Tuesday, April 22, 2008

Fox News Creates Obama Contradiction That Isn't There?

A lot of people complained about the bias at last week's ABC debate between Barack Obama and Hillary Clinton but it was the same bias you can find at all the major networks, a bias towards controversy, sensationalism, superficiality, and corporatism. Fox News, in contrast, has all those same biases as the other networks, but has, in addition, a clear ideological bias I've documented in dozens of YouTube videos in which Fox distorts the facts to help the right or hurt the left. Fox provided a good example of such bias in its coverage of last week's ABC debate when Fox deliberately misinterpreted an ambiguity in something Obama said, quoted it out of context, and created a contradiction that wasn't there, as I show in this video.

Mosaic News - 4/21/08: World News from the Middle East

American charged with giving secrets to Israel

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Justice Department: Engineer employed by U.S. Army spied from 1979-1985

NEW YORK - An 85-year-old former U.S. Army mechanical engineer was arrested Tuesday on charges he slipped classified documents about nuclear weapons to an employee of the Israeli Consulate who also received information from convicted Pentagon spy Jonathan Pollard, authorities announced.

Ben-ami Kadish was charged in U.S. District Court in Manhattan with four counts of conspiracy, including allegations that he disclosed U.S. national defense documents to Israel and acted as an agent of the Israeli government.

Prosecutors say Kadish, a U.S. citizen who worked at an Army base in New Jersey, took home classified documents for six years and let the Israeli photograph them in his basement. Those documents included information about nuclear weapons, a modified version of an F-15 fighter jet, and the U.S. Patriot missile air defense system.

Bruce Goldstein, a lawyer for Kadish, had no immediate comment. Calls requesting comment from the Israeli consulate in the United States were referred to officials in Israel, where foreign ministry spokesman Arye Mekel said: "We know nothing about it. We have nothing to say."

A criminal complaint said Kadish confessed to FBI agents on Sunday that he had given the Israeli between 50 and 100 classified documents and accepted no cash in return, only small gifts and occasional dinners for him and his family.

Kadish worked at the Armament Research, Development and Engineering Center at the Picatinny Arsenal in Dover, New Jersey. On numerous occasions between 1979 and 1985, the agent provided Kadish with lists of U.S. national defense classified documents he was interested in, according to the complaint. Kadish worked at the military facility from 1963 through 1990.

The complaint described a close relationship between the two men that continued beyond 1985, and included telephone and e-mail conversations exchanged as recently as Sunday.

The unidentified Israeli agent was described in the complaint as a one-time employee of Israeli Aircraft Industries, which since at least the late 1970s has been a defense manufacturing contractor for the Israeli government. The company is now known as Israeli Aerospace Industries.

From July 1980 through November 1985, the agent worked for the Israeli government as the consul for science affairs at the Israeli consulate in Manhattan.

The two men were introduced by Kadish's brother, who worked with the agent at the manufacturing plant in Israel.

The research center where Kadish worked housed a library of documents, including many with classified information related to U.S. national defense. From 1979 through 1985, Kadish signed out at least 35 classified documents, according to the complaint.

Kadish told the FBI that he knew that one restricted document he provided to the agent included atomic-related information and that he did not have the required clearance to borrow it, according to the complaint.

Prosecutors say the Israeli called Kadish on March 20 and told him to lie to federal law enforcement agents who were investigating possible espionage.

"Don't say anything. Let them say whatever they want. You didn't ... do anything. ... What happened 25 years ago? You didn't remember anything," the man allegedly told Kadish in Hebrew.

In addition to the spying counts, Kadish is charged with conspiring to hinder a communication with, and to make a materially false statement to, a law enforcement officer. Those charges stem from the March conversation.

The Israeli worker left the United States in November 1985 and has not returned, according to the complaint, which described him as the same Israeli to whom Pollard provided classified information.

Pollard, a former civilian intelligence analyst for the U.S. Navy, pleaded guilty to transferring military secrets to Israel while working at the Pentagon. He is serving a life sentence in a U.S. federal prison.

The United States, Israel's closest ally, provides about $2.2 billion a year in military assistance. In the last few years, the two nations have conducted tests to integrate the Israeli-made Arrow anti-ballistic missiles with the Patriot system to create a multilayered air defense system.

The U.S. deployed Patriot batteries in Israel in 1991, when Iraq fired 39 Scud missiles at Israel during the first Gulf war. The Arrow was jointly developed by Israel Aircraft Industries and Chicago-based Boeing Co. at a cost of more than $1 billion after the Patriots failed to intercept many of the incoming Scuds. Some reports said Patriots missed them all.

Dark clouds gather over Australian economy

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By Mike Head

Until last week, the prevailing view in the Australian business and political establishment, at least in public, was that the national economy had become “de-coupled” from the US, and was therefore sheltered from the worst impacts of the recession taking hold in the world’s largest economy. Booming exports to China and the rest of Asia would, the argument went, insulate Australian capitalism from a global slump.

Last week, speaking after attending meetings of the International Monetary Fund (IMF) in Washington, Treasurer Wayne Swan said he was now certain that Australia would not escape the deepening international financial crisis. In an interview with Fairfax newspapers, he said no one at the IMF meetings believed that Asia was de-coupled from the turmoil that began last year with the sub-prime mortgage collapse in the US.

The IMF’s “World Economic Outlook” report, presented to the Washington meetings, described the financial crisis as the biggest since the Great Depression, forecast a US recession this year and warned of a 25 percent chance of a worldwide downturn “equivalent to a global recession”.

Swan stated: “Australia has never been immune from these sorts of financial crises. The fallout will have substantial knock-on effects to developing and emerging economies, and from our point of view that means flow on effects to Australia.” He also warned of an end to the 15 years in which cheap imports from countries such as China had a deflationary impact. A new period had commenced of high inflation and interest rates, combined with slowing growth.

Australia has had 17 consecutive years of economic growth, with an annualised average of 3.5 percent, largely as a result of two factors. One was rising minerals exports and high commodity prices, substantially fuelled by the rapid expansion of Chinese capitalism. The other was unprecedented rises in the levels of corporate and household debt, which generated soaring share prices and real estate values. Now, it is precisely Australian capitalism’s reliance on debt and mining exports that has made it extremely exposed, both to the global credit squeeze and to signs of slower growth and inflationary problems in China.

Last week, an economics expert drew attention to this vulnerability. Associate professor Peter Kriesler from the University of New South Wales told ABC radio: “The huge foreign debt and the huge private sector debt means that we’re much more susceptible to recession, interest rates etc., coming from abroad.

“If you look at the Australian economy, the manufacturing sector, the industrial base, has been shrinking quite rapidly; we’re becoming more and more reliant on a number of key resource exports.... Right now we’re so reliant on what’s happening abroad, particularly China and India ... there’s a possibility that the growth rate there [in China] will slow down, which means that the resource boom that’s been carrying us forward will collapse.”

In Australia, the international credit crunch triggered by the US sub-prime crisis since last August has already produced a trail of high-profile collapses by heavily-leveraged companies, including ABC Learning Centres, Centro Properties, finance companies RAMS, Allco and MFS, and stockbrokers Opes and Lift. Share prices have fallen by 30 percent since last November’s peak, wiping hundreds of millions of dollars off corporate values, particularly among the banks and finance houses.

At the same time, high levels of stress and hardship have been caused by soaring mortgage and credit card interest rates and rising prices for food, fuel and other essential items. Official interest rates have been raised eight times in three years, to 7.25 percent, and this year the private banks have hiked their rates higher than that. Inflation has climbed to 4 percent, well above the 3 percent limit maintained since the mid-1990s. Recent surveys warned that 300,000 households are at risk of losing their homes, and that many young people and workers earning less than $A30,000 ($US28,260; €17,760) a year are already missing credit card payments. Ordinary working people also face the loss of their retirement incomes—superannuation funds are likely to report losses of anywhere between 5 percent and 20 percent this financial year because of the US crisis and share market losses.

These developments have begun to seriously affect consumer and business confidence. New car sales dropped 2.3 percent in February, while housing finance for owner-occupied dwellings plunged 6 percent and retail sales declined by 0.1 percent, led by a 2.3 percent fall in spending at household goods stores. The ANZ bank job ads index—regarded as a forward indicator—showed newspaper advertisements fell to the lowest level in more than 14 years.

The consumer sentiment index, compiled by Westpac bank and the Melbourne Institute, fell to its lowest level since June 1993, at the end of the last recession. “The three months to March showed the sharpest three-month decline in the index (21.2 percent) since its introduction in January 1975,” Westpac chief economist Bill Evans said. “This further fall emphasises just how concerned households must be with the current economic environment.” CommSec chief equity economist Craig James warned of a “dramatic plunge in consumer spirits”.

Business confidence, sales, profits, employment and forward orders are also falling, according to the February National Australia Bank (NAB) survey. Business confidence was the lowest since the September 2001 attacks in the US, and the business conditions index suffered one of the biggest falls in the survey’s history. NAB chief economist Alan Oster admitted that the size and breadth of the slowing in domestic demand and business conditions “has caught both business and us by surprise”.

There are signs that the fallout from the financial meltdown is far from over. In its current “World Economic Outlook”, released this month, the IMF named Australia as having one of the four most overvalued housing markets in the Western world, and one of four highest levels of housing debt. Borrowings by households had grown from 75 percent of disposable incomes a decade ago to 175 percent, and this included credit card debt of $42 billion, or $2,000 for every man, woman and child. The IMF estimated that Australian housing prices last year were 25 percent higher than could be explained by “economic fundamentals”, producing the risk of a sharp “correction”.

This warning came after another indication that the banking problems in the US and Europe could spread to Australia. One of the four major banks, the ANZ, shocked financial markets by announcing much higher bad debt provisions for the first half of fiscal 2008-09, sending its share price down nearly 7 percent. The ANZ said its provisions would be about $975 million, a 72 percent increase from a year ago.

