Fact Sheets & Briefs

Fact Sheet: The Financial Crisis Inquiry Commission

Isaiah J. Poole — Fri, 22 May 2009 15:17:45 -0700

The Financial Crisis Inquiry Commission will consist of six Democrats and four Republicans, appointed by the leaders in each house of Congress. No current officeholders at the federal, state, or local level will be allowed to serve on it.

The commission is expected to receive $5 million in funding. According to Lee Hamilton, the co-chair of the committee 9/11 commission, the $3 million budget they had was not sufficient to have a thorough investigation. This suggests current proposals at 5 million dollars for a Financial Crisis Inquiry Commission could be insufficient.

The commission has the authority to examine a wide range of issues related to the economic crisis, from the lack of regulation in Washington to reckless practices on Wall Street. Witnesses are required to testify under oath. The commission is allowed to grant subpoenas if one member of the minority party votes with the majority to issue a subpoena. The commission is to refer any information regarding alleged law violations to the U.S. Attorney General and appropriate state attorneys general.

The legislation grants the commission access to information it needs from any federal government agency or office. President Obama attached a signing statement to the legislation that reserves the right of the administration to withhold certain information based on “constitutional privilege.”

A report to Congress is due no later than December 15, 2010, but just on the causes of the current financial and economic crisis. The mandate for creating the commission does not clearly call it to present recommendations on how to fix the problem.

Why We Demand Action On Economic Recovery Now

Isaiah J. Poole — Wed, 04 Feb 2009 09:46:17 -0800

RESOURCES FOR YOU

» Fact Sheet: Congressional proposals vs. Main Street Recovery Program
» Commentary by Bernie Horn: "Stand up and fight!"
» VIDEO: How the recovery plan is being defended on Capitol Hill
» The right-wing alternative: Warmed-over Bush economics
» The fierce urgency of economic recovery now
» Paul Krugman's rebuttal of conservative bad-faith arguments
» Firing Back: Mythbusting the recovery package
» GOP pollster: Tax-and-spend debate has radically shifted
» Progressive Breakfast: Latest news and blog discussion

Conservatives are mounting a fierce counterattack against President Barack Obama's economic recovery plan in the Senate. One congressional office reports that calls are running 100 to 1 against a bold recovery plan for Main Street.

Click here to learn what you can do now to help secure a progressive economic plan and beat back conservative attacks.

On this page we've collected some of the best commentary and talking points that you can use in advocating for a true economic recovery plan, one that will:

• Generate millions of new jobs and make an immediate down payment on clean energy, modernized infrastructure, better education and more affordable health care.

• Help states and cities keep schools open, police on the streets and other essential services operating.

• Provide help to those hit worst by this crisis — the unemployed and the poor.

House passage of the American Recovery and Reinvestment Act in the first days of the Obama administration was a bold first step to address the economic crisis, one that puts us on the path of progressive change. Conservatives in the Senate continue to react with their mindless obstructionist reflex. They've been citing fictional reports, mischaracterizing the views of Obama's aides, and distorting what's in the actual legislation.

The truth is, we've already tried tax cuts for corporations and the wealthy, and that didn't work for ordinary Americans. Instead of conservative efforts to weaken the recovery bill, we need the Senate to push for an even bolder spending plan to repair the damage done by years of failed policies and jump-start the Main Street economy.

Our challenge is to overwhelm their lies with our strength in numbers, and let Congress know what the majority wants. The louder our voices are, the more likely Congress will be emboldened to expand the package and make it even more progressive.

How Congressional Plans Stack Up To The Main Street Recovery Program

OurFuture.org Staff — Mon, 26 Jan 2009 16:03:01 -0800

Here's how the economic recovery proposals now being considered by Congress match up to the recommendations in the Main Street Recovery Program, which has been endorsed by more than 2,000 progressive leaders and activists. (The comparison is based on House and Senate legislative proposals as of January 26, 2009.)

