BANK DEREGULATION FAILS AGAIN

Deregulation of “mid-sized” banks in 2018 and 2019, along with failures of banking oversight by the Federal Reserve, led to the collapse of three banks in the last ten days. The Chair of the Federal Reserve, Jerome Powell, bears significant responsibility for the conditions that allowed these bank failures to occur.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The collapse of three banks in the last weeks has been widely reported. What hasn’t been nearly as widely reported are the factors that led to these failures. Greed and mismanagement by the banks’ executives caused their collapses, of course. However, this wouldn’t have happened without deregulation and failures of oversight by bank regulators (primarily the Federal Reserve). Deregulation in banking and other industries over the last 40 years has not lived up to its promises of greater efficiencies and better products and prices for consumers. Moreover, in many cases, it has harmed employees, customers, and taxpayers. (See this previous post for more details on the failures of deregulation.)

This banking system crisis is a somewhat surprising repeat (on a smaller scale) of the banking crisis in 2008, although it was predictable in some experts’ eyes. Again, as in 2008, fifteen short years ago, the banks and wealthy depositors are being bailed out by the federal government.

After the 2008 debacle, the Dodd-Frank Act was passed in 2010 to enhance bank regulation and (hopefully) prevent a recurrence. However, Dodd-Frank wasn’t as strong as many experts would have liked and efforts to weaken it further began immediately. These efforts were led by the banks and Wall St. financial corporations, with support from most Republicans and some Democrats – and some of the federal banking regulators. The efforts included a focus on weakening and delaying the implementation of the regulations required by Dodd-Frank.

In 2018, the Trump administration and the Republicans in control of Congress (with some Democratic support), passed a law significantly reducing banking regulation, primarily for “mid-sized” banks (i.e., ones with assets between $50 billion and $250 billion). The three banks that collapsed recently are in this group.

The Chair of the Federal Reserve (the Fed), Jerome Powell, lobbied for the 2018 deregulation law, despite the fact that the Fed is the primary regulator of these banks. He is a former investment banker and was nominated to the post by President Trump. Many supporters of strong banking regulation were dismayed when President Biden renominated him in 2021.

The collapse of these three banks is due in part to the failure of the Fed’s oversight (what’s referred to in the business as “supervision”). Banking experts, investors, rating agencies, and even some in the media had identified risks at Silicon Valley Bank (SVB) that the Fed seems to have missed or ignored. SVB was the first of the three banks to collapse and is the 2nd biggest bank failure in U.S. history. (There would have been other bigger ones in 2008 if the government hadn’t stepped in to rescue them.) SVB had grown rapidly, had deposits largely from one industry and from companies that were inter-related, had significant individual deposits over the insurance limit of $250,000, and had invested lots of its cash in long-term investments that heightened risk if interest rates went up or depositors wanted money back on short notice. All of these factors are flags that should have drawn the attention of the Fed long before SVB’s collapse. Senator Warren (D-MA) and other banking watchdogs have called the collapse of these three banks a glaring failure of oversight by the Fed.

The federal government released a statement on Sunday, March 12, to reassure the public about safety and security of the country’s banking system and their bank deposits. Fed Chair Powell delayed the release of the statement with his insistence that the statement not mention the failures of the Fed in overseeing SVB and other banks. [1]

On March 15, Senator Warren sent a scathing 10-page letter to Fed Chair Powell detailing his and the Fed’s role in aiding and abetting the collapse of these banks. She wrote to Powell that these banks collapsed “under faulty supervision and in a weakened regulatory environment that you helped create.” She noted that Powell had “led and vigorously supported efforts to weaken the regulations” for these banks. In 2018, Powell, as Fed Chair, supported the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCP), which rolled back some provisions of the Dodd-Frank law, dramatically weakening regulation of banks, particularly those with $50 billion to $250 billion in assets. At that time, a Wall Street Journal editorial warned that the bill would make the financial system more vulnerable and a Bloomberg editorial warned that the bill chipped away at the bedrock of financial resilience. Powell supported it anyway.

Furthermore, in 2019, Powell took additional deregulatory steps that weakened or eliminated guardrails that would have applied to SVB. As he was doing so, a federal Reserve Board member warned that safeguards at the core of the system were being weakened. A Federal Deposit Insurance Corporation (FDIC) Board member objected to Powell’s deregulatory steps, warning at the time that they significantly underestimated the risks of banks SVB’s size, noting that banks of this size experienced significant stress in the 2008 debacle and would have collapsed without government bailouts.

Just three days before the SVB collapse, when asked by Senate Republicans if he would continue to weaken banking regulation, Powell replied, “Yes, I can easily commit to that.” Ironically, Powell’s strong and persistent push to raise interest rates causes the value of long-term bonds to fall. SVB and other banks holding long-term bonds therefore would see the value of their investments fall which would threaten their ability to sell them to deliver cash to depositors. This was a key factor in the collapse of SVB and, although Powell’s actions at the Fed precipitated it, he and the Fed apparently did not anticipate their negative effects on banks.

Senator Warren’s letter concludes by noting that Powell contributed to the bank failures in three ways:

  • Powell actively supported legislation that weakened the Dodd-Frank law,
  • Powell implemented regulations that further weakened bank regulation, and
  • Powell failed to ensure that the oversight of the Fed was effective in preventing the banks’ collapses.

Warren’s letter states that Powell should recuse himself from the internal review the Fed has announced into the oversight and regulation of SVB, given his direct involvement in and responsibility for the chain of events that led to the bank’s collapse.

As-of March 17, a week after SVB’s collapse, it and other banks that have collapsed or are at-risk have borrowed a total of $165 billion from the Fed to bail them out. The U.S. Treasury and the FDIC have committed to protect all depositors at the failed banks, bailing out the start-up companies and their venture capital funders, particularly the ones that had over $250,000 on deposit at a bank that collapsed.

My next post will provide a few more details about the collapse of these three banks and will discuss efforts to prevent this from happening again.

[1]      Johnson, J., 3/17/23, “‘An abomination’: Powell cut mention of regulatory failures from bank bailout statement,” Common Dreams (https://www.commondreams.org/news/powell-cut-regulatory-failures-mention)

Advertisement

GOOD AND BAD NEWS ON MEDICARE

The takeaways from this post are:

  • President Biden has proposed Medicare changes as part of his proposed budget that would keep it funded for 25 years, however, Republicans in Congress are not likely to pass them.
  • Partial privatization of Medicare through the Medicare Advantage and ACO REACH programs undermines quality and increases costs.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

There are three pieces of good news on the Medicare front. First, President Biden’s budget for the next fiscal year (starting 10/1/23) includes increased funding and decreased costs for Medicare that would mean it is fully funded for the next 25 years. The increased funding comes from raising the Medicare tax on people with incomes over $400,000, based on both earned and unearned income (such as capital gains). The decreased costs come from significantly expanding Medicare’s ability to negotiate what it pays pharmaceutical companies for drugs. [1] The bad news is that Republicans in the House are not likely to pass this. The other bad news is that Biden didn’t propose strengthening Medicare by adding coverage for vision, hearing, and/or dental services.

Second, there’s some good news on reining in the privatization of Medicare. The Biden administration is increasing the auditing of the private Medicare Advantage (MA) plans. (As you may well know, Medicare pays a private insurer for seniors’ care when they enroll in a MA plan. Private insurers were allowed to offer these plans because they promised to deliver better care for less money. The result has been the reverse: worse care for more money.) Because of documented and systematic overbilling of Medicare by many of these private MA insurers, Medicare projects that these audits will save $470 million per year. (See this previous post for more details on overbilling by MA insurers.) [2] Nearly every large insurer offering a MA plan has been sued by the Justice Department for overbilling Medicare. [3]

Third, the Biden administration is proposing tougher rules governing Medicare Advantage plans to counter widespread inappropriate denial of coverage for seniors’ health care and deceptive marketing. The new rules would require quick action on authorizations (or denials) of coverage for health care services and require an authorization to cover the full course of treatment, rather than requiring reauthorization for each step or individual treatment.

An inspector general’s investigation found that one out of every seven denials of payment by a Medicare Advantage insurer was inappropriate. It estimated that tens of thousands of MA enrollees have been inappropriately denied medically necessary care. Health care providers report increasingly frequent denials of payment by MA insurers for care routinely covered by traditional, government-run Medicare. In 2022, the number of appeals patients filed contesting Medicare Advantage denials was almost 150,000, up 58% from 2020. On many occasions denials are overturned when appealed; for example, most denials of coverage of skilled nursing care are eventually overturned. However, the denial and appeal process can take over two years. It is not unusual for patients to use their life savings to pay for denied coverage before recovering thousands of dollars months or years later. It is also not unusual for patients to die before their appeals are decided. [4]

Insurers’ marketing of Medicare Advantage plans often confuses consumers (intentionally?) about the fact that MA plans are private, for-profit plans as opposed to traditional government-run Medicare. The new rules would ban the private insurers from using the Medicare logo and name in ads, while requiring them to identify the insurance company operating the MA plan. The rules would also hold the insurers responsible for the actions of third parties doing marketing for them, such as aggressive, unsolicited phone calls. This third-party marketing is often done on a commission basis, so there is great pressure to sell the MA plan.

Medicare Advantage plans are very profitable for the private insurers. They charge Medicare more per enrollee than traditional, government run Medicare costs, despite the fact that their advertising attracts healthier-than-average seniors. They use prior authorization and in-network provider requirements to limit and deny payments for care. Their in-network provider and geographic area limitations mean that enrollees may find that when they’re traveling or on vacation they have no health insurance coverage. [5] Furthermore, in numerous cases, MA networks do not include the best quality care options, such as the best cancer centers and specialists. It is estimated that roughly 10,000 lives per year would be saved if Medicare terminated the 5% of MA plans with the worst rankings. [6]

The bad news on the Medicare privatization front is that a new and more insidious privatization scheme is continuing, albeit with a new name as-of Jan. 1, 2023. The Direct Contracting program initiated by the Trump administration has been renamed ACO REACH by the Biden administration. It allows private companies to manage the care of seniors enrolled in traditional government-run Medicare. Medicare enrollees may be put into these plans without their knowledge or consent based on where they live. The sliver of good news is that new criteria for companies’ participation have eliminated some companies with histories of fraud and abuse with Medicare. However, over a dozen members of Congress have sent a letter to the Centers for Medicare & Medicaid Services (CMS, the agency running Medicare) asking for investigations into nine companies allowed to participate in ACO REACH that have documented cases of defrauding Medicare or other government health programs. [7]

The Physicians for a National Health Program (PNHP) has sent a series of letters to CMS highlighting problems with ACO REACH and calling for its termination. Its latest letter identifies four insurers in ACO REACH that have a history of involvement in health care fraud or other malfeasance (Centene, Sutter Health, Clover Health, and Bright Health). It took only a small investigation by PNHP to identify them. [8]

Overall, the seven largest for-profit health insurers in the U.S. are making a fortune in profits from Medicare and other government health programs, notably Medicaid and the Affordable Care Act which both provide subsidized health insurance for low-income people. For three of the seven, Centene, Humana, and Molina, roughly 90% of their health insurance revenues come from government programs. For all seven (the previous three plus Cigna, CVS/Aetna, Elevance, and UnitedHealth), their 2022 government-program revenues were $577 billion, up from $116 billion in 2012. These seven companies have more than 70% of the Medicare Advantage market, with MA plans generally being their most profitable products. Therefore, they aggressively market their MA plans and have grown them substantially so that now 31 million seniors, almost half of the Medicare-eligible population, have signed up for them. Because the private MA plans’ billings for care are more expensive per enrollee than traditional Medicare, Medicare would realize substantial savings if the MA program was eliminated. [9]

In conclusion, any privatization of Medicare, such as through the Medicare Advantage and ACO REACH programs, (as well as privatization of other government health programs) does NOT save money. It adds costs for private middlemen and their profits, advertising, and administrative costs. Moreover, there are additional costs for government oversight: creating rules and regulations to govern the private entities, monitoring their performance, enforcing the almost certain violations of the rules and regulations, and investigating and stopping efforts to game the system to increase profits. The efficiency and quality of Medicare would be best served by ending privatization, i.e., by eliminating the ACO REACH and MA programs.

I urge you to contact President Biden and your U.S. Representative and Senators and to ask them to stop the privatization of Medicare. Specifically, ask them to eliminate the new ACO REACH program and to rein in Medicare Advantage plans. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Biden, President J., 3/7/23, “My plan to extend Medicare for another generation,” New York Times (https://www.nytimes.com/2023/03/07/opinion/joe-biden-medicare.html)

[2]      Kuttner, R., 2/1/23, “Can Medicare Advantage be contained,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/2023-02-01-medicare-advantage-privatization/)

[3]      Abelson, R., & Sanger-Katz, M., 12/18/22, “US officials seek curbs on private Medicare Advantage plans,” The Boston Globe

[4]      Ross, C., & Herman, B., 3/14/23, “Denial of care often blamed on insurers’ AI,” The Boston Globe

[5]      Cyrus, R., 2/27/23, “Private health care companies are eating the American economy,” The American Prospect (https://prospect.org/health/2023-02-27-private-health-insurance-medicare/)

[6]      Archer, D., 6/2/22, “Inspector General, AMA and AHA agree: Some Medicare Advantage plans are endangering their enrollees’ lives,” Common Dreams (https://www.commondreams.org/views/2022/06/02/inspector-general-ama-and-aha-agree-some-medicare-advantage-plans-are-endangering)

[7]      Jayapal, Representative P., 1/19/23, “Jayapal applauds exit of bad actors from ACO Reach program, calls for greater accountability,” (https://jayapal.house.gov/2023/01/19/jayapal-applauds-exit-of-bad-actors-from-aco-reach-program-calls-for-greater-accountability/)

[8]      Physicians for a National Health Program, 1/17/23, “Letter to US Department of Health and Human Services Secretary Becerra and CMS Administrator Brooks-LaSure,” (https://pnhp.org/system/assets/uploads/2023/01/REACHLetter_20230117.pdf)

[9]      Johnson, J., 2/28/23, “Report shows big insurance profiting massively from Medicare privatization,” Common Dreams (https://www.commondreams.org/news/report-shows-big-insurance-profiting-massively-from-growing-privatization-of-medicare)

FIGHTING BACK AGAINST MONOPOLISTIC CORPORATIONS AND RECLAIMING DEMOCRACY

The key takeaways from this post are:

  • The Biden administration is taking strong actions to rein in monopolistic corporations and reinvigorate competition in our economy.
  • Some members of Congress are pushing to revitalize antitrust enforcement.
  • Results are already evident and will benefit workers, consumers, the public, and democracy.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Corporations and other business interests spend billions of dollars each year on election campaigns and lobbying. (See this previous post for details of their spending.) This spending is an investment in influencing public policies and the enforcement of them that provides benefits that are much, much greater than what the business interests spend. (See this previous post for more details on the benefits they get.)

The good news is that the Biden Administration and some members of Congress are working to turn the tide on monopolistic corporate power. In 2022, Congress passed the first significant update to antitrust laws in 50 years. It includes a new merger fee that will be used to fund the Federal Trade Commission’s (FTC) and the Department of Justice’s (DOJ) antitrust enforcement efforts, as well as to support states’ attorneys general in enforcing antitrust laws at the state level. [1]

Senator Warren (D-MA) is introducing the Prohibiting Anticompetitive Mergers Act in Congress, which would set clearer rules for what makes a merger illegal and create a streamlined process for breaking up monopolistic corporations. There are also three bills with bipartisan support that would rein in some of the monopolistic practices of the Big Tech companies, Amazon, Apple, Google, and Facebook. Bills to further update antitrust laws, make meat processing more competitive, and increase competition in defense contracting are also being introduced in Congress.

On July 9, 2021, President Biden signed a sweeping Executive Order. It included 72 separate actions all focused on reinvigorating competition in the U.S. economy and pushing back against monopolistic corporate behavior. He described it as being “about capitalism working for people” and noted that “Capitalism without competition isn’t capitalism; it’s exploitation.” [2]

Seventeen federal agencies were specifically named in the Executive Order and even ones that weren’t responded with explanations of what they would do to foster competition in the economy. Key Biden appointees leading the revitalization of competition are Lina Kahn, chair of the Federal Trade Commission and Jonathan Kanter, head of the Department of Justice’s Antitrust Division. A new White House competition council was created, led by the National Economic Council, to monitor implementation of the executive order, including complementary legislative and administrative efforts.

Results are already evident. The Federal Trade Commission (FTC) has promulgated new definitions of unfair or deceptive acts and practices. And it’s taking action based on them. It has proposed a ban on non-compete clauses in employment contracts, which depress wages and limit workers’ career advancement. At least one-third of U.S. companies require non-compete clauses, including for fast food workers, dog groomers, and custodians. The FTC has also filed a lawsuit to force Meta (parent of Facebook) to spin off Instagram and WhatsApp. It has sued Meta over its acquisition of the virtual reality company, Within. Last February, Lockheed Martin dropped its proposed merger with Aerojet in the face of an FTC lawsuit. The FTC is working to restore consumers’ right to repair equipment they have purchased, from cell phones to farm tractors. There’s also new scrutiny of bank mergers, pricing practices in the pharmaceutical industry, anti-competitive practices by the giant railroad corporations, price fixing in ocean shipping, abusive use of patents to restrict markets and jack up prices, and junk fees in banking, credit cards, airlines and elsewhere.

For example, according to research by the Center for Responsible Lending, TD Bank charges U.S. customers more than $100 a day for overdrafts by levying a $35 fee three times in a day. These are junk fees that bear no relationship to actual costs; they are opportunistic price gouging. In Canada, where these practices are regulated, TD and other banks may charge overdraft fees only once a day of no more than five Canadian dollars (about $3.50 in USD). This is one reason TD Bank’s proposed merger with Memphis-based First Horizon Bank, a $13.4 billion deal, should be blocked. [3]

The Department of Justice (DOJ) and FTC are rewriting merger guidelines to strengthen antitrust enforcement. The DOJ has already begun a number of antitrust enforcement actions. One would require Google to separate its online advertising business from its search engine business. The DOJ has successfully blocked the merger of publishing houses Simon & Schuster and Penguin Random House. It has filed suit against three giant poultry processors who are alleged to have colluded to deny workers $85 million in pay and benefits.

The DOJ is also investigating the Live Nation – Ticketmaster merger. This is an all-too-frequent example of a merger that was allowed with conditions, but where the merged entity has not complied with the conditions. Live Nation and Ticketmaster promised that after their merger they would not block events from taking place at venues that did business with their competitors. It now appears that Live Nation – Ticketmaster have done just that. In many cases in the past, there has been no enforcement when merger conditions were violated. Hopefully, this is changing. Furthermore, Senator Warren (D-MA) argues that a merger that requires conditions simply shouldn’t be approved. If it’s illegal, then it’s illegal and authorities should just say, “No.” The government shouldn’t be put in the position of having to spend time and money monitoring compliance with merger conditions and then having to go through a typically long and costly process to enforce them when violations occur. [4]

Several federal agencies, not just the FTC and DOJ, have the power to block anticompetitive mergers in their areas of jurisdiction. The Department of Transportation can stop anticompetitive mergers and practices by airlines and other transportation corporations and banking regulators can do so for banks. The Department of Agriculture can regulate mergers and practices of food processors and can protect farmers and ranchers from exploitation by monopolistic agribusinesses. The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau is investigating monopolistic consolidation among beer makers and also the distributors of alcoholic beverages.

In 2017, Congress passed bipartisan legislation allowing the purchase of hearing aids without a prescription. The requirement for a prescription had allowed a small cartel to control the market and jack up prices by thousands of dollars. As a result, less than one-fifth of the Americans who would have benefitted from a hearing aid got one. The Trump administration failed to implement the law. Biden’s executive order gave the Food and Drug Administration 120 days to implement it. People are now able to buy hearing aids for thousands of dollars less than before.

It’s past time to take on corporate power in America and return power to workers, consumers, and the public, i.e., to rebuild democracy. The Biden administration has made a good start at doing so. Partially as a result of its efforts, merger and acquisition activity in the last half of 2022 slowed sharply. (See this post for more on ways to take on corporate power and rebuild democracy.)

Competition is essential to the vitality of our economy – and of our democracy. A shift seems to be taking place in government and public consciousness about what it means to be a democracy, both politically and economically. Taking back our democracy requires regulating capitalism so it serves multiple stakeholders and the public good, not just wealthy shareholders and executives.

I urge you to contact President Biden and thank him for his efforts to reinvigorate competition in our economy and democracy in our society. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to contact your U.S. Representative and Senators to ask them to support efforts to strengthen antitrust laws and rein in monopolistic behavior by big tech, meat processors, defense contractors, and others. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Warren, Senator E., 2/15/23, “Keynote speech at the Renewing the Democratic Republic Conference,” Open Markets Institute (https://www.warren.senate.gov/imo/media/doc/FINAL%20-%20Senator%20Warren%20Speech%20Antitrust%20Open%20Markets%202023.pdf)

[2]      Dayen, D., 1/25/23, “A pitched battle on corporate power,” The American Prospect (https://prospect.org/economy/2023-01-25-pitched-battle-corporate-power/)

[3]      Kuttner, R., 3/3/23, “Excessive bank overdraft charges demand regulation,” The American Prospect blog (https://prospect.org/blogs-and-newsletters/tap/2023-03-03-bank-overdraft-charges-regulation/)

[4]      Warren, Senator E., 2/15/23, see above

WHAT CORPORATIONS GET FOR THEIR CAMPAIGN AND LOBBYING SPENDING

Corporations and other business interests spend billions of dollars each year on election campaigns and lobbying. (See this previous post for details.) This spending is an investment in influencing public policies and the way they are (or are not) enforced. It provides benefits that are much, much greater than what the businesses spend.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Here are some examples of what they get in return for their lobbying and campaign spending:

  • Deregulation so they can maximize profits with little regard for the safety of workers and the public or the fair treatment of customers and employees.
  • Lack of enforcement of antitrust laws, so they can become as big and as powerful as possible, while swallowing up or squashing competition.
  • Low tax rates and tax loopholes that allow them to minimize the taxes they pay.
  • Regulations, such as patent laws, that stymie competition.
  • Government bailouts when they’re in trouble.
  • Financial laws and regulations that facilitate acquisitions and mergers, including the vulture capitalism of hedge funds and private equity, such as bankruptcy laws (see this post for more detail) that allow rewarding executives and shareholders while ripping off every other stakeholder.

The safety risks of deregulation are apparent in the derailment of the Norfolk Southern train in Ohio on February 3, 2023, and the toxic nightmare that’s been the result. In 2017, after the railroad industry put over $6 million into Republican campaigns and millions more into lobbying, the Trump Administration repealed a regulation enacted by the Obama Administration that required better braking systems on rail cars carrying hazardous materials. Norfolk Southern and other railroads lobbied for its repeal because they claimed the regulation would be costly and wouldn’t increase safety that much. The railroad industry also lobbied to limit the regulation by defining the “high-hazard flammable trains” (HHFTs) that it would cover to include only trains carrying oil and not ones with industrial chemicals. The train that recently derailed in Ohio was NOT classified as a HHFT! [1] (See this previous post for more details on the railroad industry’s deregulation, consolidation, monopolistic behavior, working conditions, and soaring profits.)

In the aftermath of the train derailment, President Biden pointed out that deregulation has compromised Americans’ safety. He stated that “Rail companies have spent millions of dollars to oppose common-sense safety regulations. And it’s worked. This is more than a train derailment or a toxic waste spill – it’s years of opposition to safety measures coming home to roost.” [2]

Despite their rhetoric about the free market, big corporations do not want to compete for customers or for workers. Because of forty years of failure to enforce antitrust laws, monopolistic corporations dominate the U.S. economy from airlines to food processing to oil and gas to beer, banks, and health care. (See this post for more details.) For example, since 2006, banking regulators have processed 3,500 bank merger applications and haven’t stopped a single one.

To avoid competing for customers, huge monopolistic corporations eliminate competitors via the extreme capitalism they have gotten the government to allow, which includes wiping out small businesses. The dominant corporations buy small business competitors and swallow them, or drive them out of business with their market place power. For example, in the last decade, nearly 20,000 small businesses have been eliminated from the military goods and services market by the five huge defense contractors. Amazon did this in the book selling market and now does this in other markets as well.

Among other things, huge corporations that dominate an industry have monopolistic pricing power. Therefore, during the pandemic, these dominant corporations have been able to engage in price gouging to increase their profits. The best estimates are that between 40% and 53% of the inflation consumers have experienced over the last year is due to corporate price gouging. (See this post for more details.)

Huge, dominant corporations have dramatic negative effects on the economy if they get into trouble, therefore they’re too big to let fail. So, they get government bailouts when they’re in danger. The big banks and financial corporations got trillions of dollars in bailouts in the aftermath of the 2008 financial catastrophe they created. More recently, the airlines – the four huge airlines that are left after consolidation in this industry – got $25 billion in a government bailout during the pandemic. Nonetheless, they laid off thousands of workers, are now raising fares and fees at an exorbitant rate, schedule flights they know they don’t have the workers to fly, and are squeezing workers and customers to increase profits. [3]

Big businesses don’t want to compete for workers, so they have imposed non-compete clauses on many employees in many industries, including the fast-food industry. These non-compete clauses are in employment contracts employees are required to sign and prevent an employee from going to work for a competitor. This means lower wages for workers and less turnover, both of which boost corporate profits. The Federal Trade Commission (FTC) has proposed banning non-compete clauses and big businesses are apoplectic about having to compete for workers. The U.S. Chamber of Commerce, big businesses’ powerful trade association and political megaphone, along with 99 other industry associations, have written a letter to the FTC to complain.

In terms of taxes, the effective tax rate for large, profitable corporations (i.e., what they actually pay) has fallen from 16% in 2014 to 9% in 2018. Furthermore, the portion of large, profitable corporations paying no corporate income tax has increased to 34%. This has occurred in part because of the 2017 Republican tax law that cut the maximum, theoretical corporate tax rate from 35% to 21% and added even more loopholes to a tax code already riddled with them. Corporate taxes are now less than 11% of government revenue; in the 1950s, they were over 30% of revenue. [4]

The ever-increasing wealth of large corporations and rich individuals gives them plenty of money to spend on election campaigns and lobbying. This enhances their political power and allows them to tilt the playing field further and further in their favor, from lax antitrust enforcement to favorable tax and bankruptcy laws to weak regulations to employer-leaning labor laws. This lets them disempower workers (see this post for more details) and destroy communities. It leads to rising prices for housing, food, and medical care; to lower pay and worse working conditions; to the degradation of the quality of the information we get from mass media; and to further concentration of wealth and power.

All of this undermines democracy. It’s past time to take on American corporatocracy and reinvigorate democracy. My next post will discuss current and potential future strategies for fighting back against monopolistic corporations.

[1]      Cox Richardson, H., 2/15/23, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/february-15-2023)

[2]      Cox Richardson, H., 2/22/23, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/february-22-2023)

[3]      Warren, Senator E., 2/15/23, “Keynote speech at the Renewing the Democratic Republic Conference,” Open Markets Institute (https://www.warren.senate.gov/imo/media/doc/FINAL%20-%20Senator%20Warren%20Speech%20Antitrust%20Open%20Markets%202023.pdf)

[4]      U.S. Government Accountability Office, 12/14/22, “Corporate income tax: Effective rates before and after 2017 law change,” (https://www.gao.gov/products/gao-23-105384)

CURRENT U.S. CAMPAIGN FINANCE SYSTEM IS UNDEMOCRATIC

The key takeaways from this post are:

  • Business interests are spending billions of dollars each election cycle on political campaigns.
  • Supreme Court decisions have allowed unlimited campaign spending by wealthy special interests who are increasingly hiding their identities from voters.
  • Business interests are also spending billions of dollars on lobbying each year.
  • This huge spending by business interests is affecting public policy, allowing extreme capitalism where returns to shareholders outweigh all other interests.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The 2022 midterm (i.e., non-presidential) federal elections were the most expensive ever by a wide margin. Candidates and political action committees (PACs) spent a total of $9 billion, up from $7 billion in 2018 and $5 billion in 2014 (both figures are adjusted for inflation). Identifiable business interests contributed $3.5 billion to federal campaigns, a record amount. They spent 14 times as much as organized labor. [1]

In the 2022 election cycle, business interests gave $66 million to members of Congress who voted NOT to accept the results of the 2020 presidential election, the so-called Sedition Caucus. Numerous corporations pledged to stop or re-evaluate supporting these members of Congress after the Jan. 6, 2021, insurrection at the Capitol. A significant number of these corporations have resumed making corporate PAC contributions to members of the Sedition Caucus, including contributions from AT&T, Boeing, Cigna, Comcast, General Motors, Home Depot, Lockheed Martin, Marathon Petroleum, Pfizer, Raytheon, UPS, UnitedHealth, Verizon, and Walmart. [2]

A growing number of members of Congress (73) refused corporate PAC money for the 2022 elections; 59 did for the 2020 elections. A much smaller number (7 members of the House and 6 Senators) refused money from all business PACs, including PACs of businesses not organized as corporations (e.g., many law, lobbying, and accounting firms) and of industry associations (e.g., the National Association of Realtors). Note that neither of these categorical refusals excludes the receipt of donations from corporate executives.

Election spending by outside groups has been growing since the 2010 Supreme Court Citizens United decision (as well as other related decisions). The Supreme Court’s decisions allow unlimited outside spending (i.e., spending that is [supposedly] independent of candidates’ campaigns and the political parties). Since 2010, there’s been over $9 billion in outside spending. A growing portion of this money is coming from sources that aren’t required to disclose their donors – so-called “dark money” groups. Most of the dark money comes through non-profit “social welfare” groups, but shell corporations are also used.

Outside spending was about $2 billion in the 2022 federal elections and over $637 million of that was dark money. All but $25 million of this dark money was contributed to PACs (this is essentially money laundering) or was spent on activities that avoid requirements for reporting to the Federal Elections Commission (FEC). (These activities are typically ads promoting or attacking candidates but without explicitly calling for their election or defeat, and that are run before the short period prior to an election when reporting is required.) [3]

In a troubling but not surprising development, the non-profit dark money groups that spent the most on the 2022 elections, $346 million, are closely linked to Republican and Democratic leaders in Congress. The largest spender was One Nation, a dark money non-profit linked to Senate Republican leader Mitch McConnell (R-KY). It spent $145 million, of which $74 million was contributed to PACs, with the vast majority going to McConnell’s Leadership Fund PAC. Note that his PAC shares staff and offices with One Nation. So much for the independence of such spending, despite the requirement for independence in the Supreme Court’s decision! One Nation also spent $71 million on ads, on which it was careful to avoid triggering reporting to the FEC. McConnell’s PAC spent more money on the 2022 elections than any other outside group: $246 million on U.S. Senate races across the country. [4]

Majority Forward, a dark money non-profit linked to the Democratic Senate leadership, spent over $102 million with $27 million going to ads (that avoided FEC reporting) and $76 million in political contributions (with $72 million going to Senate Majority Leader Schumer’s (D-NY) PAC). On the House side, the Republican dark money group spent $77 million, while the Democratic group spent $21 million.

Business interests spend money on lobbying in addition to campaign spending. For example, the National Association of Realtors spent $4 million on federal campaigns in the 2022 election cycle and $126 million on lobbying in the same two-year period.

Overall, $4.1 billion was spent on federal lobbying in 2022, an all-time record in terms of dollars and the highest since 2010 after adjusting for inflation. Over the course of 2022, over 13,000 organizations paid over 12,600 lobbyists. The $1.7 trillion budget bill passed in late 2022 was the subject of lobbying by 1,393 organizations. [5]

The top ten clients hiring lobbyists ranged from the National Association of Realtors, which spent $82 million on lobbying in 2022, to Meta (parent company for Facebook, Instagram, and WhatsApp), which spent $19 million. Amazon, the only individual corporation other than Meta on the list, spent $21 million. The U.S. Chamber of Commerce was second on the list, spending $81 million, followed by the Pharmaceutical Research & Manufacturers of America (PHRMA, $29 million), the American Hospital Association ($27 million), and Blue Cross / Blue Shield ($27 million).

In terms of industries, pharmaceuticals topped the list, spending $372 million on lobbying in 2022, followed by electronics ($220 million), insurance ($158 million), securities and investments ($140 million), and real estate ($135 million). Electric utilities, oil and gas, hospitals and nursing homes, and health services and HMOs each spent roughly $120 million on lobbying.

With billions of dollars being spent by business interests on campaigns and lobbying, it’s clear there’s a lot at stake in federal policy making and implementation. These businesses spend this amount of money because they see a return on their investment. My next post will discuss what they get for their money.

With corporate and business interests spending so much money to buy and exercise influence over government actions, it’s no wonder that we have largely unfettered capitalism in the U.S. The result is extreme capitalism that puts returns to investors and executives ahead of all other stakeholders – workers, consumers, communities, and the public interest. This creates high levels of economic insecurity and inequality in our society.

Everyday citizens have little voice to fight back against the megaphones all this money gives to businesses’ voices. Our only hope is to elect people to office who will stand up for workers, consumers, communities, and the public interest. This is why elections and campaign financing are so important. We must all be involved and informed citizens and voters if we want to stand a chance against the onslaught of corporate and business interests’ spending to influence public policy.

[1]      Giorno, T., 1/27/23, “Business interests spent $3.5 billion on federal political contributions during the 2022 cycle,” Open Secrets (https://www.opensecrets.org/news/2023/01/business-interests-spent-3-5-billion-on-federal-political-contributions-during-the-2022-cycle/)

[2]      Giorno, T., 1/27/23, see above

[3]      Massoglia, A., 1/24/23, “ ‘Dark money’ groups have poured billions into federal elections since the Supreme Court’s 2010 Citizens United decision,” Open Secrets (https://www.opensecrets.org/news/2023/01/dark-money-groups-have-poured-billions-into-federal-elections-since-the-supreme-courts-2010-citizens-united-decision/)

[4]      Massoglia, A., 1/24/23, see above

[5]      Giorno, T., 1/26/23, “Federal lobbying spending reaches $4.1 billion in 2022 – the highest since 2010,” Open Secrets (https://www.opensecrets.org/news/2023/01/federal-lobbying-spending-reaches-4-1-billion-in-2022-the-highest-since-2010/)

HOW TO REFORM CAMPAIGN FINANCING TODAY TO PROMOTE DEMOCRACY

Here are the three takeaways from this post:

  • Our current system of election financing gives wealthy special interests outsized influence.
  • Using public funds to magnify small donations to campaigns can change this.
  • New York State is implementing an innovative campaign financing system for the 2024 elections that significantly magnifies small donations and could dramatically reduce the influence of wealthy special interests.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Current campaign financing systems in the U.S. allow a handful of wealthy special interests to dominate election funding and, therefore, gain undue influence in policy making. The 2010 Supreme Court’s Citizens United ruling ended decades of campaign finance laws that maintained a reasonable semblance of democracy. Now, wealthy individuals and corporations, often using Political Action Committees (PACs) and dark money non-profits (501(c)(4) organizations that don’t have to disclose their donors), have become the dominant funders of campaigns.

In the 2022 election cycle, $16.7 billion was spent on national and state elections. The biggest donors (organizations and individuals donating $1,000 or more) have been consistently increasing their share of election spending since the 2010 Citizens United ruling, which (along with other court rulings) allows unlimited spending by wealthy special interests.

The most effective immediate solution, given the Supreme Court’s rulings, is using public funds to magnify small donations. New York City has had such a campaign financing system in place since 1988. It offers a six-to-one match for donations up to $175 by city residents. Therefore, an ordinary resident’s donation of $50 or $100 now has the clout of a much larger contribution – $350 or $700, respectively. As a result, more people are donating, because their small contributions are more impactful and their voices are amplified. This has also led to higher voter turnout. [1] (For more details see this previous post.)

New York State will implement a new, innovate system using public funds to magnify small campaign donations in its 2024 elections for statewide and legislative offices. In its 2022 elections, the 200 biggest individual campaign donors gave $15.9 million, outweighing the 206,000 donors of $250 or less who gave a total of $13.5 million. In addition, millions of dollars were spent by big donors through PACs and dark money organizations, further amplifying their influence.

Candidates in 2024 will have the option of participating in the new campaign financing system. Those running for statewide office who opt-in will receive $6 of public funds for every $1 of small donations (up to $250) from New York residents. Candidates for the legislature who opt-in will receive public funds magnifying small donations from residents in their districts on a sliding scale ranging from $12 for every dollar from donors of $50 or less to $8 for every dollar from donors of $150 to $250. To qualify to receive public funds, a candidate must raise a threshold number of small donations from their constituents and those in lower income districts will require fewer donations to qualify. There is a cap on how much public money a qualified candidate can receive and they must abide by limits on the size of contributions. Fundraising and spending must be publicly reported and will be subject to strict oversight and enforcement. [2]

Modeling of the effects of this new campaign finance law based on the 2022 elections for the NY legislature shows that it has the potential to flip the predominant source of campaign money upside down so more money is coming from small-donor constituents than from wealthy special interests. In New York’s 2022 elections, 11% of campaign donations to candidates for the legislature came from small donors ($250 or less) and 69% came from big donors ($1,000 or more from an individual or organization). If all candidates participate in the new campaign financing system and donations came from the exact same set of donors, 53% of campaign money would come from small donors (up from 11%) and 39% would be from big donors (down from 69%), flipping the source of the majority of campaign funds.

Moreover, a significant increase in the number of small donors is likely and would dramatically increase their impact. New York City’s public financing system produced a significant increase in campaign donors and it now has a rate of donor participation that is about twice that of the rest of the state. If, with the new financing system, the statewide donor rate matched that of NYC, small donors would provide 67% of campaign funding (up from 11%) versus 28% from big donors (down from 69%). This would be a watershed change with the financial weight of small donors being six times what it was in 2022.

For New York’s statewide races (i.e., governor, lt. governor, attorney general, and comptroller), a similar effect would be expected. In 2022, small donors provided just 6% of these candidates’ funds and big donors contributed 90%. With all candidates participating in the new system and the same contributors, small donors would provide 27% of the funds, 4 ½ times what it was. If the number of small donors doubled, their share would increase to 41%, almost seven times what it was. The governor’s race and its high dollar amounts skews this result.  If only the other three offices are considered, the small donor share of funding with a doubling of their numbers would be 73% of candidates’ funds compared to just 27% for big donors.

Election systems with significant public funding have been operating in Arizona, Connecticut, and Maine for a number of years. Roughly a dozen other states and some municipalities also have some public funding for elections.  Bills have been offered in Congress that would create a campaign financing system for congressional elections that is similar to New York City’s.

In New York City, the system of public funds magnifying small donations has changed candidates’ attitudes and approaches to the voting public and to the solicitation of donations. It has muted the importance of large contributors, motivated more citizens to run for office, and made races more competitive. Candidates spend less time fundraising and can, therefore, be more engaged with and responsive to their constituents.

Using public funds to magnify small donations has multiple benefits: [3]

  • Reduces the importance of big donors, thereby reducing the influence of wealthy special interests.
  • Amplifies the voices of average voters and their small donations, and can be used to amplify only those donations coming from constituents, i.e., residents of the area the candidate would represent.
  • Encourages more citizens to make campaign donations and to vote.
  • Incentivizes candidates to seek broad support from many voters in their jurisdiction, as opposed to focusing on support from a few wealthy backers, including out-of-district interests.
  • Enables more people, and more diverse people, to competitively run for election.
  • Supports candidates in being competitive without big donors and even when an opponent has big donors.
  • Allows candidates to spend less time fundraising and more time interacting with voters and talking about issues.

I encourage you to support the use of public funds to magnify small donations to candidates’ campaigns. It will make our elections more democratic. I also encourage you to make contributions of whatever size to candidates who are running to represent you, and to get to know them and your elected officials at the local, state, and federal levels. This is what makes democracy work!

[1]      Migally, A., & Liss, S., 2010, “Small donor matching funds: The NYC election experience,” The Brennan Center for Justice (http://www.brennancenter.org/publication/small-donor-matching-funds-nyc-election-experience)

[2]      Vandewalker, I., Glavin, B., & Malbin, M., 1/30/23, “Analysis shows amplification of small donors under new NY State public financing program,” The Brennan Center for Justice (https://www.brennancenter.org/our-work/research-reports/analysis-shows-amplification-small-donors-under-new-ny-state-public

[3]      Brennan Center for Justice, retrieved 2/1/23, “Public campaign financing: Why it matters,” (https://www.brennancenter.org/issues/reform-money-politics/public-campaign-financing)

REPUBLICANS, DEMOCRATS, THE DEBT, AND THE ECONOMY

Here are the three takeaways from this post:

  • The U.S. economy is strong, it’s growing and creating jobs, despite the Federal Reserves’ interest rate increases.
  • Over the last 90 years (the period for which data has been captured), the economy has been significantly stronger under Democratic Presidents than Republican ones.
  • Republicans’ current concerns over the federal government’s debt and deficit are hypocritical as they had no such concerns when Trump and other Republicans were president.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The U.S. economy finished off 2022 with strong 2.9% growth in the 4th quarter in Gross Domestic Product (GDP, the total of all goods and services sold). GDP growth was 2.1% for the full year. The economic growth was strong despite big interest rate increases by the Federal Reserve (the Fed) designed to slow the economy in an effort to reduce inflation. Employers added 4.5 million jobs in 2022, the second-best year on record; 6.7 million jobs were created in 2021 (available data goes back to 1940). The unemployment rate is 3.5%, a 53-year low. [1]

Inflation is down significantly. Actually, in December, prices were DOWN 0.1% from the previous month. Over the last six months, prices have risen just 1.9%. This is below the Federal Reserve’s target rate of 2%, which would suggest that the Fed should stop increasing interest rates in its fight against inflation. [2]

However, the mainstream media have focused on the fact that prices in December were 6.5% higher than a year earlier, even though this is a significant decrease from June when they were up 9.1%. This focus supports the Fed continuing to increase interest rates, which benefits the banks, investors, and financial elites, but hurts workers and everyday Americans trying to buy homes and pay debts.

