For many, buying one’s first house is a major milestone, both financially and symbolically. The ownership of a home has traditionally led families towards long—term wealth, and a home is the foundation of the American dream, an accomplishment and a source of pride. Unfortunately, despite some talk of an improvement in the economy, there are still various factors preventing many people from realizing this dream.
—Although the foreclosure rate declined for the third straight month in October—decreasing by 3% between September and October 2009 to one in every 385 housing units—this rate is an increase of nearly 19% from October 2008.1 —In September, 7.7% of all homeowners were behind 30 days or more on their primary—residence mortgages, up about 0.1% since August. This is a record rate comparing to the 5.2% rate of September 2008 and the 3.6% rate of September 2007.2 —Nearly 4.4% of payments on bankcard accounts were at least 60 days late, compared to 3.4% in September 2008. This is a 28.7% increase since September 2008.3
On Wall Street today, AFL-CIO President Richard Trumka is calling for tough new regulations on the financial industry and a new approach to making the U.S. economy work for working people.
Trumka spoke today at the New York Stock Exchange as part of the new AFL-CIO leadership team's national tour to set out a jobs-focused, progressive vision for the economy-and to fight back against the corporate agenda that left workers behind.
We've let wealth concentrate for too long, Trumka said. The past decade has shown us the folly of building an unfair and unequal economy that only works for a few, while working people pile up debt to get by. We need to be able to protect consumers from abuses by mortgage lenders and credit card companies and hold accountable those whose greed and irresponsibility have undermined the economy, Trumka said:
Banks and other financial institutions must be held accountable for making this mess that required trillions of dollars of our money to clean up. For the pain they've inflicted on families who face financial ruin-unemployment, wiped out pensions, foreclosures and bankruptcy.
Two days ago, I wrote that I did not trust the Obama administration when it comes to applying political pressure on conservative Democrats in order to pass some of the more progressive elements of the Democratic agenda. The specific examples I used were card-check and cramdown, on which I believe the administration offered token vocal support but did not take serious (or at least effective) efforts to advance.
In response, Matthew Yglesias wrote yesterday that I wasn't using common sense, which would show that the Obama administration is passing the most progressive legislation that is possible to pass:
For a bill to pass the House of Representatives, it needs a majority. According to DW-NOMINATE score, the median member of the House of Representatives is currently Stephanie Herseth of South Dakota. The median member of the United States Senate is Kay Hagan of North Carolina. The pivotal sixtieth Senator required to break a filibuster is Ben Nelson of Nebraska. All you need to believe in order to believe that Barack Obama is generally signing the most progressive bills that it's possible to pass is that the Obama administration is more left-wing than Representative Herseth and Senator Nelson.
That is a very nice generalization about the political situation, but it breaks down when you look at the specific fights I cited as my examples: card-check and cramdown. In particular, the card-check fight is case where the administration completely failed to apply necessary pressure to pass what was a very winnable fight.
In the 110th Congress, 52 Senators supported cramdown, eight away from passage. On June 26th, 2007, 51 Senators voted in favor of invoking cloture on a version of the Employee Free Choice Act that included card-check. One Senator, Tim Johnson, was supportive but too ill to attend the vote.
With 8 votes needed to reach 60 in the Senate, and with all major Democratic challengers for Senate stating their support for the Employee Free Choice Act with card-check, the target in 2008 was to net Democrats 8 Senate pickups. Rather than lacking common sense about the need for 60 votes, as Yglesias accuses me, I mentioned this target repeatedly during my 2008 Senate forecasts, as a running whip count on card check. In the end, Democrats netted exactly 8 seats--enough for passage.
A couple of months after card-check had been defeated, White House Chief of Staff Rahm Emanuel was quoted calling pressure from progressive groups against conservative Democrats, including labor, "f*cking stupid."
To recap: we had 60 votes for card-check, we lost six of those votes under the Obama administration's watch, and then the White House chief of Staff called attempts to apply political pressure on wayward Democrats "f*cking stupid."
So please, tell me again why I should believe the Obama administration is doing everything it can to pass things like card-check, and how I lack common sense about how 60 votes are needed to pass the Senate. We had the votes, the votes were lost under the Obama administration, and then the Obama administration protected the Democrats who defected.
