Foreign Correspondent: Here Comes A Massive Recession-- A Recession Was Inevitable, But COVID-19 And The Trump Administration’s Failures Are Making It Worse

-by Reese Erlich

The current recession was triggered by the COVID-19 pandemic. But after 11 years of economic boom, a capitalist bust was inevitable. And it’s being made worse by the Trump Administration's blunders.

Meanwhile socialist China, despite very real problems, is effectively combating the pandemic and starting an economic recovery.

Here in the US, shuttered businesses, massive unemployment, and the spread of a deadly disease are grinding the economy to a standstill.

Economists at Morgan Stanley predict the Gross Domestic Product (GDP) will decline at a 38% annual rate in the second quarter this year and by -5.5% for 2020. By comparison, the economy contracted at an annual rate of 8.4% in the worst quarter during the Great Recession of 2007-09. (A recession is defined as two or more successive quarters of negative GDP.)

Optimists in Washington predict a “V” shaped recovery-- a sharp economic plunge followed by a sharp return to normalcy. They believe we'll be back to Trump boom times as soon as the pandemic recedes.

But that prediction comes from Fantasyland.

Large states such as New York and California will be shuttered at least until May. But because of the lack of a national plan, other states are seeing an upswing in virus infections and have only recently ordered residents to shelter in place.

New COVID-19 epicenters will likely emerge in Florida, Texas, and other states where rightwing Republican governors refused to protect their people in a timely manner. As late as April 7, when 95% of the US population was under instruction to “shelter in place,” nine states had refused to issue statewide stay-at-home orders.  So we may see pandemic recoveries in some areas while others continue shutting down for months.

“There will be no nationwide all-clear signal,” says Sylvia Allegretto, a labor economist and co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley. In a phone interview, she tells me that epidemiologists predict that the virus will continue in regional hotpots. “So we'll likely see an initial significant economic bounce back followed by slower, possibly uneven, growth.”

How bad is the economy?

David Kotz, an economics professor emeritus at the University of Massachusetts Amherst and  an old friend, tells me the US was due for a recession as an inevitable part of the capitalist boom and bust cycle.

The economy did show signs of a possible recession towards the end of 2019 and beginning of 2020, he explains. “Then the coronavirus walloped the economy.”

Kotz says the decisions made by the Trump Administration have worsened the pandemic and hurt the economy. Trump hasn’t made sure that hospitals and first responders have the necessary equipment and supplies, so “states and localities are forced to compete with one another for scarce medical resources, instead of them being directed to the areas of greatest need.”

The Trump Administration cut funding for vital health services and replaced competent government officials with “political hacks whose only qualification is willingness to praise Trump. That has undermined the ability of the government to respond to this crisis,” he tells me.

“Trump’s slow and inconsistent response to the pandemic will prolong the economic crisis,” says Kotz. Trump has also refused to suspend tariffs imposed on numerous countries, from France to China. The tariff policy had already slowed the economy, according to Kotz, because business people couldn’t be sure if other countries would impose retaliatory tariffs.

“Tariffs reduce business investments and will retard the recovery,” he says.

The US government response to the pandemic has been to give qualifying individuals $1,200 direct cash payments and let small and large businesses apply for large loans and grants. The federal government will also extend unemployment insurance, which will be changed to include gig workers and independent contractors.

But even this $2 trillion package won't be enough. Leaders in Washington are already preparing for another outpouring of cash. They face a serious problem, however. No one can predict when the quarantines will end, nor whether consumers will spend money once they do. The recession could deepen.

Needed reforms

The recession has already changed political dialogue in the US. Small government Republicans suddenly favor massive government intervention. Corporate denunciations of socialism have transformed into cries of “help me, Washington.”

Reforms that once seemed out in left field are being seriously considered. Here are a few reforms that could slow the recession and permanently help the economy:

• Medicare for All. A single payer health care system would guarantee that everyone could be tested and treated. It could improve health care delivery for African Americans and other people of color.
• Nationalized payroll where the federal government pays workers’ wages to their employers for the duration of the crisis as is being done in Germany, Denmark, and Ireland.
• Use the Defense Production Act to produce needed health equipment and make sure it’s distributed where it is needed.
• Expand social programs and increase emergency aid to states and cities.
• Suspend monthly payments for rent, mortgages, and student, medical, and consumer debt for the duration.

The government could partially pay for such plans by trimming the Pentagon budget and increasing taxes on the rich. But it would have to allocate trillions more. The government bailout laws now spend trillions to subsidize big corporations. Why not provide assistance directly to ordinary people?

Resistance

Unionized nurses in western Pennsylvania went on strike to protest the failure of their nursing home employer to provide protective masks. Gig workers at Shipt, a delivery service, have started a unionization effort. Amazon workers are increasingly angry at working long hours under unsafe conditions. Some walked off the job to protest.

