@DavidCayJ
Donald Trump

No, Trump Didn't 'Win Big' In South Carolina

Politics reporters last weekend hailed Saturday’s South Carolina Republican primary results as a “big win” for Donald Trump.

Not so fast. The results show that Trump is a weak candidate even in one of the most conservative states in the country. And the coverage shows that our biggest and best news organizations, on their third try, can’t figure out how to cover Trump’s campaigns.

With nearly all ballots counted, Nikki Haley won almost 40 percent. Trump got almost 60 percent. That’s well below the 30-point or even 35-point margin polls predicted for Trump, so his win was not so big.

The South Carolina results are significant because they show, yet again, how the focus by political reporters on the horse race rather than the issues distorts and damages American politics. At DCReport, we don’t cover horse races because we focus on what politicians do far more than what they say. We also never shy away from critiquing the performance of our fellow journalists.

Tuesday, Michigan Republicans will vote in their primary, which should further indicate what to expect in November. Michigan is one of only 13 states, most in the heart of the country and the edge of the Old South, in play in the Electoral College.

Clueless Commentators

For a week or so, I’ve watched numerous politics reporters, political strategists, and former party and elected officials on various cable shows offer long, detailed, and often obtuse explanations for why Haley hasn’t withdrawn from the Republican presidential primaries, given Trump’s unbroken winning streak.

The answer is so obvious you can say it in a few words. You can conceptualize it if you think about one of those billion-dollar lotteries: If you buy a lottery ticket, your chance of winning is tiny, but if you don’t, you have no chance.

Haley is simply positioning herself to be the only viable Republican choice should Trump falter due to criminal conviction, ill health, or telling voters to stay home if he realizes he may lose badly on November 5.

The South Carolina primary vote results convey a valuable message for all Americans about the values of our citizenry: not all Republicans have gone MAGA.

A large minority of GOP voters reject the racist make America white again foundation of Trump’s campaign, along with his kowtowing to dictators, promises to deploy the military for mass roundups of undocumented people, vows to lock up those who displease him, as well as his crude misogyny.

Traditional GOP Values

In short, many Republicans still believe in democracy, the rule of law, standing up to dictators, treating others with respect, holding politicians accountable, and women’s reproductive and other rights.

That these traditional American values were supported by only a minority, albeit a significant minority, of Palmetto state Republicans, shows the truth in Haley’s argument that Trump is a weak general election candidate. As Haley said just after the polls closed Saturday evening, “nearly every day, Trump drives people away.”

In South Carolina, people can vote in the other party’s primary, so some of Haley’s votes may have come from Democrats, but it is unlikely that was a significant factor.

We will have another test of Trump’s support on Tuesday when Michigan holds its primary election. How many people turn out, the share of votes Haley gets, and how politics reporters cover this primary all matter for the fate of our democracy.

In the mid-1970s, when I was the investigative reporter in the Detroit Free Press state capital bureau, Michigan was a bastion of socially conservative and economically progressive Democrats allied with powerful unions, especially the United Auto Workers. Union political arms looked out for Joe Lunchbox’s family.

Parts of Michigan, notably around Grand Rapids and west to Lake Michigan, were solidly Republican. Still, the elected officials I knew didn’t spout hatred, admiration for dictators, and revenge as their core message the way we hear from Trump and his MAGA mob.

Jobs and Voting

Michigan’s red shift followed decades of the big three automakers paying too little attention to quality. That created an opening for Japanese and other overseas car makers who steadily improved their offerings and adapted to changing consumer preferences. Many newer vehicle plants are in Ontario because Canadian healthcare isn’t on the books of employers, unlike Michigan and the rest of America.

The anti-union politics of the 1980s also drove down American pay. As pay and job availability deteriorated for factory and related workers, many Michigan Democrats aligned with the Republicans, believing that GOP policies would make working people better off. We now have more than 50 years of indisputable economic evidence showing the reverse.

But support for Republicans, while enough to capture the governor’s office for 20 of the last 33 years, was always weak in Michigan. Trump beat Hillary Clinton in 2016 by fewer than 12,000 votes, while the Democratic Party candidate has won every other presidential election since 2000 by at least 154,000 votes.

Trump and his allies insist “deep state” operatives and partisans stole the 2020 election. Three months ago, Trump even claimed he won all 50 states. But when judges in Michigan and elsewhere asked for offers of proof in five dozen lawsuits, Trump and his fellow election deniers produced not even a scintilla of evidence. Nonetheless, ever since, leaders of the Michigan Republican Party have perpetuated Trump’s lie. This has made for a literal state party fistfight, a dramatic fall in donations, and general disarray.

Voters should pay close attention to the Michigan Republican primary turnout and the margin of Trump’s almost certain victory. The turnout will help gauge voter enthusiasm within the GOP. And, as with South Carolina, Trump’s margin will indicate the breadth of his support within the Republican Party.

Reprinted with permission from DC Report.

Former President Donald Trump

Why Trump's Next Legal Move May Be Filing For Personal Bankruptcy

Conspiracy theorist Alex Jones did it two years ago. Rudolph Giuliani did it just before Christmas. Now there’s a very good chance that before March 12, Donald Trump will join them in filing personal bankruptcy.

Trump would do so for the same reason as Jones and Giuliani — to delay paying court-ordered awards for defamation.

Trump has never filed personal bankruptcy, as I will show below. Doing so now might seem at first blush to ruin his brand, his polished image as a multi-billionaire, a modern Midas who turns to gold all that he touches.

But spinning a bankruptcy filing to his advantage would be easy. Trump will tell his cultish believers that he is as rich as ever, but he was forced to seek refuge in Bankruptcy Court by the Marxist-Fascist-Corrupt-Deep State-Liberal-Radical cabal he blames for his legal woes.

Appeal Deadline Looms

Monday, March 12, matters because that is the deadline for Trump to appeal the $83.3 million a jury awarded to advice columnist E. Jean Carroll for defaming her after a federal court jury awarded $5 million for earlier defamation. Court rules require that, as a condition of appealing, Trump, like all such litigants, must show that he has the money to pay the jury’s award.

Trump’s options:

  • Pay the Carroll award, which I believe, knowing the man well, isn’t going to happen.
  • Post $83.3 million in cash with the federal court so he can appeal.
  • Obtain a bond guaranteeing payment of the award, which assumes that Trump can find a lender foolish enough to extend him credit.

In a previous DCReport piece, I questioned whether Trump has the capacity to either deposit that much money with the court or obtain a bond that will cover the entire amount should Trump prove unable to do so. After all, how many actual billionaires hawk $399 gold sneakers and $99 perfume, a human invention to hide stink?

But the Carroll award is not his only problem. On Friday, Trump was ordered to disgorge ill-gotten gains from persistent business fraud. With interest, he owes more than $450 million, a level of cash no one who critically follows Trump believes he has.

Stopping The Clock

Filing for personal bankruptcy stops the clock on both awards. That means he won’t need to deposit cash or get bonds to appeal the Carroll and New York State civil fraud awards. The automatic stay to these and other civil proceedings would benefit Trump by getting past what he sees as the finish line: the November 5 presidential election.

In the end, a bankruptcy filing won’t save Trump from paying, according to Professor Gregory L. Germain, who teaches bankruptcy law at Syracuse University College of Law.

Germain, my law school colleague for many years, says that while Trump can achieve is delays, surely enough to get past Election Day.

That strategy worked for conspiracy theorist Alex Jones. Two years after his bankruptcy filing Jones has yet to pay any of the $1.5 billion jury award for defaming the parents and relatives of the 2012 Sandy Hook massacre. That more than two years have passed suggests Trump should have no trouble getting past the election through this delaying tactic.

If you’re not familiar with Jones and his Info Wars internet program, he promotes not just baseless conspiracy theories but far-out tin foil hat nonsense like his assertions that “interdimensional beings” have taken over the bodies of many humans, especially political leaders. Among the guests Jones has fawned over: Donald Trump.

Jones Case

Jones repeatedly charged that the 2012 Sandy Hook Elementary School massacre was a hoax, and the grieving parents and other relatives were paid actors. The survivors filed a defamation case. A decade later a jury awarded the survivors $1.5 billion. Jones quickly sought refuge in federal Bankruptcy Court.

In October, a Texas judge ruled that Jones cannot use bankruptcy to avoid paying the $1.5 billion award. Jones has yet to pay anything.

Similarly, Giuliani repeatedly insisted that two Georgia election workers, a mother, and daughter, passed around a USB stick that altered the 2020 Georgia vote count, despite clear evidence that this was untrue. After a jury awarded $148 million to the victims, who were harassed in their homes and repeatedly threatened with death, Giuliani walked onto the sidewalk outside the courthouse and declared he had spoken the truth about the two women and had done nothing wrong. One of Giuliani’s lawyers says that the once-wealthy mayor of New York City is close to broke.

Giuliani is also under criminal indictment in Georgia over the same efforts by Trump and his confederates to steal the 2020 Georgia election.

Delaying legal proceedings has always been Trump’s first strategy, taught to him more than a half-century ago by the notorious Roy Cohn, a corrupt lawyer, and political fixer.

Trump’s second strategy, also taught by Cohn, is to attack anyone who comes after you: federal prosecutors, housing or gambling regulators, journalists or political opponents are all corrupt and illegitimate, Cohn taught Trump to shout.

Trump’s third strategy — is never to admit even the slightest wrong or mistake, no matter how powerful the evidence against you.

Trump has little chance of prevailing on appeal in the Carroll and New York State fraud cases, though he might get modest modifications of the damage awards. Delaying payment will likely make him even worse off, assuming he actually is worth as much as he claims, a figure that changes from day to hour to minute depending, he has testified, on his mood.

Professor Germain notes that Trump could put his company, the Trump Organization, into bankruptcy. However, that would not help because he is personally liable as the sole owner for the judgments in all three cases.

“It wouldn’t do him any good to get his corporations discharged from bankruptcy because the debts are against Trump personally,” German said.

Maximum Value Principle

In bankruptcy proceedings, the responsibility of the trustee and the bankruptcy judge supervising the case is to extract maximum value from the businesses, bank accounts, and other assets, known as the estate. The creditors, now primarily Carroll and the State of New York, would have to agree to any combination of asset sales and other actions to satisfy the debts, or press to liquidate the trump organization. But that could be years off.

Also, there are more civil cases pending against Trump, including those brought by Capitol police officers who were injured when Trump sent a mob to the Capitol on January 6, 2021.

Now for Trump’s bankruptcy history, which is the subject of many factually wrong articles and claims.

In 1990 his lawyers engineered a private equivalent of bankruptcy made possible because New Jersey casino regulators — in violation of their legal duty — took Trump’s side against bankers he owed $3 billion. At the time, Trump boasted that he was worth billions, but the public record showed he was underwater to the tune of almost $300 million. As I wrote in my 1992 casino expose´ Temples of Chance, you were probably worth more than Donald Trump in 1990.

Later, his publicly traded casino company filed bankruptcy four times while Trump was its president, even as he collected at least $83 million in compensation and benefits.

After Trump was, in effect, paid to go away, the casino company went bankrupt two more times before going out of business.

Trump has managed to trick tens of millions of Americans into believing he is a business genius rather than a wealth-destroying con artist. People who believe he is worth billions will believe him when he says he only filed personal bankruptcy because they made him do it.

David Cay Johnston, a former columnist for The National Memo, co-founded DCReport. He is a best-selling author, investigative journalist and former reporter for The New York Times, where he won a Pulitzer Prize in 2001. He teaches at Syracuse University College of Law.

