Category Archives: Nevada economy

Heads Up Nevada, We Could Once More Join The Sand States

Heads up, Nevada!  There’s another storm on the horizon, and it’s not meteorological, nor is it related to the proliferation of high powered rifles and stockpiles of ammunition.  It has to do with a crisis we thought we’d withstood and overcome.

We were one of the Sand States eight years ago, those with massive development projects in which homes were constructed, mortgages were offered, and then sold into secondary markets to be sliced, diced, tranched, and manipulated into financial products in the Wall Street Casino.  We know what happened next.  The investment banking sector collapsed, the financial markets were in ruins, and Nevadans felt the aftermath with unconscionable unemployment levels and lost income.

The response was the Dodd Frank Act, a set of regulations to control the excesses of the Wall Street Casino and investment banking practices.  The first major assault came from the House of Representatives last June:

“The House legislation, called the Financial Choice Act, would undo or scale back much of Dodd-Frank. The bill was approved 233 to 186. All but one Republican — Walter Jones of North Carolina — voted for the bill. No Democrats supported it.

Its major changes include repealing the trading restrictions, known as the Volcker Rule, and scrapping the liquidation authority in favor of enhanced bankruptcy provisions designed to eliminate any chance taxpayers would be on the hook if a major financial firm collapsed.

The bill also would repeal a new Labor Department regulation, largely still pending, that requires investment brokers who handle retirement funds to put their clients’ interests ahead of their own compensation, company profits or other factors.”

Representative Mark Amodei voted in favor of this bill, HR 10, on June 8, 2017.   What Representative Amodei voted for was to allow banks to play in the stock market with depositors money (remember deposits are guaranteed up to $250,000) and to allow financial advisers to recommend products to their customers which are not necessarily to the advantage of their retired clients, but which may happily enhance the financial advisers’ bottom lines.   In light of what happened to this Sand State in 2007-2008 Nevadans should be especially concerned about this.  But, wait, there’s more

Remember that one of the major problems for working Americans, Nevadans included, was the burden of pay-day lending?  The Consumer Financial Protection Bureau, created by the Dodd Frank Act, is seeking to limit the negative impact of some of the more egregious practices in this sector of the banking industry.  Now the Comptroller of the Currency has another idea, publicized on October 5th:

“…the Office of the Comptroller of the Currency surprised the financial services world by making its own move—rescinding guidance that made it more difficult for banks to offer a payday-like product called deposit advance.”

Lovely, so now banks can “offer” those insidious high rate pay-day loans, only changing the name to “deposit advance,” and consumer will be right back on the hook.  At almost the same time as the CFPB issued a rule preventing pay day lenders from handing out loans without reviewing a customer’s capacity to repay the loans, the bankers get the green light to hand out “deposit advances.”

There is one bill in the US Senate which does offer some improvements on Dodd Frank, Senator Claire McCaskill (D-MO) and Senator David Perdue (R-GA) have introduced a bill to address some of the problems for community banks.  There are more reasons to support this legislation than to oppose it, but beware of the rationalizations and gamesmanship.

Those who want to eliminate the CFPB, gut its authority, or toss the Dodd Frank Act altogether may wish to convince us that (1) the entire act needs to be repealed to “enhance the free market,” or some other euphemism for re-opening the Wall Street Casino, (2) the CFPB places “burdensome” regulations on those pay day lenders who (bless their hearts) are only trying to provide more “options” for consumers.   This isn’t the most interesting or engaging story of the moment, but it is an issue Nevadans would do well to follow very closely.

We don’t need to be ground into the sand again.

 

 

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Filed under Amodei, Economy, financial regulation, Nevada, Nevada economy, Politics

While We’re Ducking and Dodging

While we’re ducking, dodging, and otherwise attempting to avoid damage from the GOP, they’re still busy with legislation to make our lives just a bit more difficult.  Cases in point:

The House leadership has delayed, but hasn’t promised to discard, a bill, HR 367, to allow the general sale of silencers — which the proponents tell us will mitigate hearing loss for gun owners.  Pro Tip: A nice pair of headset style ear protectors will set you back about $30.00 (if the foamies will do you can buy’em for about 12 cents each in a bucket of 200) as opposed to spending $1300.00 on a suppressor for your AK/AR-some number or another.

The GOP tax cut legislation, which somehow is being titled “reform,” is a walloping giveaway to the top income earners in the U.S.  Not sure about this? See the Institute on Taxation and Economic Policy, that tells us those in the bottom 20% will see 1.3% of the tax benefits while the top 1% will enjoy 67.4%. Bringing this closer to home, the top 1% of income earners (which amounts to about 0.4% of our population) will get a 70.7% share of the tax cuts. For all that chatter about the Middle Class, the plan doesn’t really help middle class Nevadans:

“The middle fifth of households in Nevada, people who are literally the state’s “middle-class” would not fare as well. Despite being 20 percent of the population, this group would receive just 4.6 percent of the tax cuts that go to Nevada under the framework. In 2018 this group is projected to earn between $38,900 and $60,600. The framework would cut their taxes by an average of $380, which would increase their income by an average of 0.8 percent.”

Just to put this in context, a family in Nevada’s middle income range would see a tax cut of about $380…meanwhile back at the home mortgage, if that family is in Reno where the average home loan is about $187,000, the monthly payments are about $855 per month.  Congratulations Middle Class Nevadans, you may receive an annual prize of 44% of one month’s mortgage payment.  Color me unimpressed.

The GOP passed its version of the FY 2018 budget on a 219-206 vote.  Representative Mark Amodei (R-NV2) voted in favor of the bill; Representatives Kihuen, Titus, and Rosen were in Las Vegas attending to their constituents in the wake of the massacre at the music concert.   The AARP was quick to notice that the Republican plan calls for $473 BILLION to be cut from Medicare over the next 10 years.   Expect a cap on the Medicaid program funding; it wouldn’t be too far off to estimate cuts of about $1 TRILLION in that category.   Beware when Republicans speak of “entitlement reform,” that simply means cutting Social Security benefits and Medicare.  When they say “welfare reform,” they often mean cutting Food Stamps, Housing Assistance, and Medicaid.   Representative Amodei might want to explain why he supports cutting Medicare by $473 billion over the next decade?

Those in Nevada’s 2nd Congressional District can reach Representative Mark Amodei at 202-225-6155 (Washington DC) 775-686-5760 (Reno), or 775-777-7705 (Elko);  the office addresses are — 332 Cannon Building, Washington, DC 20515; 5310 Kietzke Lane #103, Reno, NV 89511; 905 Railroad Street, Ste 104D, Elko, NV 89801.

