By Lisa Lambert
Reuters 14 Dec 06 WASHINGTON - More Americans went homeless and hungry in 2006 than the year before and children made up almost a quarter of those in emergency shelters, said a report released on Thursday by the U.S. Conference of Mayors.
"The face of hunger and homelessness right now ... is young children, young families," said the conference's president, Douglas Palmer, the mayor of Trenton, New Jersey. The survey of 23 cities found civic and government groups received, on average, 7 percent more requests for food aid in 2006 than in 2005, following a 12 percent jump in 2005. Requests for shelter rose by an average of 9 percent in 2006, with requests from families with children rising by 5 percent. More than half the cities said family members often had to split up to stay in different shelters. As the numbers who could not buy their own food grew, more than half the cities, including Los Angeles and Boston, said groups spread resources farther by giving less food to individuals or cutting the number of times people could receive help. The group estimated 23 percent of requests for emergency food assistance simply went unmet. Franklin Cownie, the mayor of Des Moines, Iowa, who worked on the study, said he was troubled that more than a third of the adults asking for food aid were employed. "If you look at the data, you'll find folks that have jobs that don't have enough money to feed themselves," he told reporters. People remained homeless for an average of eight months in 2006, the report said. Trenton had the longest span, with those in poverty spending an average of 22 months in cars and shelters or on the street. The survey relied on census statistics along with data that city officials collected from local agencies. Calling the report "not so much science as perception," the United States Interagency Council on Homelessness, which includes state and federal agencies, said in a statement nearly 30 cities were reporting reduced homelessness due to a federal program run in partnership with the Conference of Mayors. It said the Bush administration was also working to help connect homeless people to government agencies and private aid groups. In the mayors' report, Cleveland was one of the cities that saw demand for food assistance drop in 2006. Officials said it was still much higher than in 2000, before the city experienced an economic downturn. From 2000 to 2005, the number of people using food stamps, or federal subsidies to cover groceries, increased there by 29 percent. Food stamps and other public nutrition programs account for 60 percent of the U.S. Agriculture Department's spending. The USDA said almost 11.2 million U.S. households received food stamps in 2005. Congress is expected to consider changes to the food stamp program as part of broad-ranging agriculture legislation in 2007. |
The Great Wealth Transfer - more of the nation's bounty held in fewer and fewer hands. And Bush's tax cuts are only making the problem worse
PAUL KRUGMAN
Rolling Stone 30 Nov 06 Why doesn't Bush get credit for the strong economy?" That question has been asked over and over again in recent months by political pundits. After all, they point out, the gross domestic product is up; unemployment, at least according to official figures, is low by historical standards; and stocks have recovered much of the ground they lost in the early years of the decade, with the Dow surpassing 12,000 for the first time. Yet the public remains deeply unhappy with the state of the economy. In a recent poll, only a minority of Americans rated the economy as "excellent" or "good," while most consider it no better than "fair" or "poor."
Are people just ungrateful? Is the administration failing to get its message out? Are the news media, as conservatives darkly suggest, deliberately failing to report the good news? None of the above. The reason most Americans think the economy is fair to poor is simple: For most Americans, it really is fair to poor. Wages have failed to keep up with rising prices. Even in 2005, a year in which the economy grew quite fast, the income of most non-elderly families lagged behind inflation. The number of Americans in poverty has risen even in the face of an official economic recovery, as has the number of Americans without health insurance. Most Americans are little, if any, better off than they were last year and definitely worse off than they were in 2000. But how is this possible? The economic pie is getting bigger -- how can it be true that most Americans are getting smaller slices? The answer, of course, is that a few people are getting much, much bigger slices. Although wages have stagnated since Bush took office, corporate profits have doubled. The gap between the nation's CEOs and average workers is now ten times greater than it was a generation ago. And while Bush's tax cuts shaved only a few hundred dollars off the tax bills of most Americans, they saved the richest one percent more than $44,000 on average. In fact, once all of Bush's tax cuts take effect, it is estimated that those with incomes of more than $200,000 a year -- the richest five percent of the population -- will pocket almost half of the money. Those who make less than $75,000 a year -- eighty percent of America -- will receive barely a quarter of the cuts. In the Bush era, economic inequality is on the rise. Rising inequality isn't new. The gap between rich and poor started growing before Ronald Reagan took office, and it continued to widen through the Clinton years. But what is happening under Bush is something entirely unprecedented: For the first time in our history, so much growth is being siphoned off to a small, wealthy minority that most Americans are failing to gain ground even during a time of economic growth -- and they know it. A merica has never been an egalitarian society, but during the New Deal and the Second World War, government policies and organized labor combined to create a broad and solid middle class. The economic historians Claudia Goldin and Robert Margo call what happened between 1933 and 1945 the Great Compression: The rich got dramatically poorer while workers got considerably richer. Americans found themselves sharing broadly similar lifestyles in a way not seen since before the Civil War. But in the 1970s, inequality began increasing again -- slowly at first, then more and more rapidly. You can see how much things have changed by comparing the state of affairs at America's largest employer, then and now. In 1969, General Motors was the country's largest corporation aside from AT&T, which enjoyed a government-guaranteed monopoly on phone service. GM paid its chief executive, James M. Roche, a salary of $795,000 -- the equivalent of $4.2 million today, adjusting for inflation. At the time, that was considered very high. But nobody denied that ordinary GM workers were paid pretty well. The average paycheck for production workers in the auto industry was almost $8,000 -- more than $45,000 today. GM workers, who also received excellent health and retirement benefits, were considered solidly in the middle class. Today, Wal-Mart is America's largest corporation, with 1.3 million employees. H. Lee Scott, its chairman, is paid almost $23 million -- more than five times Roche's inflation-adjusted salary. Yet Scott's compensation excites relatively little comment, since it's not exceptional for the CEO of a large corporation these days. The wages paid to Wal-Mart's workers, on the other hand, do attract attention, because they are low even by current standards. On average, Wal-Mart's non-supervisory employees are paid $18,000 a year, far less than half what GM workers were paid thirty-five years ago, adjusted for inflation. And Wal-Mart is notorious both for how few of its workers receive health benefits and for the stinginess of those scarce benefits. The broader picture is equally dismal. According to the federal Bureau of Labor Statistics, the hourly wage of the average American non-supervisory worker is actually lower, adjusted for inflation, than it was in 1970. Meanwhile, CEO pay has soared -- from less than thirty times the average wage to almost 300 times the typical worker's pay. The widening gulf between workers and executives is part of a stunning increase in inequality throughout the U.S. economy during the past thirty years. To get a sense of just how dramatic that shift has been, imagine a line of 1,000 people who represent the entire population of America. They are standing in ascending order of income, with the poorest person on the left and the richest person on the right. And their height is proportional to their income -- the richer they are, the taller they are. Start with 1973. If you assume that a height of six feet represents the average income in that year, the person on the far left side of the line -- representing those Americans living in extreme poverty -- is only sixteen inches tall. By the time you get to the guy at the extreme right, he towers over the line at more than 113 feet. Now take 2005. The average height has grown from six feet to eight feet, reflecting the modest growth in average incomes over the past generation. And the poorest people on the left side of the line have grown at about the same rate as those near the middle -- the gap between the middle class and the poor, in other words, hasn't changed. But people to the right must have been taking some kind of extreme steroids: The guy at the end of the line is now 560 feet tall, almost five times taller than his 1973 counterpart. What's useful about this image is that it explodes several comforting myths we like to tell ourselves about what is happening to our society. MYTH #1: INEQUALITY IS MAINLY A PROBLEM OF POVERTY. According to this view, most Americans are sharing in the economy's growth, with only a small minority at the bottom left behind. That places the onus for change on middle-class Americans who -- so