Progress Report: Morally Bankrupt

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Mon, 14 Feb 2005 08:48:50 -0800

Progress Report: Morally Bankrupt

 

 

" American Progress Action Fund "

<progress

 

 

The Progress Report

 

by Christy Harvey, Judd Legum and Jonathan Baskin

with Nico Pitney and Mipe Okunseinde

..February 14, 2005

 

 

 

CONSUMER RIGHTS Morally Bankrupt

IRAN Operation Next?

UNDER THE RADAR Go Beyond The Headlines

 

 

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CONSUMER RIGHTS

Morally Bankrupt

 

The United States credit card industry rakes in $2.5 billion a month

in profits – largely in fees and interest charged to the American

consumer. But its thirst for additional profits is insatiable. Credit

card corporations are showering Congress with cash in an attempt to

squeeze every last dime out of those who can afford it least to by

making it harder for them to get out of debt. The industry is pushing

for a bill that would deny bankruptcy relief to " people with low or

moderate incomes who have fallen on hard times because of illness, job

loss or divorce. " Meanwhile the bill does nothing to stop " abusive

lending practices by credit card companies. " (Share your thoughts on

the bankruptcy bill at ThinkProgress.org.)

 

INCREASED BUREAUCRACY: The bankruptcy bill is an attempt to prevent

people from filing Chapter 7 bankruptcy – which gives people a clean

slate – and make them file under Chapter 13, which requires continued

payments to the credit card companies. Already, judges can deny

Chapter 7 protection if they think the law is being abused. The

bankruptcy bill would require consumers to complete a complex array of

forms to " prove " they qualify for Chapter 7. The law would also

require those seeking Chapter 7 protection to " obtain counseling from

a court-approved counseling center before filing. " But according to

the American Bankruptcy Institute, a nonpartisan research

organization, just " 3 percent of people who file under Chapter 7 could

continue to pay under a court-supervised plan if they filed under

Chapter 13. " So the real impact of the bill would not be to prevent

abuse of the system but to " make filing for bankruptcy much more

costly " for those who genuinely need it.

 

PUNISHING THE SICK: The overwhelming majority of Americans do not

become bankrupt by purchasing Rolex watches and plasma TVs. The

leading cause: getting sick. A Harvard University study found that

half of all respondents " said that illness or medical bills drove them

to bankruptcy. " Three-quarters of that group had health insurance but

" high co-payments, deductibles, exclusions from coverage and other

loopholes left them holding the bag for thousands of dollars in

out-of-pocket costs when serious illness struck. " Many people who

suffer debilitating illness lose their jobs and, eventually, their

health insurance. Elizabeth Warren, the Harvard Law professor who

headed up the study, argues " the problem is not in the bankruptcy

laws. The problem is in the health care finance system. " Passing the

bankruptcy bill " would be no different than a congressional demand to

close hospitals in response to a flu epidemic. " A group of 1,700

doctors sent a letter to Congress opposing the bankruptcy bill because

it " would remove protection from patients financially ruined by

medical costs. "

 

PUNISHING THE ELDERLY: Another group saddled with credit card debt –

largely due to costs out of their control – is the nation's elderly.

Between 1992 and 2001, " the number of older Americans filing for

bankruptcy tripled. " A new report by the Demos Network emphasizes " the

growing presence of America's seniors in the bankruptcy courts should

warn policymakers of the importance of safeguarding this difficult

last resort. "

 

PREDATORY LENDING PRACTICES: Credit card companies aggressively market

their products to many consumers – such as college students, low wage

workers and people already drowning in debt – that they know can't

afford to pay off their balances. Last year, the industry " collected

$11.7 billion in penalty fees. " Even as the Federal Reserve has kept

its target rate very low (2.25 percent), credit card corporations

charged customers who miss one or two payments " with maximum rates

that now exceed 28 percent. " In April, a unilateral change in the

agreement by Discover card allowed the company " to raise the interest

rate to 19.99 percent, from as low as zero, for a single late

payment. " A late payment that was made anytime in the 11 months before

the rule change could justify the increase.

