In a landmark decision last week, the Supreme Court ruled that corporations could spend unlimited funds to influence American elections, overturning a century of legal precedent. The Court's ruling in Citizens United v. FEC undermines the integrity of the U.S. government, as President Barack Obama emphasized at his State of the Union address. But the decision also deals a damaging blow to the U.S. economy by encouraging lawmakers to write economic rules that benefit specific companies at the expense of everyone else.
The editors of The Nation lay out the High Court's hubris in no uncertain terms:
The Citizens United campaign finance decision by Chief Justice John Roberts and a Supreme Court majority of conservative judicial activists is a dramatic assault on American democracy, overturning more than a century of precedent in order to give corporations the ultimate authority over elections and governing. This decision tips the balance against active citizenship and the rule of law by making it possible for the nation's most powerful economic interests to manipulate not just individual politicians and electoral contests but political discourse itself.
Citizens United and the financial crisis
How does this ruling have any bearing on the economy? Markets are not simply the product of random interactions between consumers and producers. Even under the most radical, laissez-faire economic theories, markets are defined, coordinated and policed by the government. For the economy to function at all, we need the government to define what constitutes fair play.
But over the past few decades, we've watched Congress and the executive branch rewrite those rules of the game under heavy corporate influence, creating artificial profits for a set of favored companies with very bad consequences for the broader economy.
The U.S. banking industry serves as a prime example. Since the 1980s, banks have been spending like crazy in all kinds of elections, and getting just about anything they want in return. I interviewed Harvard University Law Professor and TARP Oversight Panel Chair Elizabeth Warren for AlterNet, and she presented a concise but unsettling economic history of consumer protection law:
Thirty years ago we had laws that put some basic fairness into the consumer credit market. Over time, the large financial institutions captured the regulators who were supposed to be the cops on the beat to enforce those laws. They also pumped hundreds of millions of dollars into Washington to make sure that no new cops were put on the beat. Without good laws, the industry started selling ever-more-deceptive products, and their friendly regulators looked the other way.
The bank lobby and the AIG bailout
In Mother Jones, Corbin Hiar reveals how even a bank that engineered a massive tax fraud scheme was able to benefit from the AIG bailout. Major financial institutions convinced Congress to block any regulation of credit default swaps (CDS) all the way back in 2000. CDS contracts were essentially insurance on the value of financial assets-if the assets lost value, banks would still get paid as if they were highly profitable.
CDS insurance encouraged banks to engage in risky mortgage lending, and allowed them to book huge profits on those risky mortgages during the housing boom, even though many of those mortgages were doomed from the get-go. AIG binged so heavily on CDS that the company was on the brink of bankruptcy in the fall of 2008. But an AIG bankruptcy would have hammered the major banks who served as AIG's betting partners, most notably Goldman Sachs. Those banks would have received just pennies on the dollar from a bankrupt AIG. But under the bailout, the New York Federal Reserve paid the banks off at full value, without demanding any concessions whatsoever.
"The credit crunch was an existential threat to every over-leveraged big bank. What's most shocking about the AIG bailout ... is that these endangered banks were able to extract such a sweet deal from the government," Hiar writes. "The banks were paid the full value of all the CDS contracts they had made with AIG-including those mortgage-backed securities they had bought when it was clear the subprime market was collapsing."
The only AIG counterparty to even consider taking CDS losses was Swiss banking giant UBS, which was negotiating a separate settlement with the U.S. government over a massive tax evasion scheme. But even the tax fraudsters at UBS ultimately received full payment on their CDS exposure, and it now appears that the Swiss bank will be able to protect its wealthy tax-evading clients.
With the AIG bailout, the corporate takeover came full-circle. The banks purchased radical deregulation in Congress, and when the deregulated banks destroyed themselves, the government paid out billions to save them. The rest of the economy was ravaged by predatory lending, and taxpayers, not bankers, footed the bill for bank losses.
