Archive for the ‘Economics’ 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.

Thomas Jefferson Got the Health Care Crisis Right

Written by Robert Justin Lipkin on August 14th, 2009

Ultimately, Wall Street is at the bottom of our health care reform problems. Insurance companies are corporations that must nurture the bottom line at any cost to American citizens who as patients must rely of the good will of insurantmpphpmz0YNh[1]ce companies.  These companies have little, if any, of that particular commodity. Since the bottom line is shareholder profits, not patient care, insurance companies must deny a variety of claims in order to secure the appropriate–the sky’s the limit of appropriateness–level of profits.  Some insurance practices, regarding individual policies, for example, will surreptitiously renew policies every six months in order to maximize the chances that they will be in a position to deny a claim due to “pre-existing conditions.” Other practices include refusing to insure patients, fine print qualification that can be deadly, caps on lifetime support for patients, discriminating on the basis of gender, and a host of other devices that benefit corporations not patients.  Thomas Jefferson predicted as much.  Consider his words: “I hope we shall crush in its birth the aristocracy of our moneyed corporations [including health care insurance companies I hope] which dare already to challenge our government to a trial of strength and bid defiance the laws our country.”   –Thomas Jefferson, November 12, 1816. Prescient, as if our third president were writing today. What will we do it about this most egegious injustice?

Can the Democrats be Liberated “from the cult of neoliberalism”?

Written by Robert Justin Lipkin on August 4th, 2009

Check out Michael Lind’s piece in Salon.com. If I understand him correctly, this is what he means by neoliberalism, a political perspective opposed to progressivism: “New Dealers and Keynesians are wrong to think that industrial capitalism is permanently and inherently prone to self-destruction, if left to itself. Except in hundred year disasters, the market economy is basically a sound and self-correcting. Government can, however, help the market indirectly, by providing these three public goods [environment, healthcare, and education], which, thanks to ‘market failures, the private sector will not provide.” Cick here to read the full piece.

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.

Specter’s Defection & the Separation of Powers

Written by Robert Justin Lipkin on May 1st, 2009

There’s a conventional understanding of why Arlen Specter defected. Basically, he defected because the Republican Party is on the cusp of imploding. There different versions of this story, one in which Specter is a cowardly villain the other which blames the contraction of the Republican Party.  But suppose there’s another reason.  Suppose Specter believed some of the damage the former administration did to American constitutionalism needs to be reversed, and only a President with the constitutional acumen and moral sensibilities of Obama would conceivably be sympathetic to this rectification. Here’s the tease line:

In the seven and a half years since September 11, the United States has witnessed one of the greatest expansions of executive authority in its history, at the expense of the constitutionally mandated separation of powers. President Obama, as only the third sitting senator to be elected president in American history, and the first since John F. Kennedy, may be more likely to respect the separation of powers than President Bush was. But rather than put my faith in any president to restrain the executive branch, I intend to take several concrete steps, which I hope the new president will support.

What follows is a description of some of the more blatant assaults by the previous administration of the constitutional principle of “checks and balances.” (Though Specter’s fulsome emphasis on how important his own role in these matters was raises legitimate skepticism about his motives.) Here’s specter’s plan for the future.

These experiences have crystallized for me the need for Congress and the courts to reassert themselves in our system of checks and balances. The bills I have outlined are important steps in that process. Equally important is vigorous congressional oversight of the executive branch. This oversight must extend well beyond the problems of national security, especially as we cede more and more authority over our economy to government officials.

As for curbing executive branch excesses from within, I hope President Obama lives up to his campaign promise of change. His recent signing statements have not been encouraging. Adding to the feeling of déjà vu is TheWashington Post ‘s report that the new administration has reasserted the “state secrets” privilege to block lawsuits challenging controversial policies like warrantless wiretapping: “Obama has not only maintained the Bush administration approach, but [in one such case] the dispute has intensified.” Government lawyers are now asserting that the US Circuit Court in San Francisco, which is hearing the case, lacks authority to compel disclosure of secret documents, and are “warning” that the government might “spirit away” the material before the court can release it to the litigants. I doubt that the Democratic majority, which was so eager to decry expansions of executive authority under President Bush, will still be as interested in the problem with a Democratic president in office. I will continue the fight whatever happens.

I think (I hope) that Specter’s last remark misses the mark. Few Democrats, indeed, few Republicans, are as politically psychopathic as Bush-Cheney. They were egregiously insensitive about essential constitutional values and had no appreciation for the fundamental values rendering America, in aspiration if not always in practice, a progressive beacon for the twenty-first century.

The real action lies with how the Republican Party, without Specter, will reconstruct itself, as it surely will, to meet the challenges they face with the death of traditional and woefully ineffective laissez-faire economics along with their commitment to tyrannical social policies.

For a mournful account of the Republican Party’s turn to the exclusive ultra Right click here.

