Politics

by

Mr. Robinson Wins the Pulitzer

Washington Post editor and columnist, Eugene Robinson, has won the 2009 Pulitzer Prize for commentary for his columns about the 2008 election. 

One of his best was A Special Brand of Patriotism from July 4, 2008.  It begins

Anyone who took U.S. history in high school ought to know that one of the five men killed in the Boston Massacre, the atrocity that helped ignite the American Revolution, was a runaway slave named Crispus Attucks. The question the history books rarely consider is: Why?

Think about it for a moment. For well over a century, British colonists in North America had practiced a particularly cruel brand of slavery, a system of bondage intended not just to exploit the labor of Africans but to crush their spirit as well. Backs were whipped and broken, families systematically separated, traditions erased, ancient languages silenced. Yet a black man — to many, nothing more than a piece of property — chose to stand and die with the patriots of Boston.

Barack Obama had been criticized for failure to wear a flag lapel pin.

It is not common, in my experience, for sitting U.S. senators to be questioned on their love of country — to be grilled about a flag pin, for example, or critiqued on the posture they assume when the national anthem is played. For an American who attains such high office, patriotism is generally assumed.

It seems that some people don’t want to give Obama the benefit of that assumption, however, and I have to wonder whether that’s because he’s black. And then I have to wonder why.

Three Tuskegee Airmen -- from left, Charles McGee of Bethesda, Howard Baugh of Petersburg, Va., and Roscoe Brown Jr. of New York City -- stand for the national anthem at a memorial ceremony in Grapevine, Tex., in 2007.

What’s unpatriotic is pretending that the past never happened. What’s unpatriotic is failing to acknowledge that we’ve struggled with race for nearly 400 years. What’s unpatriotic is relegating “black history” to the month of February when, really, it’s American history, without which this nation could never be what it is today.

My father, Harold I. Robinson, served in the Army during World War II and has lived to witness this transformative moment of possibility. My father-in-law, the late Edward R. Collins, was a sailor who saw action in the South Pacific; he rests at Arlington National Cemetery. I have no patience with anyone who thinks that patriots don’t have brown skin.

Congratulations, Mr. Robinson.

by

Following up on Tea Parties

Here are some observations on the April 15 Tea Parties.  In all the news clips, I saw not a single person of color.  I think this is because they were basically anti-Obama demonstrations with more than a tinge of racism.  These demontrations were mostly not about taxes.  They were about how President Obama is not a citizen, was not legitimately elected, and will take away your Second Amendment rights. 

Then there is the question of attendance.  Nate Silver who has been tracking this at fivethirtyeight.com reports his final total to be more than 300,000.  He writes

 promised that I wasn’t going to put much more work into estimating crowd sizes for yesterday’s tea party events, but here is one last update. The important thing is that we now have a credible estimate for Atlanta at 15,000 persons; we were previously relying on an estimate of 7,000 that the Atlanta Journal-Constitution had initially made yesterday evening but then pulled back upon.

It’s not surprising that Atlanta had the largest turnout (in fact, the largest turnout by far, according to our collection of nonpartisan estimates). Turnout was much higher in state capitals than in other cities, and seems to have been much larger in the South than in other regions of the country. Atlanta, being by far the largest Southern state capital, therefore did very well.

His list ranges from the high point in Atlanta to 12 at the Fort Point, NY tea party.  300,000 is really not a lot of people when you think about it.  Maybe the rest of us should be glad of that.  As for the larger turnouts in the South,  I believe that Southern whites just cannot believe that a black man is really President.

So what exactly do the Republicans do with this Fox New movement?

Dan Baltz wrote in today’s Washington Post

The teabag protests that marked tax day on April 15 represent an opportunity and a risk for the Republican Party. Opportunity because they offer a jolt of energy for a battered party after two dismal elections. Risk because they supply at best only a partial answer to what ails the Republicans

…

For now standing back and saying no to Obama may be enough. But opposition to Obama’s policies represents an incomplete message for a party seeking to regain power. Republicans still must confront larger questions of how they can appeal nationally and how they would govern were they given the opportunity again.

Will the Republican Party try to use the issues of the Tea Parties to try to revive?  I don’t think that is the road back.  I hope and believe that Americans are beginning slowly to more past issues of race and gender.  Certainly the youngsters I see on the subway in Boston are often in mixed groups and couples are often interracial.  Maybe the race issue and the anti-Obamaism is why more people turned out in the South.  Plus we have that black president with very high approval ratings.  We will probably find out how tea parties work as a strategy when we know the results of the Kay Bailey Hutchinson v. Rick Perry (king of the Texas Tea Party) race for the Republican nomination for Texas governor.

