Freezing Workers Out

President Obama’s move to freeze wages for federal workers is so wrong on so many levels:

AFL-CIO President Richard Trumka says today’s White House announcement of a two-year pay freeze for federal workers is “bad for the middle class, bad for the economy and bad for business.”

No one is served by our government participating in a “race to the bottom” in wages. The president talked about the need for shared sacrifice, but there’s nothing shared about Wall Street and CEOs making record profits and bonuses while working people bear the brunt.

Pointing to the upcoming federal deficit commission report that is expected to call for wide ranging cuts in crucial federal programs and policies, AFGE President John Gage offered a much more blunt criticism of the pay freeze:

This proposal is a superficial panic reaction to the draconian cuts his deficit commission will recommend. A federal pay freeze saves peanuts at best and, while he may mean it as just a public relations gesture, this is no time for political scapegoating.

Gage says the two-year freeze barely makes a dent in the federal budget deficit but will be devastating to the “VA nursing assistant making $28,000 a year or a border patrol agent earning $34,000 per year.”

President Obama asks federal workers to share the sacrifice, but it’s unconscionable for him to attack the wages of federal working people while the millionaires and billionaires on Wall Street not only get their bailouts and astronomical bonuses; they also get their tax cuts.

Mark Sumner and Scarecrow go into more detail on why this move won’t be helpful to the economy, while Jed Lewison and Chris Bowers look at the political ramifications.

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The Downward Spiral

Well, unemployment insurance runs out right away for 800,000 people if Congress doesn’t vote to renew it. And Congress doesn’t appear ready to move on that, so that’s an awful lot of people losing the small check that’s keeping them afloat while they look for work.

NELP’s Christine Owens writes:

There’s Robert Pugh, in Santa Barbara, California, who earned his MBA after a long career as a chef and found work as a financial analyst in small business and commercial banking, only to be laid off last June. He will lose his unemployment benefits next month—and, after that, his apartment and health insurance. There’s Robert Horvath of Glenview, Illinois, also laid off in June after a career in banking. Of his $1,500 in monthly benefits, due to expire in December, he needs $1,200 just for health insurance. At 58, he has applied for all kinds of jobs and received no offers. There’s Sharron Tetrault from Mount Vernon, New York, who has worked as an event planner for nonprofits for fourteen years, but since being laid off in January has struggled daily to find work. She’ll be cut off unemployment insurance in the coming weeks if Congress fails to renew the programs, “and it’s only a matter of time before my phone gets shut off,” she says. “How will employers call me?”

These are not irresponsible losers. They are victims of disastrous economic conditions. And the nation will “save” nothing by condemning them to poverty and homelessness. Rather, we will see a downward spiral in which yet more jobs and more tax revenue are lost.

In fact, just as the House torpedoed the federal programs last week, economic experts, including orthodox fiscal conservatives, begged to differ. A new Department of Labor study, commissioned by the Bush administration and co-authored by the chief economic adviser to John McCain’s presidential campaign, found that the federal programs had injected enough into the economy to reduce the unemployment rate by 1.2 points. The Congressional Budget Office has ranked unemployment insurance as the most effective stimulus to the economy, generating $1.90 in economic activity for every $1 the government spends.

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You Hurt Alan Simpson’s Feelings

Poor Alan Simpson. The co-chair of the Deficit Reduction Commission (popularly known as “The Catfood Commission”) isn’t feeling the love from folks responding to his initial recommendations on how to reduce the deficit. From the Wyoming Capital Journal:

During Al Simpson’s nearly 50 years in government, he hasn’t been afraid to take on critics and naysayers of his work in the U.S. Senate or on a variety of high-profile commissions and committees.

But as the co-chair of President Obama’s debt commission, the Wyoming Republican said he’s been taking an unprecedented amount of flak for the commission’s draft proposals to help erase the nation’s $13.8 trillion debt.
“I’ve never had any nastier mail or [been in a] more difficult position in my life,” said the 79-year-old Simpson. “Just vicious. People I’ve known, relatives [saying], “‘You son of a bitch. How could you do this?’”

And

Simpson said he’s spent about $25,000 of his own money on travel and hotel expenses on behalf of the debt commission — an expense he said he doesn’t mind paying.

Oh, the humanity! What a noble fellow, spending his own money to ensure that low income seniors live under bridges and eat catfood in the years to come! Simpson also had this to say:

“We had the greatest generation — I think this is the greediest generation,” he said.

