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1/29/2012

Class Warfare?

Some say class warfare began when Karl Marx (1818–1883) (often with Richard Engels) published his economic works, and when the communist party became a reality.  Wrong!

Class warfare has been going on for as long as there has been an elite that possesses power through the accumulation of wealth and position.  Whenever the elite recognize that chaos or envy could work against them in the form of a rebellious under-class, they become very possessive and obsessive about their assets.  Some of the elite recognize that they must give back to those who helped to put them where they are, while too many believe that it is incumbent upon them to keep the “others” in their place lest the “others” demand and take back what is needed to fill their own desires.

So before we go any further, let me be clear in my opinion that “class warfare” is not the battle that the poor and the working class -- the proletariat according to Marx -- foment against the powers that be in the elite class.  Class warfare -- or the maintenance of privilege through the utilization of power -- is the instrument of the rich and powerful used to keep “lesser beings” in their place in society, and to maintain a status quo favorable to themselves.

This classic warfare has evolved through the centuries, especially noted in that European country that bequeathed so much of itself to America.  England was a bastion of an aristocracy that took every advantage of its standing and position in relation to the  lesser classes.  Just one example of their rapaciousness was the enclosure of in-common lands so that they could expand ownership of such lands for themselves.  That led to peasant revolts and even some riots by returning soldiers and sailors who found it difficult to make a living.

The class warfare of rich upon the poor and “middling” folk pushed the latter into periodic rebellious actions throughout the long history of humankind.  In fact, downward pressure on the poor by the nobility, and the suppression of their yearnings for greater prosperity, resulted in popular uprisings across Europe as early as the 14th and 15th centuries.  However, to characterize such historic rebellions, revolutions and riots of the poor as “class warfare” is a misnomer; they are simply the reactions of those without power to those  in power who suppressed, repressed, coerced, manipulated, and ridiculed the “others” who the elite claimed fed off of their riches, the largesse of their charity, and the “welfare” of governments and organizations.

When modern-day politicians charge President Obama with class warfare because his administration wishes to allow tax cuts for the rich to expire, or tries to establish improved programs for the poor and broad middle class that require some re-distribution of wealth by taxing the rich their fair share; this is not class warfare.  It is a social contract in action whereby all who can afford to be are taxed fairly, and all who cannot contribute monetarily are helped, aided, lifted up, provided with supplements they might not otherwise have.

The social contract is a fundamental agreement that says that to lift up all in a society is the wise and prudent thing to do because it strengthens the whole society and provides for that society to utilize the  talent, wisdom, innovation and entrepreneurship of all, not just of a privileged class.  How does this differ from Communism or socialism?  It differs fundamentally in that the state is not the controller of all life and work, nor are workers at war with the rich.  The State -- democratic government in our case -- is seen rather as the primary means by which fair, equitable and just solutions are legislated and arbitrated so that all may prosper, all may achieve, all may give back, all may rise to a level to which they aspire.

So, I would argue that every “battle” fought by the lower or “middling” classes to counter the oppression of a ruling class, is not class warfare, but simply an attempt to stop oppression or repression; to gain greater rights; to awaken both rich and poor to injustice; or, to gain a foothold on another rung of the ladder toward freedom, prosperity, and even ownership.  Rarely do the poorer classes initiate a rebellion or riot out of thin air.  It always has a context and that context is the overt and covert attempts of the oligarchs, the plutocrats, the aristocrats, the barons of industry, the rich and powerful, to be taxed less, to gain special privileges at someone else’s expense, to be free from regulation or restrictions on their enterprises, to protect their property and assets by any means, to gain more wealth by quasi-legal and even illegal means, to gain more power by controlling the mechanisms of government and free enterprise.

Right now the cry of the “shills” for the rich -- mostly conservative Republican politicians -- is that all social programs that aid the poor (food stamps being the latest straw man) and entitlements (social security, Medicare and Medicaid) are socialistic attempts to control where the wealth goes in this country.  Even Universal health care (known by the derisive term, “ObamaCare”), controlled by for-profit private companies, is decried as socialism, as government controlled, as re-distribution of wealth.  It’s all a smokescreen for the age-old complaint of the rich and powerful that “their money” is being unfairly given to the lower classes which contain unproductive and irresponsible people.  They are doing everything they can to protect their assets and property and to deny their riches being bestowed on unworthy people, and their shills in the political world are assisting them in this enterprise, attempting to undo their contractual obligation to the whole of our democratic society.  The following are a few of their machinations:

