New Shorts, Jan. 20-28, 2018
OECD Official at Davos Warns of New Global Crash
Jan. 27, 2018—All was not happy talk at the confab of the financial elite in Davos, Switzerland this week. Speaking at the Davos World Economic Forum, economist William White, a veteran of the Bank for International Settlements, and currently head of the Organization for Economic Cooperation and Development’s review board, warned that “all the market indicators right now look very similar to what we saw before the Lehman crisis.” Somehow the lesson of the 2008 crash has been forgotten, he said.
White substantiated his point by reviewing the huge increase in indebtedness which has been created by the quantitative easing regime of the last nine years, and elaborating on the dangers that will be created as the Fed, in particular, attempts to disengage from that practice.
White’s warnings were echoed by a number of bankers at Davos as well, including top spokesmen from Citigroup, Barclays, and M&G Investments. None, however, were reported to be talking about a return to the Glass-Steagall era, in which speculative finance would no longer be supported, and commercial banks would be protected.
Sanders Town Hall on Single Payer Plan Draws over One Million People
Jan. 27, 2018—On Jan. 23, Senator Bernie Sanders held a national town hall meeting on line, which drew over one million viewers, most of them “live.” The unprecedented event, which was co-hosted by video news outlets The Young Turks, NowThis and ATTN, featured three panel discussions moderated by Sanders.
One discussed problems with America’s current health care system; the second dealt with the potential economic impact of a “Medicare for all” program; and the third compared the American health care system with those in other countries. Among the experts was a notable new convert to the proposal, Obama’s head of the Center for Medicare and Medicaid Services Donald Berwick.
Sanders’ bill to enact Medicare for All, S. 1804, has 16 cosponsors. In the House of Representatives the parallel legislation, H.R. 676, has 120 sponsors. For americansystemnow’s evaluation of Sanders’ proposal and the Medicare issue overall, you can click here.
Americans for Financial Reform Mobilizes Against Loosening Bank Regulations
Jan. 28, 2018–On Jan. 17, the Americans for Financial Reform, a coalition of 200 labor and civic groups dedicated to bringing about an “end to the casino economy,” issued a letter to Congress, urging defeat of 23 separate banking deregulation bills now being considered by the House Financial Services Committee. The bills as a totality would significantly reduce regulatory oversight and the powers of the Consumer Financial Protection Board, and thus, according to the AFR, increase the risk of the need for a new taxpayer bailout. The bills’ numbers are HR 1264, 2226, 2319, 3748, 4061, 4550, 4566, 4607, 4738, 4771, 4785, and 4790.
A set of bills geared to accomplishing the same aim have been introduced into the Senate as well. One bill, S 2155, has become the object of mobilization from its opponents, due to the fact that it has gained the sponsorship of 11 Democratic Senators and Independent Angus King, in addition to the Republicans. Under the deceptive rubric of “Economic Growth, Regulatory Relief, and Consumer Protection,” the bill would reduce oversight over a large number of banks, leaving only the largest to meet strict conditions. According to the Splinter blog,
The 30 banks deregulated by this bill hold a combined $5.3 trillion in assets, or roughly 25% of the total assets in the banking sector. Collectively they received $65 billion in TARP bailout funds and hundreds of billions more in additional forms of government support. This universe of banks deregulated by the bill also includes the U.S. holding companies of systemically important foreign banks like Credit Suisse, Deutsche Bank and HSBC. These scandal-plagued foreign banks should be some of the last banks policymakers consider deregulating.
The Democratic Senators who have lent support to this legislation are: Tom Carper (Del.), Chris Coons (Del.), Joe Donnelly (Ind.), Heidi Heitkamp (N.D.), John Tester (Mont.), Mark Warner (Va.), Claire McCaskill (Mo.), Joe Manchin (W.Va.), Tim Kaine (Va.), Gary Peters (Mich.), and Michael Bennet (Colo.).
