Weekly Mulch: Slick of Oil Industry Cash Gummed up Regulatory Works
by Sarah Laskow, Media Consortium blogger
The Deepwater Horizon oil spill in the Gulf of Mexico is worse than anyone thought, and the crisis will likely go on for months. British Petroleum (BP) is tripping over itself to say it'll cover the costs of the clean-up, yet before the spill, the company spent its time and money pushing back against government regulation and safety measures.
Care2 reports, "A piece of machinery costing .004% of BP's 2009 profits might have prevented the Gulf of Mexico oil spill that is currently threatening the U.S. gulf coast. An acoustic valve designed as a final failsafe to prevent oil spills costs $500,000; the Wall Street Journal writes that the valve, while not proven effective, is required on oil rigs in Norway and Brazil, but not in the U.S."
Oil is drifting towards the southeastern coastline as clean-up crews and politicians scramble to respond. BP has not staunched the leaks that are pouring more than 200,000 gallons of oil into the Gulf of Mexico each day.
Beach communities in Louisiana, Mississippi, Alabama and Florida are bracing for the oil's arrival and waiting to see what the damage to their businesses and their natural resources will be. And in Washington, members of Congress, who just a couple of weeks ago were willing to compromise on off-shore drilling expansion are rallying against the practice.
As Sen. Joe Lieberman (I-CT) said this week, "accidents happen," but in this case, it's becoming clear that the oil industry and government regulators did not do all they could to minimize the risks of a spill.
The slick
Over the past week, reporters trying to describe the size of the spill have compared it to Jamaica or Puerto Rico. Public News Service talked to Steve Bousquet, Tallahassee bureau chief for the St. Petersburg Times, who saw the slick in flight.
"It's really a horrifying thing to see because of the magnitude of it," Bousquet said. "They use these chemicals to break up the oil and it takes on a kind of rust-colored look to it. And we saw these long streaks, miles and miles long of oil, and just oil as far as the eye can see."
"This is Louisiana sweet crude, and it's got a lot of what's called "light ends," which evaporate very quickly into the air and also dissolve very readily into the water column. So what you see on the surface is like the tip of the iceberg...Imagine a big cumulus cloud of dissolved and dispersed oil under the slick, wherever it is. And that cloud is extremely toxic to everything in the water column - shellfish, eggs and embryos - so shrimp eggs and young life forms that are in the water column, young fish."
According to Dr. Ott, the extent of the damage won't be clear for a few years. Oyster fisherman, for instance, would usually be seeding oysters now, as the crops take two years to mature. That work needs to be done within the next few months to avoid economic losses two years in the future, but the precautionary measures shutting off access to waters east of the Mississippi are keeping that from happening.
Oiling the machine
It's no accident that oil interests work under looser rules. As Lindsay Beyerstein reported last week for Working In These Times, BP wrote to the U.S. Minerals Management Service (MMS) saying that tighter regulation of the oil industry was unnecessary. MMS doesn't have a stellar history of oversight, and if you're not familiar with its sordid past, TPM's Justin Elliott put together a tour through the agency's history with sex and drugs.
The industry hasn't just been selling snake oil to MMS, though. Oil companies have been greasing the palms of politicians with campaign donations for years. Democracy Now! spoke to Antonia Juhasz, author of The Tyranny of Oil, about the oil industry's influence.
"The entire oil industry, will continue to use its vast wealth - unequaled by any global industry - to escape regulation, restriction, oversight and enforcement," Juhasz says. "BP, now the source of the last two great deadly US oil industry explosions, has shown us that this simply cannot be permitted."
The new politics of climate
To see the oil industry's influence in action, look no further than the ongoing work on the Senate's climate legislation. Two weeks ago, before the spill, Sen. John Kerry (D-MA) announced that the oil industry would back the tri-partisan legislation that he was working on with Sen. Lieberman and Sen. Lindsey Graham (R-SC). Since then, Graham has stepped away from the bill, and off-shore drilling, a keystone of the negotiations over the legislation, has become much less politically palatable.
"While he acknowledged that "we can't drill and burn our way out of danger," Kerry also spoke highly of the oil companies backing the draft legislation, which was supposed to be released last week," Sheppard writes. "BP, operator of the rig currently spewing hundreds of thousands of gallons of oil into the Gulf of Mexico, was expected to be among the supporters."
