What’s
Wrong Today:

Have you ever heard
of the Logan Act? It says
that any attempt by a US citizen to conduct foreign relations without authority
is a felony. It has been in effect since 1799. Here is a section:

Potential violations of
the Logan Act have come up occasionally. During the Reagan administration,
there were two separate occasions in which prosecution under the Logan Act was
threatened. Once when Reverend Jesse Jackson traveled to
Cuba and Nicaragua and another time,
when House Speaker Jim Wright
attempted to negotiate a cease-fire between Nicaragua‘s Sandinista government and
the Contras. (At the time,
President Reagan was much more interested in carrying out an illegal war than
an unsatisfying peace.)

In
both cases, the threatened use of the Logan Act was not carried out, probably
due to the vagueness of its wording.

So, what has Mr.
McCain done that brings this up today?

According to the WaPo,
Mr. McCain (R-AZ) and
fellow Senate Republicans Lindsey Graham (R-SC) and John Barrasso (R-WY) traveled
to Israel and met with Mr. Netanyahu while
Secretary of State John Kerry was in Jerusalem working
to win Israeli and Palestinian backing for a rough outline of a peace deal.
Kerry had met with Netanyahu on Friday for the second time in two days, and he
met later with Palestinian Authority President Mahmoud Abbas.

So that meant that
McCain and Graham had to immediately meet with Netanyahu. Subsequently, Mr.
McCain voiced skepticism about Kerry’s efforts, saying that Netanyahu:

Although the details
of the proposals, are largely secret, McCain and Graham
suggested that they and other supporters of Israel in Congress will greet
Kerry’s program skeptically: (clarification by the Wrongologist)

So, once again Mr.
McCain and Mr. Graham show their contempt for our democracy and the separation of
powers that places the responsibility for US foreign policy on the President.

And they managed to
take time out of their undermining effort to speak to the press about the news that al-Qaeda has
taken control of Fallujah, a city of 350,000 in Iraq, calling it
a failure
by Obama, saying
that he had been wrong to withdraw all US troops from Iraq in December of 2011.

McCain and
Graham are of course also wrong on
this matter: The Iraqi parliament rejected a Status of Forces Agreement
(SOFA) with the US on George W. Bush’s watch and then refused to reconsider
with Mr. Obama. Without a SOFA, as Sen. McCain knows very well, US troops could
not engage in combat without risking being brought to Iraqi courts and charged
with war crimes.

In McCain’s
case, this isn’t the first time he has walked the line on the Logan Act. In fact, McCain is something of a serial
foreign policy intruder:

• Remember in 2011 during the confusion of the Arab Spring, as Egypt was just
  emerging from widespread unrest after Hosni Mubarak stepped down, Sen. McCain and
  then-Sen. Joe Lieberman (I-CT) made a surprise visit to Cairo. They met with
  Arab League chief Amr Mussa and made quasi-policy statements to reporters. Neither
  Lieberman nor McCain ever said that they were not there in a diplomatic or
  official capacity.

• McCain
  snuck
  into Syria in May of 2013 to meet with the Free Syrian Army and then urge
  President Obama to set up a no-fly zone, supply anti-aircraft and anti-tank
  weapons to the insurgents.

Most
rational House and Senate members ― including most Republicans, would never
even think of undermining their POTUS, (even if he’s from another party) by
flying in and holding a news conference in the middle of an ongoing diplomatic negotiation. But we are talking about Johnny
Volcano, who keeps doing
the same thing over and over again and expecting different results. An action
that most of us would agree is one definition of insanity.

Everywhere that McCain
has interfered in our foreign policy has led to confusion. Netanyahu can’t be comfortable
with McCain showing up when he did.

Kerry has repeatedly
said that the Israeli-Palestinian peace negotiations is an extremely difficult
process with little chance for success. Do you think he ever expected that
McCain and Graham’s crashing the party would be among the problems he
would face?

