Sanders Reaches Agreement With Dodd On Audit Of Fed

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Published on Friday, May 7, 2010 by TalkingPointsMemo
Unwashed Masses 1, Fed 0: Sanders Scores

by Dean Baker

The effort to audit the Fed got a big boost last night when Senator Bernie Sanders reached an agreement with Chris Dodd, the chair of the banking committee. Under the deal, the Government Accountability Office (GAO) would undertake a full audit of the special facilities created by the Fed since December of 2007. GAO would make the findings from its audit available to the Congressional leadership. It would also make most of the details of the Fed's transactions available to the public.

To cope with the economic crisis, the Fed created 13 different special lending facilities. At their peak last year, these facilities had lent out more than $2 trillion. The Fed has only disclosed aggregate data about these facilities, telling us how much each one lent out month by month. It has refused to disclose any information about the specific loans and beneficiaries. This means that we have no way of knowing how much Citigroup, Goldman Sachs or anyone else benefited from these facilities.

Under the terms of the deal, by December 1 of this year the Fed will have posted on its website all the loans that were part of these facilities. Any interested journalist, academic, blogger or generic snoop can read through the data and find exactly how much money Goldman Sachs got, at what interest rate, with what collateral and when they paid it back. This is a big victory.

The Fed had previously argued that disclosing this information would compromise its independence. It complained that the having their borrowings made public would put a stigma on dealing with the Fed, so that banks and other financial companies would be reluctant to use special lending facilities in future crises.

Of course these arguments made no sense. This is why a majority of senators stood behind Sanders and why the House of Representatives attached an audit bill sponsored by representatives Ron Paul and Alan Grayson to its financial reform bill. The basic point is simple: this is our money; we have a right to know what the Fed did with it.

Sanders did make some compromises. The audit has an arbitrary cutoff date of December 2007. The special facilities date from the summer of 2007. It also only has the audit as a one-off proposition, rather than establishing GAO audits of Fed operations as an ongoing principle. The compromise also explicitly exempts open market operations - the Fed's daily buying and selling of short-term assets to control interest rates - from GAO scrutiny.

These concessions are unfortunate, the Fed is a creation of Congress and for that reason it should be subject to the same investigative procedures as any other federal agency, but they certainly are secondary compared with getting a full accounting of the money lent out through the special facilities. It is also important to note that in one very important way the Sanders compromise goes beyond the original Paul-Grayson language. Under the compromise, the information about the lending facilities will be made fully public where everyone can scrutinize it. The original bill would just have this information made available to the relevant congressional committees. They would then have to make a further decision about what information, if any, would be made public.

There has been a long ongoing battle with the Fed over its policy of excessive secrecy. Over the years, Congress has pushed back at efforts to treat the Fed as a holy temple outside of democratic control. It has made progress at holding the Fed accountable through measures like requiring the semi-annual Humphrey-Hawkins testimony by the Fed chair before Congress, the release of full transcripts of Fed open market meetings (with a 5-year lag), and now this public audit of its special facilities. There will be further battles and we have a long way to go before the Fed is as democratically accountable as it should be, but the Sanders compromise is a big step forward.
© 2010 TPM Media LLC

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

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Pentagon Costs Strangle Budget

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Tomgram: William Astore, You Have No Say About Your Military
Posted by William Astore at 10:50am, March 18, 2010.

When was the last time you saw the headline, “Cost of [Pentagon-weapons-system-of-your-choice] halved”? Probably never. Still, the thought came to mind when this recent Associated Press headline caught my eye: “Pentagon: F-35 fighter jet cost doubles.”

Here’s the story behind it: Since 2001, when an F-35 Joint Strike Fighter was expected to cost an already hefty $50 million, the plane’s cost has soared into the stratosphere (despite the fact that the aircraft itself has barely left the ground). The estimated cost today is $113 million per plane. Yes, that’s per plane. This supposed future workhorse of the U.S. military is now priced like the planet’s most precious gem. It’s also 2 ½ years behind schedule. Keep in mind that the Marines, the Air Force, and the Navy are planning to buy a combined 2,450 of them for what’s now an eye-popping $323 billion. And if you think the costs are likely to stay in the $113 million range, given the history of Pentagon cost overruns, then I have a nice little national security bridge to Brooklyn I think the U.S. public might love.