Reprinted with permission from D.C. Report
Why Trump's Delaying Tactics Will Lead To Further Self-Destruction

Why Trump's Delaying Tactics Will Lead To Further Self-Destruction

Alex Jones did it two years ago to avoid paying a $1.5 billion jury award for defaming the parents and relatives of the 2012 Sandy Hook massacre. Rudolph Giuliani did it just before Christmas to escape a $148 million jury award for defaming two Georgia election workers he falsely accused of vote tampering.

Now, there’s a good chance Donald Trump will do it, too, given that a judge on Friday ordered him to pay $454 million, including interest, for persistent business fraud, and the $88.3 million he already owed advice columnist E. Jean Carroll for defaming her and, after being found liable for defaming her, did it again.

It refers to seeking refuge from creditors in federal bankruptcy court. Ultimately, a bankruptcy filing is unlikely to save Trump from paying what he owes, according to Professor Gregory L. Germain, who teaches bankruptcy law at Syracuse University College of Law.

Germain, my law school colleague for many years, says what Trump can achieve is delays, but almost certainly not escaping paying, assuming he has the assets to fulfill the judgements against him.

Contrary to stories circulating widely on the internet, Trump has never filed bankruptcy, as I will explain below.

Delaying legal proceedings has always been Trump’s first strategy, taught to him more than a half century ago by the notorious Roy Cohn, a corrupt lawyer and political fixer.

Trump’s second strategy, also taught by Cohn, is to attack anyone who comes after you: federal prosecutors, housing or gambling regulators, journalists or political opponents are all corrupt and illegitimate, Cohn taught Trump to shout.

Trump’s third strategy — never admit even the slightest wrong or mistake no matter how powerful the evidence against you.

The immediate problem facing Trump isn’t the order by Justice Arthur Engoron removing Trump from running the Trump Organization for at least three years while putting in place an independent compliance director. It’s not the ill-gotten gains that the judge says trump must disgorge, $454 billion including interest so far.

The immediate problem is that three weeks from today is the deadline for Trump to appeal the $83.8 million award to E. Jean Carroll.

In a previous DCReport piece, I questioned whether Trump has the capacity to either deposit that much money with the court or to put up about $17 million to obtain a bond that will cover the entire amount should Trump prove unable to do so.

Trump’s first problem is how much cash he actually has. The second, should he seek a bond, is whether any financial institution would be foolish enough to guarantee the full $83.3 million in return for about a fifth of that amount upfront, and a promise by Trump that he will pay if his appeal fails.

Trump has little chance of prevailing on appeal, though he might get modest modifications of the three damage awards. Delaying payment will likely make him even worse off, assuming he actually is worth as much as he claims, a figure that changes from day to hour to minute.

Professor Germain notes that Trump could put his company, the Trump Organization, into bankruptcy, but that would not help him because he is personally liable as the sole owner for the judgments in all three cases.

“It wouldn’t do him any good to get his corporations discharged from bankruptcy because the debts are against Trump personally,” German said.

In bankruptcy proceedings, the responsibility of the trustee and the bankruptcy judge supervising the case is to extract maximum value from the businesses, bank accounts and other assets, known as the estate. The creditors, at the moment Carroll and the state of New York, would have to agree to any combination of asset sales and other actions to satisfy the debts, or press to liquidate the Trump organization.

But there are more civil cases pending against Trump, including those brought by Capitol Police officers who were injured when Trump sent a mob to the Capitol on January 6, 2021.

In 1990 his lawyers engineered a private equivalent of bankruptcy made possible because New Jersey casino regulators — in violation of their legal duty — took Trump’s side against bankers he owed $3 billion. At the time, Trump boasted that he was worth billions, but the public record showed he was underwater to the tune of almost $300 million. As I wrote in my 1992 casino expose´ Temples of Chance, in 1990 you were probably worth more than Donald Trump.

Later, his publicly traded casino company filed bankruptcy four times while Trump was its president, as he collected at least $83 million in compensation and benefits.

After Trump was, in effect, paid to go away, the casino company went bankrupt two more times before going out of business.

How a Trump personal bankruptcy would fare now can be gleaned from the Alex Jones and Rudy Giuliani filings.

Jones, who grew rich formulating conspiracy theories on his Info Wars internet program, repeatedly charged that the 2012 elementary school massacre was a hoax, and the grieving parents and other relatives were paid actors. The survivors filed a defamation case. A decade later a jury awarded the survivors $1.5 billion. Jones quickly sought refuge in federal bankruptcy court. So far Jones has paid nothing.

In October, a Texas judge ruled that Jones cannot use bankruptcy to avoid paying a $1.5 billion award for defaming the parents and relatives of the Sandy Hook massacre murders. Jones has yet to pay anything.

Similarly, Giuliani repeatedly insisted that two Georgia election workers, a mother and daughter, passed around a USB stick with fake election results despite clear evidence that this was untrue. After a jury awarded $148 million to the victims, who were harassed in their homes and repeatedly threatened with death, Giuliani walked onto the sidewalk outside the courthouse and declared he had spoken the truth about the two women and had done nothing wrong. One of his lawyers says that the once wealthy mayor of New York City is close to broke.

Giuliani is also under criminal indictment in Georgia over the same efforts by Trump and his confederates to steal the 2020 Georgia election.

Reprinted with permission from DC Report.

E. Jean Carrol

E. Jean Carroll Has Trump By The Wallet (But Is There Anything In It?)

The $83.3 million defamation judgment that writer E. Jean Carroll won Friday against Donald Trump will soon reveal the depth of his finances, long shrouded in smoke and mirrors, disclaimers that his financial statements are not to be trusted, and outright fabrications about his income and wealth.

The secret: does Trump have the money to pay Carroll?

Trump says he’ll appeal. He has few grounds to challenge the federal court judgment. But if Trump does appeal, it will open the curtain on his murky finances, where inflated valuations and concealed obligations are common.

Trump testified almost a year ago that he was sitting on $400 million of cash. Be skeptical. Don’t discount the prospect that Donald conflated his personal money with cash from his MAGA fundraising operations, which by law cannot be used to pay Carroll.

Appealing will require Trump to either deposit the entire judgment amount with the court or obtain a bond covering 20 percent of the judgment, close to $17 million.

If you were in the financial business, would you loan any money to Trump? What if he offered to pay a fat fee upfront? A high-interest rate? What real estate would you take as collateral to back the bond, knowing that if the appeal fails, Trump will fight to keep you from collecting?

As early as this week, Trump expects a Manhattan judge to impose a fine of more than $300 million for persistent financial fraud.

Naked Claim

Even if Trump had $400 million cash a year ago, an unverified claim, he has faced enormous legal and other bills since then. At the same time, his golf courses in Ireland and Scotland continued losing money, public records in London show.

The Carroll case and the expected New York State civil judgment for persistent fraud would consume 96 percent of the cash he claimed without proof.

Suppose Trump can’t financially qualify to pursue an appeal. In that case, Carroll can enforce judgment, seizing cash in bank accounts and putting liens on properties such as the portion of Trump Tower that Trump still owns and Mar-a-Lago in Florida. That would take time and cost Trump a small fortune in legal fees—he has a history of stiffing his lawyers—to delay paying Carroll. Meanwhile, interest costs will add to the $83.3 million obligation.

Trump hopes that an appeals court will find the damages award excessive. Death cases, after all, are often settled for a few million dollars, sometimes a few hundred thousand.

He is unlikely to prevail because the jury awarded $18.3 million in compensatory damages and $65 million in punitive damages. As a rule, courts respect punitive awards of less than six times actual damages. This punitive award was about 3.6 times the compensatory damages.

The punitive damages are intended, as Carroll lawyer Roberta Kaplan told the federal court jury, to get Trump to stop lying about Carroll. After an earlier trial Trump was judged to have raped Carroll in a Bergdorf-Goodman department store dressing room and to have lied about it in repeated attacks on Carroll. More than two dozen other women have accused Trump of rape or sexual assault.

Trump insists he never met Carroll and “she’s not my type.” During a pretrial deposition he was shown a photo of himself and his first wife facing E. Jean Carroll and her then husband. Trump misidentified Carroll as his second wife, Marla Maples. When his lawyer interrupted to repair the damage Trump asserted that the sharply focused image was blurry.

Knowing Trump, I doubt he will stop attacking Carroll. His emotional state and views about women, frozen in puberty, and his declining mental health and cognitive capacity will not facilitate a proper change in conduct.

Fantasy Finances

Trump’s finances have always been exercises in fantasy. For example, in 1985, he bought Mar-a-Lago for $10 million. He claimed it was a cash purchase with no mortgage. I have in my home a Chase bank executive’s letter to Trump promising never to file the Mar-a-Lago mortgage at a courthouse, as banking laws require.

One reality is that Trump borrowed 125 percent of the purchase price, taking $2 million for himself while claiming he paid from his supposed rich cash deposits. A second is that bankers who declare their illegal conduct rarely get prosecuted or even disciplined, so weak is government regulation of finance in America.

The same year he bought Mar-a-Lago with the hidden mortgage, Trump also acquired the nearly finished Hilton Casino in Atlantic City. He paid with a $325 million loan, from which he shaved off a $5 million fee for himself.

Eventually, he owned three Atlantic City casinos, yet he never invested a dime in that New Jersey resort town. It was all borrowed money. Because he took fees for himself from the loan proceeds, his investment was less than zero, just as with Mar-a-Lago.

Only a foolhardy or corrupt banker would issue Trump a bond enabling his appeal of the $83.3 million award to E. Jean Carroll. If Trump fails to meet the financial qualifications for an appeal, there’s one thing we’ll know for sure: the man who ran for president claiming he was worth more than $10 billion is so financially weak that when an 80-year-old woman grabbed him by the wallet, he couldn’t perform.

Reprinted with permission from DC Report.

Young Reporter Exposes Boeing Scandal In Near-Disaster -- While Big Media Yawn

Young Reporter Exposes Boeing Scandal In Near-Disaster -- While Big Media Yawn

A compelling story about corrupt Washington dealings that needlessly put you and your family at risk of death if you board a Boeing 737 Max 9 jetliner broke last week. This story may come as a surprise because — shockingly — it hasn’t gained any traction with our best and biggest mainstream news organizations.

Today we praise The Lever, one of our competitors in the lightly financed world of online journalism, for breaking the stories behind the Max jetliner catastrophe. Its thoroughly documented coverage, with more coming, connects the dots, showing how greedy Washington and Wall Street practices produce dangerous jetliners.

Government rules can foster behavior that is vicious or virtuous.

The surface story about the January 5 door panel blowout received recurring prominent coverage because passengers shot dramatic cell phone videos. That’s the cheap and easy part of the news.

Digging below the surface, The Lever found a frightening tale of political influence involving former Trump administration official Nikki Haley, dark money campaign contributions, cowed aviation regulators, safety waivers and more.

The foundational problem is the corrosive effects of stock buybacks and government subsidies, elevating executive and corporate director greed above aviation safety.

Most troubling is compelling evidence that executives at a major Boeing contractor, Spirit Aerosystems, ignored safety warnings. An email shows that instead of spending money on safety, employees were ordered to falsify safety records. If those facts make you fear boarding any recent model Boeing plane, they should.

Cub Reporter Breaks Story

The story was broken by Katya Schwenk, a cub reporter in her first week on The Lever staff, to the shame of all the big-name and well-paid journalists at our major news organizations.

Working with colleagues Freddy Brewster, Helen Santoro, and Lucy Dean Stockton, Schwenk expanded the story. Any reporter at The Bigs in journalism could have beaten The Lever, but none did. Indeed, no major news organization has cited The Lever’s reporting as of this writing. That illuminates a gaping hole in how Wall Street and Washington reporters work, as will be examined below.

