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By Brent Budowsky
Before leaving office George W. Bush will issue a mass pardon, the largest collection of presidential pardons in American history. Bush will pardon himself, Vice President Cheney, and a long list of officials involved in torture, eavesdropping, destruction of evidence, the CIA leak case and a range of potential crimes.
As George Bush signs the pardons and boards the helicopter to depart Washington as his presidency finally ends, even then, he and those pardoned will worry about the statute of limitations.
There is an important point to this, often not recognized in official Washington during the Bush years, where the unthinkable becomes a way of life, and acts have been done that have never been done by an American president or administration.
Torture violates international law, domestic law, statutory law, customary law, American law, European law — the list goes on.
Eavesdropping without court order violates a statute, FISA, that includes severe criminal penalties. If the courts ultimately conclude that these laws were broken, as I predict they ultimately will, considering the number of individual violations, and the penalties for each violation, the potential sentencing liability for anyone convicted would be huge.
On the destruction of evidence, disappearing e-mails, claims of executive privilege that I predict will be clearly rejected by the Supreme Court after Bush has departed, arguably false testimony to Congress, attempts to cover up actions that violate the law, the list, again, goes on.
There will be a huge legal debate about the ability of a president to issue pardons so sweeping in their language that they cover all these potential areas of legal liability, and very possibly, it cannot be done.
As we approach the election, leaks will increase as they did prior to the 2006 election, from within the administration, about these matters and others. Legal scholars will debate the legality of a mass pardon.
Congress should pursue every pending and possible legal challenge to claims of executive privilege so completely untenable under the law that even some conservative Supreme Court justices will refuse to uphold them, as conservative justices joined liberals ruling against Richard M. Nixon.
I predict a series of historic Supreme Court cases that will defeat most of the Bush executive privilege claims and permanently end attempts for royalist interpretations of the law that the Bush years embody.
The fact that Bush attempted to seize power in ways that negate the legislative and judicial branches of government, and the fact that Congress was not heroic in defending its rightful place in the separation of powers, do not change the fact that what is illegal is illegal.
This is not merely a liberal issue. There are many authentic conservatives, true Barry Goldwater Republicans, genuine libertarians, honorable strict constructionist conservative jurists and legal scholars who agree entirely that on occasions George Bush has attempted and at times executed seizures of executive power that violate the American Constitution and American statutes.
Get ready for mass pardons.
Get ready for the long-held precedents of American law to be ultimately if belatedly upheld as spurious claims of executive privilege, to be be rejected even by some conservative justices of the Supreme Court.
Get ready for a long-overdue debate that has barely begun and will be triggered by the mass pardons that will be the last sorry act of the presidency of George W. Bush.
Because it will be legally almost impossible to issue mass pardons so sweeping and universal they would cover every possible offense, get ready for the words "statute of limitations" to enter our public dialogue by January of 2009 as a new president assumes office and the Bush years, finally, are over.
Monday, July 28, 2008
Bush Forced al-Maliki to Back Down on Pullout in 2006
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By Gareth Porter
Many official and unofficial proponents of a long-term U.S. military presence in Iraq are dismissing Iraqi Prime Minister Nouri al-Maliki's demand for a U.S. timeline for withdrawal as political posturing, assuming that he will abandon it under pressure.
But that demand was foreshadowed by an episode in June 2006 in which al-Maliki circulated a draft policy calling for negotiation of just such a withdrawal timetable and the George W. Bush administration had to intervene to force the prime minister to drop it.
The context of al-Maliki's earlier advocacy of a timetable for withdrawal was the serious Iraqi effort to negotiate an agreement with seven major Sunni armed groups that had begun under his predecessor Ibrahim al-Jaafari in early 2006. The main Sunni demand in those talks had been for a timetable for full withdrawal of U.S. troops.
Under the spur of those negotiations, al-Jaafari and Iraqi national security adviser Mowaffak al-Rubaei had developed a plan for taking over security in all 18 provinces of Iraq from the United States by the end of 2007. During his first week as prime minister in late May, al-Maliki referred twice publicly to that plan.
At the same time al-Maliki began working on a draft "national reconciliation plan", which was in effect a road map to final agreement with the Sunni armed groups. The Sunday Times of London, which obtained a copy of the draft, reported Jun. 23, 2006 that it included the following language:
"We must agree on a time schedule to pull out the troops from Iraq, while at the same time building up the Iraqi forces that will guarantee Iraqi security, and this must be supported by a United Nations Security Council decision."
That formula, linking a withdrawal timetable with the buildup of Iraqi forces, was consistent with the position taken by Sunni armed groups in their previous talks with U.S. Ambassador Zalmay Khalilzad, which was that the timetable for withdrawal would be "linked to the timescale necessary to rebuild Iraq's armed forces and security services". One of the Sunni commanders who had negotiated with Khalilzad described the resistance position in those words to the London-based Arabic-language Alsharq al Awsat in May 2006.
The Iraqi government draft was already completed when Bush arrived in Baghdad Jun. 13 without any previous consultation with al-Maliki, giving the Iraqi leader five minutes' notice that Bush would be meeting him in person rather than by videoconference.
The al-Maliki cabinet sought to persuade Bush to go along with the withdrawal provision of the document. In his press conference upon returning, Bush conceded that Iraqi cabinet members in the meeting had repeatedly brought up the issue of reconciliation with the Sunni insurgents.
In fact, after Bush had left, Vice President Tariq al-Hashimi, a Sunni, said he had asked Bush to agree to a timetable for withdrawal of all foreign forces. Then President Jalal Talabani, a Kurd, released a statement of support for that request.
Nevertheless, Bush signaled his rejection of the Iraqi initiative in his Jun. 14 press conference, deceitfully attributing his own rejection of a timetable to the Iraqi government. "And the willingness of some to say that if we're in power we'll withdraw on a set timetable concerns people in Iraq," Bush declared.
When the final version of the plan was released to the public Jun. 25, the offending withdrawal timetable provision had disappeared. Bush was insisting that the al-Maliki government embrace the idea of a "conditions-based" U.S. troop withdrawal. Khalilzad gave an interview with Newsweek the week the final reconciliation plan was made public in which he referred to a "conditions-driven roadmap".
Washington Post columnist David Ignatius further revealed in a Jun. 28 column that Khalilzad had told him that Gen. George Casey, then commander of the Multi-National Force - Iraq, was going to meet with al-Maliki about the formation of a "joint U.S.-Iraqi committee" to decide on "the conditions related to a road map for an ultimate withdrawal of U.S. troops". Thus al-Maliki was being forced to agree to a negotiating body that symbolised a humiliating dictation by the occupying power to a client government.
The heavy pressure that had obviously been applied to al-Maliki on the issue during and after the Bush visit was resented by al-Maliki and al-Rubaie. The Iraqi rancor over that pressure was evident in the op-ed piece by al-Rubaei published in the Washington Post a week after Bush's visit.
Although the article did not refer directly to al-Maliki's reconciliation plan and its offer to negotiate a timetable for withdrawal, the very first line implied that the issue was uppermost in the Iraqi prime minister's mind. "There has been much talk about a withdrawal of U.S. and coalition troops from Iraq," wrote al-Rubaie, "but no defined timeline has yet been set."
Al-Rubaei declared "Iraq's ambition to have full control of the country by the end of 2008". Although few readers understood the import of that statement, it was an indication that the al-Maliki regime was prepared to negotiate complete withdrawal of U.S. troops by the end of 2008.
Then the national security adviser indicated that the government already had its own targets for the first two phases of foreign troop withdrawal: withdrawal of more than 30,000 troops to under 100,000 foreign troops by the end of 2006 and withdrawal of "most of the remaining troops" -- i.e., to less than 50,000 troops -- by end of the 2007.
The author explained why the "removal" of foreign troops was so important to the Iraqi government: it would "remove psychological barriers and the reason that many Iraqis joined the resistance in the first place"; it would also "allow the Iraqi government to engage with some of our neighbours that have to date been at the very least sympathetic to the resistance..." Finally, al-Rubaie asserted, it would "legitimise the Iraqi government in the eyes of its own people."
He also took a carefully-worded shot at the Bush administration's actions in overruling the centrepiece of Iraq's reconciliation policy. "While Iraq is trying to gain independence from the United States," he wrote, "some influential foreign figures" were still "trying to spoon-feed our government and take a very proactive role in many key decisions."
The 2006 episode left a lasting imprint on both the Bush and al-Maliki regimes, which is still very much in evidence in the present conflict over a withdrawal timetable. The Bush White House continues to act as though it is confident that al-Maliki can be pressured to back down as he was forced to do before. And at least some of al-Maliki's determination to stand up to Bush in 2008 is related to the bitterness that he and al-Rubaie, among others, still feel over the way Bush humiliated them in 2006.
It appears that Bush is making the usual dominant power mistake in relations to al-Maliki. He may have been a pushover in mid-2006, but the circumstances have changed, in Iraq, in the U.S.-Iraq-Iran relations and in the United States. The al-Maliki regime now has much greater purchase to defy Bush than it had two years ago.
By Gareth Porter
Many official and unofficial proponents of a long-term U.S. military presence in Iraq are dismissing Iraqi Prime Minister Nouri al-Maliki's demand for a U.S. timeline for withdrawal as political posturing, assuming that he will abandon it under pressure.
But that demand was foreshadowed by an episode in June 2006 in which al-Maliki circulated a draft policy calling for negotiation of just such a withdrawal timetable and the George W. Bush administration had to intervene to force the prime minister to drop it.
The context of al-Maliki's earlier advocacy of a timetable for withdrawal was the serious Iraqi effort to negotiate an agreement with seven major Sunni armed groups that had begun under his predecessor Ibrahim al-Jaafari in early 2006. The main Sunni demand in those talks had been for a timetable for full withdrawal of U.S. troops.
Under the spur of those negotiations, al-Jaafari and Iraqi national security adviser Mowaffak al-Rubaei had developed a plan for taking over security in all 18 provinces of Iraq from the United States by the end of 2007. During his first week as prime minister in late May, al-Maliki referred twice publicly to that plan.
At the same time al-Maliki began working on a draft "national reconciliation plan", which was in effect a road map to final agreement with the Sunni armed groups. The Sunday Times of London, which obtained a copy of the draft, reported Jun. 23, 2006 that it included the following language:
"We must agree on a time schedule to pull out the troops from Iraq, while at the same time building up the Iraqi forces that will guarantee Iraqi security, and this must be supported by a United Nations Security Council decision."
That formula, linking a withdrawal timetable with the buildup of Iraqi forces, was consistent with the position taken by Sunni armed groups in their previous talks with U.S. Ambassador Zalmay Khalilzad, which was that the timetable for withdrawal would be "linked to the timescale necessary to rebuild Iraq's armed forces and security services". One of the Sunni commanders who had negotiated with Khalilzad described the resistance position in those words to the London-based Arabic-language Alsharq al Awsat in May 2006.
The Iraqi government draft was already completed when Bush arrived in Baghdad Jun. 13 without any previous consultation with al-Maliki, giving the Iraqi leader five minutes' notice that Bush would be meeting him in person rather than by videoconference.
The al-Maliki cabinet sought to persuade Bush to go along with the withdrawal provision of the document. In his press conference upon returning, Bush conceded that Iraqi cabinet members in the meeting had repeatedly brought up the issue of reconciliation with the Sunni insurgents.
In fact, after Bush had left, Vice President Tariq al-Hashimi, a Sunni, said he had asked Bush to agree to a timetable for withdrawal of all foreign forces. Then President Jalal Talabani, a Kurd, released a statement of support for that request.
Nevertheless, Bush signaled his rejection of the Iraqi initiative in his Jun. 14 press conference, deceitfully attributing his own rejection of a timetable to the Iraqi government. "And the willingness of some to say that if we're in power we'll withdraw on a set timetable concerns people in Iraq," Bush declared.
When the final version of the plan was released to the public Jun. 25, the offending withdrawal timetable provision had disappeared. Bush was insisting that the al-Maliki government embrace the idea of a "conditions-based" U.S. troop withdrawal. Khalilzad gave an interview with Newsweek the week the final reconciliation plan was made public in which he referred to a "conditions-driven roadmap".
Washington Post columnist David Ignatius further revealed in a Jun. 28 column that Khalilzad had told him that Gen. George Casey, then commander of the Multi-National Force - Iraq, was going to meet with al-Maliki about the formation of a "joint U.S.-Iraqi committee" to decide on "the conditions related to a road map for an ultimate withdrawal of U.S. troops". Thus al-Maliki was being forced to agree to a negotiating body that symbolised a humiliating dictation by the occupying power to a client government.
The heavy pressure that had obviously been applied to al-Maliki on the issue during and after the Bush visit was resented by al-Maliki and al-Rubaie. The Iraqi rancor over that pressure was evident in the op-ed piece by al-Rubaei published in the Washington Post a week after Bush's visit.
Although the article did not refer directly to al-Maliki's reconciliation plan and its offer to negotiate a timetable for withdrawal, the very first line implied that the issue was uppermost in the Iraqi prime minister's mind. "There has been much talk about a withdrawal of U.S. and coalition troops from Iraq," wrote al-Rubaie, "but no defined timeline has yet been set."
Al-Rubaei declared "Iraq's ambition to have full control of the country by the end of 2008". Although few readers understood the import of that statement, it was an indication that the al-Maliki regime was prepared to negotiate complete withdrawal of U.S. troops by the end of 2008.
Then the national security adviser indicated that the government already had its own targets for the first two phases of foreign troop withdrawal: withdrawal of more than 30,000 troops to under 100,000 foreign troops by the end of 2006 and withdrawal of "most of the remaining troops" -- i.e., to less than 50,000 troops -- by end of the 2007.
The author explained why the "removal" of foreign troops was so important to the Iraqi government: it would "remove psychological barriers and the reason that many Iraqis joined the resistance in the first place"; it would also "allow the Iraqi government to engage with some of our neighbours that have to date been at the very least sympathetic to the resistance..." Finally, al-Rubaie asserted, it would "legitimise the Iraqi government in the eyes of its own people."
He also took a carefully-worded shot at the Bush administration's actions in overruling the centrepiece of Iraq's reconciliation policy. "While Iraq is trying to gain independence from the United States," he wrote, "some influential foreign figures" were still "trying to spoon-feed our government and take a very proactive role in many key decisions."
The 2006 episode left a lasting imprint on both the Bush and al-Maliki regimes, which is still very much in evidence in the present conflict over a withdrawal timetable. The Bush White House continues to act as though it is confident that al-Maliki can be pressured to back down as he was forced to do before. And at least some of al-Maliki's determination to stand up to Bush in 2008 is related to the bitterness that he and al-Rubaie, among others, still feel over the way Bush humiliated them in 2006.
It appears that Bush is making the usual dominant power mistake in relations to al-Maliki. He may have been a pushover in mid-2006, but the circumstances have changed, in Iraq, in the U.S.-Iraq-Iran relations and in the United States. The al-Maliki regime now has much greater purchase to defy Bush than it had two years ago.
Your Tax Dollars at Work
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By Llewellyn H. Rockwell, Jr.
Frédéric Bastiat famously observed that the State costs us in ways we can see and ways we cannot see. Economists tend to focus on the second type because they elude public perceptions. What inventions are we denied because of regulations? What might have been done with the resources that are diverted in taxes or higher prices due to protectionism? The answers demonstrate that, because of intervention, we are worse off than we know.
Sometimes, however, we should also look at the potentially seen costs of the State, if only because the State doesn’t want us to see those either. These are the direct destructions caused by some State activity, most especially war. Seeing war in photographs changes things. It causes us to observe the State’s war and what it is doing to people: us and them.
This is why the State doesn’t want pictures of US wounded or dead circulating in public. The media mostly obey. Did you ever notice that? You are being shown only what the government wants you to see. The State does not want you to see dead soldiers or suffering families of those shot and killed.
Instead the State wants you to believe that the Iraq War is about patriotism, 9/11, national pride, the campaign to make you safer, the administering of justice, manhood and courage, and all the rest of the cover-ups for what war really is: murder and destruction paid for by you and me and made legal solely because it is the State and not someone else doing it.
Take a picture of dead soldier, or the child of a killed Iraqi family, broadcast it on your blog, and what happens? Photo journalist Zoriah Miller has found out. He was kicked out of his "embed," which is the name for the pack of journalists permitted to travel with a group of soldiers and report what those in command want reported. Afterwards, he was prohibited from traveling in any Marine-patrolled area of Iraq. The military command worked to get him kicked out of the country altogether.
Yes, it all seems very pre-modern and primitive, and contrary to all our pieties about the free flow of information, the first amendment and all that. But from the government’s point of view, it is running the war, and it should control what people know about it to the same extent it controls everything else about the war. As a result, after 4,000 dead soldiers, countless hundreds of thousands of Iraqi dead, millions of wounded on all sides, there are only a handful of bloody pictures to be found anywhere.