**They have so taken over the institutions of governing that the ability to do what is best for most people at any point of need is rejected out-of-hand (the Jobs bill; infrastructure improvement; public option in universal health care; extension of the payroll tax cut, protection of the environment, etc.). 
**They are so influential within the court system that the Supreme Court has taken their side (Citizens United decision) allowing corporations to become the voice, not of ordinary people, but of the moneyed interests so that their allies can be elected by the infusion of 3rd party cash and negative advertising. 
**They so control the institutions of government that labor unions are in jeopardy along with their bargaining rights; that school curricula based on facts and science are threatened; that environmental improvements and alternatives to oil are not even considered. 
**Elections are currently being rigged to support their supporters, first, through re-districting and second, by the passage of  laws that restrict the registration of the poor, the elderly, and the disabled, along with minorities. 
**When a consumer protection agency is proposed, and legislated, all kinds of restrictions are imposed upon it (by the very people who decry restrictions and regulations on business enterprises), and its director’s appointment is delayed endlessly until a recess appointment is the only alternative (which, of course, is time-limited and can be overturned).  Recognizing that the original Constitution and subsequent Bill of Rights omitted any protection for common people against corporations or capitalist profiteers, modern-day elite intend to keep it that way.
**The tax code is so shot through with their exemptions, incentives, loopholes, special privileges and deductions that some billionaires like Warren Buffet (and multi-millionaires like Mitt Romney) get to pay a lower rate than their secretaries.  At the same time, their cronies in Congress seek to reduce their taxes even further (helping themselves as well, since almost half the members of Congress are millionaires):  lowering the regular tax rate, the corporate tax rate, the capital gains tax, the inheritance tax and who knows what-all. 
**And now, that structure of communication for all people, but especially for the broad middle class, the internet (which has been successfully utilized against dictators to bring down oligarchic regimes, and to fight by petition against unjust actions by banks and others) is under an attack to gain control of its uses.  Bills in the House and Senate (lately put on hold) masquerading under the guise of controlling pirating of intellectual and artistic property, are nothing more than an attempt to gain control over advocacy by the “others” in their quest to gain some justice, equality, and advantage for the 99% of the population whose voices are being drowned out by the 1% in power.  (Does it seem a bit ironic that the Party that insists on free markets and lack of restriction or regulation from government, is using government to control a particular market when it should instead be encouraging the manufacturers affected to find their own ways to stop the pirating?).

In light of all of these examples, is it any wonder that the “Occupy Wall Street” movement has materialized?  This is the same grassroots type of movement that has arisen throughout our history (e.g. the Patriotic Society of Philadelphia, Shay’s Rebellion, the Dorr movement, the labor movement, etc.), and the history of other countries.  Unfortunately, without the wealth of the rich, or the advocacy of lobbyists and lawyers, or the backing of a Super-PAC, or the organization of a political party, this movement is probably headed to the trash-heap of history wherein lie the hopes and dreams of so many movements that could not flourish in the midst of the class warfare being waged against them by the rich and powerful. 

It is a very sad commentary that the poor, the downtrodden and the needy of most societies have failed in their attempts to achieve substantial victory against the class warfare perpetrated by the rich and powerful.  Although the rich have been able to use the power of government to quell most demonstrations of discontent, our American enterprise is one ray of light in an otherwise defeated enterprise.  We have seen victory over an oppressive king; the emancipation of slaves; the legitimization of labor unions and their bargaining rights; the triumph of women’s suffrage; the acquisition of civil rights for African-Americans and other minority groups; the rise of a broad middle class; the vote for 18-year olds; the acquisition of universal health care, old-age insurance, and medical care for the poor and disabled.  

But we now face the annihilation of so many of the gains we have made, all because the rich and powerful - “Greedy Bastards” as Dylan Ratigan calls them --  want to control, and direct the government to their ends and not to the ends that we have long proclaimed as our credo: “liberty and justice for all”; “government of the people, by the people and for the people”; “that all men are endowed by their Creator with certain inalienable rights, … life, liberty and the pursuit of happiness;” “to promote the general welfare and secure the blessings of liberty to ourselves and our Posterity…”

Can we reclaim the social contract that expresses the common welfare of all?  It is an open question.  Part of the answer will occur in the elections of November 2012.  But the other parts of the answer will only come as we try to prevent, by all necessary means -- including an amended Constitution and nation-wide demonstrations -- the complete takeover of our governmental institutions and economic system by a small 1% of our population. 
 
Voting for shills for the rich is the greatest single failing of our electorate.  Putting more control in the hands of radical Republicans will continue to put more money and power in the hands of the 1% of elite power-brokers who are reaping all the rewards, while the middle class keeps struggling to maintain what little they have.  

Don’t continue to be bamboozled by politicians acting as shills for the rich proclaiming “class warfare.”  Class warfare is overwhelmingly initiated by those in control, not by those who are being controlled.    

1/22/2012

“FOOD STAMP” PRESIDENT?

