Wednesday, August 25, 2010


HISPANDERING OBAMA, AND LA RAZA NAPOLITANO, OF HOMELAND SECURITY = PATHWAY TO CITIZENSHIP, can’t find the loot to defend our borders, even has Obama just squandered $1.6 billion building 3 bases in OpiumLand of Afghanistan, whose head-of-state is a drug addict, and his brother a drug dealer!

U.S. Gives Corrupt Mexican Govt. $400 Million

U.S. Gives Corrupt Mexican Govt. $400 Million

04/06/2010 - 10:43am

In a miserably unsuccessful effort to combat the rampant violence created by Mexican drug cartels, the United States is giving that country’s corrupt government hundreds of millions of dollars even though its official "drug czar" got busted taking huge bribes from renowned cartels.

The U.S. continues to pour huge amounts of tax dollars into a notoriously crooked Mexican administration that often collaborates with the sophisticated drug operations that have infested the southern border as well as cities throughout America.

This fiscal year alone, the U.S. has given Mexico $400 million to fight drug cartels yet the operations appear to be thriving like never before. Drug-fueled violence has led to more than 5,000 deaths and unprecedented amounts of narcotics have been smuggled north of the border.

Senior U.S. counter narcotics officials confirm that the U.S.-Mexico relationship has for years been stormy and infested with mistrust and neglect. That’s because, like most Latin American countries, Mexican administrations have long been plagued by major corruption at the highest levels.

A perfect example is the recent arrest of the Mexican government’s official "drug czar," Noe Ramirez Mandujano. Authorities say he took nearly half a million dollars in bribes from drug cartels, making it impossible to take his government’s promise to battle drug operations seriously.



Wells Fargo, which owns Wachovia, immediately entered into a deferred
prosecution agreement and paid the federal government $160 million in fines.

Calderon's military surge was backed by more than $1.2 billion in drug war aid from former President Bush, and by several hundred million more from the Obama administration.

Read more:
Bloody Mexico drug war boosts U.S. gun shops, banks

Juan Gonzalez - News

Friday, August 20th 2010, 4:00 AM

Romero/ReutersMexican military has spent billions of
dollars fighting endless drug war, with little to show
but profits for banks and gun dealers in U.S.

They found the body of Edelmiro Cavazos
on a dirt road on the outskirts of Santiago,
a popular tourist spot near Monterrey,

The 38-year-old, U.S.-educated mayor of
Santiago had been shot execution-style,

hands tied behind his back, head bound
with tape.

Cavazos, whose body was found
Wednesday, was the fifth Mexican mayor
gunned down in the past two years - the
latest high-profile victim in a nation that is
bleeding to death from its War on Drugs.

The mayhem in Mexico has gotten so bad
that President Felipe Calderon launched an
unprecedented public debate and political
summit on ways to end the war, possibly
by legalizing drugs.

The reason Mexico's politicians are
desperate for peace is simple.

More people are dying each day from the
bullets and bombs of drug traffickers in
their country than are being killed in the
Iraq and Afghanistan wars combined.

In the border city of Juarez, the epicenter
of the violence, 60 residents were gunned
down between Friday and Monday.

Since December 2006, 28,000 Mexicans
have been murdered, including more than
2,000 police and security officials.

Drug gangs have resorted to car bombs,

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kidnappings and have even blockaded
wealthy neighborhoods of Monterrey in
spectacular displays of force.

The escalating carnage is a direct result of
Calderon's decision, shortly after his
election in 2006, to station 45,000 soldiers
and police on the country's streets to
combat the cartels.

Calderon's military surge was backed by
more than $1.2 billion in drug war aid from
former President Bush, and by several
hundred million more from the Obama

Although Mexican officials have captured or
killed scores of drug lords and seized tons
of drugs, the violence and the trafficking
continue to mushroom.

The country's tourism is dying, its industry
is suffering and thousands have fled
violence-plagued border cities like Tijuana
, Matamoros and Juarez.

Meanwhile, two industries in the U.S. are
flourishing from Mexico's tragedy.

More than 7,000 gun shops have sprouted
on the U.S. side of the border, and their
owners seem not to care where the

merchandise goes. Three-quarters of the
84,000 weapons, including high-powered
assault rifles, that Mexican officials have
seized since 2006, originated in the U.S.

Then there are the banks.

On March 12, federal prosecutors in Miami
charged Wachovia Bank with repeatedly
failing to report possible money-laundering
activity by money-transfer firms from
Mexico that used the bank.

Some of the more than $370billion wired to
Wachovia from Mexico bought planes here
that were used to transport drugs.

Wells Fargo, which owns Wachovia,
immediately entered into a deferred
prosecution agreement and paid the
federal government $160 million in fines.

Several other U.S. banks have also been
discovered flouting money-laundering laws.

No wonder former Mexican president
Vicente Fox, a conservative businessman, is
urging his country to legalize the
production, sale and distribution of drugs
"as a strategy to weaken and break the
economic system that allows cartels to earn
huge profits."


