Archive for the ‘Corporate Power’ Category

Bill Moyers’s Hosts Floyd Abrams and Trevor Potter on Corporate “Speech”

Written by Robert Justin Lipkin on September 8th, 2009

The question of the role of corporate funds (“speech”) in the marketplace of ideas is one that is vital to democracy. Again Bill Moyers provides a forum for an essential debate soon to be heard before the Court.

September 4, 2009

BILL MOYERS: Joining us now is Trevor Potter who had a hand in creating the McCain-Feingold campaign finance reform legislation. On its behalf, he has filed one of the more than 50 friend-of-the-court briefs submitted in this current Supreme Court case.

Trevor Potter heads the political activity law practice of the firm Caplin & Drysdale in Washington and served as general counsel to John McCain during the Senator’s 2000 and 2008 Presidential Campaigns. He’s former chairman of the federal election commission. And he’s the founding president of the campaign legal center. A nonpartisan group committed to quote: “Representing the public interest in the enforcement of campaign and media law.” Good to have you.

TREVOR POTTER: Thank you very much.

BILL MOYERS: What’s the public interest in this case?

TREVOR POTTER: The public interest in this case is enormous. It has grown significantly as the Supreme Court has changed the case. It started with a question of whether a particular film funded with for-profit corporate money could be advertised on television. It has morphed, or the Supreme Court has turned it, into a case about whether 100 years of American tradition of regulating the speech of for-profit corporations in election should be changed. Whether the Supreme Court should legislate that what the government has done for 100 years, starting with Theodore Roosevelt, what more than 22 states do, in terms of restricting corporate spending in elections should be overturned. That’s a big deal.

BILL MOYERS: I’ve read your brief. And you clearly think it’s dangerous– you didn’t use that word. But dangerous to allow corporations and unions to spend so much money in an election, and at certain times. I mean, but don’t they have important questions to address?

TREVOR POTTER: Well, let’s start with a couple things. First, everyone says corporations and unions and it sounds as if there’s some parody here. This is a case about corporate money. If this case is won by the corporation, we will be in the ironic situation where corporations will have no limits on what they can spend in elections and unions still will. So, it’s important to remember we’re talking about corporations.

BILL MOYERS: But aren’t those corporations, don’t they have important things to say, important issues?

TREVOR POTTER: They probably have a lot to say. The question is, first of all, who are they? Now, you and I have never seen a corporation walking down the street and we haven’t seen one in the voting booth. That’s because corporations are creatures of the state. That sounds like some piece of law school mumbo jumbo, but it’s not. Corporations exist, because government said, “We’re going to give you limited liability for commercial, for economic purposes. We’re going to take somebody who might have lost everything they invested and we’re going to say you can limit your liability by having a corporate form. You only lose what you invest.”

That was an economic revolution when it happened. But it was done for economic purposes. Corporations exist because somebody creates them, goes down, files the paper with the state. The state blesses them and gives them a special status. So, what I think is that corporations exist for economic purposes, commercial purposes. And that the notion that they have full First Amendment free speech rights, as well, doesn’t make any sense for this artificial creation that exists for economic, not political purposes.

BILL MOYERS: In the briefs she filed for the government, our Solicitor General, Elena Kagan, makes that same case. She says they’re artificial persons. They don’t die. They don’t get sick. They amass great wealth. And because the state created them, the state has the right to try to limit their activities in non-economic or political–

TREVOR POTTER: I think that’s true, but it goes beyond that. Corporations exist solely to make money. Amassing economic power. They want, if they could get it out of government, monopolies. They want the ability to defeat their competitors. And if they can use government to do that, they will. Individuals have a whole range of interests. Individuals go to church, they care about religious and social issues, they care about the future of the country. They’re voters.

So, they have a range of issues at stake that corporations don’t have. Corporations just want to make money. So, if you let the corporation with a privileged economic legal position loose in the political sphere, when we’re deciding who to elect, I think you are giving them an enormous advantage over individuals and not a healthy one for our democracy.

BILL MOYERS: What do you think will be the result if Floyd Abrams and his side prevail next week with the Supreme Court?

TREVOR POTTER: I think we would see an enormous change in the way our democracy is conducted. And that’s really dangerous to think that that would happen in a case that, you know, as I say, the Supreme Court has largely created, because there are very narrow ways to deal with this issue, and one that would be contrary to what the Congress has done again and again in 1907, ’25, Taft-Hartley in ’47, federal campaign law in ’74, McCain-Feingold. All of these are part of that tradition of saying that individuals speak and vote and are citizens and corporations have a different status. And they ought to be focused on the economic marketplace and not the political marketplace.

TREVOR POTTER: I think there’s some risk here that the court will forget. That it is dealing with laws passed over a century by Congress, by the other branches of government, that, in my view, have worked well. And so, in some ways, what you have here is a solution in search of a problem. And that’s worrisome.

BILL MOYERS: What did you think as you heard Floyd talk about the fact that yes, maybe in a corporation there should be some limitations, but when it comes to free speech, no limitation.

TREVOR POTTER: I respectfully — and I have enormous respect for Floyd and his career as a First Amendment lawyer — I thought it was backwards, because it seemed to me that corporations ought to have great latitude as economic competitors, restricted by the laws that Congress has put in place on competition. But basically, corporations exist for economic reasons. That’s where you want them competing. These courts have never said corporations have full First Amendment rights.

And I think that’s the right balance. Floyd talked, “Well, if corporations are too powerful, then we should make them smaller.” But I don’t think that makes sense in society, when we’re trying to have corporations competing in a global marketplace. So, to me it’s backwards to say we’re going to give them political rights and then we’re going to turn them into different size corporations to deal with that.

