Ohio Sen. Sherrod Brown (D) took the Senate floor today to argue against Wall Street mega-banks that have been deemed “too big to fail” and thus receive the implicit backing of the federal government, arguing that lawmakers should act immediately to break up the big banks that now have assets worth more than three-fifths of the American economy.

Wall Street banks sparked the financial crisis in 2008 and were rescued by the federal government. Congress passed the Dodd-Frank Wall Street Reform Act in 2010, but many of its rules have yet to take effect and banks are even bigger today than they were before the crisis. They are also just as scandalous, as financial institutions have faced lawsuits over mortgage and foreclosure fraud, money laundering, interest rate-rigging, and other practices. That, Brown said Thursday, should drive lawmakers to learn from past mistakes and break up the big banks to protect the health of the American economy:

BROWN: In the last five years alone we have seen faulty mortgage-related securities; foreclosure fraud; big losses from risky trading; money laundering; and Libor rate rigging. [...]

How many more scandals will it take before we acknowledge that we can’t rely on regulators to prevent subprime lending, dangerous derivatives, risky proprietary trading, and even fraud and manipulation?

Wall Street has been allowed to run wild for years. We simply cannot wait any longer for regulators to act. These institutions are too big to manage, they are too big to regulate, and they are surely still too big to fail.

Watch it:

Two decades ago, the six largest Wall Street banks held assets worth just 16 percent of the American economy, Brown said. They now hold assets worth more than 60 percent of the total economy:

Brown has emerged as a leading critic of Too Big To Fail in the Senate, and his efforts have attracted bipartisan support. Louisiana Sen. David Vitter (R) joined Brown’s call for action on the Senate floor today, and Iowa Sen. Chuck Grassley (R) has ripped big banks for holding a “get out of jail free card” and, with Brown, has urged the Department of Justice to prosecute large banks for fraudulent practices.

The Volcker Rule — a part of the Dodd-Frank financial reform law that is meant to rein in risky bank trading — is on the verge of being delayed, again, as regulators squabble over its exact parameters. Wall Street banks and congressional Republicans, after successfully watering down the Volcker Rule when Dodd-Frank was being debated, have been trying to get rid of what little bits are left ever since.

But Occupy the SEC, an offshoot of the Occupy Wall Street movement that focuses on matters before government regulatory agencies, is suing the federal government in an attempt to speed up the process and get the Volcker Rule in place. The two plaintiffs in the case claim that their deposits are at risk, so long as banks are allowed to engage in risky gambling with federally backed funds:

Plaintiffs suffer the risk of irreparable injury to their deposits by reason of [the government's] non-action. The Plaintiffs’ bank accounts are subject to potential dissipation or liquidation resulting from bank losses occasioned by excessively risky trading activities by those banks. The Volcker Rule would institute structural safeguards insulating depository accounts from banks’ proprietary trading activities, thereby protecting Plaintiffs’ bank accounts. Defendants’ unjustified delay in finalizing the Volcker Rule puts Plaintiffs’ bank accounts at continued risk of financial loss.

This is the first lawsuit challenging regulators to implement, rather than delay, the Volcker Rule. As Public Citizen’s Bart Naylor wrote, the suit is “making the straightforward case that banks shouldn’t gamble with savings because real people may be harmed.”

Currently, less than half of the rules in Dodd-Frank have been finalized. Wall Street, meanwhile, had its second most profitable year ever last year.

Republicans love to claim that low-tax states such as Texas enjoy a disproportionate amount of economic success, while higher-tax states like California are economic basket cases. Republican governors in several states are using that rationale to propose gutting their state income taxes (and, in many instances, replacing them with regressive sales taxes).

But a new report from the Institute on Taxation and Economic Policy shows that so-called “high tax states” are actually experiencing more growth and less decline in income than states that are supposedly super-conducive to economic expansion:

In reality, states that levy personal income taxes, including the states with the highest top rates, have seen more economic growth per capita and less decline in their median income level over the last ten years than the nine states that do not tax income. Unemployment rates have been nearly identical across states with and without income taxes.

Here’s the breakdown:

– Four of the nine states without income taxes are actually doing worse than the average state in regards to economic growth per capita: Texas, Tennessee, Florida, and Nevada.

