Charles Evans, president of the Chicago Fed, shared the new page on Facebook this morning with the comment: “I’ve spoken a number of times this year on the Fed’s Dual Mandate — a congressional requirement to promote both maximum employment and price stability. We’ve just launched a Dual Mandate site with background information and links to my speeches on the topic.”

The page features graphs of the unemployment rate and changes in consumer inflation since 1999, together with the current projection from the FOMC, the Fed’s policy committee, of what the unemployment rate and inflation rate will be in the next five years. The Fed’s most recent projections, from the start of November, say that the unemployment rate will remain above 7.5 percent through 2013, and the inflation rate will remain below 2 percent during that same time period.

That’s an unacceptably high level of unemployment for Evans, who has said that it’s worth tolerating a higher rate of inflation, up to 3 percent, in order to accelerate a return to full employment.

Evans has been the loudest voice on the FOMC in favor of using monetary policy to stimulate the economy further. In the FOMC’s most recent policy statement, which announced that it would continue to maintain its current level of monetary stimulus, Evans was the lone dissenting vote. He voted against the majority because he favored “additional policy accommodation.”

In a conversation with reporters at the Council on Foreign Relations today, Evans reaffirmed that he is calling for “increasing amounts of policy accommodation” in order to reduce the unemployment rate, which is currently 9 percent. “We ought to be behaving as if there’s a very big problem out there.”

Evans’s vote was the first dissent for further stimulus since December 2007. Since then, all dissenting votes have come from inflation hawks who have opposed the FOMC’s efforts to further stimulate the economy in the wake of the recession. That the vote for further stimulus comes from Evans is particularly noteworthy because all of the dissenting votes against stimulus in the past three years have come from his fellow Federal Reserve Bank presidents on the FOMC.

Seven seats on the FOMC are appointed by the president and confirmed by Congress, but five seats are reserved for presidents of the regional Federal Reserve Banks. As the American Independent has previously reported, these presidents aren’t selected by democratic representatives but rather by the Federal Reserve Banks’ boards of directors, which are predominantly made up of senior business and financial executives.

Some of Evans’s fellow Federal Reserve Bank presidents have made statements indicating they don’t believe that unemployment should be reduced by government at all. In a speech on the same day as the most recent Fed statement, Dallas Federal Reserve Bank president Richard Fisher criticized government efforts at reducing unemployment. ”Pliant fiscal authorities,” Fisher said, “have run out of enabling money.”

Fisher added that were the Federal Reserve to support Congress’ spending by “monetizing their debts”, it would end “in the most ruinous of scenarios, the onset of hyperinflation.” The government must not, Fisher said, “hide under the skirts of the Federal Reserve.”

This is not only a rejection of Evans’ belief that the Federal Reserve should directly undertake more stimulus, it is also a rejection of Federal Reserve Chair Ben Bernanke’s statements at his most recent official press conference that Congress should engage in short-term fiscal stimulus in order to reduce unemployment.

But as the Chicago Fed’s new dual mandate page explains, the Federal Reserve does have a legal obligation to reach maximum employment. The Chicago Fed page quotes exactly where in the Federal Reserve Act the mandate is written:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. [emphasis added]

The most recent FOMC statement is at odds with this mandate, as it currently states in its own projections that unemployment remains unacceptably high, but is simultaneously committed to maintaining policy constant. Moreover, under current policy, inflation is projected to remain under 2 percent, below what it has been in past decades, and talk of “hyperinflation”, or extremely rapid or out of control inflation, is considered by most economists to be a red herring in the debate over whether to stimulate the present day American economy.

Here are the Chicago Federal Reserve’s charts showing unemployment and inflation over the next five years:

Justices on the U.S. Supreme Court heard oral arguments this week on a controversial California law that requires non-ambulatory livestock at slaughterhouses to be immediately euthanized and removed from the food supply and, based on their questions, it appears the justices are leaning toward a ruling in favor of the meat industry and the Obama administration.

The 2008 law, which was set aside by a federal judge pending this further legal action, was prompted by whistleblower video at a slaughterhouse that showed non-ambulatory, or “downer” cattle being shocked, kicked and hit with heavy equipment at one California facility. As The Iowa Independent earlier reported, state lawmakers sought to prohibit the sale of meat for human consumption from such animals, and mandated under its penal code that any “downer” livestock be immediately euthanized.

