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US admits DEA lied about Honduras 'massacre' that killed four villagers

By Nina Lakhani. This article was first published on The Guardian.

Bipartisan investigation finds drug agents misled Congress after river shooting left four dead, including two pregnant women and a schoolboy

An aerial view of the Mosquitia region near the remote community of Ahuas, Honduras, where the shooting took place.

An aerial view of the Mosquitia region near the remote community of Ahuas, Honduras, where the shooting took place. Photograph: Rodrigo Abd/AP Nina Lakhani

The US Drug Enforcement Administration lied about its role in a bungled anti-narcotics operation in Honduras that left four innocent villagers dead, then misled Congress, the justice department and the public as it tried to cover its tracks, a damning bipartisan investigation has found.

Honduran officers under the command of DEA agents fired at unarmed passengers traveling by taxi boat in May 2012, killing four people – including two pregnant women and a schoolboy – and seriously injuring three others.

The operation, which left several children orphaned, was part of a militarized DEA programme that led to a series of deadly confrontations and has now been abandoned.

The DEA had previously absolved itself of any wrongdoing, but the scathing report released by the justice department’s inspector general on Wednesday found major discrepancies in the agency’s description of the events.

 

Honduras counts the human rights cost of America's war on drugs

The shooting took place at about 2am on 11 May on the river Patuca near the village of Ahuas in north-eastern Honduras, after a passenger boat with 16 people on board collided with a disabled vessel carrying American and Honduran agents and large quantities of cocaine that had been seized. The ground troops were escorted by four state department helicopters equipped with mounted door guns.

The DEA said two Honduran officers on the disabled boat had fired at the river taxi in self-defence after they came under gun attack.

In fact, the officers – who included a DEA agent – shot first, and even aimed at passengers who had jumped or fallen into the river.

Then at least one DEA agent in a circling helicopter ordered a Honduran door gunner to fire his machine gun at the passengers from above.

There is no evidence to suggest any shots were fired from the taxi boat, or that the passengers were involved in drug trafficking, the report found.

The self-defence motive claimed by the DEA was based, at least in part, on fabricated testimony from a confidential DEA informant who later admitted she had lied.

The role of American agents on foreign soil is one of the most divisive aspects of its long-running war on drugs.

The DEA consistently maintained that it was a Honduran-led operation in which its agents acted only as mentors and advisers.

But according to the new report, the agency planned and controlled the operation. Honduran agents did not have direct access to intelligence information or the necessary equipment to command such an operation. They received orders from the DEA; they did not give them, the review found.

The review also found that state department officials gave similar inaccurate and incomplete information to Congress and the public.

After the incident, the American-led mission showed little interest in helping the dead or injured.

It did not participate in search-and-rescue efforts. Instead, the aerial team rescued the cocaine and US agents from the stranded boat and returned to base.

It took community members two days to recover all four victims from the river.

They were Candelaria Trapp Nelson, a 48-year-old mother of six who was pregnant; Juana Jackson Ambrosia, 28, a mother of two who was pregnant; Hasked Brooks Wood, 14; and Emerson Martínez, 21, a former soldier and father of one.

The survivors have struggled to access adequate medical care and support.

Lucio Nelson, now 25, was returning home on the river taxi after visiting his mother and was shot in the right arm and lower back. He was a small-scale farmer cultivating rice and beans, but has barely worked since the incident. Despite four surgeries, he continues to suffer from severe weakness in his arm and chronic back pain.

“They called us narcos, but it’s a lie. It was a massacre of innocent people,” he said in a phone interview. “I need someone to help me, I cannot support by family.”

The owners of the boat, Hilda Lezama and her husband, Melaño Eulopio Nixon, were also injured.

Lezama, now 56, was injured in both thighs by a bullet, which ripped apart the muscle tissue. Her legs are still painful and swollen, and the scars never properly healed.

The shooting left four people dead and several children orphaned.

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The shooting left four people dead and several children orphaned. Photograph: Rodrigo Abd/AP

Wilmer Morgan Lucas, 14, a school friend of Hasked Brooks, was shot in the right hand. His shattered limb was only saved after a local NGO intervened to pay for urgent medical care.

The fact-finding report does not make any recommendations regarding compensation or help for the victims.

The report praises and draws upon an investigation carried out by activists, which persuaded Congress to question the DEA’s account.

In comparison, the report describes the DEA internal investigation as “little more than a paper exercise” that gave no consideration “to the accounts of survivors from the passenger boat or local residents”.

Furthermore, the agency attempted to block any external oversight by refusing to cooperate with the embassy, the state and justice departments, and the Honduran government.

The findings are critical about almost every aspect of the DEA’s actions before, during and after the incident.

The report describes a separate fatal incident a few weeks after the two boats collided, in which senior DEA officials failed to act on information that a Honduran officer had planted a gun at the scene.

In a statement, the DEA said it had made significant and numerous changes in the past five years and had accepted all of the inspector general’s recommendations.

But victims of the bungled operation said that wasn’t enough.

Juana Jackson’s two sons are being raised by her older sister Marlene Jackson, who is struggling to maintain them.

“We wanted the truth, but we also want justice and compensation – or don’t they care what happens to these children?”

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Panama: The War to Start All Wars

By Greg Grandin. This article was first published on Tom Dispatch.

A note from the editorsPanama's last dictator, Manuel Noriega, died in Panama City on Monday, May 29th. He had been in prison and then under house arrest ever since his extradition from France in 2011. In total he spent 26 years in prison in the US and in France following his capture following the US invasion of Panama in December 1989. The article below by Greg Grandin below provides a glimpse into the invasion and the lasting impact it had for US foreign policy and the overcoming of the so-called "Vietnam Syndrome."

The 25th Anniversary of the Forgotten Invasion of Panama

As we end another year of endless war in Washington, it might be the perfect time to reflect on the War That Started All Wars -- or at least the war that started all of Washington’s post-Cold War wars: the invasion of Panama.

