Economy

Economy

Cascading Economic and Political Turmoil and Our Tasks

I’ve been trying to wrap my mind around some of the important economic and political developments cascading across Europe, and how they might affect us.

Late last week, the financial markets were rocked with the announcement that the biggest, and heretofore assumed most stable US bank, J.P. Morgan, lost $2 billion  - the outcome of speculation in high-risk financial securities. In other words, the kind of investing that set off the previous global financial crisis in 2007.

Yet JPMorgan Chase Chief Executive Jamie Dimon speaking just two weeks ago at a conference, where he was lauded as "executive of the year" and introduced as a "CEO Statesman,", argued that the government should focus on resolving its own fiscal issues instead of reengineering a financial system that is healing itself. Dimon claimed:

"The consumer is in my opinion 80% repaired, business 100% repaired," "We have the widest, deepest and most transparent capital markets in the world."

Wow, how’s that for Hubris!

I urge you to listen to William Black’s interview on Democracy Now!

Now we may be witnessing once again the unraveling of the capitalist global financial system.

Europeans stocks are tumbling and investors around the world are keeping a close eye on Greece as the Euro crisis enters a new phase. Thanks to the worldwide economic meltdown and trickle-down austerity response - the Greek economy has been in recession for the last five years.

On the heels of elections that ousted the pro-austerity government in Greece – there will be a new round of elections on June 17th.   The Left will likely pick up even more seats in Parliament - making an anti-austerity coalition government a real possibility just before Greece runs out of money. When Greece goes broke - if the likely new left government refuses as expected to sign on to the austerity and bailout plans - then Greece will default and likely be forced out of the Eurozone.

We see huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany.

Those of you that follow such stuff may have noticed the speculators’ “flight to safety” in both Europe and the U.S. This is not caused by a “little thing” like  JP Morgan Chase losing $2 billion. They’re estimated to have an exposure of $79 trillion (that’s t from trillion) on a market capitalization of only $140 billion! Talk about being highly leveraged.

What happened with J.P. Morgan last week—and is still yet to happen further with J.P. as well as with other US banks—shows how deeply the US banking system is integrated with the European. J.P’s losses are Euro-centered, speculation driven, and Credit Default Swaps and other derivatives based. That means what’s been happening in Europe and its banking system is not isolated from the U.S. banks. Today’s emerging European bank crisis—the second globally since the first in 2007-09 centered in the U.S.—will have a significant impact on the U.S.

Some recent headlines read:
Get Ready for the Spanish Bailout
Spain Is the New Greece
Growth Chill About to Hit the US

Keep in mind there are $trillions of dollars of Credit Default Swaps (bets), and other toys the geniuses on Wall Street created, piled on the worlds’ economies and ready to tumble like the proverbial stacked cards.

There’s no way the U.S. economy, despite all the false hype about another recovery now occurring in the U.S., can avoid a further downturn as well.

What’s already been the impact on our jobs, retirement security, on the state budget and services, on our families? One indicator: in 2010, 93 percent of all new income created in the previous year went to the top one percent, while the bottom 99 percent of us had the privilege of enjoying the remaining seven percent.  In other words, the rich are getting much richer while almost everyone else is falling behind.

The real solutions to the parallel failures of economic policies in both the U.S. and in Europe today require basic restructuring of the banking systems in both economies. This will only be possible if we change what’s currently politically possible. We are beginning to see that change:

People across Europe have been shaking things up on the job, in the streets, and at the ballot box.

* Last week, hundreds of thousands of British public sector workers staged a 24-hour strike against their government's attacks on pensions.

* in Spain, hundreds of thousands marched against government plans for more austerity despite record 24% unemployment.

* Polish union members protesting against plans to raise the retirement age chained together barriers meant to keep them out of Parliament on Friday. `We will decide when they will leave,' a Solidarity trade union leader said. `At least for once we will decide something instead of them.' The union members took their action after lawmakers voted to raise the retirement age.

