Thursday, April 30, 2009

FDR's New Deal v. Obamanomics

FDR'S New Deal v. Obamanomics in Their First 100 Days - by Stephen Lendman

With good reason, progressive economists reflect positively on Roosevelt's New Deal even though:

-- it failed to end the Great Depression;

-- had many flaws;

-- did too little for blacks, women, immigrants, small farmers, agricultural workers, and the poor;

-- let blacks be persecuted, discriminated against, and in the South denied their voting rights and lynched;

-- 10 weeks after Pearl Harbor, he signed an Executive Order interning loyal Japanese American citizens because of their ethnicity; smaller numbers of German and Italian Americans as well;

-- despite popular discontent with US broadcasting, he signed the 1934 Communications Act establishing permanent broadcasting law that handed the public airwaves to entrenched interests and laid the foundation for today's corrupted media; he called it a "New Deal in Radio Law," indeed for the broadcasters that profited;

-- his main task was to save capitalism, not remake America into a social democracy beyond what was necessary at the time;

-- like all elected officials, Roosevelt was above all a politician who wanted to be re-elected; and

-- it took a world war to restore prosperity.

Nonetheless, his achievements were impressive, and the differences between then and now are stark - during the two gravest economic periods in US history. Obama embraces the Money Trust. Roosevelt, rhetorically at least, confronted "the unscrupulous money changers."

The problem is what he did, how, what he didn't do; what he could have done better; and if he had, maybe the Great Depression might not have been as Great or, in fact, Great at all.

He failed to do what Jackson and Lincoln did - return money-creation power to the people, as the Constitution mandates, instead leaving it in private hands - the very "moneychangers" he denounced with the Federal Reserve atop its pyramid.

Rather than finance New Deal programs with interest-free money, he chose debt obligations to private bankers, left the Fed's power unchanged, and turned deep recessionary years into the Great Depression.

Government-created money would have eliminated the national debt, income taxes, and most important given the gravity of the crisis, would have produced stable growth and prosperity without needing a world war to get it. Lincoln did it, the Civil War notwithstanding, and so did early colonists with interest-free money. Their decision to break free from the Bank of England (run by bankers) sparked the War of Independence. Britain wanted its power back, colonists resisted, hence the war.

A future article addresses this topic and much more. This one focuses on Roosevelt's first 100 days v. Obama's and the differences in their approaches - helping people, not bankers, the above comments notwithstanding; curbing speculation, not protecting it; imposing regulations and enforcing them, not disdaining them; establishing social services, not ignoring public needs; and much more.

In all, 15 landmark laws were enacted that (imperfections aside) set a standard for dealing with a troubled economy - so grave in March 1933 that (except for the Civil War period), machine guns protected government buildings because the nation's financial system had collapsed, peoples' life savings and jobs were being lost, and it was feared they'd react violently as a result.

The Emergency Banking Act

Roosevelt took office on March 4, 1933. The next day (through a special congressional session), he declared a four-day bank holiday. On March 9, the Emergency Banking Act passed that closed insolvent banks, then reorganized and reopened viable ones under Treasury supervision, with federal loans available if needed.

By mid-March, one-half of all banks with 90% of deposits were judged solvent and reopened. Forty-five percent of the others were reorganized under "conservators." The rest were shut down. By mid-April, over 12,800 banks were operating, 4000 fewer by year end after closures and mergers, and by 1935 one-third were nationalized, an idea the Obama administration rejects, but sooner or later will have no alternative but to embrace for the large most troubled ones.

The Bank Act of 1933 - Glass-Steagall

On June 16, the Bank Act of 1933 (Glass-Steagall) created the FDIC insuring bank deposits up to $5000 and separated commercial from investment banks and insurance companies, among other provisions to curb speculation. Senator Carter Glass was its prime mover and got Senator Henry Steagall to go along by attaching his amendment to protect deposits. For years, Glass believed bankers should stick to their knitting, not deal in or hold corporate securities. He blamed them for the 1929 crash, the subsequent bank failures, and Great Depression that followed. The Bank Act of 1933 passed quickly to curb them.

Much more as well and largely people-oriented, not Obama's agenda to reward banksters with trillions of public dollars. More on that below.

Other economic measures enacted were:

The Reconstruction Finance Corporation (RFC)

In 1932, Herbert Hoover created it, but Roosevelt streamlined its bureaucracy and increased its funding to recapitalize troubled banks and corporations. Under Hoover, it had $500 million in capital with authorization to borrow up to $1.5 billion more. In its first six months, it loaned banks over $800 million but didn't halt the crisis. Like today, they retained their reserves, shunned lending, and, besides, public trust was lacking.

Roosevelt's New Deal changed things. Under the 1933 Emergency Banking Act, RFC could buy bank equity and within a year bought more than $1 billion, or about one-third of total banks' capital. At the same time, government measures and oversight restored public confidence enough to attract hundreds of millions in deposits that pumped life into troubled banks if only for starters.

During his tenure, Roosevelt used RFC funding for agencies like the Home Owners' Loan Corporation, Farm Credit Administration, Rural Electrification Administration, Public Works Administration, and others as well as emergency relief loans to states, something Hoover never did, let alone establish New Deal policies to let him.

The Securities and Exchange Act of 1934 - Following the Securities Act of 1933

The 1933 law (enacted May 27, 1933) required that offers and sales of securities be registered, pursuant to the Constitution's interstate commerce clause. Previously, they were governed by state laws, known as "blue sky laws" to protect against fraud.

The 1934 law (enacted June 6, 1934) regulates secondary trading of financial securities and established the SEC under Section 4 to enforce the new Act, then later the Trust Indenture Act of 1939, the 1940 Investment Company Act and Investment Advisers Act, Sarbanes-Oxley of 2002, and the 2006 Credit Rating Agency Reform Act.

Overall, it's to enforce federal securities laws, the securities industry, the nation's financial and options exchanges, and other electronic securities markets unknown in the 1930s along with derivatives and other forms of speculation. Then and now, it's charged with uncovering wrongdoing, assuring investors aren't swindled, and keeping the nation's financial markets free from fraud. At least that was the idea. Eventually, the fulfillment fell far short of the promise.

In the 1930s, regulation worked by requiring that salesmen and brokers be licensed, prospectuses be used, full disclosure provided, and enough enforcement as well to cut fraud significantly. In addition, Glass-Steagall eliminated many 1920s shenanigans, a decade, like today, when Wall Street did as it pleased, created speculative excesses, and caused the inevitable crash.

Reforms were simpler to implement at a time fewer than 5% of the public owned stocks compared to 50% today, and most were sophisticated enough to know what they were doing or thought so. Also, there were no 401ks, IRAs, or a proliferation of mutual and hedge funds like today let alone:

-- securitization/structured finance asset-backed securities (ABSs), mortgage-backed securities (MBSs), collateralized mortgage obligations (CMOs), collateralized debt obligations (CDOs), collateralized bond obligations (CBOs), credit default swaps (CDSs), and collateralized fund obligations (CFOs) - combined, sliced, diced, packaged, repackaged, and sold in tranches to sophisticated and ordinary investors, many to mutual fund buyers, never knowing they owned any, let alone were being swindled; and

-- derivative futures, options, forwards, swaps, warrants, leaps, baskets, swaptions, and whatever else Wall Street minds can invent, package, and sell in various ways and forms - too much of it not on the up and up as the current crisis revealed.

Home Owners' Loan Corporation (HOLC)

It was established in 1933 under the Homeowners Refinancing Act to refinance homes and prevent foreclosures, something largely missing in Obama's Homeowners Affordability and Stability Plan, the so-called mortgage bailout. It mainly helps lenders, does nothing for homeowners under water or those with second mortgages. Nor does it address plunging property valuations and its affect on millions.

In contrast, HOLC extended short and longer-term loans for up to 30 years and prevented the loss of over a million homes (about one-fifth of those owned with mortgages, the equivalent of 10 million today) at a time half were in default, and annual mortgage lending and residential construction was down 80%.

States began enacting foreclosure moratoriums at a time the average owner was two years in delinquency and three years behind on property taxes. In today's dollars, relative to current GDP, HOLC was initially authorized to issue $200 billion in bonds, acquire defaulted properties in exchange for them from lenders and investors, then refinance mortgages at lower rates (at a maximum 5%) to keep owners from losing their homes.

An essential HOLC element was for lenders and investors to take losses to provide more affordable mortgages for their holders - something missing in Obama's plan that lets issuers add unpaid balances to principal in return for lower rates and term extensions, meaning defaults are delayed, not stopped, and as valuations keep falling, millions more may lose their homes.

HOLC was hugely successful but not perfect. Given the dire conditions of the times, around 200,000 owners eventually defaulted but 80% were saved, far different from today with over four million foreclosures and 2009 estimates ranging from three million more to much higher numbers, plus many more in 2010.

The Economy Act

It was enacted on March 14, 1933 to deliver on Roosevelt's campaign promise to balance the "regular" non-emergency budget, be fiscally prudent, and do it by cutting government employees' salaries and veterans pensions by 40% for a $500 million savings at the worst possible time to do it. As a candidate, Roosevelt said deficit spending impaired recovery and hurt business confidence. However, as president, New Deal spending took precedence. By 1936, even four million veterans got their $1.5 billion bonus, in Bonus Bill cash and welfare benefits over Roosevelt's veto.