– Five of the nine states without income taxes are doing worse than average in terms of median income growth: New Hampshire, Florida, Tennessee, Alaska, and Nevada.

– Six of the nine states without income taxes had higher than average annual unemployment rates over the last decade: Texas, Florida, Tennessee, Washington, Alaska, and Nevada.

In fact, it was the “high tax” states that did the best in terms of growth, as this chart shows:

During his State of the Union address, President Obama called for raising the minimum wage to $9 per hour. Some Congressional Democrats have called to increase it all the way up to $10.10 (getting it close to the buying power it had in the 1960s).

But at the state level, conservative lawmakers are trying to go in the opposite direction. According to the National Employment Law Project, lawmakers in 31 states have introduced 105 bills aimed at suppressing workers’ wages, with a little help from the American Legislative Exchange Council (ALEC), the conservative group that provides model legislation on everything from union-busting to voter disenfranchisement:

Since January 2011, legislators from 31 states have introduced 105 bills reflecting ALEC’s “model” legislation designed to suppress the wages of low-paid workers in the United States — these bills aimed to repeal state minimum wage laws, reduce minimum wage rates for youth and tipped workers, weaken overtime compensation policies, and prevent local governments from establishing living wage ordinances. Of these 105 bills, 67 were directly sponsored or co-­‐sponsored by ALEC-­‐affiliated legislators from 25 different states. [...]

While only 11 of the 67 ALEC-affiliated wage suppression bills were ultimately passed into law, the cumulative impact of the 105 bills that have been introduced over the past two years remains significant. The persistent introduction of legislation to weaken or repeal wage standards drains the political momentum behind improving wages and workplace standards for low-paid workers by forcing a defensive fight over protecting the standards that already exist. As retail and fast-food workers in New York, Chicago, and cities across the country take collective action to improve wages in the nation’s fastest-growing low-wage industries — and as dozens of legislatures consider new proposals to increase minimum wages this year — ALEC’s wage suppression agenda serves as a significant source of inertia undermining the current push for better wages and workplace standards.

The minimum wage already isn’t enough for families to get by, while wage theft is a rampant problem across the country. Chicago, in fact, recently passed one of the nation’s strongest laws protecting workers against wage theft. But ALEC and its conservative allies wants to make it easier to steal money from workers’ pockets, while making it harder for them to get a raise.

A trio of Democratic lawmakers today introduced legislation to institute a small tax on financial transactions, a proposal that would reduce volatility in financial markets and raise substantial revenue for the federal government. Under the plan from Sens. Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI) and Rep. Peter DeFazio (D-OR), financial trades would be subject to a 0.03 percent tax, which they say would raise approximately $352 billion in revenue over the next decade.

Such a tax would slow down high-frequency trading that poses a threat to the health of financial markets while also incentivizing investment that drives economic growth. Opponents argue that the tax would slow down growth, but DeFazio told ThinkProgress last year that those claims are unfounded. “For 50 years we had a tax that was about seven times larger than this when the country was seeing the greatest growth in its history, post-World War II,” he said. “So we’ve proven this will not have a detrimental impact on growth. In fact, it perhaps is beneficial to growth. It’s not necessarily beneficial to salaries of hedge fund managers on Wall Street.”

“This commonsense proposal will raise billions in new revenue to get rid of the sequester or reduce the deficit while also discouraging the kind of reckless high-volume trading that contributed to the financial crash in 2008,” Whitehouse said.

11 European countries recently announced that they will institute a financial transactions tax, and Britain, which taxes stock and bond trades but does not tax more complex trades involving derivatives and swaps, is open to expanding its tax as well, Labour Party MP Chris Leslie said last week. “I don’t see any evidence that there would be a negative effect on economic growth,” Leslie said. “In fact, quite the opposite.”

Harkin and DeFazio have introduced the transactions tax in the past, but it has not received support from Treasury or President Obama. Many consumer groups and business and financial leaders, however, have offered support for the tax. “A modest financial transaction tax of less than 1 percent would serve as a remarkably efficient tool to achieve needed reform,” John Fullerton, a former director at JP Morgan Chase, wrote in 2011.

2012 was the second most profitable year in Wall Street’s history, with banks making north of $140 billion. Wall Street’s bonus pool, while not yet back to the heights it achieved before the financial crisis, is growing again, and the average cash bonus hit $121,900.