Newt Gingrich (he of doubtful ethical standards) has called President Obama the “Food Stamp President”, and alleged that under this President, more people have been put on food stamps than ever before in American history.  The self-styled historian failed to mention that both Democrat and Republican administrations have distributed food stamps or food surplus to the unemployed and the needy.  The food stamp act that created a program much like we now have was passed under Lyndon Johnson, and the program got underway in 1969.  So the great historian failed to clarify that “ever before in American history” is a bit of an exaggeration since the food stamp program has had a relatively short span of just 43 years.

In that same 43-year history, we have never been in a more difficult economic period than we are living through right now.  Thank goodness, President Obama’s administration has seen fit to uplift, rescue and sustain the many people who have had to apply for food stamps in order to keep body and soul together.

Politifact.com says that Newt is only half-right about all this and concludes that the economy, not Obama, is the major reason for the increase. 

“The number of SNAP beneficiaries is at a record level, and it has risen in most months of the Obama presidency. But Gingrich oversimplifies when he suggests that Obama is the root cause. Much of the reason for the increase was a combination of the economic problems Obama inherited combined with a longstanding upward trend from policy changes. But Obama has supported those policies. On balance, we rate Gingrich’s statement Half True.”

Here are a few more things that Gingrich failed to mention:

--Under George W. Bush, the eligibility for SNAP was widened considerably so more families and individuals could be covered; Obama simply followed that trend
--According to Politifact.com, “the number rose in seven out of the eight years of Bush’s presidency -- most of which were years not considered recessionary. All told, the number of recipients rose by a cumulative 63 percent during Bush’s eight-year presidency.”
--More red states utilize food stamps, so apparently a large number of Republican Governors don’t act on the ideology that such “welfare” should be discontinued. “So far, few elected officials have objected to the program’s growth,” says NYTimes.com

What Newt fails to acknowledge, above all, is that the downturn of the economy under George W. Bush is what brought us to the brink of an economic depression (through policies and ideology that Newt supports).  The failures of the Bush years -- lack of regulation of wall street and large corporations; the tax breaks given to the rich without corresponding funding; the failure to understand that banks were over-leveraged; the housing bubble - created by unregulated lending practices - that burst and created millions of foreclosures; the unnecessary war of personal revenge in Iraq that cost us not only young lives but young limbs and young psyches; the attack upon the middle class and workers as more and more jobs and industries moved abroad without a whimper of protest from the Bush administration; the massive layoffs and the failure to create jobs; the lack of attention to our infrastructure and our environment; the failure to break our addiction to foreign oil -- all of these and more created the situation in which we now find ourselves.  And the preposterous assertion that this economic downturn is Obama’s fault because he had to spend more to work us out of it, is perhaps the biggest bamboozle of them all.

Yes, President Obama has strongly utilized the SNAP program to provide qualifying, low-income Americans with vouchers to buy groceries--and more power to him!  Again, according to PolitiFact.com:  “Obviously, the rise in food stamps is a direct consequence of the serious recession that began in December 2007 -- more than a year before Obama took office.  The experts we spoke to, conservative and liberal, agree that Obama inherited a serious economic situation.”

Gingrich makes it sound as though all recipients of food stamps are “on the take” and cheating the federal government.  In contrast, the most recent Department of Agriculture report on the general characteristics of the SNAP program's beneficiaries paints an entirely different picture of recipients.  In the fiscal year that ended Sept. 30, 2010:

•47% of beneficiaries were children under age 18.
•8% were age 60 or older.
•41% lived in a household with earnings from a job — the so-called "working poor." 
•The average household received a monthly benefit of  just $287.
•36% were White (non-Hispanic), 22% were African American (non-Hispanic) and 10% were Hispanic.

In the first three years of the Obama administration, the food stamp program has been used to address certain needs and concerns that have arisen because of the deep recession, as we learn from a comprehensive article on the NYTimes.com website:
 
