At 10 am today, Rep. Henry Waxman (D-CA) and Former Rep. Wayne Gilchrest (R-MD) will speak about their bipartisan plan for having a carbon price be part of a debt deal. The moderator will be Carol Browner, Distinguished Senior Fellow at the Center for American Progress Action Fund.
Evidence is clearer than ever that urgent action is needed to protect our nation and the world from the effects of irreversible climate change. And at the same time, our country faces a very large federal budget deficit.
This event will focus on a new bipartisan proposal to address both of these seemingly intractable challenges together rather than separately. This approach would slash the U.S. debt by making power plants and oil refineries pay for their carbon dioxide pollution that endanger our health and environment. This policy will strengthen our economy, lessen our dependence on foreign oil, make our skies cleaner, and provide hundreds of billions of dollars in debt relief.
Tennessee lawmakers will consider a controversial measure on Wednesday that could intimidate women seeking abortions by requiring that the names of doctors who perform the procedures be published online. The legislation, known as the Life Defense Act of 2012 or House Bill 3808, would restrict access to the procedure in to ways:
The first would require doctors to have admitting privileges at a hospital near where they perform abortions, while the second would require the Department of Health to release more information on abortions, including the name of the doctor who performed the procedure and demographics about the women who receive them.
The measure?s sponsor, Rep. Matthew Hill, R-Jonesborough, said at an initial hearing on the bill earlier this month that the reporting requirement writes into law a form that the Department of Health already asks providers to fill out whenever they perform an abortion.
?The Department of Health already collects all of the data, but they don?t publish it,? he said. ?All we?re asking is that the data they already collect be made public.?
But the measure goes beyond existing reporting requirements and could undermine women’s right to privacy by allowing opponents to identify — harass and intimidate — patients who undergo the procedure.
The state’s Department of Health already reports information on the age, race, education, and number of children of women who receive abortions, and aggregates the data by region, “making it impossible for others to figure out who underwent an abortion procedure.” This bill, however, would require the department “to release patient data broken down by county” and could “reveal the identities of some women who receive abortions, particularly in small, rural communities.” ?I think in some small communities that woman would be identified,? State Rep. Gary Odom (D) warned when a subcommittee advanced the measure earlier this month. ?I think that by publicizing this, it would have serious consequences. … We know what has happened to physicians who perform abortions that there has been violence. … There could be violence against the women. … This is a dangerous piece of legislation. … I think this is full of meanness.?
Abortion providers could also be at risk, as abortion foes would now have a comprehensive list of the names of the doctors who perform the procedure. ?In an environment where doctors are victims of violence ? and we?ve had physicians who provide abortion care murdered in the past few years ? I think this is an attempt to intimidate and allow for providers to be terrorized,? said Jeff Teague, president and CEO of Planned Parenthood of Middle and East Tennessee.
Other stories below: As climate changes, Louisiana seeks to lift a highway; With gas prices rising, smog rules may stall
Not since the allies leveled Germany in World War II has Europe?s biggest economy undertaken a reconstruction of its energy market on this scale.
Chancellor Angela Merkel is planning to build offshore wind farms that will cover an area six times the size of New York City and erect power lines that could stretch from London to Baghdad. The program will cost 200 billion euros ($263 billion), about 8 percent of the country?s gross domestic product in 2011, according to the DIW economic institute in Berlin.
Germany aims to replace 17 nuclear reactors supplying a fifth of its electricity with renewables such as solar and wind. Merkel to succeed must experiment with untested systems and policies and overcome technical hurdles threatening the project, said Stephan Reimelt, chief executive officer of General Electric Co. (GE)?s energy unit in the country.
Here on the side of Louisiana?s Highway 1, next to Raymond?s Bait Shop, a spindly pole with Global Positioning System equipment and a cellphone stuck on top charts the water?s gradual encroachment on dry land.