Media Miss Cartels' War In U.S.
Posted 08/16/2010 06:58 PM ET
Media: As Mexico's drug war and Arizona's bid to defend itself take center stage, the growth of cartels in Los Angeles is another leg of the story. But to know about it you need to read Spanish.
Los Angeles and its suburbs are in grave danger of becoming outposts for Mexican drug- and immigrant-smuggling cartels, according to local law enforcement officials.
"We have detected the Gulf cartel and Los Zetas," Alvin Jackson, head of the Narcotics Division of the L.A. Police Department, said in a recent interview. "They are operating on a middle and street level."
In Mexico, the Gulf and Zeta gangs are among the most violent, known for beheading opponents, setting off car bombs and shooting up border cities from Tijuana to Matamoros. In L.A., they've set up "distribution centers" not just in the slums, but also the San Fernando Valley and on the well-heeled Westside near Santa Monica.
Five other Mexican cartels — Sinaloa, Beltran-Levya, La Familia, Arellano Felix and Carillo Fuentes — also operate in L.A. They're busy recruiting gangs to carry on the same mayhem they're engaged in south of the border, Jackson said.
Steven Martinez, who heads the FBI in Los Angeles, agreed with Jackson's observations.
You'd think this would be news that merits front-page coverage in, say, the city's newspaper of record, the Los Angeles Times. But it's not. Jackson's and Martinez's assessments were reported in La Opinion, a Spanish-language daily that has no English translation.
It's not that the Times doesn't cover the cartel war in detail from Mexico. But when it comes to what's going on in Joe Friday's precincts, something that might have some relevance to its readers, the paper is derelict.
Perhaps it has something to do with the Times' near-monopoly on news in a one-newspaper town. Or maybe it's the paper's historically cozy relationship with the city's political machine, which panders to the Latino vote.
As illegal immigrants inundate the city and cartels come in behind them, the City Council declares L.A. a sanctuary city and wastes time boycotting Arizona for trying to beat back the same problems.
This is going to create serious problems down the road. L.A. District Attorney Steven Cooley told the Washington (not the L.A.) Times that gangs and drug traffickers may create gang- and cartel-controlled city governments.
It's already evident, he said, along the 710 Freeway towards the Port of Long Beach — a corridor that encompasses illegal-immigrant-majority towns such as Bell, the city whose officials were caught feathering their nests with million-dollar salary packages. The 710, by the way, has seen actual cartel shootings.

MEX GANG INVESTED LOS ANGELES - Here's What La Raza Occupation Really Is!
Dozens of alleged South L.A. gang members arrested in racketeering case
By Joel Rubin

Los Angeles Times Staff Writer

12:27 PM PDT, August 25, 2010


Federal agents and police swept into a South L.A. housing project Wednesday, arresting dozens of alleged gang members indicted on federal racketeering charges of murder, drug dealing and assaults, law enforcement officials said.

The raid against the Pueblo Bishops Bloods, a group believed to have long kept a tight, violent grip on drug sales and other illegal activity in the Pueblo del Rio housing project, was the culmination of a two-year investigation by the FBI, LAPD and other agencies, officials said.

Code-named "Operation Family Ties" because of the gang's tight-knit affiliations, the sweep targeted a few dozen alleged members of the gang who are accused of various federal charges in a broad, 88-page indictment handed down last week by a grand jury.

Nineteen were arrested Wednesday, some were already in custody on unrelated charges and 10 others are fugitives, according to information released by the involved agencies. Ten more were taken into custody on state narcotics charges.

The accused gang members face a host of charges dating as far back as 1999, including murder; drug manufacturing near schools and playgrounds; cocaine, heroin and marijuana sales; assaults; and attacks on police officers.

The move against the Pueblo Bishops is the latest action in a long-running effort by federal prosecutors and law enforcement agencies to disrupt or break up gangs that have become deeply entrenched in the Los Angeles region over several decades. Like many similar attempts to disrupt or break up other Los Angeles gangs, prosecutors are characterizing the Pueblo Bishops as a well-structured criminal organization and have brought racketeering charges against the gang under a special anti-organized crime law called the RICO Act, or Racketeer Influenced and Corrupt Organizations Act, that allows for more serious charges and longer prison sentences.

"The federal racketeering indictment and today's law enforcement operation strikes at the gang's leadership and will drastically limit the gang's ability to conduct business," said United States Atty. André Birotte Jr. in a statement.


Mexico: Gang likely killed 72 migrants at ranch

MEXICO CITY (AP) — Mexican government officials say 72 migrants found dead at a ranch near the U.S. border may have been killed by the Zetas drug cartel.

Navy Vice Adm. Jose Luis Vergara says a wounded survivor reports that gunmen who identified themselves as Zetas kidnapped him and other migrants and took them to the ranch in San Fernando, a town south of Brownsville, Texas.

Vergara said Wednesday that investigators believe the migrants were from Brazil, Ecuador, El Salvador and Honduras.