The problems are not confined to ANZ. JP Morgan estimates that Australia’s top five lenders have about $7.7 billion in secured and unsecured loans made to companies with high gearing. Goldman Sachs forecasts bad debt charges at Australia’s other top five banks, excluding ANZ, to rise by 43 percent in the current fiscal year to $2.7 billion. Dun & Bradstreet estimates that one in 12 Australian-based companies is now considered higher risk, which it says implies distressed debt of $3.5 billion.

These developments underscore the fragility produced by the extraordinary growth of financial parasitism in the Australian economy, as in the US. Over the past 30 years, as corporations have constantly shifted production in search of cheaper labour, lower costs and reduced taxes, manufacturing’s share of output has fallen from around 16 percent to 10 percent, while financial services have become increasingly dominant. Boosted by the previous Labor government’s introduction of compulsory superannuation in the 1990s, the value of funds under management has grown from 50 percent of gross domestic product in 1990 to 160 percent, or $1.7 trillion.

Reliance on China and the US

Deep problems lie ahead also because of the reliance on Chinese and other Asian export markets, which are in turn heavily dependent on the US, Japan and Europe for their sales. Under the impact of the US recession and slowing growth in Japan and Europe, China’s annual growth rate has begun to slow, from 11.9 percent last year to 10.6 percent in the first three months of 2008. China, like every other country, is now also being affected by rising inflation. Food prices rose at an annual rate of 21 percent in the first quarter of 2008, and the official inflation rate was 8 percent.

Until recently, the Chinese authorities and companies were content to accept higher prices for Australian raw materials in order to secure supplies. However, there are signs that the Chinese regime, haunted by the threat of soaring prices and social unrest, is now demanding greater access to ownership and control over Australian resources. In February, state-owned Chinalco made a $15 billion share raid on Anglo-Australian mining giant Rio Tinto. Last month, Sinosteel launched a hostile takeover bid for West Australian iron ore company Midwest. China is reportedly considering a $22 billion share raid on Australian-South African BHP Billiton, the world’s biggest mining company.

On his recent trip to Beijing, Rudd called for the opening of China’s financial markets to Australian and other foreign banks and finance houses. Beijing may insist on the quid pro quo that state-owned Chinese conglomerates be permitted to buy up Australian resources, undercutting the ability of Australian-based companies to continuously ratchet up prices, the main source of a 15-year mining export bonanza.

Australian capitalism’s vulnerability was underscored when the trade deficit for February widened to a record $3.29 billion, seasonally adjusted, from $2.54 billion in January. Metal and mineral exports fell 18 percent, while coal exports dropped 16 percent. According to the Australian Bureau of Statistics, the principal cause was severe weather conditions at key ports. Nevertheless, deeper processes are at work. The trade balance has been in the red for more than five years, despite the more than doubling of base metals and other resources prices since 2003.

Because of this chronic deficit and dependence on foreign investment, the level of foreign debt has increased from 15 percent of GDP to more than 50 percent over the past two decades, reaching $610 billion by the end of 2007. This level could become unsustainable in the event of a global recession. In addition, there are indications of a significant withdrawal of equity (shares) investment since the US crisis began last August, with two quarterly outflows of up to nearly 8 percent of GDP.

With high levels of foreign and domestic debt, the Australian economy is seriously exposed to the US crisis. The US has been the largest source of foreign investment since World War II, accounting for $45.3 billion last year, or 29 percent of the total, and more than a quarter of the overall stock of investment. It is also the most important destination of Australian foreign direct investment, about 40 percent of which flows to the US, revealing the dependence of large Australian-based corporations on expansion into North American markets.

How badly the economy will fare in the immediate period ahead is not yet clear. According to the official minutes, at their April 1 meeting, Reserve Bank of Australia board members concluded that domestic growth would slow somewhat from last year’s 3.9 percent. They noted that the terms of trade—the ratio of export to import prices—would rise another 15 percent this year because of higher prices that China has previously agreed to pay for iron ore and coal. Nevertheless, they expressed nervousness about the economic prospects. “Members recognised that a considerable degree of uncertainty continued to surround the outlook for both demand and inflation.”

One thing is certain. The Rudd Labor government is committed to making ordinary working people pay for the failures of the financial markets. Ever since Labor took office, Treasurer Swan and Prime Minister Kevin Rudd have been seeking to soften up public opinion for harsh cuts of $10 billion or more to government spending in next month’s budget, citing the need to combat inflation. As his remarks following the IMF meeting indicate, Swan is now using the worsening economic outlook as an added justification for slashing social spending.

Behind the US stock market rally

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By Barry Grey

Last week, the US stock market registered major gains, despite dire first-quarter reports from major banks and investment houses and a raft of data indicating a rapid slide into recession.

The Dow Jones Industrial Average rose 524 points, or 4.25 percent, for the week; the Standard & Poor’s 500 Index gained 57 points, or 4.4 percent; and the Nasdaq Composite Index picked up 113 points, a rise of 4.9 percent. The major indexes closed at their highest points since February 1.

The upward spurt may well prove to be temporary, but the evident disconnect between the mood of big investors and the ongoing financial turmoil and economic distress is nevertheless a significant phenomenon that calls for an explanation.

The same trend was apparent on Monday, when the stock market essentially shrugged off more bad news from Bank of America and National City Bank, with the Dow giving up a marginal 24 points and the S&P 500 and Nasdaq closing slightly higher.

Bank of America said its first-quarter profit fell 77 percent, worse than anticipated by market analysts, and its credit-loss provisions rose by another $4.78 billion. National City announced it was seeking a cash infusion of over $6 billion, in exchange for discounted shares of its stock.

Last Wednesday, JPMorgan Chase announced $5.1 billion in write-downs and set-asides and a 50 percent drop in first-quarter profits. Nevertheless, its shares rose 5.1 percent. Overall, the Dow shot up 257 points.

On Thursday, Merrill Lynch, the investment bank and world’s largest brokerage firm, posted a first quarter loss of $1.96 billion, recording for the first time in its 94-year history its third consecutive quarterly loss. The firm announced an additional $6.6 billion in asset write-downs, bringing its total markdown of mortgage-backed and other speculative securities to $30 billion since last summer.

Merrill also announced an additional 2,900 job cuts, bringing the total number of job losses announced over the past several months to 4,000.

The firm’s quarterly loss, at $2.19 a share, was substantially higher than the $1.99 per share decline anticipated by market analysts. Yet Merrill’s shares soared 4.1 percent on Thursday. Stock indexes overall were mixed, with the Dow and the S&P 500 ending the day slightly up and the Nasdaq down by 8 points.

On Friday, Citigroup, the world’s largest bank by assets, reported a $5.1 billion loss for the first quarter, compared to a $5 billion profit for the same period a year ago. It had lost $10 billion the previous quarter. The bank took over $13.8 billion in write-offs and its revenue dropped 48 percent compared to the first quarter of 2007.

Citi announced it would lay off some 9,000 employees in the next twelve months, on top of 4,000 job cuts announced in January.

The company’s share price shot up 4.5 percent, and the overall stock indexes soared: the Dow closing up 229, the S&P 500 ahead by 25 and the Nasdaq up 61.

Shares of financial companies as a whole, which declined 14.7 percent in the first quarter, rose 5.2 percent last week, despite the dismal earnings reports from some of the biggest financial houses.

The spurt in banking shares coincided, moreover, with many indications of deepening slump and surging inflation.

* California reported a 0.5 percent jump in its jobless rate in March, to 6.2 percent.

* Housing starts plunged 11.9 percent in March to reach their lowest level in 17 years.

* The Federal Reserve’s “beige book” national survey reported consumer spending “softening” across the country. For the six weeks to April 7, three quarters of the Fed’s 12 districts experienced “slowing in the pace of economic activity.” The New York Times on Sunday reported that retail sales were down more sharply than at any time since the 1990-91 recession.

* Auto industry sources said car sales in the first quarter declined to an annualized rate of 15.2 million units, the lowest level in over a decade. Analysts cut their full-year 2008 forecasts to below 5 million units, more than 1 million lower than in 2007.

* The World Trade Organization reported Thursday that world trade growth declined sharply in 2007, increasing by 5.5 percent as compared to 8.5 percent in 2006. The WTO warned that growth in world trade could fall to 4.5 percent this year, the lowest level since 2002.

* Oil prices hit new record highs and US gasoline prices surged, approaching an inflation-adjusted record.

* Producer prices in the US rose in March by 1.1 percent, far higher than projected by economists and nearly four times the 0.3 percent reported in February.

* The US dollar hit new lows against the euro and other major currencies.

* The London interbank offering rate (Libor), a benchmark for loans between major banks, shot up, pointing to a continuation of the global credit crunch that is fueling the contraction in investment, sales and general economic activity.

What accounts for the seemingly irrational response of the stock market to this dismal news? In a basic sense, the answer is to be found more in politics than in economics.

The newfound bullish optimism among major Wall Street players—as transient as it may prove to be—can be traced in large part to the decision by the Fed to rescue Bear Stearns last month and open the Fed discount window for cheap loans to the big investment banks. This move, without precedent since the Great Depression, was taken to avert an imminent collapse of the US and global banking system, and it signaled that the US government would do whatever was necessary—ultimately at taxpayer expense—to bail out Wall Street.

It is this implicit guarantee from the government that has shifted the mood among big market players and institutions from fear and panic to a measure of confidence, bringing with it a new eruption of risk-taking and greed.

As Floyd Norris, the economic commentator for the New York Times, wrote on Friday, “... investors are starting to assume that the government stands behind Wall Street. The share prices of investment banks began to recover just after the Fed made it clear the investment banks could borrow from it.

“It appears that the real way we are going to get out of this crisis is to have the government guarantee lots of things. ‘The universal cry of the bust is, “Give me a government guarantee,” said Alex J. Pollack, a former president of the Federal Home Loan Bank of Chicago who is now a fellow at the American Enterprise Institute... As private balance sheets are cut back to reduce leverage, he forecast, the government’s balance sheet will grow rapidly.”

The political and social implications of this government rescue operation are far-reaching. In essence, it means that the consequences of the economic crisis precipitated by the reckless pursuit of super-profits on the basis of vastly inflated home values, leveraged buyouts and various forms of speculation and fraud will be borne entirely by the working class, while the big players, CEOs, accounting firms and ratings agencies will emerge relatively unscathed.

