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“Sanders Is Exploiting The Trade Issue”: Mirroring The Republican Approach To Obamacare

Some people are suggesting that Bernie Sanders‘ win in Michigan was a result of his opposition to trade deals like NAFTA and TPP and that this will serve him well with white working class voters in the so-called “rust belt” states. Just prior to the debate in Flint, Michigan, Sanders tweeted this:

Both Danielle Krutzleben at NPR and Steve Chapman at the Chicago Tribune did some fact-checking on the role of trade deals in the challenges faced by cities like Detroit and Flint. Krutzleban begins with a chart showing that the migration out of Detroit started around 1950 and that since then, it has lost more than 60% of its residents. That started long before the trade deals Sanders suggested as the cause of all those abandoned buildings.

Chapman identifies several factors that are not accounted for if we simply look at things like NAFTA to blame. He points out that Michael Moore’s documentary “Roger & Me” about the shut-down of the General Motors plant in Flint came out four years before NAFTA took effect and that the challenge to the auto industry back then was coming from Japan (not China or Mexico), where they were producing more reliable and fuel-efficient cars.

The other issue that hurt Detroit was the migration of auto plants – not overseas – but to states (mostly in the South) who adopted so-called “right to work” laws that undermined unions. Another factor was automation – which reduced the number of workers required to produce cars by a third. Finally, Chapman makes this observation:

Breaking down trade barriers would actually help the American auto industry and those on the assembly lines. One major attraction of building cars in Mexico is that it has free trade agreements with 45 countries — while the U.S. has free trade deals with just 20. Exporting to most of the world is easier there than here.

Bernard Swiecki, an analyst at the Michigan-based Center for Automotive Research, told Business Alabama why Audi recently decided to put a factory in Mexico instead of the U.S.: “If they export it, they save $4,500 per vehicle in tariffs they don’t have to pay.”

These are just some of the complicating factors that affected a state like Michigan. But they are paralleled by a look at history that informs us of what drove the manufacturing boom in the United States as well as what is challenging its survival today. To sum up: it is not as simple as blaming trade deals.

What I find troubling about Sanders’ approach to all of this is not simply his avoidance of even a cursory mention of these complex issues. It is more about the fact that he is obviously tapping into the anger and despair that is felt by those who are affected (much like Donald Trump is doing) and then locating a singular culprit on which to focus their blame.

But beyond even that, the one thing many of us have spent the last seven years criticizing about Republicans is their use of anger/fear mongering to foster obstruction. What is totally lacking from Sanders is any articulation of what his own approach to trade would be. In that way, he is mirroring the Republican approach to Obamacare: suggesting that trade deals need to be repealed without offering a replacement. For those of us who think that it is important to get beyond the anger/fear and talk about actual policy that works, that is not good enough.

 

By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, March 10, 2016

March 16, 2016 Posted by | Bernie Sanders, NAFTA, Trade Agreements | , , , , , , , , , | Leave a comment

“Unfit For GM Engines, OK For Children”: Rick Snyder’s Top Aides Knew Flint’s Water Was Unsafe More Than a Year Ago

In October 2014, General Motors informed the Michigan governor’s office that the Flint River’s heavily chlorinated water was rusting its car parts. The governor’s environmental-policy adviser, Valerie Brader, decided that water unfit for washing engines probably shouldn’t be ingested by children. More specifically: If the chlorine in the water could corrode car parts, it was probably also corroding Flint’s lead pipes. Governor Rick Snyder’s chief legal counsel, Mike Gadola, agreed, according to emails obtained by the Detroit News.

“To anyone who grew up in Flint as I did, the notion that I would be getting my drinking water from the Flint River is downright scary,” Gadola wrote in an email to the governor’s chief of staff and other top aides. “Too bad the (emergency manager) didn’t ask me what I thought, though I’m sure he heard it from plenty of others.”

Gadola went on to note that his mother still lived in Flint. “Nice to know she’s drinking water with elevated chlorine levels and fecal coliform,” he said. “I agree with Valerie (Brader). They should try to get back on the Detroit system as a stopgap ASAP before this thing gets too far out of control.”

It would be nearly a year before the city followed Brader’s advice.

Snyder himself was not copied on the email, and Brader told the News that she never shared her concerns with the executive personally. “I certainly was never in a meeting with him (Snyder), nor did I raise what I wrote in that email,” Brader said. “And to my knowledge, neither did Mike Gadola.”

The governor’s chief of staff, Dennis Muchmore, told the paper that his office agreed with Brader’s assessment but was prevented from acting because of resistance from the Treasury Department and the legislature.

“Since we’re in charge, we can hardly ignore the people of Flint,” Muchmore wrote in an email to communications officials in the governor’s office and Treasury Department. “After all, if GM refuses to use the water in their plant and our own agencies are warning people not to drink it … we look pretty stupid hiding behind some financial statement.”

