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NEWS FLASH

CHART: Nearly Half Of Complaints To New Consumer Protection Agency Related To Mortgages And Foreclosures | According to a report issued today, 43 percent of consumer complaints to the new Consumer Financial Protection Bureau had to do with mortgages and foreclosures. Of the mortgage complaints fielded by the Bureau, “54% involved borrowers who had problems with their loan modifications, a debt collection or foreclosure,” while 25 percent involved trouble making payments. As Firedoglake’s David dayen noted, “this is a pretty good barometer of whether or not the [mortgage] servicers have cleaned up their operations on foreclosures and loan modifications. And it’s pretty clear they haven’t.”

A History Of Paul Ryan’s Attempts To Dismantle Social Security

That House Budget Committee Chairman Paul Ryan (R-WI) supports the privatization of Social Security is well known. Ryan proposed $1.2 trillion in cuts and the partial privatization of Social Security upon taking control of the Budget Committee in 2011, and he has constantly warned about the supposed doom facing the program if major reforms aren’t enacted immediately.

But Ryan’s attempts to gut the most popular entitlement program in America go back quite a few years, as Ryan Lizza’s New Yorker profile of the conservative hero makes clear. Ryan’s fight against Social Security has been ongoing since he pushed President George W. Bush to privatize the program in 2005:

Under Ryan’s initial version, American workers would be able to invest about half of their payroll taxes, which fund Social Security, in private accounts. As a plan to reduce government debt, it made no sense. It simply took money from one part of the budget and spent it on private accounts, at a cost of two trillion dollars in transition expenses. But, as an ideological statement about the proper relationship between individuals and the federal government, Ryan’s plan was clear. [...]

Two weeks after Bush’s Inauguration, Ryan gave a speech at Cato asserting that Social Security was no longer the third rail of American politics. He toured his district with a PowerPoint presentation and invited news crews to document how Republicans could challenge Democrats on a sacrosanct policy issue and live to tell about it.

Bush ultimately went with a slightly less radical proposal that still failed in the Senate and caused Republicans massive losses in the 2006 mid-term elections. But Ryan, undeterred, told Lizza that the failure of privatization was simply due to marketing, not that the plan was unpopular:

What some might interpret as the failure of an unpopular idea Ryan insisted was mostly a communications problem. “The Administration did a bad job of selling it,” he told me. Bush had campaigned on national-security issues, only to pitch Social Security reform after reëlection. “And . . . thud,” Ryan said. “You’ve got to prepare the country for these things. You can’t just spring it on them after you win.” The lesson: “Don’t let the engineers run the marketing department.”

Aided by the mainstream media’s spreading of the lie that Social Security is “going bankrupt,” Ryan has been able to thrust Social Security “reform” back onto the table, and it was embraced during the primary by virtually every Republican candidate.

What Ryan and his Republican colleagues continue to ignore, however, is how easy fixing Social Security would be if they weren’t so insistent on protecting the wealthiest Americans from a single tax increase. By lifting the payroll tax cap that currently limits Social Security contributions to the first $110,100 in income, Congress could ensure the program’s solvency for the next 75 years — longer than the program has been in existence to this point.

That wouldn’t fit Ryan’s belief that the government doesn’t have a role in helping protect the financial security of the American people. But it would prevent millions of Americans from losing the much of their retirement savings, as they would have during the 2008 financial crisis had Ryan’s plan to privatize Social Security become law.

As GOP Guts Food Safety Budgets, New Data Show Illnesses On The Rise

House Republicans have gone to great lengths to block implementation of a new food safety law, while also trying to cut the budgets of agencies that oversee food safety. But new data from the Center for Disease Control and Prevention shows just how foolhardy those moves are, as rates of foodborne illnesses are rising:

The most recent figures from the Centers for Disease Control and Prevention show that the rates of infections linked to four out of five key pathogens it tracks – salmonella, vibrio, campylobacter and listeria – remained relatively steady or increased from 2007 through 2011. The exception is a strain of E. coli, which has been tied to fewer illnesses over the same time period.

