The New Report: Affirmative Action

By Peter Katel, Oct. 17, 2008

Is it time to end racial preferences?

Since the 1970s, affirmative action has played a key role in helping minorities get ahead. But many Americans say school and job candidates should be chosen on merit, not race. This November, ballot initiatives in Colorado and Nebraska would eliminate race as a selection criterion for employment or college candidates but would allow preferences for those trying to struggle out of poverty, regardless of their race. It’s an approach endorsed by foes of racial affirmative action. Big states, meanwhile, including California and Texas, are still trying to reconcile restrictions on the use of race in college admissions designed to promote diversity. Progress toward that goal has been slowed by a major obstacle: Affirmative action hasn’t lessened the stunning racial disparities in academic performance plaguing elementary and high school education. Still, the once open hostility to affirmative action of decades ago has faded. Even some race-preference critics don’t want to eliminate it entirely but seek ways to keep diversity without eroding admission and hiring standards.

* Has affirmative action outlived its usefulness?
* Does race-based affirmative action still face powerful public opposition?
* Has affirmative action diverted attention from the poor quality of K-12 education in low-income communities?

To read the Overview of this week's report, click here.

To read the entire CQ Researcher Online report, click here. [subscription required]

To buy a PDF of this report, click here.

Coming Up in CQ Researcher

Rescuing the Financial System
In the wake of widespread failures on Wall Street – including the federal bailout of insurance giant American International Group and the bankruptcy of venerable investment bank Lehman Brothers – Congress and the White House have approved spending more than $1 trillion to bail out the troubled financial system and unblock frozen credit markets. But many question whether the bailout will stem the financial crisis that grips not only the United States but the global banking system. Experts also are asking whether the cost to U.S. taxpayers will be excessive, and whether Congress will have to take further action to correct the nation’s systemic financial problems.
By Thomas J. Billitteri

Gun Rights Debates
The Supreme Court gave gun rights advocates a major victory on June 26, recognizing for the first time an individual right under the Second Amendment to own and possess firearms. The 5-4 decision struck down a handgun ban adopted by the District of Columbia in 1976. Gun rights advocates began filing suits the very same day challenging similar bans in Chicago and elsewhere. In his opinion for the court, Justice Antonin Scalia said the decision did not invalidate laws establishing qualifications to buy weapons, limiting the carrying of weapons in “sensitive” places or barring possession by felons or the mentally ill. Gun control groups hope the ruling sets the stage for more reasoned debate over gun regulations by removing the specter of weapons confiscation. But gun owners plan to use the ruling to challenge licensing schemes and urge state legislators to ease restrictions on carrying weapons in public.
By Kenneth Jost

Juvenile Justice
With juvenile crime on the decline, youth advocates are seizing the moment to push for major changes in iron-fisted juvenile justice systems nationwide. Above all, they want to roll back harsh state punishments – triggered by the crack cocaine-fueled crime wave of the late 1980s and early '90s – that diverted adolescents to adult courts and prisons. Today, as a result, an estimated 25 percent of all youth charged with crimes are now tried in adult courts, where judges tend to be tougher and sentences harsher. Many prosecutors say the get-tough approach offers society the best protection. But critics say young people often leave prison more bitter and dangerous than when they went in. Moreover, recent brain studies show weak impulse control in adolescents under age 18, prompting some states to reconsider their tough punishments. But youth advocates concede that any new uptick in juvenile crime could stop such efforts in their tracks.
By Peter Katel

In the News: Credit Card Defaults on the Rise

With losses from credit card defaults on the rise, an increasing number of U.S. banks are holding on to cash and lending to fewer consumers in order to protect against future card losses, according to some of the nation’s largest banks. An increase in the number of consumers unable to pay off their credit cards has put further pressure on banks already suffering from the mortgage crisis fallout. J.P. Morgan Chase said its card loans in default rose 45 percent in the third quarter compared to the same period in 2007. Capital One said it expects its default rates to rise by 7 percent in 2009. Over the past decade, credit card debt has risen by 10 percent while real wages and savings have remained stagnant, implying that Americans have been spending beyond their means and fueling the nation’s economic growth via borrowed money.

To view the entire CQ Researcher Online report, "Regulating Credit Cards," click here. [subscription required]

To buy a PDF of the entire report, click here.

In the News: Russian Energy Executives Eye Alaska

A delegation from the Russian energy company Gazprom met with state officials in Anchorage to discuss possible investments in Alaskan energy projects. Senior officials of Gazprom told shareholders in June the company was seeking to participate in a consortium that is building a natural gas pipeline from Alaska to Canada. Other potential projects being considered by the consortium include the development of hydrocarbon fields throughout the state and environmental protection initiatives. Several close associates of Russian Prime Minister Vladimir Putin attended the meeting. Gazprom is a public company with close ties to the Russian government, and critics say the Kremlin coordinates its international business activities with Russia’s foreign policy agenda.

