When the developed world all but gave up on Haiti six years ago after pouring billions into the desolately poor, still failed state, Grammy-winning hip-hop artist and Haitian native Wyclef Jean began lobbying Washington to change its mind. When violence between rival gangs in Port-au-Prince reached a fever-pitch four years ago, Wyclef stepped in to personally negotiate a truce between some of the warring factions. And after learning that his homeland had been struck by a deadly earthquake, Wyclef once again sprang into action to help his people, this time by calling on the public—through a flurry of tweets—to make $5 earthquake recovery donations by texting 501501. 

The charge from this philanthropic text will go straight to your cell phone bill, and the donations will go straight to earthquake relief efforts through Wyclef's charity Yele, which he started in 2005 with a quarter million dollars of his own money, according to a 60 Minutes special which aired in January 2009 about Wyclef's ongoing efforts to help Haiti. So many people responded to the former Fugee's call to action that the Yele site was temporarily down earlier today. The term "Yele" comes from a Haitian Creole word meaning 'to yell,' and asked by CBS's Scott Pelley why he chose this name for his charity, Wyclef responded "Because I want you to hear us."

It's been one day since the 7.0 magnitude quake struck just 10 miles outside Port-au-Price, but Wyclef has already returned to his homeland through its neighbor the Dominican Republic to focus on family, finding and assisting Yele staff and general disaster response, the Los Angeles Times reports. "I cannot stress enough what a human disaster this is, and idle hands will only make this tragedy worse," said Jean in a statement on the charity's Web site. "We must act now... Haiti needs your prayers and support."

Yele spends $100,000 a year on athletic programs for Haitian children and helps feed 50,000 people a month with food donated by the UN. The nonprofit also offers much-needed jobs to people in Cite Soleil, one of the world's most notorious slums. Don't forget to check out James Ridgeway's piece about how Bush-Cheney policy screwed Haiti and MoJo human rights reporter Mac McClelland's advice on how you can help.

 

For updates on Haiti, follow Mac on Twitter.

 

 

Our Grim Future

The Center on Budget and Policy Priorities — which desperately needs a more user-friendly name, by the way — says that our long-term federal deficits are unsustainable. In order to get them to sustainable levels we need a combination of tax increases and spending cuts equal to about 4.9% of GDP. Here's a start:

If policymakers were to allow all of the 2001 and 2003 tax cuts to expire as scheduled at the end of 2010 — or fully offset the cost of extending those tax cuts they choose to extend — this alone would shrink the fiscal gap by almost two-fifths, from 4.9 percent of GDP to 3.0 percent.

Sounds good. Except that this would take us back to the fiscal hellscape of the late Clinton era, and who wants that?

The CBPP report is pretty discouraging, but the really discouraging thing about it is this: "Policymakers should also expect to return to long-term deficit reduction multiple times over coming decades; the problem is far too large to address in a single legislative package." Strictly speaking, this is true: you wouldn't want to literally do this in a single piece of legislation. But if we were even close to having a sane political class in this country, it wouldn't be that hard to hit this target: (1) Let the Bush tax cuts expire. Nobody was overtaxed in the 90s. (2) Do a conventional fix for Social Security. This would be good for another 1% or so. (3) Get serious about reining in Medicare costs. Squeezing another 1% via Medicare changes wouldn't be that difficult if both parties were willing to treat it as a real problem instead of a chance for demagoguery. (4) Add in a modest assortment of spending cuts (smaller military, unprivatized student loan, reduced ag subsidies) and revenue increases (estate taxes, carbon taxes, financial transaction taxes) and you'd get the rest of the way there. If you don't like these suggestions, feel free to sub in your own ideas here.

For a country as big and rich as the United States, this stuff isn't even very painful. We could do it in a single legislative session and 99% of the country would barely notice the effects. And yet it's the next best thing to impossible. It doesn't speak well for our future.

Will Cape Wind finally get the green light after nine years of delays? It now looks like Interior Secretary Ken Salazar will make the ultimate decision on what could be the country's first offshore wind farm.

Salazar hosted meetings between the parties involved in a hotly contested dispute over whether to build the 24-square-mile, 130-turbine wind farm in the Nantucket Sound. Earlier this month the National Park Service determined that the sound could be considered for listing in the National Register of Historic Places in response to a request from local Native American tribes. But the tribes were just the wind farm's newest opponents: a campaign backed by dirty energy interests has been trying to thwart the project for nearly a decade.

Salazar brought together the Cape Wind developer, the tribes, state and national historic preservation officers, environmental groups, local governments, and other key parties together in Washington on Wednesday. Salazar said the agency has decided to extend the public comment period on the project until Feb. 12. The involved parties have until Feb. 28 to reach a resolution on how to progress. Changes to the project—like reducing the total number of wind turbines or changing their color or their arrangement—have been listed as possible measures to address opponents' concerns. So far, opponents have held firm that they do not want the turbines in the sound.

If the parties can't reach an agreement, Salazar and the Department of Interior will make a final determination on the project, taking into consideration both the need for renewable energy development and the responsibility to protect historic locations. That decision will be reached in April, Salazar told reporters following the meetings. "We will bring this process to conclusion," said Salazar. "I think 9 years after an application was filed with the United States government ... to have it face a future of uncertainty is bad for everybody."