Amazing isn’t it, just how effective the State can actually be when it cares intensely about something? And why does it care so much? One reason, they say, is that photos provide the enemy with information about the effectiveness of their attack and the response. In effect, that’s like claiming that anything but approved propaganda amounts to subversion and treason. In any case, we can be pretty darn sure that when the enemy makes a hit, the enemy knows about it.
Another claim – and actually they have said the same thing from World War I until the present day – their main interest is in protecting the families of the dead from shock, privacy violation, and humiliation. Maybe that sounds plausible, but another way to look at it is that the State is most especially interested in continuing to foster the myth that these kids are dying for their country, and there are no more important people to convince of that than the parents of the dead.
But actually, only the most naïve could possibly believe that this is what the rules are wholly about. They want to protect the rest of us from reality. The Vietnam war lost massive support at home when the military loosened up on photojournalism. The handful of pictures we have from World War II all date from a period after FDR too bowed to public pressure.
At one level, it is pathetic that we need pictures to underscore what war is all about. But since the ancient world, the masses at large have proven susceptible to believing every myth about the grandeur and glory of war. We imagine that we as a people are going abroad to bring justice, truth, and liberty to some unenlightened and threatening foreign tribe. This has been the constant theme since the ancient world.
Then we see the pictures. It turns out that the unenlightened tribe is a collection of individuals pretty much like us. They are made of flesh and blood, have families, worship God, and struggle with pretty much the same issues that all people everywhere have always struggled with. There is no great glory in killing them, nor in being killed by them.
But the State says that sometimes war is necessary. If our masters really believe that, why hide its costs? Let us see precisely what we are getting into here. If it is justified, let us see why and how, and let us observe what we are giving up in exchange for the just war.
The truth is that the State must hide not only its wars but all of its activities. It hides its inflation. It hides the effects of its taxation and its protectionism. It fears anyone who draws the cause-and-effect connection between its activities and their deleterious consequences for the rest of us. It is the most destructive force in our world. Because that truth is so momentous, the State does everything possible to hide the smallest drop of blood.
The State wants us to all go on with our lives, believing it, loving it, and seeing only the pictures it wants us to see.
By Llewellyn H. Rockwell, Jr.
Frédéric Bastiat famously observed that the State costs us in ways we can see and ways we cannot see. Economists tend to focus on the second type because they elude public perceptions. What inventions are we denied because of regulations? What might have been done with the resources that are diverted in taxes or higher prices due to protectionism? The answers demonstrate that, because of intervention, we are worse off than we know.
Sometimes, however, we should also look at the potentially seen costs of the State, if only because the State doesn’t want us to see those either. These are the direct destructions caused by some State activity, most especially war. Seeing war in photographs changes things. It causes us to observe the State’s war and what it is doing to people: us and them.
This is why the State doesn’t want pictures of US wounded or dead circulating in public. The media mostly obey. Did you ever notice that? You are being shown only what the government wants you to see. The State does not want you to see dead soldiers or suffering families of those shot and killed.
Instead the State wants you to believe that the Iraq War is about patriotism, 9/11, national pride, the campaign to make you safer, the administering of justice, manhood and courage, and all the rest of the cover-ups for what war really is: murder and destruction paid for by you and me and made legal solely because it is the State and not someone else doing it.
Take a picture of dead soldier, or the child of a killed Iraqi family, broadcast it on your blog, and what happens? Photo journalist Zoriah Miller has found out. He was kicked out of his "embed," which is the name for the pack of journalists permitted to travel with a group of soldiers and report what those in command want reported. Afterwards, he was prohibited from traveling in any Marine-patrolled area of Iraq. The military command worked to get him kicked out of the country altogether.
Yes, it all seems very pre-modern and primitive, and contrary to all our pieties about the free flow of information, the first amendment and all that. But from the government’s point of view, it is running the war, and it should control what people know about it to the same extent it controls everything else about the war. As a result, after 4,000 dead soldiers, countless hundreds of thousands of Iraqi dead, millions of wounded on all sides, there are only a handful of bloody pictures to be found anywhere.
Amazing isn’t it, just how effective the State can actually be when it cares intensely about something? And why does it care so much? One reason, they say, is that photos provide the enemy with information about the effectiveness of their attack and the response. In effect, that’s like claiming that anything but approved propaganda amounts to subversion and treason. In any case, we can be pretty darn sure that when the enemy makes a hit, the enemy knows about it.
Another claim – and actually they have said the same thing from World War I until the present day – their main interest is in protecting the families of the dead from shock, privacy violation, and humiliation. Maybe that sounds plausible, but another way to look at it is that the State is most especially interested in continuing to foster the myth that these kids are dying for their country, and there are no more important people to convince of that than the parents of the dead.
But actually, only the most naïve could possibly believe that this is what the rules are wholly about. They want to protect the rest of us from reality. The Vietnam war lost massive support at home when the military loosened up on photojournalism. The handful of pictures we have from World War II all date from a period after FDR too bowed to public pressure.
At one level, it is pathetic that we need pictures to underscore what war is all about. But since the ancient world, the masses at large have proven susceptible to believing every myth about the grandeur and glory of war. We imagine that we as a people are going abroad to bring justice, truth, and liberty to some unenlightened and threatening foreign tribe. This has been the constant theme since the ancient world.
Then we see the pictures. It turns out that the unenlightened tribe is a collection of individuals pretty much like us. They are made of flesh and blood, have families, worship God, and struggle with pretty much the same issues that all people everywhere have always struggled with. There is no great glory in killing them, nor in being killed by them.
But the State says that sometimes war is necessary. If our masters really believe that, why hide its costs? Let us see precisely what we are getting into here. If it is justified, let us see why and how, and let us observe what we are giving up in exchange for the just war.
The truth is that the State must hide not only its wars but all of its activities. It hides its inflation. It hides the effects of its taxation and its protectionism. It fears anyone who draws the cause-and-effect connection between its activities and their deleterious consequences for the rest of us. It is the most destructive force in our world. Because that truth is so momentous, the State does everything possible to hide the smallest drop of blood.
The State wants us to all go on with our lives, believing it, loving it, and seeing only the pictures it wants us to see.
U.S. Deficit to Reach Record $490 Billion in 2009
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By Roger Runningen
The U.S. budget deficit will widen to a record of about $490 billion next year, an administration official said, leaving a deep budget hole that will constrain the next president’s tax and spending plans.
By Roger Runningen
The U.S. budget deficit will widen to a record of about $490 billion next year, an administration official said, leaving a deep budget hole that will constrain the next president’s tax and spending plans.
The projected deficit for the fiscal year that begins Oct. 1 is higher than the $407 billion forecast by President George W. Bush in February. The bigger shortfall reflects dwindling tax receipts because of the U.S. economic slowdown, the cost of a $168 billion economic stimulus package and spending on the wars in Iraq and Afghanistan.
``We’ve already seen a pretty sharp cooling in tax receipts, and it’s just going to continue into next fiscal year,’’ Stephen Stanley, chief economist at RBS Capital Markets, said in a telephone interview.
The deficit projection will burden either Republican John McCain and Democrat Barack Obama, the presumptive presidential nominees of the major political parties, with a constricted budget that has little room for cutting taxes or increasing spending. The next president also will inherit the deepest housing recession in a generation, fears of a crisis in the banking industry, a falling dollar and high energy prices.
Campaign Promises
McCain has promised corporate and individual tax cuts that are projected to cost $4.2 trillion over 10 years along with spending to promote U.S. energy independence. Obama is vowing to enact a plan for universal health care, middle-class tax cuts and proposes spending on education and job training.
Instead, both likely will be forced to put their campaign promises on hold to reinvigorate the economy and drive down the deficit while also grappling with left-over foreign policy problems such as the wars and the nuclear ambitions of Iran and North Korea.
The official, who asked not to be named, also confirmed a report in USA Today that the deficit this year will be less than the $410 billion estimated in February. The White House budget office will release its mid-session review of the government’s balance sheets at 1:45 p.m. today.
Treasuries rose as the forecast for a higher budget deficit and a rise in European bond prices led to increased speculation the U.S. economy will slow amid decreasing global growth.
The deficit is one of the ``underlying themes that people are nervous about. It’s just more bad news, and that leads to more buying of Treasuries,’’ said Charles Comiskey, co-head of U.S. Treasury trading in New York at HSBC Securities USA Inc.
Deteriorating Budget
The shortfall reflects a deterioration of the budget over the past seven years. Bush inherited a budget surplus of $128 billion when he took office in 2001. The budget worsened almost immediately, because of recession, the Sept. 11 attacks, the beginning of the war in Afghanistan and, later, the war in Iraq that began in March 2003.
Bush recorded his first deficit a year after being sworn in, and it widened to the current record of $413 billion in 2004.
Five months ago, the administration projected a shortfall of more than $400 billion this year and next, reflecting a struggling economy, and forecast a recovery to a $160 billion deficit in 2010, declining to $96 billion in 2011 and finally a $48 billion surplus in 2012.
War Costs
The current projections may understate the deficit next year because the administration hasn’t requested money to prosecute the wars for the full year, leaving that to the next president. Military operations in Iraq and Afghanistan now are costing about $10 billion to $12 billion a month.
Asked today if the administration still believes it’s on a path to a balanced budget by 2012, White House press secretary Dana Perino said , ``I believe so, yes.’’
She called the deficit ``temporary and manageable.’’
The Bush administration and Congress also haven’t dealt with the largest long-term fiscal problems: the growing costs of Medicare, Medicaid, and Social Security. Those three programs consumed an estimated 41 percent of the federal budget in 2007.
Obama is meeting today with his top economic advisers ``on America’s pressing economic challenges,’’ his campaign said. The Illinois senator was to meet with business and labor officials on oil, food and other commodities, topped with discussions with investor Warren Buffett, former Chairman of the Federal Reserve Paul Volcker, and former Treasury Secretary Robert Rubin, among others.
McCain Meetings
McCain, an Arizona senator, was scheduled to talk about the economy at town-hall meetings with voters in Nevada and Wisconsin.
Record gasoline prices, plunging home values and shrinking credit access have thrust the economy to center stage. The Labor Department this week may report a seventh straight month of job losses.
House Budget Committee Chairman John Spratt, Democrat of South Carolina, took the administration to task for a record deficit, citing news accounts.
``If these reports prove accurate, they confirm the dismal legacy of the Bush administration: under its policies, the largest surpluses in history have been converted into the largest deficits in history,’’ Spratt said in an e-mailed statement.
A Bloomberg survey of 28 analysts completed July 25 showed the average estimate for the deficit at $447 billion next year and $407 billion this year.
Audit finds millions wasted in Iraq reconstruction contract
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Millions of dollars were likely wasted on a 900 million dollar army contract to build courthouses, prisons, police and other security facilities in Iraq, an audit released Monday has found.
The audit by the congressionally appointed Special Inspector General for Iraq, Stuart Bowen, found that the contractor, Parsons Delaware Inc., completed only about a third of 53 planned construction projects.
"Although the failure to complete some of the work is understandable because of its complex nature and the unstable security environment in Iraq, millions of dollars in waste are likely associated with incomplete, terminated and abandoned projects under this contract," the audit report said.
The contract was one of a dozen design-build construction contracts awarded by the army in 2004 to restore Iraq's infrastructure in broad areas such as security and justice, water, oil, electricity and transportation.
Parsons was supposed to build police and civil defense training areas, two prisons, two courthouses, fire stations, and border control facilities.
The report said more than 142 million dollars, or nearly 43 percent of the funds disbursed so far, "were spent on projects that were either terminated or cancelled, although a number of the projects were subsequently completed."
Repeated construction delays prompted the government to cancel the construction of two partially built prisons, one at Nasiriyah and the other at Khan Bani Saad, the audit said.
The Nasiriyah prison was later completed by another contractor, but the facility at Khan Bani Saad was turned over half finished to the Iraqi government which has no plans to use it, the audit said.
It said about 40 million dollars has been spent on the Khan Bani Saad prison.
"At this point the entire amount disbursed for this project may ultimately be wasted because the government of Iraq currently has no plans for completing or using this facility," the audit said.
The audit said there were "significant weaknesses" in the government's oversight of the contract, which created "an environment that was conducive to waste and inefficiency."
Millions of dollars were likely wasted on a 900 million dollar army contract to build courthouses, prisons, police and other security facilities in Iraq, an audit released Monday has found.
The audit by the congressionally appointed Special Inspector General for Iraq, Stuart Bowen, found that the contractor, Parsons Delaware Inc., completed only about a third of 53 planned construction projects.
"Although the failure to complete some of the work is understandable because of its complex nature and the unstable security environment in Iraq, millions of dollars in waste are likely associated with incomplete, terminated and abandoned projects under this contract," the audit report said.
The contract was one of a dozen design-build construction contracts awarded by the army in 2004 to restore Iraq's infrastructure in broad areas such as security and justice, water, oil, electricity and transportation.
Parsons was supposed to build police and civil defense training areas, two prisons, two courthouses, fire stations, and border control facilities.
The report said more than 142 million dollars, or nearly 43 percent of the funds disbursed so far, "were spent on projects that were either terminated or cancelled, although a number of the projects were subsequently completed."
Repeated construction delays prompted the government to cancel the construction of two partially built prisons, one at Nasiriyah and the other at Khan Bani Saad, the audit said.
The Nasiriyah prison was later completed by another contractor, but the facility at Khan Bani Saad was turned over half finished to the Iraqi government which has no plans to use it, the audit said.
It said about 40 million dollars has been spent on the Khan Bani Saad prison.
"At this point the entire amount disbursed for this project may ultimately be wasted because the government of Iraq currently has no plans for completing or using this facility," the audit said.
The audit said there were "significant weaknesses" in the government's oversight of the contract, which created "an environment that was conducive to waste and inefficiency."
After the Housing Bill: Time to Address Foreclosures
Go to Original
By Dean Baker
Last week Congress finally passed its long-debated housing bill. In addition to securing the multimillion-dollar salaries of the top executives of Fannie Mae and Freddie Mac, and protecting their shareholders from facing the full consequences of their bad stock picks, the bill also provided funds for guaranteeing new mortgages for homeowners facing foreclosure.
The bill allows lenders to bring failing mortgages to the Federal Housing Authority (FHA), which will guarantee a new mortgage at 85 percent of the current appraised value of the home. The Congressional Budget Office (CBO) estimates that lenders will bring 400,000 mortgages to the FHA over the next three years. CBO expects that 140,000 of these mortgages will go into foreclosure a second time, leaving a net of 260,000 homeowners who will hang onto their homes as a result of this program.
By contrast, there are likely to be 2.5 million to 3 million foreclosures in both 2008 and 2009. This means that the housing bill will likely help less than five percent of the families facing foreclosure over the next two years, leaving 95 percent of this group out of luck.
Fortunately, there is something very simple that Congress can do if it actually wants to help families facing foreclosure. Representative Raœl Grijalva has proposed a bill, the Saving Family Homes Act, which would allow many of these homeowners to stay in their homes. It requires no taxpayer dollars and no new government bureaucracy, and it can begin to protect homeowners as soon as the bill is approved by Congress.
The bill temporarily alters the rules on foreclosures. It allows homeowners facing foreclosure the option to stay in their home as renters paying the fair market rent. They would be allowed to remain in their home for up to 20 years. The bill would only apply to homes that were purchased for less than the median price in the area. This ensures that it only benefits those most in need of help, rather than millionaires who made bad bets in the housing market.
There are two main benefits from this proposal. First, it will provide housing security to millions of homeowners who would otherwise be forced out on the street. If a family is happy with their home - they like the neighborhood and the schools - they would have the option to remain there as renters. This prevents the property from standing vacant, which is a benefit to both their neighbors and the local government.
The second benefit is that it is likely to lead to a situation in which many of these families will be able to stay in their home as homeowners. By giving homeowners the option to remain in their home as renters, the Grijalva bill changes the calculation for lenders seeking foreclosures. Banks will no longer have the option to use the foreclosure process to throw families on the street and then resell the vacant house.
Instead, banks will face the prospect of having a long-term tenant. In general, banks are not interested in becoming landlords, so this will not be an attractive option. Banks will of course still be able to sell the foreclosed property, but the former homeowner would still have the right to remain as a tenant. And a property with a tenant attached will command a much lower price than a vacant home.
In short, the Grijalva bill makes foreclosure a much-less-attractive option for banks. It provides them with a real incentive to try to work out a new payment schedule with homeowners that will allow them to remain in their homes as owners.
Since the change in rules on foreclosure is temporary and limited, it should have only a minimal effect on lenders' willingness to make new loans in the future. Furthermore, if it raises concerns in the future among lenders over the risks of making loans in a bubble environment, then this would be a further benefit of the bill.
The structure of the bill is designed so that the beneficiaries will be overwhelmingly moderate-income families and actual homeowners. A speculator will not benefit from the option to stay in a home as a long-term tenant paying the fair market rent.
So, if Congress is interested in helping homeowners after its heroic efforts on behalf of Fannie and Freddie's shareholders and management, it can approve the Grijalva bill. It would almost certainly do more to protect homeownership than the bill passed last week.