To view the entire CQ Researcher Online report, "Dealing with the "New" Russia," click here. [subscription required]

To buy a PDF of the entire report, click here.

Overview of the New Report on Affirmative Action

No white politician could have gotten the question George Stephanopoulos of ABC News asked Sen. Barack Obama. “You said . . . that affluent African-Americans, like your daughters, should probably be treated as pretty advantaged when they apply to college,” he began. “How specifically would you recommend changing affirmative action policies so that affluent African-Americans are not given advantages and poor, less affluent whites are?”

The Democratic presidential nominee, speaking during a primary election debate in April, said his daughters’ advantages should weigh more than their skin color. “You know, Malia and Sasha, they’ve had a pretty good deal.”

But a white applicant who has overcome big odds to pursue an education should have those circumstances taken into account, Obama said. “I still believe in affirmative action as a means of overcoming both historic and potentially current discrimination,” Obama said, “but I think that it can’t be a quota system and it can’t be something that is simply applied without looking at the whole person, whether that person is black, or white or Hispanic, male or female.”

Supporting affirmative action on the one hand, objecting to quotas on the other – Obama seemed to know he was threading his way through a minefield. Decades after it began, affirmative action is seen by many whites as nothing but a fancy term for racial quotas designed to give minorities an unfair break. Majority black opinion remains strongly pro-affirmative action, on the grounds that the legacy of racial discrimination lives on. Whites and blacks are 30 percentage points apart on the issue, according to a 2007 national survey by the nonpartisan Pew Research Center.

Now, with the candidacy of Columbia University and Harvard Law School graduate Obama turning up the volume on the debate, voters in two states will be deciding in November whether preferences should remain in effect in hiring and college admissions.

Originally, conflict over affirmative action focused on hiring. But during the past two decades, the debate has shifted to whether preference should be given in admissions to top-tier state schools, such as the University of California at Los Angeles (UCLA) based on race, gender or ethnic background. Graduating from such schools is seen as an affordable ticket to the good life, but there aren’t enough places at these schools for all applicants, so many qualified applicants are rejected.

Resentment over the notion that some applicants got an advantage because of their ancestry led California voters in 1996 to ban affirmative action in college admissions. Four years later, the Florida legislature, at the urging of then-Gov. Jeb Bush, effectively eliminated using race as an admission standard for colleges and universities. And initiatives similar to the California referendum were later passed in Washington state and then in Michigan, in 2006.

Race is central to the affirmative action debate because the doctrine grew out of the civil rights movement and the Civil Rights Act of 1964, which outlawed discrimination based on race, ethnicity or gender. The loosely defined term generally is used as a synonym for advantages – “preferences” – that employers and schools extend to members of a particular race, national origin or gender.

“The time has come to pull the plug on race-based decision-making,” says Ward Connerly, a Sacramento, Calif.-based businessman who is the lead organizer of the Colorado and Nebraska ballot initiative campaigns, as well as earlier ones elsewhere. “The Civil Rights Act of 1964 talks about treating people equally without regard to race, color or national origin. When you talk about civil rights, they don’t just belong to black people.”

Connerly, who is black, supports extending preferences of some kind to low-income applicants for jobs – as long as the beneficiaries aren’t classified by race or gender.

But affirmative action supporters say that approach ignores reality. “If there are any preferences in operation in our society, they’re preferences given to people with white skin and who are men and who have financial and other advantages that come with that,” says Nicole Kief, New York-based state strategist for the American Civil Liberties Union’s racial justice program, which is opposing the Connerly-organized ballot initiative campaigns.

Yet, of the 38 million Americans classified as poor, whites make up the biggest share: 17 million people. Blacks account for slightly more than 9 million and Hispanics slightly less. Some 576,000 Native Americans are considered poor. Looking beyond the simple numbers, however, reveals that far greater percentages of African-Americans and Hispanics are likely to be poor: 25 percent of African-Americans and 20 percent of Hispanics live below the poverty line, but only 10 percent of whites are poor.

In 2000, according to statistics compiled by Chronicle of Higher Education Deputy Editor Peter Schmidt, the average white elementary school student attended a school that was 78 percent white, 9 percent black, 8 percent Hispanic, 3 percent Asian and 30 percent poor. Black or Hispanic children attended a school in which 57 percent of the student body shared their race or ethnicity and about two-thirds of the students were poor.