In 1991 this stretch of road through the marshlands of southern Louisiana was 3.9 feet above sea level, but the instrument ? which measures the ground?s position in relation to sea level ? shows the land has lost more than a foot against the sea. It sank two inches in the past 16 months alone.
That?s a problem because Highway 1, unprotected by levees, connects critical oil and gas resources in booming Port Fourchon to the rest of the nation.
Ten miles of the highway is now standing 22 feet above sea level on cement piles. But another seven miles is not, and if less than half a mile of this highway succumbs to the 14-foot storm surges expected in the future, the highway will need to be shut down, cutting off the port.
The Obama administration, facing political heat over high gasoline prices, may delay new rules that would cut pollution from cars but also could bring higher prices at the pump, environmental and industry leaders said.
The rules would require refiners to make cleaner-burning gasoline and auto makers to build cars that emit fewer smog-forming pollutants. The Environmental Protection Agency was scheduled to roll out the rules before April, but it hasn’t yet submitted them for White House review.
“We expect that timing will begin to slip, perhaps for political considerations” said American Petroleum Institute President Jack Gerard.
Ten years ago, a very senior federal deputy minister told me that implementing Canada’s Kyoto Protocol target to reduce our greenhouse gas emissions to six per cent below 1990 levels by 2012 would force an adjustment on the Canadian economy greater than that of the Free Trade Agreement (FTA) with the United States. (The FTA, which was ultimately of great economic benefit to Canada, had a significantly disruptive effect on the Canadian economy, especially the manufacturing sector, in the short term.)
This bureaucrat’s comment on Kyoto, made five years after Canada signed the Protocol and the year it was ratified by Parliament, reflected the dominant view within the government at that time. Even with the relatively strong Canadian economy that then prevailed, and with a decade in which to implement Kyoto, conventional wisdom in Ottawa held that Canada’s target was a bridge too far. And this was the opinion within the Chrétien government, which signed Kyoto and remained rhetorically committed to it. As a result, nothing meaningful was done to reduce Canada’s GhG emissions at the federal level during the Chrétien years.
The proposed route of the Keystone XL pipeline would carry oil extracted from Alberta, Canada?s tar sands through six states: Montana, South Dakota, Nebraska, Kansas, Oklahoma, and Texas. Although many proponents of the pipeline make a big deal about the jobs it would create, the six states would only gain about 20 permanent pipeline operation jobs, according to a report by Cornell University?s Global Labor Institute. Meanwhile, the agricultural and tourism sectors that are already major employers in those states would be affected greatly by a major spill.
The Keystone XL pipeline would go right through ?America?s breadbasket.? Agricultural and rangeland make up 79 percent of the land that would be affected by the pipeline. The agricultural sector is a major source of employment in the six states. About 571,000 workers are directly employed in the agricultural sector in the six states. The total agricultural output for the six states is $76.3 billion.
If you could get $3 back for every dollar you invested, would you throw the opportunity away? How about if the deal included added benefits like creating high-tech jobs, new start-up companies, technological breakthroughs, education for tomorrow?s scientists and leaders, and improved energy security in your home state? And if it meant that Minnesota could be a producer of new renewable energy technologies, rather than a consumer of technologies developed in China or Europe?
The answer seems obvious to us. That?s why we at the IREE are opposing the current version of legislative proposal SF2181, which is poised to strip our state of a premier and highly successful program that brings innovative renewable energy technologies to life and provides tremendous returns on investment for both economic and intellectual capital.
The Department of Agriculture is considering requiring an extensive environmental review before issuing mortgages to people who have leased their land for oil and gas drilling.
Last year more than 140,000 families, many of them with low incomes and living in rural areas, received roughly $18 billion in loans or loan guarantees from the department under the Rural Housing Service program. Much of the money went to residents in states that have seen the biggest growth in drilling in recent years, including Pennsylvania, Texas and Louisiana.
The program is popular because it generally requires no down payment. As its financing has grown and credit markets have tightened in recent years, the program?s loans have roughly quadrupled since 2004.
