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(A message from Citizen’s Trade Campaign, with a couple of extra graphs and paragraphs from me)

President Obama is likely to use the State of the Union to push for passage of the Trans-Pacific Partnership (TPP) and the rigged “fast track” trade promotion authority. Here are some facts to counter the expected public relations campaign.

Of Course “Trade” Is Good.

But first, of course “trade” is a good and necessary thing. We all trade with others. This is how people, businesses and even countries “make a living.” Critics of our country’s current trade policies are not “anti-trade”; they are anti-trade-deficit. They are opposed to the use of so-called “trade” agreements to promote the interests of the largest multinational and Wall Street corporations at the expense of America’s working people, its middle class, its domestic “Main Street” companies, our environment and the country’s long-term economic health.

Compare the timeline of a chart of our country’s trade deficits with the increase in the economic tensions of our middle class, our manufacturing regions and other economic troubles:

You will notice in the graph above and the graph below the amazing coincidence of the US trade deficit with the growth of income inequality in the United States. They mirror each other perfectly. That’s because trade agreements are negotiated to increase income inequality. They are negotiated to redistribute income from the 99 to the 1 percent, and the Trans-Pacific Partnership is no different than any other income redistribution treaty.

As the US trade in goods and services goes down in the graph above, you can see the 1 percent get richer in the graph below, while the rest of us suffer the consequences. When a job is shipped overseas, or a trade agreement paved the way for a US corporation to create jobs over there rather than over here, the difference between the old, higher US wages and the new lower wages over there goes straight  into the pockets of the affluent via higher corporate profits, rising share prices, and surging dividends.

Jobs are the largest export product of the United States. Nearly 29 million of them were exported from the United States from 1990 to 2010 (see graph below), and that doesn’t even count the jobs that trade treaties allow to be created overseas by US corporations. Those exported jobs are the principle reason the US economy is historically weak. Exporting those jobs overseas have taken away trillions of dollars from the 99 percent, and weakened the demand for US goods and services in the process.

And every one of those exported jobs represents lost tax dollars that should have gone to schools, fire, police, infrastructure and the social safety nets, such as the Social Security Trust Fund and Medicare. Those jobs used to pay the wages of US workers, but international trade has redistributed the wages and salaries of those jobs from working Americans to the rich, and every year each of those jobs exist overseas is another year in which income continues to be redistributed to the 1 percent via that same job, for as long as each job exists.

International trade treaties are the primary means to end the idea of shared prosperity, and they are the primary reason why 95 percent of all income growth in the USA has gone to the 1 percent since 2009. The evidence on this is overwhelming. And the president of the USA is trying to rig the economic game against the 99 percent even more with the Trans-Pacific Partnership.

Trade policies that are rigged to boost the interests of the giant, multinational corporations at the expense of the rest of us are not good at all. “Trade” agreements and “offshoring” of jobs have become synonymous. But “trade” doesn’t at all have to be about moving American jobs and factories out of the country so that executives can pocket the pay difference and the difference in the cost of enforcing environmental protections.

The Recent Korea-U.S. Free Trade Agreement Is An Example

During the State of the Union speech the president is expected to feature the owner of a small business that has increased its exports to South Korea since the Korea-U.S. Free Trade Agreement (KORUS FTA) was signed. This is ironic. Americans believe in and support small business – hence the use of the owner of one – but our country’s trade deals have been negotiated primarily for the benefit of giant, multinational corporations, and their interests often collide with the interests of smaller, “Main Street” businesses.

Some American businesses have indeed added sales and workers as a result of the KORUS FTA. But the fact is that since that trade agreement was signed the U.S. trade deficit with Korea has grown 50 percent – a metric that has resulted in 50,000 American jobs lost. In other words, since the KORUS FTA went into effect, South Korea is selling much more to us than the country is buying from us – and this problem is getting worse and worse. And as the trade deficit chart above shows, this just happens to be the record of our “trade” agreements.

Please take a look at this Census Bureau data page, “Trade in Goods with Korea, South.”

The KORUS FTA went into effect in March 2012. That month we sold $4,224 million in goods to South Korea and we imported $4,788.2 million in goods.

In November 2014 the U.S. had a $2.8 billion monthly trade deficit with Korea – the highest monthly U.S. goods trade deficit with Korea on record. We had $6.3 billion in imports from Korea (a record) and $3.5 billion in exports to Korea that month. In the first two years of the KORUS FTA, the U.S. goods trade deficit with Korea went up by 50 percent (a $7.6 billion increase).

