One slice of the hard right wing of the Republican party and the core Republican base voter look at tens of thousands of kids stranded at our border because where they came from was so horrifying, and see a crisis of American insecurity that can only be solved by keeping these kids in jail and thrusting them back into their terrifying realities as fast as possible.
These reactionary xenophobes look at tens of thousands of kids who don’t look like them, don’t speak their language, come from far away and see… aliens. As in alien lifeforms. They look at kids cut off from their parents, family, friends and really, their entire experience, and they don’t see children of the same species.
Pretty much everybody else looks at these same traumatized and profoundly vulnerable children and sees… children. Children who need to be taken care of; children deserving of love and care simply because they are. All of these people see a profound humanitarian crisis and many are stepping up to help.
A subset of the the jail and airmail the kids back crowd–particularly elected folk and those funding them–are such psychopaths that they tout this inhumane policy to their base purely because they believe it helps them win elections and thus gain access to immense power. I do mean psychopaths: they pick access to power over the lives of tens of thousands of kids.
Don’t believe me? Watch the Rachel Maddow show segment below, doing yourself the favor of skipping the irrelevant, snark-filled first 6+minutes. Start around 6:50 in, when she starts talking about Dallas, TX reacting to the crisis. After that it’s less than 15 minutes long and pretty much all of it is relevant.
We need to change our politics so our policy is not dictated by reactionary xenophobes and the power obsessed psychopaths that knowingly exploit them.
When Timothy Geithner orchestrated the bankers’ bailout, giving them a ‘wall of money’ without accountability, and without matching funds for ordinary Americans suddenly facing foreclosure–Geithner took justice out of the American political economy.
Hence the title.
If Geithner’s book “Stress Test” becomes the definitive history of the financial crisis–or even is viewed as a more or less accurate account–then the correct title would be: Geithner and the American Way.
Truth would have to come out because Geithner lies throughout his book, as Matt Stoller documented. In his takedown of Stress Test, Stoller partially relies on this groundbreaking work by Josh Rosner in 2010, in which Rosner exposed the Geithner’s long history of serving the biggest bankers.
But if We (the sovereign We) accept Geithner’s false history, the title Geithner and The American Way becomes apt in a snark-free sense too.
Geithner’s accountability-free bailout of the reckless richest while demonizing ‘irresponsible’ homeowners is the current, fragile precedent for how ‘our’ government responds to national crisis. If we believe Geithner’s claims of necessity and right, then the precedent solidifies and defines government policy going forward.
So: when the next crisis hits, will the response be democratic and the policy in the public’s interest? Or will it be Geithner 2.0?
Actually, as Stoller explained, it would be Rubin/Geithner 3.0. In 1994 Treasury Secretary/Citigroup leader-in-waiting Robert Rubin and protege Geithner funneled a wall of bailout money to ‘American’ banks through Mexico, ostensibly bailing out Mexico. Funny thing though, Mexico suffered two more decades as a result, as Dean Baker noted. Worst, Rubin did this even though Congress explicitly said: NO.
So that’s what’s at stake in how people receive the Geithner book. Take it as true, and ensure that next time the bankers will again have easy, accountability-free access to our tax dollars while ordinary Americans get nothing, or worse, lose everything. Reject it for the self-serving pack of lies that it is, and create the possibility that America will face the next crisis with everyone’s interest in mind.
The Proof Is In The Runway Foam
I’m not being hyperbolic. To understand how profoundly captured our government is–how closely Geithner and his ilk embrace the reckless richest while disdaining the rest of us, revisit his infamous runway foam comment.
Neil Barofsky told the story in his book, Bailout.
It involves Geithner’s use of the money that Congress gave Treasury to help homeowners restructure their mortgage debt. The policy goal was foreclosure prevention; Congress wanted people to stay in their homes as much as possible.
Sound like a homeowner bailout? Well, the money was part of the 2008 bailout–it was part of “TARP”. But unlike the billions that went to the banks, a wall of money directed at homeowners would have saved the economy by de-leveraging households, preserving their savings, and enabling them to express their demand for goods and services, fueling economic recovery.
What’s more, forbearing and restructuring debt when the debtor faces economic crisis likely to be temporary, or can and is willing to pay more than foreclosing’s worth–as millions of homeowners were–is normal business. Not so for the financial ‘innovations’ the Fed and Treasury engaged in to bailout the bankers.
One last piece of context before the story: Treasury announced the details of HAMP on March 4, 2009. At the time, headlines screamed about foreclosure spikes; Fannie Mae and Freddie Mac had imposed a moratorium on foreclosures of occupied homes. Everyone knew homeowners were in crisis.
So here’s the story: now-Senator Elizabeth Warren (D-MA) was questioning Geithner about HAMP (I would’ve loved to see her directness make him squirm) when he explained that his purpose in designing and implementing HAMP was to accommodate the banks’ foreclosure processing capacity, so that they could better handle the massive wave of foreclosures coming toward them. Geithner’s words:
“We estimate that they can handle ten million foreclosures, over time… this program will help foam the runway for them.”
Watch this 45 second CNBC clip of Barofsky; he leaves no doubt about what Geithner meant.
As David Dayen pointed out at the time, this meant that when Geithner considered the impact of 10 million foreclosures, his instinctive empathy was for the bankers, not for the people losing their homes.
Geithner wasn’t moved by the fact that foreclosure took their retirement security, their savings, and too often, their shelter. He didn’t care about foreclosures’ impact on the foreclosed, on their neighbors (both in terms of property value and health), on their communities or states, on our national economy. He just worried about bankers’ ability to process the paperwork.
But actually, it’s worse than than that.
HAMP and its cousin, HARP, paid the banks to take economically rational actions they should have taken regardless: modifying loans and forgiving principal to make it feasible for people to keep their homes while still making money v. foreclosure. Instead many many foreclosures have resulted in huge losses to the creditors and should have been avoided on that basis too.
Indeed, the banks have been so careless about acting economically rationally that California had to pass a law just to make sure banks did the math transparently when calculating whether the “net present value” of the modification was greater than the foreclosure.
So to recap-Geithner took money that was supposed to help homeowners and used it to pay banks for behaving rationally, and to stretch out the foreclosure process to the point where the banks could process the foreclosures more effectively.
No, Beltway Bubble Denizens, Geithner Didn’t “Save the System”
Perhaps the biggest lie of all implicit in the “debate” over Geithner’s policies–it’s not a real debate when one side lacks a coherent set of facts, as Geithner’s side does–is that his ‘wall of money’ saved our financial system. By failing to impose accountability while bailing out the bankers, Geithner ensured that their reckless behavior would continue. At most he saved the status quo, meaning he preserved bankers’ ability to gamble recklessly.