It’s not entirely clear why President Obama so gleefully welcomed Senator Specter to the Democratic Party. Wouldn’t it have been preferable for the Democrats to nominate an outstanding, young Democratic man or woman who could beat Specter, but more importantly, someone who could beat Toomey because Toomey surely would have beaten Specter? How does Specter’s defection to the Democratic Party benefit Democrats?

Solow on Posner & the Market Failure Crisis

Written by Robert Justin Lipkin on April 27th, 2009

Throughout the course of systemic controversies, individuals line up on different sides of a controversy and typically remain there permanently.  Sometimes there are defections, but usually not of major figures on either side. It is rarely that a major intellectual figure representing the gold standard on one side of the controversy switches sides.  But that’s what has happened now. Richard Posner, the law and economics guru and federal appellate judge, has written a book on our economic woes. This book contains a passage that will surely shock anyone familiar with Posner’s work over the past thirty years, and will surely delight his perennial critics. Here’s the passage:

Some conservatives believe that the depression is the result of unwise government policies. I believe it is a market failure. The government’s myopia, passivity, and blunders played a critical role in allowing the recession to balloon into a depression, and so have several fortuitous factors. But without any government regulation of the financial industry, the economy would still, in all likelihood, be in a depression; what we have learned from the depression has shown that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the resilience—the self-healing powers—of laissez-faire capitalism.

Richard A. Posner, A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression (2009) quoted in Robert M. Solow, “How to Understand the Disaster,” 56 NY Rev. of Bks. No. 8,  May 14, 2009.

In concluding his review, he quotes Posner as asserting: “As far as I know, no one has a clear sense of the social value of our deregulated financial industry, with its free-wheeling banks and hedge funds and private equity funds and all the rest.”  According to Solow:

That is already a hint that he thinks its social value is limited. As Posner sees it, talk about greed and foolhardiness is comforting but not useful. Greed and foolhardiness were not invented just recently. The problem is rather that Panglossian ideas about “free markets” encouraged, on one hand, lax regulation, or no regulation, of a potentially unstable financial apparatus and, on the other, the elaboration of compensation mechanisms that positively encouraged risk-taking and short-term opportunism. When the environment was right, as it eventually would be, the disaster hit.

With any luck Posner’s defection might suggest to those who thoughtlessly invoke the mantras of “free markets” and “deregulation,” for once to stop and consider the empirical evidence why markets–the financial and banking markets especially–need to be effectively and  intelligently regulated.

Equal Access to Justice

Written by Rebecca Zietlow on April 16th, 2009

Our current economic crisis has caused thousands of people to face unemployment, home foreclosures, evictions, bankruptcies, domestic violence and other problems.  However, too many people wtom-harkin.jpgho find themselves in legal trouble cannot afford to hire a lawyer to help them – as many as 80% in some parts of the country.  As a former legal services lawyer, I can attest to the value of having a lawyer when a person is in an overcrowded housing court, or seeking benefits from the government.  Regardless of the strength of your case, whether or not you have a lawyer often makes the difference between winning and losing.  Yet even as the need for legal assistance has skyrocketted, in recent years, Congress has slashed LSC funds and imposed drastic restrictions on the use of those funds.  The reduction in LSC funds has caused LSC programs to consolidate and reduce services.  Nationally, 50% of eligible applicants those who seek assistance from LSC programs are turned away.  Consider this – in order to be eligible for LSC assistance, your annual household income must be below 125% of the poverty line – currently about $25,000 for a family of four.  If LSC lawyers can’t help them, no one will.

Last month, Senator Tom Harkin introduced the Civil Access to Justice Act.  The CAJA would re-authorise the Legal Services Corporation for the first time since 1981.  It would also increase funding for the Legal Services Corporation, reduce the restrictions on LSC funded programs, provide for improved governance at LSC, and authorize a grant program from the Department of Education to expand law school clinics.  The proposed bill would expand funding to $740,000, a mere drop in the bucket in the federal budget, but over twice the funding level from last year.  It would once again enable LSC programs to collect attorneys’ fees and file class actions to provide systemic relief.  Harkin, also a former legal services lawyer, is well aware of the crying need for the Civil Access to Justice Act.  I hope that Congress will pass it quickly, to further the promise on the United States Supreme Court facade of “Equal Justice Under Law.”

Fraud & Cover-Up in the Financial-Government Complex

Written by Robert Justin Lipkin on April 6th, 2009

Bill Moyers aired an absolutely “must-see” interview with William K. Black last Friday night.  Here’s two statements from the website:

 The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.

William K. Black suspects that it was more than greed and incompetence that brought down the U.S. financial sector and plunged the economy in recession — it was fraud. And he would know. When it comes to financial shenanigans, William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s, has seen pretty much everything.

The prospect that the entire financial crisis was perpetrated by criminals under Bush’s watch and the crime covered up by those in the Obama administration is extraordinarily difficult to believe. The question, however, is not how difficult believing this is but whether it’s true.

