The Case for a New WPA

Why many are calling for a modern incarnation of the Depression-era program.

by Kate McCormack

The image catches your breath. The look etched on the mother's face reveals more about the hard lives of migrant workers during the 1930s than any history book. The photo, by Dorothea Lange, is one of the most famous shots in American history and an iconic representation of the Great Depression. Lange captured it while participating in the Farm Security Administration's photography project, a division of the Works Progress Administration (WPA).

[One of the most powerful images of the  Great Depression, "Migrant Mother" depicts 32 year-old  Florence Thompson, a pea picker, with her children in Nipomo, Calif..    Photo by Dorothea Lange, courtesy of Library of Congress.  ]One of the most powerful images of the Great Depression, "Migrant Mother" depicts 32 year-old Florence Thompson, a pea picker, with her children in Nipomo, Calif.. Photo by Dorothea Lange, courtesy of Library of Congress.

In 1933, when Franklin Roosevelt took office with the promise of government action to relieve destitution, unemployment had reached nearly 25 percent. As part of that commitment, his administration created the WPA, a permanent jobs program that put 8.5 million Americans to work between 1935 and 1943. The WPA was a massive public undertaking that changed the face of a growing nation. In addition to providing jobs to millions, it brought the nation's transportation system into the 20th century and brought art to people of all classes, leaving the U.S. with a rich legacy of oral history and artistic masterpieces.

Many organizations are calling for a modern incarnation of the WPA both to assist the nation's 6.5 million long-term unemployed and to advance national priorities, from transitioning to clean energy to modernizing infrastructure to supporting the arts. A new WPA could help support:


In 1938 the WPA was the largest employer in the nation. For every job it created, two jobs in the private sector were created indirectly. Today, with unemployment seemingly stuck above nine percent and concerns that young workers will never fully recover from slow-starting careers, a new WPA, like its predecessor, could be the answer. The WPA was an important strategy for lowering unemployment and reducing the human suffering of economic recession. Government can hire people that the private sector typically does not: the long-term unemployed, young people without work experience, people from chronically underemployed populations, older workers nearing retirement, and workers with criminal backgrounds. Job experience and training can help these workers move into new industries for the long term.

Green Infrastructure

A new WPA could also help modernize an American infrastructure in desperate need of overhaul. The American Society of Civil Engineers gave the U.S. a grade of "D" in categories ranging from drinking water to transit to hazardous waste management, and estimates that $1.6 trillion in investment is needed over five years to bring dams, bridges, roads, sewers and other public projects up to par.

The first WPA played a huge role in modernizing the United States' 19th century infrastructure. Workers built 650,000 miles of roads, 78,000 bridges, and 125,000 public buildings. The WPA built parks, zoos, public pools, golf courses, and even ski hills, many of which are still in use.

This incarnation of the WPA should focus on creating green jobs to decrease U.S. reliance on fossil fuels. WPA workers could perform overdue energy assessments on public buildings and help boost their energy efficiency; build improved and expanded transit systems; or overhaul sewer systems to stop disastrous overflows and protect fresh water sources. 

The Arts

The WPA also brought art to the public through Federal Project Number One, which included the Federal Art, Theater, Music, and Writers' Projects. During the life of the WPA, musicians performed 225,000 concerts for 150 million people, many of whom had never seen a concert. They also produced nearly 475,000 works of art, which still decorate post offices, courthouses, and other public buildings.

The Farm Security Administration's (FSA) photography project documented the life of the rural poor through photos. The motto of the program was "introducing America to Americans." The project produced more than 160,000 photos, many of which are iconic today, and captured the struggles of thousands of Americans.

The FSA was not the only project determined to "introduce America" to her citizens. The Writers' Project original goal was to produce accessible, detailed guides to every state in the union so that people could learn about their country. But one of the project's most enduring and important was the Slave Narrative Collection. Between 1936 and 1938, writers conducted more than 2,000 interviews with former slaves in seventeen states. The interviews gave ex-slaves the opportunity to describe what they had lived through and are an important part of the nation's collective memory.

A modern day Writer's Project could bring music, art, and theater back to cash-strapped public schools. It could also hire journalists and writers who have been laid off from the shrinking newspaper and publishing industries to collect oral histories from survivors of World War II and the Civil Rights Era.

