Thursday, June 2, 2011

House rejects proposal to raise debt ceiling

Washington Post
Lori Montgomery and Paul Kane

With an August deadline looming, the House overwhelmingly refused Tuesday to raise the legal limit on government borrowing, setting the stage for a long, sweaty summer of haggling over the shape of the largest debt-reduction package in at least two decades.

Not a single GOP lawmaker voted for the measure to raise the limit on the national debt from $14.3 trillion to $16.7 trillion — a sum sufficient to cover the government’s bills through the end of next year. Republican leaders said their troops would reject any increase without a plan to sharply curtail spending and, thus, future borrowing.

“Tonight’s vote illustrates that there is no support in the People’s House for a debt limit increase without real spending cuts and binding budget process reforms,” House Majority Leader Eric Cantor (R-Va.) said in a statement, adding: “The families and business owners throughout the country want Washington to begin to live within its means and stop maxing out the credit card.”

Polls show that a higher debt limit is extremely unpopular with a large majority of voters, which has left Democrats leery of calling for an increase. On Tuesday, as the House voted 318 to 97 against raising the limit, nearly half of the chamber’s Democrats sided with the Republicans. In doing so, they ignored a long-standing request from the Obama administration to boost the limit before plunging into a complex and politically difficult battle over the size of the federal budget.

“I don’t intend to advise our members to subject themselves to a 30-second political ad and attack,” House Minority Leader Steny H. Hoyer (D-Md.) said hours before the vote, noting that GOP leaders offered the bill with the intention of letting their party’s members vote against it. Seven Democrats voted “present” to protest the manner in which the Republican majority called up the bill.
Hoyer and other Democrats accused House Speaker John A. Boehner (R-Ohio) of toying with the issue and running the risk that the “no” vote could roil financial markets. Bond traders, however, appeared to pay little attention to a move that many observers on Wall Street and in Washington dismissed as political theater.

“I didn’t even know they had a vote tonight, to be honest with you,” said Ian Lyngen, a senior government bond strategist at CRT Capital Group in Stamford, Conn. “The only real event that the market is focused on is the point at which they run out of money and have to shut down the government” — a date that Treasury Secretary Timothy F. Geithner has fixed at Aug. 2.

On that date, without additional borrowing authority, Geithner has said, the Treasury would be forced to default on at least some of the government’s obligations, an outcome that could have far-reaching consequences for global financial markets and the U.S. economy.

White House press secretary Jay Carney said Tuesday that default would be “calamitous.” But he dismissed the evening vote, saying Obama believes that Congress ultimately will act both to raise the debt ceiling and to rein in future borrowing.

He Who Feeds You, Owns You – Food Stamp Enrollment Surges Above 44 Million

Downward Spiral
Bill Hicks

It was reported yesterday that enrollment in the Supplemental Nutrition Assistance Program (SNAP), still better known by its colloquial name, Food Stamps, rose to a new record high of just over 44 million Americans. As shown by the chart above (courtesy of Zero Hedge), the number of SNAP recipients has been marching steadily upwards since even before the beginning of the Great Recession, starting at around 26 million in February 2007 and surging by 18 million since then. For those of you keeping score at home, that means that our most basic social welfare program has been expanding at a rate of about 350,000 individuals a month for over four years now with no end in sight.

I’ve long argued that the untrustworthy and manipulated official unemployment statistics are no more reliable an indicator of what’s going on in the real economy than is the completely rigged Dow Jones Industrial Average. If you want a true picture of what is really happening on Main Street you need look no further than the SNAP figures, which show a tsunami-like surge of people living in abject poverty. The chart also shows that the percentage of Americans receiving food assistance has risen from just 8.7% at the beginning of 2007 to about 14.3% today. Sadly, according to Wikipedia, nearly half of all SNAP recipients are children.

Becoming a food stamp recipient means you have slid all the way down to the lowest rung of the socioeconomic ladder, since in order to qualify you have to have no better than a poverty-level income. More importantly, being reliant upon the SNAP program means that your very survival is dependent upon the ability of the United States Government to service its debt and come up with the $133.12 it sends out to each recipient every month. The overall cost of the program is skyrocketing because of the huge surge in enrollment, and is just one of many factors putting upwards pressure on the federal deficit at a time when the nation's credit card is coming within sight of being maxed out.

