In 1865, the 13^th amendment abolished slavery, but there was a loophole. Prisoners were exempt. Since the passage of the amendment, prisons and businesses have been forcing inmates to work for slave wages, or sometimes no wages.

Capital thrives on squeezing as much profit and productivity as possible out of workers. In the eyes of the corporation, inmate labor is a brilliant strategy for maximizing profit.

In an article at U.S. Uncut, Kelly Davidson reports that corporations, in partnership with the United States government, are forcing prisoners to work for wages as low as .25 and $1.15 per hour. It’s called “insourcing.” If you are a CEO or a stockholder in one of these companies it’s great! You get your products made by prison slaves for practically nothing, or you get your products made in third world countries for practically nothing—either way, you reap the profits.

Which companies make use of prison labor?

I’ve annotated Davidson’s list:

Lets start with Whole Foods. This high-end grocery chain purchases artisan cheese and fish prepared by prison inmates who work for private companies. The inmates are paid .74 cents a day to raise tilapia that Whole Paycheck sells for $11.99 a pound.

Then we have McDonald’s. It buys tons of prison-manufactured items including plastic cutlery, food containers, and uniforms. As Davidson notes, the inmates who sew the uniforms make even less money per hour than the people who wear them.

And, of course, there’s Wal-Mart. The official company policy is: “no forced or prison labor will be tolerated.” But Wal-Mart gets around this by buying from independent prison labor factories. Same thing Whole Foods is doing. According to Davidson: “Wal-Mart purchases its produce from prison farms where laborers are often subjected to long, arduous hours in the blazing heat without adequate sunscreen, water, or food.”

If you like sexy lingerie, you may enjoy buying from Victoria’s Secret. Know that female inmates in South Carolina, forced to work for slave wages, make a lot of the company’s garments, as well as J.C. Penny’s women’s underwear.

In 1993, AT&T laid off thousands of union telephone operators in a move to smash unions and increase profits. It has a prison labor policy similar to Wal-Mart’s. Yet, since 1993, AT&T has used inmates, managed by third party companies, to work their call centers, paying them $2 a day.

It turns out BP used African-American inmates to clean up the 4.2 million barrels of oil it spilled into the Gulf coast after the Deepwater Horizon oil rig disaster. The right thing was for BP to hire Coastal residents whose livelihoods it had just destroyed, but the company opted for cheap prison labor. Then its PR department put out ads touting the company’s dedication to the Gulf and the people who live there.

Davidson sums up:

From dentures to shower curtains to pill bottles, almost everything you can imagine is being made in American prisons. Also implicit in the past and present use of prison labor are Microsoft, Nike, Nintendo, Honda, Pfizer, Saks Fifth Avenue, Macy’s, Starbucks, and more.

The “more” includes, among others, Nordstrom, Eddie Bauer, Motorola, Compaq, IBM, Boeing, Texas Instrument, Revlon, Macy’s, Target Stores, Nortel, Hewlett-Packard, Intel, Honeywell, Pierre Cardin, 3com, and Lucent Technologies.

The Prison-Industrial-Complex and UNICOR

Davidson fingers the U.S. government as the guilty party in this modern day reincarnation of slavery. UNICOR, a corporation created in 1934 and owned by the federal government, oversees penal labor, and sets the condition and wage standards for working inmates.  UNICOR’s official line is that in exchange for their slave labor, prisoners are given “vocational training.” Yet the workplace conditions are often appalling, and the transfer of skills to the private sector is dubious.

For example, at one UNICOR operation at a California prison, inmates “de-manufactured” computer cathode-type monitors. According to industry safety practices, a mechanical crushing machine is supposed to be used to minimize danger from flying glass, with an isolated air system to avoid releasing lead, and other toxic substances into the workplace atmosphere. At the UNICOR facility, prisoners were required to smash CRTs with hammers without any protection.

The United States of Incarceration

We have a huge per capita prison population—the second highest in the world. Although we have only 5 percent of the world’s population, we incarcerate 25 percent of the world’s prisoners. Racism, drug laws, mandatory sentencing, and of course, privatization of prisons all play a part. The partnership of the U.S. government with big business allows prisoners to be used as slave labor, another great incentive for filling prisons. Prison overcrowding is common. Instead of helping and rehabilitating people, we use them for profit—another grotesque feature of a capitalist system fixated on making money over everything else.

I’m afraid the answer is not prison reform, because that simply won’t happen in our current political and economic environment. Also, the use of prisoners for profit has been going on for 150 years. Instead, we have to examine and question the overriding system that created prison slave labor in the first place. We have to break the taboo on talking about capitalism. We have to question capitalism’s ruthless, limited way of thinking, and its distorted, often inhumane values. We have to step back and ask ourselves: Is this how we want to treat people? Is this really how we want to live? Is capitalism a system that works for most Americans, or most inhabitants of the Earth, or just a lucky few? How can we transition to a better, more humane system, a new democratic socialism for the 21^st century?

Michael Liebowitz writes about the nature of capitalism in his book The Socialist Alternative: Real Human Development:

. . .no one could say that capitalism is a good society. Capitalism is certainly not oriented toward solidarity, respect, social responsibility, or caring: it is not about creating the conditions for protagonism in the workplace and society—that necessary way by which people can achieve “their complete development, both individual and collective.” On the contrary, capitalism is not about human development at all.

The logic of capital generates a society in which all human values are subordinated to the search for profits. . . .Rather than building a cohesive and caring society, capital tears society apart. It divides workers and pits them against one another as competitors to reduce any challenge to its rule and its bottom line. Precisely because human beings and nature are mere means to capital’s goal, it destroys what Marx called the original sources of wealth—human beings and nature.

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It’s absolutely true that Mitch McConnell and the Republicans obstructed every Democratic initiative. On the other hand, Democrats didn’t give people a reason to go to the polls. Why should Democrats bother to vote when its clear their party chooses the needs of banks and corporations over the needs of its constituents?

Whatever you think of Ralph Nader, he made a lot of sense when he spoke with Amy Goodman on Democracy Now about Democratic losses in the midterm elections. He says there are plenty of excuses being made like being outspent by Republicans, and Republican obstructionism, but they don’t hold water.