True Majority is advocating for a new WPA, while Campaign for America's Future and many other organizations are pushing the Local Jobs Act for America, a bill designed to save local jobs and services, authored by California Rep. George Miller. Notably, the Local Jobs Act lacks WPA-style funding for artists. You can show your support for a modern WPA by signing their petitions, and by calling on Rep. Miller to add funding for the arts to the Local Jobs Act.

It is difficult to quantify the priceless legacy of WPA projects; the highest honor that could be paid to the visionaries of the past would be to repeat their efforts. Maybe the time has come to "introduce America to Americans" all over again.


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Kate McCormack wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Kate is a freelance writer currently living and working in Zacatecas, Mexico. She volunteers with a transnational workers' rights law center where she participates in outreach to migrant workers about their labor rights in the United States.

Jobless 'Recovery' Requires Us to Rebuild America

by Jim Hightower

The good news is that America's economy continues to grow. The bad news is that most people's personal economies continue to shrivel.

The June report on jobs glows with the happy news that America's unemployment rate has fallen to 9.5 percent - the best we've had in a year! "We are headed in the right direction," trumpeted President Obama.

Great ... if true. However, the ballyhooed jobs statistic is a mirage. It looks good only because 650,000 more Americans became so frustrated with their fruitless search for work last month that they quit looking. In StatWorld, such "discouraged" seekers are - abracadabra! - no longer considered unemployed, even though they are. There are now 1.2 million Americans in this statistical purgatory.

That's not the only shadow on June's economic glow. Those lucky enough to have jobs, for example, saw America's average workweek shrink. It's now down to only 34 hours - which means less income for "full time" working families.

There also was another drop in the average hourly wage. Fewer hours, lower wages. That's not what most people would call an economy "headed in the right direction." Indeed, the strongest job growth in June came from the low-paying service sector, and nearly half of the 46,000 jobs added there are temporary positions.

Meanwhile, another implosion bomb is set to hit American workers. The public sector, which has been one bright spot for decent wages and benefits, is about to shed tens of thousands of teachers, firefighters, park employees, utility workers and others from state and local governments, sending our country in exactly the wrong direction.

Yet, economists are cheerfully bandying around the most moronic oxymoron I've ever heard. They are exulting that we're presently experiencing a "jobless recovery."

I don't see how their minds can put those two words together without having their heads explode! Excuse me, Einsteins, but there's no such thing.
You can spin your data till the cows come home, but an economy that has nearly 20 percent of the workforce either unemployed or underemployed, that has no plan for replacing the 8 million jobs we lost in the last two years, that is now proceeding with mass layoffs of such essential workers as teachers and firefighters and that is willing to accept poverty pay as the new American norm is not by any stretch of the imagination a recovery.

The reality we face is what economist Paul Krugman is frankly calling a "Long Depression." As happened in a similar decline in the 1870s, those at the top will prosper and take an even larger share of the wealth we all produce, while the majority sees declining income and rising poverty. To hasten this unhappiness, Republican senators have repeatedly blocked an extension of jobless benefits for America's hardest-hit families, thus intentionally increasing economic pain across our land.

While these Americans are suffering, Republican governors are reaching out - not to help those suffering, but to comfort the comfortable. Tim Pawlenty of Minnesota, for example, recently dealt with his state's deficit by slashing spending for public health, higher education, the elderly and the disabled. He then vetoed an income tax on Minnesota's richest people, declaring that this effort to balance the budget was "nonsensical." Likewise, New Jersey Gov. Chris Christie is terminating state workers while vetoing a tax hike on millionaires, calling the wealth tax "irresponsible."

There is, of course, a way to avert this economic disaster. It's called leadership. The way out is to enlist our grassroots people in an all-out "Rebuild America" campaign. Stop talking about a green economy, and put Americans to work building it. Also, let's lead the world in putting high-speed Internet in every home and school. And our crucial national infrastructure, from bridges to parks, is in a sorry state - let's go to work to repair and improve these public resources.

Destiny calls, but our "leaders" are either self-absorbed, clueless or cowardly. So, we must lead. One place to start this rebuilding is through the Blue-Green Alliance:

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

For the Economy, Help Is Not on the Way

by Ted Rall

TORONTO--Twenty years ago, in 1990, the American economy was in the third year of a deep recession. It was impossible to find a job. The 1980s housing bubble had popped; high-end housing prices in New York City dropped by 80 percent. Then, as now, the president seemed oblivious, aloof and clueless. Two years later, with no recovery in sight, angry voters turned him out of office.

