July 1, 2012 archive

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The Cooperative Movement and the “Big Tent” Approach by GeminiJen

As I entered the reception for the opening evening of the 5th National Worker Cooperative Conference (as compared to consumer cooperatives which most of us are more familiar with) I experienced a kind of euphoria.  

After all, we had just finished the keynote speech by Congressman Chaka Fattah, a nine-term progressive leader from Pennsylvania, who introduced The National Cooperative Development Act into Congress. When passed, the bill will considerably improve government support for developing a cooperative economy here in the States and bring us more in line with Europe. Moreover, the Small Business Administration had just agreed to provide some funding for cooperatives and –wait for it — the UN had declared this the UN Year of the Coop!  We had arrived! No longer were we a little side note of Utopian idealist organic food coops — we had gone mainstream!

The creation of a society based on democratic, grassroots cooperatives as an antidote to capitalism has been a dream many of us have worked toward.   The cooperative movement began with the 1844 Rochdale cooperative experiment in England (http://en.wikipedia.org/wiki/Rochdale_Society_of_Equitable_Pioneers), continued through the anarcho-syndicalist cooperative movement beginning in the 1880s (frequently associated with Emma Goldman and the IWW), was energized by the farmer’s populist rebellion in the 1930s in the United States, and in recent years the Mondragon model formed in Spain in the 50s (100,000 workers and 12 billion in assets) and the industrias recuparadas in Argentina in the 1990s.   But for the first time– perhaps more through objective necessity as we globalize and shift from an industrial economy to a digital economy–it seems to be a vision whose time has come and is actually within our grasp.

So I was prepared to enjoy the kind of movement simpatico and joie de vivre that revitalizes all us activists when we get away for the weekend with like minded souls when we are in a period of radicalization– and, to manage, of course, to gather new information and contacts to bring back to the struggle.

After Rep. Fattah’s presentation — which he finished by noting that both he and his wife were active supporters of REI (Recreational Equipment Incorporated which is a world famous consumer cooperative geared to hikers, runners, and other outdoor types) —  I sat down with a plate full of delicious organic and vegetarian food.  Next to me sat an enthusiastic young blonde who just happened to be the treasurer of the finances at the Occupy Wall Street site. She was discussing an educational cooperative venture that she and her boyfriend were planning to establish on their farm in New Hampshire. They would bring inner city kids out for an educational experience combined with a practicum in farming to help counteract  the decaying educational system in New York City. How wonderful I thought.

But be careful what you wish for. It was just at that point that the discussion started to get tricky. The first group of kids for their cooperative project, it turns out,  were going to be from a charter school in New York City.  The school was given $250,000 by Walmart.  When I and another community organizer sitting next to me seemed taken aback that they would partner with the charter schools and Walmart, the woman  acknowledged the problem but noted that they would not be in any way beholden to Walmart and they hadn’t been able to find any other way of funding the project.

peg_walmart1

Forget the fact that one of Walmart’s primary goals is to privatize education while still ripping off public resources (private charter schools, which have no accountability or oversight,  are frequently housed in public school buildings at public cost, leaving less room and resources for the “less fortunate” who did not get into a “charter” school). Forget that this mirrors Walmart’s modus operandi in their stores where Walmart bad mouths unions as it accumulates its billions, yet pays it’s employees so little that the employees  must apply for Medicaid and Food Stamps to survive (government programs which Walmart also bad mouths).

Open Thread: What We Now Know

We Now Know Obama Is Best Suited to Handle an Alien Invasion

Chris Hayes rounds up what he and his guests learned this past week. His guests are Rep. Yvette Clark (D-NY); Akhil Amar, professor of law at Yale Law Scholl; Ezra Klein, columnist for the Washington Post; and Avik Roy, Romney Health Care Advisor.

On This Day In History July 1

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Click on images to enlarge.

July 1 is the 182nd day of the year (183rd in leap years) in the Gregorian calendar. There are 183 days remaining until the end of the year. The end of this day marks the halfway point of a leap year. It also falls on the same day of the week as New Year’s Day in a leap year.

On this day in 1997, Hong Kong returned to China.