These conditions directly affect college admissions, according to The Century Foundation. The liberal think tank reported in 2003 that white students account for 77 percent of the students at high schools in which the greatest majority of students go on to college. Black students account for only 11 percent of the population at these schools, and Hispanics 7 percent.

A comprehensive 2004 study by the Urban Institute, a nonpartisan think tank, found that only about half of black and Hispanic high school students graduate, compared to 75 and 77 percent, respectively, of whites and Asians.

Politically conservative affirmative action critics cite these statistics to argue that focusing on college admissions and hiring practices rather than school reform was a big mistake. The critics get some support from liberals who want to keep affirmative action – as long as it’s based on socioeconomic status instead of race. “Affirmative action based on race was always kind of a cheap and quick fix that bypassed the hard work of trying to develop the talents of low-income minority students generally,” says Richard D. Kahlenberg, a senior fellow at The Century Foundation.

Basing affirmative action on class instead of race wouldn’t exclude racial and ethnic minorities, Kahlenberg argues, because race and class are so closely intertwined.

President Lyndon B. Johnson noted that connection in a major speech that laid the philosophical foundations for affirmative action programs. These weren’t set up for another five years, a reflection of how big a change they represented in traditional hiring and promotion practices, where affirmative action began. “You do not take a person who, for years, has been hobbled by chains and liberate him, bring him up to the starting line of a race and then say, ‘You are free to compete with all the others,’ and still justly believe that you have been completely fair,” Johnson said in “To Fulfill These Rights,” his 1965 commencement speech at Howard University in Washington, D.C., one of the country’s top historically black institutions.

By the late 1970s, a long string of U.S. Supreme Court decisions began setting boundaries on affirmative action, partly in response to white job and school applicants who sued over “reverse discrimination.” The court’s bottom line: Schools and employers could take race into account, but not as a sole criterion. Setting quotas based on race, ethnicity or gender was prohibited. (The prohibition of gender discrimination effectively ended the chances for passage of the proposed Equal Rights Amendment [ERA], which feminist organizations had been promoting since 1923. The Civil Rights Act, along with other legislation and court decisions, made many supporters of women’s rights “lukewarm” about the proposed amendment, Roberta W. Francis, then chair of the National Council of Women’s Organizations’ ERA task force, wrote in 2001).

The high court’s support for affirmative action has been weakening through the years. Since 1991 the court has included Justice Clarence Thomas, the lone black member and a bitter foe of affirmative action. In his 2007 autobiography, Thomas wrote that his Yale Law School degree set him up for rejection by major law firm interviewers. “Many asked pointed questions unsubtly suggesting that they doubted I was as smart as my grades indicated,” he wrote. “Now I knew what a law degree from Yale was worth when it bore the taint of racial preference.”

Some of Thomas’ black classmates dispute his view of a Yale diploma’s worth. “Had he not gone to a school like Yale, he would not be sitting on the Supreme Court,” said William Coleman III, a Philadelphia attorney who was general counsel to the U.S. Army in the Clinton administration.

But that argument does not seem to impress Thomas, who was in a 5-4 minority in the high court’s most recent affirmative action ruling, in which the justices upheld the use of race in law-school admissions at the University of Michigan. But even Justice Sandra Day O’Connor, who wrote the majority opinion, signaled unease with her position. In 25 years, she wrote, affirmative action would “no longer be necessary.”

Paradoxically, an Obama victory on Nov. 4 might be the most effective anti-affirmative action event of all.

“The primary rationale for affirmative action is that America is institutionally racist and institutionally sexist,” Connerly, an Obama foe, told The Associated Press. “That rationale is undercut in a major way when you look at the success of Sen. [Hillary Rodham] Clinton and Sen. Obama.”

Asked to respond to Connerly’s remarks, Obama appeared to draw some limits of his own on affirmative action. “Affirmative action is not going to be the long-term solution to the problems of race in America,” he told a July convention of minority journalists, “because, frankly, if you’ve got 50 percent of African-American or Latino kids dropping out of high school, it doesn’t really matter what you do in terms of affirmative action; those kids are not getting into college.”

To view the entire report on CQ Researcher Online, click here. [subscription required]

To buy a PDF of this report, click here.

Regulating Credit Cards

By Marcia Clemmitt, October 10, 2008

Are tougher regulations needed to protect consumers?

As home refinancing dries up as a source of cash for many Americans, credit card debt is rising faster than ever. Seeking to protect consumers from serious debt trouble, Congress is discussing the first significant legal restraints on credit card issuers imposed in many years – and possibly the toughest ever. The banking industry argues that most people don’t get into severe financial distress from credit card spending and that a crackdown on fees and other bank practices could dry up the consumer credit that drives the economy. But some consumer advocates say that the approximately 35 million households behind in payments or over their credit limits demonstrate that tough action is needed – including caps on interest rates. Meanwhile, some economists warn that increasing the earning power of working-class families is the only long-term solution to consumer credit woes.