Seems to me you want them to be good competitors in the world and you don’t want them to be overpowering the political marketplace at home. And that raises another issue here which no one has really been talking about. And that is corporations are global. We have international corporations. We have had a long tradition in this country of saying that foreign nationals may not participate in U.S. elections and that includes a ban on political speech. What about foreign corporations? What about multi-national corporations? I think you’re opening a can of worms on that.

BILL MOYERS: Are you opening a can of worms?

FLOYD ABRAMS: You’re opening the faucet, so to speak, so that more speech can occur. I don’t think it’s a can of worms to say that corporations, and it is unions as well, ought to be able to participate in the give and take of the democratic processes in the country. From my perspective, at least, the notion of saying that corporations and unions should be out of the picture either because they’re too powerful, or because of the way their money has been created, is so inconsistent with the sort of First Amendment approach that we take in everything else, where we say over and over again, we don’t care who the speaker is, we don’t care where the speaker’s coming from. And speech, we think, is, as a generality, a good thing.

TREVOR POTTER: We do think speech is a good thing. The question though is should it be citizens, individuals, voters, who are speaking? Or should it be this artificial corporate entity, which we have, through law, given enormous economic power to. And what the court has said all along is there is a difference between the two. The court has never said that corporations have the right to unlimited independent political speech.

BILL MOYERS: This movie’s not the issue.

TREVOR POTTER: The movie started as the issue. And as Floyd has noted, it’s becoming a much bigger case with a fundamental issue in it. And I look at it and say, “Why? What is wrong with the law as it stands?” And I don’t see the answer.

FLOYD ABRAMS: I think one of the reasons it’s become a much bigger case is the candor of the representative of the Solicitor General’s office. Who, answering a hypothetical question asked, during the argument in March, said, yes — as a constitutional matter, Congress has the power not just to deal with television and cable and the like, but books. Yes, if — he said — yes, if a book is partially funded by a corporation, Congress has the power to say that within certain time zones, et cetera, during an election campaign, that the publication of the book can be a crime. And there was some audible intakes of breath on the Supreme Court when that was said. Now I happen to agree, that’s been the law for awhile.

FLOYD ABRAMS: But I don’t think we can live with that.

TREVOR POTTER: I’m laughing, because I think that is the epitome of a red herring here. The Solicitor General was answering what Floyd correctly says was a hypothetical. That’s where you are in law school, and they say, “Well, just supposed the facts weren’t as they are, but they were something else entirely.” The reality is there has never been a case in all the years we have had these laws prohibiting corporate spending prosecuting anyone for publishing a book.

The law itself has an exemption for commercial speech. So, if somebody is engaged in selling a book, it’s completely exempt anyway. There’s an exemption for press activity. So, this goes to my point, what we’re doing here — and I think this is why it’s dangerous — is we’re essentially having a high level law school seminar on the Supreme Court about hypothetical, constitutional questions. But the potential result of that, because it is the Supreme Court, is they could end up changing the real world, when the real world actually functions without any book banning at all.

FLOYD ABRAMS: See, but what I think is going on is that the court acting properly, acting it should, is sort of exclaiming if you can do it to a movie, you can do it to a book. Tell us the difference. The answer is, “There’s no difference.”

TREVOR POTTER: No, the answer is the law doesn’t do it to books. And the law–

FLOYD ABRAMS: But–

TREVOR POTTER: –only restricts corporate money for movies, if you construct this sort of a case to make sure that the activity is not covered by any of the exceptions that are in existing law.

BILL MOYERS: But both of you have conceded that this is about more than a movie or a book. This is go fundamentally to the role of corporations in our political elections. And this concerns you, because you say in your brief that this is dangerous.

TREVOR POTTER: Well, if you just look at the numbers here you are dealing with a world we just have never seen in elections. Exxon Mobil has a political action committee, which means voluntary contributions given by shareholders and executives, about 900 thousand dollars in the last cycle. It made last year 85 billion dollars.

Now, there’s just a world of difference in the resources available if you say to a corporation, “You can spend money to defeat global– candidates who are in favor of global warming legislation.” If coal companies can go out and say, “If you don’t sign our pledge to support coal we’re going to defeat you. We’re going to spend money against you.” You take those enormous economic resources and you use them for something that we’ve never seen before. That I think is the radical nature.

FLOYD ABRAMS: I think that’s a real exaggeration about the likely impact if the side I’m on happens to win this case. We have 28 states now that allow unrestricted contributions, as well as independent expenditures. We haven’t seen anything in the way of corporate control. And it’s easier to control a state than it is the country. Coming about or distortion of the processes coming about as a result of the fact that corporations can give and can spend in all these states.

So, I don’t think there’s a real reason to think that the large corporate entities in this country are going to run the risk of public wrath, stockholder suits, new attempt at legislation, coming out against, a popular president or an unpopular Congress? I mean, I think as a practical matter we really shouldn’t fear so much the impact of having a greater amount of corporate money in play in allowing them to speak out.

BILL MOYERS: Would you disagree with the claim that big business dominates the political discussion today? Whether it’s the drug industry or the health insurance industry? Big business is the dominant force in Washington. I mean, I see that as a journalist.

TREVOR POTTER: Well, if that’s true. Just wait till you have unlimited spending by corporations, because you’re saying they dominate in a world in which they have very limited PAC contributions. And they can’t go out and advocate the election defeat of candidates. I would disagree with Floyd, I think, on what we know about the states. First of all, there’s no record in this case, because this issue was not litigated on this basis at the lower courts. So, we don’t– there’s no opportunity to brief for the Supreme Court–

FLOYD ABRAMS: Well, I think we’ve had a lot of–

TREVOR POTTER: What we have learned–

FLOYD ABRAMS: –supplemental briefs.