In
the next month, we will hear a lot about the Olympics and the weather. It’s so cold,
how can there be anything called global warming? The real issues: Jobs, income
inequality, minimum wage and the direction of the economy must be subjects that get fixed in 2014.

Perhaps,
unemployment is how the current generation will learn economics.

Use
this quote from Sam Smith as the basis for your homily on how to achieve the political outcomes you desire in 2014:

A Toast to
the New Year:

Republicans sit back on their principles:

Colorado Weather Report:

Putin adds new Olympics Mascot:

Minimum Wage increase offers little help to working poor:

What’s
Wrong Today:

A report that most of us missed
during the holidays was “Out
of Control: The Coast-to-Coast
Failures of Outsourcing Public Services to For-Profit Corporations“. It
was written by In the
Public Interest, a resource center on privatization and responsible government
contracting. The report provides a detailed look at examples of poor
outcomes from outsourcing functions that used to be performed by
government workers to the private sector. Here is a bit of the report’s
preamble:

For
decades, Americans have been told that the private sector can do a better
and cheaper
job of providing services than an “inefficient” government. As Michael Hoexter
has written,
a standard belief by the right wing is
that government is always incompetent:

Now it is
true that there are badly run government entities that have done better when
privatized (think British Telecom). But on the state and local level, where
voters have high visibility and usually demand a high level of accountability,
this premise should be considered dubious.

Too
often, outsourcing the management of a government function means taxpayers have
little say over how tax dollars are spent and no say on actions taken by
private companies that control our public services.

• Outsourcing means taxpayers
  cannot vote out executives who make decisions that hurt public health and
  safety

• Outsourcing means taxpayers are
  contractually stuck with a monopoly run by a single corporation – with contracts
  that often last decades

• Outsourcing too often means a
  race to the bottom for the local economy, as wages and benefits fall while
  corporate profits rise

The
report shows that of the 5.4 million people working for federal service
contractors in 2008, an estimated 80%
earned less than the living wage for their city or region.

The report
categorizes the many ways in which contractor behavior is deficient, including:
transparency, accountability, shared prosperity, and competition. For instance,
even though government contracts are almost without exception public,
outsourcing companies always try to extend the veil of secrecy, just as they
have with private companies, particularly with the price of the contract and
the levels of service they are required to provide (SLA’s, or Service Level
Agreements).

But even basic
information about a government contract and the accompanying procurement
process can be difficult to obtain. Corporations may not diligently collect
data and information related to public programs and services, leaving the
public record incomplete. As a result, the public loses access to information
about our own government. Here is an example from the report: (emphasis by the
Wrongologist)

Even though the recordings were of public meetings of
elected city officials and pertained to government business, taxpayers were
denied access to them because they
were considered the property of a private company. Toomey
took the issue to court, where a Sierra County NM district judge ruled against
transparency. Fortunately in 2012, the New Mexico Court of Appeals reversed
that decision, but the message is that we may need to go to court to get basic
information we should have as taxpayers.

The
Wrongologist has written about outsourcing and privatizing government functions a few times in the past year:
here, here,
here,
and
here. He has managed outsourced
federal contracts prior to deciding
on a life of blogging.
In his experience, outsourcing a
contract is almost always a losing proposition for the government,
involving increased costs (despite claims that contracting saves the government
money) and occasionally, poorer service quality.

Outsourcing
can work well, particularly where work ebbs
and flows in response to client requirements. So, using contractors to build the ACA Website was in line with what was
the original justification for use of contractors―the need for a large
workforce with specialized knowledge in a short amount of time.

The
justification now used is that the private sector delivers a better product
more efficiently. The report from In the Public Interest puts that claim to
rest, and you can also see that we are
long past using contractors for temporary needs– placement of foster
children? prisons? government benefits administrators? You could call these
temporary needs if you imagine that we’ll be living in some utopia in a few
years.

The
Wrongologist has written
that the push to outsource or privatize everything from education, to water
rights, to social security, is not about quality, or outcome, or even the greater
good; it is about profit and control of resources.