Meanwhile, the banks and finance houses will carry out a ruthless process of cost-cutting and job-slashing, which will be mirrored in every other sector of the economy. The US financial industry has already shed 38,000 jobs since last summer, not counting the most recent layoff announcements, and some analysts predict the final toll will reach 200,000.

Big investors are clamoring for just such measures, and are prepared to reward those companies that carry them out. Byron MacLeod, an analyst with Gradient Analytics, said of Citigroup’s quarterly report:

“Investors want to see aggressive action at this point. You want to make sure the company really cleans house. The provisions are a part of that. The layoffs are a part of that. They appear to be taking aggressive action, taking the company in line with an ideal structure going forward.”

There is no opposition from any section of the political establishment or either party to this blank check for Wall Street. The Fed’s massive intervention to shore up the banks has received the endorsement of the Democratic Congress. No congressional investigations of any substance have been launched to uncover the unprecedented scale of fraud and swindling that underlay the banking debacle. No one is being called to account.

In addtion, all three of the candidates vying to succeed George W. Bush in the White House—John McCain for the Republicans, Barack Obama and Hillary Clinton for the Democrats—declared their support for the Fed action, ensuring that the pro-Wall Street policy will continue in the next administration.

The supposed relief measures for desperate families facing foreclosure are derisory. The Senate bill passed this month, dubbed the “Foreclosure Prevention Act of 2008,” will do nothing for the hundreds of thousands of families that have already had their homes foreclosed or the millions more who face the prospect. It allocates a mere $100 million for “foreclosure counseling,” while providing over $25 billion in tax windfalls over the next several years for home builders, auto companies, airlines and other industries.

The measures taken by the Fed will, in the end, only compound the crisis that is gripping the American and world economy. They can only deepen the crisis of the US dollar, further exacerbate global economic imbalances, and create new speculative bubbles—such as in commodities—in place of the imploded housing bubble. The crisis is rooted in the capitalist system itself, and the attempts to offload its implications onto the backs of the working class must inevitably lead to social and political convulsions.

Lenders derail plan to let bankruptcy judges modify mortgages

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By Michael A. Hiltzik

The Mortgage Bankers Assn. says the measure would raise interest rates, but critics contend this claim is based on faulty data.

Sherrie Floyd says she was able to handle the first reset on the $505,000 mortgage she had taken out to refinance her Vallejo, Calif., home. And the second.

But this month, when the mortgage reset for the third time -- driving her monthly payment to more than $4,300 on a home worth about $470,000 -- she told the judge overseeing her and her husband's bankruptcy case that they would have to abandon the place unless their lender agreed to modify their loan.

That doesn't appear likely.

"We applied four times for a loan modification," said Floyd, 44, who has a clerical job with the Kaiser Foundation. "They told me there was nothing they could think of that we could afford."

The Floyds might have been helped by a congressional proposal to allow bankruptcy judges to approve modifications of home mortgages to stave off foreclosure. But that measure has been derailed amid fierce opposition from lenders, and even supporters concede that it is unlikely to win approval this year.

The Mortgage Bankers Assn., which spearheaded the Capitol Hill campaign, claimed that the bankruptcy measure would drive up the costs of all new residential mortgages by as much as 2 percentage points. That would be a major hit: A change from 6% to 8% on a $300,000 30-year fixed-rate mortgage would raise the payment by $402 a month, or nearly $5,000 a year.

But that claim has come under fire by critics who say the MBA cherry-picked data to paint a bleak picture of sharply higher mortgage rates. The association also misquoted a study by the nonpartisan Congressional Budget Office in a way that made it seem that the CBO supported its position against the bill.

In "talking points" posted on its website, the MBA cited a finding in January by the CBO that the consequence of the bankruptcy proposal "would be higher mortgage interest rates."

In fact, the CBO analysis states that there "could be" higher rates, and qualifies that even further by noting that the size of any increase "is difficult to predict and could depend on the exact change in policy."

The MBA removed the document with the misquotation from its website after it was questioned by The Times, and later posted a corrected version.

CBO Director Peter Orszag later told Rep. Brad Miller (D-N.C.), one of the bill's sponsors, that amending the bill to restrict it to existing mortgages only -- a change that was subsequently made -- "would attenuate any possible effect on mortgage rates."

A recent study by two academics, Adam Levitin of Georgetown Law School and Joshua Goodman of Columbia University, suggests that the MBA's figures on interest rates inflated the threat.

The researchers found there was virtually no difference in rates quoted by a sample of leading mortgage lenders for single-family houses and vacation homes and multifamily dwellings -- even though mortgages on the latter two can be modified in bankruptcy.

The only consistent discrepancy they found was between the rates charged on single-family homes and investment properties. But investment properties, Levitin notes, contain other risks, including the greater likelihood that investors will walk away from properties whose values fall below their loan balances, that would explain the difference.

Levitin says the findings show that there's no reason to think mortgage lenders would take the threat of bankruptcy into consideration when setting loan terms for primary residences. Lawmakers have also modified their proposal so that it would apply only to sub-prime and other risky mortgages issued from Jan. 1, 2000, to the date of enactment -- further limiting its effect on the overall market.

"I don't know how much more narrowly you can draw the provision," said Alan M. White, a bankruptcy specialist at Valparaiso University School of Law. "It's really aimed at people who want to pay their mortgages."

Francis Creighton of the MBA contends that even a limited change in bankruptcy law now would open the door to further modifications, undermining lenders' confidence in the reliability of their loans and driving up rates to compensate.

That argument became one of the key talking points for opponents to the proposal.

"This will put up barriers -- maybe unintended barriers, but real barriers, the experts tell us -- to the American dream of owning a home," Sen. Charles E. Grassley (R-Iowa) said this month during Senate debate on a housing stimulus package.

Mark S. Scarberry, a bankruptcy expert at Pepperdine Law School, said, "To allow a mortgage holder to force modification on a lender is a whole new wrinkle."

Scarberry says the costs for lenders might be moderated if the proposals required the modified mortgage to be revalued after five years, and written up to a higher market price if the home has appreciated in that period. That way, he said, "the lender would have some upside."

Sponsored by Sen. Richard J. Durbin (D-Ill.) and Rep. Miller, the bankruptcy measure has been the most contentious of the numerous proposals before Congress to address the nation's housing slump and the credit crisis, which originated in a collapse in the market for sub-prime mortgage loans.

Critics contend that thus far congressional proposals for housing market relief tilt sharply in favor of aid to lenders, bankers and even unprofitable home builders. The latter would receive a multibillion-dollar tax break from a provision in the Senate bill allowing them to reclaim federal taxes paid during profitable years dating back to 2004.

The proposal before Congress would allow bankruptcy judges for the first time to modify single-family home mortgages when the appraised value of the home has fallen below the principal balance of the loan.

The excess principal would be declared an unsecured debt -- the category that typically receives the lowest payout in bankruptcy. The remaining balance could be modified by a judge's order to give the homeowner a better chance of keeping up with payments, but the change would have to assure the lender of receiving the full present value of the remaining loan over time.

The proposal would apply to borrowers in Chapter 13, the bankruptcy provision for persons seeking to reorganize their personal debts. In most cases, Chapter 13 requires debtors to pay off their secured debts over three to five years; the proposals in Congress would grant an exception for modified mortgages, which could still extend well beyond that limit.

Although some lenders have offered to work out voluntary modifications with strapped borrowers, subject to strict conditions, "there are a lot of structural barriers to loan modifications, and a voluntary system doesn't do enough to affect them," said Kurt Eggert, a law professor at Chapman University who studies mortgage issues.

Shifting the authority to bankruptcy judges might encourage loan servicers to make modifications by giving each deal the imprimatur of a federal court.

Some supporters contend that the proposal rectifies a glaring inequality in bankruptcy law: Currently, judges can approve modifications on loans secured by "factories, grocery stores, farms, boats, motor vehicles, mobile homes and investment property," as one bankruptcy judge supporting the change observed in a letter to Rep. Linda T. Sanchez (D-Lakewood), a cosponsor of Miller's bill.

In other words, just about everything but a principal residence.

Floyd says she's become well aware of that while waiting long hours in bankruptcy court for her case to be called.

"I've seen the judges change people's car notes," she said. "If they could just freeze my rate, I could pay my note."

VA Debated PR Plan on Vets' Suicides

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By Jason Leopold

Senior officials at the Veterans Administration debated internally how to downplay evidence of a stunning number of suicides and suicide attempts among veterans who were treated or had sought help at VA hospitals around the country, according to newly disclosed internal VA e-mails.

On Feb. 13, 2008, Ira Katz, the VA’s mental health director, and Ev Chasen, the agency’s chief communications director, exchanged e-mails discussing P.R. strategy for handling this troubling news, according to evidence made public Monday in a federal court case in Northern California.

The exchange came in the context of how to handle inquiries from CBS News, which was reporting on the surge of suicides among U.S. veterans – reaching an average of 18 per day – with part of that rise attributed to soldiers returning from the wars in Iraq and Afghanistan.

In an e-mail headlined “Not for the CBS News Interview Request,” Katz notified Chasen that the VA had identified some 1,000 suicide attempts per month among war veterans treated by the VA.

“Shh!” Katz wrote to Chasen. “Our suicide prevention coordinators are identifying about 1,000 suicide attempts per month among the veterans we see in our medical facilities. Is this something we should (carefully) address ourselves in some sort of release before someone stumbles on it?”

Chasen responded to Katz with suggestions about how to avoid too much negative attention to the data.

“Is the fact that we’re stopping [suicides] good news, or is the sheer number bad news? And is this more than we’ve ever seen before?” Chasen wrote to Katz, adding:

“It might be something we drop into a general release about our suicide prevention efforts, which (as you know far better than I) prominently include training employees to recognize the warning signs of suicide.”

In testimony to the House Veterans’ Affairs Committee on Dec. 12, 2007 – just two months before the e-mail exchange – Katz had stressed the VA’s successes in treating mental health problems and preventing suicides.

