and sea have been leased.


2. Only 23 million acres are being used, which leaves 68 million acres leased but not being used.
3. 

More than 28,000 drilling permits have been given, and more than 10,000 aren’t being used.


4. ANWR has less retainable oil than the National Petroleum Reserve of Alaska (NPRA), which has drilled wells (but capped) and has the largest known oil reserves on the outer continental shelf — and isn’t being developed.


5. Government study shows that ANWR, if drilling started there today, wouldn’t be into peak production until around 2025. It would reduce the cost of a barrel of oil by $0.57 cents and a gallon of gasoline by $0.14 cents, according to a U.S. Dept. of Energy report at  www.eia.doe.gov/oiaf/servicerpt/hr/
6. Since 2001, the top five oil companies have made more than $550 billion in profits.

On June 10, 2008, Republicans filibustered two bills relating to the energy crisis:


7. Windfall profit tax on the top five profit earners (Exxon Mobil Chevron, Shell, BP America, and ConocoPhilips), which made $36 billion in profits in the first quarter of 2008.

View the full video or read the transcript online »

As we just heard, we have a long way to go to fulfill the dream of a multi-racial democracy, with equal justice and opportunity for all. Our Declaration of Independence spoke eloquently of life, liberty and the pursuit of happiness as inalienable rights, but those rights did not extend to slaves. Abraham Lincoln, the "Great Emancipator," may have been the first of our leaders fully to grasp the meaning of the American promise. In this small but significant book, "The American Dream vs. The Gospel of Wealth," the economist Norton Garfinkle writes that Lincoln believed this country's defining characteristic was economic opportunity. He believed that through hard work, over the course of a lifetime, every American -- including black people --could achieve a decent standard of living.

In Garfinkle's words, "America was the first nation on earth to offer this opportunity of economic advancement to all, even to the humblest beginner, and this was what made the nation unique and worth preserving. Ultimately, it was the largest reason for Lincoln's willingness to fight the Civil War."

In our time, this idea of universal opportunity is once again under assault for working people of every race.

Even before the Great Collapse of '08 destroyed the value of their homes, robbed their pensions, and took their jobs, American families were slipping behind, and are worse off now than they were thirty years ago. Over these past three decades, workers actually increased their productivity but did not share proportionately in the rewards of their labor. Those went largely to the top.

Since 1980, the year Ronald Reagan was elected president, the incomes of people at the top have doubled while those in the middle and at the bottom have remained flat.

Let me throw some more statistics at you. You'll find their sources at our site online. Keep in mind that each of these numbers represents lived human experience.

In this richest of countries, more than 40 million people are living in poverty.

At some point in their childhoods, half of America's children will use food stamps to eat.

Some 30 million workers are unemployed or under-employed, and for those still working, the median wage today is about $32 thousand a year, which is why so many people are working two jobs trying to make ends meet.

Meanwhile, as the economist Robert Reich recently reminded us, in the 1950's and 60's, the CEO's of major American companies took home about 25 to 30 times the wages of the typical worker. By 1980 the big company CEO took home roughly 40 times the worker's wage. By 1990, it was 100 times. And by 2007, executives at the largest American companies received about 350 times the pay of the average employee. In many of the top corporations, the chief executive earns more every day than the average worker gets paid in a year.

And then there's the financial world. Case in point: Ken Lewis, who at the end of 2009 retired as CEO of Bank of America. Only recently did we learn that, not long after his company received $45 billion in taxpayer dollars from the big bailout, Lewis raked in more than $73 million in pension benefits and stock, and was given an insurance policy worth $10 million to his beneficiaries.

But compared to some people, Ken Lewis is a piker. Hedge fund managers, who bet that taxpayers -- you -- would pay to keep the banks from collapsing, hit the jackpot. Last year, one of them alone made a cool four billion dollars. The top 25 scooped up a total of 25.3 billion.

So for those who played their cards right, there were profits galore to be made from the bailout. Just this week, the non-profit Center for Media and Democracy reported that federal agencies poured out a total of $4.6 trillion dollars – trillion dollars - to keep the banks and Wall Street from meltdown. Those financial institutions have yet to pay back about two trillion of that, but who's counting?

You can see the stakes here. You can see why we need to reclaim the economic vision of both Abraham Lincoln and Martin Luther King, Jr. If you want more evidence, get your hands on this book, "The Spirit Level: Why Greater Equality Makes Societies Stronger." As carpenters know, a spirit level is a device to measure the level of surfaces. Richard Wilkinson and Kate Pickett are not carpenters; they're epidemiologists who combined have spent more than 50 years taking the measure of different societies, comparing how inequality affects the health of populations.

The more equal the society, they found, the longer its people live, while the most unequal countries have more homicide, more obesity, more mental illness, more teen pregnancy, more high-school dropouts, and more people in prison. The United States, they report, has the greatest inequality of income of any major developed country. That's the betrayal of the American promise.

I'm a journalist, not an epidemiologist. But I've been listening to America for a long time now, and I've come to understand that what the richest and strongest among us want for their families is what most all members of society want for theirs, too: a home, steady work, enough money for a comfortable life and secure old age, the means to cope with illness and other misfortunes, and the happiness of living freely as citizens without fear.

A society whose economic system cannot make those opportunities widely available is in deep trouble, the dreams of its people mocked and denied.

That's it for the Journal. Go to our website at PBS.org. Click on "Bill Moyers Journal" and you can read an interview I conducted with the authors of "The Spirit Level." You'll also find more from Bryan Stevenson and Michelle Alexander, and more about Lincoln and Martin Luther King, Jr.

I'm Bill Moyers. See you next time.

View the full video or read the transcript online »