--Obama's stimulus act made it easier for childless, jobless adults to qualify for the program and increased the monthly benefit by about 15% through 2013
--Food stamps have become a lifeline for the millions of long-term unemployed. More than 20% of those unemployed for more than six months received benefits, according to Congress' Joint Economic Committee
--The range of people struggling with basic needs includes single mothers and married couples, the newly jobless and the chronically poor, longtime recipients of welfare checks and workers whose reduced hours or slender wages leave their pantries bare.
--Growth has been especially swift in once-prosperous places hit by the housing bust. There are about 50 small counties and a dozen sizable ones where the rolls have doubled in the last two years. In another 205 counties, they have risen by at least two-thirds. These places with soaring rolls include populous Riverside County, Calif., most of greater Phoenix and Las Vegas, a ring of affluent Atlanta suburbs, and a 150-mile stretch of southwest Florida from Bradenton to the Everglades.
--The program’s growing reach can be seen in a corner of southwestern Ohio where red state politics reign and blue-collar workers have often called food stamps a sign of laziness. But unemployment has soared, and food stamp use in a six-county area outside Cincinnati has risen more than 50 percent.
--In Indiana, Elkhart County makes the majority of the nation’s recreational vehicles. Sales have fallen more than half during the recession, and nearly 30 percent of the county’s children are receiving food stamps.
--This is the first recession in which a majority of the poor in metropolitan areas live in the suburbs, giving food stamps new prominence there. Use has grown by half or more in dozens of suburban counties from Boston to Seattle, including such bulwarks of modern conservatism as California’s Orange County, where the rolls are up more than 50 percent.
--Most enlisted military personnel E-5 and below qualify for some kind of government assistance, i.e. food stamps, subsidized daycare.  “Poverty among military families is a greatly under-reported story,” said Barbara Ehrenreich, New York Times columnist… Last year, Ehrenreich reported that according to her sources, some 25,000 families of service members were eligible for Food Stamps.

Stacy Dean of the Centre for Budget and Policy Priorities (CBPP), a think-tank, argues that the rapid growth of food stamps in recent years is a sign that they are working as intended, responding promptly to hard economic times. In contrast, she points out, block-grant programs (favored by Gingrich and his colleagues) grow much more slowly when times are tough, since funding for them does not increase in line with demand. Food-stamp participation rose by 45% between December 2007 and December 2009, CBPP calculates, while the number of families receiving cash grants under TANF, a block-grant scheme, rose by just 13%.

Food stamps also help stimulate the economy more than other forms of government spending, points out Jim Weill of Food Research and Action Centre, a charity, since their recipients are so poor that they tend to spend them immediately. When Moody’s Analytics assessed different forms of stimulus, it found that food stamps were the most effective, increasing economic activity by $1.73 for every dollar spent. Unemployment insurance came in second, at $1.62, whereas most tax cuts yielded a dollar or less.

As usual, Newt Gingrich uses half-truths and bloated rhetoric to sound intelligent, but as is so often true, he misses the mark.  In contrast, President Obama has taken action to protect and expand an important program so that millions of people could be helped.  What, after all, is Newt Gingrich (and his clown gang) proposing: that food stamps should be drastically reduced or simply eliminated?  He doesn’t really tell us exactly what he would do as President.  But you can bet your bottom dollar (and a lot of people have reached that precarious level) that he would not protect or expand this program even though millions of hungry people of all ages, races, and conditions in life are depending on it to get through a day, a week or a month. 

1/14/2012

Job Creators vs. Lost Creators

I’m concerned this week on two fronts that are most often seen separately, although they are inexorably intertwined by an interdependence and mutual responsibility engendered by the nature of our democratic society. 

One, is the rhetorical keystone used by the radical right-wing Republicans that attempts to equate being rich with being a “job creator.”  It’s so patently misleading as to fall easily into the category of bamboozling.  This isn’t the first time Republicans have used this ruse to mislead the public. 

An article from September 2011 on Salon.com recalls that Republicans have been using it for years (even decades) to push a vision of capitalism in which those who most benefit from the system are most essential to its continued success.  As long ago as 1991, a Republican conservative, who just happens to be running currently for the Republican nomination for President, Newt Gingrich, characterized  Democratic opposition to a cut in the capital gains tax as evidence that liberals “hate job creators; they’re envious of job creators.  They want to punish job creators” and then he added that they “believe in class warfare.”  Sound familiar?

Even more revealing is the debate over the 1993 Clinton budget plan, which aimed to cut the deficit by raising the top income tax rate.  Republicans fought this tooth and nail, but ended up losing on a tie-breaking vote by Vice-President Al Gore in the Senate.  Of course, one of their leaders at the time, Phil Gramm, made it plain that this was very unlikely to promote investment and job creation.  In fact, he invoked pretty much the whole world as believing it could not succeed.  Hindsight lets us see that higher taxes on the “job creators” did not create an obstacle to economic growth.  In fact, what resulted was economic growth for 116 consecutive months, the deficit cut by $290 billion, and a path established toward a balanced budget.  

As the comedian, Jon Stewart, has pointed out, “Republicans are no longer allowed to say that people are rich.  You have to refer to them as ‘job creators’.”  However, it is harder and harder to figure out who the job creators among the rich truly are.  All Americans spend, save, invest money in varying ways and varying degrees.  What distinguishes the rich as job creators from everyone else?  As a group, they have more money but probably don’t create any more jobs than all the other 99% of us. 