TREVOR POTTER: Well, I mean, they’re 15 pages long. We haven’t had a trial court look at the information from the states. There was just a recent study out of California, which is one of the states that allows full corporate spending, in which that state’s campaign finance board said there’s an enormous amount of corporate spending. It is directly influencing candidates and elections. And it’s hidden, because it’s going through all these groups that are front groups and sound like the, you know, Committee for a Better California. And it’s really corporate spending, which, of course, avoids those angry shareholders, ’cause they don’t know about it.

In judicial elections, there is an increasing record of spending by the chamber of commerce and other business groups to elect judges who will rule in their favor, because that’s in their economic interest. If you open this up at the federal level, just imagine the incentive for a corporation that only needs a little piece of this bill, a little piece over there to make their competitive position better than their commercial opponents.

FLOYD ABRAMS: And that’s why we’ve banned contributions. But in terms of having speech from the corporations, speech from the unions, the notion that allowing that will therefore result in vast changes in the political system is not only untested but unlikely. And I’d add another note. And that is I don’t know and none of us know the consequences of allowing more speech in this area. We don’t usually judge in the First Amendment area on the basis of what we suspect consequences might be.

If speech is allowed, it’s allowed. If speech is of the sort that we permit, which is just about everything, from just about everybody and just about everything, we don’t say, “You know, come to think of it, if we have too much Glenn Beck the country is going to really suffer from it.” We don’t live like that. We start–

BILL MOYERS: But we’re not talking about free press issues here. We’re talking about the power of an organized economic interest to spend vast sums of money that individuals can’t spend.

FLOYD ABRAMS: I don’t hear you using the word speech. I mean, it’s all very well just to characterize this and diminish the problem by calling it just spending a lot of money. It’s more than that. It is participating in the political process. It is speaking out. It is being heard. I’m in favor of more disclosure to deal with the secret sort of problems that Trevor has correctly identified. But in terms of saying that it is as a policy matter, let alone a legal matter, but even as a policy matter something we should avoid and fear if we have more active, loud, public participation in the political process, my reaction is that is the core indeed of what the First Amendment has always been thought to be about.

BILL MOYERS: Do you really believe that the founders, the men who wrote the Constitution included corporations in the idea of free speech

FLOYD ABRAMS: I don’t know.

BILL MOYERS: Jefferson in 1816 wrote a famous letter about the aristocratic, moneyed corporations, and how they were a danger to us. And the evidence seems to me to the contrary, that they were worried about the power of these economic entities to dominate the political process.

TREVOR POTTER: Well, they thought we were a representative– they wanted us to be a representative democracy, representing the electors. And the electors are not corporations, which are not individuals and don’t vote.

BILL MOYERS: What about that? That seems to me, the real basis of this. Is a corporation the same as an individual for the purposes of free speech?

FLOYD ABRAMS: Well, media corporations certainly are, are they not?

BILL MOYERS: Well, that’s First Amendment free press.

FLOYD ABRAMS: Thanks a lot. But that’s free press, you say. Why is it that large corporate entities, which own newspapers and broadcasters are treated, indeed as I think they should be, but treated as if Congress can’t touch them in this area. The notion of saying, General Electric ought to get more power and more rights than General Motors? I don’t find that in the Constitution.

TREVOR POTTER: Absolutely not. But what–

FLOYD ABRAMS: And the fact that General Electric owns NBC doesn’t change that dynamic. And the fact that Viacom had ownership interest of CBS doesn’t change that or shouldn’t change that. I mean, the First Amendment is not just the property of the press. The press deserves, and gets, but deserves the broadest protection. But so do all other speakers. And once we get an institutional press-only First Amendment we’re going to have a lot more problems than we’re bargaining for.

TREVOR POTTER: My point is I think we’ve had a press First Amendment for almost 100 years and we have not had problems. The example that Floyd gives I think proves it. Which is NBC has freedom of the press, because that’s its function. Its owner, GE, has a more limited speech freedom, which is, under current law, to speak to its shareholders speak to its executives, internally endorse candidates, but not go out and spend the billions of dollars it has in the general political marketplace. The press is in a position where it is able to speak with full constitutional protection. That is not true of the seller of shoes or automobiles, where you and I go out and buy them irrespective of their political views and may not know their political views. We just want their product where their shareholders are in it for economic gain, not to advance political views.

BILL MOYERS: But this is not an issue of free press. It really isn’t. This is an issue of free–

FLOYD ABRAMS: This is an issue of free speech.

BILL MOYERS: And you’re– I come back–

FLOYD ABRAMS: And why are we limiting free speech? If the movie had been funded in a different way, if the funds had come from different sources, then respectfully, but thanks very much– then it would be protected. But because the funding came from a corporation. Because of that, we can make it a crime to put the movie out. That I think is an unacceptable articulation of not only what the First Amendment has meant. But what it ought to mean, as well. We should not make technical distinctions about the degree of First Amendment free speech rights, depending on the nature of the entity that engages in the speech.

If a company wants to speak out beyond an issue. If they want to condemn a Senator who is opposing legislation that has an impact on the company’s interest, economic or otherwise to me it’s just anathema to the notion of free speech to say, “Well, you have to understand it’s a company. Their funding is different.” That’s not the way we ought to go about deciding the limits of free speech.

TREVOR POTTER: I think you, though, understate the enormous amount of speech that exists in the current system, which is essentially full free speech for individuals; the ability of a corporation or a union to have a political action committee gather individual funds and spend that, the exemption that exists for the press; the commercial exemption that exists; the exemption that the Supreme Court created for nonprofit corporations, as long as they’re not a conduit for corporate funds.

Everybody has the ability to participate in the political process, meaning here the election or defeat of candidates, except the for-profit corporations using the shareholders’ treasury funds. That, it seems to me, is a appropriately narrow exemption given whose money that is, the shareholders and the circumstances under which it was created. They can still go out and attack a Senator. They do all the time.