Twenty-five years ago this month, early on the morning of December 20, 1989, President George H.W. Bush launched Operation Just Cause, sending tens of thousands of troops and hundreds of aircraft into Panama to execute a warrant of arrest against its leader, Manuel Noriega, on charges of drug trafficking. Those troops quickly secured all important strategic installations, including the main airport in Panama City, various military bases, and ports. Noriega went into hiding before surrendering on January 3rd and was then officially extradited to the United States to stand trial. Soon after, most of the U.S. invaders withdrew from the country.

In and out. Fast and simple. An entrance plan and an exit strategy all wrapped in one. And it worked, making Operation Just Cause one of the most successful military actions in U.S. history. At least in tactical terms.

There were casualties. More than 20 U.S. soldiers were killed and 300-500 Panamanian combatants died as well. Disagreement exists over how many civilians perished. Washington claimed that few died. In the “low hundreds,” the Pentagon’s Southern Command said. But others charged that U.S. officials didn’t bother to count the dead in El Chorrillo, a poor Panama City barrio that U.S. planes indiscriminately bombed because it was thought to be a bastion of support for Noriega. Grassroots human-rights organizations claimed thousands of civilians were killed and tens of thousands displaced.

As Human Rights Watch wrote, even conservative estimates of civilian fatalities suggested “that the rule of proportionality and the duty to minimize harm to civilians… were not faithfully observed by the invading U.S. forces.” That may have been putting it mildly when it came to the indiscriminant bombing of a civilian population, but the point at least was made. Civilians were given no notice. The Cobra and Apache helicopters that came over the ridge didn’t bother to announce their pending arrival by blasting Wagner’s "Ride of the Valkyries" (as in Apocalypse Now). The University of Panama’s seismograph marked 442 major explosions in the first 12 hours of the invasion, about one major bomb blast every two minutes. Fires engulfed the mostly wooden homes, destroying about 4,000 residences. Some residents began to call El Chorrillo “Guernica” or “little Hiroshima.” Shortly after hostilities ended, bulldozers excavated mass graves and shoveled in the bodies. “Buried like dogs,” said the mother of one of the civilian dead.

Sandwiched between the fall of the Berlin Wall on November 9, 1989, and the commencement of the first Gulf War on January 17, 1991, Operation Just Cause might seem a curio from a nearly forgotten era, its anniversary hardly worth a mention. So many earth-shattering events have happened since. But the invasion of Panama should be remembered in a big way. After all, it helps explain many of those events. In fact, you can’t begin to fully grasp the slippery slope of American militarism in the post-9/11 era -- how unilateral, preemptory “regime change” became an acceptable foreign policy option, how “democracy promotion” became a staple of defense strategy, and how war became a branded public spectacle -- without understanding Panama.

Our Man in Panama

Operation Just Cause was carried out unilaterally, sanctioned neither by the United Nations nor the Organization of American States (OAS). In addition, the invasion was the first post-Cold War military operation justified in the name of democracy -- “militant democracy,” as George Will approvingly called what the Pentagon would unilaterally install in Panama.

The campaign to capture Noriega, however, didn’t start with such grand ambitions. For years, as Saddam Hussein had been Washington’s man in Iraq, so Noriega was a CIA asset and Washington ally in Panama. He was a key player in the shadowy network of anti-communists, tyrants, and drug runnersthat made up what would become Iran-Contra. That, in case you’ve forgotten, was a conspiracy involving President Ronald Reagan’s National Security Council to sell high-tech missiles to the Ayatollahs in Iran and then divert their payments to support anti-communist rebels in Nicaragua in order to destabilize the Sandinista government there. Noriega’s usefulness to Washington came to an end in 1986, after journalist Seymour Hersh published an investigation in the New York Times linking him to drug trafficking. It turned out that the Panamanian autocrat had been working both sides. He was “our man,” but apparently was also passing on intelligence about us to Cuba.

Still, when George H.W. Bush was inaugurated president in January 1989, Panama was not high on his foreign policy agenda. Referring to the process by which Noriega, in less than a year, would become America’s most wanted autocrat, Bush’s National Security Advisor Brent Scowcroft said: “I can’t really describe the course of events that led us this way... Noriega, was he running drugs and stuff? Sure, but so were a lot of other people. Was he thumbing his nose at the United States? Yeah, yeah.”

The Keystone Kops...

Domestic politics provided the tipping point to military action. For most of 1989, Bush administration officials had been half-heartedly calling for a coup against Noriega. Still, they were caught completely caught off guard when, in October, just such a coup started unfolding. The White House was, at that moment, remarkably in the dark. It had no clear intel about what was actually happening. ''All of us agreed at that point that we simply had very little to go on,'' Secretary of Defense Dick Cheney later reported. “There was a lot of confusion at the time because there was a lot of confusion in Panama.''

“We were sort of the Keystone Kops,” was the way Scowcroft remembered it, not knowing what to do or whom to support. When Noriega regained the upper hand, Bush came under intense criticism in Congress and the media. This, in turn, spurred him to act. Scowcroft recalls the momentum that led to the invasion: “Maybe we were looking for an opportunity to show that we were not as messed up as the Congress kept saying we were, or as timid as a number of people said.” The administration had to find a way to respond, as Scowcroft put it, to the “whole wimp factor.”

Momentum built for action, and so did the pressure to find a suitable justification for action after the fact. Shortly after the failed coup, Cheney claimed on PBS’s Newshour that the only objectives the U.S. had in Panama were to “safeguard American lives” and “protect American interests” by defending that crucial passageway from the Atlantic to the Pacific Oceans, the Panama Canal. “We are not there,” he emphasized, “to remake the Panamanian government.” He also noted that the White House had no plans to act unilaterally against the wishes of the Organization of American States to extract Noriega from the country. The “hue and cry and the outrage that we would hear from one end of the hemisphere to the other,” he said, “…raises serious doubts about the course of that action.”

That was mid-October. What a difference two months would make. By December 20th, the campaign against Noriega had gone from accidental -- Keystone Kops bumbling in the dark -- to transformative: the Bush administration would end up remaking the Panamanian government and, in the process, international law.

...Start a Wild Fire

Cheney wasn’t wrong about the “hue and cry.” Every single country other than the United States in the Organization of American States voted against the invasion of Panama, but by then it couldn’t have mattered less. Bush acted anyway.

