Mojo - December 2009

We're Still at War: Photo of the Day for December 9, 2009

Wed Dec. 9, 2009 7:31 AM EST

US Army Spc. Leo Leroy gets a kiss from Regina Leroy and a bow-wow welcome from dogs Yoshi and Bruiser at a homecoming ceremony on Fort Hood, Texas, Nov. 28, 2009. Leroy, assigned to E Forward Support Company, 1st Battalion, 12th Cavalry Regiment, returned after a year in Qayarrah in northern Iraq. (US Army photo by Spc. Sharla Lewis.)

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Need To Read: December 9, 2009

Wed Dec. 9, 2009 7:30 AM EST

Today's must reads:

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Elouise Cobell's Bittersweet Victory

| Wed Dec. 9, 2009 2:37 AM EST

A break from the Copenhagen news now to note a quietly momentous development regarding one of the largest and longest-running class action lawsuits in American history. I first wrote about the mind-boggling intricacies of this suit, brought by Elouise Cobell, a Blackfeet banker of incredible courage and tenacity, in MoJo four years ago.

It took 13 years and four named defendants (Cobell v. Salazar, Cobell v. Kempthorne, Cobell v. Norton, Cobell v. Babbitt) spanning three presidents (Clinton, Bush II, Obama), for Elouise Cobbell to win her suit againt the federal government for mismanagement of the Individual Indian Trust.

In a nutshell, the feds lost or otherwise never paid hundreds of thousands of Indian plaintiffs the monies owed them on lands they owned but were "managed" by the government for their mineral rights (think: oil wells) and agricultural rights for more than 100 years. Cobell's forensic accountants estimated the government owed the Indians $176 billion.

Well, today, at long last, a settlement was reached with the Department of the Interior and the Department of the Treasury for a fraction of what Cobell believes the Indians were owed. Nevertheless, the federal government has now agreed to create on behalf of the Individual Indian Trust:

  • A $1.4 billion Trust Accounting and Administration Fund
  • A $2 billion Trust Land Consolidation Fund
  • A $60 million federal Indian Education Scholarship fund to improve access to higher education for Indian youth
  • Plus a commitment to appoint a commission to oversee and monitor specific improvements in the Department’s accounting for and management of individual Indian trust accounts and trust assets, from now on

The settlement is believed to be the largest ever against the federal government and dwarfs the combined value of all judgments and settlements of all Indian cases since the founding of this nation. That's the good news.

But as Elouise Cobell says:

"Indians did not receive the full financial Settlement they deserved, but we achieved the best Settlement we could. This is a bittersweet victory, at best, but it will mean a great deal to the tens of thousands of impoverished Indians entitled to share in its financial fruits, as well as to the Indian youth whose dreams for a better life, including the possibility of one day attending college, can now be realized."

 

Two Big LGBT Endorsements For Sestak

| Tue Dec. 8, 2009 7:20 PM EST

Two important endorsements came through for insurgent Pennsylvania Senate candidate Rep. Joe Sestak yesterday, prompted by his progressive stance on LGBT issues, especially “Don’t Ask, Don’t Tell.” Outspoken opponent of the policy Lieutenant Dan Choi and openly gay Rep. Barney Frank (D- Mass.) both announced their support.

The press release for Choi’s endorsement was reprinted on the blog Pam’s House Blend:

"Putting the Army-Navy rivalry aside, I'm here to support Joe Sestak," Choi said. "Joe understands that equal rights for gay and lesbian people is the civil rights test of our generation. As the highest ranking Veteran ever elected to Congress, he spent 31 years serving our country in the Navy fighting for our rights. He has been a leader in working to end "Don't Ask, Don't Tell," and as Pennsylvania's next Senator, Joe Sestak will continue to put principle over politics."

Frank, who is the first member of Congress to back Sestak, also said at a Philadelphia press conference yesterday that he admires Sestak’s stance on “Don’t Ask, Don’t Tell.”

Sen. Arlen Specter (D- Pa.), who Sestak will challenge this November, also opposes the policy and recently called for repeal of the Defense of Marriage Act (even though he voted for it in 1996). However, some of Specter's colleagues, Barney included, have criticized his party switch from Republican to Democrat earlier this year. In his endorsement, Frank pointedly called Sestak a “true Democrat,” and added "I have to say I don’t think it did our profession any good for [Specter] to announce that he switched parties purely so he could survive."

Specter helped the Democrats secure their 60-seat majority in the Senate, but with members of Congress suggesting his party allegiance is disingenuous, I wouldn’t be surprised to see Sestak keep gaining momentum in his drive to overtake Specter in the 2010 election.

While we're on the subject of "Don't Ask, Don't Tell," see yesterday's Q&A with author and researcher Nathaniel Frank.
 