The Greek and French elections show that the people want real income growth and jobs -- and they are clear that austerity is undermining both.

In Germany - Chancellor Merkel saw her Conservative Party get crushed in state. Merkel has been leading the charge for austerity around Europe - but now finds herself vulnerable as support for her Party plunged to 26%.

The voters of Europe have spoken, and surprise: they are not too keen on fiscal austerity.  What are we waiting for–a translator? Everywhere you look - the supporters of trickle-down austerity are getting hammered by voters. However, the anti-tax bogeyman isn't going away soon with Governor Shumlin having the bully pulpit. Let's help Vermonters and other Americans get the message.

The ‘Arab Spring,’ the movement of the ‘indignant ones’ in Spain, the numerous strikes and demonstrations in Greece, the worldwide ‘Occupy’ movement which started in the US, as well as the campaign for a Peoples Budget in Vermont are all a source of encouragement. It is high time to strengthen the organizing and protests! Together, through strong grass-roots activity in Vermont and around the country, we can change the direction of our state and this country. Please don’t ever forget that, even in these difficult times.

We Need to Invest in the Right Future

This Mother’s Day, I am thinking about mothers and families all over our country. The past few years have not been easy. In Vermont, families continue to struggle to make ends meet here. In Washington, DC Congress is trying to put together a budget for next year. I’m watching this process closely because our state counts on funding from the federal government to implement crucial programs. The budget process will affect each and every one of my constituents.

The budget passed by House Republicans will slash programs used disproportionately by women and families. In addition to the Medicare and Medicaid cuts you may have heard about, it cuts funding for programs like food stamps, childcare, Head Start, job training, Pell Grants, and housing and energy assistance. Meanwhile their budget allows defense spending to continue to increase.

Each year, Congress appropriates more than half of discretionary spending to the Department of Defense. Even without deficit reduction pressure, this overspending takes dollars away from needed domestic priorities that strengthen our economy and ensure that America can compete in the world marketplace.
 
In the past decade we have spent billions on war. Afghanistan is now the longest war in our nation’s history, and we spent nine years in Iraq. Whether measured merely in direct financial cost, or in the broader and more profound cost of lives lost and damaged, we cannot afford to be a nation perpetually at war.

Some supporters of the Pentagon and their contractors tout money to the Pentagon as a jobs program. Sensible national security jobs make sense, and no member of Congress can ignore the effect of policy decisions on jobs. Nonetheless, economists have shown that federal investments in non-military sectors--like education, healthcare and clean energy--create more jobs than military spending. It makes sense to invest federal dollars in sectors that will create productive jobs that will help our economy grow for years to come.

We can make sensible reductions to Pentagon spending and invest in programs that will help build a vibrant economy for generations to come. This Mother’s Day, let’s honor hard-working women around the nation by calling on Congress to pass a budget that supports women and families and puts us back on the path to a sustainable economic recovery.

This also appeared in the May 5 edition of the Brattleboro Reformer.

Union bill sparks questions about conflict of interest for one representative

April 30, 2012; vtdigger; Anne Galloway

Saturday’s session was meant to be a gavel in, gavel out affair in the House of Representatives, after all, the reps are all but done with their business for the year.

But there’s no telling what can happen in a floor debate and on Saturday, a little bill designed to protect employees turned into big deal and became the catalyst for several hours of debate.

S.95, a piece of Senate legislation that is similar to a bill that was drawn up in the House, prevents employers from using credit reports as part of the hiring process for new workers. Another provision allows school employees to be paid over a calendar year. So far, so good.

It was the third provision of the bill that sent the body into a frenzy of discussion and amendments. It required community mental health agencies that receive state funds to certify that none of the money is used to restrict or interfere an “employee’s rights with respect to unionization.”