Redefining corruption
So the Citizens United decision will not introduce corporate influence in elections. Instead, it takes an uneven playing field and tilts it further in the favor of corporate executives. The Roberts court didn't just open the floodgates for corporate cash in U.S. elections and call it a day. It also explicitly redefined "corruption" to give corporations-and anyone else-greater leeway to financially curry favor with politicians. Heather K. Gerken details the new definition for The American Prospect:
The most important line in the decision ... was this one: "ingratiation and access ... are not corruption." For many years, the Court had gradually expanded the corruption rationale to extend beyond quid pro quo corruption (donor dollars for legislative votes). It had licensed Congress to regulate even when the threat was simply that large donors had better access to politicians or that politicians had become "too compliant with the[ir] wishes." Indeed, at times the Court went so far as to say that even the mere appearance of "undue influence" or the public's "cynical assumption that large donors call the tune" was enough to justify regulation. "Ingratiation and access," in other words, were corruption as far as the Court was concerned.
Most of us would consider the key lawmakers ensnared in the Jack Abramoff scandal as fundamentally corrupt-Abramoff flew former Republican Whip Tom DeLay of Texas to Scotland for golfing vacations in an effort to win greater leverage over DeLay's legislative agenda. The court's ruling claims that this kind of activity is not corrupt, and bars Congress from passing any laws to counteract it. As filmmaker Alex Gibney emphasizes in an interview with Amy Goodman of Democracy Now!, the court has essentially taken Tom DeLay's corporatist philosophy and made it a piece of constitutional law.
"Tom DeLay's view is, we spend more money on potato chips than we do on political campaigns. His view would be, let the money rush down like great waters,," Gibney says. "I think the court was channeling Tom DeLay when they issued their recent decision."
Why citizens need to speak out now
So what can we do about this? As GRITtv's Laura Flanders discusses in a roundtable discussion with several progressive leaders, there will be a long fight for a Constitutional Amendment to ban corporate influence in politics. Until then, as progressive strategist Mike Lux explains, citizens will have to take an aggressive stance against Corporate America as shareholders. Corporate power is exercised by a handful of executives, but the resources that support that power come from ordinary Americans who own stock in those companies, primarily through retirement plans. By demanding that the giant firms we own do not highjack our democracy with lobbying, we can limit some of the damage from the court's recent decision.
If you liked the bank bailouts, then there's plenty for you to love about the Citizens United decision. If you didn't, then it's time to speak up.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
Professional pundits and Democratic politicians are in a frenzy over what Martha Coakley's senate seat loss to Republican Scott Brown might mean for American politics.
Immigration reform in jeopardy
As Harold Meyerson of the American Prospect reports, the loss of one seat probably won't derail heath care reform, but it does make the chances of passing immigration reform slimmer. Meyerson writes that immigration reform is "necessary to restore our economic vitality and political equality," and actually passing reform would benefit the Democratic faction. Unfortunately, that means that immigration reform will require 60 votes in order to pass the senate.
The Texas Observer's Melissa del Bosque writes about the slim chances of immigration reform passing in 2010. According to Rep. Henry Cuellar (D-TX), a member of the Congressional Hispanic Caucus, a 2011 target date is "probably more realistic." del Bosque refuses to lose hope, reminding us that Rep. Luis Gutierrez (D-IL) has assured the public that "the Obama administration promised to bring up the issue in 2010." Of course, bringing up an issue and actually passing reform are two very different animals.
Holding on to hope for 2010
In her daily roundup of Spanish-language media, Erin Rosa of Campus Progress also urges a positive outlook "despite the reorganization of the Senate." Rosa relays that Rep. Xavier Becerra (D-CA) assured the media during a telephone conference that President Obama "remembers his promise well." While "most latinos" interviewed are impatient, they hold on to hope that 2010 is the year for reform.
TPS for Haitians
Haitian undocumented that are currently within U.S. borders will be given Temporary Protected Status (TPS), as Julianne Hing reports for RaceWire. The decision only applies to Haitian immigrants in the U.S. prior to January 12, 2010. Hing observes that it is unfortunate that it took "a disaster of this magnitude" to inspire the White House to offer TPS to Haitian immigrants, though it is "a great relief."