The public good,
civil liberties, equality, and ultimately justice, declines for those people who
can no longer afford the services. When we hear “The government can’t do
anything right”, that’s a bought and paid for speech spread by those who
benefit from rerouting taxpayer dollars to private corporations.

Privatize the taxpayers’ money. Tear
down the commons. Let taxpayers take the risk, let corporatists take the rewards.

Corporations
are not people, my friend.

And only
the people are capable of patriotism.

What
‘s Wrong Today:

Welcome
to 2014. Will 2014 be a time when America progresses, stagnates or retreats?
The village pundits say that we are a divided people that can’t see the
problems we face in the same way, and who believe in completely different
solutions.

Will
the political stagnation continue?

A 2014 prediction that will certainly be correct:

Congress thinks it will be Same Ol’ Same Ol’ in 2014:

Republicans plan to recycle an old strategy:

A New Year’s reboot has strings attached:

The
Wrongologist Blog reached 60,000+ reads in 2013, up from 25,000 in 2012 and
3,000 in 2011. Thanks to you, we will crack 120,000 reads in 2014. Here are the top 5 most
read Wrongologist posts of 2013:

   1.    Banks:
Burglars or Bunglers?

2.    Erdogan
Misreads the Turkish People

3.    Register
Pressure Cookers

4.    The
Growth Market in Student Loans

5.    Income
Levels Drive 2012 Election Results

Enjoy them again, or for some of you, hate
‘em again…

Happy New Year!

On Christmas, people say: “Peace
on earth, good will towards men”. While it isn’t Sunday, you might use the
quote below by Mose Allison to talk with your loved ones about the state of the
world today:

“Everybody’s
Crying for Peace on Earth just as soon as we
win this war”  – Mose Allison (“Everybody’s
Crying Mercy”)

In this season of faux deficit
outrage, few jobs (and no policy) for the long-term unemployed, let’s remember
that in America, we also face the twin epidemics of homelessness AND abandoned
properties. And we can’t figure out what to do about either of them.

Here are the Wrongologist’s favorite Christmas videos:

 #1.  Alec Baldwin, Molly Shannon and Ana
Gasteyer, “Schweddy Balls” (“Saturday Night Live”);http://www.hulu.com/watch/4156

 #2. Darlene Love, “Christmas Time for the Jews” (“Saturday Night Live”);http://www.nbc.com/saturday-night-live/video/christmastime-for-the-jews-song/n12006/

#3. Tom Lehrer, “A Christmas Carol” http://www.youtube.com/watch?v=ffO8nZThwmM

Finally, an Xmas pic of the Wrongologist’s dog:

Here’s
hoping that you are able to be with your loved ones today. 

What’s
Wrong Today:

On Dec.
17, the Turkish public and Prime Minister Recep Tayyip Erdogan were shocked by
the news of a major corruption case.

Here is a
brief outline of the scandal: Sons of three government ministers were detained by police
on the morning of Dec. 17 on charges of bribery and influence peddling. On
Dec. 19, while the sons were being questioned, the Istanbul
police launched three separate anti-corruption operations and detained 52 more
people.

At the
center of the investigation is an Iranian named Reza Zarrab, a gold dealer
apparently working for Iran. Iran has been banned from using the international
money-transfer system SWIFT since March 2012
as a part of the US-EU economic sanctions regime, but apparently Turkey and Tehran
have been
using Turkey’s Halkbank to evade the embargo.

According
to al-Monitor, here is how the
plan worked: Front companies were set up in China. Then, money was
transferred from Iran with falsified documents to bank accounts opened in the
names of those companies supposedly as reimbursements for imports from China.
The money was then transferred to the accounts of real (or other front
companies) in Turkey as payment for exports. That cash was then used to
purchase gold. The gold was then sent via courier to Iran, or to
Dubai to be forwarded to Iran.

As a
result, Turkey’s gold imports and exports rose steadily. According to
al-Monitor, $8 billion worth of gold was sent to Iran over the past 3 years, in
contravention of the sanctions regime.