In other words, if all goes well from here (an unlikely possibility), a single future weapons system is now estimated to cost the American taxpayer almost one-third of what the Obama administration’s health-care plan is expected to cost over a decade. You could even think of the Pentagon’s weapons procurement process as the health-care system of the national security state. Its costs just never stop rising. In fact, the Government Accountability Office pegs major weapons systems cost overruns since 2001 at $295 billion, another near third of the cost of the health-care bill supposedly coming to a vote this week.

And here’s what’s remarkable: You barely hear about such overruns. They’re almost never front-page headline news, even though the money’s being taken from not-so-deep taxpayer pockets. And when truly terrible news, as with the F-35, comes in, all that happens in Washington is that a few politicians mutter a little. John McCain, for example, offered this less than stirring quote on the F-35: “The taxpayers are a little tired of this. I can’t say that I can blame them”; and an irritated Senator Carl Levin, chairman of the Senate Armed Services Committee, said: “We cannot sacrifice other important acquisitions in the DOD [Department of Defense] investment portfolio to pay for this capability.” (Bet you didn’t even know that future weapons were part of a Pentagon “investment portfolio.”) In the case of Secretary of Defense Robert Gates, he’s planning to hold back $614 million in “performance bonuses” from the plane’s lead contractor Lockheed Martin. (And you thought only bankers and financial wheeler-dealers got performance bonuses!) But it’s striking that there are no tea party movements out in the streets of America demanding our money back or claiming that we’re going to be broken by this.

Here’s an American reality: the Pentagon is our true welfare state, the weapons makers our real “welfare queens,” and we never stop shoveling money their way. Somebody should raise a few tough questions about the Pentagonization of our country and its finances. Fortunately, TomDispatch has retired Lt. Col. William Astore, historian and regular contributor to this site, to take on the task. Tom

The Pentagon Church Militant and Us
The Top Five Questions We Should Ask the Pentagon
By William J. Astore

When it comes to our nation’s military affairs, ignorance is not bliss. What’s remarkable then, given the permanent state of war in which we find ourselves, is how many Americans seem content not to know.

There are many reasons for this state of affairs. Our civilian leaders encourage us to be deferential toward our latest commander/savior, whether Tommy Franks in 2003, David Petraeus in 2007, or Stanley McChrystal in 2010. Our media employs retired officers, most of them multi-starred generals, in a search for expertise that ends in an unconditional surrender to military agendas. A cloud of secrecy and “black budgets” combine to obscure military matters, ranging from global strategy to war goals to weapons procurement. The taxpayer, forced to pony up about one trillion dollars yearly to fund our military, national security infrastructure, and wars, is sent a simple message: stay clear and leave it to the experts in uniform.

The powerlessness of ordinary Americans in military matters is no accident. Recall the one-word reply -- “So?” -- Dick Cheney offered in March 2008, when asked to comment on popular opposition to the war in Iraq. The former vice president was certainly far blunter than Washington usually is, and for that we may owe him a measure of thanks. By highlighting the arrogant dismissiveness of Washington’s warrior-elite when it comes to American public opinion, he revealed more than he intended.

Time for Vatican II at the Pentagon

If military power is the church at which we worship and the Pentagon is our American Vatican, then it is desperately in need of the equivalent of Vatican II which, in the early 1960s, opened the Catholic Church to greater participation by the laity, a vitally important change in ethos. Instead of continuing to pray at the altar of their particular services, we need our Pentagon “priests” to turn to the laity -- us -- and seek our input and sanction. Instead of preaching in unintelligible Pentagonese, with its indecipherable acronyms, secret doctrines, and spidery codenames, it’s long past time for them to talk to us in a language that reasonably informed adults can understand.

