No Working Class Recovery
No Working Class Recovery
Sat Jan 31 11:27:38 2004
January 30, 2004

No Working Class Recovery

In his State of the Union speech, the President said "this economy is strong, and growing stronger." But according to new data, those comments ignore the plight of the average worker. Reuters reports "the U.S. economic rebound has so far comforted homeowners and stock investors, but has done little for working class paychecks." Why? Although GDP growth has been up, a "stalled job market is making any wage growth difficult for the average consumer." While investors have benefited from a resurgent stock market in 2003, office-supply clerks and textile workers saw their wages go down. Wages for gas station attendants and fast food workers were stagnant over the last year. Overall, "Workers' wages and benefits grew by 0.7 percent in the final quarter of 2003 -- the smallest quarterly increase in a year." And CNN reports that, according to the Labor Department, "benefits costs are far outstripping wage gains for American workers." What does it all mean? In the Bush economy people who have jobs "are working harder for less." See more on the labor market in Christian Weller's new column.

CONSERVATIVES IGNORE THE UNEMPLOYMENT CRISIS: A new study by the Center on Budget and Policy Priorities (CBPP) reveals that, because conservatives in Congress refused to extend federal assistance, 375,000 people will lose their unemployment benefits at the end of January. Never before have so many people lost benefits in a single month without being eligible for additional aid. Over the next six months, CBPP predicts, nearly two million workers will run out of benefits before finding a job – which is also a record. Nonetheless, Congress refused to extend unemployment benefits late last year, as House Majority Leader Tom DeLay (R-TX) said he saw "no reason" to help people through the tough economic time. For more see American Progress's chart showing the surge in long-term unemployment.

BREAKING PROMISES, PLAYING POLITICS: The White House and Congress have failed to act even after the economy produced 1,615,000 fewer jobs in the last six months than the White House Council of Economic Advisors predicted after the most recent tax cut. Since President Bush took office in January 2001, the economy has lost 2.3 million jobs. While extending unemployment benefits costs $1 billion a month – there is a $20 billion trust fund that has been set aside to extend benefits while the job market is weak. A CBO study found that "unemployment benefits are essential to prevent long-term unemployed from falling into poverty." The NYT suggests that the President and conservatives in Congress are reluctant to extend benefits in an election year because it would mar the message of a recovery.

GREENSPAN – THREATENING JOB CREATION: Even as the job market flounders, the WP reports Fed Chairman Alan Greenspan has signaled that he "might raise rates sooner than...expected." It was a perplexing move since rate increases are usually used to head of inflation, which "by some measures is [already] falling." Whatever the rationale, it's bad news for job seekers, since numerous economists predict that "even a slight increase in the Fed's target will cause other interest rates to jump, possibly choking off the recovery and hopes for more meaningful job creation."

GRENNSPAN – STICK TO YOUR DAY JOB: Greenspan's cryptic announcement spooked the stock market and led economist Ian Shepardson to give the Fed Chairman "an F for communications skills." Perhaps Greenspan should spend more time thinking about monetary policy and less time pontificating on issues outside his job description – like tax cuts, social security privatization and the minimum wage.

Unintelligent Stonewall

National Security Adviser Condoleezza Rice took to the airwaves yesterday as the latest Administration official to defend the White House's hyping of intelligence, inflating of the Iraqi "imminent/urgent/immediate/mortal threat," and failure to find the WMD it said there was "no doubt" Iraq possessed. Rice claimed "No one will want to know more than the President the comparison between what we found when we got there and what we thought was there going in." Yet, she repeatedly "rejected calls for an independent investigation." Yesterday, former weapons inspector David Kay, Sen. John McCain (R-AZ) and Democratic lawmakers said an independent investigation was necessary. Previously, the White House opposed the establishment of an independent commission to investigate 9/11, tried to stifle its funding, and delayed providing that commission with critical information.

WEAK ALTERNATIVES TO INDEPENDENT COMMISSION: Salon's Joe Conason notes that if the Administration gets its way and squashes an independent commission, it would mean Americans would have to "entrust Sen. Pat Roberts (R-KS), Intelligence Committee Chairman, with determining why we were misled to war." And that raises a serious question: "how can anyone take seriously the conclusions of a committee run by a politician as deluded (or dishonest) as Roberts?" Conason notes that on CNN's Late Edition, Roberts asked "If, in fact, [Iraq] didn't have WMD, why on earth didn't he let the U.N. inspectors in and avoid the war? That is a real puzzlement to me." Just days later, President Bush picked up this same line of attack saying we went to war because Iraq "did not let us in." But, of course, Iraq did let the U.N. inspectors in – and there were more inspections in the three months after inspectors returned in 2002-03 than in the entire period from 1991-1998. They were forced to withdraw only when an attack by the United States was imminent, and were then barred by the Bush Administration from resuming their work after the U.S. occupied the country. Yet now, "Americans are supposed to entrust Roberts" – the man who would so brazenly distort the facts – "with determining how and why we were misled to war. We are asked to accept his judgment about the comparative culpability of the CIA, the White House, and the highest officials of the Bush administration despite Roberts' tether to reality seeming rather badly frayed."