"Ironically we've been working very closely with some of these oil companies in the last months," Kerry said. "I took them in good faith. They have worked hard with us to find a solution that meets all of our needs."
Kerry still seems confident that the climate and energy bill will move forward, but, Steve Benen writes at the Washington Monthly, that's things are far from certain.
"The legislation was predicated on something of a grand bargain -- the left would get cap-and-trade and investment in renewables; the right would get nuclear plants and offshore drilling," Benen explains. "But in the wake of the catastrophe in the Gulf, there is no deal. Key Dems now insist drilling be taken off the table, while Republicans and Democratic industry allies (Louisiana's Mary Landrieu, for example) now insist they won't even consider a bill unless it includes plenty of drilling."
While the White House is saying that the oil spill may spur interest in and support for clean energy legislation from Congress, that hasn't happened yet. Congressional leaders might have to wait for the noise from the Hill to die down before they can re-start serious discussions about how to pass a climate bill.
This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.
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.
Various outlets (see Quick Hits on the right) are reporting that the White House and/or Nancy Pelosi are moving away from a robust triggerless public option and toward accomodating Olympia Snowe. Others say these stories are a fiction.
Instead of adding to the he said/she said on that I'd like to propose a new kind of trigger and here it is:
If a trigger-based public option passes Congress and is signed into law the entire netroots, or as much as we can corral, withholds all campaign contributions to the Democratic National Committee, the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee and Organizing for America for the 2010 and 2012 campaign cycles.
No money to these groups. None for the next 3 years. Instead, we only give money to those leaders or groups we know fought to do the right thing. Open Left does a great job highlighting these Better Democrats and other groups advancing progressive causes.
So this shouldn't be too hard a sell on this site. But should we work to spread this idea throughout the netroots?
In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The hawala broker calls another hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.
The unique feature of the system is that no promissory instruments are exchanged between the hawala brokers; the transaction takes place entirely on the honor system. As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment. No records are produced of individual transactions; only a running tally of the amount owed by one broker to another is kept. Wikipedia reference here.
There is no evidence that Hawala brokers are being used to reimburse the donors mentioned in the Washington Post story below. Some may ask whether I am undermining Arab-American political power by questioning these donations...No, I'm not.
Money equals political power only if it is followed by access, and if the donors have a voice and receive representation. The Arab-American families mentioned in the story below are described to be nearly completely apolitical and uninvolved. Some aren't even registered to vote. These people are being used and are not obtaining any representation or personal influence in the political system for their donations--all to the advantage of a political orthodoxy (well-represented by Clinton and McCain) that persecutes Arab Americans and Muslims.
The bundle of $2,300 and $4,600 checks that poured into Sen. John McCain's presidential campaign on March 12 came from an unlikely group of California donors: a mechanic from D&D; Auto Repair in Whittier, the manager of Taco Bell stores in Riverside, the owners of a liquor store in Colton.
But the man who gathered checks from them is no stranger to McCain -- he shuttled the Republican on his private plane and held a fundraising event for the candidate at his house in Delray Beach, Fla.
Harry Sargeant III, a former naval officer and the owner of an oil-trading company that recently inked defense contracts potentially worth more than $1 billion, is the archetype of a modern presidential money man. The law forbids high-level supporters from writing huge checks, but with help from friends in the Middle East and the former chief of the CIA's bin Laden unit -- who now serves as a consultant to his company -- Sargeant has raised more than $100,000 for three presidential candidates from a collection of ordinary people, several of whom professed little interest in the outcome of the election.
After initially helping to raise money for former New York mayor Rudolph W. Giuliani, a Republican, and Democratic Sen. Hillary Rodham Clinton, Sargeant, 50, has emerged as a major player in Florida fundraising for McCain. He has also become a conduit between McCain and Florida Gov. Charlie Crist (R), who was Sargeant's college fraternity brother and remains a close friend.
Crist, a beneficiary of Sargeant's fundraising network, said he saw nothing unusual in its breadth. "I was not surprised, but I certainly was grateful for his and his family's efforts," he said, adding that he anticipates Sargeant assisting McCain not only with fundraising but also with advice on military affairs and the economy. "He's been enormously helpful . . . already," Crist said.