Kolkata: The state will send its final draft on the action plan on climate change to the Centre in a few days. The plan includes the government’s strategy to address the problems of rising levels of sea water to melting Himalayan glaciers.
State environment secretary RPS Kahlon said the final draft plan had almost been prepared and was now to be submitted. “After the submission of the final draft plan, the Centre will decide which funding agency, be it the World Bank or Asian Development Bank (ADB), to approach for executing the projects,” Kahlon said.
The environment department has been working on preparing the final draft of the state action plan on climate change for quite some time. All other states, too, are preparing similar drafts for submission to the Centre. All the drafts will then be compared and contrasted to form an integrated plan for the country.
A Brazilian court has ordered 17 employees from two U.S. companies, oil giant Chevron and rig operator Transocean, to surrender their passports, barring them from leaving Brazil as authorities prepare to file criminal charges in coming days in connection with an offshore oil spill involving the companies.
The ruling by Judge Vlamir Costa Magalhaes, issued late Friday night, adds to Chevron’s woes in Brazil, which began in November when oil was found to be leaking from an offshore field controlled by Chevron. Prosecutors have already filed a civil lawsuit seeking damages of 20 billion reals, or about $11.2 billion, from the company.
Brazil’s navy and Chevron said Friday that they had detected a new sheen of oil from the same field where the earlier spill occurred.
Welcome to ThinkProgress Economy?s morning link roundup. This is what we?re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.
17-year-old Trayvon Martin, who is African-American, was shot to death by 28-year-old George Zimmerman, a neighborhood watchman who has claimed to have acted in self-defense despite witnesses and a 911 call to the contrary, in a Florida gated community more than three weeks ago. But the case still hasn’t penetrated mainstream media outlets fully, though shows like Melissa Harris-Perry’s weekend program on MSNBC have begun to cover it, and celebrities are beginning to add their voices to the case.
Def Jam Rcordings founder Russell Simmons is one of the few who’s spoken out directly, tweeting “Trayvon Martin didn’t die so we can create a race war he died so we can promote better understanding. We must start honest dialogue…pls join our facebook page as we seek justice for Trayvon Martin.” Singer Janelle Monae joined in, saying “Trayvon was murdered in his own father’s gated community,” and tweeting a link to the Change.org petition calling on Zimmerman to be prosecuted. So far, local authorities have declined to arrest Zimmerman.
Other celebrities have taken to Twitter to amplify the messages being sent by others. Spike Lee has taken time in between sending birthday wishes and discussing his NCAA tournament bracket to lend his account to the effort to get “I am Trayvon Martin” trending as a phrase and to promote others’ tweets about the Change.org petition. Taraji P. Henson also promoted the effort to get signatures, and to retweet followers telling her how disturbed they were by the case. Talib Kweli is also on board. Efforts to get celebrities like Lady Gaga, who has more followers than any other account on Twitter, Oprah, whose star may be diminished by the failures of her stand-alone network OWN but is still influential, and Rihanna to add their voices to the campaign were, as of Sunday night, unsuccessful.
But it was clear that news organizations were beginning to respond. Dan Abrams, the legal analyst for NBC and MSNBC told followers that “I’m @gma tmrw on the shooting of Trayvon Martin. I’ll talk FL law and specific facts that make the case controversial,” and GMA co-host Robin Roberts rebroadcast the promise to her followers. Star Jones tweeted that “The @todayshow is doing a feature on the #TrayvonMartin killing. Please sign this petition http://chn.ge/xc4oze #Justice.” And CNN analyst Roland S. Martin alerted his followers that “#Trayvon Martin rallies: Monday, 4 pm., prior to the Sanford City Council meeting. See @jamalhbryant for details.”
With any luck, their attention will help propel the story of Trayvon Martin’s death to the front pages and the top-rated television news programs where it belongs. And maybe some measure of justice will follow.
