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Lewandowski Hire Makes Journalists Choose Between Defending Their Profession and Embracing Its Demise
On Monday the Supreme Court struck down a key part of the Affordable Care Act, ruling that privately-owned corporations don’t have to offer their employees contraceptive coverage that conflicts with the corporate owners’ religious beliefs.
The owners of Hobby Lobby, the plaintiffs in the case, were always free to practice their religion. The Court bestowed religious freedom on their corporation as well – a leap of logic as absurd as giving corporations freedom of speech. Corporations aren’t people.
The deeper problem is the Court’s obliviousness to the growing imbalance of economic power between corporations and real people. By giving companies the right not offer employees contraceptive services otherwise mandated by law, the Court ignored the rights of employees to receive those services.
(Justice Alito’s suggestion that those services could be provided directly by the federal government is as politically likely as is a single-payer federal health-insurance plan – which presumably would be necessary to supply such contraceptives or any other Obamacare service corporations refuse to offer on religious grounds.)
The same imbalance of power rendered the Court’s decision in “Citizens United,” granting corporations freedom of speech, so perverse. In reality, corporate free speech drowns out the free speech of ordinary people who can’t flood the halls of Congress with campaign contributions.
Freedom is the one value conservatives place above all others, yet time and again their ideal of freedom ignores the growing imbalance of power in our society that’s eroding the freedoms of most people.
This isn’t new. In the early 1930s, the Court trumped New Deal legislation with “freedom of contract” – the presumed right of people to make whatever deals they want unencumbered by federal regulations. Eventually (perhaps influenced by FDR’s threat to expand the Court and pack it with his own appointees) the Court relented.
But the conservative mind has never incorporated economic power into its understanding of freedom. Conservatives still champion “free enterprise” and equate the so-called “free market” with liberty. To them, government “intrusions” on the market threaten freedom.
Yet the “free market” doesn’t exist in nature. There, only the fittest and strongest survive. The “free market” is the product of laws and rules continuously emanating from legislatures, executive departments, and courts. Government doesn’t “intrude” on the free market. It defines and organizes (and often reorganizes) it.
Here’s where the reality of power comes in. It’s one thing if these laws and rules are shaped democratically, reflecting the values and preferences of most people.
But anyone with half a brain can see the growing concentration of income and wealth at the top of America has concentrated political power there as well — generating laws and rules that tilt the playing field ever further in the direction of corporations and the wealthy.
Antitrust laws designed to constrain monopolies have been eviscerated. Competition among Internet service providers, for example, is rapidly disappearing – resulting in higher prices than in any other rich country. Companies are being allowed to prolong patents and trademarks, keeping drug prices higher here than in Canada or Europe.
Tax laws favor capital over labor, giving capital gains a lower rate than ordinary income. The rich get humongous mortgage interest deductions while renters get no deduction at all.
The value of real property (the major asset of the middle class) is taxed annually, but not the value of stocks and bonds (where the rich park most of their wealth).
Bankruptcy laws allow companies to smoothly reorganize, but not college graduates burdened by student loans.
The minimum wage is steadily losing value, while CEO pay is in the stratosphere. Under U.S. law, shareholders have only an “advisory” role in determining what CEOs rake in.
Public goods paid for with tax revenues (public schools, affordable public universities, parks, roads, bridges) are deteriorating, while private goods paid for individually (private schools and colleges, health clubs, security guards, gated community amenities) are burgeoning.
I could go on, but you get the point. The so-called “free market” is not expanding options and opportunities for most people. It’s extending them for the few who are wealthy enough to influence how the market is organized.
Most of us remain “free” in limited sense of not being coerced into purchasing, say, the medications or Internet services that are unnecessarily expensive, or contraceptives they can no longer get under their employer’s insurance plan. We can just go without.
We’re likewise free not to be burdened with years of student debt payments; no one is required to attend college. And we’re free not to rent a place in a neighborhood with lousy schools and pot-holed roads; if we can’t afford better, we’re free to work harder so we can.
But this is a very parched view of freedom.
Conservatives who claim to be on the side of freedom while ignoring the growing imbalance of economic and political power in America are not in fact on the side of freedom. They are on the side of those with the power.
Timothy Geithner’s new book about the financial crisis, “Stress Test,” is basically an argument that the Wall Street bailout succeeded. That’s hardly surprising, given that Geithner was in charge of the bailout when Treasury Secretary (as was his predecessor at Treasury, Hank Paulson), and so has an inherent interest in telling the public it succeeded.
Even so, the bailout clearly did succeed, if success means avoiding another Great Depression.
But another Great Depression might have been avoided if the crisis had been handled differently — for example, by allowing the bankruptcy laws to do what they were intended to do, and forcing the big Wall Street banks to reorganize under them.
