From Volume 7, Issue 43 of EIR Online, Published Oct. 21, 2008

United States News Digest

Bankrupt Massachusetts Slashes Services

Oct. 16 (EIRNS)—Massachusetts Gov. Duval Patrick (D) on Oct. 14 previewed his plans to cut the budget, due to a $1.5 billion revenue shortfall, warning that "people will feel this in their services. This is not about cutting so-called fat. This is going to cut muscle, because the scale of the issue requires that." The next day, 1,000 state jobs and nearly $1 billion in spending were axed, hitting state universities and community colleges, health insurance programs, and dozens of social service programs.

The Massachusetts story is not unique. Nearly all states in the Union face the same shortfalls and deficits, and thus far, state leaders are responding just like Massachusetts officials.

LaRouche Enemy John Train Endorses Paulson Fraud

Oct. 16 (EIRNS)—John Train, who played a major role in railroading Lyndon LaRouche into prison in 1989, has endorsed the bailout measures of Treasury Secretary Hank Paulson, saying in a new posting on his website, that Bernanke and Paulson are doing an "excellent job." He also speaks for Anglo-Dutch designs against the U.S.: "Incidentally, both Europe and the Far Eastern institutions bitterly resent having been stuffed with unsound paper by U.S. institutions." Under his eclectic list of proposed solutions—including, derivatives yes, but transparent, leveraging yes, but also transparent—he also shows true oligarchical stoicism while marching into the abyss: "Print money. Some argue that pushing out money will not avert a slowdown: 'pushing on a string,' one says. Not so. It is happening now and does work, but is of course inflationary." And for the oligarchy to survive, he brings in family history: "J.P. Morgan (with my grandfather) would summon the heads of the major institutions to his library and confine them there until they decided what banks should be abandoned and which they would save. 'The rot stops here,' he would say, pointing, halting the falling dominoes."

Law School Dean: Bailout Unconstitutional

Oct. 15 (EIRNS)—Today's Wall Street Journal quotes the dean of a West Coast law school as calling the Treasury Department's bank bailout unconstitutional, on the grounds that it violates the U.S. Constitution. Dr. John Eastman, dean of the Chapman University Law School in Orange, Calif., cites the power of Congress to tax and spend for the "general welfare" as specified in Art. I, Sec. 8, but says that pouring money into banks is using tax funds to prop up a particular industry, and therefore is not a "national purpose" as the Framers of the Constitution understood the general welfare.

Eastman argues that a second ground on which the bailout is unconstitutional, is that it gives to the Secretary of the Treasury and the Federal Reserve the power to spend funds as they see fit—a power which is granted only to the Congress.

Buffalo City Council Passes HBPA, Demanding Congress Act

Oct. 15 (EIRNS)—The Buffalo, New York, city council (called the Common Council) took action in September to pass a version of the LaRouche-initiated Homeowner and Bank Protection Act (HBPA). The Act had been submitted for action in November 2007, and lay dormant until this Fall, when the crisis apparently motivated the council to act. The resolution, which passed unanimously, calls on Congress to pass an HBPA which would establish a Federal agency to place Federal and State chartered banks under protection; declare a moratorium on all home foreclosures while the mortgage system is restructured and speculative obligations are written off; and authorize governors of the states to assume the administrative responsibilities for implementing the program.

Over 100 local jurisdictions have passed the HBPA since the Fall of 2007, demanding that Congress protect the banks, and freeze foreclosures nationally. Had Congress heeded its constituents, and passed LaRouche's proposal, the current banking meltdown, and foreclosure crisis, would not be occurring.

Buffalo is the third major rust-belt city to pass the HBPA, joining Detroit and St. Louis. Buffalo also passed the LaRouche-sponsored Emergency Recovery Act resolution several years ago, which, if implemented, would address the issue of industrial collapse and job creation in the auto and related manufacturing industries central to the rust-belt corridor. In a LaRouche-directed recovery, Buffalo, which is well-positioned to become a center of job creation in the rail and power industries, would play a vital role.

Hillary Clinton Attacks White House Bailout

Oct. 13 (EIRNS)—At a campaign rally yesterday in Scranton, Pa., with Democratic Vice Presidential candidate Joe Biden and former President Bill Clinton, Sen. Hillary Clinton repeated her primary campaign emphasis on Americans in the lower 80% of income brackets, and how they are being crushed by the financial collapse. Senator Clinton stated:

"We are in a financial crisis in America. And it is a crisis born and bred by failed Republican policies championed by George Bush, John McCain, and the Washington Republicans.

"You know what they have said and done—gut regulations, cut taxes for corporations and billionaires. When you try to talk about the home mortgage crisis, which I did throughout my campaign, they sort of shrug and say 'what home mortgage crisis?' For two years, I and others have said that people are losing their houses. They have been victimized by predatory lending. Families can't pay their mortgage bills. And that this mortgage crisis would mushroom out of control and become a full-blown economic crisis.

"But to President Bush and John McCain, middle class families sinking into debt are invisible. We can help Americans losing their houses. But we can only do it if we make sure the Republicans lose the White House come November. Now when this crisis finally hit Wall Street and big financial firms came calling, well suddenly, oh my goodness, President Bush and John McCain and the Republican base snapped to attention. A big bank is going to fail; well, bail it out. A big financial firm is going to fail; well, bail it out. A big insurance company is going to fail; why, bail it out.

"What about the millions of people losing their homes and their jobs every single day? Where is their bailout? If stocks continue to plummet, homeowners fall further and further into default and many face foreclosures. People are afraid to open up their 401(k) statement, aren't they? Retirees' nest eggs are starting to crack. Businesses can't find credit. Students can't find college loans. The global credit crisis is shaking the foundation of the 21st-Century economy.

"And in this election, failure is not an option. We must commit ourselves to making sure we elect leaders who will put people first, remember who built this country, who sacrificed and made us what we are today."

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