What will the recently granted TPS status mean for Haitians that are already in deportation proceedings? Such is the case of Haitian immigrant Jean Montrevil, asAarti Shahani reports for New America Media. Montrevil came to the U.S. on a green card in 1986 to "make it big," but in his efforts, "got stupid," and caught up in selling drugs from his taxi cab. That was 20 years ago, and Montrevil has served 11 years in prison to pay for his errors. Montrevil is now a father of four and a community leader. The Department of Homeland Security considers his prison time proper cause to deport him. Many others feel he has done his time, and is a positively contributing member of our society. Democracy Now! also covered Montrevil's story recently, as noted in the Jan. 7 Diaspora.
Invisible to the first world
Why are countries like Haiti mostly invisible to first world nations like the U.S. until catastrophe strikes? Leonardo Padura asks, before the earthquake, "Who talked about Haiti?" for IPS News. Haiti desperately needs the emergency aid so generously given today, but the country has needed help for a long time. "Let us hope that tomorrow, when the tragedy no longer dominates the headlines, and the dead are buried," writes Padura, "we will not forget Haiti exists...."
Disappointingly, "U.S. corporations, private mercenaries, Washington and the International Monetary Fund" are remembering Haiti in a rather cruel and opportunist fashion, as Benjamin Dangl reports for AlterNet. At a time of crisis and great human need, Washington D.C. is "promoting unpopular economic policies and extending military and economic control over the Haitian people." This is disturbing, as a long history of economic exploitation helped render the country vulnerable to disaster. The recent earthquake has claimed roughly 200,000 lives so far.
Haiti in context
While borders and border cities bear the brunt of blame when migrants move, the cure won't be found in bigger bails of barbed wire, or harsh enforcement tactics that deny escape from economic desperation or dangerous conditions.
Jocelyn Barnes, reporting for The Nation, provides a much needed contextualization of Haiti. There are many related factors that weakened and harmed Haiti's ability to thrive, not the least of which have been storms and earthquakes. But the privatization of Haiti's infrastructure-which was "championed" by current envoy to Haiti in charge of "leading the quake assistance brigade" former president Bill Clinton-have definitely been instrumental in the country's fate.
Marching against Arpaio
Finally, given the recent holiday celebrating the life and efforts of civil rights hero Martin Luther King, Jr., we would be remiss in overlooking the January 16 march in Arizona protesting Maricopa County Sheriff Joe Arpaio. The event was organized by Salvador Reza, a respected Mexican American activist and community organizer in Arizona. Musician Linda Ronstadt, Co-Founder of United Farm Workers Dolores Huerta, and approximately 5,000 people marched from a park to Tent City, the name for the sheriff's makeshift detention center.
Arpaio is reviled by many in the Latino and undocumented community for his methods of racial profiling and humiliating treatment of detainees. Recently, Arpaio was compared to Bull Connor by an ad published in in the Arizona Republic by 60 black leaders and the Center for New Community.
King's vision was large and led to new horizons; it cannot possibly be contained to one era, or one day on a calendar. The struggle continues, every day, everywhere.
This post features links to the best independent, progressive reporting about immigration by members of The Media Consortium. It is free to reprint. Visit the Diaspora for a complete list of articles on immigration issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, and health care issues, check out The Audit, The Mulch, and The Pulse. This is a project of The Media Consortium, a network of leading independent media outlets.
This week the Senate Environment and Public Works Committee held three hearings on the Kerry-Boxer clean energy bill and, as David Roberts reports for Grist, Republican Senators had an "adolescent tantrum" about the cost of emission reductions. The Environmental Protection Agency (EPA), Congressional Budget Office (CBO), Energy Information Administration (EIA) and other organizations have extensively debunked this line of debate.