So since March 2012 our exports to South Korea decreased from $4.224 billion to $3.5 billion. Meanwhile, our imports increased from $4.788 billion to $6.3 billion.

The KORUS FTA has hit American small businesses harder than large ones. According to U.S. Census Bureau data, small firms with fewer than 100 employees saw exports to Korea drop 14 percent while firms with more than 500 employees saw exports decline by 3 percent. According to “Report Funded by Big Business Explains to Small Businesses What’s Best for Them” at Public Citizen’s Eyes on Trade blog, “As a result, under the Korea FTA, small businesses are capturing an even smaller share of the value of U.S. exports to Korea (just 16 percent), while big businesses’ share has increased to 72 percent.”

This is the record: The KORUS FTA so far has resulted in a trade deficit of $2.8 billion a month, representing the loss of around 50,000 jobs. It has been harder on smaller businesses than larger ones, allowing the larger businesses to push the smaller businesses aside. But in the State of the Union, the president is going to bring attention to the owner of one small business that increased its exports and hired more workers, and use this to say to make the public think that the KORUS FTA has been good for our country – and that we should enter into more agreements like it.

Other Trade Agreements

The KORUS FTA certainly is not our only “free trade” agreement. NAFTA is the shorthand name many Americans use for our trade agreements generally. How has NAFTA – the North American Free Trade Agreement – worked out for the U.S.?

The Public Citizen Global Trade Watch report titled, “NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws” compared the promises with which NAFTA was sold to the results measured 20 years later. Some of the effects of NAFTA that are highlighted in the report include:

● a $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada,
● one million net U.S. jobs lost because of NAFTA,
● a doubling of immigration from Mexico,
● larger agricultural trade deficits with Mexico and Canada,
● and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

The data also show how post-NAFTA trade and investment trends have contributed to:

● middle-class pay cuts, which in turn contributed to growing income inequality;
● U.S. trade deficit growth with Mexico and Canada 45 percent higher than with countries not party to a U.S. Free Trade Agreement,
● U.S. manufacturing and services exports to Canada and Mexico that have grown at less than half the pre-NAFTA rate.

What about our deal to bring China into the World Trade Organization? Obviously South Korea is small potatoes when compared with China and the data bear this out. In August 2012 the Economic Policy Institute estimated that the U.S. lost 2.7 million jobs as a result of the U.S.-China trade deficit between 2001 and 2011, with 2.1 million of those lost in the manufacturing sector. Along with these job losses, U.S. wages fell due to the competition with cheap Chinese labor, which has cost a typical U.S. household with two wage-earners around $2,500 per year.

The Commerce Department reported earlier this month that our November trade deficit with China was $29.8 billion. That’s $29.8 billion in one month! Our exports to China decreased $200 million to $11.1 billion and our imports from China decreased $100 million to $40.9 billion from the previous month. Think how many jobs would be created here if $29.8 billion of additional orders came in to companies making and doing things inside the U.S., and this continued every month!

Balance Needed

Trade should be balanced or economies are thrown out of whack. “Trade” is supposed to mean we buy from them and they buy from us. It is not supposed to mean we buy from them and later they use the money to buy us. It is not supposed to mean we send jobs and factories out of our country so that a few executives and shareholders can pocket the wage difference and the reduction of environment enforcement costs.

Exports are great, but if a deal to increase exports increases imports even more, we have a trade deficit and are still at a net loss of jobs, factories and wealth. This means that we are still offshoring jobs so that executives can line their pockets with the wage differential. This has been the case with the KORUS FTA. This has been the case with NAFTA. This has so obviously been the case with China. The last thing We the People need is even more of this.

The reason our trade policies are working out this way is because the beneficiaries of this kind of trade deal are the ones controlling and negotiating these trade deals. The giant, multinational corporations and Wall Street make money from offshoring U.S. jobs and production – partly because our tax laws encourage this activity. The rest of us, including our “Main Street” businesses and the country at large, are net losers. This is obvious to anyone who drives through much of the country or who talks to regular, working people. This is obvious to anyone who looks at the timeline of that trade deficit chart and compares that to the economic shifts of our last few decades.

Our trade negotiating process is rigged from the start. Giant, multinational and Wall Street corporate interests are at the negotiating table. Consumer, labor, environmental, human rights, democracy, health and all the other stakeholder representatives are excluded and the results of these negotiations reflect this. A rigged process called “fast track” is used to essentially force Congress to pre-approve the agreements before the public has a chance to analyze and react to them.