In fact, the bailout was a colossal failure in several respects Geithner barely mentions in his book, or avoids completely:
(1) The biggest Wall Street banks are now bigger than ever, and no sane person on or off the Street now believes Washington will ever allow them to fail – which means they’ll continue to make big, risky bets because they know they can’t fail. And they’ll get even bigger because big depositors and lenders know they’ll never fail and therefore demand lower interest rates than demanded from smaller banks.
(2) No Wall Street executives have ever been prosecuted for what they did to the country, which means even more rampant irresponsibility in executive suites as well as even deeper cynicism in the public about the political power of Wall Street.
(3) The bailout helped the banks but did little or nothing for the tens of millions of Americans who lost billions of dollars in home equity and savings, and the millions more who lost their jobs. The toll was greatest on the poor and the middle class, who still haven’t recovered their losses, even though Wall Street has fully recovered (and then some). Nor have reforms been enacted that will help the middle class and the poor the next time Wall Street implodes.
So pardon me if I take issue with Tim Geithner. The bailout was a success in the narrowest terms. Seen more broadly it was a terrible failure.
We’d have done better had we forced the biggest Wall Street banks, including the giant insurer AIG, to reorganize under bankruptcy rather than bail them out.
Is Detroit destined to become a Chinese city? Chinese homebuyers and Chinese businesses are starting to flood into the Motor City, and the governor of Michigan is greatly encouraging this. In fact, he has formally asked the Obama administration for 50,000 special federal immigration visas to encourage even more immigration from China and elsewhere. So [...]
Timothy Alexander Guzman, Silent Crow News - Puerto Rico has hit a brick wall. A financial tyranny is slowly emerging as desperation is starting to reflect on the Puerto Rican Government. Not only Puerto Rico’s underground economy will face a tax burden that will be enforced by the government, but also businesses, both small and large. According to Reuters they claim that Puerto Rico is hiring “tax specialists” but it seems that they are much more than just tax specialists according to the article:
The Treasury is hiring about 200 more tax specialists. Some of those will be checking on the books of businesses across the island, but some will be mystery shopping – making purchases at specially selected stores without identifying themselves to check for violators.
Sales tax evaders could get slapped with a maximum $20,000 fine.
But $20,000 for a small business could mean a hefty chunk of revenues. That means a delicate balance for the government: Changing attitudes so that more businesses register and pay their taxes and fees, while not piling so many bills onto small businesses that they collapse
Can you imagine a $20,000 fine imposed on both small and large businesses by the Puerto Rican Government? This will destroy business activities all across the island; even if they managed to collect half of the debt at $35 billion not counting the added interest rates that accumulates over time would help the debt burden:
From the western mountain town of Lares to the capital San Juan, officials are wrestling with how to bring the underground economy out of the shadows and onto the tax rolls without creating such an onerous financial burden that thousands of small and medium businesses can’t survive.
More than a quarter of the island’s economy is informal, some studies say, from large companies evading taxes to individuals selling items for cash at roadside stands. But estimates vary widely because the activity can be so hard to track.
While not new, the problem has become urgent of late. The government desperately needs to find new revenue to bolster a budget full of holes and turn around an economy now eight years in recession. It is scrambling to avoid a painful debt restructuring some view as almost inevitable
Imposing tax collections or even adding new taxes while Puerto Rico is in a deep recession to meet Wall Street’s demands would destroy whatever is left of the economy. Foreign investors including American and European companies both small and large are becoming more hesitant to invest in Puerto Rican Industries and its real estate markets as the debt crisis continues to spark major concerns. The Associated Press also reported in February that the government has set up a task force that would “target” business owners and individuals. The report stated the following:
Treasury Secretary Melba Acosta said a task force has been set up to target both business owners and individuals, adding that authorities are investigating more than 100 cases and more are expected to follow. Puerto Rico currently has only a 56 percent “capture” rate on tax revenues that should be taken in, losing some $800 million annually as a result, economist Gustavo Velez says.
The Treasury Department already has referred 12 cases representing a total of more than $8 million in unpaid taxes to the island’s justice department. “This money belongs to the people of Puerto Rico,” Justice Secretary Cesar Miranda said. “It represents a teacher’s salary, a town’s road, a police officer’s uniform.”
Two business owners have been charged with 36 counts of tax evasion and illegal appropriation, and officials warned that dozens of others could face similar accusations
Puerto Rico’s government is in a bind. They are indebted to Wall Street and its Hedge Fund partners as they are to Washington. Hedge funds do not include Puerto Rico’s Government officials in their meetings. Bloomberg News reported that Jones Law Firm (who was one of the law firms restructuring Detroit’s bankruptcy) had a meeting that did not include Puerto Rican officials, “Commonwealth officials aren’t involved in the Jones Day meeting and didn’t call for it, according to the statement.” But Puerto Rico’s Government Development Bank’s statement said that “We made significant progress in implementing our fiscal and economic development plans in 2013, and are determined to continue that progress in 2014.” The Puerto Rico government will proceed to actions dictated by Washington and Wall Street duopoly that will undermine the economy.
