UNITED STATES NEWS DIGEST
Brawl in Congress Over Homeland Security Reorganization
According to the Congress Daily of July 10, leading Democrats in the House of Representatives, who had been trying to "out-Bush Bush" on the issue of Homeland Security, are now becoming critical of the proposed departmental reorganization, trying to slow down passage of the White House proposal.
Congress Daily reports that senior House Democrats including Government Reform Committee ranking member Henry Waxman (Calif), Appropriations ranking member David Obey (D-Wisc), and Energy and Commerce ranking member John Dingell (Mich) are objecting to the Homeland Security proposal, which their committees took up starting July 11.
The Daily says their objections signal more turbulence in Congress than had been expected, with Waxman and Obey even sending the Administration a 34-page letter outlining their objections, which ranged from costs and coordination, to how the proposal was developed, to how much oversight Congress would have, and how Federal employees would be treated.
They noted that the Defense Department wasn't created until after World War II was over (although, of course, during World War II there was the War Department), and complained that the proposal was developed in secret by a small group of White House advisers, and is being rushed through Congress on an accelerated schedule.
Democrats say House Dem leaders Dick Gephardt, Nancy Pelosi, and Martin Frost generally support these sentiments. The House Special Select Committee on Homeland Security is planning to hold a series of hearings next week to solicit testimony from Homeland Security director Tom Ridge and the chairmen and ranking members of standing committees with jurisdiction over Homeland Security.
Meanwhile, House Republicans too are criticizing aspects of the proposal; for example, the House Judiciary Committee voted against putting the Secret Service in the Department of Homeland Security (DHS); voted in favor of splitting the Immigration and Naturalization Service in two parts and not putting it intact into the DHS as Bush wants; and voted for not putting FEMA under the DHS.
These are not binding votes, but they go as recommendations to a new House Select Committee, chaired by Dick Armey, which took testimony from Cabinet members July 11, and Committee chairmen next week, before drawing up final legislation for passage by the House.
Congressional Probe of Sept. 11 Intelligence Failures Finds No 'Smoking Gun'
The House-Senate Intelligence Committees, after six months of reviewing intelligence files and closed-door hearings, have uncovered no single piece of information that would have prevented the attacks of Sept. 11, according to an article July 11 in the Washington Post. And panel members have concluded that, at present, there are no critically damaging disclosures to come, which would hurt the Bush Administration or the intelligence communityno doubt disappointing Congressional Democrats like Joe Lieberman and "Bull Moosers" like John McCain, who had hoped to be able to go after the Administration on this.
Democratic Party Presidential pre-candidate Lyndon LaRouche had weeks ago assessed that President Bush was not covering up on this matter, and had had no pre-Sept. 11 indications of what was about to happen, which LaRouche has all along characterized as a Utopian-run coup attempt from within the United States against the Bush Administration.
Now LaRouche has been proven right. "As far as I know, there is no smoking gun," Democratic Senator Evan Bayh (Ind), a member of the Senate Select Committee on Intelligence, told the Washington Post.
The probe's focus has shifted to identifying and fixing more systemic weaknesses within the nation's intelligence system.
"I hope we're in the process of shifting from a place where people were looking to assign blame and instead focussing on systemic problems and improvements," Bayh said.
State, Local Govt. Pension Funds Vulnerable to Blowout
A U.S. Commerce Department news release July 11 reveals that state and local government employee retirement funds investments were 75% invested in "non-governmental securities," in fiscal year 2001. This category includes: corporate bonds and stocks, mortgages, and foreign and international investments. Of these categories, over half the retirement funds are invested in the corporate categoreis, i.e., 35.8% in corporate stocks, and 17.6% in corporate bonds, making them extremely vulnerable to the kind of bubble blowout now in progress.
U.S. Machine Tool Consumption Still Way Behind Last Year
In May 2002, U.S. industry consumed $185.7 million worth of machine tools, which represents an increase from April's level of $172.3 million, according to the American Machine Tool Distributors Association. But, it must be remembered that U.S. industry's machine tool consumption for April represented one of the lowest levels in a decade. More accurately, comparison of U.S. machine tool consumption for the first five months of 2002, at $868.5 million, to consumption for the first five months of 2001, at $1,260.3 million, represents a steep fall of 31.1%.