Federal law, however, requires that “downer” livestock be moved away from other animals and inspected. If inspectors find no disease or “adulteration” of the animal, it is allowed to continue through the slaughter process as a part of the food supply.

The National Meat Association, which sued on behalf of the pork industry, has asked SCOTUS to strike down California’s edict on grounds that it over-stepped the federal rule. California’s attorney argued mostly on the grounds of scope and semantics. The latter appeared to be an argument that did not resonate with the Court.

“In other words, you’re saying, ‘Well, just because the federal law says you can, doesn’t mean the state can’t say you can’t,’” noted Chief Justice John Roberts during the testimony of California Asst. Attorney General Susan K. Smith.

When Smith affirmed her argument, Roberts added, “Isn’t the exact flip side of saying … you can’t sell it, is that you can? So when federal law says you can, that preempts the rule from the states that says you can’t.”

Smith was arguing that because California was immediately removing “downer” livestock from the food supply, and the scope of federal law had to do with slaughterhouse operations leading to the food supply, that the state’s requirements remained outside of the scope of what federal authorities had already mapped out as their own territory. In other words, California needed to prove that it’s new law was attempting to “preempt,” or cancel out, existing federal law, which the Constitution holds as the winner in all conflicts.

The meat industry argued that the Federal Meat Inspection Act over-rules any state law that addresses cruelty or humane treatment of livestock slated for slaughter.

The state believes it has the right to explicitly decide what types of livestock can be slaughtered for human consumption, and that its decision in such matters is outside of the federal regulations regarding slaughterhouse operations because it is making its requirement in advance of the federal law. So, if the state decided that no purple hogs or white cows could be slaughtered for human consumption, the state believes the requirement would automatically remove such livestock from jurisdiction by the Federal Meat Inspection Act.

“The federal law doesn’t say you must,” argued Smith. “It does not say that you must sell the meat or you must…”

Justice Antonin Scalia interrupted, saying, “We are not talking about conflict preemption. If it said you must and the state says you can’t, then there would be conflict preemption. But we are talking about express preemption, which says in so many words no additional requirements. And I don’t know how you can get around the fact that this an additional requirement.”

The audio file embedded below provides a portion of the oral arguments in which the justices question Smith:

The study averaged the net worth of each member. When members file their financial disclosure statements, they list assets and liabilities as part of minimum and maximum bet worth and CRP averaged those. For example, Sen. Amy Klobuchar reported a minimum net worth of $345,029 and a maximum of $1,104,000 for an average net worth of $724,512.

In Minnesota politics, the Republican members are much wealthier than the DFLers.

The wealthiest member of Minnesota’s delegation was Sen. Al Franken with an average net worth of $8,747,525 followed by Rep. Michele Bachmann at $1,783,508 and Rep. Chip Cravaack in 217th place with an average net worth of $1,391,551.

Those three were in the top half of Congress’ 535 members.

After Klobuchar’s $724,512 comes Rep. Erik Paulsen with an average net worth of $487,017, Rep. John Kline had $471,006, Rep. Collin Peterson had $263,005, Rep. Tim Walz with $247,502, and Rep. Betty McCollum with an average net worth of $88,005.

Rep. Keith Ellison had the lowest net worth, with negative $14,497.

The generally accepted cutoff for the top 1 percent of Americans in terms of net worth is about $9 million on 2010, a threshold that none of the Minnesota delegation report.

Eleven percent of Congress is in the top 1 percent in terms of net worth.

Source: Gfpeck, Flickr

A bill recently introduced by congressmen from Pennsylvania and Illinois could have a far-reaching impact on the U.S. sugar industry, including American Crystal Sugar, a farmer-owned cooperative that locked out 1,300 union workers on Aug. 1.

Members of Minnesota and North Dakota’s congressional delegations have repeatedly warned that the company’s lockout could help undermine the congressional consensus around protections for the sugar industry.