It’s too soon to know if these are the beginnings of a wider anti-corporate, pro-union movement. But an ongoing recession will make people angry and reduce at least some of Trump’s support among white workers and small business people.

So tie your face mask tight. The coronavirus and its impact are yet to be fully felt.


ADDENDUM

How capitalism responds to a pandemic crisis

• Hospitals across the United States are laying off doctors and nurses just as they are needed to fight the pandemic. Medical facilities have canceled elective surgeries and other lucrative procedures. As they lose money, for-profit hospitals reduce pay or lay off staff. What could be more irrational than laying off doctors in the midst of a pandemic?

• Ambulance drivers face layoffs in Alameda County, east of San Francisco. Falck, a multinational corporation that owns the privatized ambulances, threatens to layoff many of its 600 workers because the state's stay at home policy has reduced the number of ambulance calls. So at a time when authorities expect a spike in emergency COVID 19 cases, EMTs may be filing for unemployment. Cities such as Berkeley that hire EMTs through their fire departments will not be affected.

• In New Jersey, Baruch Feldheim bought up tens of thousands of masks, gloves, and protective gowns in order to sell them for huge profits, in one case at a 700% markup. Federal prosecutors charged him with making false statements and assault on a federal officer. I can't wait for federal prosecution of corporate CEOs for price gouging, but I'm not holding my breath.

How The Trump Regime Has Been Sabotaging The American Health Care System

Obama appointed Andy Slavitt to head the Centers for Medicare and Medicaid Services (CMS) in 2015 and he served until Putin managed to install Trump in the White House. His tweet above caught my attention Friday. It's a shame Tom Price got fired for corruption-- in his case both predictable and inevitable-- instead of for working to destroy the American healthcare system, something he's been doing with the connivance of Trump, Pence, Paul Ryan and the congressional Republicans. When Slavitt tweeted, he was responding to Bloomberg reporter Steven Dennis having posted a letter to Price and Mnuchin from Oklahoma Secretary of Health and Human Service Terry Cline. Here's the letter:

Oklahoma is one of the reddest states in America and one of the most supportive of Trump in last year's election. He beat Hillary 949,136 (65.3%) to 420,375 (28.9%), one of the only states where she didn't hit the 30% mark. Trump won every single county in the state, one, Cimarron County, 89.3% to 6.5%. But even in Oklahoma, state officials are starting to blame the Trump Regime for rising health insurance premiums. Cline blamed Price for missing a deadline for Oklahoma's Innovation Waiver, which could have been used to lower premiums for 130,000 Oklahomans by around 30%.

"After months of development, negotiation, and near-daily communication over the past six weeks, the State and your departments agreed that waiver approval must be received no later than September 25, 2017. As late as last Friday, September 22nd, an agreed upon approval package had been circulated with the state expectation, and federal department promise, that waiver approval would be forthcoming on Monday, September 25. When your departments communicated on Monday that the waiver approval would not be provided, with no reason for the delay or timeframe for approval, the Oklahoma reinsurance program was effectively inoperative for the 2018 plan year. Three days later, beyond health plan commitment and rate filing deadlines, Oklahoma is forced to withdraw our waiver request due to failure of the Departments to provide timely waiver approval... The lack of timely waiver approval will prevent thousands of Oklahomans from realizing the benefits of significantly lower insurance premiums in 2018." Maybe they were flying around on chartered jets partying again.

Price and Mnuchin to Oklahoma patients: "Fuck off!"

Or did Trump order them to do it to sabotage a state where he expected no one to blow the whistle on him and them-- his way of living up to his explicit threats to let the healthcare system implode? There is little question in the minds of officials who have worked in the public health sector, like Slavitt, that Trump and his Regime-- with the connivance of congressional Republicans-- are purposely undermining the healthcare system and attempting to wreck it. Friday, Will Drabold, elucidated on another instance of Price (and Trump) working to purposely screw up healthcare, this time by "delaying" a rule to punish drug makers who price gouge. The rule is another Affordable Care Act regulation, meant to protect low-income and vulnerable Americans, that the Republicans hate.

That rule was created in 2010 under the Affordable Care Act to protect hospitals from being overcharged on prescription drugs that are supposed to be discounted under a program known as 340B. The program, which dates back to the early 1990s, is essentially an agreement between drug companies and the government to discount drugs to hospitals and health clinics that serve high numbers of low-income patients.

The rule mandated by the ACA was written to deter price gouging. Under the rule, if a drug manufacturer is found to have “knowingly and intentionally” overcharged customers, a fine of up to $5,000 could be imposed for each instance of overcharge.

While the rule was supposed to go into effect on Sunday, it’s now been delayed until July. The Department of Health and Human Services quietly logged the delay into the federal register on Thursday.

Thursday’s delay marks the fourth time this year the administration has delayed implementation of a rule that would punish drug companies for price gouging hospitals and patients who are supposed to benefit from discounted drugs.

