2011 - %3, July

Double Dip Recession Starting to Look More Likely

| Thu Jul. 28, 2011 11:21 AM EDT

Earlier this week Britain announced that economic growth in the second quarter was an anemic 0.2%, within a hair's breadth of re-entering recession territory. But what about the rest of Europe? Today Edward Hugh passes along the latest Purchasing Managers Index figures for the Eurozone, a statistic that generally suggests the economy is expanding when it's above 50 and contracting when it's below 50. It's been dropping steadily for the past quarter, and in July registered just 50.8:

Outside of France and Germany, which are still expanding, though slowly, the rest of Europe is already below 50. "Even as growth in the core economies approaches stall speed, out on the periphery a new recession seems increasingly on the cards, and most importantly in countries like Spain and Italy which have so far managed to keep their heads just above the waterline. Growth in the second quarter of the year looks likely to have been minimal in both cases, and the outlook for the third quarter suggests we are entering a bout of economic shrinkage."

Click the link for the rest. Economic growth is slowing all over the world as we fiddle around with our insane, politically motivated debt ceiling fight. A double dip recession might still not be the betting choice, but it's hardly out of the question anymore.

Advertise on MotherJones.com

When the Home Front Takes Away Your Home

| Thu Jul. 28, 2011 10:19 AM EDT

For years, FHA and VA mortgages have made homeownership possible for military vets. Those service members' modest incomes often keep them from saving a large-enough down payment to secure a prime loan; the federal programs helped them find affordable financing that fit within their budgets.

Until the mortgage boom, that is. Private lenders managed to hawk subprime mortgages with ballooning payments under the FHA and VA umbrellas. Now, as more vets transition from the war zone to the home front, they're finding that they can no longer afford their homes.

Which is why you should read "Home From War and Facing Eviction," a riveting story of struggling vets and how the financial sector gamed the system to screw them. Written by Pulitzer winners Donald Barlett and James Steele, it comes via our partners at New American Media, and it's damned important. If you don't mind the pain of being rapped hard on your empathy bone, give it a look-see.

Herman Cain Apologizes for Anti-Muslim Positions

| Thu Jul. 28, 2011 9:51 AM EDT
GOP Presidential candidate Herman Cain

We've pilloried GOP presidential candidate Herman Cain in these parts for his insistance that Islam is incompatible with American values, his promise not to appoint any Muslims to his administration, and his belief that communities have the right to block religious groups (or at least Muslims) from building houses of worship. Cain, perhaps realizing that such bigotry has derailed a presidential campaign that really should have been focusing on health care reform instead, met with Muslim leaders in Virginia on Wednesday. Following the meeting, he released a statement declaring himself "humble and contrite," and apologizing for potentially offending Muslim Americans.

Here is his statement, in full:

I would like to thank Imam Mohamed Magid and the ADAMS Center for extending their hospitality to me this afternoon. We enjoyed heartfelt fellowship and thoughtful dialogue about how patriotic Americans of all faiths can work together to restore the American Dream.

While I stand by my opposition to the interference of shariah law into the American legal system, I remain humble and contrite for any statements I have made that might have caused offense to Muslim Americans and their friends. I am truly sorry for any comments that may have betrayed my commitment to the U.S. Constitution and the freedom of religion guaranteed by it. Muslims, like all Americans, have the right to practice their faith freely and peacefully.

As I expected, we discovered we have much more in common in our values and virtues. In my own life as a black youth growing up in the segregated South, I understand their frustration with stereotypes. Those in attendance, like most Muslim Americans, are peaceful Muslims and patriotic Americans whose good will is often drowned out by the reprehensible actions of jihadists.

I am encouraged by the bonds of friendship forged today at our meeting, and I look forward to continuing this very healthy dialogue. The relationship we established was so positive that the Imam has invited me back to speak to not only some of their youth, but also at one of their worship services.

