Friday, January 09, 2004
The U.S. Economy: The International Monetary Fund Speaks Out
The New York Times (Elizabeth Becker and Edmund L. Andrews) had a front page story on the IMF’s considerable upset over the U.S. threat to the world-wide economic system.
With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report released Wednesday by the International Monetary Fund.
Prepared by a team of I.M.F. economists, the report sounded a loud alarm about the shaky fiscal foundation of the United States, questioning the wisdom of the Bush administration's tax cuts and warning that large budget deficits pose "significant risks" not just for the United States but for the rest of the world.
The report warns that the United States' net financial obligations to the rest of the world could be equal to 40 percent of its total economy within a few years — "an unprecedented level of external debt for a large industrial country," according to the fund, that could play havoc with the value of the dollar and international exchange rates.
The danger, according to the report, is that the United States' voracious appetite for borrowing could push up global interest rates and thus slow global investment and economic growth. http://www.nytimes.com/2004/01/08/business/08FUND.html?hp=&pagewanted=print&position=
The Economic Future: We know this Administration has no answers. Does anyone?
NY senator Charles Schumer and veteran reaganite Paul Craig Roberts had a startling piece earlier this week in the NY Times. They broached a subject that most run from- the exporting of a huge percentage of U.S. jobs.
We are concerned that the United States may be entering a new economic era in which American workers will face direct global competition at almost every job level — from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid, equally skilled worker thousands of miles away. American jobs are being lost not to competition from foreign companies, but to multinational corporations, often with American roots, that are cutting costs by shifting operations to low-wage countries.
To call this a "jobless recovery" is inaccurate: lots of new jobs are being created, just not here in the United States.
In the past, we have supported free trade policies. But if the case for free trade is undermined by changes in the global economy, our policies should reflect the new realities. While some economists and elected officials suggest that all we need is a robust retraining effort for laid-off workers, we do not believe retraining alone is an answer, because almost the entire range of "knowledge jobs" can be done overseas. Likewise, we do not believe that offering tax incentives to companies that keep American jobs at home can compensate for the enormous wage differentials driving jobs offshore
America's trade agreements need to reflect the new reality. The first step is to begin an honest debate about where our economy really is and where we are headed as a nation. Old-fashioned protectionist measures are not the answer, but the new era will demand new thinking and new solutions. http://www.nytimes.com/2004/01/06/opinion/06SCHU.html
In their talk on C-Span this week, they were even bolder. Schumer reported that economists he talked with “had no good answers other than faith.” Roberts expressed the worry that the U.S. “will be a third world country in 20 years.”
Gads.
Our Distorted Tax System: By and For the Very Rich
Journalist David Cay Johnston was an informative subject on Terry Gross’s NPR show. Johnston explained how the IRS plays ‘trivial pursuit’ in targeting the income and deductions of the average taxpayer, while expending virtually no energy looking at the very wealthy and their corporations who organize their assets outside of government and manage to report little income. Essentially, he notes that most of the middle class will lose its measured tax cuts when the alternative minimum tax phases in later this decade while the super rich will continue to rake in huge sums/savings. Audio link: http://freshair.npr.org/day_fa.jhtml?display=day&todayDate=01/07/2004
Taxes, part II- Taxes down, Fees Up
Governors often trumpet their tax cuts, then quietly institute “fees.” Romney wasn’t the first, nor the last. Now, Arnold has played the game. He loudly cancelled the car tax in California, but is now proposing a 10% increase for California students attending the state schools, up to a 40% increase for graduate students, and a cut in financial aid for “moderate” income students. http://www.latimes.com/news/local/la-me-budget8jan08,1,1792474.story?coll=la-headlines-california
Government tells employers how to avoid paying OT That was a headline in the AP report (Leigh Strope) that reminded us that this Government certainly is not on the side of the worker.
The Labor Department is giving employers tips on how to avoid paying overtime to some of the 1.3 million low-income workers who would become eligible under new rules expected to be finalized early this year.