I get so frustrated when people like me–people who remain outraged that everyone from Geithner to the “Justice” Department failed to impose or even seek accountability–are portrayed as blood thirsty rabble screaming for heads regardless of justice or meaning. We are not mindless rioters, consumed by vengeful rage. We do not seek retribution; we do not want an Old Testament eye.
We want deterrence.
We want our government to prevent future crises by deterring would-be white collar criminals from creating them.
No, Eric Holder, it is not about banks being too big to jail; banks don’t go to jail. In fact, banks don’t do anything. Bank executives and the employees they manage do things. Anthropomorphizing the institution exonerates the humans who run it.
Would be white collar criminals are rational actors; they are much easier to deter than people who commit violent crime, sex crimes, addiction/drug crimes. The key to deterring them is making the threat of being caught and prosecuted credible, and the consequences of being prosecuted painful.
When powerful bankers and traders confront a choice, they weigh the downside risk against the potential upside. Because our government chose to eliminate perceived downside risk (except for insider trading, which is bad but no systemic threat), it liberated would be white collar criminals, facilitating crime sprees.
Already Living Geithner’s American Way?
Although I’m presenting the need to preserve truth and reject Geithner’s book in save-our-democracy terms, I’ve got a confession: I’m not sure we’ll have another public bailout regardless of how reckless the bailout-emboldened bankers become.
Geithner and his patrons resent the democratic backlash so much that I’m not sure the next bailout will be publicly disclosed. We still have an ongoing policy that’s kind of a pre-emptive bailout: guaranteed profit for the banks and the bankers who run them. A couple years ago Shelia Bair detailed how.
More ominous, “our” bankers are so hardwired into the halls of Congress and the White House that it may well be possible to pull off a completely stealth bailout. Consider that the Banking Caucus can be publicly identified without triggering consequences, and Jamie Dimon can offer to have JPMorgan Chase write the financial reform bill and be irritated his offer wasn’t accepted. (Dean Baker has that anecdote in his “Stress Test” takedown.)
I’d bet that if JPM or any other banking behemoth were truly at risk, the CEO would speed dial the then-head of the Federal Reserve, the then-Treasury Secretary, the President, and perhaps (but only perhaps) Congress. After explaining the risk, these sages would agree that it would be better for everyone if the situation could just be handled quietly. And the necessary wall of money would appear in the failing bank’s accounts.
At least that’s where Geithner and The American Way are headed, if his false history is taken as true.
Note: this post was updated a few times, most recently 6-13.
Thank you for willingly putting your lives on the line in America’s name–in my name–as one of the ‘People’ in ‘We the People’.
I apologize–again, as one of the sovereign We–for how America has failed you.
I admit that after marching many times and participating in efforts to spread the truth to prevent the Iraq War, I gave up. I felt powerless, as if my iota of I in the sovereign We could not matter, could not make the difference.
I look through my photos from those protests and am struck again by how broad based the antiwar movement was (I took lots of pictures of signs that identified where the protestors came from, like “Oklahomans Say No To War”) and by how much the protesters knew:
I am sorry that I stopped fighting to end our wars, stopped fighting to bring you home safely. I am not impotent; the sovereign We are not impotent.
Perhaps worse than insisting you return to fight, again and again, wars that few of us in the sovereign We support or participate in, is our failure to care for you upon your return. Our failure to care for your bodies and minds, and our failure to provide opportunities and support for your futures.
As Colbert explained, our VA scandal is a real scandal. All the work President Obama and the Congressional Democrats are doing to position themselves for November could be destroyed by it.
Will the political threat be enough to force real leadership on this issue? Maybe. It’s absurd that the merits alone aren’t, but such it is.
From where I sit, we should pass Senator Sanders’s veterans benefits bill (VT-I) and (separately) we should reinstate the draft.
On Memorial Day I will put in the mail my letter to my Congressional delegation demanding just. I will follow up with phone calls. I will participate in efforts organized by others. I will start trying again.
Senator Sanders issued a statement about his comprehensive legislation and a companion accountability bill on Friday. Here are the key bits:
U.S. Senate Veterans’ Affairs Committee Chairman Bernie Sanders …will introduce legislation to increase accountability at the Department of Veterans Affairs and reintroduce comprehensive legislation – which Senate Republicans blocked last winter – to improve veterans’ health care, education, job-training and other benefits….a hearing will be held on June 5 to address that bill and other legislation.
…The broader measure that Sanders intends to revive also would restore a 1 percent cut in annual cost-of-living adjustments for military pensions. The comprehensive bill is backed by the American Legion, Disabled American Veterans, Veterans of Foreign Wars, Iraq and Afghanistan Veterans of America and many other organizations. The measure was sidetracked last Feb. 27 when only two Republican senators voted with 54 Democrats and independents to advance the measure.
Only yesterday, Sen. Marco Rubio (R-Fla.) complained about the $21 billion, 10-year cost of the comprehensive bill. “If you think it’s too expensive to take care of our veterans then don’t send them to war,” Sanders said during the exchange with Rubio.” (Bold mine)
We need to do more than take better care of our veterans on their return; we need to send them to combat much less often. That’s why I also want to reinstate the draft.
If we had a draft prior to the War in Afghanistan, we would have started that war, but we would have fought it differently. The only broadly accepted argument for the war was avenging 9-11 and getting Bin Laden, not nation building. Hard to see President Bush betting his re-election on a badly run war fought by draftees.
If we had a draft prior to the War in Iraq, I find it hard to believe we would have started that war of choice. I cannot imagine a more powerful organizing principle to end to President Bush’s reelection hopes.
In short, given our Congress’s failure to responsibly limit Presidential warmongering, we need the direct democratic accountability of a draft, and I am sorry I have not done more to make it happen.
Either the cause is just enough to demand universal sacrifice, or it isn’t. If it’s not, we shouldn’t be fighting it. Our civilian politicians–Presidents and Congress–use our soldiers’ lives far too casually. That is why the draft, as well as Senator Sanders’ bill, will be in my letter to my Congressional Delegation.
Speaking of universal sacrifice, I am sorry that I–as part of the sovereign We–have failed to rally our nation to support you day in and day out.
We have sold no “War Bonds”; we have planted no Victory Gardens. While the gardens aren’t a necessary part of the war effort now, surely we should embrace directly funding our wars, rather than deficit financing them (including cutting taxes at their start).
If the rest of the sovereign We joins in, it will be enough. Hundreds of thousands of us could not stop the Iraq War from starting (absent a draft). I don’t think millions of us could have; the war had been wanted for a very long time. But millions of us, acting together, can get our veterans cared for as they should be, and we can rein in future warmongering.