But help was on the way. Something called the World Wide Web appeared in 1991. Two years later, Mosaic--the first graphic web browser, which would evolve into Netscape--was introduced. The Internet boom began. It flamed out seven years later, but in the meantime tens of millions of Americans collected new, higher paychecks. They spent their windfall. Consumer spending exploded. So did government tax revenues. When Bill Clinton left office in 2001, the Office of Management and Budget was projecting a $5 trillion surplus over the next ten years--enough to pay off the national debt and fund Social Security for decades. Unemployment had fallen to four percent. United States GDP accounted for a quarter of the global economy.

It's different this time. We are in a deep depression: calculated the same way as it was in the 1930s, the unemployment rate is the same as it was in 1934. Global credit markets have stalled. Investment has ceased.

And help isn't coming.

Despair oozes between the lines of media interviews of economists. Asked where the recovery will come from, they run down the list of theoretical possibilities, dismissing them one by one. The question remains unanswered. Which is, of course, the answer.

No one knows where the recovery will come from for a simple reason: It isn't coming. Not any time soon.

"A robust rebound in retail sales earlier in the spring had fueled hopes that consumer spending--which makes up about 70% of U.S. economic activity--would give a strong lift to the recovery. But now that is looking increasingly unlikely," reported The Los Angeles Times. "Households are not going to be the engine of growth for some time," Paul Dales of Capital Economics told the newspaper.

"In past recoveries, booming construction activity led the way, fueling spending and other economic activity. That's not happening this time," said the Times.

If there's some new technological innovation--like the Internet in the early 1990s--waiting in the wings, no one has heard or seen it.

Forget about Congress. The feds wasted hundreds of billions of dollars to bail out banks, insurance companies and big automakers who used our taxpayer money to give raises to their top executives and remodel their offices. Meanwhile, the stimulus that needed to happen--bailing out distressed homeowners, small businesses and individuals who lost their jobs--never happened. Now Congress is worried about the deficit. So read my lips: no new bailouts, not even one that might actually work.

Some think the U.S. could export its way out of the depression. But a radical restructuring of trade agreements and manufacturing infrastructure would have to come first, followed by years of expansion. U.S. policymakers haven't even begun to think about the first move. Moreover, the rest of the world isn't in a position to buy our stuff. The rate of expansion of the economies of China and Japan is slowing down. Germany and other EU nations are imposing austerity measures.

Globalization is key. Writing in The Wall Street Journal, John H. Makin argues that the actions of individual G20 nations threaten to bring the whole system crashing down in a Keynesian "paradox of thrift."

Makin says: "Because all governments are simultaneously tightening fiscal policy, growth is cut so much that revenues collapse and budget deficits actually rise. The underlying hope or expectation that easier money, a weaker currency, and higher exports can somehow compensate for the negative impact on growth from rapid, global fiscal consolidation cannot be realized everywhere at once. The combination of tighter fiscal policy, easy money, and a weaker currency, which can work for a small open economy, cannot work for the global economy."

Adds Mike Whitney of Eurasia Review: "Obama intends to double exports within the next decade. Every other nation has the exact same plan. They'd rather weaken their own currencies and starve workers than raise salaries and fund government work programs. Class warfare takes precedent over productivity, a healthy economy or even national solvency. Contempt for workers is the religion of elites."

One can hardly blame workers for fighting back. Two weeks after hundreds of protesters rioted at the G20 summit meeting, Toronto police are pouring through thousands of photos and are using facial recognition software to track down offenders. They have even released a Top 10 "Most Wanted" list and related pictures of activists.

Whether or not the anti-globalization protesters are motivated by the struggle for liberation and economic equality, they symbolize the industrialized world's best chance to prevent the economy from continuing its current process of slow-motion collapse. If the system cannot be saved by consumers, business or government, the system itself must be revamped and replaced. Late-period global capitalism's constant cycle of booms and busts is unsustainable and intolerable. States must regulate and equalize incomes, and control production.

If the cops were smart, they would track down and arrest those people who really are ruining the economy. They could start by listing and releasing the photos of the attendees of the G20.

