Truthout Stories Fri, 17 Apr 2015 23:28:27 -0400 en-gb Fight for $15: Tens of Thousands Rally as Labor and Civil Rights Movements Join Forces

Low-wage workers in the United States have staged their largest action to date to demand a $15-an-hour minimum wage, with some 60,000 workers walking off the job in more than 200 cities. The "Fight for $15" campaign brought together fast-food workers, home-care aides, child-care providers, Wal-Mart clerks, adjunct professors, airport workers and other low-wage workers. Organizers say the action was held on Tax Day to highlight the taxpayer funds needed to support underpaid workers. A new study says low wages are forcing working families to rely on more than $150 billion in public assistance. We speak with Steven Greenhouse, former labor and workplace reporter for The New York Times, who has been covering the "Fight for $15" movement.


This is a rush transcript. Copy may not be in its final form.

NERMEEN SHAIKH: Low-wage workers in the United States have staged their largest action to date to demand a $15-an-hour minimum wage, with some 60,000 workers walking off the job in over 200 cities. Protesters in the Fight for $15 campaign include fast-food workers, home-care aides, child-care providers, Wal-Mart clerks, adjunct professors, airport workers and other low-wage workers. The Service Employees International Union, or SEIU, helped organize the campaign.

In Chicago, demonstrators held signs saying, "We are worth more!" while in New York dozens of protesters temporarily halted business at a McDonald's by staging a die-in, lying on the ground in front of the franchise. Several New York protesters carried signs saying, "We work hard" and "We see wage slavery." Protesters included Jemere Calhoun, who works at two McDonald's restaurants.

JEMERE CALHOUN: We're fighting for $15 and a union. We're fighting for a $15 minimum wage, because we feel that that's what we need, and that's what we deserve, and it's only humane. We're fighting for a union, because without a union, I mean, you know, it's tough to enforce these rules that these companies ignore or just simply just don't care about. You know, we need benefits. We need healthcare. We need sick days. We need maternity leaves. These things are really important to families.

AMY GOODMAN: Organizers say the action was held on Tax Day to highlight the public assistance needed to support underpaid workers. A new study says low wages are forcing working families to rely on more than $150 billion in public assistance. According to the University of California Center for Labor Research and Education, more than half of combined state and federal spending on public assistance goes to working families. President Obama has been pushing to raise the current federal minimum wage of $7.25 to $10.10. On the state level, Colorado, Maine, California, Oregon and Washington are all considering increasing their minimum wage to $12 an hour. Meanwhile, the Center for Economic and [Policy] Research says the minimum wage would be more than $18 an hour if it had risen as fast as productivity since 1968.

For more, we're joined by Steven Greenhouse, former labor and workplace reporter for The New York Times. He has been covering the Fight for $15 movement extensively. On Wednesday, he co-wrote a piece for The Guardian called "Fight for $15 swells into largest protest by low-wage workers in US history." He's also author of The Big Squeeze: Tough Times for the American Worker.

Welcome to Democracy Now!, Steven Greenhouse.

STEVEN GREENHOUSE: Nice to be here, Amy.

AMY GOODMAN: Talk about the significance of what's being described as the largest low-wage protest in US history.

STEVEN GREENHOUSE: So this began in November 2012 as a one-day affair in New York with 200 strikers at like 30 restaurants. It was a small acorn. And, you know, lo and behold, it's really grown into a fairly mighty oak - you know, over 200 cities, support actions in over 30 countries, 60,000 workers.

And it's really put several things into the national discussion - one, the whole issue of low-wage workers and the difficulties it takes to live on $7.25 or $8.00 an hour. And second, it's really kind of changed - also changed the conversation from not about whether we're just concerned about a minimum wage, but really establish a living wage. And it's really brought into question, you know, whether even the $10.10 an hour that President Obama is pushing begins to be adequate.

And we've even seen some companies - McDonald's, Wal-Mart, Target - raise their wages. And a lot of people say that's the result partly of these pressure campaigns, also because of a tightening labor market. But at the same time they're saying they'd like to see Wal-Mart, McDonald's, Target go up to $15, which is a big leap.

NERMEEN SHAIKH: And what are some of the groups that have been involved in making the movement so large?

STEVEN GREENHOUSE: So, like here in New York, there's a group, New York Communities for Change, which is a group representing many African Americans, Hispanics, poor people, and they've worked very closely with the Service Employees International Union. In this protest yesterday, what was new is they started working very closely with civil rights groups around the country, with Black Lives Matter. And labor unions, in general, are very involved. The Service Employees union has spent millions of dollars really getting this going, hiring organizers, and it's really created a movement that, you know, people around the country are saying there's something new here. This is not just, you know, workers at a few restaurants. It's really this movement of fast-food workers, Wal-Mart workers, janitors, home-care aides. And politicians are really starting to pay lots of attention.

AMY GOODMAN: Can you talk about this convergence of the different movements, as you're describing - Black Lives Matter, the immigrants' rights movement, Occupy before it. Go back to 1968, right? Dr. Martin Luther King died trying to organize the Poor People's Campaign. Talk about this trajectory.

STEVEN GREENHOUSE: So, I went to Atlanta a few weeks ago to do a story for the Times about how they were very deliberately trying to combine this movement of the fast-food workers, the Fight for $15 movement, with the civil rights movement to show that it's not just, you know, trying to raise pay a few dollars an hour, but it's an economic justice and social justice movement. And the meeting was held in the reverend - you know, Reverend King's former church, Ebenezer Baptist Church, and it was very moving. And a lot of the language they're using or rhetoric they're using really comes out of the civil rights movement, that - you know, "I am a man," "We want dignity," "$7.25 isn't enough to support our families." And it's really snowballing.

And one big change I've seen since I started covering this in November 2012 is just many, many people - you know, we often think of low-wage workers are like scared to stick their heads above the parapet because they're going to fired or they're going to get in trouble, and many of them are immigrants worried that bad things will happen to them. People are usually emboldened. You know, now when I go interview a lot of these workers, they're happy to give me their names. And usually when you interview workers, they're very scared to.

AMY GOODMAN: A hundred fifty billion dollars, public assistance, that goes to working families? Explain the significance of this, something that I think people across the country identify with, that regular working people and poor working people are supporting these large corporations like Wal-Mart and McDonald's by having to pay public assistance to their workers.

STEVEN GREENHOUSE: There's this notion that everyone who receives public assistance is a chisler, isn't working, isn't sitting on their hands, isn't going to look for a job. But this study out of Berkeley found that three-quarters of the money, nationwide - three-quarters of the money nationwide spent on public assistance, whether food stamps, Medicaid, goes to people with - goes to families who have at least one person working. And the study found that this is an indirect subsidy to companies like Wendy's and Burger King and McDonald's and Taco Bell and Wal-Mart and Target, which often pay $7.25, $8, $9 an hour. And it's very, very hard to raise yourself, no less two or three kids, if you're earning that much. And, you know, I think one of the points of the study is that it really raises the question: Should taxpayers be subsidizing the Wal-Marts and McDonald's? And Wal-Mart and McDonald's respond that, "Well, thanks to - thanks in part to our lower low wages, we're able to give consumers low-cost products."

NERMEEN SHAIKH: And they also make the argument, of course, that if they paid higher wages, they would employ less people.

STEVEN GREENHOUSE: Yes. I mean, you know, as many of your guests have said on this show, many, many economic studies show that a modest increase in the minimum wage will have very little effect on jobs. You know, jumping - there really haven't been studies about the -

AMY GOODMAN: Or they'll charge more - or they'll charge more for burgers.

STEVEN GREENHOUSE: Or they'll charge some - well, if you raise pay to $15 an hour, they're going to charge more for burgers. That's - I mean, yeah, but even liberal economists like Jared Bernstein say that, you know, there haven't been studies about the job effects of going from a $7.25 federal minimum wage to $15. You know, that could really speed up automation. We could see some McDonald's cashiers replaced with kiosks and -

AMY GOODMAN: Speaking of McDonald's, McDonald's just announced that they're going to increase the minimum wage - but explain the little twist here - to the nonfranchise workers. Franchises employ 90 percent of McDonald's workers. It won't go to them?

STEVEN GREENHOUSE: Right. See, McDonald's on April 1st trumpeted this, quote-unquote, "big announcement" that it's raising wages to about $9 an hour - you know, raising wages by about 89 cents, on average around 10 percent, for its workers, from around $8 an hour to around $9 an hour, roughly. But that's only for the workers at company-owned restaurants, which - and that's only about 11 percent of all the workers at McDonald's restaurants in the US The other 89 percent work for franchisee, franchise-run restaurants. So, one of the weird things is McDonald's said, "Look, we're doing this great thing to help workers," but many workers in the franchise restaurants got really pissed off, and I think it really jazzed them up. And as a result, a lot more participated in yesterday's protest than people were expecting.