$70 Billion in debt will increase as the islands residents continue to flee towards other depressed states for job opportunities within the US, including Florida, New York and Chicago. All states mentioned have high unemployment rates, foreclosures as more business and individual bankruptcies continue to rise. Florida now leads the United States in what you would call “Zombie Foreclosures.” In a 2014 article by www.Bizjournals.com called ‘Florida leads nation in ‘zombie foreclosures,’ RealtyTrac says’ claimed that “RealtyTrac considers a “Zombie Foreclosure” when a homeowner abandons a house that is facing a pending foreclosure action. There are about 55,000 of those in Florida, more than triple the nearest state of Illinois.” An economic situation Puerto Ricans arriving in Florida would find to be as dire as it was in their homeland. Increasing tax collections on Puerto Rican businesses and people would only elevate the economic situation to an even worst state of economic affairs. This would create insecurities even among the small business owners who sell produce or ice cream on the road. As you tax more businesses to pay the States debts, you reduce profits that would be used to reinvest in equipment, supplies and even create or maintain jobs to grow the economy.
Not only would it place the burden on the Puerto Rican people, it would frighten foreign businesses, private investors and individuals from investing on the island’s economy that can create jobs. Puerto Rico’s government under Governor Padilla is just another administration under Washington’s rule. Taxing businesses and individuals was the only option the Puerto Rican Government had with regards to their enormous debt burden they face. Besides, Puerto Rico’s largest employer is the government; a bureaucracy that does not produce any goods for trade besides Pharmaceuticals and a handful of other products for the US market. The new actions taken by the Padilla government on behalf of the financial elites is at the expense of those who are financially struggling. It is just business as usual.
Did you know that Family Dollar is closing 370 stores? When I learned of this, I was quite stunned. I knew that retailers that serve the middle class were really struggling right now, but I had no idea that things had gotten so bad for low end stores like Family Dollar. In the post-2008 era, [...]
The level of employment in the United States has been declining since the year 2000. There have been moments when things have appeared to have been getting better for a short period of time, and then the decline has resumed. Thanks to the offshoring of millions of jobs, the replacement of millions of workers with [...]
“As things stand, the banks are the permanent government of the country, whichever party is in power.”
– Lord Skidelsky, House of Lords, UK Parliament, 31 March 2011)
On March 20, 2014, European Union officials reached an historic agreement to create a single agency to handle failing banks. Media attention has focused on the agreement involving the single resolution mechanism (SRM), a uniform system for closing failed banks. But the real story for taxpayers and depositors is the heightened threat to their pocketbooks of a deal that now authorizes both bailouts and “bail-ins” – the confiscation of depositor funds. The deal involves multiple concessions to different countries and may be illegal under the rules of the EU Parliament; but it is being rushed through to lock taxpayer and depositor liability into place before the dire state of Eurozone banks is exposed.
The bail-in provisions were agreed to last summer. According to Bruno Waterfield, writing in the UK Telegraph in June 2013:
Under the deal, after 2018 bank shareholders will be first in line for assuming the losses of a failed bank before bondholders and certain large depositors. Insured deposits under £85,000 (€100,000) are exempt and, with specific exemptions, uninsured deposits of individuals and small companies are given preferred status in the bail-in pecking order for taking losses . . . Under the deal all unsecured bondholders must be hit for losses before a bank can be eligible to receive capital injections directly from the ESM, with no retrospective use of the fund before 2018.
As noted in my earlier articles, the ESM (European Stability Mechanism) imposes an open-ended debt on EU member governments, putting taxpayers on the hook for whatever the Eurocrats (EU officials) demand. And it’s not just the EU that has bail-in plans for their troubled too-big-to-fail banks. It is also the US, UK, Canada, Australia, New Zealand and other G20 nations. Recall that a depositor is an unsecured creditor of a bank. When you deposit money in a bank, the bank “owns” the money and you have an IOU or promise to pay.
Under the new EU banking union, before the taxpayer-financed single resolution fund can be deployed, shareholders and depositors will be “bailed in” for a significant portion of the losses. The bankers thus win both ways: they can tap up the taxpayers’ money and the depositors’ money.
The Unsettled Question of Deposit Insurance
But at least, you may say, it’s only the uninsured deposits that are at risk (those over €100,000—about $137,000). Right?
Not necessarily. According to ABC News, “Thursday’s result is a compromise that differs from the original banking union idea put forward in 2012. The original proposals had a third pillar, Europe-wide deposit insurance. But that idea has stalled.”