The department's advice comes even as it touts the $895 million in increased wages that it says those workers would be guaranteed from the reforms.
Among the options for employers: cut workers' hourly wages and add the overtime to equal the original salary, or raise salaries to the new $22,100 annual threshold, making them ineligible.
The department says it is merely listing well-known choices available to employers, even under current law.
"We're not saying anybody should do any of this," said Labor Department spokesman Ed Frank. http://www.chron.com/cs/CDA/printstory.hts/business/2337395
PetroPolitics:
A stunning 3-day conference just concluded in D.C. (a tad on C-Span), addressing “The extent to which the world's largest and arguably most destructive, industry influences and dictates policy and politics--particularly in the United States today.” This National Summit on Petropolitics summarized that ‘Oil is Greed, Oil is Dirty, Oil is Poverty, Oil is War, Oil is Fear, Oil is Addiction’.
Politicians and the American people know that oil is bad, but feel powerless to change things. Now more than ever, the barriers to a clean energy transition are political, not technical. Hybrid cars, greater energy efficiency, and wind power are economically viable technologies today; hydrogen-powered vehicles and solar energy have great potential to be competitive, if granted a fraction of the political support and subsidies Big Oil is routinely granted. And yet our politicians continue to use our tax money to subsidize Big Oil to the tune of billions of dollars every year. The first step in ending our collective addiction to oil is reducing oil's influence over our politicians and demanding political independence from Big Oil. http://www.petropolitics.org/agenda.htm
What’s Happening, Iraq: WMD- The Carnegie Report confirmed again that there was “systematic deception” in making the case for war. Colin Powell pathetically is still claiming that there were/are weapons, that “the game is still unfolding.”
The often excellent Barton Gellman of the Washington Post relays an interview with an Iraqi scientist who confirmed that Iraq had no WMDs. His headline: ”Iraq's Arsenal Was Only on Paper: Since Gulf War, Non-conventional Weapons Never Got Past the Planning Stage” Again, there were “plans” to have weapons, on paper, but no weapons.
But investigators have found no support for the two main fears expressed in London and Washington before the war: that Iraq had a hidden arsenal of old weapons and built advanced programs for new ones. In public statements and unauthorized interviews, investigators said they have discovered no work on former germ-warfare agents such as anthrax bacteria, and no work on a new designer pathogen -- combining pox virus and snake venom -- that led U.S. scientists on a highly classified hunt for several months. The investigators assess that Iraq did not, as charged in London and Washington, resume production of its most lethal nerve agent, VX, or learn to make it last longer in storage. And they have found the former nuclear weapons program, described as a "grave and gathering danger" by President Bush and a "mortal threat" by Vice President Cheney, in much the same shattered state left by U.N. inspectors in the 1990s. http://www.washingtonpost.com/ac2/wp-dyn/A60340-2004Jan6?language=printer
Iraq’s Homeless:
The San Francisco Chronicle (Matthew B. Stannard) ran a startling piece on the degree of homelessness in Iraq – ‘Turmoil, neglect have millions homeless in Iraq…’ Seems like 1/3 to 1/2 of the country is homeless. Can that be?
Most of Iraq's problems are easy to see: shattered buildings, long lines for gas, bombs exploding in the streets. But one of its most critical challenges -- providing homes for those without them -- lurks in the shadows.
The issue has deep roots, going back at least 20 years into the regime of Saddam Hussein. Under his presidency, a mild housing shortage in 1980 became a serious problem in the 1990s and a full-blown crisis by 2000, according to the 2003 United Nations/World Bank Joint Iraq Needs Assessment…
Reliable numbers are almost impossible to come by, but the U.N./World Bank needs assessment says 1.4 million families fall into the category, a number Iraqi officials and the U.S.-led occupation authorities say is low. Some humanitarian groups believe the figure could be as high as 2.5 million….