This complicated system was designed to
solve Turkey’s inability to pay Iran directly for the Iranian oil and natural
gas it was buying, due to the embargo.

To
counter this scheme, the United States banned gold exports to
Iran in July 2013. This has resulted in the accumulation of
nearly $13 billion in imported gold in Turkey.

Although many
media outlets have framed the scandal as a power
struggle between the Fethullah Gulen movement and Erdogan’s government, the US seems
focused on the Turkey-Iran-Halkbank-gold triangle, since David Cohen, the US Treasury undersecretary
of terrorism and financial intelligence, arrived at the end of the week in
Turkey. That can’t be a coincidence. The scandal has the potential to cause major
damage to Turkey’s relations with the US, which has already been
shaken by policy differences over Turkey’s efforts in Egypt and Syria.

The New York Times reported that
Erdogan wasted no time in moving to seal off the emerging scandal:

Mr.
Erdogan is trying to contain the scandal by blaming domestic conspirators and
foreign meddlers, just as he did during last summer’s Gezi Park
demonstrations,
which began over plans to raze Gezi Park in central Istanbul and convert it
into a shopping mall.

These moves
are hard to accept from the leader of an established democracy. Importantly,
there is a Presidential
election
looming in 2015, and Mr. Erdogan wants to move from prime minister to president
when his PM term ends next year. The current President, Abdullah
Gul,
is expected to make way for Erdogan’s ascension to the presidency next summer. Gul
would like to return to being prime minister, which represents something of a
challenge to Erdogan, since executive power resides mostly with the prime
minister and Erdogan would rather have someone who is pliable in the office.

Since the
scandal became public, those media allied against the government are leaking
information on the investigations, while pro-government media are not
reporting on the evidence. These outlets are instead making the claim that the
operation is a conspiracy
to topple the government, carried out by foreigners.  

Yahoo News reports that Mr.
Erdogan described the bribery probe as “smear campaign” with
international ramifications, taking it out on foreign ambassadors. From Mr.
Erdogan:

Yahoo said
that Erdogan’s remarks were considered to be directed at US Ambassador Francis
Ricciardone, who denied the claims. Separately, The Times reported that 29 police chiefs were reassigned from their
positions in Ankara and Istanbul: 

Regarding
the Gulen movement, the Economist reported on Erdogan’s relationship with Turkey’s most influential Muslim cleric, Fethullah Gulen, who lives in
Pennsylvania but commands a global network of schools, charities and media
outlets:

The
asymmetric struggle between Mr. Erdogan’s AKP party and the Gulen movement is devolving
into a back and forth of recrimination. It appears that there will be no winners
of this fight, so it becomes important who loses less. At the moment, the most
serious damage has been inflicted upon Erdogan and his government.

Since 2010, Mr. Erdogan has become
quite authoritarian. He has a questionable record with the press in the past
couple of years. The Turkish economy is also experiencing some trouble, with the
Turkish lira being devalued by 16% in the past 6 months. It is common knowledge
that the Turkish economy is kept at its high rate of growth by foreign cash attracted with
high interest rates, and a buoyant stock market. When there is a defacto devaluation,
foreign cash leaves first. The fact that 3.5 million people get food aid from
AKP local governments, while 6 million people receive free coal from the same
sources is well-known, and likely to help Erdogan at election time.

Yet, this
scandal doesn’t look like it will go away as easily as did Gezi Park. Whether
that causes difficulty for Erdogan and the AKP at the ballot box next year
remains to be seen.

In the meantime, Mr. Erdogan has some explaining to do
with his European allies and the US regarding why Turkey failed to comply with the Iran sanctions using the now-public gold scheme.