He also disputed that veterans from Iraq and Afghanistan face any special risk of suicide.

VA’s latest data do not demonstrate an increased risk of suicide among [Afghan and Iraqi theatre] veterans compared to the age and gender matched American population as a whole,” Katz said.

Three days after the testimony, on Dec. 15, Katz painted a grimmer picture in an e-mail to Brig. Gen. Michael J. Kussman, the Veteran Health Administration’s undersecretary for health.

Katz’s e-mail said that from the total population of U.S. veterans from all wars, an average of 18 vets commit suicide each day. Katz said the data, which the VA obtained from the Center for Disease Control, showed that 20 percent of suicides in the United States are identified as war veterans.

“VA’s own data demonstrate 4-5 suicides per day among those who receive care from us,” Katz wrote.

On March 20, 2008, CBS News reported that it had obtained an internal VA study showing that 1,784 vets who received VA services still committed suicide in 2005, an increase from 1,403 such suicides in 2001.

CBS News also quoted Rep. Bob Filner, D-California, chairman of the House Veterans’ Affairs Committee, complaining that the VA had withheld this important data from Congress.

“Given the fact that we keep asking for data and they say, ‘we don’t have any,’ yes, it surprises me,” Filner told CBS News. “If we can’t get the correct information, we can’t do our job. We can’t prevent every suicide but you can prevent a whole lot of them and it’s our duty as a nation to do that.”

Suicide Epidemic

The internal VA e-mail exchange discussing P.R. strategy was disclosed at a federal trial in Northern California where two veterans’ advocacy groups – Veterans for Common Sense and Veterans United for Truth – have filed a class-action lawsuit against the VA.

The lawsuit alleges that a systematic breakdown at the VA has led to an epidemic of suicides among war veterans. The suit claims the VA has turned away veterans who have sought help for post-traumatic stress disorder and were suicidal.

Some of these veterans, the lawsuit claims, later took their own lives.

The lawsuit wants a federal judge to issue a preliminary injunction to force the VA to immediately treat veterans who show signs of PTSD and are at risk of suicide and to overhaul internal system that handles benefits claims.

Underscoring just how under-prepared the VA was for the number of PTSD cases that would emerge from the Iraq and Afghanistan wars, documents released to support the veterans’ lawsuit show that prior to the U.S. invasion of Iraq the VA believed it would likely see a maximum of 8,000 cases where veterans showed signs of PTSD.

Last week, the RAND Corporation released a study that said about 300,000 U.S. troops sent to combat in Iraq and Afghanistan are suffering from major depression or PTSD, and 320,000 received traumatic brain injuries.

Since October 2001, about 1.6 million U.S. troops have deployed to the wars in Iraq and Afghanistan. Many soldiers have completed more than two tours of duty meaning they are exposed to prolonged periods of combat-related stress or traumatic events.

“There is a major health crisis facing those men and women who have served our nation in Iraq and Afghanistan," said Terri Tanielian, a researcher at RAND who worked on the study.

“Unless they receive appropriate and effective care for these mental health conditions, there will be long-term consequences for them and for the nation. Unfortunately, we found there are many barriers preventing them from getting the high-quality treatment they need.”

Paul Sullivan, executive director of Veterans for Common Sense, has been warning lawmakers about this problem for several years.

“The scope of PTSD in the long term is enormous and must be taken seriously,” Sullivan told a congressional committee in July 2007. “When all of our 1.6 million service members eventually return home from Iraq and Afghanistan, based on the current rate of 20 percent, VA may face up to 320,000 total new veterans diagnosed with PTSD.”

“If America fails to act now and overhaul the broken DoD and VA disability systems, there may a social catastrophe among many of our returning Iraq and Afghanistan war veterans. That is why VCS reluctantly filed suit against VA in Federal Court. ... Time is running out.”

Sullivan urged Congress to enact legislation to immediately overhaul the VA.

“Congress should legislate a presumption of service connection for veterans diagnosed [with] PTSD who deployed to a war zone after 9/11,” Sullivan said. “A presumption makes it easier for dedicated and hard-working VA employees to process veterans’ claims. This results in faster medical treatment and benefits for our veterans.”

Yet despite Sullivan’s dire predictions and calls for legislative action, the issue has not been given priority treatment by lawmakers. Instead, Congress continued to fund the war in Iraq to the tune of about $200 billion and will likely approve another $108 billion next month.

VA’s Backlog

Meanwhile, a backlog of veterans’ benefits claims continue to pile up at the VA.

The VA said it has hired more than 3,000 mental healthcare professionals over the past two years to deal with the increasing number of PTSD cases, but the problems persist.

In opening statements in the federal court case, Richard Lepley, a Justice Department attorney, defended the VA, calling its network of hospitals a "world-class healthcare system."

But Gordon Erspamer, the lead attorney representing the two veterans groups, said the VA has arbitrarily denied coverage to thousands of vets, that it takes nearly a year to decide whether it will provide coverage to veterans suffering from PTSD, and takes as long as four years to address veterans appeals cases.

“Seeking help from the Department of Veterans’ Affairs ... involves a two-track system,” according to the plaintiff’s trial brief. “A veteran will go to the Veterans’ Health Administration for diagnosis and medical care; and a veteran goes to the Veterans’ Benefits Administration to apply for service-connection and disability compensation.

“VA is failing these veterans as they move along both of these parallel tracks. They are not receiving the healthcare to which they are entitled (and where they do receive it, it is unreasonably delayed) and they are not able to get timely compensation for their disabilities, which means that they have no safety net.

“These two problems combine to create a perfect storm for PTSD veterans: they receive no treatment, so their symptoms get worse; and they receive no compensation, so they cannot go elsewhere for treatment. The failings of these two separate but interrelated systems are what this action seeks to address.”

The lawsuit alleges that numerous VA practices stemming from a 1998 law violate the constitutional and statutory rights of veterans suffering from PTSD by denying veterans mandated medical care.

Justice Department attorneys argued in court papers filed in March that Iraq and Afghanistan veterans were not "entitled" to the five years of free healthcare upon their return from combat as mandated by Congress in the "Dignity for Wounded Warriors Act."

Rather, the VA argued, medical treatment for the war veterans was discretionary based on the level of funding available in the VA’s budget.

But during a court hearing before U.S. District Court Judge Samuel Conti, Dr. Gerald Cross, principal deputy under-secretary for health at the Veterans Health Administration, said veterans of Iraq and Afghanistan were not only entitled to free healthcare, but he said, "there is no co-pay."

Warnings Ignored

Chris Scheuerman, a retired Special Forces masters sergeant, testified before a congressional committee in March that there is an urgent need for mental health reform in the military.

Scheuerman said his son, Pfc. Jason Scheuerman, went to see an Army psychologist because he had become suicidal.

The Army psychologist wrote up a report saying Jason Scheuerman “was capable of (faking) mental illness in order to manipulate his command,” according to documents the soldier’s father turned over to Congress.

“Jason desperately needed a second opinion after his encounter with the Army psychologist,” Chris Scheuerman testified before the Armed Services Committee’s Military Personnel Subcommittee.

“The Army did offer him that option, but at his own expense. How is a PFC (private first class) in the middle of Iraq supposed to get to a civilian mental healthcare provider at his own expense?” Scheuerman said.

“I believe a soldier should be afforded the opportunity to a second opinion via teleconference with a civilian mental healthcare provider of their own choice.”

Jason Scheuerman shot himself with a rifle on July 30, 2005. The 20-year-old’s suicide note said, “Maybe now I can get some peace.”

More Convicted Felons Allowed to Enlist in Army, Marines

Go to Original
By Lolita C. Baldor

Washington - Under pressure to meet combat needs, the Army and Marine Corps brought in significantly more recruits with felony convictions last year than in 2006, including some with manslaughter and sex crime convictions.

Data released by a congressional committee shows the number of soldiers admitted to the Army with felony records jumped from 249 in 2006 to 511 in 2007. And the number of Marines with felonies rose from 208 to 350.

Those numbers represent a fraction of the more than 180,000 recruits brought in by the active duty Army, Navy, Air Force and Marines during the fiscal year ending Sept. 30, 2007. But they highlight a trend that has raised concerns both within the military and on Capitol Hill.

The bulk of the crimes involved were burglaries, other thefts, and drug offenses, but nine involved sex crimes and six involved manslaughter or vehicular homicide convictions. Several dozen Army and Marine recruits had aggravated assault or robbery convictions, including incidents involving weapons.

Both the Army and Marine Corps have been struggling to increase their numbers as part of a broader effort to meet the combat needs of a military fighting wars on two fronts. As a result, the number of recruits needing waivers for crimes or other bad conduct has grown in recent years, as well as those needing medical or aptitude waivers.

House Oversight and Government Reform Committee Chairman Henry Waxman, who released the data, noted that there may be valid reasons for granting the waivers and giving individuals a second chance.

But he added, "Concerns have been raised that the significant increase in the recruitment of persons with criminal records is a result of the strain put on the military by the Iraq war and may be undermining military readiness."

The services use a waiver process to let in recruits with felony convictions, and many of the crimes were committed when the service members were juveniles.

For example, in several of the Marine sex crime cases, the offender was a teenager involved in consensual sex with another underage teen. In one Army case, a 13-year-old who threw a match into his school locker was charged with arson and had to receive a felony waiver six years later.

"Waivers are used judiciously and granted only after a thorough review," said Pentagon spokesman Lt. Col. Jonathan Withington.

He added that "low unemployment, a protracted war on terror, a decline in propensity to serve," and the growing reluctance of parents, teachers and other adults to recommend young people go into the military, has made recruiting a challenge.

According to the Army, 18 percent of the recruits needed conduct waivers in the fiscal year ending Sept. 30, 2007, compared to 15 percent in the 12-month period ending in Sept. 30, 2006.

"We are growing the Army fast and there are some waivers; we know that," said Army Lt. Gen. James D. Thurman, deputy chief of staff for operations. "It hasn't alarmed us yet."

He added that "the better part of making soldiers is about leadership. Somebody invested in me, you know. That's the beauty of the United States Army. It's about leadership ... You've got to give people an opportunity to serve."