Cross posted from The Stars Hollow GazetteThis is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.Find the past "On This Day in History" here.March 19 is the 78th day of the year (79th in leap years) in[...]
Read The Full Article:
Crusader vs. the PiratesCrusader Rabbit Crusade 2 Episode 12Open Thread [...]
Read The Full Article:
From the GREAT STATE OF MAINE?
I used to like March 19th.
Not so much anymore. It's the day Republicans shot our country in the foot and expected a parade of sweets and flowers for it.
Today is the ninth anniversary of the invasion of Iraq, aka the "More Than Twice As Long As World War II" war. As its architects and cheerleaders try to rehabilitate their images by crapping out error-riddled books sprinkled with revisionist fairy dust, let's remember what they and their media enablers really said before and after it all went down. Please hold your rotten tomatoes until the very end...
"Facing clear evidence of peril, we cannot wait for the final proof---the smoking gun that could come in the form of a mushroom cloud."Is it really worth rubbing their dumbstick-beaten faces in their own muck every year on this occasion? I take the late Molly Ivins' view from April 29, 2003, barely a month after Shock 'n Awe:
---George W. Bush (10/7/02)
My colleagues, every statement I make today is backed up by sources, solid sources. These are not assertions. What we're giving you are facts and conclusions based on solid intelligence."
---Colin Powell, United Nations Speech (2/5/03)
"My belief is we will, in fact, be greeted as liberators."
---Dick Cheney (3/16/03)
"[T]he area in the south and the west and the north that coalition forces control is substantial. It happens not to be the area where weapons of mass destruction were dispersed. We know where they are. They're in the area around Tikrit and Baghdad and east, west, south and north somewhat."
---Donald Rumsfeld (3/30/03)
Who said war never solved anything?
---Brendan Miniter, Assistant Editor, Wall St. Journal (4/8/03)
"Each morning, we sat reading our copy of The New York Times, The Washington Post or the Los Angeles Times and ruminated on their prophecies of doom and quagmire. Then we looked up to see, on television, correspondents actually embedded with our troops reporting quick advances, one-sided firefights, melting opposition and, finally, welcoming crowds."
---Dick Morris (4/15/03)
"The only people who think this wasn't a victory are Upper Westside liberals."
---Charles Krauthammer (4/19/03)
-TED KOPPEL: [Y]ou?re not suggesting that the rebuilding of Iraq is going to be done for $1.7 billion?-
ANDREW NATSIOS [Agency for International Development]: Well, in terms of the American taxpayer's contribution, I do. This is it for the US.
[Liberals] can't deny that President Bush has won his two wars, and won them resoundingly.
---Paul Mirengoff, Powerline (4/26/03)
The United States, which insisted it could not give United Nations weapons inspectors so much as 10 days more to search, so dangerous were these WMDs, now says it needs months to find them. In the meantime, we are clearly being set up to put the whole issue of WMDs down the memory hole.And how did the steely-eyed Republican Commander-in-Chief and his chickenhawk cheerleaders pay for all the unnecessary carnage and chaos? Why, I think I'll let the deficit-obsessed tea party answer that. I expect the silence will be deafening.
Maybe the American people can be brainwashed into forgetting why we supposedly went to war. Near as I can tell, our national memory span is down to about two weeks, and the media have been spectacularly unskeptical on this issue. But the rest of the world is not going to forget that WMDs were our primary reason for an unprovoked, pre-emptive war.
More Cheers and Jeers below the fold...
?But, Yossarian, suppose everyone felt that way.?
