Monday, March 3, 2008
The economy is undergoing a "slowdown" according to President Bush, a "recession" according to 61 percent of Americans. Regardless of the name, 83 percent of Americans rate the economy as only fair or poor, "and almost two thirds are pessimistic now and about the future." One large source of economic stress is the credit crisis, which has spread from the subprime mortgage sector to the U.S. credit card market. "If America's $14 trillion economy is a high-powered engine, credit is the motor oil that helps it run smoothly. When the lubricant is in short supply, the economy -- like an engine -- is more prone to knocks and stalling." "The squeeze is reaching beyond Wall Street to Main Street, hitting everything from the availability of student loans to credit-card interest rates to the prices of municipal bonds in retirees' portfolios." Today, the Washington Post reports that college students will see higher costs for loans -- and "some students may be denied private loans entirely" at community and for-profit schools -- because of the credit crisis. Chairman of the Federal Reserve Ben Bernanke acknowledged last month that the credit crunch is fueling the economy's downturn. "More expensive and less available credit seems likely to continue to be a source of restraint on economic growth," he said.
CREDIT CARDS -- THE NEXT FINANCIAL CRISIS:
A new report by Center for American Progress Senior Fellow Christian Weller and Research Associate Tim Westrich details how a rise in credit card defaults could produce an economic fallout on par with the mortgage crisis of last year. Lenders have tightened access to credit in the mortgage market, "forc[ing] families to look elsewhere to borrow money to pay for ever more costly necessities," including health care and college education. "[C]onsumers who once relied on home equity to make ends meet are now increasingly relying on credit cards," Weller and Westrich write. As a result, credit card debt reached a record high of $790.2 billion last November. Approximately "35 million customers can only afford to make the minimum payment every month, which means it could take years for them to pay off their debt," the report notes. That debt is increasing rapidly. Between April 2006 and December 2007 -- the same period during which the housing market was collapsing -- inflation-adjusted credit card debt increased four times faster than between March 2001 and March 2006. Weller and Westrich point out that "lenders package credit card debt into securities" in a process similar to the securitization of subprime mortgages. As such, "increased credit card debt could ultimately translate into higher loan default and thus a liquidity crisis similar to that in the mortgage market."
OPAQUE AND UNFAIR LENDING:
Despite these warning signs, credit card companies continue to aggressively target customers with less-than-perfect credit -- often the same victims of predatory subprime lending schemes. "Direct mail credit card offers to subprime customers in the United States jumped 41 percent in the first half of this year, compared with the first half in 2006," the Boston Globe reported. Travis Plunkett, legislative director of the Consumer Federation of America, said, "It's another sign that some credit card issuers are engaging in risky, irresponsible lending to vulnerable consumers." At the same time, "[c]ard issuers also are raising fees in anticipation of increased delinquencies as the economy slows. Industry-wide penalty fees rose to $18.1 billion last year from $17.1 billion a year earlier." Last month Bank of America "sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase."
POLICIES TO PROTECT BORROWERS:
Such abusive practices have led policymakers to seek greater checks on credit card companies to protect consumers. The Center for American Progress issued a 2006 paper recommending an incentive-based, credit card safety rating system modeled after the New Car Assessment Program's five-star safety rating. Sen. Ron Wyden (D-OR) introduced a similar proposal, the Credit Card Safety Star Act, in December. Such a rating system would not preclude additional legislation that would eliminate other practices considered abusive or unfair. For example, Rep. Carolyn Maloney (D-NY) has also introduced a credit cardholders' Bill of Rights, which includes provisions requiring card companies to give cardholders 45 days notice before raising interest rates and prohibiting card companies from arbitrarily changing the terms of their contract with a cardholder. Another bill sponsored by Sens. Carl Levin (D-MI) and Claire McCaskill (D-MO) would prohibit card companies from charging interest on debt that is excessive.
Sunday, March 2, 2008
During a Senate Armed Services Committee hearing on the 27th, Director of National Intelligence Michael McConnell said that "[t]he Afghan government under President Hamid Karzai controls just 30 percent of the country," "the resurgent Taliban controls 10 percent to 11 percent of the country," and that "the majority of Afghanistan's population remains under local tribal control." Defense Intelligence Agency director Lt. Gen. Michael Maples told the same committee that "Pakistani military operations in the [region] have not fundamentally damaged al-Qaeda's position" and tribal areas in Afghanistan "remain largely ungovernable and, as such, they will continue to provide vital sanctuary to al-Qaida, the Taliban and regional extremism more broadly. "The last 12 months have seen the worst violence in Afghanistan since 2001, when U.S.-led forces ousted the Taliban from power.  More on the current state of Afghanistan here.