By Dean Baker
Last week Congress finally passed its long-debated housing bill. In addition to securing the multimillion-dollar salaries of the top executives of Fannie Mae and Freddie Mac, and protecting their shareholders from facing the full consequences of their bad stock picks, the bill also provided funds for guaranteeing new mortgages for homeowners facing foreclosure.
The bill allows lenders to bring failing mortgages to the Federal Housing Authority (FHA), which will guarantee a new mortgage at 85 percent of the current appraised value of the home. The Congressional Budget Office (CBO) estimates that lenders will bring 400,000 mortgages to the FHA over the next three years. CBO expects that 140,000 of these mortgages will go into foreclosure a second time, leaving a net of 260,000 homeowners who will hang onto their homes as a result of this program.
By contrast, there are likely to be 2.5 million to 3 million foreclosures in both 2008 and 2009. This means that the housing bill will likely help less than five percent of the families facing foreclosure over the next two years, leaving 95 percent of this group out of luck.
Fortunately, there is something very simple that Congress can do if it actually wants to help families facing foreclosure. Representative Raœl Grijalva has proposed a bill, the Saving Family Homes Act, which would allow many of these homeowners to stay in their homes. It requires no taxpayer dollars and no new government bureaucracy, and it can begin to protect homeowners as soon as the bill is approved by Congress.
The bill temporarily alters the rules on foreclosures. It allows homeowners facing foreclosure the option to stay in their home as renters paying the fair market rent. They would be allowed to remain in their home for up to 20 years. The bill would only apply to homes that were purchased for less than the median price in the area. This ensures that it only benefits those most in need of help, rather than millionaires who made bad bets in the housing market.
There are two main benefits from this proposal. First, it will provide housing security to millions of homeowners who would otherwise be forced out on the street. If a family is happy with their home - they like the neighborhood and the schools - they would have the option to remain there as renters. This prevents the property from standing vacant, which is a benefit to both their neighbors and the local government.
The second benefit is that it is likely to lead to a situation in which many of these families will be able to stay in their home as homeowners. By giving homeowners the option to remain in their home as renters, the Grijalva bill changes the calculation for lenders seeking foreclosures. Banks will no longer have the option to use the foreclosure process to throw families on the street and then resell the vacant house.
Instead, banks will face the prospect of having a long-term tenant. In general, banks are not interested in becoming landlords, so this will not be an attractive option. Banks will of course still be able to sell the foreclosed property, but the former homeowner would still have the right to remain as a tenant. And a property with a tenant attached will command a much lower price than a vacant home.
In short, the Grijalva bill makes foreclosure a much-less-attractive option for banks. It provides them with a real incentive to try to work out a new payment schedule with homeowners that will allow them to remain in their homes as owners.
Since the change in rules on foreclosure is temporary and limited, it should have only a minimal effect on lenders' willingness to make new loans in the future. Furthermore, if it raises concerns in the future among lenders over the risks of making loans in a bubble environment, then this would be a further benefit of the bill.
The structure of the bill is designed so that the beneficiaries will be overwhelmingly moderate-income families and actual homeowners. A speculator will not benefit from the option to stay in a home as a long-term tenant paying the fair market rent.
So, if Congress is interested in helping homeowners after its heroic efforts on behalf of Fannie and Freddie's shareholders and management, it can approve the Grijalva bill. It would almost certainly do more to protect homeownership than the bill passed last week.
Pull the Plug on the War State
Go to Original
By Charley Reese
Hopefully, the next president, whoever he is, will have sense enough to realize that an anti-missile site in Eastern Europe is not worth rekindling the Cold War with Russia.
Though the press pays little attention to it, the Bush administration has already practically wrecked relations with Russia by insisting on adding the Eastern European countries to NATO and siting his anti-missile system in the Czech Republic and in Poland. The Russians are right that it represents a threat to their security.
President Bush's lame excuse that the system is designed to protect Europe from Iranian missiles is no doubt another deliberate lie. I can't think of any reason whatsoever for Iran to attack Europe, and I'm sure the Iranians can't, either. Iran hasn't attacked anybody for more than 100 years. They would have absolutely nothing to gain by firing a few missiles at Europe. It doesn't make any sense at all.
Nor does it make any sense to add the small countries of Eastern Europe to NATO. This was a war-fighting alliance set up at the end of World War II specifically to deter and, if necessary, go to war with the Red Army. The Soviet Union set up its own alliance, the Warsaw Pact.
When the Soviet Union collapsed, Russia withdrew its army from Eastern Europe and dissolved the Warsaw Pact. The United States should have dissolved NATO. Its sole purpose vanished with the Soviet Union. It has no enemy, unless fools in the U.S. create one. The American politicians have used it in the Yugoslavian Civil War, and now has it involved in the Afghanistan insurgency. Why the Europeans put up with this nonsense is beyond me.
As for including little countries, that's a strategic blunder. Do you think that if the Russians one day launched nuclear missiles at the United States that Poland and Lithuania would go to war against their large neighbor? Will France become a nation of teetotalers?
In fact, including small countries in military alliances is worthless posturing. All you do is allow the little country to get you into trouble by its bad behavior. The little country is confident that its big ally will rescue it if it goes too far in antagonizing its larger neighbors. It's like a spoiled brat with a bodyguard. Sixty years after its founding, Israel is still at war with most of its neighbors precisely because it has no incentive to make a sensible peace. Why should it? It has its American attack dog. The only peace treaties it has signed are with Egypt and Jordan, both of which the U.S. bribed to make peace. Bribe or not, in both cases it's a cold peace.
Believe it or not, we are not at war with any nation at the present. We made war on Iraq, but that has long since become nothing but an occupation. We are occupying or trying to occupy Afghanistan, but other than that, we are not at war. Why then do we need military alliances? Why do we need troops in Korea, Japan and Germany? Or, I hasten to add, Iraq and the Persian Gulf?
President Bush's war on terror is a false metaphor, and a dangerous one at that. There is no terrorist army or air force. There are some gangs of criminals. What the president did when he adopted this specious metaphor about a war on terror was to commit the United States to perpetual war. Ask your local warmonger how he defines victory in the war on terror. Ask why when Iraq was very violent we couldn't leave, and now that it's less violent, we can't leave. Ask him how he defines victory in Iraq or in Afghanistan.
We really have neither a republic nor a democracy. We have a war state and an empire. We should pull the plug on both.
By Charley Reese
Hopefully, the next president, whoever he is, will have sense enough to realize that an anti-missile site in Eastern Europe is not worth rekindling the Cold War with Russia.
Though the press pays little attention to it, the Bush administration has already practically wrecked relations with Russia by insisting on adding the Eastern European countries to NATO and siting his anti-missile system in the Czech Republic and in Poland. The Russians are right that it represents a threat to their security.
President Bush's lame excuse that the system is designed to protect Europe from Iranian missiles is no doubt another deliberate lie. I can't think of any reason whatsoever for Iran to attack Europe, and I'm sure the Iranians can't, either. Iran hasn't attacked anybody for more than 100 years. They would have absolutely nothing to gain by firing a few missiles at Europe. It doesn't make any sense at all.
Nor does it make any sense to add the small countries of Eastern Europe to NATO. This was a war-fighting alliance set up at the end of World War II specifically to deter and, if necessary, go to war with the Red Army. The Soviet Union set up its own alliance, the Warsaw Pact.
When the Soviet Union collapsed, Russia withdrew its army from Eastern Europe and dissolved the Warsaw Pact. The United States should have dissolved NATO. Its sole purpose vanished with the Soviet Union. It has no enemy, unless fools in the U.S. create one. The American politicians have used it in the Yugoslavian Civil War, and now has it involved in the Afghanistan insurgency. Why the Europeans put up with this nonsense is beyond me.
As for including little countries, that's a strategic blunder. Do you think that if the Russians one day launched nuclear missiles at the United States that Poland and Lithuania would go to war against their large neighbor? Will France become a nation of teetotalers?
In fact, including small countries in military alliances is worthless posturing. All you do is allow the little country to get you into trouble by its bad behavior. The little country is confident that its big ally will rescue it if it goes too far in antagonizing its larger neighbors. It's like a spoiled brat with a bodyguard. Sixty years after its founding, Israel is still at war with most of its neighbors precisely because it has no incentive to make a sensible peace. Why should it? It has its American attack dog. The only peace treaties it has signed are with Egypt and Jordan, both of which the U.S. bribed to make peace. Bribe or not, in both cases it's a cold peace.
Believe it or not, we are not at war with any nation at the present. We made war on Iraq, but that has long since become nothing but an occupation. We are occupying or trying to occupy Afghanistan, but other than that, we are not at war. Why then do we need military alliances? Why do we need troops in Korea, Japan and Germany? Or, I hasten to add, Iraq and the Persian Gulf?
President Bush's war on terror is a false metaphor, and a dangerous one at that. There is no terrorist army or air force. There are some gangs of criminals. What the president did when he adopted this specious metaphor about a war on terror was to commit the United States to perpetual war. Ask your local warmonger how he defines victory in the war on terror. Ask why when Iraq was very violent we couldn't leave, and now that it's less violent, we can't leave. Ask him how he defines victory in Iraq or in Afghanistan.
We really have neither a republic nor a democracy. We have a war state and an empire. We should pull the plug on both.
The Last Hurrah for the Banking System
Go to Original
By Mike Whitney
The Bush administration will be mailing out another batch of "stimulus" checks in the very near future. There's no way around it. The Fed is in a pickle and can't lower interest rates for fear that food and energy prices will shoot to stratosphere. At the same time, the economy is shrinking faster than anyone thought possible with no sign of a rebound. That leaves stimulus checks as the only way to "prime the pump" and keep consumer spending chugging along. Otherwise business activity will slow to a crawl and the economy will tank. There's no other choice.
The daily barrage of bad news is really starting to get on people's nerves. Most of the TV chatterboxes have already cut-out the cheery stock market predictions and no one is praising the "impressive powers of the free market" anymore. They know things are bad, real bad. A pervasive sense of gloom has crept into the television studios just like it has into the stock exchanges and the luxury penthouses on Manhattan's West End. That same sense of foreboding is creeping like a noxious cloud to every town and city across the country. Everyone is cutting back on non-essentials and trimming the fat from the family budget. The days of extravagant impulse-spending at the mall are over. So are the "big ticket" purchases and the "go-for-broke" trips to Europe. Consumer confidence is at historic lows, disposal income is a thing of the past, and all the credit cards are at their limit. The country is drowning in red ink.
Something has gone terribly wrong with the economy, but no one knows what it is? In the last three months bank credit has shrunk faster than any time since 1948. The banks aren't lending and people aren't borrowing; that's a lethal combo. When credit-creation slows, the economy falters, unemployment rises and the misery index soars. That's why Bush will have to mail out more stimulus checks whether he wants to or not; his back is against the wall. He'll try to make it look like the economy is still breathing on its own and just needs a spell on the respirator before resuming its normal activities. But Bush is wrong; we've reached Peak credit and the blood-transfusions won't work anymore. The vital signs have shut down and rigamortis is already setting in. Our goose is cooked.
MORE BANK RUNS
On Friday, after the market had closed, the FDIC shut down two more banks, First Heritage Bank and First National Bank. Two weeks earlier, regulators seized Indymac Bancorp following a run by depositors. The FDIC now operates like a stealth paramilitary unit, deploying its shock troops on the weekends to do their dirty work out of the public eye and at times when it will least effect the stock market. The reasons for this are obvious; there's only one thing the government hates more than seeing flag-draped coffins on the evening news, and that's seeing long lines of frantic soccer moms and blue-collar working guys waiting impatiently to get what's left of their savings out of their now-deceased bank. After all, flag-draped coffins merely indicate that we're losing a war, but lines at the bank prove that the system is broken. And the system is broken, that's why people are depressed and confidence is waning.
Banks-runs are a shock to the collective psyche; they demonstrate that the stewards of the system are imcompetent and have made a mess of things. When depositors see a bank run they realize that their hard-earned money is not safe. That's why they get edgy and cut back on their spending. When their confidence wanes, it extends to the whole system. Suddenly they start questioning everything they once took for granted. They become skeptical of the institutions which, just days earlier, seemed rock-solid. That's why bankers surround themselves with marble columns, vaulted ceilings and lofty-sounding titles; to maintain the illusion of security while masking the truth, that fractional banking is the biggest scam in history. It relies on the "greater fools" theory which assumes that bankers can be trusted to only create credit when it is backed by sufficient capital. But it is not true. The banks have put us all at risk.
Bank runs are a direct hit on the foundation of the free market system. Unchecked, the tremors can ripple through the entire society and trigger violent political upheaval, even revolution. The public may not grasp their significance, but everyone in Washington is paying attention. They take it seriously, very seriously. It is a sign that the system is disintegrating and it may be irreversible.
SABER-RATTLING AT THE FDIC
An article in the San Francisco Business Times said that the FDIC is worried about the reporting on Internet blogs. They'd rather keep banking system's troubles out of the news. The publicity just further undermines the publics confidence and spreads fear. Sheila Bair, chairman of the Federal Deposit Insurance Corp., summed it up like this after the run on Indymac:
"The blogs were a bit out of control. We're very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it. The misinformation that came out over the weekend fed a lot of depositors' fears."
Is that a threat? The cure for a failed banking system is adequate capital and prudent oversight not threats to critics of the system. That's balderdash. Commissar Blair apparently believes that bloggers should be treated the same way as journalists in Iraq, who, if they veer ever so slightly from the Pentagon's "the surge is a great triumph" script, find themselves on the smoky end of an M-16 at some unmarked checkpoint outside Baquba.
If Blair wants people to take her seriously, she should stop the paramilitary-type mothballing operations to shut down banks and tell the American people the truth about what is going on. The banking system is busted; Blair knows that as well as anyone. Now its time for someone to accept the mantle of leadership, step up to the microphone and tell the public what they really need to know:
"My fellow citizens, we are embroiled in the greatest financial crisis our nation has ever faced and we will have to take emergency action to keep the entire system from melting down."
How hard is that? But it won't happen, because everyone in the administration has an aversion to telling the truth; it's like the Devil and Holy Water. Besides, its easier to blame the bloggers, that harmless subspecies that spend long hours pecking away at their keyboards in their windowless 5' by 7' hovels.
Bloggers aren't the problem; the problem is a system that's collapsing from decades of abusive credit expansion creation and insufficient capital. Now everyone is going to pay for the excesses of the few.
As the bank-runs increase, the FDIC will be forced to admit the truth, that they don't have the resources to deal with a problem this big. Currently, the FDIC has only $53 billion in reserves to guarantee $4 trillion in total bank deposits. The entire system has a mere $267 billion cash in the vaults. What a shabby way to run a banking system. Where's the money going to come from when depositors start withdrawing their savings? How will the FDIC deal with the ongoing deleveraging in the market which is forcing more and more investors move into cash?
No one knows. All we get is more prevaricating; more smoke and mirrors, Bush assures us that "Our capital markets are functioning efficiently and effectively." Nonsense. The markets are cratering and the banks are toast. A blind man can see it. The FDIC is listing and Blair knows it. Bush needs to cut the gibberish and tell the American people the truth so they can prepare for the hard times ahead.
P.T. PAULSON: "The the banking system is sound... This is a very manageable situation."
Last Sunday, sought Treasury Secretary Henry Paulson tried to reassure the public that the banking system is sound, while bracing people for more trouble ahead:
"I think it's going to be months that we're working our way through this period — clearly months. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."
Paulson is like a broken record. Everything is always hunky-dory. He is the consummate Wall Street investment sharpie; a bright guy who could charm a hungry dog off a meat-wagon. But when it comes to telling the truth; forget about it. You'd be better off listening to Bush, which isn't saying much. The banking system is not sound nor is it well capitalized. It is a corpse that's been propped up in the office hallway next to the water-cooler so that everyone who passes bye gets a stifling whiff of the decaying flesh. Still, the charade goes on. Still the lies persist.
If the rate of bank closures continues at the present pace, by the middle of 2009 their will be restrictions on withdrawals. Even now, if you go to your bank and try to withdraw $9,000 or $10,000, it sends waves of panic through the entire building like a 5-alarm fire that quickly engulfs the main exits. It's crazy. Tellers go scampering around helter-skelter, and bank managers suddenly appear at the window grimacing in pain and wringing the sweat from their brows.
"Did you say $10,000, sir?" which is usually followed by low moaning sounds and heavy wheezing.
Journalist Bill Sardi summed it up nicely in an article last week on lewrockwell.com titled "Could Your Bail Fail?":
"The banking industry is walking on pins and needles, hoping the bad news doesn’t become a self-fulfilling prophecy that drives bank depositors to demand withdrawal of funds en masse........ There is a high likelihood the American banking system will fail, and you will likely be the last to know. The more panicked you get, and withdraw funds, the worse the implosion. In an effort to avert runs on the banks, will the news media delay informing the public of the current dire situation, which appears to be an inevitable system-wide banking collapse?
What to do?
