Lax Pa. Oversight of Charters Robs Taxpayers of $30M, Groups Say
Philadelphia Inquirer - October 1, 2014, by Martha Woodall - A new report from a trio of activist groups says...
Philadelphia Inquirer - October 1, 2014, by Martha Woodall - A new report from a trio of activist groups says Pennsylvania charter schools have defrauded taxpayers of more than $30 million because oversight is so lax.
The researchers call for a temporary moratorium on new charter schools, contending agencies are not able to adequately monitor the 186 charters that already exist.
The study by the Center for Popular Democracy; Integrity in Education; and Action United of Philadelphia and Pittsburgh was to be released Wednesday.
The report urges the state Attorney General's Office to review all Pennsylvania charters for potential fraud. It asks the legislature to require charters to undergo regular fraud-risk assessments and fraud audits. And it suggests that until the law is changed to require such actions, charters should voluntarily undergo them and make the findings public.
Researchers said most of the $30 million in fraud that has been detected since the state's charter law was passed in 1997 was not uncovered by charter-oversight offices but by whistle-blowers and the media, including The Inquirer. They said the total amount of misspent funds was likely far larger.
"The current oversight system in Pennsylvania falls miserably short when it comes to detecting, preventing, and eliminating fraud," said Kyle Serrette, education director at the Center for Popular Democracy in Washington.
The center receives funding from foundations, including $990,000 this year from the Ford Foundation. It also receives a small amount of support from teachers' unions, and Randi Weingarten, president of the American Federation of Teachers, is on the organization's board.
Robert Fayfich, executive director of the Pennsylvania Coalition of Public Charter Schools, said that while his group supports accountability, the report makes "sweeping conclusions about the entire charter sector based on only 11 cited incidents in the course of almost 20 years."
". . . Fraud and fiscal mismanagement are wrong and cannot be tolerated, but to highlight them in one sector and ignore them in another indicates a motivation to target one type of public school for a political agenda," he said in a statement.
Pennsylvania school districts paid $1.5 million to charters that enrolled 128,712 students in 2012-13. More than 67,000 Philadelphia students attend 86 city charters.
Sabrina Stevens, executive director of Washington-based Integrity in Education, said: "With over $1 billion going to charter schools in Pennsylvania, it's time for charter schools to be held to the same standards of transparency and oversight that public schools are held to."
State Auditor General Eugene DePasquale said it's "good that they put this together," adding that Serrette's group had testified at a charter-oversight hearing his office held in March. "To me, the more voices on this, the better. I think in the next term in the legislature, there is going to be a charter-reform bill move forward."
City Controller Alan Butkovitz said the report echoed concerns he raised in 2010, when his office released its own oversight study that highlighted several problems his office found at city charters.
"We certainly agree with the need for greater oversight and auditing," Butkovitz said. "That's been one of our constant themes."
The instances of fraud cited in the new report include cases where charter officials were indicted or pleaded guilty and instances uncovered in state audits.
Examples include Nicholas Trombetta, founder and former CEO of the Pennsylvania Cyber Charter School in Midland, who is awaiting federal trial in Pittsburgh on charges that he diverted $8 million in school funds for personal use.
The tally also includes $6.3 million that federal prosecutors allege Dorothy June Brown defrauded from the four Philadelphia-area charters she founded.
But the authors give special attention to another recent case involving a city charter: New Media Technology Charter School in the city's Stenton section. The former CEO and founding board president went to federal prison in 2012 after admitting they stole $522,000 in taxpayer money to prop up a restaurant, a health-food store, and a private school they controlled, and for defrauding a bank.
From 2005 to 2009, when the crimes were occurring, third-party auditors hired by New Media failed to spot the fraudulent payments.
"Fraud detection in Pennsylvania charter schools should not be dependent upon parent complaints, media exposés, and whistle-blowers," the authors wrote. Rather, they urged, the system should be proactive and use forensic accounting methods.
According to the report, Pennsylvania's charters are vulnerable to fraud and financial mismanagement because school districts and state offices charged with overseeing them lack resources and staff.
For example, although the cash-strapped Philadelphia district has about half of the state's charters, it has only two auditors and a small office to monitor 86 schools, the report said.
"We agree in the need of greater oversight and a deeper look into the health of charter schools," district spokesman Fernando Gallard said, "and we have taken steps to do so."