Pennsylvania is the primary challenge everyone can agree with! In an email leaked from Journolist, Joe Klein endorses Joe Sestak even while attacking the concept of progressive primary challenges in general:
Joe Klein on Journolist
(in reverse chronological sequence)
From: Joe Kelin
Date: Aug 29, 6:03 pm
Subject: A letter from Mr. Billy Ralph Bierbaum of Waxahachie, Texas
re: condensed journalism
To: Journolist
Luke--i think primary challenges are valid in some cases. I'd vote for Sestak over Specter in a heartbeat. They are much more tricky in the House...As for Greenwald, he knows little about politics, less about journalism and cares not a whit about the national security of the United States. I find the Limbaugh-like, knee-jerk devotion of his flock depressing.
----- Original Message -----
From: journolist@googlegroups.com
Sent: Sat Aug 29 16:54:11 2009
Subject: [ JournoList] Re: A letter from Mr. Billy Ralph Bierbaum of
Waxahachie, Texas re: condensed journalism
Joe
You are arguing with a straw man. No one here is "more interested in whacking moderates than in making sure that moderate districts are represented by Democrats rather than Republicans." No one is calling for a Naderite heightening of the contradictions.
Why do you insist on characterizing people who disagree with your tactical assessments as "self-righteous political naifs" hellbent on achieving some sort of solipsistic emotional release by way of "purges" and "litmus tests"? That hardly seems civil.
In any case, the question before us is: Are primary challenges a useful means of achieving liberal policy goals? I think they are, based not only on basic human logic and my personal preference for more rather than less democracy, but also on the concrete example of Arlen Specter's recent and pleasing ideological evolution.
You seem to think they are not. Other than suggesting that a theoretical victory by a theoretical liberal in a theoretically conservative district could, theoretically, throw a Democratic seat to Republicans, what is the actual evidence from cases that is causing you to reject the validity of one half of the entire democratic process?
The whole exchange is amusing, even if the leak isn't.
Arlen Specter is having difficulty selling tickets to his fundraiser with President Obama in two weeks. So, according to PA Progressive, Pennsylvania State chair TJ Rooney is giving away $1,000 tickets to hundreds of state committee members for free:
Senator Specter promised the county Chairs free tickets to his upcoming $1000/person event in Philadelphia with President Obama. TJ Rooney then announced the Senator will pay for every state committee person to attend. This makes me thing the Senator is having trouble selling tickets if he has to begin tickets away at $1000 apiece. It'll remain to be seen if he can buy off committee people for a thousand bucks a pop. This hits me as trying to buy votes.
PA Progressive also got a video of Congressman Sestak talking at the Pennsylvania State Democratic Committee meeting over the weekend:
As the number of people in danger of losing their homes continuing to increase, Congressman Sestak has been keeping his office open seven days a week and designating two staff members to help out constituents. From the Delco Times:
For the Mignognas, Strohl, Bettcher and the Fuciles, their journey brought them to Sestak's door.
"Your office did more for me in two weeks than two attorneys that I had hired in a year and a half," Strohl said.
Bettcher said she was unsuccessful trying to refinance until she called Sestak.
"Two days later, I got a response," she said. "I've probably talked more to (Sestak's office) than my family members in the past few months to keep me from becoming a statistic."
Partly because of this, Sestak has kept his office open seven days a week.
In 2007, his office fielded 49 housing-related calls. Last year, it jumped to 224. This year, he expects to take more than 500.
"A lot of these are just conforming loans, 30 years," Sestak said. "People had it and all of a sudden, something happened."
The congressman has designated two staff members, Sean Kelly and Bill Walsh, to handle the cases.
The above excerpt is a small part of a longer story about how an effective member of Congress can make a real difference in the lives of local residents. Check it out.
Another thing we learned years ago was that the entire scheme was made possible by Senator Arlen Specter, who quietly changed the law allowing US Attorneys to be replaced. Without this change, President Bush could have threatened to fire Christie and the other USA's, but he would not have been able to easily replace them with political hacks. Apparently, Specter inserted the changes to benefit Bush and the Republican party--and after all, it's easy to guess at his motives since Bush and Rove saved in him in his 2004 primary contest, and Republican control of the Senate rested on the upcoming 2006 elections.
The biggest campaign even of the week will take place on Wednesday from 6-8 pm when Congressman Sestak debates Republican frontrunner Pat Toomey. It will be broadcast live on JoeSestak.com, and takes place in Allentown at Muhlenberg For ticket requests call (610) 891-8956 or send an email to townhall@joesestak.com.
Does anyone else find it impossible to to not start singing the Bill Joel song of the same name whenever they hear about Allentown?