NERMEEN SHAIKH: How likely do you think it is, to the extent that you can speculate, that $15 is a realistic goal? And also, if you could talk a little bit about what the impact of this movement is likely to be on the 2016 presidential race?

STEVEN GREENHOUSE: So, when this started - you know, this movement started in November 2012 - I think many, many, many people said, "$15, that's just a crazy, crazily ambitious number." But then we've seen, you know, SeaTac approve $15, and Seattle has approved a $15 minimum wage, and Washington state talks about perhaps going to a $15 statewide minimum wage. And San Francisco has a $15 minimum wage. And Chicago, with a centrist mayor, has adopted a $13 minimum wage. So the discussion about what's a achievable wage has really changed. But $15 is a very ambitious goal, in my view. You know, typical wages in fast food now are about $8.80, $9 an hour, and we're really talking about a two-thirds increase. That's a lot. And my sense is if the movement could get $12 or $13, they'd be pretty darn happy. They still - you know, it's hard to know whether $15 is really, really the goal, or it's kind of a bargaining position to aim for $12 or $13.

And the explosion in the streets yesterday, I think, is putting pressure on the candidates, Democrat and Republican, to take a stand on the minimum wage. Certainly, Hillary, as the lone Democratic candidate, will be pushed to embrace, somehow support the campaign, maybe support a minimum wage of higher than $10.10 an hour. The Republicans, you know, uniformly oppose a higher minimum wage. But I think, as this movement builds, it's going to increase pressure on them. You know, so Marco Rubio said, "I don't want wages of $10.10 an hour. I want people to be paid $30 an hour." That's kind of dodging the issue. I think this movement is going to really press the Republicans to take a firm stand on what they want to do on the minimum wage.

AMY GOODMAN: We just have 30 seconds. I want to jump to what our next subject is, TPP. You just interviewed Richard Trumka, head of the AFL-CIO, and Trumka told you he's no fan of the TPP. Explain.

STEVEN GREENHOUSE: So, he could talk about that for half an hour [inaudible]. So, he says the agreement is too secretive. It's not going to do much to help labor rights. It says - he says it'll be too much like NAFTA, the North American Free Trade Agreement, that it's going to increase imports from overseas, it's going to take away jobs from Americans, and that, he says, basically is part of a corporate agenda that's going to help big corporations and not do much for American workers, perhaps hurt them.

AMY GOODMAN: Well, Steven Greenhouse, we want to thank you for being with us, former labor and workplace reporter for The New York Times. He's been covering the Fight for $15 movement extensively. On Wednesday, he co-wrote a piece in The Guardian, "Fight for $15 swells into largest protest by low-wage workers in US history." We'll link to that article at His book is called The Big Squeeze: Tough Times for the American Worker. And next up, we will talk about the TPP, the Trans-Pacific Partnership, with Lori Wallach and Florida Congressmember Alan Grayson. Stay with us.

News Fri, 17 Apr 2015 00:00:00 -0400
"A Corporate Trojan Horse": Critics Decry Secretive TPP Deal as a Threat to Democracy

Senate Finance Committee leaders Republican Orrin Hatch and Democrat Ron Wyden are expected to introduce a "fast-track" trade promotion authority bill as early as this week that would give the president authority to negotiate the secretive Trans-Pacific Partnership trade deal and then present it to Congress for a yes-or-no vote, with no amendments allowed. On Wednesday, more than 1,000 labor union members rallied on Capitol Hill to call on Democrats to oppose "fast-track" authority. We speak with two people closely following the proposed legislation: Lori Wallach, director of Public Citizen's Global Trade Watch, and Rep. Alan Grayson, a Democrat from Florida.


This is a rush transcript. Copy may not be in its final form.

NERMEEN SHAIKH: We turn now to the pending vote in Congress on the secretive Trans-Pacific Partnership, a global trade deal currently being negotiated between the United States and 11 Latin American and Asian countries. Senate Finance Committee leaders Republican Orrin Hatch and Democrat Ron Wyden are expected to introduce a fast-track trade promotion authority bill as early as this week that would give the president authority to negotiate the TPP trade deal and then present it to Congress for a yes-or-no vote, with no amendments allowed. The bill would need 60 votes to pass the full Senate. Republicans control 54 votes, and almost all are expected to vote for the measure.

On Wednesday, more than a thousand labor union members rallied outside the US Capitol to call on Democrats to oppose fast-track authority. They were joined by several members of Congress. This is Independent Senator Bernie Sanders of Vermont.

SEN. BERNIE SANDERS: What this is about is not just trade. It is about whether this United States Congress begins to work for the middle class and working families of this country or whether it is totally owned by billionaires and their lobbyists.

AMY GOODMAN: That's Independent Senator Bernie Sanders. We'll let you know if he actually officially announces that he's running for president.

For more on the brewing battle in Congress over the Trans-Pacific Partnership and fast-track authority in Congress, we're joined by two guests. Lori Wallach is with us, director of Public Citizen's Global Trade Watch. And Congressmember Alan Grayson is with us, a Democrat from Florida.

We welcome you both to Democracy Now! Lori Wallach, let's just begin with you. We have been following the whole issue of both fast track and TPP, but for those who are not familiar with it - perhaps that's why bills like this go the way they go - explain briefly why the Trans-Pacific Partnership is so significant.

LORI WALLACH: The Trans-Pacific Partnership would make it easier for corporations to offshore our jobs. It's based on the NAFTA, the North American Free Trade Agreement, and the Korea Free Trade Agreement. It has the same provisions that give companies who offshore, who relocate their investments, special privileges and protections that make it cheaper and safer to move our jobs to low-wage countries. And TPP includes a lot of low-wage countries, which means our wages will get pushed down, when Americans are made to compete, for instance, with workers in Vietnam who are making less than 60 cents an hour.

In addition, TPP would open to 9,000 more corporations the right to drag the US government into investor-state corporate tribunals. Those are the extrajudicial tribunals where panels of three corporate attorneys would be empowered to rule on a claim brought directly against the US government by a foreign corporation claiming they should get compensation from our tax dollars for any domestic law they think violates their rights under the agreement, and they should get paid for their lost future profits for having to meet our laws.

In addition, provisions of the TPP - because most of it's not about trade; 29 chapters, only five about trade - chapters would undermine Internet freedom. The copyright chapter has pieces of SOPA, the Stop Online Piracy Act, in it. The patent chapter would increase medicine prices. It gives big pharmaceutical companies extra monopolies. The financial services chapter would roll back financial regulation. The procurement chapter would undermine "Buy America," "Buy Local" preferences. Basically - the services chapter would undermine energy regulation and undermine the policies that we need to combat the climate crisis. Basically, the entire agenda that is necessary for a decent life and livelihood and health of America, and the people in the 11 other countries, is being rolled back in the name of a trade agreement that really is just a corporate Trojan horse tool negotiated for six years in secrecy.

NERMEEN SHAIKH: And, Congressman Alan Grayson, could you explain your opposition to fast-track authority and what you're calling on your colleagues in Congress to do?

REP. ALAN GRAYSON: Well, I agree with everything that Lori just said, but I think there's also a bigger picture to consider. Our free trade, our so-called free trade, policies have been a disaster for the United States since NAFTA was enacted. Before NAFTA was enacted and went into effect 20 years ago, we never had any year in our history when we had a trade deficit of $135 billion or more. Every single year since then, for 20 years in a row, our trade deficit has been over $135 billion. Our last 14 trade deficits have been the 14 largest trade deficits not only in our history, but in the history of the entire world. And the result of that is that we've gone from $2 trillion in surplus with our trade to $11 trillion in debt. And we've lost five million manufacturing jobs and roughly 15 million other jobs in the last 20 years. So we've lost twice: We've lost the jobs, and we've also gone deeper and deeper into debt. So what's happening is not that we're buying goods and services from foreigners and they're buying an equal amount of goods and services from us - that's the way free trade is supposed to work. What's actually happening is that we're buying our goods and services from foreigners, and they are taking the money that we give to them for that and buying our assets.

That has all sorts of consequences for our economy. First we lose those jobs. Secondly, it makes American income and wealth more and more unequal. The reason why we have the fourth most unequal distribution of wealth in the world is because of fake trade. The reason why we have a bizarre, at this point unprecedented, quantitative easing policy, where the government uses the cash in our pockets to buy up assets and drive those asset prices up further and further, is because of fake trade. The reason why we have a federal deficit is because we have a trade deficit. And what happens is, the TPP, fast track, the Transatlantic version of TPP, these dramatically increase the amount of countries with whom we have this relationship - they quadruple them - and they put us on a fast track to hell, where America is nothing but cheap labor and debt slavery.

AMY GOODMAN: I want to turn to President Obama speaking in February after he began the major push for Trans-Pacific Partnership.