If Cain's views on Islam really have changed, that's great. But from a leadership standpoint, the initial problem remains. Cain, despite running on a platform of constitutional conservatism, jumped to bigoted conclusions about American Muslims based on a handful of readily debunked conspiracy theories. When he condemned the construction of a mosque in Murfreesboro, Tennessee, he cited the attorney who filed suit to block it—an attorney who has also alleged that President Obama is attempting to raise the black flag of Sharia over the White House. When Cain tried to find examples of Islamic Sharia law being forced on American courts, he errantly cited a case in Texas (the case was actually in Florida), and seemed willfully ignorant of the fact that the case followed the same arbitration process that applies to all religious groups.

Cancer Rates Higher Near Mountaintop Removal Sites

| Thu Jul. 28, 2011 7:00 AM EDT

Communities near surface mining sites suffer much higher rates of cancer than other parts of West Virginia, according to a new study published this week in the Journal of Community Health. The researchers conclude that there are likely thousands of additional cases of cancer in communities near mountaintop removal sites.

West Virginia University researcher Dr. Michael Hendryx conducted the study in several West Virginia counties earlier this year, comparing rates in a county without mountaintop removal coal mining to two where the practice is taking place.

Jeff Biggers sums up the study over on Alternet:

"A door to door survey of 769 adults found that the cancer rate was twice as high in a community exposed to mountaintop removal mining compared to a non-mining control community," said Hendryx, Associate Professor at the Department of Community Medicine and Director of West Virginia Rural Health Research Center at West Virginia University. "This significantly higher risk was found after control for age, sex, smoking, occupational exposure and family cancer history. The study adds to the growing evidence that mountaintop mining environments are harmful to human health."

Nationally, 3.9 percent of Americans are cancer survivors, according to the Centers for Disease Control, but the rate in West Virginia is as high as 9.4 percent. This door-to-door survey found that the rate in the parts of the state affected by surface mining is actually 14.4 percent—a full 5 percent higher than the rest of the state. If the rates were projected across the 1.2 million people living in the region, that would mean as many as 60,000 additional cancer cases.

This report follows a study released last month from researchers at West Virginia University and Washington State University that also found higher rates of birth defects in communities near mountaintop removal sites. The ever-classy coal industry attempted to blame this on inbreeding rather than toxic mining pollution. I wonder what kind of defense they'll offer for this latest study.

Memo to Tea Party: The US Government's Budget is Not Like a Family's

| Thu Jul. 28, 2011 6:00 AM EDT

Tea party activists and members of Congress have a story they like to tell about the fight over raising the federal debt ceiling. It goes like this: If American families ran their households like the federal government, we'd all be bankrupt. It's a pretty common line. So when the Tea Party Express took to Capitol Hill on Wednesday for a hastily arranged (and sparsely attended) rally to urge Republicans to "hold the line" in the debt ceiling fight, it was no surprise that the family-government comparison was on everyone's lips.

"I really equate it to the family," Cindy Chafian, a mother of five who recently moved to Virginia, told me after speaking at the rally, which also drew tea party luminaries like Sens. Rand Paul (Ky.) and Jim DeMint (S.C.). Chafian, who founded a new organization called the Mommy Lobby, acknowledged that government spending cuts can be painful—just like when a family that has to cut expenses, or when she tells her kids they can't go to the movies because they can't afford it. But over the long run, Chafian said, things work out and get better.

Melissa Ortiz, the founder of a new group, Able Americans, and a proud disabled tea party stalwart, echoed similar sentiments. "If you raise [the debt ceiling], it's just like getting a new credit card," she said, arguing that families have to live within their budgets and the government should too.

The family-to-government comparison is appealing. But in practice, there are huge differences between the federal government and the average nuclear family. "If you want to compare the government to anything, compare it to a business. Typical businesses borrow money and they never pay it off," argues Dean Baker, the codirector of the Center for Economic and Policy Research. Baker says a corporate board would think a CEO was out of his mind if he came to them and announced that while the company lost money, it had paid off its debt. "Maybe the government is more like AT&T than like me and Joey."

Baker explains that if tea partiers want to frame the debt debate in terms of family finances, they'd be better off to compare the debt ceiling issue to having signed an apartment lease. "We're arguing on whether we're going to send in the rent check," he said. "We're deciding whether we're going to pay our bills or screw someone. We're talking about making payments on commitments we've made."