The Democrats raised huge amounts of money this time around, and in 2012 . . . plenty of money to win. [But] . . . they didn’t get their own voters out, because although they finally came around to the only issue that Politico said is getting traction for the Democrats—raising the minimum wage for 30 million people, who are paid less now than workers in 1968 adjusted for inflation, 30 million people and their families, a lot of voters—they didn’t make it a big enough issue. . .

We got a president who spent almost two weeks in salons, from New York and Maine and San Francisco and Los Angeles, raising money for the Democrats, not barnstorming the country on an issue that has . . .80 percent support. . . .So, . . .they didn’t have a policy. They didn’t have an agenda. They didn’t have the message. They had tons of money to put on insipid television ads that didn’t move the needle. . .

In other words, people back home are not given enough reason to vote for the Democrats. But they’re given plenty of emotional reason to vote for the Republicans because of all the social issues—the school prayer, the reproductive rights, the gun control. The Democrats have dropped the economic issue that won election after election for Franklin Delano Roosevelt and Harry Truman. They can no longer defend our country against the most militaristic, corporatist, cruel, anti-worker, anti-consumer, anti-environment, anti-women, even anti-children party—the Republican Party.

A lot of soul searching is needed, and we shouldn’t let Citizens United and voting restriction laws . . . be used as alibis by the Democrats in Congress.

“Soul searching,” of course, means actually adopting a progressive agenda—one that serves the majority of Americans. And that means being willing to give up the corporate gravy train—the big campaign contributions, and the lucrative jobs upon leaving office. Most (although not all) Democrats are hooked into this money/power revolving door, so I don’t expect the money influence in the party to change, on its own, any time soon.

But there is some good news coming out of the midterms. The Republican “sweep” of Congress in no way represents the underlying mood of the country. Democratic losses came from a cocktail of Republican voter suppression and glaring Democratic Party policy failures.

While Republicans were claiming a mandate on the national level, there were plenty of local progressive victories that reveal a growing left-leaning electorate. If you’re bummed about the midterms, this laundry list of progressive victories complied by Bill Moyers.com will cheer you up. The dysfunctional, corporate-owned Democratic Party needs to sit up and take notice.

David beats Goliath in Richmond, California

Richmond, California is a small town of 100,000 and the home of Richmond Chevron refinery. For a hundred years, Chevron owned the Richmond city council. Then, in 2007, locals put forward a progressive movement to run local progressive candidates who pledged not to take a penny from corporations. Running on very little money, they won the mayor’s seat and five other local elections based on a progressive, anti-corporate message. Since then, the progressive controlled city council has accomplished a lot, including passing a $13 minimum wage and gaining an additional $114 million in taxes from Chevron. This year progressive candidates won again against extremely well funded Chevron-backed candidates. Chevron and Wall Street money failed to drive progressives out of office.

Richmond is a microcosm of what could happen on a larger scale in this country if progressives became focused and organized.

Minimum Wage measures pass in four red states

Voters in four “red” states—Arkansas, Alaska, Nebraska and South Dakota—approved measures on Tuesday to raise the minimum wage. They did this against the well-funded opposition big business groups. As a result, over 1.7 million workers will be getting a raise.

These victories didn’t come out of nowhere. Increasing grassroots pressure and demonstrations by low-wage workers around the country—especially employees of fast-food chains and Walmart—helped bring the issue to the attention of the wider public. Polls show that most Americans, Democrats and Republicans, support an increase in the federal minimum wage.

Worker’s rights expanded in two states

In Massachusetts a ballot measure passed giving paid sick days to about million workers. In Montclair and Trenton, New Jersey, voters passed ballot initiatives expanding paid sick leave to food service, childcare, and home health care workers.

Fetal personhood proposals defeated in Colorado and North Dakota

Planned Parenthood and its allies organized to beat back this extreme assault on women’s rights.

California voters say no to the prison-industrial-complex 

More than two-thirds of California voters approved revising some of the lowest-level petty crimes from felonies to misdemeanors. This was a major victory against the prison-industrial complex and the growing number of private corporations that now run state prisons and support legislation to incarcerate as many people as possible. Money for incarceration is money drained away from schools and other social needs.

Gun reform beats the NRA

Washington state voters defeated the National Rifle Association by approving a ballot measure to impose criminal background checks on people who purchase firearms online or at gun shows.

Soda tax passes in Berkeley California

Three quarters of voters in Berkeley, California adopted a tax on soda and sugary drinks to combat diabetes and other illness. The American Beverage Association spent $2.1 million to oppose the soda tax through full-page newspaper ads, television and radio spots, and telephone and door-to-door canvassing.

The “yes” campaign spent only $273,000, primarily on door-to-door canvassing and phone calls.

Public employees win in Arizona

Arizona voters defeated Proposition 487, put on the ballot by business and Republican interest groups to undermine public employee pensions.

Pot legalized in Oregon and Washington, DC

In Oregon, voters legalized recreational use of marijuana, joining Washington state and Colorado, who adopted similar measures in 2012. In Washington, DC, voters passed a measure to let residents grow cannabis indoors and possess as much as two ounces.

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Republicans are for school vouchers because they want to privatize public education, turn education into a money making venture, and use taxpayer money to fund religious schools. Some Democrats support vouchers because of a genuine desire to improve education. They want vouchers for innovative schools with alternative curriculums, creative teachers, and enhanced learning environments. Yet, the truth is, this very small number of truly wonderful innovative private schools will serve a tiny percentage of children and will do nothing to improve public education for the majority.

The answer is finding and adopting best practices within the public and private educational system, not siphoning off money and resources to the private sector. Within public and private educational systems there are plenty of outstanding schools that less successful public schools can emulate. Finding ways to disseminate and integrate those practices is one key to improving public education. Vouchers and privitization are not the answer because ninety percent of American children attend public schools. A truly progressive view aspires to improve education for all children through better public policy, not through privatization of public taxpayer money.

And it’s not like voucher schools are all that successful. Last November, NEAtoday.org reported that 150 students in Milwaukee left their voucher schools, their parents opting to return them to Milwaukee Public Schools. The voucher schools had failed to provide for kids with learning or physical disabilities, or offer after-school programs, or offer art, music and physical education classes.