At midnight on July 1, 1997, Hong Kong reverts back to Chinese rule in a ceremony attended by British Prime Minister Tony Blair, Prince Charles of Wales, Chinese President Jiang Zemin, and U.S. Secretary of State Madeleine Albright. A few thousand Hong Kongers protested the turnover, which was otherwise celebratory and peaceful.

Hong Kong is one of two special administrative regions (SARs) of the People’s Republic of China (PRC), the other being Macau. A city-state situated on China’s south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour. With a land mass of 1,104 km2 (426 sq mi) and a population of seven million people, Hong Kong is one of the most densely populated areas in the world. Hong Kong’s population is 95 percent ethnic Chinese and 5 percent from other groups. Hong Kong’s Han Chinese majority originate mainly from the cities of Guangzhou and Taishan in the neighbouring Guangdong province.

Hong Kong became a colony of the British Empire after the First Opium War (1839-42). Originally confined to Hong Kong Island, the colony’s boundaries were extended in stages to the Kowloon Peninsula and the New Territories by 1898. It was occupied by Japan during the Pacific War, after which the British resumed control until 1997, when the PRC acquired sovereignty. The region espoused minimum government intervention under the ethos of positive non-interventionism during the colonial era. The time period greatly influenced the current culture of Hong Kong, often described as “East meets West”, and the educational system, which used to loosely follow the system in England until reforms implemented in 2009.

Under the principle of “one country, two systems”, Hong Kong has a different political system from mainland China. Hong Kong’s independent judiciary functions under the common law framework. The Basic Law of Hong Kong, its constitutional document, which stipulates that Hong Kong shall have a “high degree of autonomy” in all matters except foreign relations and military defence, governs its political system. Although it has a burgeoning multi-party system, a small-circle electorate controls half of its legislature. An 800-person Election Committee selects the Chief Executive of Hong Kong, the head of government.

As one of the world’s leading international financial centres, Hong Kong has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar, is the ninth most traded currency in the world. The lack of space caused demand for denser constructions, which developed the city to a centre for modern architecture and the world’s most vertical city. The dense space also led to a highly developed transportation network with public transport travelling rate exceeding 90 percent, the highest in the world. Hong Kong has numerous high international rankings in various aspects. For instance, its economic freedom, financial and economic competitiveness, quality of life, corruption perception, Human Development Index, etc., are all ranked highly.

Cartnoon

Buccaneer Bunny

Six In The Morning

On Sunday

1st nuclear reactor to go online since Japan disaster meets with protests despite power crunch

   

By Associated Press, Updated: Sunday, July 1, 3:42 PM

Dozens of protesters shouted and danced at the gate of a nuclear power plant set to restart Sunday, the first to go back online since all of Japan’s reactors were shut down for safety checks following the Fukushima nuclear disaster.

Ohi nuclear plant’s reactor No. 3 is returning to operation despite a deep divide in public opinion. Last month, Prime Minister Yoshihiko Noda ordered the restarts of reactors No. 3 and nearby No. 4, saying people’s living standards can’t be maintained without nuclear energy. Many citizens are against a return to nuclear power because of safety fears after Fukushima.




Sunday’s Headlines:

Hong Kong’s new leader sworn in amid protests

10,000 still missing in Gaddafi’s killing fields

Race for equality in the Middle East

Search for kidnapped aid workers in Somalia intensifies

Australia introduces controversial carbon tax

Late Night Karaoke

Smarter Than Your Average Bear

Cross posted from The Stars Hollow Gazette

This is an Open Thread

The Cost of Doing Business

Crossposted from The Stars Hollow Gazette

Barclays fined for manipulation of Libor

By Danielle Douglas, Washington Post

Published: June 27

The British bank admits to scheming to manipulate rates to increase profits and hide the reality of its distress during the financial crisis. Regulators suspect Barclays did not act alone, but was part of a larger conspiracy to set artificially low rates for Libor and the Euro interbank offered rate, or Euribor.

The U.S. Commodities Future Trading Commission uncovered evidence of Barclays senior management and numerous traders in London, New York and Tokyo making false reports to improve the bank’s trading position dating to 2005, according to the complaint filed Wednesday. At the height of the recession, the bank submitted low figures to keep rates down and to deflect public scrutiny about its condition.

“When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports . . . to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined,” David Meister, director of enforcement at the CFTC, said in a statement.