Considering the sacrifices you our veterans have offered us–surely We can sacrifice some time to help.
Check it out, let me know how we can make it better…
After my naive heart was broken by the National Mortgage Settlement and nearly every law enforcer’s determined effort to avoid even attempting to incarcerate the biggest white collar criminals (and thereby ensuring their recidivism and continuing danger to the public), I started looking for ways to make a difference where I live.
Launching A Website
One commitment I made was to the North Fork Promotion Council, a local civic group aimed at helping local small businesses–farmers, vineyards, restaurants, B&Bs, retail, etc.–thrive. With a couple of others, we have determinedly worked towards designing and launching a website aimed at promoting local business by encouraging tourists and locals come out and have fun. That site, called GoNorthFork.org, is going live Wednesday (May 21st) at 10 am.
The site will feature curated lists of the best ways to have fun out here, the North Fork of Long Island. Regular columns called “The Weekend’s Best” and “Fun All Week” will help you pick what you’d like to do when you’re here. We will also feature the really big events, the annual festivals and the like, that are worth planning a trip just to attend. Those will appear in the column “Mark Your Calendar.” We will also run a weekly feature called “Last Week in Pictures”, so you can see how much fun we’re all having.
Finally, readers can become virtual neighborhood residents by getting to know our proprietors and farmers through a column called North Fork Insider, which will feature an interview with a North Fork small business owner every week.
I am the founding curator and writer. The site will publish once a week, on Wednesday mornings, with listings Wed-Tues.
Why You Should Come Out East
If you live in New York City, Connecticut, and Massachusetts, we’re easy enough to get to that you can come for an overnight, or ideally two or more.
While it’s nice to come via car, in that it makes it easiest to take fullest advantage of all we have to offer, it’s possible to take the Hampton Jitney or LIRR to Greenport, and walk to a B&B. From that base there’s a ton of wonderful restaurants, shops and activities. The Jitney and the train stop at all our towns, and if you can rent a car while you’re here, or bring your bike or rent one while you’re out, the entire fork is open to you.
If you do come for a visit, you’ll discover this place rich with history–settled in the 1600s–still beautiful and pristine, as our farmers, clammers, fisherman and environmentalists have all combined to protect our land.
Our skies get dark at night, and on Saturdays you can see the stars at the oldest public observatory on Long Island. The air smells good, and it gets quiet at night. You can get real food here. We have farmstands galore, and you pick your own fruit–apples, berries, pumpkins, as the seasons provide. You can buy meat, milk and cheese from local farms, and shed the horrors of industrialized food. Fresh scallops, oysters and clams from our Peconic Bay are a particular treat.
Restaurants feature local foods, and it’s easy to get a huge range of jams, relishes, vinaigrettes, honeys and similar items crafted from local ingredients. We also have a craft alcohol industry, including beer, wine, and hard cider.
And as GoNorthFork.org will inform you, we also offer lots of live music, visual and performing arts, historical events–like a really cool antique car show that sets up on the town green, and lighthouse tours you can get to by boat or foot.
So come check out the North Fork this summer, fall in love and return year round. It’s a fabulous way to detox from the poisonous politics and abuses of power that grind us down.
“Privatization” and “public-private-partnerships” for infrastructure and other public assets are scams driven by private greed and public cowardice. Americans have been burned by these scams. Last month the Atlantic ran a nice piece on the growing privatization backlash.
Unfortunately, as governments at the city, state and federal level continue to lack the political will to raise taxes or cut spending, as our infrastructure continues to deteriorate, and as political leaders such as President Obama and Congress peddle the idea, the pressure to privatize public goods will continue to rise. Indeed, it’s no longer companies like Deloitte offering to do deals; we’ve reached the point where the Motley Fool is pitching retail investors.
The New Jersey Toll Road Privatization Push
It’s a topic I’ve given a lot of thought to, because in my role as Legislative Advocate for NJPIRG, I played a meaningful role in defeating then-New Jersey Governor, nee Goldman Sachs Jon Corzine’s push to privatize New Jersey’s ‘three big roads’–the Turnpike, the Garden State Parkway, and the Atlantic City Expressway.
The policy arguments we made then (2007)–and which USPIRG and others continue to make today–remain true, and provide a good, accessible framework for judging any privatization deal that may affect you.
As you read the NJ story and our cheat sheet for judging proposed deals, consider what’s at stake– the level of traffic congestion and air pollution, the safety and quality of roads, and even the availability of high-quality affordable mass transit alternatives.
When Governor Corzine came into office, there was a political consensus among a sufficiently large and diverse coalition of interests that the best way to fund New Jersey’s transportation needs was to raise its very low gas tax. But rather than gather and lead this political will to pass the tax hike–something that would have taken courage, but not heroism–Governor Corzine pushed the privatization idea. I don’t know if ducked the tax hike because he was a coward, or greedy, or driven by his deep saturation in Wall Street’s greed ethos.
Regardless, Corzine (and his Democratic legislative allies, most notably State Senator Raymond Lesniak) suggested that New Jersey should fix its chronic budget crisis by leasing the New Jersey Turnpike, Garden State Parkway and Atlantic City Expressway to a private operator for 75 years. The private operator would be guaranteed annual toll hikes, given management of the ‘three big roads‘ and would pay the state some $20 billion.
Six Principles For Judging PPP Deals
1. Public Control: public policy, not protecting private profit, had to control key management decisions that would not only affect the leased roads, but also the communities all along the roads. Because of the roads at stake in New Jersey, the issue was really statewide transportation policy.
What were we talking about? As the white paper explains:
“…toll levels, maintenance and safety standards, and congestion on the Turnpike and Parkway have a substantial impact on the number of cars using alternative routes, including local roads and mass transit. …
In the wake of the last Turnpike toll hike, for instance, many communities felt the impact of trucks diverted onto local roads…. Public control of key toll roads is necessary to ensure a coherent statewide transportation planning and policy making.
… Three examples illustrate these potential dangers:
Non-Compete Clauses—Deals in California, Colorado, and to a lesser extent, Indiana, limited the state’s ability to improve or expand “competing” roads. In New Jersey…virtually all major roads compete for cars with the Turnpike and the Parkway.
