A welfare reform waiver proposed by the Obama administration that would allow states more flexibility in employment programs tied to Temporary Assistance for Needy Families (TANF) has come under fire from conservative institutions and congressional Republicans since it was introduced last week. Utah Sen. Orrin Hatch (R) has led the charge against the policy, and in a fiery floor speech Monday, he accused the Obama’s administration of wanting to “undo welfare reform” with the “stroke of a pen”:

HATCH: In essence, by the stroke of a pen, and against the clear intent of bipartisan majorities of the American people, Congress and the law itself, President Obama’s administration has attempted to undo welfare reform, one of the signature bipartisan policy achievements of the last 20 years. [...] This landmark legislation, the product of a Republican-controlled Congress, ended an entitlement to welfare and replaced it with a block grant to the states. The block grant known as the Temporary Assistance to Needy Families, or TANF, provided states with unprecedented control over welfare programs in exchange for meeting federal work standards.

But the changes sought by the administration seem similar to the program Hatch described in his rant. The administration’s waivers would give even more of the “unprecedented control” Hatch cites to state governments, a type of reform usually supported by Republicans. And though it waives certain federal requirements, the states will still have to meet federal standards (and establish their own benchmarks) under the waiver program.

Further, the reforms hardly “gut” welfare reform or its welfare-to-work requirement. Instead, they aim to improve a program that is woefully inadequate when compared to the federally-controlled welfare program that preceded it.

Though Hatch has a problem with the administration’s plan, other Republicans in his state actually began the push for waivers. Utah, under Republican control, began calling for the waivers in 2011 (along with Nevada, also under Republican control). “Utah is especially interested in the development of waiver authority in the TANF grant,” Utah Gov. Gary Herbert (R) wrote in a letter to HHS after the decision was announced.

Last year, Sylvia Allegretto, a labor economist at the Center on Wage and Employment Dynamics, found that as of 2007, the Walton family — heirs to the Walmart fortune — had a net worth equal to that of the bottom 30 percent of Americans. And due to the effects of the Great Recession that ratio has gotten substantially worse.

New Federal Reserve data analyzed by both Allegretto and Josn Bivens at the Economic Policy Institute shows that the Waltons now hold as much wealth as the bottom 40 percent of Americans combined:

Concretely, between 2007 and 2010, while median family wealth fell by 38.8 percent, the wealth of the Walton family members rose from $73.3 billion to $89.5 billion…In 2007, it was reported that the Walton family wealth was as large as the bottom 35 million families in the wealth distribution combined, or 30.5 percent of all American families.

And in 2010, as the Walton’s wealth has risen and most other Americans’ wealth declined, it is now the case that the Walton family wealth is as large as the bottom 48.8 million families in the wealth distribution (constituting 41.5 percent of all American families) combined.

Allegretto charted the change in wealth over the 2007-2010 period:

At the same time that the Waltons have amassed an ever larger fortune, Congress decided to cut the estate tax, a policy for which the Waltons have been pushing for years. And now that the estate tax cut is in place, conservatives are doing everything they can to ensure it doesn’t go away, allowing the Waltons to amass even larger amounts of wealth.

During a segment on his Fox News show last night about African-American support for the Republican Party, host Bill O’Reilly asserted that the roughly 85-90 percent of African-Americans who regularly vote for Democrats only do so because Democrats have made them “dependent” on government “entitlements”:

WILLIE BROWN [FORMER SF MAYOR]: [Democrats] moved in and offered programs and policies that allowed African Americans to become incredibly dedicated and the anchor in many Democratic elections.

O’REILLY: Alright, but that’s a nice view if you’re a Democrat. But someone else would say the Democrats moved in and gave them all kinds of entitlements, making them dependent on the Democratic party and the state, which is not a good thing.

Watch it:

O’Reilly assumes that African-Americans receive more government assistance than other Americans and hence that’s what makes them more likely to vote Democratic. But this is flatly false:

White Americans, poor and middle-class alike, receive the vast majority of tax-funded government assistance programs, from monthly assistance to Social Security to food stamps.

TANF (Temporary Assistance for Needy Families), the program that provides aid to single mothers, is the most well-known welfare program, but the truth is that Social Security and Medicare are also social welfare services, funded by tax dollars. To that end, nearly 70 percent of all benefits of these programs go to white people. In fact, since African Americans have lower life expectancy, many work and pay into the Social Security and Medicare programs through their tax dollars, only to have white Americans, who have a longer life expectancy, benefit from the income they’ve left behind.