The back-and-forth continued this week between presumptive Republican nominee John McCain and the Federal Election Commission over John McCain's desire to opt out of the public financing system for the primary election. In a Feb. 25 response to FEC Chairman David Mason, McCain's attorney (who is a former FEC chairman himself) cited precedents for releasing McCain from the presidential campaign fund and its spending limits, because while McCain had qualified for taxpayer financing, he had not yet collected any money. Mason had also asked McCain's campaign to provide additional evidence that the promise of public financing was not used to secure a $4 million line of credit (which would be against the rules). The campaign provided a letter from its bank's attorneys, one of them a -- you guessed it -- former FEC chairman, saying that the bank was very careful not to factor public financing into its evaluation of the loan. Also this week, the Democratic National Committee complained to the FEC that McCain had broken the rules in a number of ways and shouldn't be released from the limits of the public financing system, which would limit his campaign to about $5 million in spending between now and the Republican convention. (When he ran for president in 2004, DNC chairman Howard Dean also pulled out of the public system after qualifying, which McCain's campaign cited in its letter to the FEC this week, but the DNC asserts that situation was different.) Of course, the FEC can't settle this matter right now because they don't have a quorum -- and not because all the former commissioners seem to have become election attorneys in private practice. Who's holding up the nominees in the Senate? Well, on the Democratic side, one of those senators has been Barack Obama. Small world.
*Correspondence between the FEC and the McCain campaign:
*Summary of the DNC's complaint: http://www.democrats.org/a
Friday, February 22, 2008
The candidates competing to be your next president raised $3.3 million per day last month, according to reports that those still in the running and those who dropped out filed last night with the Federal Election Commission. January brought the field's total haul since fundraising began to $685 million, $586 million of it now spent. With $36 million in January -- the most any candidate has ever raised in a month while still in competitive primaries -- Barack Obama was the top fundraiser, by far. Hillary Clinton came in with about $14 million, plus $5 million from her own pocket. (Had she not lent herself that money, she would have had less to spend going into Super Tuesday than John Edwards.) Republican John McCain collected $12.6 million and reported a total of $5.5 million in loans and other debts. Summary figures for the candidates have been updated on OpenSecrets.org. The Donor Lookup, Fundraising Over Time and State/Metro data are also new. Updates to the site, including categorization of January contributors by industry and employer, will continue into next week as we analyze the data.
*Race for the White House: http://www.opensecrets.org
*Look up individual donors to presidential candidates: http://www.opensecrets.org
*Fundraising by state and metro area: http://www.opensecrets.org
*Fundraising over time: http://www.opensecrets.org
FUNDRAISING SUGGESTS TIGHT RACE IN OHIO, EDGE FOR CLINTON IN TEXAS
Following the money, you could have predicted how Tuesday's Democratic primaries in Wisconsin and Hawaii were going to turn out -- Barack Obama had a commanding fundraising lead over Hillary Clinton in both states. As for the Republican primary in Wisconsin (the GOP in Hawaii will assign delegates at a convention in May), the top Republican fundraiser last year was Tommy Thompson, the state's former governor, who ended his presidential campaign way back in August. John McCain was the top fundraiser among the remaining Republican candidates. Looking ahead to the next big contests, the fundraising in Ohio suggests a tight race between Clinton and Obama. And McCain was far outraised in the Buckeye State by dropouts Mitt Romney and Rudy Giuliani. In Texas, Clinton has a wide lead over Obama among larger donors. Both Democrats have raised more in Texas than McCain has.
*Fundraising in Ohio: http://www.opensecrets.org
*Fundraising in Texas: http://www.opensecrets.org
*Presidential primary calendar: http://www.opensecrets.org
CONGRESSIONAL RETIREES THROW THEIR OWN PARTIES
For a group that doesn't plan to run for re-election in November, this year's exceptionally large class of congressional retirees has sure been raising and spending a lot of money. Last year the 26 House and Senate retirees -- almost all of them Republicans -- managed to spend $13.5 million from their campaign accounts and political action committees, or well over half a million dollars each. In some cases, it looks like they're paying for their own extended retirement parties.