This is part and parcel of a longer trend on Wall Street, which has seen pay skyrocket as the financial industry was deregulated. According to Bloomberg News, Wall Street’s bonus pool has nearly quintupled since 1985, growing from $4 billion to more than $20 billion (in constant dollars):

Since 1985 the average securities industry bonus in the city has risen about four-fold. There’s a big jump from 1990 to 1991, when bonuses went from about $27,000 in real-dollar terms to $52,000, and a series of further increases from there. Bankers and traders in a bad year now earn much more than they did in a good one. You can see the chart to the right…Meanwhile, the bonus pool has risen in real-dollar terms from $4.1 billion to $20.1 billion.

One pernicious side effect of the near-constant growth in Wall Street bonuses is that regulators make vastly less money than those they are supposed to regulate. As a study in the Quarterly Journal of Economics, over the last few decades, it’s become “impossible for regulators to attract and retain highly skilled financial workers because they could not compete with private sector wages.”

Senate Republicans unveiled their plan to avert sequestration this week, and though they are still demanding that the looming budget reductions be offset totally by a different set of budget cuts, they are refusing to say what new budget cuts they prefer. Instead, they want to give President Obama the authority to choose which programs would face cuts as part of the $85 billion plan.

Republicans have, at times, offered specific spending cuts. The House GOP budget decimated Medicare and Medicaid while cutting taxes for the rich, and the GOP offered to replace sequestration in 2012 with a plan that protected defense while shifting all the cuts to domestic programs that have already faced steep reductions. But these proposals have been unsuccessful at brokering a spending compromise with Democrats and deeply unpopular with the American people, who largely want to protect the social safety net.

To avoid that problem, the GOP has often turned to demanding spending cuts without actually naming specific cuts they want, as they attempt to extract painful cuts without taking any of the blame:

1. BUSH TAX CUTS: In 2010, when Republicans wanted to extend the Bush tax cuts, they refused to name actual spending cuts they would support to offset the $4 trillion cost. Instead, Republican lawmakers only detailed programs that were off-limits and said cuts would have to be across-the-board.

2. FISCAL CLIFF: During negotiations to avert the so-called “fiscal cliff” at the end of 2012, Republicans again struggled to specify exactly how they would cut spending. GOP Conference Chair Cathy McMorris Rodgers, asked to detail specific spending cuts, could only offer that the GOP was “looking at the spending” and “the growth in government.” The House GOP’s plan to avoid sequestration that time around ultimately made deeper cuts to popular programs so that they could protect the defense budget.

3. DEBT CEILING: Republicans again demanded spending cuts to increase the nation’s borrowing limit last month, and again they had a hard time saying exactly what spending cuts they wanted. Rep. Peter King (R-NY) offered the most honest response yet, saying the GOP couldn’t offer specifics because that would be unpopular. “[A]s soon as a specific is put out there, it is attacked by the spending piranhas on the other side,” King said, ignoring that the “spending piranhas” also include the American people.

4. ENTITLEMENTS: Throughout these budget battles, Republicans have blasted Obama for not putting forward plans to cut entitlement programs like Medicare and Social Security, ignoring that Obama’s health care law cut Medicare (a fact the GOP was eager to remind Americans of during the November election). But even as Democrats made it clear that they would not support further cuts to entitlements, House Speaker John Boehner (R-OH) held a press conference to beg them to take the lead. Boehner’s party, perhaps learning from the backlash it has faced when it offered plans to cut Medicare in the past, refused to specify how, or by how much, it would cut entitlement programs.

Unemployment is likely to remain above 6 percent for at least three more years, Federal Reserve Chairman Ben Bernanke said during testimony in front of the House Financial Services Committee today. Responding to questions from Rep. Michael Fitzpatrick (R-PA), Bernanke said a “reasonable guess” for when unemployment will finally come down to 6 percent is 2016:

FITZPATRICK: The Fed has indicated it believes long-term unemployment rates will settle at around 5.2 percent or 6 percent.

BERNANKE: That’s our best guess.

FITZPATRICK: An understanding I heard your testimony earlier about predicting the future. When would you say we might get to around 6 percent? And also, the American people, they believe natural unemployment is actually much lower than that given what we experienced in the 1990s. Maybe your suggestion as to how we address that expectation.