Counterparites: Barclays’ $450 million LIBOR settlement

By Ben Walsh, Reuters

June 27, 2012

The importance of Libor and, to a lesser extent, Euribor, is hard to overstate. They are used to value of hundreds of trillions of dollars of financial instruments. Or as Matt Levine puts it, they “set the rates on pretty much all the loans and swaps in the world … CFTC order mentions $350 trillion of [over-the-counter] swaps, $10 trillion of loans, and $437 trillion of CME eurodollar contracts indexed to Libor alone”.

In that context, it’s fair to ask what’s $450 million compared with a scheme like that? Not much, proportionally. And Barclays won’t face criminal prosecutions, because of what the DOJ calls its “extraordinary cooperation”. Individual employees, though, are the subject of ongoing criminal investigation.

This Week in Financial Not-Crime

By: masaccio, Firedog Lake

Wednesday June 27, 2012 1:47 pm

(T)oday we learn that manipulating LIBOR isn’t a crime. Barclays Bank paid $450 million to settle charges that it deliberately manipulated the bench-mark interest rate used to establish how much people pay on $350 billion worth of credit cards, student loans and mortgages. It’s also good news for other banksters who haven’t even been sued, like HSBC, Citigroup, JPMorgan Chase and other firms that are being looked at by regulators around the world.

Apparently the manipulation ran both ways, to increase the rate artificially for direct profit, and to reflect a lower rate to hide the fact that other banks were charging Barclays more than other banks because of its perceived weakness. Still, it’s hard to see a connection between a $450 million fine and the massive profits that could come by increasing LIBOR even fractionally. If LIBOR were .1% higher on $350 billion of debt, that comes to $350 million per year. The fraud went on for at least 4 years, which in my example means $1.4 billion in profits, all going directly to the bottom line.

Quelle Surprise! Barclays Settlement on Massive Interest Rate Price Fixing Illustrates Bank Crime Pays Well

Yves Smith, Naked Capitalism

Thursday, June 28, 2012

Barclays is first to settle, and given the scale and potential profitability of this activity, the fine looks paltry: $450 million among the FSA, the CFTC, and the Department of Justice (£230 million to the US authorities, £60 million to the FSA). The DOJ has granted “conditional leniency” on anti-trust charges. Price fixing is criminal under the Sherman Act. Four top executives, including CEO Bob Diamond are also giving up bonuses this year.



But all we need to do is contrast this case with the municipal bid-rigging prosecution described by Matt Taibbi in the current Rolling Stone. Here you have three individuals at GE Capital going to jail for price fixing, which is crime under the Sherman Act. But they were merely the arms and legs of big banks. Where were the prosecutions of the higher ups, or of the senior officers of banks who were in on this con? We see the same pattern over and over: justice is meted out only on the foot soldiers, those far enough away from the executive ranks so as not to call into question the integrity of the system. The irony of it all is the public is well aware of how crooked the financial services industry is (the poll data alone is proof). But for the elites, it is vital that they not admit that something is rotten in Denmark, for if they did, they’d have to do something about it.

A Huge Break in the LIBOR Banking Investigation

Matt Taibbi, Rolling Stone

POSTED: June 28, 10:15 AM ET

This is unbelievable, shocking stuff. A sizable chunk of the world’s adjustable-rate investment vehicles are pegged to Libor, and here we have evidence that banks were tweaking the rate downward to massage their own derivatives positions. The consequences for this boggle the mind. For instance, almost every city and town in America has investment holdings tied to Libor. If banks were artificially lowering the rates to beef up their trading profiles, that means communities all over the world were cheated out of ungodly amounts of money.

First there were huge bid-rigging settlements for Chase, UBS, Bank of America, GE and Wachovia. Now we’ve got a $450 million settlement for Barclays for Libor manipulation, and one imagines this won’t be the end of it. Anyway, more on this to come soon, and if you’re wondering, yes, there should be a lot more press on this.

UK probing more banks for interest rate fixing

By ROBERT BARR, Associated Press

20 minutes ago

Osborne said Barclays was not the only bank to be involved in market fixing. Beyond the U.K., there are also investigations in several countries involving numerous global banking groups.



“Banks were clearly acting in concert,” said Andrew Tyrie, a British lawmaker who chairs the influential Treasury Committee in the House of Commons. “I fear it’s not going to be the end of the story, that we are going to find that other banks have been involved.”



