Congress to Eliminate Billions in Wall Street Subsidies to Fund Repair of Nation’s Highways

from U.S. Uncut

Both parties of Congress are in agreement on diverting billions in Wall Street subsidies to rebuild America’s crumbling infrastructure. If you’re by a window, look outside for flying pigs.

Currently, the Federal Reserve pays out a 6 percent annual dividend to roughly 2,900 banks — JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo net approximately $350 million apiece each year from the dividend. These banks own stock in the Federal Reserve as a means of becoming members of regional Fed branches around the country, and unlike other stocks, the big banks are guaranteed to never lose money on their investment in the Fed. For years, the Congressional Progressive Caucus has proposed reducing that dividend to 3 percent in order to pay for repairing American infrastructure. After lying dormant for over a year, it appears that idea has now caught on with Republicans as well.

According to Bloomberg, Senate majority leader Mitch McConnell (R-Ky.) recently told a group of Wall Street executives at a Financial Services Roundtable event that he wouldn’t use his power to remove a new rule that allots funding for federal highways by reducing that dividend to 1.5 percent. The House is now weighing whether or not to back the dividend reduction before highway funding runs out at the end of October. Should the proposal go through, America’s highways would benefit from an additional $17 billion in repairs over the next ten years.

Now, Wall Street is in panic mode.

“The idea that going forward that we are going to pay for our nation’s infrastructure on the backs of one industry sector is a really flawed public policy,” said American Bankers Association president Rob Nichols.

While Fed chair Janet Yellen has taken the banks side, saying she believes the policy “could conceivably have unintended consequences,” Washington prognosticators believe the banks will ultimately have to sacrifice their Fed dividend, and possibly more federal handouts further down the road.

“The industry is in a very dangerous spot because it is a pot of gold,” Karen Shaw Petrou, managing partner of Federal Financial Analytics, told Bloomberg. “With the general political climate I don’t know a lot of people on Capitol Hill that like banks.”

The proposal is likely to pass, as past Republican proposals to fund infrastructure repair included a tax repatriation holiday — allowing corporations to bring back some of the $2.1 trillion stashed in overseas tax havens back to the U.S. at a 5 percent rate rather than a 35 percent rate — something President Obama has promised to veto in the past. As I previously wrote in The Guardian, the only result that came out of past attempts at repatriation was mass layoffs of workers, while corporations used the repatriated cash to buy back their own stock, driving up the value of the options owned by executives.

Bad of an idea as it is, repatriation still attracted the support of Wall street-backed Democrats like Chuck Schumer, and corporations have lobbied Rep. Paul Ryan (R-Wisc.), the House Ways and Means chairman, to include repatriation in a tax reform package. However, lawmakers predicting an Obama veto are rejecting the idea of repatriation for now and are gravitating toward a solution for America’s highways they know Obama will sign by the end of the month.

The dividend cut has already been included in the Senate’s compromise bill, which will fund highways over the next 3 years. That bill passed by an almost two-thirds margin in July.

Salt Water vs. Infrastructure

from BoingBoing

Salt water is still winning. Unfortunately.

Remember back during the Fukushima crisis, when you heard a lot of talk about why the people trying to save the plant didn't want to use sea water to cool the reactors? There were a number of reasons for that (check out this interview Scientific American's Larry Greeenemeier did with a nuclear engineer), but one factor was the fact that salt water corrodes the heck out of metal. Pump it into a metal reactor unit and that unit won't be usable again.

Now, the corrosive power of salt water is in the news again — and this time it's ripping through New York City's underground network of subways and utility infrastructure. I like the short piece that Gizmodo's Patrick DiJusto put together, explaining why salt water in your subway is even worse than plain, old regular water:

When two different types of metal (or metal with two different components) are placed in water, they become a battery: the metal that is more reactive corrodes first, losing electrons and forming positive ions, which then go into water, while the less reactive metal becomes a cathode, absorbing those ions. This process happens much more vigorously when the water is electrically conductive, and salt water contains enough sodium and chloride ions to be 40 times more conductive than fresh water. (The chloride ion also easily penetrates the surface films of most metals, speeding corrosion even further.) Other dissolved metals in sea water, like magnesium or potassium, can cause spots of concentrated local corrosion.

Read the full piece at Gizmodo