 

During a trip to Afghanistan this week, Sen. Carl Levin (D-Mich.), the chairman of the Armed Services Committee and a skeptic of the president's troop surge, says he saw a number of positive signs. Speaking to reporters via conference call from Dubai, where he was awaiting a flight back to Washington, Levin said he saw "real partnering going on" between coalition and Afghan forces, sensed "a significant increase in optimism about the possibility of success," and believed the military's "counterinsurgency strategy is taking hold." According to Levin, Lt. Gen. William Caldwell, who's in charge of the effort to train the Afghan army and police, told him that President's Obama's deadline for transitioning US forces out of Afghanistan had provoked an immediate and "stunning" response from Afghan leaders.

That had a very positive effect on the Afghan leadership and focused their energies on, for instance, obtaining a larger number of recruits for their army... It was such a large increase that they couldn't even handle them physically... Gen. Caldwell was very clear that the reason that happened was because the Afghan leaders realized that President Obama was serious and meant business when he said that the commitment here is not open-ended.

The American Farm Bureau Federation—the powerful agricultural lobby group already waging war on congressional efforts to fight climate change—yesterday adopted a formal resolution condemning both pending cap-and-trade legislation and the Environmental Protection Agency's anticipated regulations of carbon emissions.

The resolution, approved at the AFB's annual meeting, "strongly opposes" cap-and-trade legislation in Congress and "strongly supports any legislative action that would suspend EPA's authority to regulate greenhouse gases under the Clean Air Act."

The resolution also refers to the "ClimateGate" hacked email controversy as evidence of "just how unsettled the science really is on climate change." It also argues that the emails demonstrate the "unwillingness of many of the world’s climatologists to share data or even entertain opposing viewpoints." Yet the vast majority of climatologists estimate that agriculture is one of the industries that will suffer most from warming global temperatures.

Meanwhile, the US Department of Agriculture estimates that, under the climate legislation passed in the House last year, farmers will receive an additional $75 million to 100 million each year from 2012 to 2016 to reduce their emissions. The market for offsets created by the bill could also generate income for farmers of $1 billion per year between 2015 and 2020, and $15 to 20 billion annually from 2040 to 2050.

AFB's resolution was unanimously approved by the 369 delegates at the AFB's annual summit. The full resolution is below the jump.

Caitlin Flanagan's new hit piece in The Atlantic suggests that school gardens are no more than modern-day sharecropping programs, shuttling Hispanic youth to migrant labor rather than higher education and academic excellence. The ever-incendiary mouthpiece of the reactionary does get some things right: It's true that Alice Waters' cachet—she's close with the Clintons, Prince Charles has toured the grounds of her Edible Schoolyard—has meant school gardens have gained in resources, in visibility, and in coverage exponentially since the 90s. Also true that Waters takes a "foodie first" approach, she wants kids to learn about food, but not just any food, foie gras on every plate is more like it, which isn't all that practical and replicable (the latter my point, not Flanagan's). She also points to the rapid rise of school garden programs even in the face of dwindling state budgets, a result of gardens being buoyed financially for their obesity-fighting, nutrition-teaching features. (This is true, but much of this funding comes from foundations, so it's not like schools are cutting history classes to buy garden hoes.)

On the whole, like in many of Flanagan's pieces, she's more inflammatory than thoughtful, or even evidence-based. She points to the fact that kids in California schools are floundering, and to the fact that gardens are on the upswing, and concludes that gardens do kids no favors when it comes to prepping them to step out of serfdom. She distills the "fad" down to a simple question, wondering how gardens will make kids smarter:

From Harold Ford, who recently moved from Tennessee to New York and is running for the Senate:

Q. Have you been to Staten Island?

A. I landed there in the helicopter, so I can say yes.

And from Harry Reid, on whether it was a good idea to negotiate over healthcare reform with Olympia Snowe:

As I look back it was a waste of time dealing with her, because she had no intention of ever working anything out.

For the record, I once stepped off the Staten Island Ferry and walked around for a few minutes before taking the next ferry back, and a couple of years ago I spent several hours crossing Interstate 278 in a massive traffic jam on my way to JFK. So I've been to Staten Island too. And I don't think Olympia Snowe was ever very serious about healthcare reform either — at least, not based on the lame excuse she gave for not supporting the final Senate bill even after it was redrafted to her liking.

Asked by a member of the Financial Crisis Inquiry Commission about whether there was a singular event—the Gramm-Leach-Bliley Act, say, or looser capital requirements at banks, or the staggering decline in underwriting standards—that led to the financial meltdown, Peter J. Solomon, a veteran investment banker, had this to say:

"It was a perfect storm from inside. It was a confluence. If you listed the number of villains in this tale, you wouldn't have a plot."

Solomon's remark, delivered in the second of the FCIC's three hearings today, came amidst a much livelier debate from three finance experts not tied to the big supermarket banks or investment houses on the causes of the crisis. For more on that and the third hearing, check back here at the MoJo blog a bit later today.