What changed everything was the fall of the Berlin Wall just over a month before the invasion. Paradoxically, as the Soviet Union’s influence in its backyard (eastern Europe) unraveled, it left Washington with more room to maneuver in its backyard (Latin America). The collapse of Soviet-style Communism also gave the White House an opportunity to go on the ideological and moral offense. And at that moment, the invasion of Panama happened to stand at the head of the line.

As with most military actions, the invaders had a number of justifications to offer, but at that moment the goal of installing a “democratic” regime in power suddenly flipped to the top of the list. In adopting that rationale for making war, Washington was in effect radically revising the terms of international diplomacy. At the heart of its argument was the idea that democracy (as defined by the Bush administration) trumped the principle of national sovereignty.

Latin American nations immediately recognized the threat. After all, according to historian John Coatsworth, the U.S. overthrew 41 governments in Latin America between 1898 and 1994, and many of those regime changes were ostensibly carried out, as Woodrow Wilson once put it in reference to Mexico, to teach Latin Americans “to elect good men.” Their resistance only gave Bush’s ambassador to the OAS, Luigi Einaudi, a chance to up the ethical ante. He quickly and explicitly tied the assault on Panama to the wave of democracy movements then sweeping Eastern Europe. “Today we are... living in historic times,” he lectured his fellow OAS delegates, two days after the invasion, “a time when a great principle is spreading across the world like wildfire. That principle, as we all know, is the revolutionary idea that people, not governments, are sovereign.”

Einaudi’s remarks hit on all the points that would become so familiar early in the next century in George W. Bush’s “Freedom Agenda”: the idea that democracy, as defined by Washington, was a universal value; that “history” represented a movement toward the fulfillment of that value; and that any nation or person who stood in the path of such fulfillment would be swept away.

With the fall of the Berlin Wall, Einaudi said, democracy had acquired the “force of historical necessity.” It went without saying that the United States, within a year the official victor in the Cold War and the “sole superpower” left on Planet Earth, would be the executor of that necessity. Bush’s ambassador reminded his fellow delegates that the “great democratic tide which is now sweeping the globe” had actually started in Latin America, with human rights movements working to end abuses by military juntas and dictators. The fact that Latin American’s freedom fighters had largely been fighting against U.S.-backed anti-communist rightwing death-squad states was lost on the ambassador.

In the case of Panama, “democracy” quickly worked its way up the shortlist of casus belli.

In his December 20th address to the nation announcing the invasion, President Bush gave “democracy” as his second reason for going to war, just behind safeguarding American lives but ahead of combatting drug trafficking or protecting the Panama Canal. By the next day, at a press conference, democracy had leapt to the top of the list and so the president began his opening remarks this way: “Our efforts to support the democratic processes in Panama and to ensure continued safety of American citizens is now moving into its second day.”

George Will, the conservative pundit, was quick to realize the significance of this new post-Cold War rationale for military action. In a syndicated column headlined, “Drugs and Canal Are Secondary: Restoring Democracy Was Reason Enough to Act,” he praised the invasion for “stressing… the restoration of democracy,” adding that, by doing so, “the president put himself squarely in a tradition with a distinguished pedigree. It holds that America’s fundamental national interest is to be America, and the nation’s identity (its sense of its self, its peculiar purposefulness) is inseparable from a commitment to the spread -- not the aggressive universalization, but the civilized advancement -- of the proposition to which we, unique among nations, are, as the greatest American said, dedicated.”

That was fast. From Keystone Kops to Thomas Paine in just two months, as the White House seized the moment to radically revise the terms by which the U.S. engaged the world. In so doing, it overthrew not just Manuel Noriega but what, for half a century, had been the bedrock foundation of the liberal multilateral order: the ideal of national sovereignty.

Darkness Unto Light

The way the invasion was reported represented a qualitative leap in scale, intensity, and visibility when compared to past military actions. Think of the illegal bombing of Cambodia ordered by Richard Nixon and his National Security Advisor Henry Kissinger in 1969 and conducted for more than five years in complete secrecy, or of the time lag between actual fighting in South Vietnam and the moment, often a day later, when it was reported.

In contrast, the war in Panama was covered with a you-are-there immediacy, a remarkable burst of shock-and-awe journalism (before the phrase “shock and awe” was even invented) meant to capture and keep the public’s attention. Operation Just Cause was “one of the shortest armed conflicts in American military history,” writes Brigadier General John Brown, a historian at the United States Army Center of Military History. It was also “extraordinarily complex, involving the deployment of thousands of personnel and equipment from distant military installations and striking almost two-dozen objectives within a 24-hour period of time… Just Cause represented a bold new era in American military force projection: speed, mass, and precision, coupled with immediate public visibility.”

Well, a certain kind of visibility at least. The devastation of El Chorrillo was, of course, ignored by the U.S. media.

In this sense, the invasion of Panama was the forgotten warm-up for the first Gulf War, which took place a little over a year later. That assault was specifically designed for all the world to see. “Smart bombs” lit up the sky over Baghdad as the TV cameras rolled. Featured were new night-vision equipment, real-time satellite communications, and cable TV (as well as former U.S. commanders ready to narrate the war in the style of football announcers, right down to instant replays). All of this allowed for public consumption of a techno-display of apparent omnipotence that, at least for a short time, helped consolidate mass approval and was meant as both a lesson and a warning for the rest of the world. “By God,” Bush said in triumph, “we’ve kicked the Vietnam syndrome once and for all.”

It was a heady form of triumphalism that would teach those in Washington exactly the wrong lessons about war and the world.

Justice Is Our Brand

In the mythology of American militarism that has taken hold since George W. Bush’s disastrous wars in Afghanistan and Iraq, his father, George H.W. Bush, is often held up as a paragon of prudence -- especially when compared to the later reckless lunacy of Vice President Dick Cheney, Secretary of Defense Donald Rumsfeld, and Deputy Secretary of Defense Paul Wolfowitz. After all, their agenda held that it was the messianic duty of the United States to rid the world not just of “evil-doers” but “evil” itself. In contrast, Bush Senior, we are told, recognized the limits of American power. He was a realist and his circumscribed Gulf War was a “war of necessity” where his son’s 2003 invasion of Iraq was a catastrophic “war of choice.” But it was H.W. who first rolled out a “freedom agenda” to legitimize the illegal invasion of Panama.