The Beer-Wine Revenue Act

On February 17, 1933, a dismal experiment ended when the Blaine Act repealed Prohibition, the Constitution's 18th Amendment, then formally adopted iti in December under the 21st Amendment.

On March 22, passage of the Beer-Wine Revenue Act levied a $5 tax on every barrel of beer and wine and reenacted parts of the Webb-Kenyon Act to protect states with laws prohibiting alcoholic beverages in excess of 3.2%. States also were left in charge of the sale and distribution of spirits.

The Civilian Conservation Corps (CCC)

The March 31, 1933 Emergency Conservation Work Act (CCC) put unemployed men to work on numerous projects - building roads, bridges, parts of dams, developing state parks, planting trees, and various forestry and recreational programs for the Forest Service, National Park Service, Fish and Wildlife Service, Bureau of Reclamation, Bureau of Land Management, and Soil Conservation Service.

Reportedly, it was FDR's favorite initiative. On April 5, Executive Order 6101 launched it by appointing a Director of Emergency Conservation Work "By virtue of the authority vested in me by the (CCC) Act of Congress...." It had great public support. By year end 1935, it employed over 600,000 in 2650 camps (including supervisors and administrators) in every state engaged in more than 100 kinds of work.

Civilian Works Administration (CWA)

On May 12, 1933, enactment of the Federal Emergency Relief Act established the Federal Emergency Relief Administration (FERA) to provide funds to states (from May through December 1935) to reduce unemployment. It set up CWA, supplied over $3 billion for various work and transient projects, created temporary jobs for over 20 million, then was gradually ended in favor of the Works Progress Administration (WPA).

Before it did, it was considered a significant initiative with Washington taking responsibility for the welfare of millions, both employable and unemployable, at a time of desperate need. Its flexibility and high administrative standards made it a model for later relief efforts.

The National Industrial Recovery Act (NIRA)

Passed on June 16, 1933, Roosevelt called it "the most important and far-reaching (law) ever enacted by the American Congress." It established the National Recovery Administration (NRA) as an initiative to revive economic growth, encourage collective bargaining, set maximum work hours, minimum wages, at times prices, and forbid child labor in industry.

Business response was mixed. GE helped write it, and the Chamber of Commerce said it was "a most important step in our progress towards business rehabilitation." In contrast, the National Association of Manufacturers and Henry Ford, among others, opposed it.

So did the Supreme Court unanimously in its Poultry Corp. v. United States (May 1935) ruling that NIRA/NRA "lay outside the authority of Congress," infringed on states' rights, unreasonably stretched the Commerce Clause, and gave legislative powers to the president in violation of the Nondelegation doctrine. It added that "extraordinary conditions do not create or enlarge constitutional powers."

By then, the Act was increasingly unpopular, and many doubted its effectiveness. Some economists called it counterproductive and damaging to economic stability by weakening antitrust laws and allowing collusion.

Public Works Administration (PWA)

It was created by NIRA for PWA-initiated projects to provide jobs, increase purchasing power, improve public welfare, and help revive the economy. Some called it designed to prime the pump and spend "big bucks on big projects," including electricity-generating dams, airports, schools, hospitals, affordable housing, even aircraft carriers.

While it operated, it spent over $6 billion but did little to lift the economy or reduce unemployment because it didn't do enough toward for either. When the nation moved toward war production, PWA became irrelevant and was ended.

Works Progress Administration (WPA)

It was a post-first 100 day initiative funded by the April 1935 Emergency Relief Appropriation Act and launched by Roosevelt's May 6 Executive Order 7034 "to move from the relief rolls to work on (various) projects or in private employment the maximum number of persons in the shortest time possible."

It replaced FERA, CWA and PWA to became the largest New Deal agency, employing millions in every state, especially in rural and western areas - those able to work, not the aged, handicapped or otherwise unemployable to be helped mostly at state and local levels. It and other programs eventually found jobs for about 60% of the nation's unemployed, paying around $50 a month (on WPA jobs) that went a lot further then than now.

WPA focused heavily on construction and developmental programs but also in areas of education, the arts, health, and other community projects for professional and white collar workers as well as efforts to feed children and redistribute food, clothing and provide housing.

Most observers called WPA a success. Others, however, objected to its competing unfairly with business, dispensing jobs as political favors, undercutting prevailing wages, and letting social protest themes be part of various arts projects. Once war production began, WPA shifted focus in that direction. By mid-1943, most alphabet soup agencies ended in favor of business as usual taking over post-war.

The Tennessee Valley Authority (TVA)

On May 18, 1933, the Tennessee Valley Authority Act became law creating TVA as a federally-owned corporation to provide navigation, flood control, electricity generation, economic development, and promote agriculture in the depression-impacted Tennessee Valley area covering most of Tennessee as well as parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina, and Virginia. It was the federal government's largest regional planning agency and remains so.

From 1933 - 1944, it built 16 dams and a steam plant, produced electricity cheaply, and by 1941 was its largest producer in the country. It also established the Electric Home and Farm Authority (EHFA) to help farmers buy major electric appliances with EHFA low-cost financing.

In Ashwander v. TVA (February 1936), the Supreme Court ruled it constitutional, noting that regulating interstate commerce includes doing it for streams. They require flood control for navigability, and electricity generation is a by-product of this effort.

Today, TVA remains America's largest public power company, with over 34,600 megawatts in generating capacity serving about 8.5 million customers.

The Agricultural Adjustment Act (AAA)

Enacted on May 12, 1933, it restricted production by paying farmers to reduce and/or destroy crops and kill livestock at a time millions were impoverished and hungry. The idea was to decrease supply and raise prices (at the worst possible time) with farmers getting government payments for agreeing not to plant specific crops, not produce milk and butter, nor raise pigs and lambs. In addition, the Agriculture Secretary had exclusive powers to license food processors to control supply and raise prices.

In United States v. Butler (January 1936), the Supreme Court ruled that the tax underwriting AAA was unconstitutional because, among other reasons, it assessed one farmer to pay another. Congress later achieved part of AAA's goals through the 1935 Soil Conservation and Domestic Allotment Act until enactment of the second AAA in February 1938. It was funded through general taxation and thus constitutionally acceptable to the High Court.

AAA was conceptually flawed. It ran counter to vitally needed policy to produce low-cost food, make it affordable for millions, and relieve hunger. It also subsidized owners, not tenant farmers or sharecroppers, and ended up depressing incomes and increasing unemployment at the worst possible time.

The Farm Credit Act of 1933

Enacted on June 16, 1933 (the last of FDR's first 100 days), it was established to help farmers refinance mortgages over an extended time at below-market rates, and by so doing, helped them stay solvent and survive. It also created the Farm Credit Administration to make loans for the production and marketing of agricultural products as well as regulate and examine banks, associations, and related Farm Credit System entities - a network of borrower-owned financial institutions to provide credit to farmers, ranchers, and agricultural and rural utility cooperatives.

The May 1933 Emergency Farm Mortgage Act, established during the time of the Dust Bowl, provided refinancing help for farmers facing foreclosure.

An Overall Assessment

Despite its flaws and failures, FDR's New Deal was remarkable in what it accomplished. It helped people, put millions back to work, reinvigorated the national spirit, built or renovated 700,000 miles of roads, 7800 bridges, 45,000 schools, 2500 hospitals, 13,000 parks and playgrounds, 1000 airfields, and various other infrastructure, including much of Chicago's lakefront where this writer lives. It cut unemployment from 25% in May 1933 to 11% in 1937, then it spiked before early war production revived economic growth and headed it lower.

The Great Depression was, in fact, two severe recessions:

-- from summer 1929 - March 1933;

-- followed by a 1933 - 1937 recovery; impressive enough for the Dow Industrials to rise from a July 1932 low of 43 to 187 in February 1937 for a near-335% gain; however, the rally followed an 89% decline so even the new top ended up 50% below the 1929 peak of 385, a level it took 25 years to regain; then

-- from May 1937 - June 1938, another slump followed (and a 47% Dow average decline) in response to reduced government spending before early war preparations produced recovery.

It might have been stronger and quicker had Roosevelt embraced all of Keynes' advice in a December 31, 1933 New York Times "Open Letter" (republished on November 25, 2008 in the London Guardian) to:

-- "spend, spend, spend;"

-- supply "cheap and abundant credit;"

-- stress "speed and quick" recovery over reform that can come later;

-- hold back on recovery-impeding reforms initially;

-- direct recovery to "increas(ing) the national output," increasing purchasing power, and "put(ting) more men to work;"

-- let rising output, not government policies, produce price increases; "increasing aggregate purchasing power is the right way to get prices up and not the other way around;"

-- undertake "a large volume of Loan-expenditures under Government auspices" but work cooperatively with business; and

-- concentrate on projects that "can be made to mature quickly on a large scale, as for example the rehabilitation of the physical condition of the railroads."