Think about this: last year, our country held innumerable public hearings on health-care reform. Congress continues to fight about it. It’s constant news. There’s a debate alive in the land. All this for a program that, in ten years, will cost the American people as much as defense and homeland security cost in a single year.

Yet runaway defense budgets get passed each year without a single “town hall” meeting, next to no media coverage, and virtually no debate in Congress. Indeed, you’d think each Pentagon budget was an ex cathedra pronouncement, given the way Congress genuflects before them and Americans accept them without so much as a peep of protest.

Those “Crazy” Kiwis

Imagine, for a moment, if Pentagon officials, supposedly toiling in our name, actually condescended to ask us for our thoughts. What do we think about global military strategy, garrisoning the planet, the ways in which our forces are structured, and how, where, and for what they should be deployed abroad?

Sound crazy? Here in the U.S.A. it most distinctly does, but not to the citizens of New Zealand. A Kiwi friend of mine recently sent me “Defence Review 2009,” a publication of New Zealand’s Ministry of Defence (MoD). And catch this: it includes a survey soliciting the advice of ordinary New Zealanders with respect to military affairs. It actually asks for the counsel of civilians on a “top ten” list of questions whose topics are remarkably comprehensive, including what the priorities of the country’s Defence Force should be, both now and in the future. Citizens can even present their views on military matters at a public hearing attended by MoD representatives, all in the name of public consultation. And the Defence Minister responds to the people in clear English sans the cobwebs of jargon that typically entangle our military pronouncements.

In case you haven’t noticed, here in the U.S.A., requests from the Pentagon for citizen feedback aren’t flooding our email boxes. So I thought -- since no one in that five-sided fortress on the Potomac has asked a thing of me -- the least I could do was ask a few questions on my own. Here, then, is my own top-five list of questions that we, the American people, should ask the Pentagon, even if none of its officials want to hear from us. Maybe they’re a tad more pointed than those in the Kiwi survey, but that shouldn’t be surprising. After all, they’ve been a long time in coming.

1. Our military is supposed to be a means to an end: national security. Due to its immense size and colossal budget, has our military not become an end as well as means?

2. In World War II, Americans could explain “Why We Fight” in part because the government provided a clear and compelling rationale for war. Why are the goals of today’s wars so opaque to most Americans?

3. If our military provides us with our way of “nation building” abroad, won’t countries and peoples be more likely to copy our military ways and weaponry than our democratic teachings?

4. America is facing painful budgetary belt tightening. Why is the military immune?

5. Why does “support our troops” seemingly end when they leave the service, leading us to tolerate such inequities as an unemployment rate of 21% for young veterans?

Keep in mind that there are 10, 20, 30 more questions where those five came from -- and our military badly needs to hear and respond to them all.

Every recruit is taught to stretch, to go the extra mile, to push until you can go no further. Our military needs some stretching and push-back: this time, from us. Unfortunately, most of us don’t think our opinions matter when it comes to our military -- unless, that is, they consist solely of slavish adoration. The fact is most of us are detached from military affairs precisely because we know in our hearts that the Pentagon serves its own needs, that it may be interested in listening in on us, but certainly not in listening to us.

Challenge the Pentagon Church Militant

Kiwis have the reputation of being practical types with an admirable dash of humility, and I like to think that their Ministry of Defence solicits the views of its citizenry not just because it’s required by statute, but because their officials don’t believe they have a monopoly on good ideas.

Perhaps the MoD recognizes as well the difficulty military professionals have in thinking outside the box. Despite its gargantuan size and its endless advisory committees and boards, our Department of Defense is, in essence, a well-insulated church of likeminded believers, administered by tightly-wound power-brokers. It sees the world only as an arena of, and for, conflict. Wherever it looks, even within its own ranks, it sees rivals and enemies. It cannot help dividing the world into believers and heretics, friends and foes.