“There are members of Congress whose natural constituency is agriculture; some who see themselves as champions of business, and others who fight for workers,” Sen. Al Franken wrote in late August. “Knowing that the program has worked so well for so many years for the hardworking growers who produce such a large percentage of our nation’s sugar beets and for the dedicated workers and skilled management, who turn those beets into the highest quality sugar in the world, has played no small role in creating this consensus.”

Big Sugar has maintained support from Congress by continuously lining the campaign coffers of both Republicans and Democrats, although there is also a tangible discontent among industries that use sugar products, who find domestic prices to be too high. Those upset with American Crystal Sugar’s labor practices could join with these discontented industries to repeal the protections.

Enter Rep. Joe Pitts, R-Penn., and Danny Davis, D-Ill., who teamed up to introduce a bill that would protect the other sweet-tooth industries: candy companies that lie within their districts.

“We’ve heard from his constituents that the price of sugar is affecting business, it’s affecting jobs,” says Pitts spokesperson Andrew Wimer, who adds that Davis, the Chicago Democrat co-sponsoring the legislation, cites examples of factories that have shut their doors because of the high price of sugar.

The Free Market Sugar Act would repeal the sugar loan program and amend the Farm Security and Rural Investment Act (known as the Farm Bill), perhaps the most important piece of legislation impacting U.S. sugar interests. Written every five years, the Farm Bill helps sugar growers with farm subsidies (which some dismiss as “corporate welfare”) and a series of quotas that tightly control the supply of imported sugar, a benefit to the handful of American sugar producers who pocket around $1 billion in excess profits a year, and a detriment to candy companies that buy U.S. sugar at prices two to three times higher than the global market rate.

Federal legislation also calls for the sugar program to be operated on a no-cost basis, a provision some sugar insiders project will remain for years to come.

“In general, [the Free Market Sugar Act] seeks to reform the sugar program so that the government is not controlling how much sugar is produced and imported,” says Wimer. ”It loosens the controls on production and importation, so that the U.S. price for sugar can be more closely aligned with the world price.”

In addition to amending the sugar price support program, the bill pushes for more transparency in the sugar industry, and an overhaul of how it does business. If enacted, the bill would replace quota import provisions with a tariff rate quota. “Right now the USDA is tightly controlling how much raw cane sugar comes into the U.S.,” says Wimer. “Instead of blanket eliminating quotas, we are modifying it so it’s not as unfair to the current market.”

Pitts and Davis have also recently announced the formation of the Congressional Sugar Reform Caucus, a bipartisan group that also includes Sens. Mark Kirk, R-Ill., and Jean Shaheen, D-N.H.

The Minnesota Independent’s Jon Collins contributed to this report.

The ad features a number of farmers, one of whom says the EPA wants to regulate methane coming from cattle.

“For thousands of years, 60 million buffalo roamed these prairies in Iowa,” one farmer says. “Who regulated them?”

EPA regional spokesman David Bryan told our sister site, The Iowa Independent Monday that “there’s no truth to that at all.”

“There are a number of regulations on greenhouse gas emissions and different types of ambient air quality standards, but trying to say we’re putting a tax on emissions from cows is just a little ridiculous,” Bryan said.

Another claim in the ad, that the EPA wants to regulate dust on farms, is also a myth. Bryan said every five years the Clean Air Act requires the EPA to evaluate air standards, but EPA Administrator Lisa Jackson made it clear in a note to Congress that there is no intention to regulate dust on farms.

“You can’t plow a field without dust, you can’t drive down a gravel road without dust,” a farmer says in Cain’s ad. “My dog makes dust.”

The EPA focuses on regulating coarse particulates, Bryan said, such as dust from construction, demolition and industrial sites.

“We center our monitoring of air mostly on urban areas where it affects the most people,” he said. “We’re going to leave the dust standards where they are.”

Dean Kleckner, former head of the Iowa Farm Bureau and the American Farm Bureau, endorses Cain in the ad, saying, “He reminds me of Ronald Reagan, and I knew Ronald Reagan.”

“Over-regulation is killing the American farmer,” Kleckner says. “I think Herman Cain is the answer. Running a farm is a business and Herman Cain is a proven CEO.”

Bryan said the EPA has worked to counter the false claims that the EPA wants to regulate methane and dust, but not everyone is getting the message.

“What further method do we have other than you folks to say we don’t intend on doing this?” Bryan said.