With an average family size of five, the number commonly used here, the estimates extrapolate to between 7 million and more than 12.5 million Iraqis in need of homes -- a staggering figure for a nation of 25 million. sfgate.com/article.cgi?file=/c/a/2004/01/05/MNG2D43G851.DTL
The Wounded:
With 35 GIs wounded in one mortar attack, it was helpful to have NPR do a worthwhile, if not breakthrough piece on the underreporting of our seriously wounded (Wednesday’s All Things Considered). Unsurprisingly the correspondent was Danny Zwerdling, who’s had stellar reports on Bill Moyers’ NOW. Zwerdling found that we (naturally) have underestimated the number who have required evacuation for ‘serious injuries’- 9000, and looked at the difficulty determining this figure. Audio link: http://discover.npr.org/features/feature.jhtml?wfId=1587762
The Kurds: Talking autonomy, maybe civil disobedience. Bremer is frustrated. The Washington Post (Robin Wright, Alan Sipress) has some of the details. http://www.washingtonpost.com/ac2/wp-dyn/A1767-2004Jan8?language=printer
Forthcoming Books Haunt Bush. Al Hunt’s column in Friday’s Wall Street Journal:
The Bush White House is nervous about two forthcoming books by former insiders. Ex-Bush Treasury Secretary Paul O'Neill assails the president for a lack of interest in substantive policy in a book written by journalist Ron Suskind that will be trotted out with great fanfare on CBS's "60 Minutes" this weekend.
One Bush insider, however, ventures that no one really cares what a former Treasury secretary says. But, a book due out later by Richard Clarke, the White House's top terror expert under both President Clinton and President Bush, is another matter. Mr. Clarke is known to feel the Bush administration largely ignored the threat of terrorism and Osama bin Laden before 9-11, even after al Qaeda in June 2001 claimed responsibility for the bombing of the USS Cole, which killed 17 American soldiers.
-R
The New York Times (Elizabeth Becker and Edmund L. Andrews) had a front page story on the IMF’s considerable upset over the U.S. threat to the world-wide economic system.
With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report released Wednesday by the International Monetary Fund.
Prepared by a team of I.M.F. economists, the report sounded a loud alarm about the shaky fiscal foundation of the United States, questioning the wisdom of the Bush administration's tax cuts and warning that large budget deficits pose "significant risks" not just for the United States but for the rest of the world.
The report warns that the United States' net financial obligations to the rest of the world could be equal to 40 percent of its total economy within a few years — "an unprecedented level of external debt for a large industrial country," according to the fund, that could play havoc with the value of the dollar and international exchange rates.
The danger, according to the report, is that the United States' voracious appetite for borrowing could push up global interest rates and thus slow global investment and economic growth. http://www.nytimes.com/2004/01/08/business/08FUND.html?hp=&pagewanted=print&position=
The Economic Future: We know this Administration has no answers. Does anyone?
NY senator Charles Schumer and veteran reaganite Paul Craig Roberts had a startling piece earlier this week in the NY Times. They broached a subject that most run from- the exporting of a huge percentage of U.S. jobs.
We are concerned that the United States may be entering a new economic era in which American workers will face direct global competition at almost every job level — from the machinist to the software engineer to the Wall Street analyst. Any worker whose job does not require daily face-to-face interaction is now in jeopardy of being replaced by a lower-paid, equally skilled worker thousands of miles away. American jobs are being lost not to competition from foreign companies, but to multinational corporations, often with American roots, that are cutting costs by shifting operations to low-wage countries.
To call this a "jobless recovery" is inaccurate: lots of new jobs are being created, just not here in the United States.