European Central Bank President Mario Draghi, speaking before the March 20th meeting in the Belgian capital, hailed the compromise plan as “great progress for a better banking union. Two pillars are now in place” – two but not the third. And two are not enough to protect the public.As observed in The Economist in June 2013, without Europe-wide deposit insurance, the banking union is a failure:
[T]he third pillar, sadly ignored, [is] a joint deposit-guarantee scheme in which the costs of making insured depositors whole are shared among euro-zone members. Annual contributions from banks should cover depositors in normal years, but they cannot credibly protect the system in meltdown (America’s prefunded scheme would cover a mere 1.35% of insured deposits). Any deposit-insurance scheme must have recourse to government backing. . . . [T]he banking union—and thus the euro—will make little sense without it.
All deposits could be at risk in a meltdown. But how likely is that?
Pretty likely, it seems . . . .
What the Eurocrats Don’t Want You to Know
Mario Draghi was vice president of Goldman Sachs Europe before he became president of the ECB. He had a major hand in shaping the banking union. And according to Wolf Richter, writing in October 2013, the goal of Draghi and other Eurocrats is to lock taxpayer and depositor liability in place before the panic button is hit over the extreme vulnerability of Eurozone banks:
European banks, like all banks, have long been hermetically sealed black boxes. . . . The only thing known about the holes in the balance sheets of these black boxes, left behind by assets that have quietly decomposed, is that they’re deep. But no one knows how deep. And no one is allowed to know – not until Eurocrats decide who is going to pay for bailing out these banks.
When the ECB becomes the regulator of the 130 largest ECB banks, says Richter, it intends to subject them to more realistic evaluations than the earlier “stress tests” that were nothing but “banking agitprop.” But these realistic evaluations won’t happen until the banking union is in place. How does Richter know? Draghi himself said so. Draghi said:
“The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks … including through the provision of a public backstop. . . . These arrangements must be in place before we conclude our assessment.”
Richter translates that to mean:
The truth shall not be known until after the Eurocrats decided who would have to pay for the bailouts. And the bank examinations won’t be completed until then, because if any of it seeped out – Draghi forbid – the whole house of cards would collapse, with no taxpayers willing to pick up the tab as its magnificent size would finally be out in the open!
Only after the taxpayers – and the depositors – are stuck with the tab will the curtain be lifted and the crippling insolvency of the banks be revealed. Predictably, panic will then set in, credit will freeze, and the banks will collapse, leaving the unsuspecting public to foot the bill.
What Happened to Nationalizing Failed Banks?
Underlying all this frantic wheeling and dealing is the presumption that the “zombie banks” must be kept alive at all costs – alive and in the hands of private bankers, who can then continue to speculate and reap outsized bonuses while the people bear the losses.
But that’s not the only alternative. In the 1990s, the expectation even in the United States was that failed megabanks would be nationalized. That route was pursued quite successfully not only in Sweden and Finland but in the US in the case of Continental Illinois, then the fourth-largest bank in the country and the largest-ever bankruptcy. According to William Engdahl, writing in September 2008:
[I]n almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks [and] take over their management and assets … In the Swedish case the end cost to taxpayers was estimated to have been almost nil.
Typically, nationalization involves taking on the insolvent bank’s bad debts, getting the bank back on its feet, and returning it to private owners, who are then free to put depositors’ money at risk again. But better would be to keep the nationalized mega-bank as a public utility, serving the needs of the people because it is owned by the people.
As argued by George Irvin in Social Europe Journal in October 2011:
[T]he financial sector needs more than just regulation; it needs a large measure of public sector control—that’s right, the n-word: nationalisation. Finance is a public good, far too important to be run entirely for private bankers. At the very least, we need a large public investment bank tasked with modernising and greening our infrastructure . . . . [I]nstead of trashing the Eurozone and going back to a dozen minor currencies fluctuating daily, let’s have a Eurozone Ministry of Finance (Treasury) with the necessary fiscal muscle to deliver European public goods like more jobs, better wages and pensions and a sustainable environment.
A Third Alternative – Turn the Government Money Tap Back On
A giant flaw in the current banking scheme is that private banks, not governments, now create virtually the entire money supply; and they do it by creating interest-bearing debt. The debt inevitably grows faster than the money supply, because the interest is not created along with the principal in the original loan.
For a clever explanation of how all this works in graphic cartoon form, see the short French video “Government Debt Explained,” linked here.
The problem is exacerbated in the Eurozone, because no one has the power to create money ex nihilo as needed to balance the system, not even the central bank itself. This flaw could be remedied either by allowing nations individually to issue money debt-free or, as suggested by George Irvin, by giving a joint Eurozone Treasury that power.
The Bank of England just admitted in its Quarterly Bulletin that banks do not actually lend the money of their depositors. What they lend is bank credit created on their books. In the U.S. today, finance charges on this credit-money amount to between 30 and 40% of the economy, depending on whose numbers you believe. In a monetary system in which money is issued by the government and credit is issued by public banks, this “rentiering” can be avoided. Government money will not come into existence as a debt at interest, and any finance costs incurred by the public banks’ debtors will represent Treasury income that offsets taxation.