...While stumping for president, Trump promised to “bring down” the cost of prescription drugs. In a meeting earlier this year with CEOs of pharmaceutical companies, he told them they needed to lower prices. He blasted “RIPOFF DRUG PRICES” in August on Twitter.

But beneath the tweets, consumer advocates, hospital groups and others say Trump has gone back on his campaign promise to penalize drug companies for increasing prescription drug prices. Critics argue the president and his administration do not hold pharmaceutical companies accountable on how they price the drugs they sell to hospitals serving low-income patients because former pharmaceutical executives oversee Trump’s health policies. In fact, a longtime lobbyist for drugmaker Gilead Sciences, Joseph Grogan, who lobbied against the ACA’s 340B rule, now runs the White House group focused on lowering drug prices.

“If you’re looking for ways to combat the high cost of prescription drugs, it doesn’t make sense to attack and limit [340B] in any way,” a Washington health care lobbyist opposed to the pharmaceutical agenda said, speaking anonymously in order to candidly assess the Trump administration.

“Thus far, what we have seen from the [Trump] administration ... has been to hurt the 340B program.”

...When the federal government sought further public comment earlier this year on whether to penalize drug companies that overcharge, hospitals weighed in. They said the penalty was crucial in preventing egregious price increases on discounted prescription drugs. Of 51 comments submitted, 21 supported further delay. All of those came from pharmaceutical companies or industry groups.

Entities like hospitals that receive discounted drugs can no longer sue drug manufacturers after a 2011 Supreme Court decision, forcing them to rely on the “honor system” or pressure from HRSA to ensure the right price.

...Since 2010, 82 rural hospitals in the U.S. have closed. Many of them serve high populations of Medicare and Medicaid recipients, giving them access to 340B discounts, and 40% of rural hospitals operate at a loss, Diane Calmus of the National Rural Health Association, said.

“High drug costs are an issue not only for hospitals, but patients they’re providing care for,” Calmus said. Her group is frustrated with the seven-plus-year delay in implementing the rule to penalize price gouging. ”[Drug] prices are rising dramatically without justification. We see drugs that have been around for a while, jumping by large margins without an explanation.”

...It’s not hard to track the transition of the pharmaceutical industry into Trump’s White House. Just look at the LinkedIn profile for Joe Grogan, the former industry executive who now leads the Office of Management and Budget’s Health Programs.

Grogan joined the Trump administration in March after about a six-year stint as a lobbyist for drugmaker Gilead Sciences. His lobbying disclosure form for the first quarter of 2017 listed Grogan as lobbying on “pharmaceutical policy as it relates to payments under the 340B program” on behalf of a leading prescription drug manufacturer.

Gilead, which has faced criticism for pricing its hepatitis C medication at $1,000 per pill, spent $1,050,000 on three lobbyists, including Grogan, in the first quarter of 2017 alone, according to the same disclosure form.

At the White House, Grogan has taken leadership of Trump’s working group focused on lowering drug prices. In June, Kaiser Health News obtained documents from those meetings that showed pharmaceutical company executives were crafting the administration’s approach to lowering drug costs. Also in June, Politico pointed out that as of then Grogan has not obtained the necessary ethics waiver to work for the government on issues he had previously lobbied on.

The same week Grogan joined the White House, the administration delayed the implementation of the price gouging punishment rule that it further delayed this week. After a delay in May, the government invited further comment on a rule that had already taken seven years to develop.

Illinois emergency room doctor and dedicated Berniecrat David Gill wasn't surprised to see the Trump Regime to start sabotaging the Affordable Care Act. "It comes as no surprise to learn that the Trump administration is taking steps to make health insurance and prescription medication more expensive," he told us last night. "This is the same president who supports proposed health care reforms which would leave 26 million more Americans without insurance, in order to fund an $800 billion tax cut for his fellow residents of the swamp. His hypocrisy knows no bounds. We absolutely must establish a new House Democratic majority in the 2018 mid-terms, to serve as a true check on his gluttonous excesses. My campaign team and I are running hard here in IL-13, to make sure that this is one of the seats that turns from red to blue next year."

Oklahoma has been one of the reddest bastions in the country but there is one bright spot on the horizon, Tom Guild, an unabashed Berniecrat who's looking like he could actually win the Oklahoma City district, OK-05. He helped give us some insight into what happened with the healthcare shenanigans down there. If you want to help his campaign, you can do it here.

Dr. Terry Cline, Oklahoma’s Secretary of Health and Human Services and Commissioner of Health at the Oklahoma State Department of Health recently chided both Washington munchkin secretaries for denying the state of Oklahoma a waiver that would have helped more than 130,000 of our fellow Oklahomans struggling with dramatic increases in premiums. It would have afforded more than a 30% premium reduction for 130,000 Okies who are now forced to buy health insurance under the Affordable Care Act rendered virtually unaffordable because of the actions of Trump appointees. Dr. Cline reluctantly withdrew Oklahoma’s waiver request, because the high flyers in Washington, DC (aka The Swamp) did not approve Oklahoma’s request by the date required for it to go into effect for 2018.

