November 2012 - Represent Consumers

Five Things Senator Elizabeth Warren Should Do Right Away

Beating the $5.5 million that the Money Industry spent against Harvard Law Professor Elizabeth Warren was the easy part.

Now Warren has to decide what she’s going to do in the U.S. Senate, where just a couple of years ago, powerful pro-Wall Street Democrats like Christopher Dodd and Treasury Secretary Geithner killed any chance that she’d be confirmed to head the new Consumer Financial Protection Bureau – possibly the most significant part of the post-2008 crash financial reform legislation. As they hoped, President Obama didn’t even bother to nominate her – even though the concept of a federal agency to protect consumers against Wall Street’s misdeeds was hers.

First, Warren has to choose what role she’ll play once she’s on the inside. Its members like to think of themselves as august and deliberative, but in fact the Senate is deeply dysfunctional and its Democratic leadership easily deterred from meaningful action by the mere threat of a filibuster. In a recent New York Times piece on the Senator-elect, you could easily spot the inside-the-Beltway types trying to crush expectations – Warren’s and ours.

Don’t dismiss the perils of the decision.

Official Washington wants Warren to play the game, wait her turn, not rock the boat and eventually win the respect and support of her “colleagues” – the traditional route to power, influence and effectiveness in the Senate. Or she can damn the torpedoes and go full speed ahead in support of popular consumer reforms, at the risk of angering and alienating those who might otherwise be her allies.

And don’t forget who her true opposition is: the multinational corporations and their Washington lobbyists, who supply senators with the cash they need to get elected. That’s what drove the American economy into a depression four years ago, as we explained in our report “Sold Out: How Washington and Wall Street Betrayed America.” (PDF) Thanks to the U.S. Supreme Court’s decision in Citizens United, they’re free to spend as much of it as they want to influence the democratic process.

Senator-elect Warren has already indicated which way she’s headed. “If the notion … is we’re going to elect somebody to the United States Senate so they can be the 100th least senior person in there and be polite, and somewhere in their fourth or fifth year do some bipartisan bill that nobody cares about, don’t vote for me,” she has said.

That’s precisely the right call. Warren is a deceptively disarming warrior – I called her “the lawyer with the dragon tattoo” a few years back. She’s got unique nerd-quality credentials, a national support base, and the close attention of the news media. Not since Ralph Nader drew nationwide attention to consumer health, safety and environmental issues in the 1970s has there been such a respected and resonant voice on consumer issues.

No one else in the Senate – or even the federal government, with the exceptions of the President and the Secretary of State – comes close. She can leverage her rock star status to propel a progressive agenda of reforms that will be so popular with the public that the other 99 will have little choice but to go along. Her leadership will prove particularly helpful to her fellow Democrats, who badly need to show that as a majority they can get something done for average Americans. The Congress and the country needs a lion in the Senate. That’s what they used to call Ted Kennedy, whose seat Warren will occupy. It’s poetic politics.

The next question for Warren will be what to work on. Here are five suggestions:

1. Bankruptcy reform. Warren, a bankruptcy expert, became widely known in the 1990s for her critique of the practices of America’s banks and credit card companies in law reviews and academic pieces. When the financial industry was lobbying Congress to make it harder for the average American to declare bankruptcy, Warren penned a landmark analysis (PDF) that concluded that most Americans sought bankruptcy protection not because they were freeloaders or deadbeats but because they could no longer afford to pay their medical bills. Unfortunately, Wall Street won, and the so-called “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” made it nearly impossible for beleaguered consumers to get a fresh start – a huge victory for the credit card industry that made sure repayment of plastic debt got higher priority than child support payments, for example. Warren should investigate the inequities of the 2005 law and then seek corrective amendments.

2. Lower credit card interest rates. Having bailed out the banking industry, Congress was under pressure to do something about credit card abuses. The “Credit Card Act of 2009” was the deeply compromised and flawed result – read our analysis here. Missing, especially, was a cap on credit card interest rates. While consumers are struggling to cover their mortgages, and pay down credit card debt at 20-30% interest rates, the banks and credit card companies get to borrow taxpayer money – our money – from the Federal Reserve at nearly 0% interest rates. That needs to be fixed, and if it is: imagine the stimulus effect on the U.S. economy.