Machine tool production closely parallels machine tool consumption. This fall during the first five months of 2002, strikingly confirms Lyndon LaRouche's assertion that no recovery exists.
U.S. machine tool consumption in 2001 was already in a depression, at only half the level of 1997, and the first five months of 2002 are 31.1% below the first five months of 2001. Machine tools incorporate into their design the most advanced scientific conceptions, and by transmitting them, increase the scientific productivity of the economy.
McCain, Liebermanin the Spotlight, and on the Hot Seat
Senators John McCain (R-Ariz) and Joe Lieberman (D-Conn) were both put in the spotlight in the July 14 coverage of the political ramifications of the stock market crash, and corporate corruption scandals (for LaRouche's assessment of this corrupt Senatorial duo, see FLASH!).
The New York Times noted in news coverage July 14, and in a separate article devoted to Lieberman alone, that the Connecticut Senator is in a "tough spot," because he has stressed the need to be "pro-business," avoid "class warfare," and so forth. In this regard, Lieberman has opposed tighter accounting rules regarding stock options (i.e., making corporations count them as liabilities), and has supported restrictions on lawsuits against management and accountants.
"Lieberman's Pro-Business Views May Haunt Him," is the title of the Times article, and it features some quotes from an interview with a very defensive Lieberman, who said he is "proud to consider myself a pro-business Democrat," and that he is outraged at "greedy individuals." Lieberman, who is, the column points out, a big recipent of funds from business, and is seriously considering a 2004 run for President, has been forced to shift his view to one closer to McCain's on some issues, such as top corporate executives' ability to sell stock options.
McCain, on the other hand, has been grandstanding non-stop on the issue of corporate corruption, making demands that SEC chairman Harvey Pitt resign, supporting the Sarbanes bill on accounting, which toughens penalties on corporate offenders, and the like. (Note LaRouche's assertion that it is no accident McCain was one of the corrupt Keating Five.)
In regard to McCain's showboating, the New York Times, in its lead feature in The Week in Review, entitled "Is Today's New Investor Tomorrow's New Populist?," concludes with a section on McCain, the "seeming wild card," who has tried to capitalize on the latest scandals. The Times author compares the mood to that of the late 19th century's William Jennings Bryan (a failed Presidential candidate hismelf). The article is accompanied by a small vignette about Teddy Roosevelt's "Bull Moose" spoiler campaign in 1912and how much at odds George W. Bush (who claims TR as a model) is with Teddy.
And finally, in the New York Post gossip column, the lead item cites "political insiders" in Arizona and Washington, saying McCain will not run for a fourth term in the Senate in 2004, but for President, as an independent. McCain's staff has attributed the story to his enemies, and says he will announce his decision after the November 2002 elections.
Fight Shapes Up Over Feinstein Amendment To Regulate Energy and Metals-Trading Derivatives
Stymied in her attempt to get her amendment regulating elecronically traded energy derivatives passed as an amendment to the Senate Energy Bill, Sen. Dianne Feinstein (D-Calif) is attempting to amend it to the Sarbanes corporate accounting fraud bill. Leading free-trade Republicans such as Sen. Richard Lugar (R-Ind) and Sen. Fitzgerald (R-Ill), whose state is home to the Board of Trade and the Mercantile Exchange, stressed the urgency of supporting the bill to restore confidence in the markets, while acknowledging the banking community is in high gear to stop the bill.
The amendment would restore the authority of the Commodity Futures Trading Commission to regulate on-line energy and metals trading, which was eliminated in the Commodity Futures Modernization Act of 2000, by Sen. Phil Gramm and all his colleagues from both parties on Capitol Hill.
Randall Dodd, Director of the Derivatives Study Center at Economic Strategy Institute, testified that the dollar value of Enron's derivatives book for year-end 2000 included $758 billion in energy derivatives and $16 billion in interest rate and foreign-exchange derivatives. The sum of Duke, Dynegy, Williams, El Paso, and others' derivatives trading is 10 times the amount of final energy use.