So, while your bank still has money and can process your checks, it may be time to pay down debts, pay quarterly taxes and mortgage payments in advance, and think of having money outside of banks (gold, foreign currencies), etc., before your money is inaccessible or even evaporates! Don’t think all your investments outside of banks are immune from all this turmoil. For example, money market mutual funds, where Americans have invested $3 trillion, are not covered by FDIC insurance (however, money market accounts offered by banks are covered). Recent losses in some of these money market mutual funds have caused some companies to rush to plug the losses. For example, Legg Mason Inc. and SunTrust Banks Inc., recently pumped $1.4 billion each into its money market funds. Bank of America Corp. has injected $600 million.
As for your checking and savings accounts, recognize you may have five different accounts in the same bank, but the FDIC only insures individuals, not each account, up to $100,000. Putting your money in different accounts in the same bank does not necessarily provide better insurance for your deposits. (Bill Sardi, "Could Your Bail Fail?", lewrockwell.com)
Good advice, but if the whole system blows; we're all in trouble. It's probably wise to have a back-up plan; like plenty of ammo and a couple hundred pounds of seed potatoes. It could get hairy.
FANNIE BAILOUT: "If they dumped these securities on the market today, their value would go straight to 0."
Most people are unaware of the fact that the new Fannie Mae and Freddie Mac bailout package that was passed into law on Saturday, provides Paulson with $300 billion of taxpayer dollars to shore up the faltering mortgage behemoths. In order to accomplish this, the congress increased the national debt by a whopping $800 billion sending it over the $10 trillion mark for the first time in history. Naturally the congress buried this little tidbit of information deep in the 600 pages of legislation. It's clear that the administration is lying about Fannie and Freddie. They'll need much more than the $25 billion infusion that Paulson is predicting. That's why the national debt is ballooning. This is the biggest boondoggle of all time and it's spearheaded by the "dueling windbags", Chris Dodd and Barney Frank; both Democrats. Dodd's lengthly oratory on the floor of the House on Friday nearly earned him a citation from the EPA for releasing massive levels of toxic gas into the jet-stream and accelerating the rate of global warming.
So it's not just the Fed and the Treasury that are ruining the system; the politicos are busy bankrupting the country, too. In fact, the Fannie bailout could quite possibly be the last straw.
It now looks like Obama has been anointed by Wall Street (who are his biggest contributors) to revive the Resolution Trust Corporation (RTC)--a morgue for dead banks---so that the investment giants can off-load hundreds of billions in bad paper in one fell swoop and purge the system. That will be the big "post election" surprise; another bone for investment giants.
The path ahead has never looked so uncertain. Still, niether Paulson nor Bernanke seem at all upset by the riskiness of their strategy or by the fact that the nation's economic future has been reduced to a crap-shoot. The Fed has already spent more than $300 billion to prop up the teetering banking system in the last year alone, plus another $29 (that was never approved by congress) to buy the toxic bonds from Bear Stearns in the JP Morgan acquisition. Now, the Treasury has been authorized by congress to buy an "unlimited amount" of Fannie and Freddie shares at their own discretion. They are presently exchanging Fannie and Freddie securities for US Treasurys, which means that the dollar is now backed by dodgy mortgage-backed sludge for which there is no market. According to Rep Ron Paul, "This is the asset (MBS) which now backs up our currency. An asset that no one else wants. If they were to dump these securities on the market today, the value of these stocks would go straight to 0. But that is literally the asset that is behind our currency. It is a very serious situation."
None of congress's back-room maneuvering has anything to do with "providing a lifeline for the struggling homeowner", as Senator Dodd claims. That's all bunkum. The homeowner won't get a lick of help from this bill. Its just another handout for the brokerage fraternity. The country is putting its AAA credit rating on the line for same clatter of carpetbaggers who created the mammoth equity bubble in the first place. Now they are being rewarded for their criminal conduct. Also, Bloomberg News notes that, "Sensible people are starting to question whether the U.S. can hang on to its AAA credit rating. The prospect of an extra $5 trillion or thereabouts leaking onto the U.S. government's tab from Fannie Mae and Freddie Mac has spooked investors."
America's AAA rating will vanish in a year. It should be zero anyway. No one really believes the US will repay its debts. The US bond market is just a glitzy imitation of casino roulette only the odds are considerably worse.
Our political leaders have engineered this whole farce and are now speeding up the process by savaging the dollar. How long before foreign creditors see through this ruse and dump their dollar-backed assets on the open market? The hoax can't go on forever.
Of course, some market analysts think the banking system will make it through this rough patch, even though it is likely to take a real pasting. Economics guru, Gary North, for example, expects a slightly different outcome which he details in his latest article on Lew Rockwell's web site "Ben Bernanke's Hush Money":
"There is an enormous difference – a literally life-and-death difference – between individual bank failures and a systemic banking failure. I do NOT believe we are facing a systemic banking failure. But we are facing more individual bank failures...
Beginning in December 2007, the Federal Reserve System has sold Treasury debt whenever it has increased its purchase of questionable assets that it has bought from banks and large financial institutions. It has unloaded about 40% of its holdings of liquid Treasury debt. This has kept it from inflating the money supply at a dramatic rate. At some point, it will run out of Treasury debt to sell to the general public in order to offset the increase of its purchase of questionable assets held by the financial system. At that point, the great inflation will begin. This could be a year away. This could be a month away. All we know is this: when the Federal Reserve system runs out of Treasury debt to sell, its purchase of all assets will be inflationary. The banking system as a whole is protected. What is not protected is the purchasing power of the dollar." ("Ben Bernanke's Hush Money", Gary North, lewrockwell.com)
North makes a good point; when the Fed runs out of US Treasuries, they'll have to rev-up the printing presses and monetize the debt. That'll be doomsday for the dollar. When foreign central banks see the greenbacks a-gushing like the blood from a harpooned whale; they'll have to sell off their dollar stockpiles and take the loss. That will trigger a period of hyper-inflation in the US. Everyone will pay for the excesses of the few.
The whole system has been rejiggered to serve the needs of a few greedy bankers on top of the food chain. They could care less whether the whole country blows up or not as long as they get their slice of the pie. That's all that matters. Congress is just as bad. They abdicated their most important responsibility by giving Paulson the authority to take whatever money he needs to do whatever he wants. If that's their attitude, then what do we need congress for? Let's just board up the House of Representatives and send them all home. It would be a lot cheaper.
The truth is, the big money guys have taken a wrecking-ball to the financial system and have now moved on to the real economy. By the time their done, we'll all be picking through the wreckage just to feed our families.
By Mike Whitney
The Bush administration will be mailing out another batch of "stimulus" checks in the very near future. There's no way around it. The Fed is in a pickle and can't lower interest rates for fear that food and energy prices will shoot to stratosphere. At the same time, the economy is shrinking faster than anyone thought possible with no sign of a rebound. That leaves stimulus checks as the only way to "prime the pump" and keep consumer spending chugging along. Otherwise business activity will slow to a crawl and the economy will tank. There's no other choice.
The daily barrage of bad news is really starting to get on people's nerves. Most of the TV chatterboxes have already cut-out the cheery stock market predictions and no one is praising the "impressive powers of the free market" anymore. They know things are bad, real bad. A pervasive sense of gloom has crept into the television studios just like it has into the stock exchanges and the luxury penthouses on Manhattan's West End. That same sense of foreboding is creeping like a noxious cloud to every town and city across the country. Everyone is cutting back on non-essentials and trimming the fat from the family budget. The days of extravagant impulse-spending at the mall are over. So are the "big ticket" purchases and the "go-for-broke" trips to Europe. Consumer confidence is at historic lows, disposal income is a thing of the past, and all the credit cards are at their limit. The country is drowning in red ink.
Something has gone terribly wrong with the economy, but no one knows what it is? In the last three months bank credit has shrunk faster than any time since 1948. The banks aren't lending and people aren't borrowing; that's a lethal combo. When credit-creation slows, the economy falters, unemployment rises and the misery index soars. That's why Bush will have to mail out more stimulus checks whether he wants to or not; his back is against the wall. He'll try to make it look like the economy is still breathing on its own and just needs a spell on the respirator before resuming its normal activities. But Bush is wrong; we've reached Peak credit and the blood-transfusions won't work anymore. The vital signs have shut down and rigamortis is already setting in. Our goose is cooked.
MORE BANK RUNS
On Friday, after the market had closed, the FDIC shut down two more banks, First Heritage Bank and First National Bank. Two weeks earlier, regulators seized Indymac Bancorp following a run by depositors. The FDIC now operates like a stealth paramilitary unit, deploying its shock troops on the weekends to do their dirty work out of the public eye and at times when it will least effect the stock market. The reasons for this are obvious; there's only one thing the government hates more than seeing flag-draped coffins on the evening news, and that's seeing long lines of frantic soccer moms and blue-collar working guys waiting impatiently to get what's left of their savings out of their now-deceased bank. After all, flag-draped coffins merely indicate that we're losing a war, but lines at the bank prove that the system is broken. And the system is broken, that's why people are depressed and confidence is waning.
Banks-runs are a shock to the collective psyche; they demonstrate that the stewards of the system are imcompetent and have made a mess of things. When depositors see a bank run they realize that their hard-earned money is not safe. That's why they get edgy and cut back on their spending. When their confidence wanes, it extends to the whole system. Suddenly they start questioning everything they once took for granted. They become skeptical of the institutions which, just days earlier, seemed rock-solid. That's why bankers surround themselves with marble columns, vaulted ceilings and lofty-sounding titles; to maintain the illusion of security while masking the truth, that fractional banking is the biggest scam in history. It relies on the "greater fools" theory which assumes that bankers can be trusted to only create credit when it is backed by sufficient capital. But it is not true. The banks have put us all at risk.
Bank runs are a direct hit on the foundation of the free market system. Unchecked, the tremors can ripple through the entire society and trigger violent political upheaval, even revolution. The public may not grasp their significance, but everyone in Washington is paying attention. They take it seriously, very seriously. It is a sign that the system is disintegrating and it may be irreversible.
SABER-RATTLING AT THE FDIC
An article in the San Francisco Business Times said that the FDIC is worried about the reporting on Internet blogs. They'd rather keep banking system's troubles out of the news. The publicity just further undermines the publics confidence and spreads fear. Sheila Bair, chairman of the Federal Deposit Insurance Corp., summed it up like this after the run on Indymac:
"The blogs were a bit out of control. We're very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it. The misinformation that came out over the weekend fed a lot of depositors' fears."
Is that a threat? The cure for a failed banking system is adequate capital and prudent oversight not threats to critics of the system. That's balderdash. Commissar Blair apparently believes that bloggers should be treated the same way as journalists in Iraq, who, if they veer ever so slightly from the Pentagon's "the surge is a great triumph" script, find themselves on the smoky end of an M-16 at some unmarked checkpoint outside Baquba.
If Blair wants people to take her seriously, she should stop the paramilitary-type mothballing operations to shut down banks and tell the American people the truth about what is going on. The banking system is busted; Blair knows that as well as anyone. Now its time for someone to accept the mantle of leadership, step up to the microphone and tell the public what they really need to know:
"My fellow citizens, we are embroiled in the greatest financial crisis our nation has ever faced and we will have to take emergency action to keep the entire system from melting down."
How hard is that? But it won't happen, because everyone in the administration has an aversion to telling the truth; it's like the Devil and Holy Water. Besides, its easier to blame the bloggers, that harmless subspecies that spend long hours pecking away at their keyboards in their windowless 5' by 7' hovels.
Bloggers aren't the problem; the problem is a system that's collapsing from decades of abusive credit expansion creation and insufficient capital. Now everyone is going to pay for the excesses of the few.
As the bank-runs increase, the FDIC will be forced to admit the truth, that they don't have the resources to deal with a problem this big. Currently, the FDIC has only $53 billion in reserves to guarantee $4 trillion in total bank deposits. The entire system has a mere $267 billion cash in the vaults. What a shabby way to run a banking system. Where's the money going to come from when depositors start withdrawing their savings? How will the FDIC deal with the ongoing deleveraging in the market which is forcing more and more investors move into cash?
No one knows. All we get is more prevaricating; more smoke and mirrors, Bush assures us that "Our capital markets are functioning efficiently and effectively." Nonsense. The markets are cratering and the banks are toast. A blind man can see it. The FDIC is listing and Blair knows it. Bush needs to cut the gibberish and tell the American people the truth so they can prepare for the hard times ahead.
P.T. PAULSON: "The the banking system is sound... This is a very manageable situation."
Last Sunday, sought Treasury Secretary Henry Paulson tried to reassure the public that the banking system is sound, while bracing people for more trouble ahead:
"I think it's going to be months that we're working our way through this period — clearly months. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."
Paulson is like a broken record. Everything is always hunky-dory. He is the consummate Wall Street investment sharpie; a bright guy who could charm a hungry dog off a meat-wagon. But when it comes to telling the truth; forget about it. You'd be better off listening to Bush, which isn't saying much. The banking system is not sound nor is it well capitalized. It is a corpse that's been propped up in the office hallway next to the water-cooler so that everyone who passes bye gets a stifling whiff of the decaying flesh. Still, the charade goes on. Still the lies persist.
If the rate of bank closures continues at the present pace, by the middle of 2009 their will be restrictions on withdrawals. Even now, if you go to your bank and try to withdraw $9,000 or $10,000, it sends waves of panic through the entire building like a 5-alarm fire that quickly engulfs the main exits. It's crazy. Tellers go scampering around helter-skelter, and bank managers suddenly appear at the window grimacing in pain and wringing the sweat from their brows.
"Did you say $10,000, sir?" which is usually followed by low moaning sounds and heavy wheezing.
Journalist Bill Sardi summed it up nicely in an article last week on lewrockwell.com titled "Could Your Bail Fail?":
"The banking industry is walking on pins and needles, hoping the bad news doesn’t become a self-fulfilling prophecy that drives bank depositors to demand withdrawal of funds en masse........ There is a high likelihood the American banking system will fail, and you will likely be the last to know. The more panicked you get, and withdraw funds, the worse the implosion. In an effort to avert runs on the banks, will the news media delay informing the public of the current dire situation, which appears to be an inevitable system-wide banking collapse?
What to do?
So, while your bank still has money and can process your checks, it may be time to pay down debts, pay quarterly taxes and mortgage payments in advance, and think of having money outside of banks (gold, foreign currencies), etc., before your money is inaccessible or even evaporates! Don’t think all your investments outside of banks are immune from all this turmoil. For example, money market mutual funds, where Americans have invested $3 trillion, are not covered by FDIC insurance (however, money market accounts offered by banks are covered). Recent losses in some of these money market mutual funds have caused some companies to rush to plug the losses. For example, Legg Mason Inc. and SunTrust Banks Inc., recently pumped $1.4 billion each into its money market funds. Bank of America Corp. has injected $600 million.
As for your checking and savings accounts, recognize you may have five different accounts in the same bank, but the FDIC only insures individuals, not each account, up to $100,000. Putting your money in different accounts in the same bank does not necessarily provide better insurance for your deposits. (Bill Sardi, "Could Your Bail Fail?", lewrockwell.com)
Good advice, but if the whole system blows; we're all in trouble. It's probably wise to have a back-up plan; like plenty of ammo and a couple hundred pounds of seed potatoes. It could get hairy.
FANNIE BAILOUT: "If they dumped these securities on the market today, their value would go straight to 0."
Most people are unaware of the fact that the new Fannie Mae and Freddie Mac bailout package that was passed into law on Saturday, provides Paulson with $300 billion of taxpayer dollars to shore up the faltering mortgage behemoths. In order to accomplish this, the congress increased the national debt by a whopping $800 billion sending it over the $10 trillion mark for the first time in history. Naturally the congress buried this little tidbit of information deep in the 600 pages of legislation. It's clear that the administration is lying about Fannie and Freddie. They'll need much more than the $25 billion infusion that Paulson is predicting. That's why the national debt is ballooning. This is the biggest boondoggle of all time and it's spearheaded by the "dueling windbags", Chris Dodd and Barney Frank; both Democrats. Dodd's lengthly oratory on the floor of the House on Friday nearly earned him a citation from the EPA for releasing massive levels of toxic gas into the jet-stream and accelerating the rate of global warming.
So it's not just the Fed and the Treasury that are ruining the system; the politicos are busy bankrupting the country, too. In fact, the Fannie bailout could quite possibly be the last straw.
It now looks like Obama has been anointed by Wall Street (who are his biggest contributors) to revive the Resolution Trust Corporation (RTC)--a morgue for dead banks---so that the investment giants can off-load hundreds of billions in bad paper in one fell swoop and purge the system. That will be the big "post election" surprise; another bone for investment giants.