Ted Rall is the author of the new book "Silk Road to Ruin: Is Central Asia the New Middle East?," and "The Anti-American Manifesto," to be published in September by Seven Stories Press. His website is

Pre-Recession Unemployment Rates May Not Be Reached for a Decade

WASHINGTON, DC - As recent calls for additional stimulus and the extension of unemployment benefits meet with stiff opposition, Congress appears to have underestimated the profound effect of the current recession on the labor market. A new report from the Center for Economic and Policy Research (CEPR) shows that with a job growth path comparable to the last recovery, the economy will not recover all of the jobs lost in the recession until March 2014. Assuming the trend rate of growth in the labor force, the unemployment rate will not fall back to the pre-recession level until April 2021.

"The economy desperately needs action on job creation," says John Schmitt, a senior economist at CEPR and a co-author of the report. "At current and projected job creation rates, we will still be suffering from the effects of the downturn well into the next presidential term."

The study, "The Urgent Need for Job Creation," compares various job growth scenarios with the job loss seen in the recession and projects when the lost jobs will be regained and when the unemployment rate will return to pre-recession levels in each case.

Considering more rapid periods of growth, the analysis shows that using the fastest period of growth of the 1990s expansion, the economy does not reach the December 2007 level until September 2012 and does not create enough new jobs to return to the pre-recession unemployment level until September 2014. If the even faster growth rates of the mid-1970s and early-1980s are applied, the economy returns to December 2007 employment levels in November 2011 and pre-recession unemployment rates by October of 2012.

Current CBO projections indicate that future job growth will fall somewhere between the rates of the two most recent expansions. This means that absent serious job creation policies, the economy will not reach pre-recession levels until well after the 2012 election cycle (June 2013), and not return to an unemployment rate near the pre-recession level until August of 2015.

The full analysis can be found here.

Countdown to Collapse: The Recovery is Not Recovering

by Danny Schechter

Financial journalist Charles Gasparino whose career trajectory took him from Newsweek to CNBC to Fox News was on with Bill O' Reilly doing what the host of the factless Factor likes to do the most: promote Fox News. In the course of their self-promotional banter, Gasparino let sip an unverifiable story about a meeting of top CEOs speculating about whether President Obama really is a secret Socialist.

Stories like this, invented or not, freak a White House ever eager to reassure the business world of their loyalties. That is no doubt why Robert Gibbs, the President's Press Secretary took a whack at the "professional left," a statement he later said had been "inartful" but did not withdraw.

Writing on OpEd News, Kevin Gosztola was not surprised:

"While circumstantial, the best evidence for why Gibbs would feel like uttering the aforementioned remarks is the shift of money from Wall Street to Republicans ahead of the election... The Democrats earned 57 percent of campaign contributions from securities and investment industries.

The situation compels the Obama Administration, especially White House press secretary Gibbs, to whip the left and the sections that are most listened to by voters into line not only because money from business interests needs to swing back the other way but because disappointed and disillusioned voters will likely stay home, not donate to Democratic Party campaigns, not make phone calls, and refuse to go door-to-door canvassing prior to Election Day if they do not fall in line."

According to a preliminary analysis, the Center for Responsive Politics reports that "individuals and political action committees linked to the financial and real estate sectors swung hard to the Republicans with their giving since last year....

In March 2009, 70 percent of money from the sector went to the governing party, but by this summer, 68 percent was going to the opposition, as Democrats fought to pass some version of a financial overhaul."

The motivation for Gibbs' remarks may or may not be tied to signaling Wall Street but the deeper truth is that everyone, right and left alike, seem frustrated and at the same time powerless to check the continuing economic decline.

The private sector is not creating jobs. The GOP is blocking the government from doing more stimulus programs while the system seems to be unraveling. All the talk of cutting deficits by conservatives or ending tax cuts by liberals will not give the economy the boost it needs. There is a paralysis of analysis and a stalemate.

The markets were more freaked by the recent pessimism oozing from the Fed than any partisan punditry. The slowdown they are worried about has already doomed any heavily-hyped "recovery."

And the public knows it, according to the recent polls.

What's worse is the tea leaves offer few signs of a turnaround any time soon even if General Motors is selling more cars-many, may we be reminded, in China. (The GM CEO who last week took a nasty ingrate smack at GM being perceived as "Government Motors," demanding the government sell all of its shares, has just announced he is leaving! I wonder why?)

The Carlyle Group is taking over while the automaker launches a new program of subprime lending, the very predatory dealmaking that got them in trouble in the first place.

