Wednesday, February 18, 2009

The Dysfunctional Duo

By Harold Meyerson

We are hemorrhaging jobs just now, but by historic standards, unemployment may look a little low. The official unemployment rate (which understates actual unemployment, to be sure) is at 7.6 percent, a far cry from the 10 percent-plus during the downturn of the early 1980s. In those years, Midwestern manufacturing shed more jobs than it is shedding today. Where's the comparable unemployment now?

It's out there, and then some. Only, it's in East Asia. We've offshored it.

In China, where exports dropped 17.5 percent in January, tens of thousands of factories have closed, and the government estimates that 20 million migrant workers -- rural Chinese who moved to manufacturing zones for the work -- have lost their jobs. Japan, Hong Kong, Singapore and Taiwan all project declines in their gross domestic products this year.

The problem is that East Asia is one big export platform, and its mega-importer -- the United States -- has stopped buying. If the emblematic image of the Great Depression was that of Americans lined up for bread or living in urban shantytowns, the signature image of the current collapse is the acres of Japanese-made cars gathering dust in the immense parking lots abutting the Los Angeles and Long Beach harbors. According to Morgan Stanley economists, exports account for 47 percent of the output of East Asia's developing economies. Here in the United States, consumption accounted for more than 70 percent of our GDP on the eve of our consumer meltdown.

The solution for East Asia, and China in particular, is to change its economic strategy. Instead of relying so heavily on exports, China will have to increase its domestic consumption. It will have to invest in upgrading its infrastructure and establish social insurance programs so that its citizens, instead of hoarding money, will be able to spend more. It will have to allow wage levels to rise, creating a more stable domestic market for its goods.

Devising a successful economic strategy for the United States is a good deal trickier. When our economic elites offshored much of our manufacturing sector to East Asia and other cheap-labor lands, and took arms against union labor here at home, they ensured that most of the American jobs created over the past quarter-century would come in retail and service sectors that paid less than manufacturing. Every year for the past couple of decades, we've added lots more sales-clerk, cashier and fast-food jobs than we've created in high technology or energy. Yet Americans have been able to maintain middle-class living standards -- not through rising income but through rising debt, available to us because China has funneled the immense revenue it amassed selling us goods back to us in the form of loans that we can no longer repay.

At the center of the global meltdown, then, is the misshapen economic codependency of the United States and China. Each has followed a fundamentally unstable economic model, with one nation suppressing wages so that it could export more and the other living on borrowed funds so that it could purchase more. Despite the sharply different roles that each nation carved for itself, though, a shared characteristic allowed them to chart their ultimately disastrous course.

What do the United States and China have in common? They are the only two major economic powers that are resolutely hostile to unions. In China, any unions not controlled by the state are outlawed, which is why so many protests about unpaid wages and the like take the form of riots; there's no legal way to enforce workers' rights. In the United States for the past 30 years, business has been implacably opposed to labor, routinely violating the National Labor Relations Act rather than permitting employees to join unions.

Over the past few years, as global alliances of unions have begun to win agreements with global corporations, there's been one major impediment to such accords. "I always look at the percentage of a company's revenues from two nations, China and the U.S.," says Ron Oswald of the International Union of Food Workers, "in deciding whether to push for an international agreement." That's what happens when worker organizing is all but forbidden.

But suppose that China and the United States did have powerful unions. In China, such unions might have pushed for higher wages, social insurance and more domestic consumption. Here, such unions would have preserved more of a manufacturing sector and boosted wages in the service and retail sectors, so that American consumers could have relied more on income than on credit to make their purchases. The two nations would have had more sustainable economic strategies. And the world economy might not now be plunging into what, so far, appears to be a bottomless pit.

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How Much Will You Benefit From the Stimulus Package?

President Obama will sign the $787 billion stimulus package into law this week, with approximately 35% going towards tax cuts and the rest going towards stimulus spending. Just about everyone stands to benefit from the stimulus in some fashion in the short-term, but a few demographics have an opportunity to reap more gains than others. Here is a list of seven groups of Americans who stand to gain the most from the soon to be enacted stimulus package.