Obviously the giant, multinational and Wall Street corporations would want the public to believe that everyday small businesses gain from our trade deals, when in fact they do not. It is less obvious why President Obama would want to present at the State of the Union the story of one small business that does not reflect the reality of the trade deals he is promoting.

_______________________________________________
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Senator Warren does an excellent job of explaining what has happened to push the middle class down a few notches in the video above. However, she misses some key points. Free trade treaties, for example, have led to the exportation of American jobs by the tens of millions since 1990, according to the Federal Reserve Bank.

The difference between the old higher wages and the new lower overseas wages goes straight into the pockets of the uber rich, which is why Wall Street Senator Ron Wyden supports these income redistribution treaties.

Currently, Wall Street’s favorite senator is pushing the Trans Pacific Partnership, the greatest income redistribution treaty of all time. This is almost entirely President Obama’s treaty, and we’ll never forget that Goldman Sachs was the biggest contributor to the president’s 2008 and 2012 presidential bids. Every major so-called free trade treaty has increased the US trade deficit. Why would anybody in their right mind want to increase that? Oh, that’s right. These treaties are about redistributing income from the 99 to the 1 percent.

That’s just one thing that Warren doesn’t explain. There are many other things in the form of legislation that has redistributed income from the 99 to the 1 percent, but I don’t have time to go into that.

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Wall Street Plutocrat Larry Summers was President Obama’s first choice to lead the Fed, but he made some missteps and out he went. That left Yellen. Thanks to the Almighty! Yellen’s predecessor was a scheming architect of redistributing income from the 99 to the 1 percent.

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Yesterday, US Senator Elizabeth Warren called for a Federal investigation of the passionate relationships between the New York Federal Reserve Bank and the investment banks of Wall Street. The senator wrote on her Facebook page, “When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy. We learned this the hard way in 2008. Congress must hold oversight hearings on the disturbing issues raised by yesterday’s whistle-blower (sic) report when it returns in November – because it’s our job to make sure our financial regulators are doing their jobs.”

US Senator Sharrod Brown serves on the Senate Banking Committee with Warren. He backed her request in a statement of his own. “These allegations deserve a full and thorough investigation, and American taxpayers deserve regulators who will fight each day on their behalf,” the Ohio senator and frequent financial industry critic said.

Carmen Segarra, fired by the New York Federal Reserve for doing her job.

Carmen Segarra is the whistle blower in question. The former bank examiner jumped into public consciousness earlier this month when she filed a wrongful termination lawsuit alleging that the Federal Reserve Bank of New York fired her after she refused to go soft on investment banking behemoth Goldman Sachs.

Her allegations of cozy relationships between the big investment banks and a 2009 internal report cited by This American Life and Pro Publica paint a picture of what’s called “regulatory capture” at the Fed. That means that an independent oversight body has stopped acting on its intended motivations of protecting the public from misdeeds by the entities it regulates and started acting on behalf of those entities’ own interests. Regulatory capture is a subtle thing defined less by concrete facts and figures and more by the tone of meetings and the way friendships between regulators and businesses color the regulators’ actions and views. If capture takes hold and goes unchecked, the regulatory cops on the beat turn into enablers. In the radio segment based on Segarra’s tapes, host Ira Glass compares captured regulators to “a watchdog who licks the face of an intruder, and plays catch with the intruder, instead of barking at him.”

Regulatory capture is just one example of the many abstract cultural forces on Wall Street that create an environment where financial misdeeds can flourish, imperiling the real economy that employs everyone else in the business of making and selling goods and services. Surveys of industry insiders have repeatedly found worrying evidence of ethical lapses among people in the financial business, including outright disregard for the law. A quarter of those surveyed in 2013 said that they would knowingly break the law for financial gain. That number jumped to 38 percent for respondents who have worked in finance for less than a decade. The same survey also found that women are twice as likely to fear retaliation for whistle blowing as men.

Most government regulations of Wall Street are to keep things honest, which you can’t expect Wall Street to do. The result of Wall Street investment bank transgressions in both the short and long term are typically income redistribution from the 99 to the 0.01 percent.

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The Federal Reserve can make or break the economy. Currently, the Fed is keeping interest rates low, which it easier for people to purchase things on credit, spurring demand for goods and services and creating jobs in the process. Republicans have wanted the Fed to raise interest rates for years, but only since President Obama was elected in 2008, in order to tank the economy and place the blame on President Obama.