Does anyone ever learn from history, or care about how communities are being destroyed as a financial crisis becomes a social crisis at the grass roots level?

Check out what happened at that mall in Atlanta where thousands of people nearly rioted to get on a public housing waiting list. The Congress returned from its recess to pass new monies to keep teachers teaching and cops patrolling. They did so by slashing food stamps so the unemployed and poor -some 41 people who rely on them---will have to cut back further.

What a trade-off.

As for insuring the stability of an increasingly volatile system, will the new financial reforms make any difference? It doesn't look like it. The New York Times reported, "As Wall Street scrambles to find the best and most profitable way to operate under the new financial reform law, Goldman Sachs Group Inc. - the firm that was expected to suffer the most under the legislation - could emerge practically unscathed...

"...we think we are well positioned to be a market leader under the new rules," said Jack McCabe, co-head of Goldman's derivatives clearing service business.

Richard Bove, a bank analyst at Rochdale Securities, said he had changed his view of the law's effect on Goldman.

"I thought this company was going to be really harmed by this bill; now I've figured out that it's not going to happen," he said. "They should win big here."

That's Goldman's reason to celebrate its "big win" What about the others? The truth is we will not know for a awhile, for a long while, for many, many years. So much for any sense of urgency even after former Fed Head Paul Volcker said we are running out of time.

Bloomberg News explained why,

"Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world's banks until 2018 to comply with limits on how much they can borrow. Parts of the Volcker rule, a provision of the new Dodd-Frank Act that would force firms to cut stakes in in-house hedge funds and private-equity units, may not go into effect for a dozen years..."

"Based on our experience of government's ability to execute these things effectively and in a timely way, we are almost uncovered now from any future financial risk for at least another 8 or 10 years, and that's a little scary," said Roy Smith, finance professor at New York University's Stern School of Business and a former banker at Goldman Sachs Group Inc

Economist Nouriel Roubini, one of the first to forecast our crisis, worries that major economies in Europe are at risk and could fall. At the same time I am reading articles that contend, "The US is more bankrupt than Greece." Another reports the IMF saying the US is bankrupt but most Americans don't know it.

What else don't we know?

At the same time, the folks who brought us this crisis are still riding high, making multi-million dollar "settlements' to cover up fraudulent practices. In recent weeks, Goldman Sachs, Countrywide and, now, Wells Fargo have just done that in part to avoid prosecutions.

Their CEOS are going on vacation to spend their ill-gotten gains, not to jail to pay for their crimes. And the "professional left"-whatever that is supposed to be---is more pissed at Robert Gibbs blathering at that podium than the banksters maneuvering behind the scenes.

Can anyone tell me what's wrong with this picture?

Just one footnote: In this week of growing economic despair, an 81-year old senior citizen named Bernard Stone stood outside the unemployment office in Harlem with a flyer of his own making calling on President Obama to issue an executive order closing all American-owned factories outsourcing jobs. If they don't do it, their executives should, he suggests, lose their citizenship and be deported to the countries to which they exported American jobs.

"The hundred or so people who read my leaflet liked that part," he told me.

Mediachannel’s News Dissector Danny Schechter investigates the origins of the economic crisis in his new book Plunder: Investigating Our Economic Calamity and the Subprime Scandal (Cosimo Books via Amazon). Comments to

Save Wall Street! Congress Passes JO(BS) Act

by Jim Hightower

Hallelujah, Washington has finally heard the people's cries for jobs! In an urgent bipartisan push, Democrats and Republicans have joined hands across the aisle to pass the JOBS Act. In this time of "The Great Hurt" — with widespread unemployment, middle-class incomes tumbling and the price of gasoline skyrocketing — we can all applaud our stalwarts in the capital city for meeting the No. 1 need of America's hard-hit economy: deregulating Wall Street.

Huh? I thought this was a jobs bill?

We'll get to that, but first (as always) Wall Street bankers must be served. Yes, them. The same priests of unmitigated arrogance who caused the disastrous financial crash that continues to rumble across our land. The same Wall Streeters we bailed out with trillions of public dollars. That Wall Street is now sulking and skulking around the U.S. Capitol, insisting that it is an economic victim, held back from its profiteering potential by government regulations to protect the public from finaglers and fraudsters. "Free Wall Street," is their cry!