the story goes -- will have to sacrifice some of their prosperity if they want to see poverty alleviated. But as our line illustrates, that's just plain wrong. It's not only the poor who have fallen behind -- the normal-size people in the middle of the line haven't grown much, either. The real divergence in fortunes is between the great majority of Americans and a very small, extremely wealthy minority at the far right of the line. MYTH #2: INEQUALITY IS MAINLY A PROBLEM OF EDUCATION. This view -- which I think of as the eighty-twenty fallacy -- is expressed by none other than Alan Greenspan, former chairman of the Federal Reserve. Last year, Greenspan testified that wage gains were going primarily to skilled professionals with college educations -- "essentially," he said, "the top twenty percent." The other eighty percent -- those with less education -- are stuck in routine jobs being replaced by computers or lost to imports. Inequality, Greenspan concluded, is ultimately "an education problem." It's a good story with a comforting conclusion: Education is the answer. But it's all wrong. A closer look at our line of Americans reveals why. The richest twenty percent are those standing between 800 and 1,000. But even those standing between 800 and 950 -- Americans who earn between $80,000 and $120,000 a year -- have done only slightly better than everyone to their left. Almost all of the gains over the past thirty years have gone to the fifty people at the very end of the line. Being highly educated won't make you into a winner in today's U.S. economy. At best, it makes you somewhat less of a loser. MYTH #3: INEQUALITY DOESN'T REALLY MATTER. In this view, America is the land of opportunity, where a poor young man or woman can vault into the upper class. In fact, while modest moves up and down the economic ladder are common, true Horatio Alger stories are very rare. America actually has less social mobility than other advanced countries: These days, Horatio Alger has moved to Canada or Finland. It's easier for a poor child to make it into the upper-middle class in just about every other advanced country -- including famously class-conscious Britain -- than it is in the United States. Not only can few Americans hope to join the ranks of the rich, no matter how well educated or hardworking they may be -- their opportunities to do so are actually shrinking. As best we can tell, pretax incomes are now as unequally distributed as they were in the 1920s -- wiping out virtually all of the gains made by the middle class during the Great Compression. There's a famous scene in the 1987 movie Wall Street in which Gordon Gekko, the corporate predator played by Michael Douglas, tells a meeting of stunned shareholders that greed is good, that the unbridled pursuit of individual wealth serves the interests of the company and the nation. In the movie, Gekko gets his comeuppance; in real life, the Gordon Gekkos took over both corporate America and, eventually, our political system. Oliver Stone didn't conjure Gekko's "greed" line out of thin air. It was based on a real speech given by corporate raider Ivan Boesky -- and it reflected what many corporate executives, conservative intellectuals and right-wing politicians were saying at the time. It's no coincidence that ringing endorsements of greed began to be heard at the same time that the actual incomes of America's rich began to soar. In part, the new pro-greed ideology was a way of rationalizing what was already happening. But it was also, to an important extent, a cause of the phenomenon. In the past thirty years, right-wing foundations have devoted enormous resources to promoting this agenda, building a far-reaching network of think tanks, media outlets and conservative scholars to legitimize higher levels of inequality. "On average, corporate America pays its most important leaders like bureaucrats," the Harvard Business Review lamented in 1990, calling for higher pay for top executives. "Is it any wonder then that so many CEOs act like bureaucrats?" Although corporate executives have always had the power to pay themselves lavishly, their self-enrichment was limited by what Lucian Bebchuk, Jesse Fried and David Walker -- the leading experts on exploding executive paychecks -- call the "outrage constraint." What they mean is that a conspicuously self-dealing CEO would be forced to moderate his greed by unions, the press and politicians: The social climate itself condemned executive salaries that seem immodest. Lately, however, we have experienced a death of outrage. Thanks to the right's well-funded and organized effort, corporate executives now feel no shame in lining their pockets with huge bonuses and gigantic stock options. Such self-dealing is justified, they say: Greed is what made America great, and greedy executives are exactly what corporate America needs. At the same time, there has been a concerted attack on the institutions that have helped moderate inequality -- in particular, unions. During the Great Compression, the rate of unionization nearly tripled; by 1945, more than one in three American workers belonged to a union. A lot of what made General Motors the relatively egalitarian institution it was in the 1960s had to do with its powerful union, which was able to demand high wages for its members. Those wages, in turn, set a standard that elevated the income of workers who didn't belong to unions. But today, in the era of Wal-Mart, fewer than one in eleven workers in the private sector is organized -- effectively preventing hundreds of thousands of working Americans from joining the middle class. Why isn't Wal-Mart unionized? The answer is simple and brutal: Business interests went on the offensive against unions. And we're not talking about gentle persuasion; we're talking about hardball tactics. During the late 1970s and early 1980s, at least one in every twenty workers who voted for a union was illegally fired; some estimates put the number as high as one in eight. And once Ronald Reagan took office, the anti-union campaign was aided and abetted by political support at the highest levels. Unions weren't the only institution that fostered income equality during the generation that followed the Great Compression. The creation of a national minimum wage also set a benchmark for the entire economy, boosting the bargaining position of workers. But under Reagan, Congress failed to raise the minimum wage, allowing its value to be eroded by inflation. Between 1981 and 1989, the minimum wage remained the same in dollar terms -- but inflation shrank its purchasing power by twenty-five percent, reducing it to the lowest level since the 1950s. After Reagan left office, there was a partial reversal of his anti-labor policies. The minimum wage was increased under the elder Bush and again under Clinton, restoring about half the ground it lost under Reagan. But then came Bush the Second -- and the balance of power shifted against workers and the middle class to a degree not seen since the Gilded Age. During the 2000 election campaign, George W. Bush joked that his base consisted of the "haves and the have mores." But it wasn't much of a joke. Not only has the Bush administration favored the interests of the wealthiest few Americans over those of the middle class, it has consistently shown a preference for people who get their income from dividends and capital gains, rather than those who work for a living. Under Bush, the economy has been growing at a reasonable pace for the past three years. But most Americans have failed to benefit from that growth. All indicators of the economic status of ordinary Americans -- poverty rates, family incomes, the number of people without health insurance -- show that most of us were worse off in 2005 than we were in 2000, and there's little reason to think that 2006 was much better. So where did all the economic growth go? It went to a relative handful of people at the top. The earnings of the typical full-time worker, adjusted for inflation, have actually fallen since Bush took office. Pay for CEOs, meanwhile, has soared -- from 185 times that of average workers in 2003 to 279 times in 2005. And after-tax corporate profits have also skyrocketed, more than doubling since Bush took office. Those profits will eventually be reflected in dividends and capital gains, which accrue mainly to the very well-off: More than three-quarters of all stocks are owned by the richest ten percent of the population. Bush wasn't directly responsible for the stagnation of wages and the surge in profits and executive compensation: The White House doesn't set wage rates or give CEOs stock options. But the government can tilt the balance of power between workers and bosses in many ways -- and at every juncture, this government has favored the bosses. There are four ways, in particular, that the Bush administration has helped make the poor poorer and the rich richer. First, like Reagan, Bush has stood firmly against any increase in the minimum wage, even as inflation erodes the value of a dollar. The minimum wage was last raised in 1997; since then, inflation has cut the purchasing power of a minimum-wage worker's paycheck by twenty percent. Second, again like Reagan, Bush has used the government's power to make it harder for workers to organize. The National Labor Relations Board, founded to protect the ability of workers to organize, has become for all practical purposes an agent of employers trying to prevent unionization. A spectacular example of this anti-union bias came just a few months ago. Under U.S. labor law, legal protections for union organizing do not extend to supervisors. But the Republican majority on the NLRB ruled that otherwise ordinary line workers who occasionally tell others what to do -- such as charge nurses, who primarily care for patients but also give instructions to other nurses on the same shift -- will now be considered supervisors. In