California Free Press

Monsanto Polluted San Diego with PCBs and GMOs

by John Lawrence from the San Diego Free Press

PCBs Pervade San Diego Bay

A San Diego group of attorneys is suing Monsanto to get millions of dollars for remediation projects to clean up San Diego Bay. Polychlorinated Biphenyls (PCBs) have been linked to cancer, neurological damage, thyroid problems and reproductive complications. Monsanto is all about the profits even when it has knowledge that what it's selling is poison. Cases have been filed in Federal Court in San Jose, Oakland and Spokane in addition to San Diego. Dozens more cities across America may soon follow suit.

Municipalities have been forced to shell out millions to clean up rivers, creeks and bays. It has been established that fishing in such places and consuming those fish is dangerous to human health. PCBs have shown up in breast milk and sea lions among other places. They are ubiquitous in our environment.

Monsanto marketed the PCBs under the trade name Aroclor. The chemicals accumulate in fish that are devoured by humans with the result that almost everybody who eats fish has a certain amount of PCBs in their system. PCBs were used in electrical equipment, highway paint, caulk and many other products. Monsanto's position is that, if their product was improperly disposed of, it was not their fault. Under California's public nuisance laws, however, a company may be held responsible if it knowingly marketed a product even though it knew it was hazardous.

Monsanto officials knew as early as 1969 that Aroclor was dangerous, but decided to keep manufacturing and marketing it anyway in order to increase profits. Their official discussions went so far as to say that Aroclor was likely a "global contaminant." Monsanto employees had thrown fish into a heavily contaminated creek and discovered that they started bleeding and losing their skin in about 10 seconds.

The Oakland city attorney said that the chemical giant "chose profits over people, and American cities and citizens are still suffering the consequences."

Robert Reich Nails Monsanto's Modus Operandi

In an excellent book, Saving Capitalism (For the Many, Not the Few), Robert Reich has a great section on Monsanto. I, therefore, give over the rest of this article to a quotation from this book:

Monsanto, the giant biotech corporation, owns the key genetic traits in more than 90 percent of the soybeans planted by farmers in the United States and 8o percent of the corn. Its monopoly grew out of a carefully crafted strategy. It patented its own genetically modified seeds, along with an herbicide that would kill weeds but not soy and corn grown from its seeds.

The herbicide and herbicide-resistant seeds initially saved farmers time and money. But the purchase came with a catch that would haunt them in the future: The soy and corn that grow from those seeds don't produce seeds of their own. So every planting season, farmers have to buy new seeds. In addition, if the farmers have any seeds left over, they must agree not to save and replant them in the future. In other words, once hooked, farmers have little choice but to become permanent purchasers of Monsanto seed. To ensure its dominance, Monsanto has prohibited seed dealers from stocking its competitors' seeds and has bought up most of the small remaining seed companies.

Not surprisingly, in less than fifteen years, most of America's commodity crop farmers have become dependent on Monsanto. The result has been higher prices far beyond the cost-of-living rise. Since 2001, Monsanto has more than doubled the price of corn and soybean seeds. The average cost of planting one acre of soybeans increased 325 percent between 1994 and 2011, and the price of corn seed rose 259 percent. Another result has been a radical decline in the genetic diversity of the seeds we depend on. This increases the risk that disease or climate change might wipe out entire crops for years, if not forever. A third consequence has been the ubiquity of genetically modified traits in our food chain. At every stage, Monsanto's growing economic power has enhanced its political power to shift the rules to its advantage, thereby adding to its economic power.

The Fight to Label GMOs

Beginning with the Plant Variety Protection Act of 1970, and extending through a series of court cases, Monsanto has gained increased protection of its intellectual property in genetically engineered seeds. It has successfully fought off numerous attempts in Congress and in several states to require labeling of genetically engineered foods or to protect biodiversity. It has used its political muscle in Washington to fight moves in other nations to ban genetically engineered seed. To enforce and ensure dominance, the company has employed a phalanx of lawyers. They've sued other companies for patent infringement and sued farmers who want to save seed for replanting. Monsanto's lawyers have also prevented independent scientists from studying its seeds, arguing that such inquiries infringe the company's patents.

You might think Monsanto's overwhelming market power would make it a target of antitrust enforcement. Think again. In 2012, it succeeded in putting an end to a two-year investigation by the antitrust division of the Justice Department into Monsanto's dominance of the seed industry. Monsanto has the distinction of spending more on lobbying—nearly $7 million in 2013 alone—than any other big agribusiness. And Monsanto's former (and future) employees frequently inhabit top posts at the Food and Drug Administration and the Agriculture Department, they staff congressional committees that deal with agriculture policy, and they become advisors to congressional leaders and at the White House. Two Monsanto lobbyists are former congressman Vic Fazio and former senator Blanche Lincoln. Even Supreme Court justice Clarence Thomas was at one time an attorney for Monsanto. Monsanto, like any new monopoly, has strategically used its economic power to gain political power and used its political power to entrench its market power.

It's useful to view the strategy of the new monopolists as integrating economic and political dominance. They acquire key patents and then spend vast sums protecting them and charging others with patent infringement. In addition, they use mandatory licensing agreements to require potential competitors to use whole lines of their products and prevent customers from using competing products, thereby creating de facto industry standards. Favorable court rulings, advantageous laws, and administrative decisions to forgo antitrust lawsuits or bring them against competitors extend these de facto standards to entire sectors of the economy. [end quote]

And so, dear reader, we live in a world in which large corporations feel free to pollute and despoil the environment including the food we eat because they have not only market dominance but because they have political dominance as well. The revolving door between government and corporations swings ever so easily, the hinges are well lubricated. Congresspersons and their staff have easy access to lucrative jobs once they have established their contacts on the inside. They just have to lobby their old friends on behalf of Monsanto and other large corporations giving them a free license to pollute and purvey dangerous products. The hallmark of these products is not that they will kill you immediately like the poor fish that Monsanto employees threw into a PCB polluted river, but that the symptoms will show up as cancer and other related diseases years later when Monsanto can no longer be linked to those outcomes.

More Bad News for Monsanto

The Organic Consumers Association (OCA), IFOAM International Organics, Navdanya, Regeneration International (RI), and Millions Against Monsanto, joined by dozens of global food, farming and environmental justice groups announced December 4th, 2015 that they will put Monsanto on trial for crimes against nature and humanity, and ecocide, in The Hague, Netherlands, next year on World Food Day, October 16, 2016.

Vandana Shiva, physicist, author, activist and founder of Navdanya, and member of the RI Steering Committee said: “Monsanto has pushed GMOs in order to collect royalties from poor farmers, trapping them in unpayable debt, and pushing them to suicide. Monsanto promotes an agro-industrial model that contributes at least 50 percent of global anthropogenic greenhouse gas emissions. Monsanto is also largely responsible for the depletion of soil and water resources, species extinction and declining biodiversity, and the displacement of millions of small farmers worldwide.”

Andre Leu, president of IFOAM and a member of the RI Steering Committee, said: “Monsanto is able to ignore the human and environmental damage caused by its products, and maintain its devastating activities through a strategy of systemic concealment: by lobbying regulatory agencies and governments, by resorting to lying and corruption, by financing fraudulent scientific studies, by pressuring independent scientists, and by manipulating the press and media. Monsanto’s history reads like a text-book case of impunity, benefiting transnational corporations and their executives, whose activities contribute to climate and biosphere crises and threaten the safety of the planet.”

Get set for an epic battle between a corporation that is destroying the planet and those who are pushing back against this monstrous corporate behemoth.

ALEC - Centralized Conservative Legislative Clearinghouse

by John Lawrence from San Diego Free Press

Why hire individual lobbyists and send them out in search of Congressmen when you can set up a lobbying clearinghouse and have them come to you? ALEC, the American Legislative Exchange Council, does just that. Funded by the likes of the Koch brothers, Exxon Mobil and PhRMA, a trade association for the pharmaceutical industry, legislators are paid  to come to ALEC meetings, where they are wined, dined, and handed "model" legislation to make into law in their state. Through ALEC, corporations vote on "model" legislation alongside politicians behind closed doors. So instead of the lobbyists fanning out on Capitol Hill to meet with Congressmen individually, public officials are invited en masse to an ALEC meeting off Capitol Hill at a fancy resort, and they had better be there or be square if they want a campaign contribution or a great job when their "public service" career comes to an end.

Foundations controlled by the billionaire Koch brothers gave ALEC over $200,000 in 2009. And that's in addition to the undisclosed amount paid in membership dues by Koch Industries. The Koch foundations have given ALEC at least $600,000 in the past decade or so, and Koch Industries has donated an untold amount. There are also a number of other right wing moneybags contributing to ALEC. The Castle Rock Foundation, which is run by right wing beer heir Peter Coors and the right wing John M. Olin Foundation have also been donors to ALEC. Another of the big right wing foundations, the Lynde and Harry Bradley Foundation, has been a funder as well as right winger Richard Scaife. 

ALEC brings legislators and their families, rich indivduals and corporations together at luxury resorts. For a few hours of work on a task force and a couple of indoctrination sessions by ALEC experts, part-time legislators can bring the whole family to ALEC’s annual convention, work for a few hours, then stay in swank hotels, attend cool parties and raise funds for the campaign coffer, all heavily subsidized by the corporate till. In 2009, ALEC spent $251,873 on childcare so Mom and Dad could have fun. The legislators from all levels - local, state and national - are then handed model legislation which the legislators then take back home to their districts where they present it as having been crafted by themselves instead of by corporate lawyers. ALEC makes old-fashioned lobbying obsolete. Once legislators return to their state with corporate-sponsored ALEC legislation in hand, the legislators themselves become “super-lobbyists” for ALEC’s corporate agenda, cutting out the middleman. The fusion of politician and lobbyist is complete.

A lot of this legislation then gets passed in states that are controlled by Republican governors and legislators. For instance, in Michigan the legislature just passed a so-called right-to-work law which basically defunds unions. Right to work laws ban mandatory union dues. Unions are one of the biggest funders of Democrats so taking money away from union coffers essentially helps more Republicans get elected.

In Wisconsin Republican Governor Scott Walker tried to strip unions of their collective bargaining rights. After much ballyhoo and a recall election, Walker was able to retain his position although much of his union busting efforts were struck down by a state judge. To give you some idea of the influence that ALEC has in Wisconsin read the following:

• 32 bills or budget provisions reflecting ALEC model legislation were introduced in Wisconsin’s 2011-2012 legislative session;
• 21 of these bills or budget provisions have passed, and two were vetoed;
• More than $276,000 in campaign contributions were made to ALEC legislators in Wisconsin from ALEC corporations since 2008;
• More than $406,000 in campaign contributions were made to ALEC alumnus Governor Walker from ALEC corporations over the same time period for his state campaign account;
• At least 49 current Wisconsin legislators are known ALEC members, including the leaders of both the House and Senate as well as other legislators holding key posts in the state. Additionally, the Governor, the Secretary of the Department of Administration, and the Chairman of the Public Service Commission are ALEC alumni; and
• At least 17 current legislators have received thousands of dollars of gifts cumulatively from ALEC corporations in the past few years, in the form of flights and hotel rooms filtered through the ALEC “scholarship fund” (complete “scholarship” information is not available).

ALEC’s 2010 annual meeting was held in San Diego at the Manchester Grand Hyatt resort. In California the main ALEC affiliate is the State Policy Network of which the San Diego Institute for Policy Research founded by Steve Francis is a member. Francis unsuccessfully ran for mayor in 2005 as a fiscal conservative against former San Diego Chief of Police Jerry Sanders and Councilwoman Donna Frye. Francis ran again in 2008 against incumbent Jerry Sanders. The San Diego Institute for Policy Research (which now resides at National University) is an ALEC affiliate, according to Daily Kos and generates economic and policy research with regard to the San Diego region. Francis serves on the Board of Advisors for the Institute.

San Diego just escaped an ALEC invasion when Bob Filner beat Carl DeMaio for mayor. According to Jim Miller:

"[The Center on Policy Initiatives report, 'Target San Diego: The Right Wing Assault on Urban Democracy and Smart Government' by Lee Cokorinos] carefully documents the intricate web of connections between the corporate-funded think tanks at the national, state and local level. Some of the key organizations include the aforementioned Americans for Tax Reform, Freedom Works and the American Legislative Exchange Council at the national level; the Project for California's Future, the Pacific Research Institute, the Claremont Institute and the Reason Foundation at the state level; and the Performance Institute [founded by Carl DeMaio] here in San Diego."

Miller goes on:

"In California, privatization advocates at think tanks like the Pacific Research Institute and the Claremont Institute argue that, according to Cokorinos, "a key political objective for the right wing is to compel states and localities to compete with one another in a frenzy of deregulation and privatization that will supposedly attract investment…. Taken to its extreme, this would involve a race to the bottom, where perfect efficiency equals no regulation, and the perfect state is a minimal government that simply secures the sanctity of contracts and provides for the common defense."

"In addition to the work being done at the Pacific Research and Claremont institutes, the Reason Foundation cranks out an endless flow of pro-privatization propaganda aimed at lambasting the incurably wasteful inefficiency of government in contrast to the flawless productivity of market forces. Through the use of "performance reviews," which inevitably show how government just doesn't work like the business world, the idea of "performance-based government" is promoted as the final solution for the hapless public sector, which just needs to be put to sleep.

"As Cokorinos observes, "the performance review, while long a part of organizational culture public and private, is used [in Reason Foundation reports] as a non-threatening entry point to achieve an ideological purpose" to identify inefficiencies that require the expertise of right-wing think-tank experts to be solved. DeMaio, in his time at Reason, and others after him have promoted a radical privatization agenda by releasing annual "privatization reports" that have advocated the privatization of military housing, education, transportation systems, public roads and highways, housing, major infrastructure projects and much more.

"DeMaio founded the Performance Institute in 2001 and set about bringing to San Diego the skills he learned at Reason and while working to starve the beast in the Beltway with Newt Gingrich at the Congressional Institute. The conservative old guard in San Diego seemed to be in peril, with labor, environmental activists and other progressives gaining new political clout. Democrats controlled the City Council for the first time in the history of the city, and a significant political realignment seemed possible."

It's clear San Diego barely escaped an extreme right wing radical who would have privatized city government and made San Diego a model of what ALEC is trying to accomplish throughout the US.

For some time legislation has not been written by elected officials but by lobbyists and presented to elected officials who then get it enacted into law if they have the votes on their side. In the election of 2010 Republicans swept into power at the state level particularly in states like Michigan, Ohio, Wisconsin and Florida. In all Republicans control 27 state legislatures and Democrats control 19. A lot of the right wing action, therefore, is at the state level. High on their agenda is privatization. Publicly owned assets are put up for sale. Government provided services are outsourced to private corporations. Public schools are replaced by charter schools. In the last few years, the Michigan state government has engaged in several privatization efforts. In 1992 the governor issued an executive order creating the Michigan Public-Private Partnership Commission and charged it with analyzing ways in which state services can be provided more efficiently by "introducing competition into the public sector." The commission encouraged the various departments to review each activity and every program in state government to find candidates for potential privatization.

ALEC members represent a who's who of right wing politicians and major corporations. The organization has 2000 legislative members and over 300 corporate members. Corporations not legislators fund almost all of ALEC's activities. Corporations sit on all nine ALEC task forces and vote with legislators to approve “model” bills. The long-term representation of Koch Industries on the governing board means that Koch has had influence over an untold number of ALEC bills.

ALEC has given awards to: Ronald Reagan, Margaret Thatcher, George H.W. Bush, Charles and David Koch, Richard de Vos, Tommy Thompson, Gov. John Kasich, Gov. Rick Perry, Congressman Mark Foley (intern sex scandal), and Congressman Billy Tauzin. ALEC alumni include: Speaker of the House John Boehner, House Majority Leader Eric Cantor, Congressman Joe Wilson, (who called President Obama a “liar” during the State of the Union address), former House Speaker Dennis Hastert, former House Speaker Tom DeLay, Andrew Card, Donald Rumsfeld (1985 Chair of ALEC’s Business Policy Board), Governor Scott Walker, Governor Jan Brewer, and more. Featured speakers have included: Milton Friedman, Newt Gingrich, Dick Cheney, Dan Quayle, George Allen, Jessie Helms, Pete Coors, Governor Mitch Daniels among others.

Lobbying for War: Lockheed Martin and the Military-Industrial Complex

by John Lawrence

Lockheed Martin has one client: the US government. They make no products which are sold to the general public. But they employ an army of lobbyists who have Congress men and women in their pocket. They insist on funding Lockheed Martin products like the F-22 Raptor fighter plane even though it has proven to be a piece of shit that the Pentagon doesn't even want. They lobby for war and the weapons of war at every turn because it is profitable for Lockheed Martin and Wall Street demands higher and higher profits. And like Northrup-Grumman, their partner in crime, they run TV ads to lobby and convince the general public that they are the good guys looking out for our interests. Northrup-Grumman sells no products to the general public. Yet they besiege us with their TV ads. To what end? Here's why. They want the TV networks to be dependent on a huge hunk of cash from them. This makes it less likely that any of the news magazines like Meet the Press or 60 Minutes will ever do a critical study of their industry with the extra added benefit of creating a warm, fuzzy feeling in the general public for their industry which is war. There is the same rationale for the oil, coal and gas industries. Their TV ads essentially amount to lobbying the TV industry and the general public. This is in addition to the amounts of money they spend lobbying Congress.

