Globalization

Here's the proposed Economic Recovery Package. The overall intent to "not forget Main Street" and "create good-paying American jobs" is a noble one, I question whether this package achieves such a goal. There is a great deal of progress in the area of Energy, allocating funding for key energy initiatives of which NDN has been an advocate (see NDN's Green Project blog). However, there is no mention of International Trade or initiatives to export new technology; the section on job creation mentions infrastructure, which is an important step forward, but no mention of how to use globalization to create more high skilled, better paying jobs. I would ask why the section designed to help small businesses - by all accounts the "job creators and drivers of the economy" - only allots $275 million for microfinance and other assistance to "Main Street," while it provides $776 million for border facility construction and "other homeland security infrastructure." I hope our taxpayer dollars don't continue to go towards a border fence that has not worked instead of small and medium-sized businesses that sustain our communities. The stimulus includes $466 million for DHS to begin construction of a consolidated headquarters in Washington, D.C., as "DHS has a critical need for a permanent, unified headquarters" - maybe having everyone under one roof will help reduce the backlog in naturalization and immigration applications! THAT must have been the hold-up all this time. While the $466 million are being allocated for offices, only $100 million is going to help communities along the southwest border fight the illegal flow of guns and drugs between the U.S. and Mexico that is fueling violence along the border. Call me crazy, but I think the offices can wait in line behind the safety of border patrol and citizens on both sides of the border. The conflict on the border similarly contributes to the economic downturn in that the violence has effectively killed business and tourism that previously made border cities job creators and places that flourished with commerce and (legal) economic activity.

NDN Globalization Initiative Chair Dr. Robert J. Shapiro spoke yesterday on Marketplace, the daily radio show by American Public Media.  Shapiro talked about the strain this proposed bailout will put on the agenda of the next president. The full transcript is below, as well as a link to the audio of the interview.

KAI RYSSDAL: Amid all the uncertainty about how this bailout's going to work, commentator and economist Robert Shapiro points out that $700 billion is a whole lot of money not to have.

ROBERT SHAPIRO: Whatever we do, this bailout will use up virtually all of the resources the next president needs to bring about whatever changes he's envisioning.

That's because the government will need those resources to buy up all those devalued mortgage-backed securities and their derivatives.

The direct costs of buying up all those falling securities will come over the next several months. But any revenues the Treasury eventually recoups from selling them back to the market? That won't happen for years, if ever.

And that leaves the next president facing a deficit of $600 billion to $700 billion, maybe more.

There goes the money for President Obama to expand health care coverage, or for President McCain to cut corporate taxes or extend President Bush's tax cuts for wealthy people.

And next, President Obama may have to trade off a major push on alternative fuels against those new tax cuts for the middle class.

While President McCain may have to give up extending tax relief for dividends or the funding for his educational reforms.

Both candidates also may face a version of the dilemma European leaders faced in the 1960s and 1970s, when they gave up plans to maintain strong military spending in order to elaborate their social welfare protections.

Here, this time, the next president's promises to expand the Army may well give way to new subsidies not for poor or working people, but for the financial institutions that once presided so proudly over the global economy.

Since most of the bailout's costs should come in the next two years or so, they shouldn't constrain the new president's longer-term plans for perhaps one major initiative. That is if he still has any public support left after failing to deliver on all those other promises he's making right now. 

Listen here to the audio of Shapiro's interview.

In its lead editorial today, the New York Times asks a simple but super important question - why should we trust this Administration to understand what is happening now to our financial markets, offer the right solution and then manage the coming difficult process ahead? 

With two days of Senate and House testimony ahead, our financial future takes center stage in Congress, as it appropriate given what the American people are being asked to do, and who is doing the asking.

As I wrote over the weekend, I, like many, worry about what this means for the agenda of the next President.  Through the twin disasters of Iraq and the financial bailout, we will have little money now to tackle other urgent national priorities - modernizing our schools, improving the skills of our workers, investing in clean and traditional infrastructure, helping move our nation to a low-carbon future, radically improving our health care system, managing the coming retirement of the Baby Boomers, protecting our homeland, keeping people in their homes? Will cleaning up the terrible messes of this disappointing era overwhelm the need to build our 21st century economy and sap our collective capacity to tackle the necessary and tough challenges ahead?

Congress must stand firm and ask the tough questions.  The most important being will this investment of what will be more than $1 trillion actually stop the meltdown?  Rob and I offered our thoughts on this last Wednesday, and argue that without an effort to keep people in their homes, any moves by the the government are unlikely to do what we need them to do. 

It is more important now for Congress to do the right thing than the expedient thing.

Senator Obama released a detailed statement of principles that will be guiding his involvement i n the coming efforts to stop a full blown financial meltdown in the US.  It includes something NDN feels very strongly about - a plan to keep people in their homes. 