Since the state legislature created Milwaukee’s school voucher program more than 30 years ago, the program has paid for thousands of city students to attend private schools, of which 85 percent are religious. More than a billion dollars has been siphoned from the public school system to pay their tuition, including more than $50 million this year alone. But studies have shown that students don’t do any better in those private schools. In fact, it’s not such a great investment for the public—or those parents.

Americans United for Separation of Church and State offers a very good list of 10 reasons why private school vouchers should be rejected. The following is an edited and reworded version of the list. I encourage you to read the entire list and the full arguments here.

1. Vouchers force taxpayers to support religion

According to the U.S. Department of Education, religious groups run 76 percent of all private schools. Over 80 percent of students attending private schools are enrolled in religious institutions, which integrate religion throughout their curriculum and often require all students to receive religious instruction and attend religious services. Thus, publicly funded vouchers are paying for these institutions’ religious activities and education.

2. Vouchers divert public money to unaccountable private schools

Under most voucher bills, private schools can take taxpayer money and still deny admission to any student they choose. They are free to discriminate against the disabled, or children from other countries. Private schools are also free to impose religious criteria on teachers and staff, and discriminate against gays, people of color, or women. In other words, a voucher system forces taxpayers to subsidize discrimination that would be illegal in a public school system.

3. Vouchers violate many state constitutional provisions

Voucher advocates say that the U.S. Supreme Court ruled in Zelman v. Simmons-Harris (2002) that Cleveland’s voucher program did not violate the church-state provisions of the U.S. Constitution. This is true, but the Zelman case did not address state constitutional issues. Some three-dozen states have church-state provisions in their constitutions that are even stronger than the U.S. Constitution. These provisions often more explicitly bar taxpayer money from being used to fund religious schools and education. Private school vouchers would likely be unconstitutional in most states—and some state courts have already ruled that they are.

4. Americans do not support vouchers

Americans have repeatedly expressed opposition to vouchers in public opinion polls. More tellingly, when people are given an opportunity to vote directly on vouchers through ballot referenda, they always reject the concept—usually by wide margins. Since 1967, voters in 23 states have rejected vouchers and other forms of tax aid to religious schools at the ballot box.

5. Vouchers do not improve student academic performance

According to multiple studies of the District of Columbia, Milwaukee and Cleveland school voucher programs, the targeted population does not perform better in reading and math than students in public schools. The U.S. Department of Education studies of the D.C. program show that the students using vouchers to attend private schools do not believe that their voucher school is better or safer than the public school they left.

The study also showed that over a period of four years, there was no statistically significant difference between students who were offered a voucher and those who were not in their aspirations for future schooling, engagement in extracurricular activities, frequency of doing homework, attendance at school, reading for enjoyment or tardiness rates. Likewise, there was no significant difference in the student-teacher ratios in their classrooms or the availability of before-and after-school programs in their schools.

6. Vouchers do not improve opportunities for children from low-income families

Vouchers do little to help the poor. The payments often do not cover the entire cost of tuition or other mandatory fees for private schools. Thus, only families with the money to cover the cost of the rest of the tuition, uniforms, transportation, books and other supplies can use the vouchers.

7. Vouchers do not save taxpayer money

Vouchers do not decrease education costs. Instead, tax money that would ordinarily go to public schools now pays for vouchers, thus harming public schools. A 1999 study of Cleveland’s program showed that the public schools from which students left for private voucher schools were spread throughout the district. The loss of a few students at a school does not reduce fixed costs such as teacher salaries, textbooks and supplies and utilities and maintenance costs. Public schools run the risk of losing state funding to pay for vouchers without being able to cut their overall operating costs. In addition, voucher programs cost the state money to administer.

8. Vouchers do not increase education choice

Voucher programs do not increase “choice” for parents because it’s the private schools that will ultimately decide whether to admit a student. These institutions are not required to give parents the information necessary to determine whether the school is meeting their children’s needs. Under voucher programs, private schools are often not required to test students, publish curriculum or meet many other standards. Even when legislatures have attempted to mandate accountability standards in voucher programs, private schools have not done what was required of them.

9. Vouchers lead to private schools of questionable quality

In Milwaukee and Cleveland, the availability of vouchers led con artists to create fly-by-night schools in order to bilk the public purse. In Cleveland, one school operated out of a dilapidated building with inadequate heat and no fire alarms. Another school “educated” children by having them watch videos all day. Fundamentalist Christian academies, which are on the rise, offer education far outside the mainstream. They teach creationism in lieu of evolution, offer a discredited “Christian nation” approach to American history and put forth controversial ideas about other religions, the role of women in society, gay rights and other issues. Taxpayers should not be expected to pay for this.

10. Vouchers distract from the real issue of reform

Voucher plans usually allow a small percentage of children to leave public schools for enrollment in private schools. This does nothing for the large percentage of youngsters left behind. Most public schools do a very good job; those that don’t should be fixed, not abandoned.

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Like so many other institutions in this, our neoliberal land of opportunity, universities have become infested with rent extracting parasites. Were I to say “We call those parasites administrators,” that would be wrong; surely there are administrators who are caring, competent, necessary, and neither over-paid nor corrupt. That said, university administrators are not, by definition, central to any university’s mission: Teaching and research, performed by professors, are. Therefore, it seems odd, or not, that we don’t look to the university administrative layer for budget savings first. But that’s what we’re doing. We’re feeding the tapeworm instead of freeing the host from infestation. The protests against budget cuts at the University of Southern Maine (USM, in Portland, ME) provide an excellent case study.  —Lambert Strether

On March 27, Aljazeera reported that the students and faculty at the University of Southern Maine (USM) were entering a second week of protests over the school’s decision to lay off up to 50 faculty and staff and eliminate various liberal arts programs in the name of fiscal austerity. USM, a public university, is one of seven University of Maine institutions with plans to dismiss a total of 165 faculty and staff in 2014. USM President Theodora Kalikow insisted that a transformation of the University system was necessary to deal with a structural gap in expenses and revenue.