Moreover, the current inflation is different than inflation historically; it’s being driven by corporate price gouging, supply chain problems, and the war in the Ukraine. Therefore, interest rate increases are not likely to be as effective in fighting this current inflation as they have been historically. Nonetheless, the Fed’s interest rate increases may well needlessly drive our economy into a recession.

Reviewing economic growth historically, there’s a stark pattern in the U.S. over the last 90 years (the period for which data have been captured): The economy has performed significantly better under Democratic presidents than Republican ones. Although a president has limited control over the overall economy, this pattern is true for all the major measures of the economy: GDP growth, job creation, incomes, productivity, and even stock prices. And the gap is significant in size. [3]

Over the last 90 years, there have been seven Democratic presidents and seven Republicans. (This does not include the current president.) In terms of annual GDP growth, the top four (FDR, Kennedy, Johnson, and Clinton) and number six (Carter) are Democrats. Three of the bottom four are Republicans (Trump [worst], G. W. Bush, and G. H. W. Bush) with Truman (D) as the third from the bottom. Overall, since 1933, the average annual GDP growth has been 4.6% under Democratic presidents, but only 2.4% under Republicans.

Looking at job growth (instead of GDP growth), the top six rates were under Democrats (the five top performers above plus Truman), while the bottom four were under Republicans (the three bottom performers above plus Eisenhower). Trump, by the way, is at the bottom and is the only president in this 90-year period with negative job growth.

Identifying the cause of this pattern is difficult, and, therefore, a bit inconclusive. However, it’s NOT spending and, in particular, it’s NOT deficit spending. In fact, Republican presidents have run up larger deficits than Democrats. (I’ll come back to this below.) Control of Congress is not the answer either.

The answer with the most supporting evidence is that Democratic presidents have been more willing to be pragmatic and follow evidence about which policies have actually strengthened the economy in the past. On the other hand, Republicans have clung to the theory that tax cuts (tilted heavily toward wealthy individuals and corporations) and deregulation will spur economic growth, despite consistent evidence to the contrary based on actual experience. Interestingly, tax increases enacted by President G. H. W. Bush in the late 1980s (to reduce the deficit created by Reagan) and by President Clinton in 1993 were both followed by strong economic growth.

In addition, it may be that Democratic presidents are more aggressive at using the government to respond to crises and that they are more focused on ensuring people have jobs. Democratic presidents may also be more aggressive in having the government invest in job-creating innovation when the private sector doesn’t, such as in medical research and clean energy.

While the causes of the better economic performance under Democratic presidents than Republican ones may not be entirely clear, the pattern is clear, strong, and long-term. (I have written about this pattern before, here.)

In terms of the federal budget deficit and the debt, over the last 40 years, Republican presidents have run up larger deficits and added more to the debt (a bit over $12 trillion) than Democrats (a bit under $7 trillion). (I have written about this pattern before, here.) The last president to balance the federal budget was Clinton (D), who actually reduced the debt over his eight years in office. Previous to that, President Johnson (D) was the most recent one who had a budget surplus.

So, when Republicans oppose raising the debt ceiling, it’s blatant hypocrisy. Under President Trump, they voted to raise the debt ceiling three times as $6.6 trillion was added to the federal debt. The tax cut they passed in 2017 raised the annual deficit by about $200 billion. Moreover, raising the debt ceiling simply allows the government to pay for the spending Republicans and Democrats have already approved in annual budgets.

Republicans’ rhetoric about the debt and deficit is a smokescreen for their efforts to cut spending that supports average Americans, like Social Security; Medicare, Medicaid, and Obama Care that provide health insurance; and the Child Tax Credit that helps low-income families with children. On the other hand, they support spending that benefits wealthy individuals and corporations, often giving them the money through tax breaks. Moreover, Republicans have for years cut the funding for the IRS, preventing it from enforcing our tax laws. As a result, wealthy individuals and corporations are dodging about $100 billion a year in taxes they owe under current tax laws.

Without the Republicans’ 2017 tax cut and with better enforcement of tax laws by the IRS, the federal government wouldn’t be hitting the debt ceiling now. So, Republicans’ opposition to raising the debt ceiling has nothing to do with fiscal responsibility or the debt. Rather, it’s all about holding our government and economy hostage to their demands for cuts in spending that supports everyday Americans. Meanwhile, they protect the wealthy (who provide lots of money for Republicans’ campaigns) from having to pay their fair share in taxes. [4]

[1]      Wiseman, P., 1/27/23, “Slow US economy grew last quarter,” The Boston Globe from the Associated Press

[2]      Kuttner, R., 1/13/23, “The misleading reporting on inflation,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/2023-01-13-misleading-reporting-on-inflation/)

[3]      Leonhardt, D., 2/2/21, “Why are Republican presidents so bad for the economy?” The New York Times

[4]      Warren, E., 1/24/23, “The Republican con on the debt ceiling,” The Boston Globe

SOUTHWEST AIRLINES: ANOTHER EXAMPLE OF EXTREME CAPITALISM

Southwest Airlines and its debacle of canceled flights around the Christmas holiday is another example of the extreme capitalism that U.S. policies have allowed to flourish. These policies of deregulation, a lack of support for workers and unions, and failure to enforce antitrust laws have allowed profits and returns to shareholders to trump all other goals and responsibilities of businesses.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Southwest Airlines canceled over 17,000 flights in the couple of weeks around the Christmas holiday. It canceled far more flights than any other airline; some days it was responsible for 90% of the flights canceled in the U.S. On some days it canceled two-thirds of its flights while other airlines were canceling 2% or fewer of their flights. Although the weather contributed to triggering the cancellations, other airlines coped much, much better with the weather conditions. [1]

The dramatic extent of Southwest’s cancellations was caused, not bad by weather, but by extreme capitalism that has pushed its workforce to the limit and failed to invest in needed infrastructure, while maximizing profits and returns to shareholders. Southwest’s management admitted that the cancellations were primarily due to the failure of internal systems and technology, particularly its personnel scheduling system. Its unions have been highlighting the need for an improved personnel scheduling system for years.

Workers had been complaining about their treatment even before the December meltdown – 16-hour days, mandatory overtime, and a requirement for a doctor’s letter to take a sick day – driven by very thin staffing levels, driven in turn by the push to maximize profits. Things only got worse with December’s problems. Some of Southwest’s unions are talking about going on strike, with much of the focus on working conditions.

Southwest is not a corporation that has been struggling to survive; rather it’s one that’s very profitable. It’s had profits of $5.9 billion and $5.4 billion in 2022 and 2021, respectively, while revenue has grown from $9 billion in 2020 to $15.8 billion in 2021 and $22.7 billion in 2022. It received $7 billion in pandemic relief funds from the federal government, but nonetheless laid off 7,800 workers between March 2020 and July 2021. Its CEO was paid $9 million in 2022 and it spent $2 million on lobbying in 2021 – 2022.

Furthermore, from 2017 through 2019, Southwest spent $5.6 billion of its profits on buying back its own stock and then another $451 million on buybacks in the first quarter of 2020 (as the pandemic was hitting). Using its profits for stock buybacks enriched shareholders and executives, when it could have invested them in workers or needed infrastructure and technology instead. [2] Furthermore, in December 2022, Southwest resumed paying $428 million a year in dividends to shareholders. (Dividends were suspended in the first quarter of 2020 when the pandemic hit). Clearly, Southwest could afford to invest in infrastructure improvements and to treat its employees reasonably.

Despite its horrible performance in December, in January 2023, Southwest announced the promotions of five executives, including the person in charge of network operations. While customers suffered, it seems there’s no accountability for executives. [3]

So far, the federal Department of Transportation has not imposed any penalties for Southwest’s December meltdown. Members of Congress, union representatives, and consumer advocates are all calling for an investigation of what happened, of delayed refunds to customers, and of possible deceptive business practices (such as letting customers book flights when Southwest knew if didn’t have the personnel to operate the flights, which at least three airlines are being investigated for doing).

Better government oversight of the whole airline industry is needed, including stronger rules for consumer protection, as well as better enforcement of existing regulations. Industry-wide problems include slow payments of refunds and compensation to harmed customers. The airlines owe roughly $10 billion in unpaid refunds and other compensation to customers, which have accumulated over the course of the pandemic.

The industry as a whole is so thinly staffed (in pursuit of higher profits) that problems with cancellations and delays are happening fairly regularly when travel peaks around holidays. For example, around July 4, 2022, the problems were bad enough that Attorneys General of 38 states wrote to Congress in August to complain that the federal Department of Transportation (DOT) wasn’t doing enough to respond to customer complaints and problems. Last fall, the DOT imposed fines on airlines (but not Southwest) of $7.25 million in total for delays in providing refunds and compensation to customers. [4]

The airline industry is another example of the poor treatment of workers and customers because U.S. policies allow extreme capitalism and big profits. The big profits are used, of course, to reward shareholders and executives rather than to invest in the business, reward workers, or improve service and prices for customers. I’ve previously written about extreme capitalism in general here and here, as well as about its manifestations specifically in the railroad industry (here and here), in the food industry, and in Medicare privatization.

I urge you to contact President Biden and your U.S. Representative and Senators to ask them to support stronger regulation of businesses, better protection for consumers, more enforcement of antitrust laws, and enhanced support for workers and their unions. We need to temper the extreme capitalism in the U.S. because it’s hurting workers and consumers, as well as leading to high and growing levels of economic insecurity and inequality. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Stancil, K., 12/28/22, “Southwest under fire for mass flight cancellations, ‘despicable’ treatment of workers,” Common Dreams (https://www.commondreams.org/news/southwest-airlines-corporate-greed)

[2]      Johnson, J., 1/8/23, “Southwest Airlines spent $5.6 billion on shareholder gifts in years ahead of mass cancellation crisis,” Common Dreams (https://www.commondreams.org/news/southwest-airlines-shareholder-gifts)

[3]      Johnson, J., 1/12/23, “‘They are just mocking Pete Buttigieg’: Southwest promotes executives after historic meltdown,” Common Dreams (https://www.commondreams.org/news/southwest-promotes-executives)

[4]      Johnson, J., 1/8/23, “Sanders calls on Buttigieg to hold Southwest CEO accountable for ‘greed and incompetence’,” Common Dreams (https://www.commondreams.org/news/sanders-southwest-greed)

STORIES CENSORED BY CORPORATE MEDIA Part 3

A central purpose of my blog posts is to share information that is under-reported by the mainstream, corporate media. This post and the previous two (here and here) share highlights of the top ten under-reported stories of 2022 from the annual State of the Free Press report from Project Censored. The media – print, TV, on-line, and social media – have undergone a dramatic corporate consolidation over the last 40 years. They are now a handful of huge, for-profit corporations, often owned and run by billionaire oligarchs. Through bias and self-censorship, this has restricted the content and quality of the information reported, skewing the terms and content of public debate and decision making. Project Censored works to hold the corporate news media and their owners accountable. (See this previous post for more detail.)

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The under-reported stories highlighted by Project Censored’s report mean that the media are failing to provide citizens and voters important information, which threatens our democracy. This also undermines progress toward of a just, fair, and inclusive society. My previous post summarized numbers five through seven of its top ten stories for the year. Here are summaries of the last three. [1]

UNDER-REPORTED STORY #8: CIA’s plans under Pompeo and Trump to kidnap or kill Wikileaks founder, Julian Assange. Such plans were seriously considered in late 2017 according to September 2021 investigative reporting by Yahoo News based on interviews with over 30 former government officials. Pompeo and others wanted vengeance against Assange for Wikileaks online publishing of documents from the CIA’s top secret hacking division. Apparently, resistance from England (where Assange was in refuge in an embassy), from the U.S. National Security Council, and from the U.S. Department of Justice kept these plans from being undertaken. Despite some coverage in non-mainstream media of the Yahoo News reporting, very little, if any, coverage occurred in the mainstream, corporate media.

UNDER-REPORTED STORY #9: Efforts to prevent disclosure of election campaign donors. In the wake of the Supreme Court’s 2010 Citizens United decision (and others) that have reduced regulation of and limits on campaign spending, the role of money whose true donor is unknown (so-called “dark money”) in our elections has exploded. Republican legislators at the national and state levels are promoting legislation that would make it illegal to require non-profit organizations engaged in political spending to disclose their donors.

At the state-level, legislators are using model legislation developed by the American Legislative Exchange Council (ALEC) to ban such disclosure and have passed such laws in nine states. ALEC brings together corporate lobbyists and corporate-friendly legislators to draft and promote legislation favorable to corporations and right-wing interests. ALEC is part of the sprawling political influence network funded by right-wing billionaires, such as the Kochs and Bradleys, both of whom use dark money non-profits to conceal their political spending.

At the federal level, the 2022 fiscal year budget bill included a rider exempting politically-active non-profit organizations that self-identify as promoting the social welfare from having to report their donors. Another rider prevents the Securities and Exchange Commission (SEC) from requiring corporations to disclose political and lobbying spending.

There has been very little coverage in the corporate, mainstream media of these efforts to protect and expand dark money in election campaigns, let alone the role of ALEC and its collaborators in such efforts at the state level.

UNDER-REPORTED STORY #10: Lobbying against online privacy protections is, in part, funded by the mainstream media. “Surveillance advertising,” which collects a user’s data from online activities to tailor advertising to that individual, generally without the user’s knowledge, is ubiquitous and essential to profiting from online advertising. It is extremely profitable for social media apps and platforms, including Facebook, YouTube, Instagram, TikTok, etc. The mainstream media also depend on online advertising revenue, including the New York Times, CNN, MSNBC, Time, the Washington Post, Fox TV, and many others.

The Federal Trade Commission (FTC) is working on regulations for the collection and use of data on online users. However, the Interactive Advertising Bureau (IAB) and its lobbyists are opposing such regulation. The IAB is funded by and represents the interests of online media outlets (including the mainstream media) and data brokers. The personal user information collected online (including from minors) is not only used to target advertising by the app or platform being used, it is typically sold to data brokers. These data brokers create predictive models of users’ online behavior and then sell them to advertisers. These predictive models also allow manipulation of the public’s perceptions of political issues. This occurred during the 2016 presidential campaign: the British firm, Cambridge Analytica, used the personal date of Facebook users, without consent or permission, to craft and target political ads and propaganda.

The importance of revenue from online advertising is huge; it has grown from $32 billion in 2011 to $152 billion in 2020 (almost five times the previous amount). Meanwhile, hardcopy advertising revenue has declined roughly one-quarter from $125 billion in 2011 to $90 billion in 2020. The mainstream corporate media increasingly rely on extensive privacy violations to generate badly needed revenue from online advertising, while the public relies on them to report on this – obviously a huge conflict of interest. While there’s been some reporting of the FTC’s efforts to protect users’ privacy, the corporate media have been largely silent on the push by the FTC and in Congress to ban or severely regulate surveillance advertising. And they have been totally silent on the fact that the industry organization they fund, the IAB, is lobbying against privacy protections for online users as well as against limitations on surveillance advertising.

CONCLUSION: The overarching theme of these under-reported stories is the failure of the mainstream corporate media to educate the American public about the power and influence of wealthy corporations and individuals. The success of these wealthy special interests in influencing government policy and the enforcement of laws is something every voter needs to be well aware of in order to make informed decisions.

This blog can only scratch the surface of the issue of stories under-reported by the mainstream corporate media. For reporting on such stories (and many others), please see the free, reader-supported media that I recommended in this previous post.

[1]      Rosenberg, P., 1/3/23, “Project Censored, Part 2: Billionaire press domination,” The American Prospect, (https://prospect.org/power/project-censored-part-2-billionaire-press-domination/)

STORIES CENSORED BY CORPORATE MEDIA Part 2

A central purpose of my blog posts is to share information that is under-reported by the mainstream, corporate media. This post and the previous one share highlights of the top ten under-reported stories of 2022 identified by the annual State of the Free Press report from Project Censored. The media – print, TV, on-line, and social media – have undergone a dramatic corporate consolidation over the last 40 years so they are now a handful of huge, for-profit corporations, often owned and run by billionaire oligarchs. Through bias and self-censorship, this has restricted the content and quality of the information reported and, therefore, skewed the terms and content of public debate and decision making. Project Censored works to hold the corporate news media and their owners accountable. (See my previous post for more detail.)

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

By failing to provide citizens and voters important information, the under-reporting highlighted by Project Censored’s report undermines democracy, the public interest, and the promotion of a just, fair, and inclusive society. My previous post summarized the first four of its top ten issues for the year. Here are summaries of the next three. [1]

UNDER-REPORTED STORY #5: A network of right-wing “dark money” organizations is undermining democracy in multiple ways. Dark money organizations are politically active groups organized as non-profits so they don’t have to report their donors. A network of them, including the Judicial Crisis Network, The 85 Fund, and the Donors Trust, has been funding election deniers, the January 6 insurrectionists, and campaigns for and against Supreme Court nominees. They have funded support for President Trump’s Supreme Court nominees and opposition to President Biden’s nominee. The billionaire Koch brothers (although one of them has passed away) have their own network of groups that funnel money to political causes, including through the Donors Trust. These dark money groups are also closely link to the Federalist Society of right-wing lawyers and judges and its co-chair Leonard Leo.

This network of dark money groups has been set up to obscure the sources of funding for right-wing political activities. In 2020, these dark money groups provided the Federalist Society and related groups over $52 million, primarily to promote the confirmation of Supreme Court Justice Barrett. In 2020, they provided over $37 million to entities that played a role in the January 6 insurrection. They previously had spent tens of millions of dollars promoting the confirmations of Trump-nominated Justices Gorsuch and Kavanaugh. They gave tens of millions to groups promoting lies about the 2020 election. Members of the Federalist Society played key roles in the various schemes to overturn the results of the 2020 election and to prevent the confirmation of Biden as President. For example, 14 of the 18 Attorneys General who filed suit to throw out election results in key states are Federalist Society members.

Despite the size and scope of this dark money network supporting right-wing political, anti-democracy activities, the corporate media have left the story of the connections and coordination of these funders almost totally unreported. Although the media have covered specific right-wing activities, they have not provided the context of the network of funders of these activities. Therefore, the impact and threat of these dark money funders and the need to address the overarching issue of dark money remain unknown to most of the public and most voters. If nothing else, this minimizes public understanding of the level of the threat to our democracy, to our elections, and to trust in our governments. This undermines democracy by failing to educate voters about the extent of the network of funders and the coordination among the right-wing extremists’ organizations.

UNDER-REPORTED STORY #6: Corporate consolidations and the marketplace power that this creates are key drivers of “inflation.” The mainstream, corporate media have reported extensively on the current surge of inflation. However, they rarely report on the price gouging by huge, monopolistic corporations that has been a key cause of inflationary price increases. When they do report on it, it’s usually to dismiss it as a cause of inflation. Corporate consolidation leading to the marketplace power to engage in price gouging has occurred in many industries in the U.S. and globally, from railroads to pharmaceuticals to ocean shipping. The food industry, which has engaged in price gouging causing high inflation in grocery prices, is a great example. Three corporations own 93% of the carbonated soft drinks sold, three other corporations own 73% of cereals, and four or fewer firms control at least 50% of the market for 79% of groceries. The four big meat suppliers have paid over $225 million to settle suits related to price fixing and other market manipulation.

Because of price increases across the whole economy, U.S. corporations’ profits are at the highest levels in 70 years. Fifty to 60 percent of “inflation” is going to increased profits, which are being used to pay big dividends to investors and to buyback over $20 billion of corporations’ own stocks in 2021 alone. (See previous posts here, here, and he re for more information on corporate consolidation and price gouging that causes “inflation.”)

UNDER-REPORTED STORY #7: Gates Foundation gifts of well over $319 million to the media and related entities. The identified gifts (the true total is undoubtedly far higher) go directly to the media, to the coverage of specific topics, and to journalism training programs and associations. These gifts raise serious questions about journalistic independence and conflicts of interest. U.S. recipients include CNN, NBC, NPR, PBS, and The Atlantic. International recipients include the BBC, Al-Jazeera, The Guardian, The Financial Times, Le Monde, and Der Spiegel. An example of funding for coverage of a specific topic is the Gates Foundation’s $2.3 million grant to the Texas Tribune to increase public awareness and engagement in education reform. Given Gates’ longstanding advocacy for charter schools, which many educators and political leaders see as an effort to privatize public education and undermine teachers’ unions, this grant could be viewed as an effort to generate pro-charter school stories that appear to be objective news reporting.

The Gates Foundation, a tax-exempt charity that frequently trumpets the importance of transparency, is often very secretive about its finances and gifts. Not included in the $319 million figure are gifts to academic journals and research targeted at producing journal articles that often end up getting reported in the mainstream media. For example, at least $13.6 million has been spent on creating content for the prestigious medical journal, The Lancet.

Major corporate media have not covered this story, despite a 2011 Seattle Times article noting that the Gates Foundation’s gifts to media organizations were blurring the line between journalism and advocacy.

My next post will summarize the last three stories that Project Censored had in its top ten list of those censored by the corporate media in 2022.

[1]      Rosenberg, P., 1/3/23, “Project Censored, Part 2: Billionaire press domination,” The American Prospect, (https://prospect.org/power/project-censored-part-2-billionaire-press-domination/)

STORIES CENSORED BY CORPORATE MEDIA Part 1

A central purpose of my blog posts is to share information that is under-reported by the mainstream, corporate media. This post and the next one will share highlights from the State of the Free Press report from Project Censored, which annually identifies its list of the most important issues that were under-reported by the corporate media. The corporate consolidation of the media – print, TV, on-line, and social media – into a handful of huge, for-profit corporations, often owned and run by billionaire oligarchs, has restricted the content and quality of the information reported and, therefore, skewed the terms and content of public debate and decision making. Project Censored works to hold the corporate news media accountable.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Over the years, Project Censored’s State of the Free Press report has identified under-reported issues involving climate change, corporate corruption, campaign financing, poverty, racism, and war. In addition, the report’s diverse contributors advocate for press freedom and media literacy as necessary to hold powerful interests accountable and to promote a just, inclusive, and democratic society. The authors note that, “History shows that consolidated media, controlled by a handful of elite owners, seldom serves the public interest.”

The corporate media’s owners filter the news they report through a class-driven frame, which they may be oblivious to. They overlook or ignore conflicts of interest between their ownership, their investors’ and their advertisers’ interests and the interests of the public that they are supposedly serving with objective news coverage. The concentration of corporate wealth and power skews or distorts what they report and, therefore, what the public learns or doesn’t learn about our society, our economy, and our policy making.

The corporate media’s self-censorship of certain stories and topics does not occur through explicit, blanket bans on reporting them, but through omission or under-reporting due to bias based on the personal perspectives of owners, some editors, and some reporters who tend to be white, male, and economically well-off. Although specific incidents of, for example, corporate corruption may be reported, the overall underlying pattern, scope, and scale of stories are often not presented. This reporting is what is referred to as “episodic,” i.e., about a specific episode or example. It lacks the context that would allow the public to truly understand the scope and scale of the issue or topic. The lack of what’s referred to as “thematic” reporting means the consumer of information is not given a complete picture or understanding of what’s happening in society, and what can and perhaps should be done to address problems, such as corporate corruption.

As a result, citizens and voters in our democratic society are under-informed, in particular about the role of government policies in shaping our economy and society. Therefore, they are ill-equipped to be knowledgeable citizens and voters in a democracy and “government based on the consent of the governed is but an illusory dream.” [1]

An overarching element of many of the under-reported stories is corporate power and sometimes outright corporate corruption. A secondary theme is the exercise of corporate power in influencing government policy making and functioning.

UNDER-REPORTED STORY #1: Public subsidy of the fossil fuel industry is over $5 trillion per year worldwide. The subsidy is largely indirect and reflects externalized costs, i.e., costs of using fossil fuels that the industry doesn’t pay. These costs include the health costs of deadly air pollution (42% of the total), damages from extreme, climate-change-driven weather events (29%), and costs of traffic accidents and congestion (15%). Two-thirds of the subsidy occurs in just five countries: the United States, Russia, India, China, and Japan. No national government sets fossil fuels prices at a level that would cover the external costs of fossil fuel use. These were key findings of an International Monetary Fund study of 191 countries published in September 2021 that was ignored by the mainstream, corporate media.

UNDER-REPORTED STORY #2: U.S. employer wage theft from workers is billions of dollars annually and goes largely unpunished. In 2017, the Economic Policy Institute released a study of one form of wage theft: minimum wage violations. It estimated that workers lose $15 billion each year to this type of wage theft, which is rarely reported by the corporate media. For the sake of comparison, street crime is heavily reported by the media, even though its financial impact is less – an estimated $14 billion in 2017 according to the FBI.

Nonetheless, employers are seldom punished for minimum wage violations that steal workers’ pay. A Center for Public Integrity report in 2021 found that over 15 years only one in four employers who were repeat offenders were fined and only 14% of those were required to pay a penalty to the aggrieved worker beyond paying the back wages they owed.

Employer wage theft also includes not paying overtime, requiring workers to work hours “off-the-clock” that they’re not paid for, and withholding tips. Most wage theft is from low-come workers, including, disproportionately, workers of color as well as immigrant and guest workers.

Another form of wage theft is misclassifying workers as independent contractors instead of employees. This has occurred with port-based truck drivers for years and has become an epidemic with the growth of gig workers in recent years. A 2014 study by the National Employment Law Center estimated that California port truckers have $800 million to $1 billion in wages stolen annually through misclassification.

Both federal and state enforcement of wage and labor laws are weak and underfunded. The Wage Theft Prevention and Wage Recovery Act of 2022 is designed to address enforcement issues but is unlikely to pass in Congress.

Given its scale, wage theft is dramatically under-reported by the corporate media. When it is covered, the reporting is episodic, focusing on a specific employer and specific employees. Thematic reporting that includes the scope of the problem, the weak enforcement, and the light punishment of offenders is very rare indeed.

UNDER-REPORTED STORY #3: EPA failed to make reports on dangerous chemicals public. In January 2019, the Environmental Protection Agency (EPA) stopped publicly releasing legally required reports about chemicals presenting a substantial risk of harm to health or the environment. By November of 2021, the EPA had received at least 1,240 reports of substantial risk of harm, but only one was publicly available.

In January 2022, Public Employees for Environmental Responsibility filed a lawsuit to force the EPA to make the reports publicly available. Within a few weeks, the EPA announced it would resume the public release of the reports. There was essentially no reporting of any of this in the corporate media.

UNDER-REPORTED STORY #4: At least 128 Members of Congress have investments in the fossil fuel industry. At least 100 U.S. Representatives and 28 U.S. Senators have investments in the fossil fuel industry. Despite detailed reporting of this in non-corporate media in late 2021, this story has been virtually ignored by the mainstream corporate media. The Senators’ investments add up to roughly $12.5 million with Senator Manchin (D-WV) topping the list with up to $5.5 million in industry investments. (Most reporting is in ranges not specific dollar amounts.) In the House, Representative Taylor (R-TX) topped the list with investments of up to $12.4 million.

Notably, many of the Members of Congress with fossil fuel investments sit on committees that have jurisdiction over energy-related policies. Therefore, they have substantial conflicts of interest as elected legislators supposedly acting in the public’s interest. By the way, the fossil fuel industry spent at least $40 million on congressional campaigns in the 2020 election cycle and spent almost $120 million on lobbying in 2020.

My next post will summarize the six other stories or topics censored by the corporate media that Project Censored had in its top ten list for the year.

[1]      Rosenberg, P., 1/2/23, “Project Censored, Part 1: Billionaire press domination,” The American Prospect, p. 1, (https://prospect.org/power/project-censored-part-1-billionaire-press-domination/)

MILITARY CORPORATIONS DISTORT DEPT. OF DEFENSE SPENDING

Large corporate contractors providing military hardware and services distort Department of Defense (DoD) spending. They inflate U.S. military spending and generate waste, abuse, and sometimes outright fraud.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The United States spends more on its military (over $800 billion a year) than the combined total of the next nine biggest military spenders: China, India, Russia, United Kingdom, Saudi Arabia, Germany, France, Japan, and South Korea. The U.S. also spends a larger share of its overall economy on military spending than its key allies, spending roughly twice the percentage of its Gross Domestic Product on the military as do the UK, France, Italy, Canada, Germany, and Japan.

U.S. military spending is roughly half of all federal government discretionary spending (i.e., spending that is authorized each year as opposed to multi-year, mandatory spending such as Social Security and Medicare). Even after adjusting for inflation, Department of Defense spending has been higher in each of the last 20 years than in any previous year since World War II. Over these 20 years, it’s been higher each year than the spike in DoD spending during President Reagan’s military build-up in the 1980s and higher than the spending peaks during the Korean and Vietnam Wars. [1]

In the budget for fiscal year 2023 that was just passed by Congress, military spending is $858 billion and spending for all other federal government programs and functions is $787 billion. There’s also $85 billion in emergency spending; $47 billion for Ukraine and $38 billion for natural disasters that occurred in 2022. These three pieces make up the $1.73 trillion overall cost of the omnibus budget bill. The $858 billion for the military is $45 billion MORE than the Biden administration requested.

This very high level of military spending in the last 20 years is due in good part to the political activities of large corporations that provide military hardware and services. These corporations have spent about $130 million a year on lobbying for the last 25 years. In addition, they have contributed about $15 million a year to candidates and political committees for the last 15 years, with a spike in contributions to $51 million for the two-year 2020 campaign cycle. This political spending targets presidential candidates and members of Congress who sit on the armed services and appropriations committees that have jurisdiction over military spending. [2] One analysis of military spending attributes excessive Department of Defense spending to three causes: corporate lobbying, pork-barrel politics, and strategic overreach.  [3]

In addition to the direct lobbying and campaign contributions of these corporations, they also pay significant amounts to trade associations and other groups lobbying for more defense spending in general, sometimes for their corporate interests explicitly, and sometimes for positions the corporations support but want to keep at arms’ length (so they are not associated with them in their shareholders’ or the public’s eyes). These groups include the U.S. Chamber of Commerce, the Business Roundtable, the National Defense Industrial Association, the Air Force Association, the Navy League, the Submarine Industrial Base Council, and state and local groups lobbying for funding for local jobs. The military contractors also provide in excess of $100 million a year to think tanks that advocate for more military spending.

Roughly half of military spending goes to contractors and about half of that, over $100 billion per year, goes to just five huge military contractors.  These five and their 2020 contract awards in billions are: Lockheed Martin ($75B), Raytheon, ($28B), General Dynamics ($22B), Boeing ($22B), and Northrop Grumman ($20B). From 2001 to 2020, these five corporations received over $2.1 trillion in DoD contracts (adjusted for inflation). These five corporations have been the five biggest recipients of government money every year since 2016 except in 2021 when Pfizer broke in due to spending on the Covid vaccine. [4] Similar to what’s happened in so many industries in the U.S. economy, mergers and acquisitions have reduced what were 51 companies in the 1990s to just these five huge, powerful, politically active corporations.

The Department of Defense’s growing reliance on private contractors raises issues of accountability and transparency, increases risks of waste and fraud, and creates perverse, profit-driven incentives. The five huge military contractors are spending about $40 to $50 million a year on lobbying. Overall, the defense industry hires about 700 lobbyists each year to lobby the executive branch and the 435 members of Congress. The majority of these lobbyists have come through the revolving door from jobs in Congress, the DoD, or other military-related positions in the executive branch of the federal government.

Further evidence of the revolving door is one study’s finding of 645 instances in 2018 alone of the top 20 military contractors hiring former members of Congress or their staffs, ex-military officers, or former executive branch officials. The revolving door turns the other way as well and, for example, four of the past five Secretaries of Defense came from the top five military contractors. [5]

The very high level of U.S. military spending is not necessary to keep the country safe. The DoD (which has never passed an audit) and its contractors are known for significant waste, abuse, and sometimes outright fraud. For example, the F-35 jet fighter may never fly a combat mission because of its hundreds of defects and problems. Nonetheless, the Defense Department has contracted for 2,400 of the planes at a multi-year cost of $200 billion. Lockheed Martin, which builds the plane, spends about $13 million a year on lobbying and $7 million on campaign contributions. This, and its exaggerated claims about the number of jobs the F-35 program creates (which it breaks down by state), have pushed Congress to approve spending for even more planes than the DoD asked for! [6]

One straightforward but valuable step that could be taken to address the issue of corporate influence on DoD spending would be for President Biden to issue an executive order requiring companies with significant government contracts to disclose all their direct and indirect political spending. Such transparency would allow the public and our elected officials to better understand and counteract the military contractors’ self-serving lobbying and campaign activities.

I urge you to contact President Biden and to ask him to require the disclosure of all political spending by government contractors. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

[1]      Hartung, W. D., 9/13/21, “Profits of war: Corporate beneficiaries of the post-9/11 Pentagon spending surge,” Watson Institute, Brown University (https://watson.brown.edu/costsofwar/files/cow/imce/papers/2021/Profits%20of%20War_Hartung_Costs%20of%20War_Sept%2013%2C%202021.pdf)

[2]      Open Secrets, Retrieved from the Internet 12/28/22, “Summary of defense industry political spending,” (https://www.opensecrets.org/industries/indus.php?Ind=D)

[3]      Williams, J., & Hartung, W. D., 8/14/22, “Secret spending by the weapons industry is making us less safe,” The Hill (https://thehill.com/opinion/national-security/3588029-secret-spending-by-the-weapons-industry-is-making-us-less-safe/)

[4]      Giorno, T., & Timotija, F., 11/3/22, “Defense sector spent $101 million on lobbying during the first three quarters of 2022.,” Open Secrets (https://www.opensecrets.org/news/2022/11/defense-sector-spent-101-million-lobbying-during-first-three-quarters-of-2022/)

[5]      Hartung, W. D., 9/13/21, see above

[6]      Williams, J., & Hartung, W. D., 8/14/22, see above

CORPORATE POWER AND A BIT OF ACCOUNTABILITY

Large corporations wield enormous power in our economy with little accountability. There’s a little good news on the accountability front and more evidence, both in general and in specific examples, of their power in creating “inflation.”

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

First, the good news. The Consumer Financial Protection Bureau (CFPB) is proposing a registry of finance companies whose violations of consumer protection laws are the subjects of criminal or other legal action. The registry would allow consumers, both individuals and small businesses, to check on the performance of finance companies before engaging in business with them, such as obtaining mortgages or other loans. It would help the CFPB track and oversee corporations that repeatedly break consumer protection laws. The registry would also help CFPB more effectively share information with other regulators and law enforcement agencies. [1]

Then, there’s the bad news. It’s become crystal clear that consumers are suffering from substantial increases in the cost of living because big corporations are increasing prices to increase their profits. Although costs for corporations have increased, they have increased their prices to more than cover their costs. As a result, their profits have soared to their highest levels in 70 years. In 2020 and 2021, increased profits were responsible for over 53% of the increase in prices. [2] Workers’ wages have increased somewhat, but not enough to keep up with the increases in the costs of food, baby formula, cars, gasoline, housing, drugs (including insulin), and other essential needs. [3]

Big corporations have the power to increase prices more than their costs have increased because 40 years of deregulation, consolidation, and lax antitrust enforcement have resulted in mega-corporations with monopolistic economic power. This hyper-capitalism creates great economic inequality and threatens our democracy. (See previous posts here and here about the threat to democracy; here, here, and here about how this has shifted our economy and political system toward oligarchy; and here about the effects of deregulation and consolidation.)

Here’s the really bad news. As corporations’ costs are starting to decline and supply chain delays are easing, they have no intentions of reducing prices – they just plan to increase their profits even more. The Groundwork Collaborative has documented hundreds of examples of corporate CEOs telling investors that they have used Covid-related reasons to jack up prices and profits and, furthermore, that they have no intentions of reducing prices as costs come down. This means they will further increase profits beyond their already record levels! Corporate executives from corporations ranging from the Kroger supermarket super chain, to toy-maker Mattel, to food-makers Hostess, Hormel, J.M. Smucker, and Kraft Heinz, to Proctor and Gamble, to Autozone, to paint and chemical giant company PPG have all boasted to investors about their increased profitability and their plans to increase profits even more – while consumers and workers struggle to survive high “inflation” due to corporations’ price gouging.

Because corporate power and profits are the main drivers of “inflation” (exacerbated and facilitated by pandemic-related supply chain problems and the war in Ukraine), Federal Reserve interest rate increases aren’t likely to be very effective in reducing inflation. They will, however, hurt workers by increasing unemployment, hurt home buyers by increasing mortgage rates, and hurt small businesses and home builders by increasing the interest costs for their loans.

Three strategies that would be more effective in addressing the current brand of “inflation” than increasing interest rates are:

  • A windfall profits tax,
  • Closing loopholes in antitrust laws to prevent corporations from colluding to increase prices (i.e., engaging in price fixing), and
  • Better enforcement of antitrust laws to reduce the monopolistic power of mega-corporations over for the longer-term.

There are bills in Congress that would institute a windfall profits tax. Senator Bernie Sanders (I-VT) has introduced legislation that would put such a tax on a broad range of companies, while other bills have focused on the oil and gas industry. [4] Eighty percent (80%) of U.S. voters support a windfall profits tax. (See this previous post for more details.) [5]

A bill to prohibit price gouging during market disruptions such as the current pandemic, the Price Gouging Prevention Act of 2022, has been introduced by Senators Elizabeth Warren (D-MA) and Tammy Baldwin (D-WI), along with Representative Jan Schakowsky (D-IL). It would empower the Federal Trade Commission (FTC) and state attorneys general to enforce a ban on excessive price increases. It would require public companies to report and explain price increases in their quarterly filings with the Securities and Exchange Commission. (See this previous post for more details.) [6]

The Competitive Prices Act, which would close antitrust loopholes that have allowed blatant price fixing and collusion to go unpunished, has been introduced by Representative Katie Porter (D-CA). For example, the three dominant makers of insulin have for years increased their prices in lock step. [7] Porter’s bill would make this illegal. [8]

I urge you to contact President Biden and your U.S. Representative and Senators to ask them to support the CFPB’s proposed corporate criminal registry and to take steps, including a windfall profits tax, to reduce corporate price gouging and price fixing. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Conley, J., 12/13/22, “CFPB applauded for proposing ‘public rap sheet’ for corporate criminals,” Common Dreams (https://www.commondreams.org/news/2022/12/13/cfpb-applauded-proposing-public-rap-sheet-corporate-criminals)

[2]      Bivens, J., 4/21/22, “Corporate profits have contributed disproportionately to inflation. How should policy makers respond?” Economic Policy Institute (https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond/)

[3]      Becker, C., 12/19/22, “Understanding corporate power and inflation,” Common Dreams (https://www.commondreams.org/views/2022/12/16/understanding-corporate-power-and-inflation)

[4]      Corbett, J., 7/29/22, “Price gouging at the pump results in 235% profit jump for big oil: Analysis,” Common Dreams (https://www.commondreams.org/news/2022/07/29/price-gouging-pump-results-235-profit-jump-big-oil-analysis)

[5]      Johnson, J., 6/15/22, “With US consumers ‘getting fleeced,’ Democrats demand windfall profits tax on big oil,” Common Dreams (https://www.commondreams.org/news/2022/06/15/us-consumers-getting-fleeced-democrats-demand-windfall-profits-tax-big-oil)j

[6]      Johnson, J., 5/12/22, “New Warren bill would empower feds to crack down on corporate price gouging,” Common Dreams (https://www.commondreams.org/news/2022/05/12/new-warren-bill-would-empower-feds-crack-down-corporate-price-gouging)

[7]      Pflanzer, L. R., 9/16/16, “A 93-year-old drug that can cost more than a mortgage payment tells us everything that’s wrong with America’s healthcare,” Business Insider https://www.businessinsider.com/insulin-prices-increase-2016-9

[8]      Owens, L, 10/30/22, “Who’s really to blame for inflation,” The Boston Globe

THE RAILROAD SETTLEMENT SHORTCHANGES WORKERS

As you’ve probably heard, the threat of a railroad workers’ strike was ended by a new contract imposed by the federal government. The Biden administration brokered a tentative agreement last September after almost three years of unsuccessful bargaining by the workers’ unions and the railroad corporations. However, some of the workers’ unions voted against the proposed settlement, largely because they didn’t feel it adequately addressed some quality-of-life issues; in particular, it lacked paid sick days.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

Four of the 12 railroad workers’ unions, but those representing a majority of the workers, voted against the proposed contract, which included only one paid sick day. Congress passed a bill that President Biden signed which has imposed the proposed contract on railroad workers because a rail strike would have had serious negative effects on the economy, which is never a good thing but especially not just before the December holidays.

The new contract that was imposed, which covers 115,000 workers, would:

  • Allow workers to take days off for medical care without being penalized, but only one of those days would be paid. (The unions had asked for 15 days of paid sick leave.)
  • Increase pay by 24% over five years, going back to 2020 when the last contract expired, bringing the average workers’ pay to $110,000 in 2024.
  • Provide more worker-friendly work schedules.
  • Keep workers’ health care premiums at current levels.

In addition to the bill imposing the contract, a separate bill was passed by the House but rejected by the Senate (the vote was 52 in favor, including six Republicans, but the filibuster requires 60 votes to pass) that would add seven days of paid sick time to the contract. This paid sick time would cost the railroad corporations an estimated $321 million a year. Given the over $20 billion a year in profits the six big railroad corporations are making, this is less than 2% of their record profits.