Michelle Malkin
The White House War on Jobs

The "Summer of Recovery" is looking more and more like the Beltway Chainsaw Massacre for America's workers. As President Obama lolls on Martha's Vineyard with his well-heeled Chicago pals, a new Reuters/Ipsos poll shows that 72 percent of people are very worried about joblessness and 67 percent are very concerned about massive government spending.
After a nearly $1 trillion fiscal stimulus and several multibillion-dollar corporate and union bailouts, unemployment remains stuck near 10 percent nationwide; jobless claims rose again last week. One shudders to think how many more jobs will be on the chopping block after the vacationing president finishes "recharging his batteries."
The blame avoidance industry, of course, never takes a break. Capitol Hill Democrats blame George W. Bush. President Obama blames inaction by the, er, Democrat-controlled Congress. On Tuesday, Vice President Joe Biden derided GOP Leader John Boehner's speech on the Obama job-killing machine as a return to the past. Biden sneered about the "good old days" when Republicans held the majority in Washington. But laid-off, unemployed and endangered Americans in the health care sector, the auto industry, and the oil, mining, gas, and fishing industries are no doubt wondering: What's wrong with returning to the days when we had jobs and steady paychecks?
These are not the wealthy fat cats and Big Business titans Democrats love to demonize.
They're employees of companies like Assurant Health, which announced last week that it would slash 130 jobs at its offices in Milwaukee and Plymouth, Minn., to prepare for costly Obamacare mandates.
They're employees of medical device firms in Massachusetts, where officials say they'll be forced to cut back on operational costs and jobs thanks to a little-noticed Obamacare tax on their products that goes into effect in 2013.
They're employees of restaurants like White Castle and International House of Pancakes, whose executives say they will be forced into layoffs and premium hikes to cope with the federal law's $3,000-per-employee penalty on companies whose workers pay more than 9.5 percent of household income in premiums for company-provided insurance.
They're mom-and-pop enterprises across the country that must now deal with Obamacare's onerous Section 9006 tax-filing mandate. It requires them to file 1099 forms with the IRS for every vendor from whom they purchase $600 or more in goods. Nebraska GOP Sen. Mike Johanns calls it one of many "job-crushing provisions" that will bury small business in paperwork and legal costs.
They're the estimated 23,000 workers in the deepwater drilling industry whom the White House deliberately wrote off in pursuit of its junk science-based drilling moratorium.
They're the estimated tens of thousands of workers employed by car dealers that were shut down by Obama's auto czars at a time, as the TARP inspector general pointed out last month, "when the country was experiencing the worst economic downturn in generations and the government was asking its taxpayers to support a $787 billion stimulus package designed primarily to preserve jobs... -- all based on a theory and without sufficient consideration of the decisions' broader economic impact."
They're employees of Utah oil and gas companies whose leases have been pulled without cause by Interior Secretary Ken Salazar. The Interior Department's own Inspector General rejected Salazar's explanation that the Bush administration had rushed the leases through. The Deseret News reports that "rescinding these leases has likely cost the state millions already. Officials in Uintah county estimate the county lost 3,000 jobs in 2009, and Duchesne lost 1,000 jobs."
They're employees of commercial and recreational fishing businesses in New England, who have organized a flotilla on Martha's Vineyard on Thursday to protest the Obama administration's restrictive environmental policies and stealth regulatory ocean grab.
The White House has invested mightily in creating a propaganda infrastructure to tout its "jobs saved or created." Taxpayers need a full, transparent accounting of how many jobs Team Obama has destroyed. Call it
Culture of Corruption: Obama and His Team of Tax Cheats, Crooks, and Cronies
by Michelle Malkin
Editorial Reviews
In her shocking new book, Malkin digs deep into the records of President Obama's staff, revealing corrupt dealings, questionable pasts, and abuses of power throughout his administration.
From the Inside Flap
The era of hope and change is dead....and it only took six months in office to kill it.
Never has an administration taken office with more inflated expectations of turning Washington around. Never have a media-anointed American Idol and his entourage fallen so fast and hard. In her latest investigative tour de force, New York Times bestselling author Michelle Malkin delivers a powerful, damning, and comprehensive indictment of the culture of corruption that surrounds Team Obama's brazen tax evaders, Wall Street cronies, petty crooks, slum lords, and business-as-usual influence peddlers. In Culture of Corruption, Malkin reveals:
* Why nepotism beneficiaries First Lady Michelle Obama and Vice President Joe Biden are Team Obama's biggest liberal hypocrites--bashing the corporate world and influence-peddling industries from which they and their relatives have benefited mightily
* What secrets the ethics-deficient members of Obama's cabinet--including Hillary Clinton--are trying to hide
* Why the Obama White House has more power-hungry, unaccountable "czars" than any other administration
* How Team Obama's first one hundred days of appointments became a litany of embarrassments as would-be appointee after would-be appointee was exposed as a tax cheat or had to withdraw for other reasons
* How Obama's old ACORN and union cronies have squandered millions of taxpayer dollars and dues money to enrich themselves and expand their power
* How Obama's Wall Street money men and corporate lobbyists are ruining the economy and helping their friends In Culture of Corruption, Michelle Malkin lays bare the Obama administration's seamy underside that the liberal media would rather keep hidden.

Product Details
• Hardcover: 376 pages
• Publisher: Regnery Publishing (July 27, 2009)
• Language: English
• ISBN-10: 1596981091
• ISBN-13: 978-1596981096


Barack Obama Vs. Majority Public Opinion

“The Democrats had hoped they could postpone Obama's commitment to Hispanic voters until after the 2010 elections by tucking the contentious immigration issue under the rug this year. But then Obama brought the immigration issue front and center by filing suit against the Arizona law.”

“A CBS poll shows that 57% of Americans think Arizona's law is "about right," and a Rasmussen poll found that 65% of Arizonans support the law. Zogby found that 58% of Americans nationwide want their own state to adopt a law similar to Arizona's.”

Barack Obama Vs. Majority Public Opinion

Posted 08/24/2010 06:17 PM ET

View Enlarged Image
Americans are being treated to welcome entertainment during the dog days of summer as we watch the Democrats wring their hands over Barack Obama's tone-deafness about political reality. Their despair about Obama is so painful that they are even calling on George W. Bush to come back and rescue Obama from his own mistakes.

The Democrats are reluctant to admit the truth that Obama is not a smart politician (like Bill Clinton, for example). Obama is a radical ideologue determined to "transform" America into the socialist mold, regardless of voter retaliation against Democratic candidates.

Let's tick off the issues where Obama staked out his lonely position at the same time public opinion polls showed the majority of Americans lining up on the other side. Obama's determination to achieve "change" doesn't include obeying the wishes of We the People.

Take ObamaCare, for example. Ramming it through Congress, overriding regular legislative procedure and the opposition of the American public, he deluded himself into believing that once it became the law of the land, the people would dutifully support it.

But they didn't. Even after passage, the Rasmussen survey reports this month that 66% favor repeal of the Health Control Law, and 50% say repeal will benefit the economy.

On Aug. 3, 71% of voters in Missouri, the bellwether state, approved a referendum to invalidate any ObamaCare mandate to force individuals to buy health insurance. The same week, a federal judge ruled that Virginia may proceed with its lawsuit to overturn ObamaCare's mandate on individuals to buy insurance.

The Democrats had hoped they could postpone Obama's commitment to Hispanic voters until after the 2010 elections by tucking the contentious immigration issue under the rug this year. But then Obama brought the immigration issue front and center by filing suit against the Arizona law.