In other words: he made millions. He’s got his. You, on the other hand, are greedy because you’ve paid in to Social Security, and will be receiving a retirement benefit.

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Rewarding Failure

Robert Scheer in The Nation:

Welcome to the brave new world of post-bailout capitalism. The Commerce Department announced Tuesday that corporate profits are at their highest level in US history, and the Fed released minutes of an early November meeting in which officials predicted a stagnant economy and continued high unemployment.

The lead on the New York Times story read like a line from a Dickens novel: “The nation’s workers may be struggling, but American companies just had their best quarter ever.” What the Times story neglected to mention is that the bulk of the increase in corporate profits was nabbed by the financial industry rather than manufacturing and other productive sectors. A whopping $33.3 billion out of the total corporate profits increase of $44.4 billion went to the banks and investment houses that those same workers had bailed out with their tax dollars.

Most of us weren’t expecting a thank-you card from the financial sector, but even a modicum of humility would be nice.

Now, if companies are doing better than ever…where are the jobs we were assured would start to appear when those companies started doing well?

Much of the rest of the corporate profit, in the non-financial sector, was also taken out of the hides of workers through increased “productivity” growth—meaning they had produced more for less personal income. Case in point: the plant that GM is reopening in Orion Township, Mich., where, under a deal negotiated with the beleaguered UAW union, 40 percent of the workers crawling through cars on the assembly line will be paid fifteen bucks an hour. That’s about half the traditional UAW wage.

In other words: these companies have figured out how to get more for less by holding workers hostage. If you want to keep your job, you’ll settle for less money. Otherwise, you too, can join the ever burgeoning ranks of the long term unemployed.

The Debts of the Dead

Americans are still defaulting on debt. The unemployment numbers are in the double digits, poverty is on the rise, and for most folks, the “economic recovery” we keep hearing about is just a rumor. In an effort to reclaim even more money, debt collection agencies have begun aggressively going after the debts of the dead. The Federal Trade Commission wants to revise the guidelines on who, exactly, is possibly responsible for the debts of the deceased. From the Washington Post:

The federal Fair Debt Collection Practices Act limits the people that collectors can contact to those with authority to pay the debt – typically a spouse or family member, and possibly a third-party executor of an estate. But in a proposed policy statement, the FTC said changes to court procedures have widened the pool of those who may be able to pay to include a host of other legal representatives.

and

Locating those who can pay the debt creates another challenge. Often, collectors may contact several friends or relatives in their attempt to find the right person. Current law allows collectors to only ask for “location information” without revealing that a debt is owed. The FTC is considering relaxing that rule for those who are deceased.

But that could pave the way for collectors to persuade unobligated consumers to pay the debt, consumer groups say. In its investigation of the practice, the FTC listened to thousands of phone calls and found debt collectors often operating in a gray area, Winston said.

That would be the gray area of trying to guilt someone into thinking they’re responsible to pay the debts of someone they loved, who has died.

The FTC proposal states that collectors appealing to consumers’ “moral obligation” to close the debt could violate federal law. In addition, it emphasized that collectors cannot imply that those with authority to pay the debt must do so out of their own pockets. All debts should be paid out of the deceased’s estate.

Instead of making it easier to harass the bereaved, it’s a shame that the FTC isn’t changing the rules to protect those who have lost someone they loved.

I confess to having a personal bias and some experience here. My husband died in 2009, and over the last year, I’ve been harassed by debt collectors, been through a very hasty foreclosure, and I’m still getting letters from lawyers. I don’t worry about it any more. There’s really nothing they can do to me. I’m earning less than the federal poverty guidelines for a single person. I do, however, worry that relaxing these rules will create a great deal of misery for elderly widows and widowers.

The whole proposal is available to read here. You can also comment on the proposed rules changes until Dec. 1.

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Messing With Social Security

In March, Erskine Bowles, co-chair of President Obama’s Deficit Reduction Commission spoke at the North Carolina Banker’s Association annual Bank Director’s Assembly. He was quoted in the Columbia Journalism Review:

“We’re going to mess with Medicare, Medicaid and Social Security because if you take those off the table, you can’t get there. If we don’t make those choices, America is going to be a second-rate power, and I don’t mean in fifty years. I mean in my lifetime.”

As the CJR points out, given that Bowles is 64, “in my lifetime” sounds pretty dire. Luckily the millions he made on Wall St. will insulate him from any unpleasantness during his later years.

