U.S. Economic/Financial News

Alan Simpson 'Can't Wait for the Bloodbath'

Nov. 22 (EIRNS)—Former Sen. Alan Simpson (R-Wyo.), whom Obama appointed as co-chairman of the Deficit Commission, made these remarks in a Nov. 19 breakfast roundtable conversation with Christian Science Monitor reporters, according to numerous sources:

"I can't wait for the bloodbath in April.... When debt limit time comes, they're going to look around and say, 'What in the hell do we do now?' We've got guys who will not approve the debt limit extension unless we give 'em a piece of meat, real meat, meaning spending cuts. And boy, the bloodbath will be extraordinary!"

Simpson figures that the massive cuts in living standards will happen next April, when Congress has to vote on raising the national debt ceiling. He expects a political standoff to be resolved only by Obama and the Republicans agreeing to otherwise popularly unacceptable austerity, to avoid default on the debt or government shutdown.

President Obama had defended Simpson on Nov. 11, after widespread outrage against Simpson and Commission co-chairman Erskine Bowles, for issuing recommendations for austerity against seniors and the poor.

USA Today quoted Obama: "Before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts. If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they're going to need to be armed with the information about the kinds of choices that are going to be involved, and we can't just engage in political rhetoric."

Now, his appointee Simpson has furnished the scenario for forcing through the austerity demanded by Obama's financier sponsors, without the public having a chance of "shooting down" their proposals.

Glass-Steagall: 'An Act Whose Time Has Come Again'

Nov. 22 (EIRNS)—The editorial of the Nov. 21 Pittsburgh Tribune-Review, the flagship newspaper of the ultra-conservative and anti-LaRouche Mellon Scaife interests in Western Pennsylvania, argued for the urgent restoration of President Franklin Roosevelt's 1933 Glass-Steagall Act, which was repealed in 1999. Headlined "Restore the Foundation: Revive Glass-Steagall," the editorial read:

"Once upon a time, a commercial bank was a commercial bank and an investment bank was an investment bank. And with good reason. There were—and remain—just too many conflicts and potentials for abuse when an entity whose mission is to manage risk is one and the same as the one taunting risk.

"It was such real conflicts and abuses that led to the Glass-Steagall Act of 1933. It separated commercial banking from investment banking. But financial industry consolidations and a zeal for deregulation fueled the repeal of Glass-Steagall in 1999.

"As then-Wall Street Journal columnist Thomas Frank wrote this past January:

"'In 1999, the last time the 1933 law was being debated, it was routinely described as a 'Depression-era' law, a 'relic' of a benighted age, 'venerable,' 'obsolete,' 'outdated,' 'archaic,' insufficient to meet the public's 'sophisticated needs' in the bold new era of accelerated everything.'"

"Need we recount the mess that followed the 'enlightenment'—lives destroyed, an economy pushed frighteningly close to collapse while perversely enriching the failures of the brace-snapping banking elite?

"A foundation without a footing will crack and eventually crumble. 'Old Economy' or 'New Economy,' there remain fundamental, sound principles that must form the basis for a sturdy footing to gird the foundation of our banking system.

"Glass-Steagall is an act whose time has come again."

Pittsburgh's Mass Transit To Be Slashed

Nov. 26 (EIRNS)—The Port Authority of Allegheny County, Pa., which runs mass transit services in Pittsburgh, caught between the economic crisis on the one side, and political apathy and ideology on the other, on Nov. 24, imposed the harshest service cuts in the history of the system. The cuts, effective on March 13, 2011, will eliminate bus service on 45 of the system's 129 bus routes, affecting more than 50 neighborhoods. Fares will be increased 25 to 50 cents. More than 500 jobs will disappear, including at least 350 by layoffs.

All of this to close a $47 million deficit in a $330 million budget. Members of the Authority board blamed the state legislature for under-funding the system for the past three years. "We have been backed into a corner by inaction, apathy, and a complete disregard for the greater good. The powers that be have turned their backs on the people who depend on transit to live their very lives," said Authority board member Joan Ellenbogen.

They still won't get any help from the incoming Republican-controlled legislature. Rep. Mike Turzai, slated to become House Majority Leader in January, said, in response, "The days of putting good money after bad are done," and that no one is against public transportation, but "it has to be run in an efficient manner and look more like the private sector. It needs to be right-sized."

The people caught in the middle, of course, are the riders, especially elderly and low-income people who have no other transportation options. More than 50 of them protested outside the Authority headquarters while the board was meeting to slash its budget. "I just want my bus," Olga Stanko, 81, told the Pittsburgh Tribune-Review. "I'm too old for this. Somebody needs to do something." The board estimates that the service cuts mean that 15,000 people will no longer be using transit, and 9,000 more cars will be driven into Pittsburgh each day.