Since 1981, drilling in the waters of the Atlantic and Pacific off U.S. shorelines has been banned under a federal moratorium. Last week, in response to high gas prices and continued dependence on an oil-based economy, the Democrat-controlled House voted 236-189 to open these offshore areas to exploration and drilling. If passed into law, the House bill would allow oil drilling 50 miles from shore with a state's permission and 100 miles from shore without a state's permission. The bill would also remove restrictions on oil shale drilling in the western United States (which the National Wildlife Federation called a "double disaster" for our climate), eliminate some tax credits currently held by oil companies, and require that 15% of U.S. energy production be by renewable sources by 2020. | ||
The Republican view: The McCain/Palin rallying cry has been "Drill, Baby, Drill!" House Republican leaders spent the summer holding weekly press conferences calling for resumed drilling. Sarah Palin, the Republican Vice-Presidential candidate, strongly supports oil exploration in her home state's Arctic National Wildlife Refuge. John McCain - who asks crowds at his campaign rallies for their support for drilling for oil wherever they happen to be standing - states that he will "cooperate with the...Department of Defense in the decisions to develop these resources," illustrating his belief that U.S. energy policy and the invasion and occupation of oil-rich nations are clearly linked. | The Democratic view: The key word has been "compromise". House Speaker Nancy Pelosi traded support for a 27-year old moratorium on offshore drilling for slightly higher taxes on oil companies, who will likely immediately continue making record profits by passing increased costs onto customers. Instead of focusing on the need for new, truly clean energy sources, Barack Obama trumpets his willingness to work across the aisle on increasing vehicle fuel efficiency (instead of replacing polluting engines with replacement technologies) and further development of so-called "clean" coal. Obama's support for new coal development (and the mountaintop removal and strip mining we use to obtain it) is a step back to a 19th-century, not 21st-century, energy strategy. | The Green view: We oppose the toxic and environmentally-destructive national oil-based energy strategy. We agree with the experts who insist that new sources of domestic oil could not be discovered, processed, and refined within a decade. We urge immediate investment in strategies that can have both a short-term and sustainable impact on our national energy strategy, such as solar, wind, and other non-polluting alternative energy sources. As Green Party Presidential candidate Cynthia McKinney says, "Leave the Oil in the soil." We support leaving it in the soil, ocean floor, shale, and wherever else the oil parties imagine they might find it. Help the Green Party win investments in sustainable alternative energy sources by investing in the McKinney/Clemente campaign and the Green Party of the United States. Democrats have called for increasing investments in renewable energy sources by a paltry 15% over the next decade - we can make real changes if you pledge to increase your support of the Green Party and its candidates by 15% right now! |
The financial crisis gripping the U.S. has the largest banks and insurance companies begging for massive government bailouts. The banking, investment, finance and insurance industries, long the foes of taxation, now need money from working-class taxpayers to stay alive. Taxpayers should be in the driver's seat now. Instead, decisions that will cost people for decades are being made behind closed doors, by the wealthy, by the regulators and by those they have failed to regulate.
Tuesday, the Federal Reserve and the U.S. Treasury Department agreed to a massive, $85-billion bailout of AIG, the insurance giant. This follows the abrupt bankruptcy of Lehman Brothers, the 158-year-old investment bank; the distressed sale of Merrill Lynch to Bank of America; the bailout of both Fannie Mae and Freddie Mac; the collapse of retail bank IndyMac; and the federally guaranteed buyout of Bear Stearns by JPMorgan Chase. AIG was deemed "too big to fail," with 103,000 employees and more than $1 trillion in assets. According to regulators, an unruly collapse could cause global financial turmoil. U.S. taxpayers now own close to 80 percent of AIG, so the orderly sale of AIG will allow the taxpayers to recoup their money, the theory goes.
It's not so easy.
The financial crisis will most likely deepen. More banks and giant financial institutions could collapse. Millions of people bought houses with shady subprime mortgages and have already lost or will soon lose their homes. The financiers packaged these mortgages into complex "mortgage-backed securities" and other derivative investment schemes. Investors went hog-wild, buying these derivatives with more and more borrowed money.
Nomi Prins used to run the European analytics group at Bear Stearns and also worked at Lehman Brothers. "AIG was acting not simply as an insurance company," she told me. "It was acting as a speculative investment bank/hedge fund, as was Bear Stearns, as was Lehman Brothers, as is what will become Bank of America/Merrill Lynch. So you have a situation where it's [the U.S. government] ... taking on the risk of items it cannot even begin to understand."
She went on: "It's about taking on too much leverage and borrowing to take on the risk and borrowing again and borrowing again, 25 to 30 times the amount of capital. ... They had to basically back the borrowing that they were doing. ... There was no transparency to the Fed, to the SEC, to the Treasury, to anyone who would have even bothered to look as to how much of a catastrophe was being created, so that when anything fell, whether it was the subprime mortgage or whether it was a credit complex security, it was all below a pile of immense interlocked, incestuous borrowing, and that's what is bringing down the entire banking system."
As these high-rolling gamblers are losing all their banks' money, it comes to the taxpayer to bail them out. A better use of the money, says Michael Hudson, professor of economics at the University of Missouri, Kansas City, and an economic adviser to Rep. Dennis Kucinich, would be to "save these 4 million homeowners from defaulting and being kicked out of their houses. Now they're going to be kicked out of the houses. The houses will be vacant. The cities are going to [lose] property taxes, they're going to have to cut back local expenditures, local infrastructure. The economy is being sacrificed to pay the gamblers."
Prins elaborated: "You're nationalizing the worst portion of the banking system. ... You're taking on risk you won't be able to understand. So it's even more dangerous." I asked Prins, in light of all this nationalization, to comment on the prospect of nationalizing health care into a single-payer system. She responded, "You could actually put some money into something that pre-empts a problem happening and helps people get health care."
The meltdown is a bipartisan affair
Presidential contenders John McCain and Barack Obama each have received millions of dollars from these very companies that are collapsing and are receiving the corporate welfare. President Clinton and his treasury secretary, Robert Rubin (now an Obama economic adviser), presided over the repeal in 1999 of the Glass-Steagall Act, passed after the 1929 start of the Great Depression to curb speculation that caused that calamity. The repeal was pushed through by former Republican Sen. Phil Gramm, one of McCain's former top advisers. Politicians are too dependent on Wall Street to do anything. The people who vote for them, and whose taxes are being handed over to these failed financiers, need to show their outrage and demand that their leaders truly put "country first" and bring about "change."
Denis Moynihan contributed to this column.