PRESIDENT BARACK OBAMA: This is bipartisan legislation that would protect American workers and promote American businesses, with strong new trade deals from Asia to Europe that aren't just free, but are fair. It would level the playing field for American workers. It would hold all countries to the same high labor and environmental standards to which we hold ourselves.

Now, I'm the first to admit that past trade deals haven't always lived up to the hype. And that's why we've successfully gone after countries that break the rules at our workers' expense. But that doesn't mean we should close ourselves off from new opportunities and sit on the sidelines while other countries write our future for us.

AMY GOODMAN: So, that's President Obama speaking in February. President Obama is, obviously, president of the United States, leading Democrat. Congressman Grayson, he represents your party, as well. Why the difference? Who are the blocs now that are united? We're not just talking it's Democrats here and Republicans here. What set of Republicans and Democrats agree on this?

REP. ALAN GRAYSON: Well, it's a mystery to me. You know, I was in the room when the president gave that statement and made that speech. He gave a 45-minute speech. On those three sentences, that was the only time during that entire speech when the Republicans rose up and applauded him and the Democrats did not. And I think that's very revealing. There are very, very few Democratic votes in the House of Representatives, because we represent ordinary working people. The groups that are lobbying the hardest for this are the multinational corporations and their K Street lobbyists. They're the ones who desperately want to see this passed, for the reasons that Lori Wallach just mentioned and enumerated. Ordinary Democrats represent constituencies who have been hurt hard, really hurt very hard, by the loss of those five million manufacturing jobs and 15 million other jobs. Go to any Democratic district in Ohio, Pennsylvania, Wisconsin, you'll see exactly what I'm talking about. And the fact is that there is very little support, if any significant support, within the Democratic House Caucus for fast track or for TPP. We do have a few corporate Democrats. Frankly, we do have a couple of sell-out Democrats, who have sold out to the corporate lobbyists. But the bulk of the Democratic Party well understands, along with the labor movement and ordinary people, that these policies have been disastrous for us. And it is a lie to say that they will improve the economy. In fact, they will continue the downward trend of the economy, until foreigners own everything.

NERMEEN SHAIKH: Well, Lori Wallach, I want to ask you about a comment that you made about President Obama's shift on this, since he voted in 2005 against the Central American Free Trade Agreement and subsequently explained his decision in the Chicago Tribune, what you referred to - his op-ed, that is - as his "Hamlet essay." Could you say why you called it that and what you think accounts for this transition of his on free trade?

LORI WALLACH: Well, I called it his Hamlet essay because it was on the one hand, on the other hand, to be or not to be. And he basically voted against the Central American NAFTA expansion, CAFTA, Central America Free Trade Agreement, probably mainly for political reasons. He would have been one of the very few Democrats who was for it. But the op-ed that he wrote in the Chicago Tribune basically laid out how much he wanted to be for the agreement. And I'm not sure it's so much a transition as he went from not feeling very strongly about these issues, but being surrounded by a lot of advisers who thought it was a great idea - NAFTA, CAFTA - the sort of few last unrequited NAFTA lovers in the Democratic Party. And unfortunately, those are precisely the people he brought in, as president, to be his international economic advisers. So, the Larry Summers, Mike Froman, who is the current trade ambassador, these guys, some of them, like Froman, a Wall Street revolving-door guy, some of them authors of NAFTA, so maybe a little cognitive dissonance about what it did - those guys have marinated him in NAFTA juice, and it's come, basically, to seep into his pores. And he now has become a guy who basically, but for maybe the Democratic Congress saving him - the Democrats in Congress - would basically ruin his own legacy by passing a trade agreement that would undermine everything he's achieved and everything he says he stands for. The good news, as Congressman Grayson said, is that there are only a handful of Democrats who are left who are either undecided or prepared to support fast track.

And so, for folks across the country, this is a vote that could happen by the end of April. We're talking quick. Every day that this debate gets aired, more and more people come out against. So, every person should find out where their member in the House of Representatives stands on fast track, and just ask them directly. Call the office over the weekend, your member of Congress's home. Look in the blue pages. Get the local address. Just stop by. A lot of them have office hours. And just ask, "Will you commit to me, your constituent, that you're going to hold onto your constitutional trade powers, not vote for fast track, which throws that away - it's a process that literally is a delegation of Congress's authority to stand up for us - and make sure we don't see more jobs offshored with trade agreements?" That is what we all have to do, and we have to do it now.

AMY GOODMAN: And, Lori, can you talk about the investment chapter of TPP, that was leaked by WikiLeaks, which highlights the intent of US-led negotiators to create a tribunal where corporations can sue governments if their laws interfere with a company's claimed future profits?

LORI WALLACH: So, this is the chapter that both creates the incentives that basically promote countries to offshore. Ironically, the Cato Institute is against this chapter because, from their perspective, it's an unfair market distortion giving a subsidy in favor of offshoring. They have no problem with offshoring; they just think the market should decide, we shouldn't use our trade agreements to promote job offshoring. So, the flipside of that is, and one of the special privileges the corporations would get is, they get elevated literally to nationhood. They get the same status as a nation state to privately enforce the terms of a public treaty. It's called investor-state dispute resolution. And if you want to learn a lot about it, go to, It's a new website that has all of these cases where corporations are empowered to drag a sovereign government to a tribunal of three private-sector trade attorneys, who rotate between being the attorneys for the corporations suing the governments and being the "judges." No conflict-of-interest rules. And these three private corporate attorneys can order a government to pay our tax dollars, in unlimited amounts, to a foreign corporation because they think that our domestic environmental, land-use, zoning, health, labor laws violate their new corporate rights in an agreement like TPP.

And the thing is, we've got a passel of those kind of agreements already. Folks remember, under NAFTA, we've had some horrible cases. Four hundred million dollars has already been paid out to corporations, even under NAFTA, where the system is narrower than what's proposed for TPP. But there are very few companies from the countries we've had the past agreements with, because it's mainly been developing countries. So there are 9,000 existing companies in all 50 agreements we have with this system. Just with TPP alone, we have another 9,000, mainly companies from Japan, so countries with - companies with sophistication and wherewithal. Plus, if we did the European agreement, we'd quadruple our liability, so that it's only a matter of time before our laws get sacked. Warning to everyone: Go look at the Sierra Club website. Recent case like this under NAFTA called the Bilcon case, Sierra Club has a great exposé on it. The actual one of the tribunalists, one of the corporate lawyers, steps back and says, "If we keep doing things like this - I have to break with the rest of you. If we keep doing this, this investor-state system is going to chill all our environmental laws." That's what one of the tribunalists said.

AMY GOODMAN: Congressman Grayson, do you have to rely on WikiLeaks to get information about what's actually in the TPP agreement?

REP. ALAN GRAYSON: Well, one of the sad and disturbing elements of this whole process has been the artificial secrecy that's been imposed by the administration and by the trade representative on these dealings. I can't think of any other occasion, when I've served in Congress, when I've seen the element of deception loom so large here. The public is better informed of Iraqi attacks on ISIS, which you'd think would be classified, than it is informed on a trade deal that's going to determine our economic future for the next 20 years. What's happened is that, right at the beginning, the trade representative took the absurd position that everything that was being negotiated was classified, even though it was directly in the hands of the foreign governments with whom he was negotiating. Remember, normally, we have a classified system to keep information away from our enemies, or at least other governments. In this case, it was the other governments that had the information, and it was Congress and the American people who were being denied the information. And they took that position for five years, even though 100 members of Congress wrote a letter to the trade representative saying, "Cut this out."

Now, I'm the first member of Congress to actually see any part of the TPP, even though 600 corporate lobbyists are, quote, "advisers" to the trade representative and they get to see everything. And I insisted they take that information to my office, and in return they told me I couldn't take it with me, I couldn't take it home, I couldn't make notes on it, I couldn't have my staff present. And here's the kicker: They didn't want me to discuss it with the media, the public or even other members of Congress. So it's a farce. And it's meant specifically to keep the information away from the American people, because if the American people knew what was going on, they'd recognize that it's a punch to the face of the middle class in America.

News Fri, 17 Apr 2015 00:00:00 -0400
Grayson on Money and Politics: "If We Do Nothing, We Can Kiss This Country Goodbye"

A day after a mailman from Florida landed a tiny personal aircraft called a gyrocopter on the lawn of the US Capitol in a protest to demand campaign finance reform, we speak to Rep. Alan Grayson of Florida about money and politics. Grayson also reveals that he will "probably" run for US Senate in 2016 for Marco Rubio's seat, who has joined the race for the Republican presidential nomination.