Here are two final looks are the Tea Parties.  Tom Toles from the Washington Post

The Republicans should maybe remember Jim Jones.

And last but not least a link to Jon Stewart.

by

Taxes and Gay Marriage

I wrote about a lawsuit filed in Massachusetts to end the Defense of  Marriage Act back in March and yesterday Ellen Goodman published a good piece about why this is important.  Titled “A Strange Duel Citizenship”, Goodman writes

THEY ARE NOT the only married couple in America who talk about taxes and ulcers in the same sentence. Nor are they the only couple who believe they are paying more than they should. On that ground they are part of a noisy majority.

But they are a couple for whom tax season also entails an identity crisis. You see, Melba Abreu and Beatrice Hernandez file state taxes as what they are – a legally married Massachusetts couple. But under federal law, they have to file federal taxes as what they aren’t – two single women.

This identity crisis is not just some psychological blip on the cheerful landscape of their family life. In the last four years, the government’s refusal to consider them a married couple has cost the writer and the CFO of a nonprofit about $5,000 a year. As Beatrice puts it, “We don’t know anyone for whom $20,000 and counting isn’t significant.”

This is not about forcing states to choose to marry people.  It is about the simple act of recognizing legal marriages in other states.  It is not different from my straight marriage being recognized in Massachusetts even though I got married in Virginia.  Goodman concludes

So what do you say about an out-of-date law that enforces an identity crisis? What do you say about a law that “defends” marriage by denying it? The winds are blowing, but in a very different direction.

Amendment to this post

When I wrote this on Saturday morning, I hadn’t seen Stephen Colbert’s video mocking the anti-gay marriage ad – which he describes as combining the 700 Club and the Weather Channel.  Take a look.

by

The Torture Memos Released

President Obama did the right thing by releasing the Bush Justice Department memos providing a legal justification of torture and in deciding not to prosecute the interregators.  The ones who should be prosecuted are the memo writers who, rather than upholding the Constitution, international law, and basic American values, caved in to people like Vice President Cheney – and perhaps even Cheney, Rice, Rumfeld and Bush.

In his statement accompanying the release, President Obama said

The Department of Justice will today release certain memos issued by the Office of Legal Counsel between 2002 and 2005 as part of an ongoing court case. These memos speak to techniques that were used in the interrogation of terrorism suspects during that period, and their release is required by the rule of law.

My judgment on the content of these memos is a matter of record. In one of my very first acts as President, I prohibited the use of these interrogation techniques by the United States because they undermine our moral authority and do not make us safer. Enlisting our values in the protection of our people makes us stronger and more secure. A democracy as resilient as ours must reject the false choice between our security and our ideals, and that is why these methods of interrogation are already a thing of the past.

…

The United States is a nation of laws. My Administration will always act in accordance with those laws, and with an unshakeable commitment to our ideals. That is why we have released these memos, and that is why we have taken steps to ensure that the actions described within them never take place again.

It will no doubt be argued that this may, in fact, leave President Bush and other high ranking members of his administration open to prosecution in international criminal courts such as the one in Spain which as already begun an inquiry.  These, memos, people will argue, only add fuel to the fire.  We can’t have our elected officials held accountable for actions they thought were legal they will argue.

To them I say:  The high ranking officials in Hitler’s government also thought they were acting under the cover of law.  Maybe they didn’t have Justice Department lawyers writing the justifications, but those brought to trial at Nuremburg did not believe they had done anything wrong either.    This is why we now have United Nations Convention on Torture. 

  1. For the purposes of this Convention, torture means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions.

…

  1. Each State Party shall take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction.
  2. No exceptional circumstances whatsoever, whether a state of war or a threat or war, internal political instability or any other public emergency, may be invoked as a justification of torture.
  3. An order from a superior officer or a public authority may not be invoked as a justification of torture.

I haven’t read the entire test of the memos, but did not we commit war crimes?  Certainly the international agreement about torture was violated.

If we are a great nation, and I believe we are, we must lead not only by words, but also deeds.  I understand the political reasons why President Obama cannot be seen as bringing members of the previous administration to trial, but I see no reason why others, like Congress,  cannot do the ground work and present evidence to prosecutors and the courts.  It is probably better to do it ourselves than to leave it to Spain. 