BILL MOYERS: Why should the executive of a board of a big corporation be able to take– you know, I have 401(k)s and retirements and I’m invested in those firms. Why should they be able to take money from the shareholders and back particular candidates or run particular-ads?

TREVOR POTTER: Well, that, of course, is a whole different issue, which we really haven’t talked about. Which is, wait a minute, whose money is this anyway? It is not the CEO’s, who’s making the decision. If you’re going to say corporations should have speech, then you open the whole question of, “Well, who decides what that speech should be? Don’t you consult the shareholders? Do you allow shareholders to opt out? The way you allow union members to opt out of having their money used?”

FLOYD ABRAMS: But–

TREVOR POTTER: But it seems to me you don’t need to get there, because you have the political action committee already.

BILL MOYERS: There’s no shortage of corporate speech in this country, right?

TREVOR POTTER: That would appear to be the case if you look at–

FLOYD ABRAMS: Well, I think you’re wrong, Bill.

TREVOR POTTER: –any daily television.

FLOYD ABRAMS: I think you’re wrong. To say, “Well, we can just carve out this area. We can carve out the speech of these entities, the entities, corporations, not their officers. Not their boards. The corporation, as determined by the folks that run it and the shareholders and whatever way state law determines to say that those entities may not be heard in their own voice, with respect to continue with the–”

BILL MOYERS: Their own voice? Whose voice?

FLOYD ABRAMS: The corporate voice. Who runs the corporation? Management runs a corporation. Shareholders can–

BILL MOYERS: So, this is the speech of the managers of the corporation?

FLOYD ABRAMS: No, it’s not just that. I mean, you’re not objecting to the notion of corporations, in general, Bill.

BILL MOYERS: I object to the notion–

FLOYD ABRAMS: I mean, corporations–

BILL MOYERS: –that a corporation is equal to an individual.

FLOYD ABRAMS: The fact that we’re suspicious of corporations sometimes and of unions, sometimes, not only because of what they say, but because of their power and what they might do, is just not a good reason to say that they have to be silenced.

TREVOR POTTER: I think the difference here is that Floyd presents that as a dangerous and novel idea. And says we shouldn’t go there. I respond by saying, we are there. We have been there for many, many years. The system has functioned, I think, well. So, to me, it is Floyd who has the dangerous and novel idea, which is we should change what has worked, has been held constitutional and go to a system when we have no idea what the effect will be, but based on what we can see, and have seen in the past, we could really have some bad affects on our democracy.

BILL MOYERS: Well, the–

FLOYD ABRAMS: My novel idea goes something like this. “Congress shall make no law abridging the freedom of speech or of the press.” I don’t think that those words are consistent with a regime, a system of law, which bars the amount of speech that we’re talking about today.

TREVOR POTTER: I think that my historical perspective is oddly longer than Floyd’s. And that we would be going back before 1907 and Theodore Roosevelt and the prohibitions on corporate activity in federal elections. We’d be going back to the senator from Standard Oil. That would be a very different world and one that no one alive has ever seen.

BILL MOYERS: We know all this started because it was revealed that Theodore Roosevelt had received secret contributions from New York insurance companies, when he was running, because they wanted legislation out of Congress that would benefit their position. And when the revelation was made, not before, but when the revelation was made, Roosevelt was so embarrassed, he raced right up to Congress and said, “We’ve got to do something about this.”

FLOYD ABRAMS: That’s why we have to be afraid of Congress and politicians making decisions in this area.

BILL MOYERS: But these are positions that you leave to legislatures. I thought conservatives–

FLOYD ABRAMS: You don’t leave free speech decisions to legislatures.

TREVOR POTTER: I would say that legislatures are uniquely knowledgeable here about how legislation has actually made. And your point is that legislators then knew that corporate money was influencing their decisions.

BILL MOYERS: Senator from Standard Oil.

TREVOR POTTER: And what came out of Congress to govern the rest of us. That was what was shown in the long record in the McCain-Feingold litigation. Members of Congress said corporate money is affecting directly amendments, what is voted on, the final language of legislation that has a disproportionate, corrupting influence on what is happening in Congress.

FLOYD ABRAMS: I asked Senator McCain–

TREVOR POTTER: That’s the worry.

FLOYD ABRAMS: –when I took his deposition, in that case, to give me an example of a vote that was changed because of contributions or independent expenditures. And he did not and could not do that.

TREVOR POTTER: Senator McCain is a very polite man, who respects his colleagues and if you go back and look at the record there were a number of affidavits from former members. Interestingly, it’s the former members in this who are the truth tellers. They’re always the ones who say, “Let me tell you what happened when I was there.” And why is that? Because they don’t have to deal with their colleagues, they’re not up before the voters and admitting something terrible. So, they can say, “This is what I really saw.”

And I think that’s the other piece of this whole case, is we’re not just talking about the ephemeral or the broad idea of what is a free speech right of a corporation. We’re talking about how does the legislative process actually work. And what sort of corruption or apparent corruption would you have if you had the ability to spend this money?

BILL MOYERS: As a journalist, I have seen over the years, done documentaries, have reported on this issue, money and politics. And I’ve seen the consequences of huge sums of money in our political process result in legislation biased for the corporation.

But on this point, we will close now. But I want to give both of you a chance to wrap up your case by giving me your response to what the Solicitor General of the United States, Elena Kagan, will say to the Supreme Court next Wednesday. In her brief, she argues that the use of corporate treasury funds is quote, “inherently likely to corrode the political system, both by actually corrupting public office holders and by creating the appearance of corruption.” Do you think that is a justifiable concern?

FLOYD ABRAMS: I don’t think it’s true. I also know the record from the McConnell case. God knows how long it is. And there wasn’t any proof of corruption. So, my reaction is, I think she’s exaggerating on the one hand. And I think she’s ignoring on the other because she doesn’t even acknowledge that this is a free speech issue.