The actual historical explanation for African-American support for Democrats, by contrast, doesn’t require parsing budgets: Democrats became, around 1964, the lead proponents of civil rights for African-Americans, while the Republican policy record is decidedly more mixed.

If O’Reilly wants the GOP to start attracting black voters, he should tell the party to start with a hard look in the mirror. One of the  leading Presidential hopefuls called President Obama “the food stamp President.” The flagship right-wing publication National Review published outright racists for years before finally catching on. O’Reilly himself has described a famous soul-food restaurant as “like any other restaurant…even though it’s run by blacks” and told an African-American professor that he “kinda” looks like a cocaine dealer.

Inequality has been front and center this political season, but one relatively unexamined aspect of the problem is the way it has exacerbated the financial distress of Social Security. As work by Monique Morrissey at the Economic Policy Institute shows, the spike in income inequality in recent decades accounts for as much as half of the program’s long-term financial shortfall.

This is because the payroll tax meant to fund Social Security is capped: The tax currently applies only to income below $110,100 a year, while any dollar an individual makes over that amount is not subject to the tax. So the growth in inequality since the late 1970s has pushed ever more income out of the reach of the payroll tax. When the formula for setting the cap was reformed in 1983, only 10 percent of earnings in the country escaped the tax. By 2008, that had grown to 16 percent:

Restoring the taxable earnings cap to cover 90% of earnings would close 31% of the projected shortfall. Add in forgone revenues and interest from 1983 to 2008, and the trust fund would now be larger by over $850 billion, equal to 16% of the $5.4 trillion shortfall. All told, growing inequality accounts for roughly half (47%) of the projected shortfall that has emerged since the system was last restored to balance.

Eliminating the cap entirely would close 71 percent of the shortfall, even if benefits for higher income earners are increased to reflect their greater contributions.

Another way to tackle the question: What if the cap had remained the same as it is, but inequality had not taken off? Which is to say, what if wage growth had maintained its historic connection to productivity growth, instead of decoupling since the 1970s, and median wages had not stagnated?:

If real wage growth had kept up with productivity from 1983 to 2007, the trust fund would now be larger by roughly $450 billion, equal to 8% of the $5.4 trillion shortfall. Going forward, the Social Security actuaries project relatively slow wage growth of 1.2% above inflation, but wage growth of 1.8% above inflation (the average productivity growth rate over the past quarter century) would eliminate 43% of the projected shortfall, according to the trustees’ 2010 report. All together, then, slow wage growth accounts for roughly half (51%) of the projected shortfall that has emerged since the system was last restored to balance.

In other words, America’s failure to maintain policies that support the wages of middle and lower-income Americans has contributed significantly to Social Security’s decline.

Meanwhile, increasing the retirement age or cutting benefits ignores the reality that Americans in the lower half of the income distribution missed out almost entirely on the gains in life expectancy, and that Social Security benefits as they currently stand kept 13.8 million seniors out of poverty in 2010.

Global bank HSBC enabled money laundering from Mexican drug cartels, funneled money to Iranian organizations despite government sanctions against the country, and was used by Saudi Arabian banks with ties to terrorist organizations, according to a Senate committee report released Monday. The bank’s executives and its regulators at the Office of the Comptroller of the Currency “ignored warning signs and failed to stop the illegal behavior at many points between 2001 and 2010,” the New York Times reported.

HSBC, Europe’s largest financial institution, ignored inside warnings about its transactions with Iran and other sanctioned countries, and the OCC ignored the behavior even after it was uncovered:

When the bank developed a way to process transactions for Iran’s largest retail bank, an HSBC executive wrote an e-mail to his colleagues that said, “I wish to be on the record as not comfortable with this piece of business.” None of his colleagues responded and the deal went ahead, according to the report.

The subcommittee also found evidence of widespread wrongdoing in HSBC’s failure to stop money laundering through accounts tied to drug trafficking in Mexico. The bank is accused of shipping $7 billion in cash from Mexico to the United States in 2007 and 2008 despite several warnings that the money was coming from cartels that needed a way to return their profits to the United States.

In many of the cases detailed in the report, the Office of the Comptroller of the Currency is said to have spotted the problematic behavior. But in nearly every case, the subcommittee found that the agency gave HSBC only a warning or mild punishment and did not push the bank to make large-scale changes.

The report’s author, Michigan Sen. Carl Levin (D), is skeptical of the bank’s expected apology at a Senate Permanent Subcommittee on Investigations hearing today. “While the bank is saying all the right things, and that is fine, it has said all the right things before,” Levin said. Both HSBC’s new chief executive and OCC head Thomas Curry, who joined the agency in April, are said to be promoting stricter enforcement atmospheres at their institutions.