This is from "Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex," by William D Hartung:

It is a striking ad. An intimidating combat aircraft soars in the background, with the slogan up front in all capital letters: 300 MILLION PROTECTED, 95,000 EMPLOYED. The ad—for Lockheed Martin's F-22 Raptor fighter plane—was part of the company's last-gap effort to save one of its most profitable weapons from being "terminated," as they say in standard budget parlance. The pro—F-22 ad ran scores of times, in print, on political websites, and even in Washington's Metro. One writer at the Washington Post joked that at a time when many companies had been cutting back on their advertising budgets, Lockheed Martin's barrage of full-page ads in February and March 2009 was the main thing keeping the paper afloat. When an arms company starts bragging about how many jobs its pet project creates, hold on to your wallet. It often means that the company wants billions of dollars' worth of your tax money for a weapon that costs too much, does too little, and may not have been needed in the first place. So it is with the Raptor, which at $350 million per plane is the most expensive combat aircraft ever built. Secretary of Defense Robert Gates has suggested that the F-22 needs to be cut because even with wars raging in Iraq and Afghanistan, it has never been used in combat. In fact, in its first "mission"—flying to Japan for deployment at a US air base there—the plane had technical difficulties and had to land in Hawaii, far short of its final destination.

So the plane is a piece of shit, but it creates jobs, jobs, jobs. And jobs are what the country needs, right? And more profits for Lockheed Martin and higher salaries for Lockheed Martin's CEO. Not to mention the lobbying industry. Those poor suckers need jobs too—desperately.

Hartung continues:

But Lockheed Martin insists that the Raptor's unique capabilities more thsn justify its huge price tag. For example, did you know that it is the "first and only 24/7/365 All-Weather Stealth Fighter"? That it has a radar signature "approximately the size of a bumblebee"? Or that it provides "first-look, first-shot, first-kill air dominance capability"? Lockheed Martin has a lot to say, and it is serious about selling you its most profitable plane. How else to explain the statement from the F-22 Raptor web page that, "when we meet the enemy, we want to win 100—0, not 51—49"? It is hard to take this claim seriously. The Raptor has never seen combat—and it may never do so given that it was designed to counter a Soviet plane that was never built—so at best the score is 0—0. But the statement has a grain of truth—it describes Lockheed Martin's lobbying efforts a whole lot more accurately than its fighter plane's mission success rate. The company never reached its goal of 100—0 support in the Senate, but not for lack of trying. As soon as there was even a whimper of a possibility that the F-22 program would be stopped at "only" 187 planes—about what the Pentagon wanted, but only half of what the Air Force and Lockheed Martin were striving for—the company started racking up big numbers on its side. By early 2009, months in advance of President Obama's first detailed budget submission to Congress—which would decide the fate of the F-22—Lockheed Martin and its partners in the F-22 project (Pratt & Whitney and Boeing) had lined up forty-four Senators and two hundred members of the House of Representatives to sign on to a "save the Raptor" letter. A similar letter was sent by twelve governors—including prominent Democrats like David Paterson of New York and Ted Strickland of Ohio. R. Thomas Buffenbarger, the president of the International Association of Machinists and Aerospace Workers (IAM), also weighed in. The governors' letter reads as if it was drafted by Lockheed Martin, which it probably was. "We urge you," it begins, "to sustain 95,000 jobs by certifying continued production of the F-22 Raptor—a defense program that is critical to our defense industrial base." After describing it as "the world's only operationsl 5th Generation fighter" (a popular Lockheed Martin description of the Raptor), the letter returns to the jobs argument asking the President to "carefully consider the economic impact of your decision."

Ah, there it is—their ace in the hole— the jobs argument! How can we cut the bloated military-industrial complex without eliminating jobs and making the unemployment situation even worse? Think of all those college graduates—engineers and the like—who work in the military-industrial complex. Think of all those good middle class jobs! Why Lockheed Martin is doing us all a favor by hiring Americans when every other corporation is outsourcing jobs to China. Lockheed Martin claims that the F-22 program created jobs in forty-four states including 132 lobbying jobs in Washington, DC. But other "job creators" don't have the well-oiled lobbying machine that Lockheed Martin can bring to bear. It has a bevy of ex-Senators and ex-Congressmen in its fold ready to deploy at a moment's notice to all the watering holes in Washington, DC and even to the House steam room to argue with this Senator or that Congressman about the fact that the country needs the F-22 Raptor or whatever other piece of crap weapon Lockheed Martin is selling lest the economic and defense base of the country fall into disrepute and disrepair.

...Lockheed Martin pulled out all the stops, deploying Republican ex-Senator Matt Mattingly of Georgia and former House members like Democrats "Buddy" Darden of Georgia and G. V. "Sonny" Montgomery of Mississippi as paid lobbyists. From a luxury box at a Baltimore Orioles game to the steam room of the House gymnasium—fair game to ex-members like Montgomery and Darden—the urgent message went out that allowing funding to slip for even a few months might strike a devastating blow to our security and our economy. Representative James Moran (D-VA) was taken aback when Sonny Montgomery confronted him in the House steam room: "We sat on the sauna naked together and talked about the F-22.... That's the advantage former members have."

Disgraced lobbyist Jack Abramoff has nothing on these guys. In fact Abramoff is coming forward, now that he's out of jail, and blowing the whistle on how the lobbying industry works. It's job security for ex-Senators and ex-Congressmen and their staffers. The promise of a lucrative job after the member or staffer exits Congress is enough to make the current House and Senate members drool at the possibilities. They can come back to Washington at triple their Congressional salary and use the same House steam room that they used before and sit naked chitchatting with their old buddies ... about the F-22 Raptor among other things. "Hey what did you think about that blonde who waited on us yesterday?"

But Lockheed Martin and their lobbyists never give up. They are a force of nature. Other forms of Federal spending—like education, health care, mass transit and weatherizing buildings—need to be cut so that dollars can be provided for Lockheed Martin and the military-industrial complex. These other prospects for Federal dollars lack the well-oiled lobbying machine of Lockheed Martin.

The F-22's growing cost caused its own concerns. It was so expensive that it threatened to crowd out spending on other combat aircraft. It was a question of blowing billions now on a plane with no clear mission or saving up some money to buy the planes of the future.

Why save up money when you have a cash cow in progress. A cash cow in the hand is worth two in the bush. And then there is the time honored boondoggle of the military-industrial complex—the cost-plus contract. The government pays all costs and then adds a fixed percentage profit over and above that so that Lockheed Martin's CEO and investors do not have to starve. This gives Lockheed Martin every incentive to run up the costs after they low bid and receive the contract. This is called "gold-plating."

At this point the plan was to buy 339 planes for a projected cost of over $62 billion—up from an initial proposal to buy 750 planes for a total price of $25 billion. That's less than half as many planes for well over twice the price. How could this happen? Unfortunately, all too easily. First, Lockheed Martin put in a low bid, knowing full well that the planes would cost far more than its initial estimates. This approach, known in the business as "buying in," allows a company to get the contract first and then jack up the price later. Then the Air Force [their partner in crime] engaged in what is known as "gold plating"—setting new and ever more difficult performance requirements after the plane was already in development. Last but not least, Lockheed Martin simply screwed up certain aspects of the plane's production, even as it gouged the Pentagon on costs for overhead and spare parts. ...this is a time-tested approach that virtually guarantees massive cost overruns.

And those cost overruns lead to higher profits because of the cost-plus contract. The tax paying public is being ripped off by the military-industrial complex to pay for the largest military budget in the world, more than all the rest of the world's military budgets combined. But don't forget about all those well paying middle class jobs it provides. Why the unemployment rate would go up by several points if all of a sudden the Pentagon's budget were to be cut in half back to the level it was when George W Bush came to office in 2000. So the US is stuck in an ever increasing spiral of militarization and mobilization for war simply because it provides so many jobs and such high profits. No rational conversion to a peace time budget could ever take place without a massive transfer by the Federal government of funds spent on war to funds spent on peaceful projects like health, education and welfare. Because the US can spend in an unlimited fashion on war and the preparations for war without any bloviating from the right wing, but as soon as it spends on health, education and welfare—well, that's socialism. The old socialism argument trumps everything, and we're right back to the point that spending on war is the only way to keep unemployment down and to create profits. That's capitalism, don't you know?

Inchoate Demands of Occupy Wall Street: Can They Be Accomplished Without a Revolution?

by John Lawrence

Much has been said about Occupy Wall Street's lack of particular demands. However, their inchoate demands are numerous and plentiful, and what they amount to when totaled up is a complete repudiation of the organization of business and government and the way they are now constituted which isn't the way the Founding Fathers envisioned them at all. The way business is being conducted in the US amounts to a transmogrification of American values under the guise of an evolution of those values. America has morphed into a pseudo republic based on lies and hypocrisy, on militarism in the name of rationality, on the worship of money and the legitmation of any means to obtain it. Without getting specific the Occupy movement represents a repudiation of these abhorrent values which represent the corruption of everything Americans used to hold dear in the service of unmitigated greed and a glorification of unlimited wealth regardless of the plight of the vast majority of the people.

What the Occupy movement really wants in a vague indefinite way among other things is

(1) Getting money out of politics. That encompasses two ideas: that political campaigns should be publicly funded instead of funded by Wall Street and other wealthy interests and that lobbyists should be gotten out of Washington. Right now 40,000 lobbyists swarm Capitol Hill writing legislation in favor of the corporations that pay them an average of $300,000. starting salary to obtain legislation that stacks the cards in the corporations' favor. Is it any wonder tax policy favors the rich and exploits the poor? Does anyone truly think that getting money out of politics can be accomplished without a revolution? No way. The wealthy and the powerful will never back off. They have morphed American democracy into a plutocracy, and Democrats, who by and large have been bought off by the same wealthy interests, are not a true opposition party. They talk out of one side of their mouth while fund raising out of the other. True democracy cannot exist again until politics becomes something other than the tool of monied interests.

(2) The rich must pay their fair share of taxes. Tax policy as a result of frenetic lobbying has favored the rich while exploiting the poor. That's the whole purpose of lobbying: to seek tax advantages for the rich at the expense of the poor. That's the whole raison d'etre for lobbyists getting paid their obscene salaries. Reagan and Greenspan were experts at raising taxes on the poor while lowering them on the rich and at the same time obfuscating what they were doing and convincing the middle class that taxes were being fairly raised or lowered on everyone. Not true. Implicit in the tax code is favorable treatment for the upper 1% and an albatross around the neck of the poor and middle class - the 99%. Wealthy Wall Streeters pay only a 15% capital gains tax and benefit from "carried interest" which gives them the same tax rate no matter how many billions they make. And Republicans fight like hell to preserve these tax advantages for the rich, every last penny of them. They will never agree to tax capital gains as ordinary income, a millionaires's tax or a financial transactions tax. Does anyone think that any of these things can be accomplished without a revolution?

(3) The filibuster rule. The most antidemocratic tool of the Republican dominated Senate. A return to democracy would require the abolition of the filibuster rule. Does anyone think this can be accomplished without a revolution? The filibuster rule means that the majority does not rule and never will again as long as the present regime holds sway.

(4) Health care as a right. Medicare for all. Medicare's overhead is 3%. Private health insurance's overhead is 30%. Health insurance corporation CEOs made an average of $11 million last year while the highest salary paid to anyone in Medicare administration was less than $200,000. That's the reason why health care is becoming so expensive with paltry outcomes. Private health insurance  corporations are under Wall Street's thumb. Wall Street demands higher and higher profits and increasing returns for investors. The result comes about from reducing the Medical Loss Ratio (MLR) which is the percentage paid out for actual medical care compared to the percentage paid out to investors and CEOs. I'ts a classic case of profit over people and again Wall Street is the culprit. Is there a theme developing here? Wall Street has its finger in every pie of the economy demanding that profits be placed over people. The Occupy Wall Street movement has pointed its finger at the exact culprit in every facet of American life that needs changing and Wall Street is at the heart of it. Does anyone think the US will join the rest of the world in providing a universal, cost contained health care system without a revolution? There is no way that "reform" will accomplish this. Obamacare was a valiant effort, but, ultimately, it is no complete solution, and its provisions are subject to being rolled back at the first opportunity by Republicans who want to eliminate not only Obamacare but also social security, Medicare, Medicaid and any other social program benefitting the poor and middle class.

(5) The student loan crisis. The heart of the student loan crisis is the privatization of the student loan industry. Instead of assisting or subsidizing students to get a college education, privatization has led to the exploiting of students in order to maximize profits. Again Wall Street is at the heart of the problem demanding higher and higher returns for investors. Instead of assisting students, the private student loan industry exploits them burdening them for life with debt which cannot be discharged in bankruptcy. Republicans and Wall Street worked together to change the law in 2006 which now requires students to pay for life to discharge their debt even going so far as to allow garnishing of their social security benefits. Democratic legislation under Obama has rolled back some of these draconian measures but has done nothing to reverse the bankruptcy law of 2006. Again Wall Street has been catered to and profits have been placed above people. Does anyone think students will ever be able to dischartge student loan debt in bankruptcy without a revolution?

(6) The foreclosure crisis. Wall Street was allowed to get completely off the hook with regard to mortgage loan modification. The performance of Obama's Home Affordable Modification Program (HAMP) has been underwhelming at best. Housing experts say the $1,000 payments mortgage servicers get for successful modifications, and the lack of consequences for disobeying program guidelines, don't provide enough incentive to modify many mortgages. The well intentioned Obama administration made mortgage modification voluntary on the part of the banks. Guess what? Wall Street has decided it would not "volunteer" to reduce its profits by giving underwater home owners a break. Again the middle class gets screwed in order to maximize Wall Street profits. What was Obama thinking? Does anyone think Wall Street will write down mortgages giving themselves a voluntary haircut without a revolution? Does anyone think Republicans will have a change of heart and suddenly decide to do the right thing with respect to the middle class against the wishes of Wall Street as long as they control at least one branch of Congress or even if Democrats control both branches of Congress and the Presidency as long as the filibuster rule is in effect? Does anyone think mortgages will ever be modified favoring the middle class without a revolution?

(7) Jobs. Does anyone think the government will ever create jobs directly by reinstating an FDR style Works Progress Administration (WPA) or Civilian Conservation Corps (CCC) or even an infrastructure bill without a revolution? Will it ever be the policy of the US to be the employer of last resort without a revolution? It'll never happen. Instead, homelessness on an ever increasing scale will become a "normal" part of American life because this is perfectly consistent with capitalism. The impoverishment of millions will become normalized. As Herman Cain says, "If you don't have a job, blame yourself." THe US will join the rest of the underdeveloped world in a world class regression to a society composed of the very rich and an extremely impoverished class of everyone else.

(8) Corporations are people; money is speech. The Citizens United Supreme Court decision verified that corporations are people and money is speech. In particular corporations can spend as much money as they want on political advertising. They have an unlimited right to spend as much as they want to get the candidates elected who will do their bidding. They can propagandize to their heart's content, and the easily led lemmings will buy it and follow them off a cliff. There is no other consideration in electoral politics than money. Democracy is irrelevant; plutocracy shall rule the day. Does anyone think that anything short of a revolution will change this state of affairs?

(9) The war in Afghanistan should be ended, and the $2 billion per week that the US is spending there should be spent on improving the lives of American citizens. The military-industrial complex budget should be cut in half. The US spends more on its military than all the rest of the world combined. It has over 1000 military bases located in just about every country in the world. This money is being wasted because defense contractors have some of the strongest and most prolific lobbyists on Capitol Hill. According to Prophets of War, Lockheed Martin and the Making of the Military-Industrial Complex by William D Hartung: Lockheed Martin "spent $15 million on lobbying and campaign contributions in 2009 alone. Add to that its 140,000 employees and its claim to have a prescence in forty-six states, and the scale of its potential influence starts to become clear. And while its current political activities are perfectly legal, the company has also been known to break the rules: It ranks number one on the database on contractor misconduct maintained by the Washington-based watchdog group Project on Government Oversight (POGO); according to POGO, Lockheed Martin has '50 instances of criminal, civil or administrative misconduct since 1995.'" So the military-industrial complex of which Lockheed Martin is the leading exponent uses its poltical influence in Washington to make sure it keeps its profits high as Wall Street demands. Again Wall Street is implicated as it demands the highest possible profits for its investors in the military-industrial complex.

Instead of overspending on the military-industrial complex, the US should adopt the model that was successfully used recently in Libya. Military goals were accomplished by joining with NATO partners to spread the cost, and not one American life was lost. Does anyone think the powerful defense contractor lobby will back down, and American taxpayer money will be spent primarily on benefitting the American people instead of trying to control and dominate the world without a revolution?

The social contract which implied that, if you studied hard, obtained a college degree and tended to your knitting, you would be rewarded with a good job has completely broken down. Corporations have no responsibility to provide anyone with a job. Instead their only allegiance at the behest of Wall Street is to their bottom line. Wall Street demands that they increase profits. They do so not by providing American jobs but by outsourcing jobs to wherever in the world labor is cheapest. Then they turn around and demand that their taxes be lowered and regulations be gutted, and say disingenuously that that is the only way they will hire more people. But they continue to outsource jobs even though their taxes are the lowest of any historical period since the Great Depression and they are sitting on $2 trillion in cash that they prefer not to use employing people. Instead they buy back their own stock and gamble on Wall Street.