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Filed under Amodei, Economy, Federal budget, Health Care, health insurance, housing, Medicaid, Medicare, Nevada, Nevada economy, nevada health, nevada taxation, Politics, Republicans, Taxation

Coal Myths and Legends: North Valmy as Dinosaur in the Coal Mine

The applause line “I dig coal” may play well in certain West Virginia venues, but it’s not playing all that well with Idaho Power:

“Idaho Power says its coal plants still generate capacity during high-demand periods, but baseload from the facilities has been declining—a trend it sees continuing in the region, and nationwide.

“The decline in baseload energy production is primarily viewed as driven by low natural gas prices and the expansion of renewable generating capacity,” the utility writes in its IRP. “Because of the low natural gas prices and expanded renewable generating capacity, wholesale electric market prices over recent years have frequently been too low to merit economic dispatch of coal generating capacity.”

Idaho Power is giving serious consideration to retiring its North Valmy plant in Nevada early; notice the references to natural gas prices and the expansion of renewable generating capacity.  In short, coal isn’t coming back, anywhere.

Why? Probably because capitalism works.  

“Coal has been crushed by the shale boom, which has made natural gas — coal’s biggest competitor — extremely cheap. The price that U.S. power plants have been paying for natural gas plunged 71% between 2008 and 2016, the Columbia report found. Coal prices were down just 8% in that same period.

At the same time, coal faces new competition from the rise of renewable energy, including wind and solar. The falling cost of solar energy combined with federal tax credits have created a boom in solar jobs. The solar industry ended 2016 with 260,000 workers, according to the Solar Foundation.” [MoneyCNN]

Why would a utility, or any other business for that matter, purchase supplies from a higher priced vendor when cheaper supplies are at hand?  If you want an example of how the “market works” this is it.  Utilities are increasingly using natural gas and renewables because those sources are (1) cheaper or (2) going to be cheaper in the long run.

A second point should be made — there are two coal markets: Metallurgical coal is used primarily in steel production; Thermal coal is used for electrical production.  Prices for metallurgical coal, also called Met Coal or Coking Coal, have increased as seaborne coal (from Queensland) tightens, and as supplies from Chinese mines diminish as their mines come under increased scrutiny about safety concerns.  The price of Met Coal is a function of not only American mines, but of Australian and Chinese sources.  The price of Thermal Coal has been declining since 2012 and doesn’t show any signs of reversing that five year trend anytime soon.  This is not a case of “if you mine it they will come,”  even with the decline in Thermal Coal prices, the price of natural gas and renewables are still putting pressure on the market.

The Columbia Study (pdf) explains, once again, how capitalism works.  What are the causal factors in the collapse of the coal mining sector of the economy?

“US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.”

Thus, bolstering the contention made previously that prices matter, and if lower prices are available for some commodity, then that’s where the “market” will go.  There are other factors: (pdf) A slowdown in Chinese manufacturing demands; deregulations may not have any significant effect on mining if the prices for natural gas and renewables continue to decrease; and, while we might expect a modest recovery to 2013 levels — that’s probably all that can be squeezed from this market.

So, Idaho Power/NVEnergy’s decision to concentrate on production using more renewables and natural gas is likely to be sound economically for long term corporate health — and the old coal-fired North Valmy plant sits like a Jurassic Creature in Pumpernickel Valley.

As for employment prospects, coal mining isn’t a growth industry: (pdf)

A plausible  range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 — lower than anything the US experienced before 2015.

Thus, basing economic policy on a sector which includes only 0.03% of our national economy makes precious little sense.  It makes even less sense to look backwards:

“When it comes to electricity generation in the US, the Department of Energy’s 2017 Energy and Employment Report suggests that the solar industry now employs more people than coal, oil, and gas combined. Oil still employs the largest share when including jobs related to fuels, however.

“Our findings would lead us to believe that the right place to invest dollars are in renewable energy rather than fossil fuels,” Delaney says. “These jobs are widely geographically distributed, they’re high paying, they apply to both manufacturing and professional workers, and there are a lot of them.”

How about job training for those seeking to move from a declining sector to sectors with more hiring prospects?  The Trump administration has lauded the prospects of job re-training and apprenticeship programs, but the money isn’t where the mouths are:

“Trump has proposed cutting the Labor Department’s budget by 21 percent in fiscal 2018.  That includes a 40 percent cut to the Labor Department’s Wagner-Peyser Employment Service, which supports about 14 million job seekers annually and last year helped nearly 6 million people find jobs. The proposed cuts also include a $1.3 billion reduction to programs that operate under the Workforce Innovation and Opportunity Act, which Congress reauthorized in a bipartisan move three years ago.”

Drilling down to “coal communities,” the impact is patently worse:

“Based on the limited information provided by the blueprint, President Trump’s FY 2018 budget would cut at least $1.13 billion from these programs and offices, including several in their entirety—a total that may increase when the full budget is released in May.2 Through the POWER Initiative, offices and programs targeted by the cuts funded more than $115.8 million in economic development, job training, and other grant projects targeting coal communities in more than 20 states from 2015 through early 2017.”

It is egregiously unseemly to give pep talks about “digging mining,” in coal country while slashing budgets for economic development and job training for the people facing declining employment prospects in the mining sector in those communities.  Indeed, the current administration gives every impression of saying “we love you,” to coal country residents while allowing greater pollution of their cities and towns, and cutting job training opportunities for residents seeking employment in faster growing sectors of the regional economies.

Meanwhile, the North Valmy plant stands in Pumpernickel Valley.

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Filed under ecology, Economy, energy, energy policy, Nevada economy, Nevada energy, Politics

Amodei, Your Banker’s Best Friend

House Roll Call Vote 412 wasn’t one of those votes likely to draw much general media attention, even its title seemed designed to induce yawns: “Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to “Arbitration Agreements.”  Representative Mark Amodei (R-NV2) voted in favor of this measure on July 25th, and few noticed, much less commented.  It’s a small thing, but indicative of a mindset that favors the Big Banks over the interests of American consumers.

