Your call has been disconnected

By Carl 

Well, this is good news, right?

Fewer Americans filed applications for unemployment benefits last week, a sign the labor market is firming heading into the second quarter.

Jobless claims fell by 6,000 to 388,000 in the week ended March 26, Labor Department figures showed today in Washington. The government also issued its annual revisions to the seasonal- adjustment factors, which caused a “mild upward shift” in the number of applications, an agency spokesman said as the figures were released to reporters.

A slowdown in firings and growing payrolls may bolster further gains in consumer spending, which accounts for about 70 percent of the world’s largest economy. Companies added 210,000 jobs in March, while the unemployment rate held at 8.9 percent, economists project a Labor Department report to show tomorrow. 

A sidenote: there is some reason for concern for the Obama camp, in that high unemployment is usually a harbinger of defeat in an election. The latest number, 8.9%, is notably down from the near-10% of this time last year, but more has to be done. Fortunately, these things have a way of gaining momentum.

Employment is like Sisyphus' boulder: once it starts up the hill, it becomes easier and faster, but when it falls, it plummets.

Americans getting jobs. Sounds like a sign of a healthy economy. 

You'd think.

As  I write this, the markets have just opened for the day. Mind you, nearly every index is up for the year at or near record paces not seen since the tech bubble of 1998, but today, when finally it looks good for an American middle class worker, the toilet lid flies up and the markets sink. The Dow is off 13 points, and S&P 500 and NASDAQ are both struggling to stay even.

What is it with corporate America that they can't sync up with Main Street Americans?

In a nutshell, there is no more Corporate America any more than there are American cars. So many companies have become multinational conglomerates that their fortunes no longer rise or fall along with those of you and I here in the USA.

It used to be "what was good for GM was good for America," but that's no longer the case. GM got bailed out. Americans got HAMPered, the plug having been pulled on the only sensible bailout program in the recession, the one that helped Americans keep their homes.

But I forgot. That program wasn't going to turn a profit for the US. Or a bigger one for the banks. My error.

Just like full employment means the banks can't hold your feet to the fire in interest and late payment charges.

(Cross-posted to Simply Left Behind.)

General Electric pays no taxes

By Michael J.W. Stickings 

You might want to sit down for this one. The Times is reporting that General Electric pays zero corporate taxes in the U.S.:

General Electric, the nation's largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.

Yes, quite extraordinary -- and, needless to say, deeply troubling.

And yet Corporate American continues to complain about how horribly it's being treated, how difficult it is to make a buck, how anti-business Obama is?

I'm not saying GE does nothing for America. It employs a lot of people, obviously, and it contributes a great deal to society, both for better (e.g., medical equipment) and for worse (e.g., weapons). And, yes, it has its not insubstantial philanthropic activities as well.

But getting away with paying essentially no corporate taxes whatsoever -- and being allowed to do so, given the "maze of [legal] shelters, tax credits and subsidies" it another other companies exploit for the sake of their own bottom lines at the expense of the public good -- is pretty despicable, not least at a time when so many people are struggling just to make ends meet, just to pay the bills and put food on the table.

Can you blame GE? Well, business is business, and business, at least in America, where it is not expected to have much of a social conscience, is about the bottom line, about making as much profit as possible. Let's not fool ourselves into thinking otherwise, into thinking that what's good for business is good for America. It isn't, at least not always, or even mostly.

But this is certainly a sign of what's wrong with Corporate America and with the system that allows it to rape and pillage -- figuratively speaking, to an extent -- without any regard for the consequences, to benefit from a society that allows it to profit with reckless abandon without having to pay for anything in return.

Think about that as you're doing your taxes and as you feel the merciless taxman breathing down your neck. If you were GE, you'd be in the clear, with your money safely stashed away "offshore."

But you're not. You are who you are, and you're screwed.

Tap water shouldn't catch on fire

By Edward Copeland

Just last week, T. Boone Pickens returned to The Daily Show to discuss how natural gas was a safe energy resource that the U.S. had plentiful supplies of that it could use to wean itself off its dependency on foreign oil. However, when Jon Stewart brought up the subject of "fracking," Pickens got tongue-tied. That's probably why he and every major natural gas executive in America refused to be interviewed about the process for Josh Fox's documentary GasLand, which details the destruction that has been unleashed on people, animals, and the environment by the practice.