The path ahead has never looked so uncertain. Still, niether Paulson nor Bernanke seem at all upset by the riskiness of their strategy or by the fact that the nation's economic future has been reduced to a crap-shoot. The Fed has already spent more than $300 billion to prop up the teetering banking system in the last year alone, plus another $29 (that was never approved by congress) to buy the toxic bonds from Bear Stearns in the JP Morgan acquisition. Now, the Treasury has been authorized by congress to buy an "unlimited amount" of Fannie and Freddie shares at their own discretion. They are presently exchanging Fannie and Freddie securities for US Treasurys, which means that the dollar is now backed by dodgy mortgage-backed sludge for which there is no market. According to Rep Ron Paul, "This is the asset (MBS) which now backs up our currency. An asset that no one else wants. If they were to dump these securities on the market today, the value of these stocks would go straight to 0. But that is literally the asset that is behind our currency. It is a very serious situation."
None of congress's back-room maneuvering has anything to do with "providing a lifeline for the struggling homeowner", as Senator Dodd claims. That's all bunkum. The homeowner won't get a lick of help from this bill. Its just another handout for the brokerage fraternity. The country is putting its AAA credit rating on the line for same clatter of carpetbaggers who created the mammoth equity bubble in the first place. Now they are being rewarded for their criminal conduct. Also, Bloomberg News notes that, "Sensible people are starting to question whether the U.S. can hang on to its AAA credit rating. The prospect of an extra $5 trillion or thereabouts leaking onto the U.S. government's tab from Fannie Mae and Freddie Mac has spooked investors."
America's AAA rating will vanish in a year. It should be zero anyway. No one really believes the US will repay its debts. The US bond market is just a glitzy imitation of casino roulette only the odds are considerably worse.
Our political leaders have engineered this whole farce and are now speeding up the process by savaging the dollar. How long before foreign creditors see through this ruse and dump their dollar-backed assets on the open market? The hoax can't go on forever.
Of course, some market analysts think the banking system will make it through this rough patch, even though it is likely to take a real pasting. Economics guru, Gary North, for example, expects a slightly different outcome which he details in his latest article on Lew Rockwell's web site "Ben Bernanke's Hush Money":
"There is an enormous difference – a literally life-and-death difference – between individual bank failures and a systemic banking failure. I do NOT believe we are facing a systemic banking failure. But we are facing more individual bank failures...
Beginning in December 2007, the Federal Reserve System has sold Treasury debt whenever it has increased its purchase of questionable assets that it has bought from banks and large financial institutions. It has unloaded about 40% of its holdings of liquid Treasury debt. This has kept it from inflating the money supply at a dramatic rate. At some point, it will run out of Treasury debt to sell to the general public in order to offset the increase of its purchase of questionable assets held by the financial system. At that point, the great inflation will begin. This could be a year away. This could be a month away. All we know is this: when the Federal Reserve system runs out of Treasury debt to sell, its purchase of all assets will be inflationary. The banking system as a whole is protected. What is not protected is the purchasing power of the dollar." ("Ben Bernanke's Hush Money", Gary North, lewrockwell.com)
North makes a good point; when the Fed runs out of US Treasuries, they'll have to rev-up the printing presses and monetize the debt. That'll be doomsday for the dollar. When foreign central banks see the greenbacks a-gushing like the blood from a harpooned whale; they'll have to sell off their dollar stockpiles and take the loss. That will trigger a period of hyper-inflation in the US. Everyone will pay for the excesses of the few.
The whole system has been rejiggered to serve the needs of a few greedy bankers on top of the food chain. They could care less whether the whole country blows up or not as long as they get their slice of the pie. That's all that matters. Congress is just as bad. They abdicated their most important responsibility by giving Paulson the authority to take whatever money he needs to do whatever he wants. If that's their attitude, then what do we need congress for? Let's just board up the House of Representatives and send them all home. It would be a lot cheaper.
The truth is, the big money guys have taken a wrecking-ball to the financial system and have now moved on to the real economy. By the time their done, we'll all be picking through the wreckage just to feed our families.
MoveOn Is Not What You Think It Is
Go to Original
By Christopher Hayes
Five years to the day after American forces began their campaign of "shock and awe" in Iraq, opponents of the war gathered in Washington. While some came with bullhorns and drums and flag-draped coffins, danced down K Street and confronted legislators on Capitol Hill, others formed a quiet vigil in Lafayette Park across from the White House. Here there were no bullhorns or drums. Instead, there were a few news cameras, a banner that read Invest in America, Not Endless War in Iraq and a clutch of several dozen members of MoveOn. Bill Hamm, a retired Air Force pilot from Texas who had come to Washington for the Take Back America conference, told me that during his military career, fellow pilots often gave him push back because of his liberal politics. But, he said, "I think that's changing now." Hamm told me that back in Austin, where he and his wife serve as regional coordinators for MoveOn's local councils, his wife was organizing a 150-person vigil outside the governor's mansion. Because of "war on terror" restrictions they were told they couldn't bring candles. "So they're going to use flashlights."
This year, MoveOn turns ten. News of the organization's advanced age tends to elicit the same startled response as word of a childhood star's divorce. But more important, the anniversary serves to highlight just how far the organization has come. What started as a simple one-sentence petition hastily posted to the web has evolved into the most readily identifiable group in the vanguard of a revived progressivism, with a membership that exceeds 3 million. Capable of dominating a news cycle with a single ad and raising millions of dollars with a lone e-mail, MoveOn pioneered an entire approach to conducting politics through the Internet that has been replicated and spun off across the country and around the globe, an approach that, as the Obama campaign has dramatically demonstrated, has permanently transformed the landscape of American politics. And yet the roots of its success remain largely misunderstood.
This is in large part because MoveOn has been viewed through the distorting lens of a four-decade culture-war narrative, one whose labels have long outlasted the movements and dynamics that gave rise to them. In 1968, as the country approached what seemed to many at the time something like a civil war, Richard Nixon addressed the Republican National Convention in Miami Beach. He described "cities enveloped in flamesirens in the nightAmericans hating each other, fighting each other, killing each other at home." Amid this tumult and chaos, Nixon presented himself as a tribune for those who weren't in the streets, who weren't seeking out confrontation and attention, "the forgotten Americans," he called them, "the non-shouters."
Forty years later, despite tectonic shifts in demographics and politics, our political map still bears the same key: a decent silent majority on one side besieged by a zealous, angry, out-of-touch left on the other. For movement conservatives and establishment centrists alike, MoveOn is just a new name for an old foe. Bill O'Reilly has called it "vicious," "radical," full of "fanatical left-wingers" who are blackmailing the Democratic Party. John McCain, not to be outdone, responded to the "General Betray Us" ad by telling a Republican audience this past fall that MoveOn "ought to be thrown out of this country." Ostensibly mainstream voices like CNN's Campbell Brown have referred to MoveOn as "American insurgents," while Peter Beinart, in a 2004 cover essay in The New Republic, suggested that MoveOn be purged from the center left just as communists once were. Democrats have gotten in on the act as well: Hillary Clinton told donors at a private fundraiser that MoveOn had "intimidated" her supporters in the caucus states, and Barack Obama took a veiled swipe at the group in his recent speech on patriotism.
But understanding MoveOn as the direct descendant of the '60s protesters gets the organization exactly wrong. MoveOn's success (and, indeed, its limitations) is powered by its appeal to today's non-shouters. Though its politics are in many ways the opposite of the Nixon silent majority's, they share a disposition. They are people not inclined to protest but whose rising unease with the direction of the country has led to a new political consciousness. For citizens angered, upset and disappointed with their government but unsure how to channel those sentiments, MoveOn provides simple, discrete actions: sign this petition, donate money to run this ad, show up at this vigil. "Before I joined MoveOn," says staffer Anna Galland, "I was organizing in Rhode Island doing faith-based antiwar activism. In March 2003, MoveOn had put out an action alert for a vigil against the Iraq War. There were 500 people on the steps of the Capitol, and I remember thinking, 'I know all the activists in the state; where did all these people come from?' I think many people have a MoveOn moment where they look around and realize that this organization has managed to tap into a much broader range of people than they might have seen at past activist events."
Take, for example, Sandy Tracy. For twenty-eight years Tracy taught high school in a small town seventy miles west of St. Paul. She always voted Democratic, but she was never particularly politically engaged. "I'm 60," she says, "and during the Vietnam protests I was too afraid to participate in any of those kinds of activities." But then came the Iraq War and Kerry's defeat, and it began to feel like the country, even the world, was spinning out of control. "I was really, really, seriously upset about the results of the election of 2004 and the track that the war was going. That was part of why I retired when I did: I just couldn't concentrate on my job."
Living in a conservative area, Tracy felt she was alone in her disaffection. But then in 2007 an e-mail arrived from MoveOn telling her that someone was organizing an antiwar rally near her. "I went, Oh my gosh, there's somebody fifteen miles from me!" Within a couple of weeks she was on a bus to Washington to join a massive protest on the Mall. "I'd never done anything like that before. Along the way I found other people in MoveOn groups, peace groups, related kinds of progressive activist groups, and they weren't telling me I should just mind my own business and not talk. And spiritually that was very uplifting to me. I just went, Aha, we're onto something here."
As Tracy's experience shows, the MoveOn model of simplified and accessible activism has proved enormously successful. But as the organization enters its second decade, there's evidence that it's reached a point of diminishing returns. In the run-up to the Iraq War, MoveOn's membership exploded, from 600,000 to 1.6 million, but its rate of growth has slowed considerably since then. What's more, the organization faces a challenge in navigating the emerging political landscape. Born in opposition, first to the Republican impeachment effort, later to the Iraq War and the Bush agenda, MoveOn may soon be forced to define its relationship to a government controlled by its supposed allies in the Democratic Party -- at a time when the party's progressive base is increasingly frustrated about its failure to deliver the change it has promised.
MoveOn founders Joan Blades and Wes Boyd are non-shouters to the core. Blades used to make her living as a divorce mediator, helping couples move from heated stand-offs to win/win, and met the mild-mannered Boyd in a soccer league. The two married and threw themselves into their new software company, which scored a massive hit in the 1990s with a package of whimsical screen savers that featured, improbably, flying toasters. "As for politics," says Blades, "I voted, and so did Wes," but that was about it. "We were very busy with our software company."
Then, in the late '90s, as they watched the impeachment spectacle from their comfortable home in Berkeley, California, the couple began to feel as if the country's leaders and the members of the media had collectively lost their minds. "We were business people," says Blades, "so we thought about the opportunity costs of our government being obsessed with the scandal when in theory they had real work to do." The technically savvy Boyd got the idea to put up a website with a petition form: people could fill in their name and contact information as a means of expressing their discontent with the entire impeachment circus. The petition read simply: "Congress must immediately Censure President Clinton and Move On to pressing issues facing the country."
They sent an e-mail to 100 friends with a link to moveon.org. A September 24, 1998, article in the San Francisco Chronicle, Net's Role in Scandals May Alter News Media, mentioned the effort in its final paragraph, noting that the site had attracted 500 signatures in its first day of operation.
By the end of the week, that number was 100,000.
"Essentially we stepped into a vacuum of leadership, and we said something sensible," recalls Blades. "We're the quintessential accidental activists." They figured the petition would be a one-time endeavor, but when they saw the reaction they knew they were onto something. "I still remember one of our early e-mails: a woman wrote in and said, You know, I've never done anything political. I'm a single mom. I get home and feed my son. This" -- meaning signing a petition, forwarding an e-mail -- "is something I can do." This ease of use remains one of MoveOn's hallmarks, one with particular appeal at a time when Americans work more than their counterparts in almost every other industrialized nation.
It's worth pausing for a moment to note the complete lack of ideological zealotry in MoveOn's founding. "It was really more about common sense versus insanity than it was about progressives versus conservatives," says Ben Brandzel, who worked for MoveOn and now consults with other groups around the world using the same model. "Impeachment, the details of that, really has nothing to do with any political scientist's idea about progressive or conservative," he says.
It wasn't until the shock of 9/11 and the run-up to Iraq that MoveOn's "basic common sense populism [was] grafted onto a partisan divide," according to Brandzel. The vessel for this shift was an unassuming 6-foot-3 20-year-old named Eli Pariser. As MoveOn PAC's executive director, Pariser, now 27, is the organization's de facto leader, and his reserved bearing is rather stunning if you've spent any time listening to Bill O'Reilly. In a wedding announcement in the New York Times this summer his new wife described him as "clear-eyed and hopeful." In person, he's so preternaturally calm one almost feels he might be some kind of reincarnated lama.
The day after 9/11, Pariser, then living in Boston, wanted to do something to help. When the local blood bank told him it was beyond capacity, he channeled his anguish and hope into an online petition he e-mailed to thirty friends. Earnest, plaintive and humane, it made the case for international leaders to use "moderation and restraint" in responding to the attacks, and called for employing "international judicial institutions and international human rights law to bring to justice those responsible for the attacks, rather than the instruments of war, violence or destruction."
"By Monday there were thousands of e-mails in my Inbox," he told me recently. "The server was crashing. It was this moment where the e-mail had hit a chord and was being repeated out through the address books." Within the first two weeks, 515,000 people signed the petition, and before long he'd connected with Blades and Boyd, merged his list with MoveOn's and joined the organization as a full-time staff member.
Starting in summer 2002, much of the antiwar movement flowed through Pariser, and as the drumbeat for war with Iraq grew louder MoveOn's ranks swelled. "There was kind of a strength-in-numbers thing," Pariser recalls. "That's when the surge of people who had been quiet through the first year and a half of the Bush Administration started to realize, This is serious; I need to be involved."
At its apex the stop-the-war-before-it-starts movement was the largest popular uprising on the left in decades. The coalition that organized the protests around the country drew millions into the streets, including everyone from anarchists, Maoists and pacifists to nuns, soccer moms and disaffected Republicans. MoveOn tended to anchor the latter part of the spectrum, as part of the moderate Win Without War coalition. Whereas other groups called out "No blood for oil!" MoveOn's most successful petition was titled "Let the Inspections Work."
Even as the Bush Administration has radicalized so many, and pushed MoveOn toward a more aggressively partisan stance, that original pragmatic sensibility remains woven into the organization's DNA. "Wes and Joan didn't come out of the left," notes Zack Exley, who worked as a union organizer before joining MoveOn in 2002 (and later worked for the Kerry campaign). "Eli hadn't had time to be on the left." For Exley, the freshness of their approach was a revelation. "It was the most exciting kind of atmosphere because they weren't negative or defeated or cynicalthey didn't have their ideas set. They kind of had this boundless faith in what their members were capable of doing."
MoveOn staffers echo Exley's characterization, stressing that whatever MoveOn's ideological sensibility ("pragmatically progressive," one offered), it's a product not of its staff's outlook but of the views of its members. "Some groups have a really strong ideological substrate," says organizing director Justin Ruben. "We tend to not be that way. We believe strongly in the wisdom of crowds, giving people the ability to make choices together. They'll make good choices."
In theory that's all well and good; in practice, it's no small task to figure out just what kind of choices 3.2 million people are interested in making. In his new book Here Comes Everybody, Internet theorist Clay Shirky illustrates how dramatically the Internet has lowered the cost of collective action and coordination across barriers of time and space. MoveOn's approach to activism -- mass e-mails, instant internal polling, distributed fundraising -- takes advantage of this development. Before MoveOn pioneered the online petition, just the simple act of gathering 100,000 signatures would have cost hundreds of thousands of dollars and hundreds of hours of labor. Now MoveOn sends out e-mail petitions several times a month. Or consider this: to manage its lobbying efforts and programs for its more than 4 million members, the NRA has a staff exceeding 500 and a $15 million, 390,000-square-foot office building in Virginia. MoveOn has a staff of twenty-three. And no headquarters. Twice a week, a dozen of MoveOn's staffers call in from around the country for a strategy session. The organization is so committed to the ethos of the virtual office, it has an internal policy that even when staffers are living in the same city they're prohibited from sharing office space.
"What makes it possible," says Ruben, "is that every action taken ends up in our database. It's all in one place and the data set is enormous, which if you're a geek is awesome." When MoveOn sends out mass e-mails, staffers often first test multiple separate subject lines within small sample groups, choosing the subject that's most effective at getting people to act on the e-mail's "ask." Each week they run a tracking poll, surveying a random subsample of members to identify which issues they're following and where their passions lie.
The speed and efficiency of Internet communication allows the organization tremendous flexibility in responding to breaking developments. "Because we are member driven, we 'Chase the Energy,'" Brandzel writes in a manifesto called "The 8 Fold Path," which lays out the MoveOn approach. "Energy flows with news cycles, and the opportunity to make a difference." In the wake of Hurricane Katrina, MoveOn was able to use its member database to set up a website where evacuees could be matched with members who had extra rooms in their houses to share. The site was up just seventy-two hours after the hurricane made landfall in New Orleans, and ended up providing housing to more than 30,000 evacuees, a response far quicker than FEMA's.
MoveOn-ers are quick to point out that technology is just the means, not the end. "The Internet's just a tool," says Brandzel. "I mean, would you call a church a paper-based organization because the Bible is printed on paper?" Just as the Reformation required both discontent with the Catholic Church's corruption and Gutenberg's printing press, MoveOn's rise required both the swelling backlash against post-Gingrich radicalism and the explosive growth of the Internet, particularly among the ranks of the professional classes with Internet access.