And it’s true that the world is a dangerous place. The problem is: the Pentagon is part of that danger. Our military has grown so strong and so dominates our government, including its foreign policy and even aspects of our culture, that there’s no effective counterweight to its closeted, conflict-centered style of thinking.

In fact, the Pentagon’s heft gives new meaning to the term “full spectrum dominance” and helps explain the lack of change in war policy since the 2008 elections. A vote that constituted an unmistakable call to end our wars in Iraq and Afghanistan -- and so lessen the military’s influence -- has led only to fresh war “surges” and mushrooming Pentagon budgets. And yet, as the Pentagon charges forward, debate is nearly nonexistent and Congress can muster just 65 votes for a resolution to curtail the endless conflict in Afghanistan.

It’s shameful that only a so-called far left congressman like Dennis Kucinich has enough sense (and guts) to insist on Congressional debate about our forever-war in Afghanistan. Equally shameful: that Congress allotted only three hours to that debate on matters of life, death, and even financial well-being. Do we really need reminding that debate makes democracy stronger? Evidently so. Take it from me as a retired Air Force officer: our troops won’t be demoralized by more debate and greater citizen participation.

Let’s face it, all of this represents a long-term sea change in American consciousness. Sadly, the old idea of the citizen army is dead, and because of this, most of us lack any direct connection to the military (and seemingly could care less). In the name of safety, security, and solidarity, we’ve buttoned our lips. We worship, but don’t partake.

Centuries from now, historians will look back on American history and wonder how so many gave away so much to so few. It should be our right to have a say in what defines the “defense” of our country. That right has been surrendered to the few. Our future may depend on genuine input from the many.

How about it? Are you ready to challenge the Pentagon church militant? Or are you content to mouth the usual catechism, while continuing to dump billions each week into the collection basket?

Citizens of courage will surely choose the path of challenge.

William J. Astore is a retired lieutenant colonel (USAF) and TomDispatch regular. He currently teaches history at the Pennsylvania College of Technology and may be reached at wastore@pct.edu.

Copyright 2010 William J. Astore

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Dean Baker Suggests Solution to Unemployment Crisis

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Published on Tuesday, March 2, 2010 by The Guardian/UK
Nice Work If You Can Share It
If Congress is serious about addressing unemployment, it will act on bills that aim to strengthen work-sharing programmes

by Dean Baker

The housing bubble and subsequent crash were the result of extreme incompetence on the part of the country's top economic policymakers. Somehow these people could not see, or did not care about, the dangers of an $8tn housing bubble.

Unfortunately, economic policymaking is not like most jobs where workers get fired when they make serious mistakes. In economics, they just keep getting promoted. Therefore, the people who sank the economy are for the most part the same group of people still designing policy today. Now this group of incompetent economists is telling the rest of us that we are going to have to endure five more years of high unemployment.

However, the rest of the country should not be forced to suffer even more just because those determining economic policy cannot do their jobs. We know how to get the unemployment rate down. Keynes taught us more than 70 years ago that we just have to spend money to eliminate mass unemployment. People work for money, if the government spends, people will work. It's pretty straightforward.

But, the deficit hawks seems to have largely closed this route. Members of Congress somehow think that they are helping our children by putting their parents out of work.

Fortunately, we can even find a way to create jobs that can keep the deficit hawks happy. It's called "work-sharing". The basic point is so simple that even an economist can understand it.

Instead of paying workers to be unemployed - in the form of unemployment benefits - we pay workers to stay employed, but work fewer hours. In effect, to avoid one worker from being laid off, several workers put in somewhat less time on the job and take a small cut in pay. Germany and the Netherlands have used this path to keep their unemployment rates from rising even though they have experienced steeper downturns than the US.

The way the system works in Germany, a firm will cut back the hours of its workers by 20%. The government then replaces 60% of the lost pay (12% of total pay). The firm is expected to kick in 20% of the lost pay (4% of total pay) and the worker ends up taking home 4% less pay.

