Wednesday, 17 February 2010
Viktor Bout “Merchant of Death,” faces new charges in the US, which could complicate US-Russian relations -
Several States With High Unemployment Are Outsourcing Food Stamp Services - To INDIA - 26 states total -
Michele Brown has seen Americans' struggles with jobs first hand. She lives in hard-hit Florida, spent 20 years in the real estate business and recently had her days as a nanny cut back after her boss had his own hours reduced.
But nothing prepared her for what happened one day when she called a toll-free line to inquire about her food stamps.
"The woman who answered the phone -- it's not like she wasn't nice or anything -- but it was kind of evident that she wasn't in the States," Brown said.
It turns out the woman was at a JP Morgan Chase call center in India.
"That really put me over the edge," said Brown, 52, of Jupiter, Fla. "It's not right because we need the work here. People are in a bad way here."
Americans have never liked the idea of jobs going overseas. But for many, it's more offensive when taxpayer dollars -- including those in the federal stimulus plan -- go to create those jobs. And when those jobs deal with food stamps, unemployment insurance and other public benefits, well forgot irony, to many it's just downright plain insulting.
Unemployment in Florida is now 9.7 percent.
"Why is the state of Florida sending these jobs away?" Brown asked. "The thing that really iced it for me, I knew that JP Morgan had gotten bailout funds."
So she called her local politicians and then she reached out to her local newspaper, the Palm Beach Post. The paper did a story two weeks ago about the $50 million Florida paid JP Morgan in the last three years to administer the food stamps distribution.
Those services include 24-hour customer-service call centers. Some of those calls were answered in Bangalore and Gurgaon, India. Others were taken at two U.S. call centers.
The next day the head of the state's Department of Children and Families said something needed to change.
"I don't want any calls going to India," he said. "We need to take care of this."
The state now has a commitment from JP Morgan to move all of its calls to the United States, according to Judi Spann, a spokeswoman for the Department of Children and Families.
Florida isn't alone in sending its customer service calls overseas.
There are three major companies that provide debit cards to food stamp recipients: JP Morgan Chase; eFunds, which is now part of Fidelity National Information Services; and Affiliated Computer Services or ACS.
JP Morgan Chase Sends Calls to India
JP Morgan is the only one today still operating public-assistance call centers overseas. The company refused to say which states had calls routed to India and which ones had calls stay domestically. That decision, the company said, was often left up to the individual states.
ABC News canvassed the country, asking states about their call centers. Often state officials overseeing the programs had no idea, despite past controversies, where their calls were going.
JP Morgan provides food stamp debit cards in 26 states and the District of Columbia. It also provides child support debit cards in 15 states and unemployment insurance cards in seven states.
The 130,000 food stamp families in West Virginia have their calls routed to India, according to Jerry Luck, program director for the state.
"We have no complaints with the call center. We get very good service," he said. "I was born and raised in Pittsburgh. There's sometimes a communication issue between somebody from Pittsburg and somebody from Harrisburg, Pa."
The state's contract with JP Morgan expires on Aug. 31. In requests for a new contract, West Virginia has requested a domestic call center because of political concerns.
The 488,000 households in Tennessee also have their calls sent to JP Morgan call centers in India. The state's contract runs through February 2012 and there are currently no plans to change it, according to Michelle Mowery Johnson, director of communications for state's Department of Human Services.
She noted that there are no federal or Tennessee state laws prohibiting the outsourcing call center operations.
Unemployment in West Virginia is now 6.9 percent and 9.6 percent in Tennessee.
Other states struggled to answer questions about their call center locations.
"Who would have ever thought it would be such a difficult question to answer," said Amy Kempe, spokeswoman for the governor's office in Rhode Island. She eventually learned that JP Morgan was sending the state's food stamps calls to India but now keeps them all domestically.
Kempe later told ABC News however that JP Morgan was still routing calls for unemployment benefits to India. Unemployment in Rhode Island now stands at 10.5 percent.
Following a congressional mandate in 1996, states started moving toward electronic delivery of food stamp benefits, now called Electronic Benefit Transfer or EBT.
States Save by Outsourcing
States found it cheaper to outsource these services. By switching to debit cards for food stamps and other benefits, states save millions of dollars in processing and administrative fees.
Companies, including JP Morgan, filled the niche. For a fee, the bank will provide debit cards to benefit recipients. Each month, they will load money onto the cards and on a daily basis process transactions at stores.
For unemployment insurance, the providers also process ATM cash withdrawals.
For instance, in Michigan, JP Morgan allows unemployment recipients two free withdrawals from its network of ATMs. For each addition withdrawal, the bank takes a $1.50 fee. If somebody loses their card, the first replacement is free. The second costs $7.50.
The banks also get a fee for each case they handle.
Take Indiana. JP Morgan gets 62 to 64 cents for each food stamp case handled monthly there. With 296,245 cases right now, that means the state is paying JP Morgan $183,672 a month on top of any other fees it collects.