The success of capitalism, or “free-enterprise,” is dependent on a complex system of work and exchange that depends on the “assistance and cooperation of many thousands” of people, as Adam Smith once said.  In such a society, no single group can be meaningfully singled out as the “job creators.”  It takes a society of managers, supervisors, workers, and consumers in the stores and broader marketplace, to create jobs and to keep on creating them.  The current rhetoric about “job creators” seems to elevate a group of people whose only outstanding trait is their shared tax bracket.

Finally, it has to be said that the 1% in this country - basically the millionaires and billionaires - are not necessarily employers.  They are essentially investors; they are the moneyed making money off their money.  Those who are CEOs or Executives are not necessarily in total charge of hiring whenever they feel the need to do so.  They may be the heads of corporations, but they are constrained by their investors and their boards, and moreover, by the appeal of their products or services.  Expansion is not necessarily in their hands.  So, the so-called job creators have to answer to others with money who may decide that expansion is not feasible, especially within the United States.

We also hear from Republicans (and many Democrats) that small businesses are the engine of job growth and economic growth in this country.  While there are lots of small businesses, there are not a lot of jobs in businesses with 20 or fewer employees.  Numbers suggest there are about 6 million businesses with paid employees.  Ninety percent of these are small businesses defined as having 20 or fewer employees. (Another definition of small businesses having 500 employees or less is nonsensical).  However, that 90% of firms only makes up 20% of all jobs.  So, this so-called engine of the economy can only be characterized as a very small engine!  Looked at another way, while small businesses may create a lot of jobs, they also destroy a lot of jobs.  If we only count small business successes, then we can say they do a lot of hiring.  But small businesses often fail, and that produces a lot of lost jobs and lost wages.  Finally, what is so often not taken into account is that many of these small businesses are made up of just one person, or a few persons: the barber, the dry cleaner, lawyers, doctors, the hairdresser, etc.  And, these businesses are not innovative or expansive.  They are interested in the day-to-day operation of a small enterprise, delivering a service or product to their customers.  Thus, most small businesses don’t even contemplate being the engines of economic growth or of jobs.

One very important reason why this rhetoric about the rich as “job creators” and small businesses as the engine of growth bothers me is because of something that came to my attention on television news the other night.  The story was about a young high school student who has a chance to participate in a prestigious national science competition because of her research and scientific involvement.  This young woman - Samantha - is also homeless.  She lives in a shelter with her mother, and does not have all the advantages of wealth or position.  The story brought home to me the interconnectedness of our society, and the danger of rhetoric that divides us into groups that must, or must not, have our undivided attention.

Right now, the middle class, those living below a defined poverty level (almost 50% of us), the homeless, the disabled and the aged, and many others, are being stereotyped and addressed as though they are not an essential part of the commonwealth of persons that makes up our whole nation.  They are being seen as dregs, as drains, as groups pulling us down from being a productive economy and government.  They are the groups being targeted as having too much government support, as being responsible for programs that cost too much, as being responsible for moving us toward a “welfare state”, like the socialistic countries of Europe.   Where is the understanding that we live within a contractual society that must support each other - the rich and the poor and those in-between-- because everyone must have a chance to contribute for the good and the advancement of all.  The divisive rhetoric of the radical Right is destructive of a social contract theory of government and society that has been in effect since the founding of our country.

Although someone has now come forward and offered a home to Samantha and her family, we are continuing to damage our democracy when we neglect the potential of all people, no matter to which grouping of society they may belong.   Here is a very brief list of some successful people of this country who either started out in poverty or in unusual circumstances that were far from privileged:

Oprah Winfrey who went from being a young girl clothed in potato sacks (literally) to the richest and most powerful female media mogul in the world;  worth around $2.9 billion in 2009.

J.K. Rowling went from being on the dole to starting a $15 billion industry. The author of the Harry Potter books series was estimated to be worth $843.92 million U.S. dollars as of 2008.

David Geffen is responsible for signing Crosby, Stills and Nash, Bob Dylan and Nirvana, starting Geffen Records and was a founding member of DreamWorks studio.  He grew up poor in Brooklyn, living in a one-bedroom apartment with his family and sleeping on the couch.  At 67, renowned art collector and philanthropist Geffen is worth an estimated $4.6 billion.

Starbucks Chairman and CEO Howard Schultz is the man known for transforming the Seattle coffee chain into a global empire.  Schultz grew up in the Canarsie Projects of Brooklyn where he lived in a cramped two-bedroom unit in an apartment building that housed about 150 families. He recalls how embarrassed he was when he found out that the sleep-away camp he went to as a kid one summer was "a subsidized program for underprivileged kids". 