President Biden could require the railroads to provide seven paid sick days to the railroad workers through an executive order. An executive order from President Obama required companies with federal contracts to provide seven paid sick days. The railroads, which all have large, long-standing federal contracts, were exempted. President Biden could remove this exemption. Over 70 Democrats in Congress and union supporters are urging him to do so. [1] [2]

I urge you to contact President Biden to ask him to require the railroad corporations to provide their workers seven paid sick days per year. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

The background for all of this is that the railroad industry is a textbook example of the extreme capitalism our current laws allow. The railroad corporations are generating very large profits for shareholders (including executives) while workers are getting squeezed very hard. Fortunately, the railroad workers are in a union so they have some power to fight back.

Extreme capitalism has allowed the railroad corporations, through consolidation, deregulation, and aggressive personnel policies, to gain so much power that they have been providing huge returns to shareholders while making life miserable for their employees. Since 1980, through mergers and acquisitions (that our government has failed to stop under antitrust laws), the 40 major railroad corporations have become six (Burlington Northern and Santa Fe [BNSF], Union Pacific, CSX, Canadian National, Norfolk Southern, and Canadian Pacific). Four of them have roughly 85% of the freight business and they operate with monopolistic power in much of their service territories. [3] (See this previous post for more background.)

The profit margin in the industry (the percentage of revenue that is profit) has soared from 15% in 2001 to 40% in 2021. A big part of this increased profitability is that the portion of revenue dedicated to paying employees has dropped from 34% to 20%. [4] In 2019, the freight railroad industry was the most profitable industry in the country with a 51% profit margin. [5]

These record profits are, for the most part, NOT being reinvested in the businesses but are being used to reward shareholders (including executives) through the buying of the corporations’ own stock and paying dividends. For the industry as a whole, these stock buybacks and dividends have totaled over $200 billion since 2010, averaging over $15 billion per year, and they are continuing. [6]

The railroad corporations have cut staff by one-third since 2016 and over 70% since 1980 as total employment in the railroad industry has dropped from 500,000 to under 135,000. This reduced workforce is generating more profits than ever for their employers but hasn’t gotten a wage increase in almost three years as their contract negotiations have dragged on and on.

Many have called the working conditions at the railroads inhumane. Workers’ schedules have been unpredictable as they have been on-call 24/7. The railroads are so thinly staffed that they can’t allow employees any flexibility and need to have them on-call at all times to keep the trains running. Workers had been penalized if they took a day off to go to the doctor or deal with a medical need. The safety of the workers and the communities the trains run through is being compromised.

It’s ironic that railroad executives, who regularly complain about and oppose government regulation, turned to the federal government to impose a contract on their workers. [7]

[1]      Meyerson, H., 12/2/22, “The rail impasse: Your questions answered,” The American Prospect (https://prospect.org/labor/rail-impasse-your-questions-answered/)

[2]      Conley, J., 12/9/22, “70+ lawmakers tell Biden ‘You can and you must’ provide rail workers paid sick leave,” Common Dreams (https://www.commondreams.org/news/2022/12/09/70-lawmakers-tell-biden-you-can-and-you-must-provide-rail-workers-paid-sick-leave)

[3]      Buck, M. J., 2/4/22, “How America’s supply chains got railroaded,” The American Prospect (https://prospect.org/economy/how-americas-supply-chains-got-railroaded/)

[4]      Gardner, E., 9/13/22, “Rail strike by the numbers: Railroad profits are soaring at workers’ expense,” More Perfect Union (https://perfectunion.us/rail-profits-soaring-at-workers-expense/)

[5]      Buck, M. J., 2/4/22, see above

[6]      Stancil, K., 9/19/22, “While fighting workers, railroads made over $10 billion in stock buybacks,” Common Dreams (https://www.commondreams.org/news/2022/09/19/while-fighting-workers-railroads-made-over-10-billion-stock-buybacks)

[7]      Johnson, J., 11/25/22, “One day of Warren Buffett wealth gains could fund 15 days of paid sick leave for rail workers,” Common Dreams (https://www.commondreams.org/news/2022/11/25/one-day-warren-buffett-wealth-gains-could-fund-15-days-paid-sick-leave-rail-workers)

MEMBERS OF CONGRESS INTERFERED WITH FTX INVESTIGATION

Last March, eight members of Congress, dubbed the “Blockchain Eight,” meddled in an investigation of cryptocurrency companies that included the FTX exchange that just went bankrupt. They wrote a letter to the Securities and Exchange Commission (SEC) trying to bully it into easing off on its investigation of cryptocurrency companies. Representative Emmer (R-MN) was the lead author of the letter that was signed by three other Republicans [Reps. Budd (NC), Davidson (OH), and Donalds (FL)] and four Democrats [Reps. Auchincloss (MA), Gottheimer (NJ), Soto (FL), and Torres (NY)]. [1]

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The Securities and Exchange Commission (SEC) is an independent regulatory and law enforcement agency whose investigations are not supposed to be influenced by politicians. However, the letter the Blockchain Eight sent questioned the SEC’s authority for making information requests to cryptocurrency companies and stated (inaccurately) that the requests might violate federal law. It said that the crypto companies found the requests “overburdensome” and that they were “stifling innovation.” The crypto industry’s complexity and opacity, along with its history of evading sanctions, concealing transactions, and defrauding investors, all make an SEC investigation into it more than appropriate. [2]

The SEC’s investigation of FTX was relevant to its possible mishandling of customer funds, which is what led to its bankruptcy. FTX was improperly transferring customers’ funds to an associated trading company, Alameda Research, which used them to engage in speculative transactions. Ironically, at a congressional hearing back in December 2021, Rep. Emmer told FTX’s CEO Bankman-Fried, “Sounds like you’re doing a lot to make sure there is no fraud or other manipulation.”

U.S. Representative Emmer (R-MN) was clear in a Tweet he sent in March 2022 that the Blockchain Eight’s letter was in response to complaints from crypto companies and that the intent was to stop the SEC’s investigation. He wrote that crypto companies “must not be weighed down by extra-jurisdictional and burdensome reporting requirements. We will ensure our regulators do not kill American innovation.” Simultaneously, Rep. Torres had an op-ed published that called for New York State to loosen its regulation of the crypto industry. However, many experts believe the crypto industry is seriously under-regulated.

It’s unclear whether or not the Blockchain Eight were acting based on a direct request from FTX in their effort to slow or stop the SEC’s investigation. In any case, it’s inappropriate for members of Congress to interfere in an on-going investigation. There are both congressional ethics rules and federal laws that prohibit political interference in investigations.

Five of the eight signers of the letter had received campaign contributions from FTX and/or its employees: Emmer and Gottheimer each got $11,600, Auchincloss got $6,800, and Budd and Torres each received $2,900. Rep. Budd had also received $500,000 from a Super PAC created by FTX co-CEO Ryan Salame. In the 2022 election cycle, with Rep. Emmer as chair of the House Republicans’ campaign committee, its PAC received $5.5 million from FTX-related sources. In 2021, the overall crypto industry contributed $7.3 million to political campaigns and committees.

The House Financial Services Committee has announced hearings into the FTX bankruptcy. Perhaps not surprisingly, six of the Blockchain Eight are on the committee: Emmer, Gottheimer, Auchincloss, Budd, Davidson, and Torres.

The FTX bankruptcy hasn’t stopped Rep. Emmer from supporting the crypto companies. At a recent event of the Blockchain Association, the crypto industry’s trade group, he promoted cryptocurrency and opposed regulation of the industry. Furthermore, Emmer and the other Republican letter signers have tried to blame the SEC and its Chair, Gary Gensler, for the FTX bankruptcy and have peddled conspiracy theories about ties between Gensler, the SEC, and FTX.

Among other things, the SEC has been investigating whether FTX and other crypto companies are creating securities that should be registered with the SEC. The Blockchain Eight’s letter criticized the SEC for “employing … investigative functions to gather information from unregulated cryptocurrency and blockchain industry” companies. However, this is exactly what the SEC should be doing – investigating whether securities that should be registered and regulated are being created by crypto companies.

The revolving door of personnel moving between related government and private sector jobs is very evident in the crypto industry and with its lobbyists. The Blockchain Association’s director of government affairs is the former financial services policy expert for Rep. Davidson. Many of the other lobbyists for the crypto industry are former regulators or other government officials, including three former SEC Chairs, three former Chairs of the Commodities Futures Trading Commission, a former Treasury Secretary, a former White House chief of staff, and three former Senators.

The crypto industry is actively using all three government influencing strategies – campaign spending, lobbying, and the revolving door – in its efforts to avoid regulation. Meanwhile, many customers are losing money in the basically unregulated cryptocurrency financial markets.

The Blockchain Eight’s letter is eerily reminiscent of the Keating Five scandal in 1987 that was part of the Saving and Loan debacle. Back then, five Senators pressured bank regulators into shutting down an investigation into Charles Keating’s Lincoln Savings and Loan bank. Keating had donated $1.3 million to the five Senators’ campaigns over a number of years. Shortly after the shutdown of the investigation, Lincoln went bankrupt, costing the government and taxpayers $3.4 billion. This was a piece of the nationwide Savings and Loan debacle and bailout that cost the federal government and taxpayers $125 billion. Keating was convicted of fraud and served time in jail. The Senate Ethics Committee found that three of the five Senators had improperly interfered with a federal investigation.

I urge you to contact President Biden and your U.S. Representative and Senators to ask them to support strong regulation of the crypto industry. Enough people have lost enough money that strong regulation is clearly needed. Also encourage them to ensure that a thorough investigation of the FTX bankruptcy occurs and that appropriate punishments and sanctions are meted out to companies and individuals that were involved.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Sammon, A., 3/21/22, “The eight Congressmen subverting the SEC’s crypto investigation,” The American Prospect (https://prospect.org/power/eight-congressmen-subverting-secs-crypto-investigation/)

[2]      Dayen, D., 11/23/22, “Congressmembers tried to stop the SEC’s inquiry into FTX,” The American Prospect (https://prospect.org/power/congressmembers-tried-to-stop-secs-inquiry-into-ftx/)

GIVING THANKS FOR FREE, READER-SUPPORTED MEDIA

I give thanks for news and information sources that are not-for-profit, reader-supported, and free, given that the mainstream media are large, for-profit corporations. Unconstrained by a corporate, for-profit mindset and dependence on advertisers for revenue that both skew “news” toward infotainment to attract attention and capitalistic viewpoints to please corporate bosses and advertisers, reader-supported media provide valuable information and perspectives that go unreported by the mainstream media.

(Note: If you find my posts too much to read on occasion, feel free to read just read the bolded portions. They present the key points I’m making.)

The mainstream media are NOT liberal on economic issues, despite the decades of assertions by the right-wing that they are. They may be liberal on social issues such as abortion rights, LGBTQ+ issues, and gun violence reduction, but they are NOT liberal on economic issues such as business and Wall St. regulation, taxes, workers’ rights, economic inequality, and enforcement of antitrust laws.

My favorite progressive (or liberal if you like), print (hardcopy and online), non-profit, free, reader-supported publications with a focus on news and public policy are presented below. I’m sure there are others but these are more than sufficient to keep me busy and informed with in-depth, accurate information, thoughtful perspectives, and expert policy analysis. You can sign-up for daily or weekly emails from them that highlight their current content.

Take even a quick look at any of these sources of news, information, and analysis and I believe you’ll quickly agree with me that the mainstream media are NOT liberal or progressive!

Common Dreams: Founded in 1997, it lists its mission as: “To inform. To inspire. To ignite change for the common good.” Its website further states: “We are optimists. We believe real change is possible. But only if enough well-informed, well-intentioned – and just plain fed up and fired-up – people demand it. We believe that together we can attain our common dreams.” It only publishes online and delivers daily or weekly emails with summaries of and links to its relatively short articles covering current news.

The Hightower Lowdown: This entertaining, irreverent, progressive populist newsletter is written by Jim Hightower. Hightower worked in Congress, was twice elected Texas Agriculture Commissioner (1983 – 1991), and “has long chronicled the ongoing democratic struggles by America’s ordinary people against rule by its plutocratic elites.” The Lowdown is available in print, online, and on the airwaves.

The American Prospect: In my opinion, this magazine and website deliver the best and most comprehensive progressive policy content. Its stated mission is “to tell stories about the ideas, politics, and power that shape our world.” It is “devoted to promoting informed discussion on public policy from a progressive perspective.” It identifies “policy alternatives and the politics necessary to create [and enact] good legislation.”

The Nation: It publishes progressive, independent journalism that “encourages debate, foments change, and lifts up the voices of those fighting for justice.” Founded by abolitionists in 1865, it believes that provocative, independent journalism can bring about a more democratic and equitable world. It provides thoughtful and investigative reporting that “speaks truth to power to build a more just society.” It’s available both online and in print.

Mother Jones: Founded in 1976, it’s “America’s longest-established investigative news organization.” Its mission is to deliver “reporting that inspires change and combats ‘alternative facts.’” It provides in-depth stories on a wide range of subjects including politics, criminal and racial justice, education, climate change, and food and agriculture. Its fellowship program is one of the premier training grounds for investigative journalists. It is available in print, online, and via videos and podcasts.

ProPublica: It was founded in 2007 with the beliefs that investigative journalism and informing the public about complex issues are crucial for our democracy. Its mission is “to expose abuses of power and betrayals of the public trust by government, business, and other institutions, using the moral force of investigative journalism to spur reform through the sustained spotlighting of wrongdoing.” With more than 100 journalists, it covers topics including government, politics, business, criminal justice, the environment, education, health care, immigration, and technology with in-depth, detailed articles.

If you prefer video content to print, I recommend Inequality Media. Its vision is “a United States where active participation by informed citizens restores the balance of power in our democracy and creates an economy where gains are widely shared.” Its mission is “to inform and engage the public about inequality and the imbalance of power” in U.S. society. Founded in 2015, its short videos are “entertaining and easy to understand [with] graphics, photos, and animations.”  It focuses on current news and explains it in a way that ties it to the larger story of needed social change to create a more equitable economy and a more stable democracy.

I urge you to read and, if you can, support financially one or more of these organizations. In the current hyper-capitalistic, plutocratic economic and political environment in the U.S., we need these sources of non-profit, reader-supported journalism to support a well-informed citizenry, democratic governance, and the relatively level economic playing field democracy requires. Today’s mainstream media are simply not performing these responsibilities of the media in a democracy. As Supreme Court Justice Louis Brandeis stated, “we can have democracy in this country or we can have great wealth concentrated in the hands of the few, but we can’t have both.”

ITS TIME TO TAKE ON AMERICAN CORPORATOCRACY

Corporate power and influence in the American economy and policy-making process are evident on multiple fronts: from bankruptcy laws, to tax laws, to the failure to enforce antitrust laws that has led to huge, monopolistic corporations that drive “inflation” with price gouging. The bottom line of all this is that in 2022 corporations are realizing their highest profit margins in 70 years while consumers are coping with the highest “inflation” in 40 years. This is on top of the record corporate profits in 2021 of $2.8 trillion, up 25% from the previous year.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

The U.S. bankruptcy system reflects a huge double standard with much more favorable rules for corporations than for individuals. Individuals who file for bankruptcy have their credit ruined and their economic security upended. They can’t get rid of student loans or mortgages. Credit card debt is very difficult to escape. Senator Elizabeth Warren (D – MA), an expert in bankruptcy law and leader of the 1995 National Bankruptcy Review Commission, fought for years to keep the banks and credit card industry from toughening bankruptcy laws for individuals (but not for corporations). She lost that battle in 2005. [1]

On the corporate front, the current example is the bankruptcy of the FTX cryptocurrency exchange. Its CEO Sam Bankman-Fried (now ex-CEO) hired a top-notch team of bankruptcy lawyers (who will collect a small fortune in fees) who tried to get the bankruptcy judge to let FTX write off its debts (and cheat its customers), while allowing Bankman-Fried to retain control of the company. They argued to the judge that, although Bankman-Fried and his associates drove the company into bankruptcy, because of their knowledge of the company and what happened, they were best positioned to recover as much money as possible.

Bankruptcy judges often let corporate executives keep control of their bankrupt companies because of their knowledge of the company and its situation. Fortunately, the judge in the FTX case didn’t. However, this is a standard tactic that private equity and vulture capitalists have used in pillaging companies, including Sears Roebuck, for example. By the way, one of the goals of using the bankruptcy process is that it lets companies break union contracts and escape the debt that workers’ pension plans represent. So, current corporate bankruptcy laws treat corporate executives and owners much better than they treat workers.

Senator Warren has proposed a fundamental reform of U.S. bankruptcy laws in the Consumer Bankruptcy Reform Act. In the meantime, bankruptcy judges should stop letting executives keep control of companies that they have driven into bankruptcy.

On the tax law front, despite their record profits, corporations are asking Congress to renew and extend special tax loopholes that would cost the government about $60 billion a year. Despite the 40% federal income tax cut corporations got from the December 2017 tax cut bill that Trump and congressional Republicans rammed through, corporations are asking for tax cuts in a 2022 end-of-year budget bill. They want to be able to write-off as immediate expenses assets they purchase and research costs, both of which are more appropriately spread out over many years. They also want to be able to deduct a larger share of interest expenses. Deducting large interest expenses is a key factor in making leveraged buyouts by private equity and vulture capitalist firms financially viable. [2]

Instead of more tax cuts for wealthy corporations and vulture capitalists, corporate taxes should be increased (by repealing at least part of the 2017 tax cuts), the corporate minimum tax should be strengthened (so wealthy corporations can’t dodge paying income tax), and offshore corporate tax loopholes should be closed. Offshore loopholes incentivize corporations to shift jobs and profits to tax havens, which results in about $60 billion in lost U.S. tax revenue each year. Globally, it is estimated that $312 billion a year in government revenue is lost to cross-border tax abuse by multi-national corporations. The Organisation for Economic Cooperation and Development, made up of 38 rich countries, enables this by failing to require corporations to disclose profit-shifting to tax havens, despite a formal international request to do so. [3]

Some members of Congress and various advocacy groups are working to rein in the American corporatocracy, its power and influence, and the unfair policies that they have produced. For example, the economic justice advocacy organization, Fight Corporate Monopolies, recently released it Corporate Power Agenda, which consists of 19 policy recommendations including: [4]

  • Strengthening antitrust enforcement to protect small businesses and consumers from monopolization, which has been evident in 75% of U.S. industries over the last 20 years,
  • Banning stock buybacks, which enrich investors and executives while hurting workers and other stakeholders, and which were an illegal form of market manipulation until 1982,
  • Reining in private equity and vulture capitalists by passing the Stop Wall Street Looting Act,
  • Fixing tax laws to ensure that corporations pay their fair share of taxes,
  • Passing the Protecting the Right to Organize (PRO) Act to support workers’ collective bargaining in the face of the growing power of huge corporate employers,
  • Outlawing price fixing and price gouging, including passing the Ending Corporate Greed Act and instituting a windfall profits tax,
  • Blocking employers from requiring employees to sign “non-compete” agreements that prevent many workers, including low-wage workers, from going to work for a competitor,
  • Closing campaign finance law loopholes that effectively allow Political Action Committees (PACs), funded by wealthy corporations and individuals, to coordinate with candidates’ campaigns, and
  • Stopping bailouts of huge corporations.

I urge you to contact President Biden and your U.S. Representative and Senators to ask them to take on the American corporatocracy, and to rein in corporate power and influence in our economy and politics. Ask them to pass a windfall profits tax and other tax laws to ensure corporations are paying their fair share of taxes and aren’t price gouging consumers. Ask them to make bankruptcy laws fairer so corporate executives don’t get a free pass while individuals have their economic security ruined. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Kuttner, R., 11/16/22, “Bankman and the bastardization of bankruptcy,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/bankman-and-the-bastardization-of-bankruptcy/)

[2]      Americans for Tax Fairness, retrieved from the Internet 11/19/22, “Congress should raise, not cut, corporate taxes during the lame-duck session,” (https://americansfortaxfairness.org/wp-content/uploads/Lame-Duck-Corporate-Tax-Breaks-Fact-Sheet-1.pdf)

[3]      Johnson, J., 11/15/22, “Secrecy enabled by rich countries lets corporations dodge $90 billion in taxes per year,” Common Dreams (https://www.commondreams.org/news/2022/11/15/secrecy-enabled-rich-countries-lets-corporations-dodge-90-billion-taxes-year)

[4]      Conley, J., 11/15/22, “Democrats urged to embrace agenda to combat crisis of ‘corporate power’ in US,” Common Dreams (https://www.commondreams.org/news/2022/11/15/democrats-urged-embrace-agenda-combat-crisis-corporate-power-us)

MEDICARE ADVANTAGE IS A PRIVATIZATION FRAUD

Medicare’s open enrollment period occurs each year from mid-October to early December. In this window, private insurers deluge seniors with ads for their privatized versions of Medicare, called Medicare Advantage plans. Rather than allowing more and more seniors to enroll in these slickly marketed for-profit plans, they should be eliminated because they undermine Medicare and our health care system with fraud and other schemes that reduce health care quality while overbilling the federal government. Roughly half of the Medicare population, almost 30 million seniors, are now enrolled in this privatized version of Medicare.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

Medicare was created in 1965 when people over 65 found it virtually impossible to get private health insurance coverage. It made health care a universal right for Americans 65 and over. It improved the health and longevity of older Americans, as well as their financial security. Initially, Medicare consisted solely of a public insurance program that included all seniors.

Today, a mixed public-private health insurance market exists under Medicare. The Medicare-eligible population has been able to enroll in private health insurance plans since the 1980s. The private, for-profit health insurance industry pushed hard for a privatized option under Medicare; they wanted the opportunity to sell insurance to the large, population of seniors. They claimed they could deliver better quality services at lower cost due to their efficiencies, thereby saving Medicare money. However, these promised efficiencies never materialized and it became clear that the private insurers were simply looking for a way to increase their profits. For example, the typical administrative overhead for Medicare Advantage plans, including profits, is around 15% – 20% of premiums paid, while for traditional, government-operated Medicare it’s around 2%. [1] [2]

Medicare Advantage plans should be eliminated for the following four reasons:

  • They have become very skillful at paying as little as possible for enrollees’ health care services in order to maximize profits for themselves. They attract seniors by offering low or no premiums and special benefits (such as dental or vision coverage, or a subsidized health club or gym membership). However, they typically have high out-of-pocket costs, restrictive networks of providers, and requirements for pre-authorization of services. Through their marketing, they work to attract healthier-than-average enrollees to minimize their costs; this is called cherry-picking. By restricting or denying access to care, they cut costs and often drive sicker enrollees to leave, further lowering their costs; this is referred to as lemon-dropping.
  • They game the reimbursement system by over-reporting the seriousness or even the number of illnesses or health conditions of their enrollees; this is called “upcoding”. It makes the enrollees appear to be sicker than they are and therefore eligible for more or higher reimbursements from Medicare. For example, knee pain can be reported as arthritis and an episode of distress can be reported as major depression, even if no services are provided for the more serious diagnosis. Efforts by Medicare to police upcoding result in significant administrative costs and a cat and mouse game where the private insurers find new ways to game the system as old ones are brought under control. Multiple studies and investigations have documented rampant, fraudulent upcoding. Estimates of its cost to Medicare range from $10 to $25 billion a year. (This is enough money to pay for adding vision and hearing coverage for everyone eligible for Medicare.) Almost every major insurer has been charged with upcoding fraud by the government or a whistleblower.
  • They have been very effective at limiting regulation and enforcement by contributing money to members of Congress, spending significantly on lobbying, and using the revolving door to move people back and forth between jobs at the insurance companies and at the government agencies that oversee Medicare. For example, U.S. Representative Richard Neal (D – MA), Chair of the House Ways and Means Committee, which oversees all government spending, has received $3.1 million in campaign contributions from the insurance industry.
  • Their profit motive inevitably provides perverse incentives to skimp on enrollees’ care and engage in fraud to maximize payments from Medicare. One study found that insurers make twice as much profit on Medicare Advantage plans as they do on other types of insurance. Medicare Advantage was supposed to lower Medicare spending and save the government money; instead, it costs the government substantially more per enrollee than traditional Medicare.

Furthermore, a mixed public-private health insurance system can’t achieve the efficiencies and quality of traditional Medicare because private insurers:

  • Fragment the pool of insured people undermining the basic theory and efficiency of insuring large groups of diverse individuals,
  • Have no financial incentive to maintain the long-term health of their enrollees, and
  • Spend a large portion of premiums on overhead and profits. (See this previous post for more details.)

(Previous posts provide more details on Medicare Advantage and why it can’t work and needs to be eliminated.)

Bills have been introduced in Congress to reduce payments to Medicare Advantage insurers, to increase regulation and oversight, and to end Medicare Advantage (and a related, even more insidious pilot program, called ACO REACH, which puts seniors into privatized plans without their consent or knowledge). Furthermore, a bill has been introduced to ban private insurers from using the term “Medicare” in the titles and ads for their plans. [3] This would reduce confusion for seniors and curb misleading advertising. In particular, this would reduce the confusion between Medicare Advantage plans and Medicare Supplemental Insurance (often called Medigap insurance) that covers health care not covered by traditional Medicare (i.e., it fills “gaps” in Medicare, such as coverage for dental, vision, and hearing care). Medigap insurance is also sold by private insurers and adds coverage on top of Medicare, while a Medicare Advantage plan is a replacement for Medicare.

I urge you to contact President Biden and your U.S. Representative and Senators to ask them to eliminate Medicare Advantage because it is a rip off of Medicare and undermines our health care system. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Rogers, S., 8/25/22, “Comment on Request for Information: Medicare Advantage program,” Physicians for a National Health Program (https://pnhp.org/system/assets/uploads/2022/08/PNHPMedicareAdvantageComment_Aug2022.pdf)

[2]      Stancil, K., 10/9/22, “ ‘Straight up fraud’: Data confirms private insurers use Medicare Advantage to steal billions,” Common Dreams (https://www.commondreams.org/news/2022/10/09/straight-fraud-data-confirms-private-insurers-use-medicare-advantage-steal-billions)

[3]      Johnson, J., 10/14/22, “New bill would ban private insurance plans from using ‘Medicare’ name,” Common Dreams (https://www.commondreams.org/news/2022/10/14/new-bill-would-ban-private-insurance-plans-using-medicare-name)

WELL-KNOWN COMPANIES ARE SUPPORTING ELECTION DENIERS

My last four posts have been about the record spending by wealthy individuals and corporations in the 2022 elections, its corruption of democracy, and what we can do about it. (See previous posts here and here for some details about the spending and here and here for what we can do about it.) This post focuses on corporations that are giving money to the 147 Republicans in Congress who voted against certifying the 2020 presidential election. In particular, it focuses on those corporations that announced a suspension of contributions to those 147 members of Congress after the January 6, 2021, storming of the Capitol, but have now resumed supporting them.

(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)

For an overall perspective on the huge amounts of money being spent on the election, Open Secrets now projects that spending on the 2022 federal and state elections will set a record and will exceed $16.7 billion. Spending on federal races is projected to be $8.9 billion and has already surpassed the 2018 record for a mid-term election of $7.1 billion (adjusted for inflation). Federal election spending in non-presidential years has increased from almost $5 billion in 2014 to over $7 billion in 2018 (up 48%) and to a projected nearly $9 billion in 2022 (up 25%). (Prior year figures are adjusted for inflation.) [1]

Spending on state elections, including ballot questions, is projected to be $7.8 billion, which would exceed the 2018 record of $6.6 billion. State election spending has increased from $4.6 billion in 2014 to roughly $7.0 billion in 2018 (up 52%) and to a projected $7.8 billion in 2022 (up 11%). (Prior year figures are adjusted for inflation.)

At least 228 of the Fortune 500 largest American companies have made contributions totaling over $13 million to Republicans that voted against accepting the 2020 presidential election results. (Millions of dollars in companies’ contributions to Republican Party committees are NOT included in this figure. Much of the spending of these committees is going to the 147 election-denying members of Congress.)

In the immediate aftermath of the Jan. 6 insurrection, many of these companies condemned the attack and the violence, and stopped making political contributions to the 147 members of Congress who voted against the peaceful transfer of power. This was good public relations for them. Furthermore, these big companies depend on the stability of the country, its political system, and its economy to successfully operate.

However, at least 228 of these companies have now quietly gone back to giving money to the 147 election results deniers. Note that they resumed giving to these members of Congress before their next election. Therefore, there was NO meaningful impact from their short-lived suspensions of contributions on the re-election fundraising of the election deniers. [2]

Home Depot suspended political contributions after Jan. 6 but a year later resumed making them. It has now made 100 contributions totaling $475,000 to 65 of the 147 election deniers. This makes it the biggest corporate donor for direct contributions to election deniers and represents 12% of Home Depot’s direct donations to candidates. [3]

Boeing stated in Jan. 2021 that it “strongly condemns the violence, lawlessness and destruction” of the Jan. 6 insurrection. It promised to ensure that the politicians it supported would “uphold our country’s most fundamental principles.” However, since then, it has supported 74 of the 147 election deniers with 314 contributions totaling at least $390,000 (which is 14% of its giving).

Other companies that announced a suspension of political giving after Jan. 6 but have now given to election deniers include AT&T ($389,900 in 127 contributions), United Parcel Service ($385,500 in 155 contributions), Lockheed Martin ($366,000 to 90 deniers), Raytheon ($309,000 to 66 deniers), and Northrop Grumman ($175,000 to 26 deniers).

General Dynamics has donated over $324,000 to 67 election deniers despite the fact that a recent investor report stated: “Our employee PAC will not support members of Congress who provoke or incite violence or similar unlawful conduct.” However, it seems clear that denying the validity of the 2020 presidential election has indeed incited a range of violence and unlawful conduct.

After Jan. 6, Amazon announced in a strongly worded statement that it would stop contributing to members of Congress who voted not to certify the election results because their actions represented an “unacceptable attempt to undermine a legitimate democratic process.” Nonetheless, in September 2022, its PAC gave $17,500 to nine of the election deniers. [4]

General Electric (GE) issued a particularly strong statement after Jan. 6 stating its “commitment to democracy” and suspending donations to the 147 election deniers. Nonetheless, GE has now made contributions totaling $12,500 to eleven deniers, saying it is considering “individual exceptions [to its suspension of donations] on a case-by-case basis.” Not coincidentally, all eleven of them sit on congressional committees of importance to GE: defense and energy spending, transportation and infrastructure spending, and taxation. By the way, to give you a sense of the amounts companies are donating to election deniers, this $12,500 dollar amount ranks GE as tied for 145th on the ProPublica list of companies donating to election deniers.

I urge you to boycott or reduce your business with these companies and the others in the ProPublica list. I also urge you to contact them (e.g., their Chief Executive Officer or their corporate communications office) to let them know you disapprove of their support for election deniers and the undermining of democracy that it fosters.

[1]      Giorno, T., & Quist, P., 11/3/22, “Total cost of 2022 state and federal elections projected to exceed $16.7 billion,” Open Secrets (https://www.opensecrets.org/news/2022/11/total-cost-of-2022-state-and-federal-elections-projected-to-exceed-16-7-billion/)

[2]      MacGillis, A., & Hernandez, S., 11/1/22, “What Fortune 500 companies said after Jan. 6 vs. what they did,” ProPublica (https://www.propublica.org/article/companies-funding-election-deniers-after-january-6)

[3]      Hernandez, S., & Lash, N., 11/4/22, “Fortune 500 companies have given millions to election deniers since Jan. 6,” ProPublica (https://projects.propublica.org/fortune-500-company-election-deniers-jan-6/)

[4]      Legum, J., 10/26/22, “Amazon puts January 6 in the rearview mirror: ‘It’s been more than 21 months’,” Popular Information (https://popular.info/p/amazon-puts-january-6-in-the-rearview)

REINING IN GREAT WEALTH WOULD REDUCE POLITICAL CORRUPTION

Wealthy individuals and corporations are buying and corrupting our candidates for public office and our political system like never before. An increasing proportion of the record amounts of campaign spending is coming from a small number of wealthy donors. This is damaging our democracy in multiple ways. (See previous posts here and here for some details.) Changes in our campaign finance system will help, such as increasing disclosure and limiting contribution amounts in exchange for matching public funds. (See this previous post for more details.)

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

However, as Louis Brandeis once said (prior to becoming a Supreme Court justice), “we can have democracy in this country or we can have great wealth concentrated in the hands of the few, but we can’t have both.” The current accumulation of huge wealth and hence political power in the hands of a few has indeed proved to be antithetical to democracy.

Economic inequality has grown because progressivity in the American tax system has largely disappeared. This is the result of two trends:

  • Income tax rates at the federal and state levels have become less progressive, and
  • More and more government revenues are coming from regressive taxes such as state and local sales taxes, taxes on gambling, and property taxes, as well as the federal payroll tax for Medicare and Social Security.

A progressive tax or tax system is based on the taxpayer’s ability to pay. It imposes lower taxes as a percentage of income on low-income earners than on those with higher incomes, i.e., the percentage of income paid as taxes progresses from lower to higher as income increases. A regressive tax or tax system does the reverse; those with lower incomes pay a higher percentage of their incomes in taxes.

Progressive taxes are viewed as fairer because low-income households need their income to pay for necessities, such as housing, food, clothing, utilities, and transportation. Higher income households have enough income to afford luxuries; they have more discretionary income, i.e., income they can spend at their discretion rather than having to use it to pay for necessities of life. Another way of thinking about this is that an extra dollar of income is much more valuable to a low-income household than to a high-income household. Therefore, it is fair to take a higher portion of that extra dollar of income from a high-income household in taxes.

Most of the taxes we pay have a flat tax rate, such as sales taxes and taxes on alcohol and tobacco. The effect of these taxes is regressive because low-income households spend a greater portion of their incomes on purchases that are subject to these taxes. Another example of a regressive tax is the revenue governments get from gambling. Low-income households spend a greater portion of their incomes on gambling, such as lottery tickets, and, therefore, this is a regressive revenue source for government and effectively a quite regressive tax.

The only significant progressive tax in the U.S. today is the income tax. The federal income tax has become much less progressive over the last 40 years and the portion of revenue that governments at all levels get from progressive taxes has declined significantly. As a result, our overall tax system has become much less progressive over the last 40 years and, at the state and local levels, generally quite regressive.

To have a progressive income tax, multiple brackets (i.e., income ranges) with higher tax rates for higher income brackets are necessary. The federal income tax has had as many as 50 brackets and until 1986 had always had at least 15. The highest tax rate was 94%, which, in 1944, was the marginal rate on income over $200,000 (equivalent to $2.5 million today). By the way, this tax rate was in place during one of the longest periods of economic growth in U.S. history.

The top tax rate was at least 70% until 1981; today it is 37%. President Reagan and other Republicans led the effort in the 1980s that reduced the top income tax rate from 70% to 28%. They also led the reduction of the number of tax brackets from 16 to two. Needless to say, the progressivity of the U.S. tax system plummeted and the path to great economic inequality was created. Today, there are seven tax brackets and a top rate of 37%. [1] So, some progressivity has been reintroduced but it’s still much, much less than it was prior to the 1980s. (The issue of taxes on capital gains, both realized and unrealized, is also important but a topic unto itself.)

The loss of progressivity has also occurred in state and local tax systems. Washington State has the country’s most regressive overall state tax system; state and local taxes consume 17.8% of family incomes for the 20% of families with the lowest incomes and only 3% of incomes for the 1% with the highest incomes. In Massachusetts, the richest 1% pay 6.5% of income in state and local taxes while the bottom 80% pay between 9% and 10% of income in state and local taxes.

Several proposals have been put forward to change the current regressivity of the U.S. tax system and to begin to change the high and growing level of economic inequality in the U.S., in terms of both income and wealth:

  • Taxing wealth (in addition to income) is important because of the huge wealth that some individuals have accumulated over the last 40 years and because the wealthy are able to avoid income taxes by minimizing their incomes and living off their wealth. (See this previous post for more on the rationale for a wealth tax.) Two of the proposals for taxing wealth are:
    • The Ultra-Millionaire Tax, proposed by Senator Elizabeth Warren (D-MA), would put a 2% tax on wealth between $50 million and $1 billion and a 4% tax on wealth over $1 billion. The wealth of 99.9% of American households is below $50 million, so they would pay no wealth tax under this proposal. [2]
    • The OLIGARCH Act: The Oppose Limitless Inequality Growth and Restore Civil Harmony (OLIGARCH) Act, proposed by the group Patriotic Millionaires, would tax wealth in four brackets defined in relation to the median wealth of an American household, which is about $122,000. It would put a 2% tax on wealth between 1,000 and 10,000 times median wealth, or wealth of about $122 million to $1.2 billion. The tax rate would go up in 2% steps and top out at 8% on wealth over roughly $122 billion (one million times median wealth). (Note: There are two Americans with wealth of over $122 billion.) [3]
  • For the federal income tax, the End the Bracket Racket Act, also put forth by Patriotic Millionaires, would add five new brackets with one establishing a 50% tax rate on income between $1 and $5 million and progressing to a 90% tax rate on income over $100 million. It would also incentivize states to raise revenue through income taxes by providing a federal tax credit for state and local income taxes (while eliminating the deduction for property, sales, and excise taxes). [4]

I encourage to you contact President Biden and your Representative and Senators in Congress. Ask them to support the establishment of a wealth tax as well as changes to the income tax to increase progressivity. These steps would begin to reduce economic inequality and, ultimately, the ability of the wealthy to corrupt our elections and democracy. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Patriotic Millionaires, retrieved 10/22/22, “End the Bracket Racket (EBR) Act,” (https://patrioticmillionaires.org/wp-content/uploads/End-the-Bracket-Racket-Act-1.pdf)

[2]      Senator E. Warren, retrieved 10/22/22, “Ultra-Millionaire Tax,” (https://elizabethwarren.com/plans/ultra-millionaire-tax)

[3]      Patriotic Millionaires, retrieved 10/22/22, “Oppose Limitless Inequality Growth and Restore Civil Harmony (OLIGARCH) Act,” (https://patrioticmillionaires.org/wp-content/uploads/Oligarch-Act-Memo.pdf)

[4]      Patriotic Millionaires, retrieved 10/22/22, see above

STOPPING WEALTH FROM CORRUPTING OUR POLITICAL SYSTEM

Wealthy individuals and corporations are buying and corrupting our candidates for public office and our political system. Congressional races, state ballot questions, and possible 2024 presidential candidates are all raising record amounts of money. Furthermore, an increasing proportion of this money is coming from a small number of very wealthy donors. This is damaging our democracy in multiple ways. (See previous posts here and here for some details.)

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

We need to rein in the corrupting effects of huge amounts of money being spent on election campaigns by a relatively small number of very wealthy individuals and corporations. A few dozen billionaires will spend over $100 million on the 2022 elections after spending $1.2 billion on the 2020 elections, which included a presidential election. Ultimately, we need a constitutional amendment to overturn the Supreme Court’s decisions (e.g., Citizens United) that equate spending with speech and give freedom of speech rights to corporations and other organizations. But that’s a long-term strategy.

Initial steps to address this problem include:

  1. Enhancing disclosure of spending in campaigns: full disclosure of who the money is coming from, including both individuals and organizations, disclosed in a timely fashion so voters know who is trying to influence their votes,
  2. Enacting partial public financing of campaigns that will reduce dependence on wealthy donors and provide a way within current law to limit the size of contributions,
  3. Reducing the accumulation of huge wealth and hence political power in the hands of a very few people, which is antithetical to democracy, by reforming our tax system, including the implementation of a wealth tax, and
  4. Reducing corporate influence in our politics and policy making by enforcing anti-trust laws (see this post for more information) because huge corporations with huge wealth and political power are antithetical to democracy. We also need to better regulate lobbying and the revolving door of personnel between corporate and government jobs. These steps are topics for other posts.

Two bills were passed by the U.S. House that would address election system issues (items 1 and 2 above), the DISCLOSE Act and the For the People Act. Both have been blocked by Republicans and the filibuster in the Senate. (In addition, the John R. Lewis Voting Rights Advancement Act, which would restore and revitalize the Voting Rights Act (VRA) of 1965 and stop racial discrimination in our elections, passed the House but was also blocked in the Senate.)

In response, The Freedom to Vote Act (S.2747), a compromise bill, was developed and introduced in the Senate. It includes most of the key provisions of the For the People Act and the DISCLOSE Act. Unfortunately, Republicans in the Senate have blocked it as well.

The Freedom to Vote Act includes provisions that would: [1]

  • Reform the campaign finance system by a) requiring enhanced disclosure (e.g., all major donors) by any entity spending more than $10,000, b) ensuring super PACs are truly independent of candidates, and c) strengthening campaign finance enforcement,
  • Create a publicly-funded system for matching small donations to U.S. House campaigns that states and candidates can opt into, which would match small donations with $6 for every $1 contributed in exchange for limiting the size of donations, thereby eliminating the need for candidates to rely on big money donors and their corrupting influence,
  • Enhance protections for election officials, ballots, and other election records and procedures,
  • Expand opportunities to vote through mail-in voting, early voting, and making election day a holiday,
  • Reduce voter suppression by a) creating a national standard for voter IDs that allow a wide range of options, b) restoring formerly incarcerated citizens’ federal voting rights, c) requiring waiting lines to be less than 30 minutes, and d) cracking down on intimidating and deceptive election-related practices,
  • Modernize voter registration with same-day, online, and automatic registration, as well as protection against unjustifiable purges of voters from the voting rolls, and
  • Ban partisan gerrymandering and establish clear, neutral standards for redistricting.

I encourage to you contact President Biden and your Representative and Senators in Congress. Ask them to support the Freedom to Vote Act (S.2747) to ensure fair, democratic elections. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

My next post will identify some reforms to our tax system that are needed to begin to reduce the accumulation of great wealth and hence political power in the hands of a very few people, which is antithetical to democracy.