FROM UNEQUIVOCAL TO EQUIVOCATING: Rice yesterday said "you are never going to be able to be positive" about intelligence data. That was especially true, considering the White House was repeatedly warned by the intelligence community that the President's WMD justification for war was weak. Nonetheless, Rice's comments contrasted sharply to the scores of unequivocal statements from the Administration that they were 100% sure Iraq possessed WMD. Rice herself said on 11/21/02, that Iraq was "armed with weapons of mass destruction" and later and on 8/25/03, that Iraq "possessed weapons of mass destruction." Donald Rumsfeld unequivocally said on 1/20/03, "Saddam Hussein possesses chemical and biological weapons." President Bush also stated unequivocally on 1/3/03, that Iraq "not only has weapons of mass destruction, they used weapons of mass destruction" and said definitively on 10/7/02, that "Iraq could decide on any given day to provide a biological or chemical weapon to a terrorist group or individual terrorists." Vice President Cheney said in August of 2002, "there is no doubt that Saddam Hussein now has weapons of mass use against our friends, against our allies, and against us." See a good list of Administration definitive quotes about Iraq.

CHANGING THE SUBJECT: Despite efforts to ignore the hyping of intelligence, claim the White House never said Iraq was a serious threat, and blame the intelligence community for the WMD failure, the President has been very clear: when it comes to Iraq policy, the buck stops with him. As he declared in October, "The person who is in charge is me." Yet, as the NYT reports, instead of taking responsibility, the White House is opting for a different war rationale than it presented to the American public before the war. Despite all the pre-war claims that Iraq possessed WMD that posed an imminent threat to America, Administration now says "it was justified in going to war against Iraq even if Saddam Hussein had not stockpiled weapons of mass destruction - because Saddam had a history of trying to acquire such weapons." For more, see American Progress' talking points on passing the buck.

Growing Overnight

The Bush Administration announced "The new Medicare bill will cost about 35% more" than it had estimated during the debate over the bill. President Bush specifically "said he would not sign anything that exceeded $400 billion" while also opposing provisions to allow the government to negotiate lower drug prices and reimportation of medicine from Canada – provisions that would have lowered the overall price of the bill. Instead, the White House backed provisions pushing more seniors into private HMOs and sending taxpayer money to the health care industry that bankrolls its political campaign.

WHO KNEW WHAT WHEN: Some conservatives who voted against the measure are not surprised by the new price tag. ""I'm not the least bit surprised," said conservative Rep. John Shadegg, R-Ariz., who voted against the Medicare bill in November." "The estimate may be surprising to some people, but it's not shocking to me," said Tom Scully, who was in charge of Medicare while the bill was being drafted and debated. But others expressed dismay. "Representative Patrick J. Toomey, a Pennsylvania Republican who voted against the bill, said: "The new cost estimate is very disturbing…What could have changed so much in just a few months?" A spokesman for HHS says, "We could not make a final analysis of the cost until it became law." Perhaps, but in the five months time between initial passage of the bills in each chamber and final passage, there was plenty of time for preliminary analysis. This begs the question: Did the Administration prevent the analysis from being done or did it suppress it?

INSURANCE INDUSTRY'S CASH COW: One likely reason for the higher price tag: more money to private health insurers than expected. While "Republicans say the private plans will enhance competition and efficiency," according to the NYT, experts disagree. Robert D. Reischauer, president of the Urban Institute and vice chairman of a federal commission that advises Congress on Medicare, noted, "For the foreseeable future, the private plans are more expensive than the traditional fee-for-service Medicare program." See our Medicare page for more on the costs and politics behind this issue.