* Should Congress crack down on credit card industry practices?
* Have credit card issuers unfairly targeted vulnerable populations?
* Is credit card debt bad for the country?

To read the Overview of this week's report, click here.

To read the entire CQ Researcher Online report, click here. [subscription required]

To buy a PDF of this report, click here.

Coming Up in CQ Researcher

Affirmative Action
Affirmative action has sunk deep roots in American higher education, government and business. But tension still runs strong between the ideal of choosing school and job candidate purely on merit, and requirements to factor in other criteria – including race. This November, ballot initiatives in at least two states would eliminate race, but not socioeconomic, preference. And big states including California, Florida and Texas are still struggling to reconcile legal mandates restricting the use of race in college admissions with the goal of increasing diversity. One stumbling block: Affirmative action didn’t lessen the stunning disparities that plague elementary and high school education, disparities that often follow the color line. Still, the open racial hostility that marked opposition to affirmative action decades ago has faded. Even some race-preference critics don’t want to eliminate it entirely. Instead, they’re exploring ways to keep diversity without eroding admission and hiring standards.
By Peter Katel

Financial System Bailout
In the wake of widespread failures on Wall Street – including the federal bailout of insurance giant American International Group and the bankruptcy of venerable investment bank Lehman Brothers – Congress approved a $700 billion bailout proposed by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. But many question whether the bailout will stem the financial crisis that grips not only the United States but the global banking system. Experts also are asking whether the costs of the bailout to U.S. taxpayers would be excessive, and whether Congress will have to take further action to correct the nation’s systemic financial problems.
By Thomas J. Billitteri

Gun Rights Debates

The Supreme Court gave gun rights advocates a major victory on June 26, recognizing for the first time an individual right under the Second Amendment to own and possess firearms. The 5-4 decision struck down a handgun ban adopted by the District of Columbia in 1976. Gun rights advocates began filing suits the very same day challenging similar bans in Chicago and elsewhere. In his opinion for the court, Justice Antonin Scalia said the decision did not invalidate laws establishing qualifications to buy weapons, limiting the carrying of weapons in “sensitive” places or barring possession by felons or the mentally ill. Gun control groups hope the ruling sets the stage for more reasoned debate over gun regulations by removing the specter of confiscation of weapons. But gun owners plan to use the ruling to challenge licensing schemes and to urge state legislators to ease restrictions on carrying weapons in public.
By Kenneth Jost

In the News: Many of World’s Mammals Face Extinction

At least one-quarter of the world's wild mammal species are at risk of extinction, according to a survey of scientists by the International Union for Conservation of Nature. The group's assessment involved 1,700 scientists in 130 countries and took five years to complete. Nearly 80 percent of primates in South and Southeast Asia are thought to face extinction, principally the largest species. A sharp decline in mammals was found across the globe. Threats cited by scientists included habitat devastation across the Tropics, deforestation in Asia, Africa and the Americas and hunting in Asia, Africa and South America. Meanwhile, in an effort to protect the endangered North Atlantic right whale, the U.S. government mandated an 11.5-mph speed limit for ships 65 feet or longer that travel along the Atlantic Coast, where the whales breed and feed.

To view the entire CQ Researcher Online report, "Disappearing Species," click here. [subscription required]

To buy a PDF of the entire report, click here.

In the News: Court Blocks Release of Chinese Muslim Detainees

A federal appeals court blocked the planned release of 17 Chinese Muslims from the U.S. military facility at Guantanamo Bay, Cuba, one day after a lower court ordered their release. The detainees, ethnic Uighurs from a mostly Muslim autonomous region in western China, have been in U.S. custody for seven years. They fled Afghanistan soon after the U.S.-led bombing campaign began, and Pakistani authorities turned them over to the U.S. military. Attorneys for the government said the 17 had engaged in weapons training at an Afghan military training camp. While the government determined in 2004 that the 17 Uighurs were not enemy combatants, it argued that they were not returned to China because of credible fears that they could be persecuted if returned. The Chinese government has asked that its citizens be repatriated and stated that they would not be tortured.

To view the entire CQ Researcher Online report, "Treatment of Detainees," click here. [subscription required]

To buy a PDF of the entire report, click here.