Background

 “In May 2016, the CFPB issued a proposed rule prohibiting predispute arbitration agreements in providing consumer financial services products. This rule would prohibit mandatory predispute arbitration agreements in consumer agreements for items such as checking or savings accounts, credit cards, student loans, payday loans, automobile leases, debt management services, some payment processing services, other types of consumer loans, prepaid cards, and consumer debt collection. The rule would also prohibit predispute arbitration agreements in connection with providing a consumer report or credit score to a consumer or referring applicants to creditors to whom requests for credit may be made.” [ABA]

Translation:  For “predispute” read Day in Court, as in the rule prevents a financial corporation from requiring arbitration before a person can take his or her case to court as a member of a group of consumers who have been hurt by the financial institution’s action or actions.   The Consumer Financial Protection Bureau explained:

“Many consumer financial products like credit cards and bank accounts have contract gotchas that generally prevent consumers from joining together to sue their bank or financial company for wrongdoing. These widely used clauses leave consumers with no choice but to seek relief on their own – usually over small amounts. With this contract gotcha, companies can sidestep the legal system, avoid accountability, and continue to pursue profitable practices that may violate the law and harm countless consumers.”  (emphasis added)

And, Representative Amodei supported the legislation to disapprove of this rule which was an attempt to protect consumers from actions like the following:

The poster child of bank malfeasance, Wells Fargo’s  —  “admitted its employees systematically created millions of sham bank accounts in its customers’ names, and then in many cases fraudulently billed those same customers for fees and services they never agreed to. Executives of the megabank knew this was happening but did nothing. Then, they decided to blame 5,300 “rogue” employees, who were summarily fired. Now, to ward off thousands of lawsuits, the company is hiding behind binding arbitration clauses in its victims’ contracts.” [USNWR]

And, there’s this —

“Military readiness has been negatively affected by unscrupulous payday lenders who prey on military servicemembers and veterans. The victims become overly indebted thanks to exorbitant interest rates and hidden fees they don’t understand, and then find themselves unable to obtain relief thanks to forced-arbitration clauses. Because of this, the Military Coalition, which represents nearly 6 million uniformed service members, veterans and their families, has formally petitioned Congress to ban the clauses.”  [USNWR]

It’s hard to imagine siding with unscrupulous bankers against the interests of enlisted personnel who are in the E6 to E9 ranks  in which pay runs from $2,486.99 to $4,186.09 for a person with more than eight years service, however Representative Amodei found a way to do it.  The problem became such a persistent issue for the military that in 2007 the Department of Defense started enforcing the Military Lending Act to protect its service personnel. However, pay day lenders found loopholes such that they could re-introduce their ‘products’ to members of the military. [MrktPlc] Who would support legislation designed to force members of the Armed Services to accept arbitration before they could have their day in court?  Representative Mark Amodei (R-NV2) and his Republican cohorts in the 115th Congress.

What makes this vote particularly noticeable regarding the protection of bankers is that there are ways — at least two — to ‘prevent’ that bete noir of all Republicans, the consumer lawsuit, without pitching the baby out with the bath water.

The first way would be to make all arbitration voluntary.  Companies could save time and money, and avoid publicity IF the consumer agrees.  If there is no agreement then the case goes to court.

The second possible solution would be to put the arbitration on a “business pays” status.  The American Bar Association offers this common sense proposal:

“The CFPB should require any consumer arbitration to be fully business-funded at no cost to the consumer. When a business faces transaction costs of nearly $2,000 per arbitration filed, repeat consumer filings will attract its attention. In addition, the CFPB could consider requiring that any consumer arbitration which results in a favorable consumer award on the merits should be awarded treble damages and attorneys’ fees. This provision would include a sort of “built in” incentivizing provision. The goal of this provision is to encourage organically what we already see occurring, increased settlement of consumer disputes. Still further, the CFPB should require that any consumer arbitration award must result in a written statement of decision, which permits other consumers to know how the arbitrator applied the law to the facts of that case. This will facilitate consumer knowledge of potential corporate overreach (and encourage more recovery), and will also help aid the consumer in arbitrator selection.”

In short, it is not necessary to go full-bore all-out in support of the banksters among us in order to prevent the unscrupulous from skinning the unwary or uninformed, but that’s what Representative Mark Amodei did on July 25, 2017.

Perhaps this may be explained by the fact that as of May 2017 Representative Amodei received $8,000 in donations from commercial banks for this election cycle, another $7,000 from credit unions, and $1,000 from finance and credit companies.  Or maybe it relates to the $25,000 he’s collected from the American Bankers Association over his political career?  Whatever the motivation, it’s clear that Representative Mark Amodei is placing the interests of the bankers above those of American consumers.   This situation could be rectified in 2018.

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Filed under Amodei, consumers, Economy, financial regulation, Nevada economy, Nevada politics, Politics

Deregulation isn’t the solution, it’s the problem

Representative Mark Amodei (R-NV2) was pleased to vote for the so-called “Choice Act,” which rolls back some of the reforms enacted in the wake of the Wall Street casino debacle and subsequent recession as the Great Wall Street Derivative Monster collapsed like an air dancer in a Nevada wind.   The theory behind this ridiculousness is that regulations restrict commerce, and a restriction of commerce diminishes wealth, therefore diminished wealth impacts investment, ergo diminished investment equates to a limit on economic growth.  Not. So. Fast.

Yes, regulations restrict “commerce,” but only some kinds of “commerce,” generally the fraudulent variety.  I am free to issue shares of stock in my corporation — however, I am not free to issue shares of stock in the Reese River Steamboat Company.  Some sharp soul offered shares of this highly dubious company during one of the mining booms, and assuredly some investors were cheated by this obviously fraudulent sale.  We have regulations to prevent this.  We have laws and related regulations to prevent insider trading, to prevent “blue sky” stocks, and to reduce the possibility investors are cheated by financial products which promise high returns with little or no risk.  Sometimes the adage, “If it looks too good to be true, it probably is,” isn’t quite enough to prevent mismanagement of other people’s money.

Recently, Wells Fargo was found guilty of violating regulations and laws relating to the creation of phony accounts, the fine totaled a massive $185 million and some 5,300 individuals were fired. [NYT] The situation was all the more egregious because the bank was ripping off its own customers.  $100 million of that fine was the highest penalty the CFPB ever levied against a financial institution.  This is precisely the agency the so-called “Choice Act” wants to ham-string.

The “Choice Act” would eliminate the regulation regime which was intended to prevent the collapse of banking institutions.  Just for the record, let’s look at the list of US institutions that either disappeared or were acquired during the Great Recession: New Century, American Home Mortgage, Netbank, Bear Stearns, Countrywide Financial, Merrill Lynch, American International Group, Washington Mutual, Lehman Brothers, Wachovia, Sovereign Bank, National City Bank, CommerceBancorp, Downey Savings and Loan, IndyMac Federal Bank, HSBC Finance Corporation, Colonial Bank, Guaranty Bank, First Federal Bank of California, Ambac, MFGlobal, PMI Group, and FGIC.

If we extrapolate the “let the market sort it out” argument to its conclusion — it’s acceptable to allow banking institutions to over-extend themselves to such an extent that they will ultimately collapse; that’s just the market “at work.”  Fine, if the impact of such deregulation solely impinges on the banking institutions themselves, but that’s not what happens in the real world.  In the real world such supposedly safe havens (money market accounts) were in peril:

“A little over a year ago the collapse of Lehman Brothers sparked heavy redemptions from the dozen or so money market funds that held Lehman debt securities. The hit was particularly hard at The Reserve Fund, a money market fund that had a $785 million position in Lehman commercial paper. Soon The Reserve saw a run on its Primary Fund, spreading to other Reserve funds. Reserve tried to furiously sell its portfolio securities to satisfy redemptions, but this only depressed their values.