Clucking with sympathy, Congress' tea party Republicans have rushed to the side of these poor, rich financiers, pledging to unshackle them from "burdensome" regulations. Serving Wall Street is not all that popular these days with voters, however, so the Repubs and their Democratic allies have committed their own fraud in order to pass this bill, deceptively titled it the "JOBS Act" (even though it doesn't actually create any jobs).

Then they pushed it in the name of small businesses (even though they quietly defined "small" as a billion dollars a year in sales). In fact, the accent on the JOBS acronym should be on "B.S." Will it surprise you to learn that the word "jobs" isn't even included in the title? Instead, JOBS stands for "Jump-start Our Business Start-ups."

Alarmingly, the so-called "onerous" regulations that Congress eliminated primarily are the extremely useful financial disclosure rules passed a decade ago to prevent another Enron scandal.

The GOP House even tried to free financial hucksters from having to tell potential investors the names of the executives running the company and — get this — from providing such essential investor information as a description of what the company does and accurate accounting of its financial condition!

The last thing our economy needs is an open invitation for a new crop of Enroners to be unleashed to defraud the public — but that's the first thing that Washington agreed to do. It's a disgrace.

While the law was rushed to passage without any public hearings in the name of hard-hit American workers and small business, all of the benefits go to corporate and financial hucksters who begged Congress to roll back financial disclosure and anti-fraud rules that were designed to protect investors, consumers and taxpayers. It's just another "tinkle-down" economic scam written by and for Wall Street fraudsters. The law makes it easier for them to raise cash for their new business schemes by deceiving investors about the risk of loses, the true financial condition of the enterprise and the amount of capital being raked off by executives.

"Free us from those pesky old regulations," demanded the hucksters, "and we'll attract speculators for corporate startups that (if they succeed and don't set up operations offshore) could possibly, someday create a few low-wage American jobs. But don't hold us to that job thing."

Sure enough, Washington's Wall Street-hugging politicos did not. Instead, they merrily passed a bill upping the likelihood of more financial swindles without even getting a promise from the swindlers that America will get some good jobs in return. The JOBS Act should be called the ROBS Act.

© 2012 Creators Syndicate

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

“JOBS Act” a “Recipe for Fraud” Creating a “Race to the Bottom”

April 5, 2012
3:49 PM

CONTACT: Institute for Public Accuracy (IPA)
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167
“JOBS Act” a “Recipe for Fraud” Creating a “Race to the Bottom”

WASHINGTON - April 5 - WILLIAM K. BLACK, blackw at
Available for a limited number of interviews, Black is now an associate professor of economics and law at the University of Missouri, Kansas City and the author of “The Best Way to Rob a Bank is to Own One.” He was the deputy staff director of the national commission that investigated the cause of the savings and loan debacle. He was just interviewed by The Real News: “JOBS Act 2012 a Recipe for Fraud" (

Black recently wrote an open letter signed by several noted analysts: “The JOBS Act is so Criminogenic that it Guarantees Full-Time Jobs for Criminologists,” which states: “As white-collar criminologists (and a former financial regulator and enforcement head) and experts in ferreting out sophisticated financial frauds, our careers and research focus on financial fraud by the world’s most elite private sector criminals and their political cronies. Therefore, we write to thank Congress and the President for preparing to adopt a JOBS Act that will provide us with job security for life. We will be the personal beneficiaries of Congress’ decision to adopt the law without the pesky hearings that would allow critics to launch devastating attacks on the proposed bill based on a brutally unfair tactic — the presentation of facts. Unfortunately, in our professional capacities, we must oppose the bill. This bill is an atrocity.

“The ‘Jumpstart Our Business Startups’ Act, the comically forced effort to create a catchy acronym, is the most cynical bill to emerge from a cynical Congress and Administration. It is an exemplar of why Congressional approval ratings are well below those of used car dealers. The JOBS Act is something only a financial scavenger could love. It will create a fraud-friendly and fraud-enhancing environment. It will add to the unprecedented level of financial fraud by our most elite CEOS that has devastated the U.S. and European economies and cost over 20 million people their jobs. Financial fraud is a prime jobs killer. …