	Main Street Recovery Program	Congressional proposals
Green Investment	$100 billion for green infrastructure investments (particularly retrofitting buildings to improve energy efficiency, expanding mass transit and freight rail networks, constructing “smart” electric-grid systems, increasing capacity for generating power from wind and solar energy, and developing carbon capture technologies and next-generation biofuels) and extending clean-energy production tax credits.	$51 to $54 billion for green infrastructure projects, tax incentives, and bond programs for renewable energy and energy conservation.
Infrastructure	$225 billion over two years to undertake public transit projects, improve drinking water and wastewater systems, repair and modernize schools, fix roads, maintain and green public housing, and make other investments.	$90 to $140 billion for a broad range of infrastructure investments and pollution cleanup.
Aid to States	$125 billion over two years for flexible block grants and a temporary increase in federal matching funds for Medicaid.	$90 to $110 billion for state aid for Medicaid, state and local law enforcement, and social services block grants. Also included is funding for tax-exempt bonds and tax-credit bonds for state and city “recovery zones” with high unemployment rates.
Education	$40 billion a year to expand Head Start and other pre-kindergarten programs, fully fund federal student lending, and increasing Pell Grant awards.	$125 to $141 billion for grants to local school districts and public universities, programs for children with disabilities, Pell Grant award increases and eligibility expansion, and expanded education tax credits.
Research and Development	$15 billion over two years for investments in medical, energy, and other research initiatives.	$10 to $16 billion for research and development investments, including investments in science facilities and research through federal health, science and space research agencies; and for broadband Internet-access expansion
Health Care	$70 billion over two years to expand the State Children’s Health Insurance Program, increase access to Medicaid, and provide incentives for hospitals and physicians to adopt electronic medical record systems	$16 to $20 billion for health care investments, including electronic medical records and other health information technology, preventative-care programs and health-care effectiveness research. A bill expanding the SCHIP program has passed the House and is currently moving through the Senate.
Unemployment Insurance and COBRA Subsidy	$15 billion to provide a 75 percent COBRA health insurance premium subsidy for unemployed workers, and modernization of the unemployment insurance system to meet the needs of the contemporary workforce.	$80 to 100 billion for health-care support and insurance benefits for the unemployed, including increased unemployment benefits and job training, COBRA subsidies or Medicaid support for unemployed workers, unemployment insurance modernization.
Food Stamps	$15 billion for a 20 percent increase in the food-stamp benefit.	$17 to $20 billion for food stamp benefits, including increasing the food stamp benefit by over 13 percent and providing additional resources for WIC and food banks.
Poverty Reduction	$40 billion for investments to increase the Earned Income and Child Tax Credits, raise the minimum wage, and expand access to child care.	$20 to $30 billion for Earned Income Tax Credit and Child Tax Credit increases, plus additional contingency funding for needy-family assistance, one-time additional Social Security payments to the elderly and disabled, and two years of federal child-support enforcement.
Middle-Class Tax Cut	$145 billion in tax cuts for middle-income households.	$145 billion for a new “Making Work Pay” tax credit.

Investing In People

OurFuture.org Staff — Thu, 13 Nov 2008 10:53:04 -0800

•Every dollar invested into the high quality pre-school programs yields a return of over seven dollars later.

High/Scope Educational Research Foundation. Lifetime Effects: The High/Scope Perry Preschool Study Through Age 40. 2005.

•In mathematics, science, and problem solving, the United States ranked 25th, 20th, and 25th, respectively, out of the 30 Organization for Economic Cooperation and Development countries (OECD).

United States Department of Education. “Table 389: Average Mathematics Literacy, Reading Literacy, Science Literacy, and Problem-Solving Scores of 15-Year-Olds, by Sex and Country: 2003.” National Center for Education Statistics. March 2005.

•High poverty school districts receive, on average, $938 less per-pupil in state and local funding than low poverty districts.

Carmen G. Arroyo. The Funding Gap. The Education Trust. January 2008.

•Public school teachers earn 15 percent lower weekly earnings than comparable professionals in other sectors.

Sylvia A. Allegretto, Sean P. Corcoran, and Lawrence Mishel. The Teaching Penalty: Teacher Pay Losing Ground. Economic Policy Institute. March 2008.

•Raising teacher wages by 10% lowers high school drop out rates by 3-6%.

Susanna Loeb and Marianne E. Page. “Examining the Link Between Teacher Wages and Student Outcomes: The Importance of Alternative Labor Market Opportunities and Non-Pecuniary Variation.” The Review of Economics and Statistics. August 2000. Volume 82. Number 3.

•One third of United States’ schools need extensive repair; 15,000 public schools had air that was unfit to breathe.

United States General Accounting Office. School Facilities: Condition of America’s Schools. February 1995.

•Investing $20 billion in deferred school maintenance would generate 250,000 skilled maintenance jobs.

Mary Filardo. Good Buildings, Better Schools: An Economic Stimulus Opportunity with Long-Term Benefits. Economic Policy Institute. Briefing Paper #216. 29 April 2008.

•Since 2000, the average cost of tuition at a public college has increased 39 percent but median household income has fallen 1 percent.

Carmen DeNavas-Walt, Bernadette D. Proctor and Jessica C. Smith. Current Population Reports: Income, Poverty, and Health Insurance Coverage in the United States: 2007. United States Census Bureau. August 2008.
United States Department of Education. “Table 313: Average Undergraduate Tuition and Fees and Room and Board Rates Paid by Full-Time-Equivalent Students in Degree-Granting Institutions, by Control of Institution and By State: 2000-01 and 2001-02.” National Center for Education Statistics. November 2002.
United States Department of Education. “Table 321: Average Undergraduate Tuition and Fees and Room and Board Rates Charged for Full-Time Students in Degree-Granting Institutions, by Type and Control of Institution and State or Jurisdiction: 2005-06 and 2006-07.” National Center for Education Statistics. July 2007.

