September 2010, Week 4


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Thu, 23 Sep 2010 21:33:18 -0400
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Time to Fix the Economy - So Long Summers, Making Sense of
the Poverty Numbers (2 posts)

* So Long, Summers (Robert Scheer in TruthDig)
* Making Sense of Poverty Numbers (Barbara Ehrenreich and
  Diana Pearce - Institute for Policy Studies)


So Long, Summers

By Robert Scheer


September 21, 2010


Finally! The announced departure of Lawrence Summers as the
president's top economic adviser is welcome news. Harvard's
loss in taking back its $586,996-a-year professor and
"president emeritus," who is also paid millions by Wall
Street on the side, is the nation's gain. Maybe now Barack
Obama, who hopefully will also push out Summers' protégé,
Treasury Secretary Timothy Geithner, will begin to provide
an authentic populist alternative to those tea party
Republicans who totally absolve Wall Street of
responsibility for the economic collapse. But the early
signs are not fully reassuring.

As I stated in my column last week, for the umpteenth time
urging Summers' dismissal, I expected the president to have
kind words for a man who deserved none if he were to be
fired. But Obama's effusive praise on Tuesday went well
beyond the requirements of professional pink-slip courtesy
and suggests that he is still in denial over the role of key
Democrats like Summers in getting us into this mess:

"I will always be grateful that at a time of great peril for
our country, a man of Larry's brilliance, experience and
judgment was willing to answer the call and lead our
economic team."

A parsing of that one sentence will reveal much of what is
rotten in our political system and distorted in the
president's response to the economic crisis he inherited.
There is simply no serious accountability when Summers is
lionized for his disastrous service and Wall Street's high
rollers are bailed out after their stark disgrace. By what
standard would one judge as "brilliant" the abysmal
performance of Summers both as treasury secretary in the
Clinton administration and more recently as a top economic
adviser for Obama?

The "great peril" for our country that Obama referred to was
a direct result of the radical financial deregulation that
Summers helped make law when he worked for Bill Clinton. He
led the effort to destroy the career of Brooksley Born, the
Clinton-appointed head of the Commodity Futures Trading
Commission who had the prescience to sound the alarm in the
face of a dangerously spiraling market in suspect mortgage
packages. Her sensible suggestion in a "concept release" for
a study of the risks in those newfangled financial gimmicks
horrified Summers, who told a Senate committee:

Advertisement "In our view, the Release has cast the shadow
of regulatory uncertainty over an otherwise thriving
market-raising risk for the stability and competitiveness of
American derivatives trading. We believe it is quite
important the doubts be eliminated."

They were eliminated when, at Summers' instigation, Clinton
signed off on the Commodity Futures Modernization Act, which
summarily banned any regulation of those derivatives under
any existing law or by any agency.

Ever one to fail upwards, Summers was rewarded for his
betrayal of the public trust with an appointment as
president of Harvard, where his dismissal of the scientific
competence of women was his most noted achievement. That did
not stop candidate Obama from selecting him to be a key
economic adviser in his campaign. Nor was the fact that
Summers received almost $8 million in consulting and lecture
fees from Wall Street firms during the time he advised the
Democratic candidate a deal-breaker for Obama.

Obama had absolutely nothing to do with the causes of the
financial meltdown, but he wasted two precious years being
misled by Summers and Geithner as to how to respond to it.
The key error, and it is not too late to rectify it, was the
failure to force the bailed-out Wall Street titans to give
back something significant to the public in the way of
mortgage relief. A temporary moratorium on mortgage
foreclosures at a time when 11 million homeowners are
"underwater," at risk of joining the almost 4 million who
have already lost their homes, is a must to recharge the
economy. That is what Obama should have initiated when he
first came into office, and I hope it will be done now that
the dead hand of Summers has been lifted.

Perhaps at Harvard Summers will have time to reflect on the
dismal arc of his split tenure in government service. Thanks
to the banking debacle he did so much to initiate back in
the Clinton years, the nation now has more people living in
poverty, 43.6 million of them, than ever in our history.
Americans have witnessed the disappearance of $11 trillion
of their net worth, $1.5 trillion in the second quarter; the
debt has risen alarmingly; unemployment is stuck at 9.6
percent; and trillions of dollars in toxic pools of housing
stock are still held by the banks to be thrown into the
housing market fire sale anytime home prices promise to edge
upward. Behold what brilliance has wrought.


Making Sense of Poverty Numbers

By Barbara Ehrenreich and Diana Pearce. Edited by Emily
Schwartz Greco ·

Institute for Policy Studies
[Originally published in McClatchy]

September 22, 2010 ·


The recent Census data on poverty in America hide as much as
they reveal.

The Great Recession has hit those on the bottom most
heavily, adding six million Americans to the ranks of the
officially poor.

The number of officially poor is now higher, at nearly 44
million, than at any time in the 51 years of this count. Yet
these recent Census numbers hide as much as they reveal.

They don't include the homeless, who number anywhere from
half a million to three million. Nor do they count most
doubled-up families - experts say they're up by at least 11
percent. And then there's those young adults returning home
who at other times would be living independently (the Census
estimates 42 percent of them would be poor if still out on
their own). Most invisible are those whose incomes are above
the poverty line but can't afford the bare necessities, a
problem that is most acute in high-cost urban areas.

Only senior citizens have been exempt from the general
downward slide. They're the only age group that experienced
a decline in poverty and an actual increase in income in
2009. This continues a long-term trend as elders have gone
from being the poorest age group in 1959, when more than one
in three was poor, to being the least poor group today with
a poverty rate under 9 percent. Why? Because seniors, more
than any other demographic group, have a working safety net
in the form of Social Security, plus Medicare which was
added in the 1960s. In 2009, Social Security alone saved
over 14 million Americans from falling into poverty.

Workers didn't fare so well. More than 3 million Americans
were kept out of poverty by unemployment insurance alone,
but millions of other workers are struggling to survive job
loss without government help and have little prospect of
finding a job in the current economy.

The new poverty also highlights the continuing plight of
families with children, especially single-parent families
where there is rarely a second income to fall back on when
one parent loses a job. The most vulnerable families are
those headed by single mothers, and among them the hardest
hit are those headed by single women of color. Almost two
out of five single mothers are poor, and this isn't for lack
of trying: Even now, two-thirds are employed. But in
addition to the chronic problems of low wages and unstable
and episodic employment, many single mothers have seen their
work hours cut in the recession.

Welfare (now called TANF, Temporary Assistance to Needy
Families) doesn't begin to meet the needs of vulnerable
families. Even though there are six people for every job
opening in this recession, TANF ironically still insists you
have to find a job to get benefits.

And welfare often doesn't last as long as its beneficiaries
may need it. Right now, TANF is cutting or eliminating
benefits for 85,000 families per month, even as welfare
offices are swamped with destitute families who have
exhausted all other options. With welfare budgets frozen at
pre-recession need levels, officials must choose between
spending money on child care for still working mothers and
helping families with no income at all.

There are a few bright lights in this dark picture: The TANF
emergency fund has created 250,000 subsidized jobs, mostly
in the private sector, making the difference for many small
enterprises as well as the jobholders and their families.
Extended unemployment benefits have sustained the unemployed
and their communities. The Recovery Act has saved or created
millions of jobs. Yet Congress has turned a blind eye to
what clearly works and is clearly needed. Some especially
cynical and callous lawmakers are even ignoring worries
about deficits and supporting tax breaks for the rich. As we
have seen with Social Security, and to a lesser extent the
extension of unemployment benefits, food stamps, and housing
programs, we can reduce poverty. We know what to do. We just
have to have the determination to do it.



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