The statement: 

"The era of greed and irresponsibility on Wall Street and in Washington has led to a financial crisis as profound as any we have faced since the Great Depression. 

"But regardless of how we got here, the circumstances we face require decisive action because the jobs, savings, and economic security of millions of Americans are now at risk.

"We must work quickly in a bipartisan fashion to resolve this crisis and restore our financial sector so capital is flowing again and we can avert an even broader economic catastrophe. We also should recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America. 

"But thus far, the Administration has only offered a concept with a staggering price tag, not a plan.

"Even if the Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects some basic principles. 

No blank check. If we grant the Treasury broad authority to address the immediate crisis, we must insist on independent accountability and oversight. Given the breach of trust we have seen and the magnitude of the taxpayer money involved, there can be no blank check.

Rescue requires mutual responsibility. As taxpayers are asked to take extraordinary steps to protect our financial system, it is only appropriate to expect those institutions that benefit to help protect American homeowners and the American economy. We cannot underwrite continued irresponsibility, where CEOs cash in and our regulators look the other way. We cannot abet and reward the unconscionable practices that triggered this crisis. We have to end them.

Taxpayers should be protected. This should not be a handout to Wall Street. It should be structured in a way that maximizes the ability of taxpayers to recoup their investment. Going forward, we need to make sure that the institutions that benefit from financial insurance also bear the cost of that insurance.

Help homeowners stay in their homes. This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities.

A global response. As I said on Friday, this is a global financial crisis and it requires a global solution. The United States must lead, but we must also insist that other nations, who have a huge stake in the outcome, join us in helping to secure the financial markets.

Main Street, not just Wall Street. The American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do the emergency on Wall Street. That is why I call on Senator McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families - a plan that would help folks cope with rising gas and food prices, save one million jobs through rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes, and provide retooling assistance to help ensure that the fuel-efficient cars of the future are built in America.

Build a regulatory structure for the 21st Century. While there is not time in a week to remake our regulatory structure to prevent abuses in the future, we should commit ourselves to the kind of reforms I have been advocating for several years. We need new rules of the road for the 21st Century economy, together with the means and willingness to enforce them.

"The bottom line is that we must change the economic policies that led us down this dangerous path in the first place. For the last eight years, we've had an "on your own-anything goes" philosophy in Washington and on Wall Street that lavished tax cuts on the wealthy and big corporations; that viewed even common-sense regulation and oversight as unwise and unnecessary; and that shredded consumer protections and loosened the rules of the road. Ordinary Americans are now paying the price. The events of this week have rendered a final verdict on that failed philosophy, and it is a philosophy I will end as President of the United States," said Senator Barack Obama.

$1 trillion bailout.  Government takeover off some of the largest companies in America.  Warnings of more bad news to come. 

It is critical that as part of this emerging financial bailout package, our Congress ensures that Americans facing foreclosure are also bailed out and allowed to stay in their homes.  This is not only the right thing to do, but as Rob Shapiro argued earlier this week, it is one of the best ways to stop the carnage on Wall Street.

Update, Sat 7:15am - Joe Nocera of the New York Times takes a hard look at the emerging financial bailout plan, and doesn't find much to like. 

After the fiscal mismanagement of the Bush era, are the American people really being asked to spend a trillion dollars bailing out failed financial institutions controlled by very rich people?  Will this rush to bailout prevent the next Administration from making critical investments needed to advance the national interest - in traditional and clean infrastructure, in our schools and teachers, in the skills of our workers, in health care, in reforming our immigration system, in securing our homeland? Will the next era of American politics be one of cleaning up the two great messes of the Bush age - Iraq and our financial and fiscal disasters? And not about embracing a new era of investment, of opportunity and 21st century prosperity? Of dreams deferred and sights lowered?  

The failure of conservative government in the Bush-DeLay-Abramoff era has been so epic, so profound and so terribly costly to the national interest and the American people themselves.  Bush and his team have been very much like a political hurricane, leaving behind unimaginable wreckage in their wake.  Perhaps it will be Katrina that becomes the symbol of this failed conservative era, the image that will be evoked in our collective minds eye for generations to come. 

Every year the United States takes a time out from September 15-October 15 to recognize the contributions of Hispanics in the United States as part of Hispanic Heritage Month. Hispanics are now recognized as the largest minority in the U.S. - the Census estimates that by 2042 one in four persons will be of Hispanic origin. As this year's Hispanic Heritage Month kicked off this week, it becomes clear that an unprecedented number of Latino voters could decide this year's election, Latinos are increasingly represented in government and industry, Latinos are a growing force in the media - as evidenced by the launch of shows like "Agenda" and "Al Punto" on Spanish language networks, and Hispanics are also becoming web and technology users in rapidly growing numbers.