No break for the homeless on Xmas:

It’s too big an ask even for Santa:

Old beliefs die hard:

Wisemen don their gay apparel:

Unpacking Fox’s White Santa:

+

It may be tough to post over the next few days with the holidays and all. Sunday Cartoon Blogging will still appear tomorrow, and maybe a few other things leading up to the New Year. Here is a Christmas card that appeared in the Wrongologist’s snail mailbox:

Not a conspiracy theorist, but Bo and Sunny have suspiciously similar signatures…

Enjoy the next 10 days, after all, our do-nothing Congress will be, well, doing nothing!

What’s
Wrong Today:

Can raising the minimum wage be a defining political battle of the 2014 Congressional
elections? Dave Johnson at Campaign
for America’s Future writes:

As the Wrongologist reported,
when
the public can vote on minimum wage increases, they pass handily:

Even in
New Jersey, where voters re-elected Republican Chris Christie as governor, the
minimum wage was increased to $8.25, and indexed it to inflation, by 61% to 39%
of the voters.

Polls show
public pressure is building: A December
11 Wall Street Journal/NBC News poll found that 63% supported a rise to
$10.10:

Here are a
few more polls:

• A November
  Gallup poll showed that 76% of Americans want the minimum wage raised to at
  least $9 from the current $7.25. This is up 5 percentage points just since
  March.
  

• An August
  poll by the National Employment Law Project (NELP)
  found that 80% support raising
  the minimum wage to $10.10, including 62% of Republicans and 75% of
  southern whites.
  

• A March
  poll by the USA Today/Pew Research Center found that 71% favor increasing
  the minimum wage to $9.

How many
hours does it take to make rent at the minmum wage? The National Low Income
Housing Coalition looked
at the number of hours minimum-wage employees have to work per week in each state just to
rent an apartment and still be able to survive. (See their
chart here).

West
Virginia is lowest at 63 hours. Hawaii was 175 hours. California, Maryland, New
Jersey, New York and Washington, DC were all over 130 hours. A standard work
week is 40 hours. So, today, there is
no state where a minimum wage worker can earn enough to make the fair market rent
for a two-bedroom place on 40 hours a week.

In the New
Year, the Fair
Minimum Wage Act, that would raise the wage to $10.10 and index it to
inflation, was introduced in the 113th Congress by Sen. Tom Harkin
(D-IA) and Rep. George Miller (D-CA). President Obama has endorsed the
proposal.

So, the
push to make it a national issue begins. Republicans will have to decide: Will they allow this increase to pass the Congress, or will they try to obstruct it and run as opponents of fair pay
for working people in 2014? Many Republicans are likely to oppose the bill, but many local and state measures may be brought to the ballot in order to increase
turnout, which could hurt Republicans in some districts.

Republicans
will continue to push the nonsense that joblessness will result from a higher
minimum wage, when in fact more consumer demand via a higher minimum wage means
more jobs. As the Wrongologist said on Tuesday:

David
Johnson also makes a good point about businesses reducing employment if the minimum
wage goes up:

Businesses can
decide how to cover their added costs. Some might raise prices, others might
pay top executives a bit less, and others would dip into some of their excess
cash. Companies that raise prices so top executives can retain their pay will
be at a disadvantage if their competitors don’t raise prices.

According to the BLS, 3.6
million workers in the US make the minimum wage or less. These 3.6 million
workers make up 4.7% of the working population.

Raising
their take home pay will not hurt our (now) growing economy, it will help it move
ahead. Let’s force corporate America to take their employees off of federal
aid.

Let’s
force Congressional Republicans to tell their voters why a higher
minimum wage is a bad idea.

 

What’s Wrong Today:

We
have become a low-growth economy. Republicans have to answer why
“growth policies” (that have directly increased inequality), did not
also provide the promised payback of increased growth for all. Particularly in
the minimum wage.

As Mr.
Obama and others have
noted, a parent who works full-time, year round at the federal minimum wage
does not earn an income above the federal poverty line.

This wasn’t always
the case. Up until the early 1980s, an annual minimum-wage income—after
adjusting for inflation—was enough to keep a family of two above the poverty
line. At its high point in 1968, the minimum wage was high enough for a family
of three to be above the poverty line with the earnings of a full-time worker,
although it still fell short for a family of four. Today, at the federal
minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year
yields an annual income of only $15,080. As shown in this chart from EPI,
this is below the federal poverty line for families of two or more.