Feinstein testified that "round-trip" or wash trades made on the unregulated Inter-Continental Exchange (ICE), an electronic trading facility, were a major cause of the California energy crisis of 2000-2001.
New York City, Region on Edge of Power Outages This Summer
According to the July 12 New York Times, the forecasters who figured that losing 90 Megawatts of electricity demand in Lower Manhattan, with the loss of the World Trade Center, would mean that Con Edison could make it through the summer with adequate electricity supplies, are now warning that even that hasn't stopped the risk of brownouts and blackouts this summer.
While the multi-day heat wave around July 4 did push up demand, and put additional strain on equipment, that is not an unusual condition for summer, nor should it be the excuse for shortages and delivery problems. Thanks to deregulation, and the past decade's threat of deregulation, generation and transmission equipment has not been adequately maintained or replaced. Redundancy to maintain reliaibility, does not exist. Aging equipment, in both generation and underground transmission lines, leads to an increased incidence of breakdown when any strain, such as heat, is put on the system.
Last week there were blackouts on Fire Island, when three transmission lines went out of service at the same time, and near-blackouts when a fire knocked out a transmission line in Yonkers. In eastern Connecticut, 12,000 customers lost power last week, when a substation transformer overloaded. Con Edison says brownouts are "likely" over the summer, and that there could be a major blackout if there is a significant equipment failure. A spokesman for the New York Independent System Operator stated simply, "We're skating on the edge."
It is estimated that New York State will need over 7,000 additional Megawatts of electric capacity by 2005. Only two new plants have been approved, and neither is in New York City or Long Island, which cannot import any more power due to transmission constraints.
California Hit With Power Emergency
As temperatures topped 100 degrees, and generating plants shut down, a Stage 1 alert was declared by the California Independent System Operator (ISO) July 9-10, as the ISO was forced to scramble to purchase power from neighboring states, and demand conservation by California residents. There were no blackouts, but prices zoomed to the highest level of the year.
This was the first Stage 1 emergency since July 3, 2001 (a Stage 1 alert means that many businesses which had applied for lower rates must voluntarily curtail usage). The Los Angeles Times reports that an unexpectedly large amount of generating capacity was down on July 9, more than twice the usual amount.
On July 10, California had a Stage 2 power alert, coming close to brownouts in some sections of the state. Governor Gray Davis said that, had the weather been this hot last summer, the state would have suffered through repeated blackouts.
Ross Perot To Be Grilled on California Energy Manipulations
According to a July 10 wire from the Associated Press, zillionaire businessman and former Presidential candidate Ross Perot is set to be grilled by California State Senators on the energy deregulation that hit the state, and its effects. "Even before California's deregulated energy market opened for business, employees with Perot Systems, the company that developed software for the market, understood how to game the system for higher profits, a state senator said documents show," according to the AP story.
State Senator Joe Dunn and others planned to grill Perot Systems founder and chairman H. Ross Perot, who was asked by the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market to discuss his company's role in creating software for the California Independent System Operator, which runs much of the state's power grid.
AP reported that the Committee was especially interested in Perot's defense of "the marketing of the flaws in the system to market participants," Dunn said. Perot will address a July 22 hearing of the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs.
Apparently, the Senate became interested in Perot when documents subpoenaed from Reliant Energy in connection with the investigation of California's energy crisis, included a Perot Systems sales pitch to Reliant that identified "holes" in the California energy market that "allowed strategies that would destabilize the market"essentially, a handbook to "gaming" the market.
'The LaRouche Show' Debuts on Internet
On July 13, "The LaRouche Show," a one-hour radio webcast, made its debut on the Internet at www.larouchepub.com, featuring Harley Schlanger, the Western States spokesman for the LaRouche Presidential campaign. The show, hosted by EIR Counterintelligence co-director Michele Steinberg, airs at 3:00 p.m. Eastern Daylight Time.
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