But Muchmore never asked the legislature for a supplemental spending bill to reconnect Flint to Detroit’s water system, concluding that such a proposal would be “dead on arrival.”

Public-health officials believe that as many as 8,000 children in Flint ingested water with dangerously high levels of lead.

The emails are the latest in an ongoing series of publicly released messages from the governor’s office concerning the state’s handling of the water crisis in Flint. Prior emails showed that government workers in Flint were provided bottled water more than a year before it was given to regular citizens.

 

By: Eric Levitz, Daily Intelligencer, New York Magazine, February 26, 2016

February 29, 2016 Posted by | Flint Water Crisis, Lead Poisoining, Rick Snyder | , , , , , | 2 Comments

“Deferred Prosecution Agreements”: Criminals Should Get Same Leniency As Corporations, Judge Says

For years, when corporations paid big fines to escape prosecution for their misdeeds, critics fumed. Why, they asked, shouldn’t big companies be treated like common criminals?

A federal judge turned that question on its head this week as he lamented being asked to approve yet another corporate settlement. Perhaps, he said, common criminals ought to be treated more like big companies.

Judge Emmet G. Sullivan, of the United States District Court for the District of Columbia, took aim at a favorite tool of the Obama administration for addressing corporate wrongdoing: a form of probation known as a deferred prosecution agreement. If companies behave for the length of the agreement, the matter is closed without any criminal record.

The judge said individual defendants should enjoy the same opportunities. While it is not uncommon for judges to criticize outcomes that they see as unjust, it is highly unusual for them to so explicitly advocate — and at such great length — a change in approach.

Judge Sullivan’s 84-page opinion — in what could have been a short, straightforward decision — is the latest influential voice to join a growing chorus of both liberals and conservatives who see the American criminal justice system as fundamentally unfair.

The ruling comes amid a rapidly changing environment: The White House is approving clemency applications at historically high rates; support is coalescing on Capitol Hill to ease sentencing laws; and law enforcement leaders around the country have declared that too many Americans are in prison for too long. Though the federal prison population has declined for the first time in decades, America remains the world’s largest jailer by far; its prison population nearly equals China’s and Russia’s combined.

Justice Department officials agree in principle with Judge Sullivan’s critique and have encouraged Congress to ease tough sentencing laws that were passed at the height of the crack epidemic. Emily Pierce, a department spokeswoman, noted that under an initiative begun in 2013, prosecutors were already ordered to prioritize more serious crimes, while looking for alternatives to prison for low-level offenders. Fewer low-level criminals being charged means fewer people eligible for deferred prosecution. The department has also strongly supported drug courts, which essentially offer the same second chance that companies are given.

At the same time, the Justice Department recently promised to get tough on corporate executives after years of criticism in the aftermath of the financial crisis that bankers, in particular, escaped punishment because their companies agreed to pay big fines. It was that promise, followed days later by a deferred-prosecution agreement with General Motors, that ignited Judge Sullivan’s fury.

Judge Sullivan was appointed to the federal bench by President Bill Clinton. He previously served as a municipal judge and a local appellate judge in Washington, having been appointed by Presidents Ronald Reagan and George Bush.

He called G.M.’s $900 million settlement “a shocking example of potentially culpable individuals not being criminally charged.” G.M. admitted that it misled the public about auto defects, but neither the company nor its executives were prosecuted, “despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people.”

“The court is disappointed that deferred-prosecution agreements or other similar tools are not being used to provide the same opportunity to individual defendants to demonstrate their rehabilitation without triggering the devastating collateral consequences of a criminal conviction,” Judge Sullivan wrote.

Justice Department figures show deferred-prosecution agreements are rare for both individuals and companies. But the number of cases against organizations and companies is so tiny — 150 or so each year, compared with 160,000 or more individual prosecutions — that these deals occur at a much higher rate in corporate cases, which also tend to be higher profile.

Deferred-prosecution deals are attractive because they spare companies the consequence of criminal convictions, such as stock collapse and a loss of contracts. For people, the effects can be even more severe. The American Bar Association has identified tens of thousands of consequences of criminal conviction, which demonstrates how a single arrest can cost people their jobs and homes.

President Obama has indicated that he will make a criminal justice overhaul one of the most important issues of his remaining time in office. He became the first sitting president to visit a federal prison. On Thursday, he defended the Black Lives Matter movement, which has been criticized by police unions in particular as being anti-police. Mr. Obama plans to speak about changing the criminal justice system next week at the annual meeting of the International Association of Chiefs of Police in Chicago.

Much of the public debate has focused on reducing the prison population by cutting sentences for those serving long sentences for nonviolent crimes. Lost in the debate, Judge Sullivan said, has been the importance of keeping people out of jail in the first place. “This oversight is lamentable, to say the least!” he wrote.