Source: Sen. Lee Bright's Facebook page.

Rep. Michele Bachmann announced Tuesday that her presidential campaign chairman in South Carolina, where the first shots of the Civil War were fired, is state Sen. Lee Bright, who has made comments about secession and introduced a bill to study whether the state should start printing its own currency.

“Michele Bachmann is the candidate who doesn’t just give lip service to conservative principles but actively lives them out every day,” Bright said in a statement. “She is the conservative who has been consistent in her record and her rhetoric.”

Bright introduced his bill to study the creation of a new South Carolina currency earlier this session. The resolution argues that the right to print currency can flow from the state’s constitutional police powers.

“[M]any widely recognized experts predict the inevitable destruction of the Federal Reserve System’s currency through hyperinflation in the foreseeable future,” the resolution reads. ”[I]n the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System, for which the state is not prepared, the state’s governmental finances and private economy will be thrown into chaos, with gravely detrimental effects upon the lives, health, and property of South Carolina’s citizens, and with consequences fatal to the preservation of good order throughout the state.”

If passed, the legislation would appoint a subcommittee to come up with a plan for an alternative currency.

“South Carolina can avoid or at least mitigate many of the economic, social, and political shocks to be expected to arise from hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System only through the timely adoption of an alternative sound currency that the state’s government and citizens may employ without delay in the event of the destruction of the Federal Reserve System’s currency,” according to the resolution.

It was last year that Bright played a major role in helping to pass a non-binding, but contentious, affirmation of South Carolina’s sovereignty under the U.S. Constitution.

“If at first you don’t secede, try again,” Bright joked to the Spartanburg Herald-Journal after the sovereignty bill’s passage. ”I think all of our rights are under assault, but assault on the 9th and 10th amendments is the most egregious.”

In the annual St. Cloud State University Survey, 55 percent of Minnesotans surveyed say the state is on the wrong track, down one percent from last year.

About 22 percent of Minnesotans said unemployment and jobs were the biggest problem, with another 14 percent pointing to the economy. The survey found that most respondents thought Democrats could do a better job with the economy, while they trusted Republicans to fix the budget.

Despite their trust in Republicans to fix budgets more than 54 percent of those surveyed blamed the Republican-dominated legislature for this summer’s government shutdown, with a little more than 18 percent laying full blame at the feet of DFL Gov. Mark Dayton. Event those who identified as Republicans blamed the legislature at a higher proportion, according to survey results.

About half of all respondents want to see state budget solutions that rely only on spending cuts, while a little more than a quarter of those surveyed want both.

The survey also found that U.S. Rep. Michele Bachmann was the most unpopular figure of the 11 surveyed, with those surveyed giving her a rating of 33 out of 100. It also found that even in her home state, Bachmann would perform much worse in a hypothetical match-up against Pres. Barack Obama than either Herman Cain or Mitt Romney. Obama won in all three hypothetical match-ups.

The Minnesota Pollution Control Agency (PCA) is responsible for monitoring and enforcing environmental standards in the state. For the final quarter of 2010, the PCA had an accounts receivable balance of $8.2 million, with errors of $6.2 million.

Auditors found that the PCA hadn’t created adequate controls to monitor regulatory fines or penalties the agency received. Because the PCA didn’t safeguard or keep daily logs of receipts, auditors found that checks could have been lost or stolen without the agency’s knowledge.

The PCA also failed to “redact not public information, such as bank routing and account numbers.” The agency allowed employees without a business need to access the information, which auditors said employees could use to “commit fraud against the check writer.”

The PCA also neglected to safeguard non-public data, which was available for all agency employees to view, and which 52 employees could edit, auditors found.

The lax financial controls led to errors in the PCA’s quarterly report, the audit found.

“For the quarter ended December 31, 2010, the agency reported about $8.2 million of accounts receivable to the Department of Management and Budget; however, the report had significant errors and concerns, totaling about $6.2 million.”

Those errors included an overstatement of superfund receivables by $4.5 million, including $3 million where the agency had already either settled and failed to adjust the balance or didn’t post the payments to the debtor’s account.

The report concludes that the agency was ultimately unable to substantiate hundreds of thousands of dollars in regulatory penalties due to the lax controls.