?Then,? said Yossarian, ?I?d certainly be a damned fool to feel any other way, wouldn?t I?? ?Joseph Heller, Catch-22
Last November 29, American Airlines declared bankruptcy under Chapter 11, the provision of the bankruptcy code that allows a corporation to stiff its creditors, break contracts, and keep operating under the supervision of a judge. This maneuver, politely termed a ?reorganization,? ends with the corporation exiting bankruptcy cleansed of old debts. In opting for Chapter 11, American joined every other major airline, including Delta, Northwest, United, and US Airways, which has been in and out of Chapter 11 twice since 2002. No fewer than 189 airlines have declared bankruptcy since 1990. As the sole large carrier that had not gone bankrupt, American missed out on savings available to its rivals and thus was increasingly uncompetitive.
Bankruptcy is intended to give a fresh start to persons and enterprises overwhelmed by creditors. In the case of American (like other airlines before it), the main ?creditors? are its employees. The costs of American?s bankruptcy will be borne mainly by its workers and secondarily by taxpayers. The contracts being broken are union contracts and legal promises to honor pension obligations. American is laying off 13,000 workers, slashing wages, and reducing its annual pension contribution from $97 million to $6.5 million. The airline hopes to stick the federal Pension Benefit Guaranty Corporation with liability for much of the $6.5 billion that it owes its workers and retirees.
This national indulgence for corporate bankruptcy has a certain logic. The Wall Street Journal editorial page recently termed bankruptcy ?one of the better ways in which American capitalism encourages risk-taking,? and that is the prevailing view. Thanks to Chapter 11, a potentially viable insolvent enterprise is given a fresh start as a going concern, rather than being cannibalized for the benefit of its creditors.
However, what?s good for corporate capitalism is evidently too good for the rest of us. Suppose everyone felt that way?
Wall Street has convinced lawmakers that relief for the masses, even in a deflationary economic emergency, would not only inflict unacceptable costs to bank balance sheets; it would also promote ?moral hazard??the economist?s term for rewarding and thereby inviting improvident behavior. Thanks to a revision in the bankruptcy law passed in 2005 and signed by President George W. Bush after nearly a decade of furious lobbying by the credit-card industry and the banks, consumers generally face far more onerous bankruptcy terms than do corporations.
The housing collapse, depressing trillions of dollars of consumer assets, is the single biggest drag on the recovery. But underwater mortgage holders, unlike submerged corporations, have never been eligible for bankruptcy relief. Homeowners are explicitly prohibited from using the bankruptcy code to reduce the amount of the mortgage to the present value of the house or to a monthly payment that could enable them to keep their home.
The selective privileges of bankruptcy display yet another facet of the convenient concept of corporate personhood. Some persons are evidently more equal than others. The gross disparity in the way that bankruptcy law treats corporate persons and actual people is only one of multiple double standards that increasingly define our age.
Petty felons and 200,000 small-time drug users do prison time, while corporate criminals whose frauds cost the rest of the economy trillions of dollars are permitted to settle civil suits for small fines, with shareholders bearing the expenses. Ordinary families pay tax at a higher rate than billionaires. When fracking contaminates a property and makes a home uninhabitable, the homeowner rather than the natural-gas company suffers the loss. The mother of all double standards is taxpayer aid and Federal Reserve advances?running into the trillions of dollars?that went to the banks that caused the collapse, while the bankers avoided prosecution, and the rest of the society got to eat austerity.
Linking all of these disparities between citizens and corporations is the political power of a new American plutocracy. Until our politics connects these dots and citizens start resisting, the financial elite will rule. Despite the Occupy movement, most regular people have yet to experience the sudden enlightenment of Captain Yossarian, who decided, unpatriotically, that he didn?t want to die. In the face of economic pillaging, we are behaving like damned fools.
Bankruptcy privileges for the elite have been with us for centuries. On October 29, 1692, Daniel Defoe, merchant, pamphleteer, and the future best-selling author of Robinson Crusoe, was committed to London?s King?s Bench Prison because he could not pay debts that totaled some 17,000 pounds. Before Defoe was declared bankrupt, his far-flung ventures had included underwriting marine insurance, importing wine from Portugal, buying a diving bell to search for buried treasure, and investing in 70 civet cats whose musk secretions were prized for the manufacture of perfume.