He said criminal justice reform should offer people “the chance to demonstrate their true character and avoid the catastrophic consequences of felony convictions.”

While Judge Sullivan cannot make policy from the bench, the opinion shows the momentum behind efforts to improve the system, said Norman L. Reimer, the executive director of the National Association of Criminal Defense Lawyers.

“It has finally seeped into the public consciousness that there is something wrong,” he said. “All of a sudden, a nation wakes up and realizes we’ve created this unbelievable cadre of second-class citizens.”

 

By: Matt Apuzzo, The New York Times, October 23, 2015

October 25, 2015 Posted by | Corporate Crime, Corporations, Criminal Justice System, Deferred Prosecution Agreements | , , , , , , , | Leave a comment

“It’s The People Stupid”: The Way To Stop Corporate Lawbreaking Is To Prosecute The People Who Break The Law

Today General Motors announced that it has fired 15 employees and disciplined five others in the wake of an internal investigation into the company’s handling of defective ignition switches, which lead to at least 13 fatalities.

But who’s legally responsible when a big corporation breaks the law? The government thinks it’s the corporation itself.

Wrong.

“What GM did was break the law … They failed to meet their public safety obligations,” scolded Sec of Transportation Anthony Foxx a few weeks ago after imposing the largest possible penalty on the giant automaker.

Attorney General Eric Holder was even more adamant recently when he announced the guilty plea of giant bank Credit Suisse to criminal charges for aiding rich Americans avoid paying taxes. “This case shows that no financial institution, no matter its size or global reach, is above the law.”

Tough words. But they rest on a bizarre premise. GM didn’t break the law, and Credit Suisse never acted above it. Corporations don’t do things. People do.

For a decade GM had been receiving complaints about the ignition switch but chose to do nothing. Who was at fault? Look toward the top. David Friedman, acting head of the National Highway Traffic Safety Administration, says those aware of the problem had ranged from engineers “all the way up through executives.”

Credit Suisse employees followed a carefully-crafted plan, even sending private bankers to visit their American clients on tourist visas to avoid detection. According to the head of New York State’s Department of Financial Services, Credit Suisse’s crime was “decidedly not the result of the conduct of just a few bad apples.”

Yet in neither of these cases have any executives been charged with violating the law. No top guns are going to jail. No one is even being fired.

Instead, the government is imposing corporate fines. The logic is that since the corporation as whole benefited from these illegal acts, the corporation as a whole should pay.

But the logic is flawed. Such fines are often treated by corporations as costs of doing business. GM was fined $35 million. That’s peanuts to a hundred-billion-dollar corporation.

Credit Suisse was fined considerably more — $2.8 billion. But even this amount was shrugged off by financial markets. In fact, the bank’s shares rose the day the plea was announced – the only big financial institution to show gains that day. Its CEO even sounded upbeat: “Our discussions with clients have been very reassuring and we haven’t seen very many issues at all.” (Credit Suisse wasn’t even required to turn over its list of tax-avoiding clients.)

Fines have no deterrent value unless the amount of the penalty multiplied by the risk of being caught is greater than the profits earned by the illegal behavior. In reality, the penalty-risk calculus rarely comes close.

Even when it does, the people hurt aren’t the shareholders who profited years before when the crimes were committed. Most current shareholders weren’t even around then.

Calling a corporation a criminal is even more absurd. Credit Suisse pleaded guilty to criminal conduct. GM may also face a criminal indictment. But what does this mean? A corporation can’t be put behind bars.

To be sure, corporations can effectively be executed. In 2002, the giant accounting firm Arthur Andersen was found guilty of obstructing justice when certain partners destroyed records of the auditing work they did for Enron. As a result, Andersen’s clients abandoned it and the firm collapsed. (Andersen’s conviction was later overturned on appeal).

But here again, the wrong people are harmed. The vast majority of Andersen’s 28,000 employees had nothing to do with the wrongdoing yet they lost their jobs, while most of its senior partners slid easily into other accounting or consulting work.

The truth is, corporations aren’t people — despite what the Supreme Court says. Corporations don’t break laws; specific people do. In the cases of GM and Credit Suisse, the evidence points to executives at or near the top.

Conservatives are fond of talking about personal responsibility. But when it comes to white-collar crime, I haven’t heard them demand that individuals be prosecuted.

Yet the only way to deter giant corporations from harming the public is to go after people who cause the harm.

 

By: Robert Reich, The Robert Reich Blog, June 4, 2014

June 7, 2014 Posted by | Auto Industry, Corporations, Financial Industry | , , , , , | Leave a comment

“Reaganomics Killed America’s Middle Class”: The Time Is Long Past Due For Us To Roll Back The Reagan Tax Cuts

There’s nothing “normal” about having a middle class. Having a middle class is a choice that a society has to make, and it’s a choice we need to make again in this generation, if we want to stop the destruction of the remnants of the last generation’s middle class.