Although the district's charter office at times had only two or three staffers, Gallard said, it now has six and is seeking an executive director.
Researchers also said that charters lack strong internal fiscal controls and that their boards have not adopted strict management policies.
And even though the charters are required to have annual audits performed by outside firms, researchers said, those audits rely on general accounting techniques and are not designed to detect fraud.
"The current system of oversight relies heavily on information provided by charter schools themselves and traditional audits that are designed to check accuracy rather than detect and prevent fraud," the report said.
The report said taxpayers cannot afford to lose another $30 million in misspent charter funds. "While the reforms proposed will require additional resources," the authors said, "they represent a smart investment in our communities and in our future."
Researchers said the study was the first in what would be a state-by-state investigation of oversight of charters in the 42 states that have them.
Serrette said researchers decided to begin with Pennsylvania because the timing seemed right. He pointed out that both DePasquale in Harrisburg and Butkovitz in Philadelphia have highlighted the fraud risks in charter schools. And State Rep. James R. Roebuck Jr. (D., Phila.), minority chairman of the House Education Committee, introduced a bill last year to tighten charter controls.
Said Serrette: "The stars are aligning."
Source
Joining Forces to Win
The Huffington Post - November 21, 2013, by Ana María Archila - As progressives, we need to dramatically increase our...
The Huffington Post - November 21, 2013, by Ana María Archila - As progressives, we need to dramatically increase our scale and reach to win. With the merger of the Center for Popular Democracy (CPD) and the Leadership Center for the Common Good (LCCG) in January 2014, we are poised to do just that. The stakes are high. The crisis in American society is severe: Inequality is now at the highest level ever recorded. In 2012, the top 1 percent of U.S. households received 19.3 percent of all household income.
The income gap between white and non-white America is growing even faster. Between 2005 and 2009, median white wealth declined by 16 percent, while median black wealth dropped by 53 percent and Latino wealth declined by 66 percent. Increasing economic inequality is being matched by increasing political inequality. Our democracy and the political participation of people of color, young people and the elderly are being eroded by state legislatures, with the tacit support of the Supreme Court.
All this would be much worse of course, if not for the work of the progressive organizations and movements that have fought inequality and racism for decades.
We can, and must, go farther and faster to fight inequality, the erosion of democracy and racial injustice. There is a growing opportunity to challenge the status quo and to build a society characterized by opportunity, equality and inclusion. Increasingly strong and assertive community organizations across the country are stepping up to demand better. Immigrant organizations, worker centers, progressive unions, elected officials and people of faith are envisioning and creating more inclusive and equitable cities and states, even in spite of our failed national politics.
The most successful community campaigns present a new vision for change, a creativity and fearlessness to promote policies many have thought unachievable, as well as a canny understanding of how to navigate local political forces.
My organization, the Center for Popular Democracy, works at the center of this emerging new politics, working to build the capacity and resilience of rooted, democratic, community-organizing institutions. We feel the urgency to grow our movement, to build new strength, to share organizing models and strategies more broadly, and to replicate campaigns and tactics that work to confront racial and economic inequality.
Just as our movement needs more power and reach, so do we. That's why we are merging with the Leadership Center for the Common Good to create a newly powerful Center for Popular Democracy on January 1, 2014. Our organizations' sister c4 organizations, Action for the Common Good and Center for Popular Democracy Action Fund will also merge to create a newly powerful Action for the Common Good. Part campaign center, part capacity builder, part policy shop, our merged and expanded organizations will work together to more effectively build the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial and economic justice agenda. From recent successes, we have a sense of what is possible when working communities are well organized, resourced and equipped to demand change. In New York, coalitions of community groups, progressive unions, and faith networks came together this year to secure a raft of impressive victories, from a raise in the state's minimum wage, to the adoption of paid sick days' legislation in New York City to the passage of pro-immigrant language access initiatives in both Nassau and Suffolk Counties on Long Island. And, in the face of fierce opposition from outgoing Mayor Bloomberg, CPD and our allies secured passage of new laws to stop the discriminatory policing tactics of the NYPD -- Stop and Frisk. CPD brought our policy expertise, strategy insights, and coalition coordination experience to these fights -- helping drive them to victory.