In that era, there was no Chapter 11. Bankrupts like Defoe ended up in debtors prison, an institution that would persist well into the 19th century. Typically, creditors could obtain a writ of seizure of the debtor?s assets (historians record that Defoe?s civet cats were taken by the sheriff?s men); if the assets were insufficient to settle the debt, another writ would send the bankrupt to prison, from which he could win release only by negotiating a deal with his creditors. Defoe had no fewer than 140 creditors. However, he managed to negotiate his freedom by February 1693, though he dodged debt collectors for the next decade. His misadventures later informed Robinson Crusoe, whose fictional protagonist faces financial ruin as ?an overseas trader? and lands bankrupt in prison four times, deeply in ?remorse at having ruined his loyal and loving wife.?
It gradually dawned on enlightened opinion that putting debtors in prison might be economically irrational. Once behind bars, a debtor stripped of his remaining assets had no means of resuming productive economic life, much less satisfying his debts. In this insight was the germ of Chapter 11.
Defoe soon became England?s leading crusader for bankruptcy reform. In 1697, he published the book-length Essay upon Projects, in which he proposed a novel solution. Rather than leaving the debtor to the mercy of his creditors, a ?Court of Inquiries? could tally the bankrupt?s assets, allocate them to creditors at so many pence in the pound, and leave the debtor with enough money to carry on his business. This legal action, undertaken with the full cooperation of the debtor, would result in the full ?discharge? of any remaining obligation to creditors.
London was suffering from the aftermath of bubonic plague and the costs of Britain?s recent wars with Spain. Debtors prisons were overflowing, not only with sundry speculators and deadbeats but also with solid businessmen whose enterprises had been ruined by general economic dislocations. In 1705, with the support of Queen Anne?s ministers, Parliament took up a reform act, introducing for the first time the concept of discharge.
The legislation, however, was aimed at relief for merchants. Ordinary citizens, fraudulent or just unlucky, could rot in jail. Discharge required the consent of four-fifths of the creditors. When the law was passed in 1706, Defoe himself could not qualify, and he fled to Scotland. Nonetheless, an important concept had been invented. A bankrupt merchant could settle his debts at less than the full sum owed, avoid going to prison, and resume economic life with his debts considered legally discharged. From the outset, there was a double standard of relief for capitalists, but not for the hoi polloi.
Almost a century later, the same scenario played out in the fledgling American republic. After the War of Independence came the financial crash of the 1790s. Robert Morris, the leading financier of the Revolutionary War but later a ruined speculator, was in jail, as was James Wilson, an associate justice of the U.S. Supreme Court. When Congress enacted a temporary bankruptcy law in 1800, it was much in the spirit of the British Act of 1706, providing relief and discharge only for commercial debtors owing at least $1,000, a threshold that excluded ordinary artisans and farmers. When the immediate economic crisis passed, the law was repealed.
Not until 1898 did Congress enact a general and permanent federal bankruptcy statute. It would be amended several times, with oscillating solicitude for debtors and creditors. In the depressed 1930s, Congress added the forerunner of the current Chapter 11 as well as relief for farmers. By the 1980s, the use of Chapter 11 was becoming more frequent, especially in formerly regulated industries that desired to shed wage and pension costs and in companies ruined by hostile takeovers or other leveraged buyouts.
There is indeed a moral-hazard problem, it turns out, but it lies in the increasingly promiscuous use of corporate bankruptcy. The vaunted economic efficiency of Chapter 11 depends on a tacit balancing act between the expedient temptation to blow off your debts and the lingering shame attached to ?going bankrupt.? If Chapter 11 becomes too common, it ceases to be efficient because it frightens off investors. The supposed shifting of norms, in which people no longer feared the stigma of bankruptcy, was the argument made by bankers in the legislative battle to make bankruptcy less available to ordinary citizens. It was an epic case of corporate America admonishing the citizenry to do as I say, not as I do.