For these reasons and more, the Pew Hispanic Center reported this week on a survey it conducted on the overall state of Latinos. The report reflects how Hispanics are bearing much of the current economic crisis, combined with suffering increased instances of discrimination.

Half (50%) of all Latinos overall (native and foreign born) say that the situation of Latinos in this country is worse now than it was a year ago, according to this nationwide survey of 2,015 Hispanic adults (higher than the average for non-latinos). Fully 63% of Latino immigrants say that the situation of Latinos has worsened over the past year. In 2007, just 42% of all adult Hispanic immigrants - and just 33% of all Hispanic adults - said the same thing. These increasingly downbeat assessments come at a time when the Hispanic community in this country--numbering approximately 46 million, or 15.4% of the total U.S. population--has been hit the hardest by rising unemployment.

Due mainly to the crisis in the housing and construction industry, the unemployment rate for Hispanics in the U.S. rose to 7.3% in the first quarter of 2008, well above the 4.7% rate for all non-Hispanics, and well above the 6.1% rate for Hispanics during the same period last year. As recently as the end of 2006, the gap between those two rates had shrunk to an historic low of 0.5 percentage points--4.9% for Latinos compared with 4.4% for non-Latinos, on a seasonally adjusted basis. The spike in Hispanic unemployment has hit immigrants especially hard. For the first time since 2003, the unemployment rate for Latinos not born in the United States was higher, at 7.5 percent, than the rate for native-born Latinos, at 6.9 percent, the report found. Latinos make up 14.2% of the U.S. labor force, or roughly 22 million people.

In addition to the economy, issues like immigration, access to health care, and discrimination continue to be of concern to Hispanics and to Hispanic voters. In the Pew survey, one-in-ten Hispanic adults - native-born U.S. citizens (8%) and immigrants (10%) alike - report that in the past year the police or other authorities have stopped them and asked them about their immigration status. Some Latinos are xperiencing other difficulties because of their ethnicity. One-in-seven(15%)say that they have had trouble in the past year finding or keeping a job because they are Latino. One-in-ten (10%) report the same about finding or keeping housing.

On the question of immigration enforcement, the Pew Center's research demonstrates the same data NDN found through our polling on immigration, released last week. Latinos disapprove of current enforcement-only measures - more than four-in-five Hispanics (81%) say that immigration enforcement should be left mainly to the federal authorities rather than the local police and 76% disapprove of workplace raids. Two-thirds (68%) of Latinos who worry a lot that they or someone close to them may be deported say that Latinos' situation in the country today is worse than it was a year ago, as do 63% of Latinos who have experienced job difficulties because of their ethnicity and 71% of Latinos who report housing difficulties because of their ethnicity.

Most Hispanics in the U.S. are native born, i.e., U.S. citizens legally not susceptible to deportation, therefore the fact that most Hispanics worry about raids, immigration, and even facing possible deportation reflects how the existing reckless "enforcement-only" policies are impacting not only foreign Hispanics, but U.S. citizens.

NDN has a history writing and speaking about the Hispanic community as one of the great American demographic stories of the 21st century, recognizing that it will be hard for any political party to build a 21st century political majority without this fast-growing electorate. Hispanics have become one of the most volatile and contested swing voting blocs in American politics, and they are responding to this attention. As reported in Hispanics Rising II, an analysis of the Hispanic electorate and their motivation, Hispanic immigrants are becoming increasingly involved, as reflected by the data released this week by the Immigration Policy Center, demonstrating a spike in citizenship applications. Immigrants want to be U.S. citizens, they want to apply for citizenship, often having to overcome virtually impossible obstacles to be able to pay the obscenely high application filing fees.

Therefore, political candidates will do well to pay attention to the many challenges facing Hispanics today. At the onset of Hispanic Heritage Month this week, both Presidential candidates released statements praising Hispanics' contributions to American society and their military service. The difference between the two statements is that Barack Obama also called for comprehensive immigration reform. On the other hand, John McCain didn't mention it. This is curious because polling for the last 3 or 4 years, including the latest polls conducted by NDN, consistently shows that immigration is of top concern for Hispanic voters.

U.S. Sen. Barack Obama, in Española, New Mexico today, gave a speech on the economy and called for the passage of a plan that would help struggling families stay in their homes. NDN President Simon Rosenberg and NDN Globalization Initiative Chair Dr. Robert J. Shapiro called yesterday for just such an action. NDN applauds Senator Obama for his bold plan to address the underlying factors in the financial crisis and his strong understanding of both the moral and economic cases for keeping struggling Americans in their homes.