The New York victories mirror the work we are engaged in across the country -- in 27 states with more than 90 partners nationally. Through strategic and sustained local and state victories, driven by strong community and labor partners, and supported in important ways by CPD, we can secure tangible improvements in working people's lives and generate the upward pressure and momentum necessary to refocus national policy on furthering values of equity, opportunity and democracy for all.
Strong local organizations with a clear vision and an appetite for bold action are well able to scale up to win national victories when strategic opportunities present themselves. Last May, for example, the Home Defenders League, a project of LCCG and many close allies, staged a dramatic week of action which included civil disobedience by foreclosed homeowners at the Department of Justice as well as at other sites. Their actions tied together the simmering public outrage over the lack of prosecutions of Wall Street banks with a need to find relief for the hard hit families and communities. Five months later, reports of a pending $13 billion federal settlement with JPMorgan Chase suggest the long fight may be about to yield results.
The launch of the merged and expanded Center for Popular Democracy and Action for the Common Good is our ambitious move to help increase the strength, scale and reach of community organizing. Together, we are stronger. Together, we can build the power we need to win.
Source
Markets to Fed: See you next year
MARKETS TO FED: SEE YOU NEXT YEAR! — Asia followed Wall Street higher on hopes the Fed might take weak jobs data into...
MARKETS TO FED: SEE YOU NEXT YEAR! — Asia followed Wall Street higher on hopes the Fed might take weak jobs data into account and wait until next year to hike rates. … Reuters: “Fading expectations that the U.S. Federal Reserve will raise interest rates this year and a bounce in oil and commodity prices helped lift Asian stocks to two-week highs on Tuesday …
“‘One of the two big persistent concerns has faded, so investors are taking risks,’ said Masashi Oda, senior investment officer at Sumitomo Mitsui Trust Bank, referring to expectations of a near-term Fed hike. … Japanese shares garnered further momentum from speculation that the Bank of Japan might expand its massive stimulus program to support the flagging economy”http://www.reuters.com/article/2015/10/06/us-global-markets-idUSKCN0S001I20151006
M.M. SIDEBAR — Seems like wishful thinking. The FOMC is almost certain to hit the liftoff button by December unless jobs growth really falls off a cliff, which appears unlikely based on other data. It remains possible that both August and September jobs figures will get revised higher. And even a slightly sub-200K pace is enough to keep unemployment dropping to what the Fed generally considers full employment (though nobody actually knows exacly what full employment is). Of course a messy debt limit fight actually could push the Fed off into 2016 but it would likely take markets down with it.
“FED UP” PROTESTERS TO HIT PHILLY — POLITICO's Zachary Warmbrodt: “Activists lobbying against a Federal Reserve interest rate increase as part of the so-called ‘Fed Up’ campaign are planning to hold a protest targeting new Federal Reserve Bank of Philadelphia president Patrick Harker on Tuesday afternoon. Around 15-20 people including workers, small business owners and clergy are expected to participate in the protest, which is aimed at pressuring Harker to meet with the coalition and take a tour of low-income neighborhoods …
“Kendra Brooks, who leads the local Fed Up coalition and is an organizer for Action United, is attending Harker's event but says she has been urging him to meet with more members of the community beyond the heads of non-profits and corporations … Brooks tried to get a commitment from Harker at the Fed's symposium in Jackson Hole, and their chat is on YouTube:https://www.youtube.com/watch?v=2h-GN7cHDAc
WILL HILLARY FLIP FLOP ON TPP? — POLITICO's Victoria Guida: “Hillary Clinton has presented herself as a skeptic of the biggest trade deal in history, saying this summer that ‘we should prepared to walk away’ from the 12-nation Trans-Pacific Partnership unless it boosts Americans' wages and national security. But with a deal announced Monday after months of backstage wrangling, Clinton will be under intense pressure to take a stance.