John Paul Dejoria’s hair care company John Paul Mitchell Systems began as a $700 startup from loans.  He started his first job at the age of nine when Dejoria, his mom, and his brother would wake up at 4 a.m. everyday to fold and deliver newspapers.  When his mom could not support him anymore, he was sent to a foster home. He was homeless twice before making his fortune, working jobs from being a janitor to driving a tow truck.

The Xerox CEO,  Ursula M. Burns, grew up on New York City's Lower East Side "when it was really bad, when the gangs were there and the drug addicts were there," she told the NY Times.  Her mother ran an at-home daycare center taking care of other children and also ironed shirts for people in order to allow her daughter to afford to go to Catholic school. Burns is the first African-American woman to oversee a Fortune 500 company.

My point?  
We are not only on the wrong track with this divisive rhetoric.  By buying into this rhetoric, and by defending a government structure that fails to deliver on freedom and justice and support for all the citizens of this wonderful country, we are heading for destruction of our social contract, and thus of our democracy, our economy, our principles, and of our way of life. .  Let us pay attention to all our job creators, and to all the creators who may be lost to us if we fail to recognize the potential of people at all levels of our society.   It is long past time to expand our vision of what we can do and what we should do and what we need to do to support, involve, and nurture our citizenry.  A narrow vision of that task - centered on the 1% of the richest among us - does not bode well for our future.

1/08/2012

Real Reform of Washington

Congressman Richard Hanna (R-NY 24th) has again sent his constituents a colorful (and expensive) flyer that makes claims far beyond reality.  Entitled, “Reforming Washington to Work for You”,  this piece of propaganda makes the absurd claim that Mr. Hanna has been “focused on reforming government to make it more responsive and responsible.”

To back up this claim, he points to several pieces of legislation that he has either sponsored, co-sponsored, or voted to support:
--sponsored legislation that would put a “time-out” on rules and regulations
--voted to support a “balanced budget amendment”
-- voted to cut Congress’ budget by 5%
--offered an amendment that would ban Members of Congress from leasing luxury vehicles
--introduced a bipartisan “AGREE Act” which combines the best jobs ideas from Republicans and Democrats
--cosponsored the Congressional Budget Accountability Act that requires leftover dollars in congressional budgets be used for deficit reduction

Mr. Hanna desperately wants us to believe that these measures constitute reform of Washington.  They do not.  They simply nibble around the edges of what is being passed-off as reform by a regressive Republican majority in the House and a recalcitrant minority in the Senate.  Putting a time-out on regulation and rule-making, for instance, does nothing more than leave the playing field wide-open for those business entities that want to earn profits in an unfettered environment, and end up cheating consumers like you and me.  Look at what big banks are trying to do with outrageous new fees; or what Verizon wanted to do by charging you a fee to pay your bill by phone or online.  Anyone remember the Netflix debacle?

A balanced budget amendment is not reform.  It is a power-grab meant to limit the Executive’s ability to propose federal solutions to national problems and a way to put a cap on spending, especially for government programs that assist the poor and workers and the middle class.  It limits the power of the Presidency without a corresponding check on Congress.  If we need a Balanced Budget Amendment to limit the spending that the  President can propose, then we also must have a Line Item Veto Amendment to give the President some control over the penchant of Congress to pass unneeded spending within large essential appropriation bills.  It also limits the federal government from taking necessary measures to address an ugly recession or an emergency situation.  Moreover, it serves as a crutch for the Congress to lean on.  Instead of making difficult decisions like raising more revenue through a fair tax system, and cutting out all the loopholes in that system, they would get to hide from that particular responsibility. 

Real reform is what President Obama is trying to bring about with the Consumer Financial Protection Bureau (C.F.P.B.) that will regulate mortgage brokers, lenders and servicers, as well as payday lenders, credit card companies, private student loan providers, and all banks with assets over $10 billion.  This is a rulemaking and enforcement authority that has been consolidated out of 12 different federal agencies and placed in a semi-independent bureau that targets the very groups that happen to be large donor patrons for the Republican Party.  Congressional Republicans (including Rep. Hanna) tried to undercut the bureau at every opportunity.  Let me count the ways:

--trashed Elizabeth Warren in hearings when they thought she would end up being nominated as head of the agency.
--tried to replace the C.F.P.B.’s single director with a five-member bipartisan commission
--attempted to lower the number of votes required for the newly created Financial Stability Oversight Council to overturn any CFPB rule.
--proposed legislation to prevent the Bureau from functioning without a Senate-confirmed director in place; and then proceeded to hold up, oppose, and delay the approval of Obama’s appointee (until the President made a recess appointment)
--in addition, its budget is capped; it is subject to GAO oversight, and is required to report regularly to Congress -- all compromises with Republicans in order to get it passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Real reform of Washington will be accomplished when politicians like Mr. Hanna stand up for consumer protection, public financing of elections, ending of all PACs that benefit no one but special interests;  re-districting drawn by non-partisan citizen commissions in every state; restricting amounts that can be spent for primaries or general elections for all offices; setting standards for political advertisements in all media and restricting the length of time allowed for campaigning; enhancing voter registration, not curtailing it with pseudo reforms like picture IDs.