In the News: World Markets Act to Stem Economic Chaos

Leading central banks around the world enacted coordinated interest rate cuts in efforts to counter a global financial crisis. After the sixth straight day of losses in stock markets in the U.S. and amid market downturns in Europe and Asia, the U.S. Federal Reserve, the European Central Bank, the Bank of England and central banks in Sweden and Switzerland all cut their rates by half a percentage point. China, meanwhile, cut 27 basis points off its key interest rate. Following the Fed’s rescue effort, the British Treasury also announced its own nearly $700 billion bank bail-out, but economists fear that it won’t be enough. The International Monetary Fund’s September Global Financial Stability Report puts international losses at $1.4 trillion and says more still needs to be done to prevent worldwide recession.

To view the entire CQ Researcher Online report, "Financial Crisis," click here. [subscription required]

To buy a PDF of the entire report, click here.

Overview of the New Report on Regulating Credit Cards

By Marcia Clemmitt, October 10, 2008


“As I was growing up, I always thought, ‘I don’t want a credit card; if I don’t have the money, I just won’t buy,’” says Edwin Lindo, a senior business major who is student body president at the University of the Pacific in Stockton, Calif. He’d seen his family struggle with some debt and didn’t want to repeat those experiences.

But early in his college career, he faced some big purchases – a laptop computer, for example, and about $500 for books each semester – that changed his mind. Quickly, Lindo found himself with three cards – only one of which he actually intended to apply for – and rising debts. “For a while, I was using all three, but when I got the bills and realized I was paying more for things than I would have paying cash, I didn’t like it at all and realized I was in a very bad position,” says Lindo.

“Right now,” working a part-time campus job that pays $9.50 an hour, “all the money I earn, I’m using to pay off my credit cards,” he says. But Lindo says he worries that his combined student loans and credit card debt will constrict his career dreams. He hopes to attend law school and would like to go into public service, but he fears he’ll have to take a job in a private firm, instead, just because of the better pay.

Consumer debt increasingly plagues Americans, and credit card debt makes up a large portion of that. Between 1980 and 2005, Americans’ annual credit card purchases jumped 25-fold – from $69 billion to $1.8 trillion. And along with the increase have come calls to regulate the credit card industry and end some industry practices that can transform moderate debt into a crushing burden for unwary consumers. Congressional bills introduced this year and in 2007 would ban, among other things, such bank practices as increasing credit card interest rates without notice. For its part, the banking industry argues that only a small percentage of people get into severe financial distress from credit card spending and that the benefits of cashless transactions outweigh the problems.

Overall personal debt – including credit card debt – has risen substantially in recent years. By 2006, says Robert M. Lawless, a professor of law at the University of Illinois, total annual personal income in the United States “was less than our total household debt,” including both mortgage debt and consumer debt such as credit cards. In other words, “if everybody in the country devoted their entire incomes to repayment of our personal debt, we still wouldn’t be able to retire it,” he says.

Moreover, while mortgages make up the biggest chunk of personal debt, in the past two years – as housing prices have dropped and home-equity-backed consumer loans have dried up – credit card debt rose four times as fast as it did between March 2001 and March 2006, says Tim Westrich, a research associate at the liberal think tank Center for American Progress.

Among the approximately 80 percent of U.S. households with at least one credit card, outstanding credit card debt now averages $10,000, says Ronald J. Mann, a professor at Columbia Law Schools in New York City. And only households earning more than $200,000 a year could comfortably pay off that amount of debt in the next billing cycle, he says. Thus, many are carrying so much credit card debt that their ability to respond to sudden needs is limited.

Americans’ median debt levels – the level at which half have more debt and half less – range from Mississippi’s low of $1,098 per individual borrower to Alaska’s whopping $3,384.

And many can’t keep up with those payments. At least 35 million U.S. households are either behind in payments or over the limit on at least one card, says Christopher Viale, president of the Cambridge Credit Counseling Corp. in Massachusetts.

Credit card debt is also instrumental in pushing more low- and moderate-income people into bankruptcy, says Lawless, who estimates 1.1 million American families will file for bankruptcy this year.

Filmmaker Danny Schecter, whose 2006 documentary “In Debt We Trust” traces the web of debt in American society, often asks college audiences how many are in credit card debt. Usually, no one raises a hand at first, he says. Eventually a student will admit to a few thousand in debt, and “suddenly there are topper stories all around the room,” he says. “ ‘I’ve got $10,000.’ ‘I’ve got $100,000.’ “

But many analysts point out that having readily available portable credit is a boon in many ways. “We could not have the kind of society we have” – with the ability to travel and engage in business everywhere and the “flexibility to make quick decisions and act on them financially” – without the current credit card system, says Jeffrey I. Langer, a partner at Chicago-based financial-services law firm Chapman and Cutler.