This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Congressman Grayson, I assume you heard the story of the gyrocopter that landed on the White House lawn [Capitol lawn]. This mailman named Doug Hughes, basically a flying bicycle, landed on the lawn. He expected to be blown out of the air. But he said he was doing this for campaign finance reform. He had a letter to every member of Congress. I want to ask you, how much does the money that is going to your fellow Democrats and Republicans determine their support for TPP?

REP. ALAN GRAYSON: It's decisive. I am the only member of the House of Representatives - there are 435 of us -

AMY GOODMAN: Rather, he landed on the lawn of the US Capitol, so it was even closer to you.

REP. ALAN GRAYSON: That's right. I'm the only member of the House of Representatives who raised most of his campaign funds in the last election from small contributions of less than $200. Thousands of people came to our website,, and made contributions. I am one - one - out of 435. On the other side of the building, over at the US Senate, there's only one member of the US Senate who raised most of his campaign from some small contributions. That's Bernie Sanders, who you heard earlier in this broadcast. That tells you something. In fact, to a large degree, in both parties, because of the absence of campaign finance reform, the place is bought and paid for. And the only question is: Do the members stay bought? That's what the corporate lobbyists stay up late at night wondering about: Is that member going to stay bought?

Now, I was actually in the courtroom when this disastrous Citizens United decision was decided five years ago. Mitch McConnell was two seats to my left. We were the only public officials who were in the courtroom. Mitch McConnell was the happiest I have ever seen him that day. He was literally chortling when the decision was rendered. And I said on MSNBC that night five years ago that if we do nothing, you can kiss this country goodbye. Well, pucker up, because right now the millionaires and the billionaires and the multinational corporations are calling the shots with whatever they want in TPP, whatever they want in fast track - more generally, whatever they want. They get the bailouts. They get the tax breaks. They get the so-called deregulation. They get what they want here because they get what they pay for.

AMY GOODMAN: Congressman Grayson, very quickly, Bernie Sanders hasn't yet officially announced that he's running for president, but what about you? Senator Rubio has announced he is running for president. Will you be running for his seat in Florida?

REP. ALAN GRAYSON: I'm giving it a lot of attention. The answer is probably yes, but I haven't made up my mind yet once and for all. I hope to do that soon.

AMY GOODMAN: Well, we want to thank you for being with us, Congressman Alan Grayson, Democrat of Florida's 9th Congressional District, and Lori Wallach, director of Public Citizen's Global Trade Watch.

This is Democracy Now! When we come back, we're going to Cambridge, Massachusetts. What's Harvard Heat Week? Stay with us.

News Fri, 17 Apr 2015 00:00:00 -0400
No More Cheating: Restoring the Rule of Law in Financial Markets

The political debate about finance in the US is often cast as markets versus regulation, as if "more regulation" means the efficiency of private sector decisions will necessarily be impeded or distorted. But this is the wrong way to think about the real policy choices that - like it or not - are now being made. The question is actually what kind of markets do you want: fair and well-functioning, with widely shared benefits; or deceptive, dangerous, and favoring just a relatively few powerful people?

In a speech on Wednesday, Senator Elizabeth Warren (D., MA) laid out a vision for better financial markets. This is not a left-wing or pro-big government agenda. Senator Warren's proposals are, first and foremost, pro-market. She wants - and we should all want - financial firms and markets that work for customers, that encourage innovation, and that do not build up massive risks which can threaten the financial system and bring down the economy.

Senator Warren puts forward two main sets of proposals. The first is to more strongly discourage the deception of customers. This is hard to argue against. Some parts of the financial sector are well-run, providing essential services at reasonable prices and with sound ethics throughout. Other parts of finance have drifted, frankly, into deceiving people - on fees, on risks, on terms and conditions - as a primary source of profits. We don't allow this kind of cheating in the non-financial sector and we shouldn't allow it in finance either.

The unfortunate and indisputable truth is that our rule-making and law-enforcement agencies completely fell asleep prior to 2008 with regard to protecting borrowers and even depositors against predation. Even worse, since the financial crisis, the Securities and Exchange Commission, the Justice Department, and the Federal Reserve Board of Governors proved hard or near impossible to awake from this slumber.

We need simple, clear rules that ensure transparency and full disclosure in all financial transactions - and we need to enforce those rules. This is what was done with regard to securities markets after the debacle of the early 1930s. The Consumer Financial Protection Bureau (CFPB), for which Senator Warren worked long and hard, has started down a sensible road towards smarter and simpler regulation. The CFPB needs to go further - including on auto loans - and for this it needs renewed political support.

The second proposal is to end the greatest cheat of all - the implicit subsidies received by the largest financial institutions, structured so as to encourage excessive and irresponsible risk-taking. These consequences of these subsidies have already caused massive macroeconomic damage - this is why our crisis in 2008-09 was so severe and the recovery so slow. Yet we have made painfully little progress towards really ending the problems associated with some very large financial firms - and their debts - being viewed by markets and policymakers as being too big to fail.

If you could visit a casino with the prospect of keeping all your winnings, while your losses would be partially or completely paid by someone else, how much would you gamble? You would bet a huge amount - presumably as much as the house allows. Big banks are run by smart, rational people. The incentives they face - which themselves have worked long and hard to retain - are not acceptable from a broader social point of view.

Senator Warren wants to cut through the complex morass of modern regulation. Force the biggest half dozen banks to become smaller, simpler, and more transparent. Limit the tax deductibility of interest for large highly leveraged financial institutions, so they choose to fund themselves with relatively more equity and less debt.

And reform the emergency powers of the Federal Reserve - to strengthen its ability to deal with genuine disasters while also ensuring an appropriate level of democratic review and control. The days of secretive bailouts should end.

Senator Warren's main point is this:

"without some basic rules and accountability, financial markets don't work. People get ripped off, risk-taking explodes, and the markets blow up. That's just an empirical fact - clearly observable in 1929 and again in 2008."

Of course you cannot outlaw all cheating or prevent all forms of future potential macroeconomic problems. But the legislative framework and presidential priorities matter. This is demonstrated by what happened since the 1980s, when the deregulation of finance distorted incentives in very ways that proved very dangerous.

We can choose now to make markets function better. Put in place simpler, clearer rules and enforce them.

This is a completely centrist agenda. As a result, there is real potential here for bipartisan policy initiatives - and there are senators on both sides of the aisle who show signs of being willing to go to bat for exactly these kinds of sensible pro-market ideas.

All presidential candidates, Republican and Democrat, would be smart to embrace this agenda.

News Fri, 17 Apr 2015 00:00:00 -0400
New Restrictions on Abortion Restrictions ]]> (Lauren Walker) Art Fri, 17 Apr 2015 00:00:00 -0400 Jeb Bush's Elephant in the Room: Role in "Bush v. Gore" Recount

Little noticed among Jeb Bush's recently released emails, published on, is this one (Dec. 6, 2000) offering thanks to his brother's future Supreme Court Chief Justice Appointee, John Roberts, for legal advice during the election. "Thank you for your time today. I really appreciate your input on my role in this unique and historic situation," he wrote.

If Bush wants to run for the presidency in 2016, he should answer questions about his involvement, and the media should fact-check and obtain the truth.

Jeb Bush may have a problem in the primaries with his family name because of his father and brother's legacies of the Iraq war and the 2008 recession -issues that may have been handled very differently in a Gore presidency - and now attempts to distance himself from them with the widely covered statement, "I'm my own man." The media has not, however, even mentioned what may be his biggest problem: his level of responsibility in Florida for taking the 2000 election from Gore and the national repercussions.

Bush's communications director in July 2001, Katie Baur, said, "While he recused himself from any involvement in what happened after Nov. 7, he did not recuse himself from his role as a brother." What's not known is that the level of direct involvement was, frankly, enormous. The Los Angeles Times reported on July 14, 2001, "The Florida governor's office in Tallahassee made 95 telephone calls to the George W. Bush presidential campaign, its advisors, lawyers and staffers during the 36-day recount period, records show. At least 10 calls came from an office number used primarily by Jeb Bush."

At least one call from Jeb Bush's number "went to Karl Rove, his brother's campaign strategist. ... One went to the Texas governor's chief of staff, Clay Johnson. Additional calls were logged to cell phones assigned to Bush campaign staffers."

Bush emailed in July 2001: "I have no clue what these calls were about." He had "no clue" of what his own calls were about while his brother was on the cusp of winning or losing the presidency?

Even before the recount, Florida officials were aware of flaws in the voting system that Katherine Harris, the secretary of state under Governor Bush, directed. Harris was co-chair of the Bush campaign, itself a likely conflict of interest for the state's top voting procedures official.

"There emerges a confluence of circumstances that indicates intimidation and harassment of the Florida voters, and that was set in motion long before the November election," said Commissioner Victoria Wilson of the US Commission on Civil Rights in their report, "Voting Irregularities in Florida During the 2000 Presidential Election." Issued June 8, 2001, the report accuses Florida election officials of "gross dereliction" and "injustice."