At the very least, none of those Bush officials can travel outside of the United States without risking arrest.  Oh, I forgot, they better not set foot in Vermont either.

by

Al Wins the Vote

The three judges counting the votes have declared Al Franken ahead by 312 votes.  The Washington Post  reports

A Minnesota court confirmed Monday that Democrat Al Franken won the most votes in his 2008 Senate race against Republican Norm Coleman, who had already announced plans to appeal the decision.

Coleman has 10 days to appeal to the state Supreme Court. Once the petition is filed, it could further delay the seating of Minnesota’s second senator for weeks.

After a statewide recount and seven-week trial, Franken stands 312 votes ahead. He gained more votes from the election challenge than Coleman, the candidate who brought the legal action.

“The overwhelming weight of the evidence indicates that the November 4, 2008, election was conducted fairly, impartially and accurately,” the judges wrote. “There is no evidence of a systematic problem of disenfranchisement in the state’s election system, including in its absentee-balloting procedures.”

So now Coleman can appeal, but there appear to be some potential problems looming there.  TPM reported ealier today that one of the judges on the Minnesota Supreme Court contributed to the Coleman campaign.

In the years before he was appointed to the state bench, Christopher Dietzen was a private attorney and occasional Republican donor, including a check for $250 to Coleman in December 2001, and another $250 for the current cycle in January 2004. The Hill also points out Dietzen served as a campaign counsel for GOP Gov. Tim Pawlenty, during the 2002 open-seat race.

A spokesman for the state Supreme Court told TPM that no information is available about any possible recusal. Since there hasn’t been an actual ruling in the trial, much less the filing of an appeal, we don’t know and cannot predict what would happen.

The contributions were made before appointment which may make a difference.  In addition Eric Kleefeld, the author of the story points out

The question here is the degree to which Dietzen’s pre-judicial activities might impact the legitimacy of the proceedings. For my own part, having watched all the legal arguments in this election, I haven’t noticed any severe or obvious political bias on Dietzen’s part — he has sometimes ruled against Franken, and sometimes ruled against Coleman. And he’s pitched tough questions at both sides.

The whole Minnesota Senate election gets curiouser and curiouser.

by

Let’s Tea Party

I don’t know how anyone else feels but I think it is very clear that the Republican Party is caught in a timewarp.  Maybe not 1980, but sometime in the early Reagan Year or even pre-Reagan years.  And they are also trying to be 2009 hip.  The combination is ripe for hilarlity – unfortunately for the Republicans.  First there was Chairman Steeele saying he wanted to appeal to the hip hop crowd kinda like Karl Rove and his famous rap, I guess.  Now there is tea-bagging.  The tea baggers don’t seem to get it that we did really well with the higher tax rates – look at the Clinton years.  It is the Clinton tax rates the President wants to restore.

The original Boston Tea Party in 1773 protested the tax on tea without representation in Parliament.  If I recall my history, we had not yet decided to split from Mother England but just wanted to have some guys in Parliament.  I don’t think it was a protest on the tea tax directly.  The tax on tea touch everyone.  President Obama’s tax plan only effects the very top earners since the rest of us will get a little cut.  Bruce Bartlett, writing in Forbes.com, has posted some very interesting statisitics.

Next week is April 15, the day when most Americans have to file their federal income tax returns. To protest the allegedly high level of taxation in the United States, various right-wing groups are organizing tea parties around the country in the spirit of the Boston Tea Party of 1773.

The irony of these protests is that federal revenues as a share of the gross domestic product will be lower this year than any year since 1950. According to the Congressional Budget Office, the federal government will take only 15.5% of GDP in taxes this year, compared to 17.7% last year, 18.8% in 2007 and 20.9% in 2000.

The truth is that the U.S. is a relatively low-tax country no matter how you slice the data. The following tables illustrate this fact by comparing the U.S. to other members of the Organization for Economic Cooperation and Development, a Paris-based research organization.

As Table 1 shows, total taxation (federal, state and local) amounted to 28% of the GDP in the U.S. in 2006. Only four of the 30 OECD countries had a lower tax ratio. Taxes averaged 35.9% for the OECD as a whole and 38% in Europe. Citizens of Denmark and Sweden paid very close to 50% of their total income in taxes.