Credit cards are a big help to merchants, freeing them from the dangers of handling large amounts of cash, for example, he says. And a hotel will accept a credit card rather than a wad of cash for a room because “they can put a hold on your card for a significant amount more than the actual room charge to protect themselves from your unexpectedly using a lot of paid services that run the bill from $400 to $900,” he says.

Indeed, some analysts say, Congress risks mucking up the credit card market with ill-considered regulations.

Free competition, largely unfettered by prescriptive rules, has allowed the industry to develop cards that consumers want, says Langer. People who pay late, for example, have seen their penalties rise from around $10 a decade-and-a-half ago to $35 to $40 today, but raising those fees has allowed companies to reduce charges elsewhere, such as lowering interest rates for people who pay on time, he argues.

But others say current card practices allow or even encourage too many people to get into trouble. “Right now there is virtually no regulation of the substantive terms of credit cards,” says Adam Levitin, an associate professor of law at Georgetown University.

Industry practices that consumer advocates call troublesome include:

* charging customers with late fees for payments that arrive on the due date but after an arbitrary cutoff hour, which can be as early as 9 a.m.;
* raising interest rates suddenly and with no stated reason for customers in good standing;
* applying new higher interest rates to existing balances, not just future purchases; and
* requiring customers to bring disputes before professional arbitrators rather than the courts – even when the disputed debt may have resulted from identity theft.

“Arbitrators have a strong financial incentive to rule in favor of the companies . . . because they can make hundreds of thousands of dollars a year conducting arbitrations,” according to the consumer group Public Citizen.

Card issuers and free-market economists generally prefer greater disclosure of credit terms instead of more rules. But “the evidence [shows] disclosure is just not working,” says Lawless, who recommends “substantive” regulation. “We need to look seriously at some form of interest-rate cap,” he says, similar to the 36 percent cap on consumer-loan interest that Congress approved for the military in 2006.

The more vulnerable segments of the population – the poor and unsophisticated borrowers such as students – increasingly are offered credit cards.

The use of credit cards has steadily increased, with most of the recent jump occurring in lower-income households. “Credit card companies have become really good at exploiting people’s irrationality,” says Michelle J. White, a professor of economics at the University of California at San Diego. “They know that if they get the card into your pocket, you’ll use it, even if you think you won’t.” Then, “once you do something like pay late, you get put into a riskier group,” your interest rate and fees rise, and the debt becomes much more difficult to repay, she says.

Extending more credit to poorer people has gone hand in hand with another troubling trend, says White. “People filing for bankruptcy have become poorer and poorer,” she says. “The average person filing for bankruptcy now is well below median income,” a significant change from 20 years ago. “And that’s not surprising, with more credit available. Once you’ve built up a big balance, you can’t pay it off.”

But others dispute that expansion of credit card use has harmed low-income groups. If credit cards weren’t easily accessible, many would borrow anyway, using far riskier loan sources, such as payday lenders, said Todd Zywicki, a professor at George Mason University School of Law, in Fairfax, Va. The percentage of the lowest-income households “in financial distress” has been largely constant since 1989, he said.

To view the entire report on CQ Researcher Online, click here. [subscription required]

To buy a PDF of this report, click here.

New Report: Protecting Wetlands

By Jennifer Weeks, October 3, 2008

Is the government doing enough?

The nation’s millions of acres of wetlands are valuable natural resources. Ponds, lakes, swamps, bogs, bays and marine estuaries not only shelter countless fish, birds and animals but also filter pollutants from water and soak up floodwaters. Since the United States was settled, more than half of its wetlands have been lost, and crucial areas like Louisiana’s coast and the Florida Everglades are eroding daily. Although the U.S. is now gaining more wetlands every year than it is losing, scientists say too many acres of crucially needed wetlands are still being lost. For several decades national policy has called for protecting wetlands, but the powerful construction, energy and agriculture industries say current environmental regulations make projects too expensive. Conservationists, sportsmen and many state officials argue that stronger regulations are still urgently needed. Meanwhile, recent Supreme Court decisions have intensified debate over how broadly the federal government can oversee activities affecting wetlands.

* Does the Clean Water Act protect most wetlands?
* Are federal agencies doing enough to protect wetlands?
* Does mitigation work?


To read the Overview of this week's report, click here.

To read the entire CQ Researcher Online report, click here. [subscription required]

To buy a PDF of this report, click here.