•In 1979, Pell Grants covered 77% of the cost of college; now it is down to 32%. An investment of $51 billion would return the Pell Grant to its 1979 level.

United States Department of Education. “Table320: Average Undergraduate Tuition and Fees and Room and Board Rates Charged for Full-Time Students in Degree-Granting Institutions, by Type and Control of Institution: 1964-65 Through 2006-07.” National Center for Education Statistics. July 2007.
Jacqueline E. King. "2003 Status Report on the Pell Grant Program". American Council on Education and the Center for Policy Analysis. October 2003.
American Council on Education and the Center for Policy Analysis. Fact Sheet on Higher Education. November 2004.

The Case For A Program To Rebuild America

OurFuture.org Staff — Thu, 30 Oct 2008 14:24:09 -0700

Conventional wisdom holds that America has to get the federal budget deficit under control. Conservatives and even some good-government moderates have called for a virtually government-wide spending freeze. But cutting federal spending during a recession is a recipe for depression. To climb out of the hole that conservative economic ideology and policy has thrown us into, we need federal spending to reinvigorate economic growth. We should use this moment to make investments that will improve our future. Here's why.

We are looking at a deep and potentially long recession. America has lost nearly a million private-sector jobs since the beginning of the year. [CNN] Home values are declining at record rates. [Market Watch] Exports, which have been rising recently , will begin to sink as the economic downturn spreads across the globe. State and local government employment, which has also been rising, will certainly decline as layoffs are made to compensate for rising state-budget deficits. [Center on Budget and Policy Priorities] The manufacturing sector never recovered from the last recession. [New York Times] Consumer confidence recently plunged at the fastest rate ever. [Market Watch]

To avoid a deeper downturn, we have to kick start our economy. The consensus among economists, even “deficit hawks” like former Clinton Treasury Secretary Lawrence Summers, is that we need another fiscal stimulus to jumpstart economic growth. [Financial Times, New York Times] To be effective, a growth package will have to have a value of about 2-3 percent of our gross domestic product, or at least $300 billion. [Dean Baker] Congressional Democrats announced plans to enact part of that—a $150 billion stimulus—before the end of 2008. [Time]

The most effective stimulus would focus on making the investments we need to generate jobs. The stimulus payments distributed during the summer of 2008 didn’t help get the economy growing. Americans spent some of that money to pay down debt and some on goods made abroad, yielding little bang for the buck. To be more efficient, a stimulus plan should focus on making or sustaining public investments.

First, it should provide aid to state and local governments to forestall deep layoffs.
Second, it should extend unemployment payments and raise food stamp benefits, providing help to those who will spend the extra money.
Finally and most importantly, it should include investments that are vital to improving our future: modernizing infrastructure, promoting green buildings, and developing clean-energy technology. These investments would create jobs here in America.

Economists say that such a stimulus package will yield the greatest return on the investment. [Dean Baker] In contrast, stimulus plans proffered centered on tax cuts for the wealthy tend to pull money out of circulation, generating the opposite of a stimulus effect. [Center for Budget and Policy Priorities]

The conservative economic strategy risks another depression. When faced with a sharp economic downturn after the Crash of 1929, President Herbert Hoover said, “We must have insistent and determined reduction in government expenses.” [1931 State of the Union] History emphatically shows that a short-sighted and narrow focus on deficit reduction leads to economic disaster.

Adapted from "Making Sense 2008" issue alerts, Campaign for America's Future. October 2008.

Taxes: Myths and Realities

OurFuture.org Staff — Thu, 30 Oct 2008 13:59:54 -0700

When talking about taxes, conservatives present themselves as champions of beleaguered average wage-earners and characterize opponents of their tax policies as “socialists” whose efforts to "soak the rich" would drag down the economy. Here are some facts you should know about the impact of tax policies enacted by the Bush administration and the realities behind conservative arguments about taxation.

Fairness

During the Bush years, wealth was redistributed—upward. Under the Bush administration, the incomes of middle-range households have stagnated. Workers with earnings in the lower range have lost ground and, taking inflation into consideration, on average they now earn less than they did in 2000. [U.S. Census Bureau] All the income these workers lost went directly to the top 20 percent of households, the only group whose share of income rose over the last eight years. [U.S. Census Bureau] Income inequality in the United States has skyrocketed since Bush took office, making America the world’s third-most economically unbalanced country, behind only Mexico and Turkey. [Organization for Economic Co-operation and Development]

It’s the wealthy, not working Americans, who avoid taxes. Conservatives claim that more than 40 percent of Americans pay no income taxes right now, as if it’s low-income workers who are skipping out on their tax responsibility. But it's the wealthy who enjoy most of the income generated by capital investments—and that income is taxed at a lower rate than the income middle-class workers earn. Warren Buffett pointed out that it is unjust for him to pay taxes at a lower rate than his secretary does. [Raw Story]