The Trump Administration has shamelessly added to the burden of tens of thousands of our citizens in intentionally undermining the ACA and forcing working people in the Sooner State (and elsewhere) to unfairly and unnecessarily shoulder huge health care premium increases. The failure to grant a waiver to the state of Oklahoma reminds us of yesteryear, when the question was asked, “Have you no shame? Have you no sense of decency, sir?” The action of Trump and Trump’s cabinet appointees are despicable and unforgiveable. It is disgraceful to intentionally add to the burden of working families struggling to obtain health care, raise families, and survive. The Swamp is alive and well in the nation’s capital. We need to put a stake through the Swamp Monsters hearts in the 2018 elections and put an end to their disgraceful actions.

The Republican Health Care Plan Hasn't Changed: Don't Get Sick-- And If You Do, Die Quickly

Last October-- a month short of a year ago-- I started treatment for a rare form of cancer. The treatment ended, successfully, about a month and a half ago after a month in the hospital for stem-cell transplants. Today I spent the entire day at City of Hope's day hospital getting maintenance treatment, something I'll probably be doing every few months for the rest of my life. I've kept a sporadic running diary of my adventures in the world of medicine that you can check out here if you'd like.

Tuesday you probably read, as I did, the Andrew Pollack piece in the NYTimes that everyone was talking about, Drug Goes From $13.50 a Tablet to $750, Overnight. Short version: A typical greed-obsessed 32-year-old Albanian-American hedge-fund manager buys the rights to a life-and-death drug and jacks the price into the stratosphere. He isn't dragged out of his office and killed but goes on TV instead and will soon be talked about as a Ted Cruz, Jeb Bush or Marco Rubio potential running mate. The piece has been updated because the ensuing uproar caused one of the companies (UPDATE: now Shkreli has partially raised the white flag himself, lowering the cost per pill to a so-far undisclosed price.) involved to rescind the bulk of the increase. Blended, for those who don't have access to the Times, these are the most crucial bits:

A huge overnight price increase for an important tuberculosis drug has been rescinded after the company that acquired the drug gave it back to its previous owner under pressure, it was announced on Monday.

However, outrage over a gigantic price increase for another drug spread into the political sphere on Monday, causing biotechnology stocks to fall broadly as investors worried about possible government action to control pharmaceutical prices. The Nasdaq Biotechnology Index fell more than 4 percent.

“Price-gouging like this in the specialty drug market is outrageous,” Hillary Rodham Clinton, a contender for the Democratic presidential nomination, said in a tweet on Monday. She said she would announce a plan on Tuesday to deal with rising drug prices.

Ms. Clinton was referring to the actions of Turing Pharmaceuticals, which last month acquired Daraprim, a 62-year-old drug used to treat a serious parasitic infection, and raised its price to $750 per tablet, from $13.50.

The cases of Daraprim and of the tuberculosis drug, cycloserine, are examples of a relatively new business strategy-- acquiring old, neglected drugs, often for rare diseases, and turning them into costly “specialty” drugs.

Cycloserine was acquired last month by Rodelis Therapeutics, which promptly raised the price to $10,800 for 30 capsules, from $500. But the company agreed to return the drug to its former owner, a nonprofit organization affiliated with Purdue University, the organization said on Monday.

“We discovered literally on Thursday the strategy that had been undertaken” by Rodelis, said Dan Hasler, the president of the Purdue Research Foundation, which has oversight of the manufacturing operation. “We said this was not what we had intended.”

By Saturday, he said, Rodelis had agreed to give back the drug. Rodelis confirmed this in a brief statement on its website.

The foundation now will charge $1,050 for 30 capsules, twice what it charged before, but far less than Rodelis was charging. Mr. Hasler said the new price was needed to stem losses.

Cycloserine is used to treat multidrug-resistant tuberculosis, a serious form of the disease that does not respond to the usual drugs. There are only about 90 new cases a year in the United States, Mr. Hasler said, and about half those patients get treated with cycloserine.

Turing does not appear ready to surrender. Turing’s founder and chief executive, Martin Shkreli, a former hedge fund manager, used television interviews and also Twitter and Reddit to defend his move.

He said that toxoplasmosis, the infection Daraprim is used to treat, had been ignored by the pharmaceutical industry because there was little money to be made. Now that Turing can presumably make money, he said, it will be able to educate doctors about the disease, improve delivery to patients and develop better drugs for the infection.

Infectious disease specialists, who have protested the price increase, question the need for new drugs for toxoplasmosis and say that if Turing wants to develop such drugs, it should use money from investors. They say the price increase will raise the cost of treating some adult patients with toxoplasmosis to hundreds of thousands of dollars a year.

Senator Bernie Sanders of Vermont, who is also vying for the Democratic presidential nomination, sent Turing a letter on Monday demanding information on the price increase.