Those of us who aren’t so well insulated may be less fortunate. From an op-ed in the LA Times by Nancy Altman and Eric Kingson, the co-directors of Social Security Works:

In releasing their plan, the co-chairs went out of their way to make clear that they were proposing changes to Social Security “for its own sake, not for deficit reduction.” This was an acknowledgement that Social Security does not and cannot contribute to the deficit, because it has no borrowing authority and by law cannot pay benefits unless it has sufficient income and reserves to cover their cost. But Simpson and Bowles just couldn’t keep their hands off the program.

This needs to be repeated. Often and loudly.

One thing they propose is increasing Social Security’s retirement age to 69. Every year that Social Security’s retirement age is increased amounts to a 6% to 7% across-the-board benefit cut for recipients. The retirement age is already being raised to age 67 for those turning 62 in 2022. Increasing the age to 69 would cut benefits by one-quarter from a decade ago, when the retirement age was 65.

The co-chairs also want to increase the early retirement age to 64. Currently, the majority of Americans start claiming benefits at age 62, despite the fact that this means they receive reduced benefits. As a new General Accountability Office report concluded, the people who take early retirement often do so because they work in jobs that are too physically demanding to continue or because they have health problems or can no longer find work. Raising the early retirement age will shut out workers who are disproportionately low income and minority, and it will do it when they are most vulnerable, potentially forcing them to seek disability benefits or welfare.

I’m at a loss. I truly do not understand how cutting benefits for older people will make the US a first rate power. I can think of many things it will make us, but I’m far too genteel to list them.

The co-chairs apparently think most Americans can work as long as politicians, Wall Street billionaires and others who have all of life’s advantages. In effect, the Bowles-Simpson plan says to America’s workers that they must work longer for less because the rich are living longer.

Erskine Bowles and Alan Simpson are a couple of reverse Robin Hoods, attempting to steal from the poor to give to the rich.

The folks at Social Security Works are asking all of us to participate in a national day of action. On November 30, people all over the country will be calling their US Senators and their Congressperson to say: Hands Off My Social Security!

More info.

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Thanksgiving Without Turkey

Washington, DC and Northern Virginia:

In Loudoun County – the nation’s wealthiest county measured by median income – the food pantry is distributing its first-ever Thanksgiving meal, giving food to 2,000 families. In Montgomery County, the Manna Food Center added some Saturday hours for the convenience of working families. And in Fairfax County, the nonprofit Our Daily Bread is facing the grim reality that, although it will feed 2,400 people, it may not be able to help as many 650 needy families at Thanksgiving.

Lynn Brantley, president and chief executive of the Capital Area Food Bank in Northeast Washington, said this year was the most difficult in the organization’s 30-year history. The food bank – the main supplier of food to more than 700 agencies and nonprofit groups around the Capital Beltway – will distribute a record-breaking 30 million pounds of food, up from 27 million last year.

California:

Even though the holidays are a peak giving period, San Mateo County charities are now seeing a slump in contributions despite ever increasing need in the community.

Charity officials say the demand for food assistance just before Thanksgiving is usually a good indicator of what the rest of the season will be like in terms of need.

Second Harvest Food Bank of Santa Clara and San Mateo counties — the Peninsula’s largest food bank — has collected only $1.43 million of its $11 million holiday fundraising drive goal as of this week.

The number of clients it serves increased 6 percent, but donations decreased 8 percent from this time last year, according to spokeswoman Poppy Pembroke, who projected over a quarter-million clients a month until January.

Colorado:

The Salvation Army says around this time of year they usually have at least a thousand turkeys on hand. This year the number’s less than 200.

But this season not only are donations down, the sign-up sheet for help is longer than ever.

“Looks like its going to be about 2000 to 2500 families that we’re going to help this Christmas season,” says Salvation Army Captain Dan Wilson. “We can use all the turkeys we can get right now. We only have about 150 turkeys that have come in.”

Arizona:

Even after a big turkey drive over the weekend, there’s still a big shortage. Approximately 1,800 turkeys were donated on November 20, but St. Mary’s food Bank is still almost 3,000 shy of it’s goal of 6,000 for the holiday food box season.

Montana:

More than 900 families across the food bank’s five-pantry network — in Kalispell, Bigfork, Evergreen, Marion and Martin City — have signed up to receive Thanksgiving meals, said Lori Botkin, executive director of the Flathead Food Bank.

There are 750 families signed up in Kalispell alone.

But as of Tuesday morning, the food bank only had 279 turkeys for its Thanksgiving meals.