Auditors recommend that the PCA institute safeguards for its accounts receivables, limit the workers who have access to view and edit non-public data and that Office of Management and Budget provide more oversight for all state agencies on dealing with account receivables.
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“We have to listen carefully to what local governments say they want,” the governor told reporters last night after the election, “because the ability to … bail them out, to somehow come to the rescue with money -– we don’t have the money to do that.”

But it seems obvious that Kasich wouldn’t be “bailing out” local governments, especially after halving the state’s payments to them. The governor’s budget, passed earlier this year, included $1.4 million worth of cuts to the state’s municipalities, monies earned through sales tax revenue.

The budget also included dramatic cuts to health services, including around $360 million in cuts to nursing homes, according to the Associated Press.

“Certainly, no one was expecting a bailout of any kind from the state of Ohio,” said Columbus Mayor Michael B. Coleman’s spokesperson, Dan Williamson, in an interview with our sister site, The American Independent. “It’s not that we aren’t concerned with it, but it is was it is, and we are dealing with it,” he said of Columbus losing state money.  “No one thought, ‘Well, if Senate Bill 5 loses, the state is going to give us some cash’; that didn’t seem very likely.

“The mayor spoke out and said that cutting the local government fund in half wasn’t ‘shared sacrifice,’ it was disproportionate sacrifice, and he spoke out against the elimination of the estate tax, which doesn’t help the state budget at all, it only hurts cities.”

The new budget does, however, give breaks for business, totaling around $400 million annually, according to an estimate by Progress Ohio.

“The mayor spoke out on those things, and the Legislature passed it (the budget) anyway,” said Williamson. “You’ll see when we introduce our budget on Tuesday that we’re looking ahead to where those cuts are going to hit us.

“It’s passed,” he said of the state budget. “We know what’s coming. We can’t change what’s coming.”

Overcoming challenges

Williamson said that the City of Columbus has worked out many of its greatest challenges through the collective-bargaining process with the city’s workers, including phasing out the practice of pension pick-up and asking employees to pay more for their health care.

“What we’ve done with the city of Columbus is, frankly, a lot of the stuff I think [Kasich] was trying to achieve through SB5, which is getting employee benefits in-line with the market,” he said.  “Before the voters voted for the income tax increase last year, we put out a reform plan and that was to reduce the amount we spent on employee benefits, and already, in just two years, we are projected to save at least $200 million in that ten-year period of time,” he said.  (The city’s original commitment was to save $100 million over the next decade.)

Williamson said that, while the Legislature and the government had passed SB5 on the premise unions were insatiable and third-party dispute arbitrators were favorable to unions, Columbus had not found that to be the case.

“We found the arbitration period works very well,” he said, adding that phasing in cuts gradually mitigated the effect workers felt on their wallets.

“I think if Governor Kasich were to look at what we’re doing in the city of Columbus, he would find that some of what he would like to accomplish can be done by working with the unions,” he said.  “Hopefully, as he looks at what steps to take now, that could be helpful for both the Legislature and the governor.”

Source: David Shankbone, Flickr

Ohio voters struck down a law pushed by Gov. John Kasich that would have taken away public sector workers’ collective bargaining rights in the state.

Just over 61 percent of people voted against the law, with 82 of 88 counties opposing the measure, according to the Ohio Secretary of State’s office.

The vote came after an intense campaign by Democrats and labor unions. The Washington Post reports that the We Are Ohio group, which opposed the measure, poured $30 million into the repeal effort. Opponents of repeal raised only $7.5 million.

The White House lauded by the vote, the Huffington Post reported.

“The President congratulates the people of Ohio for standing up for workers and defeating efforts to strip away collective bargaining rights, and commends the teachers, firefighters, nurses, police officers and other workers who took a stand to defend those rights.”

Ohio Democratic Chairman Chris Redfern told the Columbus Dispatch that politicians shouldn’t use public workers as scapegoats.

“If you overreach, the people will respond. There is no one tonight who could suggest this was about Democrats versus Republicans,” Redfern said, noting the wide margin of defeat. “This is literally about what is right and what is wrong, and what Ohioans feel is important.”

Kasich, who spearheaded the change admitted to the paper that people might have seen it as “too much, too soon.”