[1]      Brennan Center for Justice, retrieved 10/15/22, “The Freedom to Vote Act,” (https://www.brennancenter.org/freedom-vote-act)

WEALTH IS CORRUPTING OUR POLITICAL SYSTEM LIKE NEVER BEFORE

Wealthy individuals and corporations are buying and corrupting our candidates for public office and our policy making processes like never before. Congressional races, state ballot questions, and possible 2024 presidential candidates are all raising record amounts of money. (See this previous post for some details.) This is bad for democracy.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

Most of this record amount of money is spent on advertising and much of that is negative advertising, i.e., attacking, undermining, discrediting, and demeaning the opposing candidate, even lying about them. One effect of all the negative ads is that they tend to depress turnout (e.g., why bother to vote for the better of the flawed candidates) and to undermine faith in our elected officials and the government. This undermines democracy and citizens’ belief in democracy.

Of particular concern, is that a big chunk of the huge amount of money being spent on our elections is coming from a relatively few individuals and corporations. A few dozen billionaires will spend over $100 million on the 2022 elections. They and the corporations they are connected with want policies that will reduce their taxes and provide other benefits to them. The 2017 tax cut bill was very directly the result of these big donors telling Trump and Republicans in Congress that they wanted a big tax cut or their donations to 2018 campaigns would be significantly curtailed. This quid pro quo is corrupt; it’s a kickback scheme.

Twenty-seven billionaires have given $89 million to the two Republican congressional super PACs, nearly 50% or half of the money they’ve raised for the 2022 elections. A few have given $20 million or more. Nineteen billionaires have given $26 million to the two parallel Democratic PACs, which is 17% of the money they have raised. For both parties, the bulk of the money came from people in the finance and investment business. These billionaires are also engaged in other political spending. For example, Peter Thiel, the billionaire co-founder of PayPal, who is openly anti-democracy and anti-government, has spent $15 million helping J. D. Vance win the Republican Senate primary in Ohio and $13.5 million helping Blake Masters win his Arizona Senate primary. [1] [2]

Back in the 2020 elections, billionaires collectively spent $1.2 billion, which was roughly one-tenth of all spending, despite being only 0.01% of all donors contributing over $200 (i.e., 1 out of every 10,000 donors). In 2020, the billionaires spent 40 times what they spent in 2010, due to the Supreme Court’s Citizens United and other decisions that now allow unlimited spending in our supposedly democratic elections. The political spending and influence of the billionaires has been growing election after election.

Large amounts of corporate money are also flowing into political campaigns, often through intermediary groups that make it hard to trace the connection between specific donors and specific recipients. Therefore, it is hard to hold the corporations accountable for the policies of the candidates they’re supporting. For example, eight corporations, who publicly committed to covering travel expenses for employees who needed to travel to obtain reproductive care, nonetheless have, since 2018, given almost $8 million to three Republican groups that have helped elected Governors, Attorneys General, and legislators who have worked to restrict abortion rights. The corporations are: Pfizer ($3 million), Comcast ($2.2 million), Microsoft, Citigroup, Uber, and Bank of America (between $800,000 and $400,000), and lesser amounts from Lyft and Yelp. [3]

Fifteen corporations, who publicly committed to covering travel expenses for employees who needed to travel to obtain reproductive care, nonetheless have political action committees that have given $2 million to members of Congress who voted against the Women’s Health Protection Act, which would have protected access to reproductive care. The top givers (between $501,000 and $113,000) are PricewaterhouseCoopers, Google, Microsoft, Wells Fargo, Johnson & Johnson, JPMorgan Chase, and Meta (Facebook’s parent corporation).

Frequently, these large donors, individuals and corporations, make significant efforts to avoid being identified and linked to the candidates they’re supporting. For example, the Conservative Americans Political Action Committee (PAC) filed its statement of organization with the Federal Election Commission on July 11. Then, between July 19th and 24th, it spent $2.4 million in Republican U.S. House primary races in Missouri, Tennessee, and Arizona. Because of its late registration, it’s not required to disclose its donors until August 20, weeks after the voting in the primary elections it was working to influence. [4] Therefore, voters didn’t know who was trying to influence their votes.

An insidious strategy that is seeing increased use is the spending of large sums of money by Political Action Committees (PACs) and other political groups aligned with one party in the other party’s primaries. Democratic-aligned groups have spent nearly $44 million in Republican primaries for congressional seats and governorships. They are promoting more radical candidates that Democrats think will be easier to beat in the final election. Some of the downsides of this strategy are that it doesn’t always work, that it diverts funds from Democratic candidates, and that it promotes divisive, fringe positions. [5] Similarly, the American Israel Public Affairs Committee (AIPAC) and its super PAC, heavily funded by Republican donors and the endorser of over 100 Republican candidates who are 2020 election deniers, is spending roughly $20 million in Democratic primaries. It is opposing progressive Democratic candidates and supporting more conservative alternatives.

The amount of outside money in primaries, particularly across party lines, is very unusual if not unprecedented. Given the low voter turnout in primaries for congressional seats, a few million dollars can have a significant effect on the outcome. [6]

In conclusion, the large amount of money being spent on campaigns in supposedly democratic elections is corrupting. When candidates receive large sums of money, it changes who they meet with, who they listen to, and how they weigh competing interests when making decisions on how to vote on legislation once they’re in office. It changes which issues get addressed and what legislation gets written. It means politicians have strong incentives to act in support of their wealthy donors rather than in support of the average Americans who are, nominally, their constituents. This is corruption – money given to candidates’ campaigns changes their behavior when they’re in office.

For example, Senator Joe Manchin (D-WV) refused, along with Senator Kyrsten Sinema (D-AZ) and all the Republicans in the Senate, to increase taxes on wealthy individuals and corporations as part of the recently passed Inflation Reduction Act, despite strong support for this among the public. [7] The obvious explanation for these Senators’ refusal is that they were being responsive to their wealthy donors rather than to the constituents who voted for them. (More detail on Sinema’s unusually blatant apparent quid pro quo corruption is here.)

Among other things, this means that economic inequality is likely to continue to increase in the U.S. It also means that wealthy campaign donors will have even more money to invest in future campaigns – and it is an investment, because favorable tax and other laws put far more money in their pockets than they spend on their campaign contributions, as the Senator Sinema examples makes clear. This is, in effect, a corrupt kickback scheme.

Furthermore, the exorbitant cost of a congressional campaign changes who runs for these seats. Given that in a contested race you need a minimum of $10 million to run a US Senate campaign or $2 million for a House race, who can afford to run is extremely skewed – it’s not your average citizen! This gives incumbents a huge advantage, as it often means that no one runs against them. As a result, Members of Congress are currently older than they’ve ever been with 23% of members over 70, up from 16% in 2012 and 8% in 2002. [8]

My next post will describe steps to rein in the harmful effects of current campaign spending.

[1]      Stancil, K., 7/18/22, “Just 27 billionaires have spent $90 million to buy GOP Congress: Report,” Common Dreams (https://www.commondreams.org/news/2022/07/18/just-27-billionaires-have-spent-90-million-buy-gop-congress-report)

[2]      Rice, W., Tashman, Z., & Clemente, F., July 2022, “Billionaires buying elections,” Americans for Tax Fairness (https://americansfortaxfairness.org/issue/report-billionaires-buying-elections/)

[3]      Datta, S., 8/2/22, “Corporate donations to GOP political groups boosted candidates behind anti-abortion rights laws in states,” Open Secrets (https://www.opensecrets.org/news/2022/08/corporate-donations-to-gop-political-groups-boosted-candidates-behind-anti-abortion-rights-laws-in-the-states/)

[4]      Giorno, T., 8/3/22, “ ‘Pop-up super PAC spent over $2.4 million in weeks leading up to three states’ GOP congressional primaries,” Open Secrets (https://www.opensecrets.org/news/2022/08/pop-up-super-pac-spent-over-2-4-million-in-three-states-gop-congressional-primaries-in-three-weeks/)

[5]      McCarty, D., 7/15/22, “Democrats spend millions on Republican primaries,” Open Secrets (https://www.opensecrets.org/news/2022/07/democrats-spend-millions-on-republican-primaries/)

[6]      Sammon, A., 7/14/22, “AIPAC has taken over the Democratic primary process,” The American Prospect (https://prospect.org/politics/aipac-has-taken-over-the-democratic-primary-process/)

[7]      Dusseault, D., & Lord, B., 7/19/22, “Joe Manchin just proved why we need the OLIGARCH Act,” Common Dreams and the Patriotic Millionaires Blog (https://www.commondreams.org/views/2022/07/19/joe-manchin-just-proved-why-we-need-oligarch-act)

[8]      Giorno, T., 9/15/22, “Gen Z candidate Karoline Leavitt outraised ‘establishment’ candidate in lead-up to her win in New Hampshire’s GOP House primary,” Open Secrets (https://www.opensecrets.org/news/2022/09/gen-z-candidate-karoline-leavitt-outraised-establishment-candidate-in-lead-up-to-her-win-in-new-hampshires-gop-senate-primary/)

WEALTH IS BUYING OUR POLITICAL SYSTEM LIKE NEVER BEFORE

Wealthy individuals and corporations are buying our political system like never before. Congressional races, state ballot questions, and possible 2024 presidential candidates are all raising record amounts of money. This is anti-democratic in more ways than one. It undermines the core principle of one person, one vote, by giving some people a much louder voice than others – effectively giving them more than one vote. It means that politicians have strong incentives to vote and act in support of their wealthy donors rather than in support of the average Americans who are, nominally, their constituents.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

What follows are some examples of the money in our political system and its effects, which are endemic throughout our elections and policy making. There simply isn’t time or space to begin to cover all of it.

As-of early August, candidates running for the 35 U.S. Senate seats that are up for election have collectively raised almost $1 billion. Twenty-seven of those races have raised over $10 million; the other eight have no serious competition. The races in Pennsylvania and Georgia have each already raised close to $90 million, with three months to go. The Florida, Arizona, and Ohio races are approaching $80 million. Wealth is very directly trying to buy Senate seats in the races where the candidates have spent $138 million of their own money. [1]

In the races for the U.S. House, the most expensive race so far is in Louisiana where $37 million has been raised, followed by a seat in New York at $36 million. California has six races that are in the top ten with amounts raised so far at between $33 million and $20 million. [2] In a race for the U.S. House in the small state of New Hampshire (population 1.4 million), three candidates had raised $6.5 million as-of the September primary.

Although the next presidential election is two years away and no one has officially declared their candidacy, since January 2021, 20 politicians who’ve expressed some interest in running have already raised almost $600 million. Leading the pack is Governor DeSantis, Republican of Florida, who has raised a record-setting $174 million. Next is Governor Pritzker, Democrat of Illinois, who has raised $133 million with $132 million coming from his own pocket (he’s a billionaire). Trump is next with $131 million and after that there’s a huge drop off to Senator Tim Scott (R-SC) with $35 million. [3]

Note that until a candidate officially declares they are running for president and sets up an official campaign committee, there are no limits on how much they can receive and they do not have to report their spending. Federal law requires candidates to register a campaign committee and file financial reports when raising or spending more than $5,000 for a presidential campaign. Clearly, the spirit of the law, if not the letter of the law, is being flouted here, as it has been for years by candidates of all stripes.

In addition to the very troubling amounts of money that are being raised and spent, there are other concerning trends as well. Increasing amounts of money are being spent by supposedly independent outside groups and also by dark money groups that don’t have to disclose their donors. Although the public, i.e., voters, may not know where the money is coming from, you can be sure the candidates know – and therefore know to whom they are beholden. In addition, in many of the high-profile congressional races, an increasing amount of the money is coming from out-of-state.

Ballot questions are also seeing large and record-setting spending. In California, committees supporting and opposing two ballot questions on sports betting have raised $244 million. This has eclipsed the record from 2020 when the ballot question deeming gig-economy drivers to be independent contractors saw its sponsors, Uber, Lyft, DoorDash, and other ride-share and delivery companies, spend $205 million to get it approved. [4] In Massachusetts (less than 1/5 the population of CA), committees supporting and opposing a ballot question that would add a 4% tax on income over $1 million have raised $30 million.

All of this is bad for democracy. My next post will highlight additional characteristics and effects of all this political spending. It will also identify steps that can be taken to tackle these problems.

[1]      Datta, S., 8/4/22, “Senate races attract nearly $1 billion ahead of 2022 midterms,” Open Secrets (https://www.opensecrets.org/news/2022/08/senate-races-attract-nearly-1-billion-ahead-of-2022-midterms/)

[2]      Open Secrets, retrieved 10/7/22, “Most expensive races,” (https://www.opensecrets.org/elections-overview/most-expensive-races)

[3]      Siemons, J., 9/15/22, “Possible presidential contenders raise over $591 million while waiting to declare candidacy,” Open Secrets (https://www.opensecrets.org/news/2022/09/possible-presidential-contenders-raise-over-591-million-while-waiting-to-declare-candidacy/)

[4]      Giorno, T., 9/12/22, “Sports betting ballot measures set new $243.8 million record in California,” Open Secrets (https://www.opensecrets.org/news/2022/09/sports-betting-ballot-measures-set-new-243-8-million-record-in-california/)

REFLECTIONS ON WHAT PRO-LIFE REALLY MEANS

Truly being pro-life would rationally mean being pro-child, and also pro-parent and pro-family, but that’s not the way the term is typically used. (See this previous post for a discussion of this.) A similar disconnect exists with the term “family values” as it’s used by many right-wing politicians. Pro-child and pro-family (i.e., truly pro-life) state and federal policies would, among other things, provide economic supports for families with children. Economic security, self-sufficiency, mobility, and well-being are all linked to better outcomes for children, mothers, and families. They are also linked to abortion rights, so being truly pro-child and pro-family means supporting abortion rights.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

States where abortion is legal and accessible have lower rates of poverty, family financial hardship, teen births and marriages, and maternal mortality, especially for Black women. These states also have higher labor force participation, earnings, and educational attainment, again, especially for Black women. As Treasury Secretary Janet Yellen has said, “Eliminating the rights of women to make decisions about when and whether to have children would have very damaging effects on the economy and would set women back decades.” [1]

The states that are restricting abortion rights while also providing limited supports for children, mothers, and families (see this previous post which identifies MS, LA, AL, AR, OK, and WY as the worst ones) would seem to be engaged in an intentional effort to disempower and economically subjugate women. [2] As Meyerson writes in his analysis of the misuse of the term pro-life, “There is, however, one plausible explanation for their determination to compel women to carry unwanted pregnancies through to birth and … make sure that life after birth … will be hard. The common thread … is a punitive misogyny,” [3] in other words, a desire to punish and control women.

Legal and accessible abortion is essential not only to women’s economic well-being, but also to their humanity, dignity, life, liberty (freedom to make important decisions for oneself), and pursuit of happiness. Therefore, being truly pro-life means supporting economic justice and reproductive justice.

As an example of truly pro-life policy making, President Biden recently announced a major initiative to end hunger in America by 2030 while also increasing healthy eating. [4] Pandemic relief measures were also critical pro-life policies that supported children and families. They reduced child poverty and food insecurity by roughly 25% from pre-pandemic levels. However, the enhanced Child Tax Credit, which was one of the pandemic relief policies, was not extended when it expired in December 2021. As a result, food insecurity in households with children is up 12%. The expiration of other pandemic relief measures has pushed food insecurity well above pre-pandemic levels. Lack of access to good nutritional meals can have negative consequences for children’s cognitive and social-emotional development, for their ability to learn in school, and for their health, with potentially lifelong effects. [5] Therefore, efforts to address hunger and nutrition are definitely pro-life and the failure to do so is anything but pro-life, despite the fact that some politicians who claim to be “pro-life” and to support “family values” are stingy when it comes to funding programs to reduce hunger.

As a bit of an aside, the number of intentional abortions in the U.S. has been steadily declining for 30 years. It has declined over 40% from roughly 1.6 million per year in the 1980s to about 900,000 in 2020. There has been an even bigger decline in the rate of abortions per 1,000 women of child-bearing age (between 15 and 44) from 29.3 in 1980 to 13.5 in 2017, a 54% decline. [6] One might think that “pro-life” people would be celebrating this accomplishment but they aren’t. The causes for this decline aren’t known definitively. Access to and use of contraception is undoubtedly an important contributor to reducing abortions, however, “pro-life,” anti-abortion people are typically opposed to promotion of contraception. Reduced sexual activity by teens is another contributor to the decline, which “pro-life,” anti-abortion people generally support. These positions are driven in large part by religious beliefs: sex outside of marriage is wrong and access to contraceptives encourages sex, so contraceptives are bad. Some religious beliefs go so far as to assert that sex should be engaged in only for the purposes of procreation, and contraception is antithetical to this belief.

The assertion that a fertilized human egg is a person and should be given all the rights of personhood and, therefore, that all abortions should be banned is typically based on religious beliefs. Interestingly, the only religious group where a majority of members oppose abortion rights is white, evangelical Protestants. Perhaps surprisingly, 64% of white Catholics support abortion rights, as do 75% of Hispanic Catholics.

An examination of the history of evangelical opposition to abortion reveals a concerted effort by Republicans to convince evangelicals to take this position. As recently as 1976, the Southern Baptist Convention, a centerpiece of white evangelical religion, passed a resolution declaring that having an abortion was a matter to be decided by a woman and her doctor. In general, evangelicals oppose government intrusion into individuals’ beliefs, decisions, and actions.

In the 1960s and 1970s, Republicans realized that their pro-business and pro-wealth policies weren’t going to capture a majority of voters. So, their strategists identified “culture wars” as a way to broaden their support and get people to vote against their economic interests. Core elements of the culture wars were abortion, homosexuality, and racism, with racism initially raised with innuendo and dog whistles so it was disguised and could be denied. The culture wars were a key component of the Republicans’ “southern strategy” to turn southern Democrats into Republican voters. The Republicans’ southern strategy, particularly subtle racism, was used in Goldwater’s 1964 presidential campaign and Nixon’s campaigns in 1968 and 1972.

It wasn’t until the late 1970s that Republicans began a long and ultimately successful campaign to convince evangelicals to oppose abortion. They did so by claiming that abortion rights were part of a women’s movement that sought to upend patriarchal control and the traditional family. In 1979, a right-wing, Republican consultant, Paul Weyrich, and minister Jerry Falwell founded the Moral Majority organization. Its goal was to move southern and evangelical voters away from Democrats and President Jimmy Carter, who, ironically, was a southern evangelical Christian. Abortion, feminism, and their supposed undermining of traditional values and families were core wedge issues of the Republicans’ culture wars. [7]

The bottom line is that for five decades Republicans have used anti-abortion rhetoric, and a false “pro-life” moniker, for political purposes. Now that the Supreme Court has overturned the right to an abortion, the hypocrisy and insincerity of their political rhetoric is being exposed as Republican candidates are disavowing their past anti-abortion rhetoric to try to win in November’s elections. Some candidates are dramatically flip-flopping, while others are just eliminating their opposition to abortion from their talking points and websites, because, having won their primary elections, they now want to appeal to a broader set of voters. These candidates have been claiming to be “pro-life,” and defining it as meaning anti-abortion, solely for political purposes.

[1]      Banerjee, A., 5/18/22, “Abortion rights are economic rights,” Economic Policy Institute (https://www.epi.org/blog/abortion-rights/)

[2]      Banerjee, A. 5/18/22, see above

[3]      Meyerson, H., 8/26/22, “ ‘Pro-life’: America’s most patently absurd misnomer,” The American Prospect (https://prospect.org/politics/pro-life-americas-most-patently-absurd-misnomer/), page 6

[4]      The White House, 9/28/22, “The Biden-Harris Administration announces more than $8 billion in new commitments as part of call to action for White House Conference on Hunger, Nutrition, and Health,” (https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/28/fact-sheet-the-biden-harris-administration-announces-more-than-8-billion-in-new-commitments-as-part-of-call-to-action-for-white-house-conference-on-hunger-nutrition-and-health/)

[5]      Stancil, K., 5/20/22, “Millions more kids going hungry since GOP, Manchin killed expanded child tax credit,” Common Dreams (https://www.commondreams.org/news/2022/05/20/millions-more-kids-going-hungry-gop-manchin-killed-expanded-child-tax-credit)

[6]      Diamant, J., & Mohamed, B., 6/24/22, “What the data says about abortion in the U.S.,” Pew Research Center (https://www.pewresearch.org/fact-tank/2022/06/24/what-the-data-says-about-abortion-in-the-u-s-2/)

[7]      Meyerson, H., 8/26/22, see above

WHY RAILROAD WORKERS WERE THREATENING TO STRIKE

As you’ve probably heard, railroad workers were threatening to strike and may still do so if they don’t feel the tentative agreement is good enough. What you probably haven’t heard much about is why they were threatening to strike.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

The railroad corporations, through consolidation, deregulation, and practicing extreme capitalism, have gain so much power that they have been making life miserable for their employees. They have also been a major contributor to the supply chain problems in the post-Covid period and to the high levels of inflation. One of the reasons it was so important for the Biden Administration to step in and negotiate a proposed settlement was that a strike would have further disrupted continuing supply chain problems and exacerbated inflation.

Since 1980, through mergers and acquisitions (that our government has failed to stop under antitrust laws), the 40 major railroad corporations have become six (Burlington Northern and Santa Fe [BNSF], Union Pacific, CSX, Canadian National, Norfolk Southern, and Canadian Pacific,) and four of them have roughly 85% of the freight business. [1]

Because the railroad corporations are focused in different areas, they operate with monopolistic power in much of their service territories. In 2012, 78% of train stations had service from only one railroad. This allows the railroad corporations to engage in the extreme capitalism that is running rampant in the U.S., generating huge profits by price gouging and aggressively squeezing labor and other costs. They have aggressively reduced surge capacity and redundancy to minimize costs, which have contributed to the bottlenecks and fragility in supply chains.

Deregulation has allowed the railroads to shed their obligations to serve the public, which were put in place after the robber barons of the late 19th century made fortunes from their railroads while running roughshod over the public interest. The railroads have dropped unprofitable routes leaving many small towns cutoff from efficient freight shipping. As a result, from 1980 to 2008, railroads reduced their miles of track by over 40%. Railroads are no longer required to treat similarly situated shippers equally; they can now cut special deals with big shippers putting small businesses at a disadvantage. Like the airlines, the railroads are increasing fees on customers, which some feel is a form of price gouging. In the third quarter of 2021, the railroads had doubled their fee revenue since the beginning of 2019 to about $800 million.

The profit margin in the industry (the percentage of revenue that is profit) soared from 15% in 2001 to 40% in 2021. In other words, for every $100 that the corporations received, $40 is now profit as opposed to $15 ten years ago. A big part of this increased profitability, is that the portion of revenue dedicated to paying employees has dropped from 34% to 20%, or, in other words, from $34 of every $100 or revenue to $20. [2] In 2019, the freight railroad industry was the most profitable industry in the country with a 51% profit margin. [3] As evidence of the high profitability of the railroad industry, all but one of the publicly traded railroad stocks outperformed the overall stock market over the ten-year period from 2011 to 2021. Union Pacific had the second-highest total return in the market over that period, rewarding its investors with an almost six-fold return, roughly a 20% gain each year.

These record profits are, for the most part, NOT being reinvested in the businesses but are being use to reward shareholders (including executives) through the buying of the corporations’ own stock and paying dividends. For the industry as a whole, these stock buybacks and dividends have totaled over $200 billion since 2010, averaging over $15 billion per year, and they are continuing. For example: [4]

  • Union Pacific: $5 billion in stock buybacks and dividends in the first half of 2022 from $22 billion in revenue and $6.5 billion in profits in 2021.
  • CSX: $3 billion in stock buybacks and dividends in the first half of 2022 from $12.5 billion in revenue and $3.8 billion in profits in 2021.
  • Canadian National: $2.3 billion in stock buybacks and dividends in the first half of 2022 from $11.5 billion in revenue and $3.9 billion in profits in 2021.

The railroad corporations have cut staff by one-third since 2016 and over 70% since 1980 as total employment in the railroad industry has dropped from 500,000 to under 135,000. This reduced workforce is generating more profits than ever for their employers but haven’t gotten a wage increase in over two years as their contract negotiations have dragged on and on. Train crews used to be five people but today are two. The corporations have even proposed reducing the number of engineers on a train from two to one, despite what would happen if a single engineer on a long freight train had a medical emergency with no one else onboard. This would be like having an airplane with no co-pilot.

Many have called the working conditions at the railroads inhumane. Workers’ schedules are often unpredictable. They do not have paid sick days or other leave. They are penalized if they take a day off to go to the doctor or deal with a medical need. The railroads are so thinly staffed that they can’t allow employees any flexibility and need to have them on-call at all times to keep the trains running.

The safety of the workers and the communities the trains run through is being compromised; in the rush to get more done with fewer workers safety inspections are being neglected. Since 2012, the rates of accidents, equipment defects, and safety incidents have climbed; there have been more fatalities even though the number of miles trains are running has dropped roughly 40%.

The new proposed contract, which involves 12 unions representing 115,000 workers, would:

  • Allow workers to take days off for medical care without being penalized, but only one of those days would be paid. (Union leaders had initially asked for 15 days of paid sick leave.)
  • Increase pay by 24% over five years, going back to 2020 when the last contract expired, bringing the average workers’ pay to $110,000 in 2024.
  • Provide more worker-friendly work schedules.
  • Keep workers’ health care premiums at current levels.

Union members will vote over the next couple of weeks on whether to accept the proposed contract. [5]

The railroads are a textbook example of the extreme capitalism our current laws allow. Corporations generate very large profits for shareholders (including executives) while workers get squeezed hard. Amazon and Walmart are other examples that jump to mind. Fortunately, the railroad workers are in a union so they have some power to fight back.

[1]      Buck, M. J., 2/4/22, “How America’s supply chains got railroaded,” The American Prospect (https://prospect.org/economy/how-americas-supply-chains-got-railroaded/)

[2]      Gardner, E., 9/13/22, “Rail strike by the numbers: Railroad profits are soaring at workers’ expense,” More Perfect Union (https://perfectunion.us/rail-profits-soaring-at-workers-expense/)

[3]      Buck, M. J., 2/4/22, see above

[4]      Stancil, K., 9/19/22, “While fighting workers, railroads made over $10 billion in stock buybacks,” Common Dreams (https://www.commondreams.org/news/2022/09/19/while-fighting-workers-railroads-made-over-10-billion-stock-buybacks)

[5]      Gurley, L. K., & Stein, J., 9/15/22, “Biden scores deal on rail strike, but worker discontent emerges,” The Washington Post

WHAT PRO-LIFE REALLY MEANS

By John A. Lippitt, Ph.D., and Kirtly Parker Jones, M.D., OB/GYN

The Supreme Court’s overturning of the right to an abortion prior to fetal viability has put a spotlight on what it means to be “pro-life.” Right-wing Republicans declare that being “pro-life” means asserting that life begins at conception, i.e., fertilization. Therefore, they say, our laws should declare that a fertilized human egg is a person and should be given all the rights of personhood. If an individual believes, typically based on religious beliefs, that human (sacred) life begins at conception, they have every right to believe that, to lead their life based on that belief, and to try to convince others to live their lives that way. However, they do not have a right to impose that belief on others; that’s one important example of what a right to freedom of religion means.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

A declaration in our laws that life and personhood begin at fertilization has many implications. It means, of course, that anything that prevents a fertilized egg from being born as living, breathing, presumably healthy baby is murder. It would criminalize some forms of contraception. Most forms of contraception primarily either stop ovulation (egg production) or prevent egg fertilization, but they can also reduce the likelihood of successful implantation of a fertilized egg, which could be considered murder. A personhood-at-fertilization law would make any miscarriage subject to a criminal investigation as to its cause. [1] Theoretically, the failure of a pregnant women to take steps to minimize the likelihood of a miscarriage could be criminalized, such as a failure to stop smoking, maintain a healthy weight, control diabetes, or cease use of alcohol and drugs, including some legal drugs.

Understanding the implications of a declaration that personhood begins at fertilization requires understanding the development of a pregnancy. Fertilization occurs in the fallopian tubes and it typically takes 3 – 4 days for the fertilized egg to reach the uterus. It then takes 2 – 6 more days for the fertilized egg to implant itself into the uterine lining where it will grow, assuming all goes well, for the next 38 or so weeks until birth.

Many fertilized eggs have abnormalities in their chromosomes. This means they cannot produce a viable fetus and typically die because they fail to successfully implant in the uterus or result in a miscarriage early in pregnancy. However, under a personhood-at-fertilization law, all deaths of a fertilized egg would be an illegal abortion and a murder.

Some fertilized eggs can get stuck in the fallopian tubes and an ectopic pregnancy results, which is life threatening if the embryo is not removed. But this would be an abortion and murder under a personhood law, unless a specific exception is included in such a law.

Overall, between a third and a half of all fertilized eggs do not implant in the uterus and therefore die. However, under personhood-at-fertilization laws, each such event would potentially be subject to a criminal investigation. This would also be true of any intentional or accidental destruction of a fertilized egg stored at a fertility clinic.

Somewhere between 7 and 9.5 million human eggs get fertilized each year in the U.S. Somewhere between 2.5 and 4.5 million of them don’t successfully implant in the uterus and do not lead to a viable fetus. Under proposed personhood laws, these would be considered abortions and potential murders, although in many cases the woman is not even aware that this has happened.

For medical professionals, pregnancy begins when the fertilized egg has successfully implanted itself in the uterus, roughly a week after fertilization. There are 4.5 to 5.0 million pregnancies in the U.S. each year. Roughly 18% of them are ended through intentional abortions, about 900,000 per year. A similar number, about 20% or 1 million, end through a miscarriage. [2]

If a person were truly pro-life (as opposed to anti-abortion), they would do everything they could to ensure that every pregnancy produced a vibrant, healthy baby. Prenatal and even pre-pregnancy care for women of child bearing age would be a priority. Furthermore, post-partum care for every baby and mother would be a high priority too, as would care and supports for children and their families from infanthood to adulthood.

An examination at the state level reveals that the six states that are most strongly anti-abortion (based on polls that find support for abortion rights is 49% or less) are the states with the worst records for supporting mothers and babies before, during, and after childbirth, despite the claims of at least their politicians to be “pro-life”. Indicators of their lack of support for mothers and babies include: [3]

  • Mississippi: ranks 50th among the states with the worst (i.e., highest) rate of infant mortality and ranks 45th worst on its rate of maternal mortality; it refused to expand Medicaid to cover more low-income families under the Affordable Care Act (aka Obama Care), despite the fact that Medicaid is the source of health insurance coverage for many low-income mothers and their babies
  • Louisiana: ranks 49th worst on infant mortality
  • Alabama: ranks 48th worst on infant mortality, 48th worst on maternal mortality, and refused to expand Medicaid
  • Arkansas: ranks 47th worst on infant mortality and 50th worst on maternal mortality
  • Oklahoma: ranks 46th worst on infant mortality
  • Wyoming: ranks 47th worst on its rate of women without medical insurance and refused to expand Medicaid

Conversely, polls find that in 14 states 70% or more of the population support abortion rights. In these states, support for mothers and babies is strong. All have implemented the Medicaid expansion and nine have enacted paid family and medical leave that includes coverage for when a new baby arrives. Another, less specific measure of support for parents, especially young parents, is the level of the minimum wage. Five of the six anti-abortion states listed above (Arkansas is the exception) have a minimum wage at the lowest level federal law allows, $7.25 per hour. On the other hand, 13 of the 14 states with strong support for abortion rights (New Hampshire is the exception) have minimum wages well above the federal $7.25 level. [4] By improving incomes and economic security, a higher minimum wage improves the well-being and outcomes of children, mothers, and families.

It’s hard to truthfully claim that you’re “pro-life” when you have high infant mortality, high maternal mortality, don’t provide health insurance to low-income mothers and babies, and/or maintain low wages for parents. As former U.S. Representative Barney Frank once quipped, many of these supposedly “pro-life” people seem to believe that “life begins at conception and ends at birth” at least from a public policy perspective.

Being pro-life should mean being pro-child, and also pro-parent and pro-family. Pro-child state and federal policies would support health, food, and nutrition benefits for mothers and children; a living wage for parents; affordable, high quality early childhood education and child care; and so forth. Being pro-life should mean being pro-mother and pro-woman, making contraception readily available, and leaving the decision about terminating a pregnancy to a woman and her doctor. To be truly and morally consistently pro-life, one would also have to be against capital punishment and war. Some people are consistently pro-life but many of those who claim to be “pro-life” are not.

The far-right won a battle in the culture war when they framed their anti-abortion stance as “pro-life” and the pro-abortion people lost when they used “pro-choice.” The pro-abortion folks should have framed their stance as pro-child and pro-woman, instead of pro-choice. But they didn’t. So, here we are today, fighting to take back the language and the law about what it really means to be pro-life.

[1]      Bartlett, J., 5/14/22, “Examining the biology of birth control,” The Boston Globe

[2]      Guttmacher Institute, Sept. 2019, “Induced abortion in the United States,” retrieved from the Internet on 9/16/22 (https://www.guttmacher.org/sites/default/files/factsheet/fb_induced_abortion.pdf)

[3]      Meyerson, H., 8/26/22, “ ‘Pro-life’: America’s most patently absurd misnomer,” The American Prospect (https://prospect.org/politics/pro-life-americas-most-patently-absurd-misnomer/)

[4]      Banerjee, A., 5/18/22, “Abortion rights are economic rights,” Economic Policy Institute (https://www.epi.org/blog/abortion-rights/)

FEDERAL LEGISLATION NEEDED TO PROTECT CHILDREN ON SOCIAL MEDIA

The harm that social media can do to children and youth is well documented. (See this previous post for more detail.) Clearly, the social media platforms are not going to do what’s necessary to keep our kids safe online on their own. No significant relevant federal legislation has been passed since the 1998 Children’s Online Privacy Protection Act (COPPA). A lot has changed since then and new federal legislation is needed.

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Europe has done a better job than the U.S. of protecting everyone’s privacy and well-being on social media, including that of children. Its General Data Protection Regulation (GDPR) is four years old and provides greater protections than U.S. laws. Meta (formerly Facebook) was recently fined $400 million because its Instagram subsidiary violated European regulations on the protection of children’s data. [1]

The social media platforms’ business model is to hook kids at a young age, amass extensive personal information about them and their online and consumer behavior, and then use these to engage in lucrative (for them) marketing to the kids in ways that too often promote toxic content and harm kids’ well-being and mental health. [2]

Two pieces of relevant federal legislation are being considered in the U.S. Senate:

  • Kids Online Safety Act (KOSA, Senate bill 3663) and
  • Children and Teens’ Online Privacy Protection Act (COPPA 2.0, Senate bill 1628)

These bills seek to provide privacy protections for children and youth, limit individually targeted advertising (referred to as surveillance advertising), and require the social media platforms to put the interests of young people first. For example, KOSA would:

  • Provide families with the tools and safeguards to protect children’s well-being and health,
  • Require transparency from the social media platforms about the data they are capturing and the algorithms they are using for promoting content and advertising, and
  • Establish accountability for harms caused by social media.

COPPA 2.0 would, for example:

  • Extend to 13 to 16-year-olds the prohibition on social media platforms capturing children’s personal information without their consent and require the platforms to delete any such information they collect if requested to do so,
  • Ban individually targeted marketing to children,
  • Establish a “Digital Marketing Bill of Rights for Minors,” and
  • Create a Youth Privacy and Marketing Division at the Federal Trade Commission (FTC) to monitor and regulate data privacy for and marketing to minors.

Some concerns have been raised, particularly about KOSA. Some privacy advocates have raised concerns that it would allow parents to spy on and control children’s activities online. They worry about unsupportive parents spying on LGBTQ+ youth. They worry that politicians could force the social media platforms to block information on topics the politicians dislike, such as abortion information. And they worry that the social media platforms will block broad arenas of information to avoid liability for possible harm to children.

Trying to regulate social media platforms to keep children safe is complicated, but it’s clear that steps need to be taken to reduce the significant harm that’s occurring. The first laws and sets of regulations won’t be perfect, but we need to act. Then, we can figure out what is and isn’t working and make improvements.

I encourage you to contact your Representative and Senators in Congress and to tell them you support regulation of the social media platforms to prevent them from harming our children and youth. Urge them to support the Kids Online Safety Act (KOSA, Senate bill 3663) and the Children and Teens’ Online Privacy and Protection Act (COPPA 2.0, Senate bill 1628).

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

If you’re interested, you can sign-up here for an online information session and Rally for Kids’ Online Safety next Tuesday, September 13, from 6:30 – 7:00 p.m. eastern time. You’ll learn more about how you can support the Kids Online Safety Act (KOSA) and the Children and Teens’ Online Privacy Protection Act (COPPA 2.0). Senators Ed Markey and Richard Blumenthal will discuss how these bills would revolutionize social media platforms’ treatment of kids and teens, requiring them to put young users’ wellbeing ahead of their profits. If passed, the bills would ban surveillance advertising to minors, extend privacy protections to teens, and  set the stage for a safer internet for children and youth. They would also hold the platforms accountable for exploiting kids’ vulnerabilities. Advocates, including Fairplay and members of its Screen Time Action Network, will discuss how you can take action to help get these bills passed.

[1]      Business Talking Points, 9/6/22, “Instagram fined over protection of teenagers’ information,” The Boston Globe from the New York Times

[2]      Corbett, J., 7/27/22. “ ‘Critical’ online privacy protections for children advance to Senate floor,” Common Dreams (https://www.commondreams.org/news/2022/07/27/critical-online-privacy-protections-children-advance-senate-floor-vote)

POLITICAL INFLUENCE BUYING SURE SMELLS LIKE CORRUPTION

Corporations want to have political power and influence on issues that directly affect their interests. They make political contributions and engage in political spending to ensure they have access and a sympathetic ear with elected officials. They view these expenditures as investments from which they expect a return and often get a very high return. Their campaign contributions and political spending are used to grease the wheels of access and influence for their lobbying.

A blatant example of this occurred recently with Senator Kyrsten Sinema (D-AZ) and her demands for modifications in the Inflation Reduction Act in exchange for her critically important vote. Her vote was the crucial 50th vote for the bill and in exchange she demanded that two provisions that would have increased taxes on the wealthy operators of private equity investment funds and hedge funds be taken out of the bill, although they are broadly popular with other Senators as well as with the public. This will allow these few thousand, very wealthy individuals to pay a lower income tax rate than a typical worker. [1]

First, Senator Sinema demanded that the carried interest loophole remain unchanged. It lets hedge fund and private equity managers claim their income is capital gain taxed at around 20% instead of earned income taxed at around 37%. This saves them about $1.4 billion a year. Not only the public, but even many of the people who benefit from this special interest tax break, recognize that it so egregiously unfair that it should be ended.

Second, she demanded that private equity-owned firms be exempt from the new 15% minimum tax on companies with over $1 billion in annual profits. This change in the tax laws would ensure the large, profitable companies cannot use loopholes to avoid paying any income tax as many of them have done in the past. (See previous posts here and here for more on the long history of large, profitable corporations paying little or no income tax.) This exemption is estimated to save the private equity industry about $3.5 billion per year.

Senator Sinema has received more than half a million dollars in campaign contributions from private equity and hedge fund managers in the current two-year election cycle. This represents about 10% of her fundraising from individual donors. Since she was elected in 2017, she has received more than $2.2 million from the securities and investment industry. [2]

The roughly $5 billion per year tax benefit the private equity and hedge fund managers will receive with the elimination of these two tax changes represents an over 10,000 to 1 return on their investment! If this doesn’t scream corruption, I don’t know what does. As the Patriotic Millionaires group wrote, “It’s clear that [Senator Sinema] doesn’t work for her constituents, she works for private equity and hedge fund billionaire supporters.”

On a different front, the Blue Cross Blue Shield (BCBS) network of non-profit health insurance companies receives substantial tax benefits that are the result of significant expenditures on campaign contributions and lobbying. From 2018 to 2021, 12 of 32 BCBS companies didn’t pay any net federal taxes and have, in fact, collectively received more than $6.6 billion in tax refunds. This reflects a long history of working with people in Congress to craft complex tax rules that give the BCBS companies special treatment.

Most recently, the 2017 tax cut law passed by Republicans in Congress and the Trump administration repealed the Alternative Minimum Tax (AMT). The AMT was created to ensure that high-income taxpayers, businesses and individuals, could not use loopholes in the income tax system to owe little or no tax, which many had done and could do without the AMT. An AMT was first created in 1969, was significantly modified in 1982, experienced changes in other years, and then was repealed in 2017.

Many of the BCBS companies paid the Alternative Minimum Tax because the special treatment they had gotten into the tax system reduced their traditional income taxes to little or nothing. In particular, in 1986, the BCBS companies succeed in lobbying Congress to create them a special tax break that reduced their taxes by about $400 million per year. It has been described as “an artificial deduction that no one else gets.” [3]

Therefore, the BCBS companies lobbied hard and successfully to get the AMT repealed in the 2017 Tax Cuts and Jobs Act. Not only did this reduce their taxes for future years, it also allowed them to use tax credits they had accumulated in the past to receive substantial one-time tax benefits, reflected in the billions of dollars of tax refunds BCBS companies have received in the last four years.

(NOTE: If you’re surprised that the non-profit BCBS companies pay income taxes to begin with, they were historically considered tax-exempt non-profit charities. However, in 1982 their exemption was removed because they, and other health care non-profits, were operating much like traditional corporate businesses; they were for all intents and purposes commercial enterprises rather than charitable ones.)