Despite its best efforts, The Reserve Primary Fund couldn’t find enough buyers and on Sept. 16 the unthinkable happened. The Primary Fund “broke the buck,” meaning that the net asset value of the fund, $1, fell to $0.97 a share. It was only the second time a money market fund, which are commonly thought of as guaranteed, broke the buck in 30 years.”

Meanwhile in Nevada, unemployment soared to 14+%, the state endured being listed among the states with the highest levels of foreclosures, and it took until 2016 for the state to recover almost all the wealth and jobs lost in the aftermath of the deregulated Wall Street casino debacle. [LVRJ]

Deregulation may sound fine when discussed in theoretical, ethereal, terms, it obviously didn’t work in the real world in which Bear Stearns, Lehman Brothers, WaMu, and IndyMac collapsed, and where the Reserve Primary Fund “broke the buck.”

The questions someone should ask of Representative Amodei, and other “deregulators,” are:

(1) Do you favor a return to the regulatory environment in which investment banks were allowed to over-extend and engage in risk taking far beyond their capacity to remain solvent?

(2) Do you favor a regulatory environment in which those being regulated are allowed permission to “self regulate,” without oversight from governmental agencies and institutions?

The second question is particularly important because it addresses the question of trust in commercial relationships.

The most basic of all commercial relationships is the simple act of buying and selling.  I have something to sell, and there is a potential customer for my goods or services.  This is another point at which deregulation can easily become part of the problem.  If I am selling food, there are self-evident reasons for regulating the conditions under which that food is prepared and served to the general public.  Deregulation invites disasters of the public health variety.  We trust that the food offered for sale by restaurants and groceries is safe for consumption.

If I am selling financial products does the buyer (consumer) have the expectation that my product is what it purports to be?  That it is backed by sufficient funds for ‘redemption?’ That it conforms to the standards of acceptable practices?  And, if it doesn’t, are there avenues of redress such that the consumer can be compensated?  In short, can the customer be assured that he or she can trust the product?

If I am selling a manufactured product, can the consumer trust that the item was produced in a safe way, that the product will perform as advertised, that the product will not create a hazard in my home or office?  There are voices on the fringe of Free Market thought calling  for the abolition or at least the restriction of the Consumer Product Safety Commivoicssion, who would love to see the return of Caveat Emptor, but most reasonable people agree that regulations pertaining to product safety are conducive to commerce, NOT restrictive.  A vehicle which meets or exceeds safety standards is more likely to be my choice than a vehicle which does not.  A vehicle which meets or exceeds fuel consumption standards is more like to be my choice than one which does not.  In short, regulatory standards benefit the best products (and their producers) while those who do not meet the standards have a more difficult time at the point of sale.  Now, the question becomes — do we want a regulatory environment which benefits the marginal, the inadequate, or perhaps even the corrupt producers?

Unfortunately, the deregulatory voices are answering this question in the affirmative.

Is this really the answer Representative Amodei and his cohorts want to give to constituents in the Second District? In the US?  To our customers around the world?

 

 

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Filed under Amodei, banking, Economy, financial regulation, Foreclosures, Nevada economy, Nevada politics, Politics

Anti-Choice: The Rebirth of Deregulation

I don’t think anyone in the state of Nevada doesn’t know what happened the last time Wall Street was left unfettered.  The Bubble splattered all over the state.   The offcast included 167,000 empty houses. [USAToday]  Nevada’s unemployment rate soared to 12.8% by December, 2009.  By October 2010 the state’s unemployment rate was 14.4%.  And now the House of Representatives is on track to vote on H.R. 10, the “Choice Act” to dismantle the financial regulatory reforms enacted in the wake of the Housing Debacle and deregulated banking disaster.

Two procedural votes are on record to move this bill forward — House vote 290, and House vote 291 — and Representative Mark Amodei voted in favor of bringing this bill to a vote by the full House.   Watch this space for an update on the vote for passage.

Update:  On House vote #299, Representative Mark Amodei (R-NV2) voted along with 232 other Republicans to essentially gut the financial reform regulations enacted in the wake of the Housing Bubble debacle. (HR 10)

Representatives Kihuen, Rosen, and Titus voted against this deregulation bill.

Comment: Be aware of Republican representatives to frame this vote as one against Bank Bailouts and “Too Big to Fail.”   In a polite world we’d call this something euphemistic like “south bound product of a north bound bull.”  The Dodd Frank Act requires banks to have a plan for unwinding failing banks, and bankers have screamed to the heavens about provisions to allow outside oversight of banking management.  More simply, if you approve of the antics of Wells Fargo — then you’ll love the “Choice Act,” a bill which gives banks the “choice” to skewer its customers and investors.

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Filed under Amodei, Economy, financial regulation, Nevada economy, Nevada politics, Politics

The Warning Flags are Up: Trumpsterism and Corporate Debt

Corporate Debt Chart 2016

No, you don’t need to get out the magnifier to get the gist of this chart, but if you’d like to see the original click here.  Simply consider the trajectory of the blue line indicating the level of non-financial corporate business debt – as in UP.  Nevadans may want to gaze at this with some caution, because (to borrow and vandalize a fine old saying) the last time the national economy caught a cold, Nevada got pneumonia.  We can, and should, look at the comparison in the trends of corporate debt, government debt, and household debt:

Corporate Government Debt Levels

In the last five years government debt has dropped precipitously, (don’t show this chart to Uncle Fustian at your holiday dinner it’s likely to jolt his fact free universe) household debt has declined, and “business debt” is way up.  There are all manner of reasons for an increase in corporate debt, and some of them are very productive – such as expansion of plants and factories – others not so much.  We’re in “maybe not so much” territory.

Part of the pile of current corporate debt is the result of stock buy backs, a boomlet of sorts in recent times:

“Over the first six months of the year (2016) S&P 500 companies paid out 112 percent of their earnings in the form of either dividends or share buybacks. That, Damodaran argues, is the kind of figure you might expect to see when a recession had suddenly crimped company cashflows, not during a very long-running, if tepid, expansion.

The last time companies were paying out this much more than they are taking in was in 2008, when the financial crisis hammered revenues faster than companies could cut buybacks and dividends.”