“Without fast access to this drug, used to treat a very serious parasitic infection, patients may experience organ failure, blindness or death,” Mr. Sanders said in a letter written with Representative Elijah Cummings, Democrat of Maryland. The two lawmakers have been investigating sharp price increases in drugs, many of them old generics.

Last night, Chris Hayes had Bernie Sanders on his show talking about this whole outrage-- specifically and general-- and what he's been doing to work on this problem in the Senate. Watch what Bernie had to say about it. Shkreli is just the latest ugly face of a catastrophic problem that needs to be seriously addressed-- but, because of the way our elections are financed, hasn't been. (You can contribute to Bernie's campaign here.)



It's lovely that Hillary jumped in; none of the Republicans, to my knowledge, have. But it is a subject that Bernie Sanders has been working on for most of his career. Just before I started my treatment, I started covering how generic drug prices have been skyrocketing and how Bernie was taking on an issue that few others wanted to touch.

Remember, Medicare Part D is "Republican Health Care." It was supported by virtually no Democrats except a gaggle of right-wing Blue Dogs, and it demonstrates the inherent unfairness towards working families that is emblematic of the GOP approach to health care. When the House voted on Bush's Medicare Part D scheme on November 22, 2003, it passed by only 5 votes, 220-215. 25 Republicans joined nearly the entire Democratic conference to oppose it. 

The 25 Republicans who opposed the Bush proposal are against all forms of government involvement in healthcare. Tthe 16 Democrats who backed it were almost entirely reactionary Blue Dogs, and only two of them, Colin Peterson (MN) and David Scott (GA), are still in Congress-- where they're still voting for Republican policies that wreck the lives of ordinary working families. The others were subsequently defeated or forced to retire to avoid being defeated. As Xavier Becerra (D-CA) explained recently on the House floor, "Congress should be in the business of making life better, not worse, for everyday Americans."

Bernie's bill, S.1364, the Medicaid Generic Drug Price Fairness Act of 2015, is winding its way through a Republican-controlled Congress hostile to the very idea of, in Becerra's words, "making life better, not worse, for everyday Americans." Since Bernie introduced it, Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) signed on as co-sponsors, joining Bernie, Sherrod Brown (D-OH), Mazie Hirono (D-HI), Richard Blumenthal (D-CT) and Al Franken (D-MN). The bill would make generic-drug manufacturers reimburse Medicaid for excessive price increases (increases greater than the rate of inflation). If Bernie's bill passes, it will save taxpayers $1 billion annually, which would cut into excessive profits by the GOP-enabled pharmaceutical corporations.

One of the most common side effects from chemotherapy is neuropathy, extreme pain in the feet, legs and hands. The pain is nerve damage and normal painkillers have no effect on it whatsoever. Lidocaine-based gels, however, ameliorate the worst pains. And the worst pains are pretty bad; it makes many patients suicidal-- many patients. Lidocaine has always been a relatively inexpensive drug. I used to buy a tube for around $25. A tube lasts two to three weeks. Suddenly, though, the generic-drug manufactures were all bought up and the price went from $25/tube to $300/tube, making it unaffordable to thousands of cancer and diabetes patients in extraordinary daily pain.

That's what Bernie and other champions of working families in Congress are trying to combat.

Attorneys general in Connecticut and Vermont are also looking at possible collusion among some manufacturers. There have been allegations of practices such as buying up several generic drug companies as a way to corner the market-- and set pricing-- for a specific drug.

At the June 6-10 American Medical Association’s House of Delegates meeting in Chicago, the delegates instructed the AMA to pursue efforts to find ways to address the increases.

Many physicians spoke of specific instances of generic drug prices go up multiple times their cost, sometimes abruptly but more often over the past few years. For instance, said Georgia delegate John Antalis, MD, the price of the antibiotic doxycycline now costs $276, up from $70 a few years ago. One physician said a patient called him from a pharmacy to report that the generic version of aripiprazole (Ablilify/Teva) cost more than the brand name of the drug.

At least 12 states require pharmacists to give patients to generic drugs when available and many more allow the substitution. If the plans permitted patients to get whichever version of a drug was cheaper, that could help fight some generic drug price increases. Health plan specifics are a matter of state regulation.

At the AMA meeting, Mario E. Motta, MD, cardiologist in Salem, MA, wondered why generic digoxin, the pharmaceutical version of digitalis (a common garden flower also known as foxglove), cost $180 when it costs about a penny a pill to manufacture and has been used for more than 200 years as an herbal tea.

While I was getting the stem-cell operations, there was another patient of my doctor's in a room down the hall going through the same procedure, a young father who had four small children running around the hospital the whole time I was there. One day my doctor came in and told me he probably wouldn't make it. She was visibly shaken up and grappling with how she was going to tell his wife. Well, since then there's some good news and some bad news since then.

