U.S. Economic/Financial News
Farm Bill Cuts Funding for Hungry School Children 90%
May 6 (EIRNS)According to an column in the Washington Post today, coauthored by former Senators George McGovern and Robert Dole, entitled, "A Slap at Schoolchildren," the current farm bill reduces by more than 90% the mandatory funding to feed hungry children. If the current law passes, funding for the program would go from $840 million over five years to $60 million this coming year. After that, there would be no guarantee of funding at all.
McGovern and Dole, who initiated the program that the current farm bill would cut, demand that the full $840 million in mandatory funding for the "McGovern-Dole Program" be restored. "At a time when increasingly high food prices are pushing millions of families around the globe deeper into poverty, we must step up, not reduce, our efforts to feed hungry schoolchildren."
City of Vallejo, California To File for Bankruptcy
May 7 (EIRNS)A $20 billion-plus revenue hole has opened up, causing a cash crisis in California under the misleadership of Gov. Arnold Schwarzenegger, at the same time that the city of Vallejo voted to file for bankruptcy protection at a City Council meeting May 6. The state could run out of cash by August, due to low cash reserves and lagging revenues, which would force it to seek loans from banks which, due to the state's low credit rating, would mean paying higher interest rates. State Comptroller John Chiang remarked, "In essence, it's taking a subprime loan for the state, and it comes with greater costs." The state Treasurer's Office puts the cost of such a loan at $100 million, or enough to educate 8,300 students in a year.
Vallejo will run out of cash by June 30; its revenues have plummeted as housing prices have collapsed. In January alone, home prices fell 19%, causing a drop in Vallejo's housing-related revenues. The city estimates a $16 million deficit for the next fiscal year, which starts July 1. The city's revenue base was decimated after the 1996 shutdown of its shipyard, the Mare Island Naval Shipyard, which was the West Coast's first shipyard, established in 1854.
The state's $20 billion-plus deficit is equal to 20%one-fifthof the its general fund. California, the biggest U.S. state economy, and world's fifth-largest economy, has built its fiscal house on the quicksand of the London and Wall Street housing and stock market bubbles. Its revenue demise is a reflection of the global financial meltdown.
Ding-a-Ling Brothers and Barney Bailout's New Act
May 7 (EIRNS)Many observers are claiming surprise over Federal Reserve chairman Ben Bernanke's May 5 call for Rep. Barney 'Bailout' Frank's "American Housing Rescue Act." But already in February, the LaRouche Youth Movement in Washington, D.C. exposed the "Ding-a-Ling Brothers and Barney Bailout Circus," which teams up the desperate Fed chairman, with the corrupt sidekick of Mis-Leadership Nancy Pelosi, in pushing to set up Federal bailouts in the hundreds of billions of dollars for collapsing debt-bubble securities. In fact, CNBC-TV reported in March that Wall Street investment banks drafted the bill with their willing agent Barney Frank (D-Mass.).
Frank's bill is intended not to rescue housing, but to rescue Countrywide, Bear Stearns, and hedge funds from the collapse of their pyramid of debt securities. In particular, it is an intended roadblock against the Homeowners and Bank Protection Act (HBPA), proposed by Lyndon LaRouche and called for by city councils and state legislatures around the county. Barney Bailout's bill was analyzed in "Congress Converges on Bailouts To Block HBPA" in EIR, March 21, 2008; and in early April, the Congressional Budget Office echoed EIR's charge that the bill is a bailout.
Even though the White House claims Bush may veto the $300 billion commitment of the Federal Housing Administration (FHA) to buy mortgages, Bernanke pushed it in a Columbia University speech May 5. Frank is gloating that, "It is too bad President Bush ignored the advice of Chairman Bernanke and decided on right-wing ideology over needed compassion and good economics." Bernanke, who has continually increased the Federal Reserve's large bailout loans to banks, wants Federal agencies like the FHA, with Federal tax dollars, to be brought directly into the bailout circus.