… Certainly the very idea of buybacks has come under increasing scrutiny. While a share buyback improves per share earnings performance, it is a piece of financial engineering which increases leverage but does nothing to improve a company’s product offerings or market position, much less its long-term prospects. Indeed, the vogue for buybacks has happened at the same time as an otherwise puzzling lack of corporate investment, especially given that corporate profit margins are still high by historic standards.” [Time] (emphasis added)

There’s nothing too terribly “puzzling” about this state of affairs.   Why would companies indulge in “financial engineering” while profits are high?  Could it be that the “wealth” of the company is financially anchored rather than structurally? Consider this Household debt service as a percentage of disposable personal income  chart from FRED:

Household Debt trends 2016

Superficially, we could argue that the American consumer has done some belt tightening since the Recession of 2007-08 and there’s less money being paid out in debt service from the family coffers – but, we’d also have to be realistic and see that the debt levels are already too high.

Yes, household debt levels relative to the GDP have been declining, but it remains higher than it’s been for almost all of post-war history, and by post-war we mean World War II. [Slate]  

What else could be depressing loans? Other loans – such as Student Debts. Again, we have a picture of that from the Federal Reserve:

Student Loan Trends FRED

What we see here is an increase in student loans owned and securitized, which are outstanding: from Q1 2006 at $480.9670 to Q3 2016 at $1,396.3355.  Student loan indebtedness now exceeds credit card debt, auto loans, and other non-mortgage debt. [Slate] What’s happening here?  Perhaps those corporate profits aren’t predicated on the increasing number of consumers flocking to their doors?  Perhaps not when consumers have an annual household credit card debt of $16,000; a $27,000 average of auto loans; and $169,000 in mortgages? [Slate]

Then, there’s the matter of real household income in the US.  In the first quarter of 1999 it hit a high of $57,909 and hasn’t been back since. The current figure is $56,516. [FRED]   Little wonder there’s some “financial engineering” going on in the corporate world.   That “financial engineering” especially in terms of stock buybacks simply doesn’t make any long term sense:

“No matter how low-interest rates get, it is hard to justify the raising of corporate debt to purchase outstanding stock. Longer-term debt should be used for longer-term needs, e.g. capital expenditures. But from a macroeconomic view, raising stock prices does not figure in promoting economic growth or general well-being—it is simply financial engineering serving the interest of only shareholders and management. No new jobs are created and no new capital investment is undertaken in a world of corporate buybacks. Investors are simply bribed with their own money.” [FinSen] (emphasis added)

So, where does Trumpsterism come into play?  First, let’s assume, given the preliminary appointments to Commerce and Treasury, that the emphasis in this administration won’t be on reducing student debt and regulating the securitization of corporate debt.  Let’s also assume that a Corporate Tax Holiday in the form of “re-patriated” corporate earnings will be a feature.  How is that likely to be spent?

The Financial Times reports: “Much of the debt sold by companies in recent years has been used to buy back their own shares, pay out higher dividends or finance big mergers and acquisitions. While these buybacks funded by cheap borrowing have boosted earnings, a missing ingredient has been spending on investment to build their businesses.”

Why not? If the consumers (read the other 99% of the US population) aren’t clamoring to spend more (read creating demand) then the “financial engineers” will boost themselves by … buybacks, higher dividends, and mergers and acquisitions.  Or…

“A tax holiday that prompts repatriation of cash held overseas by global US companies, a move investors expect during the Trump administration, could help boost investment. Mr Milligan says it is unclear whether companies will plough any repatriated profits into capital investment or simply boost buybacks.“Repatriation could flow through fairly quickly and lead to a noticeable rise in share buybacks.” [FinT]

In less diplomatic terms – here we go again.  Corporations, getting tax breaks and subsidies, faced with a market in which there is declining or stagnating consumer capacity, find ways to engineer their financial statements.  Nevada has seen this movie before, and it didn’t end well for us.

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Filed under Economy, financial regulation, Nevada economy

Warning: Republicans Are Hazardous to Your Bank Account, and this includes Rep. Heck

Dem Rep Job Creation These are some of the most dangerous words ever spoken – with regard to your bank account:

“After eight years of the Obama economy, Americans are struggling with stagnant wages, reduced hours, and decreased economic opportunity. The policies of this Administration, from the Affordable Care Act to the Dodd Frank financial reform legislation, have hurt economic growth and make it more costly and burdensome for businesses to expand and add workers.” [Heck]

Heck tries to waffle a bit in the last segment: “I will continue to support reasonable regulations that protect the consumer, employees, and the environment while working to reduce burdensome federal regulations so that businesses can thrive and create good-paying jobs.”

First, it’s fact check time. As the chart above indicates the ACA and the Dodd Frank Act have not “decreased economic opportunity,” (whatever that might mean) and in light of what’s been happening with Wells Fargo Bank we need to talk about the “burdens of regulation.”  We also need to talk about a piece of legislation that just passed the House Financial Services Committee.

The “Financial Choice Act” —

“The Financial Choice Act split the banking panel with a vote of 30 to 26, with just one Republican, Representative Bruce Poliquin of Maine, siding with the committee’s Democrats against it.

Mr. Hensarling has been a prominent critic of Dodd-Frank and other changes after the 2008 financial crisis, including the creation of the Consumer Financial Protection Bureau to regulate the consumer finance industry.

“It has been six years since the passage of Dodd-Frank. We were told it would lift our economy, but instead we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic,” said Mr. Hensarling at Tuesday’s session. “The economy does not work for working people.”

The legislation, which was unveiled in June, calls for numerous changes to Dodd-Frank. One provision would allow some of the largest banks to exempt themselves from some regulatory standards if they maintained an important ratio of capital to total assets at 10 percent or more.” [NYT]

There’s more. The Financial Choice Act (comprehensive summary pdf) reads like the American Bankers Association Christmas Wish List and Birthday Party requests combined with everything a banker would want from a Financialist Santa Claus.

However, let’s start with the Consumer Financial Protection Bureau about which the House Republicans have several complaints:

“The Consumer Financial Protection Bureau is not accountable to Congress or the  American people. The Bureau’s policies often harm consumers or exceed its legal authority because the Bureau is not subject to checks and balances that apply to other regulatory agencies.” [House pdf]

This is another iteration of the initial whine the GOP wheezed out when the idea of a Consumer Financial Protection Bureau was suggested which would not be subject to the corporate/financialist tastes of Republican Congressional representatives.  The ones who want government so small it can be drowned in a bathtub – and the CFPB along with it.   At this point it might be instructive to ask: What harm has been done to consumers of, say, Wells Fargo Bank, by the CFPB?

“When news first broke that Wells Fargo would pay the largest fine in Consumer Financial Protection Bureau history for routinely opening unauthorized accounts that clients didn’t want or need, CEO John Stumpf put blame squarely on his worst-paid workers.

He’s changed his tune since, as political pressure over the years-long scandal mounted and evidence depicting the high-pressure sales culture at the bank got more attention.