The first quote is from Lambert Strether’s recent post at Naked Capitalism. You can read his entire article here. In it, he answers questions about why colleges and universities around the country are so strapped for cash, why students are being asked to pay higher tuition, why tenured professors are being laid off and humanities departments closed. He points out that at the same time colleges and universities are enforcing “austerity” measures on students and faculty, they have triple A bond ratings and are building new facilities like crazy. So what’s going on?

You can gather from Strether’s sarcastic comments that the budget cuts and the “restructuring” of colleges and universities are not being carried out in good faith. What he describes are colleges and universities that have become a microcosm of the society at large, where the 1%, in this case the “administrators,” suck up the lion’s share of the resources that should be going to students and faculty. The misallocation of resources at the national level, where the elite take more and more wealth for themselves, has “trickled down” to our institutions of higher learning. The greed and corruption of the corporate and finance sector, aided and abetted by all three branches of government, has moved into the university, where neoliberal, corporate ideas increasingly dominate what used to be considered institutions of higher learning.

For a working definition of “neoliberalism,” we turn to Wikipedia:

Neoliberalism is a political philosophy whose advocates support economic liberalizations, free trade and open markets, privatization, deregulation, and enhancing the role of the private sector in modern society.

Reflecting the neoliberal approach, which is to seek individualistic, free-market solutions to every social and economic problem, the administration at the University of Southern Maine now refers to students as “customers” as if the university was a “mall” where they “purchase” knowledge in different “profit centers” formally known as educational departments.  Strether quotes one of the student leaders of the protest (which is being carried out in solidarity with faculty):

And we want to look at the way money is being spent in the administration throughout the University of Maine system. I think we really see this whole supposed financial crisis as part of a nationwide trend of the corporatization of public higher education and the corporate war on public higher education. And so we’re interested in talking about it in those terms.

And what I see happening is people being told that they can no longer have a humanities education here, they can no longer have a thriving social sciences department. I think that this is what we’re moving towards . . .

And how is that money spent?   Lambert quotes a faculty member of USM who shows how money is being siphoned off to high-paying non-teaching jobs and bloated administrative departments that often provide cushy work for the well-connected. This is in contrast to the slave wages paid adjunct faculty.

The University of Maine System office in Bangor—where no one teaches anybody anything—spends $20 million a year, almost 10 percent of the state’s higher education appropriation.

Just take a look at the budget. The $20 million the system office spends not teaching exceeds the $14.95 million spent annually by the three smallest University of Maine campuses (at Fort Kent, Machias and Presque Isle). If it doesn’t teach, doesn’t grade, doesn’t create assignments or even talk with the faculty who do all these things, how does the system blow through 20 million bucks a year?

There are 291 people employed at the University of Maine System office, of whom 87 (30 percent) are administrators. One of the most senior, and expensive, positions in the system is that of the vice chancellor for academic affairs. That’s a provost, and there’s a provost on each campus. The system has a chief student affairs officer, as does each campus.

… Any claim that the system is in financial trouble, or that it’s broke, is absurd. If anything’s broken it’s the system’s priorities. The system devotes a mere 27 percent of total expenses to the core academic mission. Every year for the last five years the share of expenses devoted to education has declined while the share sucked up by the administration has increased.

Strether stresses that the corporatization of higher education is not unique to the University of Maine system. The starving of educational resources and the bloating of administrative functions is a feature in universities an colleges nationwide. He quotes a Johns Hopkins University professor, Benjamin Ginsburg who wrote The Fall of the Faculty: The Rise of the All-Administrative University and Why it Matters. Ginsburg says, “US campuses have seen far more significant rises in administrators (85 percent) and professional staff (240 percent) than faculty (51 percent) between 1975 and 2005.”

A professor for over 40 years, Ginsburg argues that such data are commensurate with a calculated effort in college administrations to achieve neoliberal, profit-based goals such as erasing tenure tracks, reducing political speech, and increasing focus on student job placement rather than encouraging knowledge and critical thinking.

Ginsburg says “deanlets”—administrators and staffers often without serious academic backgrounds or experience—are setting the educational agenda. Consequently, students are denied a more enriching educational experience—one defined by intellectual rigor. 

My hope is that the student/faculty protest at the University of Southern Maine sparks a new national student movement, one that challenges tuition hikes and also ties the unfair austerity measures to the deeper issue of the neoliberal takeover of education, government, and society at large, and the silencing of political dissent.  If we’re lucky, students will take over where Occupy Wall Street left off.

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In a recent article at Truthdig, “The Public-Private Profiteers,” Barabara Garson is critical of President Obama’s reliance on public-private partnerships to solve major social problems. Such partnerships are entered into by the private sector, then deliberately undermined to prevent government from delivering services directly to constituents. Garson looks at Obama’s failed Home Affordable Modification Program (HAMP) for clues as to how the private sector may undermine the Affordable Care Act (ACA) to prevent movement toward single-payer.

How banks undermined the HAMP program

The disastrous Home Affordable Modification Program (HAMP) was “a poorly designed, deeply flawed effort to nudge lenders into rewriting the terms of homeowners’ mortgages so that they could remain in their homes.” The statistics show it was an utter disaster. Garson reports that six million nine hundred thousand Americans applied for HAMP modifications. Only 13% got one, and 22% of those had their homes foreclosed on anyway.

Unfortunately, it was a planned disaster. The banks set up separate refinancing companies to deliberately slow down and undermine the mortgage modification process by demanding massive amounts of paper work, and dragging out the process, sometimes for a year and a half.

Economics blogger Steve Randy Waldman reports that, at a Treasury Department meeting in 2010, government officials admitted HAMP was designed to help banks and not homeowners:

Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. . . . The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks.

Clearly, HAMP was a bone tossed to desperate homeowners after hundreds of billions were doled out to save the banks. In my view, it’s hard not to come to the conclusion that it was a cynical and cruel move by the Obama administration to help keep “the banks, not homeowners, afloat as the global financial system slowly recovered.” It kept desperate homeowners scraping to pay their mortgages in hopes of refinancing, while the banks, with the blessing of the administration, collected their money yet had no real obligation to help them. It also served the private sector by giving yet another “government program” a bad name.