Late last fall, the Pentagon quietly began looking for ways to make it easier for people with minor criminal records to join the military. The goal of that review is to make cumbersome waiver requirements consistent across the services - the Army, Marine Corps, Navy and Air Force - and reduce the number of petty crimes that now trigger the process.

According to the data released Monday, a bit more than half of the Army's 511 convictions in 2007 were for various types of thefts, ranging from burglaries to bad checks and stolen cars. Another 130 were for drug offenses.

The remainder, however, included two in 2007 for manslaughter, compared to one in 2006; five for sexual crimes (which can include rape, incest or sexual assaults) compared to two in 2006; and three for negligent or vehicular homicide, compared to two in 2006. Two received waivers for terrorist threats including bomb threats in 2007, compared to one in 2006.

At least 235 of the Marine Corps' 350 waivers were for various types of thefts in 2007, and another 63 were for assaults or robberies that may also have included use of a weapon. The remainder included one for manslaughter in 2007, compared to none in 2006; four for sex crimes, compared to one in 2006; and five for terror threats, including bomb threats, compared to two in 2006.

The total number of sailors who received felony waivers dipped from 48 in 2006 to 42 in 2007. Most were for a variety of thefts or drug and drunk driving convictions. Two in 2007 were for terror or bomb threats compared to three in 2006.

There were no Air Force recruits with waivers for felony convictions in 2007.

Waivers must be approved by an officer who is ranked as a brigadier general or above, and recruits must have written recommendations and endorsements from community leaders showing they would be a good bet for the military.

The Great Silence

Go to Original
By Steve Fraser

Our Gilded Age and Theirs

Google "second Gilded Age" and you will get ferried to 7,000 possible sites where you can learn more about what you already instinctively know. That we are living through a gilded age has become a journalistic commonplace. The unmistakable drift of all the talk about it is a Yogi Berra-ism: it’s a matter of déjà vu all over again. But is it? Is turn-of-the-century America a replica of the world Mark Twain first christened "gilded" in his debut bestseller back in the 1870s?

Certainly, Twain would feel right at home today. Crony capitalism, the main object of his satirical wit in The Gilded Age, is thriving. Incestuous plots as outsized as the one in which the Union Pacific Railroad’s chief investors conspired with a wagon-load of government officials, including Ulysses S. Grant’s vice president, to loot the federal treasury once again lubricate the machinery of public policy-making. A cronyism that would have been familiar to Twain has made the wheels go round in these terminal years of the Bush administration. Even the invasion and decimation of Iraq was conceived and carried out as an exercise in grand-strategic cronyism; call it cronyism with a vengeance. All of this has been going on since Ronald Reagan brought back morning to America.

Reagan’s America was gilded by design. In 1981, when the New Rich and the New Right paraded in their sumptuous threads in Washington to celebrate at the new president’s inaugural ball, it was called a "bacchanalia of the haves." Diana Vreeland, style guru (as well as Nancy Reagan confidante), was stylishly blunt: "Everything is power and money and how to use them both… We mustn’t be afraid of snobbism and luxury."

That’s when the division of wealth and income began polarizing so that, by every measure, the country has now exceeded the extremes of inequality achieved during the first Gilded Age; nor are our elites any more embarrassed by their Mammon-worship than were members of the "leisure class" excoriated a century ago by that take-no-prisoners social critic of American capitalism Thorstein Veblen.

Back then, it was about masquerading as European nobility at lavish balls in elegant hotels like New York’s Waldorf-Astoria, locked down to forestall any unpleasantness from the street (where ordinary folk were in a surly mood trying to survive the savage depression of the 1890s). Today’s "leisure class" is holed up in gated communities or houseoleums as gargantuan as the imported castles of their Gilded Age forerunners, ready to fly off -- should the natives grow restless -- to private islands aboard their private jets.

The Free Market as Melodrama

At the height of the first Gilded Age, William Graham Sumner, a Yale sociologist and the most famous exponent of Herbert Spencer’s theory of dog-eat-dog Social Darwinism, asked a good question: What do the social classes owe each other? Virtually nothing was the professor’s answer.

As in those days, there is today no end to ideological justifications for an inequality so pervasive that no one can really ignore it entirely. In 1890, reformer Jacob Riis published his book How the Other Half Lives. Some were moved by his vivid descriptions of destitution. In the late nineteenth century, however, the preferred way of dismissing that discomfiting reality was to put the blame on a culture of dependency supposedly prevalent among "the lower orders," particularly, of course, among those of certain complexions and ethnic origins; and the logical way to cure that dependency, so the claim went, was to eliminate publicly funded "outdoor relief."

How reminiscent of the "welfare to work" policies cooked up by the Clinton administration, an exchange of one form of dependency -- welfare -- for another -- low-wage labor. Poverty, once turned into the cultural and moral problem of the impoverished, exculpated Gilded Age economics in both the nineteenth and twenty-first centuries (and proved profitable besides).

Even now, there remains a trace of the old Social Darwinian rationale -- that the ascendancy of "the fittest" benefits the whole species -- and the accompanying innuendo that those consigned to the bottom of the heap are fated by nature to end up there. To that must be added a reinvigorated belief in the free market as the fairest (not to mention the most efficient) way to allocate wealth. Then, season it all with a bravura elevation of risk-taking to the status of spiritual, as well as economic, tonic. What you end up with is an intellectual elixir as self-congratulatory as the conscience-cleansing purgative that made Professor Sumner so sure in his cold-bloodedness.

Then, as now, hypocrisy and self-delusion were the final ingredients in this ideological brew. When it came to practical matters, neither the business elites of the first Gilded Age, nor our own "liquidators," "terminators," and merger and acquisition Machiavellians ever really believed in the free market or the enterprising individual. Then, as now, when push came to shove (and often way earlier), they relied on the government: for political favors, for contracts, for tax advantages, for franchises, for tariffs and subsidies, for public grants of land and natural resources, for financial bail-outs when times were tough (see Bear Stearns), and for muscular protection, including the use of armed force, against all those who might interfere with the rights of private property.

So too, while industrial and financial tycoons liked to imagine themselves as stand-alone heroes, daring cowboys on the urban-industrial-financial frontier, as a matter of fact the first Gilded Age gave birth to the modern, bureaucratic corporation -- and did so at the expense of the lone entrepreneur. To this day, that big business behemoth remains the defining institution of commercial life. The reigning melodrama may still be about the free market and the audacious individual, but backstage, directing the players, stands the state and the corporation.

Crony capitalism, inequality, extravagance, Social Darwinian self-justification, blame-the-victim callousness, free-market hypocrisy: thus it was, thus it is again!

At the end of the Reagan years, public intellectuals Kevin Phillips and Gary Wills prophesied that this state of affairs was insupportable and would soon end. Phillips, in particular, anticipated a populist rising. It did not happen. Instead, nearly 20 years later, the second Gilded Age is alive, if not so well. Why such longevity? The answer tells us something about how these two epochs, for all their striking similarities, are also profoundly unalike.

Missing Utopias and Dystopias

As a title, Apocalypse Now could easily have been applied to a movie made about late nineteenth century America. Whichever side you happened to be on, there was an overwhelming dread that the nation was dividing in two and verging on a second civil war, that a final confrontation between the haves and have-nots was unavoidable.

Irate farmers mobilized in cooperative alliances and in the Populist Party. Farmer-labor parties in states and cities from coast to coast challenged the dominion of the two-party system. Rolling waves of strikes, captained by warriors from the Knights of Labor, enveloped whole communities as new allegiances extended across previously unbridgeable barriers of craft, ethnicity, even race and gender.

Legions of small businessmen, trade unionists, urban consumers, and local politicians raged against monopoly and "the trusts." Armed workers’ militias paraded in the streets of many American cities. Business and political elites built massive urban fortresses, public armories equipped with Gatling guns (the machine guns of their day), preparing to crush the insurrections they saw headed their way.

Even today the names of Haymarket (the square in Chicago where, in 1886, a bombing at a rally of rebellious workers led to the legal lynching of anarchist leaders at the most infamous trial of the nineteenth century), Homestead (where, in 1892, the Monongahela River ran red with the blood of Pinkerton thugs sent by Andrew Carnegie and Henry Clay Frick to crush the strike of their steelmaking employees), and Pullman (the company town in Illinois where, in 1894, President Grover Cleveland ordered Federal troops to put down the strike of the American Railway Union against the Pullman Palace Car Company) evoke memories of a whole society living on the edge.

The first Gilded Age was a moment of Great Fears, but also of Great Expectations -- a period infatuated with a literature of utopias as well as dystopias. The two most successful novels of the nineteenth century, after Uncle Tom’s Cabin, were Edward Bellamy’s utopian Looking Backward and the horrific dystopia Caesar’s Column by Populist tribune Ignatius Donnelly. The latter reached its denouement when Donnelly’s fictional proletarian underground movement, the "Brotherhood of Destruction," marked its "triumph" with the erection of a giant pyramid composed of a quarter-million corpses of its enemy, "the Oligarchy" and its minions, cemented together and laced with explosives so that no one would dare risk removing them and destroying this permanent memorial to the barbarism of American industrial capitalism.

This end-of-days foreboding and the thirst for utopian release were not, moreover, confined to the ranks of agrarian or industrial trouble-makers. Before "Pullman" became a word for industrial serfdom and the Federal government’s bloody-mindedness, it was built by its owner, George Pullman, as a model industrial city, a kind of capitalist utopia of paternal benevolence and confected social harmony.

Everyone was seeking a way out, something wholly new to replace the rancor and incipient violence of Gilded Age capitalism. The Knights of Labor, the Populist Party, the anti-trust movement, the cooperative movements of town and country, the nation-wide Eight-Hour Day uprisings of 1886 which culminated in the infamy of the Haymarket hangings, all expressed a deep yearning to abolish the prevailing industrial order.