Schwenk & Co. uncovered robust evidence hiding in plain sight because they researched the public record. The Bigs in American journalism relied on statements, including corporate and government handouts and refusals to comment.

The Lever’s coverage should prompt significant safety and financial reforms. Its reporting on this story is worthy of the top honor in American journalism, the Pulitzer Gold Medal for public service.

As is almost always the case with the most important untold stories, the facts are readily available, provided journalists know where to look and that they understand what often obtuse bureaucratic language means.

Corporate America wants to make such facts less accessible, and to shield some entirely from public inspection. In recent years, governments have enacted many subtle restrictions on access to official data at the behest of companies. That is a large part of what Trump’s calls for abolishing the “deep state” and “deregulation” are about — shutting the windows into corporate conduct.

There is no “deregulation,” only re-regulation that typically favors corporate secrecy over the public’s right to know.

You can read The Lever stories in order here, here, here, here and here.

Executive Pay Before Passenger Safety

While Boeing and Spirit executives were too cheap to put safety first, The Lever revealed that executives and company directors spent lavishly to enrich themselves.

Executives and directors paid themselves $800 million, according to public records The Lever consulted.

They also spent an eye-popping $69 billion buying back their companies’ stock.

Stock buybacks reduce the number of shares outstanding. That makes each remaining share more valuable. That, in turn, enriches executives, because most of their lavish pay is in stock options —whose value grows when the stock price rises, as typically happens when there are fewer shares in the market.

The butcher’s bill for this greed:

  • 189 people killed when a Boeing Max jet crashed in Indonesia in 2018
  • 157 killed when a Max jet crashed in March 2019 in Ethiopia.

Significantly, five years ago during the Trump administration, Chinese aviation authorities, not Americans, were the first to ground all Max jetliners.

On the surface, faulty cockpit software caused those crashes. But the real killer was unbridled greed. Boeing executives and directors were so cheap that instead of hiring the best programmers, Boeing hired part-timers for as little as $9 an hour.

Think about what The Lever showed — jumbo jets full of cash for executive and director enrichment, but a scant $9 an hour for programmers.

As is often the case in corporate cheap skating, the ultimate cost to the companies far outweighs the corner-cutting savings. But since the executives and directors get to keep their ill-gotten gains with no risk of prison or even disgorgement, why not continue with the same practices? After all, what’s 346 dead people in Asia and Africa against taking home millions of dollars in compensation each year?

In addition, consider Nikki Haley’s role as South Carolina governor in arranging a $900 million taxpayer subsidy for Boeing to build its 787 Dreamliners in her state. That profitable companies scoop up such subsidies, sometimes their only source of profits, was the focus of my 2007 book Free Lunch.

Inexperienced South Carolina workers, paid less than unionized machinists around Seattle, did such shoddy work that Boeing slowed production, spending a fortune refitting and fixing 787s.

Curious how Boeing management thinks it can’t afford highly skilled union machinists around Seattle, so it hunts for union-free locations and taxpayer subsidies from South Carolina. At the same time, Airbus does just fine in high-cost Europe with its competent, unionized, and well-paid workforce.

It's Not Just Boeing

The story here is not just about Boeing. It is about how assaults on regulatory systems put your health, life and money at unnecessary risk. The motivating factor in all of this is greed and rules that favor short-term profiteering over enduring profits. That is a story seldom reported in The Bigs.

To be sure, there is a great deal of solid, and at times, extraordinary reporting by finance and politics journalists, many of whom I know personally, have competed against and respect.

But there is a gaping systematic hole in Wall Street and Washington journalism that I’ve been calling out for five decades in books, in columns for many publications — including the Columbia Journalism Review — as well as in lectures and television appearances.

The problem is excessive reliance on interviews instead of checking the robust public record and learning complex systems to understand how they work, especially whether they punish or reward bad behavior.

Newsrooms tend to be rigidly status quo. Calls for reform are routinely dismissed out of hand even as journalists produce stories about the need for others to reform.

The journalism reform America needs grows from an old newsroom adage: the first step in reporting is checking the clips in the morgue, as the newsroom library is known, to learn what’s already known.

The reform needed today: first check the robust public record of government rules, statistics and cases so coverage focuses on what politicians do, not what they say. That has been the motto of DCReport since its founding seven years ago. It’s the same principle applied at The Lever, launched in 2020 by former Capitol Hill aide David Sirota, who lives in Denver. I’ve known Sirota for more than two decades. His journalism is as important as it is impeccable.

Sirota’s been among the very best at showing how corrupt connections between regulators passing through the revolving door between Washington and banking companies, combined with secretive campaign donations and favors, cause terrible damage to taxpayers and pension funds for public employees like cops and teachers.

The Lever’s coverage draws attention to the lack of focus on how all the pieces of regulation fit together.

Vicious Cycle -- Or Virtuous Circle

Government rules can foster behavior that is vicious or virtuous. Systems can be self-reinforcing of good behavior, in part by making the price of misconduct much higher than the financial rewards for dangerous, bad behavior.

Fines alone cannot overcome greed because companies can find ways to make executives and managers whole. That’s why rules making it easier to prosecute corporate crime and mandatory prison sentences for white-collar crime are the potent integrity vaccines America needs.

Our entire regulatory system has been under assault since the American people chose Ronald Reagan in 1980, abandoning the New Deal that brought prosperity to the middle class in favor of a promise of universal prosperity through the idea that government is our problem. Instead, we got government just as big as it ever was as a share of the economy along with new policies of, by and for the rich.

Donald Trump promises that if he returns to the White House, he will finish what he says he only partly accomplished in his first term: the destruction of what he and Steve Bannon call the administrative state.

Regulations ensuring that the air you breathe and water you drink are free of toxic elements, rules that make it almost impossible for crooked bosses to steal your retirement savings and many other protections would be flushed by a second Trump administration. Your opportunity to seek redress by taking wrongdoers to court, already tightly restricted, would go away if Trump does what he says.

That would create quick and huge fortunes through short-term economic exploitation while making America worse again. Polluters, price-gouging monopolists and makers of unsafe products would be free to jack up their pay and profits while shifting risks onto you.

Haley, who seeks the Republican nomination for president, left the Trump administration to become a Boeing director in February 2019. The Lever showed how Haley peddled influence for Boeing.

As The Lever reported:

Haley helped kill an initiative designed to force the company to more comprehensively disclose its spending to influence politicians and safety regulators, government filings show.

Haley was a member of Boeing’s board when it unanimously opposed shareholders’ transparency proposal, which proponents said was designed to uncover whether Boeing had bought itself regulatory relief from federal safety officials.

“In the wake of the two 737 Max jet crashes, questions have been raised whether Boeing’s lobbying led to relaxed Federal Aviation Administration oversight,” shareholders wrote in urging passage of their proposal, noting that the company spent a staggering $153 million on federal lobbying from 2010 to 2018.

Haley and her fellow board members urged a “no” vote, insisting in Boeing’s proxy statement prior to the shareholder meeting that the company has “instituted full transparency into — and extensive oversight of — any political expenditures.”

The Lever’s reporting of the story behind the terrifying Alaska Airlines catastrophe — and others — involving newer model Boeing jetliners isn’t limited to Boeing.

Who Benefits From A Broken System?

The system encourages and rewards dark money support for politicians who do donors’ bidding rather than work for voters. It helps hide this influence. And it diverts corporate spending from adequate pay to hire competent talent, such as software programmers, to instead boost the pay of executives and directors.

Whether processed foods, medicines or vehicles, the regulatory system works for greedsters, less for the people.

We can fix that. The Lever focused a spotlight on Boeing and its shorting safety for executive and director pay. That spotlight should be much broader and brighter, a job only The Bigs in American journalism can do. So far, The Bigs haven’t even told their audiences what The Lever first reported. That’s shameful.

Reprinted with permission from DC Report.

New York Judge Gives Trump Organization The 'Corporate Death Penalty'

New York Judge Gives Trump Organization The 'Corporate Death Penalty'

Reprinted with permission from DCReport

Donald Trump is no longer in business.

Worse, the self-proclaimed multibillionaire may soon be personally bankrupt as a result, stripped of just about everything because for years he engaged in calculated bank fraud and insurance fraud by inflating the value of his properties, a judge ruled Tuesday.

His gaudy Trump Tower apartment, his golf courses, his Boeing 757 jet and even Mar-a-Lago could all be disposed of by a court-appointed monitor, leaving Trump with not much more than his pensions as a one term president and a television performer.

A New York State judge on Tuesday cancelled all of the business licenses for the Trump Organization and its 500 or so subsidiary companies and partnerships after finding that Trump used them to, along with his older two sons, commit fraud.

Under the New York General Business Law you can only do business in your own name as a sole proprietor or with a business license, which the state calls a “business certificate.” All of Trump’s businesses were corporations or partnerships that require business certificates.

The civil fraud case was brought by Letitia James, the elected attorney general of New York State.

The evidence and the issues were so clear cut, Judge Arthur F. Engoron ruled on Tuesday, that there was no reason to waste the court’s time trying them.

In a 35-page decision, Judge Engoron also excoriated Trump and his lawyers for making nonsense arguments, so badly misquoting legal cases that they turned the law upside down, and other legal misconduct.

Five Trump lawyers were each fined $7,500 for making “frivolous” arguments.

A judge calling a lawyer’s argument “frivolous” is the equivalent of saying it is no better than nonsense from a drunk in a bar, as I teach my Syracuse University College of Law students.

Those lawyers may well find it wise to hire their own lawyers as Judge Engoron’s findings could form the basis of disbarment proceedings, something already underway against Trump lawyers Rudy Giuliani, the former federal prosecutor, and John Eastman, a former dean of the Chapman University School of Law in Orange, Calif.

In 2015 Trump claimed his net worth was north of $10 billion. When he became president, he asked if he could file his federally required financial disclosure statements without signing them under penalty of perjury. That request was denied. The statement Trump then filed, by my counting, showed a net worth of not much more than $1 billion, but was based on fantastical assertions of value.

News organizations, except DCReport, told their audiences next to nothing about how from June 2015 to January 2017 Trump’s claimed net worth fell by roughly 90 percent.

Trump will, of course, appeal. He is already suing the judge, so far without success.

I give Trump’s chances of prevailing on appeal at somewhere between zero and nothing except perhaps on some minor procedural point, which you can be sure Trump will describe as complete vindication.

The summary judgement decision Tuesday was partial, however.

A non-jury trial before Judge Engoron next week will determine how much Trump will be fined for his years of bank fraud and insurance fraud.

Barring a highly unlikely reversal by an appeals court, Trump’s business assets eventually will be liquidated since he cannot operate them without a business license. Retired Judge Barbara Jones was appointed to monitor the assets, an arrangement not unlike the court-supervised liquidation of a bankrupt company or the assets of a drug lord.

Creditors, any fines due the state because of the fraud, and taxes will be paid first from sales of Trump properties.

The various properties are likely to be sold at fire sale prices and certainly not for top dollar when liquidation begins, probably after all appeals are exhausted.

Among these properties is the portion of Trump Tower that Trump still owns and leases to businesses as office and retail space; his own triplex apartment there; his golf courses; and Mar-a-Lago, the Florida mansion he bought in a corrupt mortgage deal decades ago. He also has deals to license his name on buildings and businesses, which similarly he can no longer operate and whose profits he must give up.

The fact that Trump assigned values two, four, ten times and more above their actual values indicates that once all of the priority bills are paid there will be little to nothing left for Trump.

Trump, for example, has claimed that his Westchester County mansion north of Manhattan was worth close to $300 million, ten times the highest valuation by appraisers and bankers. Even those valuations may be inflated because of restrictions on developing the 30-acre property with more mansions.