The U.S. job market may be showing signs of life, according to a report issued by the Labor Department on Friday. The unemployment rate dropped in July, something no economist expected. Under the most optimistic interpretation, the news indicates that the worst of the recession is finally behind us. But the scenario isn't really so rosy, as our government has yet to relieve the foreclosure pandemic. Even if unemployment is leveling off, there will be no economic recovery if the the foreclosure problem isn't fixed.
July's unemployment rate only fell from 9.5% to 9.4%, and even the most bullish Wall Street economists think the rate will hit double digits by the end of the year. The fact that July's tiny drop in unemployement counts for good economic news says a lot about how severely the economy has deteriorated over the past year and a half.
But when you dig a little deeper, the numbers get worse. As Tim Fernholz explains for The American Prospect, even though the unemployment rate dropped, the nation's economy actually shed 247,000 jobs in July. The rate was pushed down because 400,000 people gave up looking for a job in July; as such, they are no longer included in the statistic. So, while we "only" lost 247,000 jobs, we also lost 400,000 workers.
The government also adjusts its job loss figures for seasonal developments. When the Labor Department says we lost 247,000 jobs in July, that isn't the actual number-it's the number relative to what the Department considers a normal July. This summer has been unique for the U.S. economy, and especially in the case of the automobile industry. Auto companies usually lay off workers in the summer: The factories close while companies prepare the next year's models. So many factories were already closed earlier this year that the seasonal shutdowns haven't really happened this summer. Even though car companies laid people off in July, the government's seasonally adjusted numbers marked an increase in car manufacturing jobs.
Things get even more complicated when you include the Cash for Clunkers program, which started on July 24. The plan offers people up to $4,500 to trade in their gas guzzlers for more fuel efficient new car. Whether the program helps the environment is somewhat controversial, but there is no doubt that it has created a lot of unusual demand for new cars. As Ed Brayton notes for The Michigan Messenger, the government's plan to pump an additional $2 billion into the program has analysts predicting a big boost for manufacturers in July and August.
So we don't really know if the labor market actually improved last month, or if the report is just an exaggeration of statistical anomalies resulting from the recession itself, or even some of the government's recovery efforts. But as Steve Benen notes for The Washington Monthly, even if the numbers come with a healthy dose of uncertainty, it's still better to see them come in good than bad. "There hasn't been encouraging news on the job front in quite a while, and given the severity of the economic crisis, today's report offers at least some relief," Benen says. "The job numbers beat expectations, the overall unemployment rate declined, earnings went up, and the manufacturing sector improved."
But even if unemployment is finally slowing down, the housing market remains awful. Foreclosures are significantly outpacing the administration's efforts to help troubled borrowers. The Treasury Department released a report last week indicating that only about 9% of the borrowers eligible for relief under the government's anti-foreclosure plan have actually received any aid-and even here the numbers are juiced to make the program look better. The administration only includes borrowers who are already at least two months behind on their mortgage payments in the group of eligible borrowers, when in fact any borrower in danger of "imminent default" is supposed to be eligible. Much of the problem, as I argue in a piece for Salon, is that the plan relies on private-sector debt collectors to identify distressed homeowners and get them help, something these companies have never been very interested in doing. All in all, just 235,247 borrowers have received assistance under the Obama plan, while foreclosures increased to 1.5 million in the first six months of 2009, with 2.4 million expected for the entire year and 9 million by 2012.
Writing for Mother Jones, Andy Kroll emphasizes that a much better policy option is available than the current tack. Rather than ask the banking industry to voluntarily adopt the administration's plan without any consequences, we should put "homeowners' fate in the hands of a neutral arbiter, like a bankruptcy court judge . . . [It] would go a long way toward stemming the tide of foreclosures," Kroll writes.
Thanks to a bizarre legal loophole, mortgages cannot be modified in a bankruptcy proceeding if the owner actually lives in the house (investment properties, on the other hand, can be written off). In other words, if a predatory loan is driving you bankrupt, a judge can't do anything about it in bankruptcy court. Congress has tried to change this rule a few times over the past year, but the bank lobby has stymied those efforts. The most recent legislative push failed overcome a Senate filibuster in April, but the political momentum may be changing as foreclosures get increasingly out of hand.