Such groups weren’t just angry; they weren’t merely resentful -- although they were that, too. They were disturbed enough, naïve enough, desperate enough, inventive enough, desiring enough, deluded enough -- some still drawing cultural nourishment from the fading homesteads and workshops of pre-industrial America -- to believe that out of all this could come a new way of life, a cooperative commonwealth. No one really knew what exactly that might be. Still, the great expectation of a future no longer subservient to the calculus of the marketplace and the capitalist workshop lent the first Gilded Age its special fission, its high (tragic) drama.

Fast-forward to our second Gilded Age and the stage seems bare indeed. No great fears, no great expectations, no looming social apocalypses, no utopias or dystopias -- just a kind of flat-line sense of the end of history. Where are all the roiling insurgencies, the break-away political parties, the waves of strikes and boycotts, the infectious communal upheavals, the chronic sense of enough is enough? Where are the earnest efforts to invoke a new order which, no matter how sketchy and full of unanswered questions, now seem as minutely detailed as the blueprints for a Boeing 747 compared to "yes we can"?

What’s left of mainstream populism exists on life-support in some attic of the Democratic Party. Even the language of our second Gilded Age is hollowed out. In a society saturated in Christian sanctimony, would anyone today describe "mankind crucified on a cross of gold" as William Jennings Bryan once did, or let loose against "Mammon worship," condemn aristocratic "parasites," or excommunicate "vampire speculators" and the "devilfish" of Wall Street? If nineteenth century evangelical preachers once pronounced anathema on capitalist greed, twenty-first century televangelists deify it. Tempers have cooled, leaving God, like many Americans, with only part-time employment.

The Great Silence

I exaggerate, of course. Movements do exist today to confront the inequities and iniquities of our own Gilded Age. Wall Street bandits are, once in a while, arrested by a sheriff. Some ministers, even born-again ones, do still preach the Social Gospel. But all this seems a pale shadow of what was. Something fundamental about the metabolism of capitalism has changed.

Perhaps the answer is simple and basic: The first Gilded Age rested on industrialization; the second on de-industrialization. In our time, a new system of dis-accumulation looted American industry, liquidating its assets to reward speculation in "fictitious capital." After all, the rate of investment in new plant, technology, and research and development all declined during the 1980s. For a quarter-century, the fastest growing part of the economy has been the finance, insurance, and real estate (FIRE) sector.

De-industrialization has set off an avalanche whose impact is still being felt in the economy, in the country’s political culture, and in everyday life. It laid the industrial working class and the labor movement low, killing it twice over. This, more than anything else, may account for the great silence of the second Gilded Age, when measured, at least, against the raucous noise of the first. Labor was mortally wounded by direct assault, beginning with President Reagan’s decision in 1981 to fire all the striking air traffic controllers. His draconian act licensed American business to launch its own all-out attack on the right to organize, which continues to this day.

In itself, however, resorting to coercion to deal with the opposition hardly distinguishes our own gilded elite from the first one. If anything, we live in less savage times, at least here at home. More fatal by far was the arrival of a new mode of capital accumulation, starkly different from the one that had prevailed a century ago. It eviscerated towns, cities, regions, and whole ways of life. It demoralized people, hollowed out popular institutions that had once offered resistance, and stoked the fires of resentment, racism, and national revanchism. Here was the raw material for mean-spirited division, not solidarity.

Dis-accumulation transformed the working class into a disaggregated pool of contingent labor, contract labor, temporary labor, and part-time labor, all in the interests of a new "flexible capitalism." Ideologues gussied-up this floating workforce by anointing it "free agent" labor, a euphemism designed to flatter the free market homunculus in each of us -- and, for a time, it worked. But the resulting reality has proved a bitter pill to swallow. To be a "free agent" today is to be free of health care, pensions, secure jobs, security in every sense. In our gilded era, downward mobility, lasting a quarter-century and still counting, has marked the social trajectory of millions of people living in the American heartland.

Dis-accumulating capitalism also undermined the political gravitas of poverty. In the first Gilded Age, poverty was a function of exploitation; in the second, of exclusion or marginalization. When we think about poverty, what comes to mind is welfare and race. The first gilded age visualized instead coal miners, child labor, tenement workshops, and the shantytowns that clustered around the steel mills of Aliquippa and Homestead.

Poverty arising out of exploitation ignited widespread moral revulsion and a robust political assault on the power of the exploiters. The perpetrators of the poverty of exclusion of our own time have been trickier to identify. In his 1962 book The Other America, Michael Harrington noted the invisibility of poverty. That was half a century ago and misery still lives in the shadows. Helped along by an ingrained racism, poverty in the second Gilded Age was politically neutered… or worse.

Decline, dispossession, and marginalization: a grim scenario. Yet the new political economy of finance-based dis-accumulation also announced itself as the second coming of democratic capitalism. And in the realm of the collective imaginary, if not in reality, it convinced millions.

The Myth of Democratic Capitalism

Aristocrats don’t exist anymore, but it is remarkable how long they lasted as major actors in the country’s political dramaturgy. Franklin Delano Roosevelt was still denouncing "economic royalists" and "tories of industry" at the height of the New Deal. The struggle against the counter-revolutionary aristocrat, seen to be subverting the institutions of democratic life, piling up unearned riches, supplied the energy powering American reform for generations. In real life, the robber baron industrialists and financiers of Wall Street were no more aristocrats than my grandma from the shtetl. They were parvenus.

For their own good reasons, however, they actively conspired in this popular misperception by playing the aristocratic role for all it was worth. In hindsight, what looks like one of the silliest utopias of the first Gilded Age was enacted by these nouveaux riches, performing in tableaux vivants at gala balls dressed in aristocratic drag, or cavorting in the castles and villas they had transported stone by stone from France and Italy, or showing off at the weddings of their daughters to the offspring of bankrupt European nobility, or parading to New York’s Metropolitan Opera in coaches driven by liveried servants and embossed with their family’s "coat of arms," complete with hijacked insignia and faked genealogies that concealed their owners’ homelier origins.

We may laugh at all this now. Back then, for millions, these aristocratic pretensions confirmed an ancient Jeffersonian suspicion: Capitalists were nothing more or less than camouflaged aristocrats. And mobilizing to rescue the republic and democracy from such a danger was practically an indigenous instinct. However, pushing beyond this horizon of political democracy in the direction of social democracy is a different matter entirely, arousing anxiety about threatening the understructure of private property which is, after all, also part of the American dream. Having an aristocracy to kick around, even an ersatz one, can be politically empowering.

Minus the oddball exception or two, the new tycoonery of the second Gilded Age does not fancy itself an aristocracy. It does not dress up like one or marry off its daughters to fortune-hunting European dukes and earls. On the contrary, its major figures regularly dress down in blue jeans and cowboy hats, affecting a down-home populism or nerdy dishevelment. However addicted to the paraphernalia of flamboyant excess they may be, the new capitalist elite does not pretend these are the insignia of ruling class entitlement.

Once upon a gilded time, the lower orders aped the fashions and manners of their putative betters; today it’s the other way around. Indeed, it is no longer even apt to talk of a "leisure class," since our moguls of the moment are workaholics, Olympians of the merger-and-acquisition all-nighter.

Although the economic and political throw-weight of our gilded elite is at least as great as that of its predecessors in the days of J.P. Morgan and John D. Rockefeller, an American fear of a moneyed aristocracy has subsided accordingly. Instead, from the Reagan era on, Americans have been captivated by businessmen who took on the rebel role against a sclerotic corporate order and an ossified government bureaucracy that, together, were said to be blocking access to a democracy of the bold.

Often men from the middling classes, lacking in social pedigree, the overnight elevation of people like Michael Milken, Carl Ichan, or "greed is healthy" Ivan Boesky, flattered and confirmed a popular faith in the American dream. These irreverent new "revolutionaries," intent on overthrowing capitalism in the interests of capitalism, made fun of the men in pin-striped suits.

When the captains of industry and finance lorded it over the country in the late nineteenth century, no one dreamed of calling them rebels against an overweening government bureaucracy or an entrenched set of "interests." There was then no government bureaucracy, and tycoons like Russell Sage and Jay Gould were "the interests." They worried about being overthrown, not overthrowing someone else.

Our corporate elite are much more adept than their Gilded Age predecessors were at playing the democracy game. The old "leisure class" was distinctly averse to politics. If they needed a tariff or tax break, they called up their kept Senator. When mortally challenged by the Populists and William Jennings Bryan in 1896, they did get involved; but, by and large, they didn’t muck about in mass party politics which they saw as too full of uncontrollable ethnic machines, angry farmers, and the like. They relied instead on the Federal judiciary, business-friendly Presidents, constitutional lawyers, and public and private militias to protect their interests.

Beginning in the 1970s, our age’s business elite became acutely politically-minded and impressively well-organized, penetrating deeply all the pores of party and electoral democracy. They’ve gone so far as to craft strategic alliances with elements of what their nineteenth century predecessors -- who might have blanched at the prospect -- would have termed the hoi polloi. Calls to dismantle the federal bureaucracy now carry a certain populist panache, while huffing and puffing about family values has -- so far -- proven a cheap date for a gilded elite that otherwise generally couldn’t care less.

Moreover, the ascendancy of our faux revolutionaries has been accompanied by media hosannas to the stock market as an everyman’s Oz. America’s long infatuation with its own democratic-egalitarian ethos lent traction to this illusion.

Horace Greely’s inspirational admonition to "go West young man" echoed through all the channels of popular culture in the 1990s -- from cable TV shows and mass circulation magazines to baseball stadium scoreboards and Internet chat rooms. Only now Greeley’s frontier of limitless opportunity had migrated back East to the stock exchange and into the ether of virtual or dot.com reality. The culture of money released from all ancient inhibitions enveloped the commons.

"Shareholder democracy" and the "ownership society" are admittedly more public relations slogans than anything tangible. Nonetheless, you can’t ignore the fact that, during the second Gilded Age, half of all American families became investors in the stock market. Dentists and engineers, mid-level bureaucrats and college professors, storekeepers and medical technicians -- people, that is, from the broad spectrum of middle class life who once would have viewed the New York Stock Exchange with a mixture of awe, trepidation, and genuine distaste, and warily kept their distance -- now jumped head first into the marketplace carrying with them all their febrile hopes for social elevation.