For some
context, median individual earnings are $40,404 a year, according to the BLS, while the US
poverty level is $23,656, according to HHS.
Full-time minimum wage earners make 62.7% less than median income and are 36%
below the poverty level.
According to Barry
Ritholtz:

As Bloomberg
Businessweek reported earlier this year, net total public assistance to the fast-food industry is about $7
billion dollars. (This does not include future medical costs associated
with diabetes or heart disease). If the minimum wage were suddenly raised
to $15, it would drive fast-food prices 25% higher, adding $1 to the cost of a Big Mac.

And employees
of the fast food industry receive more taxpayer aid than any other sector. How
much? More than half (52%) of the families of fast-food workers receive some
form of public assistance. That’s more than double the rate of the workforce as
a whole. Most of it is through Medicaid and the Children’s Health Insurance
Program ($4 billion), while the Earned Income Tax Credit, food stamps, and
Temporary Assistance for Needy Families program are the rest ($3 billion).

So, let’s
consider the options: we can continue to provide SNAP
(food stamp) assistance, SCHIP, and the
Earned Income Tax Credit
(EITC), subsidizing large and profitable companies with a significant slice of
our tax revenues, or we can raise the minimum wage, effectively shifting the
cost of poverty among the working poor from taxpayers to the corporations and
fast food consumers, where they belong. Why should taxpayers subsidize anyone’s Big Mac?

Do the
math: $7 billion in entitlements for two million fast-food workers (ignoring other minimum wage
earners for simplicity) would be the equivalent of $3.50 an hour. 7B/2M = $3,500,
$3,500/50 weeks (assuming that most of these jobs, if not all of them, are part
time) would be $70. $70/20 hour work week is $3.50. Adding $3.50 to the current
$7.25 would make the minimum wage $10.75.

Raising
the minimum wage to $10.75 should offset that $7 billion in federal expenditures.
If that was done, and the federal assistance programs were cut by a
corresponding $7B would make for a pretty good tradeoff.

And to Republicans: If the price of beef doubled, would we see the same hue and cry
about that cost versus increased wage cost? No one would care, the cost would be passed along. But if we were
to double wages, Republicans, CEOs and pundits would tell us the sky is falling.

A Pew
Research Center survey
found that 71% of people favored an increase in the federal minimum to
$9.00/hour from $7.25. But while large majorities of Democrats (87%) and
independents (68%) said they favored such an increase, there are clear partisan
differences; Republicans were split, with 50% favoring an increase to 47%
opposed. (see chart below)

Nineteen
states (plus DC) have set their own, higher minimums, ranging from $7.35 in Missouri to $9.19 in
Washington State. Some cities and counties have gone even higher — San
Francisco’s minimum wage, for example, is set to rise 19 cents to $10.74 next
month. Those states collectively include 45%
of the nation’s working-age (16 and over.

Here is a view of
the minimum wage by state from The
Economist:

Source: The Economist

The proliferation of different state and
municipal minimum wages means that the federal rate covers fewer workers than
it once did. In 1979, 7.9% of workers were paid at or below the minimum wage,
while in 2012, 2.8% earned below minimum wage. Starting on January 1st
2014, 21 states will have a minimum
wage that is higher than the current federal minimum, but few will be
near the $15/hour that voters approved in SeaTac,
Washington. Nor will many be above the
federal minimum of $10.10 as Sen. Tom Harkin (D-IA) and Rep.
George Miller (D-CA) have proposed.

Jobs are the answer to better GDP
growth and reduced income inequality, but ONLY if the jobs produce enough income so that
the person doing the work can afford the other necessities that go along with a
sustaining lifestyle, with minimal contribution from the social safety net by
federal or state programs.  

This all
adds up to why the minimum wage must be increased.