CPD IN THE NEWS

One of the candidates taking on the establishment is Kerri Harris, who is running to unseat Sen. Tom Carper, a Democrat from Delaware. Harris, who is a community organizer with the Center for Popular Democracy and an Air Force veteran, has been hammering Senator Carper on his decision to partner with Republicans to dismantle Dodd-Frank -- the law passed in the wake of the financial and housing crisis.

The Federal Reserve is a hot topic in the news these days. Usually, the stories revolve around the merits of its decisions: Was quantitative easing a good idea? Should it raise interest rates again in April? But Andrew Levin, a Dartmouth economist and former aide to Federal Reserve Chair Janet Yellen, thinks our questions need to go much deeper.

On Monday, Levin and the activist campaign Fed Up proposed four major reforms that would radically alter the structure of the Federal Reserve. The reason they cite is compellingly simple: How the Fed works is basically out of whack with what it does today.

The Federal Reserve began around a century ago as a decentralized and private institution aimed at avoiding financial panics and making sure the interactions between the nation's for-profit banks remained stable. Since then, it's basically become a kind of government agency, with a fundamental role in shaping the American economy and the supply of wages and jobs for everyday workers. But the design and governance of the Fed has not kept up with that shift in responsibilities.

To understand why, let's start at the very beginning. Western economies began creating central banks several centuries ago as modern capitalism was first coming into focus, to serve as a "lender of last resort." Private banks could go and borrow from the central bank when times were tight — even if was just for a few days — and that would quell potential financial panics and bank runs. As a result, central banks were generally created by government charters, but as private corporations whose shares were owned by the banks that borrowed from them. "When the Bank of England and some other major central banks were founded, they were viewed as mostly providing services to commercial banks," as Levin explained to The Week.

America's Federal Reserve was created in 1913 under very similar circumstances. A potential financial crisis in 1907 was averted only when J.P. Morgan stepped in to backstop the country's private banks with his own personal fortune. No one wanted a repeat of that, so the Fed was created. It's actually a system of 12 regions, each overseen by a Fed branch bank — there's one in Dallas, in Richmond, in New York City, and so forth — with the private banks owning the shares of whatever Fed bank oversees their region.

More importantly, each regional Fed bank is run by a board of nine directors, six of whom are appointed by the private banking industry. The other three are appointed by the Federal Reserve system's national Board of Governors — a seven-member group appointed by the U.S. president and confirmed by the Senate. Together, the directors appoint a president to run their particular regional bank, rather like a CEO and a corporate board: They set the president's salary, review his or her performance, etc. All nine used to do that, but Dodd-Frank reformed the system in 2010 so that three of the six governors appointed by the private banks no longer play a role in selecting the president.

Over the course of the 20th Century, various developments like the end of the gold standard and the creation of federal deposit insurance diluted the importance of the regional banks as lenders of last resort. At the same time, however, the regional banks found themselves owning large amounts of financial instruments as a result of serving that role. So they created a joint national group to manage all those holdings called the Federal Open Market Committee (FOMC), and over time it grew in importance. Its decisions are determined by 12 votes: the seven members of the Board of Governors, plus five of the 12 regional presidents. (The 12 presidents rotate through the voting positions, while the other seven sit in on the FOMC but don't vote.)

Today, when we talk about the Fed setting interest rates or meeting to decide monetary policy — which in turn decides the rate of wage growth and the supply of jobs throughout the entire national economy — we're talking about the FOMC. "For all practical purposes, the Federal Reserve today is a public enterprise," Levin said. "It's serving the public. It's making nationally critical decisions."

The problem is the Federal Reserve system was originally conceived of and designed as an add-on to the private banking industry, and that design has remained even as the nature and responsibilities of the Fed have change enormously: "This whole rationale that made perfect sense in 1913 doesn't make sense anymore," Levin said. The result is an institution that, while of enormous import to the public good, is incredibly complex, opaque, and governed with comparatively little input from everyday Americans.

"The Fed, in order to be effective, has to have the confidence of the public," Levin said. But allowing the banks to hold such enormous sway over the decision-making of the institution tasked with both setting national interest rates and regulating the financial system undermines that confidence. Economist Dean Baker analogized it to "reserving seats on the Federal Communications Commission’s board for the cable television industry." Levin himself likened it to allowing criminal attorneys or defense lawyers to select the director of the FBI and set his or her salary and performance review.

So Levin has put forward four major reforms. They're broad, and the details for how they could play out are negotiable, but they're aimed at starting a conversation around the topic.

One is to eliminate private ownership of shares in the Federal Reserve system and make it fully public, but more importantly to completely reform how the nine directors of each regional bank are appointed. This could involve reducing the number of directors, but mostly it would involve selecting them all via the same process, one that brings in all aspects of the community — small businesses, community groups, unions, non-profits, etc. In particular, directors should not come from institutions — i.e. private banks and financial entities — that the Fed system is tasked with overseeing.