Fox had never made a documentary before but sort of stumbled into it when he noticed the changes happening in the creek near his family home in rural Pennsylvania following an offer from Halliburton to lease the family's land for natural gas exploration. While they would receive a few hundred thousand dollars from the agreement, as had many rural Americans across the country, they'd also encounter poisoned water sources, dead animals, health problems and more, all which seem to stem from the process used to retrieve the natural gas.

It inspired Fox to go on a cross-country journey to other sites to see the damage done by the hydraulic fracturing (or fracking) process, which the companies insist were safe but which evidence proves otherwise. In a way, it doesn't matter because the 2005 Energy Bill, formed in the wake of the secretive Cheney Energy Task Force, exempts all energy companies from safety regulations that had been in place for decades, some dating back to the Nixon Administration, so the corporations basically can do whatever they want in the least-expensive way without any concerns for the safety of nearby residents, the companies' own workers or the environment itself.

As one man tells Fox, "Amazing. What took millions of years for Mother Nature to build can be destroyed in hours by heavy equipment." If only the equipment were the main problem... What's really causing all the destruction is the seepage of a virtual stew of hazardous chemicals that are used in the fracking process to retrieve the natural gas. It's pretty amazing to watch scene after scene in state after state of people putting a lit match next to a flowing faucet or a stream and see the flames burst forth.

There are other stories that you hear repeatedly as residents complain about contamination only to be told that the water is safe by government or company officials, who then refuse to drink a glass of the tap water when the residents offer one. It's even more disgusting when Fox meets with representatives of state departments of environmental protection and they speak the corporate party line, denying that contamination is as widespread as it is, or at congressional hearings where executives testify that there isn't any evidence of risks and the happy House members, including a particularly dumb-looking and -sounding Rep. Dan Boren (D-Okla.), side with the businesses.

Meanwhile, Fox learns of those who have contracted cancer and died, the risks of brain damage from repeated exposure, pets losing hair and a Colorado woman who keeps the corpses of mass and sudden animal deaths preserved in her freezer for any potential investigations. Even more frightening is learning how Hurricanes Katrina and Rita scattered the junk from hundreds of thousands of sites all over the place.

GasLand is a pretty good effort for a first-time filmmaker such as Fox and another example of a documentarian doing the investigative work that the Fourth Estate has abandoned. You do learn a lot, though he tends to repeat himself and I don't think it belongs in Oscar's final five documentary features compared to some of the other finalists and nonfinalists from 2010 that I've seen. Still, it's very good and yet another case of showing the indifference both corporate America and our elected leaders have toward the average citizen's wellbeing.

(Cross-posted at Edward Copeland on Film.)

Be careful which enemies you make

By Edward Copeland 

In Charles Ferguson's outstanding documentary on the financial meltdown, Inside Job, one of his interview subjects is former N.Y. Attorney General Eliot Spitzer, who'd been known as the Sheriff of Wall Street for going after shady business practices long before the collapse. Toward the end of Inside Job, it makes the point that none of the financial firms ever faced investigations for their traders writing off high-priced escort services as business expenses, but the Justice Department did pursue Spitzer when it was discovered after he was governor that he used an escort service. The work that Spitzer did and the promise he held as a gifted politician that came crashing down because of his personal weakness are detailed well in another excellent documentary from the prolific filmmaker Alex Gibney, Client 9: The Rise and Fall of Eliot Spitzer.

Gibney also made the great 2010 documentary Casino Jack and the United States of Money as well as the similarly outstanding Taxi to Dark Side and Enron: The Smartest Guys in the World. He also served in producing capacities on Ferguson's excellent No End in Sight and the brilliant Who Killed the Electric Car?

While Client 9 definitely makes the case that the political downfall of Spitzer may have been an orchestrated hit by his enemies in the business community and the Republican Party, Gibney doesn't try to downplay Spitzer's faults beyond the weakness that led him to seek high-priced sexual companionship in the first place. The film paints a broader portrait of the man's achievements and his hubris, which include a superiority complex and an approach that makes him come off as a bully, even if what he was trying to do was right.

