Stock Market Dives Catch Congress and Trump Flat-footed; Where is Glass-Steagall?
Feb. 11, 2018—The major dives on the stock market last week shouldn’t have taken anyone in Washington by surprise, but it should finally grab their attention. If it does, they will turn their minds to the legislation to re-impose banking separation which has been languishing in both Houses of Congress for the better part of year.
It has long been known that the conclusion of Quantitative Easing, and start of the Fed reducing its balance sheet, would lead to an increase in Federal bond prices, and thus a hit on the stock market. The speculative binge which has driven that market to unprecedented heights had to come to an end, and there has always been considerable nervousness about the ability of the government to manage the damage. After all, leverage ratios are now higher than those of 2008, and derivatives gambling is off the charts.
What was not inevitable, however, was that Congress would fail to act on the unique safety net to protect the legitimate banking system from the fallout. Legislation to reinstitute Glass-Steagall regulations, which would cut loose the speculative banking activity from commercial banking, has been introduced in both Houses: HR. 790, the Return to Prudent Banking Act, by Rep. Marcy Kaptur; HR 2585, The 21st Century Glass-Steagall Act by Rep. Mike Capuano; and S. 881, the 21st Century Glass-Steagall Act, by Sen. Elizabeth Warren. But instead of pushing forward on this legislation, Congress has proceeded with the Administration deregulation agenda, which has only made the dangers of a coming crash more dramatic.
Trump’s apparent endorsement of Glass-Steagall has been buried by his Goldman Sachs coterie.
Despite a major push for Glass-Steagall last Fall, highlighted by a Sept. 27 webinar sponsored by Public Citizen, Americans for Financial Reform, and Our Revolution, there has been only one additional cosponsor of the House legislation (HR. 790) since that time. The number of Senate bill sponsors stand at 9, and the House at 59 (with overlapping sponsorships of the two bills). No hearings have been held, and not even a ruckus has been raised.
Without Glass-Steagall, our financial system is a powder-keg. Step Number One to prevent a calamity worse than 2008 remains to be taken.
Think-tanks document Administration Infrastructure Plan to be “bait and switch”
Feb. 11, 2018–Evaluations of the Trump Administration’s plan for $1.5 trillion in infrastructure spending in light of his proposed 2018 budget reveal that the proposal could well be categorized as a “bait and switch” gambit. To be specific: The Administration has proposed major cuts in already-existing infrastructure funding, which potentially add up to more than the new plan calls for, thus leaving the nation with a cut in infrastructure spending overall.
Center on Budget and Policy Priorities published its review by Jacob Leibenluft on January 30. Leibenluft reports that the President’s 2018 budget proposal cut $2 billion in funding to the Department of Transportation, including a 49% cut to Amtrak, a 49% cut to mass transit capital investment grants, and elimination on a program which funded innovative local infrastructure projects. Then, there was a proposed 18% cut to the Army Corps of Engineer’s civil works programs, program that deal with the nation’s decaying inland waterways.
The 2018 budget proposal also called for ceasing transfers into the Highway Trust Fund from other parts of the budget, and restricting spending to what comes from the dedicated gas tax. Due to the fact that the gas tax has not risen in 25 years, dedicated revenues will fall drastically short of needs for expenditure—i.e., lead to a cut in highway infrastructure and transit spending.
A similar analysis appeared in a Feb. 9 posting by the Center for American Progress. According to their figures, if all the 2018 cuts were taken to “pay for” the new $1.5 trillion plan, there would be a net cut of $1.69 for every $1.00 of “new” infrastructure spending.
Alabama Sues Maker of Oxycontin
Feb. 11, 2018—On Feb. 6, Alabama became the latest state to file suit in Federal court against Purdue Pharma LP, for deceptive practices in the marketing of the opioid drug on which it holds the patent, Oxycontin. In so doing, it joined at least nine other states in taking legal action against the company; they include Louisiana, Mississippi, Missouri, New Hampshire, New Mexico, Ohio, Oklahoma, South Carolina, Washington state, and West Virginia.
Purdue Pharma is no stranger to such lawsuits. Back in 2007, it also faced lawsuits for “misbranding” Oxycontin, and ended up pleading guilty and settling them by paying a fine of $634 million. A small penalty indeed for the company which carried out the intense campaign to popularize this “pain management” drug back in the 1990s, as various exposé articles have pointed out.
Alabama Attorney General Steve Marshall told the media that Purdue misrepresented the risks and benefits of Oxycontin, and that this behavior has led to hundreds of deaths each year in his state. Meanwhile, Purdue continues to reap billions in profits. Purdue has protested its innocence.
Trump Administration Approves Medicaid Work Requirement in Indiana
Feb. 11, 2018—On Feb. 2, the Health and Human Services Department announced that it has approved the waiver requested by the state of Indiana, which will allow the state to impose work requirements on able-bodied adults. In addition, HHS extended permission for a previously approved Indiana program, which allows the state to withhold coverage from those who fail to supply paperwork to determine their eligibility on the deadline.
As reported by NPR Feb. 2, “Since November 2015, more than 91,000 enrollees in Indiana have been kicked off Medicaid for failing to complete the eligibility redetermination process, according to state records. The process requires applicants to show proof of income and family size, among other things, to see whether they still qualify for the coverage.”
Indiana also has regulations which allow them to drop individuals from Medicaid if they failed to pay their monthly premium. Those who are dropped are unable to reapply for a period of six months.
The recent decision by HHS to okay a work requirement for able-bodied Medicaid recipients in Kentucky also includes this “lock-out” provision, if fees are not paid in a timely fashion.
The Indiana program has been seen as a kind of bellwether, given the fact that it was devised by Vice-President Mike Pence, and that Pence’s former top health aide, Seema Verma , is now the head of the Center for Medicare and Medicaid Services.
Train Accidents Highlight Real Infrastructure Need
Feb. 11, 2018—The occurrence of four deadly train accidents in a matter of two months, has focused attention on the crying need for upgrading rail transport in the United States. The first, and most deadly, was the derailment of an Amtrak train on its maiden run between Seattle and Portland, Oregon on Dec. 18. Three people were killed, and over 100 were injured.
The other three accidents occurred in January and February: 1) a Jan. 14 collision of an Amtrak trail with a car on the tracks in North Carolina, killing two; 2) a Feb. 1 collision of a special Amtrak train (carrying the Republicans to their retreat) with a garbage truck in Virginia, killing one; and 3) a Feb. 4 collision of an Amtrak train with a CSX engine in South Caroline on Feb. 4, killing 2 and hurting more than 116 people.
While thorough investigations by the NTSB have not been completed, two obvious crying needs for safety measures can be identified immediately. First, in none of these cases was the Positive Train Control (PTC) technology mandated by Congress in 2008 activated. This technology can take over control of a train to prevent derailments, train-to-train collisions, and speeding, to prevent mishaps. The tracks used by passenger trains in the U.S. are only 50-60% equipped with this life-saving technology at this time. The deadline for implementation, originally 2015, has been pushed back to the end of 2018.
PTC was not activated in any of the afore-mentioned accidents.
The second urgent safety measure is to avoid on-grade intersections (where cars have to cross rail tracks), and reduce the dual use of tracks by freight and passenger rail. This could best be accomplished by implementing the long-overdue leap in rail technology into magnetically levitated travel, which would not only save lives, but upgrade the productivity of the economy as a whole.