1. Wage Earners & the Self-Employed

Wage earners and the self-employed are eligible for up to $400 a year for single taxpayers and up to $800 for couples filing jointly in both 2009 and 2010. If you are single, the credit starts to phase out at an adjusted gross income of $75,000. If you are part of a couple filing jointly, your phaseout would begin at $150,000 of adjusted gross income. You’re probably wondering when the check will arrive. It won’t. The IRS will begin reducing withholding taxes automatically at the clip of about $30-$40 a month. If you are self-employed, you can claim your credit when you file your return for 2009.

2. First-Time Homebuyers

Thinking of buying your first house? Although the oft-mentioned $15,000 credit for all home purchases was dropped from the final stimulus package, first-time home buyers can still claim a tax credit of up to $8,000 if the home is purchased between January 1st and December 1st of this year. If you purchase between these dates, you won’t have to repay the credit, as those who purchased in 2008 are required to. This is only for primary residences and the house cannot be sold within 3 years in order to keep the credit. Huge bummer for aspiring house flippers.

3. Home-Owners Looking to Improve Home Energy-Efficiency

If you’ve been thinking of adding new windows, an outer door, insulation, or other energy-efficient improvements around the house, this might be a smart year to do so. The max energy-efficiency credit has been raised from $500 to $1,500, and from 10% of the project’s cost to 30%. Additional purchases include energy efficient appliances such as air conditioners and water heaters. Before making a purchase, make sure the product is eligible for the credit.

4. Vehicle Buyers

If you purchase a new car, light truck, SUV, motorcycle, or RV after the package has been signed, you are able to deduct state and local sales or excise tax on the first $49,500 of the vehicle’s cost. This deduction starts to phase out for single taxpayers with adjusted gross incomes over $125,000 and couples over $250,000. You get the deduction whether or not you itemize on your return. If you’re in the market for a plug-in hybrid, you could benefit from a credit of at least $2,500 on up to $7,500.

5. Students

The American Opportunity (formerly known as HOPE) credit for college expenses will increase from $1,800 to $2,500 in both 2009 and 2010. The credit covers 100% of the first $2,000 of tuition and related expenses per year and 25% of the next $2,000. This credit has also been extended from two to four years of college and can now count against book purchases. Credits are phased out for singles earning over $80,000, and married couples earning $160,000.

6. The Unemployed

Have you been laid off recently? Take some solace in knowing that the first $2,400 in unemployment benefits received can now be excluded from income. Additionally, you may also be eligible for a 65% subsidy for up to 9 months if you stay on your former employers health insurance policy. You will also start to receive a $25 weekly increase in your benefit check.

If you’ve been worried that your 26 weeks of unemployment benefits were almost up, you may now benefit from up to an additional 33 weeks through the end of the year. Check with your local unemployment office for further clarification.

7. Middle Classers Scheduled to Get an AMT Tax Hit

Middle classers can expect a $500 increase in the AMT exemption for individuals, to $46,700, and a $1,000 increase for couples, up to $70,950. This temporary fix is thought to free 26 million families from the AMT in 2009.

What’s Next?

The stimulus package has not done much to solve the foreclosure and negative equity problems that the country is facing, and the market has reacted with uncertainty as a result. Many homeowners were hoping an across-the-board interest rate decrease would be worked into the stimulus package and were disappointed to get no relief in this area. The next step for the Obama administration should be to create a plan to help stem foreclosures before they’ve already happened. Meanwhile, how much do you stand to gain from the stimulus package?

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Jury: Rancher didn't violate illegal immigrants' rights

Associated Press

TUCSON, Ariz. — A federal jury found Tuesday that a southern Arizona rancher didn't violate the civil rights of a group of illegal immigrants who said he detained them at gunpoint in 2004.

The eight-member civil jury also found Roger Barnett wasn't liable on claims of battery and false imprisonment.

But the jury did find him liable on four claims of assault and four claims of infliction of emotional distress and ordered Barnett to pay $77,804 in damages — $60,000 of which were punitive.

Barnett declined to comment afterward, but one of his attorneys, David Hardy, said the plaintiffs lost on the bulk of their claims and that Barnett has a good basis for appeal on the two counts on which he lost.