“The deal is one of the most ambitious items left on President Barack Obama's White House bucket list. But his former secretary of state owns it too, even though she has expressed increasing ambivalence about its details and could soon disown it outright, as some in her circle have suggested. … [R]eacting to the polarizing TPP deal is one of the most excruciating policy decisions of her campaign thus far - and far more politically perilous with Democratic primary voters than her backing of Obama's Iran deal.” http://www.politico.com/story/2015/10/hillary-clinton-trade-dilemma-214456
BIGGEST TPP WINNER: JAPANESE AUTO MAKERS — Per Bloomberg’s list of winners under the trade deal: “Japanese car and auto-parts makers may be the biggest winners, as they get cheaper access to the U.S., the industry’s biggest export market” https://www.bloomberg.com/news/articles/2015-10-06/tpp-trade-deal-who-stands-to-benefit-suffer-in-asia-pacific
FIRST LOOK: “TAX HAVEN SEX MANSION” — Can't resist a headline like that, eh? Bloomberg Businessweek piece up at 7:00 a.m. by Zeke Faux “investigates how Abe Zeines and Muir Hurwitz, two sons of an ultra-religious Jewish neighborhood in Brooklyn piloted a shady new kind of finance — ‘merchant cash advance’ — made a fortune, and then saw it all come to an end.” The two now live in a "tax-haven sex mansion in Puerto Rico.” As one does. https://www.bloomberg.com/authors/AP5w7epl1Xo/zeke-faux
LITAN RESPONDS — Bob Litan writes in FORTUNE: “Sen. Warren clearly disagrees with our study, but rather than address its reasoning and facts, she claimed my disclosure was vague (which it was not) and that I was misusing my non-resident perch at Brookings by identifying that position in a footnote (a newly established Brookings rule of which I was unaware but promised Brookings I would not run afoul of again), though I never mentioned my Brookings affiliation at the hearing. …
“I can only speculate why Sen. Warren has been so interested in our research, but I suspect it is because, even with its disclosed sponsor, the study exposed two major weaknesses in Labor’s proposal — which the Department may correct when it issues its final rule. But if it does not, these two points, at least in my view, make the rule susceptible to being overturned by a court as being arbitrary and capricious (or failing a benefit-cost test) if it is legally challenged” http://fortune.com/2015/10/05/elizabeth-warren-robert-litan-u-s-department-of-labor/
Litan’s pithy email response to M.M. on the whole affair: “Life in the big city.”
GOOD TUESDAY MORNING — Crazy Monday Night Football game. The Lions had a surprising road victory over the Seahawks in their grasp only to have Kam Chancellor poke the ball out of Calvin Johnson’s hands at the goal line. The Seahawks then illegally batted the ball out of the end zone for the touchback but the refs missed it. Should have been Lions ball at the goal line. Crushing blow. Massive officiating mistake. Email me at bwhite@politico.com and follow me on Twitter (like Kam Chancellor does!) @morningmoneyben.
THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Adam Behsudi on the TPP currency side deal that Congress might not like – [https://www.politicopro.com/financial-services/story/2015/10/pro-trade-tppcurrency-behsudi-056469] and to get Morning Money every day before 6 a.m.-- please contact Pro Services at (703) 341-4600or info@politicopro.com
** A message from Grant Thornton LLP: The tax code puts U.S. companies at a disadvantage. Congress can’t address the problem if it excludes pass-throughs from an innovation box or tax reform. Congress should lower the effective business tax rates equitably for all U.S. businesses. https://www.grantthornton.com/issues/library/articles/public-policy/2015/policy-issues/support-the-BER.aspx?utm_medium=ad-partnership&utm_campaign=public-policy-issues&utm_term=Public-policy&utm_content=article **
BLOOMBERG EVENT TODAY — The Bloomberg Markets Most Influential Summit takes place in New York, London and Hong Kong featuring Tom Steyer, Mike Bloomberg, Bill Ackman, Cliff Asness, Barry Diller, Blythe Masters and more https://www.bloomberglive.com/markets-most-influential/new-york/agenda/
SOFTBALL REPORT: FERC TAKES THINK TANK CROWN — Per AEI’s Michael Pratt: “FERC defeated the defending champs AEI 13-7 in the Think Tank Softball League Championships in a game under the lights in a field by Pentagon City. Congrats to the winning team - over 40 teams are part of the league.”
POSTCARD FROM THE NEW YORKER FESTIVAL — POLITICO’s Daniel Lippman reports: “Homeland” actor Damian Lewis told the New Yorker festival on Saturday that he's met with hedge fund managers like Bill Ackman and Dan Loeb to prepare for his upcoming new show about Wall Street called "Billions" (on which Andrew Ross Sorkin is an executive producer).
He asked the hedgies: "Give me your intellectual defense of being a hedge fund guy, of shorting companies and the one thing they could never really persuade me of, was that playing to a moral code that we might all conventionally understand, it wasn't possible for them to justify what they do. But if they just ever so slightly shifted the goal posts and created a new moral reality for themselves, which is essentially that as long as I don't break the law and as long as the game exists, I'm here to play the game and everything is fine."