Turns out the reporter of the bill, Rep. John Moran, D-Wardsboro, had what appeared to be a conflict of interest, and other lawmakers questioned whether the bill was directed at his former employer, Health Care and Rehabilitation Services of Southeastern Vermont, one of the state’s community mental health agencies.

HCRS was involved in a labor dispute a few years ago, and Moran, a substance abuse counselor for HCRS, was one of the union members who was involved in the fight waged by the United Nurses and Allied Professionals Local 5051.

In 2007, HCRS filed a formal complaint with the House Rules Committee against Moran, regarding what the organization saw as a violation of his conflict of interest limits under House Rule 75.

The letter alleged that Moran had used his position as a lawmaker to put pressure on his employer.

An attorney for HCRS wrote: “Rep. Moran’s public advocacy — wielding the influence of his legislative position — for his own financial gain — is gross misuse of that office; it is possibly slanderous as well, notwithstanding the legislative immunity doctrine.”

HCRS laid off Moran, who worked on a per diem basis, a few years ago. He now works at the Brattleboro Retreat.

Moran says he’s done nothing wrong, and he has nothing to gain from the legislation now under consideration. Besides, Moran says, he was never a union organizer, he was just a member of the union.

“Once I was elected as a legislator (in 2007), I dropped away from active participation in the union,” Moran said.

In the House General, Housing and Military Affairs Committee, of which Moran is a member, lawmakers took testimony in March about the salary levels of the upper management of HCRS and grilled the CEO of the agency about how much money was spent on lawyers to fight the union. The agency spent $1.1 million in salaries for eight executives in 2009. That year, HCRS spent more than $500,000 on the legal expenses for Jackson Lewis, a Boston firm that has a reputation for union busting.

On Saturday, Rep. Helen Head, D-S. Burlington, suggested that the language of S.95 be broadened to include all employers who receive grant funds from the state. The legislation would apply to municipalities, schools and other entities. Employers would have to certify that no funds were used “to interfere with or restrain the exercise of an employee’s rights with respect to unionization.”

The bill passed and is up for third reading on Monday.

The remarks of Rep. Chris Pearson, P-Burlington, were journalized for the record.

“How ironic to have blatantly anti-union motions brought forward on a Saturday,” Pearson said. “After all, it was unions that gave us the very concept of our treasured weekends.”

Over the weekend, the Vermont League of Cities and Towns sent out an action alert asking local officials to contact their legislators and ask “why such a certification is necessary on top of all the requirements already in place for state dollars granted to municipalities.”

According to the League, “every” city and town in the state receives grants of state funds, “town highway aid being among the most widely distributed.”

Karen Horn wrote: “It seems redundant and unnecessary to require a new certification that the municipality is complying with laws already in statute or grant conditions already in place, particularly when it is unclear what ‘records’ shall be required upon request to attest to such certification.”

The Secretary of Administration would be responsible for the certification records. The Shumlin administration opposes the legislation.

On Monday, the House approved the bill on third reading. Attempts by Rep. Oliver Olsen, R-Jamaica, to amend the bill failed.

Labor Bills Stuck on the Wall

For me, a threat to the basic right to organize in any state is a threat to the right to bargain everywhere. After Governor Scott Walkers assault on public employees,  I stood in solidarity with my brothers and sisters in Wisconsin, in Vermont and with all public employees- state, school, municipal and universities. I spoke out at several rallies with a strong message that we are not willing to give up our right to bargain. As co-chair of the Legislative Working Vermonter’s Caucus I helped author and pushed for support of a House resolution resolving that workers in all states, regardless of economic sector and job title or responsibility, must have the basic right to organize and bargain collectively for fair and just outcome. 

At the AFL-CIO convention last fall, Senate President pro tem John Campbell (along with majority leader, Representative Lucy Leriche) presented Wisconsin AFL-CIO President Emeritus David Newby with the senate version of the Legislative Working Vermonter’s Caucus HR0007 resolution supporting bargaining rights for Wisconsin workers.  