"They won a fraction of the damages they were seeking," Hardy said.

All six plaintiffs are citizens of Mexico, five of whom are living in the United States with visa applications pending, and the sixth resides in Mexico but was allowed into the U.S. for the trial, said Nina Perales, an attorney with the Mexican American Legal Defense and Educational Fund. She declined to say where in the U.S. they're residing.

Perales called the outcome "a resounding victory that sends a message that vigilante violence against immigrants will not be tolerated."

David Urias, attorney for the plaintiffs, said, "Obviously we are disappointed with some aspects of the verdict. But I think that overall this was a victory for the plaintiffs."

For years, Arizona has been the busiest point along the Mexican border for illegal immigrants entering the United States.

For more than a decade, Barnett has been a controversial figure in southern Arizona. He's known for aggressively patrolling his ranch property and along highways and roads in the area, often with his wife and brothers, on the lookout for illegal immigrants.

The plaintiffs alleged that Barnett threatened them with his dog and told them he would shoot anyone who tried to escape.

Barnett's lawyers argued that his land was inundated with illegal immigrants who left trash on his property, damaged his water supply and harmed his cattle.

Barnett's wife and a brother were dismissed as defendants; in addition, 10 more people initially named as plaintiffs were dropped from the proceedings.

Barnett has been known to wear a holstered 9-mm pistol on his hip and upon coming across groups of migrants, to flash a blue and gold badge resembling that of the highway patrol, with the wording "Barnett Ranch Patrol. Cochise County. State of Arizona."

The Barnetts detain and turn over those whom they encounter to the U.S. Border Patrol. In 2006, Barnett estimated that he had detained more than 10,000 illegal immigrants in 10 years.

His actions have resulted in formal complaints from the Mexican government against what it considers vigilante actions, and in several other lawsuits, including one stemming from an October 2004 incident.

In that case, a jury awarded a family of Mexican-Americans on a hunting trip $100,000 in damages, later upheld by the Arizona Supreme Court.

Barnett's 22,000-acre ranch, about five miles north of the Mexican border, includes private and federal lease holdings in addition to nearly 14,000 acres of state-leased land.

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Where is Your Money Going?

The American Recovery and Reinvestment Act targets investments towards key areas that will save or create good jobs immediately, while also laying the groundwork for long-term economic growth. The charts and numbers below give you an idea of where the money is going.

Over the upcoming months, we will provide more information on the distribution of funding by Federal agencies. In order to give small businesses and Americans across the country a chance to apply for recovery dollars to create and save jobs, some funding may not be distributed until this summer. New information on the allocation of funds will be posted on as it becomes available.

Where is your money going- This chart gives you the breakdown of allocations by categories.

* Tax Relief - includes $15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy.

State and Local Fiscal Relief - Prevents state and local cuts to health and education programs and state and local tax increases.

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Dow slips nearly 300 points

By Jack Healy and Matthew Saltmarsh

Financial gloom was everywhere Tuesday.

On Wall Street, the Dow Jones industrial average came within sight of its lowest levels in more than a decade. Financial shares were battered. And rattled investors clamored to buy rainy-day investments like gold and Treasury debt. Markets from Hong Kong to Stockholm to London also staggered lower.

It was a global wave of selling spurred by rising worries about how banks, automakers - entire countries - would fare in a deepening recession.

At the close, the Dow was down more than 297.81 points, at 7,552.60 points, a drop of 3.79 percent. The index was just a few fractions of a point away from its lows of Nov. 20, when financial markets plummeted to their lowest point in a decade. The only Dow stock to trade consistently in positive territory on The only Dow stock to trade consistently in positive territory was Wal-Mart, which rose after reporting better-than-expected profit.

The broader Standard & Poor's 500-stock index slid 37.67 points, or 4.5 percent, to 789.17 points, unable to cling to what analysts said was an important trading threshold.

"If we get substantially below 800 then look out below," said Marc Groz, chief investment officer at Topos, a risk-advisory firm in Greenwich, Connecticut.

The Nasdaq composite index closed 63.70 points lower, down 4.1 percent, at 1,470.66 points.