Roosevelt did much of the above, but not enough of it, then in 1937 declared victory too early and precipitated another downturn. Nonetheless, he deserves praise for what he accomplished during the gravest ever economic period to that time. He confronted it head-on with emergency first 100 days measures and vital reforms, Keynes advice notwithstanding, including:

-- the above-cited "first 100 days" legislation, then later

-- the National Labor Relations Board with the passage of the 1935 Wagner Act, that, for the first time, let labor bargain collectively on equal terms with management - something very much eroded in today's environment;

-- the 1935 Social Security Act that to this day is the single most important federal program responsible for keeping seniors and others eligible out of poverty;

-- unemployment insurance in partnership with the states; by 1935, nearly all the unemployed got social benefit payments;

-- the Revenue Acts of 1934 and 1935, so-called "Soak the Rich" ones to make high income earners pay their fair share;

-- the Revenue Act of 1936 that established an "undistributed profits tax" on corporations;

-- the Revenue Act of 1937 that cracked down on tax evasion;

-- a minimum wage, a 40-hour week, and time-and-a-half for overtime guarantees under the 1938 Fair Labor Standards Act (FLSA);

-- public housing under the 1934 National Housing Act (creating the Federal Housing Administration - FHA) to make housing and mortgages more affordable through FHA and Federal Savings and Loan Insurance Corporation (FSLIC) financing;

-- the May 1935-established Rural Electrification Administration (REA) to bring electrical power to rural and remote areas;

-- the 1937 Housing Act (Wagner-Steagall Act) providing subsidies to local public housing agencies;

-- the Railroad Retirement System, separate from Social Security, administering a social insurance program for railroad workers and their families;

-- the National Youth Administration (NYA) under WPA to help youth unemployment through grants to high school and college students in return for work; it also aided unemployed young people not in school with on-the-job training in federally-funded work projects to provide marketable future skills; and

-- more initiatives in an effort to reform and revive the economy.

Obamanomics - Obama's Bad Deal

As stated above, Roosevelt confronted "the money changers," even though mostly through rhetoric. Obama, like Bush, embraces them openly to the tune of $12.8 trillion "spent, lent or guaranteed," according to Bloomberg on March 31 while people needs go begging at a time they're most essential. He leads:

-- an imperial enterprise presided over by a war cabinet engaged in unbridled militarism, aggressive wars and occupation with a budget well above $1 trillion annually;

-- a bogus democracy under a homeland police state apparatus;

-- an anti-labor job destruction offensive, from 800,000 - one million a month since his inauguration, compared to FDR creating employment for most workers and reviving the national spirit; and

-- a criminal cabal in charge of the greatest ever wealth transfer in history - from the public to the top 1%, mainly powerful corrupt Wall Street institutions.

As Michel Chossudovsky explains, his budget reflects "the most drastic curtailment in public spending in American history." It's a "War Budget (affecting) all major federal (programs except): 1. Defense and the Middle East War(s and whatever new ones are planned); 2. the Wall Street bank bailout, (and) 3. Interest payments (approaching $500 billion annually) on a staggering (growing) public debt."

People needs don't matter. They get little more than lip service, and in his April 14 Georgetown University economic policy speech, Obama promised disappointment. When he should have been Rooseveltian, he defended bank bailouts, suggested more are coming, championed "free market" rubbish, and presented "five pillars (to) make the new century another American (one):"

-- no-teeth financial regulations;

-- education reform, meaning the Bush agenda to end public education;

-- renewable energy and technology investments, likely to be far less than needed and for the wrong things;

-- health care reform minus Medicare-for-all to assure profits trump human need; and

-- "restoring fiscal discipline (by) reduc(ing) discretionary spending for domestic programs" at the same time it's been recklessly abandoned for bankers and militarism....we (cannot solve this problem by trimming a few earmarks; (the) biggest (budget costs) are entitlement programs like Medicare, Medicaid, and Social Security all of which get more expensive every year....So if we want to get serious about fiscal discipline - and I do - we will have to get serious about entitlement reform" - meaning phase them out in future years, or something close to that.

Unless policies like these are reversed, this agenda is heading the nation toward insolvency, tyranny and ruin with ordinary people hurt most.

Simon Johnson is a former IMF chief economist, now teaching at MIT's Sloan School of Management. His article in the Atlantic's May issue, titled "The Quiet Coup," suggests that Wall Street (a "financial oligarchy") is turning America into a "banana republic," given the depth, similarities and shock "reminiscent of" earlier crises in Southeast Asia, Russia, Latin America, and other developing countries.

His analysis is long and detailed, concluding as follows:

"The conventional wisdom among the elite is still that the current slump 'cannot be as bad as the Great Depression.' This view is wrong. What we face now could, in fact, be worse than the Great Depression - because the world is now so much more interconnected and the banking sector so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite."

So far policy is mirror-opposite, hugely destructive, publicly papered over but evident in divergent G 20 views, raging on London and other European streets, to a lesser degree in America, and openly stated by Czech prime minister/EU president Mirek Topolanek calling Washington's stimulus "a way to hell (that will) undermine the stability of" global finance.

Obama is wrecking America. Roosevelt determined to revive it and help people as the way to do it.

He had his "Brain Trust," notable figures like Felix Frankfurter, (a future Supreme Court justice), Justice Louis Brandeis, consumerist/labor supporter Frances Perkins, economist Rexford Tugwell, educator/author Adolph Berle, and close personal confidant Louis Howe, among others - officials and advisors dedicated to reviving the economy by putting people back to work. One other was prominent as well, his wife Eleanor.

Rexford Tugwell said this about her:

"No one who ever saw Eleanor Roosevelt sit down facing her husband, and, holding his eye firmly, say to him, 'Franklin, I think you should....or, 'Franklin, surely you will not....' will ever forget the experience....It would be impossible to say how often and to what extent American governmental processes have been turned in new directions because of her determination."

At first, she worried she'd be marginalized as first lady, unable to speak publicly about causes she championed. But it didn't stop her. She held press conferences for women reporters only; pressed FDR to appoint more women and much more:

-- she urged the creation of the National Youth Administration;

-- became a civil rights champion and pushed for including blacks in government programs;

-- supported the Southern Tenant Farmer's Union;

-- worked with the PWA's Housing Division for planned communities ("greenbelt towns") and slum clearance;

-- backed Federal Arts Projects, even ones with "controversial" themes;

-- supported worker rights and lobbied for the Wagner and Fair Labor Standards Acts;

-- visited coal mines, migrant camps, homes of sharecroppers and slum-dwellers;

-- wrote articles, spoke publicly and on radio;

-- traveled widely to see firsthand how the Depression affected the most vulnerable; and

-- displayed an unmatched spirit, passion and dedication, and, by so doing, set a standard never matched by another first lady; few, in fact, even tried.

That Was Then, This Is Now - A Different Time, A Different President, A Different Agenda

The differences between FDR and Obama are stark during the two gravest economic crises in our history. Obama chose a financial coup d'etat "dream team" to address it. It includes a rogue's gallery of 1990s and earlier retreads, many of them proteges of former Treasury Secretary Robert Rubin who plundered world economies during his tenure, then led Citigroup close to collapse - disciples like Treasury Secretary Timothy Geithner, former New York Fed president who partnered with Ben Bernanke and Hank Paulson's Treasury-looting under Bush.

Reportedly he was also one of the architects behind the Bear Stearns bailout and various others, including Fannie, Freddie, AIG, Merrill Lynch, Washington Mutual, and Lehman Bros.' suspicious collapse that shocked financial markets globally. He now runs the Treasury and continues looting on a grander scale on the pretext of reviving the economy. Instead, he's wrecking it - by design.

Others like Lawrence Summers, a former Reaganite and World Bank chief economist before becoming Clinton's Under-Treasury Secretary for International Affairs, then Treasury Secretary from 1999 - 2001. He helped deregulate financial markets and played a key role in the 1999 Gramm-Leach-Bliley Act that repealed Glass-Steagall and opened the door to the kinds of rampant speculation, fraud, and abuse that created today's crisis.

He was also instrumental in the passage of the 2000 Commodity Futures Modernation Act (CFMA). It legitimized "swap agreements" and other "hybrid instruments" at the heart of today's problems by preventing regulatory oversight of derivatives and leveraging that turned Wall Street into a casino.

Now he's do for Obama what he did earlier - as Director of the National Economic Council where he's part of a criminal cabal triumvirate in charge of economic policies along with Geithner and Bernanke.

Another Rubin protege, Peter Orszag, heads the Office of Management and Budget. Earlier he was on Clinton's Council of Economic Advisors, then was Congressional Budget Office Director from early 2007 to late 2008. He's for destroying Social Security through a combination of payroll and "benefits adjustments" as a way of cutting retiree payouts.

Also close to Rubin and for Social Security privatization is Jason Furman, Deputy Director of the National Economic Council. In the Clinton administration, he served as Special Assistant to the President for Economic Policy and on the Council of Economic Advisors.

UC Berkeley economist Christina Romer chairs the Council of Economic Advisors where she's close to the president but with less clout than Geithner, Summers and Bernanke. Her idea of good government - the less the better, except for handouts to the rich. In praise of Ronald Reagan she once wrote: "The costly wrong turn in ideas and macropolicy of the 1960s and 1970s has been set right, and the future of stabilization looks bright," meaning, of course, to take from the many for the few.

That's also true for Paul Volker (former Fed chairman, Trilateralist, corporatist and no friend of working people), now serving as 1st Chair of the President's Economic Recovery Advisory Board, a position with lots of bark and little bite, but enough to pay attention to nonetheless, especially when he differs on public policy.