And now, the bank’s board is reaching into Stumpf’s own pocket to discipline him. The CEO will forfeit $41 million in past compensation — all of it in the form of investment holdings that hadn’t vested yet — and the woman who ran his firm’s retail banking unit will give back $19 million of her own.” [TP]

What harm was done by this agency in fining Wells Fargo for its “cross selling scam” that created phony accounts to boost sales figures?  And, what is wrong with this result?

“By clawing back a large chunk of Stumpf’s roughly $100 million in compensation over the past decade, though, the board is hoping to signal that it’s taking the scandal seriously. The day news of the $185 million fine broke, Stumpf portrayed it as an issue of some bad apples at junior positions and said responsibility started and stopped with the 5,300 people fired in response.

That holier-than-thou response first started to crack in front of the Senate Banking Committee last week, when senators including Elizabeth Warren (D-MA) bounced the bank head off the walls of a hearing room for hours.

Wednesday’s announcement of clawbacks comes a day before Stumpf returns to Capitol Hill to face the House’s version of the same inquisition.

Clawbacks are a hot-button concept for finance watchdogs and Wall Street critics. Many of the industry’s sins stem from compensation policies that incentivize executives to break whatever rules they have to keep the company stock rising, knowing they’ll walk away rich even if the company gets caught. Clawbacks, observers and policymakers say, are an important tool in reversing that deviant cycle.” [TP]

So, how do the House Republicans mean to “improve” the CFPB? The CFPB that caught Wells Fargo? Made the Bank pay fines and restitution? Made the Board of Directors claw back the ill-gotten gains of the bank executives and not lay the whole scam on the lower level employees?

The House Republicans want to (1) replace the head of the CFPB with an awkward “bipartisan” board; that should facilitate logjams and obstructionism. (2) Make the CFPB budget subject to specific Congressional control – meaning the Congress can cut the budget until there is no way the agency can do its job. (3) Require a cost benefit analysis of every rule promulgated by the agency – which means if the regulation “costs too much” for the preservation of bank profits the rule dies. (4) Prohibit the CFPB from cutting off “access” to fraudulent or abusive bank practices and products.  In other words, the bankers have the CHOICE to offer any product they wish and if you buy in and get scammed that was your choice as a consumer.

Now it’s time to return to Representative Heck’s own words: “…Dodd Frank financial reform legislation, have hurt economic growth and make it more costly and burdensome for businesses to expand and add workers.” 

Does Representative Heck believe that they current structure of the CFPB as an independent agency is a weakness?  Does he believe that it should be subject to Congressional pressure to weaken its enforcement activities?  Is CFPB protection from fraudulent practices and products really denying Americans “choices” in financial products?

If the “Financial Choice Act” (essentially a repeal of Dodd Frank) came up for a vote in the House today would Representative Heck vote in favor of it?

And how does he feel about the House GOP charges that the CFPB was late to the game and didn’t handle the Wells Fargo case adequately?

“Where was the CFPB? Why did they come in so late to the game?” he continued. “They have immense powers and this is their job to enforce these basic consumer laws and it appears they were asleep at the switch.”

Hensarling also has criticized regulators for the $185-million settlement with the bank, which allowed Wells Fargo to avoid admitting any wrongdoing. 

The controversy over the San Francisco-based financial institution has become the latest flash point in a bitter battle between Republicans and Democrats over the fate of the CFPB, which was created by the 2010 Dodd-Frank overhaul of financial regulations.

The legislation passed with almost no GOP support. Ever since, House and Senate Republicans have been trying unsuccessfully to reduce the power of the bureau, arguing it was designed to avoid congressional oversight and has limited consumer’s access to credit through over-regulation.” [LATimes]

Interesting that the very Republicans who were trying to reduce the power and capacity of the CFPB to regulate lending practices are now trying to blame the agency for not doing enough, fast enough.

“Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, said Republicans are pushing “a false narrative” about the CFPB’s role in the Wells Fargo case in order to discredit the agency.

“The fact is the CFPB and OCC were investigating before the L.A. Times story came out,” he said. “But that does not mean that the leading congressional opponent of the CFPB won’t try to pitch that narrative again at this hearing because it plays to his base. But it’s simply false.” [LATimes]

Nice try, Rep. Hensarling, but there’s an ample record of Republican opposition to the creation, organization, and implementation of the CFPB to make any contention that the 1,600 man/woman agency wasn’t trying to do its job in regard to the egregious practices of Wells Fargo. As the old saw goes: That dog won’t hunt.

So, the next question to Representative Heck (and Hardy and Amodei too) is: In light of the Wells Fargo scandalous behavior and the bilking of its own customers, what are you advocating to increase the power of the Consumer Financial Protection Bureau to actually protect PEOPLE and not the bankers who have been scamming them?  No one chooses to get bilked, and no one should have to tolerate banks who chose to bilk their customers.  Period.

** On the other hand Nevadans who want adequate protection from illegal, illicit, and otherwise unethical banking practices have an advocate running for the U.S. Senate – Catherine Cortez Masto, who has a track record of taking on the big banking interests on behalf of us “little people who pay taxes.”   A candidate with an endorsement from the woman who fought for the CRPB, Elizabeth Warren:

“I’m so grateful to have Senator Warren’s support,” said Cortez Masto. “Senator Warren and I are both committed to taking on the big banks, protecting consumers, homeowners and helping to grow the middle class – issues I championed as Attorney General and hope continue doing in the U.S. Senate with her. Unlike my opponent Joe Heck who has voted to keep tax breaks for big corporations and billionaires like the Koch brothers, I will fight for policies that help hard working Nevadans, not hurt them.”

“Catherine’s race is critical to restoring our Democratic majority,” said Senator Warren. “During her two terms as Nevada’s Attorney General, Catherine held big banks accountable and fought predatory lending, cracked down on sex trafficking and got tough on elderly, child, and domestic abusers. Catherine knows who she’s fighting for and I need her fighting alongside me in the Senate.” [Link]

And there’s the choice – let the banks make the choices? Or, protect people from the banks’ bad choices.

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Filed under Economy, financial regulation, Heck, koch brothers, Nevada economy, Nevada politics, Politics, Republicans

Wage Discrimination is an Economic, not just family, Issue

Rosie Riveter

Consider the following report from the Institute for Women’s Policy Research:

“Women are almost half of the workforce. They are the equal, if not main, breadwinner in four out of ten families. They receive more college and graduate degrees than men. Yet, on average, women continue to earn considerably less than men. In 2015, female full-time workers made only 79 cents for every dollar earned by men, a gender wage gap of 21 percent. Women, on average, earn less than men in virtually every single occupation for which there is sufficient earnings data for both men and women to calculate an earnings ratio.”