How insurance companies will undermine the ACA

In the same way Obama delivered up desperate homeowners to the banks, he delivered those without healthcare to the insurance companies. You would think the industry would be grateful for the new business, but Garson explains how, in the months before the ACA took effect, insurance companies rushed to undermine it and why they will continue to do so. It’s a long quote but worth the read:

We’ve already seen the president take full blame for assuring people that, under the new law, they could keep their old policies if they chose.  Apparently he didn’t anticipate that, in the months between the passage of the Affordable Care Act and its implementation, insurance companies would rush to sell policies that didn’t meet the minimal standards set in the law. Insurance companies knew that they would have to cancel these and other non-compliant policies as soon as the law went into effect. In the meantime, however, what a great twofer: first you get to collect and invest the premiums, then you get to stick it to your government partner by announcing to customers that their policies are being canceled thanks to Obamacare.

For insurance companies, this blame game is more than just sport; it’s their only real defense against single-payer healthcare.  Vermont has already created a state health care plan that will go into effect in 2017.  Oregon, Massachusetts, and Washington State are seriously considering similar plans.  Seattle congressman Jim McDermott (who happens to be a doctor) hopes to attach “a patch” to the Affordable Care Act that would make it easier for governors to use the healthcare money Washington will send them to create statewide single payer options.

The insurance companies were successful in lobbying any kind of public option out of the national health care law and they will fight every local public option to the death.  For if it works anywhere, it offers Obamacare a way to evolve, state by state, into “Medicare for all.”

Private health insurance companies can only survive if people throw their hands up in horror at the thought of an incompetent and intrusive government.  Expect, then, that the untimely requests for death certificates, the delayed payments to doctors, the arbitrary denials of coverage, and all the other slings and arrows that the insured already endure will be baroquely embellished and cynically blamed on “government.”

If it was hard for underwater homeowners to distinguish between bankers and bureaucrats while they were losing their homes, it will be even harder for frustrated sick people to untangle the public and private strands so tightly braided into the Affordable Care Act. That, however, is what has to happen if Americans are to move toward a simpler, go-to-the-doctor-when-you’re-sick healthcare system.

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Senator Elizabeth Warren has another brilliant and truly progressive proposal. It would help the more than 68 million Americans (25% of all households) who use payday loan services because they have no checking or savings account, and also help shore up the struggling U.S. Postal Service.

It’s not Warren’s idea, but one that she and others—even within the Obama administration—have championed for a long time. This past week, she penned an op-ed on Huffington Post on the heels of a new report by the Office of the Inspector General (OIG) of the U.S. Postal Service. The report explores the possibility of the USPS offering basic banking services—bill paying, check cashing, savings accounts, debit cards and even simple loans—to its customers. The Inspector General weighing in on postal banking moves it from a good idea being tossed around and going nowhere to a significant policy proposal.

Warren writes:

With post offices and postal workers already on the ground, USPS could partner with banks to make a critical difference for millions of Americans who don’t have basic banking services because there are almost no banks or bank branches in their neighborhoods.

Families rely on financial services more than ever, but those who need them most—who struggle to make ends meet—too often must contend with sky-high interest rates and tricks and traps buried in the fine print of their loan products.

In a more lengthy article in the New Republic, David Dayen writes that post offices could deliver the same services as payday loan operations at a 90 percent discount, saving the average household over $2,000 a year in interest and fees and provide the struggling USPS with $8.9 billion in annual profits.

Instead of partnering with predatory lenders, banks could partner with the USPS on a public option, not beholden to shareholder demands, which would treat customers more fairly. As the report says, “the Postal Service could greatly complement banks’ offerings,” and in turn help drive out of business some of the most crooked companies in America, while promoting savings and expanding credit for the poor.

The Post office is well positioned to deliver simple financial services. After all, it once was a bank. Dayen explains:

The postal service, with public trust earned over generations and 35,000 outlets in the best real estate in practically every city in America (in fact, the report notes, 59 percent of all post offices are in “bank deserts” with only one bank branch or less), is well-positioned to deliver simple financial services. In fact, it did for over 50 years. Begun in 1911, the Postal Savings System allowed Americans to deposit cash with certain branch post offices, at 2 percent interest. By 1947, the system held deposits for over four million customers. Though dismantled in 1967 (after banks offered higher interest rates and eroded its market share), the post office continues to issue domestic and international money orders, including $22.4 billion worth in 2011, as well as prepaid debit cards through a deal with American Express.

The OIG proposal is an amazing win-win proposition. It would shore up the postal service under attack by corporations and politicians who want to privatize postal services and it would save hundreds of thousands of jobs by stabilizing one of the biggest employers in the country. It would provide financial services to the poor and working poor giving them a better chance to get ahead. As Dayen says, “it’s classic inequality reducer.”

In his very thorough report, “Providing Non-Bank Financial Services for the Underserved” Inspector General David C. Williams makes the case that the USPS could potentially start providing banking services immediately without congressional approval. But there are significant political problems and hurdles to clear to make this happen, not the least of which is the current Postmaster General, Patrick Donahoe who, according Dayen, has not been open to innovative ideas that would save the post office and expand its services. Rather, he has concentrated on things like closing facilities, cutting staff, and raising rates. To get an idea of how bad Donahoe’s leadership is, read Ralph Nader’s 2012 “Letter to Postmaster General Patrick Donahoe—It’s Time to Resign.” The letter is co-signed by Robert Weissman, president of Public Citizen, Judy Lear acting director of Gray Panthers, and other activists.

So far, no post office official has endorsed the IG report. Dayen thinks it’s time for President Obama to step in:

He’s been looking for something to show he can help improve the lives of ordinary Americans, regardless of Congress’ inaction. Here’s a perfect opening on an issue of equal access, of affordability, of saving an American institution. Sure, the banks will squawk: the chief counsel of the American Bankers Association has already pronounced himself “deeply concerned”—but as the IG report shows, they have no interest in serving this community. So surely that won’t stop the President from urging the USPS to take advantage of this lucrative and worthwhile option. Unless he values payday lenders and greedy middlemen more than the financial security of the Postal Service and millions of poor Americans.