It's also an indicator showing why the “debate” going on in Washington right now over lifting the federal debt limit is just so much sound and fury signifying nothing. For while it’s true that our nation’s “leaders" long ago stopped caring about the poor, that is only so long as they can manage to keep them invisible and their plight away from the national spotlight. Let the SNAP payments lapse for a few months and I’ll bet even our lapdog mainstream media might begin to notice when a large number of kids start showing up to school in poor areas looking like Ethiopian famine victims. For this reason alone the debt limit will eventually be raised, unless things really have gone completely off the rails in the nation’s capital.

So here we are, faced with yet another intractable problem that has been made exponentially worse by a feckless national political leadership that has allowed the wealth of the nation to be stripped down and stolen by the greedy elites who finance their campaigns. It was bad enough when huge numbers of blue collar and middle class jobs were being shipped overseas in the name of the corporate bottom line. But now, by driving America to the brink of insolvency they have virtually assured that the day will come in the not too distant future when the SNAP cards will fail to recharge at the beginning of the month. And that will unleash a humanitarian tragedy the likes of which this nation of historical food abundance has never seen before.

Despite health fears, trailers are housing tornado victims

Years after FEMA moved Hurricane Katrina and Rita victims out of formaldehyde and mold-infested trailers, the very same government-issue dwellings are once again sheltering disaster victims.

Bought at government auctions or from entrepreneurs reselling them, the trailers are appearing in increasing number along the path of the tornadoes that ravaged Alabama and other parts of the South last month. Jacked up on cinderblocks above severed tree limbs and piles of trash, the trailers cut a lean white silhouette eerily familiar to anyone who spent time in the Gulf Coast region in the past five and half years.

For many Katrina survivors, the sight of the trailers triggers memories of mysterious rashes, burning eyes and chronic breathing problems linked to the formaldehyde the trailers emit. Yet in Alabama, not even a federal ban on residential use of the trailers can curb the market for these low-cost housing units.

"They're livable," Tommy Ramsay, a retired truck driver said, standing next to the 8-foot by 32-foot Gulfstream travel trailer he moved into after a tornado tore his house off its foundation and dropped it some ten feet away. One of several trailer models manufactured specially for FEMA in the immediate aftermath of the deadly 2005 hurricanes, Ramsay's one-bathroom, two-bedroom Cavalier is marked with a serial number guaranteeing it was made in compliance with agency specifications. Ramsay got it from a family member who had bought it at an auction after that "Louisiana deal," he said, referring to the government's decision to condemn residential use of the trailers three years after rushing them into use by Katrina and Rita victims.

Ramsay said he was in the bath when the tornado flattened 40 percent of the houses in his tiny hometown of Phil Campbell, Ala. (population 1,000). Like many of his neighbors, Ramsay isn't sure if he will have the money to rebuild. "We're 65 years old," he said. "Are we going to rebuild or stay in a mobile home? It's a big decision that we can't make yet."

Even after the government banned residential use of Katrina-era FEMA trailers because of high formaldehyde levels, businesses are selling them -- and finding a market in disaster zones, and other places where people are desperate for low-cost housing.

Roughly 100 miles south of Phil Campbell, customers at a discount used car and recreational vehicle dealership on the outskirts of Birmingham mull variations on the same question. Last Saturday, a man in dirty blue jeans came in to take a look at the FEMA trailers advertised in a hand-written sign on the outlet's front window. "I need a home," he told a salesman. When asked why the dealership markets its Gulfstream Cavaliers by tapping into a bungled public program that ended with 40,000 trailer residents suing the government, Myles Smith points to its $2,500 price tag. "The average American is hurting, especially around here, around now," he said. "They need housing. People think they are saving money when they go with FEMA."

From housing to hazard and back again

The trailers -- which are selling in Alabama for between $2,000 and $4,000 -- traveled a long road before landing in the state's tornado-flattened neighborhoods. The journey began within weeks of the 2005 hurricanes, when several recreational vehicle manufacturers, including Gulfstream, received $2.7 billion in contracts from FEMA to supply 145,000 trailers for displaced Gulf coast residents. Gulfstream collected $521 million from FEMA for 50,000 of the bare-bones, aluminum-sided homes, according to federal documents.

Within months of moving in, residents began to report rashes, fatigue, burning eyes and problems breathing. They complained about feeling overwhelmed by the scent of formaldehyde. An industrial chemical commonly used to engineer wood, formaldehyde at high levels of exposure is a known carcinogen that can aggravate respiratory problems and weaken the immune system.

In June 2006, a Slidell, La. man was found dead in his trailer. He had complained about formaldehyde fumes for weeks before collapsing. By 2008, tests done by the Centers for Disease Control and Prevention had shown the chemical present in trailers at rates anywhere from five to 40 times greater than average in most modern homes and at levels that exceeded federal workplace regulations. Officials told people to leave the trailers and after years of downplaying risks, finally committed to tightening chemical safety standards for mobile housing units.