“Among the many fraud-friendly policies that led to the deregulation that prompts our recurrent, intensifying financial crises, the undisputed most destructive aspect is the recurrent, intensifying embrace of the ‘regulatory race to the bottom.’ The ‘logic’ of the argument in the securities law context is that (1) dishonest issuers like bad regulation because it allows them to defraud with impunity, (2) our ‘competitor’ nations (typically described as the City of London) offer weaker regulation to induce the fraudulent issuers to locate abroad, and (3) we must not allow this to happen; we must make sure that fraudulent issuers are based in America. Of course, they never phrase honestly their ‘logic’ about dishonesty. Four national commissions investigated the causes of financial crises — the S&L debacle, the ongoing U.S. crisis, the Irish crisis, and the Icelandic crisis. Each of the commissions has decried the idiocy of the ‘race to the bottom’ dynamic and warned that it must end. The arguments advanced by industry in support of the JOBS Act reflect and worship at the altar of ‘the race to the bottom.’”

Background: The New York Times piece this week, “JOBS Act Jeopardizes Safety Net for Investors,” states: “Maybe President Obama should have bought shares in Groupon’s I.P.O. If he had, he would understand what some Groupon investors may be feeling as he prepares this week to sign a new piece of legislation to help start-ups get financing. Had he purchased $10,000 worth of shares on the open market on the first day of public trading for Groupon, the online coupon company based in his hometown Chicago, he would have lost a good chunk of his investment, putting him in the red by almost $4,100 today.”

Also see: “Obama JOBS Act Leaves Labor Fuming In Democratic Feud.”


A nationwide consortium, the Institute for Public Accuracy (IPA) represents an unprecedented effort to bring other voices to the mass-media table often dominated by a few major think tanks. IPA works to broaden public discourse in mainstream media, while building communication with alternative media outlets and grassroots activists.

Institute for Public Accuracy (IPA) Links:

Why Obama's JOBS Act Couldn't Suck Worse

by Matt Taibbi

Boy, do I feel like an idiot. I've been out there on radio and TV in the last few months saying that I thought there was a chance Barack Obama was listening to the popular anger against Wall Street that drove the Occupy movement, that decisions like putting a for-real law enforcement guy like New York AG Eric Schneiderman in charge of a mortgage fraud task force meant he was at least willing to pay lip service to public outrage against the banks.

Then the JOBS Act happened.

The "Jumpstart Our Business Startups Act" (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

Ostensibly, the law makes it easier for startup companies (particularly tech companies, whose lobbyists were a driving force behind its passage) attract capital by, among other things, exempting them from independent accounting requirements for up to five years after they first begin selling shares in the stock market.

The law also rolls back rules designed to prevent bank analysts from talking up a stock just to win business, a practice that was so pervasive in the tech-boom years as to be almost industry standard.

Even worse, the JOBS Act, incredibly, will allow executives to give "pre-prospectus" presentations to investors using PowerPoint and other tools in which they will not be held liable for misrepresentations. These firms will still be obligated to submit prospectuses before their IPOs, and they'll still be held liable for what's in those. But it'll be up to the investor to check and make sure that the prospectus matches the "pre-presentation."

The JOBS Act also loosens a whole range of other reporting requirements, and expands stock investment beyond "accredited investors," giving official sanction to the internet-based fundraising activity known as "crowdfunding."

But the big one, to me, is the bit about exempting firms from real independent tests of internal controls for five years.

When I first read this, I asked myself: how does a law exempting a Silicon Valley startup from independent accounting actually encourage investment? If American companies have to post real, independently-verified numbers when they go public, doesn't that give investors all around the world a big reason to put their money here, instead of investing in, say, Mobbed-Up Siberian Aluminum LLC, or Bangalore Sweatshop Inc.?

In other words, how does letting go to market (and stay on the market for five years!) without publishing real numbers actually help the industry attract more financing in general, when the whole point of all of these controls is to make investment a less risky experience for the investor?

Get ready for the ostensible answer, because you won't believe it. Here's how CNN explained the reasoning behind that exemption:

Having 500 investors or raising $5 million previously forced a company to register with the SEC -- a costly endeavor. Filling out stacks of legal forms and undergoing independent accounting audits can cost hundreds of thousands of dollars. The law loosens requirements for most companies by raising several thresholds.

We needed Barack Obama and the congress to compromise the entire U.S. stock market because it's too expensive for a publicly-listed company with billion-dollar ambitions to hire an accountant? That almost sounds like a comedy routine:

SILICON VALLEY EXECUTIVE: Listen, is the hottest thing on the internet. We're so huge it hurts... I can't even walk to my corner bodega without women throwing me their phone numbers!