The U.S. economy may finally be bottoming out. But if the worst is really behind us, we are likely facing a painful period of "growth" that looks very much like the present. Without increasing unionization and mitigating racial inequality, our economic progress will prove as hollow as it is slow. While the economy may improve in a dry, statistical sense, the foundation for a productive economy has been decimated over the past three decades.
The economy has shown some encouraging signs of strength lately. Home prices have actually increased and the pace of layoffs slackened quite a bit in July. But that data doesn't signify a strong recovery, as Andrew Leonard notes in a pair of blog posts for Salon. Even in areas where there is some good news-housing and the job market-there is plenty of contradictory bad news. First, mortgage delinquencies are at an all-time high, and the souring loans are not just subprime. Even people with relatively affordable mortgages have problems paying when they lose their jobs, and with the unemployment rate at 9.4%, a lot of people are losing their jobs.
What's worse, Leonard notes, new claims for unemployment benefits escalated in August, suggesting that last month's job market improvements may have been a fluke. And while home prices may be ticking up slightly, they have been abysmal for the past two years. Since many households accumulated debt based on higher home values, the overall ratio of consumer debt to household net worth is perilously high.
Household net worth is a crucial statistic and is often overlooked by a focus on day-to-day measurements of worker well-being, like wage growth. While wages matter for paying the rent and buying groceries, our long-term economic security is defined not by what we make each week, but by the value of the things we own. In a piece for The American Prospect, economists Derrick Hamilton and William Darity Jr. detail the massive racial disparities in household net worth in the U.S. While the median white family has roughly $90,000 to its name, the median Latino family has just $8,000, while the median Black family has only $6,000.
Centuries of discrimination have resulted in today's inequality, but Hamilton and Darity propose a simple, straightforward solution: The government should establish savings accounts for children born into poor families, and fund it with a relatively small amount of money. Children will not be able to access the accounts until they turn 18, but over the years, interest will accrue on the accounts to the point where children should have between $50,000 and $60,000 by the time they can withdraw funds. Since so many people of color are born into households with relatively low net-worth, establishing a policy to use government money to boost the wealth of those born without it would have the effect of promoting racial economic equality.
But we also have to worry about jobs. President Barack Obama's economic stimulus package has succeeded in creating or saving hundreds of thousands of jobs since going into effect earlier this year, but it is important to focus not only on creating jobs, but on creating good jobs. As Laura Flanders of GritTV emphasizes in a roundtable discussion with key academics and labor representatives, our increasingly hostile attitude towards unions has created major barriers to a sustainable economic recovery.
The legislation critical to ending this intimidation is known as the Employee Free Choice Act, one of the most important bills presented to Congress in decades, although it has been overshadowed by the debates surrounding health care reform and financial regulatory overhaul. Flanders' panelists include Kate Bronfenbrenner, a Columbia University Professor who wrote a recent paper for the Economic Policy Institute examining 1,000 attempts to establish unions all over the country, and found that employer opposition to unionization is more aggressive than ever. A full 30 million workers want to be part of an organized union, but only 70,000 workers successfully organize each year.
"It's always been hard to organize, but employers now have made it harder than ever. They've literally have said to workers that, 'If you try to organize, we will go after you in every way possible,'" Bronfenbrenner said. "They threaten workers, they harass them, one in every three employers fire workers for union activity . . . . There literally is a war on workers who try to organize."
Another panelist, Mark Winston Griffith, Director of the Drum Major Institute, notes that the decline of unionization has weakened the economy. In the 1950s, when one-third of all U.S. workers belonged to a union, the potential foundation for the economy was strong. Workers were well-paid and had excellent job security, which created a strong source of demand. With less than 8% of U.S. workers unionized today, our economic demand is fueled by household debt, which has left families struggling for financial security and has injected a heavy dose of instability into the entire economy.
Writing for The Nation, Sarah Jaffe details the difficulties faced by a group of security officers in Philadelphia trying to unionize under current labor laws.
But while the workers who form the foundation of our economy are gasping for air, the elite have almost never had it better. A recent study found income inequality to be deeper than any period since World War I, and this absurdity plays out in public policy. While workers struggle to get a fair shake from their employers, executives and managers evade taxes through elaborate international financial deception. Swiss banking giant UBS recently agreed to turn over the names of thousands of its clients who allegedly used the company's banking operations to skip out on the bill for Uncle Sam.