Obama's Jobs Speech Raises Troubling Questions

| Tue Dec. 8, 2009 6:41 PM EST

President Barack Obama has spent much of his term, from the stimulus bill pushed through shortly after he took office, up to this morning's speech on jobs at the Brookings Institution, trying to show the public that he is serious about reducing the unemployment rate. Today, with 15.4 million Americans looking for work and tens of millions more joining the ranks of the long-term unemployed, the president announced a series of small business tax cuts, infrastructure investments, and aid measures to build on the Recovery Act, which the nonpartisan Congressional Budget Office estimates has already saved or created some 1.6 million jobs. The speech, which a senior administrative official said was primarily intended to "get ideas out there," was encouraging but left many questions unanswered.

The components of Obama's new jobs plan that were apparently intended to appeal to his Democratic base were the green building and aid measures. In a statement issued shortly after the speech, Lawrence Mishel, the president of the progressive Economic Policy Institute, noted that he was "particularly enthusiastic about the president's proposals for infrastructure investments and assistance to state and local governments." The speech also included support for a much-discussed "cash for caulkers" program modeled on the popular cash for clunkers scheme. There are questions about how Congress would motivate homeowners to take part. After all, consumers are more accustomed to purchasing cars than insulation. But Dean Baker, the director of the Center for Economic and Policy Research, said he was still "fairly certain" cash for caulkers would stimulate job growth. The public's response will largely "depend on how generous we're prepared to make [the subsidies]," Baker added.

The Problem With Derivatives

| Tue Dec. 8, 2009 5:00 PM EST

Last week, the Project on Government Oversight (POGO), a Washington nonprofit group, wrote to House Agriculture committee chairman Collin Peterson (D-Minn.), warning him that he was in danger of gutting his own bill. The bill in question supposedly aims to regulate derivatives, the complex financial products that some people believe bear part of the blame for the financial crisis.

You've probably heard of a futures contract, a promise to trade a certain asset at some point in the future, like the frozen concentrated orange juice contracts Dan Akroyd and Eddie Murphy deal with in the movie Trading Places. Most futures and other relatively simple types of derivatives are already traded on exchanges like the Chicago Mercantile Exchange. That means the contracts are somewhat standardized and it's easier to see how much certain derivatives are worth and how much exposure derivative holders have.

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The Public Option That Isn't Public At All

| Tue Dec. 8, 2009 4:54 PM EST

As I predicted some time ago, the interminable smoke and mirrors game going on in Congress will most likely end with the adoption a "public option" that isn't public at all. In fact, it resembles the plan first proposed by the Heritage Foundation, premier architects of conservative policy, back in the 1980s under Reagan. Then, as now, the scheme essentially imitates the Federal Employees Health Benefits program, which gives people a choice of various private insurance company plans, sanctioned by an independent authorizing board. There is nothing really public about this program. In fact, it keeps access to health care firmly within the grip of the private insurance industry. And it isn't cheap either: Some federal employees have opted out because they can't afford their share of the costs.

This is the Democrats' idea of a "compromise"--not with the Republicans, but with the so-called moderates within their own party. A group of ten Democratic senators (ten liberal, ten not) huddled over the weekend to work out plan that could get through the Senate, and President Obama paid a "rare Sunday trip" to Capitol Hill to drum up party unity on the issue. What came out of all this is a public option so weak that it seems more like a last-ditch piece of political face-saving than a genuine effort to improve access to health care. Here is how the Washington Post on Tuesday described the deal:

Sen. Ben Nelson, D-Neb., said the idea is on the table as part of an emerging compromise under which liberals would back away from their demand for a new government health insurance plan to compete with private carriers. Instead of a so-called public plan, the compromise envisions private insurers operating under the auspices of the government agency that now manages the federal employee health plan--the same one that covers members of Congress.

ArmorGroup Loses Kabul Embassy Contract

| Tue Dec. 8, 2009 4:00 PM EST

The Animal House antics of ArmorGroup North America's guards have cost the company its 5-year, $189 million State Department contract to protect the US embassy in Kabul. Following a months-long review, the agency has decided it won't renew the contract, as it has done for the past two years, when it comes due in June, according to State Department spokesman Fred Lash. "The department's Office of Aquisitions Managment, Bureau of Diplomatic Security, and Embassy Kabul reviewed the contract and concurred that the next option year should not be excercised and that work should begin immediately to compete a new contract," Lash told me.