Indiana eliminated 100 full-time employees when it hired JP Morgan to make the program cost-neutral, according to Marcus Barlow, spokesman for the state's Family and Social Services Administration.
But unlike Florida, Tennessee or West Virginia, Indiana keeps all its calls domestically. In fact, all of its calls go to a call center in Maryville, Ind., Barlow said, because the state required an in-state call center when soliciting bids.
Other states have rebelled against sending jobs overseas.
South Carolina used to have its calls go to a JP Morgan call center in India. But in its latest contract, signed a year and a half ago, it stipulated that the calls stay domestically.
Indian call-center employees typically earn about $2.50 to $3.50 an hour, roughly 70 percent less than their American counterparts, said Jagdish Dalal, a managing director at the New York-based International Association of Outsourcing Professionals.
Overseas call center sites, he said, can vary from small "mom and pop shops" with 15 employees to mass operations with 3,000 seats.
But Dalal added that companies that engage in outsourcing often end up facing higher costs related to infrastructure because the transportation and electrical systems in the developing countries often home to call centers, like India, aren't as reliable as in the United States.
Despite these obstacles, he said, the savings from outsourcing persists, with companies saving about 25 percent to 30 percent by locating workers in foreign countries.
The Fight Against Outsourcing
In recent years, lawmakers have attempted to curb federal and state governments' use of outsourcing and met with varying degrees of success.
In 2005, New Jersey passed a law essentially requiring all services under state contracts to be performed within the United States.
Since at least 2003, Congress has considered several bills related to outsourcing, including those that would limit the practice as well as one -- the "Call Center Consumer's Right to Know Act" that would require call center operators to disclose their location to callers. The act never became law.
Most recently, Rep. Sue Myrick, R-N.C., proposed a bill stopping banks that receive funding under the government's Troubled Asset Relief Program -- which includes JPMorgan Chase -- from sending new call center jobs overseas. The bill was approved by the House, but did not move on from there.
While JP Morgan would not say what percentage of its calls go overseas, the other two major companies said all of their calls are handled in the United States.
"While we do not comment on specific client contracts, the support for all of our food stamp programs is handled domestically," Ken Ericson, director of corporate communications for ACS, said in an e-mail.
eFunds used to route calls overseas. It was acquired in 2007 by Fidelity National Information Services and now keeps all public-assistance calls domestic, according to Anthony Ficarra, who oversees the electronic benefit transfer program for the company.
Fidelity is the largest food stamp servicer, handling accounts in 31 states. All of the calls go to centers in Wisconsin, Arkansas, Florida and Minnesota.
"We have a large operation in India ourselves, but because of the nature of the programs, we do it all in the U.S," Ficarra said. "For us there's a long-term sensitivity to not handling those things outside the borders of the country."
Obama's Stimulus Weatherization Program - planned 593,000 - actually weatherized 22,000 homes last year -
On the one-year anniversary of President Obama's American Reinvestment and Recovery Act, a new report obtained by ABC News says a $5 billion weatherization program that was meant to save energy and create jobshas not yet done much of either.
As of December 31, only 9,100 homes had been weatherized nationwide, according to the new report by the Government Accountability Office (GAO) to be released Thursday.
The Department of Energy, which runs the program, says it actually weatherized more than 22,000 homes last year with Recovery Act funds. Either way, it's a far cry from the 593,000 they had planned to complete last year.
What's the hold up?
The GAO says the problem is red tape. Before getting the full funding, local governments and contractors have to jump through several hoops.
For example, the Recovery Act included so-called Davis-Bacon requirements for all weatherization grants. Davis-Bacon is a Depression-era law meant to ensure equitable pay for workers on federally funded projects. Under that law, the grants may only go to projects that pay a "prevailing wage" on par with private sector employers.
According to the GAO report, the Department of Labor spent most of last year trying to determine the prevailing wage is for weatherization work, a determination that had to be made for each of the more than 3,000 counties in the United States.
Secondly, many homes have to go through a National Historic Preservation Trust review before work can be started. The report quotes Michigan state officials as saying that 90 percent of the homes to be weatherized must go through that review process, but the state only has two employees in its historic preservation office.
According to the Department of Energy, the pace of weatherization is starting to pick up because the Davis-Bacon issues have now "largely been resolved."
"The states received wage determinations for every county in the U.S. before Labor Day and worked through the process of updating their systems and their wage rates throughout the fall," the Department of Energy said in a written statement.
The statement continued: "The agency is on a path to reach its target of weatherizing 20,000-30,000 homes a month."
Using The Money
The Department of Energy also told ABC News that about $522 million Recovery Act dollars has been spent so far on weatherization -- or about 10 percent of the $5 billion set aside for the program.
But Energy Department officials pointed out that the department weatherization program that pre-dates the Recovery Act and is not subject to Davis-Bacon requirements. Including that program, the Department financed the weatherization of about 124,000 homes in 2009.