New money can be added to the money supply without creating inflation, at least to the extent of the “output gap” – the difference between actual GDP or actual output and potential GDP. In the US, that figure is about $1 trillion annually; and for the EU is roughly €520 billion ($715 billion). A joint Eurozone Treasury could add this sum to the money supply debt-free, creating the euros necessary to create jobs, rebuild infrastructure, protect the environment, and maintain a flourishing economy.
Ellen Brown is an attorney, founder of the Public Banking Institute, and a candidate for California State Treasurer running on a state bank platform. She is the author of twelve books, including the best-selling Web of Debt and her latest book, The Public Bank Solution, which explores successful public banking models historically and globally.
Summer Reese, who was named executive director in November after doing the job on an interim basis for more than a year, was fired by Pacifica’s national board on Thursday. In a brief statement on Friday, the board confirmed the move and thanked Ms. Reese “for her service to date,” but gave no explanation.
Ms. Reese’s dismissal is the latest in a series of changes in recent years that have destabilized Pacifica and its five stations. In August, WBAI, which operates a powerful signal at 99.5 FM but is millions of dollars in debt, laid off 19 of its 29 employees, including the entire news staff. The station, which is supported almost entirely by listener donations, has since been through two program directors and struggled publicly with its fund-raising.
"According to a media release Monday morning, Reese and a small group of supporters removed a padlock installed at Pacifica’s offices the previous day and “informed staffers that business would continue as usual.” (Tracy) Rosenberg claims the firing was illegal because of the three-year contract held by Reese, adding that she has “no doubt” that the board was planning to fire Reese for political reasons.
The forces currently aligned with Summer Reese, including Gary Null, and with Bernard White, Lydia Brazon and Dan Siegel were already engaged in a long-term struggle by the time I arrived in January 2006. Many of the players still remain the same, and "takeover" rumors are currently being circulated by both factions.
Contract issues were also involved in my departure, although I ultimately chose to leave rather than extend what was becoming a stalemate. Essentially the same leadership that retook control of the PNB and dismissed Reese urged my early departure and the selection of Nicole Sawaya (without interviewing any other candidates). Not a great transition, as it turned out, and entirely avoidable.
That said, no one faction is exclusively responsible for the network's decline. But snap dismissals are no better than bolt cutters in solving Pacifica's real problem - a crippling deficit of trust. In light of recent developments, I thought these 2010 reflections might be relevant...
A lot has happened since I left my job as Pacifica Radio’s Executive Director at the end of 2007. Almost a decade after she was abruptly fired former KPFA General Manager Nicole Sawaya returned as my replacement with enthusiastic support from the Board and community – but resigned twice over the next year. As the network approached its 60th anniversary it faced the most serious organizational and financial crisis in years. On-air fund drives, which bring in over 80 percent of the network’s income, weren’t meeting their goals, most stations had meager cash reserves, and WBAI was a half a million behind its target and mired in an internal power struggle that had been building for several years.
According to Casey Peters, Pacifica’s National Election Supervisor in 2007, a “vacuum of power” developed after my departure. “With obvious instability at the top,” he wrote in his final report, “the election campaigns descended into chaos.” When he tried to meet with Sawaya to discuss the process, she declined and told him “she opposed Pacifica Bylaws provisions for elected boards.”
The problems intensified further when Sawaya resigned and corporate counsel Dan Siegel stepped in. “He applied intimidation regarding the still-pending certification of KPFA results,” Peters claimed, “telling me that I would be fired if I did not do so promptly. The problem was that criteria for certification had not been met due to irregularities in the campaign.” Peters came to believe that Siegel was attempting to control the outcome of the vote. On March 13, 2008, as Peters was about to fly to New York for the WBAI vote count he received a message from Chief Financial Officer Lonnie Hicks. The word was that Siegel didn’t want him counting votes in New York. Furthermore, he was being fired.
A few days later, according to Peters’ account, Siegel entered his home without notice and startled his wife. “His intent was to confiscate election equipment and materials,” Peters wrote. “Siegel had apparently been drinking, and sat in a rented SUV flashing his headlights into our bedroom. Marilyn called the police to stop the harassment. We seriously considered pressing trespass and assault charges, but felt any publicity about the incident would not look good for the Pacifica Foundation.” Nevertheless, after the elections a lawsuit was filed by one faction at WBAI against the network and its representatives.
In Spring 2008, a fight over financial control between Hicks and Sawaya, who had been wooed back after her first resignation, resulted in a Board decision to give her the right to directly supervise the national financial staff, something I’d sought without success. Unfortunately, after a three month absence she faced a rapidly worsening picture. Frustrated by a costly organizational structure that often blocked change, she openly called it “unsustainable.”