*Read the full article: http://www.capitaleye.org
"Not since the Depression has a larger share of Americans owed more on their homes than they are worth," reports The New York Times, as Congress weighs various proposals to help the "8.8 million homeowners, or 10.3 percent of the total," who "are underwater."
Despite his rhetoric against lobbyists and special interests, "virtually every one" of Sen. John McCain's (R-AZ) "closest advisers" are "part of the Washington lobbying culture." McCain's campaign manager, chief political adviser, and other senior advisers are all current or former lobbyists. Some are still being paid by lobbying firms while working on the campaign.
Former Gitmo prosecutor Air Force Col. Morris Davis, who resigned over political interference in the military tribunals, has agreed to appear at a hearing for defendant Salim Hamdan. "I'm more than happy to testify," Davis said. He called it "an opportunity to tell the truth."
In "the first confirmed ground operation by the Turkish military into Iraq since the U.S.-led invasion," as many as 10,000 Turkish troops pursued separatist Kurdish rebels across the border into Iraq yesterday. The operation raises concerns of a wider conflict between Turkey and the Iraqi Kurds.
Influential Shiite cleric Moqtada Sadr ordered his Mahdi Army militia on Friday to extend a ceasefire for another six months. Those who honor Sadr's "pledge will be treated with respect and restrain," the U.S. military said.
Several hundred Serb demonstrators, "incensed by the U.S. recognition of Kosovo's independence, overran and burned part of the American Embassy in the Serbian capital of Belgrade on Thursday." The European Union said the attacks "risked harming efforts to bring the Balkan nation closer to the EU."
Yesterday, Congress held a bipartisan meeting to broker a compromise on surveillance legislation. Republican lawmakers, however, prevented their staffs from attending. House Speaker Steny Hoyer (D-MD) responded by noting conservatives want "to have a political issue rather than a strong new FISA bill in place as quickly as possible."
A "surge of immigrants" are going to court "to force U.S. Citizenship and Immigration Services (USCIS) to complete their background checks and act" on their citizenship applications, which are often delayed for several years. In 2005, there were 4,400 suits filed against USCIS "over delayed name checks," up from 270 in 2005.
And finally: Last weekend, Janet Huckabee, wife of former Arkansas governor Mike Huckabee, had a room booked at the MGM Grand hotel in Las Vegas. She was in town "to root for fellow Arkansan and friend Jermain Taylor," who was boxing against Kelly Pavlik. At the last minute, however, "plans changed" and Huckabee ended up staying at "the pride of Sin City, the Hooters Casino Hotel." "It was the only thing, quite frankly, that was available," said Huckabee.
Monday, February 18, 2008
SENATORS VOTE TO BAN WATERBOARDING, McCAIN NOT AMONG THEM:
The Senate approved an intelligence bill that bans waterboarding, "temperature extremes and other harsh tactics that the CIA used on al-Qaeda prisoners after the Sept. 11, 2001, attacks." The measure will limit the CIA "to using 19 less-aggressive interrogation tactics outlined in a U.S Army Field Manual." CIA Director Michael Hayden recently acknowledged that the agency had used the tactic of waterboarding on at least three prisoners nearly five years ago. Other administration officials, such as Attorney General Mike Mukasey, have refused to say that waterboarding is torture. The White House has even left open the possibility of using the technique in the future. While Sen. John McCain (R-AZ) has previously called waterboarding "very exquisite torture" and co-sponsored a bill to ban any military use of the technique, he voted against yesterday's Senate bill banning waterboarding -- effectively siding with President Bush, who has vowed to veto the bill.
REP. LEWIS LEADS IN EARMARKS, DESPITE FEDERAL INVESTIGATION:
Rep. Jerry Lewis (R-CA), under investigation for funneling money to a contributor's clients, "was among the top lawmakers securing money for special projects in this year's spending bills," according to Taxpayers for Common Sense. Lewis ranked second among all House members in "solo earmarks." Though the current status of the Lewis investigation is uncertain, in May 2006, "federal authorities in Los Angeles began looking into the relationship between Lewis and Washington lobbyist Bill Lowery, a former congressman from San Diego." In 2007, "Lewis collected $59,000 in donations from Lowery, members of his lobbying firm, and clients, some of whom received earmarks supported by Lewis." The investigation is an offshoot of the Randy "Duke" Cunningham case, in which the former congressman is serving jail time after pleading guilty to accepting bribes.