The good news is that, although the operation was not successful, he didn't die. The bad news is that my doctor is keeping him alive with a daily pill. More bad news: The insurance co-pay for the monthly prescription is $10,000. This is not a wealthy family. They can't pay. Right now the hospital appears to be picking up the cost. But it's hard to imagine that that's going to last forever. My doctor is scrambling to figure out a way to make this work out.

The key for the rest of us is to elect more members of Congress to stand with Bernie and the others taking this seriously. Recently I spoke with Donna Edwards, a congresswoman from Maryland currently running for her state's open Senate seat, and she would certainly be an immediate co-sponsor of Bernie's bill were she to be elected to the Senate next year. Same for P.G. Stittenfeld in Ohio, where Rob Portman, as usual, is on the wrong side of the issue. "If elected to the U.S. Senate," P.G. told us, "I will always be on the side of the people, rather than the special interests, and that is why on Day 1, I would support the Medicaid Generic Drug Price Fairness Act, ensuring that generic drugs remain affordable to those who need them. Not only is a progressive vision for our health care system the right thing to do, in the case of this legislation it would also save taxpayers a billion dollars." You can help make that happen right here.

Most Americans (72%) are catching on that we're being ripped off by the Republican-enabled big drug companies. Often, the exact same drugs cost much less overseas. Is this a big enough deal for them to motivate their choice of 2016 candidates? If it is, Bernie Sanders will be the next president of the United States and Donna Edwards, Russ Feingold, P.G. Sittenfeld and Alan Grayson will be in the U.S. Senate.

Verizon may have pulled back on that $2 fee for paying bills online, but this is a battle that's only begun

Companies like Verizon and Time Warner Cable don't need masks and guns to rob us, as long as they have pricing power over us.

"It’s not just about the money (though if you’re like me, you don’t have extra cash to be sending to a giant phone company in order to pay your own bills). It’s that Verizon thinks it can do anything to its customers, and that we’re powerless to stop it."

-- Molly Katchpole, in a change.com e-mail (see below)

"At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time."

-- Verizon CEO Dan Mead, in a statement

"Pricing power is the ability to raise your prices beyond the inflation rate and expect that most people will pay. It occurs in monopolies and oligopolies and in necessities during crises (how much is a loaf of bread worth if you'll die without it?)"

-- Ian Welsh, in his post "You don't get the payroll tax 'cut' "

by Ken

By now I'm sure you've heard about Verizon's latest plane -- already rescinded (we'll come back to this in a moment) -- for sticking its hand in our pockets. The plan was to slap on a $2 fee, as of January 15, every time a customer makes a one-time payment by credit card or debit card, either online or by phone. I had a feeling this wasn't going to happen, that the uproar would be too great, and indeed before I could even write about it, Verizon has pulled back ("Verizon scraps $2 fee to Pay Bills Online").

But you can be sure they'll be back -- Verizon and everyone else who's in a position to stick their hands in our pockets. Which is why the e-mail from Molly Katchpole of change.org seems to me every bit as pertinent now as when she sent it out.

Remember when together we beat Bank of America -- and the whole banking industry backed away from charging us just for using our debit cards?

Well, it’s time to get the band back together. Verizon just announced a new fee for paying your bills online. Really. Even though paying via internet is fully automated.

It’s not just about the money (though if you’re like me, you don’t have extra cash to be sending to a giant phone company in order to pay your own bills). It’s that Verizon thinks it can do anything to its customers, and that we’re powerless to stop it. (Spoiler alert: We’re not.)

By the way, I found out that a recent report says Verizon paid zero federal income tax from 2008-2010, and actually got almost a billion dollars in rebates from taxpayers. So they definitely shouldn't be nickel and diming us.

As a Verizon customer, I've started a new Change.org petition demanding that the phone company drop the fee for paying bills online. I'd be grateful if you signed it. You can click here to add your name. [Bear in mind, again, that Verizon has already rescinded the payment fee. -- Ed.]

We can win this. And, if we do, we’ll save a lot of money for millions of people, many of whom are like me - not exactly swimming in a billion dollars of rebates.

But we’ll also prove again that times are changing. People like us have real power when we organize together! Lots of people will see this petition, and maybe some of them will start their own, realizing that they can change something in their own community.

First things first, though. Let’s stop Verizon from charging us a fee to send them money. Click here to sign my petition.

Thanks! And happy new year!

- Molly Katchpole

As it happens, I'm not a Verizon customer, even though Verizon is my local phone company. I'm not a Verizon wireless customer either, simply because when I finally had to get a cell phone to maintain contact with my declining mother a thousand miles away, I picked a provider more or less blindly, and it was someone else. However, in the years when I was taking care of my mother's bills as well as my own, I came to depend heavily on online bill-paying, which was actually a godsend. Nowadays I probably pay 98 percent of my bills that way.