UBS has been caught with its hand in nearly every cookie jar labeled "bank scandal" over the past two years, from the subprime mortgage crisis to phony securities peddling to diamond smuggling. But as Robert Scheer explains at Truthdig, former senator and deregulation hawk Phil Gramm (R-Texas), has been an executive at the firm while the company has been destroying its reputation. Gramm helped pass some two key anti-regulation bills later years of the Clinton administration, and was unabashed about jumping to UBS immediately after leaving office. Scheer notes that the public knows almost nothing about Gramm's role at the company, including any potential involvement in its laundry list of scandals.
Real economic progress in the U.S. is impossible without a stronger base of unionized workers. But it's just as important to invest in our future by giving the children of poor families an even economic playing field.
A new study by Economist Emmanuel Saez revealed this week that income inequality in the U.S. is more severe today than at any time since World War I, and the current recession is taking its heaviest toll on the worst-off members of our society. As our government rebuilds the financial sector using taxpayers' money, it's important to remember that both financiers and the government are responsible to our communities, not just bank shareholders. If we want to strengthen our country's economic foundation, we need to demand better wages for workers and an end to all kinds of predatory lending.
Saez's new data on income inequality is, as Paul Krugman put it, "truly amazing." Saez, who teaches at the University of California at Berkeley, found that the top 0.01% of U.S. earners had 6% of total U.S. wages, more than double the level in 2000. Earners in the top 10%, meanwhile, took home an astonishing 49.7% of all wages. That gap is larger now than during the Great Depression or the Gilded Age of the Roaring '20s.
"We're seeing Depression-era inequality again-only now it's slightly worse," writes Steve Benen for The Washington Monthly. Benen also notes that this level of inequality is not an inevitable consequence of a market economy: It's an extreme historical aberration. In the U.S., prosperity for much of the 20th Century was shared. But in 2007, at the economic bubble's peak, the wealthy simply got wealthier.
In that context, it is beyond absurd that the government is allowing 8-figure bonuses to be doled out by bailed out banks. Writing for Salon, Robert Reich dissects the policy implications of Citigroup's plans to pay its top executives an average of $10 million this year and award over $100 million to its top trader, a man who literally owns a castle in Germany. Citigroup was one of the most reckless U.S. banks during the housing bubble, a major subprime offender that received $45 billion in direct bailout money, as well as hundreds of billions in federal guarantees. How much is $45 billion? With the median U.S. home price at $174,100, that's the full market price of over 258,000 foreclosed homes. The company says that $10 million a head is necessary to attract and maintain top "talent," which Reich notes is a somewhat misleading term, given recent history. The problem is not just that Citigroup and other Wall Street firms are paying tons of money to a few people, it's that these people are being rewarded for the same kind of activities that got us into this mess to begin with: Risky, highly leveraged securities trading.
"Over the last several years Wall Street has exhibited a truly astonishing lack of talent," Reich says, noting that, "The Street is back to the same, relentlessly untalented tactics that made it lots of money before the meltdown-which also forced taxpayers to bail it out, caused the world economy to melt down, and tens of millions of people to lose big chunks of their life savings."
In truth, Reich argues, most large financial firms in the U.S. are much more like public utility companies than private-sector businesses. Even in good times, they depend on government guarantees and other support systems to function. In bad times, we bail them out. Instead of paying financiers tens of millions of dollars to reinforce a flawed system, Reich argues that we should impose rules that result in salaries similar to the public utilities sector, where top earners are generally restricted to 6-figure incomes.
The American Prospect features two pieces emphasizing problems in the current financial sector. Under a law known as the Community Reinvestment Act (CRA), enacted in 1977 we require banks to make loans in communities where they collect deposits. The loans have to be to dependable borrowers and they have to be relatively inexpensive. The law works very well-institutions covered by it made only a tiny fraction of the high-interest subprime loans that brought down the financial sector, as National Community Reinvestment Coalition President John Taylor notes for the Prospect. But CRA only applies to actual banks. You know, the places where you deposit your paychecks. CRA does not apply to subcompanies owned by the same corporation, and it does not apply to giant Wall Street securities firms like Bear Stearns and Goldman Sachs. Taylor says we need to expand CRA to cover these other big players in the financial world.
Why? As Alyssa Katz details in a piece for the Prospect funded by The Nation Institute, many Wall Street firms are bidding on foreclosed properties and selling them at rip-off rates to low-income borrowers.