The tea partiers, though, don't seem inclined to view the debate that way, or even to acknowledge that most families have tons of debt they never pay off, namely in the form of big mortgages. They also don't seem willing to acknowledge that sometimes even a family strapped for cash will seek out a revenue solution, like a second job, akin to the government raising taxes. None of the tea partiers I spoke with was willing to entertain the idea of, for example, letting the Bush tax cuts expire. One man, who was volunteering for a tea party candidate running for a Virginia Senate seat and declined to give his name, even expressed deep cynicism that raising taxes would even do any good. Big companies like GE don't pay taxes now, he said, so why would they pay taxes if they went up?

Still, the handful of tea partiers who came to Capitol Hill Wednesday didn't seem quite as willing to drive the economy into a ditch as some media coverage has implied. Chafian, for her part, says, "I'd like to not see [the debt ceiling] raised, but I'm also a realist." Her husband is a 19-year veteran of the US Navy, so she understands the implications of the government running out of money. If the debt negotiations fail, her family may have to cut its spending. Even so, she still wants to see Congress bring spending more in line with revenue, and also to pass the balanced budget amendment, even though she realizes that making it official would be a long, drawn out process.

The tea partiers also weren't entirely united about the performance of House Speaker John Boehner (R-Ohio), who has been under fire from some tea party groups for not pushing hard enough against raising the debt limit under any terms. "I think he's doing the best he can with what he has to work with," Ortiz says. Just like a family?

Your Chicken Nuggets Are Killing Your Crab Cakes

| Thu Jul. 28, 2011 6:00 AM EDT

Every year in the Chesapeake Bay, an algae bloom spreads out, sucking oxygen out of the water and destroying fish habitat. This year's "dead zone" stretches from Baltimore Harbor to south of the Potomac River, the Washington Post reports. It's on track to become the bay’s largest ever. Already, fully a third of the bay—once one of the globe's most productive fisheries—is incapable of supporting sea life.

Meanwhile, down the Gulf of Mexico, the same thing is happening on an even grander scale. According to Texas A&M University researchers, this year's Gulf dead zone blots out 3,300 square miles of our nation's most important fishery—"roughly the size of Delaware and Rhode Island combined," they calculate. Before the year's out, it could as much as triple in size, the researchers fear, which would make it the Gulf's largest hypoxic (oxygen-depleted) area ever.

Why such huge dead zones this year? The immediate cause is heavy rains in both the Midwest and the Northeast, which wash vast amounts of nutrients down streams and rivers and into the sea at key river delta areas like the Chesapeake and the Gulf. There, the nutrients provide a feast for algae, and voilà, dead zones.

But the ultimate source of the nitrogen and phosphorus that feed the algae blooms is industrial agriculture: millions of acres of fertilizer-guzzling corn farms in the Mississippi River watershed and massive concentrations of chicken farms right on the banks of the Chesapeake.

Advertise on MotherJones.com

We're Still at War: Photo of the Day for July 28, 2011

Thu Jul. 28, 2011 6:00 AM EDT

"Rainbow Runners"

Cadets and staff assigned to Cadet Field Training finished their summer detail with a run-back from Camp Buckner to the steps of Washington Hall, July 22, West Point N.Y. After the runners came through Washington Gate they were cooled down by the West Point Fire Department. Lt. Gen. David H. Huntoon Jr. ran with the group and spoke to the CFT detail at the completion of the run. (Photo by Tommy Gilligan/West Point Public Affairs)

Breaking Down the Lucky Duckies

| Thu Jul. 28, 2011 1:57 AM EDT

The other day I wrote about the zombie lie that half of Americans pay no taxes. This is something conservatives repeat routinely, somehow forgetting repeatedly to explain that what they really mean is that half of Americans pay no federal income tax but do pay plenty of other taxes. When you call them out on this wee mistake they tend to get offended — though somehow, never quite offended enough to stop saying it.

But put that aside. Even stated accurately, you might be wondering how it is that so many people end up not paying any federal income tax. Today the Tax Policy Center has the answer for you. In 2011 they estimate that 46% of Americans will pay no federal income tax. Donald Marron breaks this down:

  • 23% pay nothing because they're poor. A couple making less than $19,000, for example, doesn't owe anything after their $11,600 standard deduction and two exemptions of $3,700 each reduce their taxable income to zero. As Bob Williamson puts it, "The basic structure of the income tax simply exempts subsistence levels of income from tax."
  • 10% are elderly and pay nothing because their Social Security benefits are exempt from federal income taxes.
  • 7% pay nothing thanks to provisions in the tax code designed to benefit low-income families: the earned income tax credit, the child credit, and the childcare credit account.