“If Bob Diamond had a scintilla of shame, he would resign,” said Matthew Oakshott, a member of the House of Lords. “If Barclays’ board had an inch of backbone between them, they would sack him.”

Prime Minister David Cameron, when asked whether Diamond should resign, said he thinks “the whole management team have got some serious questions to answer. Let them answer those questions first.”

The massive fines are unlikely to be the end of the pain for Barclays. The cost of lawsuits related to the LIBOR scandal will likely be bigger, said Sandy Chen, banking analyst at Cenkos Securities.

“Since Royal Bank of Scotland, HSBC and Lloyds Banking Group have also been named in lawsuits, we expect they will also face significant fines and damages. We are penciling in multi-year provisions that could run into the billions,” Chen said.

Leading article: A sick banking culture that cannot be tolerated

The Independent

Friday 29 June 2012

Politicians have attempted with varying degrees of rigour to introduce rules preventing a recurrence. Mostly, in the face of determined lobbying by the banks (led in the UK by Barclays), they have retreated or watered down their proposed measures. But it is obvious now that the authorities are only scratching at the surface: a far stronger hand is required.

For a start, they should act immediately and decisively. Fining a bank has little effect: what is required is the naming and shaming and driving from office of those involved. The era of entitlement – something we hear an awful lot about in relation to those at the other end of society, on benefits – must be brought to an end for bankers. Incredibly, only one UK top banker has been punished for his bank’s role in provoking the credit crunch: Fred Goodwin lost his job and subsequently, his knighthood. Now, with a second storm engulfing the sector, that cannot be allowed to happen again. Light-touch regulation and, with it, light-touch penalties should be banished. In that respect, Bob Diamond is right: the time for mere remorse is well and truly over.

Barclays Libor fix trail leads to senior managers

By Sarah White, Reuters

Wed Jun 27, 2012 6:09pm EDT

Staff responsible for submitting rates in some instances told colleagues of “internal political” pressure to set these low, the FSA’s report shows.

Barclays “senior management at high levels” became concerned over the media scrutinizing the bank’s funding access early in the financial crisis, in August 2007.

“Senior management’s concerns in turn resulted in instructions being given by less senior managers at Barclays to reduce Libor submissions in order to avoid negative media comment,” the UK’s FSA said in its report. “The origin of these instructions is unclear.”

The U.S. CFTC said specific instructions to lower submissions came from “senior Barclays Treasury managers”. They asked submitters to provide rates at a level where Barclays wouldn’t be “sticking its head above the parapet”.

Can Bob Diamond hang on after Barclays Libor scandal?

Nils Pratley, The Guardian

Wednesday 27 June 2012 11.37 EDT

Barclays tried to manipulate a $550tn market for almost half a decade. Internal controls and risk management functions were inadequate. The compliance department failed to do its job. The bank’s actions created the risk that the stability of the UK financial system would be threatened.

Add up that collection of misdemeanours and even £290m of fines, plus a voluntary waiving of boardroom bonuses, is woefully inadequate. The outside world will want to know why no director of Barclays has offered his resignation.



None of the various regulators’ reports suggest that Diamond or any other executive director at Barclays knew what was going on – they, we must assume, are not the “senior management” referred to in the FSA report who gave instructions to reduce Libor submissions. But should the top brass have known what was going on? Why doesn’t the buck stop at the top when the reputation of the bank has been so badly damaged?

Federal Reserve Lies About Foreclosures

Cross posted from The Stars Hollow Gazette

While the attention was on the SCOTUS ruling on the affordable Care Act, this is what was going on under the radar at the Federal Reserve:

Federal Reserve, Regulators Arguing for More, Quicker Foreclosures

by David Dayen

The Federal Reserve has decided to put their thumbs on the scales of justice, explicitly attempting to overturn state-based anti-foreclosure laws on the spurious grounds that they hurt the economy.

This story by Tim Reid in Reuters cites the Fed arguing against the kind of laws in states like Nevada – and soon, California – that have saved hundreds of thousands of homes from foreclosure.

   “State and federal laws enacted to protect homeowners from eviction in the wake of the 2008 housing crash may be extending the slump, according to a growing number of economists and industry experts.