We are confronted with competing values here. And the values of speech are at odds in this area with the desire of well-meaning and very serious people, to do what they think they should to make the system work better. And my view is that the speech interests here are very high, very important, very serious and that when you take them into account you can’t sustain the sort of statutes that we now have on the books and that the Supreme Court is, essentially, taking a second look at.

TREVOR POTTER: Well, I think the Solicitor General’s comments to the court are a warning bell in the night. That she is right that there are enormous implications to this case. I think, ironically, one of the reasons she’s right is because of the very natures of corporations. As we’ve discussed, they exist to make money. They are profit-maximizing. That’s their job.

So, we’re not talking about political speech by people who care about their country, who are concerned about changes in society, who are dealing fairly with friends and neighbors and all the things that get involved in politics. We’re talking about a potential spender here that has a single-minded purpose, which is to make more money, to maximize their value. And I think what we’re looking at here is not a First Amendment speech right, because the individuals who head those corporations have that now, their PAC’s have it now, their shareholders have it now. We’re talking about using the funds that are amassed under the preferential corporate treatment, to go out and seek economic gain, what they call economic rents, through legislation, by electing people who will give the corporation what it wants, whether or not is in the greater good. And I don’t think that’s the essence of democracy. And I don’t think it has been or should be the way the First Amendment is read.

What’s Wrong with “Big” Government?

Written by Robert Justin Lipkin on August 10th, 2009

Americans have been wary of too much government from the Republic’s inception. We fought a revolutionary war against tyranny, twice within the first fifty years of our great nation’s existence, and several times thereafter. And government, our government, was a lot smaller then. But is anyone else getting tired with the inbred American aversion to progressive governmental efficiencies which can bring about the goods and services Americans want and need and which justice requires? After all, we, the people are, in the final analysis, the government. Accordingly, the government should be as capacious as we, the people want it to be. If we want government to be involved in health care, the economy, the financial system, the environment, education, well, then it should be.  That’s what a republican democracy is for, to wit: within the confines of constitutional constraints, here the people rule. Unfortunately, this inbred American aversion goes back as far as our first great President and perhaps made special sense then. ctmpphpgsEIRqConsider the following statement of the debate over whether we should have a bicameral legislature. “[A] bicameral legislature slowed down the legislative process. That was a good thing to many of the framers, who worried about excessive government power.  When Thomas Jefferson questioned the role of the Senate in the 1790s, George Washington allegedly asked:  ‘Why did you pour that coffee into your saucer?’ ‘to cool it,’ said Jefferson.  ‘Even so,’ replied Washington ‘we pour legislating into the senatorial saucer to cool it.'” Linda R. Monk, The Words We Live By: Your Annotated Guide to the Constitution (2003).  But in cooling it, we risk seeding the ground for killing it. Sure sometimes that’s good.  But it’s also good to have a lean self-governing process to which the majority–consistent with preserving minority rights–can have access.  Absent such a viable process, well-funded special interests control the destiny of the American Republic. In these circumstances, the corporations rule, not the people.  That can’t be good for the majority of Americans, can it? I know, I know, the founders created a Republic, not a Democracy. But is this distinction quite as useful as perhaps it once was, if it ever was?.  Most Americans want to live in a self-governing polity where the right to self-government–collective-self-direction–permits us to achieve the benefits of our labor–everyone’s labor–and also the benefits of civilization. Several times in American society the private sector has been given its chance and each time the results were problematic at best at least for most Americans.  I know, I know. American capitalism produced more economic growth than any other nation or system and is currently the envy of and the model for the world. But what has it done for us lately. And what do we call “economic growth without fair distribution”? Perhaps, pre-2007 capitalization has huffed and puffed it’s way out.  Moreover, privatization only occurs in the context of law and law means government. So the private sector is just one of several forms of government. Those ideologically committed to the government of privatization usually are indifferent to the needs and aspirations of the highly variegated forms of American life. Big government is not the problem. Oppressive government is.  And laws protecting the private sector and corporate power while preventing the little guys from effecting change can be as tyrannical as any despotic regime.  As Paul Krugman puts it: “[S]ometimes the private sector is the problem, and government is the solution.”

Can’t we try dropping the jejune dichotomy between government and the good guys and see if we can solve our problems fairly and with the common good in mind? Let’s switch to what should have been our ethos all along–democratic capitalism–where the reflective majority will prevails over those whose self-interest prevents them from seeing beyond the narrow corridors of their own insulated hermitages.

Which Official Do You Want Between You and Your Doctor?

Written by Robert Justin Lipkin on July 21st, 2009

Governmental heath care overhead, I’m told, costs approximately 6% of health care.  Corporate health care overhead is approximately 20-30%. Why? Corporate insurance is designed to reject claims. That’s expensive. But that’s the insurance company’s raison d’etre. Why would you want a corporate (insurance) official to come between you and your doctor so that the insurance company can make more money? Your money by the way.

Consider Single Payer

Written by Rebecca Zietlow on May 21st, 2009

After years of woeful neglect, health care reform is now thankfully at the top of the national agenda.  What’s missing from President Obama’s and Congress’ consideration?  A single payer health care system.  This omission is a huge mistake, since it is likely that only a single payer health care system  can solve our nation’s health care woes.

There are two reasons why our nation needs health care reform now: The first is the cost, and theimages2.jpg second is the lack of accessibility of our current system.   Shockingly, 50 million people in our country currently lack health insurance.  At the same time, those of us fortunate enough to have health insurance face mounting costs and cuts in coverage by our employers.  Meanwhile, the cost of medical care in the United States is twice the average in other industrialized nations.  Patients aren’t the only one bearing these costs, either.  From small business owners to General Motors, American employers are being crippled by their responsibilities to pay health insurance premiums.