Real reform of Washington will be accomplished when representatives and senators vote to amend our constitution in a thoughtful and balanced way:  by establishing term limits for congressional and judicial office-holders; outlawing any and all gifts or contributions (broadly defined) to office-seekers or office-holders;  severely limiting the ability of office-holders, and their family and staff members, from any involvement with consulting or lobbying firms while they hold, and after they leave, office; not only calling for a balanced budget but for a line-item veto; and, ending any ability to establish earmarks and tax loopholes that benefit a limited constituency.

Finally, real reform of Congress will involve the transparency of the budget of every congressional office; reduction in the number of committees and sub-committees (they all cost money); the demolition of all political offices within the leadership of the House and Senate;  the elimination of irrelevant or special privilege offices like chaplains or in-house medical clinicians; the elimination of all special privileges not available to most ordinary citizens (like leased limousines and special drivers; and corporate jet transport by big business interests); no more exemptions or exceptions for members of the legislative branch -- all laws passed must apply equally to them as to ordinary citizens; legal restrictions on the use of insider information to feather their own nests in the stock market, land development or 3rd party aggrandizement.

Although this is just a starting point, it is a much more substantive plan than that presented by Mr. Hanna, or by most of our representatives who fear real governmental reform and the threat it augurs for their positions, their power, and their crony capitalism.  Nibbling at the edges like Mr. Hanna wants to do will not solve our issues with a dysfunctional Congress, nor will it change the way Washington functions.  Real reform must aim at the very core of our governmental processes.  I challenge Mr. Hanna, and his colleagues, to make such in-depth reform of  our federal government a top priority and the imperative for our times.

1/01/2012

Throw Them All Out

We have been given information lately by the media that insider trading and crony capitalism are among the influences corrupting our political process and the governing of our nation.  Recent reports on 60 Minutes (CBS) and MSNBC make it quite clear that members of Congress are “on the take”, so to speak, but seem to be getting away with it, perhaps because Congress itself determines what is legal and what may be termed illegal. 

Recently, I finished reading a book that tackles this topic.  Peter Schweizer in Throw Them All Out makes it plain that, from President to Congress to the Judiciary, all are guilty of playing fast and loose with the ethics of the situation, let alone with laws that may inform the issue, however slightly.  My purpose this week is to impart some of the main points of the book, by way of encouraging you to read it and to consider again, as we enter the New Year of 2012, that  reform is imperative in our times.

It is instructive to look at the sub-title of the book: “How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals and Cronyism that would send the rest of us to Prison.”  Schweizer presents us with the legal restrictions imposed upon most sectors of our capitalistic system for dealing with these particular actions:

1)     Insider trading laws are on the books.  If a board member or employee within a large corporation dumped all his shares right before an announcement of bad news and a plunge in the company’s stock price, it would at least warrant a look by the SEC. (Remember the prison term served by Martha Stewart for insider trading?).  But when a Congressman does the same thing, he or she gets a free pass.
2)    Conflict-of-interest statutes exist.  Often legislators receive big financial favors from specific companies, and then through legislation they sponsor or push, they work to help those firms instead of recusing themselves from the legislative process.  No problem, because conflict-of-interest statutes don’t apply to them.  An executive persuading a large corporation to spend money on an initiative that he would personally profit from, would raise substantial legal questions.
3)    Enriching oneself by mixing real estate investments with taxpayer money would certainly be actionable at the municipal level.  Congressional “ethics” committees have deemed it “ethical” for Congress persons to do so.  A favorite trick in Congress is to earmark a mass transit project that is in close proximity to their (or their family’s or friends‘) real estate holdings to increase the value of those properties.
4)    If a government grant somehow is designated as “serving the public interest”, it can become part of a larger project and escape scrutiny.  The game of funneling taxpayer money to friends or favored 3rd parties, has exploded to astonishing levels in recent years.  Try that in the private sector with corporate money and you could wind up facing criminal charges for misuse of corporate assets.  Interesting then that it becomes legal and even acceptable if it’s taxpayer money.

It doesn’t take long to realize that the Congress, which makes the laws for everyone else’s business transactions, exempts itself from those laws, or refuses to apply common practices, such as recusal, to themselves.

So, let’s take a brief look now at some rather glaring examples of questionable practices by our politicians.