But as Mary Kane notes for The Washington Independent, banks have also devised several methods of making money without making a loan. By charging tremendous fees on borrowers for minor infractions, banks generate billions of dollars without producing anything of social value. One of the worst forms of abuse, Kane writes, comes in the form of overdraft fees. When you withdraw too much money from your bank account, the bank fronts you the money, and then charges you a fee for this "protection." The trick is, banks almost never tell you that this has occurred, and often play around with the timing of your charges and deposits to maximize the fees they collect. Banks are on track to collect $38.5 billion in such fees this year alone. The worst part is, the fees come from the poorest customers-rich people don't overdraw their bank accounts, because they have tons of money.
In the case of credit cards, banks routinely slap borrowers with outrageous fees and interest rate hikes when the borrowers are making payments on time. Over the years, banks have targeted younger and younger credit card customers, as Adam Waxman notes for WireTap. After years of declining wages for all but the wealthiest citizens, consumers have been turning to pricey plastic to finance basic necessities.
Sadly, corporate America does not seem very focused on helping workers establish their financial independence. The Real News talks with Richard Wolff, an economist with the New School who emphasizes that, while worker productivity has jumped in recent months, wages have not made the corresponding increases. Quarterly productivity numbers tend to jump around a lot, but the trend of not compensating workers for improved efficiency has been around for years.
In a consumer-driven economy, major problems can't be fixed by giving lots of money to a few people, especially if those few people are already rich. To support broad, meaningful economic growth, we need to tailor our policies that empower those on the lower rungs of the economic ladder. And when we bail out giant corporations with taxpayer money, we need to make sure those companies arrange their business to improve the lot of taxpayers.
In the aftermath of the foreclosure crisis, the federal government has focused on stabilizing the housing market by assisting homeowners that are facing foreclosure. On The New Yorker's financial page, James Surowiecki explains that the Obama administration has not been very successful in its attempts. Comparing the administration's approach with that of Congress, Surowiecki writes:
"The Obama Administration has done better, rolling out a seventy-five-billion-dollar mortgage-modification program, which offers mortgage servicers financial incentives to renegotiate loans. So far, it's managed a couple of hundred thousand mortgages, but that's been dwarfed by the rising number of foreclosures."
It is encouraging that the Obama administration is making these efforts. The foreclosure crisis is not just harming those who have lost or are in the process of losing their home, but also entire neighborhoods and communities that are experiencing declining property values because of the number of foreclosed properties in the vicinity. As this op-ed in The New York Times argues, we should not "blame the victim" of the housing crash.
But what is also needed is a revamped effort by the federal government to assist those who rent their homes and are also finding it more difficult to pay for basic necessities. In the top ten largest U.S. cities, more than fifty percent of households are renters. Renters in these cities are faced with crushingly high rent burdens. In New York, the private rental market is hurting those families that have seen rents continually rise while paychecks have shrunk. As a result, over 500,000 New York City families pay more than half of their household income in rent.
The federal programs targeted at renters are insufficient. In many cities, waiting lists for Section 8 rental vouchers are half a decade long. At the same time, HUD is distributing grants to local governments to demolish public housing to make way for developments that have fewer units than the previously existing public housing projects. Additionally, federal programs related to rental housing focus almost exclusively on the very low-income end of the rental market. But middle-class renters in cities are also hurting. And while federal policy currently goes out of its way to assist middle-income homeowners and aspiring homeowners, it does practically nothing to help those who currently rent.
Rental housing is mostly an urban issue. The Obama administration has pledged to examine all areas of federal policy that affect urban areas to see if the current policies are effective or if they are actually harming cities. While efforts to expand homeownership certainly have their place in our federal housing policy, efforts to assist renters have so far been the missing link. After all, when a family can barely cover rent and keep food on the table, how are they meant to save enough money for a down payment for a home?
The housing bubble provided some clear indicators that there is something wrong with our current patterns of housing development. The suburban sprawl model that fueled the growth of many Sunbelt economies, from South Florida to Phoenix to southern California, sputtered out, leaving foreclosed homes, half-finished developments, and never-filled strip malls in its wake. It is difficult to determine cause and effect, but it is clear that the financial crisis had its roots in the wave of foreclosures that has swept the country.
But, according to Joel Kotkin, once the dust settles we should just continue on our current trajectory. Kotkin believes that a "renewed quest for homeownership could underpin a sustainable recovery."
However, there is nothing sustainable about our current housing model. It has real costs on our pocketbooks, our economy, and our environment. The Economist seems to agree.