BERNANKE: Again, it’s hard to predict. But a reasonable guess for 6 percent would be around 2016.

Watch it:

That unemployment remains high and will continue to do so for at least three more years would seem yet another argument against sequestration, the automatic budget cuts that will begin taking effect Friday. Indeed, Bernanke was outspoken in his opposition to further fiscal contraction during his testimony, repeatedly saying the budget cuts could damage the economic recovery and that the Federal Reserve, which has been acting to stimulate the economy through monetary means for months, could use help from Congress.

Instead of offering that help, Congress remains focused on deficit reduction, even as evidence mounts that the only spending problem America has right now is that the government isn’t spending enough. But Republicans have repeatedly blocked efforts to further stimulate the economy, choosing instead to push spending cuts that have held back the recovery. The looming round of cuts will only make that worse: the Congressional Budget Office projects that sequestration will knock 0.6 percentage point off economic growth while resulting in the loss of more than 700,000 jobs.

Budget cuts under the so-called “sequester” will go into effect on Friday. Independent estimates shows that the cuts will cost anywhere from 700,000 to 750,000 jobs. And the end result may be very little deficit reduction as well, as a more depressed economy will not produce as much in the way of revenue, as economist Adam Hersh explained.

During a hearing before the House Financial Services Committee today, Federal Reserve Chairman Ben Bernanke patiently tried to explain this to Rep. Sean Duffy (R-WI), who wasn’t having it:

DUFFY: Instead of encouraging responsibility, you come in and say “listen to cut 2 percent of our budget, you can’t do it. It’s going to have a great impact on our economy.” Mr. Chairman that doesn’t make sense to me.

BERNANKE: Well, I think most economists, including the CBO, would say this will cost a lot of jobs in the short run. And you can achieve the same results with longer-term programs. [...]

DUFFY: So then are you here telling us if we cut $85 billion in a more reflective way — in the bad spending that I just referenced — you would support it? It’s a good idea if we’re not doing it by way of the sequester, but we had a little more reflective analysis on the $85 billion.

BERNANKE: It would be better.

DUFFY: So is it better or you agree with us that we should actually reduce spending?

BERNANKE: I’m still concerned about the short-term impact on jobs. And you don’t get as much benefit as you think, because if you slow the economy that hurts your revenues and that means your deficit reduction is not as big as you think it is.

Watch:

For evidence of what Bernanke is talking about, one needs to look no further than Europe, where austerity — rather than sparking a recovery — has led to weak growth, high unemployment, and yes, more debt. In fact, the EU’s debt “was barely changed at 90 percent of gross domestic product in the third quarter of 2012 compared with 89.9 percent for three months earlier…It was up from 86.8 percent of GDP a year earlier,” even after the continent embraced deep spending cuts and reforms.

Barring a last minute agreement, the automatic across-the-board spending cuts that were included in the Budget Control Act will go into effect on Friday, affecting everything from food safety inspections, to HIV testing kits, and domestic violence programs. On Monday, Immigration of Customs Enforcement even began releasing some 10,000 nonviolent detainees from Immigration Detention Centers, citing the looming budget cuts. “I’m supposed to have 34,000 detention beds for immigration,” said Homeland Security Secretary Janet Napolitano. “How do I pay for those?”

Republicans — who have remained silent on the cuts that would effect health care and education programs — immediately expressed outrage, arguing that the Obama administration was purposely releasing immigrants to scare the public. “This is very hard for me to believe that they can’t find cuts elsewhere in their agency,” House Speaker John Boehner (R-OH) said in an interview with CBS. “I frankly think this is outrageous. And I’m looking for more facts, but I can’t believe that they can’t find the kind of savings they need out of that department short of letting criminals go free.”

The party finally found a cut it didn’t like, even though all of the immigrants released were being held on non-violent, immigration-related offenses and are still being tracked by ICE.

Taxpayers are forking over roughly $5.1 billion to the private prison industry every year to pay for detention centers, which hold thousands of immigrants who have not been convicted on any crime.

At around $164 per day per immigrant in detention, the centers are a huge burden on the U.S. economy and are home to multiple human rights violations.