DB’s ranted on about this before: (2013)

“Women are having a tough time in the present economy, and the situation isn’t made any better by the wage gap.  NPWF reports: ” In Nevada, on average, a woman who holds a full-time job is paid $35,484 per year while a man who holds a full-time job is paid $41,803 per year. ” (pdf)  This has some very real economic consequences for the state since 125,402 households in Nevada are headed by women. In 32,479 of those households the income is below the poverty line.  Thus 25.89% of those households are barely getting by.”

And on the GOP filibuster of the Paycheck Fairness Act (2014).  However, it really is necessary to broaden the discussion – equal pay for equal work is not just a “woman’s issue,” nor is it a “family issue.” It’s an economic issue.

Once more, let’s look at the reality of what happens when men and women aren’t paid equally for equal work.

In the state of Nevada right now, the average annual wage for a food service manager is $62,160. Pay ranges from $18.51 per hour to $46.97 per hour with a mean wage of $29.89/hr. [NDETR calc]  Let’s keep all the variables such as experience, tenure, and specialization, the same, and concentrate solely on what would happen if two people of the same level of experience, expertise, and skills were to be paid based on gender.  Let’s have our hypothetical male food service manager paid the annual average of $62,160 per year.  This means that our hypothetical female food service manager would receive 79% of that, or $49,106.

If both our male and female food service managers were being paid $62,160 per year, and if both were in the same household then the household income would be $124,320.  Now, here’s why this is an economic issue and not merely a “gender” one.

If our male and female food service managers are paid along the lines of the 79 cents for every dollar that holds nationally, then the total household income is reduced.  That $124,320 in total household income drops to $112,266, a reduction in income of $12,054.

That $12,054 is money NOT spent at the grocery store, or at the furniture store, or the clothing store, or at the restaurant, or the automobile dealership, or the carpet center, or the movie theater. It is NOT spent on educational expenses, books, and Internet service. It is NOT spent on sporting goods, family entertainment, or automobile parts and service.  It is NOT spent at the florists’ shop, or the cabinet-maker’s store, or the barber shop, or the beauty salon.  It can’t be spent because they don’t have it.

The only way to avoid talking about this simple arithmetic is to prattle on about “Job Creators” and the Trickle Down Economics Hoax. “Supply side economics” is a theory in search of statistics – it doesn’t work in the real world, and it never has.   If there is no demand for goods or for a service, there will be no jobs created.  And, there will be no demand IF people don’t have the money to spend for those goods and services.

Once more, here’s the First Law of Personnel Management:

First Law Personnel ManagementHow are businesses in this country supposed to SUSTAIN demand for goods and services if the female employees in the country, who are doing the same jobs as their male counterparts, aren’t able to contribute the same amount to the family’s disposable income?

So, tell me, how do we grow the economy of the United States of America, an economy based in no small part of consumer spending, if we artificially limit the amount of income contributed to family coffers by women?

There are 123 million women ages 16 and above in the United States, and 72 million (58.6%) are working or looking for work. Women are now 47% of the total U.S. labor force, and they are projected to account for 51% of the increase in the total labor force between 2008 and 2018.  73% of employed women are working full time, while 27% are employed on a part time basis. [DoL]

We are no longer talking about the “little woman” working outside the home for some ‘pocket money.”  We are talking about two-income families, both incomes being necessary to move toward the middle class life style or to maintain it.   If a family of four, with an annual income of $112,266 lives in the Las Vegas metropolitan area, their income is comparable to 56% of those adults in that area. That’s the middle. [Pew Calculator] Diminish the second income and we diminish the whole.

Diminish the whole and we diminish the potential for economic growth.  Equal pay for equal work is simply dollars toward a stronger economy and old fashioned common sense.

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Filed under Economy, labor, Nevada economy, Politics, sexism, women, Women's Issues

The SNAP-ping Turtles Attack: Food Stamp Fraud Myths and Legends

Food Stamps

Among the most depressing of the many Republican attacks on people who are the least able to defend themselves are the ones snapping away at the SNAP program, aka Food Stamps.  It’s even more depressing that the attacks are based on myths and urban legends.

The attacks are continuous.  As of April 16, 2016 approximately 41,000 lost access to food assistance as a result of the Walker Administration’s work rules, although his department of Health Services admits it doesn’t track people who find work on their own. [WEAU]  Another 1,000 will lose access to food assistance in West Virginia. [Dpost]  Add yet another 5,000 in Georgia who’ve lost access because of work rule changes. [USAPP] Louisiana hacked off the access for 30,000 in late 2015. [AJA] And, then, of course, there’s the viral display of the lady who took it upon herself to embarrass a fellow human being for using assistance to feed his children.

The tantrum, if true, illustrates the extent to which the myths and urban legends about the food assistance programs have become part of the Republican narrative about food stamps and the people who use them.

One of the more persistent myths is that there is an abundance of food stamp fraud, and the fraud is the result of misuse of the assistance by the recipients.  

First, the food assistance program is actually one of the most efficient and honest programs in government.  And, most of the fraud is on the part of retailers, NOT the customers.

“SNAP fraud has actually been cut by three-quarters over the past 15 years, and the program’s error rate is at an all-time low of less than 3 percent. The introduction of EBT (Electronic Benefit Transfer) cards has dramatically reduced consumer fraud. According to the USDA, the small amount of fraud that continues is usually on the part of retailers, not consumers.” [HC.org]

Even during the last Recession, SNAP problems were miniscule: “SNAP has one of the most rigorous quality control systems of any public benefit program, and despite the recent growth in caseloads, the share of total SNAP payments that represent overpayments, underpayments, or payments to ineligible households reached a record low in fiscal year 2011.” [CPBB]

The USDA, which administers the program has taken notice of the allegations of “waste, fraud, and abuse,” continually leveled at the assistance, and presented a report in 2013:

“The report indicates that the vast majority of trafficking – the illegal sale of SNAP benefits for cash or other ineligible items – occurs in smaller-sized retailers that typically stock fewer healthy foods. Over the last five fiscal years, the number of retailers authorized to participate in SNAP has grown by over 40 percent; small- and medium-sized retailers account for the vast majority of that growth. The rate of trafficking in larger grocery stores and supermarkets—where 82 percent of all benefits were redeemed—remained low at less than 0.5 percent.”  (emphasis added)

More specifically, most of the fraudulent use can be attributed to these small retailers:

“While the overall trafficking rate has remained relatively steady at approximately one cent on the dollar, the report attributes the change in the rate to 1.3 percent primarily to the growth in small- and medium-sized retailers authorized to accept SNAP that may not provide sufficient healthful offerings to recipients. These retailers accounted for 85 percent of all trafficking redemptions. This finding echoes a Government Accountability Office (GAO) report that suggested minimal stocking requirements in SNAP may contribute to corrupt retailers entering the program.” [emphasis added]

However, the lady in the supermarket screaming at the customer, is probably thinking  it’s the food assistance recipient who commits most of the fraud and not the retailer.  She’s likely not concerned that the USDA has initiated rules to sanction 529 retailers, and permanently disqualifying 826 outlets for trafficking in benefits, or falsifying their applications.  Or, that in 2012 the USDA reviewed more than 15,000 stores and permanently disqualified nearly 1,400 for various program violations. She’s also not likely concerned that the USDA has expanded the definitions of fraud to include newer schemes. [USDA]

snapping turtle

Let’s conjecture that the screaming-mimi is associating food assistance with lazy do-nothings who are eating from her hard earned sacred tax dollars. Again, she’s wrong.