a single administrative stroke, the Bush administration stripped as many as 8 million workers of their right to unionize. Third, the administration effectively blocked what might have been a post-Enron backlash against self-dealing corporate insiders. Corporate scandals dominated the news in the first half of 2002 -- but then the subject was changed to the urgent need to invade Iraq, and the drive for reform was squelched. With Americans focused on the war, CEOs are once again rewarding themselves at impressive -- and unprecedented -- levels. Finally, there's the government's most direct method of affecting incomes: taxes. In this arena, Bush has made sure that the rich pay lower taxes than they have in decades. According to the latest estimates, once the Bush tax cuts have taken full effect, more than a third of the cash will go to people making more than $500,000 a year -- a mere 0.8 percent of the population. It's easy to get confused about the Bush tax cuts. For one thing, they are designed to confuse. The core of the Bush policy involves cutting taxes on high incomes, especially on the income wealthy Americans receive from capital gains and dividends. You might say that the Bush administration favors people who live off their wealth over people who have a job. But there are some middle-class "sweeteners" thrown in, so the administration can point to a few ordinary American families who have received significant tax cuts. Furthermore, the administration has engaged in a systematic campaign of disinformation about whose taxes have been cut. Indeed, one of Bush's first actions after taking office was to tell the Treasury Department to stop producing estimates of how tax cuts are distributed by income class -- that is, information on who gained how much. Instead, official reports on taxes under Bush are textbook examples of how to mislead with statistics, presenting a welter of confusing numbers that convey the false impression that the tax cuts favor middle-class families, not the wealthy. In reality, only a few middle-class families received a significant tax cut under Bush. But every wealthy American -- especially those who live off of stock earnings or their inheritance -- got a big tax cut. To picture who gained the most, imagine the son of a very wealthy man, who expects to inherit $50 million in stock and live off the dividends. Before the Bush tax cuts, our lucky heir-to-be would have paid about $27 million in estate taxes and contributed 39.6 percent of his dividend income in taxes. Once Bush's cuts go into effect, he could inherit the whole estate tax-free and pay a tax rate of only fifteen percent on his stock earnings. Truly, this is a very good time to be one of the have mores. It's worth noting that Bush doesn't simply favor the upper class: It's the upper-upper class he cares about. That became clear last fall, when the House and Senate passed rival tax-cutting bills. (What were they doing cutting taxes yet again in the face of a huge budget deficit and an expensive war? Never mind.) The Senate bill was devoted to providing relief to middle-class wage earners: According to the Tax Policy Center, two-thirds of the Senate tax cut would have gone to people with incomes of between $100,000 and $500,000 a year. Those making more than $1 million a year would have received only eight percent of the cut. The House bill, by contrast, focused on extending tax cuts on capital gains and dividends. More than forty percent of the House cuts would have flowed to the $1 million-plus group; only thirty percent to the 100K to 500K taxpayers. The White House favored the House bill -- and the final, reconciled measure wound up awarding a quarter of the benefits to America's millionaires. That, in a nutshell, is the politics of income inequality under Bush. Oh, one last thing: What about the claim that the Bush tax cuts did wonders for economic growth? In fact, job creation has been much slower under Bush than under Clinton, and overall growth since 2003 is largely the result of the huge housing boom, which has more to do with low interest rates than with taxes. But the biggest irony of all is that the real boom -- the one in the 1990s -- followed tax changes that were the reverse of Bush's policies. Clinton raised taxes on the rich, and the economy prospered. A generation ago the distribution of income in the United States didn't look all that different from that of other advanced countries. We had more poverty, largely because of the unresolved legacy of slavery. But the gap between the economic elite and the middle class was no larger in America than it was in Europe. Today, we're completely out of line with other advanced countries. The share of income received by the top 0.1 percent of Americans is twice the share received by the corresponding group in Britain, and three times the share in France. These days, to find societies as unequal as the United States you have to look beyond the advanced world, to Latin America. And if that comparison doesn't frighten you, it should. The social and economic failure of Latin America is one of history's great tragedies. Our southern neighbors started out with natural and human resources at least as favorable for economic development as those in the United States. Yet over the course of the past two centuries, they fell steadily behind. Economic historians such as Kenneth Sokoloff of UCLA think they know why: Latin America got caught in an inequality trap. For historical reasons -- the kind of crops they grew, the elitist policies of colonial Spain -- Latin American societies started out with much more inequality than the societies of North America. But this inequality persisted, Sokoloff writes, because elites were able to "institutionalize an unequal distribution of political power" and to "use that greater influence to establish rules, laws and other government policies that advantaged members of the elite relative to non-members." Rather than making land available to small farmers, as the United States did with the Homestead Act, Latin American governments tended to give large blocks of public lands to people with the right connections. They also shortchanged basic education -- condemning millions to illiteracy. The result, Sokoloff notes, was "persistence over time of the high degree of inequality." This sharp inequality, in turn, doomed the economies of Latin America: Many talented people never got a chance to rise to their full potential, simply because they were born into the wrong class. In addition, the statistical evidence shows, unequal societies tend to be corrupt societies. When there are huge disparities in wealth, the rich have both the motive and the means to corrupt the system on their behalf. In The New Industrial State, published in 1967, John Kenneth Galbraith dismissed any concern that corporate executives might exploit their position for personal gain, insisting that group decision-making would enforce "a high standard of personal honesty." But in recent years, the sheer amount of money paid to executives who are perceived as successful has overridden the restraints that Galbraith believed would control executive greed. Today, a top executive who pumps up his company's stock price by faking high profits can walk away with vast wealth even if the company later collapses, and the small chance he faces of going to jail isn't an effective deterrent. What's more, the group decision-making that Galbraith thought would prevent personal corruption doesn't work if everyone in the group can be bought off with a piece of the spoils -- which is more or less what happened at Enron. It is also what happens in Congress, when corporations share the spoils with our elected representatives in the form of generous campaign contributions and lucrative lobbying jobs. As the past six years demonstrate, such political corruption only worsens as economic inequality rises. Indeed, the gap between rich and poor doesn't just mean that few Americans share in the benefits of economic growth -- it also undermines the sense of shared experience that binds us together as a nation. "Trust is based upon the belief that we are all in this together, part of a 'moral community,' " writes Eric Uslaner, a political scientist at the University of Maryland who has studied the effects of inequality on trust. "It is tough to convince people in a highly stratified society that the rich and the poor share common values, much less a common fate." In the end, the effects of our growing economic inequality go far beyond dollars and cents. This, ultimately, is the most pressing question we face as a society today: Will the United States go down the path that Latin America followed -- one that leads to ever-growing disparity in political power as well as in income? The United States doesn't have Third World levels of economic inequality -- yet. But it is not hard to foresee, in the current state of our political and economic scene, the outline of a transformation into a permanently unequal society -- one that locks in and perpetuates the drastic economic polarization that is already dangerously far advanced. |
By J.D. Suss
ICH 16 Dec 06 The Democratic tide in the recent elections is, potentially at least, a force to be reckoned with. Now, citizens-who-care can watch to see if these new members of Congress will squander their mandate in hopelessly fruitless witch hunts on the so-called "issues," while the real culprit continues to bedevil them. That real culprit? - corpocracy[i] (rhymes with "hypocrisy"). Corpocracy, also called "corporatocracy," is de facto rule by mega-corporations in conjunction with international banking, corporate-owned media, and the enabling collusion of government and/or a network of governments. These Big Money[ii] plutocrats are the real enemies of our tattered democracy. Our elected representatives need to begin calling them to account and, quite simply, rein them in.