From Obama’s speech today:

The events of the past few days have made clear that we need to do more right now. We do not have time for commissions and we can’t afford to lurch back and forth between positions when dealing with an economic crisis, like my opponent has. That is why I am calling on the Treasury and the Federal Reserve to use their emergency authorities to maintain the flow of credit, to support the availability of mortgages, and to ensure that our financial system is well-capitalized. Tomorrow I will be convening a meeting with my top economic advisors to discuss a plan based on the ideas I’ve been talking about with former Fed Chairman Paul Volcker and other advisors of mine. Then I’ll call for the passage of a Homeowner and Financial Support Act that would establish a more stable and permanent solution than the daily improvisations that have characterized policy-making over the last year. Specifically, it would accomplish three primary goals.

First, it will provide capital to the financial system. Second, it will provide liquidity to enable our financial markets to function. And third, it will do what I’ve been calling for since I supported legislation on it early last spring, which is to get serious about helping struggling families to re-structure their mortgages on more affordable terms so they can stay in their homes. We’ve made a good start but we need to do much, much more. We cannot forget that there are many homeowners who are in crisis through no fault of their own, and a solution that does not have them at its core is no solution at all.

Right on the heels of Senator McCain's latest foreign policy gaffe, his side-kick/Vice Presidential running mate decided to take a crack at dispelling these "attacks" about her lack of foreign policy experience. Just to put this in context: in the past week a bomb was detonated at the U.S. Embassy in Yemen, two U.S. ambassadors were expelled from Latin American countries, and the ambassadors from those nations were similarly recalled from the U.S. (not to mention the ongoing conflicts in Afghanistan and Iraq, of course). The importance of the actual knowledge - not just "experience" travelling - and understanding of these complex international relationships by Presidential candidates cannot be understated. It is anything but unfair to demand that the persons running for the highest seat in the land possess higher than average knowledge and understanding of the different regions in the world and our interest in each.

In this town hall meeting Gov. Palin basically says that we shouldn't fear because she and her running mate might not be ready now, but they will be ready "on January 20", "God willing". And she explains her credentials in the area of foreign policy: she'll be ready because she "has that readiness"...she's "ready to serve". "You can even play stump the candidate if you want to" by asking her "specifics, with specific policy or countries."

Dr. Robert Shapiro, Chair of NDN's Globalization Initiative, and Simon Rosenberg, NDN President, today released the following statement:

The current financial crisis was caused by the persistent failure of the current Administration and the Federal Reserve to appreciate how our financial markets have been rapidly changing or to take minimal care to ensure that those changes did not put the American economy at serious risk. The Treasury and the Fed now are using nearly $1 trillion of Americans' money to bail out financial institutions whose reckless mismanagement they tolerated or ignored. The Congress must put at least as much effort into containing the crisis at one of its critical origins, by helping people keep their homes so the housing market and the derivative instruments based on it can stabilize.

Before Congress leaves, it should enact legislation that allows struggling Americans to renegotiate their mortgages, starting with the huge portfolio the government now holds through Fannie Mae and Freddie Mac. It should not be acceptable for our government to use taxpayers to bail out huge, mismanaged banks and insurance companies that speculated in mortgage-backed securities while allowing many of those same taxpayers to be tossed from the homes that backed up those securities. When Congress returns, it also should turn to the serious business of applying strict and appropriate transparency, capital and other regulatory standards to all significant financial institutions, including investment banks and hedge funds. And the politicians who hailed the hands-off attitude that enabled this crisis to fester and break out, and now blame greed instead of their own negligence, should be held accountable.

You can feel it. The Obama campaign is firing on all cylinders, driving the news cycle now, hitting McCain hard, systematically taking Palin down, announcing an extraordinary fundraising month and expanding its grassroots base, making much better use of Biden and other surrogates, and finding their voice on the economy as never before. The McCain campaign is on the defensive, reeling from harsh criticism of McCain's character and working to contain the downside of Governor Palin. The new McCain ads, issue-based, without the wildness of earlier ads, speak to a chastened McCain camp. The national tracks have shown a 1-2 point shift in the race this week toward Senator Obama.

Today the race is still dead even. But Senator Obama has seized the initiative, and the momentum has shifted from Palin to the Democratic ticket. 

I still think the greatest challenge facing McCain is that he has no real plan for the future, and that running on a culture war and character simply isn't going to be enough in this election given all the very serious stuff going on. As Jake wrote yesterday, the two main arguments of the new McCain TV ad - that lower taxes will create jobs, and drilling will lower gas prices - are not true, and not promises America can bank on. 

The lack of seriousness of the McCain campaign - and the whole national Republican Party at this point - is simply astonishing. 

But at least, as Tina Fey says, the good Governor can see Russia from her porch.