Somewhat frustratingly, MoveOn does not keep demographic information about its members, which makes it difficult to know for sure whether the sample of members I spoke with, mostly white and middle class, is representative. But it is clear that they aren't radicals. After the 2004 election, MoveOn attempted to use Internet forums, e-mails and polls to build a platform of sorts, called the Positive Agenda. The results were squarely within the mainstream of the Democratic Party: universal healthcare, clean renewable energy and the restoration of the Constitution and civil liberties. "The idea that MoveOn is like some foaming-at-the-mouth, swinging-from-the-trees liberal interest group is kind of a joke," says influential blogger Jane Hamsher of FireDogLake.com.
"People ask us all the time, you know, Make your members do this or think this," says Pariser. "We just have to politely say, We can't. Even if we wanted to, people click the link or they do the thing that we ask them to if they think it's a useful thing to do. There's no chain of command.
"It's essentially a service organization that helps people who are busy advocate in politics. We're providing something that's valuable to people and using technology to amplify the quality of the service you can get. It's not unlike Netflix or Flickr."
It's a revealing analogy. In many ways MoveOn's relationship to its members looks a lot like a business's relationship to its customers. If a product isn't selling, they take it off the shelves. For activists rooted in an earlier generation of social movements, which tended to prize long, disputatious meetings and the unwieldy process of forming bottom-up consensus, this approach is at best alien, at worst insidious. Customers, after all, aren't part of the creation of the product: they're not running the meetings where new packaging is designed; their input is limited to the final result and expressed through the transaction of purchase. And the role of customer imposes no obligations. You are free to buy or not buy, or in MoveOn's case, sign the petition or not sign the petition. Oscar Wilde once complained that the trouble with socialism was that it took "too many evenings." MoveOn holds out the promise of progressive change without the evenings.
Marshall Ganz -- who organized with the farm workers, recently ran training workshops for Obama's field staff and now studies and teaches organizing at Harvard's Kennedy School -- says much of what MoveOn does is marketing, not organizing. "The genius of the Internet is more the way it can create a marketplace than create organization," he says. "It's important to distinguish between sharing information and forming relationships. Forming a relationship, we make a commitment to work together. Participation in democratic organizations is not just an individual act. It's an act of affiliation with others." If you were to map the arrows of relationship between MoveOn's staff and its members, Ganz points out, nearly all the arrows would run between the members and the staff: you receive an e-mail, you respond, you give money, etc. -- but relatively few go from member to member.
"They're gonna send letters to Congress and the President," says Ganz. "And man, we generate a lot of fucking letters. That's great. So what sort of capacity have we created in the process? Have we developed a new leadership? Probably not. Have members learned more about relating to each other? Not so much."
Ganz's criticism is mild compared with that of John Stauber, who founded the Center for Media and Democracy and has written scathingly of MoveOn. According to Stauber, MoveOn has become "primarily a money-raising and marketing arm of the Pelosi wing of the Democratic Party. They clearly haven't shown any interest in building an organization that would empower the millions of people whose e-mail addresses they have. The so-called MoveOn membership is really just a group of people who are used for fundraising purposes."
Stauber is among a small handful of people on the left willing to express such harsh criticisms on the record. Privately, more progressive activists will make familiar complaints about grievances and frictions that have developed from working together. "In the early days they were great partners and had an interest in building up other progressive organizations," one prominent progressive who's worked with MoveOn told me. "That seems to have changed."
Perhaps the most damning criticism leveled at MoveOn is that by creating a clear and easy outlet for people's frustration and angst, the organization delivers people a false sense of accomplishment. In other words, MoveOn can be tremendously successful without being effective. Consider the vaunted petition, MoveOn's bread and butter. In 1998 a petition with 100,000 signatures would make any politician sit up and take notice, but over time the value has been degraded as more organizations have learned how to leverage the Internet. Clay Shirky calls this the "cost/value paradox" and says it can spell big trouble for MoveOn. As the transaction cost for a specific piece of activism declines, so does its value, since politicians know it doesn't require much effort. One former Democratic Senate staffer told me that when her boss was presented the weekly mail summary, the staff made sure that if an issue had landed on the top of the list as a result of a MoveOn mass e-mailing, it was marked with an asterisk. "They've been selling: Millions of E-mails Sold, the old McDonald's line," says Shirky. "They're now realizing that in a way they're empty calories."
Talk to MoveOn staff members and they'll say that any method of organizing has its limitations. The organizing model that requires long meetings and vigorous debate can lead to organizations being driven by, in MoveOn spokeswoman Ilyse Hogue's words, "the loudest person in the room," something that cuts against MoveOn's non-shouter ethos. They'll also point out that their approach has led to concrete victories: they spearheaded an effort that blocked the FCC's attempts to allow media cross-ownership in local markets; they were an instrumental part of the campaign to beat back Social Security privatization; and the "caught red-handed" ads they ran in targeted Congressional races in '06 had a real effect in softening support for a number of Republican incumbents. What's more, the model works well enough that people around the world are eager to adopt it. In Australia, a MoveOn-type group called GetUp!, which was advised by Brandzel, played a key role in the recent electoral victory of the country's center-left Labor Party. Last year James Rucker, a former MoveOn staffer, started ColorofChange.org, a MoveOn-style organization focused on African-American political mobilization that now boasts 100,000 members; Avaaz.org, a global justice MoveOn spinoff, has a worldwide membership of more than 3 million members.
All that said, there's also a stalking awareness in the organization that the model that has served it so well these past ten years may be approaching its limit. The organization still can raise money from its members to run ads on TV (like the "Not Alex" anti-McCain ad it recently unveiled), but because of the constant erosion of any e-mail list, MoveOn has to add something like 200,000 members a year just to tread water. This need to constantly refresh the membership base explains, at least in part, MoveOn's heavy focus on media exposure and its knack for courting publicity, even controversy. "There's such a huge media component to everything MoveOn does," says a progressive activist who's worked on campaigns with MoveOn. "They have a philosophy that says, Get media; that will get you members."
Meanwhile, technology moves fast and MoveOn's primary medium, e-mail, threatens to become outmoded as young people migrate to text messages, social networking sites and IM. In response, MoveOn has branched out to conduct Facebook activism, successfully running a campaign within Facebook to force the site to alter a feature that broadcast private purchasing decisions.
Most significant, MoveOn has massively expanded its focus on developing an offline presence, one grounded in the face-to-face interactions that Ganz invoked. "We had a project for a while called Click Back America, but I think you can't actually click back America," says Justin Ruben. "The things that people do in the real world, away from their computer, also matter. Our power comes almost entirely from collective action. You can only do so much through the computer."
MoveOn began developing the capacity of offline action in 2004, attempting to build from scratch in a little more than ten weeks a member-based field program in support of John Kerry in swing states. The idea was that MoveOn members would act as precinct captains and canvass their neighbors. Though rushed and somewhat ad hoc, this first foray into concerted offline activity gave birth to Operation Democracy -- since renamed MoveOn Councils -- the locus of MoveOn's local, physical presence and the conduit for everything from phone banking to house parties to war vigils. Anna Galland, who heads up the councils for MoveOn (and who is, full disclosure, a college friend), says they're ambitiously scaling up. "We're up to 250 local councils, with councils in every state." Members meet in their local councils, and council leaders report to volunteer regional coordinators. "People come from all sorts of backgrounds," says Galland, and get trained in everything from how to run a meeting to leadership development. "We're not just looking for volunteers; we're trying to build a culture of organizing," she says.
For those who came to MoveOn through the simple activism of signing a petition, forwarding an e-mail or donating money, the council provides an opportunity to take the more involved step of actually congregating with other progressives. Crossing this gulf, for millions of people, is no small step. Sandy Tracy, the retired Minnesota high school teacher, now serves as a regional coordinator. She recalls the anxiety she felt before hosting her first house party. "I had fifteen people who signed up to come to that first event," she says. "I felt a little awkward, and I'm going, Oh my gosh! I've got all these people at my house; what are we going to talk about?"
The councils were born of a desire to help elect Kerry, and now that Obama is the presumptive Democratic Party nominee, nearly all of MoveOn's focus has shifted to getting him elected. In many ways, the Obama campaign is built on much the same aspirations, ethos and constituency as MoveOn, which is why it wasn't particularly shocking that when the group polled its members in February, 70 percent voted to endorse Obama over Clinton.
Some, though, were surprised. "I was slack-jawed," says one netroots activist, noting that Obama had failed to vote on the Senate resolution that chastised the group for its General Betray Us ad. "They were at the mercy of their membership, who really were enthusiastic about Obama. But this was the guy who threw them under the bus, and they basically said, Beat me! Treat me like shit!"
The subtext here is the larger issue of MoveOn's relationship to a Democratic Party that many feel has co-opted it. "They built up a huge membership because of the war," says CodePink founder Medea Benjamin, "and the press looked at them as the voice of the antiwar movement, and then they betrayed the movement. They were more concerned with being on the same page with the Democratic leadership than with the rest of the antiwar leadership."
Particularly egregious to Benjamin and others was the failure of Americans Against Escalation in Iraq. Co-founded in January 2007 by MoveOn and run by its then-Washington director, Tom Matzzie, the coalition spent $12 million attempting to force Bush to begin withdrawing troops from Iraq. Its efforts helped push Congressional Democrats to pass a supplemental bill that tied funding to a withdrawal timeline. But after the President vetoed the bill, AAEI focused on running ads against Republicans who'd backed the White House rather than trying to force the Democratic Congressional leadership to cut off funds.
"MoveOn went all out to get a Democratic Congress elected," says Benjamin. "We now have more troops in Iraq, more funding than the Bush Administration even asked for and a guarantee that the war will continue into the next administration."
If CodePink thinks MoveOn is too cozy with the Democrats, Democratic staffers on the Hill have a hard time telling MoveOn and CodePink apart. Several staffers I talked with felt animus toward MoveOn for organizing actions against their bosses. But when they described these actions -- sit-ins in their Hill offices, for instance -- it became clear they were confusing MoveOn with CodePink and other more confrontational antiwar groups. The resentment is also a result of MoveOn's clumsy Betray Us ad, which became such a high-profile distraction that it allowed conservatives to deflect attention from the war debate. And MoveOn's presence on the Hill, where the battle over escalation was fought, is not particularly strong; in Democratic Congressional offices, it's viewed more as an annoyance than a force. "I've never been in a room where someone says, Let's all check with MoveOn," said the former staffer.
"Of course, I wish the result had been different," says Nita Chaudhary, MoveOn's chief antiwar organizer, of their efforts to prevent the escalation. "But we tried very hard." Chaudhary points out that MoveOn has spent time and effort going after Democrats. Local groups routinely meet with their Representatives to lobby them on the war, and "we ran ads against Democrats -- we did this whole backbone campaign with Democrats, trying to get them to stand up against a blank check on the war." But she concedes that the organization made a tactical decision that the best way to bring the war to heel would be through elections, first electing a Democratic majority and now trying to elect Obama along with an "anti-Iraq War majority" in Congress.
To MoveOn's critics in the antiwar movement, the tactical choice to focus most of its energy on defeating Republicans confirmed a nagging sense that, for all its talk about being led by its members, the organization is really run by its staff. Dave Swanson of Democrats.com recalls that in March 2007, "a lot of the real peace organizations were pushing the Barbara Lee amendment" (which would have provided funding only for a withdrawal of forces) "to the point where MoveOn was feeling the pressure. So do they send out a survey, Do you favor the Barbara Lee or the [Democratic] leadership's bill?" (which would have attached timelines but continued funding). "No. Instead, they offered a choice of the leadership's bill or the President's agenda. It was essentially a Stalinist poll. They know damn well what their membership would have said if offered an honest survey."
In response to criticism of that poll, Pariser argued that MoveOn's members were sophisticated enough to understand that the Pelosi bill was the best possible option. But the episode highlighted the difficulty of the situation MoveOn increasingly finds itself in. Over ten years the organization has developed a reliably confrontational posture toward the Republicans in power. It's a necessary feature of an organization that needs to raise money constantly, a rational reaction to the GOP's debased leadership and the expression of a deep and genuine sentiment among its silent majority members, who have simply had enough. But the frustrations of the past two years with a Democratic Congress struggling to deliver any of the things MoveOn members want have served as a teachable moment. In interviews with nearly two dozen of MoveOn's regional coordinators, when I asked what they saw as MoveOn's role in a future Democrat-dominated Washington, they gave without exception the same answer: hold the politicians accountable. "One of their mottoes that really resonates with me is that democracy is not a spectator sport," says Sandy Tracy, the retired schoolteacher. "Average people have elected their officials and sent them off and let them be. We're now paying the price for that."
Should the Democrats retake the White House and add to their Congressional majorities this fall, they would do well to take note of Tracy and the millions like her. Come next spring, if they haven't started withdrawing troops, you just might see Sandy Tracy in the streets with a bullhorn.
By Christopher Hayes
Five years to the day after American forces began their campaign of "shock and awe" in Iraq, opponents of the war gathered in Washington. While some came with bullhorns and drums and flag-draped coffins, danced down K Street and confronted legislators on Capitol Hill, others formed a quiet vigil in Lafayette Park across from the White House. Here there were no bullhorns or drums. Instead, there were a few news cameras, a banner that read Invest in America, Not Endless War in Iraq and a clutch of several dozen members of MoveOn. Bill Hamm, a retired Air Force pilot from Texas who had come to Washington for the Take Back America conference, told me that during his military career, fellow pilots often gave him push back because of his liberal politics. But, he said, "I think that's changing now." Hamm told me that back in Austin, where he and his wife serve as regional coordinators for MoveOn's local councils, his wife was organizing a 150-person vigil outside the governor's mansion. Because of "war on terror" restrictions they were told they couldn't bring candles. "So they're going to use flashlights."
This year, MoveOn turns ten. News of the organization's advanced age tends to elicit the same startled response as word of a childhood star's divorce. But more important, the anniversary serves to highlight just how far the organization has come. What started as a simple one-sentence petition hastily posted to the web has evolved into the most readily identifiable group in the vanguard of a revived progressivism, with a membership that exceeds 3 million. Capable of dominating a news cycle with a single ad and raising millions of dollars with a lone e-mail, MoveOn pioneered an entire approach to conducting politics through the Internet that has been replicated and spun off across the country and around the globe, an approach that, as the Obama campaign has dramatically demonstrated, has permanently transformed the landscape of American politics. And yet the roots of its success remain largely misunderstood.
This is in large part because MoveOn has been viewed through the distorting lens of a four-decade culture-war narrative, one whose labels have long outlasted the movements and dynamics that gave rise to them. In 1968, as the country approached what seemed to many at the time something like a civil war, Richard Nixon addressed the Republican National Convention in Miami Beach. He described "cities enveloped in flamesirens in the nightAmericans hating each other, fighting each other, killing each other at home." Amid this tumult and chaos, Nixon presented himself as a tribune for those who weren't in the streets, who weren't seeking out confrontation and attention, "the forgotten Americans," he called them, "the non-shouters."
Forty years later, despite tectonic shifts in demographics and politics, our political map still bears the same key: a decent silent majority on one side besieged by a zealous, angry, out-of-touch left on the other. For movement conservatives and establishment centrists alike, MoveOn is just a new name for an old foe. Bill O'Reilly has called it "vicious," "radical," full of "fanatical left-wingers" who are blackmailing the Democratic Party. John McCain, not to be outdone, responded to the "General Betray Us" ad by telling a Republican audience this past fall that MoveOn "ought to be thrown out of this country." Ostensibly mainstream voices like CNN's Campbell Brown have referred to MoveOn as "American insurgents," while Peter Beinart, in a 2004 cover essay in The New Republic, suggested that MoveOn be purged from the center left just as communists once were. Democrats have gotten in on the act as well: Hillary Clinton told donors at a private fundraiser that MoveOn had "intimidated" her supporters in the caucus states, and Barack Obama took a veiled swipe at the group in his recent speech on patriotism.
But understanding MoveOn as the direct descendant of the '60s protesters gets the organization exactly wrong. MoveOn's success (and, indeed, its limitations) is powered by its appeal to today's non-shouters. Though its politics are in many ways the opposite of the Nixon silent majority's, they share a disposition. They are people not inclined to protest but whose rising unease with the direction of the country has led to a new political consciousness. For citizens angered, upset and disappointed with their government but unsure how to channel those sentiments, MoveOn provides simple, discrete actions: sign this petition, donate money to run this ad, show up at this vigil. "Before I joined MoveOn," says staffer Anna Galland, "I was organizing in Rhode Island doing faith-based antiwar activism. In March 2003, MoveOn had put out an action alert for a vigil against the Iraq War. There were 500 people on the steps of the Capitol, and I remember thinking, 'I know all the activists in the state; where did all these people come from?' I think many people have a MoveOn moment where they look around and realize that this organization has managed to tap into a much broader range of people than they might have seen at past activist events."