Given Obama’s less than stellar record on helping the working poor, and given he owes his presidency to big banks, I will be surprised if he provides the leadership necessary to make this happen. I hope I’m wrong. Meanwhile, I’m betting on Elizabeth Warren. She ends her op ed with this:

The Postal Service is huge—employing more than a half million people—and its history is long and complicated. Any change will take time. But this is an issue I am going to spend a lot of time working on—and I hope my colleagues join me. We need innovative ways to create pathways for struggling families to build economic security, and this is an idea that falls in that category.

The post Elizabeth Warren: The post office could become a bank, replace payday lenders appeared first on Occasional Planet.

I always thought that it was a problem for the Occupy Movement to begin in late summer (2011) and then basically close up shop as fall turned to winter. Demonstrations like those of Occupy Movement are more what we would call “fair weather sports.” It takes a great deal for a person to camp out in an urban center under the best of circumstances, and only the real pioneers among us can endure the hardships of winter camping.

Since the movement began, there has not been a massive flow of money from the very wealthy to poor and middle income citizens. If economic conditions have gotten better for those who were suffering in late 2011, it is primarily due to the “rising tide lifts all ships” phenomenon. The wealthy seem to have their status in our society well established, maintaining their so-called fair shares of the income and wealth pies.

I recently read a critique of the Occupy Movement, suggesting that what the movement lacked was a clear and definable goal. I’m not sure that I thoroughly agree with that contention. But if organizers were looking for an issue that is clear, definable, concrete and outrageous, they might want to focus on the way professional sports barons in America and the players who do the heavy lifting for them systematically screw communities in need all across America.

Nearly twenty years ago, the civic and state leaders of St. Louis, Missouri ponied with hundreds of millions of dollars to lure the Los Angeles Rams football team from the West Coast to the Midwest. It may seem odd, an aging rust-belt city like St. Louis out-bidding a fast and furious metropolitan area like Los Angeles, but the situation was complicated. St. Louis private financiers  who were willing to underwrite what Los Angeles’ leaders would not. The state of Missouri had fewer obligations than the state of California, and so the situation was ripe for Los Angeles’ loss to be St. Louis’ gain.

The St. Louis consortium wanted the Rams so badly that they focused almost all of their attention on the front end of the agreement, feeling that, if they could perform magic for 1995, they would be able to duplicate it in the future. The tail end of the twenty year stadium agreement had a “killer provision” in it. It stipulated that the Rams were free to leave St. Louis if, in the team’s opinion,  the St. Louis stadium was not in the top 20% of all NFL stadiums. In another era, such a provision might not have been a problem. For instance, when the Astrodome opened in 1965, it was so far advanced compared to other facilities for both football and baseball that it was certain to be among the top 20% in 1985. It was, but then a plethora of new domed and outdoor stadiums were built for prosperous teams. The status of the Astrodome sank so quickly that by 1998 the Oilers football team left America’s fourth largest community and fled to Tennessee. A new domed stadium had to be built in Houston in 2002 to attract an expansion franchise.

Here’s a key thing about the St. Louis Stadium (currently named the Edward Jones Dome). Even if it’s somewhere in the bottom 80% of NFL stadiums, it’s in excellent condition, and it’s a fine place to watch football, as well as a number of other events. Presumably fans go there to see two teams compete against one another in one of America’s most popular sports. They can do that. No additional money other than for normal maintenance needs to be spent.

In Miami, the Dolphins football team is trying to get hundreds of thousands of public dollars to cover the cost of improvements to Sun Life Stadium. Again, the football team can play there for decades, and the fans can enjoy the game for decades without any major improvements.

What’s key is that the NFL is forcing perpetual “improvements” to existing stadiums of construction of new stadiums, all to bring in more revenue for the teams and its players. If St. Louis spends money to put its venue in the top 20% of stadiums, then some other city’s stadium falls out of the top 20%. The NFL will then push that city to put in improvements, needed or not. The public continues to get screwed and the wealthy become richer. The same is happening in virtually every other major sport in the United States and many other countries as well.

So if the Occupy Movement wanted to focus on an example of the top 1% getting richer while the poor and middle class citizens getting poorer, the National Stadium Subsidy Dance would be a good place to start. The more silent the public in any one city, the easier it is for teams in other cities to screw their fan bases, the residents of their community, and America at large.

If I ever was a decent organizer, those days are behind me. But I would love to see a community organizer in any of the three dozen or more U.S. communities with professional sports franchises come forward to network with like-minded people in other cities and get such a movement rolling. Maybe for the sake of theater, they could even occupy a stadium or two.

The post Municipal stadium rip-offs: A new direction for the Occupy movement? appeared first on Occasional Planet.

It may be one of those times when President Obama is not receiving the support that he wishes he could have from either liberals or conservatives. He certainly learned during the first two years of his presidency that Republicans were not going to support him, even if he went to the extent of adopting their ideas (e.g. the individual mandate in his Affordable Care Act). During those two years, liberals were somewhat disenchanted as he distanced himself from truly progressive legislation such as Medicare for All or any form of gun control.

The president is currently at odds with conservatives over sequestration. This issue is one that President Obama hoped to avoid because he doubted that the Republicans would call his bluff on drastic spending cuts which would hit the Pentagon most and wouldn’t touch any entitlements. But the Republicans, who still seem to have a primary goal of doing harm to anything that has President Obama’s fingerprints on it, are quite content with weakening the country’s defense and leaving millions of lower and middle income citizens at a loss.

It seems that liberals are currently wondering about the president’s support of principles that he has previously espoused and which are central to a progressive platform. After having truly stirred his base with a rousing Inaugural Address and an equally forward-looking State of the Union Address, the President seems to be mired in his effort to reach some sort of common ground with regard to sequestration.