The downward spiral came as President Obama signed the $787 billion economic stimulus package and executives at General Motors and Chrysler prepared to submit major restructuring plans to the U.S. government after receiving billions in bailout money.

General Motors stock, which was more than $25 last February, was trading lower on Tuesday, at about $2.15 a share. Shares of the Ford Motor, which has not received any bailout funds, were down 5 percent.

Analysts said investors were still nervous about the U.S. Treasury Department's plans to shore up the financial system and help remove billions of dollars in troubled mortgage-related assets from the balance sheets of major banks.

"The administration is great at floating the rumors, but we need concrete plans to back that up," said Ryan Larson, head equity trader at Voyageur Asset Management. "Without any further concreted details, the market's really left to wonder. And in this environment, they wonder the worst-case scenario."

In a sign of further deterioration in the industrial sector, a gauge of manufacturing in New York State fell precipitously in February, reflecting a plunge in new orders, prices and employment. The Empire State Manufacturing Survey, which is calculated by the Federal Reserve in Buffalo, fell to a new low of minus 34.7 in February, from minus 22.2 in January.

"Robust export demand had been the main support for U.S. manufacturing for many months," Joshua Shapiro, chief United States economist at MFR, wrote in a note. "Now, with economic activity weakening sharply around the world, exports are dropping like a stone, with the pace of decline set to accelerate significantly in the months ahead."

In Europe, attention turned to the plight of lenders active in Eastern Europe after Moody's Investors Service said it might downgrade banks with units in the region. Investors are worried about the debts owed by banks in Eastern Europe to financial institutions in West European countries, especially Austria, Belgium, Germany, Greece and Italy.

"The effects of the slowdown are continuing to widen geographically, especially to countries that have been reliant on demand in the West," said Henk Potts, equity strategist at Barclays Wealth in London.

Amid fears about exposure to Eastern Europe, Erste, a bank based in Vienna, lost 7.7 percent. Swedbank, based in Stockholm, fell 3.6 percent, while UniCredit, the Italian bank, lost 5 percent.

The International Monetary Fund has offered loans to Latvia, Hungary, Serbia and Ukraine but there is speculation that it will have to go back into the region and offer more.

"Market sentiment still remains very poor, corporate profits are under pressure and management is expressing a cautious view through 2009," Potts said.

There is also fear among investors that more banks across Europe will require capital injections from governments. In Britain, the focus has been on Lloyds Banking, which has been hobbled buy its forced merger with the stricken mortgage lender HBOS. Lloyds was off 3.2 percent Tuesday, having shed 8.1 percent Monday and 32.5 percent Friday.

The FTSE 100 index in London was down more than 2 percent while the DAX in Frankfurt slid nearly 3 percent.

In Japan, Finance Minister Shoichi Nakagawa said he would resign amid criticism of his bizarre behavior a Group of 7 news conference during the weekend. The Nikkei 225 Stock Average lost 1.4 percent. In Hong Kong, the Hang Seng index closed down 3.8 percent, while South Korea's benchmark Kospi index ended 4.1 percent lower, the biggest fall in the region.

In European trading, the euro pared initial losses as the German ZEW Feb economic sentiment index came in sharply higher than expected, showing the fourth monthly improvement. The index was minus 5.8 from minus 31 in January. It had been expected to fall to minus 28.0. The euro was at $1.2660 before midday in London, up from $1.2801 late Monday.

Separately, a report showed that the British inflation rate fell to a nine-month low in January as the deepening recession and a drop in fuel costs eased pressure on prices. Consumer prices rose 3 percent from a year earlier, compared with a 3.1 percent pace in December. The median of forecasts in a Bloomberg survey was for a rise of 2.7 percent. Prices fell 0.7 percent from December, the most since January 2008.

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Portly Johns

By William Saletan

Photo by Joe Raedle/Getty Images.Humans are getting bigger.

Not taller or stronger, sorry. Just fatter. We're gaining weight and taking up more space. And that means the entire industry of things designed to fit, hold, transport, and dispose of us has to upsize. Starting with toilets.