Former Washington governor Gary Locke is the new Commerce Secretary, hailed as "safe (and) strait-laced," but his record shows otherwise. He skirted campaign finance laws; handed Boeing a $3.2 billion tax break; paid Boeing's private consultant and outside auditor $715,000; and arranged favors for his brother-in-law's business above and beyond what's ethical.

Former Colorado senator and rancher Ken Salazar heads the Interior Department. He backed the worst of Bush administration appointments, including Alberto Gonzales for Attorney General and right-winger Gale Norton for Interior. He's an anti-environmentist and is staunchly pro-business, clearly why he was appointed in the first place.

That's true as well for Tom Vilsack, former Iowa governor, chair of the right wing Democratic Leadership Council (DLC), now new Agriculture Secretary. Agribusiness loves him. He's for ethanol and other biofuel production, big subsidies for the giants, and the proliferation of harmful GMO seeds.

As new Education Secretary, Arne Duncan will do for the nation what he did to Chicago - preside over public education's destruction by privatizing it for profit, and in the process, destroy the futures of millions of youths in the country.

The 1934 Securities and Exchange Act created an SEC with teeth and, for a while, it worked. At least since the 1980s, it hasn't, and under George Bush it became a travesty of non-enforcement.

Mary Schapiro is its new head, hand-picked by the industry she'll regulate so there's no doubt where her allegiance lies. She's a high-level insider, former FINRA and NASD head and earlier CFTC chairperson. In each job, she was a facilitator, not a regulator, credentials making her perfect for SEC where industry interests matter, not enforcing the nation's securities laws.

Other Obama officials are as tainted - his top team and their underlings. Roosevelt promised change and delivered. So did Obama - for his Wall Street backers and beneficiaries.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site and listen to The Global Research News Hour on Republic Broadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

http://www.globalresearch.ca/index.php?context=va&aid=13326

Wednesday, April 29, 2009

The Global Research News Hour - Media As It Should Be

The Global Research News Hour (GRNH): Media As It Should Be - by Stephen Lendman

Self-promotion? Fair enough, but for a good purpose - to introduce more people to what the GRNH provides:

-- real democracy advocacy live, on-air, daily;

-- an antidote to government and corporate propaganda;

-- a force against war, injustice and inhumanity;

-- championing universal freedom;

-- a voice for social justice, human rights, and beneficial change - of, for, and by the people;

-- a bulwark against Wall Street, corruption, unfettered greed, fraud, and dirty government;

-- an advocate for our most precious First Amendment rights without which all others are at risk;

-- a scrupulously free, fair, open, vibrant, and vital on-air resource, Monday through Friday on Republic Broadcasting.org with all programs archived for easy listening;

-- real news and information unavailable through the major media, on-air or in print;

-- cutting-edge discussions on world and national issues with distinguished guests rarely, if ever, heard or read through the dominant media; and

-- following Project Censored's tradition of discussing "important (world and) national news stories that are underreported, ignored, misrepresented, or censored by the US corporate media."

The GRNH is committed to what James Madison meant by: "A popular government, without popular information or the means of acquiring it, is but a prologue to a farce or tragedy; or perhaps both. Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power knowledge gives."

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Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

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http://www.globalresearch.ca/index.php?context=va&aid=13326

Monday, April 27, 2009

Israeli Use of Palestinians As Human Shields

Israeli Use of Palestinians As Human Shields - by Stephen Lendman

The Al Mezan Center for Human Rights is a Gaza-based Palestinian NGO mandated "to promote, protect and prevent violations of human rights in general, and economic, social and cultural rights in particular, to provide effective aid to those victims of such violations, and to enhance the quality of life of the community in (Gaza's) marginalized sectors."

It monitors and documents violations, provides legal aid and advocacy, and helps Gazans on "fundamental issues such as basic human rights, democracy, and international humanitarian" matters. It also produces reports and publications on its work.

In April, it published a seven-case study update of its July 2008 report titled: "Hiding Behind Civilians - The Continued Use of Palestinian Civilians as Human Shields by the Israeli Occupation Forces." This article reviews both reports to highlight what international law unequivocally prohibits. Nonetheless, it's customary IDF practice even though Israel's Supreme Court banned it on October 6, 2005.

One Palestinian woman described her experience:

"They handcuffed and blindfolded me. Then, they forced us to move out of the room, pushing me with their hands and guns to move although I was blindfolded and pregnant. I heard them pushing others to hurry up as well. I got exhausted and fell down many times. I told them that I was four months pregnant and couldn't continue but a soldier threatened to shoot me."

Other witness testimonies related similar stories, at times with tragic consequences for its victims. Israel is a party to various human rights laws and conventions. As a result, it's obligated to respect and protect the rights of people it controls.

Under Article 3 of the UN General Assembly's 1948 Universal Declaration of Human Rights (UDHR): "everyone has the right to life, liberty and security of person."

Under Article 5: "no one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment."

Under Article 9: "no one shall be subjected to arbitrary arrest, detention or exile."

The General Assembly's 1977 International Covenant on Civil and Political Rights (ICCPR) affirms the same rights. Under Article 17: "no one shall be subjected to arbitrary or unlawful interference with his privacy, family, home or correspondence."

Both international humanitarian law (IHL) and international human rights law (IHRL) protect life, well-being and dignity. ILH deals with armed conflicts while IHRL applies to peace as well as war. Hague and Geneva Conventions comprise the main body of IHL, and strike a balance between military necessity and humanitarian considerations. As an occupying power, Israel is obligated under them.

Fourth Geneva protects civilians in war time, including those in Occupied Palestine. It restricts the use of force and prohibits seizing non-combatants as hostages, including persons who've laid down their arms or can't fight because of illness, injury or any other reason.

Article 34 states: "the taking of hostages is prohibited." Article 28 states: "the presence of a protected person may not be used to render certain points or areas immune from military operations." Article 29 states: "the Party to the conflict in whose hands protected persons may be, is responsible for the treatment accorded to them by its agents, irrespective of any individual responsibility which may be incurred."

Protocol I, Article 51, paragraph 7 states: "the presence or movements of the civilian population or individual civilians shall not be used to render certain points or areas immune from military operations, in particular in attempts to shield military objectives from attacks or to shield, favor or impede military operations." In other words, using civilians as human shields is prohibited under all circumstances.

Further, the International Criminal Court's (ICC) Rome Statute, Article 8 prohibits the "Taking of hostages." Israel isn't a Court member but is obligated under international law. Nonetheless, it flaunts it with impunity.

Al Mezan collected sworn testimonies of people's homes seized and used as military posts for days with their residents confined for prolonged periods, beaten and abused, prevented from normal activities, and put in harm's way.

Another practice was called the "neighbor procedure," later changed to "the prior warning procedure" to get around a Court prohibition. Israel commandeers civilians, has them knock on neighbors' doors, usually at night, to deliver military orders to submit to arrest. Hostages are put in harm's way when violence at times erupts that may result in deaths or injuries.

Finally the practice was banned, but Israel blatantly disregarded its own High Court ruling as well as its clear obligation under IHL. It continues to use civilian men, women and children as human shields.

During the Second Intifada (especially for Israel's large-scale West Bank Operation Defensive Shield incursion), Amnesty International (AI) said the following in October 2005:

AI "investigated tens of cases where the Israeli army used Palestinians, children as well as adults, as 'human shields' during military operations in towns and refugee camps throughout the Occupied Territories. Palestinians were forced to walk in front of Israeli soldiers who, at times, fired their weapons while shielding themselves behind the civilians. As well (they) were made to enter houses ahead of Israeli soldiers to check for explosives or gunmen hiding inside, to inspect suspicious objects, to stay in their houses when Israeli soldiers took them over to use as sniper positions, or to enter the houses of wanted, possibly armed, Palestinians to tell them to surrender to Israeli forces."

B'Tselem reports that Israel routinely uses "human shields (as) an integral part of the orders received by Israeli soldiers...." Al Mezan documented "dozens of cases" in Gaza in spite of specific High Court prohibitions, usually at times of incursions. Case studies below refute Israeli claims about respecting civilians, not using them as shields, and abiding strictly according to international and its own case law.

Israeli officials lie. As standard practice, they seize Palestinian civilians randomly, including women and young children, then force them into harm's way. Usually to:

-- let soldiers commandeer their homes as military posts and for sniper positions;

-- check for possible booby-traps in buildings;

-- order occupants inside to leave;

-- remove suspicious objects anywhere soldiers may go;

-- shield them from gunfire or thrown rocks; and

-- perform whatever other tasks soldiers order under very real threats they'll be shot if they refuse.

Orders to conduct these practices come from top commanders, not soldiers in the field.

Case Study Examples - 2008 and 2009

Number 1

On July 10, 2008, the IDF forced Rana Mofeed Awad An-Nabaheen, age 11, to visit a relative's house delivering orders to leave. On return, she was shot in the stomach by other soldiers, unaware she was acting under orders. Family member Mahir Hamdan Mheisin An-Nabaheen provided eyewitness sworn testimony. At about 4:30AM, vehicles, helicopters and gunfire woke him.