The BCBS companies, over the last eight years, have invested an average of over $4 million a year in campaign contributions and over $23 million a year in lobbying. [4] Over the last four years, just the tax refunds they have received reflect a 60 to 1 return on investment, before even factoring in the reduced taxes paid by the BCBS companies.

The health care industry as a whole in the 2020 two-year election cycle spent $690 million on campaign contributions and $1.2 billion on lobbying. As a result, the internationally unique, private, capitalistic U.S. health care system had over $189 billion in profits in 2021 (pharmaceuticals: over $100 billion; hospitals: over $70 billion; and health insurers: $19 billion). Meanwhile, over 500,000 families experienced medical cost-driven bankruptcy in 2021. A recent National Academy of Sciences report estimated that a public, single-payer, universal health care system, similar to what exists in every other developed country, would save, every year, 212,000 lives and $438 billion. [5] [6]

[1]      Bowden, A., 8/5/22, “Sinema’s defense of carried interest is indefensible,” Patriotic Millionaires blog (https://patrioticmillionaires.org/2022/08/05/sinemas-defense-of-carried-interest-is-indefensible-2/)

[2]      Stancil, K., 8/8/22, “Sinema received over $500K from private equity before shielding industry from tax hikes,” Common Dreams (https://www.commondreams.org/news/2022/08/08/sinema-received-over-500k-private-equity-shielding-industry-tax-hikes)

[3]      Herman, B., 6/20/22, “Blue Cross Blue Shield system reaps billions in tax refunds,” The Boston Globe

[4]      OpenSecrets, retrieved 9/2/22, “Blue Cross / Blue Shield summary,” (https://www.opensecrets.org/orgs/blue-cross-blue-shield/summary?id=D000000109)

[5]      Hartmann, T., 6/15/22, “How many billions in profit is it worth to kill 212,000 Americans a year?” Common Dreams (https://www.commondreams.org/views/2022/06/15/how-many-billions-profit-it-worth-kill-212000-americans-year)

[6]      Galvani, A.P., et al., 4/22/22, “Universal healthcare as pandemic preparedness: The lives and costs that could have been saved during the COVID-19 pandemic,” Proceedings of the National Academy of Sciences (https://www.pnas.org/doi/epdf/10.1073/pnas.2200536119)

CORPORATE SUPPORT FOR SEDITION CAUCUS DESPITE ANTI-DEMOCRACY ACTION

Corporations value having political power and influence to the point that they seem to care little about politicians’ ethics or actions on issues other than those that directly affect their corporate interests. Furthermore, they don’t seem to recognize that customers and employees care about the ethics and political activity of the corporations they do business with or work for.

Immediately after the January 6, 2021 insurrection at the U.S. Capitol, 248 corporations and corporate business organizations voiced support for democracy, condemned the insurrection, and suspended contributions to the 147 members of Congress who voted to overturn the 2020 election by rejecting the Electoral College results. These 139 Republican U.S. Representatives and 8 Republican U.S. Senators have been labeled the “Sedition Caucus” because they voted against the peaceful, democratic transition to a new, duly-elected President.

However, over 100 corporations and industry groups out of the 248 that suspended contributions to the Sedition Caucus have resumed supporting them. (See this previous post for more details.) Corporate business organizations and the political action committees of Fortune 500 companies have donated $21.5 million to them in the 19 months after January 6th. [1]

Furthermore, the hearings of the House Select Committee to Investigate the January 6th Attack on the U.S. Capitol and the alarming details it has presented of a serious coup attempt, have not slowed the corporate contributions to the Sedition Caucus. In June 2022, its members received over $800,000 from corporate interests. [2] These corporations claim to support democracy but apparently value political influence more than they value democracy.

Members of the Sedition Caucus, aided by corporate support, have raised huge amounts of money for their campaigns. For example, in the first nine months of 2021: [3]

  • Senator John Kennedy (R-LA) raised over $14 million,
  • Kevin McCarthy (R-CA) raised over $9 million,
  • Steve Scalise (R-LA) raised $7.4 million,
  • Marjorie Taylor Greene (R-GA) raised over $6 million,
  • Jim Jordan (R-OH) raised over $5 million, and
  • Matt Gaetz (R-FL) raised over $3.5 million.

Many corporations try to avoid a direct link to Sedition Caucus members by letting industry groups they belong to and support financially make these political contributions. For example, top contributors to Sedition Caucus members have been the political action committees (PACs) of the American Bankers Association, the National Beer Wholesalers Association, and the National Auto Dealers Association.

Corporations whose own PACs have been big contributors to Sedition Caucus members include Home Depot, Verizon, Boeing, Charter Communications, Eli Lilly, Cigna, Northwestern Mutual, Pfizer, State Farm Insurance, Chevron, AutoZone, and Procter & Gamble.

I encourage you to let these corporations know, as a customer, employee, or citizen, that their support for members of the Sedition Caucus does not sit well with you. Boycott them if that makes sense for you and, if possible, let them know you’re doing so.

[1]      Johnson, J., 7/26/22, “Corporate interests have given $21.5 million to GOP ‘Sedition Caucus’ since Jan. 6 attack,” Common Dreams (https://www.commondreams.org/news/2022/07/26/corporate-interests-have-given-215-million-gop-sedition-caucus-jan-6-attack)

[2]      Accountable.US, 7/25/22, “June 2022: Fortune 500 companies and corporate trade groups contributed at least $819,980 to the Sedition Caucus,” (https://accountable.us/wp-content/uploads/2022/07/2022-07-21-June-Sedition-Caucus-Report.pdf)

[3]      Holzberg, M, 1/4/22, “Election objectors are among the GOP’s highest fundraisers ahead of Jan. 6 anniversary,” Open Secrets (https://www.opensecrets.org/news/2022/01/election-objectors-among-gops-highest-fundraisers-ahead-of-jan-6-anniversary)

CORRUPT CAPITALISTIC BEHAVIOR Part 6

Here are five examples of corporate corruption from the meat industry and from global consulting, accounting and auditing firms. The pervasiveness and repetitiveness of business scandals is astounding; they are reported on a daily basis. The varied examples below document a breadth of greed-driven corruption that puts lives in danger, rips off workers, and puts governments and companies at financial risk. The extreme capitalism and wealth allowed by current U.S. laws seem to have resulted in greed rising to new heights and ethics falling to new lows. (This previous post documented corporate price gouging and this previous post highlighted eight examples of corrupt capitalistic behavior. Other posts have highlight corporate corruption as well.)

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

An underlying theme of corporate corruption is the loss of robust competition in the marketplace due to the emergence of a handful of huge, monopolistic corporations in many industries. This has occurred largely through mergers and acquisitions that have occurred due to little or no enforcement (until very recently) of antitrust laws.

The Four Huge Meatpackers (Cargill, JBS, Tyson Foods, and National Beef Packing Co.): In addition to the House Select Committee to Investigate the January 6th Attack on the U.S. Capitol, there’s a House Select Subcommittee on the Coronavirus Crisis that is investigating waste, fraud, and other issues with the federal government’s response to the Covid coronavirus. One of their findings is that the four huge beef and pork meatpacking corporations (which control over 70% of the market for beef), got the Trump Administration to issue a fraudulent executive order during the Covid pandemic declaring a meat shortage, invoking the Defense Production Act, and requiring the meat packing plants to remain open and operating despite unhealthy working conditions. The meatpackers wanted the federal government to overrule state and local public health officials who were trying to protect workers. However, there wasn’t any shortage; pork exports, for example, were at an all-time high, as were the meatpackers’ profits. [1]

The executive order was drafted by industry leaders. It also gave the industry protection from liability for workers who got Covid on the job. It’s estimated that 59,000 meat plant workers got Covid (and that there were 275,000 linked cases) causing over 250 workers to die and over $11 billion in economic harm.

Most recently, JBS agreed to pay $13 million to settle a pork price fixing lawsuit. A smaller company, Smithfield Foods ($14 billion in annual revenue), agreed to pay $125 million to settle two lawsuits over pork price fixing. [2] (See this previous post for information about beef price fixing by the big meatpackers and this post about the failure of the federal government to protect workers.)

Cargill and other Poultry Producers: The Department of Justice recently announced a lawsuit against some of the largest poultry producers alleging a long-term conspiracy to reduce workers’ wages and benefits by sharing compensation information. Cargill (one of the big four meat packers) and three smaller companies account for the hiring of about 90% of the chicken processing workers in the country. The lawsuit asks for $85 million in restitution for workers who were under-compensated as a result of the conspiracy. The lawsuit also charges that the companies treated contracted chicken farmers unfairly. [3]

Abbott and the other Infant Formula Makers: Four corporations sell 89% of all the baby formula sold in the U.S. They have lobbied long and hard to have monopolistic power by limiting imports and by discouraging promotion of breastfeeding internationally. Their behavior raises concerns that they are limiting supply and price gouging to maximize profits. The current and recently severe shortages of baby formula were most directly caused by the recall of tainted formula (Similac made by Abbott, one of the four big suppliers) and the shutting down of the large facility where it’s made because of bacterial contamination. In October, 2021, a whistleblower had warned that conditions at the Similac-making plant were substandard and that Abbott had falsified records and hidden information from regulators at the Food and Drug Administration (FDA). Four months later, after an investigation, the FDA ordered the Similac recall and shut the plant down, which created major shortages. Note that Abbott had been so profitable that in late 2019 it announced it was spending $3 billion of profits to buy up its own stock to boost the stock price, which rewards wealthy shareholders and executives. [4] [5]

Bain & Co., international consultants: The British government has banned Bain & Co., the Boston-based international consulting company, from bidding for government contracts for three years because it is “guilty of grave professional misconduct which renders its integrity questionable.” Bain was found to have been involved in corruption in South Africa by a South African judicial commission. Bain has said that its 2018 work for the South African Revenue Service was a “serious failure” and has returned its fees but has denied corruption. The government estimates the scandal cost the country $30 billion. Consulting giant McKinsey & Co. and a Swiss firm have also returned their fees related to the scandal. KPMG LLP, one of the big four accounting and auditing firms, and a German company have also been involved in scandals in South Africa in this timeframe. [6]

Ernst & Young and KPMG, accountants and auditors: Since 2017, Ernst & Young, one of the big four accounting and auditing firms (which vouch for the accuracy and honesty of other companies’ financial statements), has facilitated cheating on the ethics tests taken by hundreds of its employees. The employees were required to pass the test to get their professional licenses as auditors. Furthermore, the company withheld evidence of the misconduct from federal investigators. Ernst & Young will pay a $100 million fine, the largest ever imposed on an accounting and auditing firm. However, given its $40 billion in annual revenue, this fine of one-quarter of one percent of yearly revenue probably doesn’t hurt too much. By the way, Ernst & Young is a repeat offender; from 2012 to 2015, over 200 employees had cheated on exams, taking advantage of a software glitch in the company’s testing system. KPMG, another of the big four accounting and auditing firms, paid $50 million in 2019 for its cheating scandal. [7]

[1]      Cox Richardson, H., 5/12/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/may-12-2022)

[2]      Associated Press, 7/6/22, “Smithfield Foods settles lawsuit over pork prices,” In Business Talking Points in The Boston Globe

[3]      Balsamo, M., 7/25/22, “Poultry producers sued over workers,” The Boston Globe from the Associated Press

[4]      Dayen, D., 5/10/22, “Monopolies and the baby formula shortage,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/monopolies-and-the-baby-formula-shortage/)

[5]      Cox Richardson, H., 5/12/22, see above

[6]      Fletcher, O., & Cele, S., 8/4/22, “UK ban on Bain sets key precedent, lawmaker says,” The Boston Globe from Bloomberg News

[7]      Newmyer, T., 6/29/22, “Ernst fined $100m over cheating on ethics exam,” The Boston Globe from the Washington Post

CORPORATE PROFITS, “INFLATION,” AND THE FEDERAL RESERVE

Soaring profits at the big oil and gas companies are again making headlines. Combined, Shell, Exxon, and Chevron reported $41 billion in profits for the second quarter of 2022 –  record setting figures. Profits in the oil and gas industry are up 235% from a year ago. Meanwhile, almost half of the increase in “inflation” over the past few months has been due to soaring gasoline prices.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

The companies’ executives indicated that they plan to spend those profits on buying up their own stock (on top of $19 billion already spent on buybacks this year). This enriches shareholders and executives. The executives do NOT plan to reinvest those profits in their companies, for example to expand production or refinery capacity, or invest in modernization, research, and development. This underscores that these record profits from record high gasoline prices are price gouging and a huge transfer of money from the pockets of working Americans to the wealth of rich shareholders and corporate executives. [1] The oil and gas companies did used some of their huge profits – $200 million last year – to influence policy makers in Washington, D.C.

Price hikes and price gouging are not occurring just in the oil and gas industry, however. Overall, U.S. corporate profits are at their highest level since the 1950s. Markups – the difference between the actual cost of producing a good or delivering a service and the price charged the consumer – are at the highest level on record and saw their largest year-to-year increase in 2021. As a result, as U.S. companies increased their prices, their profit margins jumped from an average of 5.5% from 1960 to 1980, to 9.5% in 2021. [2] (See this previous post for more evidence that much of the current “inflation” is price gouging.)

All of these price hikes have created the highest “inflation” in 40 years. The primary measure of inflation that the Federal Reserve uses, the personal consumption expenditures (PCE) price index, was up 6.8% over prices a year ago. Excluding typically volatile food and energy, the so-called core PCE, was up 4.8% over the last year.

The Federal Reserve likes to see inflation at 2% and historically has used interest rate increases to slow down the economy and reduce inflation. This approach works by slowing consumer buying and business expansion by increasing the cost to borrow money for these purposes. This slows business growth and therefore the need for employees. This increases unemployment and reduces wage increases needed to hire or keep employees. This reduces businesses’ labor costs and their need to increase prices to pay their workers. Hence, price increases, i.e., inflation, are reduced.

The Federal Reserve has increased its key interest rates (which is what it charges financial institutions) by a hefty 1.5% over the last two months, from a range of 0.75% – 1.0% to 2.25% – 2.5%. This is the most aggressive increase in rates in 30 years. There are already signs that economic growth, gasoline price increases, and wage increases have slowed. The economy overall actually shrank a bit in each of the last two three-month periods.

Many economists are worried that the Federal Reserve is raising interest rates too aggressively and that a recession will be the result. Our economy is in an historically uncharted situation. The Covid pandemic has resulted in unprecedented changes in the global economy, in work and the workforce, and in supply chains. On top of this, climate change is affecting food production and natural disasters (from droughts to wildfires to storms) in ways not previously seen. And the war in the Ukraine is disrupting the global economy, especially supplies of and prices for food and fossil fuels, in ways never experienced before. [3] Finally, the widespread presence of huge, monopolistic corporations with the power to increase prices and profits has not been seen for 100 years. [4]

All of this suggests that the Federal Reserve’s effort to fight inflation with interest rate increases is not likely to work as it has in the past. Interest rate increases are not effective in controlling the drivers of today’s inflation. Federal Reserve Chairman Powell was asked by Senator Warren at a recent congressional hearing if he thought interest rate increases would bring down food and gas costs and he replied, “ I would not think so, no.” [5]

A recession, if the Federal Reserve triggers one, would increase unemployment and disproportionately hurt lower-wage employees and workers of color. It would also negatively affect the world economy and have major impacts on poor countries globally.

President Biden has appealed to oil and gas company executives and foreign leaders to increase production and reduce prices. They have refused. So, what’s needed to rein in inflation, curb corporate price gouging, and help consumers deal with high inflation is a windfall profits tax, as was done in 1980. A tax on excessive profits would make price gouging less attractive to companies and provide the government with revenue that could be used to assist families suffering from the effects of inflation and to invest in the transition from fossil fuels.

Multiple countries have already implemented windfall profits taxes. Britain’s Conservative government has implemented a 25% windfall profits tax on oil and gas companies. It will use the $19 billion in revenue generated to support low-income households struggling due to inflation. Italy raised its 10% windfall profits tax to 25% and will use the revenue to subsidize households’ energy costs. Spain implemented a windfall profits tax back in September 2021; Romania and Bulgaria have windfall profits taxes. All of them are using the revenue to provide inflation relief to working people. (See this previous post for more on tackling inflation and its effects.)

Bills in Congress would put a windfall profits tax on oil and gas companies. Senator Bernie Sanders has introduced legislation that would put such a tax on a broader range of companies. [6] Eighty percent (80%) of U.S. voters support a windfall profits tax. [7]

I encourage to you contact President Biden and your Representative and Senators in Congress. Tell them you support a windfall profits tax on companies that are price gouging, like the big oil and gas companies. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Corbett, J., 7/29/22, “Price gouging at the pump results in 235% profit jump for big oil: Analysis,” Common Dreams (https://www.commondreams.org/news/2022/07/29/price-gouging-pump-results-235-profit-jump-big-oil-analysis)

[2]      Johnson, J., 6/21/22, “Study shows excess corporate profits in the US have become ‘widespread’,” Common Dreams (https://www.commondreams.org/news/2022/06/21/study-shows-excess-corporate-profits-us-have-become-widespread)

[3]      Lehigh, S., 7/20/22, “A Nobel laureate’s polite plea to the Fed: Go slowly in fighting inflation,” The Boston Globe

[4]      Reich, R., 6/16/22, “The Fed is making a big mistake,” (https://www.youtube.com/watch?v=4xcrdDnDR-c)

[5]      Johnson, J., 7/25/22, “Elizabeth Warren accuses Fed Chair of fomenting ‘devastating recession’,” Common Dreams (https://www.commondreams.org/news/2022/07/25/elizabeth-warren-accuses-fed-chair-fomenting-devastating-recession)

[6]      Corbett, J., 7/29/22, see above

[7]      Johnson, J., 6/15/22, “With US consumers ‘getting fleeced,’ Democrats demand windfall profits tax on big oil,” Common Dreams (https://www.commondreams.org/news/2022/06/15/us-consumers-getting-fleeced-democrats-demand-windfall-profits-tax-big-oil)j

FIXING THE RADICAL, REACTIONARY SUPREME COURT

The Supreme Court’s rulings over the last year have clearly shown that the six radical, reactionary justices [1] (Roberts, Alito, Barrett, Gorsuch, Kavanaugh, and Thomas) are not guided by any coherent legal or judicial reasoning. Their decisions are driven by the outcomes they desire based on their ideological and political beliefs. They will ignore precedents, facts, and history that don’t align with the outcomes they want to achieve.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

These six justices’ rulings disregard the rule of law; they are making up their own rules, principles, and rationales as they see fit on a case-by-case basis. They are not consistently applying the law so current and future results are predictable. They are also not enforcing the law equally on all persons and institutions. [2] (See this previous post for more detail.)

It appears that the six reactionary justices intend to return us to pre-1930 America – a patriarchal (and even misogynistic), racist, xenophobic, and conservative Christian society. It is a plutocracy (i.e., where wealthy elites rule), not a democracy. In it businesses and the private sector are dominant and government does little to regulate them – at least for businesses run by executives who are in favor with those in elected or judicial offices. [3]

There are multiple ways to move the Supreme Court back toward upholding the rule of law and our democracy. None of them are quick and easy. They all rely on either increasing the number of Democratic Senators (to a solid majority that would limit or overcome the filibuster’s requirement for 60 votes) or on at least some Republican Senators breaking with their party’s current radical, reactionary agenda.

First, it’s important to note that many of the Court’s radical, reactionary rulings could effectively be overturned by passing legislation. Voting rights, same-sex marriage and other LGBTQ+ rights, interracial marriage, and access to contraception are all examples of issues where the passage of legislation could be very effective. Others, such as limiting access to guns, clarifying separation of church and state, and limiting money in political campaigns, would require constitutional amendments. As noted above, achieving these changes would require an increase in the Democratic majority in Congress or changed behavior from Republicans.

In terms of fixing the Supreme Court itself, the most straightforward and potentially near-term approach would be to increase the size of the Court. The size of the Court has been changed by Congress seven times in the past (it’s had between five and ten justices), so this is not unprecedented. In addition, Republicans and Senate leader Mitch McConnell in 2016 informally reduced the size of the Court to from nine to eight for roughly a year by refusing to consider President Obama’s nominee for a vacancy.

A prominent proposal is to add four justices to the Court. This stems from the fact the Republicans, led by Senator Mitch McConnell, denied President Obama an appointment and also rammed through confirmation of a justice days before the 2020 election that President Trump lost. The votes of these two justices would be offset by two other justices and two additional justices would be added to reflect the appointments Presidents Obama and Biden should have gotten to make. (Note that these two appointments by Trump, and the one other he made, are the only three Supreme Court justices ever appointed by a president who lost the popular vote and who were confirmed by Senators who represented less than half the country’s population (44.7% in 2016 and 48.0% in 2018). This is possible because every state, regardless of population, gets two Senators.)

The Judiciary Act of 2021 has been introduced in Congress to add four seats to the Supreme Court “to restore balance, integrity, and independence to the extremist Court that has been hijacked, politicized, and delegitimized by Republicans.” [4] It has 60 co-sponsors.

Other proposals for increasing the number of justices have been put forward including one where there would be 15 justices: five Republicans, five Democrats, and five others chosen by the ten partisan justices. This would mean that the balance of power would be held by the five justices acceptable to both parties’ justices, which would presumably have a moderating and stabilizing effect. [5]

Another reform proposal would have the nine Supreme Court justices selected randomly from the roughly 170 federal appeals court judges. They would serve for a defined period that might be as short as two weeks, and then another random group of nine Supreme Court justices would be chosen.

Term limits are a way to reduce gamesmanship by Congress and improve the likelihood of adherence to the rule of law. With an 18-year term limit and staggered terms, a justice would be appointed every two years and two justices would be appointed in every presidential term.

There are a variety of other ways to improve the likelihood of adherence to the rule of law and to reduce the volatility of the effects of Supreme Court rulings. One would be to require a super-majority vote (say 7 to 2) to overturn precedents that have been in place for more than a certain number of years or that have been affirmed by a certain number of other rulings by the Supreme Court and other courts. Or a super majority vote could be required to overturn recently passed laws (e.g., the Voting Rights Act) or executive branch regulations.

Congress could also give itself the power to expedite laws overturning or rejecting Supreme Court rulings, as they have done for executive branch regulations through the Congressional Review Act. Congress could also limit the jurisdiction of the Supreme Court so it can’t overrule certain laws or regulations.

I encourage to you contact President Biden and your Representative and Senators in Congress. Tell them you support action to restrain the radical, reactionary justices on the Supreme Court and to overturn their rulings. Ask them to support the Judiciary Act of 2021, which would increase the size of the Supreme Court by four justices to correct the Court’s imbalance due to the two appointments stolen by Senate Republicans.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      See this previous post for an explanation of the appropriateness of calling these six justices radical and reactionary.

[2]      Millhiser, I., 7/9/22, “The post-legal Supreme Court,” Vox (https://www.vox.com/23180634/supreme-court-rule-of-law-abortion-voting-rights-guns-epa)

[3]      Cox Richardson, H., 4/6/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/april-6-2022)

[4]      Senator Elizabeth Warren, 12/15/21, “Judiciary Act of 2021”,   (https://www.warren.senate.gov/newsroom/press-releases/in-op-ed-senator-warren-calls-for-supreme-court-expansion-to-protect-democracy-and-restore-independent-judiciary)

[5]      Millhiser, I., 7/2/22, “10 ways to fix a broken Supreme Court,” Vox (https://www.vox.com/23186373/supreme-court-packing-roe-wade-voting-rights-jurisdiction-stripping)

SIX SUPREME COURT JUSTICES IGNORE THE RULE OF LAW

The Supreme Court’s rulings over the last year have clearly shown that the six radical, reactionary justices [1] (Roberts, Alito, Barrett, Gorsuch, Kavanaugh, and Thomas) have no coherent legal or judicial reasoning that is guiding them. They have also shown that they will ignore facts and history that don’t align with the outcomes they want to achieve. Their decisions are driven by the outcomes they desire based on their ideological and political beliefs.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

My last three posts have covered the radical, reactionary justices’ inconsistent use of three important principles or rationales that supposedly underlie and justify their rulings:

  • Belief in a weak federal government and strong state governments (discussed in this previous post),
  • Belief in “originalism” or “textualism,” i.e., that the language and meaning of the Constitution and its amendments as and when written should be adhered to (see this previous post), and
  • Belief in the legality of laws and rights supporting practices “deeply rooted in the nation’s history and tradition” (see this previous post).

The six radical, reactionary justices’ rulings disregard the rule of law; they are making up their own rules, principles, and rationales as they see fit on a case-by-case basis. The rule of law requires that laws, as well as the rules and regulations that implement them, must be: [2]

  • Publicly promulgated and known,
  • Equally enforced on all persons and institutions, as well as in all similar situations, and
  • Consistently applied so results are predictable and not arbitrary.

Examples of their radical rulings include the overturning of multiple major, long-term precedents without presenting a clear, compelling principle or rationale that makes it clear the ruling is not arbitrary and will lead to predictability in future rulings by the Supreme Court and other federal and state courts. Their rulings on abortion, gun ownership, separation of church and state, and the power of executive branch agencies all overturned long-term precedents without presenting a clear, compelling principle or rationale. Therefore, these rulings appear to be arbitrary, likely to lead to unpredictable rulings in the future, and to reflect unequal enforcement of laws.

The six radical, reactionary justices’ frequent use of the so-called “shadow docket” is another example of how these justices are undermining the rule of law. In these cases, rulings are issued on an emergency basis without the presentation of arguments or a written decision presenting the rationale for the ruling. Rarely used in the past, the shadow docket is now a key part of the court’s decision-making process. Without any presentation of reasoning behind these rulings, given that many of them are clearly not in line with past precedents, they certainly appear to be legally arbitrary. Furthermore, the future implications of such rulings are unclear, therefore undermining predictability. (See this previous post for more details on the use of the “shadow docket”.)

Perhaps the most egregious of the many shadow docket rulings is the one in Whole Woman’s Health v. Jackson, the case over the Texas anti-abortion law that allowed private citizens to sue a provider alleged to have performed an abortion (as well as any person or entity that aided or abetted an abortion). They would receive a $10,000 bounty from the provider, person, or entity sued if they win. Any number of citizens can bring such a suit, so a provider could be hit with tens, hundreds, or even thousands of these lawsuits. Simply defending against them would bankrupt almost any provider, as would losing the lawsuits and having to pay $10,000 for each one.

The Texas law would have effectively banned abortion in the state when, at the time, the right to an abortion was a well-established constitutional right under the Roe v. Wade decision. Therefore, the law was blatantly unconstitutional. Nonetheless, five of the Supreme Court’s six radical justices refused to block the immediate implementation of the law. One of the six, Chief Justice Roberts strongly disagreed with the decision and wrote in his dissenting opinion that the ruling made a mockery of the Constitution by allowing state governments to override constitutional rights.

Many legal scholars believe that the Whole Woman’s Health v. Jackson case is one of the worst decisions in Supreme Court history and will be taught to future law school students as one of a handful of examples of how judges should never behave, [3] given its dramatic consequences and its lack of compelling reasoning. This undermines the rule of law by creating substantial unpredictability and arbitrariness, in part because it allows each state to negate constitutional rights that every American should be able to rely on. [4]

One way of looking at all this is to conclude that the six radical, reactionary justices have said that we know better what is the right thing to do than doctors, scientists, regulatory experts in executive branch agencies, and all the court decisions at all levels that have gone before us. Moreover, they appear to believe that they understand and can interpret history better than historians, even though professional historians have serious debates about how to understand historical events and their effects.

Extrapolating from the Supreme Court rulings of the past year, current rights that seem possible, if not likely, to be overturned by the six radical, reactionary justices include the rights to contraception, same sex marriage, equal treatment for LGBTQ+ individuals, and marriage across racial lines. (Note that the ruling establishing the right to interracial marriage was in 1967, i.e., quite recent, and, therefore, ripe to be overturned. Note also that Justice Thomas is in an interracial marriage. It will be interesting to see how this one plays out.) Also at risk under this Supreme Court are business regulations and protections for workers and consumers.

It appears that the six reactionary justices intend to return the country to rule by white men, as it was when the Constitution was written. In addition, they seem to be making conservative, Christian beliefs the policies and laws of the country (which was explicitly opposed by the writers of the Constitution and the First Amendment). The patriarchal (and even misogynistic), racist, xenophobic, and conservative Christian society they appear to envision is what former President Trump’s Make America Great Again (MAGA) slogan has put into a sound bite for many Americans.

There are two other key elements of their vision that were not as evident in these recent rulings. First, they appear to envision a society that is a plutocracy (i.e., where wealthy elites rule), not a democracy. Second, related to this, they appear to envision a society where businesses and the private sector are dominant and government does little to regulate them – at least for businesses run by executives who are in favor with those in elected or judicial offices. [5]

This is a prescription for a return to pre-1930 America. It’s a “father knows best” autocracy or oligarchy where favored business leaders have free rein (or should that be reign) and where government is a racist theocracy. The MAGA Republicans are working to infuse this worldview into governments at all levels and into all branches of government. The radical actions of the Supreme Court, Trump, some governors, and some state legislatures, as well as the paralysis in Congress, are all indicative of their success.

My next post will identify some steps to take to fight back and reclaim the rule of law.

[1]      See this previous post for an explanation of the appropriateness of calling these six justices radical and reactionary.

[2]      Millhiser, I., 7/9/22, “The post-legal Supreme Court,” Vox (https://www.vox.com/23180634/supreme-court-rule-of-law-abortion-voting-rights-guns-epa)

[3]      Other examples of horrible Supreme Court rulings include the pro-slavery decision Dred Scott v. Sandford (1857), the pro-segregation decision Plessy v. Ferguson (1896), and the Japanese-American internment decision Korematsu v. United States (1944).

[4]      Millhiser, I., 7/9/22, see above

[5]      Cox Richardson, H., 4/6/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/april-6-2022)

SIX SUPREME COURT JUSTICES ARE RADICAL, REACTIONARY, AND TOTALLY POLITICAL

The Supreme Court’s rulings over the last few weeks on abortion, gun violence prevention, public funding of religious institutions, and the powers of executive branch agencies reflect a political and ideological agenda, not a coherent legal or judicial philosophy. All of them overturned long-standing precedents – something all the justices pledged not to do in their confirmation hearings and something that justices believing in laws and rights “deeply rooted in the nation’s history and tradition” wouldn’t do.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

The six radical, reactionary justices [1] on the U.S. Supreme Court are justifying their rulings with rationales that are inconsistent and contradictory. This is most evident in their use of the following three principles:

  • Belief in a weak federal government and strong state governments (discussed in this previous post),
  • Belief in “originalism” or “textualism,” i.e., that the language and meaning of the Constitution and its amendments as and when written should be adhered to (discussed in this previous post), and
  • Belief in the legality of laws and rights supporting practices “deeply rooted in the nation’s history and tradition” (see below).

In the June 24, 2022, ruling overturning Roe v. Wade’s establishment of a right to an abortion, the six radical, reactionary justices (Roberts, Alito, Barrett, Gorsuch, Kavanaugh, and Thomas) ruled that the federal government could not constitutionally guarantee this right because it is not “deeply rooted in the nation’s history and tradition.” Apparently, the 50 years since the Roe v. Wade decision is not long enough to be deeply rooted. Nor is the fact that women have quietly had abortions literally forever.

In his majority-supported opinion, Justice Alito relied on an English judge from the 1600s (who believed that some women were witches and that wives were the property of their husbands) to conclude that there is no “deeply rooted tradition” of women being allowed to control their reproductive choices and bodies. If this antiquated worldview is the “tradition” that determines modern liberties, then the only liberties safe from the radical, reactionary justices are the handful of rights expressly mentioned in the Constitution – rights that were enumerated by white, male landowners in the late 1700s. Based on this standard, women’s right to vote is not a “deeply rooted tradition” and would not be recognized without being explicitly stated in the 19th amendment. This “deeply rooted tradition” criterion also ignores the fact that for the first 129 years of our nation’s history, women were denied the right to vote and thus denied any realistic opportunity to create a “deeply rooted tradition” of bodily autonomy and access to contraception and abortion. [2]

The six radical, reactionary justices misrepresented the nation’s actual history and traditions in their opinion overturning Roe v. Wade. As historian Heather Cox Richardson wrote, “Both the Organization of American Historians and the American Historical Association, the flagship organizations of professional historians in the U.S., along with eight other U.S. historical associations (so far), yesterday issued a joint statement expressing dismay that the six Supreme Court justices in the majority in the Dobbs v. Jackson Women’s Health decision that overturned Roe v. Wade ignored the actual history those organizations provided the court and instead ‘adopted a flawed interpretation of abortion criminalization that has been pressed by anti-abortion advocates for more than thirty years.’ Although the decision mentioned ‘history’ 67 times, [the six justices] ignored ‘the long legal tradition, extending from the common law to the mid-1800s (and far longer in some states, including Mississippi) of tolerating termination of pregnancy before occurrence of ‘quickening,’ the time when a woman first felt fetal movement.’ [The historians note] that ‘[t]hese misrepresentations are now enshrined in a text that becomes authoritative for legal reference and citation in the future,’ an undermining of the ‘imperative that historical evidence and argument be presented according to high standards of historical scholarship. The Court’s majority opinion…does not meet those standards.’” [3]

Justice Alito’s opinion overturning Roe v. Wade states that “Roe was egregiously wrong from the start.” But when he was questioned about his views on Roe during his confirmation hearing, he said, “[Roe] is a precedent that has now been on the books for several decades. It has been challenged. It has been reaffirmed. . . . It would be wrong for me to say … I’ve made up my mind [otherwise] on this issue.” Stating that “Roe has been egregiously wrong from the start” certainly sounds like Alito had “made up his mind on the issue” long before his confirmation hearing but failed to disclose this to the Judiciary Committee. [4] Other justices, most notably Kavanagh and Gorsuch, similarly misled Senators during their confirmation hearings.

In the Supreme Court’s June 23, 2022, decision declaring unconstitutional New York State’s over 100-year-old requirements for obtaining a permit to carry a gun in public, the six radical, reactionary justices ignored the fact that from the nation’s founding until 1959, every legal article about the Second Amendment concluded that it did NOT guarantee an individual’s right to own a gun. That and a 100-year-old law seem like a “deeply rooted tradition” to me. It wasn’t until nearly 200 years after the writing of the Constitution, in the 1970s, that legal scholars funded by the gun and ammunition industry, and its front group the NRA, began to claim that the Second Amendment established an individual right to gun ownership. [5] (See this previous post for more detail on how the interpretation of the Second Amendment changed from supporting a well-regulated militia for the security of the state to  a “right” for individuals to bear arms for self-defense.)

Similarly, the six radical, reactionary justices’ recent rulings overturning decades-old, affirmed precedents on the separation of church and state ignore roughly 200 years of a “deeply rooted tradition” based on the First Amendment language that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” (See this previous post for more detail on specific rulings.) In their June 27, 2022, decision, which allowed a high school football coach to conduct a prayer on the football field with team members and others, the six deciding justices ignored the historical record – this one specific to the case at hand. The justices accepted the claim by the lawyers for the football coach that he had prayed privately and silently, despite the facts that a lower court judge had written that this was “a deceitful narrative” and that Justice Sotomayor, in her dissent, included a photo showing the coach leading players and students in prayer. [6]

In their ruling on June 30, 2022, declaring that the Environmental Protection Agency (EPA) does not have the authority to regulate carbon emissions from power plants, the six radical, reactionary justices rejected Congress’s grant of this authority to the EPA, an executive branch agency. However, such grants of authority have occurred since the first sessions of Congress in 1789. Therefore, what was fine with the Framers and the Founding Fathers themselves, is not constitutional according to the Court’s reactionary majority today. So “deeply rooted tradition” goes out the window when it does not fit with these six justices’ political and ideological agenda. [7]

In conclusion, it’s impossible to believe the six justices’ claims that they are honestly using “deeply rooted tradition” as the rationale for their decisions, given that, all of a sudden, these six justices know better what the Constitution means and what its writers intended than the many decades, and in some cases two hundred years, of precedents established by numerous judges and legal scholars who have gone before them. The long-standing precedents look much more like deeply rooted traditions than the positions these six justices are taking. They are using “deeply rooted tradition” as a smokescreen for acting on the basis of their personal political and ideological beliefs. They are not acting as impartial judges upholding the laws established by the legislative and executive branches of government, but rather they are legislating from the bench as they see fit.

My next post will provide a bit of an overview of the current state of the Supreme Court with these six radical, reactionary justices in control. I’ll identify some next steps that it would be logical for them to take and also share some thoughts on how to fight back.

[1]      See this previous post for an explanation of the appropriateness of calling these six justices radical and reactionary.

[2]      Hubbell, R., 5/4/22, ““The hard path forward,” Today’s Edition Newsletter (https://roberthubbell.substack.com/p/the-hard-path-forward)

[3]      Cox Richardson, H., 7/6/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/july-6-2022)

[4]      Hubbell, R., 5/5/22, “The law of small numbers,” (https://roberthubbell.substack.com/p/the-law-of-small-numbers)

[5]      Cox Richardson, H., 5/24/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/may-24-2022?s=r)

[6]      Conley, J., 6/27/22, “Supreme Court takes ‘wrecking ball’ to separation of church and state with prayer ruling,” Common Dreams (https://www.commondreams.org/news/2022/06/27/supreme-court-takes-wrecking-ball-separation-church-and-state-prayer-ruling)

[7]      Hubbell, R., 7/1/22, “We have made it through the worst,” Today’s Edition Newsletter (https://roberthubbell.substack.com/p/we-have-made-it-through-the-worst)

THE RADICAL, REACTIONARY, TOTALLY POLITICAL SUPREME COURT Part 2

The Supreme Court’s rulings over the last two weeks on abortion, gun violence prevention, public funding of religious institutions, and the powers of executive branch agencies reflect a political and ideological agenda, not a coherent legal or judicial philosophy. All of them overturned long-standing precedents – something all the justices pledged not to do in their confirmation hearings.

(Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.)

The six radical, reactionary justices [1] on the U.S. Supreme Court are justifying their rulings with reasoning that is inconsistent and contradictory. There are three important areas where the contradictory nature of the reasoning underlying these rulings is most evident:

  • Belief in a weak federal government and strong state governments (discussed in this previous post),
  • Belief in “originalism” or “textualism,” i.e., that the language and meaning of the Constitution and its amendments as and when written should be adhered to (see below), and
  • Belief in the legality of laws supporting practices “deeply rooted in American tradition” (discussed in a subsequent post).

The Supreme Court’s June 23, 2022, decision declaring unconstitutional New York State’s over 100-year-old requirements for obtaining a permit to carry a gun in public is based on an interpretation of the Second Amendment that gives an individual the “right” to bear arms. This interpretation ignores the first half of the Second Amendment which predicates the right to bear arms on “A well regulated Militia, being necessary for the security of a free State.” An honest originalist could not simply ignore this language. An expanded “right” of individuals to own and carry guns in public does not in any way involve a well-regulated militia (such as the National Guard) nor enhance the security of the state. [2] So much for being true originalists or textualists.

Even ignoring this language from the Second Amendment for a moment, a modern day “right” to bear arms is being applied to arms that could not have been imagined at the time the Constitution was written. If the “right” to bear arms were being applied to muzzle-loading guns that took many seconds to reload, that would align with the original intention of the writers of the Second Amendment. Applying it to guns that can fire multiple bullets per second (and much more lethal bullets too) cannot be said (with a straight face) to be originalism.  (See this previous post for more detail on the history of the interpretation of the Second Amendment as creating a “right” for individuals, as opposed to a militia, to bear arms.)

Similarly, the Supreme Court’s recent rulings overturning decades-old, affirmed precedents on the separation of church and state ignore the First Amendment language that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” (See this previous post for more detail on specific rulings.) The intent seems clear and the amendment has been interpreted since it was written as prohibiting governments at any level from supporting a specific religion. For six supposed “originalists” to come to a different conclusion 200 years later, seems to make it clear that they are not really originalists.

In their ruling on June 30, 2022, declaring that the Environmental Protection Agency (EPA) does not have the authority to regulate carbon emissions from power plants, the six supposed originalist (aka textualist) Supreme Court justices relied on a new rationale found nowhere in the Constitution. In her dissenting opinion, Justice Kagan called out the hypocrisy of the six deciding justices who, while claiming to be originalists, are, in fact, inventing new doctrines to achieve the outcomes they desire. “The current Court is textualist only when being so suits it,” she wrote. “When that method would frustrate broader goals, [new rationales] magically appear as get-out-of-text-free cards.” [3] The ruling in the EPA case overturned grants of authority to executive branch agencies that have occurred since the first sessions of Congress. However, what was fine with the Framers and the Founding Fathers themselves, is not constitutional according to the Court’s reactionary majority today. So originalism or textualism goes out the window when it does not fit with these six justices’ political and ideological agenda. [4]

Many of this year’s rulings by the six radical, reactionary justices (Roberts, Alito, Barrett, Gorsuch, Kavanaugh, and Thomas) overturn long-standing precedents, i.e., legal interpretations and multiple court rulings by the Supreme Court and other courts that have been in place for years, some literally going back 200 years. It belies their claim to be originalists when suddenly, these six justices know better what the Constitution means and what its writers intended than the numerous judges and legal scholars who have gone before them.

Finally, these justices are totally ignoring the preamble to the Constitution, which states,  “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.” It’s hard to see any commitment to the general welfare, domestic tranquility, or liberty in their rulings expanding the presence of extremely lethal guns on the streets of America, requiring state and local governments to support religious institutions or practices (even allowing coercion of public school students), or denying women the ability (i.e., liberty) to make decisions about their own pregnancies.