Railing against the corrosive influence corporations inflict upon democracy is often met with the same kind of mindset that would make Luddites out of those who clamor for sustainable technology. The charge of conspiracy theorist is the label immediately attached to anyone who has the audacity to offer a discourse on corpocracy. And before any intelligent discussion can ensue on the subject, the framing has already done its work; corpocracy is summarily dismissed as "extremist fringe-speak" for ideas too outlandish to merit serious attention. But, thanks to the courage of people like John Perkins,[iii] the word is slowly-but-surely emerging that democracy is being critically threatened, perhaps already "disabled,"[iv] by the interests of Big Money, whose mischief both at home and abroad seemingly knows no bounds. Besides having infiltrated all three branches of government, its corrupting influence extends into almost every think tank and major university in the U.S.[v] Be that as it may, the reader is invited to exercise the right to freely (re)assemble his or her mind and to continue reading. To fully grasp the idea of corpocracy, one must see it as a crisis of consciousness. Fundamentally, we might ask ourselves: What is driving our everyday thoughts, feelings, and beliefs so as to produce a sense of reality about which we all can agree, more or less, is worth living in and fighting for? The answer? - It is our consciousness, a phenomenon steeped in this agreement or consensual reality that is further flavored by a particular, viz., "American," culture trance. From its earliest days, America was a nation built upon the advertising, buying and selling of commodities for the purpose of realizing ever-increasing profits. But with the maximization of profits as the overriding incentive, inevitably people and the world around them, become marginalized. This became especially evident as the corporate entity gained in prominence and the techno-industrial elite was more and more empowered. The greed of wealth accumulation continues to deplete scarce natural resources. The cumulative effect is a ravaging of both the environment and the social fabric of peoples unfortunate enough to be living amid such resources. And yet, to sustain a material comfort that is never quite sated, an ever-growing consumption must be constantly encouraged. Enter Big Money, which gladly encourages never-ending consumption patterns - so much so that corporate capitalism is now synonymous with democracy in the minds of most of the citizenry, including its representatives. The sad fact is that we have been turned into complacent consumeroids. We are now the beneficiaries of a material comfort that has succeeded in making us overwhelmingly passive with regard to what goes on in our government, not to mention what is going on in the rest of the world. As Harvard professor and unrepentant, status quo theorist, Samuel P. Huntington, tells us, "democratic societies 'cannot work' unless the citizenry is 'passive.' [vi]" Shockingly, in the United States less than 50% of voters vote in elections - elections that fail to meet the standards that Jimmy Carter uses to gauge free and fair elections abroad. Therein lies one telling measurement of our passivity. Big Money's overwhelming interest in profits over people is largely responsible for a kind of preservation of its base that is composed of a citizenry invested in the status quo. That broad swath of middle Americans buys into comfortable, complacent lifestyles as a kind of divine right to be enjoyed by the world's foremost "bringer of democracy." Such is the subtle yet insidious effect of a consensual reality and culture trance in which Americans - and worse, their elected representatives - are swimming. Most of us have adapted early to a status quo consciousness that has fed us the noble myths of our nation. Indeed, intrusive commercialization such as TV helps to keep the minds of the masses programmed to stay in thrall to these myths (and whatever else those with money to buy advertising or to finance TV shows wish us to believe). However, the current state of the nation, a nation now often referred to as a national security state, belies those myths. And so, to the extent people still invest the U.S. with these myths of America as the "city upon the hill" - presumed to be benevolent and morally justified in its dealings around the world - there exists a faulty or deficient consciousness. Although steadily deteriorating, this deficient consciousness none-the-less remains potent in its ability to blind us to the real enemy within that silences the true will of the people. By the mind control device of the "corporate media," Big Money subtly manipulates language to suit its needs. This helps to preserve status quo notions that are so embedded in our shared, deficient consciousness. Just look around at sporting arenas these days. All you see is corporate placards and logos. Our uniquely American culture trance wallows in phony wrestling, Nascar spectacles, "reality" shows, and law and order, ER and CSI shows designed to implant anything that will preserve the mindset, "My country - right or wrong." Whatever can be used to keep the citizenry passive and maximize profits is the name of the game. On the subject of income taxes, why can't we put the blame where it belongs? Consider this: Outrageous tax breaks and subsidies to big oil, agribusiness, etc., have been bestowed on corporations by those in Congress who are elected to uphold the interests of Big Money plutocrats. This corporate welfare amounts to hundreds of billions of dollars each year. One effective way that real people, viz., human taxpayers, might start enjoying real tax relief is to put an end to such corporate welfare. Recouping and redirecting those billions into the national coffers might have the effect of doing away altogether with income tax on individuals. Tax "radicals" (e.g., Aaron Russo[vii]), long opposing the individual income tax on the basis of its purported unconstitutionality, would indeed be vindicated. According to them, the only entity the Founding Fathers meant to pay such a direct, unapportioned tax is the corporations. More to the point, if taxing the income of individuals is unconstitutional, then the very politicians and lawyers who have taken an oath to uphold the Constitution are in fact remiss in their sacred duty whenever