Why consider single payer?  Because it is the only system that would solve both flaws in our current health care system by expanding access and lowering costs.  Expanding the risk pool of a single insurance carrier to include every person in the country would reduce the costs of health care to all of us because it would include miliions of people who are now healthy but simply unable to afford insurance.  Moreover, if the insurer is the government rather than the private insurance industry, we can save as much as a third of our current health care costs, which currently go to funding medical insurance companies.  Finally, if everyone is insured, everybody will have access to cheaper preventive health care instead of waiting until they are so sick they have to go to the emergency room and rely on expensive life saving measures.

The single payer solution is so clear, no wonder 59% of physicians and 62% of Americans support it!  Yet despite this support, a single payer plan is not currently being considered by President Obama, nor is Representative Conyers’ bill, H.R. 676, receiving much consideration in Congress.  Why not?  The health care insurance industry is a powerful lobby, it’s far too easy for opponents of single payer to demonize it as “socialized medicine” and therefore Un-American, and many are concerned about raising taxes to fund a single payer system.  While it is not possible to just make the insurance lobby go away, the other two objections are easily answered.

Let’s make this clear – single payer is not socialized medicine.  Under a single payer system, the government would not run the health care system, it would just fund the system that already exists, absent the private insurance companies.  Our health care system would be similar to that of every other industrialized nation.  (As an aside, those other nations are home to industries that compete with our American companies without being saddled with health care costs.)

Nor would a single payer system cost more than the existing system.  As I have explained, it would cost at least 30% less than the existing system.  The difference would be that our health care would be funded by tax dollars instead of employer subsidies, employee co-payments and deductibles, and payments by uninsured patients.  Yes, our taxes would go up, but taxes would be our only health care costs.  American businesses would be able to compete on the international market, and small business owners would be able to stay in business.  The millions of dollars saved by employers could be invested in raising salaries of existing employees and hiring new employees.

Imagine being able to go to the doctor whenever you need one without worrying about paying the full bill, a co-payment or a deductable.  Imagine not fearing bankruptcy if God forbid you or a member of your family suffers from a catastrophic illness or injury.  Imagine not seeing your real wages go down every year as your meager raise is eaten up by higher medical expenses.  Imagine an economy in which small businesses flourish and larger corporations can compete in the international market.  All of this is possible, and it is within out reach – if our elected representatives will consider the single payer solution.

Judicial Non-Deference to the FDA

Written by Rebecca Zietlow on March 26th, 2009

The Food and Drug Administration has been taking it on the chin in the courts – and for good reasonfinal1.jpg.  For years, it has been apparent that the FDA process for approving and evaluating drugs is flawed.  Far too many drugs have been approved only to be recalled due to deadly side effects that were uncovered only after the drug’s approval.  This problem has gotten so bad that recently, one of my doctors told me that he waits a year after a new drug is approved by the FDA before he prescribes it.  The doctor said that he waits a year in order to ensure that the drug is safe and find out more about the drug’s side effects.  Removal of approved drugs from the market is surely embarassing to FDA officials, but it is profoundly disturbing to those of us who are potential users of those drugs.   It is also evidence that things are not working right at the FDA.  Maybe the drug industry has too much power, and maybe the agency has become too politicized.

In two recent high profile cases, courts have confirmed that the FDA’s decision making process is problematic.  In Wyeth v. Levine, the United States Supreme Court upheld a state court judgment against a leading drug company and in favor of a patient who lost her arm because her doctor used the risky “IV push” method to administer a drug to her.  Wyeth sold the medication with a label did not warn against using the IV push method.  The SCOTUS rejected the company’s argument that the claim was preempted by the FDA’s approval of its label.  Under the Bush administration, the FDA had changed its regulation to provide that “FDA approval preempts contrary or conflicting state law.”  However, the Court held that the new regulation had no authority because it was contrary to the legislative history of the Food and Drug Act, because the FDA had finalized the regulation without giving states or interested parties any opportunity to comment on the change, and because the FDA had failed to provide any reasoned explanation for overturning its long standing policy of non-preemption.  Why would the FDA unilaterally act to preempt state tort claims against drug companies?  It doesn’t take a rocket scientist to figure out that the Bush administration FDA wanted to protect drug companies from lawsuits regardless of the cost to public health.

This week, a New York federal district judge overturned an FDA regulation prohibiting girls under the age of 18 from purchasing the controversial “morning after” pill without a prescription.  The court held that the FDA’s rule was entirely unsupported by scientific evidence, and that there was strong evidence that the rule was based not on science, but on politics.  Why would the Bush administration FDA want to raise the age limit for girls to buy this form of contraception without a prescription?  The “morning after” pill is a hot button issue in the conservative “right to life” movement, a key constituency of President Bush.

We deserve a government that works, and a Food and Drug Administration that bases its policies on protecting our health, not protecting drug companies or religious principles.  Thank goodness our courts are doing what they can to make the FDA accountable for its shoddy performance.

AIG Bonuses and Treating the Public Like Grown-ups

Written by Henry L. Chambers, Jr. on March 25th, 2009

The furor revolving around the AIG bonuses continues.  Mention was made of the situation yesterday in President Obama’s second nighttime press conference.  Though the press has continued to fan the flames and the Obama Administration has not done all it could to put the controversy to rest, blame for the continuing storytmpphpoqqwn91.jpg should be laid directly at AIG’s feet.  AIG has failed to end the story by failing to treat the public like grown-ups.  Rather than search for whatever tack it thought could allow it to weather the storm, AIG should have explained for what purpose the bonus money was paid and stood by the rationale.  By treating the public like it could not possibly understand a supposedly complex issue like compensation at AIG’s Financial Products Division (AIG-FP) and declining to explain why the bonuses were acceptable, AIG allowed the press and public to continue to paint the story as one more example of corporate greed and stupidity financed by the taxpayers.  Consequently, a number of extraordinary actions have occurred.  The House of Representatives voted to tax the bonuses at 90%.  The head of AIG has suggested that the executives who received bonuses return them.  Government officials have expressed outrage that particular individuals were paid particular amounts of money based on contracts signed between the individuals and their employer.  If only AIG had explained for what purpose the bonus money was paid, the public might have accepted the explanation.  The public can digest the fact that people who work for faililng entities may yet be paid significant amounts of money.  However, the why has to be explained.