Take, for example, Sandy Tracy. For twenty-eight years Tracy taught high school in a small town seventy miles west of St. Paul. She always voted Democratic, but she was never particularly politically engaged. "I'm 60," she says, "and during the Vietnam protests I was too afraid to participate in any of those kinds of activities." But then came the Iraq War and Kerry's defeat, and it began to feel like the country, even the world, was spinning out of control. "I was really, really, seriously upset about the results of the election of 2004 and the track that the war was going. That was part of why I retired when I did: I just couldn't concentrate on my job."
Living in a conservative area, Tracy felt she was alone in her disaffection. But then in 2007 an e-mail arrived from MoveOn telling her that someone was organizing an antiwar rally near her. "I went, Oh my gosh, there's somebody fifteen miles from me!" Within a couple of weeks she was on a bus to Washington to join a massive protest on the Mall. "I'd never done anything like that before. Along the way I found other people in MoveOn groups, peace groups, related kinds of progressive activist groups, and they weren't telling me I should just mind my own business and not talk. And spiritually that was very uplifting to me. I just went, Aha, we're onto something here."
As Tracy's experience shows, the MoveOn model of simplified and accessible activism has proved enormously successful. But as the organization enters its second decade, there's evidence that it's reached a point of diminishing returns. In the run-up to the Iraq War, MoveOn's membership exploded, from 600,000 to 1.6 million, but its rate of growth has slowed considerably since then. What's more, the organization faces a challenge in navigating the emerging political landscape. Born in opposition, first to the Republican impeachment effort, later to the Iraq War and the Bush agenda, MoveOn may soon be forced to define its relationship to a government controlled by its supposed allies in the Democratic Party -- at a time when the party's progressive base is increasingly frustrated about its failure to deliver the change it has promised.
MoveOn founders Joan Blades and Wes Boyd are non-shouters to the core. Blades used to make her living as a divorce mediator, helping couples move from heated stand-offs to win/win, and met the mild-mannered Boyd in a soccer league. The two married and threw themselves into their new software company, which scored a massive hit in the 1990s with a package of whimsical screen savers that featured, improbably, flying toasters. "As for politics," says Blades, "I voted, and so did Wes," but that was about it. "We were very busy with our software company."
Then, in the late '90s, as they watched the impeachment spectacle from their comfortable home in Berkeley, California, the couple began to feel as if the country's leaders and the members of the media had collectively lost their minds. "We were business people," says Blades, "so we thought about the opportunity costs of our government being obsessed with the scandal when in theory they had real work to do." The technically savvy Boyd got the idea to put up a website with a petition form: people could fill in their name and contact information as a means of expressing their discontent with the entire impeachment circus. The petition read simply: "Congress must immediately Censure President Clinton and Move On to pressing issues facing the country."
They sent an e-mail to 100 friends with a link to moveon.org. A September 24, 1998, article in the San Francisco Chronicle, Net's Role in Scandals May Alter News Media, mentioned the effort in its final paragraph, noting that the site had attracted 500 signatures in its first day of operation.
By the end of the week, that number was 100,000.
"Essentially we stepped into a vacuum of leadership, and we said something sensible," recalls Blades. "We're the quintessential accidental activists." They figured the petition would be a one-time endeavor, but when they saw the reaction they knew they were onto something. "I still remember one of our early e-mails: a woman wrote in and said, You know, I've never done anything political. I'm a single mom. I get home and feed my son. This" -- meaning signing a petition, forwarding an e-mail -- "is something I can do." This ease of use remains one of MoveOn's hallmarks, one with particular appeal at a time when Americans work more than their counterparts in almost every other industrialized nation.
It's worth pausing for a moment to note the complete lack of ideological zealotry in MoveOn's founding. "It was really more about common sense versus insanity than it was about progressives versus conservatives," says Ben Brandzel, who worked for MoveOn and now consults with other groups around the world using the same model. "Impeachment, the details of that, really has nothing to do with any political scientist's idea about progressive or conservative," he says.
It wasn't until the shock of 9/11 and the run-up to Iraq that MoveOn's "basic common sense populism [was] grafted onto a partisan divide," according to Brandzel. The vessel for this shift was an unassuming 6-foot-3 20-year-old named Eli Pariser. As MoveOn PAC's executive director, Pariser, now 27, is the organization's de facto leader, and his reserved bearing is rather stunning if you've spent any time listening to Bill O'Reilly. In a wedding announcement in the New York Times this summer his new wife described him as "clear-eyed and hopeful." In person, he's so preternaturally calm one almost feels he might be some kind of reincarnated lama.
The day after 9/11, Pariser, then living in Boston, wanted to do something to help. When the local blood bank told him it was beyond capacity, he channeled his anguish and hope into an online petition he e-mailed to thirty friends. Earnest, plaintive and humane, it made the case for international leaders to use "moderation and restraint" in responding to the attacks, and called for employing "international judicial institutions and international human rights law to bring to justice those responsible for the attacks, rather than the instruments of war, violence or destruction."
"By Monday there were thousands of e-mails in my Inbox," he told me recently. "The server was crashing. It was this moment where the e-mail had hit a chord and was being repeated out through the address books." Within the first two weeks, 515,000 people signed the petition, and before long he'd connected with Blades and Boyd, merged his list with MoveOn's and joined the organization as a full-time staff member.
Starting in summer 2002, much of the antiwar movement flowed through Pariser, and as the drumbeat for war with Iraq grew louder MoveOn's ranks swelled. "There was kind of a strength-in-numbers thing," Pariser recalls. "That's when the surge of people who had been quiet through the first year and a half of the Bush Administration started to realize, This is serious; I need to be involved."
At its apex the stop-the-war-before-it-starts movement was the largest popular uprising on the left in decades. The coalition that organized the protests around the country drew millions into the streets, including everyone from anarchists, Maoists and pacifists to nuns, soccer moms and disaffected Republicans. MoveOn tended to anchor the latter part of the spectrum, as part of the moderate Win Without War coalition. Whereas other groups called out "No blood for oil!" MoveOn's most successful petition was titled "Let the Inspections Work."
Even as the Bush Administration has radicalized so many, and pushed MoveOn toward a more aggressively partisan stance, that original pragmatic sensibility remains woven into the organization's DNA. "Wes and Joan didn't come out of the left," notes Zack Exley, who worked as a union organizer before joining MoveOn in 2002 (and later worked for the Kerry campaign). "Eli hadn't had time to be on the left." For Exley, the freshness of their approach was a revelation. "It was the most exciting kind of atmosphere because they weren't negative or defeated or cynicalthey didn't have their ideas set. They kind of had this boundless faith in what their members were capable of doing."
MoveOn staffers echo Exley's characterization, stressing that whatever MoveOn's ideological sensibility ("pragmatically progressive," one offered), it's a product not of its staff's outlook but of the views of its members. "Some groups have a really strong ideological substrate," says organizing director Justin Ruben. "We tend to not be that way. We believe strongly in the wisdom of crowds, giving people the ability to make choices together. They'll make good choices."
In theory that's all well and good; in practice, it's no small task to figure out just what kind of choices 3.2 million people are interested in making. In his new book Here Comes Everybody, Internet theorist Clay Shirky illustrates how dramatically the Internet has lowered the cost of collective action and coordination across barriers of time and space. MoveOn's approach to activism -- mass e-mails, instant internal polling, distributed fundraising -- takes advantage of this development. Before MoveOn pioneered the online petition, just the simple act of gathering 100,000 signatures would have cost hundreds of thousands of dollars and hundreds of hours of labor. Now MoveOn sends out e-mail petitions several times a month. Or consider this: to manage its lobbying efforts and programs for its more than 4 million members, the NRA has a staff exceeding 500 and a $15 million, 390,000-square-foot office building in Virginia. MoveOn has a staff of twenty-three. And no headquarters. Twice a week, a dozen of MoveOn's staffers call in from around the country for a strategy session. The organization is so committed to the ethos of the virtual office, it has an internal policy that even when staffers are living in the same city they're prohibited from sharing office space.
"What makes it possible," says Ruben, "is that every action taken ends up in our database. It's all in one place and the data set is enormous, which if you're a geek is awesome." When MoveOn sends out mass e-mails, staffers often first test multiple separate subject lines within small sample groups, choosing the subject that's most effective at getting people to act on the e-mail's "ask." Each week they run a tracking poll, surveying a random subsample of members to identify which issues they're following and where their passions lie.
The speed and efficiency of Internet communication allows the organization tremendous flexibility in responding to breaking developments. "Because we are member driven, we 'Chase the Energy,'" Brandzel writes in a manifesto called "The 8 Fold Path," which lays out the MoveOn approach. "Energy flows with news cycles, and the opportunity to make a difference." In the wake of Hurricane Katrina, MoveOn was able to use its member database to set up a website where evacuees could be matched with members who had extra rooms in their houses to share. The site was up just seventy-two hours after the hurricane made landfall in New Orleans, and ended up providing housing to more than 30,000 evacuees, a response far quicker than FEMA's.
MoveOn-ers are quick to point out that technology is just the means, not the end. "The Internet's just a tool," says Brandzel. "I mean, would you call a church a paper-based organization because the Bible is printed on paper?" Just as the Reformation required both discontent with the Catholic Church's corruption and Gutenberg's printing press, MoveOn's rise required both the swelling backlash against post-Gingrich radicalism and the explosive growth of the Internet, particularly among the ranks of the professional classes with Internet access.
Somewhat frustratingly, MoveOn does not keep demographic information about its members, which makes it difficult to know for sure whether the sample of members I spoke with, mostly white and middle class, is representative. But it is clear that they aren't radicals. After the 2004 election, MoveOn attempted to use Internet forums, e-mails and polls to build a platform of sorts, called the Positive Agenda. The results were squarely within the mainstream of the Democratic Party: universal healthcare, clean renewable energy and the restoration of the Constitution and civil liberties. "The idea that MoveOn is like some foaming-at-the-mouth, swinging-from-the-trees liberal interest group is kind of a joke," says influential blogger Jane Hamsher of FireDogLake.com.
"People ask us all the time, you know, Make your members do this or think this," says Pariser. "We just have to politely say, We can't. Even if we wanted to, people click the link or they do the thing that we ask them to if they think it's a useful thing to do. There's no chain of command.
"It's essentially a service organization that helps people who are busy advocate in politics. We're providing something that's valuable to people and using technology to amplify the quality of the service you can get. It's not unlike Netflix or Flickr."
It's a revealing analogy. In many ways MoveOn's relationship to its members looks a lot like a business's relationship to its customers. If a product isn't selling, they take it off the shelves. For activists rooted in an earlier generation of social movements, which tended to prize long, disputatious meetings and the unwieldy process of forming bottom-up consensus, this approach is at best alien, at worst insidious. Customers, after all, aren't part of the creation of the product: they're not running the meetings where new packaging is designed; their input is limited to the final result and expressed through the transaction of purchase. And the role of customer imposes no obligations. You are free to buy or not buy, or in MoveOn's case, sign the petition or not sign the petition. Oscar Wilde once complained that the trouble with socialism was that it took "too many evenings." MoveOn holds out the promise of progressive change without the evenings.
Marshall Ganz -- who organized with the farm workers, recently ran training workshops for Obama's field staff and now studies and teaches organizing at Harvard's Kennedy School -- says much of what MoveOn does is marketing, not organizing. "The genius of the Internet is more the way it can create a marketplace than create organization," he says. "It's important to distinguish between sharing information and forming relationships. Forming a relationship, we make a commitment to work together. Participation in democratic organizations is not just an individual act. It's an act of affiliation with others." If you were to map the arrows of relationship between MoveOn's staff and its members, Ganz points out, nearly all the arrows would run between the members and the staff: you receive an e-mail, you respond, you give money, etc. -- but relatively few go from member to member.
"They're gonna send letters to Congress and the President," says Ganz. "And man, we generate a lot of fucking letters. That's great. So what sort of capacity have we created in the process? Have we developed a new leadership? Probably not. Have members learned more about relating to each other? Not so much."
Ganz's criticism is mild compared with that of John Stauber, who founded the Center for Media and Democracy and has written scathingly of MoveOn. According to Stauber, MoveOn has become "primarily a money-raising and marketing arm of the Pelosi wing of the Democratic Party. They clearly haven't shown any interest in building an organization that would empower the millions of people whose e-mail addresses they have. The so-called MoveOn membership is really just a group of people who are used for fundraising purposes."
Stauber is among a small handful of people on the left willing to express such harsh criticisms on the record. Privately, more progressive activists will make familiar complaints about grievances and frictions that have developed from working together. "In the early days they were great partners and had an interest in building up other progressive organizations," one prominent progressive who's worked with MoveOn told me. "That seems to have changed."
Perhaps the most damning criticism leveled at MoveOn is that by creating a clear and easy outlet for people's frustration and angst, the organization delivers people a false sense of accomplishment. In other words, MoveOn can be tremendously successful without being effective. Consider the vaunted petition, MoveOn's bread and butter. In 1998 a petition with 100,000 signatures would make any politician sit up and take notice, but over time the value has been degraded as more organizations have learned how to leverage the Internet. Clay Shirky calls this the "cost/value paradox" and says it can spell big trouble for MoveOn. As the transaction cost for a specific piece of activism declines, so does its value, since politicians know it doesn't require much effort. One former Democratic Senate staffer told me that when her boss was presented the weekly mail summary, the staff made sure that if an issue had landed on the top of the list as a result of a MoveOn mass e-mailing, it was marked with an asterisk. "They've been selling: Millions of E-mails Sold, the old McDonald's line," says Shirky. "They're now realizing that in a way they're empty calories."
Talk to MoveOn staff members and they'll say that any method of organizing has its limitations. The organizing model that requires long meetings and vigorous debate can lead to organizations being driven by, in MoveOn spokeswoman Ilyse Hogue's words, "the loudest person in the room," something that cuts against MoveOn's non-shouter ethos. They'll also point out that their approach has led to concrete victories: they spearheaded an effort that blocked the FCC's attempts to allow media cross-ownership in local markets; they were an instrumental part of the campaign to beat back Social Security privatization; and the "caught red-handed" ads they ran in targeted Congressional races in '06 had a real effect in softening support for a number of Republican incumbents. What's more, the model works well enough that people around the world are eager to adopt it. In Australia, a MoveOn-type group called GetUp!, which was advised by Brandzel, played a key role in the recent electoral victory of the country's center-left Labor Party. Last year James Rucker, a former MoveOn staffer, started ColorofChange.org, a MoveOn-style organization focused on African-American political mobilization that now boasts 100,000 members; Avaaz.org, a global justice MoveOn spinoff, has a worldwide membership of more than 3 million members.
All that said, there's also a stalking awareness in the organization that the model that has served it so well these past ten years may be approaching its limit. The organization still can raise money from its members to run ads on TV (like the "Not Alex" anti-McCain ad it recently unveiled), but because of the constant erosion of any e-mail list, MoveOn has to add something like 200,000 members a year just to tread water. This need to constantly refresh the membership base explains, at least in part, MoveOn's heavy focus on media exposure and its knack for courting publicity, even controversy. "There's such a huge media component to everything MoveOn does," says a progressive activist who's worked on campaigns with MoveOn. "They have a philosophy that says, Get media; that will get you members."
Meanwhile, technology moves fast and MoveOn's primary medium, e-mail, threatens to become outmoded as young people migrate to text messages, social networking sites and IM. In response, MoveOn has branched out to conduct Facebook activism, successfully running a campaign within Facebook to force the site to alter a feature that broadcast private purchasing decisions.
Most significant, MoveOn has massively expanded its focus on developing an offline presence, one grounded in the face-to-face interactions that Ganz invoked. "We had a project for a while called Click Back America, but I think you can't actually click back America," says Justin Ruben. "The things that people do in the real world, away from their computer, also matter. Our power comes almost entirely from collective action. You can only do so much through the computer."
MoveOn began developing the capacity of offline action in 2004, attempting to build from scratch in a little more than ten weeks a member-based field program in support of John Kerry in swing states. The idea was that MoveOn members would act as precinct captains and canvass their neighbors. Though rushed and somewhat ad hoc, this first foray into concerted offline activity gave birth to Operation Democracy -- since renamed MoveOn Councils -- the locus of MoveOn's local, physical presence and the conduit for everything from phone banking to house parties to war vigils. Anna Galland, who heads up the councils for MoveOn (and who is, full disclosure, a college friend), says they're ambitiously scaling up. "We're up to 250 local councils, with councils in every state." Members meet in their local councils, and council leaders report to volunteer regional coordinators. "People come from all sorts of backgrounds," says Galland, and get trained in everything from how to run a meeting to leadership development. "We're not just looking for volunteers; we're trying to build a culture of organizing," she says.
For those who came to MoveOn through the simple activism of signing a petition, forwarding an e-mail or donating money, the council provides an opportunity to take the more involved step of actually congregating with other progressives. Crossing this gulf, for millions of people, is no small step. Sandy Tracy, the retired Minnesota high school teacher, now serves as a regional coordinator. She recalls the anxiety she felt before hosting her first house party. "I had fifteen people who signed up to come to that first event," she says. "I felt a little awkward, and I'm going, Oh my gosh! I've got all these people at my house; what are we going to talk about?"