Foodborne illnesses sicken 48 million and kill roughly 3,000 Americans each year, and recently, a salmonella outbreak forced the recall of 30,000 pounds of Cargill-produced ground beef. Despite these numbers, the GOP budget made drastic cuts to the Food and Drug Administration in an attempt to prevent the implementation of the Food Safety Modernization Act, a law signed by President Obama last year that marked the first significant update to food safety law in a generation. The House farm bill, meanwhile, contains an amendment proposed by Rep. Steve King (R-IA) that would prevent states from regulating agricultural products.

Republicans, however, aren’t necessarily alone in their fight. Obama also sought cuts to the Food Safety Inspection Service in his budget plan, and his administration has thus far failed to meet required deadlines to implement new regulations. “Everyone was hoping that this new food safety law would be in place and we’d start seeing improvements by now,” Erik Olson, a director at the Pew Health Group, told the Washington Post. “What these CDC numbers show is that unless new protections are put into place, millions of Americans are going to continue to get sick from contaminated food.”

PA Mayor Reaches Settlement With Unions To Pay Back Public Workers’ Wages

Scranton, PA Mayor Chris Doherty

After Scranton, PA Mayor Chris Doherty (D) reduced the pay of hundreds of his city’s public workers — including firefighters, police officers, and other safety workers — to minimum wage earlier this month, three unions challenged the cuts in federal court. In a deal reached today, the mayor has agreed to pay back the wages that the city owes to its public workers. In addition to restoring employees’ wages, Doherty will also award them with interest for the backlogged salaries, Reuters reports:

Mayor Christopher Doherty agreed that the city would pay approximately $750,000 in compensation owed to firefighters, police officers and public works employees, plus at least $5,100 in interest, said Tom Jennings, a lawyer for the employees’ unions.

In exchange, the unions said they would drop their bid to have the mayor held in contempt of court, according to the agreement, reached Saturday and presented to a judge on Monday.

Despite the fact that a federal judge issued an injunction preventing the city from decreasing workers’ pay to minimum wage, Doherty slashed the wages of hundreds of public employees earlier this month, claiming that Scranton could not afford to pay their full salaries.

John Judge, the president of Scranton’s firefighters’ union, said he remains “cautious” about the settlement’s good news for public workers, expressing hope that the city won’t hold workers’ living wages hostage in the future.

Security

McCain Can’t Explain Why Military Spending Cuts Would Be ‘Devastating’

In their current campaign against automatic military spending cuts, Republican Senators John McCain (AZ), Lindsey Graham (SC) and Kelly Ayotte (NH) claim the reductions will be “devastating” to the U.S. military. But when asked to provide specifics on that claim on CNN this morning, McCain came up empty:

SOLEDAD O’BRIEN: Senator McCain, let’s start with you, if we can. The $500 billion cut over the next 10 years. You’ve had said that sequestration would be devastating. Give me a list of why?

MCCAIN: Well, first of all, it’s on top of another $460 billion that is already being cut. Second of all, it’s the view of Secretary Panetta and our uniform leaders who have used words like devastating, impossible to carry out our national security, challenge — meet those security challenges in the most graphic terms they have used as to the effects of these cuts.

And not to mention the job losses — the over a million jobs that would be lost and the billions of dollars also in defense industry so it’s a very serious situation.

Watch the clip:

Panetta does repeatedly say the military spending sequester would be “devastating” to the U.S. military but he has also failed to explain why. Panetta’s most specific remark on this point has been to say that the U.S. would have to reduce its presence in Latin America and Africa — i.e. hardly a “devastating” blow to the military or U.S. security. Moreover, a recent non-partisan Congressional Budget Office report found that the automatic spending cuts would bring the Pentagon’s budget back to what it spent in 2006.

As for McCain’s jobs argument, defense industry CEOs and other experts have said warnings that the military spending cuts will damage the economy and cause massive layoffs are “overblown.” And if you’re going to argue that federal spending is necessary to create jobs — a concept Republicans are now embracing in order to protect the nation’s bloated military budget — it’s probably better to, as one study has found, try to direct those dollars away from the Pentagon toward other domestic priorities.