"I peeked through a window and saw Israeli soldiers breaking into my family member's house and forcing them to get out." Rana delivered orders to leave. He then heard heavy gunfire. "I peeked out and saw Rana near the gate screaming and saying: 'I am injured.' I stepped back into the house and gave her my hand....I pulled her back into the house. The gunfire became heavier. I left Rana bleeding and took cover behind a wall. Rana crawled two steps and lay on the floor....I saw her entrails coming out of her abdomen.
A physician in military uniform came, brought a bandage, and put it on her abdomen. The commander fastened Rana to a carrier, then ordered two soldiers to carry her." This case is typical of many others.

Number 2

It involves the arrest of civilians, including a pregnant woman, from the As-Sreij neighborhood in eastern Al-Qarara village in Khan Younis. They were held in an agricultural field and forced to accompany soldiers towards the separation border. The men were detained, women and children ordered to leave. They were shot at en route, then used as human shields during the operation. Out of fear of reprisals, the witness remained anonymous.

On April 3, 2008, at 7:30AM, her husband wasn't answering his mobile at the time an Israeli force entered the area where he was working. She rushed there with his ID card. "When I was on my way, I heard somebody shouting and ordering me to stop and come towards him....I tried to explain that I had come to give my husband his ID card but they threatened to shoot me."

"They led me to a room where I saw seven men and a woman with her two daughters, who were detained. The men were handcuffed and blindfolded. They handcuffed and blindfolded me. Then, they forced us to move out of the room, pushing me with their hands and guns although I was blindfolded and pregnant....They stopped for a while and took off my blindfold....I saw them taking the men across the border, and then heard one of them ordering us to leave the area....I heard heavy gunfire."

"I had to crawl for a long time to leave the area....I found (soldiers) who forced me to stop. I tried to explain what happened but they threatened to shoot me and forced me to sit down with a child of (a) family....One soldier forced the child to take his shirt off and tied his hands with it. There were many explosions and intensive firing."

"I managed to go home at around 13:00 on the same day. My husband returned home at around 21:00 on the same day. I knew he was detained in a military post close to the border line."

This is another human shield example that "demonstrates the complete disregard of the soldiers for the life of a pregnant woman and her unborn child." They were used as cover for Israeli forces to withdraw from the area.

Other cases were of medical teams forced to carry out life-threatening tasks, homes used as military posts and their residents as human shields, and a 14 year old boy used for the same purpose.

On April 9, 2009, Al Mezan presented an updated report, containing seven new case studies "based on comprehensive field investigations and witness statements," these based on incidents during Operation Cast Lead and one earlier in 2008.

"In endangering the lives of civilian men, women and children through systematically using them as human shields, the (IDF committed) crimes against humanity according to IHL." This is one of many violations against non-combatant Palestinian civilians.

Number 1: 15-year-old child used as a human shield

After being used for that purpose, the child was detained in a hole in the ground with about 100 others for four days. He now suffers from serious mental health difficulties and refuses to speak to strangers. With help from his parents, Al Mezan got him to tell his story and presented excepts from it below. At home with his parents, he was terrified by days of conflict.

"I was lying on the floor sheltering with my mother." His uncle then said: 'Come downstairs.' "So we all went downstairs. As soon as we opened the door, I saw a large number of soldiers. One of them was pointing his weapon at me....I saw my uncle and brothers lined up against the wall. I saw the soldier signaling at me to stand beside them. So I did....he wanted me to put my hands up. So I did. Another soldier came and searched me from top to bottom....He tied my hands to the hands of the people next to me."

"I stood by the wall. A few minutes later one of the soldiers came and kicked me. About two hours later, they ordered us to walk....they made us go into Khalil al-Attar's house....Then they told us all go, as a chain, into one of the rooms." They took us outside the house....I heard the sound of a huge explosion in the area. From there they took us to a farm."

"They made us sit on the ground until dawn the following day. Then they took us outside the field (and) blindfolded my eyes....they led us to a low-lying area. They made us sit on the ground....They tied my hands in front of my stomach. They searched me a third time and made me sit on the ground....After they took of my blindfold....I realized where the low-lying area was. It was a hole made by Israeli forces....south of the American school."

"We spent the whole night in this hole. I couldn't sleep. The weather was really cold and I wasn't wearing a lot of clothing. We stayed in this hole for four days....I could hear the sound of shooting and explosions" close by. We got one meal each afternoon...."On the third day I saw a soldier making a wire fence around the hole (and bring) a lot of people to the hole until the number reached around 100. On the morning of the fourth day, an Israeli soldier untied me, my brother Ali, my cousins Hussein and Khalil. They told us and the women to go to Jabalia.

Case 2: Majdi al-Abed Ahmed Abed Rabbo, male, age 40

On January 5 at 9:30AM, he was at home when he heard a loud sound and someone say, "Open the door....I arrived at the door and opened it. I was surprised to see an (IDF) soldier hiding behind a man in his twenties and pointing a gun at me. He said in Arabic, 'Take off your pants.' I took" them off. He ordered him to strip naked, then get dressed. About "15 - 20 Israeli soldiers then entered the courtyard of my house....one grabbed my neck from behind and put his gun to the back of my head."

"Two other soldiers hid behind me....They told me to lead them to the roof, where they searched pigeon coups that I keep in two rooms there." A soldier then asked about the adjacent house, belonging to his cousin and connected to his home by a common roof. "There's no space between the two houses, just the wall."

"After that, one of the soldiers brought a demolition tool and said, 'Drill a hole there.'....Then three soldiers went through the hole to (his cousin's) house." He was told to come as well along with more soldiers, then told, "Get up. Get up," and grabbed violently. "I got up and entered with them through the hole back to my roof, and they all went as a group down the stairs. This happened quickly....The whole group was running."

"The soldiers led me outside. I found myself in a mud road....One of the soldiers was holding me and making me run with him. Another soldier was bringing the young man with him the same way, and (he) had his hands tied. They pushed me in the mosque through its main door to the north....They tied my hands in front of my stomach and tied my legs and sat me down (in one corner). We entered the house adjacent to the mosque. They took us out and turned us toward another house," then sat us down nearby.

In one house, a soldier said, there were gunmen and we killed them. "Go take their clothes off and bring their guns and come back."

"I refused. I asked him to let me return to my family. I said to him:" going into that house "means death, and I don't want to die." The soldier responded, 'You are here to do what we tell you (and said) Go.'

"I walked about 200 meters to the house....I went in...I went alone....but couldn't find anyone. I expected the worst." He encountered three armed men wearing badges saying Al Qassam Brigades. He said he was forced to come. They told him to go back and say what he saw - "three gunmen in the house, still alive....then the soldier said to me, 'The officer says he's crazy and if you are lying to him he swears by his mother he will shoot you."

"A short time later, I heard the sound of heavy gunfire nearby. Twenty minutes passed....and a soldier said to me; 'We killed them now. Go get them.' I refused. I told them that they had told me that if I returned they would kill me, and he shouted at me: 'We killed them.' "

He went again and found one man seriously injured and bleeding and the others alive. He reported back what he saw, then heard heavy gunfire and a very loud explosion. A soldier said; 'Go and make sure they are dead. We bombed the house again with planes...."With difficulty, I entered the apartment. Inside, I saw the three men still living, but they were under the rubble."

Majdi al-Abed Ahmed Abed Rabbo located his wife and children after the IDF released him. His home was totally destroyed by military bulldozers, and he's deeply distressed. Numerous other examples are similar to his account - human shields illegally used by IDF soldiers in violation of international law and Israel's High Court ruling.

Conclusions

The above cases are examples of customary Israeli practice in gross violation of international law and Israel's High Court ruling. They endanger civilian lives and cause "long-lasting psychological trauma."

IHL considers using civilian human shields a war crime and when used systematically against non-combatants a crime against humanity. It's essential to hold parties guilty of these crimes accountable as the way to stop this heinous practice.

Al Mezan condemns Israel's disregard for the law and says that "the continued failure of the international community to fulfill its obligations and its silence on Israeli violations encourages" similar acts in the future - by Israel and others engaged in this outrageous practice.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

http://www.globalresearch.ca/index.php?context=va&aid=13326

Wednesday, April 22, 2009

"Hizzhonor:" - Chicago Politics Under Richard M. Daley

"Hizzhonor:" Chicago Politics Under Richard M. Daley - by Stephen Lendman

First the father, Richard J. (mayor from April 20, 1955 - December 20, 1976), now the son. To Chicagoans - "Hizzhonor," and for some - "Hizzhonor Da Mare." Authors Adam Cohen and Elizabeth Taylor called the elder an "American Pharaoh." For former Chicago columnist, Mike Royko, he was "Boss" in his 1971 book by that title. When he died on December 20, 1976, Royko wrote:

"If ever a man reflected a city, it was Richard J. Daley," for better or worse. He was "strong (and) hard-driving" with Texas-sized ambitions, but also "arrogant, crude, conniving, ruthless, suspicious, intolerant, raucous, hot-tempered, devious, big and powerful." He was Chicago.

Now the son - mayor since April 24, 1989. His official biography reads:

Now in his sixth mayoral term, "Richard M. Daley has earned a national reputation for his innovative, community-based programs (on) education, public safety, neighborhood development and other challenges facing American cities." More on that below.

On April 25, 2005. Time magazine called him "the nation's top urban executive." A week earlier, it said:

"He wields near-imperial power" (in) steer(ing) the Windy City into a period of impressive stability, with declining unemployment and splashy growth." Never mind that the facts belie the hyperbole. More on that as well.