Coming Up in CQ Researcher

Credit Card Crunch
As home refinancing dries up as a source of cash for many Americans, credit card debt is rising again. Seeking to head off the serious debt trouble some consumers get into, Congress is discussing the first significant legal restraints on credit card issuers imposed in many years – and possibly the toughest ever. How big an issue is credit card debt in the financial troubles of individuals and in the overall economic meltdown? Will a congressional crackdown on credit card company practices keep people out of the most serious debt problems, or are even bigger solutions called for?
By Marcia Clemmitt

Affirmative Action
Affirmative action has sunk deep roots in American higher education, government and business. But tension still runs strong between the ideal of choosing school and job candidate purely on merit, and requirements to factor in other criteria – including race. This November, ballot initiatives in at least two states would eliminate race, but not socioeconomic, preference. And big states including California, Florida and Texas are still struggling to reconcile legal mandates restricting the use of race in college admissions with the goal of increasing diversity. One stumbling block: Affirmative action didn’t lessen the stunning disparities that plague elementary and high school education, disparities that often follow the color line. Still, the open racial hostility that marked opposition to affirmative action decades ago has faded. Even some race-preference critics don’t want to eliminate it entirely. Instead, they’re exploring ways to keep diversity without eroding admission and hiring standards.
By Peter Katel

Financial System Bailout
In the wake of widespread failures on Wall Street – including the federal bailout of insurance giant American International Group and the bankruptcy of venerable investment bank Lehman Brothers – Congress was poised to approved a $700 billion bailout proposed by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. But even as the plan was moving toward apparent approval, many were questioning whether the bailout would stem the financial crisis that grips not only the United States but the global banking system. They also were asking whether the costs of the bailout to U.S. taxpayers would be excessive, and whether Congress will have to take further action to correct the nation’s systemic financial problems.
By Thomas J. Billitteri

In the News: Senate Approves Bailout Bill

The Senate approved a $700 billion bailout to help resuscitate the battered U.S. economy; the House was scheduled to take up the proposal on Oct 3. Meanwhile, troubling economic news at home and abroad continued. The U.S. auto industry reported selling less than a million new cars and trucks in a month for the first time in 15 years. The industry says the lack of loans and financing options kept many prospective buyers away, and that the drop in sales could worsen if something is not done to bolster the market. Colleges and universities across the country also braced for economic instability as Wachovia announced that it was freezing a $9.3 billion fund that it managed for nearly 1,000 schools. Wachovia froze the fund in an attempt to maintain liquid assists while preparing for its merger with Citigroup, making it difficult for some schools to meet payrolls for faculty and staff.

To view the entire CQ Researcher Online report, "Financial Crisis," click here. [subscription required]

To buy a PDF of the entire report, click here.

In the News: Justice Releases Findings on Firings of Federal Prosecutors

The Justice Department reported finding new e-mail messages that hinted at heightened involvement of White House lawyers and political aides in the firing process of nine federal prosecutors. However, according to the DOJ’s investigation on the political firings two years ago, they were unable to get answers to all their questions because key officials, including former presidential aide Karl Rove and former White House counsel Harriet Miers, declined to be interviewed and the White House refused to release documents. The firings occurred when Roberto Gonzales was Attorney General, and initial Congressional hearings into the matter eventually lead to his resignation. Attorney General Michael B. Mukasey recently named a veteran public-corruption prosecutor, Nora R. Dannehy, to continue the investigation, directing her to give him a preliminary report on the status of the case in 60 days.

To view the entire CQ Researcher Online report, "Prosecutors and Politics," click here. [subscription required]

To buy a PDF of the entire report, click here.

Overview of the New Report on Protecting Wetlands

On wet, spring nights across the Northeastern United States, wood frogs and salamanders go on the march. These amphibians spend most of their lives buried in forest undergrowth, but they need to breed in watery places where no fish will eat their eggs. So they migrate to vernal pools – ponds that form during the wet seasons and range from a few feet to several acres across. If all goes well, their offspring will hatch and grow large enough to breathe air before the pools dry up in summer. Some species, such as fairy shrimp, spend their entire life cycles in the pools, leaving eggs behind that stay dormant through dry months and hatch when the pools reappear a year later.

Vernal pools are wetlands – areas where the soil is always or usually saturated with water and that support plants and animals adapted to moist conditions. Many states protect vernal pools because they provide habitat for rare animals. For example, in Massachusetts it is illegal to dump materials into state-certified vernal pools, install septic systems nearby or cut down more than half of the trees within a 50-foot radius.

Other wetlands play similar roles. Estuaries (mixed salt- and freshwater zones where rivers flow into the sea) are among Earth’s most productive ecosystems.

“Shallow marsh channels are important habitat for fish,” says Doug Myers, science director of People for Puget Sound, a Seattle conservation group. “Chinook salmon rear their young in estuarine deltas, coves and lagoons in the Northwest. And birds migrating along the Pacific Coast stop to feed along the mud flats.”