The report revealed that 14.4 percent of Florida's black voters cast ballots that were rejected, compared with 1.6 percent of nonblack Florida voters. Also, 11 percent of Florida voters were African American; they cast 54 percent of the 180,000 supposedly spoiled ballots.

The report adds, "This overall lack of leadership in protecting voting rights was largely responsible for the broad array of problems in Florida during the 2000 election."

Proper conversations between Bush and Harris would have been how to expedite the counting of the most voters possible. Improper conversations would have been how to stop counts in pro-Gore areas. Which were they?

Other questions include:

  • Who did Jeb call within the Bush camp, including Rove, to strategize before and during the recount, and what was discussed?
  • Did he help suppress targeted votes before and during the recount?
  • What instructions or guidance did Bush and Harris discuss concerning the slow walk in the election recount until the US Supreme Court finally said "enough?"

To this day, Bush has not updated his "no clue" statement, but current presidential voters, including participants in the Iowa caucuses, deserve answers. The actions were only 15 years ago and have affected the economy and Iraq to this day. Until Bush says what he did (if anything) to slow walk the count so that Gore would lose by a US Supreme Court stop of the counting, there is reason for voters to question his role, and to factor that role into their voting this time around.

Des Moines Register editor's note: Jeb Bush's office declined to respond last week to this op-ed.

News Fri, 17 Apr 2015 00:00:00 -0400
Wall Street's Stealth Tax Break

For Wall Street itself, the tax break on stock market losses is simply a fact of life. (Photo: A. Golden)For Wall Street itself, the tax break on stock market losses is simply a fact of life. (Photo: A. Golden) A tax break that could be the biggest in America has never gotten its due. The break on stock market losses flies under the radar, unseen and uncounted, shifting up to 39.6 percent (the top marginal rate) of investment losses onto the US Treasury. 

And nobody suggests that this tax break should be reined in. For that matter, nobody pays it any attention at all.  

Let's see how the break operates, and how it's totally overlooked. Then let's give it the scrutiny it deserves - especially with Congress signaling that it might be getting serious about tax reform. 

Stock market losses turn into tax breaks when the losses are written off against gains on tax returns. This costs the Treasury revenue, and effectively shifts part of the cost onto other taxpayers. All tax breaks do likewise, but this one has bells and whistles besides. 

Each year, in addition to unlimited, direct write-offs, losses up to $3,000 can be deducted from ordinary income. Then there's the cherry on top: any losses that still haven't been written off can be carried forward indefinitely. 

They are, and the total is staggering. The Internal Revenue Service recently estimated capital loss carryovers on 2012 returns at $581 billion ($369 billion long term, $212 billion short term). The Treasury will be picking up part of that $581 billion. Year after year, it picks up part of those $3,000 deductions. With every Wall Street loss, in every regular, non-retirement account, it loses more revenue somewhere down the road. 

Yet Treasury shortfalls from market losses aren't even listed on a definitive ranking of tax breaks compiled by the bi-partisan Joint Committee on Taxation. When lawmakers target these breaks (or tax expenditures, as they're sometimes called), they tend to focus on the supposed biggest: employer-provided health insurance ($143 billion in 2014), tax-deferred retirement plans ($109 billion), and preferential rates on capital gains and dividends ($91 billion). In truth the unlimited write-off of capital losses could top them all - but the pieces have never been added up and compared to other breaks. Capital losses reported to the IRS include non-market losses too, muddying any possible comparison. 

All that aside, it's time for President Obama and Congress to reform this long-ignored drain on the Treasury. 

The president's 2013 budget proposed capping two other tax breaks, mortgage interest and charitable contributions, at 28 percent; he could propose the same for stock market losses. Limits on the losses that can be written off by individual taxpayers could be phased in. Time limits could be laid down. The yearly $3,000 deduction could be ended. There's a case for allowing stock market losses to be written off against gains; there's no good reason, though, to allow the write-off against ordinary income.

Could Wall Street survive without a tax break to help ease the pain of losses? It's hard to imagine. All the same, with economic inequality at Gilded Age levels, Congress could at least throttle back on one of the policies that drive inequality higher. 

For Wall Street itself, the tax break on stock market losses is simply a fact of life. It's always been touted, especially during tax season. Financial advisors continually urge investors to lower their tax bills by "harvesting" tax losses. It's a telling use of the word "harvesting" - in this case, harvesting what could well be the biggest tax break of all.

Opinion Fri, 17 Apr 2015 00:00:00 -0400
Investigations of California Group Homes Marked by Delays and Uncertainty

A ProPublica examination has found that the California Department of Social Services fails to swiftly or conclusively investigate hundreds of claims of misconduct and other problems in group homes that house the state's most troubled children.

ProPublica reviewed more than 450 complaint investigations undertaken by the agency between 2009 and 2014 from roughly 50 Level 14 group homes, the residential facilities for California's most acutely disturbed children. More than half the investigations produced "inconclusive" findings, meaning that no determination of facts was reached in cases that involved sexual abuse, physical assaults, drug use or inadequate care at the facilities.

In some instances, the agency didn't even begin its investigations in earnest until well after the alleged perpetrators and victims had moved on from the home. In other cases, the accused and the accusers lived side by side for months.

Additionally, in the investigations in which complaints were substantiated, the agency almost never imposed one of its toughest sanctions – civil penalties. Instead, even in cases where children were injured or sexually abused by their peers, the state was satisfied to order "retraining" for the staff that had failed to oversee the children.

Michael Weston, a Department of Social Services spokesman, defended the rigor of the investigations. He said the hundreds of "inconclusive" findings were the only fair determinations when the truth behind the allegations could not be established.

"Are you suggesting that they should substantiate things that they don't have preponderance of the evidence to substantiate?" Weston asked, referring to the department's investigators. "You want to investigate something thoroughly, but again, we're not encouraging people to substantiate things if they don't have a preponderance of the evidence to substantiate."

Weston added that all complaints are given "top priority," and are investigated "as soon as possible."

Advocates and experts in the field say the inconclusive reports reflect a deeper problem.

"The people conducting these investigations really aren't appropriately trained," said Bill Grimm, a lawyer with the National Center for Youth Law. "They don't look at it with a kind of rigid approach that someone in law enforcement would use in a criminal investigation. That really undercuts the legitimacy of these investigations."

In addition to acting on complaints filed by children, their families or workers at the facilities, the department is required to investigate what are known as "unusual incidents" – a range of episodes that can involve everything from missed medication to reports of criminal activity that come to involve the local police. The homes are required to file them electronically. The department must review each report within days and decide if it warrants further review. In those cases, inspectors typically visit the home, interview staff and children involved in the incident, and determine whether the home has violated its legal obligations.

ProPublica reviewed a sample of nearly 100 such investigations. The department appears to respond faster to incident reports than complaints and rarely makes "inconclusive" findings, but the investigations are sometimes left open indefinitely. Of the 100 investigations, DSS left about one-third of the cases open, found violations in another third, and deemed there were no violations in the final third.

In the cases involving complaints filed by the children or their families, the department is supposed to visit the home and initiate its investigation within 10 days. There are no legal requirements as to when the investigation must conclude. In dozens of instances, the records reviewed by ProPublica fail to make clear whether inspectors visited the home within 10 days of the complaint. The records do make clear that investigations often drag on for months.

In some respects, it's understandable the department often struggles to reach a definitive conclusion. The complaints are often made by children with severe mental health issues, whose accounts may not be consistently reliable.

Still, close examination of these cases reveal disturbing outcomes and oversights.

At the Bayfront Youth and Family Services home in Long Beach, ProPublica looked at 43 complaints from 2009 to 2014. Thirty-two were deemed inconclusive. The allegations ranged in severity. Some were very serious: children claiming they'd been viciously attacked by their peers or counselors. Others were minor, such as when a child said the home's staff had abruptly ended a home phone call by hanging up the line.

Over this five-year period, the department substantiated 10 complaints that included allegations of sexual activity and the improper use of restraints, meaning instances in which children were physically calmed or controlled by staff. In 2012, the department determined that several children had been injured during the staff's use of restraints and that staff at the home had deployed the technique far too often.

Yet, in the two years prior, Marleana Reed, the home's director, had promised DSS on nine separate occasions that she would retrain her staff on the proper use of restraints and other supervisory issues.. The department accepted her "plans of correction," but the same problems went on for years.

Reed did not respond to repeated requests for comment.

On March 26, 2010, according to DSS files, two children had sex in one of the home's "day rooms." Reed told the department she retrained the staffers who were supposed to be supervising the children. That year, eight more complaints of serious abuses came in. Children said they'd been punched, kicked and bitten, sometimes by staff, sometimes by each other. The department substantiated three complaints. One involved a counselor who had allegedly grabbed a child by the neck. In another, a child was given an icepack after he broke his clavicle. The boy didn't receive medical treatment for several hours. In a third incident, a child stood accused of "inappropriately touching" another in a movie theater. In each instance, the department accepted Reed's promises to retrain her staff and imposed no other sanctions.