BETTER MARKETS’ FUNDING QUESTIONED — National Review’s Brendan Bordelon goes long on hedge fund manager Michael Masters’ funding of pro-financial reform group Better Markets.” http://www.nationalreview.com/article/425063/elizabeth-warrens-wall-street-double-standard-brendan-bordelon
Better Markets’ Dennis Kelleher emails: “Wall Street has been trying to shut down, shut up or smear Better Markets since it was founded five years ago. Wall Street has little tolerance for anyone willing to stand up to them or who can’t be bought.
“Better Markets’ independence and effectiveness on the public’s behalf is what gets under Wall Street’s skin and why it has been shopping a fabricated story for months to anyone in the media who would listen. … [T]he story is so factually wrong it is laughable, as detailed here https://www.bettermarkets.com/blog/fact-sheet-better-markets%E2%80%99-response-wall-street%E2%80%99s-latest-attack”.
M.M. SIDEBAR — Anyone who knows Kelleher (agree or disagree with him on issues) knows he wouldn't be shilling for some hedge fund guy looking to tilt stock prices. But in an era when Bob Litan can get dumped from Bookings over a fully-disclosed source of research funding, everything seems to be fair game.
TOUGH ROAD FOR TPP IN CONGERSS — WP’s David Nakamura: “President Obama hailed the historic 12-nation Pacific Rim trade deal … as an accord that ‘reflects America’s values,’ but within hours the administration had turned from the negotiating table to selling the agreement on Capitol Hill, a reflection of the harsh political climate the controversial pact is expected to face in Congress. Obama pledged that [TPP] … would open new markets for U.S. goods and services and establish rules of international commerce that give ‘our workers the fair shot at success they deserve.’
“But almost immediately there were signs of the tough fight ahead to win final ratification from Congress next year. Lawmakers from both parties criticized the pact as falling short in crucial areas, raising the prospect that the White House could lose the support of allies who had backed the president’s trade push earlier this year" http://www.washingtonpost.com/business/economy/deal-reached-on-pacific-rim-trade-pact/2015/10/05/7c567f00-6b56-11e5-b31c-d80d62b53e28_story.html
SHARP PRICE INCREASES DRIVE DRUG COMPANY REVENUES — WSJ’s Joseph Walker: “Demand for a drug called Avonex has declined every year for the past 10. Not a problem for its manufacturer. U.S. revenue from the drug has more than doubled in that time, to $2 billion last year. The key: repeated price increases. The multiple sclerosis drug’s maker, Biogen Inc., raised its price an average of 16 percent a year throughout the decade — 21 times in all.
“It is an example of drug companies’ unusual ability to boost prices beyond the inflation rate to drive their revenue, even when demand for the drugs doesn’t cooperate. A result of this pricing power is that across 30 top-selling drugs sold by pharmacies, U.S. revenue growth has far outpaced demand in the past five years … Revenue growth averaged 61 percent, three times the increase in prescriptions” http://www.wsj.com/articles/for-prescription-drug-makers-price-increases-drive-revenue-1444096750
BERNANKE ADMITS MISLEADING ON LEHMAN — NYT’s Andrew Ross Sorkin: “It is astonishing to hear a former Federal Reserve chairman acknowledge that he may have misled the public as part of an agreement with another senior government official about one of the most crucial moments in recent financial history — and that he now questions whether he should have “been more forthcoming.” But that is what Ben S. Bernanke says in his new memoir …
“That crucial moment? The bankruptcy of Lehman Brothers. Mr. Bernanke, in perhaps the most candid explanation of Lehman’s 2008 collapse, writes that he and Henry M. Paulson, then the treasury secretary, purposely obfuscated when asked about Lehman’s demise early on, allowing a narrative to develop that the government had purposely let the firm fail
“In congressional testimony immediately after Lehman’s collapse, Paulson and I were deliberately quite vague when discussing whether we could have saved Lehman,’ Mr. Bernanke writes. ‘But we had agreed in advance to be vague because we were intensely concerned that acknowledging our inability to save Lehman would hurt market confidence and increase pressure on other vulnerable firms.’” https://www.nytimes.com/2015/10/06/business/dealbook/in-ben-bernankes-memoir-a-candid-look-at-lehman-brothers-collapse.html?_r=0
GOOGLE BUYS INTO SYMPHONY — FT’s Joe Rennison and Richard Waters: “Alphabet, Google’s renamed parent company, is set to become the latest investor to back Symphony, joining a host of big banks in their attempt to dislodge Bloomberg’s dominant position in Wall Street messaging. Born out of the 2013 snooping scandal, where it came to light that Bloomberg News reporters had spied on bankers using its ubiquitous terminals, Symphony claims to offer a more secure way for people to communicate with each other.
