Monday, March 31, 2008

Food Stamps, Wall Street, and Corruption

by Norman Markowitz

A few quick comments on the news of the day. First, the number of people receiving food stamps has risen to twenty-eight million, which goes up and down with the number of jobs in the economy.

Now the Food Stamp Plan is something that I know a great deal about as a scholar. It was created in the Department of Agriculture under Henry Wallace's leadership in 1939 and then eliminated by the conservative coalition in Congress during WWII (conservatives always despised all New Deal social programs and used the fact that the war had produced a full employment economy to eliminate the program).

The Food Stamp Plan was revived in the 1960s and has had its ups and downs since then, as the terms which make people eligible have changed over and over again. But Food Stamps was the kind of reform that the New Deal government was famous for. The program helped the poor directly, helped merchants who could retrieve the coupons or stamps from the government for money, and helped move foodstuffs, which helped farmers also. It was a social subsidy program that benefited those in need. The rightwing has not been able to abolish it over the last forty years, even though it has crusaded to eliminate all New Deal and Great Society programs that it could.

The Republican Right also pledged to eliminate the Department of Housing and Urban Development (HUD) and failed. But here the story is a little different. Here, Bush's HUD Secretary, Donald Jackson, is resigning as stories mount of a major scandal. Jackson is accused of giving big HUD contracts for projects in New Orleans and the Virgin Islands to big developer friends. He is also accused of threatening the Philadelphia Housing Authority with a withdrawal of HUD aid unless it turned over a two million dollar public property to a developer associate. What is alleged here is exactly the sort of thing that rightwing Republicans did in the 1920s, that is, privatize for a price, as a sinister alliance of rightwing ideologues and simple crooks ran wild. The Reagan administration in the 1980s launched a policy of massive reductions of HUD aid for public housing and housing authorities. Using HUD as a shill for private developers stimulates this kind of corruption. Using HUD as an instrument to provide federal support for public housing and rent controls so as to reduce the overall cost of housing to the general population and also eliminate the super-exploitation of both small homeowners and rents who find themselves paying more than half of there incomes in many cases for housing plus utilities costs should be a high priority for the next administration.

Meanwhile, the average price of a gallon of regular unleaded is now $3.27, suggesting the need for both re regulation and a national energy policy (in that area, Senator Obama especially has come forward with important suggestions and McCain with nothing. Lehman Brothers, caught in the mortgage debacle, is raising three billion through stock sales and issuing statements that the fact that it could borrow from the Federal Reserve is evidence that it is in decent shape(as against the fact that it had to borrow from the Fed is an example of the opposite).

Finally, the Bush administration's Treasury Secretary has come forward with a comically phony plan to "expand" the Federal Reserves Regulatory powers by reducing the SEC's regulatory power over Wall Street even more, turning credit unions into banks, and give state regulated insurance companies the "choice" of either continuing to be regulated by states or taking on a federal regulator (a bit like economic HMO choices). It is doubtful that any of this will be enacted and even the Treasury Department understands that but the fact that they would even put forward such a "regulatory reform" shows either how disconnected from reality they are or how contemptuous they are of the public. Senator Christopher Dodd of Connecticut, mentioning that this plan was introduced on the first day of the baseball season, called it a "wild pitch," which was charitable. For those suffering the effects of the escalating mortgage scandal it is, along with the HUD scandal, more like a bean ball.

All of this shows the need for real re regulation in the interests of wage earners and consumers and public sector revitalization in the interests of all people in the next administration. The present administration and those who seek to continue it through the McCain campaign haven't a clue about what is to be done to deal with the U.S. economic crisis.

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