Trump asserted in annual financial summaries that his gaudy Trump Tower triplex was about 30,000 square feet when it is closer to 10,000 square feet, testimony showed. He also valued the residence at as much as $200 million more than its highest appraised value.

The judge noted that these were not small differences that might be due to an apartment having, for example, an odd shape.

Trump of course will appeal. Trump always insists he has done nothing wrong and in this civil matter is the victim of a judge who doesn’t know the law. It’s a laughable argument.

Trump, in his own mind, can do and never has done anything wrong. Indeed, in 2016 he told a radio show host that as a Christian he has never asked for godly forgiveness because he has never done anything in his life that would require seeking forgiveness. No actual Christian would say that, nor would a Christian say, as Trump has many times, that his life philosophy is a single word: revenge.

When Trump was deposed by the state attorney general’s litigators, he cited his Fifth Amendment right against self-incrimination hundreds of times.

He also asserted that his annual financial statements were meaningless and everyone in the banking and insurance fields knew to pay them no heed so the judge shouldn’t either.

Judge Engoron rejected the idea that one can put out financial statements that are meaningless. As Judge Engoron wrote about the fantastical financial valuations and bizarre and baseless arguments Trump made in court:

“In defendants’ world rent-regulated apartments are worth the same as unregulated apartments; restricted land is worth the same as unrestricted land; restrictions can evaporate into thin air. That is a fantasy world, not the real world.”

The carefully written 35-page decision by Judge Engoron is known as a partial summary judgment. The judge found that on most of the civil fraud case brought by Letitia James, the state attorney general, there were no issues in dispute because James got the law and the facts exactly right and Trump had nothing but distortions, lies and baseless denials.

The principal issue to be decided at a trial scheduled to start Monday, Oct. 2, is how much Trump will be fined.

Trump also argued that since he paid his bank loans and insurance premiums on time no one was hurt. He argued against “restitution.”

The judge noted that the case is not about restitution but disgorging ill-got gains.

Here’s the analogy I will teach my students: Suppose your employer is closing for a day and when business is done you swipe $100 from the cash register, go to the racetrack, make a winning bet and before business resumes you put back $100.

You still committed a crime and if get caught you forfeit the track winnings as the proceeds of your ill-got gain — that’s disgorgement.

Trump also made the ludicrous claim that the state attorney general had no power to sue him, that she lacked what the law calls “standing” to file a case because she was not harmed.

Judge Engoron noted that state law specifically authorizes the attorney general to sue in such cases on behalf of the people of the state.

The fact is that Trump’s bizarre, fact-free, and frivolous arguments may enthrall those who see him as their hero or savior, but in a court of law all Trump could present was distortions, lies, and childish nonsense.

David Cay Johnston, a former columnist for The National Memo, co-founded DCReport. He is a best-selling author, investigative journalist and former reporter for The New York Times, where he won a Pulitzer Prize in 2001. He teaches at Syracuse University College of Law

Trump speaking at rally.

How Big Was Trump's Waco Crowd? Not Even 2000 Showed Up

Donald Trump’s power to draw crowds of adoring political fans is shriveling like an ice cube in a hot frying pan, not that you would know that from following the news in our leading newspapers about his fourth presidential campaign.

Trump formally launched his 2024 bid for the White House on the tarmac at the Waco airport in Texas.

With a single exception, the politics reporters covering his campaign launch reiterated one of Trump’s baseless claims. This lie helps Trump fabricate the impression that his MAGA movement is growing.

In radio and television interviews, hosts often ask me about the supposedly vast Trump crowds and how this indicates he may regain the White House in 2024. Lousy reporting on the size of Trump crowds, and a weakening sense of skepticism among many working politics journalists and some broadcast hosts, helps perpetuate this Trumpian illusion.

Remember when Trump had his press secretary, Sean Spicer, proclaim that his inaugural drew the biggest crowd ever despite photographic and other evidence that his audience was much smaller? His audience was average despite the splendid weather. Trump drew a much smaller audience than Barack Obama did in 2009 in bitterly cold weather. Even Fox News, which had yet to go to all-out lying 24/7, fact-checked Trump and declared his claim false.

Not Counting Cars

Sadly, my former employer, The New York Times, failed to do the basic and easy reporting to determine how many attended the Waco rally. That’s surprising since one of the Times reports makes it clear that reporters were on the scene hours before Trump spoke, giving them abundant time to count how many cars and pickups arrived and then to estimate the average number of people per vehicle.

Without attribution, The Times described as fact a Waco “crowd of thousands.”

A Times photo caption repeated this: “Thousands of supporters attended Mr. Trump’s rally on Saturday in Waco, Texas.”

The truth: not even 2,000 people attended.

Two thousand people would be the tenuous and minimal threshold for writing that “thousands” turned out in Waco.

One appropriately skeptical reporter was covering the Waco rally: John Mone of Scripps News.

Mone wrote that “hundreds” turned out while noting that Waco police expected about 10,000. Mone’s piece is a model of how to do it. Politics editors and producers would be wise to distribute his piece to their staffs.

How We Estimated Crowd Size

I didn’t go to Waco, so how can I write about the size of the crowd?

With help from two others with investigative reporting experience, we gathered and scrutinized Waco rally still and moving images. We obtained images from various perspectives to make sure we counted outliers.

We then enlarged these images, divided them with gridlines, and painstakingly checked off each human we could see.

To ensure that we gave the highest possible number, we counted as a human being many image fragments that could be just an article of clothing. Understating is a virtue that I teach investigative reporters around the world. But, of course, it’s always best for any subsequent official inquiries to show that situations were even worse than you reported.

The Count

Applying these standards, we could not even count 1,500 people at the rally. That’s not thousands.

Fans packed the three sets of risers behind Trump. Each had fewer than 240 people. In front of Trump, the images showed many empty chairs. There were also images of people leaving partway through Trump’s wandering recitation of grievances and falsehoods, a common occurrence at Trump rallies that is also seldom reported.

DCReport and other news organizations long ago established that many people at Trump rallies are super fans who show up repeatedly. Finding these people in images and interviewing them at rallies is easy. The Trump rallies are thus analogous to the claim that “Atlantic City is America’s No. 1 tourist destination with 32 million visitors” in the late 1980s when I covered that city for The Philadelphia Inquirer. Actually, Atlantic City had about two million gamblers who visited the casinos on average every three weeks.

We invite skeptical readers to check our Waco rally count and contact us via the DCReport Tip Line. But please provide evidence of meticulous counting, copies of the images used, details of counting techniques, and how and when to contact you.

An Old Trick

Trump has been inflating his claims about crowds since long before he came down the Trump Tower escalator with Melania on June 16, 2015, declaring that thousands of people were present.

Anyone who has been in the lobby of Trump Tower knows that that would be a physical impossibility. But, of course, relatively few Americans have ever visited the squeezed pink marble interior on Fifth Avenue.

The failure of politics reporters to point out this foundational lie in 2015 helped propel Trump to the White House.

The politics reporters in attendance that day didn’t even report that something seemed odd about a loud portion of the crowd that broke into applause, on cue, 43 times as Trump spouted his racist rhetoric. That journalistic failing was stunning since Manhattan isn’t known for being hospitable to racists.

One day later, The Hollywood Reporter revealed that those cheering and clapping fans were paid performers. They were television and movie production extras; each paid $50 cash after they helped Trump fabricate an image of overwhelming popularity in Manhattan.

Image Control

Ever since 2015 Trump and his security forces have ousted from his rallies people who pointed cameras at the often-empty seats in the back and sides of venues.

Journalists, confined to a pen, were required to agree to only point cameras where Team Trump instructed, a fact known to relatively few Americans because news organizations rarely, if ever, disclosed this constraint on reporting. And when it was, the facts tended to be buried deep in print and online stories. (Research has established that 85% or so of readers drop off when a Page 1 story jumps to an inside page.)

This journalistic failure is notable because there were easy ways to get around it. For example, my son Andrew, a happy-go-lucky truck driver and disc golfer who lives in New Mexico, attended a Trump rally near Albuquerque.

Capturing Forbidden Images

Andy captured images of the empty seats on his smartphone and wasn’t ejected. How? By cajoling people into posing with him for selfies and then having them all stand at angles that captured images that Trump’s security was supposed to block.

DCReport sent university journalism students to Trump rallies in Arizona and North Carolina with identical instructions on capturing the kinds of images Trump suppressed. They succeeded, as you can see here and here.

Here and there, you can find news stories showing that Trump has had difficulty since 2020 filling arenas, but they tended to be in regional and local outlets. That was, of course, the first year of the pandemic. But the dwindling crowds are a continuing issue even though Trump holds his rallies in locales where the GOP dominates.

DCReportinformed readers about a 2022 Orlando Sentinel article showing that at a venue with a listed capacity of 8,700, Trump fans bought only 5,406 tickets. Giving away seats expanded his crowd to 6,200 supporters. Still, almost 30 percent of the seats were empty.

A December 2021 Trump rally in Sunrise, Florida, with disgraced Fox television host Bill O’Reilly, drew such a small crowd that people assigned to the upper tier of the venue were moved down near the stage. Trump staff told these supporters that they had been upgraded.

Lies like that one will always fool Trump supporters, among whom blind allegiance and rejection of facts are cultural and ideological dogma.

But politics reporters, whom Trump so successfully conned over the last eight years, owe their audiences a higher duty. Checking the facts on how many people turn out at Trump rallies while contrasting that with Trump’s claims is one of the easiest yet most important things that America’s politics journalists can and should do.

Reprinted with permission from DC Report.

Bitcoin

How Crypto-Backed Ponzi Schemes Endanger Our Banking System

The collapse of Silicon Valley Bank (SVB) last week raises serious issues far more significant than the obvious ones cited by the financial press and a broad range of Washington politicians.

Chief among these are bank loans against dubious assets. That’s not getting much if any attention in the news or from Washington and is likely to soon be swept under the rug, allowing needlessly risky banking practices to continue.

Before its collapse last week, SVB made loans against Bitcoin and other cryptocurrencies.

The question: why is any bank anywhere allowed to accept crypto as collateral for loans?

Why do banking regulators allow our federally insured and regulated banks make loans using magic internet money as collateral? That’s a crazy policy, no different than allowing banks to accept buckets of ice cubes in winter as collateral, even though they melt come spring and evaporate in summer.

Bitcoin and its imitators are not money. They are not currency. They’re hardly used to buy and sell, an unsurprising fact given that by design the Bitcoin system can process only seven transactions per second compared to many thousands of transactions per second for credit cards.

Indeed, except for laundering proceeds from drug trafficking as well as hiding assets from creditors, estranged spouses, and the tax police, cryptocurrencies have no use.

High-tech Ponzi Scheme

Cryptocurrencies and their cousins, Non-Fungible Tokens or NFTs—are just a high-tech Ponzi scheme. Instead of Charlie Ponzi or Bernie Madoff personally running the con, the crypto scam relies on decentralized computer blockchain and “mining” of mathematical solutions.

Bitcoin’s supposed inventor, who went by the pseudonym Satoshi Nakamoto, has never been identified. He or she has since vanished, leaving holders with a digital string worth only as much as the next fool, or crook, will pay for this imaginary asset.

Early participants in Ponzi schemes profit mightily if they cash out while the gullible souls who get sucked in later wipe out. That is what happened to SVB, America’s 16th largest bank, which was big on crypto loans.

Many Bitcoin “investors” have already been wiped out as the “market cap” of Bitcoin plummeted from nearly $1.3 trillion in 2021 to about $389 billion on Friday, down almost 70 percent.