So what is a college education worth these days? Not much. It does not represent the promise of a happy future but instead a burden of debt which may last a life time. The education industry goes on an advertising binge to convince potential students that the only way they will have a promising future is to matriculate and borrow money. Hopefully, students are waking up to this sham. A college diploma used to be a ticket of admission to employment with a corporation. Certainly most college diplomas do not prepare one to become self-employed, only  employed by others. If a person seeks to be self-employed, they do not need a college diploma in most cases. They don't need a ticket of admission to the corporate world in order to start their own business. Steve Jobs had no college diploma. Bill Gates has no college diploma. Larry Ellison has no college diploma. These are billionaires in the world of high tech. They do, however, want their employees to have college diplomas, and it matters little to them whether these employees come from the US, India, China, Korea or someplace else. In fact they prefer overseas college graduates because they will work cheaper. Most contractors and tradesmen do not need college diplomas, and the work they do for the most part is localized and can't be exported. A word to the wise ...

Each and every public space and institution is under attack by Republicans. Public schools, public parks, public libraries are being defunded as are public teachers, park rangers, librarians, police and firemen. Republican goals are to diminish public spaces and the jobs supporting them so that they can "drown them all in the bathtub" as Grover Norquist wants. Public spaces are being impoverished at the same time private wealth is being enhanced by every means available. Public America is being turned into poverty while private America gains. And when public spaces and public jobs are diminished, the poor and middle class suffer because the rich only use private spaces - private resorts, private universities, private security companies, private libraries, private schools. A country can be rich in private wealth but poor and in debt with respect to public wealth. Such is the fate of the US under Republican rule.

The Occupy Wall Street movement is joining with movements all over the world in waking up to the fact that Wall Street is at the heart of the world's problems. They are wise not to particularize their demands because then they would be offered some sham, watered down solution which would do nothing to curtail Wall Street's power and its dominance over not only America's but Europe's political systems. Neither the US nor the euro zone has the guts to stand up to Wall Street and its extensions in Europe because this might lead to another recession. Instead, they put bandaids on the present system in the hopes that they will be able to normalize things even though "normal" means the impoverishment and the indenturization of the majority of the people.

Get Corporations off Government's Back

by John Lawrence

The Tea Party wants to get "government off 'our' back." But is government really on our back or is the case really that corporations and wealthy interests are on government's back? There are 40,000 or more lobbyists in Washiongton, DC. They are there for the purposes of extracting taxpayer money for their corporate sponsors' benefits and for no other reason. The notion that taxpayer money goes to provide benefits for taxpayers, especially middle class taxpayers, is rather nieve. Taxpayer money goes to provide benefits for large corporations and the wealthy because the poor can't afford lobbyists. And the union movement is practically dead so union money is not influencing legislators to any great extent. Republican Governors like Scott Walker are doing their level best to kill off the remaining unions so that corporate sponsored lobbyists will have full sway in Washington. They aren't there to help the middle class; that's for sure. They are there to write legislation favorable to their own interests whether they be defense contractors lobbying for more money for military hardware or corporate flacks trying to drill holes in the tax code or lower the corporate tax rate. The notion that a lower corporate tax rate combined with closing the loopholes is preferable is nieve since lobbyists will only then proceed to drill new loopholes into the tax code at the lower rate.

Republicans argue that any expiration of a "temporary" tax cut such as the Bush tax cuts is actually a tax increase, but Michelle Bachman said on Meet the Press that she wouldn't be in favor of extending the "temporary" reduction in the payroll tax rate because "we can't afford it." Yet we can afford, according to her, to continue the temporary Bush tax cuts which amount to a whole hellava lot more. Why won't Bachman apply the same logic to the temporary payroll tax cuts? I'll tell you why. Because the payroll tax affects mainly the poor and middle class. It's a regressive tax that's used to pay social security recipients and for many years the excess was just combined with income tax revenues and spent in the General Fund. So General Fund expenditures were partially funded by a regressive tax on the poor. Right wingers love to point out that the poor and lower middle class pay hardly any income tax. What they don't point out is that they pay excessive payroll taxes, taxes that allow for no deductions or exemptions. For instance, if you're a poor self-employed worker earning $10,000 a year, you will pay over $1500. in payroll taxes no matter how many children you have or how many medical expenses or anything else. You will pay at a tax rate of 15.3% (except for this year for which there is a 2% reduction for employees), more than a hedge fund manager pays. Capital gains are taxed at only 15%. Is that fair? Of course not. As long as the money is being spent in the General Fund and treated as income tax revenue, deductions and exemptions should be allowed for payroll taxes which affect mainly the poor just as they are for income taxes which affect mainly the rich. When right wingers point out that the poor don't pay any income tax, they fail to point out that the poor, especially the poor self-employed, pay a higher rate, when you consider payroll taxes, than rich hedge fund managers including Warren Buffet. Please note that the rich pay hardly any payroll taxes and have voluminous deductions and exemptions on their income taxes.

So instead of getting government off our back which is the movie right wingers want you to see, instead we should be trying to get corporations off government's back, which is the reality they want you to ignore, so that government can better serve the interests and needs of the poor and middle class. The right wing makes no bones about this being class warfare. They flat out come out and say that they are in power for one reason and one reason only: to serve the needs of the rich corporate class. That is their purpose in life. They don't even try to hide it. Michelle Bachman is not in favor of extending unemployment benefits for the long term unemployed because "we simply can't afford it." Yeah, but we can still afford more tax breaks for the rich because they are the "job creators." Really? REALLY?? If they are the job creators, then where are the friggin jobs? They've had 30 years of supply side economics (or voodoo economics as the first George Bush christened it) and the job situation is worse than it was in the Great Depression in absolute numbers of people out of work and on the verge of desperation. We "can't afford" to allow them to subsist which would cost a paltry amount, but we can afford to give gargantuan tax breaks to the corporate class because - hint, hint - they might create a job or two somewhere down the line. Give me a break. The only jobs they are creating are overseas. Cheap labor combined with automation produces all the goods and most of the services that the US needs. Free trade has allowed the global labor force to be concentrated in the country where labor is cheapest and the finished product shipped to wherever it can be sold. Increasingly, this is not in the US where consumers have cut back on their spending finally realizing that their houses can no longer be used as ATMs.

We don't need small government, weak government, a government that corporate lobbyists can ride roughshod over; we need smart government, strong government, "right sized" government, a government which has the audacity to kick lobbyists out of Washington and get money out of politics. Most Republican Senators and Congressmen are merely front men for corporations. They are merely "political personalities" able to garner votes and get themselves elected. They are not legislators. Lobbyists write the laws. As front men for corporations, Republican Congressmen's paychecks are provided by the corporations they represent. They need big money to get elected. When their time in Congress is finished, they can look forward to a cushy job working for the corporations they represent and making use of their inside contacts in Washington to funnel more taxpayer money and taxpayer funded contracts to the corporations they first represented and later worked for. Small government simply means government dominated by large corporations which exists to extract taxpayer money, mainly from the poor and middle class, and transfer it to the wealthy in terms of tax breaks and government contracts. It's not the poor who are feeding off the government trough; it's the rich. They want you to watch this movie over here about welfare queens and ignore that reality over there about the transfer of wealth to the already wealthy. They want you to abhor the redistribution of wealth from the government to the poor and middle class in terms of entitlements and unemployment insurance while ignoring the transfer of wealth from the middle class to the rich.

And why should unelected political underworld figures like Grover Norquist be in the position of extracting a pledge from every elected Republican Congressman that they won't raise taxes? They were elected to do the public's bidding not Grover Norquist's. Unelected rogues like Karl Rove, Dick Army, the Koch brothers and Grover Norquist are trying to control the American political system just as unelected lobbyists swarm the Capitol. And as for getting money out of politics, who benefits the most from keeping money in politics? The TV and cable channels who receive huge sums of money in the form of political TV ads. That's where most of the money is spent. Consequently, you will never hear anything about getting money out of politics on Meet the Press, Face the Nation or on any cable news infotainment show. There are vested interests which want to keep money in politics, the more the better. The Citizens United Supreme Court decision was a windfall for media news channels. No wonder they give as much air as possible to charlatins like Sarah Palin and Christene O'Donnell; their paychecks could just as well be endorsed by big right wing money. Instead of getting people on their shows who are really intelligent and insightful, they get airheads and then look forward to another infusion of right wing cash. The exception is CNN's Fareed Zakaria who always books intelligent and articulate experts.

Getting government off corporations' backs implies a rational world in which corporations want nothing more than to compete freely in the free enterprise system without being interfered with by government. They just want to go merrily along competing with their competitors, providing jobs, serving the public interest and providing value to their shareholders. In reality this hands off approach is a total lie. Corporations are totally hands on when it comes to government. They spend big bucks on lobbyists to make sure that government cash and legislation is funneled their way. They are not simply competing with other corporations in the free marketplace. They are using government to their advantage, and they are making sure that the middle class does not get to use government to its advantage. They don't simply want to get government off their backs. They want to climb on the back of government. They want to make sure that government does not tell them what to do, whether or not they can destroy the environment or cheat consumers. They want to tell government what it can do which is to say remove any regulations which might protect the public or the environment and lower their profit margins. They want to get government out of their way so they can exploit foreign labor and American consumers because this will maximize their profits, and that, my friend, is their bottom line. They are here to serve themselves not the public and they will use every lever of government in order to do so.

The Shameful Murder of Dodd Frank

by Robert Reich

Wednesday, July 20, 2011

Happy Birthday Dodd Frank,
Happy Birthday to you,
You’ve lost all your muscle,
And your teeth are gone, too.
 
One full year after the financial reform bill spearheaded through Congress by Christopher Dodd and Barney Frank was signed into law, Wall Street looks and acts much the way it did before. That’s because the Street has effectively neutered the law, which is the best argument I know for applying the nation’s antitrust laws to the biggest banks and limiting their size.

Treasury Secretary Tim Geithner says the financial system is “on more solid ground” than prior to the 2008 crisis, but I don’t know what ground he’s looking at.
 
Much of Dodd-Frank is still on the drawing boards, courtesy of the Street. The law as written included loopholes big enough to drive bankers’ Lamborghini’s through — which they’re now doing.

What kind of derivatives must be traded on open exchanges? What are the capital requirements for financial companies that insure borrowers against default, such as AIG? How should credit rating agencies be funded? What about the much-vaunted Volcker Rule requiring that banks trade their own money if they’re going to gamble in the stock market – how should their own money be defined? What “stress tests” must the big banks pass to maintain their privileged status with the Fed?
 
The short answer: whatever it takes to maintain the Street’s profits and perquisites.
 
The law included a one-year delay, ostensibly to give regulators time to iron out these sorts of details. But the real purpose of the delay, it’s now obvious, was to give the Street time to expand the loopholes and fill the details with pablum — when the public stopped looking.
 
Since Dodd Frank was enacted a year ago, Wall Street has spent as much – if not more – on lobbyists and political payoffs designed to stop the law’s implementation than it did trying to kill off the law in the first place. The six largest banks spent $29.4 million on lobbying last year, according to firm disclosures — record spending for the group. This year they’re on track to break last year’s record. 

According to the Center for Public Integrity, the Street and other financial institutions engaged about 3,000 lobbyists to fight Dodd-Frank – more than five lobbyists for every member of Congress. They’ve hired almost the same number to delay, weaken, or otherwise prevent its implementation.
 
Meanwhile, the portion of the law that’s now supposed to be in effect is barely being enforced. That’s because the agencies charged with enforcing it, such as the Securities and Exchange Commission, don’t have enough money or staff to do the job. Congress hasn’t seen fit to appropriate these necessities.

Several of these agencies are still lacking directors or commissioners. Senate Republicans have refused to confirm anyone. They wouldn’t even consider Elizabeth Warren to run the new consumer bureau.
 
Many of same business leaders who blame the sluggish economy on regulatory uncertainty are complicit in all this. A senior vice president of the Chamber of Commerce told the New York Times that “uncertainty among companies about the rules of the road is keeping a lot of capital on the sidelines.” The Chamber has been among the groups responsible for keeping Dodd Frank at bay.
 
But it’s the biggest Wall Street banks – the ones that got us into this mess in the first place, and got bailed out by the public – that have taken the lead in killing off Dodd-Frank. They can afford the hit job.

At the same time, their executives  – enjoying pay and bonuses as large as in the boom days of the housing bubble – are busily bankrolling both political parties, although Republicans are favored in this election cycle. A significant portion of Mitt Romney’s sizable war chest has come from the Street. President Obama is no slouch when it comes to pulling at the Street’s purse strings.
 
Bankers try to justify their shameful murder of Dodd-Frank by saying tightened regulatory standards will put them at a disadvantage relative to their overseas competitors. JP Morgan’s Jamie Dimon had the nerve to publicly accost Ben Bernanke recently, complaining that the law’s implementation would harm the Street’s competitiveness.
 
The argument is pure claptrap. In the wake of global finance’s near meltdown, Europe has been more aggressive than the United States in clamping down on banks headquartered there. Britain is requiring its banks to have higher capital reserves than are so far contemplated in the United States. In fact, senior Wall Street executives have warned European leaders their tighter bank regulations will cause Wall Street to move more of its business out of Europe.
 
Wall Street is global because capital is global. JP Morgan Chase, Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley are doing business in every corner of the world. Goldman even advised Greece on how to hide its growing indebtedness, before the rest of the world got wind, through a derivatives deal that circumvented Europe’s deficit rules.
 
The real reason Wall Street has spent the last year bludgeoning Dodd-Frank into meaninglessness is the vast sums of money it can make if Dodd-Frank is out of the way. If you took the greed out of Wall Street all you’d have left is pavement.
 
Wall Street is the richest and most powerful industry in America with the closest ties to the federal government – routinely supplying Treasury secretaries and economic advisors who share its world view and its financial interests, and routinely bankrolling congressional kingpins.

How else can you explain why the Street was bailed out with no strings attached? Or why no criminal charges have been brought against any major Wall Street figure – despite the effluvium of frauds, deceptions, malfeasance and nonfeasance in the years leading up to the crash and subsequent bailout? Or why Dodd-Frank has been eviscerated?
 
As a result of consolidations brought on by the bailout, the biggest banks are bigger and have more clout than ever. They and their clients know with certainty they will be bailed out if they get into trouble, which gives them a financial advantage over smaller competitors whose capital doesn’t come with such a guarantee. So they’re becoming even more powerful.
 
Face it: The only answer is to break up the giant banks. The Sherman Antitrust Act of 1890 was designed not only to improve economic efficiency by reducing the market power of economic giants like the railroads and oil companies but also to prevent companies from becoming so large that their political power would undermine democracy.
 
The sad lesson of Dodd-Frank is Wall Street is too powerful to allow effective regulation of it. We should have learned that lesson in 2008 as the Street brought the rest of the economy – and much of the world – to its knees. Now we’re still on our knees but the Street is back on top. Its leviathans do not generate benefits to society proportional to their size and influence. To the contrary, they represent a clear and present danger to our economy and our democracy.
 
They should be broken up, and their size must be capped. Congress won’t do it, obviously. So we’ll need to rely on the nation’s two antitrust agencies — the Federal Trade Commission and the Antitrust Division of the Justice Department. The trust-busters are now investigating Google. They should be turning their sights onto JPMorgan Chase, Citigroup, and Goldman Sachs instead.

Private Prisons Spend Millions On Lobbying To Put More People In Jail

By Andrea Nill Sanchez posted from ThinkProgress Justice on Jun 23, 2011 at 12:13 pm

Yesterday, the Justice Policy Institute (JPI) released a report chronicling the political strategies of private prison companies “working to make money through harsh policies and longer sentences.” The report’s authors note that while the total number of people in prison increased less than 16 percent, the number of people held in private federal and state facilities increased by 120 and 33 percent, correspondingly. Government spending on corrections has soared since 1997 by 72 percent, up to $74 billion in 2007. And the private prison industry has raked in tremendous profits. Last year the two largest private prison companies — Corrections Corporation of America (CCA) and GEO Group — made over $2.9 billion in revenue.

JPI claims the private industry hasn’t merely responded to the nation’s incarceration woes, it has actively sought to create the market conditions (ie. more prisoners) necessary to expand its business.

According to JPI, the private prison industry uses three strategies to influence public policy: lobbying, direct campaign contributions, and networking. The three main companies have contributed $835,514 to federal candidates and over $6 million to state politicians. They have also spent hundreds of thousands of dollars on direct lobbying efforts. CCA has spent over $900,000 on federal lobbying and GEO spent anywhere from $120,000 to $199,992 in Florida alone during a short three-month span this year. Meanwhile, “the relationship between government officials and private prison companies has been part of the fabric of the industry from the start,” notes the report. The cofounder of CCA himself used to be the chairman of the Tennessee Republican Party.

The impact that the private prison industry has had is hard to deny. In Arizona, 30 of the 36 legislators who co-sponsored the state’s controversial immigration law that would undoubtedly put more immigrants behind bars received campaign contributions from private prison lobbyists or companies. Private prison businesses been involved in lobbying efforts related to a bill in Florida that would require privatizing all of the prisons in South Florida and have been heavily involved in appropriations bills on the federal level.

Tracy Velázquez, executive director of JPI recommends that we “take a hard look at what the cost of this influence is, both to taxpayers and to the community as a whole, in terms of the policies being lobbied for and the outcomes for people put in private prisons.”

Why Health Care Costs Will Continue to Go Up as Long as Health Care Remains a Profit-Making Industry

by John Lawrence

Private laboratories are working hard to come up with the next new drug, the next new medical procedure. Arguably, this represents an advance in medical science that will benefit us all some day. The problem is that the pharmaceutical companies and the medical equipment companies all expect to make a hefty profit if, indeed, they do come up with something worthy of an advance in curing disease and/or prolonging life. The result of all this feverish activity is that there are more devices, more procedures, more drugs all of which purport to save and prolong lives and all of which cost big money. Who is going to pay for it all?