Progressive tax policies benefit all of America; conservative policies have failed. Conservatives accused President Clinton of “tax and spend politics” when he raised income taxes on the very wealthy to pay for investments in economic development, education, and new technology. [Washington Post] But Clinton’s policies yielded 23 million new jobs—nearly five times more new jobs than Bush created with his tax cuts for the super-rich. [Bureau of Labor Statistics]

Conservative tax policies contribute to the extreme inequality we now face—and they want to make it worse. Instead of giving everyone an equal tax cut, conservative proposals would give the richest people in America a cut that is as much as five times larger than what Republican presidential candidate John McCain promised the middle class. [Tax Policy Center] John McCain’s tax policies are even more unbalanced than George W. Bush’s: Bush gave 31 percent of the benefits of his tax cuts to the wealthiest one percent, but McCain would give them 58 percent of benefits. [Center for American Progress]

A progressive tax proposal is the best bet for small businesses. One such proposal would be to strengthen the earned income tax credit that is claimed by 14 percent of small-business owners. Doing so would help seven times as many small-business owners as would decreasing tax rates for the richest Americans. [Center for Budget and Policy Priorities]

The Capital Gains Tax Argument

Cutting the capital gains tax again would provide a huge payoff to the rich. Both the far-right Republican Study Committee and most Republicans in the U.S. House have called for cutting the capital gains tax in response to the financial crisis. Bush and conservatives in Congress already reduced the capital gains tax rate from 20 to 15 percent in 2003. [H.R. 2] The chief beneficiaries would be households earning over $200,000 a year; they would receive 93 percent of the benefits from the tax cut. Two-thirds of the tax cut would go to individuals earning over $1 million a year. [Tax Policy Center] Put another way, the average American household would receive $4 as a result of the proposed cut, while households earning over $1 million would receive $72,255. [Jared Bernstein]

One result: billionaires and hedge fund CEOs pay lower tax rates than their secretaries do. The 400 U.S. taxpayers with the very highest incomes pay income taxes worth only 18 percent of their income on average, compared to 25 percent for the typical American. Because of reduced capital gains taxes, the top 400 taxpayers cumulatively saved $10 billion between 1995 and 2005. [CBPP] Billionaire Warren Buffet famously criticized our tax system for taxing him at a substantially lower rate than his secretary. [Raw Story]

The capital gains tax is already ridiculously low. The current capital gains tax rate of 15 percent is the lowest it’s been in years. The 1986 Tax Reform Act set the top rate at 28 percent and later legislation lowered it to 20 percent in 1997 and to 15 percent in 2003. Today, the top federal income-tax rate for ordinary income is 35 percent, meaning that earned income is taxed at a rate 2-1/3 times higher than income from capital gains. That’s simply unfair. There is no good reason for wealth to be taxed at a lower rate than work. [Citizens for Tax Justice]

The Truth About Corporate Taxes

The problem is not that corporations are overtaxed. In fact, a whopping two-thirds of American corporations and foreign corporations doing business in the United States pay absolutely no federal income taxes—despite taking in $2.5 trillion in sales. [Government Accounting Office] In 2005, 28 percent of large foreign companies doing business in the United States (those with more than $250 million in assets or $50 million in sales) paid no taxes.

Compared to our competitors’ corporate tax rates, the U.S. rate is low. According to the World Bank and PricewaterhouseCoopers, the United States’ total corporate tax burden ranks 76th of over 100 countries. [World Bank] When conservatives claim that the U.S. tax rate is high, they’re talking about the “statutory rate.” But corporations treat the statutory rate as just a guideline—they use offshore tax havens and accounting loopholes to pay much lower actual rates. The tax rate corporations actually pay is lower than the rates of economic competitors such as China (15th highest tax rate), India (19th), and Mexico (51st). [World Bank]

The U.S. collects less in corporate taxes than other wealthy countries do. Measuring tax collections as a share of GDP is a good way to put a country’s tax rate in the context of its economy’s size. In the last seven years, the U.S. has collected an average of 2.4 percent of its GDP in corporate taxes—less than the average 3.4 percent collected by other industrialized nations. If laws remain the same, U.S. corporate taxes will be only 1.9 percent of GDP in less than 10 years. [U.S. Treasury Department]

Corporations should pay their fair tax share. American workers increasingly carry more of the tax burden than corporations do. In the 1950s, corporate income taxes accounted for about a quarter of federal tax revenues; now they account for just one-tenth, leaving workers to pay the difference. [Economic Policy Institute]

"Death Tax" Realities

Conservatives enacted a warped estate tax law in 2001. The federal estate tax—which has been in effect since 1916 but in recent years has been dubbed the "death tax" by the right—applies only to the estates of extremely wealthy people. In 2001, the Bush Administration and some of the richest families in America pushed to enact a law that has lowered the tax and will eliminate it entirely in 2010. However, to get around Senate rules, the entire law sunsets in 2011 when the tax will theoretically return to 2001 levels. [Public Citizen] As a result, Congress will have to pass a new estate tax law, most likely next year.