Despite what you might read in the Wall Street Journal or see on Fox News, capitalism is not an economic system that produces a middle class. In fact, if left to its own devices, capitalism tends towards vast levels of inequality and monopoly. The natural and most stable state of capitalism actually looks a lot like the Victorian England depicted in Charles Dickens’ novels.

At the top there is a very small class of superrich. Below them, there is a slightly larger, but still very small, “middle” class of professionals and mercantilists – doctor, lawyers, shop-owners – who help keep things running for the superrich and supply the working poor with their needs. And at the very bottom there is the great mass of people – typically over 90 percent of the population – who make up the working poor. They have no wealth – in fact they’re typically in debt most of their lives – and can barely survive on what little money they make.

So, for average working people, there is no such thing as a middle class in “normal” capitalism. Wealth accumulates at the very top among the elites, not among everyday working people. Inequality is the default option.

You can see this trend today in America. When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today’s dollars, about $50 an hour with benefits. Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical “raw capitalism,” what we call “Reaganomics,” or “supply side economics,” our nation’s largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed – this huge change was done in less than 35 years.

The only ways a working-class “middle class” can come about in a capitalist society are by massive social upheaval – a middle class emerged after the Black Plague in Europe in the 14th century – or by heavily taxing the rich.

French economist Thomas Piketty has talked about this at great length in his groundbreaking new book, Capital in the Twenty-First Century. He argues that the middle class that came about in Western Europe and the United States during the mid-twentieth was the direct result of a peculiar set of historical events.

According to Piketty, the post-World War II middle class was created by two major things: the destruction of European inherited wealth during the war and higher taxes on the rich, most of which were rationalized by the war. This brought wealth and income at the top down, and raised working people up into a middle class.

Piketty is right, especially about the importance of high marginal tax rates and inheritance taxes being necessary for the creation of a middle class that includes working-class people. Progressive taxation, when done correctly, pushes wages down to working people and reduces the incentives for the very rich to pillage their companies or rip off their workers. After all, why take another billion when 91 percent of it just going to be paid in taxes?

This is the main reason why, when GM was our largest employer and our working class were also in the middle class, CEOs only took home 30 times what working people did. The top tax rate for all the time America’s middle class was created was between 74 and 91 percent. Until, of course, Reagan dropped it to 28 percent and working people moved from the middle class to becoming the working poor.

Other policies, like protective tariffs and strong labor laws also help build a middle class, but progressive taxation is the most important because it is the most direct way to transfer money from the rich to the working poor, and to create a disincentive to theft or monopoly by those at the top.

History shows how important high taxes on the rich are for creating a strong middle class.

If you compare a chart showing the historical top income tax rate over the course of the twentieth century with a chart of income inequality in the United States over roughly the same time period, you’ll see that the period with the highest taxes on the rich – the period between the Roosevelt and Reagan administrations – was also the period with the lowest levels of economic inequality.

You’ll also notice that since marginal tax rates started to plummet during the Reagan years, income inequality has skyrocketed.

Even more striking, during those same 33 years since Reagan took office and started cutting taxes on the rich, income levels for the top 1 percent have ballooned while income levels for everyone else have stayed pretty much flat.

Coincidence? I think not.

Creating a middle class is always a choice, and by embracing Reaganomics and cutting taxes on the rich, we decided back in 1980 not to have a middle class within a generation or two. George H.W. Bush saw this, and correctly called it “Voodoo Economics.” And we’re still in the era of Reaganomics – as President Obama recently pointed out, Reagan was a successful revolutionary.

This, of course, is exactly what conservatives always push for. When wealth is spread more equally among all parts of society, people start to expect more from society and start demanding more rights. That leads to social instability, which is feared and hated by conservatives, even though revolutionaries and liberals like Thomas Jefferson welcome it.

And, as Kirk and Buckley predicted back in the 1950s, this is exactly what happened in the 1960s and ’70s when taxes on the rich were at their highest. The Civil Rights movement, the women’s movement, the consumer movement, the anti-war movement, and the environmental movement – social movements that grew out of the wealth and rising expectations of the post-World War II era’s middle class – these all terrified conservatives. Which is why ever since they took power in 1980, they’ve made gutting working people out of the middle class their number one goal.

We now have a choice in this country. We can either continue going down the road to oligarchy, the road we’ve been on since the Reagan years, or we can choose to go on the road to a more pluralistic society with working class people able to make it into the middle class. We can’t have both.

And if we want to go down the road to letting working people back into the middle class, it all starts with taxing the rich.

The time is long past due for us to roll back the Reagan tax cuts.

 

By: Thom Hartmann, AlterNet, April 19, 2014

April 20, 2014 Posted by | Economic Inequality, Middle Class, Reaganomics | , , , , , , , | 1 Comment

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