Likewise, the moderation of George W. Bush’s Secretary of Defense, Colin Powell, has often been contrasted favorably with the rashness of the neocons in the post-9/11 years. As the chairman of the Joint Chiefs of Staff in 1989, however, Powell was hot for getting Noriega. In discussions leading up to the invasion, he advocated forcefully for military action, believing it offered an opportunity to try out what would later become known as “the Powell Doctrine.” Meant to ensure that there would never again be another Vietnam or any kind of American military defeat, that doctrine was to rely on a set of test questions for any potential operation involving ground troops that would limit military operations to defined objectives. Among them were: Is the action in response to a direct threat to national security? Do we have a clear goal? Is there an exit strategy?

It was Powell who first let the new style of American war go to his head and pushed for a more exalted name to brand the war with, one that undermined the very idea of those “limits” he was theoretically trying to establish. Following Pentagon practice, the operational plan to capture Noriega was to go by the meaningless name of “Blue Spoon.” That, Powell wrote in My American Journey, was “hardly a rousing call to arms… [So] we kicked around a number of ideas and finally settled on... Just Cause. Along with the inspirational ring, I liked something else about it. Even our severest critics would have to utter ‘Just Cause’ while denouncing us.”

Since the pursuit of justice is infinite, it’s hard to see what your exit strategy is once you claim it as your “cause.” Remember, George W. Bush’s original name for his Global War on Terror was to be the less-than-modest Operation Infinite Justice.

Powell says he hesitated on the eve of the invasion, wondering if it really was the best course of action, but let out a “whoop and a holler” when he learned that Noriega had been found. A new Panamanian president had already been sworn in at Fort Clayton, a U.S. military base in the Canal Zone, hours before the invasion began.

Here’s the lesson Powell took from Panama: the invasion, he wrote, confirmed all his “convictions over the preceding twenty years, since the days of doubt over Vietnam. Have a clear political objective and stick to it. Use all the force necessary, and do not apologize for going in big if that is what it takes... As I write these words, almost six years after Just Cause, Mr. Noriega, convicted on the drug charges contained in the indictments, sits in an American prison cell. Panama has a new security force, and the country is still a democracy.”

That assessment was made in 1995. From a later vantage point, history’s judgment is not so sanguine. As George H.W. Bush’s ambassador to the United Nations, Thomas Pickering said about Operation Just Cause: “Having used force in Panama... there was a propensity in Washington to think that force could provide a result more rapidly, more effectively, more surgically than diplomacy.” The easy capture of Noriega meant "the notion that the international community had to be engaged... was ignored."

"Iraq in 2003 was all of that shortsightedness in spades,” Pickering said. “We were going to do it all ourselves." And we did.

The road to Baghdad, in other words, ran through Panama City. It was George H.W. Bush’s invasion of that small, poor country 25 years ago that inaugurated the age of preemptive unilateralism, using “democracy” and “freedom” as both justifications for war and a branding opportunity. Later, after 9/11, when George W. insisted that the ideal of national sovereignty was a thing of the past, when he said nothing -- certainly not the opinion of the international community -- could stand in the way of the “great mission” of the United States to “extend the benefits of freedom across the globe,” all he was doing was throwing more fuel on the “wildfire” sparked by his father. A wildfire some in Panama likened to a “little Hiroshima.”

Greg Grandin, a TomDispatch regular, is the author of a number of books including, most recently, The Empire of Necessity: Slavery, Freedom, and Deception in the New World, which was a finalist for the Samuel Johnson Prize, was anointed by Fresh Air’s Maureen Corrigan as the best book of the year, and was also on the “best of” lists of the Wall Street Journal, the Boston Globe, and the Financial Times. He blogs for the Nation magazine and teaches at New York University.

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The Numbers Are In: A Single-Payer Health System in California Would Cover Everyone and Save Tens of Billions a Year

By Steven Rosenfeld / AlterNet

The only people who would pay more are the most well to do.

The analysis was done by a team led by Robert Pollin, the co-director of the Political Economy Research Institute at the University of Massachusetts and a former UC Riverside faculty member. At a Sacramento press conference, he explained how a single-payer system would enable all Californians to be completely covered. That includes 3.7 million currently uninsured residents and another 12 million who are underinsured, meaning they cannot afford their policy’s co-pays and deductibles.

The universal coverage would be paid for by combining all government healthcare subsidies, which accounts for about 70 percent of California’s current spending, and by two proposed tax increases: a 2.3 percent gross receipt taxes on businesses (which kicks in after the first $2 million in earnings and which exempts small businesses); and a 2.3 percent increase in the sales tax, with exemptions for necessities such as food, housing, utilities, and other services.

Those combined revenue streams would raise an estimated $400 billion annually to pay for universal coverage under a single-payer system. Today, Californians spend about $370 billion annually in an insurance-dominated system that leaves 40 percent of the state's  population underinsured or without any insurance at all.

“The good news is that California can get a lot more for our money,” said state Sen. Ricardo Lara, D-Bell Gardens, the bill’s co-sponsor. “When the legislature passes the Healthy California Act, we will actually spend less than we do on health care. Families will pay less for health care. The average middle-class family will see their out-of-pocket costs fall by 9 percent.”

Most businesses will also save money, Pollin explained, because they will no longer be paying for their employees' health care. Even with the proposed gross receipts tax exempting the first $2 million, typical California businesses employing 10 to 19 people would see costs fall by 13.8 percent, he said. Businesses employing 20 to 99 people would see costs fall by 6.8 percent, he said. Businesses employing up to 500 would see costs fall by 5.7 percent, and the 500-plus businesses would see costs fall by 0.6 percent.

Indeed, the financing framework Pollin laid out would be a major shift from today's system, in which employers include health insurance as part of an employee's compensation. Until this press conference Wednesday, the only other analysis of how universal coverage would be paid for was in a Senate staff analysis that envisioned raising the state's payroll tax by 15 percent.

“This measure is good for businesses. It is also good for households,” Pollin said.