As Mike Lillis notes for The Colorado Independent, Sen. Dick Durbin, D-Ill., plans to bring back the legislation if the banking industry doesn't get serious about helping borrowers fast. Many of the companies letting borrowers fall into foreclosure received billions of dollars in bailout money over the past year, and some even agreed to help borrowers as a condition for taxpayer support. But reform doesn't just depend on the banks. Peter Dreier argues in The Nation that citizens need to publicly protest for stronger economic reforms.
Foreclosures are terrible for the economy. They wreak havoc on families' lives, wipe out personal savings, lower the value of neighboring properties and put more homes on the market, further lowering home prices nationwide. If we cannot stop foreclosures, the economy cannot recover. If job losses are finally moderating, that's great news. But it would be much better to see job losses stabilize and see the banks we bailed out actually do something to avert foreclosures.
By now it's clear that the Senate Finance Committee won't cough up a healthcare bill before the summer recess. As Nick Bauman points out in Mother Jones, the delay is sure to sap momentum for reform. Worse, the break will give healthcare reform's opponents more time to spread fear, uncertainty, and doubt. Disinformation is already running wild.
Dave Weigel of the Washington Independent points to July 31 memo from House Minority Leader John Boehner (R-Ohio) entitled "A Very Hot Summer," in which he announces that the GOP has launched an "entrepreneurial insurgency" against healthcare reform.
And now the National Republican Congressional Committee (NRCC) is openly celebrating the angry mobs of anti-reform protesters that are disrupting town hall meetings and shouting down pro-reform Democrats, as Eric Kleefeld of TPM DC notes. "Roaring Chants Interrupt Healthcare PR Campaign As Dems Lose Their Cool and Town Halls Turn Into 'Town Hells'," gloats one NRCC email message to reporters. This campaign's official logo depicts a donkey being roasted alive.
If the reformers used the NRCC's playbook, reporters would be deluged with retaliatory tweets claiming that teabaggers are killing babies and raping old women, but facts are stubborn things. As of press time, the Pulse is not aware of any ritual sacrifices by teabaggers at townhall meetings.
Steve Benen of the Washington Monthly warns that the GOP's strategy to egg on the wingnuts could have unintended consequences:
"It's probably the one angle the corporate interests and their lobbyists haven't considered: the unintended consequences of rallying confused right-wing activists to shout down policymakers who'll improve their health care coverage. Once you wind up the fanatics and point them in the direction of a town-hall meeting, you never really know what they're going to say, do, wear, or hold. In at least one case at the Doggett event, there really was a sign with Nazi "SS" lettering."
Top Obama adviser David Axelrod denounced groups like Conservatives for Patients Rights for stoking the protesters. Axelrod pledged to aggressively combat misinformation about the Obama administration's reform plan, as Rachel Slajda of TPM reports. Is it a coincidence that Axelrod was abruptly issued a Secret Service detail this week without explanation?
In the American Prospect, Paul Waldman describes how Republican members of Congress are promulgating the urban legend that the healthcare bill includes mandatory euthanasia:
"In some tellings, government bureaucrats will visit the elderly to force them to choose their manner of death. In another, their doctors will be required to "tell them how to end their life sooner" (this one is being popularized by Betsy McCaughey, as despicable a merchant of lies as has ever slithered through our public debate). One GOP member of Congress after another has simply dispensed with all the complexity and said that the Democratic health plan will cause seniors to be "put to death by their government" or some variation thereof."
The rumor grew out of a provision to reimburse doctors for end-of-life care, including discussions of living wills, as Waldman explains.
Speaking of misinformation, Rep. Kent Sorenson (R-Iowa) is tweeting nonsense about a shadowy healthcare commissioner who decide's everything for you, as Jason Hancock of the Iowa Independent reports. "Page 42 healthcare bill 'Health Choices Commissioner' will decide health benefits for you. You will have NO choice," Sorenson breathlessly informed his followers. In fact, according to an analysis by the Pullitzer Prize-winning website PoliFact, the healthcare commissioner would regulate insurance companies to make sure they don't exclude people for preexisting conditions.