As with the best documentaries, Client 9 teaches you things that you didn't know. It seems as if so many of the recent outstanding documentaries, no matter what their subject may be, show how spoonfed the U.S. media are, regurgitating "facts" that get handed to them while seldom checking their veracity. As far as I knew (and I imagine this to be the case with most people who heard about Spitzer and the call girl), his preferred escort was "Kristen" aka Ashley DuPre, who then turned herself into another of those freak celebrities, who ended up with a job at Rupert Murdoch's New York Post as a love and sex columnist.

Client 9, through interviews with one of the owners of The Emperors Club escort service, reveals that Spitzer saw "Kristen" maybe once but mainly went out with a woman who went by the name Angelica. Gibney interviewed her, but she didn't want her face or voice revealed, so an actress plays her part and reads the transcript of her interviews. Ironically, she's now a commodities day trader.

Where Spitzer really might have earned the enemies who were determined to stop him was when as attorney general he went after the head of AIG, Hank Greenberg, for the crooked financial games that company was playing, long before that company's collapse became a major cause of the world financial collapse and cost U.S. taxpayers billions in not one, but two bailouts. Greenberg was not at the helm by then, having been removed by his own board for violating company rules, but the methods AIG employed while Greenberg ran it were still going on and led to AIG's implosion.

U.S. Attorney Michael Garcia prevented Spitzer's pursuit of Greenberg prior to that by claiming the Justice Department was building a case against Greenberg, which they never filed. However, this same Garcia intercepted wire transfers Spitzer made and started looking into escort services that led to leaks that got Spitzer's sexual habits revealed. This also came at the time the Bush Administration was firing U.S. attorneys who weren't prosecuting enough Democrats.

Needless to say, when prosecutors go after prostitution rings, they rarely go after the clients, just the owners and the prostitutes. In contrast, around the same time, the D.C. Madam case surfaced and they only pursued the madam there, even though it was revealed that two of her clients were high-profile Republicans, including Louisiana Sen. David Vitter, who was just re-elected. He faced no legal inquiries.

Many believed that Spitzer had a good shot at being the country's first Jewish president. I just wonder if he'd been able to keep after Wall Street as he was doing, whether some of the mess that happened could have been prevented since no regulatory fixes have really been put in place to stop it since. Government of the corporations, by the corporations, for the corporations shall not perish from the United States and we the little people always will be the ones paying the price. Thank goodness we have documentary filmmakers such as Alex Gibney to do the job that journalists have long since abandoned or forgotten how to do.

(Cross-posted at Edward Copeland on Film.)

DeLay sentenced to 3 years in prison

By Edward Copeland

From The New York Times:

AUSTIN, Texas — Tom DeLay, the former House majority leader, was sentenced to three years in prison on Monday after convictions for money laundering and conspiracy stemming from his role in a scheme to channel corporate contributions to Texas state races in 2002.

Mr. DeLay, once one of the most powerful and polemical Republican congressmen in the state’s history, was ushered out of Travis County Court after the sentencing and was taken by sheriff’s deputies to the county jail, where he was expected to post a $10,000 bond and be released pending an appeal.

After listening to Mr. DeLay say he felt he had done nothing wrong, Judge Pat Priest sentenced him to three years in prison for the conspiracy count and 10 years’ probation for the money laundering count. The judge rejected arguments from Mr. DeLay that the trial had been a politically motivated vendetta mounted by an overzealous Democratic District Attorney.

“Before there were Republicans and Democrats, there was America, and what America is about is the rule of law,” the judge said just before pronouncing the sentence.

Cuomo targets government employees, will call for pay freeze

By Michael J.W. Stickings

As the Times is reporting, new New York Gov. Andrew Cuomo is targeting government employees as part of a broader program of fiscal tightening:

ALBANY — Gov. Andrew M. Cuomo will seek a one-year salary freeze for state workers as part of an emergency financial plan he will lay out in his State of the State address on Wednesday, senior administration officials said.