Specter's post-switch voting record is now a perfect demonstration of why having 60 Democratic Senators is not, and never was, a magic number for Democrats. In June, when Al Franken is seated, there won't be a single piece of legislation that has been defeated so far in the 111th Congress (cramdown, EFCA, 100% cap and trade) but will pass when Democrats have 60 Senators. Not a single one.
We will shortly reach 60 votes in the Senate, but the more progressive aspects of the Democratic legislative agenda will still be stalled. This means we have officially reached the era where "more Democrats" is completely irrelevant to the progressive cause. From now on, all progressive electoral activity must be targeted in support of candidates who will add, or maintain, progressive votes on key pieces of legislation like cramdown, the Employee Free Choice Act, and putting a price on all carbon usage rather than just some carbon usage.
The "D" next to a the name of a Senate candidate or incumbent has become irrelevant. Now we need letters list "B" for bankruptcy reform, "C" for putting a price on all carbon, and "E" for EFCA. No matter what party a with which candidate identifies, Senate campaigns are now only relevant to progressives in terms of which pieces of defeated legislation their election or re-election will assist. And that's it.
Just in case anyone had their doubts about whether progressive groups are serious about holding Blue Dogs, conservodems, and other center-right Democrats accountable for supporting Wall Street and conservative groups instead of supporting their own constituents, doubt no more. The following video is the first paid media campaign from a large progressive coalition designed to hold Democrats accountable on mortgage bankruptcy reform, otherwise known as "cramdown."
It will appear over 250 times in Jonesboro, which is the largest city in the Arkansas 1st congressional district. Jonesboro is also a college town (home to Arkansas St.) It would have cost just as much to run the ad in smaller, nearby towns, so only Jonesboro was targeted.
It will run only on CNN, both in the daytime and during primetime. CNN was chosen because its appeals to news junkies and its viewers lean heavily Democratic (65%-26% according to a poll by Rasmussen Reports) and because MSNBC was not available in the area.
The ad will run over the next three weeks, starting today. By appearing over 250 times in one area, and over an extended period of time, local Democratic news junkies will see it often enough to remember it.
The ad placement cost $5,000, paid for by BlogPac. Such a low price was made possible by the new services offered by SaysMe TV.
For the last week or so there has been a faint drumbeat of positive economic news. Consumer confidence ticked slightly higher in March, new home sales actually increased in February, durable goods orders have increased, inventories declined, and stocks rallied. Certain "market watchers" have told us to jump back into the stock market, the media is reporting signs of "economic hope", and Ben Bernanke talked about the economy's "green shoots", prompting an online debate about recovery hosted by The New York Times.
The response to this rather superficial positive news - after all, foreclosure activity increased again in February and the unemployment rate rose to 8.5% - was necessarily swift. Paul Krugman pointed to an increase in industrial production in 1931; Tyler Cowen warned about "suckers' rallies" and what will happen when Bernanke is eventually forced to hike interest rates; the new Baseline Scenario holds that "The one positive sign is that some forecasters are beginning to recognize that growth in 2010 is not a foregone conclusion"; at Vox EU economists plotted frightening graphs showing how the global downturn is in some ways worse than the Great Depression; and a gargantuan op-ed in the Wall Street Journal on Monday very chillingly sourced both the Great Depression and the current economic collapse to a consumer debt crash. In sum, the economic picture became worse for its comparison to the titillating glimmers of economic rebound.
Earlier this year, I visited my father, who lives in the Bay Area. As we drove from the Oakland airport, the conversation quickly turned to the Obama presidency. Born in 1923, my dad survived the Great Depression, fought in World War II, endured vicious Jim Crow segregation and violence, participated in the Civil Rights Movement, and, this year, witnessed the inauguration of an African-American president of the United States.
On our drive, he reminisced about how, at age 8, he had gone with his 2nd grade class to see the cavalcade of then-president Herbert Hoover as it drove through downtown Detroit. A year later, the country would throw Hoover out of office for his gross mishandling of the economy, choosing Franklin Delano Roosevelt and his message of change. Before my dad's teen years were through, he would join the Marines and defend a segregated nation from within a segregated military. Traveling to and from southern military bases, he would experience racial humiliation, threats, and violence from white fellow Americans, often while wearing his Marine uniform.
As we marveled at the progress we've made as a country, we drove by block after block of boarded up houses in some of Oakland's African-American neighborhoods, many with foreclosure signs visible. Many homes in the same neighborhoods still sported lawn signs reading "Change" and "Hope."