In this scenario the worker ends up working 20% fewer hours for 4% less pay. This can mean, for example, that the worker ends up working a four-day week instead of a five-day week. Given the savings on work-related expenses, like transportation and childcare, most workers would almost certainly end up better off under a work-sharing arrangement than they are now.

While the economy is past its period of rapid job loss, a huge number of workers still lose their jobs each month through the economy's normal job churning. Each month, companies lay off or fire close to 2 million workers. These job losses are largely offset by hiring by other firms, so that the net change in jobs has been a small negative in recent months. However, if we could just reduce the rate of job loss by 10%, then it would be equivalent to creating an additional 200,000 jobs a month or 2.4 million jobs a year. This would get us back to full employment in two years, rather than five or six, as is currently projected.

There are other potential benefits from work sharing. The reduction in work time could give companies an opportunity to adopt more family friendly work practices. For example, they could adopt a policy of paid family leave or paid sick days on a trial basis during the downturn.

There would also be environmental benefits to reducing work hours. Suppose everyone worked a four-day week so that we reduced the number of commutes by 20%. This would substantially reduce the amount of greenhouse gas emissions associated with getting to and from work. The fact that Europeans tend to work far fewer hours than we do is undoubtedly one of the main reasons that their per person carbon emissions are about half of the US level.

There are already 17 states that have work-sharing programmes in place. There are bills in both the House and Senate that would strengthen these programmes and give support to other states to set up their own programmes. If Congress is serious about addressing unemployment, it will act on these bills.
© 2010 Guardian News and Media Limited

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

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A Thought on Evan Bayh and Partisan America

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Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including The Work of Nations, Locked in the Cabinet, and his most recent book, Supercapitalism. His "Marketplace" commentaries can be found on publicradio.com and iTunes.

A Thought on Evan Bayh and Partisan America

Tuesday, February 16, 2010

Not long ago I was debating someone on television. I thought the discussion was going well until the commercial break when a producer said into my earpiece “be angrier.”

“Why should I be angrier?” I asked him, irritated that he hadn’t appreciated the thoughtfulness of debate.

“That’s how we get channel surfers to stop and watch the program,” the producer explained. “Eyeballs are attracted to anger.”

At this point I lost my temper.

The incident came back to me when I heard about Evan Bayh’s decision to leave Congress because he felt it was becoming too partisan. The real problem isn’t partisanship. Bold views and strong positions are fine. Democratic debate and deliberation can be enhanced by them.

The problem is the intransigence and belligerence that has taken over Congress and much of the rest of the public — a profound distrust of people “on the other side,” an unwillingness to compromise, a bitterness and anger disproportionate to issues being discussed.

Anger makes good television, but it’s fake and it teaches Americans the wrong lessons. Anger also can win elections (Senate Republicans haven’t given Obama any votes because they’ve been eyeing the 2010 midterms since he took office, hoping for a rerun of 1994), but partisan anger is just as fake, and it undermines the capacity of our democracy to do the public’s business.

By the way, I was on CNBC this morning, and the subject of discussion was Bayh’s decision. No producer prodded me to be angrier but Larry Kudlow introduced the segment by saying that I’d be “duking it out” with Steve Moore, who writes editorials for the Wall Street Journal. And when it came for us to discuss the gridlock in Congress, Larry continuously interrupted, saying the reason for the gridlock was Obama’s lefti-leaning agenda.

When this is almost all the public sees and hears about public issues, it’s no wonder Americans begin to think everything is an angry shouting match. Americans stop listening to each other. We retreat into small ideological bubbles and talk only with people who agree with us. We forget how much we have in common, and how important it is to get on with the task of making the nation better.

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Back to the Drawing Board on Climate Legislation?