   Foreclosures have all but ground to a halt in Nevada, which passed one of the stiffest borrower-protection laws in the country last year. Yet the housing market is further than ever from recovery, local real estate agents say, with a lack of inventory feeding a “mini-bubble” in prices that few believe is sustainable.

   A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

There’s been a concerted effort to overturn due process in these judicial foreclosure states, on the theory that foreclosures must be quickly flushed through the system so the market can “clear.” Incredibly, house organs like the Fed still express this opinion even after years of documented evidence of illegal foreclosures using false and forged documents in court. The explicit recommendation from the Federal Reserve is to react to systematic foreclosure fraud by closing the courthouse doors to troubled borrowers.

The entire premise that judicial foreclosure states are prolonging the housing slump is completely spurious. Nothing furthers the housing slump more than a spate of foreclosures flooding the market, increasing the supply of distressed homes that sell cheaply and bringing down property values in a particular area. That’s what the Fed is arguing for.

Yes, they’re serious. This is basically siding with the banks, giving fraud as pass and screwing the homeowners and housing market with a flood of foreclosures. And Reuters and other trade publications have decided to publish the propaganda that keeping people in their homes is causing the market to slump and the solution is more foreclosures.

Freelance writer and attorney who helped expose the foreclosure fraud, Abigail Field takes on the Reuters “b.S.” sentence by sentence, shredding the propaganda that the housing crisis was caused by homeowners but by the banks themselves who created the shadow market of foreclosed homes and the underwater crisis. She makes these four points:

  • First, en route to committing mass securities fraud the banks dishonored their contracts and failed to document the mortgage loans as they promised investors they would. As a result, they’ve had to fabricate nonsensical, obviously fraudulent and often sworn statements to try to foreclose. It’s that swamp of fraud that’s causing the delays.
  • Second, banks are manipulating housing market inventory, letting properties they own rot, not listing them for sale, and when auctioning them, sometimes outbidding third parties.
  • Third, bankers’ securities fraud broke the secondary market for non-government backed mortgages. As a result, there’s a lot less capital to lend wannabe homeowners.
  • Fourth, lender-driven appraisal fraud led to such inflated prices that the underwater problem is directly attributable to them.
  • Rather than deal in the reality that our housing crisis is banker driven and dare push the meme that bankers must be held accountable, Reuters is helping bankers (and their government allies) push the idea that if only we made it easy for bankers to use their fraudulent documents, the housing market would heal quickly.

    There’s even more that exposes not just the Federal Reserve’s pass on bank fraud but the how the Obama administration’s so called homeowner bail out is just more hand outs to the banks:

    Sentences ten and eleven:

    “The increasing doubt about the impact of anti-foreclosure laws on the long-term health of the housing market calls into question a basic principle of the Obama Administration’s approach to the housing crisis.

    Many Democrats, including Obama, say struggling homeowners should get more time to make good on their mortgage arrears, or have the breathing room to renegotiate their loans with lenders, especially in the wake of the “robo-signing” scandal in which banks were found to have falsified foreclosure paperwork.”

    How I wish the Obama Administration’s approach had really been about helping struggling homeowners. Instead it has been mostly theatrics with gifts to the banks thrown in. Most recent example – the latest refinancing program has become a fee/profit center for the big banks. Moreover, if homeowners did “make good”, that would be better for everyone involved, including the broader market, but in the era of maximally predatory servicing, it’s not easy. Ditto with mortgage mods that work – and when they include principal reduction that’s meaningful, they work.

    Hey, look! In sentence 11 we get the first whiff of banker wrongdoing. And wow, he not only uses the misleading “robo-signing“, but he also says “falsified foreclosure paperwork.” Foreclosure “paperwork” doesn’t sound that serious, though, does it? How about “falsified documents affecting property title”? Or, “lied under oath about how much borrowers owed and to whom?”

    And as Yves Smith at naked capitalism notes in her article the lies get repeated ad nauseum:

    The way Big Lies get sold is by dint of relentless repetition. In the wake of the heinous mortgage settlement, foreclosure fatigue has set in. A lot of policy people want to move on because the topic has no upside for them. Nothing got fixed, the negotiation process took a lot of political capital (meaning, as we pointed out, it forestalls any large national initiatives in the near-to-medium term), and Good Dems don’t want to dwell on a crass Obama sellout (not that that should be a surprise by now). But the fact that this issue, which ought to be front burner given its importance both to individuals and the economy, is being relegated to background status creates the perfect setting for hammering away at bank-friendly memes. When people are less engaged, they read stories in a cursory fashion, or just glance at the headline, and don’t bother to think whether the storyline makes sense or the claims are substantiated.