In conclusion, it’s impossible to believe the six justices’ claims that they are pursuing the original intentions of the Constitution and its writers. Rather, they are using “originalism” as a smokescreen for acting on the basis of their personal political and ideological beliefs. They are not acting as impartial judges upholding the laws established by the legislative and executive branches of government, but rather they are legislating from the bench as they see fit.

In my next post, I will review the contradictory and inconsistent nature of the six radical, reactionary Supreme Court justices’ use of their supposed belief in the legality of laws supporting practices “deeply rooted in American tradition.”

[1]      See this previous post for an explanation of the appropriateness of calling these six justices radical and reactionary.

[2]      Johnson, J., 6/23/22, “ ‘Devastating’: Supreme Court blows massive hole in state gun control efforts,” Common Dreams (https://www.commondreams.org/news/2022/06/23/devastating-supreme-court-blows-massive-hole-state-gun-control-efforts)

[3]      Cox Richardson, H., 6/30/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/june-30-2022)

[4]      Hubbell, R., 7/1/22, “We have made it through the worst,” Today’s Edition Newsletter (https://roberthubbell.substack.com/p/we-have-made-it-through-the-worst)

THE RADICAL, REACTIONARY, TOTALLY POLITICAL SUPREME COURT

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The Supreme Court’s rulings last week on abortion, a gun violence prevention measure, and public funding of religious institutions reflect a political and ideological agenda, not a coherent legal or judicial philosophy, as I will discuss below. All of them overturned long-standing precedents – something all of the justices had pledged not to do in their confirmation hearings. There are three important areas where the contradictory nature of the reasoning underlying these rulings is most evident:

  • Belief in a weak federal government and strong state governments,
  • Belief in “originalism,” i.e., that the language and meaning of the Constitution and its amendments as and when written should be adhered to, and
  • Belief in the legality of precedents and rights unspecified in the Constitution only if they reflect long-standing practices in the country.

In this post, I’ll explore the belief in a weak federal government and strong state governments as a rationale for the justices’ rulings and demonstrate their inconsistent and contradictory use it. I’ll cover the other rationales in subsequent posts.

Conservatives have traditionally supported a weak federal government and strong state governments. However, for the six justices in the majority in each of these recent rulings their commitment to this belief seems to depend on the issue.

There are two main pillars behind the weak federal and strong state government position. One is support for “states’ rights;” leaving as much of the public sector role and policy making to lower levels of government that are closer to the grassroots. Having control of schools and elections in local and state hands are two bedrock conservative examples of this. The exercise of “states’ rights” has, both historically and currently, reflected racism. Racism was an important component of “states’ rights” politics in the 1960s as it was pushback against federal Civil Rights laws, including voting rights and school desegregation.

The second pillar of conservative support for a weak federal government is opposition to regulation of businesses and the private sector. Conservatives typically believe that an economy that is as unfettered by government regulation as possible will be the most productive (if not necessarily the fairest). They also typically believe in market place and private sector solutions to social issues (e.g., privatization), not government programs as solutions.

In the June 24, 2022, ruling overturning Roe v. Wade’s establishment of a right to an abortion, the Supreme Court ruled that the federal government could not constitutionally guarantee this right. On the face of it, this reflects a belief in a weak federal government and a “states’ rights” approach where policies on abortion would be left to state governments. However, Alito’s opinion seems to go out of its way to ensure that anti-abortion advocates could pursue a nationwide, federal ban on abortion (i.e., a strong federal government role) by repeatedly writing that the abortion debate is being returned “to the people and their elected representatives.”  He does not write that the decision is being returned to the states. The implication is that those “elected representatives” could be those in Congress. Therefore, within this one decision and opinion, Alito and the five other concurring justices are at best unclear and at worst contradictory about whether they believe the Constitution creates a strong or weak federal government in relation to the states, at least in realm of abortion law. [1]

The Supreme Court’s June 23, 2022, decision declaring unconstitutional New York State’s requirements for obtaining a permit to carry a gun in public is an assertion of a strong federal government with the power to overrule states’ laws regulating guns. The Court is furthering federal enforcement of an individual “right” to bear arms based on its interpretation of the Second Amendment. (I discussed the problems with their interpretation of the Second Amendment in this previous post and won’t go into them here.) This ruling overturns a state law that has been in place for over 100 years and effectively renders any state law restricting ownership or carrying of a gun presumptively unconstitutional. The ruling, among other problems, seems to ignore the language of the Second Amendment that the right to bear arms is predicated on “being necessary for the security of a free State.” A state and the people living in it are neither more secure nor freer with an expanded “right” of individuals to carrying guns in public. [2]

On June 21, 2022, the Supreme Court issued a ruling ordering the state of Maine to allow public dollars to pay for children’s attendance at religious schools. Putting aside for the moment the First Amendment language that prohibits the government from making any “law respecting an establishment of religion” (as the six deciding justices apparently did), this ruling reflects a belief in a strong federal government that can tell states how to spend their money. This is the antithesis of “states’ rights” and a weak federal government, which conservatives typically support. This follows a pattern of decisions where the Supreme Court has overturned decades-old, affirmed precedents and ordered state or local governments to take actions that benefit or support religious groups. In Missouri, the Court ordered the state to include religious organizations in a program funding playground maintenance. In Montana, it ordered the state to include religious schools in a scholarship tax credit. It ordered Boston to include Christian groups in a program allowing non-profit organizations to fly a flag on a city flagpole. [3] Most recently, it ruled that a Washington state school district had to allow a football coach to lead players and others in prayer on the football field, despite students reporting that they felt coerced. [4] (I wonder how the Court would rule if the religious group asking for government support were Jewish, Muslim, or some other non-Christian religion. We may find out one of these days.)

One final note. Election laws and the running of elections (along with schools) have been hallmarks of conservatives’ insistence on state responsibility and control with no or very limited federal government involvement. In recent years, the Supreme Court has overturned the Voting Rights Act, stopping federal oversight of election laws in states that had (and have) a history of discriminating against Black voters. It has refused to intervene as states have engaged in voter suppression and extreme gerrymandering with political and racial goals. However, back in 2000, the Supreme Court stepped into the presidential election in Florida (in Bush v. Gore) and ordered the state to stop counting ballots. The dissenting justices and many others identified this decision as a turning point when the “conservative” justices on the Court first displayed in a dramatic way their willingness to cast aside any coherent judicial philosophy or reasoning, upend precedent, and issue a ruling to achieve the political result they personally supported.

The recent rulings by these six Supreme Court justices (Roberts, Alito, Barrett, Gorsuch, Kavanaugh, and Thomas) are clearly political and ideological, if for no other reason than the judicial philosophy and reasoning behind them is inconsistent and contradictory. Given the lack of a coherent judicial philosophy or reasoning, the only rational conclusion I can come to, is that these justices are acting on the basis of their personal political and ideological beliefs and sympathies, and not as judges upholding the laws established by the legislative and executive branches of government. Rather, they are dramatically legislating from the bench; something conservatives used to criticize others for doing. They are radical reactionaries, not conservatives. (See this previous post for more detail on why this is appropriate terminology for describing them.)

In my next posts, I will review the six radical, reactionary Supreme Court justices’ contradictory and inconsistent uses of their supposed beliefs in “originalism” and in the legality of precedents and rights unspecified in the Constitution only if they reflect long-standing practices in the country.

In the meantime, Heather Cox Richardson has posted a 33-minute reflection on the state of our (supposed) democracy after the recent momentous and anti-democratic decisions by the Supreme Court. Her commentary and perspective are, as always, thoughtful, poignant, and steeped in history. I encourage you to listen to all or part of it (perhaps the last ten minutes if you’re short on time). I’ve linked to it on my Facebook page: https://www.facebook.com/john.lippitt.161/

[1]      Hubbell, R., 5/4/22, “The hard path forward,” Today’s Edition Newsletter (https://roberthubbell.substack.com/p/the-hard-path-forward)

[2]      Johnson, J., 6/23/22, “ ‘Devastating’: Supreme Court blows massive hole in state gun control efforts,” Common Dreams (https://www.commondreams.org/news/2022/06/23/devastating-supreme-court-blows-massive-hole-state-gun-control-efforts)

[3]      Atkins Stohr, K., 6/22/22, “Remember separation of church and state? Apparently the Supreme Court doesn’t.” The Boston Globe

[4]      Conley, J., 6/27/22, “Supreme Court takes ‘wrecking ball’ to separation of church and state with prayer ruling,” Common Dreams (https://www.commondreams.org/news/2022/06/27/supreme-court-takes-wrecking-ball-separation-church-and-state-prayer-ruling)

THE POWER OF THE GUN INDUSTRY

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The gun industry has a powerful influence on policy making in the US as well as in shaping judicial rulings on gun laws and the discussion of guns and gun violence.

Part of the gun industry’s power and influence comes from its size and its ability and willingness to spend on political campaigns and lobbying. It produces roughly 10 million guns per year, resulting in sales revenue of about $12 billion. With profits of approximately $1 billion annually, it has spent $120 million on lobbying over the last ten years. In the two-year 2020 election cycle, the advocacy groups associated with the gun industry spent over $18 million on election campaigns. While the National Rifle Association (NRA) was the source of $5 million of this spending, it has been declining in membership and financial clout. However, other gun advocacy groups have been picking up much of the slack. [1]

For example, the organization Gun Owners of America has been increasing its activity. It opposes the U.S. House passed Protect Our Kids Act as well as the emerging bipartisan Senate proposal to address gun violence. It has “concern” about expanded waiting periods on gun purchases and red flag laws that would allow courts to remove guns from people deemed to be a danger to themselves or others. It opposes the proposal to ban untraceable “ghost” guns and is spreading misinformation about what it would do. [2]

Another piece of the gun industry’s power comes from its shaping of the discussion of guns and the Second Amendment. It has shifted the discussion from a well-regulated militia, e.g., the National Guard, to an individual right to ownership of any and all types of guns. It also shifted the discussion from the security of the state to personal self-defense. (See this previous post for more detail.) This shift in language, especially to an individual’s supposed right to own a gun (including a semi-automatic assault weapon), is pervasive in the media, widespread in the court system, and even echoed by Democrats and President Biden.

The 2008 Supreme Court’s 5 to 4 decision that created an individual right to possess a firearm, District of Columbia vs. Heller, overturned 217 years of interpretation of the Second Amendment and numerous court precedents allowing restrictions on an individual’s possession of a gun. It was described by former Supreme Court Justice John Paul Stevens (appointed by Republican President Gerald Ford) as “unquestionably the most clearly incorrect decision that the Supreme Court announced during my tenure on the bench,” which extended 35 years from 1975 – 2010.

Former Chief Justice Warren Burger (appointed by Republican President Richard Nixon) called the gun industry’s and the NRA’s promotion of this interpretation of the Second Amendment “One of the greatest pieces of fraud, I repeat the word fraud, on the American public by special interest groups that I have ever seen in my lifetime.” These two statements by conservative, former Supreme Court Justices underscore the hypocrisy of the supposed originalism of the supporters of this interpretation, who ignore the first two phrases of the Second Amendment: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

Nonetheless, the media, the courts, essentially all Republicans, and even most Democrats speak of the individual right to bear arms as an unquestioned constitutional right. Questioning this interpretation of the Second Amendment or citing Justices Stevens’ and Burger’s statements about it are almost completely absent from the discourse. Based on this manufactured right, the Supreme Court seems all but certain to make a ruling this month that will find unconstitutional a New York law, in place since 1913, that requires someone carrying a concealed gun in public to have a permit.

It appears that the originalist judicial philosophy (supposedly underlying this interpretation of the Second Amendment as creating an individual right to bear arms) was invented as an intellectual smokescreen to justify this and other radical, reactionary judicial rulings. The originalists claim that the Constitution’s language, including on rights, freedom, and liberty, should always and forever be interpreted with the meaning they had in 1791 (when African Americans were slaves) or in 1868 when the 14th Amendment was passed (when women had no rights and almost all schools were segregated). [3] Such a claim seems ludicrous on its face and the Supreme Court rulings by its adherents are radical, reactionary, and inconsistent. The failure of the media and Democrats to point out these facts is hard to understand.

The gun industry also displays its power on the Internet and social media, which have certainly played a role in fomenting the American gun culture and even gun violence. Given that most TV networks, magazines, and newspapers banned gun ads years ago, digital advertising via Google and other Internet sites is essential to the gun industry’s marketing.

In 2004, based on Google’s corporate value “don’t be evil” and as a matter of ethics, Google’s cofounder Sergey Brin announced that gun ads would be banned. Nonetheless, Google’s ad systems have provided billions of views of gun makers’ ads since then. A study by the independent, non-profit, investigative journalism organization ProPublica found that between March 9 and June 6, 2022 (90 days), the fifteen largest gun sellers in the U.S. placed ads through Google that produced 120 million impressions (i.e., the displaying of an  ad to a viewer). [4] This is an average of roughly 1.3 million views of a gun ad per day.

Every time an ad is viewed, Google earns a small fee. Some of the gun ads have appeared on Google’s own sites, a clear breach of Google’s stated policy. However, the vast majority of them are placed via a long-standing and well-known loophole in Google’s policy. Although Google bans gun ads on its own ad network and on sites it owns, ads sold by partners but placed using Google’s systems are not restricted by Google.

Gun makers and sellers can use Google’s advertising system to place gun ads on websites that allow gun ads. This is where the vast majority of gun ads show up.

Although a website owner can theoretically ban certain types of ads, such as gun ads, Google’s ad systems’ enforcement of such a ban has loopholes. Most notably, if a person has visited a gun maker’s website, Google’s tools facilitate the tracking of that person as they browse other sites. When that person is at another website, one that may ban gun ads, this tracking and targeting tool can display a gun ad. This retargeting (as it’s called) of a person is a loophole Google purposefully built into its advertising system over a decade ago.

For example, although Publishers Clearing House does not accept gun ads, in a recent three-month period roughly 4.6 million views of ads for Savage Arms guns occurred on the Publishers Clearing House website. Gun ads have also been documented as showing up on websites such as The Denver Post, Merriam-Webster’s dictionary, the Britannica, U.S. News & World Report, Ultimate Classic Rock, Parent Influence (on an article about “How to handle teen drama), and on Baby Games (amid brightly colored kids’ games), as well as on recipe sites and quiz game sites.

Google makes money on each of the hundreds of millions of views each year of gun ads. Note that Google dominates the digital advertising world with 28.6% of total digital ad revenue in the U.S.; Facebook has 23.8% and Amazon 11.3%, giving the big three an overwhelming 63.7% of the market. Therefore, gun ads via Google’s advertising systems are important both to the gun industry and to Google’s revenue.

[1]      Siders, D., & Fuchs, H., 6/10/22, “The NRA isn’t the only group advocating for the Second Amendment,” Politico (https://www.politico.com/minutes/congress/06-10-2022/more-than-just-nra/)

[2]      Giorno, T., 6/14/22, “Gun Owners of America pushes back on bipartisan gun control legislation,” Open Secrets (https://www.opensecrets.org/news/2022/06/gun-owners-of-america-pushes-back-on-bipartisan-gun-control-legislation)

[3]      Mogulescu, M., 6/6/22, “It’s time for Democrats to stop agreeing that the Second Amendment protects an individual’s right to bear arms,” Common Dreams (https://www.commondreams.org/views/2022/06/06/its-time-democrats-stop-agreeing-second-amendment-protects-individuals-right-bear)

[4]      Silverman, C., &Talbot, R., 6/14/22, “Google says it bans gun ads. It actually makes money from them.” ProPublica (https://www.propublica.org/article/google-guns-ads-firearms-alphabet-advertising)

GUN VIOLENCE’S HIDDEN ACCOMPLICES

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Nowhere else in the world does civilian gun violence take anywhere near the toll that it does in the US. Other countries have and are taking strong, effective steps to reduce gun violence. We, too, can substantially reduce gun violence but it will not be easy or quick. It will take sustained, hard, and at times uncomfortable advocacy to achieve the changes in policies, practices, and attitudes that are necessary to substantially reduce gun violence here.

While the media coverage of mass shootings almost always says the shooter or shooters acted alone, their indirect or hidden accomplices are many and we cannot continue to let them avoid responsibility. The radical reactionaries on the Supreme Court are accomplices because they have given individuals the right to own arms, including semi-automatic assault weapons with large magazines that have no purpose other than killing as many people as possible as quickly as possible.

Members of Congress who block a ban on assault weapons and high-capacity magazines are accomplices. State legislators and Governors who have acted similarly are accomplices. This also applies to the blocking of other gun violence prevention measures, such as comprehensive background checks, waiting periods on taking possession of a gun, increasing to 21 the age requirement for buying a gun, laws keeping guns out of the hands of people most likely to use them to harm themselves or others, red flag laws that allow guns to be taken away from people who have indicated a likelihood to use them to harm themselves or others, etc.

The top of the list of accomplices today includes Governor Abbott of Texas, who proudly signed seven bills weakening regulations that reduce gun violence. In addition, despite saying that mental health services are what’s needed to prevent to mass shootings, he has refused to accept the Affordable Care Act’s expansion of Medicaid eligibility for low-income residents of TX (Medicaid pays for more mental health services than any other health insurer) and he used over $200 million from the state agency that provides mental health services to bus immigrants to Washington as a stunt to support Trump’s border policies. [1]

Also high on the accomplice list is Fox TV (it’s not news), which promotes grievance, hate, and sometimes violence to a largely white, male audience. The social media companies are on the list as well. They allowed the video of the May 14th mass shooting at the Buffalo food market to be seen by millions and to still be widely available two days after the shooting. Facebook took over ten hours to remove a link to the video. Twitch, where the shooter live-streamed the attack, is owned by Amazon. The ability to share video of a mass shooting with millions is what multiplies its impact and makes it real terrorism. [2]

Some of these accomplices are attacking those who are calling them out for their complicity, claiming we are using a tragedy for political purposes. They are hypocrites. First of all, they have used tragedies, fear, hate, and misinformation (let’s call it what it is – lies) for years to expand access to guns and foment their use. Second, while these accomplices appeal to our natural instinct to take the high-road in moments of crisis, they take the low-road time and time again – and appear to have no shame for doing so.

The time for being polite and civil in the face of gun massacres, which are terrorism, has long since passed. After fifty-five years of mass shootings in schools – going back to the University of Texas at Austin in 1966 – defenders of gun “rights” for individuals no longer deserve any presumption of good faith or restraint on our part given the hundreds of thousands of lives lost, including so many children. A polite and civil response has only led to an ever-mounting death toll. [3] (Please see my previous post for why claims of individual gun “rights” are the result of a manipulation of the meaning of the 2nd Amendment to the Constitution.)

It will require a strong and loud, and yes, confrontational, movement to produce meaningful action to reduce gun violence in this country. I urge you to speak out and act out however you are comfortable to contribute to this movement.

[1]      Jeffery, C., 5/26/22, “He did not act alone,” Mother Jones (https://www.motherjones.com/politics/2022/05/uvalde-texas-massacre-accomplices/)

[2]      Harwell, D., & Oremus, W., 5/16/22, “Only 22 saw the Buffalo shooting live. Millions have seen it since.” The Washington Post

[3]      Hubbell, R., 5/28/22, “He did not act alone,” Today’s Edition Newsletter (https://roberthubbell.substack.com/p/he-did-not-act-alone?s=r)

GUN VIOLENCE, THE SECOND AMENDMENT, AND THE “ORIGINALISTS”

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The rash of recent gun violence has refocused attention on the Second Amendment to the Constitution, which reads:

“A well regulated Militia, being necessary for the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

The radical reactionaries on the Supreme Court, who are supposedly “originalists,”  have interpreted this language as giving individuals the right to bear arms and an individual right to security through armed self-defense.

Somehow the “originalists” have forgotten (or choose to ignore) the first two phrases of the amendment’s language which link the right to bear arms to a well-regulated militia and the security of the state. Clearly, the original writers of the Second Amendment did NOT have in mind the right of each individual, on his or her own, to bear arms. And they had no possible conception that arms would include semi-automatic weapons that could fire multiple bullets per second; the arms they knew took many seconds to reload for a second shot. So much for originalism! (I’ll write more about the hypocrisy of the “originalists” on the Supreme Court in a future post.)

Actually, what the writers of the Second Amendment had in mind was security against slave revolts. The Second Amendment was pushed by Patrick Henry (Governor of Virginia) and George Mason (intellectual leader of the anti-Constitution anti-federalists). They were worried that the new Constitution would give the federal government the sole power to form militias, preventing states and local entities from doing so. They were also concerned that Northerners would dominate the new federal government. Given that parts of Virginia, for example, had more enslaved Blacks than Whites, Henry and Mason (and others) wanted to ensure that southern states had the power to form militias to protect white slave owners from slave revolts. [1] Therefore, if there’s any originalism in the right-wing justices’ support of an individual right to bear arms, it’s originalism that has strong racist overtones.

The ”originalists” supposedly don’t support any evolution of the meaning of the Constitution over time; according to them, it’s the original language and intent of the writers that should govern judicial decision making. Furthermore, a leading “originalist,” Justice Alito, just wrote in his draft decision overturning Roe vs. Wade, that for an unwritten right to be legitimate, it must be deeply rooted in the nation’s history and have been understood to exist when the 14th Amendment was ratified in 1868. Under either of these originalist principles, an individual right to bear arms, particularly the types of arms available today, would be impossible to assert in a truly originalist interpretation of the Constitution. Again, so much for honest originalism!

A constitutional right to individual gun ownership is a relatively new interpretation of the Second Amendment, invented by the gun industry in the 1970s and aided and abetted by the National Rifle Association (NRA). It wasn’t until the mid-1970s that the Republican Party adopted support of individual gun ownership as a core belief and policy position. In the 1960s, Republicans were strong supporters of gun control, in part because they were strong supporters of law and order. Furthermore, during the 1960s, with the rise of the Black Power movement and pushback from the Black community against racism by police, Republicans were concerned about Blacks having guns. So, for example, in 1967, California passed the Mulford Act, the most sweeping gun control law in the country. It banned personal possession of a firearm without a permit and was signed into law by Governor Ronald Reagan. At the federal level, the Gun Control Act of 1968 was passed, which restricted the sale of firearms across state lines. Neither of these laws raised any constitutional concerns at the time.

Until 1959, every legal article about the Second Amendment concluded that it was not intended to guarantee an individual’s right to own a gun. In the 1970s, legal scholars funded by the gun and ammunition industry, and their front group the NRA, began to make the argument that the Second Amendment did establish an individual right to gun ownership. [2]

In 1972, the Republican Party’s policy platform supported gun laws restricting the sale of handguns. However, in 1975, as he geared up to challenge President Gerald Ford for the 1976 presidential nomination, Ronald Reagan took a stand against gun control.

In 1977, an at-the-time radical wing of the NRA took control of the organization and shifted its focus from marksmanship and responsible gun ownership by hunters to assertion of a right to individual ownership of guns for self-defense and to opposition to any restrictions on gun ownership. In 1980, the Republican Party platform opposed the federal registration of firearms for the first time and the NRA, for the first time, endorsed a presidential candidate: Republican Ronald Reagan. This led to the Firearms Owners Protection Act of 1986, which repealed much of the Gun Control Act of 1968 and dramatically weakened federal gun control. Ironically, it was signed into law by President Reagan (who 19 years earlier had signed California’s strong gun control law).

Nonetheless, after three mass shootings in four years, the Violent Crime Control and Law Enforcement Act of 1994 included a ban on assault weapons and large capacity  ammunition magazines, as they had been used in the mass shootings and were key to making  the horrific carnage possible. However, this ban had a ten-year sunset provision. Therefore, the ban expired in 2004 and has not been renewed despite numerous attempts to do so.

These are key elements of the history of the Second Amendment and policies on gun ownership that have gotten us to where we are today. There have been over 230 mass shootings in the US already in 2022 – well over one per day. (A mass shooting is defined as one where four or more people are injured or killed, not including the shooter.) There were 20 in the week after the May 24th Uvalde, TX, school shooting. In the 230 mass shootings so far this year, 256 people have been killed and 1,010 injured. Historically, there were nearly 700 mass shootings in 2021, a significant increase from 611 in 2020 and 417 in 2019. [3]

I urge you to speak out and act out however you are comfortable to contribute to the movement to take strong action to reduce gun violence in this country. Nowhere else in the world does civilian gun violence take anywhere near the toll that it does in the US. Other countries have and are taking strong, effective steps to reduce gun violence. We can too. We have a long way to go; the sooner we start the better.

[1]      Mystal, E., 2022, “Allow me to retort: A Black guy’s guide to the Constitution,” NY, NY. The New Press.

[2]      Richardson, H. C., 5/24/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/may-24-2022?s=r)

[3]      Ledur, J., & Rabinowitz, K., 6/3/22, “There have been over 200 mass shootings so far in 2022,” The Washington Post

FOUR WAYS TO TACKLE INFLATION AND ITS HARMFUL EFFECTS

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This post will summarize four ways to attack the current inflation and its harmful effects, as well as one traditional way of reducing inflation that will probably be counterproductive.

Because what we are experiencing is not traditional inflation, interest rate increases by the Federal Reserve are not likely to be effective in reducing inflation and may well do more harm than good. Typically, interest rate increases slow the economy and job growth, which increases unemployment and slows the rate of wage increases. In the current conditions, this would have little effect on inflation because it is not being driven by wage increases and labor costs, but rather by price gouging by monopolistic corporations, supply chain problems from the pandemic, and the war in Ukraine. In this environment, slowing job and wage growth would increase economic hardship for workers and likely do them more harm than any good due that might come from decreased inflation.

There are other ways to more effectively address the harm that price increases are doing to household budgets. One way is to decrease household costs. The Biden Administration has proposed and taken a number of steps to do this. It is working to increase the supply of oil to put downward pressure on gasoline prices, but the big oil corporations are not cooperating. It is trying to reduce drug costs, but Congress is not cooperating. It is doing what it can to address supply chain problems and to reduce monopolistic power that lets companies increase prices unjustifiably, but these two tactics are not ones that will quickly produce benefits by reducing prices. (See this previous post for more detail on these efforts.)

A second way household budgets can be helped is by increasing incomes. An enhanced child tax credit and/or an expanded earned income tax credit would do this, but these have been blocked by Republicans in Congress with the complicity of a few corporate Democrats, most notably Senators Manchin and Sinema. An increase in the minimum wage would also be helpful but has not made progress in Congress.

Helping families pay the costs of child and elder care would have a three-fold benefit, but again, Congress, particularly the Senate, has not passed legislation to do this. Help with child care and elder care expenses would reduce costs for families, helping alleviate the hardship of increases in other prices. Increased affordability and access to child and elder care would allow parents and caregivers to increase their participation in the workforce, thereby increasing household income. Furthermore, this increase in workforce participation would expand the labor supply, reducing the upward pressure on labor costs of the currently tight labor market. This would reduce the albeit relatively small contribution of labor costs to inflation. [1]

A way to attack the “inflation” that is actually corporate price gouging would be to implement a  windfall profits tax. Senator Bernie Sanders (Independent of VT) has filed the Ending Corporate Greed Act, which would implement a 95% tax on the windfall profits of large corporations (those with more than $500 million in annual profits). The bill defines windfall or excess profits as profits in excess of a corporation’s average profits from 2015 through 2019, adjusted for inflation. (See these previous posts for examples of the extraordinary profits big corporations have been making recently:

The proposed tax closely parallels the World War II windfall profits tax. Windfall profits taxes were also implemented in the 1980s on oil and gas companies and during the Korean War and World War I. [2]

The goal of a windfall profits tax would be to get corporations to stop price gouging because their ability to inflate profits would be significantly reduced. However, if corporations continue to charge high prices and generate big profits, the tax revenue from the windfall profits tax could be used to provide assistance to working families facing economic hardship due to increased prices.

Price gouging can also be tackled directly. Senators Elizabeth Warren (Democrat from MA) and Tammy Baldwin (D-WI), along with Representative Jan Schakowsky (D-IL), have introduced the Price Gouging Prevention Act of 2022. It would prohibit price gouging during market disruptions such as the current pandemic. It would empower the Federal Trade Commission (FTC) and state attorneys general to enforce a ban on excessive price increases. It would require public companies to report and explain price increases in their quarterly filings with the Securities and Exchange Commission. [3]

I encourage to you contact President Biden and your Representative and Senators in Congress. Tell them you support a windfall profits tax, as well as other steps to combat price gouging, inflation, and the hardships they are causing.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Bivens, J., 4/8/22, “Child care and elder care investments are a tool for reducing inflationary expectations without pain,” Economic Policy Institute (https://www.epi.org/blog/child-care-and-elder-care-investments-are-a-tool-for-reducing-inflationary-expectations-without-pain/)

[2]      Avi-Yonah, R., 4/18/22, “Time to tax excessive corporate profits,” The American Prospect (https://prospect.org/economy/time-to-tax-excessive-corporate-profits/)

[3]      Johnson, J., 5/12/22, “New Warren bill would empower feds to crack down on corporate price gouging,” Common Dreams (https://www.commondreams.org/news/2022/05/12/new-warren-bill-would-empower-feds-crack-down-corporate-price-gouging)

GOOD ECONOMIC NEWS ACCOMPANIED BY PRICE GOUGING AND INFLATION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

There is good economic news, in case you missed it, which is likely because the mainstream media tend to give it little coverage. The bad news is that price gouging and inflation continue. Multiple ways to tackle them will be presented in my next post.

Good economic news:

  • The number of workers receiving unemployment benefits (1,384,000) is at the lowest level since Jan. 17, 1970, i.e., over 52 years ago. Applications for unemployment benefits are below pre-pandemic levels. [1]
  • Employers posted 11.5 million job openings in March, an unprecedented two job openings for every unemployed person.
  • The economy has generated over 400,000 jobs per month for an unprecedented 12 consecutive months.

Bad economic news:

  • Inflation remains high at 8.3% in April, although it was down a bit from 8.5% in March. Major contributors were airlines’ fares (up 33.3% with only a small fraction attributable to higher fuel costs), energy prices (up 30%, see below for some background), and food (up 9.4%, the highest rate in 40 years).
  • Gasoline prices continue to be a key driver of consumer “inflation.” However, price gouging seems like a more accurate description as gasoline prices have gone up or remained very high despite falling or stabilizing prices for a barrel of crude oil. Moreover, Exxon Mobil and Chevron, the largest U.S. oil corporations, reported soaring profits again for the first quarter of 2022. Exxon Mobil reported $5.5 billion in profits for the quarter despite a $3.4 billion loss from abandoning its operations in Russia. Chevron reported $6.3 billion in profits for the quarter, over four and a half times its profits in the first quarter of 2021. [2] Energy giant Shell reported record first quarter profits of $9.1 billion, up from $3.2 billion the previous year. This prompted calls from the British government to impose a windfall profits tax on the London-based corporation. [3] (More on a windfall profits tax in my next post.)
  • Top executives of six of the largest oil and gas corporations were called to appear before Congress. They refused to commit to lowering gas prices for consumers. They refused to reduce record profits, dividends to shareholder, or buying of their company’s own stock. Over the last year, they’ve spent roughly $40 billion buying back their own corporations’ stock, which drives up the stock price, rewarding themselves and other shareholders. [4]
  • The oil and gas executives also refused to increase production of gasoline, which would tend to lower prices.

Josh Bivens, Director of Research at the Economic Policy Institute, describes consumer inflation as “corporate … greed and market power … channeled into much higher prices and profit margins.” He notes that “normally corporate profits should be about 12% of the cost of anything … [but now] corporate profits [are] accounting for 54% of the total rise in prices.” He notes that increased costs of labor are not driving inflation as they are lower than the overall rate of inflation. Corporations, he states, are able to increase prices and profits now because unusual events have distorted the normal operation of the economy. [5] In other words, this “inflation” is opportunistic price gouging by the airlines, the oil and gas corporations, the meat packers, and others.

In my next post, I’ll summarize four ways to attack the current inflation and its harmful effects, as well as one traditional way of reducing inflation that will probably be counterproductive.

[1]      Ott, M., 5/6/22, “More Americans applied for jobless aid last week,” The Boston Globe from the Associated Press (Note the negative headline on an article that had overwhelmingly good news.)

[2]      Business Talking Points, 4/30/22, “Exxon Mobil and Chevron report soaring earnings,” The Boston Globe from the New York Times

[3]      Business Talking Points, 5/6/22, “Shell earnings soar on higher oil prices,” The Boston Globe from the Associated Press

[4]      Joselow, M, & DeBonis, M., 4/7/22, “Panel grills oil company executives,” The Boston Globe from the Washington Post

[5]      Martinez, A., host of Morning Edition, 5/10/22, “Are corporations using inflationary times to raise prices and up their profits?” National Public Radio (https://www.npr.org/2022/05/10/1097820864/are-corporations-using-inflationary-times-to-raise-prices-and-up-their-profits)

GOOD ECONOMIC NEWS AND THE FIGHT AGAINST INFLATION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

President Biden gave an important speech last Tuesday on the economy, including both the good news and an update on the fight against inflation. However, I saw very little coverage of the speech in the mainstream media. Here are some highlights:

  • 3 million jobs have been added to the economy in the first 15 months of Biden’s presidency – a record.
  • The unemployment rate is down to 3.6%.
  • 4 million new businesses were started in 2021 – 20% more than any other year on record.
  • The federal deficit declined $350 billion last year and is projected to decline by $1.5 trillion this fiscal year – which would be the biggest decline in history. Biden noted that this will decrease inflationary pressures. This quarter the U.S. will actually have a surplus and will reduce the accumulated federal debt. This is the first time this has happened since the Clinton presidency in 2000. (Note that under President Trump, who pledged to reduce the debt, it instead grew by $8 trillion [40%] – from $19.6 trillion to $27.5 trillion. The growth of the debt in Trump’s last year was almost $5 trillion, while in Biden’s first year it was $2 trillion.)

Biden stated that inflation is a serious problem and that reducing it and its impact on families will be his top priority. It is a major problem worldwide and the strength of the U.S. economy has put us in a better position to deal with it than almost any other country. It is driven by supply chain problems and the war in Ukraine that have put supply and demand out of synch. (Why Biden didn’t include corporate price gouging I don’t know. More on this in my next post.) He noted that 60% of inflation in March was due to gasoline prices. Food prices are up in part because Ukraine and Russia are major producers of wheat and corn. However, their shipments of these food supplies have effectively stopped. The Biden Administration and European allies are working to get the 20 – 30 million tons of grain in Ukrainian silos shipped out and into world markets. Biden also noted that four meat processors control the U.S. market and set meat prices. The Administration is working to increase competition in the meat industry as well as elsewhere. Biden repeated his statement that “capitalism without competition isn’t capitalism, it’s exploitation.”

The Biden Administration has also worked with allies to release 240 million  barrels of oil from strategic reserves to increase supply and put downward pressure on prices. Biden noted that the price of a barrel of oil has been steady for weeks but that gas prices have continued to go up. In addition, the Administration is working to increase domestic oil production, the production of biofuels, and the generation of clean energy. These steps could reduce household utility bills by up to $500 per year. (Note that the big oil corporations are not responding to requests to increase oil production, presumably because low supplies and high prices fuel high profits for them.)

The Biden Administration has been fighting to decrease other costs for families in addition to those of food and gas. It has asked for authority to negotiate drug prices in Medicare and cap the price of insulin. However, the U.S. Senate has not passed these proposals. It is tackling supply chain problems by working with labor and port operators to speed up the movement of goods at ports. It has also been working with trucking companies and truckers to speed up the movement of goods to markets.

FACEBOOK KNOWS IT PROMOTES MISINFORMATION AND WILL CONTINUE TO DO SO WITHOUT GOVERNMENT REGULATION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Facebook’s promotion of low-quality, right-wing content and disinformation has been clearly documented. For example, in April 2021, The Daily Wire, a bigoted, sexist, anti-immigrant, far-right website that produces no original reporting and a low volume of articles had by far the highest distribution / engagement on Facebook. Second highest was the British tabloid, the Daily Mail, followed by Fox News. Four of the top six sources of content engagement on Facebook were right-wing publishers of disinformation. Credible media got much less engagement due to Facebook’s content promotion algorithm. For example, for April 2021: [1]

  • The Daily Wire (1st)          74.9 million Facebook engagements based on 1,385 articles
  • CNN (4th)                         23.1 million Facebook engagements based on 4,765 articles
  • NBC (7th)                         18.7 million Facebook engagements based on 2,596 articles
  • New York Times (8th)      18.6 million Facebook engagements based on 6,326 articles
  • Washington Post (14th)   12.3 million Facebook engagements based on 6,228 articles

Facebook’s reality, driven by its content promotion algorithm, is NOT the reality outside of Facebook. The Daily Wire is NOT more popular than CNN, NBC, the New York Times, and the Washington Post in the world outside of Facebook, let alone more popular than all four of them combined – and the almost 20,000 articles they publish per month compared to the less than 1,400 articles of The Daily Wire, none of which contain original reporting. Facebook promotes this alternative reality because it maximizes its profits. (See this previous post for more detail.)

The election-related disinformation that flourishes on Facebook is a global crisis. There are 36 national elections in countries around the globe in 2022 and many of them will be affected by disinformation on Facebook. Some may be affected to an even greater degree than what has occurred in the U.S., where a strong case can be made that disinformation on social media (with Facebook as a major if not the major player) led to the election of Trump in 2016.

Facebook (and its parent Meta) know how to stop the proliferation of disinformation and have done so for short periods of time at least twice. Meta refers to these instances as “break the glass” emergencies, but the emergency is not short-term and specific incident related, it’s long-term and endemic.

For five days after the 2020 U.S. national election, Facebook’s News Feed and other features operated very differently. Facebook adjusted its content promotion calculations, i.e., its algorithm, to more strongly promote credible news sources. By implication, it deprioritized or down ranked sources publishing disinformation and divisive or hateful content. Facebook did this to slow the spread of disinformation about election fraud and the presidential election being stolen. However, it was too little and too late, lasting only five days in the face of many months of spreading lies about the election. Nonetheless, during the life of the adjusted algorithm, Facebook engagement for credible sources such as the New York Times, CNN, and NPR spiked up and the engagement dropped for the extreme right-wing sources, as well as for hyper-partisan left-wing sources.

Some Facebook staff pushed to make the algorithm change permanent, but were overruled by Facebook’s senior management, including Joel Kaplan, a Republican operative who had previously intervened on behalf of right-wing sources and the Facebook algorithm that promotes them. Moreover, as Facebook returned to “normal” operation, Facebook also eliminated its civic-integrity unit.

After the January 6, 2021, insurrection at the U.S. Capitol, Meta and Facebook again “broke the glass” and instituted more preferential promotion for credible news sources, but again, only for a few days.

Many concerned people from across the globe and from all walks of life – from policy makers to advocates to marginalized people – are calling on Facebook (and other social media platforms, including Instagram [also owned by Facebook’s parent Meta]) to take three steps: [2]

  1. Be transparent: disclose business models, algorithms, and content moderation practices; and release internal data on the effects and harms of the current mode of operation. This would allow independent verification of whether content amplification and moderation are effectively combatting disinformation, protecting elections and democracy, and keeping people, especially young people and children, safe.
  2. Change content promotion algorithms: stop preferential promotion of the most incendiary, hateful, and harmful content to the most vulnerable audiences.
  3. Protect all people equally: bolster content moderation to protect all people, especially marginalized and vulnerable groups, in all countries and all languages.

Facebook and the other social media companies won’t do this on their own. Without government regulation, they will continue to put profits before social responsibility . We must take steps to reduce the disinformation and divisiveness spread by Facebook and other social media platforms. Doing so is critical to the well-being of all of us, especially our children, and to the well-being of society and democracy. Government regulation clearly has to be an important part of the answer.

I encourage to you contact President Biden and your Congress people. Tell them you want strong regulation of Facebook and other social media platforms, including requirements to implement the three steps outlined above. (See this previous post for more on fixes for the harmful behavior of Facebook and other social media platforms.)

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Legum, J., 5/6/21, “Facebook’s problem isn’t Trump – it’s the algorithm,” Popular Information (https://popular.info/p/facebooks-problem-isnt-trump-its)

[2]      Change the Terms Coalition, retrieved from the Internet 5/2/22, https://www.changetheterms.org/

FACEBOOK KNOWS IT PROMOTES MISINFORMATION AND DOES SO TO MAXIMIZE PROFITS

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Facebook promotes misinformation. It knows this is harmful, it knows how to fix it, but it does it anyway – for the sake of profits. This is true across the full range of content from racist and misogynistic disinformation to Russian propaganda. It is true globally and across languages with the worst abuses probably occurring outside the U.S. and in languages other than English.

Facebook undermines democracy and promotes divisiveness and hate (as do other social media platforms such as Instagram, TikTok, Twitter, and YouTube) based on conscious decisions by senior management. (See this previous post on the harm being done by Facebook and other social media platforms.)

The reason that Facebook (and other social media platforms) refuse to effectively control (i.e., “moderate”) content is that profits come first. In 2021, Facebook made $39.4 billion in profits primarily from advertising exquisitely targeted to its almost three billion users.

Perhaps the ultimate confirmation of this is that Facebook and Instagram (both owned by Meta) have been blocked in Russia after the invasion of the Ukraine, but Facebook and Instagram are still publishing and promoting Russian propaganda around the world. Although they claim to be moderating disinformation from Russia, 80% of disinformation about U.S. biological weapons has been posted without being flagged or blocked. [1]

Currently, Facebook’s only incentives to moderate the content it allows and promotes are to avoid government regulation and to not be so offensive that advertisers pull their ads. In an effort to address concerns about content moderation – which admittedly sometimes requires making difficult, judgmental decisions that will be unpopular with some people – Facebook created an “Oversight Board” in 2019 to review its moderation decisions. Facebook claims the Board is independent and recruited an impressive set of individuals to serve on it. [2]

Roughly a year ago, the Board issued its first major report, a 12,000-word review of Facebook’s decision to indefinitely suspend Donald Trump from Facebook. The Board affirmed the decision to suspend Trump, but stated that it was inappropriate to make the suspension indefinite.