This is the main reason why the cost of Medicare and private health insurance is going up. Everyone wants access to the latest medical technology, but that technology is increasingly expensive. Is the government going to pay or are private health insurance companies going to pay or both? Most of the payouts occur in the last three months of life. One might argue we would be better off with the medical technology of 30 years ago and just be resigned to dying three months sooner albeit with a substantial cost savings, money which could be passed on to the next generation.

This is from Time magazine:

Americans tend to assume that more is better, especially when it comes to the heroic brand of try-everything medicine we've watched on ER and House M.D. But overtreatment is a national scandal. It's bad for our health: with medical errors now estimated to be our eighth leading cause of death, drugs, procedures and hospital stays can be risky (as well as painful, time-consuming and wallet-straining) even when they're necessary. It's also bad for the economy: health costs are bankrupting small businesses and even conglomerates like General Motors as well as millions of families. And it's awful for the country: Medicare is on track to go broke by 2017, and our long-term budget problems are primarily health-cost problems. At current growth rates, health spending by the Federal Government alone would increase from 5% to 20% of the economy by 2050; Social Security, by contrast, would increase only from 5% to 6%. ... But one man's unnecessary costs are another man's profits; lobbyists for drug- and devicemakers, hospitals, doctors and insurers are already fighting to make sure their slices of the more than $2 trillion health-care pie aren't nibbled by reform. Senate Republicans just introduced "antirationing" legislation to bar the government from using comparative-effectiveness research — "a common tool used by socialized health-care systems" — for cost control. They paused in their usual attacks on Obama's profligacy just long enough to attack his stinginess, warning that he will use evidence as an excuse to micromanage the art of medicine, stifle innovation and deny Americans their right to choose whatever treatments they want — or at least their right to taxpayer reimbursements.

A way out of this dilemma of rapid cost escalation is to follow the model of the Mayo clinic. Instead of a "fee for service" model, which rewards doctors for doing more procedures and demanding more visits, the Mayo clinic puts doctors on salary thus undercutting the perverse incentives of the fee-for-service model. Drug companies, in order to get FDA approval, just have to prove that their drug is slightly better than a placebo. They don't have to prove that it is any better than an existing drug. So you have many copy cat drugs on the market just sufficiently different from an existing drug in order to get a patent. Drugs are developed based on their profit-making potential rather than on their ability to cure illness. Patients are ordered to have unnecessary MRIs just to pay for the MRI machines. There is little data available on comparing new procedures with existing procedures in terms of their ability to obtain better health outcomes.

Located in Rochester, Minnesota, the Mayo clinic has implemented procedures that result in high quality care but at a low cost:

Mayo has computerized medical records that provide instant access to patient histories, improving information-sharing, reducing pharmacy errors and eliminating the hassle of tracking down charts. The staff cafeteria even gives away fruit, illustrating Mayo's apple-a-day commitment to prevention and wellness. Like other low-cost, high-quality institutions — the Cleveland Clinic, Geisinger in Pennsylvania, Intermountain in Utah — Mayo is dedicated to offering integrated and coordinated care, with a broad network of providers working together to reduce redundant tests and office visits, improve disease management and generally avoid treating patients like pinballs. "It's a team sport here," says David Lewallen, a Mayo orthopedic surgeon. "A bunch of tennis players doing their own thing just doesn't work — it's too expensive, and it's bad medicine. We only do things to help the patient, and we're all looking over each other's shoulders."

Evidence-based medicine, the kind the Mayo clinic espouses, is not the most profitable kind of medicine, and therein lies the rub. Last year the Mayo clinic lost money on its Medicare patients. And the profit making medical industry, the drug companies, devicemakers and medical specialists, who stand to lose money if the profit is taken out of medicine, are all allied against any government program including Obamacare which tends to diminish their profits. Currently, Medicare covers just about any kind of treatment that purports to be effective without any consideration of cost whatsoever. Lobbyists for the profit making medical world and their shills in Congress want to keep it that way.

In the final analysis the only way to reduce the skyrocketing cost of medical care is to take the profit motive out of it altogether. The Mayo Clinic model is a start, but the profit motive has to be taken out of medical and pharmaceutical research and device development as well. The only way to do that is to have the research done at government labs by researchers who are on salary and don't stand to reap a profit from each new drug and each new medical device. And more emphasis needs to be put on keeping patients healthy rather than curing them once they get sick. That means more physical and nutritional education in the schools and more preventive care in the doctor's office. Changing lifestyles will do more to reduce medical costs than anything else. But in a profit making system the doctor has no incentive to make his patients healthier. After all he or she only gets paid when they are sick. This perverse incentive needs to be taken out of medicine. Obama tried to do it with Obamacare but failed to get it passed into law. So the cost containment aspect of Obamacare was a complete failure thanks to Republican obstructionism and lobbyist fueled resistance.

Right now we don't have a health care system; we have a sick care system, and the sicker the American public becomes, the more profits the drug companies and device makers reap. Obesity in the American public is only getting worse thanks to cheap fast and processed foods that are based on sugar, salt and fat. Snack has become a completely accepted way of life. It used to be that snacking between meals was discouraged. Thanks to a successful PR campaign against smoking and the proof that it results in cancer, the American public has been weaned off smoking. Now we need an equally extensive campaign for lifestyle fitness focusing on diet and exercise without the hucksterism of diet and exercize crazes brought to you via TV advertisements. Fast food needs to be discouraged in favor of slow food. Time has to be made available for physical exercise and stress reduction. Weight reduction should be paramount for obese people. The campaign for better health needs to start in the public school system at a young age and be continued throughout one's entire educational career. Nutritional literacy as well as financial literacy needs to be made a major goal.

How Corporations Are Ripping Off US Taxpayers and Workers

by John Lawrence

US corporations are being subsidized by the US government to build factories abroad and to ship jobs formerly held by American workers overseas. In addition they are getting all sorts of tax breaks on profits they make selling products into the US market. These policies were designed during Republican administrations generally although Bill Clinton played a big role in this "globalization" process. There are three main goals of globalization from the corporation's point of view: 1) produce where labor and other inputs to the production process are cheapest; 2) sell into whatever markets are most lucrative (right now the US market represents the largest consumer market in the world); 3) pay as little in taxes to any government anywhere in the world. The Obama administration has tried to change some of these tax policies, but to no avail. The latest example of this is that at first the bill giving aid to first responders of 9/11 was going to be funded by not letting corporations continue to deduct expenses for constructing foreign plants from their tax bill. However, Republican objections and obstructionism forced a "compromise" in which that corporate tax "loophole" was left intact. Obviously, if there are tax advantages to constructing plants abroad in addition to the lure of cheap labor, corporations are being encouraged by US government policy to outsource American jobs. Just the opposite should be true. They should be given tax breaks for constructing plants here and employing American workers. The Obama administration has pledged to fix this situation, but with Republican control of the House there is little chance they will be able to accomplish this goal.

Here's how it works. Although the US corporate income tax rate is 35%, most corporations end up paying only 6-7%. This year, Google, which made $5.5 billion in revenues, only paid an effective tax rate of 2.4%. Corporations set up foreign subsidiaries in low tax countries and then shift profits to those subsidiaries. Therefore, they claim that they didn't make those profits in the US where they sold their merchandise but in those foreign countries where they didn't. It's a corporate shell game. You make your profits where the consumer market is good but taxes are high and then shift those profits to a country where the consumer market is bad but tax rates are low. An additional neat trick is that corporations are able to shift their expenses on their foreign operations to the US. Even though the expenses were incurred in the foreign country where their plant is located, for example, for tax purposes they are shifted to the US where they are deducted from their US tax bill. So they have the best of both worlds. They can shift factories to foreign countries where labor is cheapest, and then turn around and deduct the expenses for outsourcing plants and jobs from their US tax bill.

It's called "transfer pricing:"

For many companies, however, national combined reporting requirements aren’t an issue—they just create subsidiaries in international tax shelters like Ireland and the Cayman Islands. A tool called transfer pricing lets companies make profits in tax havens while allocating expenses to higher-tax countries, writes the OECD Observer. ... Google’s “Double Irish” strategy is one popular transfer pricing scheme. Google created two companies in Ireland to execute this maneuver. One pays royalties to use intellectual property (expenses that reduce income tax in Ireland). A second, located in Bermuda, collects those royalties. The meat in Google’s sandwich is the Netherlands, where profits go on their way from Ireland to Bermuda. “Irish tax law exempts certain royalties to companies in other EU- member nations,” according to the excellent Bloomberg article that describes Google’s acrobatics. “A brief detour to the Netherlands avoids…Irish withholding tax.” If you think the federal government would want to sink its teeth into those profits by implementing an international combined reporting requirement, think again. The feds would rather get what they can without changing the law: Google and the IRS negotiated for three years before coming to “an arrangement” that let the company execute its transfer pricing strategy, according to Bloomberg.

Transfer pricing is another reason the states are going broke. By locating plants in states where there are few sales, corporations avoid paying taxes in other states where most of their profits are made. By using this strategy with respect to foreign countries, they put their tax avoidance schemes on steroids. Corporations that transfer income abroad even though a lot of it might have been generated in the US are still on the hook if they repatriate those profits. That is if they bring those profits back into the US. But there is no need to. Most corporations never repatriate that income. They leave it parked outside the country because their interest is in constructing plants and facilties outside the US where labor is cheapest.

Halliburton is a good example of a corporation which makes most of its profits inside the US but exports most of its profits abroad. Recently, it moved its corporate headquarters to Dubai.

For decades, the U.S. tax code has encouraged companies like Halliburton to transfer the location of its subsidiaries from the United States to foreign countries. This is one reason why only thirty-six of Halliburton's 143 subsidiaries are incorporated in the United States and 107 subsidiaries (or 75 percent) are incorporated in 30 different countries. There are two methods by which Halliburton lowers its tax liability on foreign income: (1) By establishing a "controlled foreign corporation" and (2) By establishing a subsidiary inside a low tax, or no tax, country known as a "tax haven."

Controlled foreign corporations are becoming increasingly valuable to corporations because they allow those corporations to not pay any US income tax on profits generated outside the US. By filing a few papers and incorporating a subsidiary in the country where the profits are made, the subsidiary is no longer considered a "US resident" under the tax code. Instead it is considered a "foreign resident." These profits are only taxed if the profits are repatriated which in most cases they never are.

Here is more on how corporate profits are shifted to countries with low or no tax rates:

Congress reported that Halliburton owns 17 subsidiaries in tax haven countries, including 13 in the Cayman Islands, which has no corporate income tax, two in Liechtenstein and two in Panama. An analysis by CitizenWorks.org found a far greater number Halliburton tax havens. The nonprofit public interest group found that, while Dick Cheney was CEO of Halliburton (between 1995 and 2000), the number of Halliburton subsidiaries incorporated in offshore tax havens rose from 9 to 44. CitizenWorks.org also found that the Fortune 500 companies with the most offshore tax havens are dominated by energy firms, including El Paso (#1), AES (#2), Aon (#5), Mirant (#7), Halliburton (#8), and Williams (#14). Controlled foreign corporations and tax havens are the result of decades of corporate lobbying in Washington, DC. It has benefited corporate America tremendously. The tax savings to Halliburton, and the corresponding tax loss to individual American taxpayers, are enormous. Halliburton paid only $15 million of their $80 million in total taxes (or 19 percent) to the U.S. government in 2002. The remaining 81 percent of the company's taxes went to foreign governments. Although Halliburton is an "American" corporation on paper, it is actually a foreign corporation that has no allegiance to the United States.

The Obama administration has taken steps to discourage job creation overseas by American corporations and to encourage job creation at home. The likilhood of any of these steps being passed into law is nebulous. If American corporations find that American incorporation becomes too onerous, they can simply incorporate elsewhere like Hallburton did. Nevertheless, here are some of the things Obama is trying to do:

Currently, businesses that invest overseas can take immediate deductions on their U.S. tax returns for expenses supporting their overseas investments but nevertheless "defer" paying U.S. taxes on the profits they make from those investments. As a result, U.S. taxpayer dollars are used to provide a significant tax advantage to companies who invest overseas relative to those who invest and create jobs at home. The Obama Administration would reform the rules surrounding deferral so that--with the exception of research and experimentation expenses--companies cannot receive deductions on their U.S. tax returns supporting their offshore investments until they pay taxes on their offshore profits. This provision would take effect in 2011, raising $60.1 billion from 2011 to 2019.

In the final analysis perhaps the only way to retrieve taxes from corporations using every trick for tax avoidance is a VAT tax. The advantage of a VAT tax is that it is collected at point of sale. So no matter where a corporation chooses to move its corporate headquarters, it will never be able to escape taxation as long as it wants to sell into the American market. This also means that corporate profits aren't subject to manipulation by tax lawyers advising corporations how to get around paying taxes, and corporate lobbyists can't drill loopholes into the tax code. A VAT tax would truly tax profits made from sales in the country where the product was sold instead of allowing profits to be transferred to low tax countries. Also a VAT tax would avoid the transfer of deductible expenses from foreign countries to the US. It would put a stop to the transfer of profits to tax havens and expenses to high corporate tax rate countries like the US.

A VAT tax could also get around the free trade tariff restrictions. Germany imposes a VAT tax on imports to make them equivalent to domestically produced products on which VAT taxes have already been paid. This is only fair, but it also tends to give an advantage to domestically produced products and job creation and maintenance in country. The  VAT tax could be charged directly to the corporation whose product is being sold and not to the customer by estimating profits from each sale. Of course, the corporation could raise prices on the product thus effectively transferring the VAT tax to the consumer, but this is not necessarily bad in that it would tend to equalize the advantages of products produced by higher priced American labor. Revenue sharing of the VAT tax between the Federal and state governments would do a lot to alleviate the states' fiscal problems.

In the long run corporations cannot expect to outsource jobs and insource consumer sales indefinitely. The American market cannot sustain 70% of GDP being produced by consumption without American jobs being created to support that consumption. Prudent tax policies will not only encourage domestic job creation but also will recoup much needed tax revenues from corporations who have been escaping from paying their fair share.

Republicans Vote to Keep Subsidizing Corporations to Move American Jobs Offshore

by John Lawrence

Republicans had a chance not to filibuster a bill that would have eliminated tax breaks for corporations that move jobs offshore. The bill also provided for tax breaks for corporations that created jobs inside the US. To be fair four Democrats and Joe Lieberman joined with the Republicans.

"Why in the world would millions of Americans who are losing their jobs be subsidizing operations that are closed up, and the cost of doing that, and sending jobs overseas?" Michigan Democratic Senator Debbie Stabenow said.

The bill also takes on a hot tax topic known as "deferral," the ability of companies to defer taxes on income earned abroad. Right now companies can defer paying their taxes indefinitely as long as they keep the money parked offshore. This effectively means that they never pay US taxes as they reinvest the profits offshore or engage in other tax saving devices.

President Barack Obama's has said that he wants to sharply curtail that practice but this time it was a no go. The bill would have repealed deferral for companies that close or cut a business in the U.S. and start or expand overseas with the intention of importing goods for sale in the United States. So the American people are paying companies with their tax money to close up shop in the US, eliminate American jobs, start up a factory overseas and then import the same products back into the American market where American consumers are supposed to buy them even though their jobs have been eliminated. I guess they're supposed to go further in debt. No wonder there is a lack of demand.

Republicans and some Democrats must think that no one is paying any attention to what they do. They're giving the Bronx cheer to the American public when they continue to reward businesses for moving American jobs overseas. How can they justify that except by the fact that all Republicans and some Democrats are totally in the pocket of US corporations. They're only in it for the money and that money flows to them from lobbyists and other sources directly and indirectly from corporations with the purpose of setting up government in such a way as to profit American business and not the American middle class. Who out there that's not in the pocket of American corporations thinks that these corporations should get tax breaks for moving American jobs offshore? This is absolutely nuts.

But Republicans (and some Democrats ) don't care. They're relying on the fact that the American public is not paying close attention or is not involved in this level of minutiae. They're relying on the fact that they can do this sort of thing and fly beneath the radar because no major US news media will report on it. If Republicans can stick their thumb in the eye of the American public this blatantly with impunity, what else are they capable of?  

And what makes all this possible are the arcane rules of the Senate and in particular the filibuster rule. This bill would have passed if we had majority rule in the Senate. There were 51 votes for it, but under the filibuster rule (and let us remind you that Republicans filibuster everything) 60 votes are required just to bring any measure to a vote. This makes a joke of American democracy. First they have to vote on whether or not they are going to vote. How can you call it a democracy any more when majority rule has been made a mockery of?

The following is from Huffington Post:

Senate Republicans beat back an effort by Democrats Tuesday to end tax breaks for companies who send jobs offshore only to import products back into the United States. The House has passed a series of similar legislation over the past several weeks, as Democrats work to portray Republicans as in the pocket of Big Business at the expense of workers, the economy, the trade deficit and the budget deficit. That message was muddied, however, by the defection of four Democrats and Independent Democrat Joe Lieberman, who voted against the motion to end a filibuster. "I wish this election would be a simple referendum on this issue," Dick Durbin, the Senate's number two Democrat, said on the Senate floor Monday night. "Who in the world believes that we should be rewarding corporations in our country for shipping jobs overseas?" The U.S. Chamber of Commerce is one powerful answer to Durbin's query. The Chamber, which represents businesses in the United States, has aggressively battled the effort to reduce outsourcing. During the debate over the stimulus, the U.S. Chamber fought efforts to include a provision that would encourage taxpayer money to be spent on products made by domestic companies.