The federal estate tax doesn’t affect the middle class—it applies only to the very wealthiest taxpayers. In 2009, any estate worth less than $3.5 million ($7 million per couple) will be passed on to heirs and heiresses estate-tax free. [Center on Budget and Policy Priorities] In fact, only one of every 300 estates is subject to the tax. [Center for Economic and Policy Research]

The idea that the estate tax hurts farmers and small businesses is a myth. The Congressional Budget Office found that the estate tax threatens almost no farmers or small businesspeople. [CBO] In fact, the American Farm Bureau Federation has never cited a single example of a farm having to be sold to pay estate taxes. [New York Times]

We can’t afford this enormous tax break for the rich. The total cost of permanently repealing the estate tax would average about $110 billion per year (including increased interest payments on the national debt). [Center on Budget and Policy Priorities] That’s more than twice as much as we pay for everyone’s Social Security benefits. [Social Security Administration]

America’s wealthiest families lobbied hard to abolish the estate tax. The campaign to repeal the federal estate tax was financed by 18 of the richest families in America—including 23 billionaires—who spent nearly $500 million to enact this special interest legislation. That’s because these families, which include the heirs of fortunes from Wal-Mart, Campbell’s soup, and Mars candy, stand to reap over $70 billion from the estate tax’s repeal. [Public Citizen]

Adapted from "Making Sense 2008" issue alerts, Campaign for America's Future. October 2008.

Conservative Failure by the Numbers

OurFuture.org Staff — Thu, 30 Oct 2008 13:09:57 -0700

Jobs: Worst performance ever recorded. September 2000 to September 2008 has been the worst 8-year period for job growth since records were first kept in 1939. [MBG Information Services] In just the past year, 2.2 million have joined the ranks of the unemployed, bringing the number of unemployed Americans to a 16-year high of 9.5 million. America has now been losing jobs for 10 consecutive months. Eleven percent of Americans are now under-employed, the highest rate of under-employment in more than 14 years. [Economic Policy Institute]

Incomes: Worst record since World War II. From 2000 to 2007, the median income of working-age households fell by $2,000 (adjusted for inflation). In contrast, real median income increased by $8,000 during the Clinton Administration. [Jared Bernstein] The annual rate of increase of real wages and salaries over the past eight years has been lower than it was during any period of economic recovery since World War II. [Center on Budget and Policy Priorities]

Savings: Worst since the Great Depression. During the last three years, our nation’s personal savings rate has plummeted to its lowest point since 1934. [Department of Commerce] The value of last year’s total household debt was the highest ever recorded. [Economic Policy Institute]

Home Ownership: Largest collapse in values ever. Today, one in six homeowners is under water, owing more on their mortgage than their home is worth. [Wall Street Journal] Americans have lost an estimated $5 trillion in the value of their homes, for most their largest investment. [Dean Baker] Over the past year, the foreclosure rate has increased 71%. [RealtyTrac] September was the second-worst month for housing starts since the Commerce Department began keeping records. [U.S. Census Bureau]

Health Care: Costs soar, more go without. Since 2000, the number of Americans without health insurance increased by 7 million, growing from 14 to 15.3 percent of the nation. [CEPR] Over the same period, the cost of employer-sponsored health insurance increased by more than 55 percent. [Kaiser Family Foundation]

Foreign Debt: Worst in history. America is the world’s largest debtor, racking up $4.6 trillion in debts to foreigners over the last 8 years. [MBG Information Services] We must borrow or sell off assets to foreign creditors at the rate of $2 billion a day, nearly twice the rate in 2000. [U.S. Census Bureau] The manufacturing sector has been hit hardest, with 3.4 million jobs—or one of every five manufacturing jobs—shipped overseas during the past seven years. [Associated Press]

Energy: More dependent on foreign oil than ever. The U.S. now imports 5 trillion barrels of oil annually, an increase of 17 percent since 2000. [Department of Energy] The average price of regular gasoline—about $1.50 when George W. Bush took office—has more than doubled. [Oil Price Information Service] The six biggest oil companies reported over $50 billion in combined profit for the 2nd quarter of 2008, their largest combined profit in history. Exxon Mobil’s $11.6 billion quarterly profit was the largest of any American company in history. [Associated Press]

Poverty: Rising even when economy was growing. Between 2000 and 2008, the poverty rate increased from 11.3 to 12.5 percent and the number of Americans in poverty rose by 5.7 million. [CEPR] This is the only period in American history when the poverty rate rose despite six consecutive years of economic growth. [CBPP] Twenty-eight million Americans currently use food stamps, more than have ever used them at any single point in the program’s history. [New York Times]

Security: Most terrorist attacks worldwide in a quarter century. Eight years ago, the nation was at peace and the world was relatively stable. Now we are mired in two wars, with the war in Iraq projected to cost more than $3 trillion. Yet, worldwide, suicide bombings have increased greatly since 2001, and 2007 was the worst year for such bombings in more than a quarter-century. [Washington Post] According to the most recently declassified National Security Estimate, the Iraq war has had a “rejuvenating effect” on Al Qaeda and other terrorist organizations. [Washington Post]

Adapted from "Making Sense 2008," Campaign for America's Future. October 27, 2008.

