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Return to Lender

5:44 pm in Uncategorized by Michelle Chen

Representatives of the American Postal Workers Union, pictured here at a 2011 protest, have rallied in support of a postal banking system. (Mark Taylor / Flickr / Creative Commons)

Originally published at In These Times

Your friendly local post office may have an honorable history, but it’s facing tough times, including a fiscal crisis and, more generally, a struggle to keep pace with growing digital communication technologies. Conservatives have increasingly dismissed the United States Postal Service as a clunky relic of old-fashioned America, with right-wing lawmakers seeking to phase it out through service cuts and privatization. Now, some progressives are trying to save the USPS by rebranding it as a financial vehicle: a place for you to pick up your mail and deposit a paycheck in one stop.

Some officials have pitched the idea of the postal service expanding into “non-bank” financial services, carefully designed to complement rather than directly compete with Wall Street. In a recent white paper, the USPS Inspector General’s office suggested that local post offices could offer products such as international money transfers, small short-term loans, and prepaid debit cards for bills or everyday purchases. To fulfill needs unmet by big banks, these financial services would ideally be targeted toward “low-income areas like rural communities and inner cities.”

Ultimately, though, many advocates want to see the postal service be bolder and actually delve into full-scale banking services. Labor and consumer advocacy groups like AppleSeed say the USPS is excellently positioned as a government-supported, publicly accountable institution to fill a longstanding gap in the financial system by offering interest-bearing accounts and other basic banking services. In addition, branching into the affordable finance business would offer the USPS a steady revenue stream.

For free-marketers who fear the USPS would steal big banks’ customers, advocates point out that low-income groups that stand to gain the most from postal banking have already been marginalized as a bad business prospect. Some 68 million Americans are considered “underbanked”: In other words, they lack access to mainstream banks and essential services like savings accounts. “Banking desert” neighborhoods are typically full of people of color, immigrants and unemployed workers—and there may be no full-service bank in sight for them, because massive firms like Merrill Lynch do not see those areas as “profitable.” Read the rest of this entry →

When Federal Contracts Turn Into Corporate Welfare

7:30 pm in Uncategorized by Michelle Chen

Image: AFL-CIO’s Executive Paywatch

Originally published at In These Times

Where does the corporate bottom line end and the public interest begin? Through the voodoo economics of federal contracting, Washington’s “partnerships” with private corporations have drained the public trust straight into the pockets of top corporate executives.

The progressive think tank Demos calculates in a new research report that private contractors have funneled up to $24 billion in federal funds into executive salaries. Yet, according to the analysis, the same system of contracted firms—from defense manufacturers to concession stands at national tourist sites—also employs hundreds of thousands of poverty-wage workers at the bottom.

Federal contractors are currently subject to a very loose limit on the amount of an executive’s salary that can come directly from federal subsidies: about $763,000. Extrapolating from survey data on the top contractor executive salaries fromthe Government Accountability Office, Demos estimates the aggregate share of public money that is ultimately funneled into executive pay at $23.9 billion.

Besides taxpayers, those who stand to lose most from these skewed CEO pay schemes may be the low-wage laborers carrying out the actual work of the contract projects, such as repairing a school or building a bridge. These are the workers featured in another recent Demos analysis of contractors, showing that “an estimated 560,000 Americans employed by federal contractors were paid $12 an hour or less.”

Demos points out that the government could save taxpayers a hefty sum by simply shrinking the CEO portion of contractor payments. For example, by capping it at the level of the U.S. vice presidential salary, taxpayers could save “$6.97 to $7.65 billion.” Theoretically, under a more equitable pay distribution, that sum would be enough to significantly lift the lowest tier of worker wages:

If taxpayer-funded payouts for these executives were capped at $230,700—the salary of the U.S. Vice President—the pay of hundreds of thousands of low-wage federal contract workers could be raised by as much as $6.69 per hour or $13,902 per year for a full-time worker, without costing taxpayers an additional dime.

Demos notes that these are “conservative estimates” based on extrapolated data. Researchers based the analysis on a representative sample of defense contractors evaluated by the Government Accountability Office, with some adjustments for civilian contractors. The takeaway is that while legions of workers struggle to survive on the wages paid through federal contracts, the same grants are fattening the wallets of some of the wealthiest executives in the country. Read the rest of this entry →

Disaster Unpreparedness: Wildfire Tragedy Sheds Light on Dangerous Budget Gaps

4:05 pm in Uncategorized by Michelle Chen

(Michael Young / Flickr / Creative Commons)

They went in as a team and perished as heroes. From what ongoing investigations have been able to determine, the 19 elite firefighters of the Prescott Fire Department’s Granite Mountain Hotshots followed safety protocols amid the ferocious wildfire at Yarnell Hill in Arizona. But evidently the fast-changing wind conditions doomed them.

We may never know exactly what went wrong in the hotshots’ final moments. But we can know that underlying their misfortune were human-driven risks that have long shaped the Western landscape.

Beneath the immediate disaster—a lightning-sparked blaze that consumed several thousand acres—lurk factors that have for years exacerbated wildfire hazards: global warming and chronic drought, along with severe resource gaps for the public servants serving as the first line of defense.

Federal authorities report that wildfires consume twice as much land annually as they did forty years ago, as rising temperatures and parched vegetation transform Western landscapes into the perfect tinderbox. Risks have also multiplied as rural housing developments continue to sprawl and more people move into harm’s way. Meanwhile, changing climates tend to intensify the brutal heat conditions and lengthen the fire season, which raises direct risks for firefighters on the front lines.

At the same time, fire-management resources are drying up. This fiscal year’s cuts to the Forest Service’s Fire and Aviation Management budget shrank its forces from 10,500 to 10,000 firefighters.

These fiscal strains also impede efforts toward comprehensive, sustainable wildfire control. With tightly limited overall resources, the Forest Service strains to pay for frontline fire suppression, while longer-term wildfire programs are depleted. This makes it harder overall to invest in mitigating future hazards and prevent catastrophes.

Forest Service spokesperson Jennifer Jones tells In These Times: “Over the last few years, budgets for [reducing] hazardous fuels have been declining–and are expected to decline further.” Along with the budgets, the acreage treated for fuel reduction (mainly by thinning brush and setting contained fires) has also fallen in recent years. Meanwhile, says, Jones, “millions of acres are at risk of extreme wildfire due to climate change, drought, insect infestation, invasive species and other factors.” Yet coping with future disaster risks would involve sustained, proactive investments in measures such as restoring wild landscapes to strengthen natural fire resilience and helping communities build adaptive protective infrastructure—not just emergency responses.

Testifying before Congress in June, Forest Service Chief Thomas Tidwell described pressures on the agency to stretch limited funds to cover diverse complementary needs: “When you have a constrained budget situation the money has to come from some place, so that’s why it’s so hard.”

The funding crunch extends beyond top-of-the-line federal responders like the hotshots to state and local  firefighting budgets. Rick Swan, State Supervisor Director of CDF Firefighters of the International Association of Firefighters, tells In These Times that state and local fire stations, which often support federal firefighting, are not seen as major funding priorities, in part because extinguishing rural fires may seem “less glamorous” than, say, crime-fighting operations. Some politicians, he says, show more interest in lavishing high-tech equipment on municipal police, while community fire departments struggle to keep their stations fully staffed or to set up decent radio equipment. (The New York Times reported on signs of communication technology problems facing hotshots as well.)

But if firefighting infrastructure and personnel are allowed to erode, Swan says, “Good people [go] to other jobs.” Then, he says, private contractors move in to fill the gap.

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