CHART: How State And Local Budget Cuts Are Holding Back GDP Growth

As ThinkProgress has noted on numerous occasions, the nation’s unemployment rate would be a full point lower were it not for budget cuts that have forced hundreds of thousands of public workers to lose their jobs. The last three years, in fact, were the worst on record for public employment.

This sort of austerity, of course, has negative implications for economic growth, which in the U.S. was a sluggish 1.5 percent last quarter. As the Tax Policy Center noted, “in 2011, the state and local sector contracted 3.4 percent, the largest decline since World War II.” Budget cuts have actually knocked several tenths of a percentage point off of national GDP in each of the last two years and in the first half of 2012, as this chart shows:

Europe is presenting a shining example of the effects that austerity has on a national economy. For instance, the UK has been in a double-dip recession for three quarters, while Spain’s youth unemployment rate is above 50 percent. Conservatives, however, have not stopped pushing for more European-style austerity.

NEWS FLASH

Scandal Plagued Bank Sets Aside Billions Of Dollars To Pay Off Fines | Major British bank HSBC — which, according to a Senate report, laundered money for drug cartels and organizations with terrorist ties — has set aside about $2 billion in anticipation of fines and penalties resulting from this and other scandals. “What happened in Mexico and the U.S. is shameful, it’s embarrassing, it’s very painful for all of us in the firm,” said bank CEO Stuart Gulliver. In addition to $700 million earmarked for dealing with the laundering scandal, HSBC has set aside $1.3 billion to cover charges that it misled British customers.

Education

Predatory For-Profit Colleges Pay Executives Based On Corporate Profitability, Not Student Outcomes

According to preliminary findings of an investigation by Rep. Elijah Cummings (D-MD), the ranking member of the House Committee on Oversight and Government Reform, many for-profit colleges pay their executives based almost exclusively on corporate profitability, without taking into account student outcomes. Cummings’ office received documents from 13 for-profit schools, which showed just where the schools place their proirities:

The documents obtained during the course of this investigation indicate that the single most significant measure for determining executive compensation at these schools is corporate profitability, including factors such as operating income, earnings, profits, operating margins, earnings per share, net cash flow, and revenue. Companies use various combinations of these factors to determine the majority of executive compensation.

As discussed below, some companies provided no documents demonstrating links to student achievement when determining executive compensation, other companies provided documents with vague references to student achievement, and other companies provided documents that included specific compensation percentages linked to student performance measures. In all cases, however, the majority of compensation paid to company executives is based on measures relating to corporate profitability rather than student achievement.

As ThinkProgress has documented, predatory for-profit schools rely heavily on taxpayer dollars to produce revenue, yet leave many of their students buried in debt and without the education necessary to find a good job. They engage in aggressive marketing tactics, promising students employment opportunities that never materialize.

Meanwhile, CEOs of for-profit colleges make 26 times more in compensation than the heads of traditional universities. For instance, Strayer University CEO Robert Silberman was paid $41.9 million in 2009. (HT: Chris Kirkham)

Econ 101: July 30, 2012

Welcome to ThinkProgress Economy’s morning link roundup. This is what we’re reading. Have you seen any interesting news? Let us know in the comments section. You can also follow ThinkProgress Economy on Twitter.

  • The Federal Reserve board will meet this week to decide if it will take new actions to boost the economy. [Reuters]
  • Treasury Secretary Tim Geithner is in Europe this week to meet with officials from Germany and the European Central Bank. [CNBC]
  • A new report reveals how for-profit colleges serve shareholders over students. [Washington Post]
  • About two dozen states are reforming the way in which they license teachers to de-emphasize testing. [New York Times]
  • The House is planning to vote on a one year extension of the 2008 farm bill this week. [The Hill]
  • Spain slid even deeper into recession last quarter. [CNBC]
  • The first wave of social media companies to go public has largely underperformed expectations. [Reuters]

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