they uphold and defend such a tax. To this end, such "extremist" tax radicals would find an ally in true conservatives who certainly embrace a literal reading of the U.S. Constitution. (In his movie, Russo cites U.S. Supreme Court precedent to support the fact that the mechanism that purportedly established the income tax, the Sixteenth Amendment, was never ratified by the required number of states in order to become law.) Likewise, if you hate paying property taxes, cutting off corporate welfare should help fill state and local coffers as well. Citizens would not only be able to the throw off the yoke of being wage slaves, as property owners they would also be freed from being de facto tenants to the state, subject to ever-escalating property taxes. How many of us out there know that those artificial entities called corporations now have every constitutional right originally meant to be reserved only for natural persons? For that, citizens can thank decisions by the U.S. Supreme Court over the past hundred years or so.[viii] Putting this into perspective, we now have super-Goliath corporations pitted against puny Davids - viz., individuals, communities, and their local governments - who, by comparison, have only a fraction of the wealth, power, and influence that the corpocracy commands. Is it any wonder Big Money gets its way, both here and abroad? As Perkins makes clear, corpocracy has taken our foreign policy hostage in its exploitation of weaker nation-states while leaving in its wake a trail of poverty, environmental ruination, and intense resentment toward the United States. This is all done legally, mind you, with the help of the IMF, the World Bank, AID and other entities. And whatever cannot be stage-managed by corporations can usually be handled by the U.S. troops as surrogate enforcers for corpocracy. Thus, we now have foreign policy by military misadventure. Enter the terrorists, fighting "democracy's policeman." Abroad, Big Money views foreigners as a disposable source of cheap labor; at home, immigrants are simply units of low wage labor for corporate profit-seeking. What Big Money wants overrides whatever resentment John Q. Public may have toward undocumented immigrants, i.e., illegal aliens now awash throughout the U.S. We must be vigilant about strengthening and protecting the bonds that connect our common humanity. Preserving cultural ecology, just like caring for the physical ecology of our environment, must be given due consideration as a requisite aim of business activity. Such ecological concerns grow out of societal "goods," e.g., love, empathy, compassion, and understanding. These, in turn, form the structure upon which, ideally at least, economic and legal mechanisms of due process, equal opportunity, fairness and justice for all are built and maintained. As long as the profit incentive is allowed to reign supreme in a business atmosphere characterized by the kind of unbridled corporate capitalism that prevails in today's global society, transcending our old, status quo consciousness will be a dubious proposition. The true profit to be gained by transforming our consciousness translates into social and natural capital, i.e., a "societal wealth of nations," (Lloyd, 2004) represented by a stronger and more harmonized society at home and abroad, and a properly stewarded planet. The new, Democratically-controlled Congress must make it a priority to challenge the corpocracy, or else face failure. Following in the woefully tragic missteps of corporate Democrats and corporate Republicans means "business as usual," i.e., the people get what they didn't vote for, yet again. NOTES [i] Lloyd, D., American Corpocracy: Corporate Ownership of America's Politicians Is Destroying Democracy and the Societal Wealth of Nations (Morris Publishing, Kearney, NE, 2004) [ii] Sirota, D., Hostile Takeover: How Big Money and Corruption Conquered Our Government - and How We Take It Back (Crown, New York, 2006); Also see the Linzey, T.A. & Grossman, R.L., Model Brief to Eliminate Corporate Rights at http://www.poclad.org/ModelLegalBrief.cfm [iii] Perkins, J., Confessions of an Economic Hit Man (Berrett-Koehler Publishers, San Francisco, 2004) [iv] Nace, T., Gangs of America: The Rise of Corporate Power and the Disabling of Democracy (Berrett-Koehler Publishers, San Francsico, 2003, 2005) [v] Draffan, G., The Elite Consensus: When Corporations Wield the Constitution (Apex Press, New York, in cooperation with POCLAD, So. Yarmouth, MA, 1995), Introduction electronically reprinted at http://www.ratical.org/corporations/WCWtC.html; Ritz, D. (Ed.), Defying Corporations, Defining Democracy: A Book of History & Strategy (Apex Press, New York, in cooperation with POCLAD, So. Yarmouth, MA, 2001); For a stunning example of incestuous interrelationships among government, business, think tanks, and universities see, http://www.exxonsecrets.org/em.php [vi] Huntington, S.P., "The Crisis of Democracy," Report of the Trilateral Task Force on Governability of Democracies (1975), quoted in Moore, R.K., Beyond Left & Right: Escaping the Matrix (Whole Earth Magazine, 2000, reproduced in New Dawn, (No. 62, Sept.-Oct., 2000) accessed on 12/10/06 at http://www.newdawnmagazine.info/Article/Escaping_the_Matrix.html [vii] See, e.g., Russo, A., America: Freedom to Fascism, (2006) http://video.google.com/videoplay?docid=4312730277175242198&q=freedomtofascism [viii] For an excellent timeline synopsis see, Timeline of Personhood Rights and Powers, prepared by the Women's International League for Peace and Freedom, n.d., http://reclaimdemocracy.org/personhood/personhood_timeline.pdf © 2006 by Jonathan D. Suss, J.D., Ph.D. The author is a metapolitical American citizen, Maryland lawyer and a recent Ph.D. in Humanities, whose doctoral dissertation is entitled The Odyssey of the Western Legal Tradition: Integral Jurisprudence - Toward the Self-Transcendence of Deficient-Mental Legal Culture. Comment: No, the real problem is Pathocracy.
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By Christian Reiermann
Translated by Christopher Sultan Spiegel Online 12 Dec 06 Is an end of an era looming in the foreign exchange markets? The dollar has been depreciating against the euro for weeks. Currency experts and the German government don't yet see this as cause for alarm. The US currency's role as a lead currency isn't as important as it used to be, they say.