This turn of events won't come as much of a surprise to anyone who's viewed the lewd pictures of the company's personnel engaged in all manner of bacchanalian behavior. But the real question is why it took an international incident for the State Department to remove AGNA from the embassy job in the first place. Serious complaints about AGNA's performance emerged almost as soon as the company took over security at the embassy in the summer of 2007. That July, the State Department sent the first of at least nine warnings to the company, this one noting that "deficiencies" in AGNA's work were of such magnitude that "the security of the U.S. Embassy in Kabul is in jeopardy." For nearly two years, the agency continued to warn ANGA repeatedly about its performance and even threatened to replace the company, yet twice renewed the contract. Worse still, according to a lawsuit filed by AGNA's former director of operations, James Gordon, the State Department was alerted way back in June 2007 that AGNA recruits were engaging in the very same variety of "lewd, aberrant, and sexually deviant behavior" that ultimately ended up embarassing the Obama adminstration in September, after the Project on Government Oversight exposed a pattern of misconduct and performance lapses by the company in a letter to Secretary of State Hillary Clinton.

"The State Department seems to be holding this Embassy security contractor accountable,” POGO's executive director, Danielle Brian, said in a statement. “But State will need a real culture change before it can provide adequate oversight of these complex and challenging contracts.”

ArmorGroup employees were informed of the State Department's decision on Monday in an email that was obtained by POGO and written by Frank Schaddellee, the deputy project manager at Camp Sullivan, where ArmorGroup's personnel live (and, prior to the embassy scandal, held wild parties). "Changing out contractors is primarily a political decision based on the unfortunate and embarrassing events that occurred here several months ago," Schaddelee wrote. "There are serious consequences when things like that happen."

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In Iraq, Gear Gets Left Behind

| Tue Dec. 8, 2009 2:57 PM EST

Ernesto Londoño’s article in the Washington Post yesterday details a controversy over military gear worth tens of millions of dollars being donated to the Iraqi government. Cue arguments in the Pentagon: One military official thinks this fails to account for the need for similar items in Afghanistan, while the chief of staff for the ground forces command in Iraq says it’s more cost-effective to donate such items to the Iraqi government than to ship them out. Others express concern that equipment left behind could be looted.

In our 2007 package on the many problems associated with leaving Iraq, Mother Jones looked into the fate of military equipment in the wake of withdrawal. On containers and trailers:

Containers are easy to come by; a former logistics officer says if any are brought back the job will probably fall to contractors like Kellogg, Brown and Root. “A lot will be left there for the Iraqis to use for storage, because where do you store stuff in the middle of the desert?”

The Pentagon blocked requests earlier this year for carte blanche on donating certain kinds of items (SUVs, generators, etc.) at closing bases, maintaining that US forces in Afghanistan needed some of them. Then, in October, it relaxed its guidelines, raising the cap on donations and loosening regulations about leaving behind passenger vehicles. New "suggested rationales" used to justify donations, such as avoiding delayed withdrawal and fostering favorable relations between the US and Iraq, seem to give commanders a lot of leeway to decide what will or won’t end up sent to support the surge of troops in Afghanistan.

Worst $75 Billion Investment Ever?

| Tue Dec. 8, 2009 2:49 PM EST

At this point, it's hard to understate how much of a bust the Obama administration's Making Home Affordable program has been. As I've written before, the centerpiece of that initiative is the Home Affordable Modification Program, a $75 billion effort to work with lenders, servicers, and homeowners in order to lower home mortgage payments; when the program was rolled out in March, the administration projected it could help 3 to 4 million struggling homeowners.

Fast forward ten months to yesterday’s testimony by bailout chief Herb Allison. HAMP, Allison told the House financial services committee, has helped "thousands of borrowers" receive permanent changes to their mortgages. That's it? Predicting this response, Allison went on to say, "Although we know that not every borrower will qualify for a permanent modification, we are disappointed in the permanent modification results thus far. We all need to do better at converting borrowers to permanent modifications."

If you recall, the Congressional Oversight Panel, led by Elizabeth Warren, reported (PDF) this fall that as of September 1 the number of permanent modifications was a meager 1,711. For a program with $75 billion at its disposal. Bearing in mind the COP's findings, if the total permanent modifications—i.e., real, sustainable help for homeowners—is still in the thousands as of Allison's testimony yesterday, then maybe it's time to state the obvious: This program is a failure. The administration should cut its losses, ditch HAMP, and find a better use for billions of taxpayer dollars in solving our still-roiling housing nightmare, where foreclosures remain at record levels and experts see the pain continuing well into 2010.

A senior director for Amherst Securities Group who testified alongside Allison yesterday said as much, insisting that HAMP won't help a majority of the homeowners it was intended for. The director, Laurie Goodman, insisted that HAMP was "destined to fail," adding, "If policies continue to kick the can down the road—working with a modification problem that does not address negative equity—delinquencies will continue to spiral with no end in sight."