 

THE PAYOFF: Why are members on both sides of the aisle willing to sell

out the sick and the poor to pad the profits of the credit card

industry? Follow the money. Over the last four years, credit card

companies have contributed $24.8 million to congressional and

presidential candidates. MBNA – the company leading the industry's

hardball lobbying campaign – was the largest single contributor to

President Bush's reelection campaign. MBNA contributed $240,675 to

Bush through the company's Political Action Committee and individual

contributions. It's a reasonable investment; if the bill passes it is

expected to " add $75 million a year to MBNA's bottom line. "

 

IRAN

Operation Next?

 

The Bush administration has been flying unmanned surveillance drones

over Iran for nearly a year in search of evidence of nuclear programs

and to " detect weaknesses " in the country's air defenses, according to

the Washington Post. " The surveillance has been conducted as the Bush

administration sharpens its anti-Iran rhetoric and the U.S.

intelligence community searches for information to support President

Bush's assertion that Tehran is trying to build nuclear weapons. "

Sound familiar? Secretary of State Condoleezza Rice maintains an

Iranian invasion is " not on the menu 'at this time,' " but the

conditions mimic those in the run-up to war with Iraq, when the White

House sent the intelligence community scuttling to gather evidence

which would confirm its nuclear suspicions and justify military action.

 

PLAYING DUMB: Asked about the possibility of military strikes in Iran,

President Bush said he hoped he could " solve it diplomatically, " but

the administration continues to abstain from European talks designed

to halt the country's nuclear ambitions. Over the weekend, German

Foreign Minister Joschka Fischer became the latest foreign official to

urge America " to embrace the EU's diplomatic efforts, " but his appeal

" appeared to fall on deaf ears. " Sen. Joseph Biden (D-DE) also urged

the administration to get involved in the talks, saying that failure

to do so could result in the need to invade the country. Other

European diplomats have indicated the talks may fail without the

" leverage " of U.S participation. On Sunday, Iran " rejected a European

demand to stop building a heavy-water nuclear reactor, " which analysts

say is part of its nuclear program.

 

HERSH REVISITED: The surveillance drone story, published in Sunday's

Washington Post, supports an earlier article by New Yorker reporter

Seymour Hersh. Hersh claimed in January that U.S. forces had for

months been carrying out secret reconnaissance missions in preparation

for possible air strikes in Iran. Questioned about the article,

Pentagon spokesman Larry DiRita asserted it was " riddled with errors, "

and Condoleezza Rice said it was " inaccurate, " but neither denied its

central premise. Hersh said he was " repeatedly told that the next

strategic target was Iran. "

 

FINANCING THE MULLAHS: Besides failing to join diplomatic talks, the

U.S. may be fueling Iran's nuclear ambitions in one other way:

According to the New York Times's Thomas Friedman, high oil prices

resulting from the Bush administration's energy policy have bolstered

the financial outlook of the mullahs in Tehran, allowing them to be

self-sufficient without any help from foreign investment. According to

the Wall Street Journal, conservatives in Iran's regime have begun

shunning outside investment, " a jolt to a European plan aimed at using

diplomacy and the prospect of increased foreign investment to coax

Iran to give up a suspected nuclear-arms program. " As Friedman points

out, " by adamantly refusing to do anything to improve energy

conservation in America, " President Bush is " financing both sides of

the war on terrorism…the U.S. armed forces with our tax dollars, and,

through our profligate use of energy, " economic insulation for

terrorist-supporting regimes in Iran, Saudi Arabia and Sudan.

 

 

Under the Radar

 

IRAQ – VIOLENCE INCREASES POST-ELECTION: Those who warned against

viewing the recent elections as a cure-all for Iraq, once considered

pessimists, are now, unfortunately, being proven correct. The New York

Times reports that insurgent attacks have spiked upwards since the

Jan. 30 election; suicide bombings are on the rise, and attacks are

increasingly focused on unarmed civilians. More than one hundred

Iraqis have been killed in the last week alone, attacked at a Shiite

mosque, a hospital, police facilities, a bakery in a Shiite

neighborhood, even in residential neighborhoods. And assaults are

expected to further increase on the Shiite holy day of Ashura, which

falls on Feb. 19. More than 180 Iraqis were killed during the Ashura

celebrations last year, and a recent American intelligence report

" warned that this year insurgents would try to blend in with the

pilgrims, dressing in traditional black robes to conceal weaponry. "

 

CORPORATE WATCH – THIRD TIME'S A FAILURE: From the

government-bankrolled corporation that brought us the failed FBI

computer upgrade and the non-existent Iraqi security force comes

another failure in a string of, well, failures. Science Applications

International Corporation (SAIC) recently informed " some of the

nation's most influential former military and intelligence officials "

that they were " at risk of identity theft " due to a robbery at the

SAIC offices. The personal information – including the officials'

Social Security numbers, phone numbers and addresses – was not

obtained by some Mission Impossible stunt; the thieves gained access

to the building by breaking a few windows. For a company that is

entrusted with " sensitive government contracts, including many in

information security, " vulnerability to smash and grab jobs brings us

down to a whole new level of national insecurity.