A CBS poll shows that 57% of Americans think Arizona's law is "about right," and a Rasmussen poll found that 65% of Arizonans support the law. Zogby found that 58% of Americans nationwide want their own state to adopt a law similar to Arizona's.

Then there's the matter of building the mosque on the ground near the 9/11 attack on New York City. Obama supports it, even though 61% of Americans are against it.

The mosque raises another festering issue. The Pew Research Center reports that 18% (one in five Americans) think Obama is a Muslim, and Time magazine puts that figure at 24%. The number of people who think Obama is a Christian is in a free fall, and 43% don't know his religion.

Obama's Arabic Accent

Rush Limbaugh reminded us of Obama's statement quoted in the New York Times that the Muslim call to prayer is "one of the prettiest sounds on Earth" and that he recited it with a first-rate Arabic accent. The translation of the prayer call is "Allah is supreme. Allah is supreme. Allah is supreme. I witness that there is no god but Allah."

Obama chose the most left-wing Supreme Court justice in history, Elena Kagan. He ignored the Gallup poll showing that 42% of Americans wanted a new Supreme Court justice who would move the court in the conservative direction, while only 27% wanted it to move more liberal.

Obama is even pressing for "card check," one of his many payoffs to the unions, even though 61% of Americans oppose this, according to Voter Consumer Research. Card check would make it easier for unions to organize workplaces by getting rid of the secret ballot.

Obama is still pushing cap-and-trade, which the voters have dubbed "cap and tax" because it will make electricity and all kinds of energy cost every American thousands of dollars a year. CNN reports that 51% of Americans oppose it, and Democratic congressional incumbents who voted for it in the House last year are finding it a big negative in their 2010 campaigns.

Obama is still unwilling to face up to the American people's opposition to his economic policies of big spending, higher deficits, staggering debt and redistribution of wealth. According to a Rasmussen survey, less than one in five voters are willing to pay more taxes to lower the federal deficit because they believe we are already overtaxed.

More than 8 in 10 Americans believe the deficit is the result of overspending, not a lack of tax revenue. And 58% believe that if Obama and Congress raise taxes to reduce the deficit, they will just spend the money on new government programs.

When Gallup asked Americans to name the greatest threat facing our country, the national debt tied with terrorism as the top choice. No wonder Zogby reports that 52% of Americans say Obama's change has made the country worse.
FAIR Legislative Update February 9, 2010

Obama Proposes Cuts to Important Immigration Enforcement Programs
On February 1, President Obama released the details of his Fiscal Year (FY) 2011 Budget Request, which seeks to cut funding for important immigration enforcement programs. (See The President’s Budget Message, February 1, 2010). Specifically, the president’s budget would slash funding for the Secure Border Initiative; cut funding for US-VISIT; and cut 180 agents from the Border Patrol. The president’s proposed budget also proposes to merely maintain funding for the critically underfunded State Criminal Alien Assistance Program (SCAAP).
The Secure Border Initiative (SBI) “is a comprehensive, multi-year plan to help secure America’s borders” through fencing, infrastructure, and technology. (CBP Factsheet). SBI is a critical element of the larger DHS-CBP effort to increase border security, which includes construction of the border fence. Last year, Congress approved $800 million to fund SBI through FY2010. President Obama is requesting only $574 million for this program in his FY2011 budget, a $226 million cut. (FY2011 Budget Request Appendix: DHS).
US-VISIT, or United States Visitor and Immigrant Status Indicator Technology, is an entry-exit tracking program that collects information, including biometric identifiers, on foreign nationals attempting when they enter the United States. This information is then used to, among other things, determine whether foreign nationals should be denied entry and whether exiting aliens have overstayed or otherwise violated the terms of their admission. According to a Government Accountability Office (GAO) report released in November 2009, the Department of Homeland Security (DHS) does not have a unified schedule to completely implement a comprehensive exit function for US-VISIT, and it is difficult to determine when and how US-VISIT will be completed. (GAO Report, November 2009). Despite this failure to complete implementation, President Obama has proposed a $39 million cut to US-VISIT, from $374 million in FY2010 to $335 million in FY2011. (FY2011 Budget Request Appendix: DHS).
In addition, President Obama’s budget provides for a reduction of 180 Border Patrol agents. According to Acting DHS Chief Financial Officer Peggy Sherry, the administration does “not believe the 180 personnel reduction will in any way reduce the overall operating effectiveness of the Border Patrol because over the past five years, the Border Patrol has doubled in size.” Sherry continued: “A lot of the agent workforce, the substantial portion of it, has only a couple of years experience. As they become more seasoned and more mature in their jobs, their effectiveness will increase.” (See DHS Conference Call Transcript).
The administration has also requested only $330 million for SCAAP – a federal program administered through the Department of Justice that helps states pay for the incarceration of criminal aliens. (FY2011 Budget Request: DOJ). Congress recently cut the annual funding level for SCAAP from $400 million in FY2009 to $330 million in FY2010. (See FAIR’s Legislative Update, December 22, 2009). This cut drew significant criticism from border state Governors Rick Perry (R-TX) and Arnold Schwarzenegger (R-CA), yet through his request, President Obama suggests that he wants to make it permanent. (Id.).
Although President Obama’s budget is a significant barometer reflecting his policies and priorities, it represents simply a funding request to Congress. Congress has the true power to appropriate money and can choose to wholesale adopt, modify, or reject the President’s budget request. As Congress and the administration negotiate the complicated budgeting and appropriations process over the coming months, stay tuned to FAIR for in-depth analyses of important immigration-related funding decisions.