San Diego Philanthropist Irwin Jacobs Takes the Pledge But Conservative Philanthropists Charles and David Koch Take the Day

by John Lawrence

The San Diego Union has been reporting a lot on San Diego billionaire Irwin M Jacobs lately starting on August 14. He and wife Joan have singlehandedly saved a number of San Diego institutions like the Symphony and the new Central Library which, if not for their recent $20 million donation, might not even be built. Four days later he was back in the paper again celebrating the 25th anniversary of Qualcomm, the company he founded which is the source of his good fortune. Then the next day he was in the paper again unveiling a $30 million dollar parking plan for Balboa Park that would free up the park's central square and build a parking garage.

The Jacobs' have been major benefactors and philanthropists in San Diego and elsewhere donating to education at UCSD, providing funds for hospitals, radio station KSDS, the Museum of Contemporary Art, the La Jolla Playhouse, the La Jolla library, the Adenoid Cystic Carcinoma Research Foundation, the ACLU and many other arts and cultural charities too numerous to mention. The Jacobs tend to give when and where it can make a significant difference.

Recently they joined Bill Gates and Warren Buffet who have formed a group of billionaires dedicated to giving away half their fortunes. This is from the Telegraph.co.uk:

Mr Buffett is an extremely successful investor and one of the world's richest men, as well as one of its biggest givers to charity. Having pledged to give away 99 per cent of his estimated $47 billion fortune, much of it to the Bill & Melinda Gates Foundation, the so-called Sage of Omaha had wanted to get together a small group of like-minded billionaires to encourage their peers to join the ranks of what he dubbed the "Great Givers". Mr Gates, who has taken on an almost messianic role in advancing philanthropy since relinquishing the reins of Microsoft, needed no persuading to get involved.

Irwin Jacobs was present at that meeting. Probably not present at that dinner were libertarian billionaires Charles and David Koch. Their company Koch Industries makes $100 billion a year and they give mainly to right wing causes. They have become the major thorn in the side of President Obama's administration spending millions on lobbyists and funding think tanks like the Cato Institute (which they founded) and the Heritage Foundation and groups like Americans for Prosperity which funds the Tea Partiers. They give tons of money to academics to deny climate science and global warming while being named one of the top ten corporate polluters by University of Massachusetts at Amherst's Political Economy Research Institute. An exhaustive article in the August 23 edition of the New Yorker magazine details in depth all their activities which have set much of the conservative and anti-intellectual tone that the Obama administration is having to deal with including outright lies and distortions about Obama hinself such as that he's a Muslim (believed by 20% of Americans).

Now it's all well and good that humanitarian philanthropists donate to educational institutions, hospitals, arts and cultural institutions and the like, but, if they want to have a society worth preserving, they might want to think about setting up a think tank to advocate for sane public policy. It's not even a matter of the left-right political divide so much as it's a matter of the smart-dumb cultural divide. The Koch brothers are on a crusade to dumb down America. Their theory is that, if a lie is repeated often enough and enough people come to believe it, then they have effectively created the Truth. And I'm sure that smart guys like Irwin Jacobs, Bill Gates and Warren Buffett don't want to see American society become convinced of such lies as global warming doesn't exist when all reputable scientists have declared that it does.

Ralph Nader has written a book, Only the Super-Rich Can Save Us which is somewhat tongue-in-cheek, but the message is clear. If right wing billionaires are funding think tanks, academics, lobbyists and even mass movements like the Tea Party while liberal billionaires are out doing good deeds like funding educational institutions, hospitals and museums, the field is left open to the hate mongers and spin artists who are gradually moving the American people in a rightward direction. When a larger percentage of the population believes that global warming is not real today than believed it five years ago, something is wrong. We're going in the wrong direction. People are being uneducated, made dumber, despite the best efforts of educational institutions. An untruth is winning out over the truth. Science is being denigrated and think tanks are generating falsehoods.

Interestingly, enough both Irwin Jacobs and the Koch brothers graduated from MIT. They both narrowly escaped death in a plane accident, Jacobs by not going on a trade mission to Croatia with Ron Brown at the last minute and Koch being the only first class survivor of an actual plane wreck in LA. Other than that they don't have much in common. Jacobs is a Democrat who had a fundraiser for Barack Obama and supported Clinton and John F Kennedy.

Warren Buffett has made the public comment that he doesn't think it's fair that he pays taxes at a 15% rate while his secretary pays at a 30% rate. Obviously, these men have good intentions. So why aren't they publicly advocating in a billion dollar way the facts that global warming is real and that billionaires should pay more taxes?

This is from the New Yorker article:

The anti-government fervor infusing the 2010 elections represents a political triumph for the Kochs. By giving money to “educate,” fund, and organize Tea Party protesters, they have helped turn their private agenda into a mass movement. Bruce Bartlett, a conservative economist and a historian, who once worked at the National Center for Policy Analysis, a Dallas-based think tank that the Kochs fund, said, “The problem with the whole libertarian movement is that it’s been all chiefs and no Indians. There haven’t been any actual people, like voters, who give a crap about it. So the problem for the Kochs has been trying to create a movement.” With the emergence of the Tea Party, he said, “everyone suddenly sees that for the first time there are Indians out there—people who can provide real ideological power.” The Kochs, he said, are “trying to shape and control and channel the populist uprising into their own policies.”

So there are billionaires who want to do good and there are the Koch brothers who are building a popular movement based on lies and distortions whose agenda includes undermining true educational and liberal values in the interests, well, of Koch Industries and their $100 billion a year in revenues. It's a natural to be a climate science denier if part of your corporate empire is oil. While philanthropists like Jacobs, Gates and Buffett give for the benefit of humanity, the Koch brothers' charitable interests are completely self-serving:

Some critics have suggested that the Kochs’ approach has subverted the purpose of tax-exempt giving. By law, charitable foundations must conduct exclusively nonpartisan activities that promote the public welfare. A 2004 report by the National Committee for Responsive Philanthropy, a watchdog group, described the Kochs’ foundations as being self-serving, concluding, “These foundations give money to nonprofit organizations that do research and advocacy on issues that impact the profit margin of Koch Industries.”

The Kochs have gone well beyond their immediate self-interest, however, funding organizations that aim to push the country in a libertarian direction. Among the institutions that they have subsidized are the Institute for Justice, which files lawsuits opposing state and federal regulations; the Institute for Humane Studies, which underwrites libertarian academics; and the Bill of Rights Institute, which promotes a conservative slant on the Constitution. Many of the organizations funded by the Kochs employ specialists who write position papers that are subsequently quoted by politicians and pundits. David Koch has acknowledged that the family exerts tight ideological control. “If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent,” he told Doherty. “And if they make a wrong turn and start doing things we don’t agree with, we withdraw funding.”

... 

Naomi Oreskes, a professor of history and science studies at the University of California, San Diego, is the co-author of “Merchants of Doubt,” a new book that chronicles various attempts by American industry to manipulate public opinion on science. She noted that the Kochs, as the heads of “a company with refineries and pipelines,” have “a lot at stake.” She added, “If the answer is to phase out fossil fuels, a different group of people are going to be making money, so we shouldn’t be surprised that they’re fighting tooth and nail.”

In 2008 President Obama described the science on global warming as "beyond dispute." The Cato Institute, however, took out a full page ad in the New York Times to contradict him. They have parried Obama at every turn using their "scientists" and academics to dispute him. This has created the climate where Obama has been called every name in the book, accused of every crime, attacked at every turn no matter which way he turned. If Hillary had won, they would have done the same to her. In fact they used the same play book on Bill Clinton.

So high minded billionaires beware! While you are out there doing good deeds, your counterpart billionaires like the Koch brothers are doing their level best to move the electorate to the right, spread intolerance, denial of science and outright hatred for the values you gentlemen and ladies represent. Perhaps you should reconsider your giving, start a THINK TANK with liberal values, heed Ralph Nader's call for public advocacy and consider 'the pledge' in a new light.

Please read the New Yorker article.

The Kochs have long depended on the public’s not knowing all the details about them. They have been content to operate what David Koch has called “the largest company that you’ve never heard of.” But with the growing prominence of the Tea Party, and with increased awareness of the Kochs’ ties to the movement, the brothers may find it harder to deflect scrutiny. Recently, President Obama took aim at the Kochs’ political network. Speaking at a Democratic National Committee fund-raiser, in Austin, he warned supporters that the Supreme Court’s recent ruling in the Citizens United case—which struck down laws prohibiting direct corporate spending on campaigns—had made it even easier for big companies to hide behind “groups with harmless-sounding names like Americans for Prosperity.” Obama said, “They don’t have to say who, exactly, Americans for Prosperity are. You don’t know if it’s a foreign-controlled corporation”—or even, he added, “a big oil company.”

Democracy or “Lobbyocracy”?

Published on Sunday, August 22, 2010 by CommonDreams.org

 

by Arshad Khan

In July, the SEC fined Goldman-Sachs $550 million for failing to disclose vital information in selling an investment.  But if there were fraud, as alleged, then why not a criminal case?  John Paulson at Goldman-Sachs selected packages of mortgage loans that were most likely to fail and bet against them.  At the same time, Goldman sold these to clients deceptively as ‘least likely to fail', and, as endorsed independently by ACA Capital Management.  Goldman is not alone.  In all six major lending institutions investigated, there has been evidence of fraud as well as efforts to conceal it, and, so far, not a single criminal case.

Contrast this with the S&L scandal of the eighties when criminal prosecutions were prompt.  That debacle was the natural result of deregulating the Savings and Loans.  This time it was the banks that were deregulated and Glass-Steagall repealed.  Like clockwork these followed the same cycle of greed, fraud, bust, but with a major difference as noted earlier: no criminal prosecutions.  So what has changed?

Here is one answer.  There are now over 11,000 lobbyists.  Hundreds of ex-legislators and their staffers have joined their ranks.  Billions are being spent - more than a half-billion already for the impending November election.  The University of Kansas recently conducted research on the benefits of lobbying.  Here is just one example they unearthed:  A group of major corporations spent less than $300 million in lobbying for a particular tax break.  They were successful, saving over $60 billion in taxes.  That is twenty times their investment, and a rate of return almost impossible to achieve in a legitimate business venture by established corporations. 

Among the largest contributors, the finance industry stands out, and with it Goldman-Sachs in particular as an active source of cash and personnel.  It alone has around fifty lobbyists, both employed directly and also hired through lobbying firms.  This forceful and highly effective team includes many prominent former elected US Representatives.  It supports Congressmen, Senators, and, especially, members of key committees overseeing the industry.  It is also Obama's second highest contributor, $994,795 according to OpenSecrets.org.  Here is a list of personnel it has serving in the higher echelons of the Obama administration.

• Gary Gensler, Commissioner of Commodity Futures Trading Commission (former GS Partner);
• Larry Summers is a protege of Bob Rubin a former Chairman of GS and Clinton's Treasury Secretary;
• Mark Patterson, Geithner's Chief of Staff and the TARP overseer (former GS lobbyist and Vice President forGovernmental Relations);
• Dianna Farrell, Deputy Director, National Economic Council (former GS Financial Analyst);
• Stephen Friedman, Chairman, President's Foreign Intelligence Advisory Board - Board Member (former GS Chairman 1990-94; Director, 2005);
• Robert Hormats, Undersecretary for Economic, Energy and Agricultural Affairs, State Department (formerVice-Chairman, GS Group);
• Philip Murphy, Ambassador to Germany (former Head of GS, Frankfurt); and,
• John Thain, Advisor to Geithner (former GS President and Chief Operating Officer).

If all of this signifies an exclusive affinity with Democrats, nothing could be further from the truth.  Their support and influence is quite secular.  Thus Henry Paulson, the Treasury Secretary under George W. Bush, was a former Chairman of - you guessed it - Goldman Sachs.   The revolving door syndrome and the spectacular amounts of money involved become evident if we trace the career of just one staffer:  Rahm Emanuel, the current White House Chief of Staff left Clinton's White House near the end of their term to work for Wasserstein Parella.  He has a B.A. in Liberal Arts and a M.A. in Speech and Communication - no law or business education or experience to contribute.  Yet in two and a half years, he was included in eight deals that ‘earned' him $16.2 million.  No surprise then that while the President talks about strict controls on the financial giants, behind the scenes lobbying takes on a different tack. 

And any wonder that the toothless nematode of a Financial Reform Bill has been the result.  Limits on proprietary trading by the big banks recommended even by that old friend of banks, Paul Volcker, have been excluded.  Such trading by commercial banks on their own account has been permitted ever since Glass-Steagall was repealed through the energetic exertions of Bob Rubin and Larry Summers.  It was without doubt a major cause of our financial disaster and should have been a central feature of the bill.  It is not.  Even if all of Glass-Steagall is re-introduced, it would affect and proscribe the activities of only about ten major banks.  Yet, despite the havoc they, and other involved companies like AIG, have caused no real restraints are proposed.  A cursory look at the daisy chain of personalities lifts the veil high enough to note that nothing can change because the incestuous relationships do not permit different ideas.  Stellar economists and Nobel Laureates like Stiglitz and Krugman, can shout their heads off - nobody is listening because profits bolstered by the ‘free market' (read unregulated) win hands down.

To return to the daisy chain, here is an example.  Jamie Dimon, often rumored to be the next Treasury Secretary, is a close friend of Secretary Geithner who is then expected to rotate to a bank.  Mr. Dimon is the current head of J.P. Morgan-Chase.  Prior to that he was at Citigroup as the favored protege of Sanford Weill and rumored to be the next CEO until trouble brewed.  Mr. Rubin, a former chairman of Goldman-Sachs and a mentor to Tim Geithner, found a home at Citi after finishing his tenure at Treasury.  And so it goes on. 

The sad fact remains.  We were presented the best opportunity for change (in a couple of decades) by the financial collapse but failed to seize it.  Nothing can change, it seems, because a dependent President with no base, and no existing structure as, for example, a powerful former governor might have, is forced to use the scaffolding, already in place, constructed by the power bases in the Democratic Party.

Much worse have been the accusations against the Clintons.  The Keiser Report accuses Hillary of "look-back" trading.  It can be used as a scheme to transfer money secretly from one person to another and works like this:  Two commodity trading accounts are opened.  Each day simultaneous buy and sell orders are executed.  When the trades are closed, the winning trade is assigned to the account to which money is being transferred.  Hillary Clinton made $100,000, starting with $1000, in a commodity trading account over a 10-month period, at a time when her husband's salary was in the low thirties and they were desperate for money.  There has never been an adequate explanation why with such extraordinary commodity trading skills, she stopped trading shortly thereafter.  Most amateur commodity traders - almost 80% by some estimates - lose their stake within a few months.

Bill Clinton signed in the Commodity Futures Modernization Act in December 2000 just before leaving office.  Steered through by Rubin, Summers, Geithner et al, it, among other relaxations, excluded Credit Default Swaps from regulation.  The secret unregulated (a far cry from a regulated open market) trading in these yielded enormous profits until greed overtook common sense.  Then the government bailout.  Since Bill Clinton left office, he has accumulated over a $100 million, half in speaking fees - paid to a man noted for disputing the meaning of  'is' in a deposition.  Perhaps it is appropriate to quote the well-known journalist, Christopher Hitchens (no darling of the left himself, yet not a conservative, and one who, like the Clintons, supported the Iraq war) who states in a recent interview in the New Statesman, "Clinton could change his mind on any issue, but couldn't change the fact that he was a scumbag."

Then there is the special relationship Hillary and Bill maintain with Haim Saban, the billionaire entertainment mogul who is obsessed with a biblical prospect for Israel.  If you have been wondering whatever happened to the relatively neutral Middle East analysis from Brookings.  Well, in 2002, the $13 million dollar - largest gift in Brookings history - Saban Center for Middle East Policy happened;  in addition, Saban has doled out $5 million to Bill Clinton's library, untold millions through his group of deep pockets for Hillary's presidential campaign, $7 million for the Democrats' National Committee, etc.  Like the bankers, his is the voice that does not cry in the wilderness.

So, who cares if a family's home is foreclosed, or one in five are unemployed, or one in four children live in poverty, or the Gulf has vast dead zones, or that now, after the Israeli blockade, the World Health Organization reports almost half of the children in Gaza are anemic and stunted.  Sadly, not our government.  We have entered a new phase in our democracy, an era where elected officials no longer need to respond to the needs of the general public ... just the minority who pay to play.

Arshad M. Khan is a retired professor. He can be reached at: backfire@ofthisandthat.org

The Fourth Branch of Government

by John Lawrence

As everybody knows there are three branches of government: the executive (the President), the legislative (Congress) and the judicial (Supreme Court). But wait there's a fourth branch: the lobbyist. In fact the lobbyist branch has a membership which is 25.8 times the number of Congressmen! In addition to being the largest branch of government, The lobbyist branch is also the branch which funds the legislative branch and writes most of the legislation. The total spent on lobbying in 2009 was $3.49 billion. Lobbyists are responsible directly or indirectly for funding political campaigns of Congressmen and represent an industry that employs Congressmen when they leave "public service" to spend more time with their families, a time well provided for by not only Congressional pensions but by lucrative jobs lobbying their former colleagues in Congress.