As Wall Street suddenly seemed more welcoming, fears about strangulating monopolies died. Dwindling middle-class resistance to big business accounts for the withering away of the old anti-trust movement, a telling development in the evolution of our age’s particular form of "big-box" capitalism. Once, that movement had not only expressed the frustrated ambitions of smaller businessmen, but of all those who felt victimized by monopoly power. It embodied not just the idea of breaking up the trusts, but of competing with or replacing them with public enterprises.

Long before the Reagan counter-revolution defanged the whole regulatory apparatus, however, the "anti-trust" movement was over and done with. Its absence from the political landscape during the second Gilded Age marks the demise of an older middle-class world of local producers, merchants, and their customers who were once bound together by the ties of commerce and the folk truths of small town Protestantism.

Big-box capitalism, the capitalism of Wal-Mart, still incites local uproars that carry a hint of that anti-trust past, but oppositional forces are divided. The capitalism of which Wal-Mart is emblematic generates a dissonant universe of political and cultural desires. It appeals, first of all, to instincts of individual and family material wellbeing which may run up against calls for a wider social solidarity. Moreover, in its own everyday way consumer culture -- more far-reaching than anything imaginable a century ago -- channels desire into forms of expressive self-liberation. Grand narratives that tell a story of collective destiny -- Redemption, Enlightenment, and Progress, the Cooperative Commonwealth, Proletarian Revolution -- don’t play well in this refashioned political theater.

The End of the Age of Acquiescence?

However, the wheel turns. The capitalism of the Second Gilded Age now faces a systemic crisis and, under the pressure of impending disaster, may be headed back to the future. Old-fashioned poverty is making a comeback. Arguably, the global economy, including its American branch, is increasingly a sweatshop economy. There is no denying that brute fact in Thailand, China, Vietnam, Central America, Bangladesh, and dozens of other countries and regions that serve as platforms for primitive accumulation. Hundreds of millions of peasants have become proletarians virtually overnight.

Here at home, something analogous has been happening, but with an ironic difference and bearing within it a new historic opportunity. One might call it the unhorsing of the middle class.

During the first Gilded Age, the sweatshop seemed a noxious aberration. It lawlessly offered irregular employment at sub-standard wages for interminable hours. It was ordinarily housed helter-skelter in a make-shift workshop that would be here today, gone tomorrow. It was an underground enterprise that regularly absconded with its workers’ paychecks and made chiseling them out of their due into an art form.

Today, what once seemed abnormal no longer does. The planet’s peak corporations depend on this system. They have thrived on it. True enough, it has also encouraged the proliferation of petty enterprises -- sub-contractors, consulting firms, domestic service companies -- fertilizing the soil in which our age of democratic capitalism is rooted. But the ubiquity of the sweated economy promises to alter the nation’s political chemistry.

Many of the newly flexible proletarians working for Wal-Mart, for auto parts or construction company sub-contractors, on the phones at direct mail call centers, behind the counters at mass market retailers, earn a dwindling percentage of what they used to. Even new hires at the Big Three automobile manufacturers will now make a smaller hourly wage than their grandfathers did in 1948. So too, the relative job security such employees once enjoyed is gone, leaving them vulnerable to the "lean and mean" dictates of the new capitalism: double or triple work loads; or, even worse, part-time work, work always shadowed by indignity and fear; or, worse yet, no work at all.

Meanwhile, the white collar Tomorrowland of "free agent" techies, software engineers, and the like -- not to mention a whole endangered species of middle management -- lives a precarious existence, under intense stress, chronically anticipating the next round of lay-offs. Yet many of them were once upon a time members in good standing of the "middle class." Now, they find themselves on the down escalator, descending into a despised state no one could mistake for middle class life.

"Flexible accumulation" joins this dispossession of the middle class to the super-exploitation of millions who never laid claim to that status. Many of these sweated workers are women, laboring away as home health care aides, in the food services industry, in meat processing plants, at hotels and restaurants and hospitals, because the arithmetic of "flexible accumulation" demands two workers to add up to the livable family wage not so long ago brought home by a single wage earner.

Millions more are immigrants, legal as well as undocumented, from all over the world. They live, virtually defenseless, in a twilight underworld of illegality and prejudice. Thanks to all this, the category of the "working poor" has reentered our public vocabulary. Once again, as during the first Gilded Age, poverty seems a function of exploitation at work, not only the lot of those excluded from work.

Might these developments augur the end of our second Gilded Age; or rather the end of the age of acquiescence? No one can know. Yet anger and resentment over insecurity, downward mobility, exploitation, second-class citizenship, and the ill-gotten gains of our Gilded Age mercenaries and their political enablers already rippled the political waters during the mid-term elections of 2006. This primary season has witnessed a discernable leftward shift of the center of gravity within even the cowed leadership ranks of the Democratic Party, a shift driven in large measure by the sub-prime mortgage collapse and the ominous rumblings of severe recession.

Anger and resentment, however, do not by themselves comprise a visionary alternative. Nor is the Democratic Party, however restive, a likely vehicle of social democratic aspirations. Much more will have to happen outside the precincts of electoral politics by way of mass movement building to translate these smoke signals of resistance into something more muscular and enduring. Moreover, nasty competition over diminishing economic opportunities can just as easily inflame simmering racial and ethnic antagonisms.

Nonetheless, the current break-down of the financial system is portentous. It threatens a general economic implosion more serious than anyone has witnessed for many decades. Depression, if that is what it turns out to be, together with the agonies of a misbegotten and lost war no one believes in any longer, could undermine whatever is left of the threadbare credibility of our Gilded Age elite.

Legitimacy is a precious possession; once lost it’s not easily retrieved. Today, the myth of the "ownership society" confronts the reality of the "foreclosure society." The great silence of the second Gilded Age may give way to the great noise of the first.

Steve Fraser is working on a book about the two gilded ages. A Tomdispatch regular, he is the author of, among other works, the just published Wall Street: America’s Dream Palace. He is Editor-at-Large of New Labor Forum magazine.

Life Expectancy Falls in Poorer US Counties: Study

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By Maggie Fox

Washington - Life expectancy may have reached an all-time high for the United States, but it is declining in many poor counties, especially among women, researchers reported on Monday.

Smoking, obesity and high blood pressure are taking the lives of women in Appalachia, Mississippi River states and parts of Texas, a team at Harvard School of Public Health reported.

"There has been increasing disparity in health in the U.S. population for two decades," said Majid Ezzati of the school's department of population and international health, who led the study.

"The people who are worst off are either not getting better or are worse off" than they had been, Ezzati added in a telephone interview.

Last September, the U.S. Centers for Disease Control and Prevention reported that U.S. life expectancy had risen to almost 78 years in 2005 - up from 75.8 years in 1995 and 69.6 years in 1955. The United States ranks around 42nd in the world in life expectancy.

The CDC noted that U.S. whites will live longer than blacks, and women longer than men. But Ezzati found many exceptions to this rule.

"Female mortality increased in a large number of counties, primarily because of chronic diseases related to smoking, overweight and obesity, and high blood pressure," the researchers wrote in the Public Library of Science journal PLoS Medicine.

Ezzati and colleagues analyzed death rates in all counties of the U.S. states from 1961 to 1999.

Inching Back Up

Overall U.S. life expectancy increased mostly because of fewer deaths from heart disease, the No. 1 cause of death, and stroke. But by the 1980s, death rates started to head back up in many counties.

"The majority of these counties were in the Deep South, along the Mississippi River, and in Appalachia, extending into the southern portion of the Midwest and into Texas," Ezzati's team wrote.

"The rise in all-cause mortality was caused by an increase in cancers, diabetes, COPD (chronic obstructive pulmonary disease, mostly emphysema), and a reduction in the rate of decline of cardiovascular diseases," they wrote.

"There was also an important influence of HIV/AIDS and homicide among men."

Ezzati said the worst-affected counties had other troubles, such as lower levels of educational achievement.

"One of the questions we are asking is whether our ranking in the world is getting increasingly worse because we are not doing a good job of taking care of the worst-off," Ezzati said.

"To have 20 years of decline for about one out of five American women, it is something that is rather unprecedented," he added. "We are leaving a larger and larger part of the population behind."

While many of the worst-affected counties had a high black population, Ezzati found that white populations in poorer counties fared worse that whites elsewhere, too.

"It exists above and beyond race," he said.

"Life expectancy decline is something that has traditionally been considered a sign that the health and social systems have failed, as has been the case in parts of Africa and Eastern Europe," said Christopher Murray of the University of Washington, who worked on the study.

"The fact that is happening to a large number of Americans should be a sign that the U.S. health system needs serious rethinking."

White House Defends NAFTA as Bush Meets With Heads of Mexico, Canada

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By Michael Abramowitz

New Orleans - With the North American Free Trade Agreement taking a pounding on the campaign trail, President Bush met here Monday with the leaders of Mexico and Canada to defend the pact and to seek new ways to cooperate on border, economic and regulatory issues.

After meeting with Bush, Mexican President Felipe Calderón touched on the recent criticism of NAFTA from both Sens. Hillary Rodham Clinton (D-N.Y.) and Barack Obama (D-Ill.), who have promised to revisit the treaty if elected president.

Without mentioning the candidates by name, Calderón said, "I do not believe that people are realizing how many benefits NAFTA has brought both to the United States and to Mexico." He said the agreement has meant more jobs and economic growth and is "decreasing the flow of immigration."

White House aides have also defended the trade pact in recent days. "We want to find ways to, frankly, convince the American people ... that this is an arrangement that's worked for us, and it's also worked for our neighbors," Dan Fisk, the top White House staffer on Latin America, said before the summit. "There's nothing broken. Why fix a success?"

The two-day meeting here is the fourth in what has become an annual summit among the leaders of the three nations. Bush met separately with Canadian Prime Minister Stephen Harper, and the three heads of state were planning to dine together Monday evening.

Relations between the United States and its two neighbors have been good in recent years, with both Calderón and Harper sharing Bush's devotion to free trade and, in Canada's case, the commitment to the war in Afghanistan. But the Mexican side has been disappointed that Bush has not liberalized the U.S. immigration system, a big priority for Calderón and his predecessor, Vicente Fox.