How It All Works

The basic approach of SB-562, which must be passed by the state senate by Friday to meet a legislative deadline, is to replace the billing and price-setting bureaucracies at the core of the health care industry with a state rate-setting panel. It would pay hospitals and providers based on the prices paid under the federal Medicare program, which is about 22 percent less than what private insurers pay, and also negotiate for bulk purchases of drugs, and wresting other administrative efficiencies from a streamlined system.

Pollin’s presentation had four sections: what the state’s current health care costs and the cost of “bringing full coverage to everyone in California under the existing system;” where savings in a state single-payer approach would emerge and why; how the program could be financed; and the impact on the “financial situation of individuals and businesses at all levels.”

“Right now, the health care system in California, the total number of expenditures is $368.5 billion—roughly $370 billion,” he began. “I know you heard these reports, this study that came out last week by the [Senate Appropriations Committee] staff saying that this would cost $400 billion. Well, keep in mind that we are already spending $370 billion. We are not going from zero to $400 billion.”

The next step is asking what it would take to bring the uninsured and the underinsured up to full insurance.

“The answer is it would add about 9.6 percent to total costs,” Pollin said. “So the system that now costs roughly $370 billion would cost $400 billion or actually slightly more—if everybody was fully insured under the existing system… Our analysis is basically on track with the [Senate] staff report, in saying that if we were going to operate our present system, giving everybody full coverage, it would cost $400 billion. That would represent an increase from $370 billion to $400 billion, not zero to $400 billion—a critical point.”

But the single-payer system will not be the same as the current system, in which private insurers, hospital finance operations and pharmaceutical firms stand between the public and the health care they need. It has built-in features that will save tens of billions annually, which fall under two categories, he said: structural changes and what service providers are paid. Pollin said his team at the University of Massachusetts used numbers from reams of industry data and widely accepted government and scientific research.

“We are talking about reducing administrative costs across the board. By having a single-payer system, you will save on administration for hospitals, for physicians, for clinics and in insurance itself,” Pollin said. “Secondly, we’re talking about lowering pharmaceutical prices. And by that we are looking at both the VA [Veterans Administration] type model for setting pharmaceutical prices and the Canadian model [a country with a population akin to California's]. And so we think, through some combination of something like that, we can reduce pharmaceutical costs in the range of 30 percent.”

“Third, we suggest setting all service provision at Medicare rates,” he said, which pays 22 percent below what insurers now pay hospitals and doctors. “So, right now, we have three tiers. We have Medicare rates; we have private insurance rates; and we have MediCal [the state’s Medicaid program] rates. MediCal rates are lower than Medicare rates. Private insurers are higher. We are saying move everything to Medicare rates.”

“If you combine those three things, conservatively we estimate that you can get 13 percent savings out of what we do with our present system… through administrative efficiency, pharmaceutical prices and setting [payment] rates through the Medicare rates,” Pollin said. “Now on top of that, we also look at inefficiency or waste in service provision [unnecessary services, inefficiently delivered services, missed prevention opportunities and fraud]… the [federal] Institute of Medicine said we are wasting about 19 percent of all expenditures. Now what we are assuming, quite conservatively, is that we can only get 5 percent.”

So by combining their two sources of savings, structural savings of 13 percent and service provisions savings of 5 percent, that takes the current estimated cost of covering all Californians under today’s system, which is $400 billion, and lowers it to roughly $330 billion—the 18 percent savings. When you subtract the $225 billion now spent by the federal and what the state government spend on all of their health care programs, that means that Californians will have to find another $105 billion to pay for universal coverage—because nobody would be buying health insurance plans.

“Again, we’re not going from zero to $330 billion,” Pollin said. “We are going from what it is costing now, $370 billion, and going to go down to $330 billion, plus everybody gets covered. That’s it. Now, how do we pay for that $330 billion? Obviously it's a completely restructured system.”

The bill’s sponsors suggested that two tax increases could completely pay for the $105 billion gap and eliminate every Californian and state business having to buy health insurance and then pay deductibles. They have looked at the fine print of federal laws like Obamacare, Medicaid and Medicare and said they allow states to pursue options like single payer “and we assume that funding will still be there… and that amounts to $225 billion.”

“Where do we get the $106 billion extra? As Sen. Lara said, there are various ways to think about it,” Pollin said. “We propose… two new taxes. A gross receipts tax, at 2.3 percent of gross receipts, and a sales tax increase, also at 2.3 percent of sales. Now both of those have exemptions and a tax credit to maintain equity in the system… The first $2 million of gross receipts for all businesses are exempt from the tax. The effect of that is small businesses will pay no gross receipts tax.”

Pollin said poor households on Medicaid would also get a 2 percent tax credit “so that the people who are getting Medicaid now will effectively not have to pay the sales tax; their costs will be zero.” The 2.3 percent gross receipts tax raises $92.6 billion and the sales tax raises $14.3 billion. “I think it works really well. It’s tight,” he said.

The Impact

The impacts on businesses and individuals vary with income. The poorest Californians, on MediCal, would see costs go down 5.5 percent, because they would no longer be making out-of-pocket payments anymore. Families who earn $35,800—putting them at 40 percent or the top of the second tier of five for all Californians by income—will see health care costs go down by an average of 1.2 percent.

“We’re looking at how much they are paying now in healthcare and we are matching that against a family that will have to pay sales tax for non-necessities,” Pollin said. “This is a windfall for middle-income families because they’re paying a lot for health care now. The range is for families that are underinsured now, the net gain is 8.7 percent of their income. For individually insured families, the gain is 9.1 percent. And for those middle-income families that are getting health care from their employer, it’s more modest, but still a gain of 2.6 percent.”

The wealthy will pay more, he explained. “Right now, wealthy families [in the top 20 percent of earners, which is $227,000 a year, or top 10 percent, which is $340,000] are getting a net subsidy—because of the tax benefits they are able to write off their health care costs,” Pollin said. “One percent of their income is being paid to them by the health care system. Under Healthy California, yes, they will pay. But look, they will only have to pay 0.6 percent of their net income.”

“Businesses will have to pay the gross receipts tax after the first $2 million of expenditure—so what do we see,” he continued. “The small businesses that are not covering their workers, they will still not pay anything… The businesses that are small and are paying for health care for employees—also a huge windfall. Their health care expenditures will go down by 22 percent as a share of their payroll. This is a huge benefit for these businesses."