    Just look at the headline: “Evidence suggests anti-foreclosure laws may backfire.” First, it says there are such things as “anti-foreclosure laws.” In fact, the laws under discussion are more accurately called “Foreclose legally, damnit” laws. Servicers and their foreclosure mill arms and legs have so flagrantly violated long-standing real estate laws in how they execute foreclosures that some states have decided to up the ante in terms of penalties to get the miscreants to cut it out. [..]

    And that is perhaps the most remarkable bit, the failure to consider that gutting the protections to the parties to a contract undermines commerce. Borrowers in judicial foreclosure states paid higher interest rates due to the greater difficulty of foreclosure. So now they are to be denied what they paid for because the banks recklessly disregarded the procedures they set up and committed to perform? What kind of incentive system is it when we reward massive institutional failure with a bank-favoring settlement and supportive messaging from central bank economists? As Dayen stated:

       “So when these officials argue against laws like those in Nevada, which merely criminalize a criminal practice, or California, which provides due process for people having their homes taken from them, they’re arguing in favor of what amounts to a dissolution of justice.”

    I don’t think you’ll read anything like this at Reuters. Shameful

    ACA: The Good, the Bad & the Truly Ugly

    Cross posted st The Stars Hollow Gazette

    First, this morning House Majority Leader Eric Cantor (R-VA) made the rounds of talk shows spouting how the Affordable Health Care bill can be repealed with a simple majority in the House and Senate since the bill was passed under reconciliation. Without a filibuster proof majority in the Senate, Ryan Lizza at The New Yorker points out the obstacles for that to happen:

    Many Republicans, especially in the blog and talk-radio swamps, would cry, “Use reconciliation!” Readers familiar with the congressional debates of 2009-2010 will remember that this procedure allows certain budgetary measures to pass through the Senate with a simple majority. [..]

    But reconciliation wouldn’t work here-the process can only be used for policies that have budgetary effects and a C.B.O. score. Much of the A.C.A., such as the insurance exchanges and subsidies, would fall under these categories. But a lot of it, including the hated individual mandate, does not. Repealing the exchanges and subsides without repealing the mandate and the other regulations and cost controls in the law would create a health-care Frankenstein that a President Romney would be rather nuts to support.

    That said, the SCOTUS ruling has some rather complex ramifications and Chief Justice Robert’s ruling was rather sly. First was there are the three bit from SCOTUSblog that Lambert Strether pointed out at Corrente:

    First, here’s the reasoning:

       Essentially, a majority of the Court has accepted the Administration’s backup argument that, as Roberts put it, “the mandate can be regarded as establishing a condition — not owning health insurance — that triggers a tax — the required payment to IRS.” Actually, this was the Administration’s second backup argument: first argument was Commerce Clause, second was Necessary and Proper Clause, and third was as a tax. The third argument won.

    Second, here are the implications for the role of the State as we have understood it from the New Deal onward; what Phillip Bobbitt would call a change a Constitutional Order:

       The rejection of the Commerce Clause and Nec. and Proper Clause should be understood as a major blow to Congress’s authority to pass social welfare laws.

    Third, here is the new Constitutional Order:

       Using the tax code — especially in the current political environment — to promote social welfare is going to be a very chancy proposition.

    Chancy or not — and it will be the precariat that suffers mischance, and not the elite, in any case — that’s what they’re going to do.

    Next from Scarecrow at FDL News Desk who argues that Chief Justice Robert’s “incoherent decision” will “shackle congress” and “screw millions of uninsured:

    In the process, he did violence to constitutional law and logic.  Consider, for example, Robert’s logic on the “mandate.”  In saving the “mandate,” Roberts essentially defined it as not a mandate.  You are not really required to purchase insurance, he noted; instead, you may choose not to purchase insurance and instead pay a minor tax.  As we know, taxing is just a way to collect revenues, a contribution to the common, aggregate costs of public programs.  In this case, the program is paying for many people’s health care through a system of risk/cost sharing.