Table 1: Total Taxes as a Share of GDP, 2006

Denmark

49.1

U.K.

37.1

Ireland

31.9

Sweden

49.1

Hungary

37.1

Greece

31.3

Belgium

44.5

Czech Rep.

36.9

Australia

30.6

France

44.2

N.Z.

36.7

Slovak Rep.

29.8

Norway

43.9

Spain

36.6

Switzerland

29.6

Finland

43.5

Luxembourg

35.9

U.S.

28.0

Italy

42.1

Portugal

35.7

Japan

27.9

Austria

41.7

Germany

35.6

Korea

26.8

Iceland

41.5

Poland

33.5

Turkey

24.5

Netherlands

39.3

Canada

33.3

Mexico

20.6

Source: OECD

Bartlett ends with an interesting observation. (I should say that he also has other charts comparing individual tax rates.)

The point is that one can’t look just at the taxes people pay here or elsewhere without looking at what they get in return. It doesn’t automatically follow that the places with the lowest taxes are the best places to live and work. This is obvious when we think about where to buy a house. We always look at the quality of local schools as a major factor and are willing to pay higher property taxes in return for good schools. The same is true at the national level as well. Higher taxes may pay for services that people value and thus are not as burdensome as they might appear at first glance.

So what are these tea parties really about?  And is this the best the Republicans can do to find a voice?  Once again we have to turn to Rachel Maddow.  Gabriela Resto-Montero writes this intro for the Nation

The “Tea Bag” movement spawned by a rant on CNBC by Rick Santelli seeks to protest the Obama tax cuts by imitating the revolutionary fathers’ Boston Tea Party, which in fact protested taxation without representation (the opposite of a tax cut). While the logic behind the protest is confusing, the right-wing’s complete lack of awareness about the term “Tea Bagging” is even more so. Rachel Maddow and Ana Marie Cox have some fun at the expense of clueless conservatives and point out that at long last Senator David Vitter may have found a worthy cause to champion.

And I have a really stupid question:  Are they throwing in the tea or the entire tea bag?  If it is the entire tea bag, they are really polluting our lakes and rivers with paper made not to dissolve in water.

by

After the G-20

The meeting seemed to go well.  The world leaders fell all over themselves to get pictures with President Obama who was his usual cool self even though he didn’t get the Europeans to cough up  stimulus/recovery money of their own.  They seem to like the idea of regulations a lot more.  

 I wrote a piece a few weeks ago on the Gramm, Leach, Bliley Act as an example of degegluation that led to things like AIG.  I think the Europeans at the G-20 would like us to reinstitute some things like a version of the Gramm, Leach, Bliley Act.  Are the Administration and Congress really waiting to see the economy stabilize before the begin to write regs, or is it just a big stall hoping we will forget about it? 

Paul Krugman wrote an interesting op-ed yesterday in which he tied bankers/financiers salaries to bad stuff happening. 

Thirty-plus years ago, when I was a graduate student in economics, only the least ambitious of my classmates sought careers in the financial world. Even then, investment banks paid more than teaching or public service — but not that much more, and anyway, everyone knew that banking was, well, boring.

In the years that followed, of course, banking became anything but boring. Wheeling and dealing flourished, and pay scales in finance shot up, drawing in many of the nation’s best and brightest young people (O.K., I’m not so sure about the “best” part). And we were assured that our supersized financial sector was the key to prosperity.

Instead, however, finance turned into the monster that ate the world economy.

This is a cycle that began during the Great Depression

Before 1930, banking was an exciting industry featuring a number of larger-than-life figures, who built giant financial empires (some of which later turned out to have been based on fraud). This highflying finance sector presided over a rapid increase in debt: Household debt as a percentage of G.D.P. almost doubled between World War I and 1929.

During this first era of high finance, bankers were, on average, paid much more than their counterparts in other industries. But finance lost its glamour when the banking system collapsed during the Great Depression.

So now we have the heads of AIG, CitiBank (or whatever they call themselves now) saying they deserve their money and bonuses even though they contributed mightily to the current recession.  Even Larry Summers is fat and happy from feeding out of the financial trough.  Robert Sheer writes in The Nation

Not surprisingly, Lawrence Summers is convinced that he deserved every penny of the $8 million that Wall Street firms paid him last year. And why shouldn’t he be cut in on the loot from the loopholes in the toxic derivatives market that he pushed into law when he was Bill Clinton’s treasury secretary? No one has been more persistently effective in paving the way for the financial swindles that enriched the titans of finance while impoverishing the rest of the world than the man who is now the top economic adviser to President Obama.