Click the link below to check out a story by Josh Bivens of the Economic Policy Institute on what other steps the Fed can take to make or break the economy.

How the Federal Reserve Can Help or Hurt the Economy: What’s at Stake | Economic Policy Institute.

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Inflation redistributes income from the 99 percent and delivers said income to the 1 percent. This is a no-brainer, making inflation nothing more than an income redistribution scam that those on the right and those on the left lie about, although maybe they just don’t know, which is unlikely. Case in point is a Paul Krugman op-ed below.

Krugman claims there is little inflation nowadays, while his right wing opponents claim there is ton’s of inflation and its caused by the Federal Reserve. They’re both right and they’re both wrong, kind of, but not really.

Krugman claimed in his op-ed that inflation is close to zero, and that’s true, kind of. In reality, inflation is currently closer to 8 percent if it was measured as it was back in 1980. Since then the government has switched the way it measures inflation twenty times, and all of these changes show less and less inflation. That is why inflation as measured today is less than 3 percent when it’s probably slightly above 8 percent. The purpose of doing this was to keep people from protesting and getting mad about their loss of real spending power, such as happened back in the 1970s.

Conservatives rightfully claim the inflation numbers are understated, which is remarkably true. However, Republicans claim this is caused by the Federal Reserve and its massive printing of money, which is perhaps a tad true, but mostly false.

Inflation mostly comes from corporate planning. Publicly traded limited liability corporations must always have rising share prices, which is largely a product of increasing profits and dividends. The best way to ensure these constantly increasing returns on investment is for corporate competitors to gather together and plan price increases. Thousands of corporations plan their prices rises in tandem, for the most part, and that’s why we have inflation.

When corporations raise their prices in tandem, it’s called a conspiracy in restraint of trade, a violation of the law, but the government almost always looks the other way, which is a function of corruption. This is not to suggest that to some degree competition doesn’t exist in the corporate world, because it does, but it’s a minor nuisance to our captains of industry which is quickly eliminated when the competition gets too hot, and saner minds quickly impose a truce on any hostilities since the primary enemy of the corporations are their unwitting customers.

Guess who pays the cost of this non-competition? You do. When the price of tuna, or lettuce, or gasoline, or cars, or airline tickets rise due to corporate planning, the difference between the old prices and the new higher prices goes from your pockets into those of rich shareholders.

That’s what the politicos and corporate fat cats don’t want you to know, so they keep the argument within unrealistic and narrow lines of debate.

See Krugman’s op-ed below.

http://www.nytimes.com/2014/07/07/opinion/paul-krugman-conservative-delusions-about-inflation.html?_r=0

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This is an insightful story and you can access it by clicking on the link below, but it doesn’t grasp the big picture about how student loans over the last thirty-four years, beginning with the regime of President Ronald Reagan, became an instrument to redistribute income from working people to the 1 percent.

Wall Street geeks of the 1 percent discovered that if Wall Street investment corporations, such as Goldman Sachs, purchased outstanding student loans they could then issue bonds against the loans, and sell the bonds to rich investors.

Wall Street investment companies steal billions of dollars in the variety of transactions that make up the path of turning student loans into student-loan-backed bonds. Much of this money lines the pockets and election campaigns of federal politicians.

This is precisely why President Reagan, Republicans and Democrats in congress, decided to reduce federal financial aid grants to college students. It was more profitable for Wall Street and the 1 percent to send kids into student loan purgatory than to provide needy students with grants.

Student loan payments go in part to rich investors. That’s precisely why the entire Republican Party, many Democrats, and the Obama white house doubled the interest on  student loans from 3.4 to 6.8 percent last year, at a time when interest rates were at near historic lows. This made the loans more attractive to investors of the 1 percent because the return on investment doubled. This is one way legislation is used to rig the economic and political game on behalf of the 1 percent, and against the 99 percent.

But it also means the middle class is paying more for the loans, or rather, more of their income is being redistributed into the wallets of the rich, so that the affluent can become richer. In other words, student loans became an instrument to redistribute income from the 99 to the 1 percent. Thank you President Reagan.

That’s precisely why the US senate voted against a bill sponsored by Senator Elizabeth Warren to provide relief to student loan debtors by lowering interest rates. Doing so would have undermined the value of the student loan backed bonds by lowering return on investment. The 1 percent did not want this to occur.

According to the Federal Reserve, student loan debt has doubled to $1.3 trillion since 2007.

http://www.businessinsider.com/an-accountant-explains-why-45-of-her-income-goes-to-student-loans-2014-5Yahoo! News

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