The next step would be to make the process by which the nine directors for each region select their president public and transparent. As Ady Barkan, the campaign director for Fed Up, pointed out in a press call, when all 12 regional president slots were up for replacement in February, all 12 were quietly and opaquely re-appointed — even after the Fed Up campaign pressed Fed officials to lay out a system by which the public could participate. The ones for Dallas, Minneapolis, and Philadelphia were all previously associated with Goldman Sachs. St. Louis Federal Reserve President James Bullard once told Barkan that, "To call the reappointment process pro forma would be an understatement."

Third would be to set term limits for Fed officials. Make them long enough to insulate those officials from political pressure. But don't allow them to serve multiple terms one after the other as they can now.

And finally, apply the same transparency standards to the Fed that are applied to other government agencies: Allow the Government Accountability Office to publish an annual review of all the Fed's operations and policies, and make sure both the Fed's Inspector General and the Freedom of Information Act apply to the 12 regional banks as well as the national Board of Governors.

"What I've proposed is something that seems incremental, workable, and helpful," Levin concluded. And despite arguments over whether the Fed is making the right choices in the here and now about things like interest rates, Levin's goal is much bigger: to make the Fed a healthy functioning member of our democracy long after the current economic situation — and whatever particular monetary policy stance it calls for — has passed.

"These reforms are to improve governance, accountability and transparency," Levin said. "We live in a democracy — and the government is supposed to serve the public."

By Jeff Spross

Source

We’re in the thick of the second post-Citizens United presidential campaign, and it’s already clear that allowing unlimited funds to influence political elections was a terrible idea. 

Half of the funds supporting presidential candidates from both parties comes from a mere 158 families — a miniscule percentage of America’s 120 million households — as documented by a recent New York Times investigation. Largely white, older, male, and Republican, they are also unrepresentative of what our multicultural society looks like.

As a result of this narrow group of donors controlling what’s on the political agenda, America has a fundamentally undemocratic system in which working class people and people of color are left on the margins, silenced in a political debate, they can’t gain access to — because they don’t have millions to share.

America has become a tyranny of the few, and Americans are fed up with the broken system. Last week, voters in Maine elected to increase funding from $2 million to $3 million for the Clean Elections Fund, which provides government grants to candidates who agree to limit their spending and private fundraising. It might be a long time before Citizens United is overturned. In the interim, it’s important that other states introduce similar legislation challenging existing financing models.

The tyranny of the few is two-pronged, however. Not only are our elected leaders being held accountable to wealthy donors instead of the people of our nation, the least privileged of this nation are simultaneously facing strong barriers to voting. 

Our antiquated voter registration system results in roughly 62 million eligible voters not registered, either because they never registered or their registration information is incorrect. In a 2008 Current Population Survey, blacks and Latinos cited “difficulties with the registration process” as their main reason for not registering to vote. Whites disproportionately reported not registering because they were “not interested in elections or politics.” Barriers to voting registration are in many states especially well in place for people of color, workers and youth, who are targeted by voter suppression laws.

We could put an end to the error-ridden old-fashioned manual voter registration and step into the 21st century with automatic voter registration. Other states could follow the example set by California and Oregon, which are linking voter registration to the Department of Motor Vehicles. Through linking voter registration with public offices such as the DMV, revenue agencies, the Postal Service and others, the United States could secure over 56 million more voters, as a report from Center for Popular Democracy shows. 

So to sum up: people of color and working class Americans aren’t just unable to place millions of dollars with politicians who will take care of them in Congress, they aren’t even able to vote for leaders who might serve their interests.

The outcome? Our America has become an oligarchy run by a tiny and overly privileged section of its population, whose lives and wishes for our nation are in stark opposition to the lives and dreams of the average American. 

This is borne out in our legislation. Despite overwhelming public support for policies such as taxing those who earn more than $1 million a year, and laws that address inequality, workers’ rights, and protection of the middle class, we see the footprints of corporate powers all over our legislation. 

We need to act fast by passing laws that disrupt this undemocratic cycle. We must break Congress’ dependency on big money and return the power to the people, but we can’t only rely on our lawmakers to change our nation. 

It will take a lot of work, but we can’t allow for this undemocratic oligarchy to go on. Let’s not leave the future of our country in the hands of the wealthiest, let’s instead bring back democracy to our nation.

Source: Common Dreams

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An earlier review identified the "Three Big Sins of Charter Schools": fraud, a lack of transparency, and the exclusion of unwanted students. The evidence against charters continues to grow. Yet except for its reporting on a few egregious examples of charter malfeasance and failure, the mainstream media continues to echo the sentiments of privatization-loving billionaires who believe their wealth somehow equates to educational wisdom.