Which of course, multiplied by all those millions of other online billpayers, has contributed so much to the financial crisis of the Postal Service. I mean, with two sets of bills to pay by mail I used to feel as if I were buying first-class stamps by the truckload. Now that the USPS is out of the billpaying picture for so many of us, the people who collect our money are now in a position to soak us.

They don't even bother trying to pretend that they're just making up for costs incurred in processing these newfangled payments. As we all know, there aren't any such costs -- they're saving money, and I'm guessing tons of it. We're now plugging our payments directly into their computer systems. Why do we think they encouraged the transition to begin with? But as I say, they don't even pretend to have a rationale, at least not seriously. (I wouldn't be surprised if there was some lame-ass assertion to that effect buried somewhere in the original Verizon announcement. I didn't bother to dig into the innnards of it.)

No, as Molly says quite rightly in her e-mail, Verizon unveiled the plan because they thought they could get away with it. And while this time there was plenty of pushback, I wouldn't be surprised if they anticipated that, and already have Plans B through J ready to roll out when the times are ripe. Just the way the banks have been adding new sets of fees every month, based not on costs incurred or even necessarily their financial needs -- it's all based on what we can get away with.

As it happens, there's a standard economics term for this: pricing power. It's not something most of us think about, but for some time now as I've eavesdropped on my economically more literate friends and colleagues, it's a term I've heard come up a lot. And by chance Ian Welsh just wrote about it again. And as it happens, the example he uses, the case in point that set off this post, concerning the incessant price increase of Time Warner Cable, does strike me personally, because I am a TWC customer -- for cable TV, online service, and phone service. And for years now I've been watching my TWC bill soar, despite everything I've tried to do to control it, short of canceling the services, which I'm afraid I'm pretty well addicted to. The result is a love-hate relationship with the company -- they actually provide some pretty good services, which I rely on heavily, and yet I always feel that their only interest in me is how much more money they can squeeze out of me each month.

Because what am I going to do, cancel my cable (remember, in Manhattan we basically don't get TV reception without cable), online access, and phone service?

Anyway, here's Ian's take.

You don't get the payroll tax "cut"

2011 December 27

by Ian Welsh

There has been much ballyhoo about how there is a payroll tax cut and that an extra $40 per paycheck (every two week) will make a big difference.
Sure, if you get to keep it (via Americablog):

Some rates will be significantly higher, such as a 27.4% increase to $17 from $13.34 just to receive local broadcast channels. Others will be modestly higher, such as a 9.5% increase to $69 from $63 for broadcast plus basic cable channels, or a 7.3% increase to $58.99 from $54.99 for the digital video package. Compare that with a 3.5% annual inflation rate as of October. "The cable industry maintains a near-monopoly over television services," said Doug Heller, executive director of Consumer Watchdog, a Santa Monica advocacy group. "Their prices are completely disconnected from the real lives of their customers."

Pricing power is the ability to raise your prices beyond the inflation rate and expect that most people will pay. It occurs in monopolies and oligopolies and in necessities during crises (how much is a loaf of bread worth if you'll die without it?)

American consumers and workers, as a group, do not have pricing power and they do not have alternatives. They cannot charge more for their labor, because there is a huge surplus of workers. Because almost every major industry is an oligopoly or a local monopoly, as consumers, they cannot move from one company to another, as the companies are almost all in collusion and raising prices more or less in lockstep. There is no real competition on price in most industries (certainly not in telecom).

Until Americans have the ability to opt out, things will not get better. And tax cuts will do NOTHING. If you give money to ordinary people corporations with pricing power will take it away. If you give money to corporations or rich people, they will use it for leveraged financial plays (job destruction), offshoring or outsourcing (job destruction) or on luxury consumption like $50,000/night hotel rooms and private jets (some job creation, but destroying the quality of services you get.)

What the US needs right now is a massive tax increase on the rich and corporations. They are not spending their money usefully, and in the case of corporations are sitting on billions. In fact, every extra dollar of profit makes things worse, not better. If corps and the rich can't use money to create growth, and in fact are using it in destructive ways, you take it away and use it to create growth (assuming the Obama administration knew how to do that, which it doesn't. But theoretically, assuming competent individuals of good will in power. Yes, you can laugh hysterically now.)

If you're not accustomed to thinking in terms of pricing power, the way I'm not, now is a good time to start. It really is essential to trying to understand the world around us. Not that, in the grand scheme of things, there's much you or I can do about it. At the least, though, we can be vigilant for more schemes like this Verizon one, but I don't kid myself that we can do more than stick a finger in the dike. Still, maybe -- and I really mean maybe -- there's some value in knowing how our guts are being squeezed out of us.

#

WHO WOULD SUPPORT GASOLINE PRICE GOUGING? WANT TO GUESS-- CONGRESS JUST VOTED ON IT

This evening the House passed, with an overwhelming bipartisan majority, H R 6346, the Federal Price Gouging Prevention Act. The intent of the bill-- which was supported by every Democrat except Blue Dog extremist Collin Peterson (MN) and by 51 Republicans-- is to investigate and punish anyone who artificially inflates the price of gasoline and diesel fuel. The bill sets criminal penalties for price gouging, and permits states to bring lawsuits against wholesalers or retailers who engage in such practices. 

