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The Pentagon Conned Washington … Again

May 19, 2015 in Economics

By Mandy Smithberger, Christopher A. Preble

Mandy Smithberger and Christopher A. Preble

Advocates for higher Pentagon budgets won a victory last week, but their jubilation is misplaced.

Although the National Defense Authorization Act managed to circumvent the spending caps imposed by the bipartisan Budget Control Act of 2011, these budgetary shenanigans are likely to postpone a series of reforms that nearly everyone in Washington knows are long overdue.

Pentagon boosters shouldn’t be allowed to demolish what little fiscal discipline has been achieved in the last few years as long as Congress refuses to authorize another round of base closures to allow the services to get rid of excess infrastructure, modernize the military’s pay and benefits structure for the 21st century, and compel the Pentagon to eliminate excess civilian overhead.

A bipartisan group of 38 think tank experts endorsed such reforms in an open letter to Secretary of Defense Ashton Carter and leaders in Congress. We agree with most of what is called for in the letter. But, in the end, we declined to sign because it didn’t go nearly far enough to address the most wasteful aspects of the Pentagon’s budget and falsely implied that spending limits threatened to undermine national security.

Budgetary shenanigans are likely to postpone a series of reforms that nearly everyone in Washington knows are long overdue.”

For example, we agree that the growth of the civilian workforce is entirely out of sync with cuts to force structure. But a large civilian workforce is only part of the problem.

Feeding into this monster is also an excessive service contractor workforce — the greatest area of cost growth for the Defense Department’s workforce in the last 10 years. A 2011 Project On Government Oversight study shows how costly this workforce can be, finding that the federal government pays contractors 1.83 times more than they pay federal employees, and more than two times what the private sector pays for comparable services.

The Defense Department has ignored its responsibility to implement an improved service contract tracking system, shirking its total force management responsibilities and perpetuating billions of dollars in unnecessary service contracting costs.

As a result, as Rep. Chris Van Hollen [D-MD] recently confirmed, we have no reliable information about the size of our contractor workforce. Right-sizing the Defense Department’s workforce must look at the costs of all of these personnel, which will benefit mission and readiness capabilities.

The defense reform consensus letter calls on Congress to approve a round …read more

Source: OP-EDS

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Robert Reich: 10 Ideas to Save the Economy #4: Bust Up Wall Street

May 19, 2015 in Blogs

By Robert Reich, AlterNet

Any bank that's too big to fail is too big, period.

When Americans think of how the economic rules are stacked against them, they naturally think of Wall Street.

When the Wall Street bubble burst in 2008 because of excessive risk-taking, millions of working Americans lost their jobs, health insurance, savings, and homes.

But The Street is back to many of its old tricks. And its lobbyists are busily rolling back the Dodd-Frank Act, intended to prevent another crash.

The biggest Wall Street banks are also much larger. In 1990, the five biggest banks had 10 percent of all of the nation's banking assets. Now, they have 44 percent – more than they had at the time of the 2008 crash.

They have a virtual lock on taking companies public, play key roles pricing commodities, are involved in all major U.S. mergers and acquisitions and many overseas, and responsible for most of the trading in derivatives and other complex financial instruments.

And as they've gained dominance over the financial sector, they've become more politically potent. They're major sources of campaign funds for both Republicans and Democrats.

Wall Street banks supply personnel for key economic posts in Republican and Democratic administrations, and lucrative employment to economic officials when they leave Washington.

It's a vicious cycle. The bigger they get, the more likely it is that government will bail them out if they get into trouble again. This, in turn, confers on them an ever-larger competitive advantage over smaller, community-minded banks that don't have the implied guarantee – which gives the biggest banks even more economic and political power.

What should be done?

First, resurrect the Glass-Steagall Act that used to separate investment from commercial banking.

Second, put a small sales tax on every financial transaction. This would discourage speculation and slow down the casino. Not incidentally, such a tax could generate billions of dollars a year for, say, better schools.

But the most important thing we should do is bust up the big banks. Any bank that's too big to fail is too big, period.

Antitrust law should be used the way it was against …read more

Source: ALTERNET

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Wall Street is as Ethical as You Assumed

May 19, 2015 in Blogs

By Michael Arria, AlterNet

A new survey confirms what most already knew: many on Wall St. will cheat to get ahead.

The University of Notre Dame recently carried out a survey and concluded that a sizable number of Wall Street bankers would readily violate existing laws. The study was requested by the law firm Labaton Sucharow and questioned 1,200 people.

One quarter of the professionals surveyed said that they would break laws in order to make $10 million, provided that they wouldn't be caught. This number has actually increased slightly since the survey was last conducted in 2012. Almost half the respondents said that they thought Wall Street regulations were ineffective and nearly 23% of those surveyed said that colleagues had probably done unethical or illegal things to make more money. That last number has doubled since the last survey.

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Source: ALTERNET

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The Marijuana Economy Is Coming Out of the Shadows

May 19, 2015 in Blogs

By David Sirota, AlterNet

Expanding the cannabis market will require not just drug reform legislation, but also a consistent infusion of capital.

The convention floor at Denver Airport's Crowne Plaza on a recent afternoon could have been the trade show for any well-established industry — gray-haired execs in conservative suits mingling with office park dads in polos and fresh-out-of-college types in brand-emblazoned T-shirts. Only this is a new kind of business conference with a special Colorado theme: legal weed.

After Colorado voters legalized marijuana in 2012, more states and cities are considering a similar path for themselves. At the same time, the cannabis market is looking less like a music festival and more like a Silicon Valley confab — upscale, data-driven and focused on investors.

Vendors and potential financiers at last month's Marijuana Investor Summit here in the Mile High City say the current market for legal cannabis is more than $3 billion in the 23 states that have already legalized the drug for medicinal or recreational use. Expanding that market, they say, will require not just drug reform legislation, but also a consistent infusion of capital at a time when the marijuana economy still exists in a legal gray area — one where the drug is permitted in some states, but still outlawed at the federal level.

“It's going to take time, but it's a great opportunity,” said Chris Rentner of Akouba Credit, a Chicago small business lender exploring the possibility of working with marijuana businesses. “For people that think everyone is a stoner lying on the sidewalk passed out, it's going to take time for them to get comfortable with it. But there's too much money in it. We just need to figure out the risk associated with it, but if we can find a way where it makes sense legally, then why wouldn't we try to be in this market?”

If Akouba jumps into the marijuana market, the company would be trying to address one of the biggest obstacles to the industry's growth: access to financial services. Because marijuana is still prohibited under federal law, cannabis grow …read more

Source: ALTERNET

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NYPD Chief Wants 450 More Cops So He Can Fight ISIS…What?

May 19, 2015 in Blogs

By Michael Arria, AlterNet

Bill Bratton says he'll try to assign more officers to stop terrorist organizations.

New York City police chief Bill Bratton says that he will increase the size of the police force quickly in order to combat terrorism from the Islamic State. On the John Catsimatidis radio show Bratton explained that there is an, “increased threat from ISIS using social media to recruit people not only to go to Syria to fight, but encouraging people … to attack police, to attack government officials, to basically brainwash them under their screwed-up ideology. That threat has expanded significantly in the now 16 months I’ve been police commissioner.”

Bratton continued, “We’re treating that threat so seriously, I’m going to put another 450 police officers – if we get the approval to increase the size of the police force – and I need to do it very very quickly – into our counterterrorism operations to increase the ability of our officers to protect critical sites around the city.” Bratton then blamed the threat on, “This crazy hijacking of the Muslim religion by these fanatics, twisting it into an ideology that’s all about hate and murder and killing.”

Bratton supplied no evidence that the threat of terrorism has expanded recently, nor did he mention the NYPD's infamous Muslim spying program which led to widespread criticism from civil liberties advocates and brought about two federal lawsuits. Last year he dropped that unit and many in the mainstream press perceived it as a move away from the post-9/11 intelligence-gathering practices of the Bloomberg era. The NYPD is already the largest police force in the country, with over 34,000 uniformed officers.