As the Obama presidency sinks in, many are interpreting it in absolute terms: arguing either that it shows that racial bias and discrimination are no longer factors in American life, or that the election means little for race relations, reflecting merely a unique confluence of events-a historically unpopular incumbent, a historically bad economy, a gifted politician raised by white folks who ran a flawless 21st century campaign against a pair of tone-deaf 20th century opponents. News media coverage mostly echoed that polarized, simplistic discourse, with an emphasis on the "post-racial America" narrative.
On Tuesday, Democracy Now! featured a segment, "Report: Communities of Color Bear Heaviest Burden in Recession". The title was actually a bit misleading, because the report, though taking note of the recession and the need to respond pro-actively to it, wasn't specifically limited to the effects of the recession, it was about geographical patterns of opportunity and lack of opportunity that have long persisted throughout good times and bad. And-Surprise! Surprise!-those patterns turn out to be strongly related to race. As I'll explain below, this report was remarkable to me in part because of how many different familiar threads itg brought together, in addition to the threads of the opportunity sub-indexes it brought together.
It's not bad enough that blacks suffer twice the unemployment rate of whites (with Asians and Latinos falling in between), they also suffer inferior housing, health care, and education, along with greater exposure to pollution. Indeed, the report identified six broad areas, constructing an index of indictors for each, and found similar patterns of racialized opportunity in all six of them.
It's important to realize that none of this necessarily depends on old-fashioned racism. But that doesn't make a bit of difference when it comes to the effect, which is to place disproportionate, and often debilitating burdens on minorities. (Sub-prime mortages, for example, not only were targeted disproportionately at minorities, in many cases minorities who qualified for standard financing were simply not offered the option that would have been routine, had they been white.) Furthermore, as minority populations grow, and minorities collectively come to constitute a majority, these patterns of suppressed opportunity are increasingly a problem for our society as a whole--as, indeed, was the case with the sub-prime mortgage meltdown.
It's not just a noble sentiment, it's increasingly simply a fact of life-allowing large segments of our population to be held back by substandard opportunities to advance creates mounting problems for our society as a whole. The converse is also true: effective strategies for advancement as a whole require a special focus on those who are being held back the most. That's the message behind the report, "One Region: Promoting Prosperity Across Race" [pdf]
Here is a quick reminder of what has happened in this country:
Corporations, banks, pundits and advertisers spent decades convincing everyone to invest their retirement saving in the stock market and that buying a house would make you rich.
The financial services industry took this money, and investing it in bad housing loans that they knew were bad.
This same industry is still incredibly rich, and has enough sway over both parties that it is still writing legislation for Congress.
I think I got all that right, but feel free to fill in details in the comments. Also, if you don't believe me on that last point, check out the financial services industry lobbyists succeeding in their efforts to delay, water down, and even entirely block housing related bankruptcy reform in the Senate (more in the extended entry):
Republicans hammered Barack Obama over his connection to ACORN during last year's election, but now ACORN is taking a swing at some Democrats - with the help of liberal activists at MoveOn.org.
The role reversal arises out of the groups' anger at moderate House Democrats who opposed a housing bill that has more generous bankruptcy rules for people facing foreclosure.
Next week this coalition will begin airing TV ads criticizing House Democrats who voted against the measure, which would for the first time give judges the authority to restructure home mortgages - a procedure known as a cramdown.
Hmmm... where did I hear about this before? Oh yeah:
An Ad To Run Against Dems Who Vote Against Cramdown
How often does Congress vote on spending bills that only impact one congressional district? The answer is almost never. Members of Congress almost always write and vote on legislation that impacts the entire country, not only their own personal district. In fact, the entire reason we have a federal Congress is to pass laws that impact more than one state. If there were no such laws, there would be no need for a national legislative body.
Here is another question: when Hurricane Katrina hit the Gulf Coast, would it have been appropriate for members of Congress not from the Gulf Coast to vote down all spending for relief and rebuilding efforts, because such efforts disproportionately benefited districts in the Gulf Coast? Should members of Congress from outside the New York and Washington, D.C. metropolitan areas have voted down 9/11 relief effort because their congressional districts did not receive proportional benefit from the aid? Should we not have declared war on Japan in December of 1941 because they only attacked Hawaii?