You can see the names of all 145 Republicans who decided to defend price gougers and oppose this bill. I just want to point out a few who are vulnerable in November and who I want you to keep in mind every time you fill up your tank. (The highlighted ones are races that Blue America is involved with and the link will bring you to an ActBlue page where you can donate to the opponent of this particular loon.)



Michelle Bachmann (R-MN)
Ken Calvert (R-CA)
Mario Diaz-Balart and his brother Lincoln (R-FL)
Thelma Drake (R-VA)
David Dreier (R-CA)
Randy Forbes (R-VA)
Virginia Foxx (R-NC)
Scott Garrett (R-NJ)
John Kline (R-MN)
Joe Knollenberg (R-MI)
Jerry Lewis (R-CA)
Michael McCaul (R-TX)
Patrick McHenry (R-NC)
Marilyn Musgrave (R-CO)
Steve Pearce (R-NM)
Jon Porter (R-NV)
John Shadegg (R-AZ)
Tim Walberg (R-MI)
Don Young (R-AK)

I was able to reach a couple of the Blue America-endorsed candidates this evening after the vote. I was especially eager to get to Gary Peters because his opponent is both a major recipient of donations from Big Oil (over $65,000) and because tomorrow Knollenberg is on the host committee welcoming Bush to a $1,000/plate fundraising dinner in Livonia, Michigan. Knollenberg is an unswerving rubber stamp for Bush and Cheney and all their disastrous energy policies. As you can see above, he refuses to even hold price gougers accountable. Last weekend at his first live blog session at Firedoglake, Gary told us what a giant concern the price of gas is in his middle and working class district in the northwestern suburbs of Detroit. I asked him what the voters could expect from him that would be different from what they're getting from Knollenberg.

"Congressman Knollenberg has once again chose to side with the big oil companies, and not with the ordinary people in Oakland County who are paying outrageous prices at the pump. Here in Southeast Michigan, high gas prices are hurting families, driving up food prices, and crippling our auto industry, and we need leaders in Congress who will represent us, and not the oil companies.

"Unlike my opponent, I refuse to take campaign contributions from oil companies, and tomorrow, I will be announcing my plan to lower gas prices, seriously invest in alternative energy, and end our dependence on foreign oil. Michigan is poised to take the lead in new energy technologies and build the next generation of renewable fuel vehicles, and when I get to Washington, I will take action to get the job done."

Dennis Shulman (D-NJ) is running against an even crazier loon than Knollenberg: Scott Garrett, the last far right extremist in the Northeast. Knollenberg is a doctrinaire fanatic who equates trying to protect consumers with communisim. Dennis is polite in his response to Garrett's bizarre vote against price gauging today. "I am running for Congress because Northern New Jersey deserves a member of Congress who is in touch with economic reality. How can someone look at the record profits of oil companies like Exxon-Mobil, companies that benefit from tax breaks that Garrett supports and I oppose, and decide to stand with Big Oil instead of New Jersey's hardworking families? I am confident Northern New Jersey doesn't think the bottom-line of Big Oil's profits is the only thing in the world that requires conservation."

A little closer to home, just up the road apiece, Russ Warner is running in an L.A. suburban district against right-wing hack and non-resident David Dreier. This is commuter country and when you ask people what they want to see change once we get rid of Bush, the first thing anyone says is "the price of gas"-- and they don't mean they want to see it continue to get more expensive. Russ said he was "very disappointed with David Dreier’s vote to defend gasoline price gougers by opposing this bill, and I would have voted differently. This vote illustrates how out of touch David Dreier is with the needs of his constituents, the working families of the 26th district. It’s time Dreier takes the rising economic pressure on middle class American families seriously."


UPDATE: TIM WALBERG HOSTING BUSH IN MICHIGAN TODAY TOO

Walberg is on the same host committee as Knollenberg for Bush's $1000 a plate fundraiser for Republicans in Michigan. And they both gave Bush a little present last night: 2 votes against a bill that seeks to stop price gauging. Recall that when Bush became president people in Jackson, Adrian, Waverly and Battle Creek were paying $1.52/gallon for gas. Mark Schauer is trying to bring rational representation back to south-central Michigan. This morning he reminds us that "Tim Walberg has spent a lot of time recently telling everyone how 'concerned' he is about gas prices, but when given an opportunity to stop price gouging, he sided with the big oil companies. The simple truth is that Walberg and McCain have been pushing a false choice on energy-– they know more drilling won't lower gas prices in the short-term. McCain even admitted so yesterday, when he said this would only have a 'psychological benefit.' Helping consumers feel better about oil isn't going to help them fill up their tanks. For Walberg, it's clear that the little guy is always the last thing on his mind."