Now with Governor Scott Walker and others facing a recall, the Legislative Working Vermonter’s Caucus last week on Wednesday, unanimously supported a resolution urging the state of Wisconsin to enact Senate Bill 233, or similar legislation, restoring the full collective bargaining rights of Wisconsin public employees.

Following the workers caucus on Wednesday, the resolution was introduced on the floor and sent to the House General and Military Affairs committee,  where it joins J.R.H. 23 a Joint resolution expressing deep concern over the growing inequality in wealth and income in Vermont and J.R.S. 47 a Joint resolution urging the United States Postal Service not to implement its proposed major reductions and urging Congress to enact the Postal Service Protection Act on the wall along with other pro labor bills.

Lets hope the senate picks up HR0018 (and others) before the end of the session.

The Good & Bad of the Tax Bill

Last week the House passed this year's miscellaneous tax bill. Sadly the controversy wasn't wrapped up in any income tax equity questions, despite promises last year there was no move to increase taxes for those on top. This wasn't a surprise.

More impressive for progressives was the $6 million tax increase for Vermont Yankee. This is broken down between a property tax increase (putting money into the education fund) and a generating tax (sending money to the general fund). As it happened there wasn't much controversy over this proposal either, in fact it came out of committee on an 11-0 vote. Even Yankee supporters go soft when faced with the prospect of property tax relief.

More frustrating was the quiet re-authorization of the VT Economic Growth Incentive (VEGI) program. This is one of the State's economic development tools where we reward corporations for creating jobs. VEGI was created in 2007 as a dressed up version of VEPC. Last year we extended the program for six months and asked for a comprehensive study presumably so we could determine the wisdom of extending the program for several years.

I stood up on the floor to ask the Ways and Means chair, Rep. Janet Ancel (D-Calais), questions about the VEGI reauthorization. Imagine my surprise to  hear that the comprehensive study called for just last year was not reviewed by her committee. In fact, other than testimony from the tax commissioner and the director of the VEGI program (who wants to keep his job), the committee didn't hear from anyone about the program. How this qualifies as due diligence is beyond me. My amendment to strike the re-authorization was too late for the regular procedure so I asked leave of the House to permit the amendment. The vote just to permit the amendment to come forward failed 40-61.

Following my questions though, a number of other members stood up and echoed my comments. It is irritating to think of tax dollars going to companies that are already growing. We shouldn't pretend our money is vital to job growth, unless detailed analysis proves that to be the case. Before we can make that determination, of course, we would have to actually look at the study.

In the end all of the Progressives voted for the tax bill largely because of the Yankee tax. We will work with our friends in the Senate to see if VEGI can't be explored more fully before it's five-year re-authorization is written into law.

Budget Issues

For the Governor’s proposed budget, each department was directed to cut its prior year spending by four percent, no exceptions. As we review the budget, some of those cuts simply do not work. One area of great concern to the House Human Services Committee is Home and Community-Based Services for the elderly and people with disabilities. This is a service that the legislature has worked on for many years. The premise is that people are happier at home, and care in the community is nearly always cheaper for the state than nursing home placement.

Our problem has been that this program always seems to be first on the cut list. This year the proposed cuts would affect the community agencies that actually do the state’s work. Case management – overseeing the total service plan for an individual – is generally provided by one of the area agencies on aging or a visiting nurse agency. This year the state has decided that those providers are overcompensated and should have their payments cut. The specific proposal would shift from a per-minute rate to a monthly case rate. The change in methodology could work. Saving administrative time is always a goal in payment reform.

The problem is that the rate is far too low. And, incredibly, the department has actually reduced its offer to local providers since it presented its budget to the legislature a few weeks ago. As the state workforce has been reduced, the burden on case managers working through the AAAs and home health agencies has increased. These are the workers who problem-solve, and understaffed state offices have made their jobs more time consuming. We will be fighting hard to save this funding.

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