There were 11,140 lobbyists in Washington in April 2010. It's like old home week as former Congressional colleagues reunite with their peers currently serving in Congress. There is a lot of back slapping and glad handing going on. According to the Washington Post:

The nation's largest insurers, hospitals and medical groups have hired more than 350 former government staff members and retired members of Congress in hopes of influencing their old bosses and colleagues, according to an analysis of lobbying disclosures and other records. The tactic is so widespread that three of every four major health-care firms have at least one former insider on their lobbying payrolls, according to The Washington Post's analysis. Nearly half of the insiders previously worked for the key committees and lawmakers, including  Sens. Max Baucus (D-Mont.) and  Charles E. Grassley (R-Iowa), debating whether to adopt a public insurance option opposed by major industry groups. At least 10 others have been members of Congress, such as former House majority leaders Richard K. Armey (R-Tex.) and Richard A. Gephardt (D-Mo.), both of whom represent a New Jersey pharmaceutical firm. The hirings are part of a record-breaking influence campaign by the health-care industry, which is spending more than $1.4 million a day on lobbying in the current fight, according to disclosure records. And even in a city where lobbying is a part of life, the scale of the effort has drawn attention. For example, the Pharmaceutical Research and Manufacturers of America (PhRMA) doubled its spending to nearly $7 million in the first quarter of 2009, followed by Pfizer, with more than $6 million. The push has reunited many who worked together in government on health-care reform, but are now employed as advocates for pharmaceutical and insurance companies. A June 10 meeting between aides to Baucus, chairman of the Senate Finance Committee, and health-care lobbyists included two former Baucus chiefs of staff: David Castagnetti, whose clients include PhRMA and America's Health Insurance Plans, and Jeffrey A. Forbes, who represents PhRMA, Amgen, Genentech, Merck and others. Castagnetti did not return a telephone call; Forbes declined to comment. Also inside the closed committee hearing room that day was Richard Tarplin, a veteran of both the Department of Health and Human Services and the Senate, where he worked for  Christopher J. Dodd (D-Conn.), one of the leaders in fashioning reform legislation this year. Tarplin now represents the American Medical Association as head of his own lobbying firm, Tarplin Strategies. "For people like me who are on the outside and used to be on the inside, this is great, because there is a level of trust in these relationships, and I know the policy rationale that is required," Tarplin said in explaining the benefits of having government experience. But public interest groups and reform advocates complain that the concentration of former government aides on K Street has distorted the health-care debate, and that it further illustrates the problem posed by the "revolving door" between government and private firms. "The revolving door offers a short cut to a member of Congress to the highest bidder," said Sheila Krumholz, executive director of the Center for Responsive Politics, which compiled some of the data used in The Post's analysis. "It's a small cost of doing business relative to the profits they can garner." Aides to Baucus and other lawmakers bristle at any suggestion of special treatment for former staff members. Baucus spokesman Scott Mulhauser said the senator "remains committed to working with a variety of stakeholders" as the Finance Committee attempts to come up with a bill this summer.

One of the biggest sellouts is Dick Gephardt, former liberal Democratic Congressman.

In 2003 he harshly condemned corporate crime, which he said "ruined people's lives for selfishness and greed," and launched his candidacy claiming, "Every proposal I'm making, every idea I'm advancing has a single, central purpose: to revive a failing economy and give working Americans the help and security they need." So why, six years later, was he on Capitol Hill representing one of the biggest players in the largest economic crisis since the Great Depression? And further, why was he recently working for Visa to kill credit card reform, helping Peabody Energy stymie climate change legislation and consulting for UnitedHealth Group alongside Tom Daschle to block meaningful healthcare reform?

Gephardt is representative of a breed who talks the talk, but can't resist that good corporate money to lobby former colleagues to do the exact opposite of what he advocated when he was appealing to voters in his reelection campaigns. These guys are such hypocrites, it's unbelievable. Rather than do something productive and humane in their later years, they go all in for the money. They're so corrupt and venal, but it's all perfectly legal so I'm sure they comfort themselves with that sentiment and rest peacefully in the knowledge that they are providing a large nestegg for their family as if their pension were not enough. I used to like Gephardt. He served as House Majority Leader and House Minority Leader. In other words he was high up there in the Democratic leadership. Then once out of Congress he lobbies for United Health Care and Goldman Sachs. What a pathetic hypocrite!

And then there's nepotism. A lot of relatives of Congressmen are paid to lobby Congress fattening the exchequers of the family budgets.

The Los Angeles Times recently reported that at least 28 members of Congress have close relatives working as Washington lobbyists, some without experience. GOP Sen. Trent Lott’s son, Chet, managed pizza restaurants and played polo before becoming a telecommunications lobbyist. The family of Senate minority leader Tom Daschle, D-S.D., includes his wife, Linda, an aviation lobbyist; his daughter-in-law, Jill, a lobbyist for companies such as Aetna and Blue Cross; and his son, Nathan, a former labor union lobbyist.

It's All in the Family as wives and children of Congressmen are hired as lobbyists and the Senator or Congressman himself becomes one as soon as he leaves "public service" for the "private sector."

And then there is the saga of Tom Daschle who Obama wanted to be his health care czar. The problem was Daschle had a little problem with paying his taxes after leading the good life, thanks to a friend, and getting free carfare. But Daschle didn't lobby; he merey adised!

That is the story of Tom Daschle, the former Senator and Obama's pick for Secretary of Health and Human Services. He is the guy who will fix health care, once his embarrassing tax issues are dealt with. All because a rich friend of his gave him millions of dollars to sit on the board of his media company that, oddly, had no business with the government. And also his friend let him use his Cadillac and driver for free, whenever he was out of town, and Daschle didn't pay taxes on that, because who knew? And so Daschle's accountant finally told him that he owed $150 grand in taxes, on that car, but he can afford it because his rich friend's investment firm gave Daschle $2 million to raise money and sit on the board, with other former lawmakers and random notable political types. Oh, and Daschle also worked for a Washington law firm that had as clients lots of groups doing government business, but Daschle didn't lobby, he just, you know, advised. And then a student loan company sent him to the Bahamas! That is what they're doing with our money! Christ! If it weren't for the fact that Tom Daschle is going to fix health care, we'd be really upset with him. And so a couple Republican Senators attempting to tarnish Obama's "ethical and open" image, and his lobbyist ban, will stall Daschle's nomination for a little while, because he is a former Senator, and former Senators are rich people, and rich people don't pay taxes.

These guys are so venal, it's unbelievable. The whole Republican party and about a third of the Democrats are totally bought and sold by corporate interests. They get huge campaign donations to legislate public policies that favor their paymasters, the corporations. Their wives and children get hired by the same corporations and paid outrageous salaries. And then when they "retire", they really cash in. They start law firms whose business it is to lobby their former colleagues to enact laws that benefit the corporations that are paying them. This is where the real power in Washington is - not with the people, but with the corporations and their lobbyists who are the fourth branch of the Federal government.

The US is not a democracy; it's a plutocracy - government by the rich and powerful monied interests. How many average citizens are represented in Washington by a lobbyist, let alone by an army of them? It's obscene to think that millions of dollars are spent on these people whose whole purpose in life is to argue against any effective regulation of the corporations they represent and to give favorable tax treatment, perks and benefits to them. Military-industrial complex lobbyists argue for more money for the defense contractors they represent. Oil corporation lobbyists lobby for more favorable subsidies and benefits for oil companies. Every gigantic monopoly corporate interest spends millions of dollars on lobbyists to keep government money, tax breaks and lack of regulation coming their way. The deunionization of the US effectively guarantees that the average person will not have his or her interests represented in Washington. These same corporations spend millions brainwashing the American public through TV advertising in order to get them to vote in the interests of the corporations and against their own self-interests. The news media is bought off by the lucrative advertising and by all the money they make from campaign commercials.

Washington: Theater of the Absurd

Published on Saturday, June 19, 2010 by CommonDreams.org

by Ralph Nader

The festering corporate government in Washington, DC, is a theater of the absurd. Some of the acts of this tragedy follow:

1. Start with the often hapless Center for Medicare and Medicaid Services (CMS), the agency that administers Medicare. Medicare pays $1,593 per injection of Lucentis for wet age-related macular degeneration as well as $42 per dose for Avastin, a drug that has a similar molecular structure, used by ophthalmologists.

Both drugs are made by Genentech. Lucentis is FDA approved for the vision problem and the other, Avastin, is approved to treat cancer. Doctors can also use Avastin for vision treatment. A study by three officials of CMS and Dr. Philip Rosenfeld, a retina specialist at the University of Miami, reported that for Medicare patients 60% of eye injections were Avastin, while 40% used Lucentis. Note this: Medicare paid $537 million for Lucentis in 2008 and only $20 million for Avastin!

2. Saving about half a billion a year by using Avastin is small potatoes to another CMS shortcoming. For fiscal year 2009, CMS paid $65 billion in erroneous payments-to deceased doctors, fraudsters, delinquent or imprisoned contractors and other suspended or debarred firms.

Organized fraud of Medicare is becoming more systemic. So President Obama wants CMS to use a new fraud-detection program. Professor Malcolm Sparrow of Harvard University, the nation's leading expert on health care billing fraud told them how to do this many years ago, but they were not listening.

The President wants to reduce throughout the government "payments in benefits, contracts, grants and loans to ineligible people or organizations," according to the Washington Post. Better trillions of dollars late over the decades, then never!

3. Five oil company executives, including from BP, admitted at a Congressional hearing this week that they did not have contingency plans worked out for catastrophic failures. What is, by comparison, the worst case scenario for offshore windfarms or solar/thermal conservation, or passive solar architecture? Energy Secretary Stephen Chu still does not note such a criteria to differentiate between energy supply priorities.

4. President Obama now, belatedly, recognizes that the notorious oil industry patsy, the Minerals Management Service (MMS) in the Department of Interior, was a washout non-regulator of offshore drilling inherited from the Bush and Clinton Administrations. Well he also better take a hard look at the Federal Railroad Administration (FRA), the Office of Pipeline Safety (OPS) and the Nuclear Regulatory Commission (NRC), which are variously pleased with being captured by the very industries they are supposed to regulate. Too many agencies, in essence, allow the companies to "self-regulate" - an oxymoron.

Each of these agencies may wake up some day to witness a catastrophic hazardous materials disaster or meltdown that they should have prevented with stronger standards, inspection and law enforcement. Heed this caution, Mr. President!

5. Another $50 billion request by the White House just whisked through Congress for the brutal, spreading, futile war in Afghanistan-the historic graveyard of empires. Republicans loved to vote for this raid on the taxpayers.

But this week, a united Republican cabal, joined by Senators Joseph Lieberman (D-CT) and Ben Nelson (D-NE), blocked a $120 billion package (the threat of filibuster again) to extend unemployment benefits, preserve Medicare payments, extend tax credits for corporate research, raise taxes on oil companies, other big companies and investment partnerships. The bill also includes $24 billion to aid state governments in preventing thousands of state layoffs, including teachers.

The point here is not arbitrarily to decry Republican questioning of this domestic bill. It is to show how an overall ignorant, rubberstamping Congress is not heeding the lessons from Vietnam and Iraq - the immense casualties, the destruction and poisoning of these countries by detonations, and laying waste to the environment, and the imperialist policies that also harmed our country in so many tangible and intangible ways.

6. Dana Milbank, the Washington Post reporter-satirist, was at the House of Representatives' hearing this week where Congressman Joe Barton (R-TX) apologized to BP's CEO, Tony Hayward, saying the White House's demand that BP set aside $20 billion for its huge toxic contamination to the Gulf coast and its people was "a shakedown." He added, for good supplicant measure, that he doesn't "want to live in a country" that treats a private corporation this way. He later apologized for his apology, at the behest of Republican House leaders.

The Barton outburst illustrates why it should be easy for the Democratic Party to landslide the Republicans in the 2010 Congressional elections. Probably the most craven version of the Republican Party ever, this team takes huge slurries of corporate money while blocking any safeguards for workers, consumers, small taxpayers, and the environment. They even defeated investor rights for shareholders, who own these companies, but whose bosses pay themselves obscenely to control them.

The Democrats have their hand out to the same commercial interests. But if they want to win, they'd better formulate the language of standing with the people over big business by November. And, if the Democrats don't want November to mark their curtain call, their language of standing with the people needs to be followed by action.

Ralph Nader is a consumer advocate, lawyer, and author. His most recent book - and first novel -  is, Only The Super Wealthy Can Save Us. His most recent work of non-fiction is The Seventeen Traditions.

A Lobbying Tempest Engulfs Financial Overhaul

Published on Monday, June 14, 2010 by Associated Press

 

by Jim Kuhnhenn

WASHINGTON - Congress' final tinkering with Wall Street overhaul this month offers lobbyists a last-ditch shot to reshape the package on behalf of clients with billions at stake.

Sen. Banking Committee Chairman Sen. Christopher Dodd, D-Conn., right, and House Financial Services Committee Chairman Rep. Barney Frank, D-Mass., speak to reporters outside the White House in Washington. Lawmakers will tackle sticking points and try to blend House and Senate bills into a single rewrite of banking regulations. (AP Photo/Susan Walsh, File)

Even as the legislation gets tougher on banks by the week, agents of influence are hardly strangers on Capitol Hill. Many once worked for the lawmakers they're lobbying.

Rep. Barney Frank, chairman of a panel resolving differences in House and Senate bills, and Sen. Chris Dodd, who shepherded the Senate's measure, have their hands full fending off industry efforts to dilute the final legislation. They must do so while trying to hold together a fragile Senate coalition with only four Republicans.

So sticking points in this legislative tempest, whether over big banks' exotic trades or the plastic in people's wallets, are awfully tricky.

At least 56 industry lobbyists have served on the personal staffs of the 43 Senate and House members who will shape the legislation over the next two weeks, according to Public Citizen and the Center for Responsive Politics, two government watchdogs.

What's more, the center found that lawmakers on the committee settling differences between the House and Senate versions have received more than $112 million over two decades from political action committees or employees of industries affected by the legislation.

A look at the main issues to be settled and how lobbyists come down on them as lawmakers try to deliver on President Barack Obama's request to give him a bill to sign by July 4.

Derivatives:

Many corporations typically use these unregulated securities as a hedge against market fluctuations. For instance, an airline may try to soften the cost of a potential rise in fuel prices by betting in the derivatives market that fuel prices will rise. But derivatives have become instruments for risky speculation. The legislation would require that they be traded in regulated exchanges.

The toughest Senate provision would force banks to shed most of their lucrative derivatives business.

The proposal's chief advocate is Sen. Blanche Lincoln, D-Ark., who survived liberal and labor attacks during a hard-fought primary runoff largely by spotlighting her anti-Wall Street stance. Now she's stronger in the debate.

The Obama administration and bank regulators have said her proposal goes too far.

Large banks are apoplectic, watching as it gains strength over time.

Volcker Rule:

A Senate plan known as the Volcker rule, after former Fed Chairman Paul Volcker, would prohibit banks from betting on the markets with their own money. It would let regulators determine the best way to put into place that prohibition, which would apply to all securities trades, not just derivatives.

Several Democratic lawmakers want to strengthen that by giving regulators less latitude to modify the prohibition, and by preventing financial firms from betting against securities they assemble for their clients.

Large banks see billions of dollars in trades slipping away. They prefer a House plan that merely says regulators could ban such trades. But Frank appears set on the tougher route.

Debit card fees:

Americans use debit cards more than credit cards. But their use costs merchants money: For every swipe, merchants pay 1 percent to 2 percent to banks and credit networks.

A proposal that passed the Senate would require the Federal Reserve to limit those fees, and it has created a lobbying donnybrook between banks and retailers.

Most of the fees go to banking giants. But the face of the lobbying effort has been small community banks and credit unions that say they will be disproportionately hurt if they lose such fees.

The proposal excludes banks with assets under $10 billion. Officials at small banks say their institutions still would have to lower their fees to compete with bigger banks or drop their debit card programs.

Consumer protections:

The final legislation would create a government consumer financial protection entity. This was once considered the most contentious step sought by the administration.

The House bill exempted accountants, tax preparers, real estate agents and auto dealers from this oversight. The Senate bill has no such exceptions.

Auto dealers have lobbied fiercely to be excluded from the law's reach, arguing that they assemble loans but don't administer them. Obama has fought back, elevating the issue to a test of White House strength.

___

Online:

House Financial Services Committee: http://tinyurl.com/y4uercn

Senate Banking, Housing and Urban Affairs Committee: http://banking.senate.gov

Consumer Federation of America: http://www.consumerfed.org

Public Citizen: http://tinyurl.com/2a5zyn9

Center for Responsive Politics: http://tinyurl.com/23qbmwo

© 2010 Associated Press

What Do Wall St, Mining and Oil Rig Disasters Have in Common: Deregulation

by John Lawrence

Recent disasters on Wall Street are directly attributable to the lax regulations and lax regulatory atmosphere of the regulatory agencies who go one step farther and don't even enforce the limp regulations still on the books. Instead regulators at the SEC spend their days watching porn. Meanwhile at the Minerals Management Service (MMS), instead of regulating the mines and oil rigs, they were having sex and cocaine parties with the employees of corporations they were supposed to be regulating!

Corporations spend millions of dollars on lobbyists whose purpose is to change the laws in order to reduce regulations on corporations. And then regulatory agencies under George W  Bush were staffed by folks who were dedicated to non-regulation as a matter of principle. So what to do with all their free time spent not doing their supposed jobs? Why not party with the very folks you're supposed to be regulating or watch porn?