The Board said Facebook should either make the suspension permanent or set a specific length of time for it. The Board noted that Facebook management was seeking to dodge responsibility and that it should impose and justify a specific penalty.

The Board also posed questions to Facebook management whose answers it felt were essential to enabling it to do its oversight job. However, Facebook management refused to answer questions and failed to provide information on:

  • The extent to which the Facebook’s design decisions, including algorithms, policies, procedures, and technical features, amplified Trump’s posts.
  • Whether an internal analysis had been done of whether such design decisions might have contributed to the insurrection at the Capitol on January 6, 2021.
  • Content violations by followers of Trump’s accounts.

The Board noted that without this information it was difficult for it to assess whether less severe measures, taken sooner, might have been effective in solving the problem of Trump’s violations of Facebook’s standards.

As the Board suggests, the central issue is not simply Trump’s posts, but Facebook’s amplification of those posts and others like them. In other words, the real issue is the nature of Facebook’s content promotion algorithm and whether it promotes posts from Trump and from people expressing views like or in support of Trump’s posts. However, the Board’s jurisdiction, as defined by Facebook management, excludes oversight of Facebook’s algorithm and business practices. Furthermore, the Board has no power to compel Facebook management to abide by its decisions and recommendations – or even to simply answer its questions. It will be effective only to the extent that Facebook management voluntarily cooperates, which would mean reducing profits – not something they will do voluntarily.

Although Facebook founder and now chief executive of its parent Meta, Mark Zuckerberg, once stated: “At the heart of these accusations is this idea that we prioritize profit over safety and well-being. That’s just not true.” The data clearly show that this is true – and hardly anyone believed Zuckerberg when he said it wasn’t.

My next post will provide documentation of Facebook’s promotion of disinformation and divisiveness, as well as its conscious decision to do this and its ability – and occasional willingness – to change this. The post will also include steps that can and should be taken to force Facebook and other social media platforms to change their behavior.

[1]      Benavidez, N., & Coyer, K., 4/17/22, “Facebook ought to be protecting democracy worldwide every day,” The Boston Globe

[2]      Legum, J., 5/6/21, “Facebook’s problem isn’t Trump – it’s the algorithm,” Popular Information (https://popular.info/p/facebooks-problem-isnt-trump-its)

STOP SUPPORTING FOX TV WITH MONEY FROM YOUR CABLE BILL

National Fox “News” TV [1] is a major contributor (if not THE major contributor) to the disinformation, divisiveness, hate, and lack of civility that are undermining our society and democracy. It also drives the nationwide hyper-partisanship and the gridlock in Congress. Since its debut in 1996, Fox TV’s primetime viewership has grown to 2.5 million, with evangelical Christians as its most reliable audience. Its penetration and impact have been facilitated by its claim to be news and, moreover, to be fair and balanced. It has grown increasingly radical and extreme over time, including noticeably more so since 2019. Its core themes have been:

  • Stoking racism and the belief that anti-white bias is a serious problem (most recently and notably in its constant, withering, distorted attack on critical race theory),
  • Fanning the flames of “culture wars” against same sex marriage, LGBTQ+ rights, abortion, etc. as a fight against evil with white evangelical Christians as a key target, and
  • Promoting the belief that “liberals” are literally trying to destroy the country.

As national Fox TV consciously strives to generate outrage based on white resentment and supposed threats to Christianity, Trump and his acolytes in the Republican party have provided a reinforcing feedback loop that amplifies and exacerbates the disinformation, divisiveness, hate, and lack of civility. There is no mechanism for slowing this runaway train. [2]

Although social media play a critical role in amplifying disinformation and fostering divisiveness and other negative outcomes, much of the misinformation originates with national Fox TV. The content of other extremist channels like One American News Network (OANN) and Newsmax raise similar concerns but their audiences are minimal when compared to Fox TV’s audience. (See the Defenders of Democracy Against Disinformation website and this page about Fox TV in particular for more information.)

A significant portion of Fox’s revenue comes from the fees it receives from cable TV providers like Verizon and RCN, which transmit Fox programming to more than 100 million consumers every day.

Therefore, if you are paying Verizon or RCN (or any other provider that includes Fox TV) for your TV service, you are providing revenue to Fox, possibly as much as $2 per month. I do not want to provide one cent to Fox, but when I contacted Verizon multiple times to say I didn’t want to pay for the Fox channel, I was told that Fox can only be removed from my cable package if ALL news channels are removed. Verizon includes Fox in its News Bundle and it is inseparable from the other News channels. RCN customers have had a similar experience. This is unacceptable, in part because Fox isn’t news – it’s disinformation and propaganda. Therefore, it shouldn’t be in the News bundle to begin with.

I’m contacting senior executives at Verizon (see contact information and a sample letter below) to ask that Fox be removed from the News Bundle so that I don’t have to pay for Fox’s propaganda. I do want access to credible news on my TV but I don’t want to give money to Fox. Two of the four executives I’m targeting have email contact forms on the Internet. The other two (as far as I can tell) are only available by regular mail. I’ve also included contact information below for the CEO of RCN for those of you who are RCN subscribers. If you have another cable TV provider, please do an Internet search to find contact information for senior executives.

I encourage you to join me in contacting executives at your cable TV provider to ask that Fox be dropped from your service so we don’t have to give it money as part of our cable bills. I’ve drafted a letter to Hans Vestberg, the Verizon Chairman and Chief Executive Officer (see below). Please feel free to modify it as you see fit – particularly, of course, if you have a different cable TV provider but have the same Fox problem. Please send it by regular mail to him and to the Corporate Social Responsibility officer listed below at the address provided. Please email it to the other two executives using the webpage links for them presented below.

If you would like to call Verizon’s corporate headquarters, the number is 212-395-1000.

Senior executives at Verizon
Hans Vestberg, Chairman and Chief Executive Officer
Rose Stuckey Kirk, Corporate Social Responsibility Officer
Jim Gerace, External Communications and Media Relations, email form: https://www.verizon.com/about/our-company/leader/contact/916685
Manon Brouillette, Verizon Consumer Group, email form: https://www.verizon.com/about/our-company/leader/contact/922789

Chief Executive Officer at RCN
John Holanda, Chief Executive Officer
RCN
PO Box 11816
Newark, NJ
07101-8116

Sample letter to Verizon CEO

April 24, 2022

Mr. Hans Vestberg, Chairman and Chief Executive Officer
Verizon
1095 Avenue of the Americas
New York, NY
10036

Dear Mr. Vestberg,

We have been Verizon customers for many years. We are very unhappy that we have to pay money each month through our Verizon bill to Fox TV. We have called and asked multiple times to have Fox removed from our cable TV package but have been told that it’s part of the News Bundle and cannot be removed unless all news channels are removed.

Fox TV is NOT news. Much of its content is inaccurate information and could more properly be described as propaganda. It fuels divisiveness and hate. We do NOT want our money supporting an organization that undermines our democracy and civility in our society.

If a resolution to this issue cannot be provided by Verizon, we will consider changing or eliminating our cable TV service, along with our Internet and landline services that are currently bundled with our cable TV service.

Please let us know what you are doing to stop forcing your customers who want good, informational news channels from paying money to Fox TV. If we don’t hear from you, we will assume nothing is being done and will pursue alternatives to our Verizon FIOS service.

Thank you for your time and attention to this important matter.

<Note: I’d recommend signing your letter by including your name(s), address, phone number, and an email address to indicate that you are serious and want an answer.>

[1]      I put News in quotes because Fox TV delivers more disinformation than news. Hereafter, I will refer to it as Fox TV and drop “News” because I don’t want to imply that it provides news. I also use “national” before Fox TV to make clear that my focus is on the national programming and not the programming of local Fox affiliates.

[2]      Drum, K., Sept.-Oct. 2021, “The real source of America’s rising rage,” Mother Jones   (https://www.motherjones.com/politics/2021/07/american-anger-polarization-fox-news/)

EXAMPLES OF CORRUPT CAPITALISTIC BEHAVIOR Part 5

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The on-going saga of corrupt, extreme capitalistic behavior by big corporations is manifesting itself dramatically in the wake of the pandemic in price gouging for the sake of increasing profits. This enriches wealthy shareholders, including corporate executives, while ripping off consumers. Some recent examples are presented below. (See this previous post for some background, ways to fight price gouging, and previous examples ranging from disposable diapers to gasoline.)

Giant meat processor Tyson Foods posted a $1 billion profit last quarter, a 48% increase, while increasing meat prices for consumers by double digits. The price of beef is up 16% over the last year, a significantly bigger increase than the already high 7.5% increase in the price of food in general. The four biggest meat processing corporations (Tyson Foods, Cargill, JBS, and National Beef Packing Co.) control over 70% of the market for beef and have tripled their profit margins during the pandemic. The Justice Department is investigating them for price fixing. [1]

Nike’s profit increased by 125% last year to $5.7 billion, but it’s blaming “inflation” for a 10.5% price hike on its expensive sneakers, which are made in Vietnam by workers earning less than a dollar an hour. Phil Knight, Nike co-founder and previous chairman and CEO, became $26.7 billion richer during the pandemic as the price of Nike’s stock doubled from March 2020 to April 2022, largely due to the growth in profits.

Price gouging of a slightly different sort is evident at Moderna, which received $2.5 billion from U.S. taxpayers to develop its COVID vaccine. Its pricing of its vaccine and its refusal to share production of it with others to serve the global need have led to a $12.2 billion profit in 2021, a huge turnaround from a $737 million loss in 2020. As a result, its stock price has increased from $20 in Feb. 2020 to $165 in April 2022. It has given its CEO a $923 million golden parachute and handed out $360 million in stock options to two top executives.

At Amazon, profits increased by 75% last year to a record $35 billion. A $20 price hike in a Prime membership was blamed on “inflation” while Amazon denied workers a $3 raise and illegally underpaid drivers. Executive Chairman Jeff Bezos became $81 billion richer during the pandemic as Amazon’s stock price increased 50% from March 2020 to April 2022.

Price gouging by the pharmaceutical industry has been routine for years. (See this previous post from Jan. 2022 and this one from Jan. 2019 for background.) Outrage over drug price gouging is growing and, with a specific focus on insulin, the drug diabetics require to stay alive, President Biden is calling for a limit on its price and the U.S. House has taken action to implement one. Price controls are one way to counter price gouging.

On March 31, 2022, the U.S. House of Representatives passed a bill, 232 to 193, to limit what diabetics have to pay for insulin to $35 a month or 25% of one’s insurance companies’ negotiated price, whichever is lower. One hundred ninety-three (193) Republicans (all but 12 of them) voted against reducing the cost of insulin for the 30 million Americans with diabetes who require it to live.

The fate of the bill in the Senate is uncertain. Last November, House Democrats passed a bill that would have addressed drug costs more broadly, including allowing Medicare to negotiate drug prices. However, Republicans and a couple Democrats blocked that bill in the Senate. [2]

The price of insulin in the U.S. has soared from $21 in 1999 to $332 in 2019 and now costs ten times more in the U.S. than in any other wealthy country. This could happen only because there is no regulation or negotiation by the U.S. government to keep the price reasonable. There is no reason for the high price other than corporate price gouging as insulin is a 100-year-old drug. [3] However, only three companies – Novo Nordisk, Sanofi, and Eli Lilly – supply insulin in the United States. Estimates of the cost to produce a vial of insulin range from $2.28 to $6.16 depending on the version of insulin and other factors, [4] so the over $300 retail cost represents a huge mark-up and huge profits for the drug makers. (See this previous post for more detail.)

[1]      Puzzanghera, J., 2/19/22, “Why are beef prices so high? Some ranchers and White House say it’s more than just inflation,” The Boston Globe

[2]      Sprunt, B., 3/31/22, “House passes bill to cap insulin prices,” NPR (https://www.npr.org/2022/03/31/1090085513/house-passes-bill-to-cap-insulin-prices)

[3]      Richardson, H. C., 4/1/22, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/april-1-2022?s=r)

[4]      Silverman, E., 6/22/19,  “Insulin rationing high in US, survey finds,” The Boston Globe

WHY AMERICANS ARE SO PESSIMISTIC ABOUT THE ECONOMY

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Americans are pessimistic about the economy, the Biden administration, and Democrats in Congress despite the good news about jobs, unemployment, and wages. Although inflation, pandemic fatigue, partisanship, and the negativity of the mainstream media have a role to play, Americans’ economic insecurity probably plays a significant role. [1]

Over the last 40 years, economic insecurity has been increasing for middle and lower-income households. Many of these households see government policies undermining their economic security and are not optimistic that government is doing or will do much that will improve their economic well-being.

Middle and lower-income households in the U.S. have seen very little income (or wealth) growth in the last 40 years, while the rich have experienced big increases in income and wealth. This growth in economic inequality has been much more dramatic in the U.S. than in other wealthy democracies.

Furthermore, these households are now exposed to much more financial risk than they were 40 years ago. Jobs are much less stable due to off-shoring and the growth of contract, gig, and part-time work. When a job is lost, new jobs with similar pay and benefits are often hard to find. And unemployment benefits are generally not available to workers who are not full-time employees.

Retirement benefits are much less secure. They have been shifted from company sponsored plans with income and often health insurance guarantees to individual savings plans where the individual assumes the risks and responsibilities of saving and investing for their retirement.

Unions used to help by ensuring jobs had good pay and benefits, as well as some stability. Unionization had an impact not only on union jobs but on the economy as a whole because non-union employers had to compete with union employers to hire workers. However, unionization in the private sector has plunged from 35% in the 1950s to 6% today. This greatly reduces the power of workers in the job market and has led to an erosion of economic well-being and stability for workers.

The risk of bankruptcy due to a health crisis is very real as private insurance has introduced limits on coverage and increased co-pays, although access to reasonably good health insurance has been improved to some extent by the Affordable Care Act (aka Obama Care). The security of the equity in one’s home was shattered by the housing market collapse and the Great Recession of 2008. Debt from higher education has skyrocketed at the same time as the good jobs needed to pay back student loans have become harder to find and keep for many.

The effect of the pandemic on jobs and earnings was dramatic. Everyone is now aware of the risks of a pandemic and this undermines middle and lower-income workers sense of security. Many of the emergency pandemic economic measures made a real difference for these workers, but now it’s clear they were only temporary relief. Furthermore, the stress of the pandemic, along with that of political divisiveness, climate change (and the related crises from forest fires to more frequent and powerful storms), as well as international conflicts, are additional unsettling influences on people’s state of mind.

Finally, Americans are not optimistic that government and its leaders will effectively address their economic insecurity and stress. The failure of the Build Back Better bill – which would have supported families by extending the Child Tax Credit, helped them pay for child care, strengthened the health insurance system, reduced the price of drugs, reduced the cost of higher education, etc. – does not give middle and lower-income households any faith that help is on the way. By the way, all of the factors increasing economic insecurity have, of course, hit Black and Latino households harder the white households.

The termination of pandemic economic assistance policies, despite their popularity, indicates to middle and lower-income households and workers – the bulk of the American public – that the U.S. political system is broken and does not, and cannot be expected to, work for them and reduce their economic insecurity.

Given all of this, it’s not surprising that the public is pessimistic about the economy and the government, even if there are jobs to be had and pay is increasing.

[1]      Hacker, J. S., & Kapczynski, A., 3/22/22, “The great disconnect,” The American Prospect (https://prospect.org/economy/great-disconnect-american-economy/)

GOOD AND BAD NEWS FROM THE ECONOMY AND FOR WORKERS

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The good news: First, the U.S. economy is creating lots of jobs: 1.7 million in the first three months of 2022. Wages are up 5.6% over the last year while unemployment continues to fall and is near its all-time low at 3.6%. The number of Americans getting unemployment benefits is at a 50-year low. [1] (These figures are particularly impressive given that many workers are re-entering the workforce after dropping out during the pandemic.)

This economic recovery in the U.S. is extraordinary; it has happened eight years faster than the recovery after the Great Recession of 2008 and is stronger than in other countries. Much of the credit belongs to the American Rescue Plan, passed in March 2021, which injected $1.9 trillion into the economy, spurring its recovery. It was passed by Democrats in Congress without a single Republican vote and enthusiastically signed into law by President Biden, who had been championing its passage.

Second, consumer spending is rising. This indicates that individuals and families are doing better economically and have money to spend. It’s also good for the overall economy, which is fueled by consumer spending. Business at restaurants, hotels, and airlines is increasing.

Third, workers at Amazon’s huge warehouse in New York City voted strongly to unionize (2,654 to 2,131). They overcame strong opposition from Amazon to form the first union of Amazon employees. This is one of the biggest wins for union organizing in decades, in part because Amazon is the country’s second largest employer and has 1.6 million employees globally. It also comes in the face of decades of declining unionization where the percentage of workers in unions has dropped from roughly 33% (one in three) in the 1940s to 20.1% (one in five) in 1983 to 10.3% (one in ten) in 2021. There has also been a series of unionization victories at Starbucks. [2]

The bad news: First, inflation is high at 7.9%; its highest in 40 years, but similar to what it is in other countries. Increasing evidence is pointing to corporate price gouging as a significant contributor to “inflation.” Corporate profits rose 25% in 2021, the biggest increase since 1976, while hitting record highs and totaling $2.8 trillion. [3] Corporations are able to increase prices and profits because of a lack of competition, which gives them monopolistic power. This is profiteering, i.e., making an unreasonable profit on sales of essential goods, especially during emergencies. (See previous posts here, here, and here for more about price gouging, which is profiteering by a different name.) As a first step to stop price gouging, there is a Big Oil Windfall Profits Tax bill in Congress. [4] (See this previous post for more information.)

Second, soaring profits on Wall St. sent the average bonus senior employees received to a record $257,500! This is 20% higher than last year and the overall bonus pool is estimated to be $45 billion. [5] The U.S. system of extreme capitalism allows our elite financiers to make huge sums of money while many workers struggle to make ends meet. Thus, economic inequality continues to grow.

Third, the gender pay gap in the U.S. remains stubbornly high, declining only 1.1% in the last 37 years from 23.2% in 1994 to 22.1% in 2021. From 1979 to 1994, it had declined from 37.7% to 23.2%, in part because men’s wages were stagnant. The wage gap has persisted over the last 37 years despite the fact that the percentage of women with a four-year college degree has grown to 43.8% (from 23.8%) and now exceeds that of men (37.4% now and 25.1% in 1994). [6]

Fourth, David Weil, an expert on how employers cheat workers out of their pay, was rejected for confirmation to a key post in the Labor Department. The Senate voted not to confirm him with “No” votes from all Republicans and three Democrats: Manchin (WV), Sinema (AZ), and Kelly (AZ). The only explanation for this vote effectively condoning wage theft by employers is that these Senators value campaign funds from corporate donors more than they care about fairness for American workers. Employer wage theft is increasingly happening because employers misclassify workers as contractors instead of employees, thus bypassing labor standards such as minimum wage and overtime pay laws. [7] It also means that workers don’t get benefits such as paid sick and vacation time, health insurance, and retirement benefits. Employers also steal pay from employees by failing to pay extra for overtime, not giving workers their tips, and not including all hours on the job as paid time.

[1]      Ott, M., 3/25/22, “US jobless claims per week lowest since 1969,” The Boston Globe from the Associated Press

[2]      Weise, K., & Scheiber, N., 4/2/22, “Amazon workers on Staten Island vote to unionize in landmark win for labor,” The Boston Globe from The New York Times

[3]      Johnson, J., 3/31/22, “ ‘Their inflation strategy is working’: Corporate profits soared to record high in 2021,” Common Dreams (https://www.commondreams.org/news/2022/03/31/their-inflation-strategy-working-corporate-profits-soared-record-high-2021)

[4]      Corbett, J., 3/17/22, “New campaign aims to ‘Stop the Oil Profiteering’ of fossil fuel giants,” Common Dreams (https://www.commondreams.org/news/2022/03/17/new-campaign-aims-stop-oil-profiteering-fossil-fuel-giants)

[5]      Associated Press, 3/24/22, “Average Wall Street bonus last year reached record $257,500,” The Boston Globe

[6]      Gould, E., 3/10/22, “Equal pay day,” Economic Policy Institute (https://www.epi.org/blog/equal-pay-day-there-has-been-little-progress-in-closing-the-gender-wage-gap/)

[7]      Kuttner, R., 4/1/22, “The shame of corporate Democrats,” The American Prospect (https://prospect.org/blogs-and-newsletters/tap/shame-of-corporate-democrats-david-weil-labor/)

FIXES FOR INSTAGRAM AND FACEBOOK

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The evidence that Facebook and Instagram are harmful, especially to teens and young people, goes back to 2006 and has been growing consistently more definitive over the last fifteen years. (See my previous post for more detail.) The pressure from the public, especially parents, and most recently from Congress to address this problem is mounting.

In response, in mid-March, Meta Platforms (the new parent corporation for Facebook and Instagram) made an announcement of some new and coming parental supervision tools for Instagram. Note that teens will have to consent to their parents’ use of supervision tools! Furthermore, teens will know what their parents are seeing about their account and activity. Rather than building in universal safety controls, Meta claims it wants to enable parents to control teens’ social media activity because parents know their teens best and teens have different maturity levels. This sounds to me like a classic blame the victim – and the victim’s parents – strategy.

Moreover, Meta knows that many parents aren’t tech savvy and/or won’t have the time and energy to effectively control teens’ social media activity. It also knows that teens tend to be far more tech savvy than their parents and will often be able to evade parental controls. It could easily institute universal strategies to eliminate or greatly reduce the potential for harm from its platforms. Finally, it knows that teens’ vulnerability changes over time and that having harm protections in place by default would be much more effective than relying on parents to recognize and quickly react to teens’ changing vulnerability.

Here’s what Meta announced about new parental supervision tools for Instagram: [1]

  • A Family Center providing information to teach parents how to talk about social media with teens.
  • An ability for teens to invite a parent to supervise their social media account.
  • Parental ability to see how much time their teens are spending on Instagram, whom they are following, who is following them, and when they complain to Instagram about another user. However, a parent will have to have an Instagram account themselves to do so.
  • Future plans for:
    • Parental ability to limit when teens can use Instagram (e.g., not during school or after bedtime),
    • Blocking of access to inappropriate content by parents and/or based on ratings by the International Age Rating Coalition, and
    • Parental supervision tools for its Oculus Quest virtual reality program, where parents, experts, and the British government have raised concerns about exposure to violence and harassment.

Meta acknowledged in its statement that many parents are not on social media and are not tech savvy – meaning that these parental controls are often meaningless. Furthermore, many of these controls, including the future plans, seem like controls that should have been put in place years ago and before these products ever went on the market, i.e., they’re too little too late.

A bipartisan bill has been introduced in Congress, the Kids’ Online Safety Act (KOSA), requiring Facebook, Instagram, and other social media platforms to provide parents with more control over their children’s online interactions. The bill reflects months of congressional investigations and a history of failures by the social media platforms to respond to their documented harmful effects on young users. [2] Congress last passed legislation to protect children when they’re online, including their privacy, 24 years ago. [3] Needless to say, much has change since then and the current business model of Facebook, Instagram, and the Internet as a whole is simply not healthy for kids and teens.

KOSA would require social media platforms to provide “easy-to-use” tools to limit screen time, protect personal data, and keep kids under 16 safe. It holds the online platforms accountable by establishing an obligation for them to put the interests of children first and to make safety the default. It requires them to prevent the promotion of bullying, sexually abusive behavior, eating disorders, self-harm, and other harmful content. The bill mandates an annual independent audit of risks to minors, steps taken to prevent harm, and compliance with KOSA. [4]

The bill would require the social media platforms to be transparent about how they operate. It would require giving parents the ability to disable addictive product features and modify content recommendation algorithms to limit or ban certain types of content. It would require the social media platforms to provide researchers and regulators with access to company data to monitor and investigate actual and potential harm to teens and children. This would allow parents and policymakers to assess whether the online platforms are actually taking effective steps to protect children.

The root of the problems with social media platforms is that there is greater profit in promoting unsafe behaviors, creating animosity, encouraging extremism, and fueling pseudo-science than there is in creating a safe place for civil discourse based on facts. Our system of capitalism and the deference to and alignment of our policymakers with large corporations has allowed this business model that commodifies and exploits human attention to explode unchecked. In the world of social media, you, your time and attention span, and your clicks are the products that are being sold – to advertisers. This means the social media business is a race to the bottom; an enterprise based on stimulating, titillating, and capturing our most base emotional and subconscious responses. Social media’s ability to do harm to individuals, our society, and our democracy is well-documented and endemic to the current business model. Without strong and effective public oversight and control, the social media platforms will continue to inflict substantial harms.

I urge you to contact President Biden, as well as your U.S. Representative and Senators, to let them know that you support the Kids’ Online Safety Act and additional actions to regulate social media platforms.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Peng, I., 3/17/22, “Meta adds parental tools to Instagram,” The Boston Globe from Bloomberg News

[2]      Zakrzewski, C., 2/17/22, “Senators introduce children’s online safety bill after months of hearings,” The Boston Globe from the Washington Post

[3]      Monahan, D., 3/22/22, “Diverse coalition of advocates urges Congress to pass legislation to protect kids and teens online,” Fairplay (https://fairplayforkids.org/march-22-2022-diverse-coalition-of-advocates-urges-congress-to-pass-legislation-to-protect-kids-and-teens-online/)

[4]      Blumenthal, Senator R., retrieved 2/16/22 from the Internet, “Blumenthal & Blackburn introduce comprehensive Kids’ Online Safety legislation,” (https://www.blumenthal.senate.gov/newsroom/press/release/blumenthal-and-blackburn-introduce-comprehensive-kids-online-safety-legislation)

THE HARMS OF INSTAGRAM, FACEBOOK, AND SOCIAL MEDIA

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The news that Facebook and Instagram are harmful, especially to teens and young people, is not new. In 2006, a college professor, Joni Siani, whose class on Interpersonal Communications had access to Facebook a year before the public, found almost immediately that the Facebook experience was stressful and depressing for her students. Her class effectively became a Facebook group therapy session. That’s the beginning of a story I’ll come back to in a minute. [1] (By the way, Facebook and Instagram are now part of a new corporate entity, Meta Platforms. This name change seems to me to be an effort to obfuscate responsibility and accountability for the harms caused by Facebook and Instagram.)

In 2019, the docudrama The Social Dilemma came out, which highlights the manipulation and harms of social media. I encourage you to watch the film (on Netflix) or at least watch the 2 ½ minute trailer that’s available on the website. I urge you to explore the website; there’s a wealth of information under the button “The Dilemma” and a variety of ways to pushback under the “Take Action” button.

The Social Dilemma was created by the Center for Humane Technology, which was founded in 2013 by a Google design ethicist. The Center’s website provides terrific resources for understanding the effects of social media platforms and how to use them intelligently. It has modules for parents and educators on how to help teens be safe, smart users of social media.

Last fall, a former Facebook employee, Frances Haugen, blew the whistle on Facebook’s practices with testimony to Congress, an appearance on 60 Minutes, and a trove of inside documents that the Wall Street Journal reported on extensively. (Blogger Whitney Tilson in one of her posts provides links to Haugen’s interview on 60 Minutes and to the Wall St. Journal’s investigative articles based on documents provided by Haugen. Tilson also wrote a letter to Facebook COO Sheryl Sandberg that’s part of her blog post.)

Haugen documented that Facebook is a threat to our children and our democracy. Furthermore, she made it clear that Facebook knows this but fails to take steps to reduce the harm because doing so would hurt profits. I previously wrote about the threats of Facebook to our children and our democracy here and what can be done about them here.

Instagram, a Facebook partner under the Meta Platforms umbrella, says it only allows users on its platform who are 13 or older, but its age verification tools are weak. Its algorithm (i.e., its decision-making processes) for what information to direct to individual users has been shown to promote harmful content to youth who are particularly susceptible to such messages, such as material promoting eating disorders. Instagram was developing a separate product targeting children under 13 until criticism and pushback from parents and child advocacy organizations caused it to announce that it had paused (but not terminated) development.

A resource for responding to social media’s threats to children is an organization called Fairplay and its website. Formerly the Campaign for a Commercial Free Childhood, Fairplay has been fighting for years to protect kids from the manipulation and harm from commercial advertising and social media platforms. If you want to get updates from Fairplay, click on “Connect” under the “About” button to sign-up. Fairplay helps parents manage kids’ screen time and provides alternatives to screen time. It sponsors a Screen-free Week every spring. It has established the Screen Time Action Network to support parents concerned about the effects of screen time and social media platforms on their children.

Returning to the story of that college professor, Joni Siani, who in 2006 saw the harm that Facebook did to her college students, in 2013, she wrote a book about the love-hate relationship between users and their digital devices titled Celling your soul: no app for life. And she started an organization called No App for Life.

In 2021, Siani and No App for Life partnered with Fairplay and its Screen Time Action Network to create three podcasts titled The Harms. They present three stories of parents who lost a child due to social media platforms’ harmful impacts on their children. One describes the ruthless assaults of social media “friends” that led to a suicide. One describes how “fun” online challenges can lead to horrible results. And one describes how drug dealers sell their products on social media, even posting ads amongst all the other ads seen on social media constantly. These horrific examples are from strong families who were trying to do everything right in managing their children’s social media activities but were overwhelmed by the power of social media.

My next post will summarize Meta Platforms recent announcement of new and planned parental supervision tools, as well as the bipartisan Kids Online Safety Act, which has been introduced in Congress.

[1]      Rogers, J., & Siani, J., 3/6/22, “What do I do now? Unthinkable stories Big Tech  doesn’t want to tell,” Fairplay’s Screen Time Action Network and No App for Life Podcasts (https://fairplayforkids.org/harms-podcast/)

MORE EVIDENCE THAT “INFLATION” IS PRICE GOUGING

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

More evidence is emerging that price gouging, particularly by big corporations, is responsible for a good portion of recent consumer price increases. Inflation is normally the result of increases in production costs. In a competitive market, production cost increases result in decreased profits. However, currently, corporate profits are increasing, often dramatically. With production cost increases, profits would be expected to decline because producers will be competing for consumers based on price. Therefore, they would restrain price increases to avoid losing customers. Some of the cost increases might be passed through to consumers in order to reduce the decline in profits. With real competition in a free-market, a producer’s prices and profits can’t increase dramatically because other producers in the market (or new ones who will enter it) will take advantage of the opportunity to make good but lower profits by charging a lower price.

When consumer prices increase and profits increase dramatically, real competition is NOT occurring. Rather, it shows that producers have monopolistic power and are able to increase prices and their profits because consumers have no or few choices. In some cases, the few producers in the market may collude and raise their prices in tandem rather than actually competing with each other. This is illegal price fixing.

In 2019, before the pandemic, big U.S. corporations had about $1 trillion in profits. In 2021, during the pandemic, their profits were $1.7 trillion, a 70% increase. One estimate is that these increased profits account for 60% of the price increases that consumers are experiencing; it’s supposedly “inflation” but it’s really price gouging. [1]

For example, Proctor & Gamble (P&G) increased the prices of its Pampers brand diapers last April blaming increased costs. However, its previous quarterly profits had been $3.8 billion and, six months later, its profits were over $5 billion. These exorbitant profits allowed it to spend $3 billion buying back its own stock. Corporate stock buybacks increase the price of a corporation’s stock, benefiting big, wealthy shareholders, including corporate executives. (Note: Until 1982, stock buybacks were considered illegal market manipulation.)

In a competitive market, consumers would buy other brands of diapers to avoid the P&G price increase. However, effectively, there is only one other brand of disposable diapers, Huggies, which are made by Kimberly-Clark. These two corporations control 80% of the global disposable diaper market. Kimberly-Clark just happened to increase its prices for Huggies at roughly the same time as P&G increased its prices for Pampers.

As another example, as gas prices at the pump skyrocket, the big oil corporations’ 2021 profits were at seven-year highs, even before the most recent dramatic gas price increases:

  • Exxon Mobil: $23 billion, highest since 2014
  • Chevron: $15.6 billion, highest since 2014
  • Shell: $19.3 billion, highest since 2014
  • BP: $12.9 billion, highest since 2013

Big oil is using the smoke screen of the war in Ukraine and inflation elsewhere in the economy to engage in price gouging. The U.S. gets only about 7% of its imported petroleum products from Russia and this represents just 3% of the oil the U.S. consumes. Moreover, in 2020, the U.S. exported more petroleum products than it imported. This is hardly a situation where the loss of Russian oil would result in such dramatic price increases if the oil market was a truly competitive one.

One way to tackle price gouging is with a windfall profits tax. Democrats in Congress have introduced the Big Oil Windfall Profits Tax bill. It is estimated that this tax would raise $45 billion per year. That money would be used to provide rebates to middle and lower income households of $240 (single tax filers) to $360 (joint tax filers) per year. [2] A windfall profits tax would seem to be called for in many other sectors of the economy as well, such as meat packers, diaper makers, drug manufacturers, car dealers, and shipping corporations.

Other ways to fight price gouging include:

  • Price controls,
  • Stronger enforcement of anti-trust laws including breaking up giant corporations that have monopolistic power in their markets,
  • Stronger action to stop and penalize anti-competitive market behavior including criminal charges against executives who engage in price fixing, and
  • Banning stock buybacks, which provide corporate executives with a strong incentive for price gouging to increase profits. [3]

As President Joe Biden said, “Capitalism without competition isn’t capitalism, it’s exploitation.” He’s right. Price gouging is one important manifestation of that exploitation. This exploitation of consumers is one result of the current extreme capitalism in the U.S. that has allowed the emergence of huge corporations that reduce or eliminate competition. We need to fight price gouging and anti-competitive capitalism with both short-term and long-term strategies.

I urge you to contact President Biden and your U.S. Representative and Senators to let them know that you support a range of actions to stop price gouging. Tell them you support the Big Oil Windfall Profits Tax bill and urge them to pass it quickly. Urge them to institute a windfall profits tax on all businesses that are engaging in price gouging, not just big oil. Ask them to support stronger enforcement of antitrust laws and to penalize anti-competitive market behavior. Tell them to ban stock buybacks and, if all else fails, to institute price controls on price gouging companies.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Hightower, J., 2/1/22, “Corporate profiteers’ pandemic strategy: Gouge consumers and blame Joe Biden,” The Hightower Lowdown (https://hightowerlowdown.org/article/corporate-profiteers-pandemic-strategy-gouge-consumers-and-blame-joe-biden/)

[2]      Germanos, A., 3/10/22, “Dems introduce windfall tax on big oil so companies ‘pay a price when they price gouge’ ,” Common Dreams (https://www.commondreams.org/news/2022/03/10/dems-introduce-windfall-tax-big-oil-so-companies-pay-price-when-they-price-gouge)

[3]      Hightower, J., 2/1/22, see above

PRICE GOUGING BY BIG PHARMA

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Big increases in the prices of many drugs from multiple manufacturers in January appear to be price gouging by the big drug companies. Price gouging by big corporations is increasingly being blamed as a major contributor to the current high level of inflation. (See this previous post for more detail.)

Thirteen Members of Congress have sent a letter to the industry trade group (the Pharmaceutical Research and Manufacturers of America [PhRMA]) asking for an explanation and justification for the price increases. [1] The letter alleges that the big drug companies are using their monopolistic power in the market to raise prices to increase their already large profits, i.e., to engage in price gouging. [2]

The broad price increases by virtually every manufacturer of popular prescription drugs appear to be coordinated and perhaps timed to coincide with (and therefore go unnoticed due to) the high inflation the economy is experiencing. These drug price increases will contribute to keeping inflation high. Although drug companies often increase some prices in January, they also often increase prices in July as well. Therefore, these drug price increases are probably not the only increases in drug prices consumers, Medicare and other health insurers, and the economy are likely to experience this year. [3]

A study of drug prices over the first 25 days of January found that drug companies increased the prices of 72% of the 187 different formulations of the 100 top selling drugs and on 26% of all brand name drugs. While the average increase for brand name drugs was 5.1%, for 118 drugs the increase was 10% or more. The highest price increase was 60%!

A separate study of price increases on the 20 drugs with the highest expenditures by Medicare found that prices were raised on 16 of them. Twelve of them had increases of 4.0% or more and four of those had increases of 6.0% or more. These price increases are estimated to cost Medicare and seniors $2.5 billion this year. Many of these drugs have been on the market for years and some for decades, so it appears that these price increases are only occurring to increase the already high profits of the drug companies.

The pharmaceutical drug industry’s profits (i.e., operating margin) are 26.4% of revenue compared with an average of 13.2% across all U.S. industries. [4] A profit margin of 10% is generally considered good and one of 20% is considered high. So, the pharmaceutical drug industry’s 26.4% is very high and price increases are possible only because of a lack of competition, i.e., a lack of other manufacturers that would sell at lower prices and be happy to have somewhat lower, but still healthy, profit margins.

Pfizer Inc., for example, is the manufacturer of eight of the twenty drugs with the highest price increases in January 2022, all of which were 10% or higher. In 2021, it reported revenues of $81.3 billion and profits of $25.2 billion, both of which had roughly doubled from 2020. Its 2021 profit margin was 31.0%. Nonetheless, it significantly increased drug prices in January 2022 and projects that in 2022 its revenue will grow 23% and its profit margin will grow to 37%. [5] It’s hard to view its price increases as anything but monopolistic power in the market for its drugs and greed for even more exorbitant profits.

The Build Back Better Act (BBBA) included some provisions to address high drug prices, including allowing Medicare to negotiate drug prices with manufacturers (which the Veterans’ Administration and every private health insurer and other country do). With the BBBA stalled, a standalone bill was introduced in the U.S. Senate to cut drug prices. However, Republicans blocked voting on the bill.

President Biden, in his State of the Union speech on March 1st, called for Congressional action to cut drug prices, including allowing Medicare to negotiate drug prices and putting a cap on the price of insulin at $35 per month. The price of insulin in the U.S. is eight times what it is in Canada and ten times the average price in three dozen other countries. [6]

I urge you to contact President Biden and your U.S. Representative and Senators to let them know that you support a range of actions to control and reduce drug prices. Allowing Medicare to negotiate drug prices is one. Price controls and a windfall profits tax are others. (By the way, price controls and a windfall profits tax should be considered for all businesses that are engaging in price gouging, not just the drug companies.)

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

UPDATE: I wrote about price gouging by drug companies in 2016, including highlighting the huge price increases ($100 to $608) for EpiPens, which inject a drug to treat severe allergic reactions, such as to peanuts or a bee sting. On Feb. 28, 2022, the EpiPen price gouger, Mylan (now Viatris), agreed to a $264 million class-action lawsuit settlement for illegal monopolistic behavior. EpiPens are made by two subsidiaries of Pfizer, which settled its piece of the lawsuit for $345 million last July. [7]

[1]      Corbett, J., 3/2/22, “Warren demands big pharma end ‘corporate price gouging’,” Common Dreams (https://www.commondreams.org/news/2022/03/02/warren-demands-big-pharma-end-corporate-price-gouging)

[2]      Price gouging typically refers to price increases when businesses are taking advantage of spikes in demand or shortages of supply and charge exorbitant prices for necessities, often after a natural disaster or another type of emergency. Here it refers to businesses that are taking advantage of having monopolistic power, which means they control the supply in the market.

[3]      Senator Elizabeth Warren et al., 3/1/22, “Letter to PhRMA on January 2022 drug price increases,” (https://www.warren.senate.gov/imo/media/doc/2022.03.01%20Letter%20to%20PhRMA%20on%20January%202022%20Drug%20Price%20Increases%20(1).pdf)

[4]      Stern School of Business, Jan. 2022, “Margins by sector (US),” New York University (https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html)

[5]      Pfizer Inc., 2/8/22, “Pfizer reports fourth-quarter and full-year 2021 results,” (https://s28.q4cdn.com/781576035/files/doc_financials/2021/q4/Q4-2021-PFE-Earnings-Release.pdf)

[6]      RAND Corporation, 1/6/21, “The astronomical price of insulin hurts American families,” (https://www.rand.org/blog/rand-review/2021/01/the-astronomical-price-of-insulin-hurts-american-families.html)

[7]      Jimenez, J., 2/28/22, “Viatris agrees to settle EpiPen antitrust litigation for $264 million,” The New York Times

PRICE GOUGING BY BIG PHARMA (3/5/22, #452) Categories:

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Big increases in the prices of many drugs from multiple manufacturers in January appear to be price gouging by the big drug companies. Price gouging by big corporations is increasingly being blamed as a major contributor to the current high level of inflation. (See this previous post for more detail.)

Thirteen Members of Congress have sent a letter to the industry trade group (the Pharmaceutical Research and Manufacturers of America [PhRMA]) asking for an explanation and justification for the price increases. [1] The letter alleges that the big drug companies are using their monopolistic power in the market to raise prices to increase their already large profits, i.e., to engage in price gouging. [2]

The broad price increases by virtually every manufacturer of popular prescription drugs appear to be coordinated and perhaps timed to coincide with (and therefore go unnoticed due to) the high inflation the economy is experiencing. These drug price increases will contribute to keeping inflation high. Although drug companies often increase some prices in January, they also often increase prices in July as well. Therefore, these drug price increases are probably not the only increases in drug prices consumers, Medicare and other health insurers, and the economy are likely to experience this year. [3]

A study of drug prices over the first 25 days of January found that drug companies increased the prices of 72% of the 187 different formulations of the 100 top selling drugs and on 26% of all brand name drugs. While the average increase for brand name drugs was 5.1%, for 118 drugs the increase was 10% or more. The highest price increase was 60%!