“The service officially launched on September 15, unveiling tie-ups with McGraw Hill Financial, which will supply financial information from S&P Capital IQ, and News Corp’s Dow Jones unit, which will provide a live news feed to the platform. Symphony and Alphabet declined to comment. People familiar with the matter said the deal was yet to be finalised but one confirmed a WSJ.com report that the new funding round would value Symphony at about $650m.”https://www.ft.com/content/32dbcf1a-6ba1-11e5-aca9-d87542bf8673
ALSO FOR YOUR RADAR —
FIRST LOOK: MARANTIS JOINS VISA — Per release going out this morning: “Visa … day announced the appointment of former Acting U.S. Trade Representative Demetrios Marantis as Senior Vice President, Global Government Relations. Marantis joins Visa from Square, where he led global policy, government, and regulatory affairs. Marantis will report directly to William Sheedy, Executive Vice President, Corporate Strategy, M&A, and Government Relations at Visa Inc., and be responsible for all facets of Visa’s government relations activities
JOIN US — WOMEN RULE: TAKING RISKS AND TAKING CHARGE Women Rule live event series returns Wednesday morning at 8 am with “Women Rule: Taking Risks and Taking Charge,” a series of conversations with women who have braved the odds in their lives and careers. Vian Dakhil, Iraqi MP and voice of the Yazidi people being attacked by ISIS and her sister, Dr. Deelan Dakhil, the co-director of the Sinjar Foundation will headline the event. Featured speakers also include Sen. Tammy Baldwin (D-Wis.); Sarah LaFleur, Founder and CEO, MM. LaFleur, and former White House NSA and EVP of MacAndrews and Forbes, Frances Fragos Townsend. RSVP: http://www.politico.com/events/2015/10/women-rule-taking-risks-and-taking-charge-213943
NOW AVAILABLE: POLITICO PRO LEGISLATIVE COMPASS — POLITICO Pro, POLITICO’s premium subscription service, has released a first-of-its kind legislative data analytics and decision-making tool that helps policy professionals manage and act on legislation. Leveraging features such as a personalized dashboard, virtual whip count, bill text comparison and 20 years of data, users will not only save time but benefit from customizing and cross-referencing information, enabling them to make smarter and faster decisions. Schedule your demo today.
** A message from Grant Thornton LLP: When Congress fails to act, businesses suffer. More than 50 popular tax provisions expired at the end of 2014, including the R&D credit. Congress’s indecision on these provisions is impeding business planning and stifling growth. According to a Grant Thornton survey of top financial executives, more than half of companies that use the provisions do all their planning under the assumption that the extension will not occur. That’s a huge blow to the effectiveness of the provisions and a barrier to growth. The R&D credit is a major driver of entrepreneurial activity and high-paying jobs. Congress needs to act soon to reinstate these provisions and to make the R&D credit permanent. Find out what else Congress could do to strengthen the R&D credit and view survey findings at http://gt-us.co/1iOXJW5
Source: Politico
Taxing the rich: how Seattle leads a ‘go-local’ trend in liberal politics
Taxing the rich: how Seattle leads a ‘go-local’ trend in liberal politics
Seattle is trying to tackle income inequality one local move at a time – and becoming a case study in how cities are...
Seattle is trying to tackle income inequality one local move at a time – and becoming a case study in how cities are testing liberal policies that lack traction at the state or federal level.
Read the full article here.
Experts Urge Fed To Pursue 'Genuine Full Employment' Before Rate Hike
The Federal Reserve should pursue "genuine full employment" with "robust wage growth" before raising interest rates, ...
The Federal Reserve should pursue "genuine full employment" with "robust wage growth" before raising interest rates, experts from the Center for Popular Democracy and the Economic Policy Institute argue in anew report.