The councils were born of a desire to help elect Kerry, and now that Obama is the presumptive Democratic Party nominee, nearly all of MoveOn's focus has shifted to getting him elected. In many ways, the Obama campaign is built on much the same aspirations, ethos and constituency as MoveOn, which is why it wasn't particularly shocking that when the group polled its members in February, 70 percent voted to endorse Obama over Clinton.
Some, though, were surprised. "I was slack-jawed," says one netroots activist, noting that Obama had failed to vote on the Senate resolution that chastised the group for its General Betray Us ad. "They were at the mercy of their membership, who really were enthusiastic about Obama. But this was the guy who threw them under the bus, and they basically said, Beat me! Treat me like shit!"
The subtext here is the larger issue of MoveOn's relationship to a Democratic Party that many feel has co-opted it. "They built up a huge membership because of the war," says CodePink founder Medea Benjamin, "and the press looked at them as the voice of the antiwar movement, and then they betrayed the movement. They were more concerned with being on the same page with the Democratic leadership than with the rest of the antiwar leadership."
Particularly egregious to Benjamin and others was the failure of Americans Against Escalation in Iraq. Co-founded in January 2007 by MoveOn and run by its then-Washington director, Tom Matzzie, the coalition spent $12 million attempting to force Bush to begin withdrawing troops from Iraq. Its efforts helped push Congressional Democrats to pass a supplemental bill that tied funding to a withdrawal timeline. But after the President vetoed the bill, AAEI focused on running ads against Republicans who'd backed the White House rather than trying to force the Democratic Congressional leadership to cut off funds.
"MoveOn went all out to get a Democratic Congress elected," says Benjamin. "We now have more troops in Iraq, more funding than the Bush Administration even asked for and a guarantee that the war will continue into the next administration."
If CodePink thinks MoveOn is too cozy with the Democrats, Democratic staffers on the Hill have a hard time telling MoveOn and CodePink apart. Several staffers I talked with felt animus toward MoveOn for organizing actions against their bosses. But when they described these actions -- sit-ins in their Hill offices, for instance -- it became clear they were confusing MoveOn with CodePink and other more confrontational antiwar groups. The resentment is also a result of MoveOn's clumsy Betray Us ad, which became such a high-profile distraction that it allowed conservatives to deflect attention from the war debate. And MoveOn's presence on the Hill, where the battle over escalation was fought, is not particularly strong; in Democratic Congressional offices, it's viewed more as an annoyance than a force. "I've never been in a room where someone says, Let's all check with MoveOn," said the former staffer.
"Of course, I wish the result had been different," says Nita Chaudhary, MoveOn's chief antiwar organizer, of their efforts to prevent the escalation. "But we tried very hard." Chaudhary points out that MoveOn has spent time and effort going after Democrats. Local groups routinely meet with their Representatives to lobby them on the war, and "we ran ads against Democrats -- we did this whole backbone campaign with Democrats, trying to get them to stand up against a blank check on the war." But she concedes that the organization made a tactical decision that the best way to bring the war to heel would be through elections, first electing a Democratic majority and now trying to elect Obama along with an "anti-Iraq War majority" in Congress.
To MoveOn's critics in the antiwar movement, the tactical choice to focus most of its energy on defeating Republicans confirmed a nagging sense that, for all its talk about being led by its members, the organization is really run by its staff. Dave Swanson of Democrats.com recalls that in March 2007, "a lot of the real peace organizations were pushing the Barbara Lee amendment" (which would have provided funding only for a withdrawal of forces) "to the point where MoveOn was feeling the pressure. So do they send out a survey, Do you favor the Barbara Lee or the [Democratic] leadership's bill?" (which would have attached timelines but continued funding). "No. Instead, they offered a choice of the leadership's bill or the President's agenda. It was essentially a Stalinist poll. They know damn well what their membership would have said if offered an honest survey."
In response to criticism of that poll, Pariser argued that MoveOn's members were sophisticated enough to understand that the Pelosi bill was the best possible option. But the episode highlighted the difficulty of the situation MoveOn increasingly finds itself in. Over ten years the organization has developed a reliably confrontational posture toward the Republicans in power. It's a necessary feature of an organization that needs to raise money constantly, a rational reaction to the GOP's debased leadership and the expression of a deep and genuine sentiment among its silent majority members, who have simply had enough. But the frustrations of the past two years with a Democratic Congress struggling to deliver any of the things MoveOn members want have served as a teachable moment. In interviews with nearly two dozen of MoveOn's regional coordinators, when I asked what they saw as MoveOn's role in a future Democrat-dominated Washington, they gave without exception the same answer: hold the politicians accountable. "One of their mottoes that really resonates with me is that democracy is not a spectator sport," says Sandy Tracy, the retired schoolteacher. "Average people have elected their officials and sent them off and let them be. We're now paying the price for that."
Should the Democrats retake the White House and add to their Congressional majorities this fall, they would do well to take note of Tracy and the millions like her. Come next spring, if they haven't started withdrawing troops, you just might see Sandy Tracy in the streets with a bullhorn.
Australian Labor government unveils carbon trading scheme that shields corporate polluters
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By Patrick O’Connor
Emissions targets withheld
Technology and economic planning
By Patrick O’Connor
Prime Minister Kevin Rudd and Climate Change Minister Penny Wong have released the Labor government’s “Green Paper” on its proposed carbon emissions trading scheme that is scheduled to come into effect by mid-2010. The various measures outlined make clear that Rudd is determined to ensure that ordinary working people, rather than the major corporate polluters, bear the full cost of a scheme that will inevitably fail to reduce greenhouse gas emissions by the required levels.
Alongside the promise to ratify the Kyoto Protocol, the creation of an emissions trading scheme (ETS) by 2010 formed one of Labor’s central promises ahead of last November’s federal election. The government’s “Green Paper” outlines some of the specific mechanisms it is proposing, ahead of further “public consultation” leading to the drafting of the final legislation by December.
The Green Paper’s release has come a week after the publication of a 600-page draft report of Professor Ross Garnaut’s Climate Change Review. Virtually every section of business, along with the media and all the parliamentary parties including Labor, Liberal, and Greens, have backed some form of carbon trading as the solution to the climate change crisis. Despite ongoing media coverage, immense confusion exists. One opinion poll showed that 60 percent of the population still has little or no understanding of how a carbon trading scheme would work.
The “free market” theory underlying emissions trading is itself relatively straightforward. Under the “cap and trade” model underlying the Australian scheme, the government determines a given limit of carbon emissions (the “cap”) and then divides up the total level of emissions into discrete pollution permits, “carbon credits”, which are each equivalent to one tonne of carbon dioxide pollution. These are distributed to those corporations most responsible for the emission of greenhouse gases. Firms included in the scheme are then free to either reduce their emissions below the level allowed by their allotted carbon credits, and subsequently sell the surplus credits on the open market, or—if it proves to be a cheaper option—increase their polluting activities and purchase additional carbon credits to cover the excess emissions. According to proponents of carbon trading, overall emissions are reduced as the government lowers the cap over time, while businesses are provided with an incentive to find the least costly and most efficient means of reducing their greenhouse gas output.
Complications immediately arise, however, with regard to the precise legislative mechanisms involved in the establishment of the emissions trading scheme. For example, how is the emissions “cap” to be determined? Are carbon credits to be sold to business or simply given away for free? Should businesses be fully compensated for the costs involved in complying with the scheme and should any restriction be placed on their ability to pass on these costs to the consumer? Are industries that consume enormous amounts of energy and are vulnerable to international competition—such as coal, aluminium, and cement—to be included in the scheme? These questions are inextricably bound up with the profit interests of different, and sometimes competing, sections of big business.
Rudd’s approach is to do everything he can to ensure that no corporate sector is adversely affected.
The Labor government’s proposed emissions trading scheme—the so-called “Carbon Pollution Reduction Scheme”—will involve just 1,000 companies. Up to 30 percent of the total carbon credits will be given away for free, while for the most energy-intensive industries such as aluminium smelting and cement production, 90 percent of their polluting activities will be entirely compensated. The government’s “Green Paper” also pledged direct cash compensation payments to the heavily polluting coal-fired electricity generators. Rudd has said he will consider the demands raised by other sections of business for additional compensation beyond that already announced.
Ordinary people will bear the full cost of the scheme’s implementation. According to the government’s own figures, with an initial carbon credit price of $20, the official inflation rate would increase by an additional 0.9 percent, while electricity bills would rise by 16 percent and gas bills by 9 percent. The government has pledged to initially set a ceiling on the carbon credit price, but the Australian price will eventually have to converge with the world price which currently stands at $40 per credit. (The world price is projected to rise to $100 per credit by 2020.) This will see an even more severe escalation in costs of living.
Sensitive to a potential backlash, Rudd announced that rises in petrol prices due to carbon trading will be offset by reductions in fuel excise for at least three years. The Garnaut’s draft report also proposed spending 50 percent of the revenue collected through the government’s sale of carbon credits on compensatory welfare payments and tax cuts. While Rudd has backed this proposal, his “Green Paper” emphasised that compensation mechanisms “need to be consistent with the government’s fiscal strategy and the focus on expanding the productive capacity while restraining inflation”. Given that the government’s fiscal and anti-inflationary strategy is to cut social spending and suppress wages, there is no doubt that low income and working people will be left substantially worse off irrespective of whatever token compensation is finally offered.
Rudd’s “Green Paper” was generally welcomed by big business, though some sections have indicated they will press for even more concessions in the coming “consultation” period. The media similarly welcomed the government’s proposals. The Australian’s July 17 editorial applauded Rudd for demonstrating he was not “captive to the extreme views put by some environmental groups”. The Murdoch newspaper further noted that there was little difference between the government’s carbon trading scheme and that proposed by the former Howard government before the last election, and approvingly concluded that “the government has stopped well short of what was recommended by Labor’s climate change expert, Ross Garnaut.”
Garnaut’s draft report warned that to maintain a viable carbon market, and to maintain public support, a hardline stance had to be taken against corporate “rent seekers” looking to profit from the implementation of the trading scheme. He advised that sections of business should bear some of the cost of enacting the emissions trading scheme and specifically argued against compensating electricity generators, against giving away too many free permits to companies, and against reducing fuel excise. Garnaut also insisted that no ceiling should be placed on the price of carbon credits.
Neither the government’s “Green Paper” nor Garnaut’s draft report included any conclusions regarding the final emissions targets to be settled on.
Thanks to a major loophole in the Kyoto Protocol, ratified last year by the Rudd government, by 2012 Australia is allowed to emit 30 percent more than its 1990 level, excluding land clearing. (Most other advanced countries had to reduce their emissions to about 95 percent of 1990 levels by 2012.) This target, which was on track to be met—without any carbon reduction efforts—will form the basis of the emissions “cap” for the trading scheme from 2010 to 2012. In other words, while ordinary people will be immediately hit with higher energy prices and other costs of living, the carbon trading scheme will do nothing to even marginally reduce emissions in its first two years of operation.
The post-2012 emissions caps will be determined in parallel with the international negotiations on a post-Kyoto treaty that are due to be conclude by the end of next year.
Liberal Party leader Brendan Nelson has argued that Australia should do nothing until 2012 and even then only implement an emissions trading scheme if the major emitters, including China and the US, take equivalent action. His grandstanding has only highlighted the opposition’s disarray on climate change policy. Shadow treasurer Malcolm Turnbull and others initially indicated that they backed the government’s proposals. For his part, Rudd has made clear that any medium- and long-term target will also be determined only after Treasury finalises its calculations and forecasts of the potential costs on corporate Australia.
Whatever the final targets, it is already clear that carbon trading is inherently incapable of resolving the climate change crisis. There is a mounting body of scientific evidence pointing to the gravity of the situation. According to NASA climate scientist James Hansen, the level of atmospheric carbon dioxide concentration beyond which dangerous and potentially irreversible global warming is likely has already been passed. With 385 parts per million (ppm) of atmosphere now comprising carbon dioxide, Hansen suggests that the latest scientific and historical data indicates that the target should be a maximum of between 300 to 350 ppm. The Rudd government’s “Green Paper” noted that if emissions continue to increase at their present rate, carbon concentration will rise to 1,000 ppm by the second half of this century.
The impact of such an increase would be catastrophic. Garnaut’s draft report described the potential impact in Australia. With unmitigated climate change, by 2100 agricultural production in the Murray-Darling basin (which currently produces 40 percent of total national output) would virtually collapse—by 92 percent. Australia’s snowfields would decline by 85-96 percent by 2050 and disappear entirely by the end of the century. Numerous animal species would become extinct, including those dependent on the Great Barrier Reef, which would be entirely wiped out. Also by 2100, there would be an additional 11,000 “temperature related deaths”, while many more people would be exposed to Dengue fever and other tropical diseases, as well as to the effects of severe flooding, storms, and sea-level rises.
Carbon trading schemes—no matter how they are established and irrespective of whether sectional business interests are favoured or not—cannot address the enormous divergence between the projected 1,000 ppm forecast and the lower-end estimates of the limits required. The schemes are specifically designed to gradually reduce emissions by encouraging big business to lower emissions by initially taking advantage of what the policy writers term “low hanging fruit”—that is, easily realisable energy savings such as installing more efficient lighting and appliances. This is why the Garnaut Review does not even examine a potential target of 350 or 400 ppm carbon concentration, and misleadingly refers to a 450 ppm target as “effective ambitious global mitigation” and a 550 ppm target as “effective firm global mitigation”.
What carbon trading does not address is the fundamental question of how to refashion the power-generating basis of the world economy. To maintain an atmospheric carbon level of 300-350 ppm—or even 400-450—will likely require the vast restructuring of broad areas of social and economic life, such as urban planning, transport, land use and agriculture. But above all it requires the immediate phasing out of fossil fuel-based energy such as oil and coal, and the development of renewable power sources.
The well-known Columbia University economist Jeffrey Sachs pointed to some of these issues during his visit to Australia, which coincided with the release of the “Green Paper”. He said he opposed carbon trading because: “It’s hard to implement, it’s hard to monitor, it’s non-transparent, it’s highly political, highly manipulative, which is why the banks love it, the banks all want to trade, this is an investment banking dream.” He argued that the emphasis, particularly for developing economies such as China, ought to be on developing technological solutions, such as carbon capture and storage for existing coal-fired power plants, as well as nuclear, solar, wind, and biomass power.
Sachs’s position immediately raises the question—why are these technologies not already in place? After all, the necessary technology is either readily available now or could be quickly developed with relatively modest increases in public investment. The Garnaut Review cited the International Energy Agency’s estimate that to cut global emissions in half by 2050, research and development spending on energy would need to be increased by an additional $US10-$100 billion annually. By way of contrast, Washington now spends $16 billion per month on the direct costs of occupying Iraq and Afghanistan.
The reality is that under the profit system the rational utilisation of the world’s productive forces and technological capacities is impossible.
The private ownership of the means of production has seen entrenched profit interests repeatedly stymie the development of new, environmentally-beneficial technological innovations. Big business interests also dominate every stage of the political debate on climate change. The influence of the oil industry within the Bush administration is well known, but in Europe, as increasingly in Australia and other countries, the influence of private carbon trading interests is no less insidious. Europe’s multi-billion dollar emissions trading scheme has seen the rise of a powerful carbon industry, with myriad “offsetting” companies and carbon speculators and investors.
Virtually every commentator on climate change has noted that there is no national solution to the problem and that only an internationally coordinated response is capable of achieving anything. But again, such coordination is immediately undermined by the division of the world into rival nation states. International conferences convened to reach agreement on emission reduction targets invariably revolve around squabbles between the various national governments who defend the “right” of their corporate polluters to special privileges. Disastrous developments such as the melting of the Arctic ice cap similarly results in the various bourgeois governments in North America, Russia, and Scandinavia scrambling for control over the new sea lanes and oil reserves.
Only a democratically planned socialist economy—having broken down the artificial national borders which pit working people against one another, and having made social need, not the accumulation of profit and private wealth the guiding principle of social and economic life—is capable of engineering the required rapid transformation to carbon-free production while at the same time advancing living standards for all.
But such issues can never be broached in the official “debate” on the climate change crisis. The confusion felt by ordinary people is not simply due to ignorance or the complexity of the issue, but is the consequence of the deliberate obfuscation created by the media and political establishment. The Rudd government has, for the time being, been able to take advantage of the general lack of understanding. Opinion polls show that despite not knowing how emissions trading schemes work, most people support its creation in Australia. According to one survey, more than two-thirds say they are willing to pay higher prices for goods and services if this helps reduce carbon emissions.
These sentiments reflect the enormous concern, particularly among young people, over the world ecological crisis. The more advanced layers will soon understand that no solution to this crisis is possible within the existing social and political order, and that the preservation of a habitable world eco-system now stands objectively posed before humanity as a revolutionary question.
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