One of her first big decisions, made with Hicks’ agreement, was to cut the budget for Free Speech Radio News by 25 percent. What seemed to shock some people wasn’t so much the cutback (about $11,000 per month) but the fact that it was done without prior discussion. Sawaya explained that the financial crunch required strong and immediate action. The Board decided to let it stand.
The next surprises came in July, just as budgets for the next fiscal year were being developed. The National Board had voted to convene in person that month, but the national office didn’t follow up and the meeting had to be cancelled. Afterward, without explanation, Hicks disappeared from work. No announcement was issued, but news leaked out that he was on “paid leave to deal with family matters.” Later, rumors circulated that an investigation of his activities was being pursued – and also that he might sue. Sawaya meanwhile assumed responsibility for budget development, pushing for staff reductions and other budget cuts.
In the end, she left first, while Hicks returned to work in late 2008. He was ultimately terminated in early 2009, and replaced by an old nemesis, former National Finance Committee Chair LaVarn Williams. As predicted, he filed a lawsuit, alleging that he was dismissed because he was African American and a whistleblower. Clearly, Hicks had a sense of irony, considering his frequent warnings about escalating legal costs, the fact that a majority of Pacifica's National Board and staff – including his replacement – were people of color, and that he fought as hard as anyone to hold back information from the board and membership when he was in control.
Sawaya announced her second resignation in early August 2008, but asked those who knew not to say anything for a month. At meetings, she meanwhile tried to convince the Board and National Finance Committee that Pacifica should act like a network and “centralize” various functions, especially accounting and reporting. Directors listened but nothing changed.
As the national political conventions approached she turned her attention to Pacifica’s coverage. A radio journalist, Sawaya considered it a high priority. Still, people were surprised by her decision to leave the national office and personally cover the presidential race at a time when the main management issue was resolving its financial crisis. What they didn’t know was that she had already resigned.
Before she left for Denver, another confrontation intensified the situation. A volunteer programmer, allegedly “banned” from KPFA in Berkeley, showed up unexpectedly. The General Manager wasn’t around, but the Business Manager felt that something needed to be done. Calling the National Office next door, she asked for advice from the new Human Resources Director, Dominga Estrada, who advised her to call the police. According to witnesses, when the cops arrived excessive force was used. Sawaya was there and attempted to block videotaping of the event.
This deepened the existing divide at the station. Management defended its decision but said it wasn’t responsible for the overreaction of the police. Dozens of volunteers, and some on the staff, saw it as another example of a management out of step with Pacifica’s values and mission. A letter of no confidence in GM Lemlem Rijio was signed by dozens of people.
Soon afterward HR director Estrada left for a new job elsewhere and the National Board began to openly discuss what was called a “national office collapse.” The term actually referred to one of several options for how to address the overall problems. One alternative was to struggle on as is, a decision that would create a large budget deficit. Another was to cut some national positions and the salaries of others. The third and most radical option was to lay off almost everyone, retaining only enough staff to pay the bills and keep governance and the national office functioning.
The Board also had to decide what to do about the leadership vacuum. Some hoped to quickly recruit a new Executive Director. But the process would take months, and proposals to re-expand the CFO’s authority and apply strict performance standards to managers were likely to get in the way.
Even if a new chief executive could be found – and the Board overcame its divisions – there were elephants in the room. Pacifica’s leaders were far from agreement on how to resolve its financial crisis, and, even more difficult, restructure its programming and management to reverse the long-term decline in listenership and income.
By early 2009, as blogs and discussion forums speculated about receivership, bankruptcy, and breaking up the network, the balance of power shifted again. In New York and on the national board, the controversial Justice and Unity Coalition lost control. A new national chair, Grace Aaron of Los Angeles, stepped in as Interim ED. As the crisis deepened, she took dramatic action.
WBAI was facing eviction. It was $128,000 behind on the rent for its Wall Street office and studio space by April, and owed another $75,000 in back payments for its coveted transmitter atop the Empire State Building. It was losing at least $500,000 a year, required repeated short-term bailouts, and owed the national office almost $1 million in back payments for central services. WBAI had weathered storms and struggles before. But this time the troubles not only could bring down the station but also threaten the future of Pacifica itself.
To reduce the rent, Tony Riddle, the station’s fifth General Manager in seven years, renegotiated a long-term lease with Silverstein Properties – without getting Aaron’s approval. Under the new terms, WBAI had to pay $60,000 in May, another $75,000 in June, and $45,000 by July 25. If the station or Pacifica missed a payment, the consequence would be immediate eviction. It turned out to be one of Riddle’s last acts as GM.
In early May, Aaron removed him, but created a new “at home” job for Riddle as National Development Director. It was apparently a consolation prize for not making a stink. The new CFO, LaVarn Williams, was appointed Acting GM of the station. Almost immediately, Program Director Bernard White was removed. Aaron had already ordered the locks changed on the transmitter site. While some WBAI boosters cheered the changes as long overdue, others took to the streets, decrying a racist world view among opportunistic liberals.