Many wetlands that are far from coastlines also are important. For example, lakes carved by glaciers across the upper Midwest, known as prairie potholes, are critical breeding and nesting areas for millions of ducks, geese and other waterbirds.

Until the 1970s Americans widely regarded wetlands as swampy places that were useless unless they could be drained or filled in. Before settlers arrived, the continental United States contained more than 220 million acres of wetlands. Today less than half of that area (107 million acres) remains. Some of America’s most famous and valued wetland areas, such as Florida’s Everglades and Louisiana’s Gulf Coast, are also its most degraded.

For the past 20 years policymakers have tried to prevent more net losses of wetlands. President George W. Bush raised the bar in 2004, arguing that the United States could achieve net annual increases by creating and restoring more acres than it developed. But environmentalists, outdoor advocates and regulators say that not all wetlands are equal, and that more action is needed to protect and restore high-quality wetlands.

“We see a lot of threats to wetlands around Puget Sound, including urban growth, shoreline development and polluted stormwater runoff from paved areas,” says Myers. “It’s death by a thousand cuts.” Nutrient pollution from farms (excess fertilizer and animal waste) and septic systems washes into lakes and bays nationwide, generating huge algae blooms that deprive aquatic organisms of sunlight and dissolved oxygen.

And many advocates fear that recent U.S. Supreme Court rulings limiting federal jurisdiction over wetlands have made some more vulnerable to development.

Wetland protection affects a range of industries that often excavate or drain land, including commercial and residential construction, agriculture, mining and energy. Under Section 404 of the Clean Water Act, when a project involves dredging or filling in the “waters of the United States” – a category that includes many wetlands – a permit must be obtained from the U.S. Army Corps of Engineers. The Corps then must consult with the Environmental Protection Agency (EPA), which has veto power over permit decisions.

This process can be lengthy and expensive. A 2002 study of 103 permit applications found that the average general permit for lower-impact activities cost $28,915 to prepare and took 313 days to gain approval. Individual permits for higher-impact projects cost $271,596 on average and took more than two years. Developers who proceed without permits face civil penalties of up to $32,500 per day and criminal penalties up to $50,000 per day plus three years in prison.

Many trade groups say they support reasonable wetlands protection but that current standards are too broad and the permitting process too cumbersome. “While [the permits’] environmental purposes are laudable, they do add to the cost and delay the completion of the public and private infrastructure that literally forms the foundation of our nation’s economy,” Associated General Contractors of America CEO Stephen E. Sandherr told the House Transportation and Infrastructure Committee in July 2007. Contractors, growers and other such groups would like to see the Corps and EPA eliminate or limit federal protection for small, isolated and temporary wetlands.

But environmentalists argue that destroying wetlands could end up costing the country much more, because wetlands provide billions of dollars worth of ecological services that benefit the public. Often referred to as “nature’s kidneys,” they filter out pollutants from water and trap suspended particles. They also absorb flood waters and release them slowly, like natural sponges. According to one estimate, wetlands cover less than 3 percent of Earth’s surface but provide up to 40 percent of annual, renewable ecosystem services such as purifying water and cycling nutrients.

After Hurricane Katrina caused at least $125 billion in damages along Louisiana’s Gulf coast in September 2005, several studies indicated the storm surge would have been lower if large swathes of coastal wetlands had not been obliterated by Mississippi River flood-control projects and coastal oil and gas development. In 2007 Louisiana approved a master plan for protecting and restoring its coast that, if fully funded, is expected to cost more than $50 billion and take up to 30 years to complete.

Since the 1980s regulators have used a process known as “mitigation” (preserving, enhancing or creating wetlands to compensate for destroying others) as a tool to balance wetland conservation and development. Initially, owners who wanted to fill in wetlands had to do mitigation projects on the same site or nearby. To make the process more flexible, however, agencies developed mitigation banking, in which developers buy credits from a wetland “bank” (acres restored by a third party) to compensate for acres that they drain or alter.

The National Mitigation Banking Association, a trade group, calls mitigation banking “a unique concept . . . that unites sound economic and environmental practices.” But skeptics say the process often helps developers rather than maximizing the quality of U.S. wetlands.

“If a developer fills in wetlands for an urban project and restores something 50 miles away, flooding may be caused in the city where the wetlands used to be. There’s no net loss of wetlands, but you have a big loss of [ecological] value” says Jon Kusler, associate director of the Association of State Wetland Managers (ASWM).

To view the entire report on CQ Researcher Online, click here. [subscription required]

To buy a PDF of this report, click here.