Yet even with the trailers condemned at the policy level, federal officials were determined not to throw away the contaminated units, which had cost $1.7 billion to manufacture and another $75 million a year to store and maintain, according to FEMA.

In 2010, the General Services Administration began holding mass public auctions of the unneeded, and thoroughly troublesome, trailers. Heavy discounts reduced the price per unit to a small fraction of what FEMA paid in 2005. The fire-sale prices, however, came with a catch -- all buyers had to sign a waiver agreeing that the government cast-offs would not be used as housing and that each unit would be marked with a notice labeling it unfit to live in. The agreement also stipulated that if units were resold, the new owners must inform the purchaser that the units are not intended for housing. If the risks and regulations are not made clear, the seller is liable for penalties and even criminal charges that could result in a five-year prison sentence, FEMA spokeswoman Mary Olsen said. Vowing never again to use the same models of travel trailers, FEMA has also rewritten specifications for emergency housing to mandate units that are larger and have more ventilation.

Toxic trailers on the open market

But even as FEMA develops safer alternatives to the Katrina-era trailers, hundreds of companies and individuals remain heavily invested in the future of the contaminated units, thanks to the decision to sell the trailers to the public. Businesses small and large have spent a combined total of more than $279 million to put more than 130,000 trailers back on the market, where they are often sold multiple times and without the legally mandated warning against residential use.

Everyone who bought a FEMA trailer from the government was required to sign a waiver agreeing that the federal cast-offs would not be used as housing, and that each unit would be marked with a notice labeling it unfit to live in. On a recent Saturday, however, a large number of the 60 FEMA trailers on a dealer's lot in Alabama didn't have this notice. A quick tour of the lot revealed only one with a notice still affixed to it.

At the discount trailer dealership on the outskirts of Birmingham, Ala., salesman Myles Smith is well aware that some customers are buying trailers to live in. Of the 60 trailers on his lot, most are missing the legally mandated labels warning that they are unfit for habitation. The stickers were removed before the trailers reached his dealership, Smith said. But even if the trailers had stickers, Smith is not convinced potential buyers would be deterred. "You can write 'not for housing' all you want but if you need a place to live and the trailers are the most affordable option, that's what you're going to do," he said. "You can't spend what you don't have."

"I understand why the government did the stickers, but they know folks are going to live in them. That's what they made them for -- folks to live in," he added. He anticipates selling some of his remaining trailer stock in the next few months to tornado victims.

Several of the largest resale companies selling FEMA trailers to small outfits like Smith's are in the Gulf Coast region, where more than 53,521 trailers have changed hands for an aggregate price of more than $60 million. One of the resale companies, Timberline Homes Inc., spent upwards of $300,000 on 200 castoffs purchased at auction over the past several years, according to interviews and federal documents. The company, based in Brewton, Ala., makes no secret of the trailers' residential use.

"This is a home you can get set up for a few thousand dollars. For someone who just can't afford anything else, it's the way to go," said Winston Lindsey, the company's chief financial officer. Lindsey, like Smith, expects to sell most if not all of his remaining stock to people displaced by the tornados. "Once the FEMA checks start coming in, we'll see people," he said.

Nick Shapiro is a medical anthropologist and Oxford University doctoral candidate who has traveled across the United States interviewing buyers and sellers of the one-time emergency housing units.

"The trailers exhibit a desperate architecture and have a natural magnetism towards disaster," he said, "but they also reveal less concentrated and visible misfortunes as they gravitate to states like South Dakota, where there is a lot of rural poverty, and Florida, where there are high rates of foreclosure." Shapiro, like the dealers, expects the trailer trade to grow briskly as existing housing stock fills and tornado victims who can't afford rising rents search for low-cost alternatives.

The resellers say they don't worry about formaldehyde levels in the trailers. Over time, the chemical dissipates in the air and they say, given the passage of time, that FEMA travel trailers are likely no more dangerous than any other manufactured housing. "If you buy a brand-new trailer today it has formaldehyde too," trailer seller Smith said. "Clothes have formaldehyde. Everything does. After Katrina, it was an emergency situation so they didn't let the trailers air out enough. Now, they've had time to ventilate."