Using Nevada (pdf) as an example for the moment, the median income of SNAP recipients in the state was $20,479 per year, or about $1700 per month, and 49% of the households had at least one person working in the previous 12 months; 29% had two or more workers, and only 21.8% had no one working in the previous year.  Why might the person not be working? Try acknowledging that more than 1/2 of SNAP beneficiaries nationally are either children or the elderly. [StoH]  And, no – they are not undocumented individuals: “Undocumented immigrants are not (and never have been) eligible for SNAP benefits. Documented immigrants can only receive SNAP benefits if they have resided within the United States for at least five years (with some exceptions for refugees, children, and individuals receiving asylum).” [StoH]

On a national basis, children account for 44% of food assistance, the elderly and the disabled account for another 20%.  That leaves 36% who are non-elderly, and not disabled, of whom 22% have children to support and feed, and 14% are childless.  [CBPP]

SNAP recipients Those interested in the SNAP statistics for every Congressional District in the nation can find the pdf files here.

Those interested in living in the fact based universe will also find that far from munching on the taxpayer’s dime, every $1 dollar in food assistance generates $1.80 in economic returns to the community. [USDA]

snapping turtle However, we can publicize every FAQ, every article, every report, in the land and there will still be screamers at the Wal-Mart who are convinced that low-life no-gooders mooching on the dole are taking their earnings and wallowing in sin and sloth.  The right wing echo chamber has done a good job of vilifying children, the elderly, the disabled, and the down on their luck to find an excuse to cut spending for at risk citizens. 

snapping turtle

The snapping turtles have also done a good job of associating African Americans with food assistance programs.

“The 2013 data shows, white people are nearly three times less likely than African-Americans to live in poverty; yet, white people claim more food stamps.  According to the data, not only do white people benefit from food stamps, they also benefit from not having politicians and cops target and malign them as lazy, unproductive welfare queens who take advantage of a social safety net. As the chart indicates, racist ideas about welfare have come to overshadow statistical facts that reveal that the face of food stamps is in fact white.” [AnHQ]

There is support for this conclusion  in Nevada statistics.  In Congressional District One 58% of food stamp recipients are white, in Congressional District Two 80.3% are white, in Congressional District Three 66.3% are white, and in Congressional District Four 52.9% are white.  According to the Census Bureau Nevada District 1 has a population of 693,623 of whom 380,587 are white; District 2 has 697,426 residents of whom 580,111 are white; District 3 has a population of 734,973 of whom 499,767 are white; and District 4 has a population of 713,077 of whom 470,799 are white. As much as the popular right wing mythology may want to reinforce the narrative of the Welfare Queen it just doesn’t fit with the statistical reality.

snapping turtle  When statistics don’t fit … try ideological mythology. Food Stamps make you dependent on Government, and dependency is evil incarnate because it is a disincentive to work.  This, flat out, makes no sense at all.  For example, I live in an area with a public water system. Does hooking up to the water system mean that I’m lazy and have no incentive to walk to the spring for the daily bucket? Or, that I should have to dig my own well, and install my own septic tank?  Perhaps this is plausible if I live far enough from my neighbors to put in a septic system, but I don’t so the result would be “my septic tank next to your well.”  Not a pleasant nor hygienic prospect.  Do public roads make me a lazy dependent? Does having a police department make me less independent – should I have to hire my own rent-a-cop?  Maybe in some radical libertarian  landscape no one depends on anyone else, but this is only a fairy tale of dystopian proportions.  Not a land in which any rational soul would want to reside.

snapping turtle

There’s another element not often discussed in polite circles – good old fashioned selfishness.  The trick is to make selfishness acceptable. Perhaps some of the snapping turtles harbor an unhealthy notion that someone out there somewhere is taking money out of their shells, someone who is undeserving of assistance.  I’d be willing to bet that a right wing snapping turtle would never agree that food assistance should be denied to an octogenarian, or to a disabled person, or to a small child, or to a young mother trying to keep food on the table while going to school to complete her education. So, the “undeserving” must be meanly labeled.  They’re Lazy, they’re druggies, they’re people who “have too many children.”  (I’m particularly appalled at the argument which goes: “They” have too many children,” while the next contention is that funding for family planning must be eliminated.)  The line “I saw people at the food bank who are driving better cars than mine,” illustrates the issue.

This example is a visceral reaction – not a questioning skepticism.  Is the vehicle the only asset of any significant value in the entire household?  Does “better” mean newer? If so, then what was traded in to buy it? The comment better illustrates a definition of poverty that would have only the totally destitute ‘deserving’ of assistance, not someone with a functioning vehicle, an air-conditioner, a television set, a refrigerator – as if these consumer items weren’t a necessity in modern American life. Define poverty harshly enough and all manner of selfishness can be justified.

snapping turtle

There’s one myth justifying selfishness we can dismiss. The one that says we should drug test SNAP recipients to see if they’re worthy.  Seven states spent more than one million dollars on drug testing welfare recipients only to discover that there wasn’t a reason to do it in the first place.  Missouri spent $336,297 testing 38,970 recipients to find 48 positive tests. (0.123%) Oklahoma spent $385,872 on tests for 3,342 people and got 297 positives. (11%) Utah’s results were less rational, 9,552 people were tested and 29 were positive. (3.03%) Kansas screened 2,783 persons, with 11 positive results, a 3.95% result costing $40,000. Mississippi tested 3,656 persons and got 2 positive drug tests. Tennessee tested 16,017 people and got 37 positives.  Arizona tested 142,424 persons and got a grand total of 3 positive results. [TP]  Not that it will put much of a chink in the armor of the snapping turtles, but the numbers certainly don’t justify the expense or the rationale for selfishness underlying the testing.

snapping turtle forbidden

I’d like to see the day when (1) Congressman Sludgepump launches his canards about SNAP recipients being lazy moochers, and a reporter asks if he knows the demographics of the recipients in his District, or  when (2) State legislator Gloomcryer decries the possibility of drug use by food stamp beneficiaries and he’s challenged to cite statistics to support his contentions, or when (3) we finally become outraged at the outrageous duplicity and mendacity of the Snapping Turtles. 

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Filed under conservatism, Nevada economy, Nevada politics, public health, Republicans