    When six senators on July 27, 2009, announced that they were going to eliminate the “public option” from their version of the health care reform bill, the share prices of three major insurance companies surged by between 8% and 10% the next day.  If one knew ahead of time that this event was happening, that piece of information could turn out to be highly profitable in stock trading.  A former Democratic nominee for President happened to be part of that group, and was serving as a member of the Health Subcommittee of the powerful Senate Finance Committee.  His buying and selling of health care stocks during the health care debate is very interesting.  When the legislation was working its way through the House and Senate, the Kerry's began buying stock in Teva Pharmaceuticals.  In 2010, after the passage of the bill, the Kerry's sold some of their shares in Teva and reaped tens of thousands in capital gains (all reported on his disclosure forms).  He wasn’t the only congressional trader in pharmaceuticals, nor was this the only time that some congressmen and senators had gotten richer by using inside information regarding health care. 

    Congressman John Tanner of Tennessee, Senator Jim Webb of Virginia, Senator Tom Carper of Delaware, Congresswoman Melissa Bean of Illinois, Congressman Vern Buchanan of Florida, and even John Boehner of Ohio bought shares in Teva or numerous other pharmaceutical or health insurance companies, and some invested in real estate groups specializing in health-related properties, all while health care legislation was being considered.  Elected in 2009, an already rich freshman Congressman, Jared Polis of Colorado, gained seats on two powerful committees  that were central to the crafting and passage of the health care bill.  While he was praising the benefits of health care overhaul, he was buying up millions of dollars worth of a private company called BridgeHealth International which offers medical tourism: providing less expensive medical procedures in other countries.  Guess what?  Polis bet right -- medical tourism expanded rapidly as many Americans reacted negatively to the new law and sought alternatives in other countries.

    Timing is everything, and some made money by knowing when to dump shares in certain companies while buying others.  It happened in 2003 when a new entitlement for Medicare Prescription Drugs was created and debated.  Read the book for more details.  Let’s take an example of dumping shares when inside information indicates that something drastic is about to happen.  On September 16, 2008, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke met with congressional leaders who had been led to think that the financial crisis was just a disruption with limited effect upon the economy.  What they were told at this September 16th meeting made it plain that the general perception was wrong.  Paulson also told lawmakers in this meeting that the federal government was going to bail out the insurance giant AIG and that the markets were in deep trouble.  The very next day, Congressman Jim Moran of Virginia dumped his shares in ninety different companies.  It was his most active trading day of the year.  While Moran did not profit much from these trades, he avoided large losses that the general public would face within a week.  And, Moran was just one of at least ten Senators who traded stocks or mutual funds that very day related to the financial industry.  A month later, the stock market had dropped over 22%.  Preventing a catastrophic loss can be just as important as making a big gain, and having inside information in your possession, like those who attended that closed-door meeting had, puts you in a position to act that is denied to all those who weren’t privileged to be there.

    Schweizer makes an important point for all to consider at this point: “Members of the Congress are privy to all sorts of inside information about pending government actions.  Some of it comes from their actual actions -- that is, passing legislation.  Some of it comes as a result of their position of power.  Legislators are told things by regulators or bureaucrats in private because they ask about them.  (In addition) very frank and detailed conversations often take place behind closed doors.  The most valuable information is revealed in private meetings, phone calls, and correspondence.  If members of Congress buy and trade stock based on that information, or if they pass that information along to a campaign contributor or their own financial advisers, they are not considered to be guilty of any wrongdoing…(because) they write their own rules.”

    However, using inside information for trading in stocks is not the only dirty little secret being kept by members of the Congress.  This Permanent Political Class, as Schweizer terms them, has become quite sophisticated in enriching themselves by mixing real estate investments with taxpayer money, and these are easier to camouflage than are stock transactions.  He tells the story of how a former Speaker of the House, Dennis Hastert, was able to increase the value of his land in a rural area to his own enrichment (which we do not have time to re-tell).  Suffice to say that members of Congress have used legislative earmarks to enhance the value of their own real estate holdings in several ways:  by extending a light rail mass transit line to near their property, by expanding an airport, or by cleaning up a nearby shoreline.  Federal funds have been used to build roads, beautify land, and upgrade neighborhoods near commercial and residential real estate owned by legislators, substantially increasing property values and the net worth of these elected officials.

There is just too much of importance in Schweizer’s book to bring to you in one Blog.  I recommend the book to your perusal, as it will clearly open your eyes to the bamboozling of the public in which all too many members of the Congress are actively involved.  May you have a healthy and prosperous New Year.  Many members of Congress expect to use their political position, and insider information, to make sure that their  New Year is very prosperous -- for them!!  Remember, reform is imperative for our times.  Resolve to VOTE ONLY for REFORMERS!