“We could cut unemployment in half simply by reclaiming the jobs taken by illegal workers,” said Representative Lamar Smith of Texas, co-chairman of the Reclaim American Jobs Caucus. “President Obama is on the wrong side of the American people on immigration. The president should support policies that help citizens and legal immigrants find the jobs they need and deserve rather than fail to enforce immigration laws.”
“The principal beneficiaries of our current immigration policy are affluent Americans who hire immigrants at substandard wages for low-end work. Harvard economist George Borjas estimates that American workers lose $190 billion annually in depressed wages caused by the constant flooding of the labor market at the low-wage end.” Christian Science Monitor



Obama Administration Challenges Arizona E-Verify Law
The Obama administration has asked the Supreme Court to strike down a 2007 Arizona law that punishes employers who hire illegal aliens, a law enacted by then-Governor Janet Napolitano. (Solicitor General's Amicus Curiae Brief). Called the “Legal Arizona Workers Act,” the law requires all employers in Arizona to use E-Verify and provides that the business licenses of those who hire illegal workers shall be repealed. From the date of enactment, the Chamber of Commerce and other special interest groups have been trying to undo it, attacking it through a failed ballot initiative and also through a lawsuit. Now the Chamber is asking the United States Supreme Court to hear the case (Chamber of Commerce v. Candelaria), and the Obama Administration is weighing in against the law.
To date, Arizona’s E-Verify law has been upheld by all lower courts, including the Ninth Circuit Court of Appeals. The Ninth Circuit, in particular, viewed it as an exercise of a state’s traditional power to regulate businesses. (San Francisco Chronicle, June 2, 2010). Obama’s Justice Department, however, disagrees. Acting Solicitor General Neal Katyal said in his filing with the Supreme Court that the lower courts were wrong to uphold the statute because federal immigration law expressly preempts any state law imposing sanctions on employers hiring illegal immigrants. Mr. Katyal argues that this is not a licensing law, but “a statute that prohibits the hiring of unauthorized aliens and uses suspension and revocation of all state-issued licenses as its ultimate sanction.” (Solicitor General's Amicus Curiae Brief, p. 10). This is the administration’s first court challenge to a state’s authority to act against illegal immigration, and could be a preview of the battle brewing over Arizona’s recent illegal immigration crackdown through SB 1070.
Napolitano has made no comment on the Department of Justice’s decision to challenge the 2007 law, but federal officials said that she has taken an active part in the debate over whether to do so. (Politico, May 28, 2010). As Governor of Arizona, Napolitano said she believed the state law was valid and became a defendant in the many lawsuits against it. (Id.).

Corporate America, it's time to spread the wealth
Businesses are sitting on a record hoard of cash, but they're not using it to hire workers or pay existing ones better wages. Broadly distributing the fruits of economic growth is the only way to sustain that growth.
Michael Hiltzik
August 25, 2010

Corporate America must be in a bad way. Job growth has stagnated, the prospects for hiring, at least in the near term, seem grim, and the polls of top executives sound universally glum.

And yet, operating earnings of companies in the Standard & Poor's 500 index jumped 38.4% in the second quarter compared with a year earlier, according to Thomson Reuters, and companies are sitting on an estimated $1.8 trillion in cash -- by some measures, a record mound of cash.

Somebody's making money in this economy. Unfortunately, it's not the middle class or the working class. And that's our real problem.

The business lobby talks as though the flat-lined job picture isn't the fault of employers. Certainly it's true that it's not entirely the fault of employers. Chamber of Commerce types overemphasize doubts about the strength of the economic recovery, the prospect of higher federal taxes and the costs of government initiatives such as healthcare reform.

Some aren't above suggesting that American workers have simply become too lazy to get off unemployment and do some real work.

That was the theme of a recent article in the Wall Street Journal quoting several business owners marveling at the dearth of applicants for skilled job openings. But you had to do some math to find a clue to why this might be.

One business was looking to pay $13 an hour for machinists. That works out to about $27,000 a year (assuming vacation is paid for), or about the federal poverty line for a family of five.

Now, it's possible that the business owner couldn't possibly afford to pay a penny more. Or he might be thinking that with unemployment nosing 10% he could try bidding down. But the article also quoted him saying his company could grow sharply if it only had the personnel, so perhaps he should consider bidding up.

The idea that only a shrinking proportion of American workers deserves a solid middle-class income seems to have become ingrained in parts of the business community over the last few years. That was the thought behind the punishing Southern California grocery lockout and strike of 2003-04, when the supermarket chains pressed for a wage and benefit system on which it would be difficult if not impossible to raise a family. (They got their way for new employees.)

How has that worked out? The share price of Safeway Inc., the owner of Vons and Pavilions and one of the chief drivers of the dispute, has barely budged since January 2004. The company swung from a profit of $560 million in 2004 to a loss of roughly $1 billion last year, a performance it largely blames on the crummy economy.

This is just one more manifestation of increasing income inequality in America, where the rich have gotten richer and the middle and working class have gone into debt to merely hang on. Whenever I write about the need for corporations and the wealthy to shoulder their fair share of taxes, I can count on receiving numerous e-mails instructing me that we need to cosset the rich because they're the source of job growth. "I've never been offered a job by a poor person" is the usual refrain.

The answer to this argument is that there are precious few firms that can survive purely on the patronage of the top 1% of income-earners, or even the top 20%. When no one can afford to buy, no one has customers. Broadly distributing the fruits of economic growth is the only way to sustain that growth.

Ford Motor Co. understood as long ago as 1914, when it raised its daily wage to $5. The company's new living wage all but eliminated absenteeism, built workplace loyalty and helped create a huge new market for automobiles. You want to call Henry Ford a "socialist" for implementing this idea, go right ahead.

Corporate America, in the aggregate, has the apparent capacity to do the same today. The Federal Reserve reported in June that nonfinancial companies were holding cash totaling more than $1.8 trillion, having built up their hoards at a rate unmatched in more than 50 years. That's a lot of money being held out of the economy, dwarfing what the government stimulus program is putting in.