Private Toll Decisions = Broad Private Control of Traffic Management—If the rules for increasing toll rates under Chicago toll road deal had applied to the Holland Tunnel since its inception, that roadway could presently charge a one-way toll of more than $180. As a practical matter, an operator would be unlikely to charge that price because drivers would instead take alternate routes. The point is that the Chicago toll-increase schedule effectively allows the private operator to charge whatever maximizes its profits. The toll operator can also offer discounts to particular types of motorists or encourage traffic between certain exits, as will maximize profits. Together these powers enable the operator to control toll policy, and thus dictate who drives on the toll roads, and when…
[Note: although Senator Lesniak said he would require annual toll hikes but limited them to the rate of inflation, even that doesn’t solve the issue; New Jersey would have given up its ability to set toll rates, and thus all its consequences, for 75 years. It’s not just about how high tolls go; it’s about controlling the policy–congestion pricing, HOV discounts, Lexus Lanes, etc.]
Creates “Tax” on Normal Policy Making—The Indiana deal also requires the state to pay investors compensation for reduced toll revenue when the state performs construction such as when it might add an exit, build a mass transit line down the median, or bring the road up to state-of-the-art safety standards. This compensation would add significant costs, and potentially the state could not afford to do the work it would otherwise perform. As added complication, the exact level of these future payments might be subject to dispute and lawsuits.
2. Fair Value: deals pay the state far less money than its assets were worth, as the Atlantic article notes. In New Jersey, the best public advocate on this point was Peter Humphreys, then head of securization practice at the then 13th largest American law firm (McDermott, Will & Emery).
He testified before the Assembly Transportation Committee and explained the state could itself securitize the existing annual toll revenue of $700 million for a 15-year period and get an upfront payment of about $8.4 billion. Senator Lesniak’s approach imagined getting $20 billion from a 75 year deal. Thus serial securitizations–without changing the existing toll rates–for the same 75-year time frame would produce a nominal $42 billion.
Sure, that serial securization doesn’t account for the time value of money; but it also doesn’t consider the future toll hikes guaranteed to the private lessee. If the hikes contemplated in the Lesniak deal were enacted and also securitized, the serial figure would be much higher. $20 billion was way too little.
And it’s not just New Jersey; as the white paper recaps:
A financial analysis of the Indiana and Chicago deals by NW Financial, a New Jersey investment bank that represents the Turnpike Authority (among others), found that the private investors in those deals would likely recoup their investment in less than 20 years. That analysis is confirmed in at least Indiana’s case by the company that won the bid. Macquarie sent investors a presentation asserting an “Anticipated 15 year payback to equity.” Given that Indiana’s deal is 75 years long, and Chicago’s is 99 years, the analysis suggests that governments in these states received far less for their assets than they are worth.
3. Deals capped at 30 years. As I noted in the Trenton Times Op-Ed:
Sen. Raymond Lesniak (D-Union) has introduced a bill authorizing a 75-
year deal here, in the ballpark of Chicago’s 99 years and Indiana’s 75.
Some perspective: Henry Ford introduced the Model T 99 years ago, and the George Washington Bridge opened 76 years ago. The first section of the New Jersey Turnpike didn’t open until a mere 56 years ago.
Population also shifts dramatically on these timelines. In 1930, New
Jersey’s population was 4 million; 70 years later, it more than doubled
to 8.4 million.
From these markers, it’s clear that massive, unforeseeable changes will likely take place for transportation technology, networks and
demographics over the 75-year time frame being considered here. In the face of such uncertainty, New Jersey cannot predict its future
transportation needs, nor the revenue potential of its toll roads, well
enough to negotiate a deal that fairly allocates risks, dictates policy
or sets a fair price.
To minimize this problem, New Jersey must not enter a deal longer than 30 years.
4. State-of-the-art maintenance and safety standards. As we put it in the white paper:
The New Jersey Turnpike has been innovative throughout its history. Many of its design and safety choices have been replicated throughout the country and world. It is also recognized as having traffic management and danger warning systems that are among the best in the world. Similarly, the Garden State Parkway is consistently one of America’s safest roads.
…Indiana’s deal, for example, would not guarantee this performance. … the state of Indiana can require the operator to meet generally applicable safety standards, but must pay a hefty premium to implement higher quality…. In addition to the cost of construction or performing the maintenance, Indiana would be required to pay compensation to the private operator for any loss of revenues caused by the construction or imposition of new standards.
No deal for the Turnpike and Parkway should be approved that did not guarantee that state-of-the-art innovations would continue to be introduced.
5. Complete Transparency and Accountability. Again from the white paper:
…That requires full disclosure of the deal’s terms, and any related contracts and subcontracts, at least six months before a deal is done, plus public hearings. This commitment to transparency is doubly important given New Jersey’s past struggles with corruption and pay-to-play contracts. The public must have full confidence in the process for considering a potential deal.
Likewise, New Jerseyans need to be able to hold their representatives accountable for their decision to approve (or not approve) a deal. The Legislature must vote on the final terms of any potential deal. True accountability requires that both the Legislative and Executive Branches answer to New Jerseyans
6. No Budget Gimmicks. This one is self-explanatory, but also crucial, as Legislatures typically blow the wad of cash they get from these deals without fixing anything. The Atlantic piece mentions some of that, as does the white paper.
In response to our campaign based on the principles–we demanded the Governor sign a pledge to honor them–he came out with some nice sounding principles that didn’t go nearly far enough, as I discussed in this Op-Ed in the Newark Star Ledger July 10, 2007.
Ultimately the plan cratered. The Assembly Transportation Committee, led by Assemblyman John Wisniewski (also a Democrat) was a major reason why.
While NJPIRGs position always was: privatization is fine if done right–and the principles defined “right”–realize that Wall Street will never do a deal that lives up to the six principles. It’s just not profitable enough for them, and would put too much risk on them.
Extracting “Latent Income” (NOT!)
I began by claiming cowardice and greed are the reason these deals are done. Of course, that’s not the official line. The NJ framing of the advantage of privatization–which was branded as “monetizing” the turnpike, parkway and expressway–was reported in this April 12, 2007 Philadelphia Inquirer article this way:
““Monetizing” assets means squeezing latent income from them by selling or leasing them.”
As I pointed out in this letter to the editor about that article:
The article stated that “‘monetizing’ assets means squeezing latent income from them by selling or leasing them.” The Inquirer’s readers may imagine that this process harnesses additional value or productivity from the roads themselves. That is not the case.
“Monetization” simply means to borrow against a future source of revenue. Instead of receiving toll money at a later date, the government would receive cash up front today. Thus, monetization only “extracts latent income” the way individuals do when they take out a payday loan or a second mortgage.
To be fair, I should have said “in this case Monetization simply means” as monetizing doesn’t have to involve borrowing. But that doesn’t change my point then or now. The myth of privatization is that private companies can magically make things more valuable than government can, without articulating a coherent, stands up to scrutiny reason why it can.
Given that $20 billion was much less than the 75 year toll revenue was worth, where was the latent value extraction in the Lesniak deal?