 

Yesterday I wrote a post arguing that stagnating middle class wages were a partial reason for the increase in borrowing that helped fuel the housing bubble of the aughts. Scott Winship says that can't be right because, in fact, middle class wages haven't stagnated. Among other things, Scott suggests that household incomes have actually risen considerably; that CPI is a poor measure of inflation; that fringe benefits like healthcare need to be part of the wage calculation; and that government benefits should also be counted.

This deserves a detailed response someday, but in the meantime allow me to revise and extend my remarks a bit with the help of Mike Konczal. Briefly, I think that CPI is still the most reliable measure of inflation we have, that fringe benefits change the picture only modestly (though they certainly ought to be included in any calculation of total earnings), and that government benefits shouldn't be counted because we should primarily be interested in how the private economy is treating workers, not on what the government is doing to make up for its massive imbalances. My strong preference is for an economy that treats workers decently in the first place, not one in which workers get screwed and we make up for it with lots of forced income redistribution.

These are all debatable issues. But for now I want to focus on using household income as a proxy for middle class income. It's true that median household income has increased since 1973, but a big part of that growth was driven by the entrance of women into the workplace, which itself was (partially) a response to stagnating wages. However, this dynamic was largely played out by the late 90s, while wages continued to stagnate. So what happened then? Mike Konczal provides the chart on the right, which shows us. Household income did rise through the late 90s, but it peaked around 1999.1 And when it flattened out, consumer borrowing started to skyrocket.

So the story is revised like this: incomes began stagnating in the early 70s, and the first response was for women to enter the workforce in order to contribute more to household income. After that dynamic had mostly run its course, the only way to keep incomes rising was to start borrowing more. And that's what happened. The rich, whose earnings have skyrocketed during this entire period, basically loaned money to the middle class to buy bigger houses and better TV sets, and eventually it all came crashing down.

To be absolutely clear here, I'm offering this mainly as a provocation, not as an idea I'm completely wedded to. Nor is it anything like a complete explanation. It's just one piece of the puzzle — and if you're interested in this stuff you should be sure to read both Scott's and Mike's entire posts. But I suspect there's something real going on here, and I'd sure like to see some serious economists do some real work on it.

In any case, per capita GDP in the United States has increased by about 90% since 1973. I prefer to focus on individual incomes since household incomes are distorted by things like composition and hours worked, but even if you disagree, a 30-40% increase in household income looks pretty anemic compared to the magnitude of overall economic growth. Bottom line: When the rich get too much money too fast, they do dumb things with it, and in the recent past those dumb things were even dumber than usual. We'd all be better off if economic prosperity were more widely shared and the middle class could fund lifestyle improvements out of wages instead of borrowing ever more from wealthy classes with massively growing pools of idle cash. It's better economics, better policy, and just plain better for the country.

1If you add healthcare benefits to Mike's chart, it changes a bit. But the basic structure remains about the same.

FCIC's Dull Opening

Like boxers sizing each other up and tossing the occasional jab, the opening hearing of the Financial Crisis Inquiry Commission got off to fairly predictable start this morning, with four of the biggest executives on Wall Street—Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John Mack of Morgan Stanley, and Brian Moynihan of Bank of America—outlining their reasoning for why the meltdown happened and fielding questions on anything from lending practices to risk management to compensation from the 10-person commission.

The four Wall Street execs almost unanimously agreed in their prepared testimonies that the root of the financial crisis lay in the housing market, and more specifically, in predatory and reckless practices and products, like not verifying a borrower's income for a loan or peddling mortgages where you can pick how much to pay or interest rates drastically reset after a few years. Those kinds of practices fueled a massive housing bubble, Dimon said, which in turn "helped fuel asset appreciation, excessive speculation and far higher credit losses" that spread throughout the financial markets. As banks and investors kept making larger and larger bets on both housing and other markets, they failed to adequately managing the risks that accompanied those outsized bets should they fail, Blankfein said, and when the housing bubble popped and so many of those risky bets soured, institutions like Lehman Brothers and Bear Stearns collapsed.

Boiled to its essence, that was what the four execs pointed to as the main root cause of the crisis. Aside from that, however, the morning's questioning didn't shed much light on anything. Daniel Indiviglio at The Atlantic bemoans FCIC chairman Phil Angelides' apparent lack of finance know-how in his questioning of Blankfein (which I mostly agree with); and to be honest, none of the FCIC's commissioners—barring perhaps former CBO director Douglas Holtz-Eakin—seemed to ask anything that hadn't been covered before. Former congressman Bill Thomas did request that all four men to answer the questions featured in today's New York Times op-ed page—questions far more probing than what the FCIC asked.

But in all fairness, the commission is just getting warmed up and I'm sure their work will only get better going forward. Especially if do the gritty, investigative work that my colleague Nick Baumann writes about today, like subpoenaing documents and records and even tracking down whistleblowers for testimony. That'll bring out the juicy details that can really shed some light on what happened behind the scenes, the kind of decisions and actions that Lloyd Blankfein or Jamie Dimon are never going to share.