3. Fix the Senate filibuster rule. The filibuster used to be a powerful tool for a minority of members of the Senate to take on the majority: Senators could block a vote on a bill by speaking on the floor of the Senate until they dropped... or sixty Senators voted to shut down the filibuster. Unfortunately, this extraordinary measure, once rarely invoked, has devolved. Under the current practice, a Senator need only threaten a filibuster to block a vote. It’s been used hundreds of times since 2006 by Senate Republicans to derail action on important bills and judicial appointments. Warren has already pledged to revise the filibuster rule when the Senate convenes in January. As she points out, preventing abuse of the filibuster is necessary if the Senate is going to move forward to address the nation’s most pressing problems.

4. Speak out every week. Lawmaking is just one role of a U.S. Senator. Another is to use the power and influence of the position to investigate and highlight problems in and outside of government. Wisconsin Senator William Proxmire did just that in the 1970s and 1980s through what he called “The Golden Fleece Award,” which he presented monthly to public officials who, he believed, were wasting taxpayer money. Proxmire’s pronouncements, which both amused and maddened taxpayers, were closely followed by the news media. Warren should initiate a weekly tradition of calling out waste, inefficiency, and corruption, wherever it is found.

5. Restore the First Amendment to Human Beings. According to five members of the U.S. Supreme Court, the right of corporations to spend money to influence elections, and to give money and gifts to politicians for the purpose of influencing their votes, is protected by the First Amendment and cannot be limited or regulated. That’s the infamous ruling in Citizens United v. Federal Election Commission. The Supreme Court’s decision has unleashed a tidal wave of corporate money, often undisclosed, into our elections, one that has drowned out the voices of average Americans and turned our country into an aristocracy in which the People are taxed for the benefit of the powerful elites that run Wall Street and Washington. A grassroots campaign is underway to enact a Constitutional Amendment specifying that, “the protections of the First Amendment that apply to the spending of money on lobbying and elections, whether by contributions, expenditures or otherwise, shall extend only to human beings.” Senator Warren should be one of the leaders of that crucial reform.

Still too close to call

The president won the election by convincing a majority of voters that he was the genuine protector of the middle class.

His opponent ran as a shape-shifter, one day a rabid Tea Partier, the next a moderate. But among the many conflicting themes Mitt Romney tried out in his unsuccessful presidential campaign, one that he clung to was the out of control federal deficit and the need to rein in spending on the nation’s safety net programs.

As you recall, both the president and Romney stressed that the election was about the best way to create jobs.

But now President Obama says he will spend some of his precious time hitting the campaign trail again, this time trying to sell the American people on why it’s a good idea to agree to some cuts in Social Security, Medicare and Medicaid as part of a “grand bargain” with congressional Republicans to avoid going over the so-called fiscal cliff, a set of congressionally-self imposed tax increases and budget cuts. The president is adamant that taxes on the rich will have to go up as part of a “grand bargain,” which of course, Republicans, Wall Street and corporate CEOs all adamantly oppose. Their opposition has created a false consensus inside the Beltway that maintains that essential programs such as Social Security and Medicare are unsustainable.

Voters might be forgiven if they’re surprised by this wheeling and dealing over Social Security, Medicare and Medicaid, as Matt Bai writes in the New York Times, “The possible terms of a grand bargain never came up because neither side [during the campaign] wanted to talk about it.”

But all of a sudden that’s all our leaders are focused on, when they’re not consumed with David Petraeus’ sex life and shirtless FBI agents.

Where’s the jobs program?

The president has been hanging tough on the need to raise taxes on the wealthiest Americans but now seems to be waffling about protecting Social Security and the other safety net programs that protect the well being of hundreds of millions of Americans after a lifetime of work. In negotiations with Republicans during his first term, the president had already offered to make cuts in the safety net.

Unions and progressive groups say they are now mobilizing to protect the social safety net. But will they buck the president if he deems such cuts necessary to make a deal with Republicans?

Dave Dayen at Firedoglake, who has followed the assault on social insurance programs, expresses doubts. Noting that polls show a majority of the public is opposed to such cuts, Dayen wrote: “The Obama coalition has always been more tribal than ideological, willing to take their cues from their standard bearer.”

One troubling sign comes from a column by Michael Tomasky in The Daily Beast, suggesting that “entitlements” need to be on the table with Republicans, even if they’re not the cause of the deficit, because the president needs bargaining chips to get the tax increases on the rich. So the safety net has to be sacrificed, not because it’s causing budget problems, but to satisfy Republicans – who just got whooped in the election!