In the past, we have supported free trade policies. But if the case for free trade is undermined by changes in the global economy, our policies should reflect the new realities. While some economists and elected officials suggest that all we need is a robust retraining effort for laid-off workers, we do not believe retraining alone is an answer, because almost the entire range of "knowledge jobs" can be done overseas. Likewise, we do not believe that offering tax incentives to companies that keep American jobs at home can compensate for the enormous wage differentials driving jobs offshore
America's trade agreements need to reflect the new reality. The first step is to begin an honest debate about where our economy really is and where we are headed as a nation. Old-fashioned protectionist measures are not the answer, but the new era will demand new thinking and new solutions. http://www.nytimes.com/2004/01/06/opinion/06SCHU.html
In their talk on C-Span this week, they were even bolder. Schumer reported that economists he talked with “had no good answers other than faith.” Roberts expressed the worry that the U.S. “will be a third world country in 20 years.”
Gads.
Our Distorted Tax System: By and For the Very Rich
Journalist David Cay Johnston was an informative subject on Terry Gross’s NPR show. Johnston explained how the IRS plays ‘trivial pursuit’ in targeting the income and deductions of the average taxpayer, while expending virtually no energy looking at the very wealthy and their corporations who organize their assets outside of government and manage to report little income. Essentially, he notes that most of the middle class will lose its measured tax cuts when the alternative minimum tax phases in later this decade while the super rich will continue to rake in huge sums/savings. Audio link: http://freshair.npr.org/day_fa.jhtml?display=day&todayDate=01/07/2004
Taxes, part II- Taxes down, Fees Up
Governors often trumpet their tax cuts, then quietly institute “fees.” Romney wasn’t the first, nor the last. Now, Arnold has played the game. He loudly cancelled the car tax in California, but is now proposing a 10% increase for California students attending the state schools, up to a 40% increase for graduate students, and a cut in financial aid for “moderate” income students. http://www.latimes.com/news/local/la-me-budget8jan08,1,1792474.story?coll=la-headlines-california
Government tells employers how to avoid paying OT That was a headline in the AP report (Leigh Strope) that reminded us that this Government certainly is not on the side of the worker.
The Labor Department is giving employers tips on how to avoid paying overtime to some of the 1.3 million low-income workers who would become eligible under new rules expected to be finalized early this year.
The department's advice comes even as it touts the $895 million in increased wages that it says those workers would be guaranteed from the reforms.
Among the options for employers: cut workers' hourly wages and add the overtime to equal the original salary, or raise salaries to the new $22,100 annual threshold, making them ineligible.
The department says it is merely listing well-known choices available to employers, even under current law.
"We're not saying anybody should do any of this," said Labor Department spokesman Ed Frank. http://www.chron.com/cs/CDA/printstory.hts/business/2337395
PetroPolitics:
A stunning 3-day conference just concluded in D.C. (a tad on C-Span), addressing “The extent to which the world's largest and arguably most destructive, industry influences and dictates policy and politics--particularly in the United States today.” This National Summit on Petropolitics summarized that ‘Oil is Greed, Oil is Dirty, Oil is Poverty, Oil is War, Oil is Fear, Oil is Addiction’.
Politicians and the American people know that oil is bad, but feel powerless to change things. Now more than ever, the barriers to a clean energy transition are political, not technical. Hybrid cars, greater energy efficiency, and wind power are economically viable technologies today; hydrogen-powered vehicles and solar energy have great potential to be competitive, if granted a fraction of the political support and subsidies Big Oil is routinely granted. And yet our politicians continue to use our tax money to subsidize Big Oil to the tune of billions of dollars every year. The first step in ending our collective addiction to oil is reducing oil's influence over our politicians and demanding political independence from Big Oil. http://www.petropolitics.org/agenda.htm
What’s Happening, Iraq: WMD- The Carnegie Report confirmed again that there was “systematic deception” in making the case for war. Colin Powell pathetically is still claiming that there were/are weapons, that “the game is still unfolding.”