Why do banking regulators allow our federally insured and regulated banks to make loans using magic internet money as collateral? That’s a crazy policy, no different than allowing banks to accept buckets of ice cubes in winter as collateral, even though they melt come spring and evaporate in summer

Silicon Valley Bank is just one of many federally insured financial institutions that accept crypto currency as collateral for loans. Some banks will loan you 90 percent of the seeming value of your crypto, though 50 percent loan-to-value is more common and that appears to be the standard at SVB based on its web pages.

Zero Interest Crypto Loans

All sorts of financial news outlets offer advice on borrowing against crypto. These include NerdWallet, and the increasingly naïve and unreliable Forbes. People with crypto can even borrow at zero interest. Gadzooks!

For a sober look at the big risks of crypto loans read Investopedia’s essay.

In the wake of the second largest bank failure in history, you should be deeply concerned that for more than four decades we have failed miserably at regulating banks. That history contrasts with the period from 1935 until voters abandoned the moderating and successful New Deal banking rules in favor of Reaganomics.

We took a wrong turn when the prudent New Deal banking regulations in effect from 1935 were killed by Reaganomics, which re-regulated banks to reduce regulations and increase the risk of financial institutions failing. (There is no such thing as deregulation, only new regulation, which in our time on terms typically means regulations favoring corporations, including banks, over customers, financial prudence, and public safety.)

Congress’s Role Is Critical

What we need now are Congressional hearings to examine the reasons that cryptocurrencies can be collateral for bank loans.

Even if you don’t own Bitcoin or its growing list of alternatives, this story matters to you for multiple reasons.

Your money is only insured up to $250,000. Any money above that isn’t insured. That means if you’re a trustee of a nonprofit, for example, and it’s got $1 million in the bank, you or the organization you help lead is at risk of being wiped out in a bank failure.

The federal government is covering all deposits for SVB and at Signature Bank in New York, which failed Sunday. But that doesn’t mean it always will. During an earlier banking crisis nonprofits with more than the guarantee then in effect of $100,000 lost their deposits above that sum, which got very little news coverage at the time.

If people want to buy crypto, they should be free to do so. But they should not be allowed to put our bank deposits and investments at risk by using these digital tokens as collateral for loans. After all, it’s your, and my bank deposits, along with those of businesses, nonprofits, and our governments that the banks use to make loans, so it’s not like we don’t have a deep interest in blocking crypto of any kind as collateral for loans.

Reprinted with permission from DC Report.

Why Corporate Economists Predict Recession -- And May Well Be Wrong

Why Corporate Economists Predict Recession -- And May Well Be Wrong

Be cautious about recession predictions.

After consulting their models of the American economy, many political naysayers and Wall Street economists are shouting “A recession is coming! A recession is coming!”

Should we trust these projections, which dominate major news reports on the economy? Count me a skeptic, given what the economic performance data show and the conflicted interests of commercial economists.

More jobs and more pay are the opposite of what the word ‘recession’ implies: “a significant, widespread and prolonged downturn in economic activity.”

In a piece typical of news articles last week, CNN reported:

“Former Federal Reserve Chairman Alan Greenspan believes a US recession is the ‘most likely outcome’ of the Fed’s aggressive rate hike regime meant to curb inflation. He joins a growing chorus of economists predicting imminent economic downturn.”

Then, without attribution, CNN added, “His views are particularly important” because he was Fed chair from 1987 to 2007 under Presidents Reagan, Clinton, and both Bushes.

Unmentioned by CNN and others: Greenspan couldn’t foresee the mortgage market collapse that led to the Great Recession in late 2007, the worst economic downturn since the Great Depression.

That’s amazing because Greenspan, now 96, cultivated an image as a clear-eyed and profound student of economic statistics. So how did he miss years of economic red lights flashing that housing prices were headed for a collapse? It was so evident that I told my New York Times editors about the problem in 2003 and then twice found a way to write about it even though it was far beyond my beat covering taxes.

In weighing Greenspan’s prognostications, remember that Ayn “Love Is Immoral” Rand trusted him to be the executor of her estate. Greenspan adored the views of Rand, who taught that altruism is a vice, selfishness a virtue, and who wrote a novel glorifying a criminal who blows up a building because it offended his aesthetics.

Greenspan’s views are, technically and philosophically, on the fringe, yet he gets treated like a centrist.

Key Indicators

That said, how is our economy doing? Let’s examine some key indicators.

The economy added a healthy 233,000 jobs in December.

Employers created more than four and a half million jobs in 2022. That’s an average of 375,000 new jobs per month, almost twice the rate of jobs growth during the Trump Administration’s pre-pandemic years.

Indeed, 2022 was the second-best year ever for job growth. The best year was 2021, but much of that was due to our coming out of the worst of the pandemic, which Donald “inject bleach” Trump badly mismanaged, pushing the jobless rate to almost 15 percent. Most of those discharged performed manual work. People who do intellectual work mostly continued working.

For context, consider job growth under Barack Obama and Trump.

President George W. Bush’s laissez-faire banking policies produced the Great Recession, so we’ll ignore the economic results he bequeathed to Obama.Then, startingg in October 2010, when the economy turned around, Obama averaged 201,600 new jobs per month for six years.

Trump, before the pandemic, averaged just 191,100 jobs added. That’s five percent less per month than Obama and barely half of Biden’s 2022 monthly average.

Voluntarily Quitting

How about job quits? The level at which people voluntarily leave their job says a lot about expectations that they will or already have found new work, often at better pay or under better conditions. People who see a recession looming usually stay put, even in a job they hate.

Each month starting in July, more than four million workers quit their jobs voluntarily. The November quit rate was a robust 2.7 percent or 1 in 37 jobs, although that’s down from the three percent rate a year earlier.

Very Low Jobless Rate

How about unemployment? The jobless rate last month was 3.5 percent under the most widely used measure.

That’s the lowest recorded level of joblessness since World War II save the slightly lower 3.4 percent rate in May 1969 when Vietnam War and NASA spending were boosting the economy, and early Boomers were entering the job market en masse without driving up the jobless rate.

Trump’s average pre-pandemic jobless rate was 3.9 percent though he hit 3.5 percent for three months shortly before the Pandemic began in early 2020.

There is an alternative and broader measure of unemployment, known as U-6 or Bureau of Labor Statistics Table A-15.

The U-6 measure counts people working part-time because they can’t find full-time employment, or are only marginally part of the workforce, or have temporarily given up trying to find work. These marginal workers, whose economic lives are filled with stress and misery, are not central to whether the economy grows or shrinks, but their numbers tell a deeper story about job quality.

The U-6 rate was 6.5 percent in December, down from 7.3 percent a year earlier. However, that doesn’t seem to suggest that a recession is at hand.

Inflation Abating

How about rising prices? While inflation is about 7.1 percent above a year ago, that isn’t the story of the last half year.

Month-over-month inflation peaked at 1.3 percent in June. Then it dropped to zero in July and 0.1 percent in August. Inflation rose to 0.4 percent in September and October. It fell back to 0.1 percent in November. The December numbers should come out around January 13.

Inflation may be whipped, although it could roar back. But for now, its withering

The decent inflationary trend appears to have grown from the pandemic when demand for goods and services fell sharply, and global supply chain problems bedeviled businesses from toy sellers to carmakers. Remember all those acres of parking lots with shiny new cars and trucks that could not be sold until computer chips arrived from Asia? And those shipping containers piled high in ports awaiting trucks to haul them away?

Those bottlenecks have been eliminated or considerably eased through White House efforts to improve coordination and cooperation between merchant sailors, stevedores, teamsters, local port, truck, and railroad managers, and the companies that employ them all.

Still, high energy and food prices continue to bedevil most Americans. Fossil fuels are a major component in food prices. It takes lots of fuel to make fertilizers to grow crops, machines to plant and harvest them, and trucks to berry foodstuffs to grocery stores nationwide.

Overall Economic Growth

How about economic growth measured by Gross Domestic Product or GDP?

There was a lot of ill-informed talk of a recession last summer because GDP was slightly negative for the year’s first half.

But the National Bureau of Economic Research’s Business Economic Cycle Dating Committee, which calls economic contractions and expansions, didn’t call it a recession, partly because the number of jobs kept growing, as did incomes. More jobs and more pay are the opposite of what the word recessionimplies: “a significant, widespread, and prolonged downturn in economic activity.”

We don’t have the full 2022 data yet, but the federal Bureau of Economic Analysis shows overall economic growth, not contraction in the first nine months of 2022.

By the way, Trump’s economy was slowly sinking before the pandemic, as DCReport advised readers in October 2020.

Pump Price Plummets

And what of inflation, much in the news this year?

The best news is that the national average price of gasoline has plummeted from a high of $5.11 in early June to $3.77 recently. That’s $1.34 less per gallon, a stunning 26 percent decline, not that it made much of a splash on front pages and broadcast news programs.

The sharp drop in the price of gasoline came despite Vladimir Putin’s February invasion of Ukraine which disrupted worldwide oil and grain markets and may yet lead to mass starvation in Syria and parts of North Africa that rely on Ukrainian wheat. The Biden Administration imposed severe price caps on Russian oil via shipping insurance. At the same time, the president released 180 million barrels of oil from the American Strategic Petroleum Reserve to help knock down prices at the pump.

That 180 million barrels is roughly how much oil America burns every ten days, but as is often the case in economics small changes in supply or demand can prompt big changes in price, as our coverage of electrify market manipulations has shown.

Because the Democratic Biden Administration sold oil at about $89 a barrel and will buy replacement oil at about $70 a barrel, the government is expected to turn a profit of more than $3 billion on actions that sharply lowered gasoline prices. Talk about win-win government economic policies.

An inflationary threat that may emerge is tied to rising sales of what two decades ago were called Osama Wagons—gas-guzzling trucks and SUVs that help sustain Middle East dictatorships.

Trade Deficit Shrinks

Trade numbers are also improving under Biden Administration policies, although there was a brief and severe rise in the trade deficit months ago.

During Trump’s first 23 months in office his disastrous and mismanaged trade war with China played a key role in the monthly trade deficit ballooning by 26 percent, federal Bureau of Economic Analysis data show.

The trade deficit, or surplus, comes in two parts. The first and larger measures the value of goods we buy from overseas versus what we sell to foreigners. The second measure is business services we buy from foreigners or sell them.

Our perennial surplus of exported services slightly offsets a perennial and much larger deficit in goods. President Biden has made cutting reliance on overseas manufacturers—especially for computer chips and other high-value, high-tech products—a top priority.

As of November, the deficit is down 3.6 percent compared to when Biden took office two years ago.

Mortgages and Paychecks

Another good sign, and a longer-term trend, is the falling share of personal income going to interest and principal payments on mortgages.

At the end of 2007, as the Great Recession began, Federal Reserve data showed 7.2 percent of personal income went to mortgage principal and interest. Now it’s less than four percent, with a slight uptick last year as the Federal Reserve under Chairman Jerome Powell, a Trump appointee, raised the interest rates it controls.

Americans owe about $12 Trillion in mortgage debt, down almost a fifth since the start of the Great Recession once inflation is considered.

So why do so many people feel so much economic pain?

The median weekly wage—half earn more, half less—is the same now as at the end of 2019 after taking inflation into account.

So why is the median not moving much?

Because a rapidly growing share of wages and salaries goes to executives and others paid more than $1 million per year while rank-and-file workers mostly lack unions and thus lack bargaining power.

Million Dollar Paychecks

In 2020 an eye-popping 82% of all pay raises went to the very thin and well-compensated slice of workers making $1 million or more.

That fell to 29% in 2021. However, the million-and-up club enjoyed average raises of $840,000 each while full-time workers making up to $250,000 got only $1,600. That’s a ratio of $500 to $1.

Also in 2021, the poorest-paid 60 million workers collectively made less than the best-paid 237,000, more than 500 of whom averaged about $151 million, my annual analysis of Social Security Administration payroll data shows.