Like most central bankers, Jean-Claude Trichet, the president of the European Central Bank (ECB), has a penchant for cryptic comments. Injecting a certain degree of incomprehensibility is a signal to the professionals that he's competent. And when it comes to laymen, industry jargon has the desired effect of generating the necessary respect. Last Thursday the public was treated to yet another example of Trichet's convoluted speaking style. A number of risks, the ECB president said, could jeopardize a generally favorable economic outlook in the euro zone. They included, according to Trichet, "concerns regarding possible uncontrolled developments triggered by global economic imbalances." What Europe's most powerful protector of the currency was actually saying was this: The gradual decline of the dollar in the foreign currency markets in recent weeks could pose a threat to the economy. What Trichet was also trying to broadcast is that the ECB has recognized and is aware of the threat. Nevertheless, the European Central Bank in Frankfurt again increased its key interest rate on Thursday by a quarter percentage point to 3.5 percent, which makes the euro more attractive to international investors. The central bankers had no choice but to take the step, having already announced their intentions weeks ago. Experts have been predicting for some time that the dollar would eventually go into a nosedive, and now that time seems to have come. The US currency has lost five percent of its value against the euro since late October, and 13 percent since the beginning of the year. The euro is currently fluctuating around a value of $1.33, which is only 3 cents away from its all-time high in 2004. And yet Trichet's counterpart Ben Bernanke, the chairman of the US Federal Reserve, has done nothing but look on as the dollar plunges. A sea change appears to be taking place on the international financial markets. For years, global capital flowed in only one direction, with $2 billion going into the United States every day. Investors viewed the world's largest economy not only as a bastion of stability, but also as a place that promised the best deals, the most lucrative returns and the highest growth rates. The Americans, for their part, welcomed foreign investment. For them, it was almost a tradition to save very little and spend more than they earned -- essentially achieving affluence on credit. Foreigners financed the Americans' almost obsessive consumer spending, which spurred worldwide economic growth for years. Because the US government was unable to fall back on the savings of its citizens, it too was forced to finance its budget deficit with foreign capital. Both consumer spending and the federal deficit kept the dollar high, because the rest of the world was practically scrambling to invest in the United States. This phase seems to have come to an end, at least for the time being. "There are fundamental weaknesses in the American economy. This could not continue in the long term," says Alfred Steinherr, chief economist at the German Institute for Economic Research (DIW). Investors pulling out Investors worldwide are becoming sceptical and starting to pull their money out of the United States. They have realized that a people and a country cannot live beyond their means in the long term. The US dollar's exchange rate is starting to crumble as a result of this withdrawal. The depreciation is causing growing concern about what will happen to the global economy if the United States loses its role as an engine of growth. If German cars, machinery and services become more expensive, will the German economic recovery end before it has really started? The German government isn't worried yet, at least not officially. Nevertheless, experts in the finance and economics ministries have been keeping a close eye on developments. Although they continue to believe that the changes still fall within the scope of long-term averages, they don't rule out that the situation could worsen. They believe that a first critical threshold for the competitiveness of the German economy will be reached at an exchange rate of about $1.36 per euro, and that Germany could see major difficulties at rates in the neighborhood of $1.50. If there is turbulence in the foreign currency markets, the government in Berlin will find itself in an especially challenging position. In early 2007, Germany will assume the chairmanship of the so-called G8 group of seven major industrialized nations plus Russia. The G8 has repeatedly engaged in crisis management to deal with problems in the international financial system. It did so in the 1980s, when the combined forces of the G8 were needed to put a stop to the soaring dollar. It stepped in with equal verve a few years to forestall a decline in the American currency with the so-called Louvre Accord. There are two principal causes behind the most recent development. Both have to do with the fact that Europe is becoming more attractive for international investors compared to the United States. On the one hand, interest rates in Europe and the United States are moving in opposite directions. "The ECB will continue to raise its key rates next year, whereas interest rates appear to have peaked in the USA," says Joachim Scheide, an expert on the economy at the Global Economic Institute (IFW) in the northern German city of Kiel. This means that financial investments denominated in euros are yielding higher interest and are in greater demand internationally, which in turn leads to a rise in the euro. The prospects for growth are also shifting. The US economy is cooling off. The government recently lowered its 3.3 percent growth forecast for 2007. If Americans consume less as a result of a decline in foreign capital investment, the United States could even face a prolonged period of more modest growth. Germany has shed 'sick man' image By contrast the euro zone economy is robust. Germany, in particular, has surprised many with a stream of good economic news. Unemployment dropped below the psychologically critical threshold of four million in November. The Ifo business climate index, which measures the expectations of businesses, is at its highest point in 15 years, while consumer confidence has reached a five-year high. In the last quarter of this year Germany, long considered the sick man of Europe, will have transformed itself into an engine of economic growth. According to analysts at Postbank, Germany's annual growth, projected at 3.4 percent, will even exceed that of the United States this year. This is the kind of news that fuels the expectations of investors who now prefer to invest their money in the euro zone. The result is an increase in the exchange rate for the European Union's common currency. But how will the decline in the dollar's value affect future economic development? Could it cause a major imbalance in the global economy, or will the global economy, and Germany, get off lightly? Pessimists are quick to come out of the woodwork whenever a major shift in the financial markets approaches. Many economists and bank analysts, especially in the United States, believe that the correction will happen very suddenly, with the dollar depreciating by 10 to 30 percent within a short period of time. This would inevitably cause an adjustment crisis. Growth rates would plunge worldwide and a global recession, coupled with a drastic jump in unemployment, could follow. This doomsday scenario is by no means the majority view. Some experts, especially in Germany, are more optimistic. "The US trade deficit has grown in the course of a few years," says IFW expert Scheide. "It will also gradually decline over a period of several years." Scheide expects the dollar to lose another 10 percent in value against the euro in the next five years, a scenario that would be much easier to handle for the German and European economies. Companies would have sufficient time to adjust to changes in exchange rates. "In that case even an exchange rate of 1.40 wouldn't be disastrous," said DIW analyst Steinherr. Germany is a good example of how effectively this can work. Despite the fact that the dollar has lost half of its value against the euro since 2002, exports have not been adversely affected. Indeed, they even increased from €651 billion ($861 billion) to €786 billion ($1.04 triilion). The Germany economy exported more than ever before in October. Another reason is that the dollar zone is no longer as important for German exports as it was only a few decades ago. Leaving aside exceptions such as the auto industry, other regions of the world have long since become more important to the German economy than the United States, where Germany now sells less than one-tenth of its exports. Germany exports more than 40 percent of its goods and services to other countries within the euro zone, 13 percent to eastern Europe and nine percent to Asia. The turbulence surrounding the dollar has had virtually no effect on German exports to neighboring European countries. Most of the EU's new members have tied their currencies to the euro, and exchange rate risks evaporated for western Europe with the introduction of the euro. The euro even prevents the kinds of major upheavals in Europe that occurred in the past whenever the dollar fell. When that happened, German businesses and consumers were routinely forced to bear a greater burden of adjustment than the economies of neighboring countries. In the past, if the German mark gained 10 percent in value against the dollar, the French franc or the Italian lira would only gain six or seven percent. As a result, the German mark was overvalued relative to other European currencies, which translated into economic disadvantages for the German economy. This mechanism was eliminated when the euro was introduced. Now all member states carry the same burden. The consequences of a declining dollar for the German and European economy will be determined in large part by the way other currencies develop relative to the dollar. "It would be fatal if only the euro were to rise," says DIW analyst Steinherr. "Then it would only be the euro zone that would have to bear the burden of adjustment." But the foreign currency markets suggest a different development, as the dollar is also losing value in relation to other important currencies. The British pound, for example, rose to new highs last week. Even more importantly, the currencies of east Asian growth regions are also appreciating against the dollar. The Thai Baht, for example, gained about 15 percent against the dollar in 2006, while the South Korean Won gained 10 percent. Even the Chinese Yuan, which slavishly followed the dollar in the past, gained more than three percent. Virtually every economy is bearing part of the burden of adjustment. The decline in the dollar also has its advantages. For Germany, the greatest advantage is that Germans pay less for oil. The oil price is mainly set in dollars worldwide. If the dollar declines, the same amount of oil costs Europe fewer euros, and the money the Europeans save can be spent on other goods. A similar dynamic applies to exports from the dollar zone. If the decline in the dollar continues, computers, software licenses and machinery from the United States will become less expensive. Both developments would represent a windfall for companies and people in the euro zone, because the same amount of money would buy more goods. The perils of a currency crash are not nearly as great as they were in the days of the dollar's absolute dominance 30 or 40 years ago. Globalization has led to the development of a number of growth centers in the world economy which share the burden of turbulence. Gone are the days when an American finance minister could boast: "The dollar is our currency, but it's your problem." |
Pentagon to ask $468.9 bln budget for fiscal 2008 - While More Americans Go Hungry and Homeless and Without Healthcare
By Andrea Shalal-Esa and Jim Wolf
Reuters 15 Dec 06 WASHINGTON - The White House has approved a $468.9 billion budget for the Pentagon in fiscal year 2008, a six-percent increase over last year's request, according to a Defense Department document obtained by Reuters.