INVESTOR: I'd love to invest. Can I see your numbers from last year?

SILICON VALLEY EXECUTIVE: Well, that's just the thing. We painted the bathrooms last March, and then we also had that Vitamin Water machine put in the lounge. You know, the one next to the ping-pong table? So we just didn't have any money left over for an accountant. But I estimate our revenues for 2014 to be $4.2 billion.

INVESTOR: Sounds hot! Where do I send the check?

There's just no benefit that the JOBS Act brings to an honest startup company. In fact, it puts an honest company at a severe disadvantage, because now it has to compete against other, less scrupulous companies that can simply make their projections up on the backs of envelopes.

This is like formally eliminating steroid testing for the first five years of a baseball player's career. Yes, you can pretty much bet that you'll see a lot of home runs in the first few years after you institute a rule like that. But you'd better be ready to stick a lot asterisks in the record books ten or fifteen years down the line.

In the same way, get ready for an avalanche of shareholder suits ten years from now, since post-factum civil litigation will be the only real regulation of the startup market. In fact, there are already supporters talking up future lawsuits as an appropriate tool to replace the regulations being wiped out by this bill.

The JOBS Act seems like it will invite a replay of the disastrous tech-stock bubble of the late nineties. That mess was made possible by a historic collapse in accounting standards, with the great investment banks the pioneers of the collapse. In the old days, in the fifties and sixties for instance, you would never take a company public that wasn't profitable at the time of the IPO, or didn't have a multi-year track record of solid revenues.

When the banks stopped insisting on proven track records or real profitability before taking a company public, there was a sudden explosion of stock-market investment into heretofore unknown internet firms. Companies with no track records went from having literally no revenues at all to having five or six billion dollars' worth of market capitalization overnight. Banks explained that the new way to measure a company was by the quality of its ideas, not boring old indicators like revenues.

Even Alan Greenspan told the world that technology had made such great advances that the traditional laws of economics no longer applied, that there was "new paradigm," and that it was possible to have long-term growth without inflation. He essentially told the world that the bubble wasn't a bubble, because all that phony growth was not phony at all, it was just a whole bunch of people properly evaluating great new ideas, albeit before they had actually performed.

And we later found out, of course, a lot of that value wasn't value at all. And a lot of that sharp growth in the nineties was actually caused by complex fraud schemes like "spinning" and "laddering,", wherein banks artificially pumped up startup stocks in exchange for future business, or rigged the IPOs so that they would have fake "bumps" in investment at pre-arranged times.

Sometimes the companies themselves were the victims in the fraud scams, and sometimes the company executives were beneficiaries of fraud. But in virtually all of these schemes, the casual investor was the big dupe in the con. When the dot-com bubble finally collapsed, costing the world about $5 trillion in losses, the major victims were ordinary people. We can expect a replay of the same thing now, only on a much bigger scale.

The finance world is buzzing over this bill. The reactions I've heard so far range from minutes-long guffaws of dark laughter to bloodcurdling, I-can't-freaking-believe-they-went-this-far outrage. "I thought I had lost the ability to be shocked," one friend of mine, a former regulator, told me this weekend, chuckling at the sheer stones it took to push the law. "But this thing is just inspired. They broke the mold with this one."

There are some crazy side-stories that I'll get to later in the week, including the hilarious influence certain preposterous individuals had in pushing this bill (most notably Steve Case, former co-founder of AOL and a veteran of multiple accounting fraud scandals, who was recruited by both parties to lobby the bill). There are also some remarkable contradictions in the arguments the bill's supporters made when they pushed for the bill's passage. Anyway, more on this to come.

In the meantime, let's just say this is a dramatic step taken by Barack Obama. Nobody should have any illusions about where he stands on Wall Street corruption after this thing. Boss Tweed himself couldn't have done any worse.

© 2012 Rolling Stone

As Rolling Stone’s chief political reporter, Matt Taibbi's predecessors include the likes of journalistic giants Hunter S. Thompson and P.J. O'Rourke. Taibbi's 2004 campaign journal Spanking the Donkey cemented his status as an incisive, irreverent, zero-bullshit reporter. His books include Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History, The Great Derangement: A Terrifying True Story of War, Politics, and Religion, Smells Like Dead Elephants: Dispatches from a Rotting Empire.

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