The airline industry is only the extreme case. In the past two decades, the roster of companies that declared bankruptcy includes Enron, WorldCom, Global Crossing, Adelphia, General Motors, Chrysler, Delphi, Kmart, and LTV Steel, not to mention several major financial houses.
Private-equity companies routinely use Chapter 11 after they bleed dry the operating companies they acquire, load them up with debt, extract capital, and then declare that debts unfortunately exceed assets. Once out of bankruptcy, the company can be sold for more profit. Bain Capital, Mitt Romney?s firm, pocketed hundreds of millions of dollars as special dividends from such companies as KB Toys, Dade Behring, Ampad, GS Technologies, and Stage Stores, all of which subsequently filed for bankruptcy. In industries such as steel, airlines, and autos, where good union contracts were once common, one of the biggest appeals of a Chapter 11 reorganization is that contractual pension and retiree health obligations can be swept aside.
In Chapter 11, even the executives who drove a company into the ground get a second chance. Post-bankruptcy, American Airlines? president, Tom Horton, was promoted to CEO. And why not? Declaring bankruptcy will save American a small fortune. American, while in bankruptcy, has nonetheless found the money to pay a firm $525,000 a month to advise it on labor cuts. The firm is Bain Capital.
In the late 1990s, the financial industry concluded that what was available to corporations was too good for the common people. The ease of bankruptcy, supposedly, was inviting consumers to run up credit-card debt and other forms of profligate consumption. The Chamber of Commerce, Business Roundtable, conservative think tanks, and, above all, bankers lined up behind bankruptcy ?reform.? Congress passed a harsh measure in 2000, but it was pocket-vetoed by President Bill Clinton.
Harvard law professor Elizabeth Warren came to national prominence with her research demonstrating that the charge of frivolous consumer bankruptcies was a red herring. As she demonstrated, most consumer bankruptcies were in fact driven by medical bills that overwhelmed family resources or by other unforeseen financial calamities such as the death or disability of a breadwinner or the breakup of a marriage. She testified in 2005 that during the eight years that the financial industry was promoting a harsher consumer bankruptcy law, the number of bankruptcy filings actually increased a modest 17 percent, while credit-card profits went up 163 percent to $30.2 billion.
With the accession of President George W. Bush and Republican control of Congress in 2001, the banking industry increased its efforts to tilt the bankruptcy code against consumers, spending about $100 million in lobbying over eight years. In 2005, Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act. Its key provisions made it more difficult for consumers to file under Chapter 7, under which most debts are paid out of only existing assets and then forgiven, and compelled more people to file under Chapter 13, which requires a partial repayment plan over three to five years. The act introduced for the first time a means test, in which only debtors with income below the state?s median are exempt from the more onerous provisions of the law. If a citizen has above-median income, there is a ?presumption? of abuse, and future income is partly attached in order to satisfy past creditor claims, no matter what the circumstances. Many states have a ?homestead exemption? protecting an owner-occupied home, up to a dollar limit, from creditor claims. This, too, is overridden by the 2005 federal act.
In promoting the law, financial executives testified that if losses could be reduced, savings would be passed along to the public in the form of lower interest rates. But after the law passed, the credit-card industry increased its efforts to market high-interest-rate credit cards to consumers, including those with poor credit ratings. Adding insult to injury, the industry invented new fees. Thanks to the ?reform,? when overburdened consumers did go broke, credit-card companies now had far more latitude to squeeze them for repayment.
Testifying against the bill, Elizabeth Warren warned:
Women trying to collect alimony or child support will more often be forced to compete with credit-card companies that can have more of their debts declared non--dischargeable. All these provisions apply whether a person earns $20,000 a year or $200,000 a year.