The AIG bonuses can likely be explained in one of four ways, each of which a sentient grown-up ought to understand.  First, the bonuses may be for a job well done.  If AIG explained the relevant job as being the winding up of the business that caused the company to crater and explains that the quality of the job done really was extraordinary given the circumstances, the public might have been unhappy with the size of the bonuses, but might not be so unhappy with the existence of the bonuses.  At least, the press and Congress might not have been willing to fan the flames.  Nonetheless, the bonus as bonus is likely the least palatable explanation, though getting it out might have been a single-news-cycle event.  Second, the bonuses might have been retention payments.  Put differently, the promise of a bonus at the end of the year may have been what got people to stay and wrap up AIG-FP.  Of course, the public would still ask, “Who was going to hire these people?”  However, the ready response would be that the point of retaining the people is to get them to work for AIG-FP, not to stop them from working for someone else.  Again, there may have been some grumbling about the size of the “bonuses”, but not much legitimate complaint about the existence of the “bonus pool.”  Third, the bonuses could be thought of as deferred salary.  Even though AIG lost incredible amounts of money, no one would expect its workers to work for free or even for below market rate.   If the bonuses were really deferred salary, structured to be paid later so that AIG could alter the amount up or down tmpphpshbuk41.jpgbased on final receipts, the public’s problems would again likely be with the size of the pool rather than its existence.   Of course, such an explanation would make the claims in the New York Times letter to the editor written by a resigning AIG executive that he worked for a $1 a year salary ring hollow.  Working for a $1 a year while expecting a seven-figure bonus does not really qualify as working for $1 a year.  Fourth, the bonuses might be thought to be deferred commissions.  If AIG could make the argument that its workers were winding up trades that would bring lots of money into the firm and that those workers were being paid a standard Wall Street commission on the money they recouped.  Of course, the money would be paid at the end of the year.  Public outrage may have been nonexistent if this really is the reason the bonus pool existed and was paid as it was.  Presumably, one of these explanations or a combination of all four explains some, if not all, of the bonuses paid.  Had AIG just explained for what purpose the money was paid, rather than merely claiming that the money had to be paid pursuant to contracts, the firestorm might be over.

The American public can deal with automobile company executives who make more than $10 million annually while their companies collapse.  It can deal with coaches at public universities who resign after a string of bad years receiving seven-figure contract buyouts.  It can deal with the real estate agent who make 6% on the sale of a home that has lost significant value.  The American public can understand that compensation may come in many forms and may be justified in many ways.   However, the American public will not understand justifications that are never put forth or that appear to be conveniently fabricated.  That lack of understanding will be supplanted with the kind of outrage that AIG is still seeing.  For that, AIG has no one but itself to blame.

Wall Street Bonuses

Written by Henry L. Chambers, Jr. on February 4th, 2009

Wall Street has taken a beating in the press regarding the estimated $18.4 billion in bonuses firms paid out in 2008.  Just for the math challenged, $18.4 billion in bonuses amounts to $10 million bonuses for 1,840 people or $1 million bonuses for 18,400 people or $100,000 bonuses for 184,000 people.  Some argue that the beating is unjusfinal2.jpgtified and reflects a lack of understanding about how Wall Street pays its workers.  One argument suggests that what is considered a bonus to the outside world is really just salary on Wall Street.  The amount of the extra “salary” is unknown until the end of the year, but it is clear to those on Wall Street that the additional salary will be substantial.  Another argument claims that bonuses are really retention payments necessary to keep firms from losing top talent to other firms.  There are problems with using either claim to support the argument that the bonuses paid were perfectly acceptable given the magnitude of losses Wall Street has racked up in the last few years.  The salary argument is backward looking and suggests that bonuses are for past performance.  Of course, it is somewhat unclear how past performance would justify bonuses given that some many of the firms paying bonuses lost billions of dollars last year.  Certainly one could argue that specific individuals still deserve bonuses based on their performance.  However, the sheer magnitude of the bonuses paid makes the argument dubious until more information – that is almost certainly not forthcoming – is released.  The retention argument is forward looking and suggests that bonuses constitute partial payment for future services to be rendered.  Of course, it is unclear what firms will be hustling to poach top talent given the number of layoffs at all levels that Wall Street firms have endured.  Certainly, it is possible that the retention argument is a little more subtle and that the payments are also meant to keep the top talent from deciding to go home and sit on the couch.  However, if that is the argument, it is unclear why the top talent’s base salary is not substantially higher that it is now, possibly in the range of what the top talent would be expected to earn in an average year.  This would create a different public relations problem, one that would require that firms justify to shareholders and others why traders, some of whom have no idea what they are selling or how much money they are making or losing for the firm, ought to be guaranteed a high-six-figure or seven-figure salary.

I suspect that what has happened on Wall Street is that an ethos has run into an irony.  The ethotmpphpsf5rjd1.jpgs is that high salaries are anathema on Wall Street because they make people soft and complacent.  Real money is made on Wall Street by hustling and nobody hustles when they do not have to to “make” money.  In theory, bonuses reflect how much you hustled and how much you made.  The irony is that now everybody expects to get paid whether their hustling made money or not.  The mere act of hustling plus the existence of money in the firm’s bank account is supposed to lead to the same bonuses as in prior years.  The problem is that when the money in the firm’s bank account comes from the taxpayers getting hustled in the form of TARP funds, the public is in no mood to see bonuses get paid to folks whose “low” base salaries still dwarf the average salary of those in the middle class on Main Street.