"The Department continues to take proactive steps to accelerate the program schedule and ensure the success of the program," the Energy Department statement read. "For instance, we have developed a national agreement on Historic Preservation, which affects many older homes in America. The standardized template is helping to simplify the states' interactions with Historic Preservation Offices."
President Obama and Vice President Joe Biden have repeatedly touted the weatherization program as an example of a stimulus project that will create jobs and move the country toward a new energy future.
"If you allocate money to weatherize homes, the homeowner gets the benefit of lower energy bills. You right away put people back to work, many of whom in the construction industry and in the housing industry are out of work right now. They are immediately put to work doing something," Obama said at an event in Elkhart, Indiana last year. "There are billions of dollars in this plan allocated for moving us towards a new energy future."
A year ago, the administration said that this money would put 87,000 Americans to work through partnerships with the Department of Energy and state and local governments.
In his jobs proposal late last year, the president proposed giving an additional $10 billion for weatherization projects -- create new incentives for consumers who invest in energy efficient retrofits in their homes, and expand existing incentives for businesses that invest in energy efficiency and create clean energy manufacturing jobs.
But Obama administration officials also acknowledged at that time that getting over constraints will determine how fast these weatherization projects can be implemented.
"These are projects that have very high rates of return. They would pay off purely as economic problems, even if there was no energy independence issue, even if there was no environmental issue," Obama's economic adviser Larry Summers said in an interview in December. "So the constraint is not going to be lack of federal budget, the constraint is simply going to be how rapidly these projects can be implemented."
Former Mexican foreign minister calls for ‘North American union’, unified currency - and with open borders -
Prolific Mexican politician and intellectual Jorge Castañeda believes that a greater North American community -- a "North American Union" -- with economies tied together under a European Union-style system, complete with open borders and a unified currency, is the wave of the future.
In a new interview with Web site BigThink.com, Castañeda, Mexico's foreign minister from 2000-2003 and a global distinguished professor of politics at New York University, said that with nearly 11 percent of Mexicans living in the United States, he has stopped seeing his nation as a Latin American country.
"Well, my sense is that we’re moving closer and closer to forms of economic integration with the United States and Canada and conceivably Central America and Caribbean could become part of that in the coming years," he said. "I don’t see Mexico as a Latin American country. Too much of trade, investment, tourism, immigration, remittances, absolutely everything is concentrated exclusively with the United States. So, Mexico has to be part of a North American community, a North American union, which at some point probably should include some type of monetary union along European lines with a free flow of labor, with energy being on the table, etc."
Often demonized as some type of "conspiracy theory" in mainstream American press, the so-called North American Union proposals have actually existed for some time. In May of 2005, the Council on Foreign Relations released a document entitled "Building a North American Community" in which it calls for an EU-like integration of Canada, the United States and Mexico.
While the document does not specifically call for the ceding of sovereignty between the three nations -- as some vocal opponents of the idea have suggested -- it does recommend the formation of a North American Advisory Council and a multinational inter-parliamentary group to facilitate mutual cooperation. Though the group originally set out to achieve this goal by 2010, few in mainstream America are even aware of it today.
The CFR's full proposal is available online. [PDF link]
"Economic and social citizenship in North America implies the ability of citizens to exert pressure for the implementation of an inclusive economic policy at home and to be engaged in the international economy," wrote CFR member Carlos Heredia. "To the extent that citizens of the three partner countries see that North American integration brings concrete benefits, a new constituency will be galvanized to support these efforts in the years to come."
"How far away are we from that?" Castañeda asked, rhetorically. "Quite far, but so did it seem back in Europe in the 1950's and very little time later they came around and understood that that was their future lay. My sense is that the Mexican society is voting with its feet. We have a higher share of Mexicans living in the United States than we have ever had in our history. One out of every nine Mexicans, Mexican citizens, people born in Mexico, live in the United States today."
In recent weeks, Castañeda also appeared on CNN's Amanpour for a debate about the drug war. He explained that in his view, marijuana should be legalized in order to take away the drug cartels' primary revenue source. However, "we can’t do it in Mexico if the U.S. doesn’t do it at the same time," he said.
Speaking to BigThink, he carried a similar message.
"Having recklessly plunged the country into [the drug war] now, I think what Calderón and the United States should do is to sort of sit back for a second, think this through, see what they really want to achieve, what is achievable and what should be done that's new," he said. "For example, there are more and more states in the US that are moving towards decriminalization at least of marijuana. Mexico is still a very important producer of marijuana. Some people say that up to 60 percent of the profits of Mexico’s cartels come from marijuana. Well, if the United States or California’s de facto legalizing it through medical marijuana, what sense does it make for Mexicans to die to stop marijuana from entering the US when once it enters it can be sold legally at over 1,000 dispensaries in Los Angeles, more than the number of public schools there are in Los Angeles. That’s certainly one thing that we can do."
This interview was published to the Web by BigThink.com on Feb. 16, 2010. The complete interview is available here.