At the rate misinformation is mutating, perhaps Republicans will have convinced themselves that the bill will create Health Care Commissar who will involuntarily euthanize you and make your grandmother have an abortion by tomorrow morning.
Congress will return from summer break on September 4. Expect heated rhetoric and increasingly frenzied political theater in the weeks ahead.
This post features links to the best independent, progressive reporting about healthcare and is free to reprint. Visit Healthcare.newsladder.net for a complete list of articles on healthcare affordability, healthcare laws, and healthcare controversy. For the best progressive reporting on the Economy, and Immigration, check out Economy.Newsladder.net and Immigration.Newsladder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and created by NewsLadder.
In the past few years, the economic relationship between the United States and China has changed dramatically. As Tim Fernholz writes in the American Prospect: "Chastened U.S. officials who once lectured their counterparts in [China] on financial liberalization are now humbled in front of their largest creditor, reduced to offering promises of fiscal responsibility." It's a strange state of affairs. Fernholz rightly argues that:
"The common interest of the peoples, rather than the economic elite, ought to be the driving motivation behind the two countries' interactions. There is no doubt that economic openness has brought wealth to both countries, and the Obama administration is happy to laud the Chinese for bringing millions out of poverty. But in a relationship between "capitalism with American characteristics" and "socialism with Chinese characteristics," sometimes the people-whether they be workers losing jobs in the United States or the millions of Chinese living without political freedom or prosperity-have interests other than the elites. Today, we're in an economic crisis, and pragmatism overrides all else. But as recovery continues, the U.S. will require more thought on the strategic track, and perhaps in a few years our discussions with China, as they should be with all our friends, will be more frank."
But our current economic relationship with China pre-dates President Obama's "talk first" style of diplomacy. As Robert Scheer of The Nation writes: "Don't blame any of this on peacenik liberals. The new conciliatory-nay, deferential-tone toward China precedes the Obama administration, having begun in bilateral talks during the last years of the Bush administration as the U.S. economy began its ignominious downfall. It was George W. Bush's treasury secretary, Henry Paulson, who set the course when the former Goldman Sachs chairman realized how dependent were his Wall Street buddies on Chinese goodwill."
Strange relations with China aside, things aren't going so well at home. Rick Wolff, an economist from the New School, says the stimulus package has big problems in a discussion with The Real News. Wolff also notes that we shouldn't take Wall Street chatter about an economic upswing too seriously. "I think the first thing to remember is the people who are celebrating where we are now are the same people who could not imagine, did not imagine, did not foresee the problem we had last year," Wolff says.
But what's going on with our favorite bailout recipients? Talking Points Memo takes on the case of former Federal Pension Guarantor Charles Millard, who exploited his personal ties with employees at BlackRock Capital and Goldman Sachs while choosing firms to manage the Pension Benefit Guaranty Corporation. At this point, both firms "may have run afoul of federal contracting rules in how they courted Millard."
Goldman Sachs and BlackRock are also on the lookout for the next big economic bubble. Salon reveals that both firms are diversifying their portfolios to include agriculture, in addition to government contracts. "Food is becoming the new oil," especially since the world's population is expected to crest nine billion by 2050. And a lot of land is necessary to grow enough food for nine billion people. Phillipe Heilberg, founder of American investment firm Jarch Capital, is hedging his bets on farmland in distressed countries. "Instead of buying stocks, the former banker is now speculating on the political future of South Sudan, which he insists will be an independent country in 10 years, at which point land will be far more expensive than it is today."
It's abundantly clear that we can't rely on the economic elite to represent the people's interests. Tomorrow's economic structure must be drastically different if the United States is going to thrive. Put simply, we're going to have to seriously reevaluate our economic priorities and decide who calls the shots. Here's hoping that everyday people have a say.