The Wall Street Journal, in its misinformed way, says that the turnaround of public schools requires "increasing options for parents, from magnet to charter schools." Wrong. As the NAACP affirms, our nation needs "free, high-quality, fully and equitably-funded public education for all children." For all children, not just a select few.

The NAACP has called for a moratorium on charter schools. And Diane Ravitch makes a crucial point: "Would [corporate reformers] still be able to call themselves leaders of the civil rights issue of our time if the NAACP disagreed with their aggressive efforts to privatize public schools?"

Here are the four big sins of charter schools, updated by a surge of new evidence:

1. Starve the Beast

Corporate-controlled spokesgroups ALEC, US Chamber of Commerce, and Americans for Prosperity are drooling over school privatization and automated classrooms, with a formula described by The Nation: "Use standardized tests to declare dozens of poor schools 'persistently failing'; put these under the control of a special unelected authority; and then have that authority replace the public schools with charters." But as aptly expressed by Jeff Bryant, "As a public school loses a percentage of its students to charters, the school can’t simply cut fixed costs for things like transportation and physical plant proportionally...So instead, the school cuts a program or support service."

It's an insidious and ongoing process, aided and abetted by business-friendly mainstream media outlets, to convince Americans that "every family for itself" is better than the mutual support and cooperation of a public school system.

2. Cream and Segregate and Discard

Urban charter schools primarily enroll low-income minority students. That seems admirable upon first reflection, but selective admissions of the best students from ANY community will make an individual school look good, leading to the belief that the concept will work on a larger scale. Success is much harder to achieve if a school accommodates special needs and English-learner students.

Numerous sources reveal the high degree of segregation in charter schools -- white or black, and by income and special need.

As expressed in the report "Failing the Test," "School choice is just that — except that charter schools are doing the choosing instead of communities."

It gets worse. Prominent New York charter network Success Academy has been accused of "counseling out" students who are low-performing or disruptive or otherwise difficult to teach. Even worse are charters that shut down, stranding hundreds of students, while their business operators can just move on to their next project. Nearly 2,500 charter schools closed their doors from 2001 to 2013, leaving over a quarter of a million kids temporarily without a school.

3. Scream 'Public' to Get Tax Money, Plead 'Private' to Hide Salary Data

Charter schools are increasingly run by private companies, or by private trusts. The National Labor Relations Board affirms that charters are private, not public.

As private entities, they are unregulated and lacking in transparency, and, as concluded by the Center for Media and Democracy, they have become a "black hole" into which the federal government has dumped an outrageous $3.7 billion over two decades with little accountability to the public.

4. Engage in "Fraud, Waste, Abuse, and Mismanagement"

That's how the Center for Popular Democracy describes charter performance in 2015, during which the schools wasted an estimated $1.4 billion of taxpayer money. The fraud is far-reaching, with examples from around the country:

The Department of Education audited 33 charter schools and concluded: "We determined that charter school relationships with CMOs (charter management organizations) posed a significant risk to Department program objectives."

In California, charter performance is so poor that even the National Association of Charter Authorizers is calling on the state to better control the authorization of such schools. At present, there are almost no restrictions on opening a charter school, and existing schools are restrictive in their enrollment policies.

Because of charters, Michigan cities have lost nearly half (46.5%) of their revenue over the past 10 years. Detroit, which is surpassed only by New Orleans in the number of charter students, half of the charter schools perform only as well as, or worse than, traditional public schools. A federal study found an "unreasonably high" number of charters among the lowest-rated public schools in the state.

In Louisiana, according to the Center for Popular Democracy, "charter schools have experienced millions in known losses from fraud and financial mismanagement so far, which is likely just the tip of the iceberg."

According to PR Watch, Florida "has one of the worst records in the nation when it comes to fraud and lack of charter school oversight." Texas has an unknown number of charters housed in churches. Nine charters in Washington remain open despite being declared unconstitutional by the state's Supreme Court.

Ohio might be worst of all. Since the 2006-07 school year, 37 percent of the state's charter schools receiving federal grants have either closed or never opened. An Ohio newspaper reported, "No sector – not local governments, school districts, court systems, public universities or hospitals – misspends tax dollars like charter schools in Ohio."

The Big Picture

Despite student selection advantages, charter schools generally perform no better than public schools, according to the most recent CREDO study and as summarized by the nonpartisan Spencer Foundation and Public Agenda: "There is very little evidence that charter and traditional public schools differ meaningfully in their average impact on students' standardized test performance." As for technology-based schools, the National Alliance for Public Charter Schools admits that "The well-documented, disturbingly low performance by too many full-time virtual charter public schools should serve as a call to action to state leaders and authorizers across the country."

Charter schools have turned our children into the products of businesspeople. Americans need to know how important it is to get the profit motive out of education, and to provide ALL our children the same educational opportunities.

By Paul Buchheit

Source