In June, Aaron removed another GM, Ron Pinchback of WPFW in Washington, DC. The station had also lost listeners and fallen short on fundraising in recent years. Yet critics saw racial motives: like White and Hicks, Pinchback was African-American, suggesting to some that the changes were really a purge of top Black managers. The fact that most replacements were also Black was overlooked.
“WBAI was predominantly white in the 1960s and 1970s,” noted JUC leader Lederer. “And there has always been a rear guard of white listeners and programmers who want to go back.” JUC members and other Bernard White backers threatened to boycott and possibly sue unless this latest “national coup” was reversed. The station’s “race” war wasn’t over yet.
When Amy Goodman expressed “dismay” about White’s removal in a letter to Pacifica management, Williams replied that he and previous GMs were responsible for a “failure model” that jeopardized both “your program and the whole foundation.” Despite the popularity of Democracy Now!, Amy’s influence had become limited over the years, mainly governed by a mutually lucrative contract to air the show and assist with fundraising. Thus, barring a successful lawsuit, which could take years to resolve, or an LSB election that returned the JUC to power, Bernard White had seen his final days at Pacifica.
By 2010, Pacifica finally settled on a new Executive Director, Florida feminist radio host Arlene Engelhardt. The intensity of conflict was down a bit, but revenues from on-air fundraising continued to decline. KPFA’s GM Rijio was forced out and only KPFT in Houston had permanent management.
Upset about staff cutbacks, Kellia Ramares, long-time journalist and board operator at KPFA, delivered her own swan song at a Pacifica National Board meeting in July. After more than a decade with the network, including an arrest in the newsroom during the bad old “hijack” days, she announced that she was leaving. “Pacifica hires an election supervisor while they cannot keep a news tech at quarter-time hours?” she asked rhetorically. “Is this the business of elections or radio? To those who say that I should not criticize this expenditure, because ‘we must democratize Pacifica,’ I quote Confucius: “You cannot teach philosophy to a hungry man.”
The critique went deeper still. In an article for the Atlantic Free Press, Ramares added, “I now question the entire alleged movement that calls itself progressive.” She urged others similarly disillusioned to ask whether “progressivism is a philosophy that helps its adherents live healthy, secure, decent lives in the material world of today, or is it just pie-in-the-sky propaganda that institutions such as Pacifica use to get well-meaning people to give it money.”
Acknowledging that all media were taking an economic hit, she nevertheless had concluded that “citizen journalism, available across the political spectrum, but a special darling of the left because of its free speech nature and alleged purity of purpose, is destroying the ability of journalists to make a living. Paid journalists can’t compete with free. Is it progressive to expect, or even to demand, to receive free work in a society that demands that we pay for our food, clothing, housing and health care? Is it progressive to give donations to an institution for its infrastructure, but not to care about whether the workers in that institution can pay their bills?”
“Can we do well while we do good,” she concluded, “or is progressivism just a fancy name we give our struggle and poverty in order to make our marginalization seem noble?”
When rumors fly through Planet Pacifica or attacks get especially nasty, people often blame provocateurs and charge that the government is out to get radio’s voice of the people. There is some basis for this suspicion. The FBI had Pacifica in its sights as early as 1958, and took a special interest in 1962 when former Special Agent Jack Levine gave KPFA an interview. Levine exposed the Bureau as a threat to democracy and a tool of J. Edgar Hoover, its vain and obsessed director. According to Mathew Lasar, who reviewed Freedom of Information Act files, the Bureau poked, prodded, and harassed the organization for years, even planting agents disguised as private citizens.
In recent times, however, charges of counter-intelligence operations directed against the organization have been speculative at best, and occasionally excursions into free-range paranoia. As Executive Director, I was frequently asked to investigate such suspicions but found no solid evidence of a government operation. And even if a disinformation campaign was being pursued, it would be overkill. The Pacifica community is capable of destabilizing itself without a federal assist. Outside forces aren’t responsible for the bylaws or listener activist distrust of staff, the slow response to the digital age, disputes about the mission, programming gridlock, financial decline, or misbehavior by board members and volunteers.
Part of the problem is the version of democracy put in place in 2002. At this point, the five stations had about a million regular listeners (declining since then). Of this total, about 10 percent make financial or volunteer contributions, qualifying them to participate in local elections. Of that total, little more than 10 percent actually return ballots in the elections. In recent years it has sometimes been difficult to reach that bylaw-mandated threshold.
Due to instant runoff voting, it takes at most about 300 votes for someone to be elected to a station board. In other words, Local Station Board members draw their right to govern from less than one percent of the listeners. And in order to win, candidates often resort to negative appeals, especially charges that the process is corrupt and Pacifica isn’t democratic enough. In general, the elections have tended to perpetuate an atmosphere of confrontation and suspicion.