Agence France Presse has the latest from Australia:

The standard strength of toilet seats is slated to triple, after the national safety watchdog Standards Australia found the maximum unsupported weight capacity of 45 kilogrammes was not enough. Toilet seats will soon have to pass flex and rigidity tests at 150 kilogrammes—"a precautionary measure to accommodate the increasing size of humans," a Standards spokeswoman said.

If your toilet was designed in the era of smaller humans and breaks under the stress of the new normal weight, don't fret. We can get you to the hospital, thanks to bigger emergency vehicles.

The Royal Flying Doctors, Australia's iconic outback air ambulance, is the latest service to supersize, announcing last month that it was seeking larger aircraft to cope with heavier patients. ... The planes will join a fleet of "mega lift" road ambulances already in use in New South Wales. ... More than 1,500 patients have been transported by the special ambulances since 2002, and the number is growing. ...

And if you don't make it to the hospital in time, we'll take care of your corpse,

with the standard coffin size growing from 18 inches (46 centimetres) across the shoulder to 20 inches. Most coffin-makers now stocked a range right up to 32 inches—once considered a "custom order," said [the director of the Australian Funeral Directors Association]. Crematoriums were upgrading their ovens to expand door widths closer to 100 centimetres (40 inches) and gone were the days of a "standard" grave, he said.

So, if you failed to burn off some of that extra fat when you were alive, no worries. We'll burn it off after you're dead. Or we'll put you in an extra-wide burial plot with a matching headstone to help future paleontologists reconstruct the era of wide-body humans.

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For Japan, a Long, Slow Slide

Pedestrians are reflected on a market board in Tokyo. Following a decline of 12 percent in 2007, Japan's stock market is off 11 percent so far this year.
Pedestrians are reflected on a market board in Tokyo. Following a decline of 12 percent in 2007, Japan's stock market is off 11 percent so far this year. (By Katsumi Kasahara -- Associated Press)

Washington Post Foreign Service
Sunday, February 3, 2008; Page A17

TOKYO -- As the United States frets noisily about a recession, Japan is quietly enduring a far more fundamental economic slide, one that seems irreversible.

This country, which got rich quick in a postwar miracle of manufacturing and alarmed Americans by buying up baubles such as Rockefeller Center, is steadily slipping backward as a major economic force.

Fifteen years ago, Japan ranked fourth among the world's countries in gross domestic product per capita. It now ranks 20th. In 1994, its share of the world's economy peaked at 18 percent; in 2006, the number was below 10 percent.

The government acknowledged last month what has long been obvious to economists and foreign investors, if not to the Japanese public and many politicians. The minister of economic and fiscal policy, Hiroko Ota, told parliament that Japan could no longer be described as a "first-class" economy.

"I have a sense of crisis because Japan has not nurtured industries that will grow in the future," said Ota, who offered no specific remedies for the crisis.

Japan is still the world's second-largest economy, as measured by gross size, although the island nation has been surpassed by China in purchasing power. In coming decades, the economies of China and India will dwarf Japan's, according to many projections. By 2050, Japan's economy will be about the size of Indonesia's or Brazil's, according to a study by PricewaterhouseCoopers.

Japan's slide relative to other major economies is not a tabloid tale of suddenly squandered riches. It is rather an insidious petering out of growth, productivity and innovation -- and of political will to stop the slippage.

The slide has dovetailed with another quietly insidious crisis -- the petering out of the population. Japan has the world's highest proportion of elderly people and the lowest proportion of children.

By 2050, population decline will have reduced economic growth to zero, according to the Japan Center for Economic Research. Seventy percent of the country's labor force will have disappeared.

The undertow is already being felt here. Supermarket and department store sales have declined for 11 consecutive years. Toyota now is arguably the world's largest carmaker, but sales of new cars of all brands in Japan peaked 18 years ago and have been falling steadily since then.

Still, with the exception of increasing poverty among the elderly in shrinking rural towns, this remains a remarkably comfortable middle-class country, with good health care and infrastructure and a low crime rate.

Unemployment is at a 10-year low of 3.9 percent, although wages are stagnant or declining. Thanks to six consecutive years of (relatively slow) growth, the panic and deflation that accompanied the bursting of Japan's real estate bubble in the 1990s are gone.