"Even the Rope...": The Facts

Isaiah J. Poole — Mon, 06 Oct 2008 12:17:36 -0700

Today, and again tomorrow, and again each day thereafter, this nation must raise $2 billion from foreign creditors.

• In 2007, the United States' deficit in international trade in goods and services was $700.3 billion.
(U.S. Census Bureau. U.S. Trade in Goods and Services—Balance of Payments (BOP) Basis: Value in Millions of Dollars, 1960 thru 2007. Foreign Trade Division. June 10, 2008. )

Since 2000 we’ve lost one out of five manufacturing jobs.

• From September 2000 to September 2008, the United States has lost over 3.8 million manufacturing jobs—a decline of 22 percent. Alan Blinder, former vice chairman of the Federal Reserve during the Clinton administration, says as many as 40 million additional manufacturing jobs could be lost over the next two decades due to overseas outsourcing. the number of jobs at risk of being shipped out of the country over the next decade or two could reach 40 million.
(United States Department of Labor. “Employment, Hours, and Earnings from the Current Employment Statistics Survey (National).” Bureau of Labor Statistics. Data Compiled October 3, 2008. )
(Martin Crutsinger. “Factory Jobs: 3 Million Lost Since 2000.” Associated Press. April 20, 2008.)

For those that remain, wages and benefits actually declined over the last eight years—a record in futility.

• Since 2000, median household income has declined by 1 percent ($324), the number of workers with employer-provided health insurance has declined by 8 percent (almost 2 million workers) and the number of workers with employer-provided pension coverage declined by 2.8 percentage points from 2000 to 2006—to 42.8 percent—and 7.8 percentage points below the level in 1979.
(United States Census Bureau. Current Population Survey 2007. Table A-1: Households by Total Money Income, Race, and Hispanic Origin of Householder: 1967 to 2007 (Adjusted 2008 Dollars). Pg 31. August 2008. )
(Lawrence Mishel, Jared Bernstein, and Heidi Shierholz. The State of Working America 2008/2009. (Advance Proof). Economic Policy Institute. Pg 121. Ithaca, New York: Cornel University Press, 2008.)

We are now running a deficit with China in high technology goods.

• From 2002 to 2007, the U.S. high-tech trade deficit with China has increased 473 percent—$67.7 billion.
(Christian E. Weller and Holly Wheeler. "Our Nation’s Surprising Technology Trade Deficit: A Wide Array of High-Tech Imports Overtake U.S. Exports." Center for American Progress. March 2008.)

Mexico now exports 50 percent more cars to the U.S. than we export to the entire world.

(Charles W. McMillion. Michigan’s Worsening Eight-Year Depression: Paying the Price for $1 Trillion in U.S. Auto-Trade Losses. American Manufacturing Trade Action Coalition. 26 September 2008.)

America built itself into an economic powerhouse through balanced and fair trade. But with rigged trade policies for the last three decades, these deficits kept rising.

• Since 1977, the U.S. trade deficit has increased 651 percent, adjusted for 2007 dollars.
(United States Census Bureau. U.S. Trade in Goods and Services—Balance of Payments (BOP) Basis: Value in Millions of Dollars, 1960 thru 2007. Foreign Trade Division. June 10, 2008.)

Foreign central banks, sated with U.S. bonds, have set up sovereign investment funds to buy into strategic U.S. companies.

• Led by Japan, China, the United Kingdom and the oil exporting nations of OPEC, foreign governments now own more than $2 trillion in American debt. In 2007, the Chinese government created the China Investment Corp. to seek high returns on that foreign reserve nest egg. It invested $3 billion for a stake in the Blackstone Group and $5 billion in Morgan Stanley. Abu Dhabi bought $7.5 billion of Citigroup and Singapore paid $4.4 billion for a part of Merrill Lynch.

• Warren Buffett, one of the world's most successful investors, has launched his most withering attack to date on the U.S. trade deficit, describing Americans as "rich spending junkies" who could turn into a nation of "sharecroppers".

(Andrew Ross Sorkin, Ed. “Of Sovereign Funds and Prairie Fires. New York Times. February 21, 2008.)
(Paul Wiseman and Calum MacLeod. “China unlikely to rescue Wall Street.” USA Today. October 2, 2008.)
(Simon Bowers. “Buffet Attacks American Spending Junkies.” The Guardian. March 7, 2005.)

American business is steadily moving finance, technology, production, and marketing beyond our borders.

• Some 50 percent of all U.S.-owned manufacturing production is now located in foreign countries, and 25 percent of the profits of U.S. multinational corporations are generated overseas—and the shares are rapidly growing.
(Jeff Faux. Globalization that Works for Working Americans. Economic Policy Institute. Briefing Paper #179. 11 January 2007. )

It's time to forge a global strategy that works for working people.
First: Slash our trade deficit with a concerted drive for energy independence.