Norway demands that off shore oil rigs have a device which can remotely shut off oil flow if necessary. Dick Cheney decided that such a device, which would have shut off the flow of oil that is polluting the Gulf, was unnecessary on American oil rigs. The reason was that the device cost $500,000., a pittance compared to oil company profits. The following is from an article in the Wall Street Journal:

The oil well spewing crude into the Gulf of Mexico didn't have a remote-control shut-off switch used in two other major oil-producing nations as last-resort protection against underwater spills. The lack of the device, called an acoustic switch, could amplify concerns over the environmental impact of offshore drilling after the explosion and sinking of the Deepwater Horizon rig last week. The accident has led to one of the largest ever oil spills in U.S. water and the loss of 11 lives. On Wednesday federal investigators said the disaster is now releasing 5,000 barrels of oil a day into the Gulf, up from original estimates of 1,000 barrels a day. U.S. regulators don't mandate use of the remote-control device on offshore rigs, and the Deepwater Horizon, hired by oil giant BP PLC, didn't have one. With the remote control, a crew can attempt to trigger an underwater valve that shuts down the well even if the oil rig itself is damaged or evacuated. ... Nevertheless, regulators in two major oil-producing countries, Norway and Brazil, in effect require them. Norway has had acoustic triggers on almost every offshore rig since 1993. The U.S. considered requiring a remote-controlled shut-off mechanism several years ago, but drilling companies questioned its cost and effectiveness, according to the agency overseeing offshore drilling. The agency, the Interior Department's Minerals Management Service, says it decided the remote device wasn't needed because rigs had other back-up plans to cut off a well. ... Industry critics cite the lack of the remote control as a sign U.S. drilling policy has been too lax. "What we see, going back two decades, is an oil industry that has had way too much sway with federal regulations," said Dan McLaughlin, a spokesman for Democratic Florida Sen. Bill Nelson. "We are seeing our worst nightmare coming true."

In addition to catering to oil corporation demands for lax regulations and limp regulatory enforcement, the US extracts a relative pittance in royalties for US taxpayers requiring only 12.5% of oil company profits compared to 50% in Norway. Norway's Government Pension Fund is entirely funded by royalties from oil. But the US taxpayers receive a paltry sum from oil royalties while oil companies rack up record profits.

(1) A 2007 Government Accounting Office (GAO) report on Gas and Oil Royalties found: "In fiscal year 2006, oil and gas companies received over $77 billion from the sale of oil and gas produced from federal lands and waters, and the Department of the Interior's Minerals Management Service (MMS) reported that these companies paid the federal government about $10 billion in oil and gas royalties. (Royalties are usually about 12.5 % to 16.7% of the final value.) "Based on results of a number of studies, the U.S. federal government receives one of the lowest government takes (percentage of cash flow) in the world. Collectively, the results of five studies presented in 2006 by various private sector entities show that the United States receives a lower government take from the production of oil in the Gulf of Mexico than do states--such as Colorado, Wyoming, Texas, Oklahoma, California, and Louisiana--and many foreign governments." For example: The states above receive royalties of between 51% to 57%; United Kingdom: 52%; Norway: 76%; Australia: 61% and Alaska: 53%. (GAO-07-676R Oil and Gas Royalties, 2007)

The two most profitable US corporations were Exxon Mobil and Chevron making a combined total of $69 billion in 2009. Compared to these profits only about $7.6 billion went to the US Government (er, uh, TAXPAYERS) for oil, gas and coal royalties. US taxpayers are clearly getting the shaft while private corporations get record profits. But then when a disaster occurs as it did on Wall St and as it did in the Massey Energy mining disaster and the disaster in the Gulf, US taxpayers are called upon to spend billions bailing out the corporations or cleaning up the mess. Meanwhile, the oil companies tie up their portion of the expense in court. Recipients of damage claims for the Exxon Valdez disaster had to wait 20 years to collect and by then Exxon had managed to get the damages reduced to practically nothing and some of the claimants had already died. I predict that the same will be true for the disaster in the Gulf. By law (thanks to oil company lobbyists) the liability of the oil companies is only $75 million, and US taxpayers are on the hook for the rest which could mount up to $14 billion by some estimates. So when BP says repeatedly that they will pay all legitimate claims, don't you know that in the back of their spokesman's mind is the specter of prolonged court hearings and that $75 million limit?

With regard to the above referenced GAO report ...

"This report shows that the U.S. has one of the most lenient royalty collection systems in the world and calls into question whether taxpayers are getting a fair return for the resources they own," said Rep. Nick Rahall, D-West Virginia and chairman of the House Natural Resources Committee. Bottom line... The industry buys our oil cheap and often pays us for it by giving some back... And only then when they feel like it. Sweet deal. The information above only scratches the surface of royalty mismanagement and oil industry malfeasance. Given their past record, should we assume the oil industry has only our best interests at heart in the future? One would think the issue of oil and gas royalty underpayment and payment abuse would be good political campaign fodder for Democrats this year but the silence is deafening. (Not so for the Republican enthusiasm for the Drill Here, Drill Now.) John McCain's recent epiphany on offshore drilling, with no stated restrictions, should land him straight in the cross-hairs. Obama, should he decide to push the issue, can show his creds by touting his sponsorship of S.115 The Oil SENSE Act (01/2007). The bill called for the suspension of royalty relief, the repeal of certain provisions of the Energy Policy Act of 2005, and to amend the Internal Revenue Code of 1986 to repeal certain tax incentives for the oil and gas industry. (The bill died in committee.)

Of Paradigm Shifts and Paradigms Unshifted

by John Lawrence

It was 1968. Everybody was looking forward to the Age of Aquarius.

Harmony and understanding
Sympathy and trust abounding
No more falsehoods or derisions
Golden living dreams of visions
Mystic crystal revelation
And the mind's true liberation
Aquarius! Aquarius!

So sang the Fifth Dimension. There was to be a forthcoming paradigm shift from the old paradigm of war, acquisitiveness, competition, ticky tack houses, jealousy, suspicion, exclusiveness to a new paradigm of peace, love, cooperation, trust, inclusiveness. There was to be more sharing and less money grubbing, everyone was to be entitled to a good life - no more poverty, no more racism. Harmony and understanding, no more hypocrisy. And everyone could lead a fulfilling life of satisfaction.

What happened? The paradigm never shifted, that's what. Instead of a new paradigm, what happened instead was that the old paradigm intensified. We got more war, a more intensified rat race, more McMansions. Instead of the mind's true revelation we got ... Ronald Reagan! We got fed more drivel about "Morning in America." We got more exploitation, more commercialism. In fact the Age of Aquarius itself was commercialized! Instead of hippies with bell bottoms and tie died shirts, we got J Crew and Abercrombie and Fitch. We got an ever expanding and all inclusive military-industrial complex. We got hedge funds and credit default swaps.

True, the new paradigm was just too risky. Trust and unlocked doors led to the murderous perversion of the Manson family. People withdrew into more conservative lifestyles after criminals took advantage of the trust and openness. The paradigm never shifted. Things went back to business as usual. Students, once relieved of the draft, became more conservative. We entered a 40 year period where Republican politics held sway. John Kennedy, Robert Kennedy and Martin Luther King had all been killed. A dream deferred became a dream that, for all intents and purposes, had died. The CIA overthrew democratically elected governments in South America only to replace them with repressive governments, military dictatorships and the Chicago Boys - disciples of Milton Friedman dedicated to the libertarian dream of privatization, deregulation and free trade - a free trade, incidentally, that President Clinton recently admitted had ruined Haiti's rice farmers. It was good to be greedy. Sharing was for the birds. Egotism and arrogance were back in fashion. The USA was number 1, and don't you forget it, baby.

Ronald Reagan initiated the tax break mantra that would lead to all good things including increased government revenues, according to the Laffer curve. Free trade would open up brave, new vistas where American goods and American ideas were exported everywhere. Instead American jobs were exported. Trade and national deficits grew. NAFTA produced that "giant sucking sound" that Ross Perot had predicted. The one Democratic President during this period, Bill Clinton, got co-opted and then impeached for his efforts. The Laffer curve turned out to be a fake. The US having lowered taxes collected less revenues and went further into debt. American markets were flooded with cheap foreign imports. THe US went from being the world's largest creditor nation to being the world's largest debtor nation. The US was reduced to begging China to revalue its currency because having invested its prestige in the libertarian philosophy of Milton Friedman, Alan Greenspan and Ayn Rand of free trade, deregulation and privatization, it could not go back even when it became obvious in the Great Financial Meltdown of 2008 that this philosophy had left the US in a shambles, fast becoming a Third World nation left in the dust by the rest of the developed and developing world.

No, when the paradigm really needed to shift from the lower taxes, smaller government crowd, when the libertarian paradigm had proven to be a fraud and a failure, Americans hung on ever more tightly to the outmoded paradigm - America is the best and the wisest nation on earth. We're the leaders. We "won" the Cold War. We're number 1. Even after China had become our banker, loaning us the money to fight ridiculous, unwinnable wars of aggression while leaving our borders undefended, even after the middle class had lost ground under the old paradigm of less government (more deregulation), even after Alan Greenspan had admitted that the banks had not regulated themselves but had screwed up everything and then were rewarded with billions of dollars of taxpayer money, Americans clung to the old paradigm of getting government off their backs and out of their lives. As Ronald Reagan had said: "The nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'". Americans still clung to the happy homilies of "Morning in America."

Barack Obama was elected to bring about change, but change is the last thing American corporations wanted. They clung to the old paradigm with a vengeance. They spent untold millions on lobbyists whose job was to guarantee that there would be no change. The left, which had been so vocal in the sixties, replaced the right as the silent majority with no vision for an America any different from the status quo plus maybe a little extra for the middle class. The right amped up its rhetoric to the point that a health care reform bill became "Armageddon." A bill that guaranteed that there would be only privatized health care corporations which were to be delivered 30 million new customers became socialism. It was unthinkable even to advocate for real socialism. Everything had to be couched in the rhetoric of the right. Reform had to be acceptable to the large corporations. Even human genes had been privatized and patented to the point that biotech companies owned the genes responsible for early onset breast cancer and would send "cease and desist" letters to any other party that had the audacity and temerity to want to do further research regarding them.

Barack Obama had his work cut out for him. No longer was it acceptable to have a War on Poverty. The poor and homeless continued to accumulate on the streets of America as jobs continued to dry up. But Americans considered it immoral for the government to use their tax money to try to help them. It was not immoral, however, to use their tax money to fight wars of aggression on foreign soil while ignoring the real war raging on the border. Arcane rules in the Senate allowed a determined bunch of paid off politicians to stop any progress whatsoever even after the prevailing conservative philosophy had produced the catastrophe of the Great Recession. The big banks, even after having been bailed out at taxpayer expense because they were too big to fail, were determined to get even bigger and to hand out even more outrageous bonuses to their executives. The culture of money and accumulation was intact. Greed was still good. The growing army of bankrupts and the foreclosed upon were losers in the American argot. Americans didn't want their tax money supporting them. Americans, it seemed, only wanted their tax money to go for war and to give corporate welfare to large corporations. They complained that it was socialism and a government takeover when the government took back under its wings the issuance of student loans which had been a cash cow for private corporations at taxpayer expense.

So when the paradigm really needed to shift, Americans wouldn't let it. They were all caught up in the disappearing reality that they were the privileged elite of the world who were entitled to consume the majority of the world's resources and produce the majority of the world's garbage. Instead they were becoming Richard Nixon's descriptive term: "pitiful, helpless giants". President Obama had all he could do to get meager health care reform and for his efforts was branded a socialist and a Nazi. He dare not even speak of reducing the deficit by ending the wars and shifting the military-industrial complex budget, larger than that of the rest of the world combined, to more productive purposes like alternative energy production and high speed rail. No, people still wanted lower taxes. They didn't care if their taxes were lowered by just a few dollars while the large corporations had theirs lowered by millions. They didn't care if lower taxes increased the national debt. They didn't care if more futile offensive wars increased the national debt while actual defenae could be had for a relative pittance and the savings used for peaceful purposes. Just don't tread on them.

When the handwriting was on the wall, when the old pardigm had completely failed, when the paradigm really needed to shift, Americans clung to the old paradigm with a vengeance. Even  as large corporations took control over their lives, they clung to their freedom, misidentifying the source of its diminution as the government itself rather than the government as controlled by private corporations by means of their lobbyists, campaign contributions and TV advertising. After all how can there be a national debate when the chief advertisers on "Meet the Press" are the Boeing Corporation (chief defense contractor) and the Exxon Corporation (major oil producer). Do you think the debate on Meet the Press is going to be critical of the military-industrial complex or the oil industry?

So while America treads water, despite the heroic efforts of President Obama and a few Democrats to turn around the ship of state and enter a new paradigm, Americans clamor for smaller government and long for the days in the 1950s when Eisenhauer was President, cars had tail fins and jobs were plentiful.

The Irrationality of the Tea Party Movement

by John Lawrence

The Tea Party people don't make sense. A lot of them have lost their jobs so they have plenty of time to protest. But to protest what? They want smaller government even as they are sitting there collecting unemployment? A lot of them have lost their houses or their houses are underwater. So they want government, the only entity that is trying to help them, out of their lives? It just doesn't make any sense. I've often wondered - where do these people get time off from work to do all this protesting? Well now the answer is clear. According to a New York Times article, With No Jobs, Plenty of Time for Tea Party, a lot of them have lost their jobs:

SOUTH BEND, Ind. — When Tom Grimes lost his job as a financial consultant 15 months ago, he called his congressman, a Democrat, for help getting government health care. Many Tea Party supporters argue for smaller government even as they argue it should do more. Then he found a new full-time occupation: Tea Party activist. In the last year, he has organized a local group and a statewide coalition, and even started a “bus czar” Web site to marshal protesters to Washington on short notice. This month, he mobilized 200 other Tea Party activists to go to the local office of the same congressman to protest what he sees as the government’s takeover of health care. Mr. Grimes is one of many Tea Party members jolted into action by economic distress. At rallies, gatherings and training sessions in recent months, activists often tell a similar story in interviews: they had lost their jobs, or perhaps watched their homes plummet in value, and they found common cause in the Tea Party’s fight for lower taxes and smaller government.

I guess disgruntled people will seek out and join a movement, any movement. Since this one got started with corporate help and hence is known not as a grass roots movement but an astroturf movement, the activists hold to the illogical position that they want smaller government but more help with the problems they're facing. Logically then, they should ask the corporations not government for help. See where that gets them! It's clear that these people are being used by the right and corporate interests for their own political purposes.

Many Tea Party supporters argue for smaller government even as they argue it should do more.

Maybe what they really stand for is that government should help them - mostly white middle class people- and not minorities or illegal immigrants in which case their protestations are mainly code for racism and discrimination. Sarah Palin said that what we want is "freedom," and Janis Joplin said, "Freedom's just another name for nothing left to lose." Well, the Tea Partyers, it sounds like, have nothing else to lose. They've lost their jobs, lost equity in their houses, are on unemployment or social security and now they want government to do for them even as they demand smaller government. In other words they want government to do for them - nice white folks - even as it shuts down programs for the poor.

The Great Depression, too, mobilized many middle-class people who had fallen on hard times. Though, as Michael Kazin, the author of “The Populist Persuasion,” notes, they tended to push for more government involvement. The Tea Party vehemently wants less — though a number of its members acknowledge that they are relying on government programs for help. Mr. Grimes, who receives Social Security, has filled the back seat of his Mercury Grand Marquis with the literature of the movement, including Glenn Beck’s “Arguing With Idiots” and Frederic Bastiat’s “The Law,” which denounces public benefits as “false philanthropy.” “If you quit giving people that stuff, they would figure out how to do it on their own,” Mr. Grimes said. The fact that many of them joined the Tea Party after losing their jobs raises questions of whether the movement can survive an improvement in the economy, with people trading protest signs for paychecks. But for now, some are even putting their savings into work that they argue is more important than a job — planning candidate forums and get-out-the-vote operations, researching arguments about the constitutional limits on Congress and using Facebook to attract recruits. “Even if I wanted to stop, I just can’t,” said Diana Reimer, 67, who has become a star of the effort by FreedomWorks, a Tea Party group, to fight the health care overhaul. “I’m on a mission, and time is not on my side.” A year ago, Ms. Reimer’s husband had been given a choice — retire or be fired. The couple had been trying to sell their split-level home in suburban Philadelphia to pay off some debt and move to a small place in the city. But real estate agents told them the home would sell for about $40,000 less than they paid 19 years ago — not enough to pay off their mortgage. Then Ms. Reimer saw a story about the Tea Party on television. “I said, ‘That’s it,’ ” she recalled. “How can you get this frustration out, have your voices heard?” She liked that the Tea Party was patriotic, too. “They said the Pledge of Allegiance and sang the national anthem,” she said. She had taken a job selling sportswear at Macy’s. But when her husband found her up early and late taking care of Tea Party business, he urged her to take a leave. When the store did not allow one, she quit. “I guess I just found my calling,” she said.

While some might find it odd that a group of people living on government support should be protesting against the government, these people are doing what comes naturally to them: not thinking for themselves and falling into a convenient role set up for them by corporate America complete with flag salutations and singing of the National Anthem. The trappings of an America that they once knew and are afraid they are losing is what attracts them to this cause. The Tea Party movement was organized by FreedomWorks, a conservative group organized by Dick Armey, a lobbyist for the pharmaceutical and life insurance corporations. ThinkProgress reports:

FreedomWorks represents a top-down, corporate-friendly approach that has been the norm for conservative organizations for years. As Obama prepares to push to close corporate tax loopholes, reform health care, and transition to a clean energy economy, we can expect more corporate lobbyists to create astroturf protests to oppose change.