"People here are rich, happy, safe and clean," said Oki Matsumoto, chief executive of Monex Inc., an Internet investment company. They also have more savings in the bank than residents of any other major wealthy country.

And that is precisely the problem, according to Matsumoto and many others who worry about Japan's future.

"Although the situation is not good, because it is not so bad, people from top to bottom remain indifferent," said Minoru Morita, a political analyst in Tokyo. "The leaders in this country don't expect too much and they are very good at adapting to a new environment, even if that means a downward spiral."

Economists here say that although Japan's economy is growing, it is not growing nearly fast enough to keep pace with other countries, especially booming China and much of the rest of Asia.

Japan, in many ways, continues to keep out foreign capital and foreign management. It ranks last in foreign direct investment among the 30 members of the Organization for Economic Cooperation and Development, and second to last in venture capital investment.

Its market for initial public offerings is shrinking because of onerous regulation, according to the Nihon Keizai Shimbun, the country's leading financial newspaper.

As stock markets boomed across the rest of Asia last year, stocks here declined by nearly 12 percent. They are off another 11 percent so far this year. Two major investment firms here say Japan has fallen into recession.

Many foreign investors are pulling their money out of Japan and looking elsewhere for good long-term return, said Hiromichi Shirakawa, chief economist in Tokyo for Credit Suisse.

"Japan has failed to generate any interesting investment themes," he said. "Inside this country there is a very limited sense of urgency."

Shirakawa says there are good reasons to be urgently concerned, even about the one area of Japan's economy that remains relatively strong: manufacturing.

"Over the medium to long term, I think that Japanese manufacturers cannot survive because of international competitive pressures," he said.

In the classes he teaches at Tokyo's Keio University, Shumpei Takemori compares Japan's passive acceptance of economic slippage to that of a frog swimming in a dish of slowly warming water. "Our problem is that the frog is already boiled," said Takemori, a professor of economics. "It doesn't have enough energy to jump."

A jump toward restructuring did occur here after the bursting of the bubble in the 1990s.

Junichiro Koizumi, prime minister from 2001 to 2006, moved more aggressively than any postwar Japanese leader to overhaul the banking system, deregulate big business and open up the economy. His government convinced many investors that "Japan is back," and the stock market rebounded.

But under his successors -- Shinzo Abe and now Yasuo Fukuda -- the momentum for change has stalled. In recent months, there has been re-regulation.

New building codes hobbled the home-building industry, sending housing starts last fall to a 40-year low. New lending regulations created a credit squeeze for small businesses. For the first time since 1990, Japanese companies are increasingly buying each other's shares to stave off acquisition by foreign companies, according to research done by Nomura Securities.

Japan's foreign minister, Masahiko Komura, said last month that the government might consider requiring long-term foreign residents to prove proficiency in speaking Japanese, a suggestion that spooked foreign businessmen here.

Regardless of government policy, some downward drift of Japan from its lofty economic perch is natural and inevitable, according to economists and business leaders.

Japan's spectacular flush of manufacturing wealth after World War II was, in many ways, "lucky," said Matsumoto, the investment company executive, who is a student of Japanese economic history.

"The government took a huge bet on a few strategic industries -- like steel and automobiles -- and it worked," he said. "It took our economy up to second place in the world. It is totally abnormal for a country with 127 million people."

Citing the rise of China and India, Matsumoto says global capitalism is shifting patterns of wealth creation in a way that more closely links a country's gross domestic product with the size of its population.

What concerns political and economic analysts is that many Japanese politicians -- and the voters they represent -- do not understand how wealth is being created in the 21st century.

"The current leadership of Japan came of age during the incredible success after World War II," said Matsumoto. "They think that what worked then will work forever."

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Justice probe may pose 'enormous consequences' for Bush officials

David Edwards and Stephen C. Webster

A Department of Justice report has called into question the entire legal basis of the Bush administration's repeated justifications of abusing prisoners captured in the former president's terror war. According to Monday night's guest on MSNBC's The Rachel Maddow Show, the "consequences" of some of the report's findings could be "enormous" for members of the Bush administration.