Board meetings also pose problems. They frequently feature rude outbursts and other disrespectful behavior. Roberts Rules are often abused, becoming weapons of obstruction rather than tools to promote rational discussion. Members use e-mails to spread rumors and promote debates of marginal relevance. In many cases, factional alliances manipulate the rules. Productivity suffers and questionable behavior opens the organization to legal liability. All this has had the effect of alienating potential supporters or future board members.
Touring the stations back in 2006, I repeatedly asked whether Pacifica was trying to operate a radio network or create a government. The reason was that it looked like the latter. Some even wanted quasi-judicial bodies – like the Committee to Investigate Allegations of Racism and Sexism formed in 2006 – and the equivalent of a Freedom of Information Act, as if Pacific was a National Security State. Anyone who questioned the “bold experiment” was considered out of step, possibly even a reactionary.
More than three years after I left, despite financial crisis, major staff turnover and a forceful exercise of executive power, progress remains elusive. Change is in the air, but the outcome is uncertain. Another round of contentious Board elections is underway, and whatever the results, they will likely either slow down the pace or again alter the direction.
Investigative reporter Greg Palast is usually pretty good at peering behind the rhetoric and seeing what is really going on. But in tearing into Senator Elizabeth Warren’s support of postal financial services, he has done a serious disservice to the underdogs – both the underbanked and the US Postal Service itself.
In his February 27 article “Liz Warren Goes Postal,” Palast attacked her support of the USPS Inspector General’s proposal to add “non-bank” financial services to the US Postal Service, calling it “cruel, stupid and frightening” and equating it with the unethical payday lending practices it seeks to eliminate.
After “several thousand tweets by enraged liberals,” he wrote a follow-up article called “Brains Lost in Mail—Postal Bank Bunkum,” in which he contends, “the Postal Governors are running a slick, slick campaign” to “use federal property to run illegal loan-sharking shops.” He says they would “team up with commercial banks to cash in on payday predation,” exempting themselves from Warren’s own consumer protection regulations.
His first article concludes:
While the USPS wants to “partner” with big banks, why not, instead, allow community credit unions to use post offices as annexes to provide full, complete, non-usurious neighborhood banking services? This is the type of full-service “postal banking” successful in Switzerland and Japan that is envisioned by Ellen Brown, not the payday predation proposed by the USPS.
I obviously agree with him on the full-service postal banking alternative, but that is not something Congress appears ready to approve. Palast has not looked closely at the white paper from the Inspector General’s office relied on by Senator Warren, or at the research on payday lending and the inability of credit unions to service that market. The IG’s proposal, rather than fleecing the poor, would save them from being fleeced by offering basic financial services at much reduced rates. And that makes it a very good start.
The Straits and Strictures of the USPS
In analyzing the proposal, we need to consider the stressed circumstances and limitations of the Postal Service. It is fighting for its life, after the nefarious 2006 Postal Accountability and Enhancement Act (PAEA) rendered it insolvent. Apparently intended to force the privatization of the post office, the Act required the prefunding of postal retiree health benefits for 75 years into the future. That means funding workers not yet born, an onerous burden no other public or private company is required to carry.
Worse, as the white paper notes:
The 2006 Postal Accountability and Enhancement Act (PAEA) generally prohibits the Postal Service from offering new nonpostal services. However, given that the Postal Service is already providing money orders and other types of non-bank financial services, it could explore additional options within its existing authority.
Given the hostility among conservatives in Congress to postal expansion of any sort, full-service banking (involving deposits, checking and savings accounts, and home and business loans) is unlikely to be authorized any time soon. But the proposed prepaid Postal Cards would simply be an electronic 21st century extension of paper money orders, and short-term Postal Loans could be construed as advances on those cards. According to the white paper, the proposed Postal Card would cost users less than half what they pay for prepaid cards now, and Postal Loans would cost them less than one-tenth the cost of a payday loan, a substantial savings for the poor.
It sounds good, but where will the post office get the money for the loans if it cannot branch into taking deposits? And where will it get the capital to back the loans when it is insolvent? The white paper states:
Electronic payment products like Postal Cards might be a wise entry point, and would expand upon existing services like paper money orders. . . . The right partners could bring much needed startup cash to the table as part of the deal, overcoming the Postal Service’s current funding limitations.
The white paper also suggests partnering with banks for the back-end network and expertise necessary to deal with a national or global card system. But the RIGHT partners are emphasized:
One important note of caution: the Postal Service should be very mindful to ensure that no partnership damages its reputation. The level of trust the Postal Service has earned from the public is an unmatched asset, and one that should not be jeopardized.
Billions More for the Poor
The white paper notes that more than a quarter of all US households do not have a bank account, or use costly services like payday loans and check-cashing exchanges just to make ends meet. People who filed for bankruptcy in 2012 were on average just $26 per month short of meeting their expenses, so even modest