Of, Buy and For PhRMA

If ever there was a question in people's minds whether the drug industry wrote the President's Medicare bill, it can now been put to rest. Rep. Billy Tauzin (R-LA), the top author of the bill, is now negotiating a multi-million dollar deal to head PhRMA – the drug industry's lobbying group. According to CNN, Tauzin was "one of the chief architects of the drug plan" that has been criticized for giving away billions to drug companies without guaranteeing a serious drug benefit for seniors. Tauzin would be the second principal architect of the bill to move directly into a lobbying job for an industry that stands to make a windfall off the bill. Just last month, Medicare chief Tom Scully took a job with a health care/drug industry lobbying firm right after passage of the Medicare bill. Scully was specifically granted a waiver from the Bush Administration that permitted him to evade ethics rules and federal law that regulate the "revolving door" between business and government.

A MONEY-DRENCHED RELATIONSHIP: Tauzin consistently ranks among the top recipients of drug industry cash, raking in more than a quarter million dollars from the drug industry since 2000. He was one of the leaders in Congress who helped strip out a provision in the bill that would allow Medicare to negotiate lower prices with drug companies. He also helped eliminate a proposal to give seniors access to lower-priced, FDA approved medicines from Canada – a provision opposed by the drug industry.

PELOSI SAYS SENIORS NEED TO TAKE HEED: House Minority Leader Nancy Pelosi (D-CA) called Tauzin's behavior "inappropriate" and an "abuse of power." She said "Seniors who are wondering why the pharmaceutical companies made out so well in this bill at their expense, need only to look at this example of abuse of power and conflict of interest." Tauzin acknowledged he was unable to defend himself on the merits of the argument, only saying "Nancy Pelosi should be ashamed of herself. She knows better than that." And House conservatives brushed off the controversy, telling CongressDaily: "In the real world, no one knows what PhRMA is."

LEGAL ISSUES: Lawmakers are "questioning the timing of the discussions over the job and whether the timing occurred during the debate on Medicare." As Public Citizen notes, if the discussions did occur simultaneously, "he may have violated House conflict of interest rules." At the time, Tauzin admitted that he had been approached by "a number of people," but his spokesman repeatedly claimed that he was not interested. Public Citizen has called for a formal investigation, saying "if Tauzin takes the drug industry job, that could subvert the House's 'revolving door' policy, which prohibits former members of Congress from directly lobbying their former colleagues for a year after leaving office." When asked about the conflict, Tauzin angrily claimed, "I'm not seeking employment from anyone."

'FOR SALE: ONE CONGRESSMAN': Under this headline, the LA Times writes "Tauzin breaks new ground by conducting what amounts to a public auction for his services in the private sector." The industry "is understandably eager to land Tauzin because it could show that it rewards those who back it in Congress." The WP writes "it will certainly be useful for the pharmaceutical lobby to have one of the bill's godfathers as its paid advocate." Columnist Steve Pearlstein notes "when you consider that Tauzin could probably tip the balance in favor of legislation that could save an industry hundreds of millions of dollars, the question isn't why the Pharmaceutical Research and Manufacturers of America is willing to pay him $1.5 million or even $2 million, but why he can't get even more?" Pearlstein notes Tauzin still hasn't formally accepted the job meaning "the bidding is still open on Billy Tauzin. Do I hear $2.5 million?"

MEDIA – CITIZEN SPEAK OUT AGAINST DEREGULATION: The San Antonio Express-News reports that a "standing-room-only and often intense crowd" trekked to the San Antonio City Counsel Chamber for a public FCC hearing. At the hearing dozens of citizens "told members of the FCC hat broadcasters aren't always serving the community." Of the 500 people in attendance about one quarter lined up to ask a question and "some...waited more than 12 hours to explain, in sometimes emotional statements, why they are opposed to deregulation of media ownership." Many also expressed "their frustration and anger at big media companies and broadcasters." To his credit, FCC Chairman Michael Powell, who has led the charged for media deregulation, "extended the hearing until everyone who'd lined up to talk had a chance to speak."

HEALTH CARE – DRUG ADS INCREASE COSTS, MISLEAD CONSUMERS: Ever wonder why prescription drugs cost so much? Knight-Ridder reports that "Drug companies spend about $1 billion a year - nearly a third more than they did five years ago - to market prescription drugs in general audience publications." As astronomical as that figure is, the pharmaceutical industry spends "even more to advertise on television." Besides adding costs, drug ads "aren't always...good at informing readers of the risks." Meanwhile, "The Food and Drug Administration, which is supposed to protect people from ads that exaggerate the benefits or soft-pedal the risks of prescription drugs, is hobbled by obsolete standards, inadequate staffing and a growing reluctance to get tough with drug companies." Last year, "Only 18 FDA reviewers were assigned to scrutinize the roughly 37,000 drug ads and promotiona

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