....
Some of the most prolific givers in Sargeant's network live in modest homes in Southern California's Inland Empire. Most had never given a political contribution before being contacted by Sargeant or his associates. Most said they have never voiced much interest in politics. And in several instances, they had never registered to vote. And yet, records show, some families have ponied up as much as $18,400 for various candidates between December and March.
Both Sargeant and the donors were vague when asked to explain how Sargeant persuaded them to give away so much money.
"I have a lot of Arab business partners. I do a lot of business in the Middle East. I've got a lot of friends," Sargeant said in a telephone interview yesterday. "I ask my friends to support candidates that I think are worthy of supporting. They usually come through for me."
....
Nader, 39, and Sahar Alhawash, 28, of Colton, Calif, who at one point ran the Avon Village Liquor store, donated a total of $18,400 to Giuliani, Clinton and McCain between December and March. About 80 people in the country made such large contributions to all three, and most were wealthy business executives, such as Donald Trump. The Alhawashes declined to comment about the donations. Abdullah Abdullah, a supervisor at several Taco Bell restaurants in the Riverside area, and his wife have donated $9,200 to McCain.
MapLight.org is reporting that House Democrats who changed their vote to support Telco immunity received much more, on average than their counterparts who did not change position. This is a group correlation, of course. Not all those who voted for immunity received more money than those who voted against. Indeed, 11 of those who voted for immunity received nothing at all from the three Telcos. But the group correlation is quite strong.
Note: Lawrence Lessig joined MapLight's board of directors earlier this year.
The top ten recipients of Telco money-from Verizon, AT&T;, and Sprint, (Jan 2005-March 2008) were:
Contribution
House Member
District
1
29500
Clyburn, James
SC-6
2
29000
Hoyer, Steny
MD-5
3
28000
Emanuel, Rahm
IL-5
4
27500
Boucher, Frederick
VA-9
5
26000
Meeks, Gregory
NY-6
6
24500
Crowley, Joseph
NY-7
7
24500
Pelosi, Nancy
CA-8
8
24000
Bean, Melissa
IL-8
9
22500
Edwards, Thomas
TX-17
10
22100
Baca, Joe
CA-43
MapLight:
On March 14 of this year the House passed an amendment that rejected retroactive immunity for phone carriers who helped the National Security Agency carry out the illegal wiretapping program without proper warrants. Ninety-four House Democrats voted in favor of this measure--rejecting immunity--on March 14, then 'changed' to vote in favor of the June 20 House bill--approving immunity.
"Why did these ninety-four House members have a change of heart?" asked Daniel Newman, executive director of MAPLight.org, "Their constituents deserve answers."
MAPLight.org's research department compiled PAC campaign contributions from Verizon, AT&T;, and Sprint and correlated them with the voting records of all House members who voted on last week's FISA bill. (The analysis used data from CRP; contributions were from January 2005 through March 2008). Here are the findings:
Continued on the flip with all 94 members and their totals reeived.
The statewide Dem candidates have said they're prepared to return over-the-limit campaign contributions, but Republicans? Their grab-all-you-can legislation created the mess, and now, clutching the boodle to their breasts, they whine about giving it back like a five year old who wants to keep the neighbor kid's toys.
Rep. Jane Cunningham, a St. Louis County Republican who is running for the Senate, said refunds would be unfair because that would help slow-starting campaigns instead of those who hustled to raise funds early. She could be forced to return $35,800. "It's not the American way to advantage people who have sat on their thumbs," she said.
If Republicans "hustled", to use her word, the definition that applies would be this one: to earn one's living by illicit or unethical means.
Case in point:
Last June, Matt Blunt took tens of thousands of dollars in campaign contributions from individuals affiliated with the Dairy Farmers of America, a large milk marketing organization with offices in Kansas City.
Now comes word that the Blunt Administration is providing a five year, no-bid contract to DFA to conduct "state" safety testing on the milk it sells.
The statewide Dem candidates have said they're prepared to return over-the-limit campaign contributions, but Republicans? Their grab-all-you-can legislation created the mess, and now, clutching the boodle to their breasts, they whine about giving it back like a five year old who wants to keep the neighbor kid's toys. 