    But if the so-called mandate is not really a mandate but rather an option that can be avoided by paying a tax, and if a legitimate purpose of this tax, as government and amicus briefs argued, is to help cover aggregate costs across a pool of many insured and uninsured people, then what does that do to Robert’s argument about the Commerce Clause?  When arguing about the Commerce Clause, Roberts insists it’s a requirement to purchase a “product,” which forces you to take an action, and thus to engage in commerce when you would not otherwise have done that.  Regulating “inaction” is not permissible, Roberts argues.

    But if, as Roberts concludes, the “mandate” is not a mandate, and the tax’s purpose is to help cover pooled costs, and not to buy a “product,” then there is no “mandate” to purchase a “product.”  So no one is forced to engage in commerce as Roberts framed it.  Indeed the “commerce” is already there in the risk sharing system across millions of people, all engaged in commerce by paying premiums into a pooled risk scheme.  Robert’s entire premise for striking down the Commerce Clause rationale is thus contradicted by his argument about how it’s permissible for Congress to enact a tax to support funding of collective health care costs.  That’s what the tax does; but it’s also what paying insurance premiums does.

    Roberts’ reasoning on Medicaid is equally illogical. His premise is that Congress cannot expand an existing program administered by states that depends on shared state/federal funding by conditioning funding for the whole program on the states actually implementing the expansion.  As Brad DeLong observes, if Congress were just now creating a fully expanded Medicaid, to be implemented by states but mostly paid for by the feds, there would be no question that Congress could condition federal funding on the states actually carrying out the programs.  But if the program already exists for half the needy population, Congress cannot complete the program for the other half and use the same leverage to achieve the same degree of state cooperation.

    As per the CBO, if the states actually implement the expansion and make an effort to get those eligible to sign up, 16 to 17 million more people will have health care coverage. But without that leverage to get the states to accept Medicaid expansion it leaves the poor between around 50% and 133% of the poverty line in a real no man’s land, because they would both be ineligible for Medicaid AND the coverage subsidies in the exchanges.

    As for the states voluntarily opting in for the Medicaid expansion, David Dayen doesn’t think that will happen either, even though the cost for the states would only be responsible for less than 10% of the costs.

    And being on the hook for even a small amount of funds isn’t going to make any of these governors happy. Heck, here’s a Democrat, former West Virginia Governor and current Senator Joe Manchin, making the argument for them:

       We should all recognize that the health care challenges that many West Virginians and Americans face are not going to go away unless Congress takes additional action to repair this bill. Now that the Court has ruled, we can move forward with fixing what is wrong with this bill and saving what is right. I have always been determined to reduce the burden on states from the Medicaid expansion, and this ruling affirms my position – and makes clear that states must have the flexibility to live within their means by determining Medicaid eligibility as each state sees fit. I have always said one size doesn’t fit all.

    That’s going to be a compelling set of logic for a non-trivial number of governors. They’ll also distort how much the expansion would put their states “on the hook.” 26 states sued to eliminate the Affordable Care Act entirely, and they almost got there. Why wouldn’t they jump at the chance to eliminate the portion that creates half of the coverage benefits?

    This isn’t going to be universal. New Mexico’s Republican Governor Susanna Martinez, for example, certainly sounds like she’ll take the money. But Southern states in particular, who paradoxically house the citizens most in need of the Medicaid expansion coverage, will be likely resisters at the outset. And it’s not like a lot of success in modern America comes from rallying at the grassroots level for poor and disenfranchised people.

    As was noted by Ezra Klein of the Washington Post, opponents of the ACA see this as a win:

    “We won,” said Georgetown law professor Randy Barnett, who was perhaps the most influential legal opponent of the Affordable Care Act. “All the arguments that the law professors said were frivolous were affirmed by a majority of the court today. A majority of the court endorsed our constitutional argument about the Commerce Clause and the Necessary and Proper Clause. Yet we end up with the opposite outcome. It’s just weird.”

    Yes, it’s weird but so was the whole ACA bill from the very start.

    Hey, what do you know?

    We’re up.

    As it turns out our servers are connected to the Amazon cloud in Virgina that went down last night.

    We will continue with our regular schedule tonight and tomorrow.