The million-dollar and up pay club now collects almost seven percent of all wages and salaries, up from two percent in inflation-adjusted data from 1991. The number of these high-paid workers has exploded from 191 in 1991 to 237,000 three decades later in 2021. Last year the number of million-dollar-plus jobs grew 95 times faster than jobs overall.

Recession Risks

So, are we likely to fall into a recession, as Greenspan and many Wall Street economists warn?

The honest answer is we don’t know. As Yankees catcher Yogi Berra said, “it’s tough to make predictions, especially about the future.”

If the Fed raises interest rates too high or too fast, it could so discourage executives and entrepreneurs that they go on a capital strike, halting the new investment that is crucial to job creation. Then again higher interest rates may also draw more capital into the United States, further strengthening the dollar against other currencies.

When the dollar is high relative to other currencies, it makes what we import cheap, while other countries are burdened with high prices to purchase our goods and services.

The greenback has been riding very high for the past two years. My wife and I vacationed in New Zealand (beautiful, fascinating, and friendly) this fall. Our greenbacks were worth $1.78 against the Kiwi dollar. In Australia, the exchange rate was above $1.60. The story is similar worldwide.

My view on the chance of a recession: bringing back jobs from Taiwan and China, especially microchips and related high-tech manufacturing, will be a long-term boon to the American economy with some immediate effects.

If Biden succeeds in his goal of making America the go-to country for high-quality, high-tech manufacturing the American economic future will be bright. It will also enrich investors more than workers unless the union movement or a proxy for it becomes a major player in economic decision-making.

And as for the policies of the Fed?

It’s independent so you can’t do anything about how its regional governors vote on interest rates and whether money is hard or easy. But the notion that a recession is certain or even likely seems out there, at least for now.

Reprinted with permission from DC Report.

Trump Defrauded IRS Dozens Of Times Since 2016 -- And Knew It

Trump Defrauded IRS Dozens Of Times Since 2016 -- And Knew It

Donald Trump knowingly committed dozens of brazen tax frauds during the six years when he ran for office and was President, my analysis of the recent Congressional report on his tax returns and other documents shows. This explains why he fought all the way to the Supreme Court in a failed effort to keep his tax information secret.

One technique he used at least 26 times between 2015 and 2020 was as simple as it was flagrant. Trump filed sole proprietor reports, known as Schedule C, that showed huge business expenses despite having zero revenue. That created losses which Trump used to offset his income from work and investments, thus lowering his income taxes. Additional Schedule Cs had expenses exactly equal to revenues while only a few showed profits.

What Trump did again and again and again—taking expenses for businesses with no revenue—is so simple that jurors should have no trouble understanding the issues were Trump to be indicted by a federal or New York state grand jury.

Trump knew this was unlawful because he lost two trials over his 1984 income taxes in which he did the exact same thing, a story I broke in June 2016. Both judges, in scathing opinions, ruled that Trump committed civil tax fraud.

That Trump persisted in using the same fraudulent technique in six years of recent tax returns is powerful evidence of mens rea or criminal intent. This device is not Trump’s most lucrative tax cheating technique, but it is the easiest for jurors to understand should Trump be indicted on tax charges.

The 65 Schedule Cs Trump filed as a candidate and as president helped him convert a federal tax bill that could have been as high as $46 million into a $2.1 million profit from the federal tax system, my analysis of the Congressional Joint Committee on Taxation staff report shows.

Trump received more than $154.2 million in wages, interest, dividends, capital gains, and pensions over the six years when he ran for president or lived in the White House. Despite this huge revenue stream, Trump reported minus $53.2 million in Adjusted Gross Income, the last number on the front page of your Form 1040 income tax return.

Trump's Other Tax Schemes

The Congressional report raises questions about numerous other tax deductions Trump took, including charitable deductions that may be bogus or overstated; treating personal expenses as business expenses; loans to his three older children that may be to escape gift taxes; and reporting almost $5 million of capital contributions as tax-deductible business expenses.

In short, Trump’s tax returns are a rich environment in which questionable conduct is found throughout the filings and needs only seasoned auditors to uncover fictional expenses.

Should our Justice Department or the Manhattan District Attorney’s office ask grand juries to indict Trump for tax crimes, the losses on supposed businesses with no income would be easy for jurors to understand. In contrast, a kitchen sink tax prosecution could confuse jurors because it would involve obscure tax law issues, possibly allowing Trump to slip away.

Tax Cheating Year by Year

In four of the six years, Trump’s taxable income was zero.

The report shows that Trump paid no income tax in three of the six years and just $750 in 2016.

Over the six years, he paid $776,126 in net federal income tax. That’s just half of one percent of his positive income, the equivalent of a married couple earning $100,000 paying $500 instead of the typical $8,500. The typical tax rate for Trump’s income class is more than 25 percent.

Trump received $18.7 million in refunds under the Alternative Minimum Tax, which is $2.8 million more than he paid, a nifty profit off that tax law. Three decades ago Trump lobbied Congress for generous Alternative Minimum Tax refund provisions for himself and other real estate investors.

In four of those six years, all but 2016 and 2017, his Schedule Cs showed losses totaling almost $1.3 million.

Shocking But True

Because New York State tax returns adhere closely to federal rules on reporting income and tax-deductible expense, Trump almost certainly made additional profit off the Empire State tax system.

It may shock you to learn that there are legal ways to turn the burden of income taxes into a source of profit. Still, every sophisticated tax accountant and lawyer knows how business owners, especially real estate operators like Trump, can do this legally. As a leading Manhattan tax lawyer told me years ago: “If you’re big in real estate and pay any income tax, you should sue your tax lawyer for malpractice.”

Workers and pensioners are excluded from the rules that let rich business people and landlords convert the burden of income taxes into the joy of financial gains.

Medieval alchemists claimed that the mythical Philosopher’s Stone would turn lead into gold. They failed, but thanks to the modern alchemy of tax accounting, the black ink of taxable income can be transformed into the red ink of losses that in turn reduce or eliminate income taxes and can even turn the income tax system into a source of profit.

For decades I’ve been exposing ways that tax law and accounting rules favor the wealthiest business owners, hoping the voters would realize that the tax system that burdens them is, perversely, a lawful source of income for people like Trump.

Trump didn’t limit himself to lawful tax avoidance, my analysis of the Congressional report and other documents shows.

Trump's Fraud Trials

This takes us back to 1984, by far Trump’s most lucrative year up to that point. Trump Tower opened at the end of 1983, and his first Atlantic City casino opened in the spring of 1984. Rivers of greenbacks flowed into Trump’s accounts.

State and city auditors spotted a Schedule C consulting business that showed no fees or other revenue but more than $600,000 in costs. State and city auditors disallowed the losses. Trump appealed. I couldn’t find a record of the IRS taking any action.

In scathing decisions following administrative trials, judges for New York state and city ruled that Trump was not entitled to use losses from this supposed consulting business to offset his other income.

Trump produced no receipts, no invoices, no work papers — nothing indicating the 1984 consulting business was more than a figment of his imagination.

“The record does not explain how Petitioner [Trump] had significant expenses without any concomitant income from his consulting business,” wrote H. Gregory Tillman, the city administrative law judge who tried the case in 1992.

Trump complained of double taxation, but Judge Tillman ruled that claim baseless. Using bold face to emphasize his point— an extraordinary step in a judicial opinion — Judge Tillman wrote, “The problem at issue is not one of double taxation, but of no taxation.”

Trump’s longtime tax accountant and lawyer, Jack Mitnick, gave damning testimony before Judge Tillman.

Photocopier Enables Fraud

The tax return the city received was not an original with “wet” (ink) signatures, but a photocopy.

Asked about the validity of the photocopy, Mitnick gave astonishing testimony.

“We did not” prepare that return, Mitnick testified, referring to himself and his firm. In other words, the tax return was a forgery. Mitnick’s signature was applied using scissors and a photocopy machine. (My first national journalism award, in 1975, was for exposing a corrupt Michigan state senator who put his name on his predecessor’s medical records using a photocopier, then tricked the state Supreme Court into giving the supposedly dying senator a law license after he badly flunked the bar exam, and then miraculously recovering and using his law license to swindle his predecessor’s widow out of her fortune.)

Imaginary Businesses?

The Congressional report assumes that all the Schedule Cs on Trump’s recent tax returns actual businesses. Some of them may not exist except in tax filings. Auditors would be smart to demand evidence of business activity such as calendars, correspondence, travel to see potential clients, and the like to determine whether some or all of these businesses exist only on paper, if that.

While we only have details from six recent years of Trump’s taxes, it’s reasonable to suspect that he has used this technique continually since 1984 and may have well used it before then.

There is no statute of limitations on civil tax fraud, so even if Trump is never indicted, he could be pursued to collect taxes owed, along with penalties and interest, going back years or even decades.

But the beauty of the particular Schedule C scheme is that this is plain and simple.

Much more lucrative, the Congressional report indicates, was Trump apparently treating real estate as a Cost of Goods business rather than applying the real property rules. Bogus or overvalued charitable donations are another area of inquiry the Congressional report recommended.

Much of tax law is esoteric and difficult to grasp. But what Trump did again and again and again — taking expenses for businesses with no revenue — is so simple that jurors should have no trouble understanding the issues were Trump to be indicted by a federal or New York state grand jury.

The Congressional report also notes another tax integrity issue I have spent years exposing: The least compliant taxpayers get away with wrongdoing because fighting them consumes vast amounts of limited government resources. The IRS today is a mere shell of what it was at the turn of the century, or in 1980, in terms of capacity to uncover tax frauds and to pursue enforcement, civil or criminal, against those who thumb their nose at the law. The Transactional Records Access Clearinghouse at Syracuse University is a rich source of information on the decline of the IRS.

The Congressional report notes “the history of difficult negotiations between Mr. Trump’s counsel and IRS personnel” implying this explains why only one auditor was assigned to only one of the six Trump tax returns and that auditor was not allowed to seek advice from the specialists the IRS employees in fields from biology to real estate partnership rules.

Considering that Trump headed our government for four years while obviously cheating on his income taxes, his case deserves whatever resources it takes to bring him to civil and criminal justice.

Reprinted with permission from DC Report.
What Liz Cheney Meant In Her Warning To Coup Conspirators

What Liz Cheney Meant In Her Warning To Coup Conspirators

Rep. Liz Cheney delivered two clear warnings during last week's House Select Committee hearings. One was to Donald Trump aides and allies who conspired with him to violently overthrow our government. The second was to those who merely observed these crimes but refuse to tell what they know.

The first message: the game is up because the J6 committee has the goods on Trump’s conspiracy, the coverup and the witness tampering so it’s time to either rat out Donald to save your own skin or give up any hope of leniency when indictments are handed out.

The second message: there’s no legitimate public reason to hold back information if you were a bystander, an observer, but if you do nothing your reputation will be trashed, you will be forever branded a coward and you just might get indicted for failure to report traitorous conduct, itself a crime called misprision of a felony.


The only issue is how to frame the case against Trump and his co-conspirators. As prosecutors often say, you file the case you can win, not the case you want to file.

Cheney didn’t say any of those specifics. She didn’t have to because while the significance of her words and actions may have flown over the heads of most people the lawyers got it loud and clear to criminal defense lawyers representing both the conspirators and the bystanders. The lawyers could be as drunk as Rudy Giuliani and they would still get the messages.

Cheney, that rare Republican who has not surrendered her soul to Trump, put two messages on a big screen at the end of Tuesday’s hearing. The texts showed witness tampering, something Trump has done all his life as the late great Wayne Barrett documented three decades ago.