Middle-sized businesses will also see payroll net savings, he said, from 13.8 percent for businesses between 10 and 19 employees, to 5.7 percent for businesses between 100 and 500 employees. Only the largest businesses, with more than 500 employees, would see slight savings, less than 1 percent. “They will, of course, have to pay a large chunk of gross receipts, because they will have a large chunk of gross receipts, but nevertheless their [payroll] costs will also go down, we estimate, by an average of 0.6 percent.”

“So businesses at all levels come out at least as well,” Pollin said. “Most of them in the middle come out much better. This measure is good for business. First and foremost, it’s really good for business.”

Sen. Lara, the bill’s sponsor, said the goal was to pass the measure in the Senate by Friday, and then begin discussions with “stakeholders” on the revenue and taxation elements. While the state’s health insurers, hospital chains, drug companies and some physicians' groups are all opposed to a single-payer system, this analysis is likely to take the political fight to a new orbit. Even if it contains spending, savings and revenue estimates that are slightly off, it brings new specificity to the debate.

The University of Massachusetts analysis portrays a system where the vast majority of residents and businesses could do better than the status quo. As Republicans in Washington seek to destroy Obamacare and underfund Medicaid in their 2018 budget, the pressure on California to protect and insulate its citizens will only grow.

Steven Rosenfeld covers national political issues for AlterNet, including America's democracy and voting rights. He is the author of several books on elections and the co-author of Who Controls Our Schools: How Billionaire-Sponsored Privatization Is Destroying Democracy and the Charter School Industry (AlterNet eBook, 2016).

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Exxon Shareholders Approve Climate Resolution: 62% Vote for Disclosure

By Marianne Lavelle. This article was first published on Inside Climate News.

The landmark investor vote defied Exxon's management. It requires the oil giant to begin reporting climate-related risks to its business.
Exxon holds its shareholder meeting

The Exxon vote caps a shareholder meeting season that has seen unprecedented investor support for corporate disclosure on climate risks. Credit: Karen Bleier/Getty Images

ExxonMobil shareholders voted Wednesday to require the world's largest oil and gas company to report on the impacts of climate change to its business—defying management, and marking a milestone in a 28-year effort by activist investors.

Sixty-two percent of shareholders voted for Exxon to begin producing an annual report that explains how the company will be affected by global efforts to reduce greenhouse gas emissions under the Paris climate agreement. The analysis should address the financial risks the company faces as nations slash fossil fuel use in an effort to prevent worldwide temperatures from rising more than 2 degrees Celsius.

Last year, 38 percent of Exxon shareholders supported essentially the same measure, which at the time was a record.

The vote at Exxon shows the rapid erosion of support for the company's defiant stance on climate disclosure, and it caps a shareholder meeting season that saw unprecedented support for greater corporate disclosure on climate change. In recent weeks, shareholders voted in favor of climate risk analysis at two other major energy companies, Occidental Petroleum and PPL, Pennsylvania's largest utility. Climate-related shareholder resolutions also garnered record support at other big U.S. utilities that rely on fossil fuels: Dominion Resources (47.8%), Duke Energy (46.4%) and DTE Energy (45%).

In a week when President Donald Trump is expected to either back out of the Paris accord or scale down the U.S. commitment to cut carbon emissions, the vote at Exxon shows that momentum for action on climate is growing without White House leadership.

Mainstream investment firms are asking harder questions of companies as scientific evidence of the need for deep decarbonization of the global economy mounts. Investigations, first by InsideClimate News and then by the Columbia University School of Journalism and the Los Angeles Times, also showed that Exxon long knew of the risks posed by climate change, yet its leaders avoided disclosing those risks to the public and instead sowed doubt about the science. Attorneys general for New York and Massachusetts are now leading an investigation into whether Exxon misled shareholders in violation of securities laws.

The oil industry and its allies are mounting a defense, with prominent industry analyst Daniel Yergin, the powerhouse lobby of the U.S. Chamber of Commerce and others opposing calls for climate change scenarios to be integrated into corporate financial disclosure. They say that securities law on disclosure is meant to inform investors of potential returns, not to implement social policy.

But institutional investors argue that climate risk is a long-term financial risk that should be integrated into financial reporting.

BlackRock, the world's largest investment firm, with $5.1 trillion in assets under management, and several major global investors—including State Street, Aviva, and Legal & General—have signaled that they want more transparency on climate change risk. BlackRock's first vote against corporate management on climate came this year against Occidental, where it was the largest institutional investor.

"I think we are witnessing a truly historic shift in shareholder support for these resolutions," said Andrew Logan, director of the oil and gas program at Ceres, a nonprofit that works with institutional investors on sustainability issues. "It's a sign that the world is getting ahead of the oil industry. When you have very conservative institutions like BlackRock and Vanguard taking these positions, you know the issue has changed in some fundamental way."

"Carbon risk is now understood to be a financial fundamental," said Danielle Fugere, president of As You Sow, a corporate social responsibility and shareholder advocacy organization that supported the Exxon resolution.

Exxon's Position as Investor Concern Rises

Since 1990, when the first resolution related to climate change went before ExxonMobil's annual shareholders' meeting, the company has succeeded in quashing more than 40 such proposals. The first climate resolutions, in the wake of the Exxon Valdez oil spill, eked out just 6 percent of the vote. It was 2002 before any measure related to global warming garnered support in the double digits at the annual conclave of investors in Dallas. But by last year, a climate disclosure resolution received a record 38.2 percent of the vote at Exxon.

In the run-up to this year's shareholder meeting, its since former CEO Rex Tillerson left to become U.S. Secretary of State in the Trump administration and Darren Woods took over, Exxon maintained its position on climate change.

"We believe the risks of climate change are serious and warrant thoughtful action," the company said.

During the meeting, Woods reiterated Exxon's support for the Paris climate accord and for a carbon tax. He told shareholders that the company supported the carbon tax proposal put forward by the Carbon Leadership Council, led by former Secretary of State James Baker.