While science backs the claim that toxicity dissipates over time and with proper ventilation, there is no clear consensus on how exposure, even at low levels, affects people over the long term. Further complicating matters is the fact that all people have different chemical thresholds and very little research has been done on how toxins like formaldehyde affect people with varying health conditions. "We know senior citizens, those already exposed to high levels of formaldehyde, and children can be more sensitive but beyond that, there are a multitude of variables that make it difficult to generalize," Shapiro said.

Research has also found that symptoms can be caused by dangerous levels of mold, which grows quickly in trailers because of high indoor moisture levels and lack of ventilation.

Given the uncertain risks, the Centers for Disease Control and Prevention recommends that the trailers be used only as short-term, temporary housing, no matter how long they've had to ventilate. "These units weren't designed or built for people to live in for two and a half years," Dr. Michael McGeehin, director of CDC's Environmental Hazards and Health Effects Division, testified at a 2008 congressional hearing on the FEMA trailers.

The courts have had no easier time establishing the cause of alleged health effects. In 2008 a federal judge denied class-action status to lawsuits filed on behalf of trailer residents alleging exposure to toxins. U.S. District Judge Kurt Engelhardt ruled that the suits can't be handled as a class action because each person's claim is unique and must be examined individually. Of the thousands of legal claims, some have resulted in settlements for residents while others, including several high-profile, precedent-setting cases, have favored the trailer manufacturers; thousands more are still being litigated.

"The causality is difficult to prove," said Stephen Stetson, a policy analyst for Alabama Arise, a coalition of 50 congregations and community groups that promote fairer state policies toward low-income Alabamians. "The manufacturers say these people were not in good health before. But I go back to the congressional hearing where the manufacturers themselves admitted these were unsafe."

Low bid, high risk

On a rainy morning in late April, neat white rows of used travel trailers and recreational vehicles stretched across a former racetrack north of Lafayette, La. Amid the sea of trailers, about 500 people had gathered under a big circus tent set up by the auctioneer.

In the past three years, Henderson has paid the government $18 million for 23,636 trailers, and hundreds of them -- most lacking stickers condemning their use as housing -- were going on the block that day in Lafayette.

In promotional and sales materials, Henderson Auctions warns potential buyers that trailers are not meant to be used as housing but most of its trailers are sold without the legally mandated notices.

As the auction heated up, small children sipped cans of soda and tugged on the hands of parents focused intently on the bidding. Men dressed in loafers and loose jeans -- Bayou business casual -- jotted notes on clipboards. Middle-aged couples looked on nervously as prices inched upwards.

In a dozen interviews over the course of the day, buyers said that the risk of formaldehyde poisoning was trumped by home economics. "I was staying away from the Cavaliers because of the things I've heard about them, but now, with everything but wages going up, you can't help but think about it as a backup in case I lose my job and can't pay my mortgage," prospective buyer Juanita Tabb said. Meanwhile, her family plans to use the trailer for camping, she said.

Henderson Auctions did not return repeated requests for comment. In the past, however, company representatives have told reporters that they cannot control what their buyers do with the trailers. "They're not to be used for permanent housing, which is not what we're selling them for... We're selling them for recreational use," the company's chief financial officer Mike Cagley said in an interview with a reporter from KATC news in Lafayette.

A hard choice: health or housing

New Orleans resident Earl Kimble never needed chronic medical care before Hurricane Katrina. Less than a decade later, he relies on three different kinds of throat clearers, two anti-itch eye solutions and one antibiotic for recurring infections. His wife, a self-identified "neat freak" who on a recent Monday could be found scrubbing mold off windowsills in their five-year-old FEMA trailer, takes similar medications. Bottles of Nyquil and bacteria-cleaning Clorox bleach line the unit's small kitchen table.

Itchy eyes, a persistent bronchial cough and constant fatigue have become a part of life in the years since the couple and their daughter moved into a FEMA trailer while saving to buy a new home.

Kimble is grateful to have his Mid-City trailer to live in but says the years in the 32-foot Cavalier have weakened him and his family. "It's not getting better, it's getting worse," he said. "I never had bronchitis before. Now I have severe bronchitis. Me, my wife and my daughter, we cough all the time."

Kimble did not participate in the lawsuit against the trailer manufacturers and FEMA because he did not want to take the chance that the litigation would result in his family losing the trailer which had become their home. "We stayed and took the risk," he said. "Sometimes though I wake up coughing and wonder if it was worth it."

To report illegal trailer use, call the Inspector General of the General Services Administration at (800) 424-5210. Photo of a travel trailer standing beside the foundation of a house struck by the recent tornado In the town of Phil Campbell, Ala., by Ariella Cohen.