The terrifying part for conspirators who still cling to Donald was that no names were shown on the big screen, a move sure to spread paranoia and suspicion among the conspirators.

Conspiracy law is designed to help law enforcement drive a wedge between criminals. Criminal defense lawyers are for sure asking their clients this question: Which do you prefer, prison for you or for Donald?

In the cold calculus of criminal law, conspirators who get to prosecutors first with solid evidence and who come clean, really clean, may be able to cut deals saving them from much if any prison time. Even if they can’t avoid prison, they may be able to negotiate agreements on how long and where they will serve their time.

Witness tampering is a charge that prosecutors love to include in a conspiracy case because it shows mens rea – criminal intent. If you are actualoly innocent why would you try to prevent witnesses from telling the truth, the whole truth and nothing but the truth?

No Going Back

For some of Trump’s traitors it’s too late. Like Dante, they stare at the sign above the gates of Hell: abandon hope all ye who enter here. Among those are Giuliani and Mike Flynn, the disgraced general who was on at least two Kremlin-connected payrolls, one direct, the other surreptious.

During a video deposition, snippets of which were played at the Tuesday hearing, Cheney asked Flynn an anodyne question that any loyal American immediately would answer with one word: Yes.

Cheney asked Flynn if he supported the peaceful transition of power from one administration to the next. Flynn exercised his Fifth Amendment right against self-incrimination.

Flynn’s response, his lawyer at his side, makes perfect sense only if you are a traitor who participated in Trump’s failed coup d’état.

But for others who conspired, or watched and failed to act, there is still hope.

A legal tool can be used to persuade those foolishly loyal to Trump to tell the truth even if all they did was observe the coup plotting and execution of that incompetent but still dangerous attempt to overthrow our democracy.

Title 18 Section 4, known as misprision of a felony, provides that “having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under ther United States shall be fined under this title or imprisoned not more than three years, or both.

Misprision—note the third “i” in that word—means “the deliberate concealment of one’s knowledge of a treasonable act or a felony.” That’s what a coup is: treason. But there are many other crimes that the Justice Department can file against the Trump conspirators.

The Only Issue

The issue before Attorney General Merrick Garland, thanks to work his people should have done but that the J6 committee did instead, is no longer whether there is a criminal case to be made against Donald Trump. The issue isn’t even, as some former federal prosecutors keep saying, whether Trump should be indicted.

The only issue is how to frame the case against Trump and his co-conspirators. As prosecutors often say, you file the case you can win, not the case you want to file.

Part of that framing is how to break up the conspiracy; how to get the rats to turn on each other.

Its clear from search warrant affidavits and subpoenas that Garland has an active criminal investigation or multiple investigations underway.

The real question how is how far flung will the indictments be and will our Justice Department bring a clear, simple and direct case against the man who would be our dictator.

Reprinted with permission from DC Report.

Banks Gouging Their Customers Face Tough New Regulation Under Biden

Banks Gouging Their Customers Face Tough New Regulation Under Biden

Junk fees and checking account overdraft fees are on the run now that President Joe Biden has appointed regulators who are looking out for bank customers instead of just bankers.

Such fees can result in a cup of coffee that costs $40 — five bucks for the java and a $35 bank overdraft fee because the debit card purchase came to pennies more than the customer had on deposit.

The Biden administration is reviving the Consumer Financial Protection Bureau, the brainchild of Sen. Elizabeth Warren that Trump and his cronies tried to shut down.

Before Trump, and now under Biden, the board is recovering for consumers many times its annual budget. Under Trump CFPB enforcement shriveled as $1 fines for bank misconduct became common.

In a much more tentative way, the Office of the Comptroller of the Currency may be recovering some regulatory backbone after being weakened under the predatory banker Stephen Mnuchin when he was Trump’s Treasury Secretary.

Ending Junk Fees

These two agencies are pushing to end junk fees and reduce overdraft fees. The Comptroller has even proposed specific reforms on overdraft fees.

A dozen large banks, recognizing the days of easy profits from gouging customers with junk and overdraft fees were unlikely to survive a Biden administration, reduced or eliminated them last year, the trade publication American Banker reported. Its reporting showed “how quickly a longtime mainstay of the consumer banking business has fallen into disfavor.”

If you haven’t heard about that, it’s not surprising. The actions have gained hardly any mention in America’s major news organizations with a few exceptions.

For decades I’ve noted that newspaper business pages and cable financial news channels typically report on banking issues through the eyes of bankers instead of the vastly larger audience of bank customers.

The nonprofit National Consumer Law Center has long been at the forefront in working for policies that reduce or eliminate overdraft and junk fees. Center lawyer Chi Chi Wu says that fees for overdrafts or insufficient funds on deposit “are one of the leading reasons that people are unbanked, either because past overdrafts put the consumer on an account screening lists that prevent them from opening new accounts, or because the fees make it too costly to maintain an account.”

Account screening can also be seen as an anti-consumer measure designed to give banks an excuse to reject service. It’s a key factor in the public banking movement to make low-cost banking services universal.

Whitewashing Banking History

Sadly, the banking industry is busy trying to erase the real history of its price gouging, dishonest mortgage lending, and reckless risk-taking as banks mixed the staid business of retail banking (checking and savings accounts; auto, credit card, and mortgage loans) with the risky but often more profitable businesses of underwriting stocks and bonds, trading securities and commodities and insurance.

A revealing example of this comes from the web pages of the Consumer Bankers Association which has a mildly Orwellian name. The trade group is not about consumers, but retail banks that serve them. You can get a flavor of its real interest from articles it reprints. For example: Fewer People Are Paying Overdraft Fees and Banks are Hurting.

Orwellian is a strong term, but then note this February 10 announcement, paying close attention to the words “understand” and “attack.”

“The Consumer Financial Protection Bureau (CFPB) last month launched a new initiative to better understand fees charged by banks and other financial institutions, with a specific emphasis on overdraft fees. The launch marked the latest attempt by the CFPB to attack the banking industry with extreme rhetoric…”

Using understanding and attack as synonyms is not just Orwellian, it's Trumpian.

Actual Banking History

Here’s some perspective on why a federal agency dedicated to protecting consumers from predatory banking practices would be interested in such fees:

Overdraft fees per American adult averaged $687 in 2008 (the equivalent of $915 in today’s money) with a total cost to bank customers of almost $200 billion in today’s money. Fewer than 10 percent of bank customers incur more than 90 percent of bank overdraft fees, most of them poorly paid workers.

Those fees have now fallen 77 percent to $158 per American, the Consumer Bankers Association says, a burden still borne mostly by the poorly paid. But the association focuses on how this “hurts” banks, not the consumers they exist to serve.

Here’s another association claim that would make Orwell smile: “America’s leading banks engage in rigorous underwriting practices.”

“Arts and Crafts”

Failure to underwrite mortgages, including the brazen fabrication of documents in “arts and crafts” rooms at Countrywide Mortgage to justify mortgages to unqualified buyers, was half the reason for the Great Recession in 2008. The other half was dishonest ratings by Wall Street. Journalist Michael Hudson was onto this as early as 2005 while most news reports praised the glories of mortgage lenders who were neck-deep in fraud against their customers and buyers of mortgage-backed securities.

All this is documented in the report of the Financial Crisis Inquiry Commission. From page 23 of its report:

“This report catalogues the corrosion of mortgage-lending standards…. Many mortgage lenders set the bar so low that lenders simply took eager borrowers’ qualifications on faith, often with a willful disregard for a borrower’s ability to pay. Nearly one-quarter of all mortgages made in the first half of 2005 were interest-only loans. During the same year, 68 percent of ‘option ARM’ loans originated by Countrywide and Washington Mutual had low- or no-documentation requirements.”

By the way, no error has ever been found in the inquiry commission report.

Keep all this in mind as the Consumer Finance Protection Board and the Comptroller move to make new regulations that protect customers from the worst behavior by bankers.

David Cay Johnston is the Editor-in-Chief of DCReport. He is an investigative journalist and author, a specialist in economics and tax issues, and winner of the 2001 Pulitzer Prize for Beat Reporting.

Reprinted with permission from DCReport
The Failure To Raise The Federal Minimum Wage Is A Moral Outrage

The Failure To Raise The Federal Minimum Wage Is A Moral Outrage

Reprinted with permission from DCReport

Very few of the poorest paid workers in America have unions to advocate for them, but many have a proxy for unions: government.

The minimum wage rose in 21 states this month thanks to a combination of ballot measures passed by voters, state laws raising the minimum and automatic inflation adjusters authorized by nine legislatures. These laws set a floor, a minimum standard, of pay.

That’s not as good as it could be. Indeed, it’s a glass-less-than-half-full scenario for the lowest paid American workers in 29 states. For them, the New Year meant continuing to labor for the same old inadequate wages.

Voting out those officeholders who use their power to keep the poor impoverished, especially those who do so while claiming to be Christians, would solve this problem of favoring capital at the expense of labor. It would also save money because people with inadequate incomes use a host of social services that cost taxpayers.

The federal minimum wage increased last in 2009 thanks to legislation signed by President George W. Bush. That law authorized three consecutive annual increases. Since then, Republicans have blocked every effort to raise the minimum wage even as inflation erodes its value.

The $7.25 that took effect in 2009 is worth less than $5.50 in today’s money, the government’s official inflation calculator shows. That calculator tends to understate the effects of rising prices on the poor because they spend so much of their money on food, energy and rent.

Economy Up, Minimum Wage Down

Compare this with1969, when the nominal minimum wage was $1.60. That’s the equivalent of $12.50 today. Our country today is a vastly wealthier country with a Gross Domestic Product per person of $66,144, about three-quarters larger than in 1969. Yet the minimum wage has shrunk dramatically rather than grown in tandem with inflation, the economy or overall worker productivity as lawmakers have bit-by-bit tilted the economic playing field in favor of investors and against workers.

You can check the minimum wage in your state and what effect state law will have on future pay in a report from the Economic Policy Institute, which focuses on the poor and poorly paid workers.


Minimum Wage Workers In 21 States Got A Raise On New Year's Day

States with minimum wage increases effective January 1, 2022 by type of increase

Notes: The New York State increase took effect on December 21, 2021. Source: Economic Policy Institute

Republicans in Congress block every proposal to raise the federal minimum wage. They claim, falsely, that paying higher wages would ruin many small businesses and would mostly benefit teenagers, neither of which is even close to being true.

Studies of counties that share a border at a state line in which one side raised the minimum wage and the other didn’t find strong earnings effects and no employment effects of minimum wage increases.

Bible Belt States

Sixty percent of minimum wage workers are age 25 or older, the Bureau of Labor Statistics says. The highest levels of workers being paid the minimum wage or less are found in so-called Bible Belt states, which are also among the poorest states. About 5% of workers in Louisiana and South Carolina earn the minimum wage or less as do about four percent in Mississippi.

Raising the minimum wage, numerous studies have shown, may eliminate one in 200 low-wage jobs. The increased pay to the other 199 workers would be vastly greater than the loss of that one job, increasing overall capacity to buy goods and services. That is, raising the minimum wage is a win for workers, for businesses with products and services to sell. Customers have more to spend; tax more revenue flows in and less is spent on subsidies for the poorest workers among us.

The resistance to raising the minimum wage among politicians who shout that they are Christians is especially appalling given the many teachings in testaments Old and New about paying workers what their labor is worth and the Christian obligation to sacrifice for the poor.

The Baylor University Center for Christian Ethics shows simply and eloquently why actual Christians should support a living wage to protect workers against bad employers:

Since the 13th century, Christians have urged employers to pay a just wage—not the low payment that desperate workers will accept, but the amount they would take for their labor if they were neither coerced nor deceived nor bargaining from a vastly unequal position.