Exxon said addressing climate change was a "dual challenge" with meeting the world's demand for energy and economic growth. Exxon said its current analysis is that oil will remain the world's primary fuel through 2040 due to transportation and petrochemical demand, that natural gas will grow faster than any other source, and that renewables will only account for 4 percent of world energy demand by that year. Exxon said its current financial disclosures were sufficient for ensuring long-term shareholder value, given this outlook.In 2014, responding to pressure from shareholders asking the company to report on how much of its reserves would become unsellable—or stranded—if a global treaty decreased fossil fuel demand, Exxon released a report declaring it "highly unlikely" that governments would enact strong enough policies to affect demand.

But InsideClimate News and others have detailed through internal documents that Exxon's own scientists had warned company officials about the risks it faced from climate change 40 years ago, long before most of the public was aware of the issue.

In response to the growing pressure, Exxon in January appointed a climate scientist, Susan Avery, former director of Woods Hole Oceanographic Institution in Massachusetts, to its board of directors. Only a year ago, Exxon had urged its shareholders to vote against a resolution that the company take precisely this step.

Proponents of this year's climate resolutions modeled them after the December recommendations of a G20 task force, led by former New York Mayor Michael Bloomberg, that greater corporate disclosure on climate risks is needed. (See "Climate Risk Experts: Transparency Should Be Fossil Fuel Companies' New Normal.") The task force of the Financial Stability Board, established by the world's major economies in the wake of the 2008 crash, said that without effective disclosure, markets will be vulnerable to shocks as the costs of climate change become clearer.

Last month, chief executives from 27 large international corporations pledged to adopt the new climate disclosure rules. The Alliance of CEO Climate Leaders includes a number of banks, insurers and consulting firms, as well as cement manufacturer LafargeHolcim, consumer goods giant Unilever and battery and electronics producer Johnson Controls. Together, they have a collective greenhouse gas footprint of 458 million metric tons carbon dioxide, equivalent to the 15th largest emitting country.

"Five years ago, climate wasn't even on the map for fossil fuel companies or investors. And now, disclosure of climate-related financial risks has become a mainstream expectation," said Kathy Mulvey, climate accountability campaign manager for the Union of Concerned Scientists.

"Still, it's going to take public pressure to hold these companies accountable," Mulvey said.

The Oil Industry Pushes Back

The oil industry and its allies are mounting opposition to the growing call for detailed financial reporting with projections on different climate scenarios.

BP, Chevron, ConocoPhillips and Total hired one of the leading energy industry analysts, Daniel Yergin, vice chairman of IHS Markit, to produce an analysis of the potential impact of such reporting. The report warned that the kind of financial disclosure that the Financial Stability Board task force recommended could "obscure material information, create a false sense of certainty, and distort markets. ... This could lead investors to misunderstand opportunities and risks, misprice assets, and forego future returns," the report said.

Oil companies cannot predict the long-term impact of climate and climate policy with enough precision to provide the kind of risk analysis that shareholders are seeking, IHS Markit said. Financial disclosure under securities regulation looks ahead over a much shorter time frame. "For eight decades the overall context of financial disclosure was aimed at providing reasonable investors the information they need to understand their potential returns on investment," Yergin said at a recent forum on the report hosted by the U.S. Chamber of Commerce.

"What's really at issue here is whether it should be a tool of social policy—environmental climate policy," Yergin said.

Investors Worry about Exxon's Long-Term Health

Patrick Doherty, director of corporate governance for the New York State Office of the State Comptroller, which spearheaded the Exxon resolution along with the Church of England, said that climate is a very real financial concern for the employees paying into state pension funds and looking to payouts decades into the future. The New York State Common Retirement Fund, one of the world's largest public employees investment funds, holds more than $1 billion in Exxon stock.

"We have a very, very strong financial interest in the long-term health of the company," Doherty said.

"The average CEO has a tenure of five years, and hedge funds are looking to maybe the next quarter," he said. "Only institutional investors have this longer view. And one of the reasons that support for climate disclosure has been increasing over the years is more and more institutional shareholders are saying, hey, there can be large long-term risk and long-term damage."

Some climate advocacy groups argue that institutional investors should be divesting rather than pushing for disclosure and other changes, which they see as weak responses to the climate crisis. "We don't need Exxon to study how climate change is going to impact its profits; we need them to stop burning fossil fuels. Divest now before it's too late," said Mark Dunlea of PAUSE, an affiliate of the grassroots group 350.org.

New York State Comptroller Thomas DiNapoli has argued active engagement will be more effective in getting companies to change. He called the Exxon shareholder vote an unprecedented victory for investors.

"Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of ExxonMobil," DiNapoli said. "The burden is now on ExxonMobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously."

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The CBO: Working the refs

By Five Thirty Eight

A good rule of thumb in sports is that the team that’s complaining about the referees isn’t the team that’s winning the game. So what should we make of it when one team suggests abolishing referees altogether?

The “referee” in this analogy is the Congressional Budget Office, the nonpartisan agency tasked with evaluating the fiscal and policy impacts of proposed legislation. Republicans, both in Congress and the White House, have loudly criticized the CBO in recent months over its analysis of their health care plan. White House budget chief Mick Mulvaney took that criticism to a new level this week, however, when he implied that it might be time to kill off the CBO, at least in its present form. “At some point, you’ve got to ask yourself, ‘Has the day of the CBO come and gone?’” Mulvaney said to the Washington Examiner.

The source of Mulvaney’s frustration is the CBO’s report last week estimating that the health care overhaul passed by the House would increase the ranks of the uninsured by 23 million people by 2026, among other effects. Republicans dispute those findings, although they are generally consistent with estimates from outside analysts (including, reportedly, those of the agency Mulvaney runs, the Office of Management and Budget).

There is a long, bipartisan tradition of complaining about the CBO. And the agency’s analyses have been far from perfect. It initially overestimated how many people would sign up for the Affordable Care Act’s insurance marketplaces, for example. Overall, however, the CBO’s analysis of Obamacare turned out to be pretty good and better than most private estimates. And despite their carping over specific estimates, congressional leaders of both parties have historically seen an advantage to having an agreed-upon scorekeeper.