The report authors say the Fed, the central bank of the United States, can help reverse wage stagnation and narrow gender and racial wage gaps through its monetary policy.
Most Americans have faced wage stagnation over the last 35 years, despite there being a 64.9 percent growth in productivity during this time, according to the report. Wage growth also remained sluggish last month, with average hourly earnings increasing only 2 percent in June from one year ago.
A move by the Fed to slow the economy with an interest rate hike before "genuine full employment" is achieved will "hamper the ability of workers' wages to rise," the authors wrote.
"Because the vast majority of American workers have seen near-stagnant wages even as economy-wide productivity growth has constantly risen, there's ample space for wage gaps to close without anyone losing wages," said report co-author Josh Bivens, EPI's research and policy director. "The Fed has a powerful role in shaping labor market trends and raising wages. By pursuing full employment, it could help to close these wage gaps among workers."
In the report, the experts highlighted wage trends over recent decades among men and women as well as racial groups. Over the past 35 years, racial wage gaps between whites and Latinos or blacks have widened, the report says. During the same time period, disparities in median earnings between men and women did narrow by about 30 percent, but over a quarter of that progress was due to a decline of men's wages, according to the report.
For its part, the Fed has a "dual mandate" to keep prices stable and maximize employment. The Fed's current inflation target is 2 percent, and full employment is defined by the financial institution as a jobless rate between 5.0 percent to 5.2 percent. The nation's unemployment rate in June was 5.3 percent.
At some point this year, the Fed could begin to raise short-term interest rates, which were cut to near zero percent during the Great Recession to support the economy.
The report authors argue that the Fed's full employment estimate is "too meek," adding that the financial institution "should experiment aggressively with letting the unemployment rate fall as low as possible before raising interest rates."
"[T]he Fed should allow much lower unemployment levels, so long as no accelerating inflation results," the report adds. "Substantial evidence supports pursuing this more tolerant approach to falling unemployment. The late 1990s saw much lower rates (4.0 percent for two full years in 1999 and 2000) without sparking accelerating price inflation."
According to the experts, annual wage growth should also be in the 3.5 percent to 4.5 percent range before the Fed considers an interest rate hike.
Here are the three key recommendations listed in the report:
The Federal Reserve should set a clear and ambitious target for wage growth, which will provide an important and straightforward guidepost on the path to maximum employment. Wage targeting can be fairly easily tailored to the Fed's price-inflation target and pegged to increases in productivity.
The Fed should maintain a patient, but watchful posture. The history of the past 35 years shows a generally steady downward trend in price inflation and that prematurely slowing the economy results in higher than desirable unemployment.
The Federal Reserve should not consider an interest-rate hike until indicators of full employment--particularly wage growth--have strengthened.
"Failure to aggressively target and achieve genuine full employment by keeping interest rates low and setting a clear and ambitious target for wage growth explains a large part of why wages continue to stagnate," said report co-author Connie Razza, CPD's director of strategic research. "There is increasing talk about raising interest rates, but it would be a terrible mistake for the Fed to do so. Raising interest rates too soon will slow an already sluggish economy and will disproportionately harm women and people of color."
Source: Progress Illinois
Fed policymakers see rate hikes, blurring dove-hawk divide
Whitehurst’s group of activists, Fed Up, has printed pamphlets to distribute at the conference venue that say George,...
Whitehurst’s group of activists, Fed Up, has printed pamphlets to distribute at the conference venue that say George, along with other traditionally hawkish policymakers, “wants more people to be unemployed.”
Read the full article here.
Pittsburgh police tightening security for march after Dallas
Pittsburgh police tightening security for march after Dallas
PITTSBURGH (AP) - Pittsburgh police say they're using uniformed and plainclothes officers and "extreme caution" to...
PITTSBURGH (AP) - Pittsburgh police say they're using uniformed and plainclothes officers and "extreme caution" to safeguard police and the public at an activists march on Friday.
The march opening the People's Convention at the city's convention center is billed as protesting "growing inequality and a toxic atmosphere of hate." Organizers expect 1,500 activists to march through downtown protesting what they believe are various social ills.
Pittsburgh's Public Safety Department is working with the FBI and other law enforcement in the wake of sniper shootings that killed five police officers and wounded seven others at a protest march in Dallas on Thursday.
Pittsburgh Bishop David Zubik also planned a noon Mass to pray for "peace and reconciliation."