It is especially disturbing that Summers got most of the $8 million from a major hedge fund at a time when such totally unregulated rich-guys-only investment clubs stand to make the most off the Obama administration’s plan for saving the banks. The scheme, as announced by Treasury Secretary Timothy Geithner, a Summers protégé, is to clean up the toxic holdings of the banks using taxpayer money and then turn them over to hedge funds that will risk little of their own capital. At least the banks are somewhat government-regulated, which cannot be said of the hedge funds, thanks to Summers.

 It was Summers, as much as anyone, who in the Clinton years prevented the regulation of the hedge funds that are at the center of the explosion of the derivatives bubble…

So do we have the makings of another crisis rather than a solution?  Here is Krugman again

The banking industry that emerged from that collapse was tightly regulated, far less colorful than it had been before the Depression, and far less lucrative for those who ran it. Banking became boring, partly because bankers were so conservative about lending: Household debt, which had fallen sharply as a percentage of G.D.P. during the Depression and World War II, stayed far below pre-1930s levels.

Strange to say, this era of boring banking was also an era of spectacular economic progress for most Americans.

The bottom line is we need to make banking boring again by regulating it so the Larry Summers of the world don’t get all the gain and the rest of us can do well also in our more modest way.

And finally, in case you missed it, is Paul Krugman on the Rachel Maddow show.

by

Election updates

Remember Minnesota where poor Amy Klobachar is trying to fill the the shoes of two Senators?  The election may be coming to a close – finally.  While Norm Coleman is going to appeal to the Minnesota Supreme Court it doesn’t seem likely that they will overturn the results of the panel of judges that has been overseeing things.  At this point, Al Franken’s lead is 312 votes. 

This from Franken’s lawyer on April 7

At post-court press conference, lead Franken attorney Marc Elias commented that the election contest is essentially over, with Al Franken the winner after the court had 351 previously-rejected ballots counted, which boosted Franken’s lead from 225 votes to 312.

“Today is a very important step, as we now know the outcome of the election contest,” said Elias, “and that is the same outcome as the recount, which is that Al Franken has more votes than Norm Coleman.”

When asked whether he expected Coleman to appeal, Elias said: “That’s a question at this point for former Sen. Coleman. I guess I would say the same thing about his appeal as I said about his case: That the U.S. court system is a wonderful thing, as it’s open to people with non-meritorious claims.”

It really is time for Norm Coleman to hang it up.

 

 

 

 

 

In Illinois, there was no surpise in the 5th Congressional District.  Michael Quigley, a Democrat, replaced Rahm Emanuel, another Democrat.

The other close election is in New York State’s 20th Congressional District.  Politico’s Scorecard  reports as of today

According to the latest unofficial combined machine and paper results released this afternoon, Democrat Scott Murphy has a 35-vote lead over Republican Jim Tedisco in New York’s 20th District.

The following counties have finished counting their domestic absentee ballots: Delaware, Essex, Greene, Otsego, and Rensselaer counties. No numbers have been reported to the state from Saratoga and Washington counties

The interesting thing about this is comparing the counties left to be counted and Nate Silver’s analysis.  Washington County is heavily Democratic while Saratoga is Republican.  Saratoga, however, had fewer absentee ballots.

One thing that seems fairly clear is that there tend to be a relatively higher proportion of absentee ballots returned in counties where Murphy performed well on election night. For example, Columbia County, where Murphy won 56.3 percent of the of the vote last week, accounted for 9.8 percent of ballots on election night, but accounts for 15.3 percent of absentees. Conversely, Saratoga County, which is a Tedisco stronghold, represented 36 percent of ballots on election night but only 27.2 percent of absentees:
…

If I simply apportion the absentee ballots based on the distribution of the election day vote in each county, I show Murphy gaining a net of 173 ballots during the absentee counting phase. In addition, as Michael Barone has noted, although a plurality of the absentee ballot returns are Republican, they are somewhat less Republican than registration in the district as a whole.

If Murphy hangs on, it looks like a trifecta for the Dems.  Two holds and one gain.

by

Cutting the Defense Budget

How do you tell someone their favorite defense program is no longer going to be funded?  Secretary Gates did it as well as anyone could have when he made his announcement earlier this week.  I think that will turn out to have been the easy part.