It is also asking the Pentagon to cover some Army and Marine Corps war costs in Iraq and Afghanistan as part of the regular budget, rather than through emergency budget requests. The 2008 budget request is $4.7 billion more than the level the Pentagon forecast in its 2007 budget documents. Deputy Defense Secretary Gordon England welcomed the increase in a letter to Rob Portman, director of the White House Office of Management and Budget. But he strongly objected to OMB's orders that "costs to accelerate Army and Marine Corps combat and combat support units, Army Force Readiness and replacement of additional aircraft losses" should be funded as part of the 2008 budget. England said that violated the Pentagon's earlier agreement with the White House that the extra spending would be used to cover Army budget shortfalls, and that war costs would continue to be funded through supplemental budgets. The Bush administration is continuing to discuss budgets with various government agencies, including the Pentagon, and will submit a fiscal 2008 budget to Congress in February. "The inconsistency ... is that adding war costs in the budget would effectively negate the prior agreement for a topline increase," England said in the December 14 memorandum. Offsets proposed by White House budget officials would "significantly weaken the department's strategic position" and jeopardize the Pentagon's joint warfighting concept, he said. England did not give details on the proposed offsets. However, he said the Pentagon's initial budget proposal -- before the suggested offsets -- was based on thousands of hours of work, and the best judgment by senior military and civilian leaders. "It is balanced and provides for our nation's defense at a time of diverse and dramatic threats," England said. WAR COSTS U.S. lawmakers have grown increasingly frustrated about the Pentagon's use of supplemental budgets to fund war costs, given that the costs are no longer "unanticipated," said Steven Kosiak of the Center for Strategy and Budgetary Assessments, a Washington-based research group. But he said lawmakers wanted more oversight of that spending than permitted in the supplemental budgets, and there was no suggestion that they would curb funding for the war. "They would like the administration to ask for most of the funding up front," he said. Kosiak also rejected England's statement in the memo that the 2008 increase "reverses a trend of declining real growth", calling England's description "flat-out wrong". "There has been a upward trend in real terms, above the rate of inflation," he said, citing a 23 percent real increase, above inflation, in the Pentagon's budget from 2000 to 2007. Loren Thompson of the Virginia-based Lexington Institute, said England's letter revealed the Pentagon's growing concern about being able to modernize its forces and fund new weapons programs while paying escalating war bills. "This has real significance for the Pentagon in terms of being able to fund other items besides the war," he said. The Pentagon is likely to ask for an additional $100 billion to fund the Iraq and Afghanistan wars early next year. The Pentagon's 2008 overall budget request of $468.9 for fiscal 2008 is 6.3 percent higher than its fiscal 2007 budget request of $441.2 billion. © Reuters 2006. All Rights Reserved. |
By DOREEN CARVAJAL
NY Times 18 Dec 06 PARIS, Dec. 17 - She is a former marine, a native Californian and, now, an ex-American who prefers to remain discreet about abandoning her citizenship. After 10 years of warily considering options, she turned in her United States passport last month without ceremony, becoming an alien in the view of her homeland.
"It's a really hard thing to do," said the woman, a 16-year resident of Geneva who had tired of the cost and time of filing yearly United States tax returns on top of her Swiss taxes. "I just kept putting this off. But it's my kids and the estate tax. I don't care if I die with only one Swiss franc to my name, but the U.S. shouldn't get money I earned here when I die." Historically, small numbers of Americans have turned in their passports every year for political and economic reasons, with the numbers reaching a high of about 2,000 during the Vietnam War in the early 1970s. But after Congress sharply raised taxes this year for many Americans living abroad, some international tax lawyers say they detect rising demand from citizens to renounce ties with the United States, the only developed country that taxes it citizens while they live overseas. Americans abroad are also taxed in the countries where they live. "The administrative costs of being an American and living outside the U.S. have gone up dramatically," said Marnin Michaels, a tax lawyer with Baker & McKenzie in Zurich. So far this year, the Internal Revenue Service has tallied 509 Americans who have given up their citizenship, said Anthony Burke, an I.R.S. spokesman in Washington. He said complete figures were still being calculated. Applications to renounce citizenship are on the rise at the American Embassy in Paris, according to an official who spoke on condition of anonymity. At the embassy in London, the number of applications was reported to be fairly stable over the past two years, though it would be hard to spot a recent surge because applications are taking longer to process there than in past years. Neither embassy would disclose exact figures. A spokeswoman for the American Embassy in London, Karen Maxfield, said Americans living abroad usually took the step "because they do not have strong ties to the United States and do not believe that they will ever live there in the future." "All have two citizenships and generally say they would like to simplify their lives by giving up a citizenship they are not using," she said. Andy Sundberg, a director of the Geneva-based American Citizens Abroad, has been tracking renunciations dating back to the 1960s through annual Treasury Department figures. He considers the numbers low compared with some stretches in the past, like the early 1970s. But he has also noticed a recent increase in interest among Americans in renouncing their citizenship. "I think the cup is boiling over for a number of people living abroad," Mr. Sundberg said. "With the Internet and the speed and the ubiquity of information, people are more aware of what's happening." With the changes in the tax laws, he said, some Americans living abroad fear "they're heading toward a real storm." He cited a survey by the American Chamber of Commerce in Singapore, which polled its members in October and November and found that many were considering returning to the United States because of the higher taxes. Concern about taxes among Americans living abroad has surged since President Bush signed into law a bill that sharply raises tax rates for those with incomes of more than $82,400 a year. The legislation also increases taxes on employer-provided benefits like housing allowances. The changes, enacted in May, apply retroactively to Jan. 1, 2006. Matthew Ledvina, an international tax lawyer in Geneva, said demand for legal counsel on the citizenship issue was coming largely from American citizens who held second passports and who had minimal ties to the United States. "There are incentives to do it before the end of the year so that you can minimize your future reporting," he said. Mr. Ledvina said the waiting period for appointments at the American Embassy in London had increased from a few days to more than three and a half months. He said he had recently approached embassies in Vienna, Bern, London, Paris and Brussels before finally getting an appointment in Amsterdam for a client's renunciation application. The legal ritual of renunciation is largely unique to the United States because other countries base taxation on residency, not citizenship, according to Ingmar Dörr, a tax lawyer with Lovells in Munich. "We don't have that issue," he said. "We only have the problem that rich people who don't want to pay taxes in Germany just move to a lower-tax country in Switzerland." For some Americans abroad, motivations for renunciation are mixed and complex, involving social concerns, political displeasure with their government and other reasons. But it is clear that taxation plays a large role for many, even though few are willing to admit that because of penalties enacted a decade ago. In 1996, Congress tried to address a wave of tax-driven expatriation by the wealthy by requiring former citizens to file tax returns for a decade and forbidding Americans who renounced their passports for tax reasons from visiting the United States. But in practice, the government is mainly interested in wealthier ex-citizens with a net worth of more than $2 million - few of whom pay further United States taxes because they generally avoid making American financial investments after giving up citizenship, Mr. Ledvina said. As for the rule barring entry to tax refugees, he said, it has not been enforced by the authorities. Still, that possibility prompts ex-citizens to tread carefully and remain discreet about their choices. "I didn't give up my citizenship with a sense of hostility," said an importer in Geneva who renounced her citizenship as President Bush was taking office in 2001. "I gave it up with a sense of fairness." |
By Beth Healy and Michael Rezendes
Boston Globe December 18, 2006 Sheriffs in three Massachusetts counties that once made a business of towing vehicles on behalf of unscrupulous debt collectors have adopted new rules to treat consumers more fairly and have sharply cut back on the common practice of seizing vehicles from beleaguered debtors.