 

HEALTH CARE – SOARING COSTS ARE COSTING COMPANIES: The chairman and

chief executive of General Motors Corporation, the company that

provides " health insurance for more people than any other private

employer in the nation, " has pointed a finger at rising health care

costs to explain why " American manufacturers are losing their ability

to compete in the global market place. " Speaking in Chicago over the

weekend, CEO G. Richard Wagoner Jr. provided extensive evidence of the

effect that soaring medical bills were having on " his company's bottom

line " and announced he is launching a campaign to entreat legislators

to pay attention to a very serious problem that endangers both future

generations and future economies. Wagoner is not only concerned for

his company; the cost of health care is " ultimately threatening the

viability of most U.S. firms. " But as Sean McAlinden of the Center for

Automotive Research stated, " GM is the canary in the coal mine for

Medicare and everyone else. "

 

WAL-MART – CHILDREN OF THE SAW: In January, Wal-Mart secretly settled

federal charges that it violated child labor laws more than 20 times

in three states, including allegedly allowing workers under age 18

operate dangerous machinery like cardboard balers and chain saws. It's

no wonder the deal was kept under wraps. Wal-Mart was forced to pay

just $135,540 – about .000055 percent of the retailer's annual revenue

– to settle the charges. Moreover, the agreement includes a promise by

the Labor Department to give Wal-Mart 15 days' notice before the

department investigates any other " wage and hour " accusations, like

failure to pay minimum wage or overtime. John R. Fraser, the

government's top wage official under the first President Bush and

President Bill Clinton, told the New York Times the 15-day notice was

" very unusual, " saying it " appears to put Wal-Mart in a privileged

position that to my knowledge no other employer has. "

 

IRAQ – NO PAPER TRAIL: Testimony from Frank Willis, a former official

of the Coalition Provisional Authority (CPA), has shed new light on

the mismanagement of funds in Iraq during the early months of the

United States occupation of the country. Describing the situation as

the " Wild West, " Willis summed up the situation as " inexperienced

officials, fear of decision-making, lack of communications, minimal

security, no banks, and lots of money to spread around. " Under the

oversight of the Pentagon, the CPA paid contractors in cash that it

obtained from one of Saddam Hussein's palace basement vaults " because

the country lacked a functioning banking system. " According to the

" spokesman for the special inspector general for Iraq reconstruction, "

making payments in cash continues to this day under the " U.S.-funded

reconstruction. " Sen. Byron Dorgan (D-ND) declared, " This isn't penny

ante. Millions, perhaps billions of dollars have been wasted and

pilfered. "

 

DON'T MISS

 

DAILY TALKING POINTS: Talking Loudly but Carrying a Little Stick.

 

BUDGET: The New York Times on the consequences of runaway debt.

 

EDUCATION: American Progress's Robert Gordon on why education reform

is a clear loser in President Bush's 2006 budget.

 

ENVIRO: Global warming treaty set to take effect, minus U.S.

participation.

 

 

 

DAILY GRILL

 

" Any way you slice it, the president's tax cut made the system more

progressive. "

 

– White House Spokesman Trent Duffy, 2/13/05

 

VERSUS

 

" When both income and payroll levies like those for Social Security

are counted, Americans making as little as $100,000 paid a larger

share of their income in taxes in 2002 than those making more than $10

million. "

 

– NYT, 2/13/05

 

 

 

 

DAILY OUTRAGE

 

How about dinner and a movie instead of that giant box of chocolates

this Valentine's Day? Sen. Tom Harkin (D-IA) and Rep. Eliot L. Engel

(D-NY) write in the LA Times that child slaves in Ivory Coast " are

whipped, beaten and broken like horses to harvest the almond-sized

beans that are made into chocolate treats for more fortunate children

in Europe and the United States. "

 

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