The HSBC report is the latest in a recent run of scandals at the world’s largest financial institutions. The LIBOR rate-rigging scandal at Barclays has led to scrutiny, and potential lawsuits, from both American and British lawmakers, and JP Morgan Chase recently disclosed that its employees attempted to cover up trades that went wrong in the “London Wale” deal that has cost the bank billions of dollars.

Mitt Romney, who has long battled perceptions that his immense wealth renders him out of touch with voters, tried to prove his sympathies with the middle class at a fundraiser in Jackson, Mississippi last night. To an audience that paid $2,500, $10,000 or $50,000 a ticket, Romney pointed out the waitstaff in the room, saying “they’re not having a good year” due to the country’s slow economic recovery:

I know that people in this room are probably doing relatively well, relative to folks across this country. But not everyone in America is doing so well right now, it’s tough being middle class in America right now. The waiters and waitresses that come in and out of this room and offer us refreshments, they’re not having a good year. The people of the middle class of America are really struggling. And they’re struggling I think in a way because they’re surprised because when they voted for Barack Obama…he promised them that things were going to get a heck a lot of better. He promised hope and change and they’re still waiting.

Though he may embrace the middle class rhetorically, his actual policy tells a different story. Romney plans to increase the taxes for half of middle class families with children, while his wealthy fundraiser attendees who make $1 million or more would get an annual tax cut of nearly $150,000. He also wants to make it easier for companies to outsource jobs; by exempting companies from taxes on foreign profits, Romney could send as many as 800,000 jobs overseas. 

He also recently flipped his position on raising the minimum wage, saying, “There’s probably not a need to raise the minimum wage.” In Mississippi, the minimum wage is $7.25 an hour and the minimum wage for tipped employees is an even lower $2.13. The minimum wage would need be be near $10 today to have the purchasing power that it had in the 1960s.

Just a few months ago, Romney dismissed concern for the struggling middle class as “envy” and “class warfare.” Now he’s trying to change his tune a bit, while still embracing policies that would do no favors for American workers.

Our guest bloggers are Adam S. Hersh, an Economist at the Center for American Progress Action Fund, and Cameron DeHart, an intern at CAPAF.

The Federal Reserve, America’s central bank, has two jobs: make sure that inflation stays low, and make sure that employment stays high. Of late, with the economy still in a funk, the Fed’s first job has been easy to manage; the second, much less so.

Today and tomorrow, Federal Reserve Chairman Ben Bernanke will testify before the House Financial Services Committee and the Senate Banking Committee. While the private sector continues adding new jobs — each month for the past 28 months — unemployment in the United States remains unacceptably high four and a half years since the start of the Great Recession. At fulfilling its employment mandate, the Federal Reserve is failing.

Since the crisis began, the Fed has taken some out-of-the-ordinary measures to help boost employment, but can it do more? The answer is undoubtedly yes. And members should ask Bernanke why he and the Fed are not taking these or other actions to do its job consist with the severity of America’s unemployment woes:

1) Target the economy, not inflation. Currently, the Fed targets its policy to maintain a 2 percent annual inflation rate (currently running at 1.7 percent annually). The market knows this and tempers its investment behavior accordingly. Instead, the Fed could target the growth of gross domestic product, before inflation, so-called “nominal GDP targeting.” This would amount to a pledge to keep our economy growing on a sensible path, according to University of California, Berkeley economist Christina Romer. The move would work by causing investors and consumers to form expectations of slightly higher inflation, thereby creating an incentive to invest and consume today instead of tomorrow.

2) Target unemployment. Charles Evans, the President of the Reserve Bank of Chicago, suggested adopting an explicit target for the unemployment rate, following a so-called “Evans’ Rule.” In line with its dual mandate of stable prices and maximum employment, the Fed should pledge to do whatever it can to get the economy back to full employment, even if that means accepting a little more inflation for the time being. There is no reason to think accepting slightly higher inflation for lower unemployment is any worse than accepting higher unemployment for low inflation—and a lot of reason and economic evidence to suggest it is much better.

3) More easing. The Fed has already engaged in two rounds of “quantitative easing” — directly buying assets in financial markets to affect interest rates. Now it’s time for a third. Past easing primarily targeted government bonds, whose rates underpin our financial system, and mortgage-backed securities. But there’s no reason the Fed needs to stop there. The next round of easing could also target municipal bonds, student loans, or even securitized credit card assets to push down interest rates on infrastructure investments for cash-strapped state and local governments, for education that help people boost their skills and temporarily take sabbatical from the labor force, and for financially-strained families.

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