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Published on Saturday, November 28, 2009 by The Baltimore Sun

Climate Change Reset Needed

by Mike Tidwell

Tomorrow is not an option.
Those ought to be the words coming from the White House right now on global warming. Never again can we tolerate a year like 2009, when attempts to cap carbon pollution go nowhere. Already this month, President Barack Obama has confirmed two painful truths. First: Congress will not complete work on a global warming bill in 2009. And second, the corollary blow: There will be no international climate deal in Denmark next month, dashing years of international hopes.
So Mr. Obama should move quickly from explaining failure to achieving real success. He should travel to the Copenhagen climate conference in December and guarantee drastic action from the U.S. in 2010, even if it means blowing everything up in Congress and starting over. If a "cap and trade" bill won't fly in the Senate in 2010, then let the Environmental Protection Agency explore maximum-strength carbon regulations while, legislatively, we switch back to Mr. Obama's original presidential campaign plan: "cap and rebate."
Apologists, of course, are rushing to defend the president, explaining away the now-official climate failures of 2009. There was never enough time, they say, to fix in a few months all the global warming harm George W. Bush created in eight long years.
Maybe so. But we can't blame Mr. Bush forever. What's the plan for 2010? The only strategy the Democrats seem to have is borrowed from 2009: Get the Senate to finally pass the cap and trade bill. That would be the 1,400-page bill narrowly approved by the House in June and loaded with subsidies for "clean coal" and likely big profits for Wall Street traders. It's been stagnating in the Senate for most of the autumn.
Centrist Democrat Jim Webb of Virginia - a vitally important vote - all but condemned the cap and trade bill last week in a news conference. What if the bill simply never passes? What will Mr. Obama take to the international treaty talks in Germany in June 2010 or in Mexico next December?
As long as Mr. Obama sticks to a principle of "Act now, not tomorrow," then Plan B should become relatively clear. Allow the EPA to move rapidly forward with its court-sanctioned ability to require carbon reductions across the economy under the Clean Air Act. This has always been the shotgun in the closet. No one really wants to proceed this way, unleashing messy regulations from a bureaucratic agency. But if the Senate won't act, then the EPA must - and Mr. Obama has full power to make it happen.
And while the EPA door is opening, we should all ask why the Senate has had trouble acting. The most obvious (but least discussed) problem is the concept of "cap and trade" itself. The bill treats our life-giving global atmosphere as if it were the property of private corporations. Up to 85 percent of the pollution permits under the bill would be given away free to polluters, on top of loopholes that allow, for example, coal companies in America to avoid carbon reductions by paying faraway Zambian farmers to stop tilling their fields. Two prominent EPA attorneys - both with extensive experience implementing federal pollution regulations - have recently asserted that the cap and trade measure before Congress simply won't work and shouldn't be tried.
So what will work? For starters, we must rightly view the atmosphere as a shared resource belonging to all people, not as a commodity owned by polluters. Mr. Obama had this idea in mind when he campaigned for president. His global warming proposal then would have required all polluters to pay for emissions permits. And at least 80 percent of the money raised would be rebated to American households. The rest - more than $10 billion per year - would be invested in clean-energy projects.
By rebating almost all the permit money to American households, this policy approach robs Republicans of their cherished ability to call a carbon cap a "carbon tax." And by making all polluters pay, the approach relieves many Democrats of their nervousness over corporate welfare. These features alone will provide a fresh and popular boost to the climate debate should the cap and trade approach stall completely in 2010. A rebate approach - especially one that gives all Americans an equal refund every month - would also create the political space necessary for the kind of deep emissions cuts scientists say are needed to save the climate.
Unfortunately, after Mr. Obama's election, thanks to big lobbying from Big Oil and Big Coal, Congress went down the dubious trading path that now finds the clock running out in 2009. But if Mr. Obama wants to succeed as a politician and truly earn his Nobel Peace Prize, he'll again embrace what the Rev. Martin Luther King called "the fierce urgency of now" and move the country toward his better, original instincts in the new year.

Copyright © 2009, The Baltimore Sun

Mike Tidwell is director of the Chesapeake Climate Action Network.