Does anybody think President Obama would have been reelected if had told voters he planned to use Social Security and Medicare as bargaining chips?

The president should hit the road, but he should do it in support of the social insurance programs a majority of Americans want unscathed, and against the budget hokum that blames these programs for the deficit.

The president and his team have shown they know how to get the job done when his own job is at stake. Now it’s time for them to use their prowess to protect the safety net from the vultures that are circling it.

Call the president today and ask him if he’s got our backs.

Martin Column / President Barack Obama / Social Security - 11/15/2012

The Battle for Obama's Soul

We know which Barack Obama won reelection Tuesday night.

The question is: which one woke up and went to work Wednesday morning?

Was it the passive Obama who, after winning a stirring, historic victory in 2008, allowed the insurgent tea party to inaccurately redefine his affordable health care plan as a government takeover?

Was it the conciliatory Obama who chose not to use his considerable rhetorical skills to rally the country against intransigent Republicans and Wall Street CEOs who opposed even the most modest attempts to use government to rein in Wall Street excess?

Was it the detached Obama of the first presidential debate October 3 who bizarrely said that he and the Republican candidate Mitt Romney agreed in their approach to Social Security?

Or was it the other Obama, the one whose 2012 campaign struck early and often against Mitt Romney, branding him as an out of touch plutocrat, while defining the president as the staunch defender of the threatened middle class?
As Mark Weisbrot of the Center For Economic and Polcy Research points out, Obama and his team carefully shaped a populist message for the 2012 campaign that was much more specific than the 2008 message of hope and change, and it was tailored specifically to win blue-collar votes in the swing states that decided the election.

Will the president continue to embrace that message or abandon it now that he’s won the election?

Which is just another way of saying that the fight for President Obama’s soul continues.

The current battlefield is the drama over the $7 trillion fiscal cliff and the “grand bargain.” As portrayed in the media, if Congress and the president can’t come up with a combination of budget cuts and revenue to cut the budget, Congress has agreed to impose a set of draconian budget cuts.

At the heart of the dispute is the continuation of the Bush cuts and the payroll tax holiday, the extension of unemployment benefits, and a variety of defense and other cuts. Some congressional leaders from both parties are pushing for a “grand bargain” to avoid the cliff – and they want to include cuts to Social Security, Medicaid and Medicare.

President Obama may have wavered on protecting Social Security, but Harry Reid, the Democratic Senate majority leader and 28 other senators have not. They’ve signed a pledge to avoid cuts to Social Security as part of any deficit reduction package.

Which makes complete sense since Social Security doesn’t add a single dime to the deficit.

Have your senators signed the pledge? If they have, call them and thank them, and suggest they add Medicare and Medicaid. If they haven’t, urge them to sign. The more senators that sign the pledge, the better it will be for our president’s soul.

Martin Column / Mitt Romney / President Barack Obama / Social Security - 11/08/2012

And The Loser Is….We, the People

No matter which way it goes on Tuesday, this election – the first presidential contest since the U.S. Supreme Court let the dogs out in Citizens United – has to be recognized as a disaster for democracy. In thousands of races, from the presidential down to statehouse races, an unprecedented influx of money has corrupted the electoral process.

Here are five dangerous trends in American politics that have manifested themselves this year.

1. Spending by “Outsiders.” In Citizens United, the Supreme Court ruled that spending money is a form of freedom of speech under the First Amendment. And the court gave corporations the same “freedom of speech” that American citizens were granted by the Bill of Rights. That ruling, issued in January 2010, freed corporations and other inanimate entities from limits on influencing elections.

Of the record $2 billion raised and spent in the presidential campaign, close to half appears to have come not from money raised by the candidates themselves or their political parties, but rather from Super PACS: campaign organizations that are supposed to be completely independent of the candidates. No talking is allowed between the candidate and the Super PAC. But this “firewall” is a fraud on the voters. All it takes is a few sophisticated lawyers and a “wink and nod” approach for the candidate campaigns to communicate their strategy and desires to the “independent” campaign.

We’re not really talking about “outsiders” here anyhow. The people running these operations are consummate insiders – usually people who have worked directly for the candidates and parties in the very recent past. Strategists for the Romney campaign also consult with Karl Rove’s Super PAC, American Crossroads, which is right down the hall. One of the pro-Obama Super PACs is run by two former White House aides.