A draft of the report from the Office of Professional Responsibility, the department's watchdog unit, was submitted during the waning days of the Bush administration, but former Attorney General Michael Mukasey objected to it, according to a Monday report by Newsweek reporter Michael Isikoff.

"The [Justice Department] report is expected to focus on three former officials of the Office of Legal Counsel, the Justice Department office that advises the executive branch on the interpretation of the law," reports the International Herald Tribune. "They are John Yoo, a Berkeley law professor, now a visiting professor at Chapman University, who was the primary author of opinions on torture while at the counsel's office in 2002; Jay Bybee, now a judge on the U.S. 9th Circuit Court of Appeals, who as head of the office signed the 2002 opinions, which were later withdrawn; and Steven Bradbury, who wrote three more still-secret opinions on interrogation in 2005, when he was the top lawyer in the counsel's office."

Mukasey and his deputy wanted the report to contain responses from Bybee and Yoo, along with Steven Bradbury, chief of the Office of Legal Counsel (OLC), at the time the report was submitted.

The OPR is now working to include the ex-officials' responses before presenting a final version to Attorney General Eric Holder Jr. If Holder accepts the report's findings, it could be forwarded to state bar associations which may choose to disbar the attorneys.

On Monday night's The Rachael Maddow Show, Isikoff took time to shed additional light on the subject, offering several stark possibilities.

"Bush interrogation policy was based on not just shoddy legal analysis, but unprofessional and potentially unethical legal analysis," he said, noting that he has not yet seen the full report.

"But the consequences of such a finding would be enormous," continued Isikoff. "Not just for those lawyers, but for the whole argument of whether there should be a 'truth commission' or continued investigations.

"Remember, the pushback against that has always been, 'Well, there were valid, legal memos from the Justice Department that justified waterboarding.' Now, if these legal memos are called into question, that changes substantially the equation."

The most recent high-profile airing of the justification Isikoff mentions came during CNN's Larry King interview with President Bush, which aired Friday, Feb. 13.

In his interview with CNN's Larry King, Bush said, "Everything we did was -- you know, it had legal -- legal opinions behind it. Look, you're sitting there, you've captured Khalid Sheikh Mohammed. He's the guy that ordered the September the 11th attacks. And we want to know what he knows in order to protect the United States of America. And I got legal opinions that said whatever we're going to do is legal. And my job is to protect you, Larry. And I've given it my all. I've given it my all."

"If it turns out that those memos are bunk, that they might get their authors disbarred or something, does that actually materially change that as a legal defense though, to prosecution?" asked Maddow. "Or does that only change the political calculation about prosecuting?"

"Well, it certainly changes the political calculation," said Isikoff. "And it probably does not change the calculation for say, CIA officers who were relying on these memos. But what's really interesting about this report is -- and this investigation, is -- they just didn't reach a legal conclusion.

"I talked to a number of Bush administration lawyers who'd been questioned as part of this. And they said the OPR investigators who did this report got internal e-mails, internal drafts, of back and forth correspondence with the White House to reconstruct how these memos came to be crafted.

"And if, in fact, it's shown essentially senior officials in the Bush administration at the White House and others were dictating and in collusion with the lawyers with the Justice Department to sort-of predetermine what the outcome was, then, in fact, the look into how these memos, could go elsewhere; It could go beyond just the authors of these memos into the people who ... Into the clients they were seeking to please."

"On his second full day in office, President Barack Obama instructed officials not to rely on any opinions on interrogation issued by the Justice Department since 2001," noted the Herald Tribune.

This video is from MSNBC's The Rachel Maddow Show, broadcast Feb. 16, 2009.

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Florida mom sues Scientology over suicide

A Florida woman charges in a lawsuit that the Church of Scientology contributed to her son's death by denying him access to antidepressants.

The lawsuit filed in Tampa, Fla., contends that 20-year-old Kyle Brennan shot himself in 2007 while with his Scientologist father, who allegedly took away Brennan's medication and tried to put him into a church-oriented drug treatment program.

Brennan wasn't a Scientologist and had been staying with his father, Thomas Brennan, in Clearwater, Fla., for about a week before his death. The lawsuit alleges two other Scientology members convinced Thomas Brennan to lock up his son's medication.