Cowardice And Greed
Public policy involves tough choices. Privatization deals offer legislatures and governors an easy sounding way out; let stuff happen long after they’re out of office (and hope that’s when the bad consequences hit), and get in return a big wad of cash to blow now. No need to raise taxes or cut services.
Thus often privatization advocates on the government side are simply cowards–they don’t want to raise taxes, and they don’t want to cut spending.
The greed happens on both sides. On the private side, it’s the extraordinary profit potential. On the public side, greed can also shape decisions whether through quid pro quo type corruption or revolving door corruption.
And of course, greed and cowardice are not mutually exclusive motives.
When I look at:
the Supreme Court’s equation of corporate “people” with people, in particular making them ‘equally’ free to invest in election outcomes–never mind the ,000,000,000 (zeros)–and even purchase their own personal representatives;
“public” corporations governed under a dual citizenship stock–one set of shareholders gets to vote, and one doesn’t, a break with previous norms and morals;
and the continuing criminalization of poverty;
I see the same two things:
determined efforts by a small, incredibly wealthy and powerful minority to hoard as much as possible while feeling self-righteous, because they in their elitism believe they are better than everyone else and
determined efforts by a small, incredibly fearful and reactionary minority to prevent anyone who they don’t recognize as fully human from achieving real equality before the law, because they in their racism/sexism/homophobia believe they are better than all ‘others’.
Mind you, I’m not claiming a vast conspiracy; whether or not the individuals weaving the various threads are working together is irrelevant. The effect is the same.
The System Is Broken
When the government jails people without charge indefinitely, tortures, and flagrantly violates our privacy in the name of security–all as if the Bill of Rights didn’t exist;
When in the wake of a financial crisis that drove a bailout of the bankers (but not the homeowners the bankers fleeced), the best a Democratically-controlled government can do is Dodd-Frank, a law which even Fed Presidents say didn’t end ‘too big to fail';
When massive amounts of law breaking in making loans, servicing them, and foreclosing on them is ‘settled’ by every major law enforcer in a totally ineffective, harmful way;
When members of Congress so transparently serve the interests of the corporations they are supposed to legislate about that they can be identified, for example, as “the banking caucus“–a bipartisan bunch on the House Financial Services Committee;
When a single corporation and a single industry can deploy so many lobbyists, they can move legislation that facilitates corporate tax-dodging through a Congress gridlocked like a Gov. Chris Christie traffic Jam;
When the Department of Justice focuses on criminally prosecuting banks instead of bankers, risking harming many innocents rather than jailing ill-gotten power and deterring crime (although it will jail peaceful protesters);
When the top criminal prosecutor at the Department of Justice doesn’t know the elements he has to prove for criminal securities fraud (he apparently conflated it with the standard applicable in private civil litigation, which he surely knew from practicing on the defense side);
When federal courts are so solicitous of corporate speech that companies cannot be forced to publicly shame themselves by acknowledging their purchases of minerals supported (or may have supported) brutal warfare;
When the government has outsourced the most basic functions of government and, as a result, allowed the profit motive to distort war, criminal law and immigration policy, and infrastructure construction;
I know the system is so profoundly broken citizens must unite outside it to make fundamental changes.
I’m not saying people shouldn’t vote, or that they should; that’s a personal choice of conscience, and for the record, I vote.
I’m saying we need to amend our Constitution.
I’m saying we need to find the time to talk to each other, to our neighbors, to our friends, to strangers. We need to gather at kitchen tables.
We need to organize.
ACF: Updated to fix typos, add a couple links, and flesh out the end.
America is struggling with at least three major environmental policies: fracking, Keystone, and climate change. Climate change needs its own post. This one focuses just on the first two, which are so critical because of their potentially devastating impact on our water (again, setting climate change aside.)
The debate on whether to frack or not, whether to build the Keystone pipeline or not, focuses on jobs v. environment. The claims are two: the jobs will be many and good paying (and implicitly, there’s no alternative source of such jobs) and the environmental consequences are overblown because both fracking and oil pipelines are safe (or could be done safely.) Both are flawed.
Sure, these projects will create large numbers of good paying jobs, and we desperately need such. However, they are not the only way to get such jobs. Building and restoring decrepit infrastructure is an easy way to generate good jobs. And we could invest in cleaning up contaminated soil and water too–the Superfund list is quite long.
Second, the track record of contamination and secrecy shows that both fracking and pipelines are currently done in ways that produce large amounts of contamination and have very high contamination risk profiles. (See below, after the corruption examples)
Let’s assume, however, that it is possible to frack and pipe oil in a way that poses very very little risk to our water supply. Do we have any reason to believe that is what will happen as fracking expands?
The answer is no, because of the corrupt relationship between industry and government at all levels. Americans cannot trust industry to act safely on its own; Americans cannot trust the government to ensure industry acts safely.
In such a situation: catastrophic risk profile, and inability to manage risk effectively, the only sane option is to not run the risk at all.
In short, unless and until Americans can trust that state and federal environmental regulators have the rules, culture and budget to ensure industry is operating safely, we must stop fracking’s expansion and we must reject Keystone.
Seeing the Corruption
An encyclopedic recitation of all evidence of government corruption in the environmental context would require a book. Below I highlight two recent examples from the coal industry, to illustrate what and how it happens.
First a housekeeping note: what I mean by “corruption.” I mean both something personal and something policy.
On the personal level, I mean people gaining money or power in exchange for enacting and enforcing public health policies that prioritize industry profits over clean water (or clean air and clean soil) and the health impacts dirty water, dirty air and dirty soil have.
On the policy level I mean the fact that such policy exists is a res ipsa loquitur case that the personal corruption is occurring. Last, I’m not suggesting that industry’s viability is irrelevant to policy making; just that the pro-industry skew is so extreme it cannot be explained except through underlying corruption.
West Virginia and the Freedom Industries Spill
Freedom Industry’s January 2014 spill of a chemical into the drinking water used by about a third of West Virginians shocked locals and will have unknown but possibly quite serious consequences overtime.
Evan Osnos documented the back story to the spill for the New Yorker, a tale big coal’s cementing of power in West Virginia. The article is a compelling read, but here are the key bits for this post’s purposes:
“MCHM—[the primary chemical leaked]—is part of a chemical bath that the mining industry uses to wash clay and rock from coal before it is burned.
Doesn’t sound like something I’d want to drink.
There are more than eighty thousand chemicals available for use in America, but, unless they are expected to be consumed, their effects on humans are not often tested, a principle known in the industry as “innocent until proven guilty.”
How safe does innocent until proven guilty make you feel? How do you like the idea of being confronted with a chemical in your drinking water and not knowing just how bad it is?