And here is another question: did Congressman Eric Massa serve in the Armed Forces only because he thought such service would disproportionately benefit New York's Southern Tier? And when Captain Massa ran for Congress, did he refuse all contributions from people living outside his district, including help from the DCCC and other groups which are not based in his district?
And when 8,100,000 American families are facing foreclsoure over the next four years, is it appropriate for a member of Congressto vote against a housing bill because his district is facing only 7,048 foreclosures, which is less than 1 out of every 435 of all foreclosures? As I discuss in the extended entry, this is not a hypothetical question.
In every case, a "Y" refers to the vote that gave money to Wall Street, and a "N" refers to a vote against giving Wall Street money. ("A" refers to not voting.)
Totally for Wall Street, no for Homeonwers Rick Boucher: Y, Y, A
Chet Edwards: Y, Y, Y
Bart Gordon: Y, Y, Y
Consistent: Bobby Bright: N
Chris Carney: N, N, N
Travis Childers: N, N, N
Kathy Dahlkemper: N
Lincoln Davis: N, N, N
Parker Griffith: N
Baron Hill: N, N, N
Tim Holden: N, N, N
Larry Kissell: N
Frank Kratovil: N
Betsy Markey N
Eric Massa: N (what the fuck Massa?) Jim Matheson: N, N, N
Bart Stupak: N, N, N
Gene Taylor: N, N, N
Harry Teague N
Given that they represent blue districts, if either Ron Kind or Mike Arcuri was to vote against President Obama's budget, it should be open season on both of them in their 2010 primaries. To vote to hand hundreds of billions over to Wall Street, but then to oppose even a New Democrat approved housing bill and oppose President Obama's budget--at that point, you simply don't deserve to be a Democratic nominee for Congress anymore.
Ron Kind in particular needs to go, as he was a pro-FISA rewrite, pro-Iraq blank check Bush Dog on top of all this. As such, I don't even really care how Ron Kind votes on the budget--he has crossed the line way too many times for an Obama 58% district. Let's get a primary challenger on him now. Even with Wisconsin's open primary laws, that is an exceptionally winnable primary campaign.
Last night, the House passed legislation permitting modification of mortgages on primary loans. Though the bill has been kicked around for over a year, the banking lobby only ratcheted up its campaign to shape the final legislation in the last several days.
Changes to the initial bill, then, obviously favor the financial industry. The first major change increased the amount lenders can recover from homeowners if their home's value appreciates after bankruptcy. In principle, such a recovery provision makes sense: mortgage holders take a hit when mortgage principle is reduced in bankruptcy. But the change merely ratchets up by 10% the amount the lender can recover from the borrower, suggesting that the New Democrats in favor of amending the legislation wanted to sweeten the deal for the banks. However, two quite obvious considerations mitigate how much of a "giveaway" this really is. First, home sales are way, way down (and will stay down). Second, home prices are way, way down (and will stay down). Because of this, the recapture provision functions less as a straight handout to banks and more as a disincentive for underwater homeowners to seek out bankruptcy in search of a principal write down and, thus, a chance at regaining equity.
The other major change limits the situations in which bankruptcy judges can reduce mortgage principal, among other measures explicitly permitting only interest rate reductions if such reductions make a mortgage affordable. Like the previous change, this alteration also seeks to prevent underwater homeowners from using bankruptcy as a means to recover equity in their homes.
While this concern is perhaps understandable, the narrow "affordability" provisions in the bill, which define affordability by monthly income, ignore the fact that until recently many middle-class homeowners relied on home equity to maintain a middle-class standard of living. As housing prices continue to plummet, these homeowners lose a significant source of wealth: poof, as the Federal Reserve said, went the 17% growth in median household wealth between 2004 and 2007. Principal reductions, in and out of bankruptcy, are the only means of restoring this wealth and are important to prevent foreclosures (and to incentive homeowners not to abandon their houses when they owe more than the house is worth).
The chatter about making mortgages "affordable" - in Obama's housing plan as well - is insufficient. Of course the housing crisis is a complex beast that requires imperfect solutions, as the bankruptcy bill and Obama's housing plan are. But we should remember that by avoiding principal write downs - and focusing on monthly mortgage payments - the burden of wealth destruction is being placed on homeowners, not on banks.
That's how many families are losing their homes to foreclosure. More than 8 million families are at risk.[2]
And, this is no accident. In Brave New Foundation's provocative new film on the housing crisis, a California mortgage broker admits on tape that he was "trained to mislead borrowers" and get them into the most expensive loans.