In 2011, the pattern continued. Children lodged 11 complaints that year and four were substantiated. Two involved allegations of assault by staff. The department also investigated 16 separate incident reports that year, formal notices filed by staff at Bayfront. In one, inspectors confirmed that a counselor punched a child. In another, a child was found slashing her arm in a bathroom and was later hospitalized after swallowing a piece of metal. Reed fired four employees involved in incidents that year and told the department she had retrained several others. In November of that year, the department issued a civil penalty after confirming that two children had sex on the campus - the second such incident in a year.

In March 2012, records show, a department inspector spoke to Reed at the home. Children had fought or left the campus on four consecutive days that month and the inspector was concerned about the volume of restraints on the campus. Reed was instructed to tell her staff to use the technique only as a "last recourse." But reports of violence between staff and clients continued that year.

On October 22, the home incurred another civil penalty after a child's face was injured during a restraint. A week later, the "day room" again was the site of sexual activity among children, according to an incident report.

In the first six months of 2013, department inspectors investigated six more complaints and responded to three incident reports at Bayfront. They substantiated just one complaint, finding that a child's thighs, torso and arms had been bruised during several restraints.

In spite of the home's record, the department allowed the facility to expand.

In the summer of 2013, the home added one more child to each of 11 rooms that originally housed two. It now has a capacity of 40 boys and girls, making it one of the largest Level 14 facilities in the state.

Since then, state inspectors have been back to the facility at least a dozen times to investigate claims of beatings and harassment perpetrated by staff. Again and again, the investigations have ended with a finding of "inconclusive."

Department of Social Services spokesman Weston would not answer questions about the home and the state's oversight of it.

Other homes had their share of problems, too, the records show.

In March of 2009, the Department of Social Services received a complaint that a staff member at a 28-bed group home called Casa Pacifica in Camarillo was having sex with a minor resident.

The home's chief executive, Steven Elson, had hired the worker in 2008, and Elson said the man passed a background check performed by DSS. Elson said he had submitted the man's fingerprints and work history information to the department. The department, Elson said, reviewed the material and cleared him to work in the home in early 2008.

Six months later, Elson said he started receiving emails from staff about the worker. The man was supposed to be working exclusively with boys, but he kept showing up in the girls' cottage. Elson said he reprimanded the man, but decided to keep him on the staff.

In early 2009, a female resident of the home complained about the man's conduct. She said the man had been having sex with another girl on the campus. Elson's staff filed an unusual incident report with DSS. Elson said he also began an internal investigation. He couldn't substantiate the girl's claim. The alleged victim said she never had sex with the man and the accuser recanted her allegation. Elson said he fired the worker anyway.

DSS didn't begin its investigation until five weeks after the man had been fired. The investigation then took nine months. In that time, DSS wasn't able to substantiate the allegation of sex abuse.

But the inspectors did unearth one troubling, incontrovertible fact: It turned out the worker had impregnated an under-age child eight years earlier in 2001, state records show. The child was not a resident of a group home, and the man had yet to begin working for a home. Still, both the department and Elson missed that troubling episode during their background check.

No action was taken against the facility."There are no deficiencies cited," the report concludes.

Elson, in an interview, said that his facility had acted responsibly. He said he was disappointed, but not altogether surprised by the department's conduct in the investigation.

"It's a big bureaucracy. They regulate thousands of facilities: senior care, day care centers, group homes. Thousands of fingerprints and other information go to them. I know they probably aren't going to catch everything," Elson said. "But here's the thing. Child serving businesses - day care centers, schools, places that work with children - they are a magnet for pedophile types. So you've got to be super careful and have policies that will highlight activity that might be concerning."

In February 2010, DSS banned the former worker from working at any facility overseen by the department. Weston, the DSS spokesman, would not elaborate on how the department missed the earlier instance of child abuse.

"There was no information provided to the Department during the background check process that would have allowed the Department to deny the application for clearance," he said.

In San Diego, the list of complaints made against the San Diego Center for Children in February of 2013 were lengthy and serious: too many children; not enough staff; staff members were driving residents of the facility around the city despite having been drinking and taking drugs; the facility's medical technicians were underqualified. State investigators took nine months to investigate the charges. Ultimately, they declared they could neither prove nor disprove any of the allegations. "Therefore, the above allegations are found to be inconclusive at this time," the DSS report reads.

Representatives of the group home declined to address the specific allegations, saying only that they try to maintain a transparent and open relationship with the department and are sometimes frustrated themselves by DSS's inconclusive reports.

"As an organization we would like the opportunity to be cleared of allegations such as these and have the reports reflect the department's actual findings," said Cheryl Rode, the home's senior clinical director.

In December of 2012, a staffer at the Fred Finch Youth Center in Lemon Grove had allegedly broken a child's collar bone. After nine months, investigators confirmed that the child had indeed suffered a fracture. But, their report said, "there is insufficient evidence to determine how the injury occurred." There is no indication that the child or the alleged assailant had been relocated.

In an interview, Fred Finch Youth Center President and CEO Tom Alexander said the boy broke his collar bone when counselors were trying to prevent him from attacking them and other children.

"It was an accident," Alexander said. "The staff did what they could. He was a big kid, probably 240 pounds or something like that."

Alexander said that, in general, it's not unusual for a DSS investigation to culminate in an "inconclusive" finding. He said reports often sit on the desks of investigators for months after an initial questioning. Alexander attributes the delays to underfunding and understaffing in the department.

"They don't have the staff to get out to the facilities and investigate as quickly as they should," Alexander said. "People's memories change. A kid might feel strongly about a complaint three weeks ago and now they can't remember it. That leads to more inconclusive reports than they'd have if they had adequate staff to make rapid and comprehensive review of allegations."

Weston told ProPublica the agency is sufficiently funded to "meet its mandates."

Maria Ramiu, an attorney for the Youth Law Center in San Francisco, said the inconclusive reports suggest a lack of training and expertise on the part of DSS investigators.

"You can move from being a DMV clerk to working as a [Licensing Program Analyst] if you meet the state's basic requirements," Ramiu said, referring to the DSS employees who respond to complaints. "It goes to the core of whether we have an oversight system that is structured to keep kids safe. These children are very vulnerable. This is a population that is likely to be preyed upon because of their history of abuse. They are isolated. But we don't have a good system of protection for them."

News Fri, 17 Apr 2015 00:00:00 -0400
Did Money Seal Israeli-Saudi Alliance?

Secretary of State John Kerry walks alongside Saud al-Faisal, the foreign minister of Saudi Arabia, center, before a meeting with King Salman in Diriyah, Saudi Arabia, March 5, 2015. (Evan Vucci/Pool via The New York Times)Secretary of State John Kerry walks alongside Saud al-Faisal, the foreign minister of Saudi Arabia, center, before a meeting with King Salman in Diriyah, Saudi Arabia, March 5, 2015. (Evan Vucci/Pool via The New York Times)

For more than half a century, Saudi Arabia has tried to use its vast oil wealth to build a lobby in the United States that could rival the imposing Israel Lobby. At top dollar, the Saudis hired law firms and PR specialists - and exploited personal connections to powerful families like the Bushes - but the Saudis never could build the kind of grassroots political organization that has given Israel and its American backers such extraordinary clout.

Indeed, Americans who did take Saudi money - including academic institutions and non-governmental organizations - were often pilloried as tools of the Arabs, with the Israel Lobby and its propagandists raising the political cost of accepting Saudi largesse so high that many people and institutions shied away.

But Saudi Arabia may have found another way to buy influence inside the United States - by giving money to Israel and currying favor with Israeli Prime Minister Benjamin Netanyahu. Over the past several years, as both Saudi Arabia and Israel have identified Iran and the so-called "Shiite crescent" as their principal enemies, this once-unthinkable alliance has become possible - and the Saudis, as they are wont to do, may have thrown lots of money into the deal.

According to a source briefed by US intelligence analysts, the Saudis have given Israel at least $16 billion over the past 2 ½ years, funneling the money through a third-country Arab state and into an Israeli "development" account in Europe to help finance infrastructure inside Israel. The source first called the account "a Netanyahu slush fund," but later refined that characterization, saying the money was used for public projects such as building settlements in the West Bank.

In other words, according to this information, the Saudis concluded that if you can't beat the Israel Lobby, try buying it. And, if that is the case, the Saudis have found their behind-the-scenes collaboration with Israel extremely valuable. Netanyahu has played a key role in lining up the US Congress to fight an international agreement to resolve a long-running dispute over Iran's nuclear program.