Earlier, the Wall Street Journal praised him as "a fix-it, problem-solving man" and most recently in a February 7 interview as: "The President's Mayor....whose personality and history are inseparable from Chicago('s) political culture....successful and enormously popular." He hopes bringing the 2016 Olympics to Chicago will "showcase the city (as a) gleaming tourist destination (and) At this stage in the process, the city's bid is not just Chicago anymore. It's the United States of America." Indeed, and like the nation, Chicago and Illinois reek with problems, corruption, and are for sale to the highest bidders, business ones, of course.

According to the Corporate Crime Reporter, Illinois ranks sixth worst in the nation on corruption after Louisiana, Mississippi, Kentucky, Alabama and Ohio. In the wake of the governor Blagojevich scandal, The New York Times (on December 13) said Illinois has "a tradition (since the 19th century) of corruption" (because) the state's unusually lax (campaign finance) laws" allow it, and local citizens say it's just the way it is.

On February 3, Dick Simpson, Thomas Gradel, and Andris Zimelis (below Simpson et al) from the University of Illinois Chicago's Political Science Department published: "Curing Corruption in Illinois - Anti-Corruption Report Number 1."

They call it "an unfortunate aspect of Illinois (and Chicago) politics for a century and a half," in citing one example after another - like former secretary of state Paul Powell's $800,000 stash found in shoe boxes when he died, 13 judges caught for fixing court cases, and a state auditor's embezzlement of over $1.5 million to buy two planes, four cars, and two homes.

Since 1972, three governors (besides Blagojevich), state legislators, two congressmen, 19 Cook County judges, 30 aldermen, and many others were convicted of corruption. In all since 1970, around 1000 public officials and businessmen were caught and convicted.

It's a tradition as far back as the 1860s, and mainly in Chicago where its large immigrant population helped politicians gain power. Needing housing and work, they turned public office into a bizaar. It's called patronage, and in return, politicos got support. Businessmen as well with bribes and payoffs for lucrative contracts, free from "troublesome city inspectors."

Former Chicago alderman Paddy Bauler said it best: "Chicago ain't ready for reform," and he was right. Richard J. Daley modernized machine politics, and while mayor, many of his subordinates were jailed. Under Richard M., the machine "simply adjusted to draw its power from interest groups, corporations, unions, and the global economy instead of ethnic communities." Everything changes, yet stays the same.

The 2004 - 05 Hired Truck Program involved private trucks for city work, but was phased out after a Chicago Sun-Times investigation uncovered companies being paid for little or no work and having mob and city officials' ties. Daley's patronage chief Robert Sorich was involved. He was tried, convicted and sentenced to 46 months in prison with US District Court Judge David Coar saying he ran a corruption operation "with a capital C."

Simpson et al calls Chicago "a one-party system where Democrats control the city" but govern like Republicans. They also explained that while many Daley aides were convicted of corruption, "neither father or son" was ever indicted. Yet, "corruption continues unabated in city, county, suburban, and state" politics. Paddy Bauler was right, and it's no different today. Here's more:

-- the FBI's Operation Safebet investigation into political corruption and organized crime's control of prostitution throughout metropolitan Chicago snared over 75 individuals;

-- Operation Gambat targeted First Ward connections to organized crime with 24 individuals convicted or pleading guilty;

-- Operation Incubator on City Hall corruption involved bribes to win city contracts for collecting unpaid parking tickets and water bills; convicted were four aldermen, a former state senator, a deputy water commissioner, and an aide to former Mayor Harold Washington;

-- Operation Greylord into Chicago's court system netted 87 court personnel and attorney convictions and guilty pleas, including 13 judges;

-- Operation Haunted Hall about City Hall ghost payrolls yielded 38 indictments and 35 convictions, including four aldermen, a Cook County treasurer, and a state senator;

-- Operation Silver Shovel probed city government and netted 18 convictions and guilty pleas from public employees and six aldermen;

-- Operation Board Games into public corruption of insider deals, peddling, and kickbacks involving state government boards; and

-- much more systemic corruption for decades, including under both Daleys.

Simpson et al explained while corruption permeates Illinois, "the most notorious and persistent (kinds are in) Chicago('s) City Council." The guilty aldermen range from "bumblers (to) the most brilliant (and powerful) politicians" like Tom Keane and Richard J. Daley's floor leader, "Fast Eddie" Vrdolyak.

In the past 35 years, 30 alderman were indicted and convicted of bribery, extortion, embezzlement, conspiracy, mail fraud, and income tax evasion - three Republicans and 26 Democrats. Three others were indicted. Two died before going to trial, and the other was too sick to proceed. Several others weren't indicted but resigned after media investigations.

"In most cases, the Chicago political machine taught the crooked aldermen the fine art of graft." They learned from the grassroots up. "They saw political officials amass power and get rich over time by playing the game, keeping quiet, and delivering votes and campaign funds for the party." Locally, heads only rolled if exposed in the media. "The Cook County States Attorney or Illinois Attorney General almost never investigated or prosecuted political corruption." The task fell to federal attorneys, postal inspectors, FBI, and IRS agents.

The convicted are a who's who in Chicago and state politics, and the game is as old as the system - "Pay-to-Play" and "quid pro quo" with the latter very hard to prove, but it made millionaires out of the players.

These crimes persisted for decades, so it's clear Chicago and Illinois house "a thriving culture of corruption." Fixing something this embedded will take decades of committed change, no simple task after a century and a half of plundering public coffers for personal gain.

Simpson et al put it this way:

"Corruption is not funny (or) free. It costs taxpayers more than $300 million a year. (What's called) 'The Chicago Way' has also undermined the sense of political efficacy in voters. Why apply for a city or state job if you know only patronage employees or politicians' relatives will be hired anyway? Why report corrupt officials, if you know they won't be punished (unless the Feds do it), and they may turn the powers of government on you?"

Voters become apathetic because they know the "fix is in." After a tradition of corruption, it's time "to become the land of Lincoln rather than the land of "Where's Mine."

Richard M. Daley's Machine

Simpson and four assocates (Ola Adeoye, Daniel Bliss, Kevin Navratil, and Rebecca Raines) wrote earlier about "The New Daley Machine: 1989 - 2004" and compared it to the old one under his father - from 1955 - 1976.

Elder Daley's was characterized by "patronage, slate-making, and alliances" to Chicago's business community. Richard M.'s new version continues some of the old ways, "but patronage precinct captains are supplemented by candidate-based, synthetic campaigns using large sums of money from the global economy to purchase professional political consultants, public opinion polls, paid television ads, and direct mail."

In government, it's enforced by a "rubber stamp city council and public policies that benefit the new global economy more than the older developer" one. From 1955 to the present, two Daleys, father and son, have run Chicago for over 40 years and show no sign of stepping down with Richard M. a still youthful 66 and likely to run for a seventh term in February 2011.

He solidified power with strong business and trade union backing, especially from construction, real estate, finance, law, lobbying, and tourism related interests. His "regime is composed of traditional (rubber stamp city council backing along with) developers, city contractors, construction unions, real estate firms (plus) major contributors from the new global (economy), including banks, lawyers, and international manufacturing firms."

Combined, it's less democracy and more centralized power under the new "Chicago Machine." In city council votes, mayoral support runs about 90%. In elections, it's mainly from Whites and Latinos who are rewarded for their backing.

An old-fashioned political machine runs city precincts and the government, but private business instituted important changes. One is "turning over major public decisions either entirely to the private sector (with minimal government supervision) or to quasi-independent governmental agencies appointed by the mayor and governor."

In the 1990s, Chicago, like other cities, renovated a corporate-centered downtown and expanded its service economy. It became "the Midwest capital of the global economy," for example in tourism and conventions with millions of annual visitors and growing annual tax revenues as a result. "Most tourist, convention, and major development decisions are made behind closed doors with little public input" and considerable private sector influence. On the one hand, business greatly benefits at the discretion of an imperial mayor heading a powerful Chicago Machine.

It's active in elections where it crushes a "poorly organized opposition. In the 2003 aldermanic elections, all but five (of 50) incumbents were re-elected, most by landslide totals, and those that lost (got) tepid machine support in the face of strong community opposition." At the same time, ward committeemen won in "mostly uncontested romps."

With less power than his father, Richard M. still runs Chicago unchallenged. Democrats dominate city politics. The last Republican mayor ("Big Bill" Thompson) left office in 1931. The Great Depression ended their rule when Anton Cermak took over, built a strong constituency among African Americans, and consigned Republicans to small pockets on the city's far northwest side and suburban growth post-war.

As for regaining power in Chicago, they face "the prospect of a long wait," according to one observer. Democrats are well entrenched, and business loves them. Why not, they're more Republican than Republicans and voters hardly notice. They should as topics below explain.

Growing Poverty in Chicago

Last year, the Heartland Alliance for Human Needs and Human Rights (HA) prepared a "2008 Report on Illinois Poverty: Chicago Area Snapshot." It quotes federal poverty monetary threshold guidelines (FPL). In each case, they're woefully inadequate, given the city's true cost of living. FPLs are:

-- $10,400 for a single person;

-- $14,400 for a family of two;

-- $17,600 for three;

-- $21,200 for four; and

-- $24,800 for five.