2. “Issue” Advertising by Business Interests. The enormous spending reported for or against the presidential candidates by allegedly independent Super PAC supporters doesn’t include expenditures for so-called “issue advertising”: advertising propaganda dumped into our living rooms and pumped into our computers by political partisans who are able to skirt disclosure and other laws by discussing “causes” without actually urging a yes or no vote on a candidate – even though it’s obvious from the message who the ad targets.

In the post-Citizens United world, the lines are getting even blurrier: business interests that want to explicitly influence candidate elections without revealing their identity have begun funneling money through non-profit organizations set up for that purpose, an abuse of the laws granting tax exempt status to social welfare organizations. For example, Citizens for Responsibility and Ethics in Washington was able to track $7.4 million in donations the Aetna, the health insurance company, made to two non-profit organizations, and attacking lawmakers for supporting Obamacare – at the same time that the president of Aetna was making public speeches in support of the law. But that is an exception: sophisticated corporations can easily avoid disclosing their “donations” to ersatz non-profit organizations.

3. Corporations buying the courts. Most state judges are appointed by the governor, but must run for re-election or “retention.” Increasingly, business groups who want favorable court rulings are challenging judges who have ruled against them or might do so. Big money – tens of millions of dollars – is pouring into judicial elections in half a dozen states on Tuesday, featuring the kind of nasty and deceptive thirty second ads that have polluted the airwaves in candidate races. Leading this attempt to stack the deck in the courts is the U.S. Chamber of Commerce, whose corporate members want to elect judges who will throw out consumer, defective product and environmental protection cases. Confronted with well-funded challenges by a special interest, the judges can only defend themselves by raising money from…some other special interest.

This is not just tawdry, it's a devastating threat to our country. The judiciary is the one branch of government that is supposed to be insulated from partisanship; where decisions are made based on the rule of law, not political considerations. A series of rulings by the current US Supreme Court – Bush v Gore, for example, Citizens United, and even its decision upholding federal health care reform (read the fine print) – have already undermined that principle; public disapproval of the high court, once held sacrosanct, now approaches 40%. Once the American people lose confidence in the integrity of the judicial branch, democracy itself is in jeopardy.

4. The Millionaires Club. Let’s say you want to run for public office because you want to help solve America’s problems. And you aren’t beholden to anyone; in fact, corruption is one of the problems you want to solve. There are lots of Americans of all political stripes who would want to serve their country. But with so much corporate money in politics, how are people who are not in the pocket of some special interest able to run? You have to be rich! Nearly half of the US House of Representatives, and two-thirds of the US Senate, are millionaires, according to a study published last year.

It’s tempting to think that the wealthy will better serve the public because they have no need to raise money from special interests, but we in California learned the hard way that that is not necessarily true: “As you know, I don't need to take any money from anybody” then action movie star Arnold Schwarzenegger told Jay Leno” back in 2003. “I have plenty of money myself.” The next year, Schwarzenegger ran for Governor to replace Governor Gray Davis, who was widely criticized for his incessant fundraising. As Governor, Schwarzenegger broke Davis’s fundraising record.

The disparity in wealth between elected officials and the people they are supposed to represent is at least partly why America’s economy is in terrible shape today. When Wall Street and Washington got together, few public officials were willing to oppose the deregulatory policies that led to the financial crash in 2008. (Download our report on the Great Betrayal here.) It’s the reason why, when Congress passed credit card reform, the piece most important to average Americans was missing: a cap on interest rates. The experience of being a member of the middle class, or poor, isn't a reality for most of our elected officials. The rest of us pay for that.

5. Your vote, nullified. Supporters of the Wild West approach to political funding like to point out that the voters still have the last word. Corporations ostensibly can’t vote – at least not yet. But take a look at what has happened: the average American has little possibility of running for office when up against well-funded candidates beholden to special interests. We have freedom of speech, but unless you own a TV station, your views are drowned out by billions of dollars in paid advertising. Meanwhile, pocketbook issues of profound import for the middle class – international trade, Social Security – are off the table – hardly debated by the candidates, so as not to offend the powerful. Voters today have been reduced to spectators: we are presented with a slate of candidates and causes by way of thirty-second commercials, and we have to hope we can discern the truth.