But the means test as written has another, more basic problem: It treats all families alike. It assumes that everyone is in bankruptcy for the same reason?too much unnecessary spending. A family driven to bankruptcy by the increased costs of caring for an elderly parent with Alzheimer?s disease is treated the same as someone who maxed out his credit cards at a casino. A person who had a heart attack is treated the same as someone who had a spending spree at the shopping mall. A mother who works two jobs and who cannot manage the prescription drugs needed for a child with diabetes is treated the same as someone who charged a bunch of credit cards with only a vague intent to repay. A person cheated by a subprime mortgage lender and lied to by a credit-counseling agency is treated the same as a person who gamed the system in every possible way.
At bottom, this trend was a rendezvous between flat or falling wages and banks making it ever easier for consumers to go more deeply into debt. Inflated assets?which turned out to be a bubble?were advertised as a substitute for income. Are your earnings down? Just borrow against your home. Between 1989 and 2004, credit-card debt tripled, to $800 billion, while earnings stagnated. Homeowners borrowed trillions more against the supposed value of their home. The moral vocabulary of debt is filled with denunciations about improvident borrowers, but who ever heard of an improvident lender? Yet it was the recklessness of banks that caused the financial collapse.
The financial crash that began rumbling in 2007 had numerous consequences, but in many ways the most durable and destructive one is the continuing undertow of the housing collapse. The collapse began with a housing bubble pumped up by subprime mortgages. It is being prolonged by the loss of several trillion dollars in household assets representing the collapse of housing prices. With about one homeowner in five holding a mortgage that exceeds the value of the house, and more than a million homeowners defaulting every year, the result is forced sales into a depressed housing market. This puts further downward pressure on prices, prolonging and deepening a classic deflationary spiral.
The housing deflation is such a widely recognized cause of the persistent economic slump that even the Federal Reserve has publicly criticized the Obama administration for its feeble response to the housing/mortgage crisis. Bill Dudley, president of the New York Federal Reserve, recently told a bankers? convention, ?The ongoing weakness in housing has made it more difficult to achieve a vigorous economic recovery. With additional housing-policy interventions, we could achieve a better set of economic outcomes.?
The administration?s housing policy has been built on two programs of shallow relief, both intended to avoid direct reduction in principal owed and both widely dismissed as failures. The first, the Home Affordable Modification Program (HAMP), gives mortgage servicers bonus payments for voluntarily reducing monthly payments. It has helped fewer than one underwater homeowner in ten, and as many as half of those who get HAMP relief go right back into default. The program is a well-documented bureaucratic nightmare for the homeowner. The second, more recent program, known as HARP, for Home Affordable Refinance Program, allows moderately underwater homeowners to refinance mortgages held by Fannie Mae and Freddie Mac, as long as the debt is not more than 125 percent of the value of the home. But HARP does not reduce the principal owed, and its terms exclude those most in need of relief. The much-touted legal deal announced February 1, supposedly worth $26 billion, would actually give homeowners about $3 billion in mortgage write-downs (the rest is accounting changes and counseling outlays), compared to a $700 billion gap between the market value of homes and the mortgages against them.
The more straightforward solution, analogous to a corporate Chapter 11, would be to give a bankruptcy judge the power to adjust the outstanding mortgage debt. When congressional progressives proposed this as part of the legislation creating HAMP, Wall Street fiercely resisted. Several Democrats as well as nearly all Republicans ended up voting against it. Direct relief, from the perspective of the financial industry and its allies in the Treasury, is odious because it would require banks to acknowledge the actual, as opposed to nominal, condition of their balance sheets.
So while corporations continue to get a fresh start under Chapter 11, the aftermath of the financial crisis continues to sandbag millions of homeowners and the economy as a whole. This double standard is not just a question of fairness. The selective relief for corporations and banks, but not for the 99 percent, is killing the recovery. None of this will change until the citizenry builds a politics that demands a single standard.
This piece draws on the themes of a book that Robert Kuttner is completing for Knopf, titled Debtors Prison.
For those who love basketball, this is the sweet spot, the best time of year. There was tons of[...]
Read The Full Article: