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Alan Barber, (202) 293-5380 x115
There are many useful features of President Obama's proposals for the reform of the regulatory system. Most notably, the plan to establish an agency to ensure that financial products are fair and transparent to consumers is a big step forward. Such an agency might have prevented many of the worst abuses in the subprime market.
The proposal to provide regulatory authorities with resolution powers for non-bank financial institutions is also a useful reform. Such powers would have greatly facilitated regulators' efforts to deal with the collapse of Bear Stearns, Lehman Brothers, and AIG.
This plan should also go far toward eliminating the sort of regulatory arbitrage that allowed firms to seek out the weakest regulators. It would have been desirable to have also included some sort of national consolidation of regulation of insurers, but that would have faced enormous political opposition.
The requirement that hedge funds and private equity funds register with the SEC is also a step forward in transparency, although it is not clear how much, if any, of this information will be made available to the public. Requiring that derivatives be traded through clearing houses will also prevent some of the worst abuses in this area. However, it would have been preferable to require that they be exchange-traded and that non-standardized derivative instruments be strongly discouraged. This would be a further gain of transparency and also lead to lower transactions costs.
The principles for altering executive compensation are also useful, but it remains to be seen how effectively these can be enforced to change entrenched practices.
There are some areas in which the proposal does not take some obvious steps, perhaps most notably by not directly addressing the conflict of interest that exists when a company hires and pays a rating agency to rate its issues. This conflict could have been removed simply by having an independent party (e.g. the stock exchange) select the rating agency. If the hiring decision was taken away from the company, then the rating agency would have no incentive not to present an honest assessment of the issues it rates.
However, the biggest problem with the Obama administration's regulatory proposals is that they support the view that we had an economic meltdown primarily because we had an inadequate regulatory structure rather than failed regulators. The basic story of this crisis was not that the regulatory authorities lacked the ability to rein in this disaster before it was too late. Rather, the regulators - most importantly the Fed - opted not to use their power to rein in the housing bubble.
The discussion of financial issues has largely worked to hide the centrality of the housing bubble to the crisis. If there had been no credit default swaps, collateralized debt obligations, or subprime and Alt-A mortgages, but the housing bubble had still grown to $8 trillion, we would be in pretty much the same economic situation that we are in today.
Residential construction would have collapsed due to a huge glut in the housing market and consumption would have plunged as a result of the loss of $8 trillion in household wealth. The financial problems created by failed regulation do complicate the picture, but the fundamental picture is a very simple one of a collapsed bubble causing demand to plummet.
Politicians and regulators have a direct interest in portraying the crisis as being the result of an inadequate regulatory apparatus rather than failed regulators, because failed regulators should get fired. However, by not holding failed regulators accountable, this reform proposal is setting the grounds for the next crisis.
Even a perfect regulatory structure will not work if the regulators do not do their job. They will not have an incentive to do their job if there are no consequences for failure
In this case, we have seen the most disastrous possible regulatory failure. This is like the drunken school bus driver who gets all his passengers killed driving into oncoming traffic and no one is held accountable. The message to future regulators is, therefore, to simply go along with the powers that be (i.e. the financial industry) and you will never suffer any negative consequences.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.(202) 293-5380
"MAGA House Republicans are threatening a default that could cost us millions of jobs and trigger a recession," said the president. "All because they are demanding deep cuts that will hurt hardworking families—even while they protect tax breaks for the wealthy and corporations."
Before a meeting with U.S. House Speaker Kevin McCarthy planned for Monday, President Joe Biden on Sunday renewed his criticism of what GOP lawmakers are demanding in exchange for raising the debt ceiling to prevent an economically catastrophic default.
"I've done my part," Biden told reporters—pointing to his trillions of dollars in proposed spending cuts and new sources of revenue—before heading back to Washington, D.C. from Hiroshima, Japan, where he attended a three-day Group of Seven summit.
"Now it's time for the other side to move... from their extreme positions, because much of what they've already proposed is simply, quite frankly, unacceptable," Biden said of McCarthy (R-Calif.) and the other House Republicans holding the economy hostage.
\u201cMAGA House Republicans are threatening a default that could cost us millions of jobs and trigger a recession.\n\u00a0\nAll because they are demanding deep cuts that will hurt hardworking families \u2013 even while they protect tax breaks for the wealthy and corporations.\n\nI\u2019ve got a plan to\u2026\u201d— President Biden (@President Biden) 1684685203
The president continued:
Let me be clear: I'm not going to agree to a deal that protects, for example, a $30 billion tax break for the oil industry, which made $200 billion last year—they don't need an incentive of another $30 billion—while putting healthcare of 21 million Americans at risk by going after Medicaid.
I’m not going to agree to a deal that protects $200 billion in excess payments for pharmaceutical industries and refusing to count that while cutting over 100,000 schoolteachers and assistants' jobs, 30,000 law enforcement officers' jobs cut across the entire United States of America.
And I'm not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistance at risk for... nearly 1 million Americans.
"It's time for Republicans to accept that there is no bipartisan deal to be made solely... on their partisan terms," Biden added, while also declaring that "America has never defaulted... on our debt, and it never will."
However, Treasury Secretary Janet Yellen has warned that if Congress doesn't raise the debt limit soon, the federal government could run out of money to pay its bills by June 1. Growing fears of a default have prompted some legal scholars and progressive lawmakers to pressure Biden to stop negotiating with GOP hostage-takers and invoke the 14th Amendment to the U.S. Constitution, which says in part that "the validity of the public debt... shall not be questioned."
Among them is Sen. Bernie Sanders (I-Vt.), who wrote in a Sunday email to supporters: "In a manner that is unprecedented and incredibly reckless and cruel, these Republicans have hijacked the debt ceiling process. Their position: If the Congress does not agree to impose savage cuts on the needs of working people, the elderly, the children, the sick, and the poor, they will push the U.S. government to default on its debt. In other words, they are prepared to wreck our economy if they don't get their way."
"In my view, President Biden has the authority and the responsibility under the 14th Amendment of the Constitution to make sure that we continue to pay our bills. The language in that amendment is quite clear," Sanders said, urging anyone who agrees to sign a petition "calling on President Biden to exercise that authority in order to protect the country from the savage Republican budget."
In response to a reporter's question Sunday, Biden said that "I'm looking at the 14th Amendment, as to whether or not we have the authority. I think we have the authority. The question is: Could it be done and invoked in time that it... would not be appealed and, as a consequence, pass the date in question, and still default on the debt? That's a question that I think is unresolved."
The American Prospect executive editor David Dayen suggested in a pair of tweets that rather than inquiring if Biden will invoke the 14th Amendment, journalists should be asking how he plans to respond to an existing lawsuit that involves it.
\u201cA good question from the Gang of 500, instead of "will you invoke the 14th amendment" (which is not how it works) is "you've been served, how will you respond?"\u201d— David Dayen (@David Dayen) 1684678216
Earlier this month, lawyers for the National Association of Government Employees (NAGE)—which represents roughly 75,000 workers across federal agenices—filed a suit against Biden and Yellen in the U.S. District Court for the District of Massachusetts.
NAGE, which has endorsed Biden for reelection in 2024, aims to have the debt ceiling law declared unconstitutional, and on Friday—after Dayen publicly pointed out lack of progress with the case—the union's legal team requested emergency action by the court.
Meanwhile, Politicoreported Friday that some Biden aides fear invoking the 14th Amendment "would trigger a pitched legal battle, undermine global faith in U.S. creditworthiness, and damage the economy," and "officials have warned that even the appearance of more seriously considering the 14th Amendment could blow up talks that are already quite delicate."
After departing Japan on Sunday, Biden spoke with McCarthy by phone from Air Force One. Following the call, the GOP speaker confirmed plans to meet with the president on Monday but also said that "my position has not changed."
Sanders, in his email Sunday, wrote that "Republicans' willingness to hold the world's economy hostage to their draconian and cruel demands, and their refusal to consider one penny in new revenue from the wealthy and large corporations, has made it seemingly impossible to enact a bipartisan budget deal at this time."
"The debt ceiling is about paying money that has already been appropriated and spent. It has nothing to do with future budgets and future spending," he stressed. "And throughout the history of our country, the U.S. government has always done what it is supposed to do—we pay our debts."
"We can return to the path of progress. We can realize our ambitions for health and well-being for all," said António Guterres. "But only if the world works together... despite the tensions straining relations between nations."
"Progress is in peril."
That was United Nations Secretary-General António Guterres' warning Sunday to the 76th World Health Assembly.
Over seven decades ago, he noted, "countries came together and affirmed some fundamental truths: that peace depends on health; that disease in one nation endangers all; and that achieving the greatest possible health for everyone, everywhere relies on cooperation."
Since the creation of the World Health Organization (WHO), Guterres continued, "human health has advanced dramatically: global life expectancy—up over 50%; infant mortality—down 60% in 30 years; smallpox—eradicated; and polio on the verge of extinction."
But now, "war and conflict threaten millions. The health of billions is endangered by the climate crisis. And the Covid-19 pandemic has stalled, and even reversed, progress in public health," the U.N. leader said in a video address kicking off the assembly.
"We can return to the path of progress. We can realize our ambitions for health and well-being for all. But only if the world works together. If we cooperate, despite the tensions straining relations between nations," he stressed.
\u201cSmallpox \u2013 eradicated.\n\nPolio - on the verge of extinction.\n\nInfant mortality \u2013 down 60% in 30 years.\n\nHuman health has advanced dramatically since the birth of the @WHO, but now progress is in peril.\n\nWe can return to the path of progress but only if the world works together.\u201d— Ant\u00f3nio Guterres (@Ant\u00f3nio Guterres) 1684699200
Guterres called for "strengthening the independence, authority, and financing of the World Health Organization," and said that "it is vital to prepare for the health threats to come—from new pandemics to climate dangers—so that we prevent where we can, and respond fast and effectively where we cannot."
WHO Director-General Tedros Adhanom Ghebreyesus—who earlier this month declared Covid-19 over as a global health emergency—similarly urged international coordination during his welcome speech to the assembly. The agency leader said that "in 2020, I described Covid-19 as a long, dark tunnel. We have now come out the end of that tunnel."
"To be clear, Covid-19 is still with us, it still kills, it's still changing, and it still demands our attention," Tedros continued. The end of the emergency "is not just the end of a bad dream from which we have woken. We cannot simply carry on as we did before."
"This is a moment to look behind us and remember the darkness of the tunnel, and then to look forward, and to move forward in the light of the many painful lessons it has taught us. Chief among those lessons is that we can only face shared threats with a shared response," Tedros added. He stressed that the pandemic accord now being negotiated "must be a historic agreement to make a paradigm shift in global health security, recognizing that our fates are interwoven."
\u201cLIVE: Opening of the 76th World Health Assembly with @DrTedros. #WHA76 https://t.co/RwqX5YGr98\u201d— World Health Organization (WHO) (@World Health Organization (WHO)) 1684673003
As the assembly—scheduled through May 30—got underway in Geneva, Switzerland, Guterres was in Hiroshima, Japan, for the Group of Seven (G7) summit, where he also underscored the importance of global cooperation while speaking to the press on Sunday.
"My message to G7 leaders is clear: While the economic picture is uncertain everywhere, rich countries cannot ignore the fact that more than half the world—the vast majority of countries—are suffering through a deep financial crisis," Guterres said. "The crushing economic impact of the Covid-19 pandemic, the climate crisis, Russia's invasion of Ukraine, unsustainable levels of debt, rising interest rates, and inflation are devastating developing and emerging economies."
"There is a systemic and unjust bias in global economic and financial frameworks in favor of rich countries," he declared, highlighting that "access to Covid-19 vaccines was deeply unfair" and "the recovery has been extremely unbalanced."
While the U.N. chief argued that "it's time to reform both the Security Council and the Bretton Woods institutions," referring to the International Monetary Fund and World Bank, he also said that "even within the present unfair global rules, more can and must be done to support developing economies."
G7 countries are "central to climate action," Guterres said, noting the need for "faster timelines to phase out fossil fuels and ramp up renewables," an end to dirty energy subsidies, and financial support for developing nations that are disproportionately bearing the brunt of a crisis largely created by the Global North.
As Common Dreamsreported earlier Sunday, since G7 leaders on Saturday put out a communiqué addressing a wide range of topics, campaigners around the world have decried the statement's support for further investments in planet-heating gas, calling it "a blunt denial of the climate emergency."
Writers Guild of America members and local allies picketed outside while the crowd in the stadium booed David Zaslav and made clear to the industry executive that "we don't want you here."
As unionized film and television writers across the United States continue to strike, Warner Bros. Discovery president and CEO David Zaslav was met with critical chants both inside and outside of Boston University's Sunday commencement ceremony, during which he spoke and received an honorary degree.
After weeks of negotiating with Zaslav's company as well as Amazon, Apple, Disney, NBCUniversal, Netflix, Paramount, and Sony under the the Alliance of Motion Picture and Television Producers (AMPTP), the Writers Guild of America (WGA) launched the strike in early May, saying that "the studios' responses to our proposals have been wholly insufficient, given the existential crisis writers are facing."
That same week, BU announced Zaslav as a commencement speaker, sparking backlash from students, alumni, community members, and the WGA, East director of communications, Jason Gordon, who expressed "deep disappointment with the university over its poor decision" to provide the industry CEO with a platform.
"Boston University should not give voice to someone who wants to destroy their students' ability to build a career in the film and television industry," Gordon told
The Boston Globe. "The university should expect students, Writers Guild members, as well as other unions and community groups to picket Zaslav's commencement address."
WGA members delivered the promised picket with support from local allies, including members of BU Young Democratic Socialists of America (YDSA) and Boston DSA, who made signs that said: "F*!# Zaslav! Solidarity With the Writers."
\u201cSolidarity with the Writers Guild on strike! Out here with @Boston_DSA and @BU_YDSA comrades picketing Warner Bros. Discovery CEO David Zaslav\u2019s commencement speech at BU.\u201d— Mike Connolly (@Mike Connolly) 1684692373
\u201cAfter getting booed by BU students David Zaslav had to cross the WGA picket line and Scabby the rat on his way out of the VIP exit. Sorry not sorry.\u201d— Annie Stamell (@Annie Stamell) 1684698472
Within Nickerson Field, "boos and expletives rained down" on Zaslav, who graduated from the BU School of Law in 1985.
During his speech, the CEO did not address the ongoing strike, "or the several dozen students who turned their backs to him, and instead shared the strategies that helped him become one of Hollywood's most powerful figures," reportedBU Today.
\u201cWarner Bros. Discovery CEO David Zaslav was met by a huge WGA-DSA picket at BU's commencement today \u2014 with hundreds outside, plus Scabby and a plane, as BU grads turned their backs and drowned him in boos and chants\n\nPay your writers, David, and get the fuck out of Massachusetts\u201d— \ud835\uddea\ud835\uddfc\ud835\uddff\ud835\uddf0\ud835\uddf2\ud835\ude00\ud835\ude01\ud835\uddf2\ud835\uddff \ud835\uddd7\ud835\udde6\ud835\uddd4 \ud83c\udf39 (@\ud835\uddea\ud835\uddfc\ud835\uddff\ud835\uddf0\ud835\uddf2\ud835\ude00\ud835\ude01\ud835\uddf2\ud835\uddff \ud835\uddd7\ud835\udde6\ud835\uddd4 \ud83c\udf39) 1684709485
As The A.V. Club's Sam Barasanti wrote Sunday:
It seems like, for those of us who weren't there, that Zaslav's speech was as stunningly out-of-touch with reality as the decision to host him was in the first place, which speaks to a general contempt he seems to have for... oh, let's say everyone.
This is a man who was put in charge of a massive media empire, and the most notable things he has done with that power are burn money, dismantle one of the most prestigious brands in entertainment, double-dip on promoting J.K. Rowling, kick off the now-common trend of studios deleting content from their streaming services and making it completely inaccessible in some cases, and—how can we forget?—driving the writers who make his shows and movies to go on a strike that may soon lead to similar strikes from the DGA and SAG-AFTRA that would render Hollywood completely motionless.
According toThe Hollywood Reporter, "'We don't want you here,' 'Pay your writers,' and 'Shut up, Zaslav' could be heard emanating from the crowd, messages similar to the prepared chants for the picket, including some created by the school's YDSA chapter members and school students who were inspired by BU hockey chants."
\u201cEnjoy a free serotonin boost every time he\u2019s forced to pause!\u201d— DSA-LA's Hollywood Labor (@DSA-LA's Hollywood Labor) 1684696957
\u201cThe WGA is thankful to all the B.U. graduates for chanting "Pay your writers" at Warner Bros. Discovery CEO David Zaslav while he delivered the #BU2023 commencement address. #WGAStrike\u201d— Writers Guild of America, East (@Writers Guild of America, East) 1684698396
As The Hollywood Reporter detailed:
Students from BU's College of Communications, which houses its film and TV program, as well as the College of Fine Arts and some enrolled in the College of Arts and Sciences, were among those who had expressed interest or were expected to take part in the ceremony protest, according to Vanessa Barlett, a graduating senior who helped lead the student-led writers strike solidarity event inside Nickerson Field.
"I'm in the same college as a bunch of film and TV kids," Barlett, who studied political science and journalism and was among those who created the day's official chants, told The Hollywood Reporter ahead of the event. "I'm friends with a lot of people in the College of Fine Arts, people who are in the theater arts program, so having a sense of solidarity is very important to me."
Some progressive lawmakers also weighed in—including Sen. Bernie Sanders (I-Vt.), who tweeted that "if Warner Bros Discovery can afford to pay its CEO David Zaslav $286 million in compensation over the past two years, it can afford to pay its writers much better wages and benefits. Mr. Zaslav: Listen to the Boston University students and the Writers Guild. Pay your writers."
\u201c\ud83d\udc68\ud83c\udffc\u200d\ud83d\udcbc \u201cYou have to listen to people you disagree with\u201d\n\n\ud83d\udde3\ufe0f \u201cPay your writers!\u201d\n\n\ud83d\udc68\ud83c\udffc\u200d\ud83d\udcbc \u201cNo, not me. Not like that\u201d\u201d— Alexandria Ocasio-Cortez (@Alexandria Ocasio-Cortez) 1684707030
Striking workers' demands from studios, which include pay increases and limits on artificial intelligence, "would gain writers approximately $429 million per year," according to WGA. "AMPTP's offer is approximately $86 million per year, 48% of which is from the minimums increase."
This article has been updated with tweets from Worcester DSA, Sen. Bernie Sanders, and Rep. Alexandria Ocasio-Cortez.