There's nothing inherently good or bad about a company's stockpiling of cash. It can bespeak a strong balance sheet. Or, if it's the proceeds of lots of expensive borrowing, a weak one. It can build corporate wealth if it's invested profitably in the business or stagnation if it just sits around in low-yielding instruments.

It can be the work of a visionary chief executive building a war chest for a big move or of a shrinking violet with nothing on his mind except inflating his company's bank account with big numbers.

The only important question is: "What are they doing with the money?"

One thing they're not doing is lavishing it on personnel, though some have taken steps to help shareholders. At least 135 companies in the S&P 500 jacked up their shareholder dividends in the first half of this year.

Among the others, let's consider one of the most cash-rich companies in the S&P, Hewlett-Packard Co., which has been getting scrutinized by management pundits lately for reasons other than, um, corporate strategy. As of July 31, HP reported cash of $14.7 billion (up from $11.3 billion in 2007), which ranked it around 13th among S&P 500 companies.


In 2009, under its just-departed CEO Mark Hurd, the firm cut base pay for many employees, cut its matching contributions to their 401(k) plans and made them conditional on financial results, and eliminated a discount on share purchases by its employees. Hurd also cut HP's research and development spending to 2.5% of revenue in 2009, half its ratio in 2003, another act that elevates the here-and-now over the what-lies-ahead.

HP hasn't raised its dividend lately, but in 2008 and 2009, its board authorized share buybacks totaling $16 billion, according to its SEC filings. By supporting the share price, that money flows to shareholders rather than wage-earners. All of this might help explain why (judging from public message boards) the HP rank and file were delighted by Hurd's departure, albeit resentful that he was leaving with a severance package worth more than $30 million.

Obviously there's no way to force employers to hire more workers or to give the ones they have better pay, any more than there's any way to force bailed-out banks to use their money to make loans. But funneling corporate wealth to shareholders at the expense of the workers who create that wealth isn't any smarter today than it was 10 years ago, when it got us into this economic fix, and it sure won't lead us to a brighter tomorrow.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at, read past columns at, check out, and follow @latimeshiltzik on Twitter.


REALITY ON THE OBAMA “RECOVERY”… Bankster donors profits SOARING! Foreclosures are SOARING! Welfare for illegals SOARING. Unemployment is SOARING! Illegals in our jobs SOARING!

“For the past several weeks, virtually every economic indicator has been worse than economists’ forecasts.”

“However, his only concrete proposal was to extend the Bush tax cuts for the wealthy—the 2 percent of households making more than $250,000 a year.”

“Those “tough decisions” include the multi-trillion-dollar bailout of the banks, the forced bankruptcy of General Motors and Chrysler, liquidation of tens of thousands of auto jobs, and imposition of a 50 percent cut in newly-hired auto workers’ wages, as well as the rejection of any further stimulus measures and focus instead on deeper cuts in social programs.”

“Neither the Obama administration nor its Republican opponents are proposing any serious measures to create jobs or provide relief for the more than 20 million workers who are either unemployed or underemployed. The Democrats and Republicans differ only on the most effective tactics for imposing the full burden of the capitalist crisis on the working class.”


HERE’S Rep. Lamar Smith’s comment on OBAMA’S endless sellout to illegals:

“We could cut unemployment in half simply by reclaiming the jobs taken by illegal workers,” said Representative Lamar Smith of Texas, co-chairman of the Reclaim American Jobs Caucus. “President Obama is on the wrong side of the American people on immigration. The president should support policies that help citizens and legal immigrants find the jobs they need and deserve rather than fail to enforce immigration laws.”


“The principal beneficiaries of our current immigration policy are affluent Americans who hire immigrants at substandard wages for low-end work. Harvard economist George Borjas estimates that American workers lose $190 billion annually in depressed wages caused by the constant flooding of the labor market at the low-wage end.” Christian Science Monitor

Record drop in US home sales

By Barry Grey
25 August 2010
Sales of existing US homes in July plunged by a record 27.2 percent from the previous month, according to a report released Tuesday by the National Association of Realtors.

The virtual collapse in home sales affected every region of the country and was more than twice as bad as anticipated by economic analysts, who had forecast a drop of 12.1 percent. Sales fell to 3.83 million units, compared to June’s downwardly revised figure of 5.26 million.

On a year-over-year basis, existing home sales in July were down 25.5 percent from an annual rate of 5.14 million units in July 2009.

The July figure was the largest monthly drop since records began in 1968. It brought the rate of US home sales on an annualized basis to the lowest level since 1995.
Home sales fell 29.5 percent in the Northeast, 22.6 percent in the South, 25 percent in the West and 35 percent in the Midwest. The link between the housing collapse and the social distress caused by long-term mass unemployment was underscored by two pieces of data: nearly a third of the homes sold were distressed properties, and sales tumbled particularly sharply for homes in the lower to mid-priced ranges. In the Midwest, sales of homes priced between $100,000 and $250,000 plunged nearly 47 percent.

The July figure marked the third consecutive monthly decline since the April 30 expiration of a federal tax credit for home-buyers. The impact of the termination of the tax credit on the housing market has been compounded by the soaring number of foreclosed homes and the rising rate of mortgage payment delinquency.

Home foreclosures are running about ten times higher than before the housing bust of 2007. A survey released last week by Deutsche Bank showed that the rate of serious mortgage payment delinquency (more than 90 days) in the average US congressional district has nearly tripled from the time of the 2008 election.

The realtors’ report also recorded a sharp rise in the inventory of unsold existing homes in July. At the end of the month, 3.98 million homes were available for sale, which translates into a 12.5-month supply, up from 8.9 months in June and the highest level in over a decade. A six-month supply of available homes is considered a healthy level.