Pay special attention to “liar’s loans” or “ninja loans”–“no income verification, no job verification, vid11.jpgno asset verification.”  The virtual absence of regulation in this part of the industry is at the core of the financial meltdown. So don’t believe those, like Geithner, who tell you too much, not too little, regulation caused the collapse of the economy. But the most scandalous dimension of this catastrophe has been the willful process of keeping secret the real reasons for this meltdown.  Until these reasons are revealed and explained to the general public we will all be at risk from the fraudulent practices of the financial-government complex. For an example of collusion in the financial-government complex click here.

Infrastructure and Intergenerational Theft

Written by Henry L. Chambers, Jr. on April 1st, 2009

Some folks seems surprised that the stimulus package, its infrastructure spending and the high deficits that will come along withtmpphpw7mhrv1.jpg them will eventually lead to higher taxes.  Folks ought to be surprised if the spending does not lead to higher taxes.  Indeed, folks ought to hope that the spending does lead to higher taxes as a reminder of who is being aided by much of the spending.  Infrastructure spending is necessary to guarantee that the America we give to the next generation is as prosperous as the America our parents gave us.  Infrastructure is the platform on which we build to make our lives, the lives of those who live in America, and even the lives of those who do not live here better.  As importantly, infrastructure is the often unseen subsidy that allows high earners and even some non-high earners to make life as comfortable as possible for themselves and their children.  That subsidy can be sensibly paid back by higher future taxes, to the extent that a superior infrastructure is a large subsidy for the incomes of future generations.

Simply put, many people who make large salaries in the future will do so because of the wonderful infrastructure that will be built on the back of today’s stimulus and today’s deficits.   Indeed, many people who make large salaries now do so because of the wonderful infrastructure that was built on the back of yesterday’s stimuli and deficits.  Of course, many will claim that this ignores uniquely talented individuals who made it all on their own.  Those many are simply wrong.  An example of the supremely talented individual who did not make it on his own would be a professional athlete who happens to work in a building that has been paid for by taxpayers.  That athlete may well be highly paid because of his talent.  However, the amount of his salary may depend in significant measure on the size of the subsithis-this.jpgdy that has been given to the athlete’s team through tax breaks or a publicly financed stadium or the infrastructure of the airwaves that allows for lucrative television contracts.   To be clear, Athlete A may get paid much more than Athlete B because of Athlete A’s talent.  However, without the infrastructure, Athlete A’s paycheck might be quite a bit lower.  This story can be played out in nearly every industry, from the trucking industry that relies on our interstate highway system to the direct mail industry that relies on the postal system to many others.   The story plays out in part because starting from scratch rarely requires that one create the infrastructure that leads to profits.  Rather, success often results from plugging into the infrastructure that helps one turn one’s skills into large salaries or profits.  The payment of higher taxes as a recognition that the infrastructure into which one is plugging is superior to the one that would be available without stimulus and infrastructure building that leads to large deficits is reasonable.

Claims that high deficits for today’s projects constitute generational theft are misguided.  If we want to tax ourselves to pay for infrastructure, we are giving future generations a large gift.  Gifting is fine, but the refusal to give a gift is not theft.  Though some may suggest that those who will have to pay for the infrastructure might prefer to keep their money and forgo the infrastructure, history suggests that when infrastructure is properly completed, the investment is worth the price.

How is the Ordinary Citizen to Understand the President’s Recovery Program?

Written by Robert Justin Lipkin on March 20th, 2009

Consider James K. Galbraith article on President Obama’s economic policies: “Barack Obama’s presidency began in hope and goodwill, but its test will be its success or failure on the economics. Did the president and his team correctly diagnose the problem? Did they act with tmpphpewipnw1.jpgsufficient imagination and force? And did they prevail against the political obstacles—and not only that, but also against the procedures and the habits of thought to which official Washington is addicted? The president has an economic program. But there is, so far, no clear statement of the thinking behind that program, and there may not be one, until the first report of the new Council of Economic Advisers appears next year. We therefore resort to what we know about the economists: the chair of the National Economic Council, Lawrence Summers; the CEA chair, Christina Romer; the budget director, Peter Orszag; and their titular head, Treasury Secretary Timothy Geithner. This is plainly a capable, close-knit group, acting with energy and commitment. Deficiencies of their program cannot, therefore, be blamed on incompetence. Rather, if deficiencies exist, they probably result from their shared background and creed—in short, from the limitations of their ideas.” To read further, click here.

This is disturbing. How is the ordinary citizen to understand the process of revivifying the economy when the experts adhere to different paradigms of what’s necessary for an economic recovery?  In a crisis affecting virtually every American, few Americans are able to understand the nuances of the debate over the proper way to proceed. It seems certain, however, that the key to the turnaround rests with the banks.  If they cannot do the trick, what’s so wrong with letting government nationalize the banks for the common good?