The move will signal the opening of what is expected to be a grueling fight between the new governor and the public-sector unions that have traditionally dominated the state's political establishment.

It will also come days after the New Year's Eve layoffs of more than 900 state workers, an event that union representatives marked with a candlelight vigil on the steps of the Capitol and outside government offices in five other cities.

"The governor said during his campaign that the difficult financial times call for shared sacrifice," said a senior administration official, who requested anonymity because he was not authorized to speak publicly about the governor's address. "A salary freeze is obviously a difficult thing for many government workers, but it's necessary if the state is going to live within its means."

I have very much the same response to this as I had to President Obama's targeting of federal employees. It's a stupid and cynically symbolic move: Big headlines, minimal actual impact on the actual budget. As I put it at the end of November:

Of course, government is an easy target. People generally want government to do what they want -- and to be there when they need something (you know, like disaster relief or police protection) -- but don't want to pay for it.

And while even in this time of economic crisis companies are making huge profits and CEO are taking home huge salaries and bonuses, government employees can easily be scapegoated as the problem, or at least as a large part of the problem, even if they aren't.

It's not about reality, it's about public perception -- and conservatives have managed to convince much of the public that government employees are all a bunch of overpaid layabouts with their snouts in the public trough.

To be fair to Cuomo, things appear to be a bit more challenging at the state level, particularly in New York, where there isn't a bloated military budget that could be significantly pared down and where there aren't tax cuts for the wealthy that ought to be repealed. 

But what I also objected to was Obama's language. He talked back then about how "getting this deficit under control is going to require some broad sacrifice and that sacrifice must be shared by employees of the federal government." Fair enough, but who else is being asked to sacrifice other than those who are already having so much difficulty dealing with the ongoing economic situation? It is likely that any deal with Republicans over the deficit will require cuts to Social Security, and of course Republicans federally have blocked various efforts to extend unemployment and other benefits to those who need help the most. So the rich get their ridiculous tax cuts for another two years while the poor struggle even to put food on the table. And government employees (while, admittedly, not poor) face a pay freeze while Wall Street execs, bailed out by the government, end up with bonuses as massive as ever and corporate America piles on the profits while refusing to hire.

Where exactly is the shared sacrifice?

Look, I get it. Obama and Cuomo have to appear to be doing something about their respective deficits and, as government executives, they're in a position to target government employees, not Wall Street bigwigs and corporate bloodsuckers. And I'm not saying that government should regulate the pay of the private sector -- yes, I'm still a capitalist.

But stop it with the "shared sacrifice" nonsense. We all know who's being asked to sacrifice -- or, rather, who's being forced to sacrifice -- and who isn't.

And we all know that what Cuomo is doing, like what Obama is doing, is almost purely symbolic. As the Times notes, "the immediate budget savings from the freeze would be relatively modest -- between $200 million and $400 million against a projected deficit in excess of $9 billion -- achieving it would be politically meaningful." It's a way around the Assembly, a way around his own state Democratic Party, and a way around the public-sector unions -- a way to look aggressive and non-partisan. The good thing is that any freeze would have to be collectively bargained, and the unions should demand a good deal in return should they agree to it. (A good thing, too, is that a freeze would likely just be for one year -- so it's possible that a fair deal could be reached.)

And remember, the pay that government employees don't get is money that won't be spent, that won't help stimulate the economy at a time when economic stimulation, far more than fiscal restraint, is most needed to get the economy moving again.

I understand the need for all of us -- individuals, corporations, and governments alike -- to live within our means. It is deeply irresponsible, not to mention deeply unfair to future generations, for governments to rack up massive debt. And, yes, tough choices need to be made. But now is not the time for tightening before all else, for restraint over stimulation, for stupid, cynical moves that target the public sector, moves dressed up in the high-falutin', hypocritical, and simply dishonest rhetoric of shared sacrifice.

I have high hopes for Gov. Cuomo and for the most part I'm willing to give him the benefit of the doubt. We'll have to wait for Cuomo's State of the State address on Wednesday for the details of the plan, but I'm just not sure targeting government employees at this time of economic uncertainty and widespread despair is really the way to go.