There are several plans floating around to replace the so-called “sequester” spending cuts scheduled to kick in on Friday. Senate Democrats and the Congressional Progressive Caucus have both released their own plans, while House Republicans have not released a new plan, but point to one passed in the last Congress.

According to a new poll commissioned by the Business Insider, the Progressive Caucus’ plan is the most popular of the three:

– Surprisingly, the plan that polled the strongest was the House Progressive Caucus plan. More than half of respondents supported it compared to sequestration and just a fifth of respondents were opposed.

– A plurality of people — 28 percent — believed the House Progressive Caucus Plan would have the least financial impact on them personally. This makes the most sense, as only 14 percent of respondents reported having income over $150,000.

– Shockingly, 47 percent of Republicans preferred the House Progressive plan to the sequester. This means that Republicans supported the House Progressive plan just as much as they supported their own party’s plan.
Support for the Senate Democrat plan was weak, with just fewer than half of respondents preferring that plan compared with the sequester.

– Opposition to the House Republican plan was strong, with 57 percent preferring the sequester to that plan.

The CPC’s plan involves replacing the sequester with $960 billion in new revenue — raised via closing loopholes that benefit the rich and corporations, as well as ending wasteful subsidies — $278 billion in defense cuts, and investment in new job creation measures, including spending $160 on America’s crumbling infrastructure. The House Republican plan, meanwhile, replaces the sequester with a basket of cuts to food stamps, Medicaid, and the social services block grant (which, among other things, funds Meals on Wheels).

Across the country, millions of American children struggle to get the food they need, a crisis that impacts educational attainment and their futures. But even though about 21 million American children are eligible for school programs that provide them with free or reduced-price meals, only half are regularly eating breakfast at school, according to a new study on food insecurity and childhood hunger.

Only 11 million of the 21 million children eligible for school lunches and breakfasts eat breakfast at school, according to the study from Deloitte and the No King Hungry campaign:

Connecting eligible children to the breakfast program would enhance academic achievement and school attendance, according to the authors. If 70 percent of the students who were eating school lunches also ate school breakfasts, there would be 3.2 million students achieving higher standardized test scores, 4.8 million fewer absences, and 807,000 more high school graduates, the study says.

No Kid Hungry suggests that to expand access to more eligible children, schools should move their breakfast programs out of the cafeteria and into the classroom, making breakfast part of the regular school day. The study examined schools in Maryland that have made that transition and found that serving breakfast in classrooms increased participation from 46 percent in 2010 to 56 percent in 2012. Schools that served breakfast in classrooms, it found, saw a decline in chronic absenteeism, while students who received breakfast in the classroom were 12.5 percent more likely to achieve proficiency on standardized tests.

As President Obama pushes to increase the national minimum wage, Mississippi Republicans are digging in their heels to prevent any similar efforts in the Hospitality State. A bill working its way through the Republican-controlled Mississippi legislature aims to ensure that no local government enacts a mandatory minimum wage or other worker protections. Mississippi has no statewide minimum wage whatsoever (so it follows the national minimum wage).

The 2012 national Republican platform made clear that the party believes in local decision-making. Endorsing the notion of “solving local and State problems through local and State innovations,” the GOP pledged to “restore the proper balance between the federal government and the governments closest to, and most reflective of, the American people.”

But the idea that local governments might pass legislation to guarantee workers a livable hourly wage scares legislators like State Rep. Jerry R. Turner (R). His proposal, House Bill 141, mandates:

No county, board of supervisors of a county, municipality or governing authority of a municipality is authorized to establish a mandatory, minimum living wage rate, minimum number of vacation or sick days, whether paid or unpaid, that would regulate how a private employer pays its employees.

The bill claims that such a law is “necessary to ensure an economic climate conducive to new business development and job growth in the State of Mississippi.” While it notes that any debate on such matters “should be assigned to the Mississippi Legislature,” it also specifically states that the majority is “not suggesting a state minimum wage or minimum benefit package.” The bill passed the House earlier this month and now awaits action in the Senate’s Accountability, Efficiency, Transparency Committee.

Turner drew attention earlier this year for a bill prohibiting localities from establishing New York City-style regulations on unhealthy foods or requiring additional nutritional labeling at fast food restaurants.