And the other 6%? Their taxes are zero for a variety of reasons: above-the-line deductions and tax-exempt interest; itemized deductions; education credits; other credits; and reduced rates on capital gains and dividends. TPC's report has all the gruesome details.

But for the vast bulk of nonpayers, the explanation is simple: the federal tax code is designed not to tax the poor, the elderly, or low-income families with children, and there are more of these in America than you'd think. One way or another, it turns out, this accounts for about 40% of the country.

Russian Diplomat: GOP Senators Are "Cold War Monsters"

| Thu Jul. 28, 2011 1:13 AM EDT

From Foreign Policy via Ink Spots, here's a full-tilt tizzy between a high-ranking Russian official and two Republican senators:

Dmitry Rogozin, Russia's ambassador to NATO, met with [Sens. John Kyl (R-Ariz.) and Mark Kirk (R-Ill.) yesterday in Washington—but they probably won't be meeting again anytime soon...

"Today in the Senate, I met with Senators Jon Kyl and Mark Kirk. The meeting is very useful because it shows that the alternative to Barack Obama is a collapse of all the programs of cooperation with Russia," he said. "Today, I had the impression that I was transported in a time machine back several decades, and in front of me sat two monsters of the Cold War, who looked at me not through pupils, but targeting sights."

Rogozin was sauced because of the GOP's longstanding opposition to US-Russia cooperation on nuclear weapons and missile defense, as evidenced by the party's initial attacks on the new START treaty late last year. (As FP's Josh Rogin points out, it could also be because Russia doesn't appreciate the US insistence on human rights reforms or its support for neighboring Georgia.) For his part, Kirk didn't take the criticism so well:

"You could say that we're just not that into him," Kirk said. "In a potential missile combat scenario between NATO and Iran, Russia is thoroughly irrelevant. So Russian concerns about what we do and not do about the Iranian threat are interesting but largely irrelevant."

Regarding Rogozin's comment that Kirk and Kyl were "radicals" and "monsters of the Cold War," Kirk said, "He should probably moderate his caffeine intake."

As Ink Spots blogger Gulliver argues, calling one of the most-heavily armed nuclear powers in human history irrelevant to a missile war is pretty nutters. But then, Mark Kirk never was one for getting military matters right.

Setting the Economy on Fire

| Wed Jul. 27, 2011 8:35 PM EDT

If the United States defaults on its debt, its credit rating will be downgraded catastrophically by every ratings agency. That's not going to happen because the United States isn't going to default, but Standard & Poor's has warned that it might downgrade U.S. debt regardless. Even if there's no default, says S&P, it might take action if Congress fails to credibly cut the long-term deficit by $4 trillion.

So how worried should we be about this? The answer comes from two places. First this from Time's Massimo Calabresi:

S&P is an outlier among the top three ratings agencies: Moody’s and Fitch say they won’t even consider a downgrade unless there’s a danger of an actual default.

And this from the mysterious Wall Street lawyer who writes Economics of Contempt:

So even if S&P follows through on its threat — and frankly, I suspect it's just a bluff — it probably won't have any immediate effect on the market for U.S. bonds. Pension funds won't have to engage in a massive sell-off, state and local bonds will be fine, and life will go on.

In other words, the threat of actual default is nil, and the threat of downgrade is pretty close to nil too. This goes a long way toward explaining why bond markets aren't panicking over the debt ceiling fight.

The real danger, of course, is different: shutting down the government for any extended period would likely have a disastrous effect on our still weak economy. Unfortunately, keeping the government operating at the cost of passing the deficit deals currently on the table would probably also be pretty disastrous. We are, for no good reason, deliberately setting our economy on fire. It's insane. Nero may have fiddled while Rome burned,1 but at least he didn't set the fire himself.2

1Though probably not, actually.

2Then again, he might have.