And Philadelphia Archbishop Charles Chaput (SHAP'-yoo) says the Dallas murders "only discredit" such protesters' "legitimate anger."
Source
Jeff Flake jokes about moment when sexual assault survivors confronted him on elevator
Jeff Flake jokes about moment when sexual assault survivors confronted him on elevator
Sen. Jeff Flake cracked a joke Saturday about the viral moment we was confronted by sexual assault survivors on an...
Sen. Jeff Flake cracked a joke Saturday about the viral moment we was confronted by sexual assault survivors on an elevator last week over his support for embattled Supreme Court nominee Brett Kavanaugh.
Read the full article here.
Support the Farmworkers Fasting to End Sexual Assault in Wendy’s Supply Chain
Support the Farmworkers Fasting to End Sexual Assault in Wendy’s Supply Chain
“This year marks a decade since the 2008 financial crisis—and many of those affected have yet to recover. As part of...
“This year marks a decade since the 2008 financial crisis—and many of those affected have yet to recover. As part of its campaign to demand that the New York Federal Reserve pick a president that will stand up to Wall Street, the Center for Popular Democracy is collecting stories from those affected by the crash. Watch and share some of those stories, then submit your own.”
Read the full article here.
Conservatives May Control State Governments, But Progressives Are Rising
Bill Moyers - March 18, 2015, by George Goehl, Ana María Archila, and Fred Azcarate - In November, conservatives swept...
Bill Moyers - March 18, 2015, by George Goehl, Ana María Archila, and Fred Azcarate - In November, conservatives swept not only Congress, but a majority of statehouses. While gridlock in Washington is frustrating, the rightward lurch of statehouses could be devastating. Reveling in their newfound power, state lawmakers and their corporate allies are writing regressive policies that could hurt families by exacerbating inequality, further curtailing an already weakened democracy, and worsening an environmental crisis of global proportions.
From a law that would censor public university professors in Kansas to a governor who prohibits state officials from using the term “climate change” in Florida, ideologues in state capitols are wasting little time when it comes to enacting an extreme agenda. And that’s just the tip of the iceberg. Wisconsin officially enacted right to work legislation on Monday, a policy that’s shown to lower wages and benefits by weakening the power of unions. Missouri, New Mexico, West Virginia, Kentucky, and Illinois are all entertaining various versions of the law. In states like New York and Ohio, legislators are considering severe cuts to public education, while vastly expanding charter schools.
Of course, a look at key 2014 ballot initiatives shows voters held progressive values on issues like the minimum wage, paid sick days, and a millionaires tax. And just 36.4 percent of eligible voters cast their ballots in 2014, meaning that there is surely a silent majority sitting on the sidelines.
The path to policies that put families first is not short, but a bold coalition across the country took an aggressive step forward this week.
On March 11th, under the banner “We Rise,” thousands of people joined more than 28 actions in 16 states to awaken that silent majority and call their legislators to account. A joint project of National People’s Action, Center for Popular Democracy, USAction and other allies across the country, the message of the day was simple: our cities and states belong to us, not big corporations and the wealthy. We can work together and push our legislators to enact an agenda that puts people and the planet before profits. And at each local action, leaders unveiled their proposals for what that agenda would look like in their cities and states.
In Minnesota, grassroots leaders are fighting for a proposal to re-enfranchise over 44,000 formerly incarcerated people. In Nevada, our allies are agitating for a $15 minimum wage. In Illinois, we are organizing for closing corporate tax loopholes and a financial transaction tax (a “LaSalle Street tax”) that would help plug the state’s budget hole. With each of these proposals, we are moving from defense to offense and changing the conversation about race, democracy and our economy.
We’ve seen over and over again in American history, change starts close to home – in our towns, cities and states. On March 11th, we saw a fresh reminder of the power of local change. Our families and communities are defining this new front in American public life, and we will continue rising to challenge corporate power and win the policies that put people and planet first - not last.
If November was a wave election, then this Spring will be a wave of bottom-up people power activism. What starts with defending people and our democracy from an extreme corporate conservative agenda, will pivot to offense as grassroots organizations across the country fight to fundamentally reshape our government and our economy from the bottom up. Expect an unabashedly bold agenda that holds the potential for awakening the progressive majority and ushering in a new era in America, an era where our country works for everyone, not just the wealthy and well connected.
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