• Currently, petroleum based imports account for 50 percent of our trade deficit.
(United States Census Bureau. U.S. International Trade in Goods and Services: July 2008.
Foreign Trade Division. 11 September 2008. Pg 11.)

Second: Invest in life-long education and training and build the most modern and efficient infrastructure to increase our competitiveness.

Investment in Education
• Every dollar invested into the high quality pre-school programs yields a return of over seven dollars later.
(High/Scope Educational Research Foundation. Lifetime Effects: The
High/Scope Perry Preschool Study Through Age 40. 2005.)
(High/Scope Educational Research Foundation. Lifetime Effects: The High/Scope
Perry Preschool Study Through Age 40—Errata. 2005.)

• In 1979, Pell Grants covered 77 percent of the cost of college; now it only covers 32 percent. An investment of $51 billion would return the Pell Grant to its 1979 level and create more educational opportunities.
(United States Department of Education. “Table320: Average Undergraduate Tuition and Fees and Room and Board Rates Charged for Full-Time Students in Degree-Granting Institutions, by Type and Control of Institution: 1964-65 Through 2006-07.” National Center for Education Statistics. July 2007.)
(Jacqueline E. King. 2003 Status Report on the Pell Grant Program. American Council on Education and the Center for Policy Analysis. October 2003.)
(American Council on Education and the Center for Policy Analysis. Fact Sheet on Higher Education. November 2004.)

Investment in Infrastructure

• Investing $500 billion over ten years with the Apollo Alliance plan will create clean energy, good jobs and energy independence—projected to add over 5 million high-wage jobs.
(Apollo Alliance. The New Apollo Program: Clean Energy, Good Jobs. 2008.)

• Every $1 billion of federal funding invested in transportation infrastructure supports 47,500 jobs.
(Mary Peters, Administrator of Transportation Research Board. Remarks, Session On Transportation Reauthorization. Washington, D.C. January 13, 2003. )

• Every $1 invested in public transportation generates an average of $6 in economic returns.
(American Public Transportation Association. The World Economy is Moving. Can America Keep Up? March 2007.)

• Investing $20 billion in deferred school maintenance would generate 250,000 skilled maintenance jobs.
(Mary Filardo. Good Buildings, Better Schools: An Economic Stimulus Opportunity with Long-Term Benefits. Economic Policy Institute. Briefing Paper #216. 29 April 2008)

• Every $1 billion spent on improving our water infrastructure creates 57,400 jobs.
(Report: Massachusetts Drinking Water. May 2007. Volume 3. Number 1.)

The Truth about the Community Reinvestment Act

Hillary Hampton — Mon, 29 Sep 2008 11:11:27 -0700

Conservative commentators in the Wall Street Journal and the National Review, and on YouTube are spreading the myth that the Community Reinvestment Act, a law designed to eliminate discriminatory banking practices, caused the current financial crisis. In the words of Fox News' Neil Cavuto, “Loaning to minorities and risky folks is a disaster.”

Conservatives have twisted the facts to substantiate their revisionist history. But don’t be fooled: the financial crisis was caused by conservative financial follies and bankers run amok and nothing more.

Myth: The Community Reinvestment Act forced banks to make loans to all low-income families and people with poor credit, fining banks that refused to comply.

Fact: The Community Reinvestment Act has encouraged banks to lend fairly and responsibly for over 30 years. The Community Reinvestment Act does not impose fines; it periodically examines FDIC-backed banks and issues them a CRA-compliance rating. [Community Reinvestment Act] To receive a high rating, banks must meet the financing needs of as many members of their community as possible and must not discriminate against racial and ethnic groups or certain neighborhoods. However, a bank cannot receive a high rating unless it is also maintaing “safe and sound banking practices.” [Community Reinvestment Act] In other words, the CRA requires banks to lend to working-class families and people of color, but only when those people have been deemed credit-worthy.

Myth: The housing bubble burst when too many people with home loans mandated by the Community Reinvestment Act failed to make their mortgage payments.

Fact: More than half of problematic sub-prime loans made in the last few years were issued by banks that are not regulated by the CRA. [U.S. House Committee on Financial Services] The CRA applies only to financial institutions that are insured by the FDIC, but not to independent mortgage companies such as Countrywide. In fact, non-CRA lenders were twice as likely as CRA lenders to issue excessively expensive subprime loans to vulnerable creditors. [Federal Reserve Bulletin] Responsible mortgages made by CRA lenders have a low rate of foreclosure similar to that of traditional mortgages. [Federal Reserve]

Myth: In 1995, Bill Clinton changed the Community Reinvestment Act to allow the securitization of CRA and subprime mortgages.

Fact: The 1995 revisions to the CRA changed only the way in which a bank’s CRA compliance is evaluated; they made no mention of mortgage securitization. [60 F.R. 22156] Under the 1995 rules, banks are rewarded only for making mortgages in their communities, not for re-selling mortgages as securities.