Two important issues come to mind, both having to do with how our democracy chooses its leaders. The first relates to Section Five of the 1965 Voting Rights Act, which is currently being challenged before the U.S. Supreme Court by conservative and possibly racist groups. Section Five empowered the U.S. Department of Justice to “preclear” any attempt to change “any voting qualification or prerequisite to voting or standard, practice, or procedure with respect to voting…” in any “covered jurisdiction.” These “covered jurisdictions” were southern states that had an ugly history of clearly discriminating against minorities, particularly African-Americans, as well as a few counties in other states that also engaged in voting irregularities that prevented qualified citizens from voting. While President Obama’s Justice Department is joining most litigants in asserting that Section Five is clearly constitutional, it has not taken the truly progressive view that voting irregularities currently occur in many of the remaining 39 states and hundreds of jurisdictions.

First, Florida was not among the southern states cited for discriminatory practices and we’re all aware of the transgressions that occurred there in 2000 and every presidential election since. More recently, northern states such as Ohio, Pennsylvania, and Michigan have had gross irregularities. Ever since winning re-election last November 6, President Obama has been talking about putting an end to the voting transgressions across the country. Many progressives are currently suggesting that the Section Five challenge to the Supreme Court provides an opportunity for the Court to rule in favor of “expanded equality.”  This would entitle every U.S. citizen, regardless of where he or she might live, to be protected from voting irregularities. So far, the president and his Justice Department have not joined to contest to advocate on behalf of broader protection for all voters.

In the case of the 1965 Voting Rights court challenge, President Obama has not been as reactive as many progressives would like him to be. And in a second area related to improving our democracy, the President and his political aides have been pro-active in a fashion that makes our democracy all the more dependent on money, particularly from large donors.

Shortly after the election, President Obama and his inner political circle put together a plan to create a group to help rally public support for his second term agenda. He did create such an organization after winning in 2008 and it hurt him, as he had difficulty rallying support for proposals such as the Affordable Care Act and the economic stimulus. So after winning in 2012, the president authorized the establishment of Organizing for Action. This was met with considerable enthusiasm by millions of progressives as we envisioned a semi-united (about as united as Democrats could get) effort to advance much of the “unfinished business” that remained from the first term. President Obama had spoken numerous times about a “people’s democracy;” one that was not characterized by inside lobbyist and big financial supporters. True, he had backed off from these words more than once, particularly in 2008 when he eschewed public financing for his campaign so that he could raise enough money to fund the vigorous campaign that he wanted. But it seemed that now that he was into his second term, he could proceed without as much worry about support from the large and powerful financial interests.

Such has not been the case with Organizing for Action. As Nicholas Confessore wrote in the New York Times:

President Obama’s political team is fanning out across the country in pursuit of an ambitious goal: raising $50 million to convert his re-election campaign into a powerhouse national advocacy network, a sum that would rank the new group as one of Washington’s biggest lobbying operations.

But the rebooted campaign, known as Organizing for Action, has plunged the president and his aides into a campaign finance limbo with few clear rules, ample potential for influence-peddling, and no real precedent in national politics.

Organizing for America is headed by Jim Messina who was Obama’s campaign coordinator in 2012. While it will bear some of the grass-roots characteristics of Obama campaigns, it will also include the presence of big donors who will have special access to the president and other major figures in the administration.

I for one am most interested in helping President Obama advance progressive tenets of his agenda. However, I’m reluctant to do so because I don’t want to be part of an organization that is structured in a fashion that I think should be illegal because it grants disproportionate power to an elite few.

I realize that it’s difficult for the president to back off from the rich and the powerful. This is evident from his playing golf with Tiger Woods and two oil executives. It’s evident when Michelle Obama acts as part of the “Hollywood cabal” in presenting the Academy Award for the best motion picture of 2012. They live in a glass bubble. Yet they’re both very aware of where most Americans live. Like any people who are cloistered, they need to be reminded of that. Let’s hope that truly popular support is what progressives can give to President Obama.

The post Where President Obama’s actions seem to differ from his words appeared first on Occasional Planet.

This short animated fairy tale, written and directed by Fred Glass for the California Federation of Teachers and narrated by Ed Asner, explains, in about 7.5 minutes, the underlying source of our economic problems. In a nutshell: our nation is being governed for the benefit of billionaires and multi-millionaires.

A no-brainer solution to our economic problems is to tax billionaires and multi-millionaires at a much higher rate, close their lobbyist-written tax loopholes, and allocate tax revenue for the benefit of the 99 percent. In polls, a majority of Americans back these policies. But in Washington DC, where most politicians are influenced by the 1%, it’s not likely that these common sense solutions will be enacted (to the extent that they should be) any time soon.

One hundred years ago, the equivalent of today’s billionaires and multi-millionaires—the robber barons of the Gilded Age—were using politicians to siphon off the nation’s wealth. Americans woke up, shunned  the vulture capitalists of the day and the political minions who enabled them, and demanded change. Its been done before. We can do it again.

The post An animated fairy tale on taxes appeared first on Occasional Planet.

A very knowledgeable person, who wishes to remain anonymous, has written the most comprehensive and exhaustive analysis to date of “Obamacare” —The Patient Protection and Affordable Care Act (ACA). You can find it on Paul Craig Roberts Institute for Political Economy website. Be forewarned, this very long and detailed explanation of the ACA might make your brain hurt. But if you want to understand the nuts and bolts of Obamacare—the reality vs. the vague promises—then pour yourself a stiff drink and click here. We’ve heard about the positive reforms of the ACA—and there are positive reforms. See Occasional Planet “related posts” for a survey of the positive aspects of the bill. Indeed, the ACA takes the edge off the most egregious health insurance industry practices in exchange for the guaranteed expansion of its market and bottom line. But will the ACA reforms make up for its deeper systemic flaws? The ACA will go into full operation in 2014, so it’s time to look under the hood of the bill, understand what’s coming, and see how it will play out in the lives of lower to middle income Americans. To get right to the point, the ACA is another “government/ business partnership” designed to make money off of the American people by feeding taxpayer money to corporations. Roberts’ characterizes it this way in his introduction to the article:

The ACA was not selflessly designed with the intent of providing affordable and equitable medical services to those in need, but rather to acquire taxpayer money for the private insurance companies under the seemingly helpful guise of health care and the ideological excuse of personal responsibility. It takes money from ordinary people and gives it to a medical insurance industry that profits handsomely from this legally-enforced corporate welfare—all while keeping Americans locked in the same broken system that puts profit before patients.