Urged on by Netanyahu, the Republican majority and many Democrats have committed themselves to destroying the framework agreement hammered out on April 2 by Iran and six world powers, including the United States. The deal would impose strict inspections and other limits to guarantee that Iran's nuclear program remains peaceful.

By crashing the deal, Israel and Saudi Arabia would open the door to more punitive sanctions on Iran and possibly clear the way for Israeli airstrikes, with Saudi Arabia granting over-flight permission to Israeli warplanes. The Saudi-Israeli tandem also might hope to pull in the US military to inflict even more devastation on Iranian targets.

Neither the Israeli nor Saudi governments responded to requests for comment on Saudi payments into an Israeli account.

Congressional Acclaim

The reported Saudi-to-Israel money transfers put Netanyahu's March 3 speech to a cheering joint session of the US Congress in a different light, too. The Prime Minister's bitter denunciations of Iran before hundreds of transfixed American lawmakers could be viewed as him demonstrating his value to the Saudi royals who could never dream of getting that kind of reaction themselves.

Indeed, as Congress now moves to sabotage the Iranian nuclear agreement, the Saudis could be finding that whatever money they invested in Israel is money well spent. The Saudis seem especially alarmed that the nuclear agreement would prompt the world community to lift sanctions on Iran, thus allowing its economy - and its influence - to grow.

To prevent that, the Saudis desperately want to draw the United States in on the Sunni side of the historic Sunni-Shiite conflict, with Netanyahu serving as a crucial middleman by defying President Barack Obama on the Iran deal and bringing the full force of the Israel Lobby to bear on Congress and on the opinion circles of Official Washington.

If Netanyahu and the Saudis succeed in collapsing the Iran nuclear framework agreement, they will have made great strides toward enlisting the United States as the primary military force on the Sunni side of the Sunni-Shiite sectarian divide, a dispute that dates back to the succession struggle after Prophet Muhammad's death in 632.

This ancient feud has become a Saudi obsession over the past several decades, at least since Iran's Shiite revolution overthrew the Shah of Iran in 1979 and brought to power the Islamic government of Ayatollah Ruhollah Khomeini.

Upset with the ouster of a fellow monarch, the Shah, and fearing the spread of Khomeini's ascetic form of Shiite Islamic governance, the Saudi royals summoned Iraqi dictator Saddam Hussein, a fellow Sunni, to Riyadh on Aug. 5, 1980, to encourage him to invade Iran.

According to top secret "Talking Points" that Secretary of State Alexander Haig prepared for a briefing of President Ronald Reagan after Haig's April 1981 trip to the Middle East, Haig wrote that Saudi Prince Fahd said he told the Iraqis that an invasion of Iran would have US support.

"It was … interesting to confirm that President [Jimmy] Carter gave the Iraqis a green light to launch the war against Iran through Fahd," Haig wrote, in the document that I discovered in US congressional files in 1994. Though Carter has denied encouraging the Iraqi invasion, which came as Iran was holding 52 US diplomats hostage, Haig's "Talking Points" suggest that the Saudis at least led Hussein to believe that the war had US blessings.

Haig also noted that even after the overthrow of the Shah and the establishment of the Islamic state under Khomeini, Israel sought to maintain its clandestine relations with Iran by serving as an arms supplier. Haig reported that "Both [Egypt's Anwar] Sadat and [Saudi Prince] Fahd [explained that] Iran is receiving military spares for US equipment from Israel."

Those Israeli weapons sales continued through the eight bloody years of the Iran-Iraq War with some estimates of the value reaching into the scores of billions of dollar. The Israelis even helped bring the Reagan administration into the deals in the mid-1980s with the so-called Iran-Contra arms shipments that involved secret off-the-books bank accounts in Europe and led to the worst scandal of Reagan's presidency.

Rise of the Neocons

In the 1990s - with the Iran-Iraq war over and Iran's treasury depleted - Israeli attitudes cooled toward its erstwhile trading partner. Meanwhile, American neocons - juiced by the demonstration of US military supremacy against Iraq during the Persian Gulf War in 1991 and the collapse of the Soviet Union leaving the US as "the sole superpower" - began advising Netanyahu on employing "regime change" to alter the Mideast dynamic.

During Netanyahu's 1996 campaign, prominent neocons including Richard Perle and Douglas Feith outlined the plan in a policy paper entitled "A Clean Break: A New Strategy for Securing the Realm." The document argued that "Israel can shape its strategic environment … by weakening, containing, and even rolling back Syria. This effort can focus on removing Saddam Hussein from power in Iraq - an important Israeli strategic objective in its own right - as a means of foiling Syria's regional ambitions."

The overriding point of this neocon strategy was that by imposing "regime change" in Muslim nations that were deemed hostile to Israel, new friendly governments could be put in place, thus leaving Israel's close-in enemies - Hamas in Palestine and Hezbollah in Lebanon - without outside sponsors. Starved of money, these troublesome enemies would be forced to accept Israel's terms. "The Realm" would be secured.

The neocons first target was Sunni-ruled Iraq, as their Project for the New American Century made clear in 1998, but Syria and Iran were next on the hit list. Syria is governed by the Assads who are Alawites, an offshoot of Shiite Islam, and Iran is governed by Shiites. The neocon plan was to use US military force or other means of subversion to take out all three regimes.

However, when the neocons got their chance to invade Iraq in 2003, they inadvertently tipped the Mideast balance in favor of the Shiites, since Iraq's Shiite majority gained control under the US military occupation. Plus, the disastrous US war precluded the neocons from completing their agenda of enforced "regime change" in Syria and Iran.

With the new Iraqi government suddenly friendly with Iran's Shiite leaders, Saudi Arabia became increasingly alarmed. Israel was also coming to view the so-called "Shiite crescent" from Tehran through Baghdad and Damascus to Beirut as a strategic threat.

Saudi Arabia, working with Turkey, took aim at the center of that crescent in 2011 by supporting a Sunni-led opposition to the government of Syrian President Bashar al-Assad, a set of protests that quickly spiraled into bloody terrorist attacks and harsh military repression.

By 2013, it was clear that the principal fighters against Assad's government were not the fictional "moderates" touted by the US mainstream media but Al-Qaeda's Nusra Front and a hyper-brutal Al-Qaeda spinoff that arose in resistance to the US occupation of Iraq and evolved into the "Islamic State of Iraq and Syria" or simply the "Islamic State."

Israeli Preference

To the surprise of some observers, Israel began voicing a preference for Al-Qaeda's militants over the relatively secular Assad government, which was viewed as the protectors of Alawites, Shiites, Christians and other Syrian minorities terrified of the Saudi-backed Sunni extremists.

In September 2013, in one of the most explicit expressions of Israel's views, Israeli Ambassador to the United States Michael Oren, then a close adviser to Netanyahu, told the Jerusalem Post that Israel favored the Sunni extremists over Assad.

"The greatest danger to Israel is by the strategic arc that extends from Tehran, to Damascus to Beirut. And we saw the Assad regime as the keystone in that arc," Oren told the Jerusalem Post in an interview. "We always wanted Bashar Assad to go, we always preferred the bad guys who weren't backed by Iran to the bad guys who were backed by Iran." He said this was the case even if the "bad guys" were affiliated with Al-Qaeda.

Oren expanded on his position in June 2014 at an Aspen Institute conference. Then, speaking as a former ambassador, Oren said Israel would even prefer a victory by the Islamic State, which was massacring captured Iraqi soldiers and beheading Westerners, than the continuation of the Iranian-backed Assad in Syria.

"From Israel's perspective, if there's got to be an evil that's got to prevail, let the Sunni evil prevail," Oren said.

On Oct. 1, 2013, Israeli Prime Minister Netanyahu hinted at the new Israeli-Saudi relationship in his United Nations General Assembly speech, which was largely devoted to excoriating Iran over its nuclear program and threatening a unilateral Israeli military strike.

Amid the bellicosity, Netanyahu dropped in a largely missed clue about the evolving power relationships in the Middle East, saying: "The dangers of a nuclear-armed Iran and the emergence of other threats in our region have led many of our Arab neighbors to recognize, finally recognize, that Israel is not their enemy. And this affords us the opportunity to overcome the historic animosities and build new relationships, new friendships, new hopes."

The next day, Israel's Channel 2 TV news reported that senior Israeli security officials had met with a high-level Gulf state counterpart in Jerusalem, believed to be Prince Bandar bin Sultan, the former Saudi ambassador to the United States who was then head of Saudi intelligence.

The reality of this unlikely alliance has even reached the mainstream US media. For instance, Time magazine correspondent Joe Klein described the new coziness in an article in the Jan. 19, 2015 issue: "On May 26, 2014, an unprecedented public conversation took place in Brussels. Two former high-ranking spymasters of Israel and Saudi Arabia - Amos Yadlin and Prince Turki al-Faisal - sat together for more than an hour, talking regional politics in a conversation moderated by the Washington Post's David Ignatius.