The changes, coming after a Globe Spotlight Team report on debt collection abuses, are now seen in Norfolk, Plymouth, and Worcester counties. In Norfolk County, deputy sheriffs are no longer seizing vehicles from consumers whose debt results from medical or dental expenses or in cases in which the amount owed is less than $1,500. "We will no longer seize cars over medical bills, no matter what the amount," Sheriff Michael G. Bellotti said, calling the practice inappropriate because medical services are not a discretionary purchase. As a result of the changes, confiscating vehicles in the county has dropped by half from September to November, compared with the same three months last year. A similarly dramatic change has come to Worcester County, where more than 1,000 vehicles had been seized from debtors over the last five years. The number of vehicle confiscations has dropped by two-thirds since two notorious debt collectors -- brothers Daniel and Chad Goldstone -- closed their local offices and left the state after the Globe series, which detailed their practices. And in Plymouth County, the Sheriff's Department has adopted an even more striking shift: treating debtors with simple consideration. The deputy sheriff now writes to anyone whose vehicle is about to be seized, said spokesman John Birtwell . The change was made after the Globe reported that many consumers have no idea they are being sued for debt or that a debt collector has a court judgment to seize their property. "The primary concern was that a lot of these folks had absolutely no idea that their vehicles were being taken," Birtwell said. Often, in searching for a vehicle to seize, a deputy sheriff or constable successfully finds the address of a person who the debt collector and the court did not previously take the trouble to find, according to the Globe report. Now, if a deputy sheriff in Plymouth County sends a letter of warning to an address provided by the court, and the letter is returned as undeliverable, the deputy will not hunt further for the vehicle, Birtwell said. As the three counties shift their practices, some legislators and consumer advocates are working to further limit the seizure of vehicles to satisfy debts, and Bellotti is proposing that his recent policy moves be adopted statewide. Separately, a task force appointed by the chiefs of the Massachusetts Trial Courts to change the district court system -- where most debt cases are decided -- continues to deliberate on a range of reforms. The Spotlight Team series, which ran mid summer, documented the extraordinary degree to which the small-claims sessions have become pliant forums for debt collectors. Collectors, who buy delinquent debts for pennies on the dollar, have won court judgments by the thousands -- judgments that allow for the seizures of vehicles and other property. Article Tools * PRINTER FRIENDLYPrinter friendly * SINGLE PAGESingle page * E-MAILE-mail to a friend * RSS FEEDSLocal RSS feed * RSS FEEDSAvailable RSS feeds * MOST E-MAILEDMost e-mailed * REPRINTS & LICENSINGReprints & Licensing * Share on Facebook * Tag with Del.icio.us Save this article * powered by Del.icio.us More: * Globe City/Region stories | * Latest local news | * Globe front page | * Boston.com * Sign up for: Globe Headlines e-mail | * Breaking News Alerts The report highlighted how remarkably common such cases have become, with ordinary debtors given the sort of harsh treatment once reserved for the most obdurate of deadbeats. The article also showed how little regulatory supervision or interest there has been in reining in the more abusive debt collectors. Now, however, the climate is shifting. Jeffrey R. Turco , the Worcester County sheriff's chief deputy, said the big change -- beyond the Goldstones' departure -- has been new rules designed to ensure that deputy sheriffs take more responsibility for these cases and are not acting as street-level enforcers of erroneous court judgments. For example, if a debtor claims to have filed for bankruptcy protection, Turco said, Worcester deputy sheriffs must not seize the person's vehicle unless they determine the claim is false. And when seizing vehicles, deputy sheriffs must now consult a catalog of used-car prices to determine whether a vehicle's sale value will cover the debt that is owed. The sheriff doesn't want to take someone's vehicle only to leave them still in debt, Turco said. The department will no longer seize a vehicle with a large lien against it, Turco said, because in such cases, the lender has first rights to the vehicle. That means the vehicle cannot be sold at a sheriff's auction. If a vehicle cannot be sold, it would effectively be held for ransom, while the debtor comes up with cash to reclaim it. In cases in which a vehicle is seized and goes to auction, Turco said, the department is trying to attract more bidders to boost the potential sale price. The department has begun posting auction notices in the town hall and at the Police Department in addition to advertising in a local newspaper as it has in the past. State Senator Robert S. Creedon Jr. , chairman of the Legislature's Judiciary Committee, is among those pressing for change in debt-collection oversight. He said he plans to hold hearings early next year on abusive debt collectors and the free pass they often get in the state's district courts. He said he is particularly concerned about defendants not getting proper notice of court dates and the automatic default rulings against them when they fail to show up in court. "We don't want these default judgments popping up when nobody knows they're sued," Creedon said. He has filed a bill that would bar debt collectors from seizing vehicles worth less than $10,000. Current law, which is decades old, aims to protect a consumer's primary mode of transportation but only up to $700. State Senator Marc R. Pacheco also has filed a bill, which he plans to refile in the next session, that would raise the auto exemption to $2,600, with regular increases based on the cost-of-living index. Robert J. Hobbs , deputy director of the National Consumer Law Center in Boston, said he thinks the exemption should go even further. As part of a package of debt-collection reforms his group is preparing to present to legislators, he suggests that every family ought to be able to keep one vehicle safe from collectors, no matter its value. He proposes protecting other assets as well, including $2,000 in a bank account, household furniture worth up to $4,000, and wages up to 30 times the Massachusetts hourly minimum wage. "The most important thing is to make sure the property exemptions are modernized," Hobbs said, "so it's not so financially devastating if there is a judgment against you." |
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