Myth: President Bush and Senator McCain tried to stop the subprime mortgage crisis, but Democrats blocked their efforts.

Fact: Bush and McCain supported the Federal Housing Enterprise Regulatory Reform Act of 2005, which would have created a new government agency to oversee Fannie Mae and Freddie Mac and other federal housing programs. However, the bill would have done nothing to stop the rash of subprime lending that preceded the housing bubble because it provided oversight for only Fannie and Freddie, not for the companies that issued subprime mortgages. [GovTrack]

Banksters Run Amok: The Facts

Brian Dockstader — Mon, 22 Sep 2008 11:51:48 -0700

The Unprecedented Crises Our Nation Now Faces

Lehman Brothers, one of the largest investment banks in the world, is now gone, having declared bankruptcy. Merrill Lynch agreed to sell itself at a fire-sale price to Bank of America. Mortgage giants Fannie Mae and Freddie Mac were taken over by the Treasury Department, and the insurance giant American International Group needed more than $123 billion in federal loans to avoid collapse. Banks across the nation, holding billions in toxic loans, are in trouble.

This debacle unfolded when, to increase profits, finance companies sold subprime and nontraditional mortgages to millions of Americans who—the companies knew—could not afford to make the payments. The brokers didn’t care; before the mortgages could become a problem, they sold the loans to investment houses that repackaged them into exotic securities and marketed them around the world. Now the entire financial system is reeling since no one knows what the toxic loans are worth.

These follies were made possible when:

Banking deregulation allowed the growth of a totally unregulated shadow banking system that borrowed heavily while inventing exotic securities to hide the value of underlying assets.
The Office of the Comptroller of the Currency, which could have halted the sale of the worst of these loans by designating them “unfair and deceptive practices,” refused to do so. [Center for Responsible Lending]
The Federal Reserve Board failed to regulate subprime and exotic mortgage loans, although it had the power to do so. [New York Times]
The U.S. Department of Housing and Urban Development allowed Fannie Mae and Freddie Mac to purchase large numbers of subprime loans. [Washington Post]

The banks went on a binge; the cops on the street turned a blind eye. The bankers pocketed billions until the housing bubble burst.

Americans are now paying dearly for the folly. Across the nation, home values have dropped 16 percent over 12 months, the largest one-year decline on record. [New York Times] Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth. [Bloomberg] Homeowners without mortgage problems find themselves surrounded by boarded-up foreclosed houses. And taxpayers will ultimately have to pay hundreds of billions for all the recent government banking bailouts. [U.S. News]

The huge sums of federal money taxpayers are being asked to spent to cover bad bets could have been used to make America better:

• Fix a broken health care system. In 2007, 45.7 million Americans were without health insurance; 8.1 million of these Americans are children.
(United States Census Bureau. Current Population Survey 2007. Table C-1: Health Insurance Coverage: 1987 to 2007. Pg 61. Table C-3: Health Insurance Coverage by Age: 1999 to 2007. Pg. 66. August 2008. (Adjusted 2008 Dollars)).

• End our addiction to oil. Since September 2001, U.S. oil imports have increased 12 percent.
(Oil Price Information Service and AAA. Daily Fuel Gauge Report. 2008. (Adjusted 2008 Dollars).
(Energy Information Administration. U.S. Crude Oil and Petroleum Products Imports from All Countries (Thousand Barrels). 26 August 2008)..

• Rebuild a country that’s falling apart:

♦ One out of four bridges in the United States is structurally deficient or functionally obsolete. Every $1 billion of federal funding invested in transportation infrastructure creates 47,500 jobs.
(United States Department of Transportation. “Deficient Bridges by State and Highway System.” Federal Highway Administration. 14 August 2008)

♦ One third of United States’ schools need extensive repair. Investing $20 billion in deferred school maintenance would generate 250,000 skilled maintenance jobs.
(United States General Accounting Office. School Facilities: Condition of America’s Schools. February 1995)
(Mary Filardo. Good Buildings, Better Schools: An Economic Stimulus Opportunity with Long-Term Benefits. Economic Policy Institute. Briefing Paper #216. 29 April 2008)

♦ Investing $500 billion in a comprehensive economic strategy to build America’s 21st century clean energy economy over the next 10 years would generate 5 million high-quality, green-collar jobs.
(Apollo Alliance. The New Apollo Program: Clean Energy, Good Jobs. September 2008)

Wall Street Is A Monster Donor to Both Political Parties

From 1990 through July 2008, the banking, real estate and insurance industries poured more than $2 billion into federal election campaigns, including $311 million just in the first seven months of 2008. The money follows the party in power: Republicans got more money when they controlled Congress; now that Democrats do, they’re getting more. Plus, these industries spent $415,259,323 on lobbying in 2007.
(Center for Responsive Politics)

Revised with content adapted from "Making Sense 2008" issue alerts, Campaign for America's Future. October 2008.