After their meeting Monday, Bush called for U.S. congressional approval of a $550 million package to help Mexico fight drug traffickers who have threatened to destabilize the country in recent years. A House Democratic aide said the package is likely to pass this year, possibly as part of the funding bill for the war in Iraq.

By far the most sensitive topic in the trilateral relationship is trade, which amounts daily to a three-way exchange of about $2.5 billion in goods and services, Fisk said.

Both Democratic candidates have said they would try to amend NAFTA to better protect the environment and labor rights. Obama has said he was against the 1994 agreement from the start; Clinton says that she, too, was a critic, though she says she muted that criticism because she was part of the administration of her husband, who pushed the agreement through Congress.

Thomas J. Donahue, president of the U.S. Chamber of Commerce, who is attending the meeting, said he believes that the candidates have softened their rhetoric because they are fishing for votes in Pennsylvania, which he said is a big exporter of goods to Mexico and Canada. In the end, he said, "I don't think we are going to screw up the NAFTA deal."

Clueless in America

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By Bob Herbert

We don’t hear a great deal about education in the presidential campaign. It’s much too serious a topic to compete with such fun stuff as Hillary tossing back a shot of whiskey, or Barack rolling a gutter ball.

The nation’s future may depend on how well we educate the current and future generations, but (like the renovation of the nation’s infrastructure, or a serious search for better sources of energy) that can wait. At the moment, no one seems to have the will to engage any of the most serious challenges facing the U.S.

An American kid drops out of high school every 26 seconds. That’s more than a million every year, a sign of big trouble for these largely clueless youngsters in an era in which a college education is crucial to maintaining a middle-class quality of life — and for the country as a whole in a world that is becoming more hotly competitive every day.

Ignorance in the United States is not just bliss, it’s widespread. A recent survey of teenagers by the education advocacy group Common Core found that a quarter could not identify Adolf Hitler, a third did not know that the Bill of Rights guaranteed freedom of speech and religion, and fewer than half knew that the Civil War took place between 1850 and 1900.

“We have one of the highest dropout rates in the industrialized world,” said Allan Golston, the president of U.S. programs for the Bill and Melinda Gates Foundation. In a discussion over lunch recently he described the situation as “actually pretty scary, alarming.”

Roughly a third of all American high school students drop out. Another third graduate but are not prepared for the next stage of life — either productive work or some form of post-secondary education.

When two-thirds of all teenagers old enough to graduate from high school are incapable of mastering college-level work, the nation is doing something awfully wrong.

Mr. Golston noted that the performance of American students, when compared with their peers in other countries, tends to grow increasingly dismal as they move through the higher grades:

“In math and science, for example, our fourth graders are among the top students globally. By roughly eighth grade, they’re in the middle of the pack. And by the 12th grade, U.S. students are scoring generally near the bottom of all industrialized countries.”

Many students get a first-rate education in the public schools, but they represent too small a fraction of the whole.

Bill Gates, the founder of Microsoft, offered a brutal critique of the nation’s high schools a few years ago, describing them as “obsolete” and saying, “When I compare our high schools with what I see when I’m traveling abroad, I am terrified for our work force of tomorrow.”

Said Mr. Gates: “By obsolete, I don’t just mean that they are broken, flawed or underfunded, though a case could be made for every one of those points. By obsolete, I mean our high schools — even when they’re working as designed — cannot teach all our students what they need to know today.”

The Educational Testing Service, in a report titled “America’s Perfect Storm,” cited three powerful forces that are affecting the quality of life for millions of Americans and already shaping the nation’s future. They are:

• The wide disparity in the literacy and math skills of both the school-age and adult populations. These skills, which play such a tremendous role in the lives of individuals and families, vary widely across racial, ethnic and socioeconomic groups.

• The “seismic changes” in the U.S. economy that have resulted from globalization, technological advances, shifts in the relationship of labor and capital, and other developments.

• Sweeping demographic changes. By 2030, the U.S. population is expected to reach 360 million. That population will be older and substantially more diverse, with immigration having a big impact on both the population as a whole and the work force.

These and so many other issues of crucial national importance require an educated populace if they are to be dealt with effectively. At the moment we are not even coming close to equipping the population with the intellectual tools that are needed.

While we’re effectively standing in place, other nations are catching up and passing us when it comes to educational achievement. You have to be pretty dopey not to see the implications of that.

But, then, some of us are pretty dopey. In the Common Core survey, nearly 20 percent of respondents did not know who the U.S. fought in World War II. Eleven percent thought that Dwight Eisenhower was the president forced from office by the Watergate scandal. Another 11 percent thought it was Harry Truman.

We’ve got work to do.

Out of the Way, Peasants

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By Steven Greenhut

Readers have been shocked to learn that California has about 1 million citizens who are literally above the law. Members of this group, as a Register front-page article April 6 detailed, can drive their cars as fast as they choose. They can drink a six-pack of beer at a bar and then get behind the wheel and weave their way home. They can zoom in and out of traffic, run traffic lights, roll through stop signs and ignore school crossing zones. They can ride on toll roads for free, park in illegal spots and drive on High Occupancy Vehicle lanes even if they have no passengers in the car with them. Chances are they will never have to pay a fine or get a traffic citation.

They are a special class of people, basically exempt from the laws the rest of us must follow. This isn't a small number, either. Drivers of one of every 22 California cars and light trucks on the road have this special immunity, which should cause our government leaders and law enforcement authorities – always eager to protect us from any perceived problem – to demand a fix to this real public safety threat. Think about what this means: a million drivers who can endanger our lives with near impunity. I can hear it now: "There ought to be a law!"

But instead of pushing for a fix, most legislators are trying to expand the program so that even more people can have the special "we're above the law" license plates. What gives? The answer is sickeningly obvious. The Special People are those who work for law enforcement or other government agencies or are their family members.

Now you get it. Government officials are zealous about dealing with problems caused by average citizens, but they are far less interested in dealing with the excesses of fellow members of the privileged, government elite. There are rules for "us" and rules for "them" – us being the subjects and them being the rulers. Feel free to pound the table in anger now!

How did we get to this sorry place?

In 1978, the state started a program to protect the confidentiality of peace officers so members of the public couldn't find their addresses on Department of Motor Vehicle databases. Over the years, the program has been expanded from one set of government workers to another. It now applies to corrections employees, social workers, nonsworn personnel who work in juvenile halls, parole officers, parking enforcement employees and on and on. Even county supervisors, city attorneys and city council members can be exempt from the state's traffic laws.

Even after the Register article exposed this outrageous situation, an Assembly committee voted to expand this special privilege to firefighters, animal control officers and veterinarians. Assemblyman Mike Duvall, R-Yorba Linda, explained his vote to the Register in this way: "I don't want to say no to the firefighters and veterinarians that are doing these things that need to be protected." That attitude explains why our society is moving in this direction. No one – not even a self-proclaimed believer in limited government – will stand up to groups of workers who have become as demanding, self-righteous and arrogant as those found in the French bureaucracy.

Americans used to be better schooled in the views of our nation's founders, who believed that government should be strictly limited and highly accountable. The Constitution, after all, is designed to protect the People from their rulers. These days, and especially after 9/11, Americans have become compliant and dangerously obedient to the authorities. Hence, they keep getting rolled. You know something's amiss when museum security guards, court workers, DMV employees and retired parking officers are part of the special-license caste.

The special-plate program works this way: The addresses are kept secret, so toll-road operators and parking enforcement cannot easily track down violators. The Transportation Corridor Agencies, which runs the toll roads, does not legally have access to the confidential addresses. The Orange County Transportation Authority has to go through additional hoops to get the addresses and admittedly doesn't pursue toll violations too zealously.

In one instance reported by the Register, one couple had racked up almost $35,000 in penalties from OCTA for driving on toll roads without paying. Regarding moving violations, when police see these special plates they either don't pull the drivers over or they don't ticket them if they do. The cops call this "professional courtesy." Officers know that those with the special plates are "their own," and officers are quite open about refusing to ticket other members of the Brotherhood. They scratch each other's back. "It's a courtesy, law enforcement to law enforcement," Sgt. Tom Lee of the San Francisco Police Department, told the Register. "We let it go."

Well, such "courtesies" are functions of police states, not free societies. In a free society, the government serves the people. No one is supposed to be above the law, not even animal control officers and their spouses. Assemblyman Todd Spitzer, R-Orange, calls the situation immoral, unfair and unethical. He has proposed legislation that would limit the practice. Spitzer deserves kudos for this effort, but I wouldn't expect the legislation to go far given the deference afforded public-sector union members and law enforcement in the state Capitol.

The whole thing is a scam. This confidentiality of plates is defended on grounds of safety – even though there's no example of anyone's safety having been jeopardized and even though so many of the workers who receive the protections are not in even remotely dangerous professions. Plus, the original rationale for the protection has evaporated. As the Register noted, "updated laws have made all DMV information confidential to the public."

Pound that table again!

Wouldn't it be nice if the government, for once, put the public's safety above the concerns of its own workers and its own bureaucratic prerogatives? These days, the focus always seems to be on the safety of the government workers (FYI, no government job is in the top 10 list of most-dangerous occupations), even though the government's entire raison d'être (hey, French is appropriate, given the subject matter) is to protect us. Public-choice theory is correct – government workers function mainly to promote their own self-interest, and not to promote what some naïvely believe to be the public good.

Sadly, as the government expands, America is becoming a society where the public "servants" are now the masters. Government workers earn higher salaries than their cohorts in the private sector and far higher benefits – with a massive public unfunded liability (debt) as a result. The taxpayer eventually will be forced to clean up the fiscal mess. These same government employees have special protections from accountability. There's the Peace Officers' Bill of Rights, civil service protections and government unions, the last of which instill fear and trepidation into the hearts of politicians.

And now we learn that members of this coddled and powerful group (and their family members) don't even need to follow the basic traffic laws that apply to the rest of us. If you're not angry, then you must be a member of the special caste.