So what are people saying about his proposals?

From the Boston Globe  article titled “Deep Cuts, New Chances”

For the defense sector, which in recent years has posted big profits from a rapid run-up in military spending, the new focus was a mixed message. Big programs appear to be in jeopardy, but others may be built up under Gates’ plan.

“This budget represents an opportunity, one of those rare chances to match virtue to necessity, and ruthlessly separate appetites from real requirements,” Gates said of his $534 billion spending plan for the 2010 fiscal year.

Many defense stocks jumped Monday even as the broader market fell. Shares of Lockheed Martin Corp. and Northrop Grumman Corp. each rose nearly 9 percent. Analysts said the big gains, which occurred as Gates made his early afternoon speech, were likely because the budget cuts were not as bad as some investors had anticipated.

The New York Times said the reaction was mixed

Members of Congress and advocates for the armed services pushed back on Tuesday against Defense Secretary Robert M. Gates’s plans to pare billions of dollars from a variety of Pentagon weapons systems, but others said that the cuts were prudent and that fights over them would be limited to several leading programs.

Military analysts said the biggest lobbying campaigns would be focused on Mr. Gates’s proposed cutbacks in the F-22, the advanced stealth fighter that critics call a relic of the cold war, as well as his trimming of the Army’s $160 billion modernization project, called the Future Combat Systems.

Members of Congress from Georgia and Oklahoma, where the jet and the Army project mean jobs, promised a fight. The arguments, which were frequently directed by Republicans against one of their own — Mr. Gates, one of two Republicans in President Obama’s cabinet — were cast in terms of national security and moral responsibility.

But the best commentary is from Jon Stewart in a segment titled “Full Metal Budget”

The fight between regions, technologies and the future of the military has begun.

by

Credit Card Blues

Like most Americans I use credit cards.  I use them to buy online and to save the hassle of carrying cash.  Mostly these days I use my debit card but credit cards are great if your stove dies and you need to pay a repairperson or buy a new stove.  Or help with expenses if you are going to graduate school late in life as I did.  But they are a trap.  I remember a time when I cringed if I didn’t pay off the balance each month.  Those days are long gone.

James Surowiecki wrote a great piece for the New Yorker’s  Financial Page  in which he explains very clearly why credit cards companies need regulation as badly as the other financial markets.

It’s little wonder, then, that credit-card companies are now scrambling to shed the customers they think are most likely to default, and to limit the amount that others can spend. In effect, they’re trying to follow the advice given by Larry Selden and Geoffrey Colvin in a book called “Angel Customers & Demon Customers.” Not all customers are equal, it turns out: some are tremendously profitable, while others, like the guy who calls customer service six times a day to check his account balance, cost more than they’re worth. To boost profits, you must cultivate the angels and protect yourself against the demons.

That sounds easy enough. But credit-card companies have created a strange business, in which there’s a fine line between good and bad customers. Their best customers aren’t those who dutifully pay off their balance every month; instead, they’re the ones who charge a lot and pay only a little every month, carrying a sizable balance and racking up interest charges and late fees. These are the “revolvers,” and the credit-card business feeds on them. Credit-card companies don’t necessarily want revolvers to pay off their debts; if they did, there’d be no interest or fees to collect. They want their loans to be, in the words of a banking regulator, “a perpetual earning asset.”

One of the things that credit card companies are doing is increasing interest rates – even on money borrowed at a lower rate.

This increase is partly a response to the greater risk of default, but it also takes advantage of the recession. Many cardholders don’t have enough money to pay off their balance in full, so when interest rates rise they aren’t able to just close their account and get a different card. Effectively, they’re captive customers. And since credit-card companies, unlike most lenders, are allowed to change the terms of their loans at any time, people who borrowed a big chunk of money at, say, nine per cent may now be paying seventeen per cent on the loan.

These tactics are not going to improve the credit-card industry’s dismal reputation. They’re also not going to help an economy in recession, since reduced credit lines take away an important cushion for consumer spending, and higher interest rates and increased fees are likely to drive more people to default. But the odd thing is that while less access to revolving credit is a bad thing for us in the short run, having people rely less on credit cards is a good thing in the long run.

Will Congress and the administration step up to help ease this transition?  A good first step would be higher rates only on new balances to let people pay off the old ones at a reasonable rate – both time and interest.