There is only one solution to this crisis: a constitutional amendment to restore our democracy to the people. Here’s our formulation of the 28^th Amendment to the Constitution:

“The protections of the First Amendment that apply to the spending of money on lobbying and elections, whether by contributions, expenditures or otherwise, shall extend only to human beings.”

Whatever the outcome tomorrow, this is the campaign all Americans need to get behind.

Images of Pres. Obama and Gov. Romney (c) Charles Lynn Bragg – Thanks, Bro!

Citizens United / Harvey Column - 11/05/2012

Behind Romney's battleship plan, an ill wind blows

If Mitt Romney’s high-finance cronies had more money invested in horses and bayonets, would the Republican presidential candidate be insisting that our national security depended on them?

As it is, Romney is championing a vast and costly expansion in the number of the Navy’s big battleships, from which one of his top foreign policy advisers could make a healthy profit.

That would be John Lehman, CEO of J.F. Lehman & Company, an investment firm that specializes in acquiring “middle market companies in the defense, aerospace and maritime industries and the technologies that originate from them.”

He’s also a former secretary of the Navy during the Reagan administration, a member of the 9/11 Commission and a stalwart Republican who also advised John McCain’s losing presidential bid. Lehman has been advocating for more big ships since his days in the Reagan administration – and as Wired magazine reported, he’s put himself in a good spot to profit from an increase in military shipbuilding. “He has profited hugely from the Navy’s slow growth in recent years — raising the prospect that he could make even more if Romney takes his advice on expanding the fleet."

And now he’s being mentioned as a possible secretary of defense in a Romney administration.

But Lehman’s history makes him a particularly dubious character to place anywhere near taxpayers’ money, especially as Romney insists he will preside over a huge increase in spending on defense – including Lehman’s pet project to increase the number of battleships. (Under Obama, the Navy plans to build an additional 15 warships by 2019, bringing the fleet to 300, at a cost of between $17 and $22 billion a year. Under the more ambitious Romney/Lehman plan, the fleet would grow to more than 350 ships by 2022.)

During the Reagan administration, Lehman was an acknowledged master of the Washington insider political game. But his management style at Navy was blamed for a massive corruption scandal involving military officials and big defense contractors.

Prosecutors dubbed their investigation, which began after Lehman returned to private life in 1987, “Operation Ill Wind.” More than 50 government officials, corporate heads, consultants and military contractors were convicted.

But Knight-Ridder, citing a congressman and a former defense official, reported in 1988, “The autocratic management of former Navy secretary John F. Lehman Jr. created an environment ripe for the type of abuses uncovered by the Justice Department's probe into Pentagon contract bribery.”

Lawrence Korb, an assistant secretary for defense at the beginning of the Reagan administration, said: "The Navy, when I was in the Defense Department looking at it from the inside, and when I was outside, was a bureaucracy run amok. It was making its own procurement rules in many cases which were different from the Defense Department."

One of those who went to prison was a close associate of Lehman’s, Melvyn Paisley, who Lehman brought in as a top Navy Department official. Paisley pleaded guilty to accepting hundreds of thousands in bribes and served four years in prison and paid a $500,000 fine. Lehman was never charged with any wrongdoing, but according to media reports, he was suspected of improperly tipping off Paisley to the investigation.

Ill Wind investigators also discovered that when Lehman joined the administration, he had sold a lucrative defense consulting business from which he was earning $180,000 a year – but not before securing a guarantee from Boeing Corp., a major defense contractor, that it would use the consulting business. Knight Ridder reported that while Justice Department officials said Lehman’s actions violated no law, they constituted an ethical breach that would have required his dismissal had they been discovered while he was still Navy secretary.

The latest escapade in which Lehman surfaced was his company’s investment in the government-backed construction of a superferry to carry passengers between several Hawaiian islands.

As detailed in Wired and the New York Times, the superferry ultimately was a failure for civilian travel, even with the encouragement of $136 million in government loans. But it boosted the fortunes of a shipyard Lehman owns, along with the prospects that the Superferry would catch the eye of another very wealthy customer – the Defense Department.

Ryan Sibley, of the government watchdog group Sunlight Foundation told Wired that “Lehman’s involvement with the Superferry shows that he is no stranger to using personal connections to influence costly decisions.”

Martin Column / Mitt Romney / Uncategorized - 11/02/2012