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Source: ALTERNET

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Amtrak Is No Way to Run a Railroad

May 19, 2015 in Economics

By Richard W. Rahn

Richard W. Rahn

If taxpayers suddenly stopped subsidizing Amtrak, what do you think would happen? Before trying to answer that question, it is useful to review U.S. railroad history. The first railroads were built in the United States in the late 1820s, and by 1900, only 70 years later, almost every town in the country had rail access. Railroads were high tech, the Internet of their time. The system was built and profitably operated by private companies.

Amtrak and the modern freight railroad companies use the infrastructure that was built long ago. The 180-year-old privately built Canton Viaduct (a stone bridge) in Canton, Massachusetts and the 100-year-old Hells Gate Bridge over the East River in New York are still used by Amtrak. The investor-owned Pennsylvania Railroad built the hugely expensive railroad tunnels under the Hudson River in 1908, which were technological wonders of the time. They are still used by all of those who ride Amtrak from New Jersey to New York. (As an aside, I found it rather ironic when President Obama claimed that private business only succeeded by using government infrastructure — “you did not build that” — when, in fact, government mostly uses privately built infrastructure.)

Let’s get rid of Amtrak and its taxpayer subsidies, and see what magic free-market rail entrepreneurs might create.”

Once the railroads were built, state and local governments began heavily taxing every mile of track and other railroad facilities, and the federal government imposed endless regulations, including regulating fares. The predictable result was that expenses grew faster than revenues — causing deferred capital spending and maintenance. Eighty years ago, trucks, automobiles and airplanes began to lure away rail’s customers. As a result, the rail industry began a death march after World War II. Railroad companies ripped up thousands of miles of track to save on expenses and tax levies. Today, the United States has a fraction of the number of miles of railroad tracks compared to what it had 100 years ago. Route mileage peaked at 254,251 miles in 1916 and fell to 139,679 miles in 2011.

By the late 1960s, most of the nation’s railroads were in deep trouble as a result of new forms of competition, disastrous tax and regulatory policies, and inflexible unions. In 1971, the federal government created Amtrak as a government corporation to operate intercity passenger rail service. Freight rail was finally deregulated in 1980, now resulting in the most …read more

Source: OP-EDS

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How am I Supposed to Learn Anything without a Lazy River and Wet Wall?

May 19, 2015 in Economics

By Neal McCluskey

Neal McCluskey

It’s easy to blame sheer greed for colleges raising their prices at breakneck speeds — I know, I’ve done it — but it would be wrong to conclude they’re doing it only because they’re hopelessly money-grubbing. No, as Jacob, McCall, and Stange have found, colleges often have to furnish expensive amenities, dorms, etc., to compete for students.

Next time someone tells you the price of college is going up because of cheap states — or even just remorselessly greedy schools — tell them to go jump in a lake.”

A great illustration of this is Louisiana State University’s pending $85 million recreation facility, which it was recently reported would be completed even as the state’s higher ed system faces potentially $500 million in funding cuts.

How could this be, you ask? Shouldn’t all dollars be directed toward academics?

Not if LSU wants to successfully vie for students against competitor institutions suggests this article and Jacob, McCall, and Stange. LSU needs a “lazy river” with “bubbler lounges” because Texas A&M has “a zero-depth entry in its leisure area, raindrop fountain, a three stream bubble fountain and an adjacent 12 person in-ground hot tub.” Auburn sports a “200,000 gallon leisure pool that has three different depths to accommodate water sports and other leisure pool activities. They also have a 45-person, tiger-shaped hot tub and fire pit, in the shape of a tiger paw.” And, of course, they have an AquaClimb Wet Wall. And don’t forget all the wet and wild fun at the University of MissouriColorado State, and more!

But how do students pay for all this? The answer is that to a significant extent they don’t. Taxpayers do.

True, in many cases the campus Splash Mountain might not be funded directly by taxpayers, but they subsidize public universities’ academic functions, freeing up students to pay for the fun stuff. And, of course, many students carry ever-increasing aid they can use for paying all those recreation fees and other non-tuition costs. In many cases Mom and Dad also likely help out, but all to basically the same effect: someone else is paying for students’ choices, so students demand things — sometimes very indulgent things — they likely would not demand were they paying their own way, or even with money provided by profit- and risk-conscious lenders.

So, next time someone tells you the price of college is going …read more

Source: OP-EDS