The worst outcome of this bill, according to Roberts’ anonymous author, is that it will significantly increase household debt for individuals and families who can’t afford the “affordable” high-deductible, insurance.  It will become yet another source of financial stress in a very difficult economy, undermining the whole idea of improving the heath of the many. The forced purchase of health insurance will bring increased revenue to the industry and more kickbacks to Congress, creating a bloated, entrenched system similar to the banking industry. Eventually it, too, will be “too big to fail.” At least that’s one possibility, one the industry is hoping for. The following is an outline of the article:

1)   Health insurance Exchange basics. This includes a discussion of how your Modified Adjusted Gross Income (MAGI) will affect all determinations made by an Exchange including eligibility for Medicaid. This is something you need to pay attention to now, in 2013, as your MAGI this year will determine what you pay for health insurance in 2014.

2)   Determining Eligibility for a Tax Credit. The tax credit is paid in advance for the year you are currently in based on an estimate using your last year’s tax return. The advance payment of the tax credit carries with it some potential heavy-duty consequences. (See point 4.)

3)   Tax Credits and Your Share of the Premium. The author provides Federal Poverty Level formulas and explanation of how the tax credit subsidies will work.

4)   Payback of Tax Credits to the IRS. The advance payment of the tax credit is essentially a loan from the government paid on your behalf to the insurer. When you file you tax return for the year you received your “advance tax credit,” if your income changes from your estimate, you have to settle with the IRS. Your industry friendly Congress has increased the cap on this money you might owe to $2,500, thereby putting a huge financial burden on the backs of the people ACA claims to help. If you happen to get ahead, and make more than 400 percent of the poverty line, you will have to pay back the entire subsidy.

5)   Medicaid Expansion and Estate Recovery. In a nutshell, if an Exchange determines you are eligible for Medicaid, you have no choice but to be enrolled in it. (So much for the assurances that you will have a “choice.”) When you die, the State, on behalf of the Federal Government, will go after your estate for repayment of Medicaid services. In other words, loads of taxpayer money for banks, corporations, and the Jamie Dimons of the world, but none for you! The State will go after any of your remaining assets, including your family home.

6)   Insurance Plans at the Exchanges. The author covers the four plan levels that will be offered. For each, you will pay for all your medical care until you reach the annual deductible, then you will pay a percentage of the coinsurance until you reach the out-of-pocket spending cap. The high deductibles in all but the two most expensive plans could put you into debt for routine care and may stop you from seeking necessary treatment for illness or injuries. The promise of access to affordable health care is, in reality, access to inadequate, high-deductible coverage. Most importantly, Obamacare has no cost controls. There is nothing stopping insurance companies from increasing their rates.

7)   Penalty for Being Uninsured. If you choose not to buy the ACA health insurance you can’t afford, most likely, the IRS will deduct the penalty from your refund. If you don’t qualify for a refund, you will be hit with an outstanding tax obligation.

8)   Exemptions from the Penalty. The author covers the various exemptions, including the laughable one where the purchasing of health insurance would cause you to experience “serious deprivation of food, shelter, clothing or other necessities.”  Laughable, because it may be the story for millions.

9)   Other Tidbits. The author explains the Accountable Care Organization (ACO) that will manage your care and how they are set up to encourage doctors to abuse the system at the patient’s expense.

10) Enroll America, Herndon Alliance & The Exchanges—Master’s of Spin. Enroll America is a non-profit financially backed by Aetna, Blue Cross Blue Shield, UnitedHealth, etc. to encourage people to purchase health insurance in the open market or the Exchanges. Its board of directors is made up of industry cartel—CEO’s, presidents, vice presidents, and directors of organizations like the American Hospital Association, Express Scripts, Kaiser Permanente, and so on. Never short on chutzpah, they are asking for donations on their “not-for-profit” website to help them sell insurance to you. Their goal is to fleece you for another $100 million by 2014.  Herndon Alliance is a health care spinmeister creating messaging to change public opinion about insurance products. The Obama talking points used to promote the ACA came from Herndon. Herndon and other PR firms are working with the Exchanges to promote enrollment. The author ends with this:

The ACA is most definitely a “uniquely American solution” which has little to do with reforming this country’s barbaric health care system. It merely controls peoples’ finances and choices while leaving insurance companies in charge and does virtually nothing to end their abuses. It will leave many millions of Americans uninsured and millions more underinsured at a staggering cost to taxpayers.

A generous (and seriously wrongheaded) view of Obamacare is that it was a progressive bill designed to be a steppingstone to single payer. But, in reality, it was designed to strengthen, expand, and more deeply entrench corporate control of healthcare delivery. What will happen when the ACA comes online in 2014? I think millions will decide (out of necessity) to take the IRS fine rather than go into further debt buying inadequate, high deductible insurance. The insurance companies, limited to a smaller profit margin, and not getting the numbers they want, will decide they can’t make enough money to keep their yachts afloat, and fold. Hospitals, tired of treating people in emergency rooms for free, will push for Medicare expansion, as will the general population. Slowly, in fits and starts, we will move to Medicare for all. That will be a huge improvement. But, in order for us to have humane healthcare for all, the profit taking throughout the system has to stop—the $200 a pill prescription, the $15 box of hospital tissues, the many unnecessary, but lucrative procedures that line the pockets of surgeons. The “free market” for-profit health care industry with its bloated costs is the underlying cancer of healthcare delivery in the United States. Physicians for a National Health Program sums it up:

The financing infrastructure of the Affordable Care Act is fatally flawed since it cannot ever reach our goals. In contrast, if we replaced the financing system with a single payer national health program, such as an improved Medicare that automatically covered everyone, we could eliminate the profound administrative excesses of our current fragmented financing system, and use global budgets for hospitals, negotiated rates for health care professionals, and bulk purchasing of pharmaceuticals and supplies to slow the intolerable increases in health care costs. Those economic tools are effective in a truly universal system, but really don’t work in a dysfunctional, fragmented system such as that of the Affordable Care act.

The post Obamacare: a primer for 2014 appeared first on Occasional Planet.