The “Bail Out” Should Not Sell Out The Auto Workers

Written by Rebecca Zietlow on December 4th, 2008

I am increasingly concerned that the powers that be in Congress and industry are attempting to use the issue of whether or not to bail out the auto industry as a means to sell out the auto workers’ unions and the path to the middle class that union membership has represented for thousands of workers in the past half century.

One of the most important New Deal measures, the National Labor Relations Act, enabled workers to join together and use their collective influence to bargain for decent wages and benefits in industries including the afinal.jpgutomobile industry.  Due in large part to their union membership, for decades workers in the automobile industry were able to earn enough money to buy a house and raise a family, and achieve the American dream.  Working in a factory is an exhausting, often dangerous job, but thanks to the union contracts, workers received decent disability, retirement and health benefits.  Good union jobs were key to the prosperity of the middle class, and the nations’ economy in general, in the second half of the Twentieth Century.  Automobile magnate Henry Ford was no friend to the unions, but he recognized that his workers needed to earn enough money to pay for his cars, or he wouldn’t be able to sell enough cars to make a profit.

The wisdom of our past leaders seems to be lost in the debate over the future of the American automobile industry.  Some argue that it would best for the Big Three to go bankrupt so that they can get rid of their costly contractual obligations to current and former workers.  Last weekend former presidential candidate Mitt Romney argued that the American automobile companies simply can’t afford to pay their workers the wages that they currently earn.  As the clamor for union concessions increases, it would be wise to remember that the UAW has already made considerable concessions in recent years, including agreeing to a starting wage of only $14.00 per hour.

In order for our economy to survive, we need a middle class – people who can afford to buy retail goods beyond the bare necessities.  For all of our sake, we can’t let our national leaders use the bail out as an excuse to sell out our union brothers and sisters, and deprive them of their path to the middle class.

Should Oil Company CEOs be Prosecuted in a Court of Law?

Written by Robert Justin Lipkin on June 24th, 2008

eca11.jpgContemplate the following: “James Hansen, one of the world’s leading climate scientists, will today call for the chief executives of large fossil fuel companies to be put on trial for high crimes against humanity and nature, accusing them of actively spreading doubt about global warming in the same way that tobacco companies blurred the links between smoking and cancer. . . . Hansen will use the symbolically charged 20th anniversary of his groundbreaking speech (pdf) to the US Congress – in which he was among the first to sound the alarm over the reality of global warming – to argue that radical steps need to be taken immediately if the ‘perfect storm’ of irreversible climate change is not to become inevitable. . . . Speaking before Congress again, he will accuse the chief executive officers of companies such as ExxonMobil and Peabody Energy of being fully aware of the disinformation about climate change they are spreading. . . . In an interview with the Guardian he said: ‘When you are in that kind of position, as the CEO of one the primary players who have been putting out misinformation even via organisations that affect what gets into school textbooks, then I think that’s a crime.’ . . . He is also considering personally targeting members of Congress who have a poor track record on climate change in the coming November elections. He will campaign to have several of them unseated. Hansen’s speech to Congress on June 23 1988 is seen as a seminal moment in bringing the threat of global warming to the public’s attention. At a time when most scientists were still hesitant to speak out, he said the evidence of the greenhouse gas effect was 99% certain, adding ‘it is time to stop waffling’. . . . He will tell the House select committee on energy independence and global warming this afternoon that he is now 99% certain that the concentration of CO2 in the atmosphere has already risen beyond the safe level.” To continue click here.

Why Do We Fight? Because the MICI Cabal Tells Us To

Written by Robert Justin Lipkin on February 29th, 2008

While critical questions of republican democracy go unexamined, the American media are focused on the silly questions of whether John McCain had a sexual relationship with a lobbyist or whether Barack Obama was blessed with a sweetheart price to purchase his home. The vital questions concerning the hijacking of American democracy are successfully suppressed by the media. Virtually no major news organization, for instance, examines the relationship between the American military, the defense industry, the United States Congress, and the vast array of conservative “think tanks” that have become an entrenched force in American society. This stealth alliance between military-industrial-congressional–and intellectual players, or “MICI” for short, threatens the survival of American republican democracy.

MICI creates American foreign policy, defense policies, and has deleterious consequences for domestic spending. This conspiracy, though hiding in plain sight, controls vast American resources as well as the lives of many of our sons and daughters. Most ordinary American–indeed many sophisticated Americans–know nothing about how MICI controls our lives or the imminent danger it poses for American democracy. The story begins in earnest with President Eisenhower’s farewell address. Click here. There’s some repetition in the videos and some might be come unavailable on ECA. Sorry!

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Here are some of the fascinating issues you hear in the complete documentary. “Militaristic”! “Economic colonialism.” BLOWBACK! BLOWBACK! BLOWBACK! 25 military bases in 130 countries around the world? Whether true or not, why aren’t these questions being discussed during the current presidential campaign?

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“And the Halliburton thing is just an outrageous effort to associate the Vice-President with the activities of a company with which he has no connection. No connection at all!!!” —Richard Perle. In ECA’s view, no piece of information is more important than the Eugene Jarecki‘s documentary, “Why We Fight.” It is an absolute must-see for anyone who cares about the future of American democracy. In seven years George W. Bush was able to exploit MICI in order to create a soft American dictatorship, which now has a life of its own. MICI has now become integrated into the very fabric of American government and American society. The stakes could not be higher. The longer Americans tolerate MICI, the greater the gap becomes between precious American ideals and the reality of America’s soft dictatorship. This documentary should be viewed by all Americans. Credit for Image