From 1980 - 2008, greater Chicago experienced a 114.5% increase in poverty. Up to last year, it affected 400,000 suburban residents and over 570,000 Chicagoans or 21.2% of the population. Given the global economic crisis and massive monthly job losses, these numbers are rising dramatically at a time basic necessities like food, housing, health care, energy costs, and more are less affordable for many.

Like most major cities, Chicago is greatly impacted. HA reports 977,320 Chicagoans as low income poor and 1.2 million "at risk of experiencing poverty," meaning they struggle daily to meet basic needs and are dangerously close to the edge. One negative event (like job loss) alone can push them over.

Latinos and especially blacks are far more impoverished than whites. Women are more affected than men. So are children, the disabled, one wage-earner households, and anyone "without education past high school." One-fourth of Chicagoans have no health insurance. Being employed is no guarantee against poverty. Over 56,000 full-time workers are impoverished and nearly 210,000 part-time ones. From 2000 - 2006 alone, when adjusted for inflation, Chicagoans' median annual household income declined by $3515 besides greater erosion since the 1970s. The changing job market and lost benefits are to blame, and conditions keep worsening with one-third of all northeastern Illinois jobs classified as "low-wage service" ones.

Affordable housing is shrinking, and the percent of renters paying over half their income for shelter rose substantially from 2000 - 2006 to around 30% of the population, leaving fewer resources for other needs. Critically important is that "the vast majority" of people needing help get none. Since 2000, under the 1996 Welfare Reform Act, welfare rolls dropped 77%, meaning tens of thousands of Chicagoans are on their own and can't make it. Less housing aid is also provided because vouchers from nine of the 12 Public Housing Authorities aren't available. For many, the situation is critical.

The result is extreme poverty is rising. It reached almost 10% in 2006 and now is much higher given the economic crisis. In January, Feeding America (FA) reported that Obama's economic stimulus plan provides nothing for the hungry when growing numbers are needy and desperate.

Chicago and other city food banks report a 30% demand increase for their services. Many are newly unemployed, currently don't qualify for food stamps, or are waiting for benefits to be approved. FA's president, Vicki Escarra, said "Americans are going hungry, we're in crisis," and government help isn't forthcoming. "Food banks are on the front lines feeding people," so they're typically an early warning sign of what's to come. In December, 70% of them couldn't meet community needs, and that percentage is rising as resources can't match demand.

In a December report, Chicago Community Trust reported that local conditions are far worse than a year earlier:

-- 6000 Chicagoans face homelessness each month;

-- 350,000 Cook County residents depend on food pantries to survive; tens of thousands more monthly are joining them; 625,000 rely on food stamps;

-- 440,000 Illinois workers are unemployed and more layoffs are announced daily; and

-- metropolitan area home foreclosures doubled from autumn 2007 to autumn 2008.

The Decline of Public Housing in Chicago

Last July, the Chicago Tribune ran a lengthy report on "Public housing limbo" in which it asked "What went wrong with Chicago's grand experiment." Thousands of families were displaced despite hundreds of millions of dollars spent after the Daley administration let private developers shape public housing's future for the city's poor under the Chicago Housing Authority's (CHA) Plan for Transformation.

CHA calls it "a blueprint for positive change (to) improve the appearance, quality and culture of (Chicago's) public housing." Tribune reporters Jason Grotto, Laurie Cohen and Sara Olkon called it a "virtual giveaway of public land" so real estate developers could displace poor residents and gentrify neighborhoods for profit. In the past decade, Chicago saw a surge in upscale development with many working-class and poor neighborhoods transformed for the well-off.

In the 1960s, sociologist Ruth Glass coined the term "gentrification" to describe the invasion of middle and upper income households into areas no longer affordable for the poor. Upscale condos replaced low-cost housing with people displaced to what Marquitta Campbell discovered - substandard construction, leaky ceilings, mold, awful odors, and much more making new quarters worse than the old ones.

Also low-cost housing proceeded slowly and got bogged down by bureaucracy, politics, and complex financing made all the worse by today's crisis. With a glut of unsold upscale properties, developers won't build low-profit ones for the poor.

The result is thousands of displaced Chicagoans have waited years for new public housing, and since 2001 no new applicants have been accepted. The trend goes far beyond Chicago in the wake of the Bush administration prodding dozens of cities to adopt similar plans to dump their poor, shift them to shoddy new buildings, and concentrate on gentrifying neighborhoods for profit.

Recently, many projects stalled as the economy faltered, but it hit Chicago hardest. Under ambitious Daley plans, it undertook the nation's largest public housing redevelopment with the idea of reshaping the city and enriching builders.

Stateway Gardens was typical. It was once some of the nation's worst public housing. It's demolition made it prime real estate for Allison Davis, a developer with close Daley ties. His Park Boulevard project is close to US Cellular Field, home of the White Sox, but it's in trouble. Construction bogged down and one development team member went bankrupt.

At Plan for Transformation's launching, Daley vowed to replace Chicago public housing eyesores with 25,000 new units for the poor. But housing advocates worried that displacing thousands quickly spelled trouble, and so it has. Horizontal ghettos replaced vertical ones, made up mainly of impoverished black families.

Daley promised to "rebuild lives." Meanwhile, demolition proceeded, new construction slowed, and stringent employment rules and background checks prevented most residents from returning to refurbished neighborhoods. Most took federal housing vouchers, were told they'd be back in five years, were forced to move numerous times since the plan started, and are no closer now to getting new housing than before.

Stateway Gardens was supposed to be a bustling neighborhood with new buildings, businesses, and a renaissance for Chicago's South Side. Instead, most of the 33-acre site is vacant with dirt and brick pallets astride unfinished sidewalks and homes.

The Daley administration approved the plan to mix public housing with for-sale condos in the same buildings. It required selling market-rate homes first. Under financing terms, developers can't build affordable housing until it's pre-sold half its upper-scale units. When housing peaked and imploded, so did construction for the poor.

One development team promised to build 439 public housing units by September 2008. The number so far is 53 and no new development is planned. For its part, Chicago's CHA offered free land and paid to clean up property and tear down old high-rises. The city also spent millions for new roads, water pipes and sewers.

If housing stayed healthy, developers stood to profit handsomely with all kinds of sweeteners at public and former residents' expense. They donate heavily to the Machine and are well compensated in return. As for the poor, Francine Washington summed it up saying: "The only thing wrong with Park Boulevard is the management." City government as well the way it always is.

Chicago: "The National Capital of Police Repression"

That's how Frank Donner characterized Chicago in his 1990 book "Protectors of Privilege." As an ACLU attorney, he explained how city police and US intelligence agencies targeted alleged internal subversion, and while it operated "was the outstanding example of its kind in the United States (in terms of) size, number, and range of targets or operational scope and diversity."

He referred to "wide-open, no-holds-barred style surveillance" unmatched anywhere in the country. For years, "Chicago-style official vigilantism (waged) guerrilla warfare against substantial sectors of the city's population." He called it "institutionalized aggression, unique in the annals of any American city. Its (methods) were flamboyantly illegal and in many instances criminal."

Law enforcement employed intimidation, physical confrontation, and outright abuse. That was then. What about now. CNN reported that between 2002 - 2004 alone, "more than 10,000 complaints - many involving brutality and assault - were filed against Chicago police officers." Yet only 18 of them resulted in disciplinary action, according to attorney Craig Futterman who uncovered the data while researching a client's claim.

Diane Bond sued the city and police on charges physical and sexual assault. The administration settled for $150,000, admitted no wrongdoing, reprimanded no officers, two were later promoted, and this case is typical of many.

For years, community activists accused the Department's Office of Professional Standards (its investigative unit) of indifference and poor oversight. The Daley administration did nothing to change things.

On November 15, 2007, The New York Times headlined: "Chicago Police Cases Exceed Average." Writer Susan Saulny explained that city police "are the subject of more brutality complaints per officer than the national average, and the Police Department is far less likely to pursue" them, according to a University of Chicago report titled "The Chicago Police Department's Broken System."

It's detailed and damning in citing extensive abuse, a broken disciplinary and supervisory system, and a practice of impunity. Under the Daley administration (much like others that preceded him), cops can get away with anything and they do.

Listed were police brutality, illegal searches, false arrests, racial targeting, sexual abuse, shoddy investigations, a culture of silence, and apartheid justice. The data is conclusive. It:

-- "demonstrates the existence of deficient disciplinary and supervisory policies;

-- provides powerful evidence of deliberate indifference - the affirmative efforts that policymakers must make not to know about individual and group patterns of abuse and the egregious harm caused by (it); and

-- supports several theories of causation, including demonstrating that minimally effective practices would have identified and stopped (these things instead of) encourag(ing them through a culture of indifference, silence, and impunity)."

The report called the Chicago Police a "regime of not knowing," and accomplishing that requires considerable effort. "It (takes) a deep commitment to the machinery of denial, including denying incidents of brutality, turning a blind eye to patterns of abuse, refusing to look at data that is just a key stroke or two away, and passively encouraging a culture of silence in the face of abuse perpetrated by officers."