"They disagreed on some things, like the exact nature of an Israel-Palestine peace settlement, and agreed on others: the severity of the Iranian nuclear threat, the need to support the new military government in Egypt, the demand for concerted international action in Syria. The most striking statement came from Prince Turki. He said the Arabs had 'crossed the Rubicon' and 'don't want to fight Israel anymore.'"

While the Saudis may still pay lip service to the plight of the Palestinians, that issue is no longer much of a priority. Indeed, the Saudi royals may view the Palestinians, many of whom are secular having seen first-hand the evils of Islamic extremism, as something of a regional threat to the Saudi monarchical governance which is based on an ultra-fundamentalist form of Islam known as Wahhabism. That some of the reported $16 billion Saudi payment to Israel was going to finance Israeli settlements on the Palestinian West Bank would further reflect this Saudi indifference.

In 2013, again collaborating with Israel, Saudi Arabia helped deal a devastating blow to the 1.8 million Palestinians locked in the Gaza Strip. They had received some relief when Egypt elected the Muslim Brotherhood government of President Mohamed Morsi, who relaxed the embargo on passage between Egyptian territory and Gaza.

But the Saudis saw the populist Muslim Brotherhood as a threat to monarchical rule and Israel was angry over Morsi's apparent sympathy for Hamas, the party ruling Gaza. So, Saudi Arabia and Israel supported a military coup which removed Morsi from power. The two countries then showed off their complementary powers: the Saudis helped the government of General Abdel Fattah el-Sisi with money and oil, while Israel had its lobby work the corridors of power in Washington to prevent retaliation for the ouster of an elected government.

Back to Syria

Israel's growing collaboration with Saudi Arabia and the two governments' mutual hatred of the "Shiite crescent" have extended into a tacit alliance with Al-Qaeda's Nusra Front in Syria, with which the Israelis have what amounts to a non-aggression pact, even caring for Nusra fighters in Israeli hospitals and mounting lethal air attacks against Lebanese and Iranian advisers to the Syrian military.

Israel's preference for the Saudi-backed jihadists over Iranian allies in Syria was a little-noticed subtext of Israeli Prime Minister Netanyahu's address to Congress on March 3, urging the US government to shift its focus from fighting Al-Qaeda and the Islamic State to fighting Iran. He trivialized the danger from the Islamic State with its "butcher knives, captured weapons and YouTube" compared to Iran, which he accused of "gobbling up the nations" of the Middle East.

To the applause of Congress, he claimed "Iran now dominates four Arab capitals, Baghdad, Damascus, Beirut and Sanaa. And if Iran's aggression is left unchecked, more will surely follow." His choice of capitals was peculiar, however, because Iran took none of those capitals by force and, indeed, was simply supporting the embattled government of Syria and was allied with Shiite elements of the government of Lebanon.

As for Iraq, Iran's allies were installed not by Iran but by President George W. Bush via the US invasion. And, in Yemen, a long-festering sectarian conflict has led to the capture of Sanaa by Houthi rebels who are Zaydi Shiites, an offshoot of Shia Islam that is actually closer to some Sunni sects.

The Houthis deny that they are agents of Iran, and Western intelligence services believe that Iranian support has consisted mostly of some funding. Former CIA official Graham E. Fuller has called the notion "that the Houthis represent the cutting edge of Iranian imperialism in Arabia - as trumpeted by the Saudis" a "myth." He added:

"The Zaydi Shia, including the Houthis, over history have never had a lot to do with Iran. But as internal struggles within Yemen have gone on, some of the Houthis have more recently been happy to take Iranian coin and perhaps some weapons - just as so many others, both Sunni and Shia, are on the Saudi payroll. The Houthis furthermore hate al-Qaeda and hate the Islamic State."

Indeed, the Saudi airstrikes, which have reportedly killed hundreds of Yemeni civilians, have aided the Yemen-based "Al-Qaeda in the Arabian Peninsula" by limiting Houthi attacks on the terrorists and enabling AQAP to overrun a prison and free scores of its militants.

But President Obama, recognizing the joint power of the Saudis and Israelis to destroy the Iran nuclear deal, authorized support for the Saudi airstrikes from US intelligence while rushing military resupplies to the Saudis. In effect, Obama is trading US support for Saudi aggression in a neighboring country for what he hopes might be some political space for the Iran-nuclear agreement.

New Terrorist Gains

Saudi Arabia and its Persian Gulf allies, along with Turkey, are also ramping up support in Syria for Al-Qaeda's Nusra Front and the Islamic State. Flush with jihadist reinforcements, the two terrorist organizations have seized new territory in recent weeks, including the Islamic State creating a humanitarian crisis by attacking a Palestinian refugee camp south of Damascus.

All of these Saudi actions have drawn minimal criticism from mainstream US media and political circles, in part, because the Saudis now have the protection of the Israel Lobby, which has kept American attention on the supposed threat from Iran, including allegedly controversial statements from Iranian leaders about their insistence that economic sanctions be lifted once the nuclear agreement is signed and/or implemented.

Neocon warmongers have even been granted space in major US newspapers, including the Washington Post and the New York Times, to openly advocate for the bombing of Iran despite the risk that destroying Iran's nuclear reactors could inflict both human and environmental devastation. That might serve the Saudi-Israeli interests by forcing Iran to focus exclusively on a domestic crisis but it would amount to a major war crime.

The strategic benefit for Israel and Saudi Arabia would be that with Iran unable to assist the Iraqis and the Syrians in their desperate struggles against Al-Qaeda and the Islamic State, the Sunni jihadists might well be hoisting the black flag of their dystopian philosophy over Damascus, if not Baghdad.

Beyond the slaughter of innocents that would follow - and the likelihood of new terrorist attacks on the West - such a victory would almost surely force whoever is the US president to recommit hundreds of thousands of US troops to remove Al-Qaeda or the Islamic State from power. It would be a war of vast expense in money and blood with little prospect of American success.

If Saudi Arabia's petrodollars helped secure Israel's assistance in creating such a potential hell on earth, the Saudi royals might consider it the best money they ever spent - and the resulting orgy of military spending by the US government might benefit some well-connected neocons, too - but the many victims of this madness would certainly feel otherwise as might the vast majority of the American people.

News Fri, 17 Apr 2015 00:00:00 -0400
Financial Reform's Effect on Shadow Banking

An undated photo of the General Electric sign, atop 30 Rockefeller Plaza, in New York. G.E. recently decided to sell off most of its financial services unit. (CREDIT: Brian Harkin for The New York Times)An undated photo of the General Electric sign, atop 30 Rockefeller Plaza, in New York. GE recently decided to sell off most of its financial services unit. (Photo: Brian Harkin for The New York Times)There are two big lessons from General Electric's announcement that the company is planning to get out of the finance business.

First, the much maligned Dodd-Frank financial reform law is doing some real good. Second, Republicans have been talking nonsense on the subject. (OK, maybe the second isn't really news, but it's important to understand just what kind of nonsense Republicans have been talking.)

GE Capital, the company's finance unit, was a quintessential example of the rise of shadow banking. In most important respects it acted like a bank. It created systemic risks very much like a bank. But it was effectively unregulated, and had to be bailed out through ad hoc arrangements that understandably made many people furious about putting taxpayers on the hook for private irresponsibility.

Most economists believe that the rise of shadow banking had less to do with the advantages of such nonbank banks than it did with regulatory arbitrage - that is, institutions like GE Capital were all about exploiting the lack of adequate oversight. And the general view is that the 2008 financial crisis occurred largely because regulatory evasion had reached the point where an old-fashioned wave of bank runs (albeit wearing somewhat different clothes) was once again possible.

The Dodd-Frank Act tried to fix these bad incentives by subjecting "systemically important financial institutions" - or SIFIs - to greater oversight and higher capital and liquidity requirements. And sure enough, GE is, in effect, now saying: If we have to compete on a level playing field, and if we can't play the moral hazard game, it's not worth being in this business. That's a clear demonstration that reform is working.

Now the official GOP line has been, more or less, that the crisis had nothing to do with runaway banks - that it was all about Barney Frank, the former chairman of the House Financial Services Committee, somehow forcing poor, innocent bankers to make loans to "Those People." And the line on the right also asserts that the SIFI designation is actually an invitation to behave badly, that institutions so designated know that they are too big to fail and can start living high on the moral hazard hog.

But as the economist Mike Konczal noted recently on the Roosevelt Institute's blog, GE - following in the footsteps of others, notably MetLife - is clearly desperate to get out from under the SIFI designation. It sure looks as if being named a SIFI is indeed what it's supposed to be: a burden rather than a bonus.

A good day for the reformers.

Opinion Fri, 17 Apr 2015 09:53:47 -0400