CMS Waiver Permitting Medicaid Work Requirement Faces First Legal Challenge
Jan. 28, 2018–Fifteen Kentucky recipients of Medicaid filed a class action lawsuit in Washington, D.C. Federal Court Jan. 25, with the aim of preventing implementation of a new work requirement for “able-bodied” Medicaid recipients in their state. The requirement is part of a Kentucky demonstration project which was approved by the Center for Medicare and Medicaid Services (CMS) on Jan. 12.
According to Reuters, the lawsuit argues that the new rule, which would require adult able-bodied recipients to engage in “employment activities” 80 hours a month in order to receive their health care coverage, violates the purpose of the Medicaid law. That purpose is to expand access to health care to the indigent.
Advocates of the new rule, which requires a waiver from CMS, are primarily looking to save money, as they admit. Medicaid expansion to able-bodied adults making up to 138% of the poverty level has been the major source of expansion of health care coverage due to Obamacare, and significantly raised the costs to the states which chose to participate. However, the state applicants for a CMS waiver to permit this requirement have also made the tortuous argument that the work requirement will improve the health of the recipients forced to work.
As opponents of the new rule have pointed out, nearly 60% of the working-age adults now receiving Medicaid are already working, but are not being provided health insurance from their jobs. Moving more people into low-wage jobs is not likely to have a different result.
The Kentucky rule change is set to go into effect in July, if the legal challenge fails. Nine other states have prepared applications for similar rules: Arizona, Arkansas, Indiana, Kansas, Maine, New Hampshire, North Carolina, Utah, and Wisconsin.
Puerto Rico’s Disaster Keeps Getting Worse
Jan. 28, 2018–With his state still suffering from a lack of electricity for an estimate 40% of its inhabitants, and anticipating new disasters in the form of the Trump tax bill and an impending wave of foreclosures, Puerto Rican governor Ricardo Rosselló announced his new budget on Jan. 25. The plan anticipates that the Island will run at a deficit for the next four fiscal years, and not be able to resume debt service on its $72 billion in bond debt until fiscal year 2022.
The plan assumes that a minimum of $35.3 billion in federal aid, part of a disaster-aid package still stalled before Congress, will be delivered. It also involves significant additional austerity, including cuts in aid to localities, shutting of 300 schools, and other “streamlining.” Rosselló indicated that he expects emigration from the Island to continue, with another 600,000 people leaving.
Thanks to legislation passed under the Obama Administration, the Puerto Rican budget plan has to be submitted to Puerto Rican Financial Oversight and Management Board for approval.
The immediate new impending disaster is the expiration of a moratorium on housing foreclosures. Hundreds of thousands of Puerto Ricans have been unable to pay for their housing, due to the destruction by Hurricane Maria, and face eviction. While the Federal government has extended its moratorium for three months—until March, the banks have not.
Opioid Commission Member Resigns, Excoriating Inaction
Jan. 28, 2018—Former Congressman Patrick Kennedy announced his resignation from President Trump’s Commission on Combatting the Opioid Crisis on Jan. 23, declaring that the Administration’s economic policy has turned the whole anti-opioid campaign into a “sham.”
In an interview with CNN, Kennedy called the Administration’s efforts to address the epidemic “tantamount to reshuffling chairs on the Titanic.” “The emergency declaration has accomplished little because there’s no funding behind it. You can’t expect to stem the tide of a public health crisis that is claiming over 64,000 lives per year without putting your money where your mouth is,” he said.
While President Trump did declare the opioid epidemic a national public health emergency in October, there has been no additional funding for dealing with the crisis. The only changes in policy appear to be the loosening of Medicaid rules to allow addiction treatment; increased border enforcement against the import of fentanyl; and more emphasis on law enforcement against pill mills.
Meanwhile, the United States suffers a devastating shortfall of medical and treatment facilities. More critically, the Trump Administration and Congress have failed to address the major cause of the crisis, which lies in the economic and social decline hitting vast sections of the U.S. population, as well as the laissez faire policy toward drug money laundering, which has facilitated the opioid disaster. See americansystemnow’s array of articles on the opioid crisis.