As expected, those most affected are blacks, Latinos, and the city's poor and disadvantaged. The report asks: "Does a different Constitution apply in inner city minority (and poor) communities?....How great is the loss of life, liberty, and property? The loss of hope and opportunity? The loss of family? Loss of justice? Loss of faith in our political institutions?" How important is it that Richard Daley is as silent as the police?

Why is he letting Chicago police equip 500 rank-and-file officers with military assault weapons, according to a March 25 Chicago Public Radio report? In question is the purchase of 500 M-4 semi-automatic rifles powerful enough to penetrate walls and cars, both sides of a military helmet at 600 meters, and travel up to two miles, meaning stray bullets may kill anyone and likely will, especially in poor neighborhoods where they'll be used.

Destroying Public Education in Chicago

Under Richard Daley, Chicago took the lead in destroying public education nationally through privatization schemes for profit. Two previous articles by this writer covered them. Below is material from them.

As Chicago Public Schools (CPS) "CEO" before becoming Obama's Education Secretary, Arne Duncan
led Chicago's Renaissance 2010 Turnaround strategy for 100 new "high-performing" elementary and high schools in the city by that date. Under five year contracts, they'll "be held accountable....to create innovative learning environments" under one of three "governance structures:"

-- charter schools under the 1996 Illinois Charter Schools Law; they're called "public schools of choice, selected by students and parents....to take responsible risks and create new, innovative and more flexible ways of educating children within the public school system;" in 1997, the Illinois General Assembly approved 60 state charter schools; Chicago was authorized 30, the suburbs 15 more, and 15 others downstate. The city bent the rules, initially operated about 53 charter "campuses," and now has nearly 100.

Charter schools aren't magnet ones that require students in some cases to have special skills or pass admissions tests. However, they have specific organizing themes and educational philosophies and may target certain learning problems, development needs, or educational possibilities. In all states, they're legislatively authorized; near-autonomous in their operations; free to choose their students and exclude unwanted ones; and up to now are quasi-public with no religious affiliation. Administration and corporate schemes assure they won't stay that way because that's the sinister plan. Duncan was a key part of it, and so is his successor.

George Bush praised these schools in April 2007 when he declared April 29 through May 5 National Charter Schools Week. He said they provide more "choice," are a "valuable educational alternative," and he thanked "educational entrepreneurs for supporting" these schools around the country.

Here's what the president praised. Lisa Delpit is executive director of the Center for Urban Education & Innovation. In her capacity, she studies charter school performance and cited evidence from a 2005 Department of Education report. Her conclusion: "charter schools....are less likely than public schools to meet state education goals." Case study examples in five states showed they underperform, and are "less likely than traditional public (ones) to employ teachers meeting state certification standards."

Other underperformance evidence came from an unexpected source - an October 1994 Money magazine report on 70 public and private schools. It concluded that "students who attend the best public schools outperform most private school students, that the best public schools offer a more challenging curriculum than most private schools, and that the private school advantage in test scores is due to their selective admission policies."

Clearly a failing grade on what's spreading nationally en route to total privatization and the triumph of the market over educating the nation's youths.

In 1991, Minnesota passed the first charter school law. California followed in 1992, and it's been off to the races since. By 1995, 19 states had them, and in 2007 there were over 4000 charter schools in 40 states and the District of Columbia with more than one million students in them and growing.

Chicago's two other "governance structures" are:

-- contract (privatized) schools run by "independent nonprofit organizations;" they operate under a Performance Agreement between the "organization" and Board of Education; and

-- performance schools under Chicago Public Schools (CPS) management "with freedom and flexibility on many district initiatives and policies;" unmentioned is Delay's close ties to the Bush and Obama administrations and their preference for marketplace education; the idea isn't new, but it accelerated rapidly in recent years.

Another part of the scheme is also in play, in Chicago and throughout the country. Inner city schools are being closed. Remaining ones are neglected and decrepit. Classroom sizes are increasing, and children and parents are being sacrificed on the alter of marketplace triumphalism.

Consider recent events under Daley. Last February 27, the city's Board of Education unanimously and without discussion voted to close, relocate or otherwise target 19 public schools, fire teachers, and leave students in the cold. Thousands of parents protested, were ignored and denied access to the Board of Ed meeting where the decision came down pro forma and quick. It wasn't the first time and won't be the last. For years under the current mayor, Chicago closed or privatized more schools than anywhere else in the country, and the trend is accelerating. Since July 2001, 59 elementary and secondary schools were closed or replaced with charter or contract ones.

The trend continues in Chicago and across the country to "reform" education nationally, hand it to business profiteers, destroy teacher unions, end public education, commodify it, educate the well-off, cheat underprivileged kids, consign them to low-wage, no benefit service jobs, and end the American dream for millions.

Arne Duncan is doing it as Obama's Education Secretary with schemes like the No Child Left Behind Act of 2001 (NCLB) that became law on January 8, 2002. It succeeded the 1994 Goals 2000: Educate America Act that set eight outcomes-based goals for the year 2000 but failed on all counts to meet them. Goals 2000, in turn, goes back to the 1965 Elementary and Secondary Education Act (ESEA) and specifically its Title I provisions for funding schools and districts with a high percentage of low-income family students.

NCLB is outrageous, and Duncan administered the worst of it in Chicago. It's long on testing, school choice, and market-based "reforms" but short on real achievement. It's built around rote learning, standardized tests, requiring teachers to "teach to the test," assessing results by Average Yearly Progress (AYP) scores, and punishing failure harshly - firing teachers and principals, closing schools and transforming them from public to charter or for-profit ones.

Critics denounce NCLB as "an endless regimen of test-preparation drills" for poor children. Others call it underfunded and a thinly veiled scheme to privatize education and transfer its costs and responsibilities from Washington to individuals and impoverished school districts. Mostly, it reflects current era thinking that anything government does business does better, so let it. And Democrats (like Obama, Duncan and his successor) are as supportive as Republicans.

So far, NCLB renewal bills are stalled in both Houses, election year politics intervened, and final resolution will be for the new administration and 111th Congress to decide. For critics, that's positive because the law failed to deliver as promised. Its sponsors claimed it would close the achievement gap between inner city and rural schools and more affluent suburban ones. It's real aim, however, is to commodify education, end government responsibility for it, and make it another business profit center.

Obama promised to fix "the broken promises of" NCLB. Whatever's done will affect millions of students already harmed with little chance that the worst of this act will be changed. Nonetheless, National Education Association (NEA) president, Dennis Van Roekel, is hopeful that the new administration will be "the beginning of a promising new period for public education in this country."

Arne Duncan won't let it. He told Congress that NCLB funding "should be doubled within five years, and that the law must be amended to give schools the maximum amount of flexibility possible...." Repealing the law, ending the funding and privatization schemes, and fostering policies to educate all kids equally regardless of socioeconomic status is what's needed. Obama and Arne Duncan won't let it. They've consigned poor kids to the trash bin of no future.

Below are some Duncan policy initiatives, now run by new CPS "CEO," and former Chicago Transit Authority head Ron Huberman:

-- using the CPS's $5.5 billion budget for no-bid contracts to cronies for all sorts of goods and services; Huberman now recommends them to the seven-member board, and nearly always they're approved unanimously with no discussion or debate;

-- militarizing Chicago high schools (perhaps most in the country) on the pretext of offering students "choice;" JROTC programs were institutionalized, and high schools were established entirely for military studies; poor minorities comprise the overwhelming majority of affected students;

-- while still in Chicago, Duncan litigated to be freed from an early 1980s federal desegregation consent decree; he claimed he did everything possible to comply even though city students are predominantly black and over 90% black and Latino; Chicago has over 300 segregated black schools plus 40 or more all-Latino ones;

-- Duncan opposed and litigated against federal oversight of special education programs; he violated the Individuals with Disabilities Education Act (IDEA), ignored parents' wishes, the needs of the children, and forced teachers to go along; and

-- Chicago has nearly 100 quasi-private charter schools, many of them run by for-profit companies; less than 10% of them are integrated; the city is notorious for violating the education needs of minority students; their schools are sub-standard and abysmal.

Under "Renaissance 2010," 59 public schools were closed, and 2009 plans call for shuttering at least another 22. In its February issue, Substance News headlined: "End Ren 2010! echoes across city....Chicago protests grow." Backing them against closure and privatization is an alliance of parents, teachers, students, grandparents, and community leaders. Even cold winter mornings and nights haven't kept them off the streets - downtown outside, and inside, the Board of Education headquarters. Their mission - save Chicago public education from a rapacious scheme to privatize it.

With no background or knowledge of education, it's Ron Huberman's job to do it. As new CPS CEO, he's in charge of:

-- gutting the city's public system in favor of privatization schemes for profit;

-- continuing the process of militarizing them;

-- neutralizing the Chicago Teachers Union (CTU);

-- educating the well-off, not minorities or the poor; and

-- wrecking the dream of disadvantaged kids who'll be sacrificed on the alter of marketplace education the way Richard Daley and Washington mandate.

"The President's Mayor," nationally known for his "innovative, community-based programs (on) education, public safety, neighborhood development and other challenges facing American cities." After 20 years in office, he's just months away from equaling his father's reign as Chicago's longest serving mayor.

"Hizzhonor," the most prominent of today's big city bosses with no sign of stepping down or changing decades of Chicago-style politics.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He's lived in Chicago for the past 40 years and can be reached at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday through Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

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