“…the [leak] site posed an immediate problem: it was a mile upriver from the largest water-treatment plant in West Virginia. The plant served sixteen per cent of the state’s population, some three hundred thousand people—a figure that had risen in the past decade, because coal mining has reduced the availability and quality of other water sources, prompting West Virginians to board up their wells and tap into the public system.
Note: an industry leak threatened the public water supply West Virginians had turned to because prior pollution wrecked their well water.
Also, does the “expected to be consumed” part of “innocent until proven guilty” consider the risk of consumption via pollution? If it does, why didn’t we know the risk profile of a chemical stored in tanks next to a river just upstream from a major drinking water treatment plant?
[West Virginia] has become a standard-bearer for pro-business, limited-government conservatism. The day before the chemical spill, the governor, Earl Ray Tomblin, delivered his State of the State address, criticizing federal environmental regulators… Tomblin, a conservative Democrat elected in 2011, cut corporate taxes … For the second consecutive year, West Virginia’s Department of Environmental Protection would take a 7.5-per-cent cut in state funds, dropping to its lowest level since 2008.
It’s very hard to protect the public without the money to do the job.
Things have been so poorly regulated in West Virginia that:
In 2008, the Charleston Gazette discovered that in a nearly five-year period coal companies had self-reported around twenty-five thousand violations of the Clean Water Act, but the D.E.P. had not reviewed the reports or issued a fine.
Can you imagine admitting you violated the law 25,000 times and never getting in trouble for it? Can you imagine relying on an agency like that to protect your drinking water from fracking or oil pipeline leaks? Indeed, it’s so bad that
In 2009, four environmental organizations petitioned the federal government to take over enforcement of parts of the Clean Water Act in West Virginia; they described the state’s regulatory system as approaching a “nearly complete breakdown.”
Also in 2009
“… federal investigators from the Office of Surface Mining wrote that West Virginia had become so lax in its enforcement of coal-mining pollution regulations that “the consequences for violating the law, even when the violations are intentional, willful and blatant, are not significant enough to be a deterrent.”
Nonetheless, nothing came of the petition to have the feds take over enforcing the Clean Water Act. How safe does that make you feel? Think the feds have your back if your state doesn’t?
This lax enforcement is not accidental; it is a direct result of policy set by Governors and legislators who directly benefited from, or were threatened by, the industry:
…Joe Manchin, the governor from 2005 to 2010, “said that when the industries see the D.E.P. coming onto their property he wanted them to feel comfortable.” Manchin, a Democrat, had prospered as a middleman who helped coal mines sell to power plants and other users. Once in office, he repeatedly advised the department to shift its emphasis from enforcement to “compliance assistance.” …
In 2010, Manchin left the Governor’s Mansion and ran for the U.S. Senate. …The American Chemistry Council, the leading industry group, spent two hundred and twenty-five thousand dollars on advertisements praising Manchin as the “Senator for Our Future.”…On his Senate financial disclosures, he has reported income of more than three million dollars between 2009 and 2012 from Enersystems, a coal brokerage that he owned. (It is now run by his son.)
“Senator for Our Future” of undrinkable water, perhaps. But it’s not just Manchin.
The West Virginia legislature has proved vulnerable to the forces of outside influence. In the nineteen-eighties, coal companies converted part of the top floor of a hotel into a Coal Suite, where lawmakers could enjoy an open bar, a buffet, card tables, and private areas.
Today, the Coal Suite is gone, but, unlike in a majority of states, West Virginia industry groups and their clients don’t have to report how much they spend. In 2010, the Pacific Research Institute compared state laws on transparency in politics—the requirement, for instance, that a lobbyist disclose its spending on behalf of a client. West Virginia tied with Nevada as the least transparent in America.
Heck, who cares how much lobbyists spend on behalf of their clients?
The Democrat John Unger, a pastor and former Rhodes Scholar who serves as the majority leader in the state Senate, told [Osnos] that he has identified three steps by which lobbyists win the coöperation of his peers. “First, they try to wine and dine you. Then they try to set you up. And then they try to threaten you.”
Set you up? [Osnos] asked.
“Set you up in the sense of getting something on you so that you become beholden to them,” he said.
Industry punishes those who dare buck them:
In 2012, a coal-industry lobbyist asked Larry Barker, who was the chair of the House Energy, Industry, and Labor Committee, to advance an industry-backed bill out of his committee. Barker declined, and the meeting adjourned.
Afterward, Barker told me, a lobbyist “walks over and crowded me with his shoulder, kind of back to the corner, where there was nobody there but me and him. And I’m looking up at him, and I said, ‘What is it?’ And he said, ‘What’s it going to take for you to run our bill?’ And I said, ‘I want to look it over. I want to let the attorney look at it, I want the union to look it over.’
He said, ‘This is the last meeting. You can call a special meeting and put this bill on there.’ And I said, ‘Well, now, why do you think I would do that?’ He said, ‘Because we want it.’ We, meaning the coal industry. ‘We want it. Period.’
I said, ‘Well, we’ve reached a deadline. If I’m still here next year in this same position, if this is a good bill, I promise you I’ll run it in the first meeting next year.’ He looked me in the eye and he said, ‘That will be too late for you.’ […]
That fall, a first-time candidate backed by the coal industry challenged Barker and defeated him.
Don’t you feel safe and secure now, knowing that people who dare defy industry can be pushed out of office by industry’s deep pockets? Aren’t you confident that fracking and the Keystone pipeline will be pursued safely, with tremendous focus on potential public health impacts?
And although much is not known about the safety of the leaked chemical, note:
The company that made MCHM, Eastman Chemical, of Tennessee, had tested it on laboratory animals and given it a U.S. Occupational Safety and Health Administration rating of “hazardous.”
Sounds super safe to me!
Dr. Gupta, the head of the [local] health department [said that he and his family were not drinking tap water]. The water at their house still had an odor….[Osnos] asked if there were any outstanding scientific questions, and he laughed. Then he said, “What is the metabolism and excretion of this compound in humans? Does it accumulate? Where does it accumulate? What is the carcinogenic potential? What is the teratogenic potential? What does it do to home pipes? How does it interact, if at all, with other compounds in water, such as chlorine? Does it form harmful or harmless products?”
Good ol’ innocent until proven guilty at work!
There’s much more in the article, read it when you can.
New rules designed to protect coal miners from black lung, which has been sharply rising, were announced April 23, 2014. As the Center for Public Integrity reported, the new safety standard was lower than labor and environmentalists wanted, but the Secretary of Labor Tom Perez, and Joe Main, the head of the Mine Safety Administration, touted the the new rules’ closure of existing loopholes.