The disastrous home sales report is consistent with dismal reports last week on housing starts and new housing permits and other data, including a nine-month high for initial jobless benefit claims, which reflect a sharp contraction in economic growth and point to a further rise in unemployment, already near Depression levels.
Most economists believe that when the Commerce Department issues its revised estimate for second quarter US economic growth on Friday, it will downgrade the figure from the 2.4 percent it reported last month to 1.3 percent. Even this grim prediction may be overly optimistic. For the past several weeks, virtually every economic indicator has been worse than economists’ forecasts.

Dan Greenhaus, chief economic strategist for Miller Tabak & Co., spoke in a research note Tuesday of a “near, if not outright, collapse in housing.”

Paul Dales of Capital Economics said, “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.”

In a note analyzing the housing numbers, Nigel Gault, chief US economist for HIS Global Insight, wrote, “A sustained upturn [in the housing market] will depend on an improvement in the jobs market, which at the moment is slowing down rather than gathering pace.” He added, “There is no sign of any underlying recovery despite rock-bottom interest rates.”

The average rate for a 30-year fixed mortgage has sunk to 4.42 percent, the lowest rate in decades. That home sales continue to plummet despite such attractive rates underscores the depth of the economic crisis and absence of any real recovery. Workers who would otherwise be in the market are not buying either because they have lost their job or they fear joining the jobless ranks. Banks have also tightened their requirements and cut back on loans.

Stock markets around the world fell sharply on the latest sign of a slowdown in the US economy. Asian stocks, which fell Tuesday morning, in part in anticipation of the US housing report, resumed their decline on Wednesday. European stocks fell by more than 1 percent Tuesday, as did US stocks. The Dow Jones Industrial Average lost 133 points, a decline of 1.3 percent. The Standard & Poor’s 500 index and the Nasdaq fell even more sharply on a percentage basis. It was the fourth consecutive decline on Wall Street.

Other global indicators pointed to an erosion of confidence and mounting fear of a “double-dip” recession. Crude oil prices fell below $72 a barrel, their lowest level in eleven weeks. Gold for December delivery closed $4.90 higher at $1,233.40 an ounce at the Comex division of the New York Mercantile Exchange. The yield on ten-year US Treasuries fell to 2.499 percent, reflecting a “flight to safety” by big investors.

Neither the Obama administration nor its Republican opponents are proposing any serious measures to create jobs or provide relief for the more than 20 million workers who are either unemployed or underemployed. The Democrats and Republicans differ only on the most effective tactics for imposing the full burden of the capitalist crisis on the working class.

On Tuesday, John Boehner, the leader of the Republicans in the House of Representatives, made a demagogic speech in which he attempted to present himself as the advocate for unemployed and economically threatened working people. He denounced Obama for failing to stem the jobs crisis and called for the resignation of Obama’s top economic advisers, Treasury Secretary Timothy Geithner and Lawrence Summers, the director of the White House National Economic Council.

However, his only concrete proposal was to extend the Bush tax cuts for the wealthy—the 2 percent of households making more than $250,000 a year. He also criticized the extension of federal emergency jobless benefits and the $26 billion in federal aid to the states recently passed by Congress.

In response, the Democrats, speaking out of both sides of their mouths, sought to foist the blame for mass unemployment and growing poverty on the Bush administration, while touting the supposed “success” of Obama’s economic policies. Vice President Joseph Biden said that Obama’s 2009 stimulus package was “working to rescue the economy from eight years of failed economic policy and rebuild it even stronger than before.”

Speaking from the exclusive Massachusetts resort island of Martha’s Vineyard, where Obama is vacationing, White House deputy press secretary Bill Burton said Boehner “would fire the very people who helped to make the tough decisions, who helped to do the hard work to get our economy moving in the right direction again.”
Those “tough decisions” include the multi-trillion-dollar bailout of the banks, the forced bankruptcy of General Motors and Chrysler, liquidation of tens of thousands of auto jobs, and imposition of a 50 percent cut in newly-hired auto workers’ wages, as well as the rejection of any further stimulus measures and focus instead on deeper cuts in social programs.

Biden cited Obama’s auto policy as an example of successful “innovation.” The essence of this policy is to keep unemployment painfully high and use it as a bludgeon to permanently reduce the wages and living standards of the American working class, narrowing the differential between US workers and super-exploited workers in China, India and other “emerging economies.” On this basis, the Obama administration is seeking to revive US manufacturing as a cheap-labor platform for export to global markets.


Biden cited Obama’s auto policy as an example of successful “innovation.” The essence of this policy is to keep unemployment painfully high and use it as a bludgeon to permanently reduce the wages and living standards of the American working class, narrowing the differential between US workers and super-exploited workers in China, India and other “emerging economies.”

The assault on US workers’ wages
19 August 2010
An article published in Wednesday’s Financial Times under the headline “US Matches Indian Call Centre Costs” gives some indication of the impact on American workers of a coordinated and escalating wage-cutting drive by big business, backed by the Obama administration.
The article begins: “Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company. High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.” *****



July 13, 2010

Former Secretary of Labor, Professor at Berkeley
Posted: July 13, 2010 12:16 PM

The Root of Economic Fragility and Political Anger
Missing from almost all discussion of America's dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June's decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.

Meanwhile, a much smaller group of Americans' earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.
We're back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.

And as long as this trend continues, we can't get out of the shadow of the Great Recession. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing.

America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class could boost its purchasing power was to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.

Each of America's two biggest economic downturns over the last century has followed the same pattern. Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928--with 23.5 percent of the total.

We all know what happened in the years immediately following these twin peaks--in 1929 and 2008.

Yes, China, Germany and Japan have contributed to America's demand-side problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance--we buy too much and save too little, while they do the reverse--is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.