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Published on Monday, September 28, 2009 by The Guardian/UK

The Public Option Is Nothing To Fear

Republican opponents of a public option for US healthcare are defending the insurance industry, not conservative principles

by Dean Baker

Back in the good old days, the conservatives were the folks who favoured individual choice. Not any more. In the current healthcare debate, the top priority of the so-called conservatives is to deny people choice. They want to make sure that Americans do not have the option to buy into a Medicare-type public healthcare plan. These alleged conservatives have come up with a variety of arguments against allowing people the Medicare-type option, but the only one that makes sense is that they work for the insurance industry.

The argument against a Medicare-type option always begins with the assertion that the government can't do anything. This is a peculiar claim given the popularity of Medicare, but it also makes no sense as an argument against giving people a buy-in option. Suppose the government gives people the option to buy into its really bad plan. Everyone would just stick with the good private plans we have now, right?

The so-called conservatives then tell us that people will end up buying into the bad Medicare-type plan instead of the good private insurance options because the government will subsidise the Medicare-type plan. A little bit of arithmetic is sufficient to dismiss this argument.

How much money would be needed to get people to choose a bad healthcare plan rather than a good one? This would have to involve some serious subsidies. People are not going to sacrifice their health and the health of their families for another cup of coffee at Starbucks.

Suppose it took a subsidy of $1,000 a year to get people to choose the bad Medicare-type plan over the good private sector plans. With a non-Medicare population of more than 250 million, this would imply government subsidies of more than $250bn a year, if the Medicare-type plan was to fully replace private sector plans, as the so-called conservatives warn.

Is it really plausible that Congress will approve $250bn a year in subsidies ($2.5tn over a 10-year budget window) for a Medicare-type plan that everyone thinks is awful? Is there another altogether wasteful programmes that gets public subsidies even one-tenth of this size?

This one just doesn't pass the laugh test. If conservative politicians don't think they can prevent such an enormous waste of taxpayer dollars being perpetuated year after year for the indefinite future, they should probably consider another line of work.

In short, there is no genuine conservative argument against allowing people the option of buying into a Medicare-type plan. If the plan proves to be inferior to private insurance plans, as is often argued, then the consequences will be relatively minor. Some number of people who choose to sign up with this plan will find that they don't like it, and then will switch to a better alternative. In time, a bad public plan will soon flounder, since few people will buy into it. There may be some effort to provide subsidies to even a bad public plan, but it is not plausible that the subsidies could be large enough to displace private plans.

It is also clear that the opposition to a Medicare-type public plan does not stem from townhall-type mass opposition. A recent New York Times poll found that by an overwhelming majority, 65% to 26%, the public favours giving people this option. If there is a member of Congress that risks defeat by supporting a public plan, it is not because of their constituents' views.

The opposition to a Medicare-type option is not based on public sentiment or the fear that the plan will be bad. Rather the opposition is based on the fear that the plan will be good and that people will choose to buy into it. This will cost the insurance industry tens of billions of dollars in profit over the next decade and could mean the end of big paycheques for the industry's CEO's and other high-level executives.

But the people who oppose giving the public the opportunity to buy into a Medicare-type plan should not be called conservatives. Honest conservatives would have no objection to giving the public a choice. The people who oppose a Medicare-type plan are doing the bidding of the insurance industry - there is no conservative principle at stake. And we all know what Joe Wilson has to say about people like that.

© 2009 Guardian News and Media Limited

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer ( www.conservativenannystate.org) and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.

Support Network Neutrality

Published on Tuesday, August 11, 2009 by Save the Internet
American Library Association Wants Network Neutrality

by Carrie Lowe

At last month’s American Library Association annual conference in Chicago, I served on a Sunday morning panel presentation on the topic of Network Neutrality. On that day, there was no Network Neutrality legislation in Congress (like there is today, thanks to Reps. Markey and Eshoo). There was no flashy evening news piece on the topic, no rock stars on the Hill advocating for a free and open Internet. Yet 500 librarians showed up on a spectacular Chicago summer morning to hear Cliff Lynch, Greg Jackson and me talk about Network Neutrality.