Indeed, “remuneration for labor is to be such that man may be furnished the means to cultivate worthily his own material, social, cultural, and spiritual life and that of his dependents,” wrote Pope Paul VI in Gaudium et Spes [the Pastoral Constitution on the Church in the Modern World] (1965).

By itself, this appeal is impractical, says [Prof.] Jerold Waltman. “Unless all employers are equally convinced of the rightness of paying a just wage, and all do so in fact, the unscrupulous employer wins a competitive advantage. Therefore, only a law compelling all employers to pay the just wage will level the playing field.”

Moral Duty

Consider this moral duty to pay a living wage in the context of the law on minimum wages for restaurant and bar workers. President Bill Clinton and Congress fixed the minimum wage in 1993 at $2.13. Adjusted for inflation that’s just $1.10 an hour today.

Waitstaff, busboys and the like must apply their tips to fill the gap between $2.13 and $7.25. That means that the first $5.12 in tips they collect each hour is just a subsidy to the restaurant or bar owner who pays only the federal minimum.

To get an idea of just how hard congressional Republicans are making life for the lowest-paid workers consider this: The average cost of a municipal bus to get to work and back was $3.20 – and that was in 2019. That’s an hour and a half of minimum wage restaurant work just for bus fare.

The Informed Critic Locked Up By Trump Files Suit Against Him

The Informed Critic Locked Up By Trump Files Suit Against Him

Reprinted with permission from DCReport

Remember “Lock Her Up,” the wannabe dictator Donald Trump’s rallying cry about Hillary Clinton?

Trump did lock someone up — and in clear violation of the First and Fourth Amendments: Michael Cohen, his longtime lawyer, fixer and the man who paid Stormy Daniels $130,000 to keep quiet about her barely a minute intimacy with Donald.

Now Cohen is suing Trump, then Attorney General William P. Barr and six other individuals. For all eight of them the facts and circumstances are just awful.

Cohen’s federal lawsuit asserts that Trump “issued specific directives and guidance to his co-defendants that govern the treatment” of Cohen as well as others Trump perceived as enemies.

“At his [Trump’s] direction,” the lawsuit alleges, Cohen “was remanded back to prison and subjected to great indignities when he was unlawfully incarcerated.”

Proving that Trump was personally engaged, while easy to believe, may prove difficult.

Throughout his career as a con artist Trump has avoided email, tossed out calendars at the end of each month and, as president, destroyed official documents in violation of federal law.

The National Archives created a team to recover ripped up papers from the Oval Office wastebasket to piece them back together.

Running Roughshod Over Rights

The suit is a so-called Bivens action, named for a 1971 Supreme Court decision against six unnamed federal agents who violated a suspect’s Fourth Amendment rights against unreasonable search and seizure. The high court, voting 5-4, held that since every wrong must have a remedy in law, allowing Bivens and others like him to sue when their Fourth Amendment rights were violated was a remedy implied by the Framers.

Justices Hugo Black and Harry Blackmun, in separate dissents, expressed worries that Bivens actions would flood the federal courts with cases.

Of course, their fears would be realized only if federal agents were routinely running roughshod over Fourth Amendment and other Constitutional rights. Following Justices Black’s and Blackmun’s line of reasoning, had they prevailed, it would have signaled to federal agents that they could indeed run roughshod over constitutional rights.

Cohen has an ironclad First Amendment case for prior restraint of his rights of speech and press even if he can’t prove that Trump personally ordered him thrown into the modern dungeon at Otisville prison, where Jewish prisoners are concentrated.

Forbidden To Speak

Cohen lawyers Andrew Laufer and Jeff Levine describe an extraordinary addition to the boilerplate contract for home release with an ankle monitor. “The very first condition within the agreement specifically forbade Mr. Cohen from speaking to or through all media, including publishing his tell-all book about then President Trump,” Laufer and Levine wrote.

Here’s the exact wording showing irrefutable proof of First Amendment prior restraint:

No engagement of any kind with of the media, including print, tv, film, books, or any other form of media/news. Prohibition from all social media platforms. No posting on social media and a requirement that you communicate with friends and family to exercise discretion in not posting on your behalf or posting any information about you. The purpose is to avoid glamorizing or bringing publicity to your status as a sentenced inmate serving a custodial term in the community.

Lawyers Laufer and Levine call the speak-no-criticism-of Donald language “a prima facie violation of Mr. Cohen’s constitutional rights under the First Amendment as well as in retaliation for his public comments and proposed publication of his tell-all book critical of President Trump.” They are absolutely right about that.

Cohen asked the probation officers who summoned him for some explanation of this extraordinary provision and whether it could be “refined,” his complaint says. Cohen was told to wait while federal probation officer Adam Pakula left to consult with higher-ups. About 90 minutes later Cohen was taken back into custody.

Solitary Confinement

He was held in solitary for 16 days – just for asking a more than reasonable question about an obvious violation of his Constitutional rights. If this case ever gets to trial, you should expect that federal prisons officials will say that solitary confinement was used to protect Cohen from the coronavirus. How convenient for them.

Where are the howls from Fox, Wall Street Journal editorial writers, and those Republicans who rail against tyranny?

Cohen was still in solitary two weeks later when senior U.S. District Judge Alvin K. Hellerstein ordered Cohen’s immediate release from custody. Judge Hellerstein said Cohen’s return to prison was “retaliatory in response” to block Cohen’s “First Amendment rights to publish a book” criticizing Trump.

Federal prison officials and contractor GEO Group, whose top executive was a prominent Trump supporter and seeker of more taxpayer money for private prisons, slow-walked the judge’s order. Cohen spent two more days locked up in solitary the lawsuit asserts. After a Cohen victory at trial or more likely in settlement talks to avoid a trial that implicit contempt for a judicial order will likely prove costly.

But unless a judge, or a settlement agreement, requires the eight defendants to pay out of their own pockets for what they did under the guise of lawful authority we taxpayers will foot the bill for their un-American behavior.

Team Trump’s Lawlessness

Two months after being freed Cohen’s book Disloyal: A Memoir was where he laid out his solid case about Trump’s dishonesty and contempt for the rule of law.

The shut-up condition was totally lawless, but also consistent with Trump’s oft-stated view that no one should be allowed to write about him in ways he dislikes. And then there’s his campaign vow, aimed at journalists who refuse to be sycophants, “to open up libel laws, and we’re going to have people sue you like you’ve never got sued before.”

While Trump broke that promise, like almost every other one he made to con his way into office, legal attacks on honest journalism in America are growing, as are state laws designed to restrict or even shut down honest reporting, as explained well here.

Trump Fatigue

We have also seen cops, taking their cue from Donald, target reporters for police violence in New York City, Minneapolis and Portland, Ore.

To those with Trump fatigue, me included, it would be easy to just say meh and move on. Who cares that yet another lawsuit has been filed against Donald?

But Trump is still trying to find a way back into power. Worse, people as competent as they are dangerous to liberty are scheming to do what Trump tried and failed to pull off, turning America into a dictatorship.

Cohen’s lawsuit is a reminder of how this isn’t abstract, this isn’t a potential. Cohen’s lawsuit serves as a scary reminder that of a clear and present danger to all of us and to our liberties.

Under Trump's Misrule, The Most Highly Compensated Got Even Richer

Under Trump's Misrule, The Most Highly Compensated Got Even Richer

Reprinted with permission from DCReport

Donald Trump's presidency and the Covid pandemic combined to make 2020 a remarkably enriching year for the highest-paid workers in America. Meanwhile, the numbers for the bottom 99.9 percent are, in a word, awful.

Just one in 900 workers makes $1 million or more, a new Social Security report on wages shows. My annual analysis of this data shows that this thin and rich group made 14 percent more money in 2020 than in 2019.

On average, the pretax pay of the $1 million-and-up workers increased by $305,600. That's after adjusting for inflation.

The other 99.9 percent of American workers got an average raise of just $76 each. But even that overstates how badly most workers did. That's because most of this minuscule pay increase went to the 1/10th of workers making $100,000 to $1 million. The bottom 88 percent, those making less than $100,000, got next to nothing.

The standard measure for worker pay is the median. It illustrates the typical pay situation because at the median, half of workers make more while half make less. Median pay in 2020 rose by a mere $26.

What A Surprise!

Put another way, for each $1 of increased pay going to the typical worker, each worker in the two-comma club collected $11,750.

Suppose $26 is the height of the heel of a shoe worn by a man standing on Fifth Avenue outside Trump Tower. The heel is 1 inch. The height for the highest-paid workers' pay would soar 315 feet above that 58-story high-rise, for a total of 908 feet. That's a lot of heels. Plus one.

Trump has a policy: One for you, thousands for the rich; another for you, thousands more for the rich…

And don't forget, Trump's 2017 tax law gave the most highly paid workers a roughly four percent federal income-tax cut. Also, those workers tend to be the Americans with significant stock portfolios and Trump gave corporations a 40% tax-rate cut. So, they got a two-fer.

Crumbs For The Rest

You didn't get anything like either of those income-tax cuts. You got crumbs in tax savings plus the burden of $2 trillion in federal debt to pay for the Trump/Radical Republican tax cuts.

Indeed, if you live in the states with most of the high-paying jobs – California, Connecticut, New York, Maryland and the like – Trump and congressional Republicans increased federal income taxes for millions of people. That's because Trump and the Radical Republicans took away your deductions for state and local income and property taxes and mortgage interest. The number of Americans who itemize deductions, including charitable gifts, fell by three-fourths after Trump's tax cuts for the rich and the companies they own became law.

More pay going to workers at the top is a long-term trend that began long before Trump. What's significant in the newest data is how much that trend accelerated during the Trump years.

In 2016, just 143 workers made $50 million or more. That number jumped 50% in Trump's first year as president and stayed at that level in 2018 and 2019. But in 2020, Trump's last year as president, the number of workers paid $50 million and up soared to 358, 1.5 times as much as under Barack Obama.

Monthly gross paychecks for those 358 highest-paid workers averaged close to $8 million each. A worker at the median pay would have to labor for more than 225 years to get paid what these workers made in a month.

More For The Top

Even more significant, the share of all pay going to $1 million-and-up workers grew by a fourth during Trump's four years.

Their collective pay rose to 5.2 percent of all worker compensation, up from 4.2 percent of total compensation in 2016 under Obama. That means most workers got a thinner slice of the American wage pie under Trump, the opposite of MAGA pledges to improve most incomes and just as I predicted back in 2015 and 2016.

The median worker in 2020 made just $34,612, or less than $3,000 a month before taxes. During Trump's four years, inflation-adjusted median income rose by five percent.

By far the biggest increase in median pay in this century occurred in 2014 under Obama when Social Security data show an increase of 3.44 percent over 2013.

The average pay for all workers was $53,383.18, or less than $4,500 per month.

More than two-thirds of workers made less than the average. The average is higher than the median because all those very highly paid workers skew the average upward.

One more awful fact: The number of Americans with any work fell in 2020 by more than one percentage point. In 2020, more than 1.7 million fewer people found any paid work than in 2019. That's the first time this has happened in all of Trump's life.

While Trump at his inaugural promised that every act he took would be for the benefit of the "forgotten men and women" of America, it was all just another con.

His actions, again and again, favored the highly paid, the already rich, and, not least of all, the Trump-Kushner family.

David Cay Johnston is the editor-in-chief of DCReport. He is an investigative journalist and author, a specialist in economics and tax issues, and winner of the 2001 Pulitzer Prize for Beat Reporting. He is also a former columnist for The National Memo.



How Three Dollars A Day Can Buy America A Rich Future

How Three Dollars A Day Can Buy America A Rich Future

Reprinted with permission from DCReport

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