ADMINISTRATION SHUTS DOWN WEBSITE TRACKING U.S. ECONOMIC INDICATORS: With the U.S. economy faltering, conservatives have attempted to deflect attention from the crisis by blaming the media's negative coverage and insisting the United States is not headed toward a recession, despite what economists are predicting. The Bush administration's latest move is to simply hide the data. Forbes had awarded EconomicIndicators.gov one of its "Best of the Web" awards. As Forbes explains, the government site provides an invaluable service to the public for accessing U.S. economic data. Economic Indicators is particularly useful because people can sign up to receive e-mails as soon as new economic data across government agencies becomes available. While the data will still be available online at various federal websites, it will be less readily accessible to members of the public. The Bush administration has decided to shut down this site because of "budgetary constraints," effective March 1, even though Bush recently submitted a record $3.1 trillion budget to Congress for FY '09.
Wednesday, February 13, 2008
The Family and Medical Leave Act (FMLA) -- a bill authored by Sen. Chris Dodd (D-CT) and signed into law by President Clinton in 1993 -- grants eligible workers up to 12 weeks of unpaid leave per year in case of a serious health condition, or to care for a new child or sick family member. The law protects an employee's job during such an absence and provides various benefit and privacy protections. For nearly fifteen years, the law has made it easier for over 50 million American workers to provide a better balance between work, health, and family life. The FMLA currently allows employees up to two days after the beginning of a shift to notify their employers of their intention to claim time off. But the Labor Department recently proposed changes to the law that would add restrictions to the FLMA -- provisions benefiting employers and making it more difficult for workers to take advantage of the law. Some of the proposed changes include requiring workers to notify their bosses in advance when taking non-emergency leave, allowing employers to require "fitness-for-duty" evaluations for those who took FMLA time off, requiring employees to obtain medical certifications of their illnesses every year, and allowing businesses to exclude workers who took FMLA time from perfect attendance awards.
EMPLOYEES NEED MORE PROTECTIONS:
Even if the Labor Department's proposals -- which some businesses regard as welcome news -- are not adopted, the FMLA needs to expand in order to cover more American workers and to provide increased benefits. As it currently stands, the FMLA does not apply to businesses employing fewer than 50 people, a provision that allows the exclusion of nearly 40 million America workers from the law. Millions more are excluded because of rules not covering part-time workers and those who have not worked for their present employer for over one year. Yet "while unpaid leave has helped millions of families, there is little question that many employees have been unable to take time to care for a new child or an ill loved one because they cannot afford the lost pay." Indeed, a study released last year by Harvard University and McGill University found that the United States lags "far behind virtually all wealthy countries with regard to family-oriented workplace policies" such as maternity leave and paid sick days. According to the study, the United States is one of just five countries out of 173 "that does not guarantee some form of paid maternity leave." Expanding the FMLA is necessary because nearly "half of all full-time private sector workers (and three quarters of low-wage workers) in the U.S. get no paid sick days." Businesses also suffer in productivity and other workers face health risks when sick employees are forced to go to work. In fact, expanding employee benefits has overwhelming support: "95 percent of the public thinks it is unacceptable for employers to not provide paid sick leave" while "60 percent think it is illegal."
House, Education, and Labor Committee Chairman George Miller (D-CA) has said that the Labor Department proposal tightening the FMLA "clearly benefits employers at the expense of workers." Sen. Edward Kennedy (D-MA), Chairman of the Senate Committee on Health, Education, Labor, and Pensions, has also criticized the proposals, saying they "will make it more difficult for workers to use this leave when they need it" and "impose burdensome new paperwork requirements on both workers and heath providers." Hearings on the Labor Department's proposals will be held this week in both the House and Senate. The National Journal notes that, under a new administration, Congress "could do away" with the Labor Department rule change proposals in "early in 2009 under the Congressional Review Act, which allows Congress to withdraw regulations within 60 session days after they are published."
CALIFORNIA LEADS THE WAY:
On July 1, 2004, California's Paid Family Leave (PFL) Law went into effect. The law is a 100 percent employee-funded provision that provides workers in that state "with a maximum of six weeks of partial pay [55% of wages up to a maximum of $882 per week] each year while taking time off from work to bond with a newborn baby, newly adopted or foster child, or to care for a seriously ill parent, child, spouse or registered domestic partner." While five other states have proposed similar bills to provide some form of paid leave, California is currently the only state mandating comprehensive paid family leave. Nearly 85% of California adult residents in every segment of the population support paid family leave, and one survey of California businesses found that more workers returned to their jobs where employers offered leave benefits beyond what is required.