If you are not familiar with librarians, this story might surprise you. But if you have ever found yourself on the business end of a discussion of intellectual freedom issues with someone from our community, you can predict what I am going to say next: The audience asked incredibly thoughtful questions and challenged some basic assumptions.

You see, Network Neutrality is, at its core, an issue central to librarians’ professional hearts. Like other issues that we’ve dealt with – such as censorship or book banning – Network Neutrality is fundamentally about having access to ideas.

Libraries’ Position on Network Neutrality

The ALA’s Office for Information Technology Policy laid out its position on Network Neutrality in an issue brief published in 2006. In that paper, we argued that libraries’ interest in Network Neutrality is twofold.

First, Network Neutrality is an intellectual freedom issue. The ALA defines intellectual freedom as the right of all people to seek and receive information from all points of view, without restriction. Unfortunately, there is no law that protects intellectual freedom on the Internet today. Internet service providers (such as the cable and telephone companies) have the ability to block or degrade information or services travelling over their networks. If these companies discriminate against certain kinds of information based on the content of the message being delivered, this would represent a severe violation of intellectual freedom.

Second, Network Neutrality is a competition issue. Libraries in the digital age are providers of online information of all kinds. Among hundreds of examples, public libraries are developing online local history resources, and academic libraries allow the online public to explore some of their rarest treasures. Libraries, as trusted providers of free public access to information, should not compete for priority with for-profit history or literature Web sites that might be able to afford to strike deals with service providers. This makes the Network Neutrality debate not only a matter of philosophy and values for librarians, but also of livelihood.

In addition, librarians value innovation. Many of the technologies most central to the Internet are founded in principles of librarianship. Metadata? We call it cataloging. Online search? May I point you to the online public access catalog (OPAC)? Linked content? Cross references in the card catalog. Indexes, full-text search – the list goes on and on. We understand that in the context of the Internet, innovation begins at the edges; a killer app is more likely to be developed by two guys in a garage than by a highly paid executive in an industrial park. It is vital to preserve and encourage this innovation that has built the Internet. Network Neutrality is central to achieving this goal.

So What Do Libraries Want?

While our profession is built on some lofty principles – and librarians are among the fiercest free speech and intellectual freedom advocates you’ll meet – we are also a community of pragmatists. We believe that there is a way to strike a balance on Network Neutrality.

There oughtta be a law. The FCC changed the rules in 2005, removing the legal protections that guaranteed consumers the right to send and receive communications and content of their choosing over the Internet. Legal protections to prevent discrimination by ISPs and to protect intellectual freedom and innovation on the Internet should be restored. There are two ways to do this:

1. The “fifth principle”of nondiscrimination is right on the money. The language of the nondiscrimination condition the FCC applied to the AT&T/BellSouth merger (and echoed in the Broadband Technology Opportunities Program rules) is rational and appropriate. We urge the FCC to make this principle official.

2. Congress should act to preserve the neutral and open nature of the Internet. The Internet Freedom Preservation Act is the right bill at the right time. We urge Congress to pass this legislation.

Tiered pricing structures are both fair and unrelated to the central debate. We strongly agree that any Web site or organization (including libraries – nearly all public libraries provide no-cost access to the Internet) with a high-bandwidth connection should pay more for that service than a home user or a smaller organization. This is a traditional tiered pricing structure, and it is a fair and proven model. However, once a user has purchased bandwidth, there should be no artificial restraints on the legal content that he or she receives.

The Network Neutrality debate shows no signs of slowing down, and as I witnessed in Chicago, librarians show no sign of losing interest in this topic. We look forward to working with policymakers to protect the free and open nature of the Internet. Our libraries – and our nation – deserve nothing less.
Carrie Lowe is the Director of the Program on Networks at the American Library Association's Office for Information Technology