The often excellent Barton Gellman of the Washington Post relays an interview with an Iraqi scientist who confirmed that Iraq had no WMDs. His headline: ”Iraq's Arsenal Was Only on Paper: Since Gulf War, Non-conventional Weapons Never Got Past the Planning Stage” Again, there were “plans” to have weapons, on paper, but no weapons.
But investigators have found no support for the two main fears expressed in London and Washington before the war: that Iraq had a hidden arsenal of old weapons and built advanced programs for new ones. In public statements and unauthorized interviews, investigators said they have discovered no work on former germ-warfare agents such as anthrax bacteria, and no work on a new designer pathogen -- combining pox virus and snake venom -- that led U.S. scientists on a highly classified hunt for several months. The investigators assess that Iraq did not, as charged in London and Washington, resume production of its most lethal nerve agent, VX, or learn to make it last longer in storage. And they have found the former nuclear weapons program, described as a "grave and gathering danger" by President Bush and a "mortal threat" by Vice President Cheney, in much the same shattered state left by U.N. inspectors in the 1990s. http://www.washingtonpost.com/ac2/wp-dyn/A60340-2004Jan6?language=printer
Iraq’s Homeless:
The San Francisco Chronicle (Matthew B. Stannard) ran a startling piece on the degree of homelessness in Iraq – ‘Turmoil, neglect have millions homeless in Iraq…’ Seems like 1/3 to 1/2 of the country is homeless. Can that be?
Most of Iraq's problems are easy to see: shattered buildings, long lines for gas, bombs exploding in the streets. But one of its most critical challenges -- providing homes for those without them -- lurks in the shadows.
The issue has deep roots, going back at least 20 years into the regime of Saddam Hussein. Under his presidency, a mild housing shortage in 1980 became a serious problem in the 1990s and a full-blown crisis by 2000, according to the 2003 United Nations/World Bank Joint Iraq Needs Assessment…
Reliable numbers are almost impossible to come by, but the U.N./World Bank needs assessment says 1.4 million families fall into the category, a number Iraqi officials and the U.S.-led occupation authorities say is low. Some humanitarian groups believe the figure could be as high as 2.5 million….
With an average family size of five, the number commonly used here, the estimates extrapolate to between 7 million and more than 12.5 million Iraqis in need of homes -- a staggering figure for a nation of 25 million. sfgate.com/article.cgi?file=/c/a/2004/01/05/MNG2D43G851.DTL
The Wounded:
With 35 GIs wounded in one mortar attack, it was helpful to have NPR do a worthwhile, if not breakthrough piece on the underreporting of our seriously wounded (Wednesday’s All Things Considered). Unsurprisingly the correspondent was Danny Zwerdling, who’s had stellar reports on Bill Moyers’ NOW. Zwerdling found that we (naturally) have underestimated the number who have required evacuation for ‘serious injuries’- 9000, and looked at the difficulty determining this figure. Audio link: http://discover.npr.org/features/feature.jhtml?wfId=1587762
The Kurds: Talking autonomy, maybe civil disobedience. Bremer is frustrated. The Washington Post (Robin Wright, Alan Sipress) has some of the details. http://www.washingtonpost.com/ac2/wp-dyn/A1767-2004Jan8?language=printer
Forthcoming Books Haunt Bush. Al Hunt’s column in Friday’s Wall Street Journal:
The Bush White House is nervous about two forthcoming books by former insiders. Ex-Bush Treasury Secretary Paul O'Neill assails the president for a lack of interest in substantive policy in a book written by journalist Ron Suskind that will be trotted out with great fanfare on CBS's "60 Minutes" this weekend.
One Bush insider, however, ventures that no one really cares what a former Treasury secretary says. But, a book due out later by Richard Clarke, the White House's top terror expert under both President Clinton and President Bush, is another matter. Mr. Clarke is known to feel the Bush administration largely ignored the threat of terrorism and Osama bin Laden before 9-11, even after al Qaeda in June 2001 claimed responsibility for the bombing of the USS Cole, which killed 17 American soldiers.
-R