When you have record numbers of people needing help putting a Thanksgiving dinner on their family’s table, and lower than usual numbers of turkeys in the food banks, that tells us something big about the economy. This problem is bigger than what any family can be expected to overcome on their own. America didn’t just wake up one day and decide to not be able to afford turkey on Thanksgiving—massive unemployment did that. America didn’t just wake up one day and decide to stop giving turkeys to food banks—again, massive unemployment did that, and the people who still have jobs being worried they’d be out of work soon.

Let’s take this Thanksgiving as a wake-up call about how severe a problem we face.

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If You’re Patted Down, Remember…

Whatever you think about the TSA’s new screening procedures, remember that the TSA agent patting you down or watching as you go through a detector is just doing his or her job and doesn’t call the shots on how screening happens. Remember what one Working America member who is a TSA officer wrote about the job—how injuries from carrying bags are common, but they are reprimanded when they use sick leave, about how unclear the rules are.

There’s context for that:

TSA screeners are more vulnerable than most federal employees. Unlike their counterparts elsewhere in the civil service, the agency’s employees don’t have collective-bargaining rights yet, which means it’s more difficult for them to negotiate with TSA over working conditions and policies and procedures. There isn’t even consensus over which union should represent TSA screeners. Both the American Federation of Government Employees and the National Treasury Employees Union have been organizing Transportation Security Officers for years, but it was only last week that the unions won the right to have an election to see which one will represent screeners.

Salaries for TSA screeners start at $17,083, plus locality payments depending on where screeners are stationed.

Flying with Fish reached out to 20 TSA screeners about the new procedures and heard back from 17 of them. They’re uncomfortable touching people all day—but their paychecks depend on it, and they have to act professionally. On top of that, they’re getting a lot of abuse from passengers upset about being patted down.

“Molester, pervert, disgusting, an embarrassment, creep. These are all words I have heard today at work describing me, said in my presence as I patted passengers down. These comments are painful and demoralizing, one day is bad enough, but I have to come back tomorrow, the next day and the day after that to keep hearing these comments. If something doesn’t change in the next two weeks I don’t know how much longer I can withstand this taunting. I go home and I cry. I am serving my country, I should not have to go home and cry after a day of honorably serving my country.”

If you’re traveling this holiday week, remember that while it’s understandable to be upset at the new screening procedures, the TSA officers screening you are not the ones who decided this is how it’s going to be. If you’re going to complain, complain to the management level people who can change things.

Making a Buck on Misery

Banks, hedge funds, and other investors are now putting up money for lawsuits (medical malpractice, class action, etc) in the hopes of cashing in on big awards. From the NY Times:

The loans are propelling large and prominent cases. Lenders including Counsel Financial, a Buffalo company financed by Citigroup, provided $35 million for the lawsuits brought by ground zero workers that were settled tentatively in June for $712.5 million. The lenders earned about $11 million.

And of course:

The rise of lending to plaintiffs and their lawyers is a result of the high cost of litigation. Pursuing a civil action in federal court costs an average of $15,000, the Federal Judicial Center reported last year. Cases involving scientific evidence, like medical malpractice claims, often cost more than $100,000. Some people cannot afford to pursue claims; others are overwhelmed by corporate defendants with deeper pockets.

This doesn’t always work out well for the plaintiff:

Such financing also drains money from plaintiffs. Interest rates on lawsuit loans generally exceed 15 percent a year, and most states allow lawyers that borrow to bill clients for the interest payments. The cost can exceed the benefits of winning. A woman injured in a 1995 car accident outside Philadelphia borrowed money for a suit, as did her lawyer. By the time she won $169,125 in 2003, the lenders were owed $221,000.

This whole story is disturbing, but this paragraph gave me the shivers:

“If you want to use the civil justice system, you have to have money,” said Alan Zimmerman, who founded one of the first litigation finance companies in 1994, in San Francisco, now called the LawFinance Group. “If there’s less money, you’d have less litigation. But then you’d also have less justice.”

Increasingly, there are two justice systems. There is one for the folks who have money, like the Colorado wealth manager Laura wrote about last week. Then there’s the other system, where people who don’t have money have no choice but to live with injustice.

Did the Bush Tax Cuts Grow the Economy?

So growing the economy is the answer. But what measures accomplish that?

David Leonhardt follows up with a look at the Bush tax cuts, which were supposed to create growth…somehow.

Those tax cuts passed in 2001 amid big promises about what they would do for the economy. What followed? The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7.

The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.

Yeah. It really turns out that a huge giveaway to people who already have more money than they could possibly need doesn’t do that much for the economy. Go figure.

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