During the Great Recession, the wealth gap between whites and African-Americans nearly doubled, leaving white with nearly 22 times as much in household wealth. According to a new study from Brandeis University’s Institute on Assets and Social Policy, this merely exacerbated a much longer trend during which the wealth of whites exploded while that of African-Americans stagnated:

In 2009, a representative survey of American households revealed that the median wealth of white families was $113,149 compared with $6,325 for Latino families and $5,677 for black families.

Looking at the same set of families over a 25-year period (1984-2009), our research offers key insight into how policy and the real, lived-experience of families in schools, communities, and at work affect wealth accumulation. Tracing the same households during that period, the total wealth gap between white and African-American families nearly triples, increasing from $85,000 in 1984 to $236,500 in 2009.

The report shows that the disparity is driven by “policy and the configuration of both opportunities and barriers in workplaces, schools, and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated.” For instance, whites are far more likely to receive familial assistance when buying a home (due to previously accumulated wealth), therefore allowing them to purchase a home earlier and hold it for longer. They are also more likely to live in a place where home equity rises more quickly. The same familial advantages allow whites to graduate college with far less student debt. All of this compounds on an already existing disparity, making it that much harder for African-Americans to catch up.

Voters in Italy — while not giving any party firm control of their government — did deliver a rebuke to austerity during yesterday’s national elections. “This election, I think, is the logical consequence of pursuing policies that have dramatically worsened the economic and social picture in Italy,” Simon Tilford, the chief economist of the Center for European Reform, told the New York Times.

But Eurozone Commission President Jose Barroso (who holds the highest EU office) wants to make sure that other Europeans don’t get any ideas regarding ditching their own austerity programs following Italy’s results:

Speaking at a Reuters summit on the future of the euro zone, Barroso said efforts to revive Europe’s economy would take time and required determination. The fact Italian voters had turned Monti out of office did not mean his policies, or those advocated by the European Union, were wrong.

“I hope we are not going to follow the temptation to give in to populism because of the results in one specific member state,” Barroso, speaking with passion, said of the EU’s efforts to combat the sovereign debt crisis.

“The question we have to ask ourselves is the following: should we determine our policy, our economic policy, by short-term electoral considerations or by what has to be done to put Europe back on the path to sustainable growth? For me the answer is clear.” [...]

Barroso said it was incumbent on all EU and euro zone countries, especially those receiving aid from the bloc’s rescue funds, to retool their economies and cut deficits in an effort to improve competitiveness and stimulate growth.

Barrosso is far from the only EU official imploring countries to stay the course, despite the clear evidence that austerity is stifling economic growth in Europe while not delivering significant debt reductions, as these two charts from economists Paul De Grauwe and Yuemei Ji show:

As De Grauwe and Ji wrote, “As it becomes obvious that the austerity programs produce unnecessary sufferings especially for the millions of people who have been thrown into unemployment and poverty, resistance against these programs is likely to increase. A resistance that may lead millions of people to wish to be liberated from what they perceive to be shackles imposed by the euro.”

Our guest blogger is Jane Farrell, a research assistant for economic policy at the Center for American Progress Action Fund.

When Marissa Mayer became the first ever pregnant CEO of a fortune 500 company, there was hope that her perspective as a new mom would highlight the importance of parental leave and workplace flexibility for families and for businesses. But when she said she’d work remotely during her “few short weeks” of maternity leave and, later, that she didn’t consider herself a feminist, there was some cause for concern about whether she would strive to improve workplace policies.

Now that her company has eliminated its work-from-home options for thousands of its employees, requiring them to instead work in Yahoo! offices or leave the company entirely, many of her admirers and employees are feeling disappointed and angry.

Yahoo! announced this new plan last Friday, claiming that in order “to become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side.” This means that employees who telecommuted full-time, along with those who just worked remotely one or two days per week, will now need to be at a Yahoo! office every day, without exception.

While there is something to be said for fostering a creative and collaborative workplace, Mayer is ignoring myriad studies showing the benefits of telecommuting and workplace flexibility, possibly to the detriment of her company. She’s also neglecting to consider how Americans are increasingly reliant on two working parents to support families, meaning that every hour saved on commuting time is an hour they can spend programming for Yahoo! and not worrying about leaving the office in time to meet their children at the bus stop.

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