In his Washington Examiner interview, Mulvaney implied that the CBO had strayed from its bipartisan roots and was trying to make the Republicans’ health bill look bad. What he didn’t mention is that the CBO’s director, Keith Hall, served in the George W. Bush administration and was chosen by Republican leaders in Congress. Among those leaders was Tom Price, then the chairman of the House Budget Committee, who at the time praised Hall’s “impressive level of economic expertise.” Price, of course, is now secretary of health and human services and is President Trump’s point person on health care reform.

Health care: Changes from within

While Republican plans to repeal and replace the Affordable Care Act simmer in the Senate, the Department of Health and Human Services has been busy drafting its own changes to how the law is carried out. While Congress writes, and possibly repeals, the bills, the interpretation and implementation of the law are largely up to federal agencies. In the case of Obamacare, that means HHS, and under Trump, it has already introduced several changes to the marketplaces that serve people who don’t get insurance from an employer or a public program. Those changes include shortening the enrollment period, allowing insurers to sell plans that pay for fewer services, and giving the private sector more leeway to sell ACA policies. HHS has also encouraged states to apply for waivers that would place work requirements on some Medicaid recipients or allow states to cover some of the costs of the most expensive enrollees.

Now, the department is apparently taking on one of the most controversial, and popular, of the Obamacare rules, the contraceptive mandate. The ACA requires most companies to offer insurance to their employees, and that insurance must cover a wide range of contraceptives with no co-pay or additional charge to enrollees. According to documents obtained by Vox, the draft policy would allow any company to seek a moral or religious exemption from that contraceptive mandate. As a result, more women would likely have to pay out-of-pocket for contraceptives. That would be a step beyond the existing policy, which grants some nonprofits and companies an accommodation — their plans still have to cover contraceptives at no cost to enrollees, but insurers pick up the cost rather than the companies. As Alina Salganicoff, a vice president at the Kaiser Family Foundation, noted, about 10 percent of large nonprofits currently use the accommodation; it’s not clear how many would take advantage of the opportunity to drop birth-control coverage entirely.

Research has shown that the mandate has saved women a lot of money since the ACA passed. Historically, contraceptives have been estimated to make up 30 percent to 44 percent of out-of-pocket health-care expenditures for women. That decreased dramatically with the ACA, saving women who use an IUD or birth control pills around $250 a year. The rule change hasn’t been made official, but the draft shows that HHS has the power to make some pretty substantial changes to the health insurance landscape, regardless of what happens to Obamacare in Congress.

Immigration: Conflicting priorities

The federal budget that the Trump administration released last week relies on projections of economic growth that most experts consider unrealistic. One factor that could make it even harder for Trump to achieve his goals: his own immigration policies.

Trump, of course, ran on a platform of strict immigration enforcement, and he has made good on those promises so far. There has been a dramatic uptick in immigration arrests since Trump took office, and he has requested billions of dollars to improve border security and ramp up immigration enforcement.

Those policies, however, could be taking a toll on the economy. At an event at the Council on Foreign Relations this week, Robert Kaplan, the president of the Federal Reserve Bank of Dallas, said there is anecdotal evidence that immigrants have become more reluctant to spend money. “They are not going out and shopping. They are staying home,” Kaplan said. “They’re afraid if they go out they may not come home.” Kaplan said it’s too soon to see any such trend in the data, but if it’s real, the effect wouldn’t be trivial: Immigrants had over $900 billion dollars in disposable income in 2014. (Kaplan isn’t the only one expressing concern. In April, 1,470 economists signed a letter to the president emphasizing the economic benefits immigration brings the country.)

Kaplan also highlighted another, potentially even bigger issue: the labor force. One reason that economists are so skeptical of the White House’s economic projections is that the American labor force is growing slowly as baby boomers retire and relatively few young workers come of age thanks to Americans’ low birth rates. Without immigrants, though, the situation would be much worse: The Pew Research Center estimates that without immigrants (both those already here and those expected to arrive in coming years), the U.S. workforce would shrink over the next two decades. Some industries that rely substantially on immigrant workers, such as construction and farming, are particularly worried about Trump’s immigration crackdown, though he has insisted enforcement efforts would not harm those industries.

“Immigrants and their children have made up over half the workforce growth in the country over the last 20 years,” said Kaplan said at the CFR event. “So if we do things that limit sensible immigration, we are likely to slow [gross domestic product].”

The environment: Going it alone

On Thursday, Trump formally announced that the U.S. would be withdrawing from the Paris climate agreement — a fact that had essentially been established in March, when he canceled the Obama executive orders that were meant to fulfill our commitments to that agreement. This marks the second time in as many decades that the U.S. has signed on to an international plan to fight climate change, only to later call backsies on the deal. (In 2001, under President George W. Bush, the U.S. pulled out of the Kyoto climate treaty, which had been signed by Bill Clinton’s administration but was never submitted to the Senate for approval.)

Luke Kemp, an Australian social scientist who studies international climate negotiations, saw this coming. Even before Trump was elected, Kemp said in an interview, it was obvious what was going to happen to the Paris deal. American commitment to the deal was based on an executive order, meaning that all it would take to stop complying was for a different president to take office — and even if a Democrat had been elected last year and left the orders in place, it was inevitable that the White House would eventually shift back to the Republicans, who would likely revoke the order. In May of 2016, Kemp published a paper outlining this problem and discussing how the international community might go about crafting future climate agreements that account for American flakiness and could survive without our involvement. He believes his is the first academic paper to deal with this issue, but he doesn’t think it will be the last. “When I wrote the paper, I framed it as an idealistic measure. Highly unlikely. But now it doesn’t seem all that unlikely, does it?” he said.

Kemp expects China and the European Union to take over from the U.S. as the prime movers on climate negotiations and to pursue deals that aren’t predicated on American participation. And that could have big economic consequences for the U.S. That’s because trade penalties are one of the primary mechanisms that international treaties, including environmental agreements, use to prevent countries that don’t participate from freeloading off the work of others. For example, the Montreal Protocol, a 1989 deal to reduce emissions of ozone-depleting chemicals, forbade its signatories from trading in those chemicals with countries that weren’t part of the agreement. In a climate agreement, a similar penalty might require the U.S. to pay carbon-based taxes on any goods we sold to member countries. In other words, the U.S. can free itself from international agreements, but not from international power.

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