The St. Petersburg (Fla.) Times said Tuesday that church officials denied any role in Brennan's death, saying the defendants weren't Scientology leaders and the incidents all took place off church property.

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Police recover second weapons cache in central MA

AUBURN, Mass.—Police say a 72-year-old Auburn man will face criminal charges after investigators found 85 guns and 800 pounds of ammunition in his home, most of them stored improperly.

Investigators zeroed in on Anthony Simulynas after a Worcester resident who was arrested for illegal possession of military-style explosives and assault weapons said he stole a powerful machine gun from the elderly Auburn resident.

The Worcester Telegram & Gazette reported Monday that charges will be filed against Simulynas after Auburn police officers discuss the case with prosecutors in the Worcester County district attorney's office on Tuesday.

Auburn and Worcester police investigators removed the weapons from Simulynas' home and turned them over to the Bureau of Alcohol, Tobacco, Firearms and Explosives whose agents assisted in the raid on Thursday.

Earlier this month, Paul Mateiko of Worcester was arrested after investigators recovered about 101 firearms, thousands of rounds of ammunition and C4 explosives, blasting caps and other devices, including artillery simulators.

Police detained the 54-year-old Mateiko after firefighters responding to a medical emergency at his home noticed a large cache of unsecured weapons.

Investigators seeking to find out where Mateiko got the weapons later learned that he stole a Maschinengewehr 34, or MG34 -- a German machine gun that was used as the primary infantry machine gun during the 1930s, and remained as the primary tank and aircraft defensive weapon.

The Worcester Telegram & Gazette reports that Simulynas is a former firearms dealer who had his license to carry and sell firearms revoked in 1999.

© Copyright 2009 Associated Press.

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16-year-old girl found dead in Fort Lewis barracks

A 16-year-old girl was found dead at Fort Lewis early Sunday, and a second teen girl was found unconscious in an incident which is raising questions that base officials are not yet prepared to answer.

Seattle Times staff reporter

A 16-year-old girl was found dead at Fort Lewis early Sunday, and a second teen girl was found unconscious in an incident which is raising questions that base officials are not yet prepared to answer.

Fort Lewis spokesman John Norgren said a U.S. Army soldier has been questioned in relation to the incident but at this point has not been arrested or placed in custody. He said the incident is being treated "very seriously" by Fort Lewis' top brass, who are still trying to figure out all the facts.

The girls are both civilian residents of South Puget Sound who are not affiliated with the military in any way, Norgren said.

He said Fort Lewis emergency-response personnel went out on a 911 call placed at 3:30 a.m. The 16-year-old girls, "both unresponsive," were found in a barracks. One was declared dead at the scene by a doctor, while the other was rushed to Madigan Army Medical Center. The second girl was in stable condition today.

The dead girl showed no signs of physical trauma or any other obvious indications of what may have caused her death, Norgren said. Because of that, he said, the Office of the Armed Forces Medical Examiner is expected to conduct an autopsy.

He said the questions of how the girls got onto the secure base — and what they were doing there — are part of the ongoing investigation.

The accommodations on the base are a mix of older, open-bay barracks which house many soldiers and more-modern apartment-style barracks. The modern barracks typically have two or more private bedrooms and shared kitchens and common areas. Fort Lewis is not yet prepared to identify the type of barracks where the girls were found, Norgren said.

Fort Lewis is home to some 30,000 military personnel. It is a closed base, meaning that civilians who want to enter need to show identification at a checkpoint and need a valid reason for coming on to the base.

Fort Lewis put out a news release this afternoon, about 36 hours after the girls were found in the barracks. Norgren said the delay was due to the Presidents Day holiday and the need to notify the dead girl's next of kin.

Norgren said it's hoped the investigation will uncover what corrective action is needed to prevent such a tragedy in the future. "A review of installation policies and procedures is already underway," said a news release issued by Fort Lewis.

Norgren said the investigation is being spearheaded by the Army's Criminal Investigation Division, and that information is being shared with the Pierce County Sheriff's Department. He said he didn't know when more details would be made public.

Nick Perry: 206-515-5639 or

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