From the Center for Public Integrity report:
“Under existing rules, miners wear pumps that collect samples of the amount of dust in the air, but coal companies get to average five samples, meaning some miners could be exposed to dangerously high dust levels as long as they are balanced by lower exposures to other miners. Samples are taken over an eight-hour period, even though many miners now work 10- or 12-hour shifts.
Nice–assess safety based on an 8 hour average that didn’t reflect actual worker exposure. But it gets worse:
“When an inspector is conducting sampling, companies are allowed to operate at half of normal production levels, generating less dust than likely would be present at full production.”
So the average based on a short shift is further low-balled by cutting production in half. And this counts as a test?
“When MSHA does issue a citation, companies often have been allowed to avoid fixing the underlying problems for weeks or even months, potentially leaving miners exposed to high dust levels.”
Wait–even with the test rigged to be an artificially short sampling of artificially low dust production and averaged to minimize the chance of a high test result, the companies still fail tests and MSHA issues a citation?
“The new rule allows MSHA to issue a citation if any individual miner’s sample is too high, mandates sampling over a full shift, requires companies to operate at 80 percent of normal production levels during sampling and gives the agency authority to order quick fixes of violations and step up enforcement efforts at mines that appear to be cutting corners.
Much better, but why operating at 80 of normal production levels? Why not a real world test?
“Miners have long described what they viewed as rampant cheating of dust samples. Documents and interviews with current and former miners have revealed practices such as supervisors placing pumps in clean air or tampering with pumps after sampling.
Wow, nothing says ‘we don’t give a s–t about our workers’ more than stuff like that. The new rules require continuous monitors, which “should make such practices much more difficult, Main said Wednesday.”
No wonder black lung has been increasing. And again, we’re supposed to have faith that industry, unregulated, will protect us? Or that our governments as currently composed will? Not likely.
Seems the best that can happen is closing egregious loopholes after tremendous health impacts have already been documented.
1. When the chemicals get in drinking water, people get sick. Consider the $3 million awarded to a Texas family poisoned by fracking. For a more humorous presentation, see Aasfi Monvi’s Daily Show take.
2. Fracking destablizes the ground by causing earthquakes.
(At this point in the national policy discussion, it’s deeply misleading to say it’s not fracking, it’s the disposal well, that causes the quakes. When people think about fracking–whether to have it or not–they mean the industry as a whole, not the component parts of the process. It doesn’t matter if the fracking industry is causing the quakes at the start or end of the process. Unless and until the industry disposes of its waste in a way that does not cause earthquakes, it is fair to say “fracking” causes quakes.)
Fracking has been found to cause (or at least be strongly correlated with) earthquakes in at least Ohio (see here too), Oklahoma, Texas,and Kansas. Indeed, the injection wells pose enough risk that earthquakes in distant countries have triggered quakes at well locations, as this article explains.
What’s the big deal, given that these quakes are generally small?
First, there’s no way of knowing they’ll stay small; each earthquake relieves stress but may build stress elsewhere on a fault. Second, earthquakes can change groundwater flow by producing new cracks in bedrock or changing the compactness of soil.
The ground water flow impacts of earthquakes are normally studied in response to big earthquakes. However, when you consider that source of the quake is pollution-laden water, the risk is clear: how can anyone really know where the dirty water will end up?
3. Only the companies know what’s in fracking chemicals.
One company, Baker Hughes, announced this April that it would voluntarily disclose all ingredients in its fracking fluid. Other companies say they will continue to use the trade secret exceptions.
How safe do you feel now? What’s in the fracking chemicals can make you sick, but we don’t really know what they all are, and we don’t really know where they’ll end up.
4. Home values People whose properties are impacted by fracking pollution lose a lot of value.
5. NYC’s water supply. More than 8 million people get water from upstate New York, piped untreated into New York City. Governor Cuomo is considering allowing fracking in NY. Here’s a look at where “initial” fracking is likely to be. Note it shows the key shale is in the watershed and that initial fracking (if approved) is expected to include areas near it. Do you think that if fracking companies contaminate NYC’s drinking water supply they will pay for the treatment plant to clean it up?
This post is already very long, so rather than highlight the risks of the Keystone pipeline, see here for starters, which explains:
Catastrophic spills of tar sands crude in Mayflower, Arkansas and Michigan’s Kalamazoo River illustrate just how risky tar sands pipelines are. The inevitable spills from tar sands pipelines poison waterways, disrupt communities, make residents sick, and decrease property values.The unique chemical makeup of tar sands oil causes it to sink in water, making it particularly difficult to clean-up.
The spill that occurred in the Kalamazoo River three years ago still hasn’t been cleaned up, and the total cost of redressing the devastation will top $1 billion.
Given that Keystone XL runs right over the Ogalala aquifer, one of the most important sources of water in the Midwest, the risks of contamination are enormous.
Just one spill from the Keystone XL pipeline could destroy a water source on which hundreds of communities and thousands of ranchers and farmers rely.
So. Put aside for the moment the fight over whether or not it is technically possible to frack and pipe tar sands oil in a way that poses very very little risk to drinking water. Assume for the sake of argument that both can be done safely (ex-climate change.)
They won’t be.
Industry, and our governments as currently composed, won’t keep our water safe; they will put our lives, and our ways of life, at risk.
In this context, the only way to manage these risks is not to run them.
Our nation’s tax code reflects our corrupt politics. The code contains many provisions that benefit our wealthiest, most powerful companies and people while hurting the rest of us.
(“Our” most powerful people in the sense that they claim to be American, regardless of how transnational and unpatriotic they behave.)
For Benzinga, I did a set of stories on some of the visible corruption in the code. Like the “carried interest” provision. That’s the income naming rights deal purchased by private equity, hedge funds and other extremely wealthy people with lobbying and campaign contributions.
Income Naming Rights
The carried interest provision lets these 0.1%ers call most of their income “long term capital gains” instead of “income.” The difference? About twenty cents out of every dollar.
These folks’ capital gains are taxed at 20 percent; their income over about $407k is taxed at 39.6 percent. And given the salaries involved–the “best” hedgies can make $1 billion in a year–that adds up to meaningful money.
On $1 billion, labeling the money income or capital gains means $200 million more dollars that are either paid in taxes and benefit all Americans, or aren’t, and just get added to the unspendable cash horde the hedgie already sits on top of.
Aren’t taxes the more efficient use of that capital, from a system perspective?
Consider: as much as $200 million more from a single person in a single year. As much as $11 billion/year in all, just by more accurately labeling the money extremely wealthy put in their pocket.
That’s an enormous amount of money.