So all these old people are protesting for an America they thought they knew in bygone days. It's nostalgia for the past fully capitalized upon by corporate lobbyists. In other words the Tea Partyers, unbeknownst even to themselves, are carrying the water for corporate America, and what does corporate America want? It wants smaller government (read "deregulation"); it wants government out of corporate America's life. The Tea Partyers, who are collecting social security and unemployment insurance checks, don't really want government out of their lives if it means they won't get their government checks any more. They just don't want groups other than themselves to get any government help. Their Weltanschaaung has been given to them by corporate America. Their mantras and slogans have been given to them by corporate America. Just as corporate America has given them their pills and their nursing homes, they like the look and feel of the ads and literature with that friendly and concerned hue that has been given to them by corporate America even as corporate America has continued to fleece them. Only don't blame corporate America for the fact that your lives aren't what they used to be. Blame government. Dick Armey and FreedomWorks have cleverly shifted the blame from corporate America to government. Corporate America has given them a cocoon within which to operate - a nice warm Snuggy.

The Tea Party movement is all about nostalgia for the trappings of mid-twentieth century America, and those trappings have been conveniently provided to them by corporate America so they don't have to think critically for themselves. They can just salute the flag, sing "God Bless America" and say "Thank you for your service" to all the veterans present.

Jeff McQueen, 50, began organizing Tea Party groups in Michigan and Ohio after losing his job in auto parts sales. “Being unemployed and having some time, I realized I just couldn’t sit on the couch anymore,” he said. “I had the time to get involved.”   He began producing what he calls the flag of the Second American Revolution, and drove 700 miles to campaign for Mr. Brown under its banner. Flag sales, so far, are not making him much. But he sees a bigger cause. “The founding fathers pledged their lives, their fortunes and their sacred honor,” he said. “They believed in it so much that they would sacrifice. That’s the kind of loyalty to this country that we stand for.” He blames the government for his unemployment. “Government is absolutely responsible, not because of what they did recently with the car companies, but what they’ve done since the 1980s,” he said. “The government has allowed free trade and never set up any rules.” He and others do not see any contradictions in their arguments for smaller government even as they argue that it should do more to prevent job loss or cuts to Medicare. After a year of angry debate, emotion outweighs fact. “If you don’t trust the mindset or the value system of the people running the system, you can’t even look at the facts anymore,” Mr. Grimes said. Tea Party groups like FreedomWorks recognize that they are benefiting from the labor of many people who have been hit hard economically. But its chairman, the former House majority leader Dick Armey, argued that their ranks will remain strong — and connected — even as members find work. “I see these folks as pretty much the National Guard,” Mr. Armey said. “They will go back to their day jobs, they will go back to their Little League and their bridge club. But they will have their activism at the ready, and they will stay in touch.” Mr. Grimes, for his part, is thinking of getting a part-time job with the Census Bureau. But he is also planning, he said, to teach high school students about the Constitution and limits on government powers. “I don’t think that the unemployment thing is going to change,” he said.

Jeff McQueen rightly blames free trade for the loss of jobs in America. And it's true that the government has promoted free trade, but at whose behest? Government has been lobbied extensively by corporate America for free trade because it benefits US transnational corporations, and it is a conservative article of faith that that's the way it should be. The conservative administrations of the last 30 years starting with Ronald Reagan have implemented free trade. To be honest, the Republican-lite Clinton administration did also, but Clinton recently has seen the error of his ways and recanted. ("I have to live every day with the consequences of what I did."). The Obama administration and Democrats in general are fighting back on free trade. Mr. McQueen needs to make a distinction between those who aid and abet and use government to promote corporate interests and those who are fighting back against the corporate takeover of government. It's not about a government takeover; it's about a corporate takeover of government which uses bought and paid for politicians, lobbyists and TV ads to convince the likes of Mr. McQueen that corporations are good, government is bad, even as they use government to promote corporate interests at the expense of Middle America.

I'm Mad As Hell And I'm Not Taking It Any More

What the "I'm Mad-As-Hell" Party Could Do

by Robert Reich
Sunday, January 24, 2010

A third political party is emerging in America. Call it the I’m-Mad-As-Hell party.

It’s a mistake to see the Mad-As-Hell party as just a right-wing phenomenon – the so-called Tea Partiers now storming the gates of the Republican Party. There are plenty of mad-as-hellers on the left as well – furious at Wall Street, health insurers, pharmaceutical manufacturers, and establishment Democrats.

Mad-as-hellers don’t trust big government. But they don’t trust big business and Wall Street, either. They especially hate it when big government gets together with big business and Wall Street – while at the same time Main Street is in shambles and millions of people are losing their jobs and homes. 

First it was TARP, the giant bank bailout that seems to have made Wall Street flush again — so flush the Street is now distributing giant bonuses as if the crash it brought on never happened.

Then came the stimulus package, replete with earmarked goodies for every corporation big enough to hire a team of Washington lobbyists.

And then it was health care, which to some people looked like a sweetheart deal between government and Big Pharma and big health insurers.

To the Mad-As-Hell party, the biggest event last week wasn’t Scott Brown’s upset victory in Massachusetts. It was the Supreme Court’s decision in Citizen’s United vs. the Federal Election Commission, allowing corporations to spend however much they want on political campaigns. True mad-as-hellers see this as inviting even more collusion between big business, Wall Street, and big government – and against the rest of us.

With the mid-term elections months away, both Republicans and Democrats are scrambling to embrace the Mad-As-Hell Party as their own. Republicans are hoping the mad-as-hellers forget the gushing corporate welfare of the Bush administration and the last Republican congress. And Democrats have become born-again economic populists, blaming the nation’s problems on the same “fat cat” bankers and corporate lobbyists they’ve been cozying up to for years.

If the Mad-as-hell Party helps get money out of politics it will do a world of good. I might even join up. But if it just fulminates against the establishment, forget it. Wrecking balls are easy to wield. Rescuing our democracy is hard work.

Frank Thomas on the Massachusetts Election Result

by Frank Thomas, January 21, 2010

A BROKEN-DOWN SYSTEM OF GOVERNANCE

The Democratic loss in MA is a wakeup call to the convoluted, divisive  governance of our much acclaimed social-political system – a system  failing more and more miserably in employing the best of human thought and integrating the best of the old with what must be new to solve huge problems threatening the general welfare and economic progress of Middle and Upper class American [Ed. note: also Lower class] households in the 21st century.    

Obama is now seen by his supporters, e.g., in Massachusetts, as having walked away from his campaign promise of a paradigm transformation of how business is done in Washington …. a modus operendi for the past 30 years that has left the Middle Class to their own survival wares and charitable mercy of Upper Class interests. This is hauntingly true in context of the broken two-party “all or nothing”  political culture that pits the INS against the OUTS and the OUTs against the INS irregardless of the human cost or pain to the jobless, homeless, uninsured and underinsured COLLECTIVE …. with the lobbyist money parasites ultimately calling the policy shots.

In short, our democratic form of government predicated on the hallowed principle: “by, of, and for the people” has been transformed into an institution signed, sealed and delivered by the wealthy monied interests. Both political parties are trapped in this ignominious, morally corrupt game. Result? Political survival by gracing the lobby money tree is more important than tending to our common values, shared environment and goals, e.g., a well-educated, healthy, employed, law-abiding workforce …. where freedom, economic opportunity, a fair playing field and protection of property rights are everyone’s inalienable rights.   

In our broken-down governance, however, good ideas for improving this common social infrastructure get legislatively politicized to extinction. Despite this, Obama’s Administration has achieved wonders: an $800 billion infrastructure stimulus and job generating package (which most esteemed economists see as still inadequate) that has averted a Depression, and Senate/House approval for a much compromised general health care bill (not achieved in 60 years) – albeit at the price of weakly focusing on cost reduction and foolishly cutting sweetheart deals with the drug and insurer industries.

But when Republicans robotically use the filibuster and vote 100% unity against all Democratic bills to destroy Obama’s Presidency at any cost and which is supported by Blue Democrats – the latter elected on Obama’s 2008 election wings and fearful of not being re-elected in conservative states – let’s recognize that a fickle voting public is courting a return to dysfunctional governance. Result? ..., a “ME FIRST” governing process that is paralyzed by systemic infighting, do-nothing stallmates and a Republican taste for a Reaganite survival-of-the-fittest culture comprising the best, brightest and richest while watching over 70% of American households struggle in the garbage can of minimum wages and meager benefits.

If Republicans succeed in their from-the-start goal to make Obama’s governing program ineffective, thus contributing to his failure to be reelected in 2012, then we can all watch as Democrats extract their revenge by also resorting to the filibuster and obstructing all Republican initiatives. Result? Our nation goes through another decade or more of do nothing government bringing us closer to undeveloped nation status with regard to quality of life, employment stability, minimum social-nets, etc.

The system as it now operates inevitably causes vital legislation to be watered-down to a level of mediocrity (incomprehensibility and exceptions engineered by lawyers) where nobody wins in the end. Will Republican Governor Hoeven or Duane Sand of North Dakota (unannounced, announced candidates, respectively, for US Senate) or recently elected State Senator Scott Brown of MA strongly support the  access, coverage, affordability and quality of America’s health care system for All? No! The cry immediately after Brown’s victory is that health care is DEAD! Will they be creative in promoting government incentives that will stimulate job growth, job retraining and renewed manufacturing for the working class …. or will overt job destruction by outsourcing, automation, roboticizing redundancies continue as the normal business of the day? Will they support a tough set of rules/regulations to minimize another financial disaster with another round of brutal pension and job losses for Main Street? Answer? Highly unlikely! They’ll simply feel obliged to block any plan not welcomed by the monied interests that got them elected …. just as the Blue Democrats are doing. It’s all about winning at any cost...   

Fellow Americans who can still think outside the box, Wake Up. The system is broken! We must constructively, fairly, humanely repair it.  
Political stallmate will also insure there will be neither real reform of the world’s most costly, poor-coverage health care system nor real reform of an out-of-sight-unregulated, greedy financial system. After the bailouts, the banks are now laughing all the way to the bank while the “not bailed out” jobless and homeless suffer on. Banks that were too big to fail are now bigger than ever … enjoying the implicit guarantee that if trouble returns, taxpayers will bail them out. Mainstream Americans will then again see their standard of living and quality of life further decline in the next crisis. The power oligarchy of the rich over the impoverished that we have nurtured will deepen, laying naked a democracy “by, of, and for the people” as pure myth rather than reality.   

The governing system is broken. It’s in a morass where every politician is valued on what he or she said or did yesterday ... unleashing hysterical outbursts, irrational fear and debate, quick, fickle prejudgments, impatience, a culture of lies, even hatred … all directed at our first black President who after all is humanly capable of mistakes like anyone else. But a President, who I also believe is trying his brillant best to salvage a sinking ship suffering from multiple structural disrepairs and internal stresses ever since Reagan’s Presidency which incentivised our people’s worst human impulses of self-interest, greed, and vulnerabilty.

If we can’t creatively and pragmatically come together around our Individual and Common interests (as magnanimously as we are for Haitians), if politicians, corrupted by lobbyist money and that of the far right, continue to have free hand to empower Vested interests and an everyone for himself/herself cultural ethic – legitimized by repeating the usual phoney, self-serving, politically manipulated verbalisms, “freedom and liberty, small government and low taxes,” – then very dark days lie ahead for the America I grew up in during Presidents’ Harry Truman and Dwight D.Eisenhower’s time.  

For in the 50s and 60s we had an America where Balance and Equity between government and market mechanisms for Individual and Community progress were the values guiding societal norms … AN AMERICA, barring the Vietnam War, at peace and equilibrium with its citizens' needs and aspirations.

Will the Consumer Financial Protection Agency Go Down to Defeat?

Will The Banks Win Again? Bailout Watchdog Rallies Support For Consumer Protection Agency

From Huffington Post

First Posted: 01-19-10 12:54 AM   |   Updated: 01-19-10 03:54 AM

Elizabeth Warren

The battle in the Senate over a proposed consumer financial protection agency is the final show-down between banks and American families, bailout watchdog Elizabeth Warren wrote to supporters Monday night.

The outcome "will show whether we are going to let the industry continue to write the rules -- to keep the cops off the beat -- or whether the financial crisis actually changed something."

Senate Banking Committee Chairman Christopher Dodd (D-Conn.) is said to be considering dropping the proposed independent agency from the Senate's financial reform bill.

But Warren isn't giving up. "We have all worked hard to make the CFPA into a reality, and the next few weeks will determine whether our hard work will make a difference for families or whether families will lose once again," the Harvard Law professor and advocate for the middle class wrote. "The next few weeks will determine whether families will have to play by rules written by the banks and for the banks -- rules that let the industry get away with anything. In my view, we cannot let families lose again."

The new agency would be equipped with the power to write rules governing basic consumer credit products like home mortgages and credit cards, and would have the authority to regulate big banks and monitor their compliance.

Federal bank regulators, who focus on the safety and soundness of the country's banking system, are mostly concerned with bank profitability, consumer advocates and law professors say. Consumer protection has not been a priority.

But there's been a growing recognition that the lack of adequate protection for consumers helped cause the financial meltdown of 2008.

President Obama and his advisers have repeatedly called for such an agency, arguing that it's the best way to protect consumers from the big banks. The House passed a financial reform bill modeled on his proposal in December.

Republicans have vowed to defeat any bill creating such an agency, arguing that its proposed powers are best left to the bank regulators. Federal banking regulators also oppose it, arguing that it's hard to separate bank regulation from consumer protection.

Blocking the CFPA has been atop the banking industry's legislative agenda since last summer. The industry has spent millions lobbying and campaigning against such an agency, which they argue would lead to increased costs and less credit for consumers.

The power of the bank lobby on Capitol Hill cannot be understated. As Sen. Dick Durbin (D-Ill.) put it in April, as a bankruptcy bill he championed went down in flames, "they frankly own the place."

According to multiple news reports, Dodd is proposing to ditch the CFPA as an independent agency. The goal, he says, is to secure Republican support for the overall legislation. Rather, he would ask Republicans to support a consumer-protection division within another federal agency, such as the Treasury Department or a regulatory agency.

But it's not lost on reformers that federal regulators and those they regulate appear to be in lock-step with one another. Just last week, the head of the country's second-biggest bank, Jaime Dimon of JPMorgan Chase, praised federal banking regulators.

"I have been completely clear throughout that regulators should not be blamed," Dimon said of the bank regulators and their perceived role in the near-meltdown of the nation's financial system. The regulators, after all, allowed banks like Dimon's to do whatever they wanted, critics allege, like giving mortgages to unqualified borrowers and then securitizing them for sale to unsuspecting investors, spreading risk throughout the system.

The lack of effective regulation was one of the main drivers behind the collapse. Now the question is will the new regulations be any better.

Warren writes in her letter: "The fate of the Consumer Financial Protection Agency will be the best way to follow the story moving forward because consumer products were the most abusive and because the CFPA has real muscle to stop those abuses," she wrote. "The CFPA would hire new cops and change the way big banks do business.

READ the entire letter:

Friends,

The story of the financial crisis has a thousand twists and turns, but the basic narrative is easy to follow. The financial industry wrote rules that allowed it to act recklessly. The industry captured agencies that were supposed to regulate it, taking cops off the beat and funneling enormous resources into the political process to make sure there wouldn't be any new cops.

Then, with no laws to hold them back, the banks made hundreds of billions of dollars on the sales of deceptive products.

That went on for years, and the industry's tricks-and-traps pricing got more and more out of control. Eventually, the sale and re-sale of deceptive mortgages and other dangerous products made trillions of dollars for Wall Street while bringing down the American economy. When the industry's recklessness brought the biggest banks to the brink of collapse, Wall Street turned to the taxpayers for bailouts and guarantees, which put it right back into big profits and big bonuses. The industry got whatever it wanted.

Now we are coming to the final chapter of this story.

The final chapter will show whether we are going to let the industry continue to write the rules -- to keep the cops off the beat -- or whether the financial crisis actually changed something.

The fate of the Consumer Financial Protection Agency will be the best way to follow the story moving forward because consumer products were the most abusive and because the CFPA has real muscle to stop those abuses. The CFPA would hire new cops and change the way big banks do business.

We have all worked hard to make the CFPA into a reality, and the next few weeks will determine whether our hard work will make a difference for families or whether families will lose once again. The next few weeks will determine whether families will have to play by rules written by the banks and for the banks -- rules that let the industry get away with anything. In my view, we cannot let families lose again.

Like you, I read last week that the consumer agency is dead. I also read the same thing last spring, last summer, last fall, and last month. And I've been warned about the power of the banks since I first developed this idea in 2007. We always knew this was a David v. Goliath fight, but I don't believe that Washington can or will let Wall Street act like nothing has changed.

I am writing to ask you to make an extra effort these next few weeks to organize calls and emails into the Senate Banking Committee about CFPA, to organize op-ed and letter to the editor campaigns across the country, and to create visible, public support for CFPA. If everyone on this list called key Senators on the Senate Banking Committee, that would send a loud message -- and if your members will do the same, the message will get louder.

This is not the last important moment in the fight for the CFPA, but it is a critical one. You can count on me to do my part. Please help.

Elizabeth