A second parallel links 1929 with 2008: when earnings accumulate at the top, people at the top invest their wealth in whatever assets seem most likely to attract other big investors. This causes the prices of certain assets--commodities, stocks, dot-coms or real estate--to become wildly inflated. Such speculative bubbles eventually burst, leaving behind mountains of near-worthless collateral.

The crash of 2008 didn't turn into another Great Depression because the government learned the importance of flooding the market with cash, thereby temporarily rescuing some stranded consumers and most big bankers. But the financial rescue didn't change the economy's underlying structure -- median wages dropping while those at the top are raking in the lion's share of income.

That's why America's middle class still doesn't have the purchasing power it needs to reboot the economy, and why the so-called recovery will be so tepid--maybe even leading to a double dip. It's also why America will be vulnerable to even larger speculative booms and deeper busts in the years to come.

The structural problem began in the late 1970s when a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever more sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?). By the '80s, any job requiring that the same steps be performed repeatedly was disappearing--going over there or into software. Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs--the so-called "talent" who reached the pinnacles of power in executive suites and on Wall Street--soared.

The puzzle is why so little was done to counteract these forces. Government could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service: big-box retail stores, restaurants and hotel chains, and child- and eldercare, for instance. Safety nets could have been enlarged to compensate for increasing anxieties about job loss: unemployment insurance covering part-time work, wage insurance if pay drops, transition assistance to move to new jobs in new locations, insurance for communities that lose a major employer so they can lure other employers. With the gains from economic growth the nation could have provided Medicare for all, better schools, early childhood education, more affordable public universities, more extensive public transportation. And if more money was needed, taxes could have been raised on the rich.

Big, profitable companies could have been barred from laying off a large number of workers all at once, and could have been required to pay severance--say, a year of wages--to anyone they let go. Corporations whose research was subsidized by taxpayers could have been required to create jobs in the United States. The minimum wage could have been linked to inflation. And America's trading partners could have been pushed to establish minimum wages pegged to half their countries' median wages--thereby ensuring that all citizens shared in gains from trade and creating a new global middle class that would buy more of our exports.

But starting in the late 1970s, and with increasing fervor over the next three decades, government did just the opposite. It deregulated and privatized. It increased the cost of public higher education and cut public transportation. It shredded safety nets. It halved the top income tax rate from the range of 70-90 percent that prevailed during the 1950s and '60s to 28-40 percent; it allowed many of the nation's rich to treat their income as capital gains subject to no more than 15 percent tax and escape inheritance taxes altogether. At the same time, America boosted sales and payroll taxes, both of which have taken a bigger chunk out of the pay of the middle class and the poor than of the well-off.

Companies were allowed to slash jobs and wages, cut benefits and shift risks to employees (from you-can-count-on-it pensions to do-it-yourself 401(k)s, from good health coverage to soaring premiums and deductibles). They busted unions and threatened employees who tried to organize. The biggest companies went global with no more loyalty or connection to the United States than a GPS device. Washington deregulated Wall Street while insuring it against major losses, turning finance--which until recently had been the servant of American industry--into its master, demanding short-term profits over long-term growth and raking in an ever larger portion of the nation's profits. And nothing was done to impede CEO salaries from skyrocketing to more than 300 times that of the typical worker (from thirty times during the Great Prosperity of the 1950s and '60s), while the pay of financial executives and traders rose into the stratosphere.

It's too facile to blame Ronald Reagan and his Republican ilk. Democrats have been almost as reluctant to attack inequality or even to recognize it as the central economic and social problem of our age. (As Bill Clinton's labor secretary, I should know.) The reason is simple. As money has risen to the top, so has political power. Politicians are more dependent than ever on big money for their campaigns. Modern Washington is far removed from the Gilded Age, when, it's been said, the lackeys of robber barons literally deposited sacks of cash on the desks of friendly legislators. Today's cash comes in the form of ever increasing campaign donations from corporate executives and Wall Street, their ever larger platoons of lobbyists and their hordes of PR flacks.

The Great Recession could have spawned another era of fundamental reform, just as the Great Depression did. But the financial rescue reduced immediate demands for broader reform.

Obama might still have succeeded had he framed the challenge accurately. Yet in reassuring the public that the economy will return to normal he has missed a key opportunity to expose the longer-term scourge of widening inequality and its dangers. Containing the immediate financial crisis and then claiming the economy is on the mend has left the public with a diffuse set of economic problems that seem unrelated and inexplicable, as if a town's fire chief deals with a conflagration by protecting the biggest office buildings but leaving smaller fires simmering all over town: housing foreclosures, job losses, lower earnings, less economic security, soaring pay on Wall Street and in executive suites.

Much the same has occurred with efforts to reform the financial system. The White House and Democratic leaders could have described the overarching goal as overhauling economic institutions that bestow outsize rewards on a relative few while imposing extraordinary costs and risks on almost everyone else. Instead, they have defined the goal narrowly: reducing risks to the financial system caused by particular practices on Wall Street. The solution has thereby shriveled to a set of technical fixes for how the Street should conduct its business.

What we get from widening inequality is not only a more fragile economy but also an angrier politics. When virtually all the gains from growth go to a small minority at the top -- and the broad middle class can no longer pretend it's richer than it is by using homes as collateral for deepening indebtedness -- the result is deep-seated anxiety and frustration. This is an open invitation to demagogues who misconnect the dots and direct the anger toward immigrants, the poor, foreign nations, big government, "socialists," "intellectual elites," or even big business and Wall Street. The major fault line in American politics is no longer between Democrats and Republicans, liberals and conservatives, but between the "establishment" and an increasingly mad-as-hell populace determined to "take back America" from it.
When they understand where this is heading, powerful interests that have so far resisted fundamental reform may come to see that the alternative is far worse.
This post originally appeared at