Just ask Maine.
Tax Loopholes Hurt States Too
The Maine Governor is considering signing a law that will close the “Water’s Edge” loophole, and reduce tax haven abuse by multinationals. For its efforts, Maine will get about $10 million/year. As the law’s sponsor explained, that’s real money in Maine, enough to justify changing their law.
Update: This section on NY State an the carried interest loophole has been revised to be accurate:
The Waters’ Edge loophole isn’t the only one that affects states.
For example, New York forgoes “hundreds of millions of dollars a year” in taxes on ‘carried interest’ income earned by unincorporated businesses, the NY Post reported. NYC’s Comptroller Scott Stringer wants to tax it.
What could New York afford if it did?
Note, the detail of this version of the carried interest issue is different, but the spirit, at least as reported by the Post, is exactly the same:
“Sometimes they are guaranteed a return on the waived fee even if the fund does not generate a profit, a source said.” [ACF: that means it cannot be characterized as ‘capital gain'; the capital was never at risk.]
“Some firms, though, including Blackstone, do not convert their management fees into capital gains. They pay the 4 percent tax.” [ACF: that proves any claim that taxing it will result in mass exodus should be skeptically greeted.]
“Meanwhile, the IRS is looking into the matter.”
“State Attorney General Eric Schneiderman in 2012 also opened an investigation into management-fee waivers, and, a source said, has been waiting for the IRS to make the first move.” [ACF: I’m shocked, shocked at the idea that AG Schneiderman is waiting for someone else to make the first move.]
“Gregg Polsky, a University of North Carolina Law School professor, who has written a special report on PE firm fee conversions and the tax issue, said he believes the management fee waivers should be against the law.” [ACF: the more you know about it, the more clear its wrongness is.]
Speaking of loopholes and corruption, consider how the Do-Nothing Congress is moving toward passing–yet again–several heavily lobbying multinationals’ favorite loopholes, including GE‘s and Apple‘s. But it can’t manage to pass extend unemployment insurance benefits or fund our infrastructure, and it cut food stamps.
Those priorities are criminal, morally speaking.
Congress can prioritize the agenda of GE’s 98 lobbyists (including 28 “revolvers”—former members of Congress, former Congressional staffers, or former Executive Branch officials) even though it costs $6 billion in waived revenue for the two year “extension.”
Like solving the carried interest problem, solving the GE and Apple loophole is simply a matter of making income reported for tax purposes more accurately reflect the underlying economic reality. For the loopholes, it is about correctly identifying the country in which the income was earned; where the value generating happened.
$52 Billion in 2014 Alone from Making The Tax Code More Accurate.
Imagine spending $6 billion on our crumbling infrastructure instead of giving it to GE and other profitable multinationals.
Imagine if we failed to re-enact misguided (at best) tax provisions like “bonus depreciation” and the badly designed “research and experiment” tax credit. Those two would get us $90 billion over the two years Congress is considering expanding it for, according to CBO data.
Depreciation is a substantive concept about how to allocate the cost of something over its useful life. “Bonus depreciation” is a totally artificial version, where the relevant time frame has nothing to do with the useful life of the purchase.
The research and experiment tax credit’s stated purpose is to spur investment into important discoveries. Again, without questioning the policy judgment, it’s easy to see the tax credit, as designed, has unintended consequences.
Rebecca Wilkins, Senior Counsel for Federal Tax Policy, Citizens for Tax Justice explained to me (a couple weeks ago, when I reporting the tax stories for Benzinga) that
“The way the rules are written, taxpayers can get a dollar for dollar credit for all kinds of stuff that most of us wouldn’t consider valuable research. One sign of how badly it is designed,” Wilkins continued, “is that you can claim it years after doing the ‘research’ by filing an amended return. That means the credit was not an incentive to do that ‘research’.”
In just 2014, failing to re-enact just bonus depreciation and the research & experiment credit would net $35 billion, nearly double what it would take to extend unemployment benefits. In fact, it’s enough to both fund the unemployment extension and restore the $8.6 billion food stamp cut. And there’d still be more than $6 billion for infrastructure.
Add $6 billion to the $6 billion from GE and Apple loopholes; throw in the $11 billion from no-longer carried interest, and we can pay for unemployment and food stamps and plow $23 billion into our infrastructure each year.
Total transportation and infrastructure spending in the 2009 stimulus was only $98 billion. In 5 years making our tax code more accurate in those ways would pay for more infrastructure than the stimulus bill did, and it could do it for as many years as needed.
What’s important to focus on is that these changes are about accuracy; they’re not really about basic policy.
Note too, a thorough review of the tax code would surely turn up more examples where policy choices were made and then undermined by adding statutory language allowing the 0.1% to legally though dishonestly subvert the policy choice. So simply making the code honest would probably net far more.
A Congress that can enact the “active financing” GE loophole, the “CFC look through” Apple loophole (and continue preserving the related “check the box” loophole”), bonus depreciation, the research and experiment tax credit (as currently designed) and preserve carried interest, but fail to provide even a tiny modicum of income and food security to ordinary Americans is corrupt.
I don’t mean corrupt only in the Chief Justice John Roberts sense of directly proveable quid-pro-quo.
(Though donors threatening Republicans because of a House member’s tax reform proposal and conventional wisdom that the reform package is DOA sure looks like cause and effect.)
By corruption I mean Congress’s strong legislative bias in favor of the interests of 0.1% of Americans at the expense of the 99.9%. As a matter of majoritarian public policy, these tax and budget decisions are indefensible. Instead of representing us, ‘our’ Congress is representing the 0.1%.
I’m not claiming that Congress is corrupt whenever majoritarian demands are trumped by minorities’ interests. Often in policy conflicts minorities should win, because the majority is striving to deprive the minority of Due Process, Equal Protection, or other constitutional guarantees. Upholding the minority interest in such situations is upholding our constitution.
But Congress should be defined as corrupt whenever it legislates public policy choices that increase the economic insecurity and stress of the 99.9% while furthering the economic interests of the handful of people who are already so wealthy three generations of their families will be unable to liquidate their entire fortunes.
In a democratic country, the only explanation for such policy choices is that a sufficient number of Congress members personally benefit enough by legislating that way that they do it.
And I call that corruption.
Fundamental fundamental fairness and social justice are the topics I’ll be writing about here. Relevant news and information for those posts I’ll be publishing at Benzinga.com, or Corporate Secretary Magazine, or other outlets.
Specific topics will include: Taxes, Lobbying, Corruption, Campaign Finance, Climate Change, Clean Water, Drugs, Policing, Patenting Seeds, more.
I don’t have time to blog daily. But I will post once a week, on Sunday.