A separate study of price increases on the 20 drugs with the highest expenditures by Medicare found that prices were raised on 16 of them. Twelve of them had increases of 4.0% or more and four of those had increases of 6.0% or more. These price increases are estimated to cost Medicare and seniors $2.5 billion this year. Many of these drugs have been on the market for years and some for decades, so it appears that these price increases are only occurring to increase the already high profits of the drug companies.

The pharmaceutical drug industry’s profits (i.e., operating margin) are 26.4% of revenue compared with an average of 13.2% across all U.S. industries. [4] A profit margin of 10% is generally considered good and one of 20% is considered high. So, the pharmaceutical drug industry’s 26.4% is very high and price increases are possible only because of a lack of competition from companies that would be willing to sell at lower prices and have lower profit margins.

Pfizer Inc., for example, is the manufacturer of eight of the twenty drugs with the highest price increases in January 2022, all of which were 10% or higher. In 2021, it reported revenues of $81.3 billion and profits of $25.2 billion, both of which had roughly doubled from 2020. Its 2021 profit margin was 31.0%. Nonetheless, it significantly increased drug prices in January 2022 and projects that in 2022 its revenue will grow 23% and its profit margin will grow to 37%. [5] It’s hard to view this as anything but monopolistic power in the market for its drugs and greed for even more exorbitant profits.

The Build Back Better Act (BBBA) included some provisions to address high drug prices, including allowing Medicare to negotiate drug prices with manufacturers (which the Veterans’ Administration and every private health insurer and other country do). With the BBBA stalled, a standalone bill was introduced in the U.S. Senate to cut drug prices. However, Republicans blocked voting on the bill.

President Biden, in his State of the Union speech on March 1st, called for Congressional action to cut drug prices, including allowing Medicare to negotiate drug prices and putting a cap on the price of insulin at $35 per month. The price of insulin in the U.S. is eight times what it is in Canada and ten times the average price in three dozen other countries. [6]

I urge you to contact President Biden and your U.S. Representative and Senators to let them know that you support a range of actions to control and reduce drug prices. Allowing Medicare to negotiate drug prices is one. Price controls and a windfall profits tax are others. (By the way, price controls and a windfall profits tax should be considered for all businesses that are engaging in price gouging, not just the drug companies.)

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

UPDATE: I wrote about price gouging by drug companies in 2016, including highlighting the huge price increases ($100 to $608) for EpiPens, which inject a drug to treat severe allergic reactions, such as to peanuts or a bee sting. On Feb. 28,2022, the EpiPen price gouger, Mylan (now Viatris), agreed to a $264 million class-action lawsuit settlement for illegal monopolistic behavior. EpiPens are made by two subsidiaries of Pfizer, which settled its piece of the lawsuit for $345 million last July. [7]

[1]      Corbett, J., 3/2/22, “Warren demands big pharma end ‘corporate price gouging’,” Common Dreams (https://www.commondreams.org/news/2022/03/02/warren-demands-big-pharma-end-corporate-price-gouging)

[2]      Price gouging typically refers to price increases when businesses are taking advantage of spikes in demand or shortages of supply and charge exorbitant prices for necessities, often after a natural disaster or another type of emergency. Here it refers to businesses that are taking advantage of having monopolistic power, which means they control the supply in the market.

[3]      Senator Elizabeth Warren et al., 3/1/22, “Letter to PhRMA on January 2022 drug price increases,” (https://www.warren.senate.gov/imo/media/doc/2022.03.01%20Letter%20to%20PhRMA%20on%20January%202022%20Drug%20Price%20Increases%20(1).pdf)

[4]      Stern School of Business, Jan. 2022, “Margins by sector (US),” New York University (https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html)

[5]      Pfizer Inc., 2/8/22, “Pfizer reports fourth-quarter and full-year 2021 results,” (https://s28.q4cdn.com/781576035/files/doc_financials/2021/q4/Q4-2021-PFE-Earnings-Release.pdf)

[6]      RAND Corporation, 1/6/21, “The astronomical price of insulin hurts American families,” (https://www.rand.org/blog/rand-review/2021/01/the-astronomical-price-of-insulin-hurts-american-families.html)

[7]      Jimenez, J., 2/28/22, “Viatris agrees to settle EpiPen antitrust litigation for $264 million,” The New York Times

GOOD AND BAD ECONOMIC NEWS YOU MAY NOT HAVE HEARD

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The mainstream media continue to downplay extraordinarily positive economic news, not to mention the successes of the policies of the Biden Administration and congressional Democrats. In case you didn’t hear this, the number of Americans needing unemployment benefits fell to a 52-year low, i.e., the lowest number since March 1970. The unemployment rate is quite low at 4.0% and employers added 467,000 jobs in January. The estimates of job growth in November and December were revised upward by a combined 709,000 jobs. (Note: In the Boston Globe, this great economic news was not presented until page 6 of the second section and only warranted a short article, written by the Associated Press, that was about half of one column in length.) [1]

Employers added a record 6.4 million jobs in 2021, in good part due to actions of Democrats and the Biden Administration. Spending authorized by the American Rescue Plan Act (ARPA), which was passed in March, boosted economic activity. Vaccination programs and other steps to control Covid allowed businesses to reopen and workers to go back to work.

Economic growth for all of 2021 was 5.7%; the highest since 1984. This continues the historical pattern over the last 100 years of the economy performing better under Democratic Presidents than under Republican ones. (See this previous post for more details.)

There are two pieces of bad news from recent economic data. One is that consumer prices are increasing; more on that below. The other is that while unemployment is down overall, unemployment is higher and falling more slowly for non-White workers than for White workers. This is especially true for Black women. As-of the end of 2021, unemployment rates and their declines since October were as follows: [2]

  • White workers: 2% unemployed (down 20%)
  • Asian American workers: 8% unemployed (down 11%)
  • Latino / Hispanic workers: 9% unemployed (down 14%)
  • Black workers: 1% unemployed (down   9%)

Consumer prices have increased 7.5% over the last year; the highest rate since 1982. Although Covid-related supply chain problems and growing consumer demand are responsible in part, growing attention is focusing on price gouging by large corporations. The extreme capitalism that our policies have allowed to flourish over the last 40 years has resulted in a dramatic decrease in competition in many industries and markets. (See this previous post for more details.) The lack of competition and monopolistic control of markets has allowed huge corporations in many industries to raise prices and increase profits more than a competitive market would allow (i.e., to engage in price gouging [3]). This has been evident in the prices of gasoline, food, and many consumer products due to large, monopolistic corporations in everything from trans-oceanic shipping to oil and gasoline production to food production.

Analysis of car prices shows that dealers are engaging in price gouging in the face of growing demand and limited supply. Manufacturers’ prices to dealers for new cars are up only 2% over a year ago but consumers are paying 12% more than they did a year ago. Edmunds, a car-shopping research company, found that 82% of consumers paid more than the manufacturers’ suggested retail price (MSRP) in January 2022, compared with just 3% in 2021 and almost no one in 2020. Profits for large car dealer networks have, not surprisingly, skyrocketed. [4] Prices for used cars and trucks are up 40.5% from a year ago. This is another indication that car dealers are price gouging. [5]

The Federal Trade Commission is investigating the market behavior of the large oil and gas corporations. [6] Gasoline prices in January (i.e., before the Ukraine war) had jumped 40% over a year earlier to $3.49 a gallon from $2.49. Natural gas prices were almost four times what they were a year ago. Costs are not driving these price increases; the oil and gas corporations are taking advantage of the pandemic to increase profits by price gouging.

The Federal Maritime Commission is examining the large shipping corporations for price gouging. There are three alliances of nine trans-oceanic shippers that transport 80% of all seaborne cargo (up from 40% in 1998). The price of transporting a standard shipping container from China to the U.S. has increased from about $2,000 before the pandemic to $20,000 last August and roughly $14,000 in January. The shippers’ profits in 2020 were around $25 billion; it’s estimated that their profits were 12 times as much, $300 billion, in 2021. This is a clear indication that the increases in shipping prices are price gouging. [7]

As a final example, the handful of huge slaughterhouses and meatpackers that control the market for beef, poultry, and pork have tripled their profit margins during the pandemic. The Justice Department is investigating them for price fixing. The four biggest meatpacking corporations (Cargill, JBS, Tyson Foods, and National Beef Packing Co.) control over 70% of the market for beef. The price of beef is up 16% over the last year, significantly higher than the already high rate of increase of 7.5% for food in general. Cattle ranchers filed an anti-trust lawsuit against the four big meatpacking corporations in 2019; food retailers and wholesalers sued them in 2020. Ranchers now receive only 39% of the retail price of beef; down from 45% in 2017. JBS previously paid $52.5 million to settle a lawsuit over beef price fixing. [8] Again, these are clear signs that the increases in meat prices are price gouging.

[1]      Ott, M., 2/25/22, “Jobless aid numbers now lowest since 1970,” The Boston Globe from the Associated Press

[2]      Broady, K., & Barr, A., 2/11/22, “December’s jobs report reveals a growing racial employment gap, especially for Black women,” Brookings (https://www.brookings.edu/blog/the-avenue/2022/01/11/decembers-jobs-report-reveals-a-growing-racial-employment-gap-especially-for-black-women/

[3]     Price gouging refers to when businesses take advantage of spikes in demand or shortages of supply and charge exorbitant prices for necessities, often after a natural disaster or another type of emergency.

[4]      Elizalde, R., 2/23/22, “Car prices are above MSRP because of price gouging rather than inflation,” Forbes (https://www.forbes.com/sites/raulelizalde/2022/02/23/car-prices-above-msrp-reflect-price-gouging-rather-than-inflation/?sh=61d09cabb60a)

[5]      Shen, M., 2/13/22, “Used cars cost 40.5% more than last year as gas prices rise. New car prices also climbing,” USA Today

[6]      Tankersley, J., & Rappeport, A., 12/25/21, “As prices rise, President Biden turns to antitrust enforcers,” The Boston Globe from the New York Times

[7]      Khafagy, A., 2/2/22, “The hidden costs of containerization,” The American Prospect (https://prospect.org/economy/hidden-costs-of-containerization/)

[8]      Puzzanghera, J., 2/19/22, “Why are beef prices so high? Some ranchers and White House say it’s more than just inflation,” The Boston Globe

SUPPORTING CHILDREN AND FAMILIES: SOMETHING EVERY DEMOCRAT OUGHT TO BE CAMPAIGNING ON NOW

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Democrats in Congress and the Biden Administration enacted a nearly universal Child Tax Credit as part of the American Rescue Plan Act (ARPA) in March 2021. It provided almost every family in America with $3,600 annually for each child under age 6 and $3,000 for each child age 6 and up. Importantly, the credit was paid on a monthly basis rather than having to wait until one filed a tax return at the end of the year to get the money. In effect, it provided a universal basic monthly income for families with kids, something most wealthy countries do. [1]

The effect of this enhanced Child Tax Credit was dramatic – the child poverty rate declined by almost half. However, ARPA authorized these payments for only one year. Many politicians and policy analysts thought that the program would prove so effective and so popular that it would be extended. This is what was proposed by the Biden Administration and most Democrats in Congress as part of the Build Back Better bill.

Last summer, as the Build Back Better (BBB) bill was taking shape, the debate between Democratic progressives and centrists was whether to make the enhanced Child Tax Credit permanent or just extend it for five years. But then, Senators Joe Manchin and Kyrsten Sinema went rogue. They claimed they were concerned about the budgetary impact, but voted for an increased defense budget many times more expensive. They claimed that families were benefiting from it that didn’t need it or deserve it. I’ll come back to these arguments below.

Now, the question is whether any form of the enhanced Child Tax Credit will survive in whatever the Build Back Better bill becomes.

Longstanding research shows substantial benefits for child outcomes from family economic support. This research was bolstered very recently by a research paper published in the prestigious Proceedings of the National Academy of Sciences. In a randomized control trial, the most definitive kind of scientific study (the same approach as is used for testing new drugs), monthly cash support of $4,000 per year given to poor mothers with infants was found to result in changes in the infant’s brain activity that are associated with better development of important cognitive skills. [2]

Despite the strong body of research that documents that economic support for families improves children’s cognitive, school success, and life success outcomes, the Republicans and a few Democrats in Congress let the enhanced Child Tax Credit expire in January. As a result, 3.7 million more children are now in families living in poverty. The overall child poverty rate increased from 12.1% to 17.0% (a 41% increase in the poverty rate) and the impact on non-White children was greater:

  • White children in poverty increased from    7.5% to 11.4% (+3.9%)
  • Black children in poverty increased from   19.5% to 25.4% (+5.9%)
  • Latino children in poverty increased from  16.8% to 23.9% (+7.1%)
  • Asian children in poverty increased from   11.9% to 15.1% (+3.2%) [3]

The Child Tax Credit is a potent anti-poverty program. It is also extremely efficient. There are no middlemen, no application hassles, and no bureaucracy required to determine who’s eligible and who’s not; the government just provides money to all families with children, the same way it provides money to all seniors through Social Security. And the benefits are taxable, so higher income families who have less need for the money pay some of it back in income tax.

Senator Manchin has said he might support an enhanced Child Tax Credit if it had strict income limits or a work requirement. This would make it an inefficient, counter-productive policy because it requires a large bureaucratic effort to determine who is eligible and who isn’t, and mistakes will undoubtedly occur. It creates complexity and confusion because parents’ work status and income can change, often frequently for low-income workers and those in part-time jobs. Furthermore, it creates what are called “cliff effects” where as a parent’s earned income increases, they fall off the eligibility cliff and lose benefits. This creates a perverse incentive for low-income workers to refuse increases in pay or hours, or even to refuse a new job, because this might reduce their eligibility for benefits from the Child Tax Credit.

It would also make the Child Tax Credit less politically popular because middle-class parents wouldn’t get it. This reduced political support means that it will be more likely to be cut or eliminated in the future.

The Child Tax Credit is an issue that exposes the hypocrisy of many Republicans and some conservative Democrats. They claim they support family values and a right to life (as well as to liberty and the pursuit of happiness), but don’t support the enhanced Child Tax Credit that supports families and improves a child’s likelihood of leading a successful and fulfilling life.

I urge you to contact President Biden and your U.S. Representative and Senators to let them know that you support the enhanced Child Tax Credit, which would provide economic support to over 36 million families and over 61 million children. Tell them that this is what family values really are all about and that this is what a right to a life is all about for children in America.

You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Kuttner, R., 2/18/22, “Save the Child Tax Credit,” The American Prospect blog (https://prospect.org/blogs/tap/save-the-child-tax-credit/)

[2]      Troller-Renfree, S. V., et al., 2/1/22, “The impact of a poverty reduction intervention on infant brain activity,” Proceedings of the National Academy of Sciences (https://www.pnas.org/content/119/5/e2115649119)

[3]      Center on Poverty and Social Policy, 2/17/22, “3.7 million more children in poverty in Jan 2022 without monthly Child Tax Credit,” Columbia University (https://www.povertycenter.columbia.edu/news-internal/monthly-poverty-january-2022)

MEDICARE PRIVATIZATION CAN’T BE FIXED; IT MUST BE ELIMINATED

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The private health insurers in America have been working for decades to privatize Medicare, our public health insurance for all seniors, so they can profit from this large public funding stream. If we want to improve quality and control costs in our health care system, the privatization of Medicare must be stopped and rolled back. This and two other posts summarize:

  • The history and background of Medicare and efforts to privatize it (this previous post),
  • The unsuccessful efforts to control the costs and improve the quality of the privatized Medicare Advantage plans (this previous post), and
  • What needs to happen to save Medicare (this post). [1]

Theoretically, the problems of cost, quality, and access to health care services that arise with the privatized Medicare Advantage (MA) and Direct Contracting (DC) programs can be fixed with technical changes in laws and regulations. However, these approaches have been tried in the past without success. Some of the practices the MA and DC companies use to increase their revenues and profits are illegal. The Department of Justice has filed lawsuits against large MA providers for their “upcoding” gamesmanship to get more revenue per enrollee (see this previous post for more details). However, even lawsuits are unlikely to solve this problem permanently. And it won’t solve the gaming of the Medicare payment system in other ways.

The lengths the MA insurers will go to protect their profits was underscored by their active opposition to improving Medicare by adding hearing, vision, and dental benefits as was proposed by the Build Back Better Act. Recognizing that a more level field of competition from an improved public Medicare program was a threat to their profits, they engaged in a multi-million-dollar public relations campaign against the enhanced Medicare benefits. Despite the private sector’s rhetoric about believing in competition, in health care (as elsewhere) private providers do NOT want competition from the public sector on an even playing field. This is evident here with MA insurers and it was evident in the development of the Affordable Care Act (ACA) when private health insurers opposed and killed the inclusion of a public, Medicare-like option among the subsidized health insurance alternatives in the ACA marketplaces.

Both the MA insurers and the new DC entities are private companies that will pursue profits relentlessly. They can be constrained only by government regulation, which is extremely difficult if not impossible to implement effectively. Moreover, doing so would be costly and therefore inefficient. These corporations are timeless and soulless legal entities that have shown through past behavior that their only commitment is to maximizing profits. The MA insurers have shown time after time that they will find ways around government regulations or ways to game the regulations for their profit.

The delivery of key societal services, such as health care, by the public sector, i.e., government, is not only fairer and more compassionate than delivery by the private sector, it is also more efficient, effective, and streamlined. The private sector’s profit motive adds costs (i.e., profits, advertising, and administrative overhead) and incentivizes cost-cutting, often through denying needed services and cutting corners on quality. Furthermore, the private sector has no incentive to address inequality, bias, or discrimination; its only goal is to maximize profits.

To reverse the scourge that Medicare privatization has clearly become, and that is exacerbated by Direct Contracting, we need to assert strong public control over Medicare. This can and should be done by changing or reversing past policy decisions.

The privatization of Medicare is an example of the extreme capitalism that has come to dominate the U.S. economy. Bob Kuttner wrote about this in his powerful and poignant article analyzing the history of capitalism in our democracy. [2] (I summarized his article in this previous post.) This hyper-capitalism, as he calls it, includes the privatization and/or deregulation of important public services and public goods, including health care and health insurance.

Based on historical experience, Kuttner concludes that nothing short of full public control will stop the private sector’s relentless drive to capture – and profit from – Medicare spending. This large, public funding stream, currently $800 billion and projected to double by 2028 as more baby boomers become Medicare-eligible, is seen by private sector capitalists as a tremendous, irresistible profit opportunity.

Kuttner notes that without strong and effective public constraints capitalism evolves into an extreme form (which he calls hyper-capitalism) that serves wealthy individuals (i.e., plutocrats) and large corporations but leaves everyone else behind. This is antithetical to the ideals and principles on which our democracy was founded – equal opportunity for all, including the ability to realistically pursue happiness and a good life through access to health care and true freedom to make important life choices, such as where to live and work. These ideals and principles, as well as the public goods and basic societal functions that effectuate them, can only be ensured by an assertive government of, by, and for the people, not one that’s controlled by the plutocrats and wealthy corporations for their benefit.

A first step for saving Medicare is to eliminate the Direct Contracting privatization option created by the Trump Administration. Over 50 Democratic members of Congress, along with Physicians for a National Health Program (a  membership organization of 24,000 doctors and other health professionals), are calling on the Biden Administration to eliminate the Direct Contracting Medicare privatization program. A majority of the 53 current Direct Contracting companies are investor owned (i.e., owned by private equity or hedge fund vulture capitalists not by a health insurer or a healthy services provider). They are allowed to spend as little as 60% of their Medicare payments on patient care with the rest going to profits and overhead. So far, the Biden Administration has only paused the most extreme form of DC, while letting the other DC pilot programs proceed, despite questions over their legality. [3] [4]

I urge you to contact President Biden and ask him to eliminate the Direct Contracting Medicare privatization scheme. You can also let him know that you support reducing and eventually eliminating other Medicare privatization, while strengthening the public Medicare program. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to contact your U.S. Representative and Senators to let them know that you support elimination of the Direct Contracting Medicare privatization scheme. You can also let them know that you support reducing and eliminating Medicare privatization, while strengthening the public Medicare program. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Caress, B., 1/24/22, “The dark history of Medicare privatization,” The American Prospect (https://prospect.org/health/dark-history-of-medicare-privatization/)

[2]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

[3]      Johnson, J., 2/3/22, “Warren warns, ‘Corporate vultures’ circling Medicare on Biden’s watch,” Common Dreams (https://www.commondreams.org/news/2022/02/03/warren-warns-corporate-vultures-are-circling-medicare-bidens-watch)

[4]      Johnson, J., 2/16/22, “Physicians slam industry push to ‘fix’ – not end – Medicare privatization scheme,” Common Dreams (https://www.commondreams.org/news/2022/02/16/physicians-slam-industry-push-fix-not-end-medicare-privatization-scheme)

LACK OF ETHICS AT THE SUPREME COURT AND IN THE FEDERAL JUDICIARY

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

There’s a lack of ethics at the U.S. Supreme Court, both in terms of the justices themselves and in the Chief Justice’s oversight of the federal judiciary. Unlike every other member of state and federal judiciaries, the Supreme Court’s nine justices aren’t subject to ethics rules or a code of conduct, not even the ones that govern the rest of the federal judiciary. Requests for them to subject themselves to those rules have fallen on deaf ears and efforts in Congress to impose ethical standards have gone nowhere.

The 1978 Ethics in Government Act, passed in the aftermath of President Nixon’s Watergate scandal, does require the justices to file annual disclosure statements of their and family members’ financial interests. Nonetheless, Justice Thomas had to amend 20 years of disclosure statements to indicate that his wife had received hundreds of thousands of dollars of income from the Heritage Foundation, a conservative think tank. He has repeatedly been criticized for not recusing himself in cases where he appeared to have a conflict of interest based on his wife’s financial interests. [1]

There also have been issues with conflicts of interest due to justices’ ownership of stock in corporations with business before the court. For example, in 2016, Chief Justice Roberts had two instances of such conflicts. In a case involving Microsoft, he disclosed well after that fact that he had sold over $250,000 of Microsoft stock in the year prior to hearing the case. He also participated in a case involving Texas Instruments while owning over $100,000 worth of company stock. He admitted after the fact that he should have recused himself on that case.

At least four current justices have book deals worth hundreds of thousands, if not millions, of dollars. Federal employment guidelines say that justices can’t accept more than $30,000 annually in outside pay. However, book income is exempt, but, nonetheless, it has potential conflicts of interest.

Nearly every justice has been questioned at one point or another on ethical issues such as appearing at partisan events or fundraisers, or accepting travel packages or other gifts. Justice Gorsuch just gave a speech at the annual conference of the politically active, powerful, conservative legal group, the Federalist Society. His speech was the only part of the conference program that was closed to the media. Without a code of conduct that indicates what’s appropriate and what isn’t, it’s up to each individual justice’s discretion (or lack thereof).

For the rest of the federal judiciary, the Chief Justice of the Supreme Court, John Roberts, has responsibility for overseeing its ethical standards and practices. Despite numerous examples of federal judges with conflicts of interest, in his year-end report on the federal judiciary Roberts argues for “institutional independence” and for the “Judiciary’s power to manage its internal affairs”. [2]

However, the evidence indicates that Chief Justice Roberts and the federal judiciary are NOT doing a good job of managing their internal affairs. In September, the Wall Street Journal reported that between 2010 and 2018, 131 federal judges improperly heard cases involving corporations where they or family members were shareholders. This is, of course, a violation of the conflict-of-interest rules for federal judges. Subsequent to the Wall Street Journal’s reporting, 136 judges have, after the fact, informed parties in 777 cases that they should have recused themselves because of a conflict of interest.

In response to these and other revelations, members of Congress have expressed interest in:

  • Making all federal judges’ financial disclosure statements public (as they are for elected officials) so that conflicts of interest would be apparent,
  • Imposing a code of conduct on the Supreme Court justices,
  • Updating judicial ethics rules and disclosure requirements for all federal judges, including ones governing gifts, such as travel packages, and
  • Imposing civil sanctions on judges who fail to recuse themselves when the judicial code of conduct requires them to do so.

The Roberts report’s only acknowledgement of the conflict-of-interest problems among federal judges is a statement that judicial ethics training programs need to be more rigorous. It also asserts that inappropriate behavior in the judicial workplace (presumably referring to multiple reports of sexual harassment and misconduct) can be addressed with expanded guidance and training.

Given the evidence of a variety of ethical problems at the Supreme Court and in the federal judiciary, Roberts’ call for judicial independence and autonomy sounds like an effort to avoid the standards, accountability, and transparency that would be put in place by a code of conduct for the Supreme Court Justices and by an enhanced code of conduct for the rest of the federal judiciary.

[1]      O’Brien, T. L., 5/2/21, “Supreme Court’s ethics problems are bigger than Coney Barrett,” Bloomberg (https://www.bloomberg.com/opinion/articles/2021-05-02/supreme-court-s-ethics-problems-are-bigger-than-coney-barrett)

[2]      Mystal, E., 1/24/22, “Roberts gets an F on his annual report,” The Nation (https://www.thenation.com/article/society/john-roberts-report/)

PRIVATIZED MEDICARE CAN’T BE CONTROLLED

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

For decades, the private health insurers in America have, step by step, been privatizing Medicare, our public health insurance for all seniors, in order to make profits off this large public funding stream. Not surprisingly, they made dramatic new inroads during the Trump administration.

If we want to improve quality and control costs in our health care system for seniors, the privatization of Medicare must be stopped and rolled back. This and two other posts will summarize:

  • The history and background of Medicare and efforts to privatize it (a previous post),
  • The unsuccessful efforts to control the costs and improve the quality of the privatized Medicare Advantage plans (this post), and
  • What Medicare needs to do to fix what’s wrong, control runaway costs, and improve quality. [1]

Over the last 30 years, multiple efforts have attempted to control the costs of the privatized Medicare Advantage (MA) plans and to protect MA enrollees’ access to health care services (i.e., to reduce unwarranted denials of services or payments). However, the MA insurance companies always seem to find a way to dodge or get around new laws or regulations with these goals. Sometimes they block or weaken them before they’re ever enacted (e.g., through lobbying and campaign spending). Sometimes they alter their practices to skirt and undermine them.

When the privatized Medicare Advantage plans came into existence in 1985 (see my previous post for more details), reimbursement rates for MA plans were set at 95% of what seniors cost Medicare because the private insurers claimed they would be more efficient than the public Medicare program and would save Medicare money. However, MA insurance companies ended up spending 6% more per enrollee than Medicare, so they lobbied for and got higher and higher payments from Medicare. Instead of saving Medicare money, they cost it more and more. In 1997, the Clinton Administration’s Balanced Budget Act cut the excessive payments to MA plans and stopped the MA insurers from creaming-the-crop by enrolling healthier-than-average (i.e., less expensive) seniors. However, in 1999 and 2000, the MA companies got Congress to weaken these initiatives and then, under the pro-privatization George W. Bush Administration, they actually got increases in their payments from Medicare. The Obama Administration, as part of the Affordable Care Act (ACA) in 2010, tried again to cut excessive payments to MA insurers. The ACA cut about $14 billion from MA plans’ excess costs by limiting them to only 1% more per enrollee than traditional, public Medicare costs. In response, an extensive and expensive ad and media campaign was initiated by the MA health insurers and Republicans claiming that Obama and the ACA were hurting seniors by cutting Medicare – a  campaign you may well remember. As a result, two years later, under tremendous pressure, the Obama Administration backed off and instead of cutting MA rates by 2.3% to move toward the targeted savings, it increased them by 3.3%

The private Medicare Advantage insurers have been successful time after time in overcoming Medicare’s efforts to control their excessive costs. They are so big and profitable that they can spend the money needed to stymie Medicare’s efforts by engaging in campaign spending, lobbying, and advertising. Any time there is an effort to cut their funding, they run a massive media and lobbying campaign saying that the government is trying to cut spending on Medicare. This scares seniors and legislators into opposing efforts to make MA more cost effective. [2]

The private Medicare Advantage insurers also find innovative (and sometimes fraudulent) ways to dodge cost controls and increase their revenue. A major one is claiming that their enrollees are sicker than they actually are because the payments they receive are greater for sicker seniors. Codes indicating the presence of diseases and negative health conditions are added to enrollees’ records even if the MA provider is providing no treatment or services for those ailments. It is estimated that in 2019 this “upcoding” (as it is referred to) cost Medicare $9 billion. [3]

Another way that the private Medicare Advantage insurers are gaming Medicare is through its five-star quality rating program that provides bonuses to MA plans with high ratings. The original purpose of the quality rating program was to help seniors pick high quality plans. When the program was initiated in 2009, 15% of plans got 4 or 4.5 stars and none got 5 stars. Today, 86% of plans are rated at 4 or 5 stars and, therefore, get about $6 billion in quality bonuses. Yet research finds that MA plan quality has not improved. The only thing that has improved is the MA insurers’ ability to game the system to get billions in bonus payments.

When the pro-privatization Trump Administration came into power, it created a program to fully privatize Medicare called Direct Contracting. Some experts have described it as Medicare Advantage on steroids. For example, one of the three Direct Contracting models would allow all seniors in designated geographic areas to be enrolled in a privatized Direct Contracting health care plan with no right to opt out. In addition, for the first time, Direct Contracting would allow investor-controlled firms – as opposed to firms controlled by health service providers – to provide Medicare services. This would turn over the delivery of Medicare’s health care services to private investors like hedge fund and private equity vulture capitalists whose only goal is to make money. [4]

In a recent 18-month period, private investors spent $50 billion buying Medicare Advantage insurers and these new Direct Contracting firms because of the opportunities they see to make large profits. These deals value the purchased firms at an average of $87,000 for each senior they estimate they will enroll. This is indicative of the level of profit investors believe can be generated from Medicare payments to these firms. [5]

My next post will describe what Medicare needs to do to fix what’s wrong, control runaway costs, and improve quality.

[1]      Caress, B., 1/24/22, “The dark history of Medicare privatization,” The American Prospect (https://prospect.org/health/dark-history-of-medicare-privatization/)

[2]      Caress, B., 1/24/22, see above

[3]      Gilfillan, R., & Berwick, D., 9/29/21, “Medicare Advantage, Direct Contracting, and the Medicare ‘money machine,’ Part 1: The risk-score game,” Health Affairs (https://www.healthaffairs.org/do/10.1377/forefront.20210927.6239/full/)

[4]      Gilfillan, R., & Berwick, D., 9/30/21, “Medicare Advantage, Direct Contracting, and the Medicare ‘money machine,’ Part 2: Building on the ACO model,” Health Affairs (https://www.healthaffairs.org/do/10.1377/forefront.20210928.795755/full/)

[5]      Gilfillan, R., & Berwick, D., 9/29/21, see above

THE ECONOMY PERFORMS BETTER UNDER DEMOCRATIC PRESIDENTS

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

I’ve written before about the fact that the economy has historically performed better under Democratic Presidents than under Republicans. With the economy booming under President Biden, this pattern is both being confirmed and extended, and it’s receiving some attention. For example, Heather Cox Richardson, an historian, wrote the following in her Feb. 5, 2022, blog post (my bolding):

“The economy has boomed under President Joe Biden, putting the lie to the old trope that Democrats don’t manage the economy as well as Republicans.

This should not come as a surprise to anyone. The economy has performed better under Democrats than Republicans since at least World War II. CNN Business reports that since 1945, the Standard & Poor’s 500—a market index of 500 leading U.S. publicly traded companies—has averaged an annual gain of 11.2% during years when Democrats controlled the White House, and a 6.9% average gain under Republicans. In the same time period, gross domestic product grew by an average of 4.1% under Democrats, 2.5% under Republicans. Job growth, too, is significantly stronger under Democrats than Republicans.

“[T]here has been a stark pattern in the United States for nearly a century,” wrote David Leonhardt of the New York Times last year, “The economy has grown significantly faster under Democratic presidents than Republican ones.”

The persistence of the myth that Democrats are bad for the economy is an interesting example of the endurance of political rhetoric over reality. …

In the end, … the economists Leonhardt interviewed last year think [that] behind Democrats’ ability to manage the economy better than Republicans [is the fact that] Republicans tend to cling to abstract theories about how the economy works—theories about high tariffs or tax cuts, for example, which tend to concentrate wealth upward—while Democrats are more pragmatic, willing to pay attention to facts on the ground and to historical lessons about what works and what doesn’t.”

You can read the rest of her post with its more in-depth interesting historical perspective here: https://heathercoxrichardson.substack.com/p/february-5-2022

MEDICARE IS BEING PRIVATIZED AND IT’S A RIP OFF

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The private health insurers in America have been working for decades to privatize Medicare, our public health insurance for all seniors, so they can make profits off this large public funding stream. Not surprisingly, they made dramatic new inroads during the Trump administration.

If we want to improve quality and control costs in our health care system, the privatization of Medicare must be stopped and rolled back. This and two subsequent posts will summarize:

  • The history and background of Medicare and efforts to privatize it (this post),
  • The unsuccessful efforts to control the costs and improve the quality of the privatized Medicare Advantage plans, and
  • What Medicare needs to do to fix what’s gone wrong and to control runaway costs while improving quality. [1]

The U.S. health care system is the most expensive in the world with some of the worst outcomes. It costs nearly twice as much per person as in peer countries. It is eating up nearly $1 out of every $5 spent in the U.S. economy. Our policies (i.e., laws and regulations, or lack thereof) have allowed our private health care system to rip off consumers with high prices and poor quality for the sake of profits that enrich shareholders and executives.

The public, meanwhile, is less healthy and its economic security is at-risk, because even with insurance a major health problem is often astronomically costly. Surveys have found that of the adults who are not old enough to be eligible for Medicare roughly one in four (26% or about 52 million people) face challenges paying medical bills. Roughly 1 million individuals declare bankruptcy each year and for many of them (estimates range from 26% to 62%) medical bills are a significant – if not the driving – factor. This makes medical costs the number one cause of personal bankruptcies. [2]

Medicare was created in 1965 to provide health insurance for seniors that would pay their doctor and hospital bills. The Centers for Medicare and Medicaid Services (CMS) oversees Medicare (and Medicaid which is for low-income families and individuals) and sets the regulations for health insurance plans for seniors. Private insurance companies process the payments for health care services under a contract with CMS. The insurers get paid for services according to CMS regulations. However, the insurance companies manage the payments to health care providers and the processing and paperwork requirements.

Privatized Medicare Advantage (MA) plans were introduced in 1985 because private insurers claimed they were more efficient and, therefore, could save Medicare money and deliver better services – despite their poor performance record in the general health care market. MA plans are publicly funded, privately run, currently enroll 26 million seniors (40% of Medicare enrollees), cost $343 million a year, and are very profitable for the private insurers. Moreover, two corporations, Humana and UnitedHealthcare, are the insurers for half of all MA enrollees. As is true in so many sectors of the U.S. economy, this market has a few huge corporations with a very large portion of the market. Due to this limited competition, these huge corporations have monopolistic power (e.g., to raise prices and lower quality). This is a classic example of the hyper-capitalism that emerges when corporations aren’t strongly regulated.

The portion of Medicare that is privatized through Medicare Advantage (MA) plans is growing and has resulted in increased costs and a bewildering array of choices that often confuse and manipulate seniors – 3,834 MA plans are offered by nine different health insurance companies. This makes seniors’ health care complex, confusing, and costly, thereby undermining confidence in Medicare and in government programs in general.

Seniors buy MA plans because they typically cover services Medicare doesn’t cover (such as vision, hearing, and dental services) and/or reduce Medicare’s out-of-pocket costs (e.g., deductibles and co-pays). To cover their overhead and make a profit, MA plans aggressively control costs by requiring enrollees to only use in-network providers and to get prior approval for many services, especially expensive ones.

MA plans deny 4% of requests for prior approval of health care services and 8% of requests for payments for services that have been delivered. There is an appeal process but few people use it. When they do, the denials are reversed 75% of the time. Denying coverage for health care services not only saves the MA plans money, it also tends to drive seniors who have serious and expensive health issues off their MA plan and back onto traditional Medicare. This is a creaming-the-crop technique that leaves healthier, less expensive (and more profitable) seniors in MA plans and shifts the less healthy, more expensive seniors onto the public Medicare program. As a result, MA plans spend 10% to 25% less per enrollee than traditional Medicare does for comparable enrollees.

Nonetheless, over the 12 years from 2009 to 2021, Medicare paid MA private insurance companies $140 billion more than it would have spent if those seniors had stayed in traditional, public Medicare. (A further explanation of how this happens is in my next post.) MA plan insurance companies made a gross profit of $2,256 per enrollee in 2020 (which is more than double what they make on non-senior enrollees in the general health care market).

The bottom line is that the partial privatization of Medicare through Medicare Advantage plans has not saved Medicare money as promised (quite the opposite) and it has not produced better outcomes for seniors.

My next post will summarize the unsuccessful efforts to control the costs and improve the quality of the privatized Medicare Advantage plans. A subsequent post will describe what Medicare needs to do to fix what’s gone wrong and to control runaway costs while improving quality.

[1]      Caress, B., 1/24/22, “The dark history of Medicare privatization,” The American Prospect (https://prospect.org/health/dark-history-of-medicare-privatization/)

[2]      Amadeo, K., 1/20/22, “Medical bankruptcy and the economy,” The Balance (https://www.thebalance.com/medical-bankruptcy-statistics-4154729)

Good economic news ignored / downplayed by the mainstream media

Numbers released yesterday by the Bureau of Economic Analysis show that the U.S. economy grew by a 6.9% annual rate from October to December 2021 and 5.7 percent for all of 2021. That’s the fastest full-year growth since 1984. The U.S. economy also added 6 million jobs in 2021, bringing the unemployment rate below 4%. This growth is the outcome of dramatic changes in economic policy initiated by the Biden administration through measures like the American Rescue Plan and the bipartisan infrastructure law. Pay for workers is also growing.

Nonetheless, the mainstream media continue to downplay the extraordinary success of the economy, the Biden administration, and Democratic policies. Instead, they focus on the negatives. The Washington Post ran a story that began: “Even as the U.S. economy grew at its fastest pace in decades in 2021, the recovery has more recently flashed troubling warning signs, with soaring inflation, whipsawing financial markets and slowing consumer spending complicating the rebound.” What a surprising way to introduce a story on the best economic growth since 1984! The NY Times story’s headline was “Growth is surging in Biden’s economy. Why don’t voters feel better?” The answer is because the mainstream media aren’t reporting all the good news and even when they do, they highlight a negative spin! Read more at Heather Cox Richardson’s “Letters from an American” blog post of January 27 here: https://heathercoxrichardson.substack.com/p/january-27-2022

WHICH CORPORATIONS SUPPORT SEDITIOUS REPUBLICANS AND WHICH SUPPORT DEMOCRACY

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

A year after January 6, 2021, when, even after the insurrectionists’ attack on the Capitol, 147 Republicans objected (with no factual basis) to certifying the Electoral College vote that made Joe Biden President, it’s important to identify the corporations that are supporting the 147 objectors who opposed the peaceful, democratic transfer of power to the new, overwhelmingly elected President.

Remember that in reaction to the insurrection and the votes of those 147 Republicans against a peaceful transfer of power based on the will of the voters, hundreds of corporations stated they were suspending political contributions to the objectors, or in some cases all political contributions. Many pledged never to support the objectors in the future.

Corporate support of politicians and political committees is done through corporations’ political action committees (PACs). Popular Information has been monitoring corporate PACs through their reporting to the Federal Election Commission (FEC). It has published its findings in a corporate accountability index that lists 183 corporations and whether or not they have kept their pledges not to support the objectors.

GOOD NEWS: So far, 79 major corporations have kept their pledges and not donated directly to any of the 147 objectors or to committees that support them, typically the fundraising committees of the Republican National Committee. These include Airbnb, Allstate, Amazon, American Express, CBS, Clorox, Coca-Cola, eBay, Facebook, General Mills, Hallmark, Hilton, Kraft Heinz, Lyft, Marriott, Mastercard, McDonalds, Microsoft, Nike, Sony, Target, Walgreens, Walt Disney, and Zillow. (See the full list at the corporate accountability index.)

Charles Schwab, one of the country’s biggest brokerage firms, went even further. Immediately after the insurrection, it announced the dissolution of its PAC and said it would no longer make donations to politicians. The PAC’s remaining funds were donated to The Boys & Girls Club of America and historically Black colleges and universities. Hewlett Packard also shut down its PAC soon after January 6. Hallmark Cards actually requested that two objectors, Senators Josh Hawley (R-MO) and Roger Marshall (R-KS), return its PAC’s donations. [1]

Overall, Popular Information found that corporate PAC donations to objectors was down roughly 60% in 2021 as compared to 2019 (the comparable year from the previous election cycle). Of the 183 major corporations it contacted, seven explicitly pledged not to support objectors in 2022: Airbnb, BASF, Eversource Energy, Lyft, Microsoft, Dow, and American Express. [2]

BAD NEWS: To-date, 103 corporations have either given directly to objectors or to committees that support them, despite pledges not to donate to objectors, to suspend all PAC donations, or to re-evaluate their donation criteria.

  • Four corporations have broken their pledges and given directly to objectors and to committees supporting them: PriceWaterhouseCoopers: $184,000; Eli Lilly: $72,500; Cigna: $60,000; and Pacific Gas & Electric: $44,500.
  • Fifty-two corporations pledged to suspend all PAC contributions but then gave directly to objectors and often to committees supporting them as well, including Boeing: $375,500; Lockheed Martin: $323,000; GM: $158,500; as well as Aflac, American Airlines, Jet Blue, Kroger, Molson Coors, Stanley Black and Decker, T-Mobile, and UPS. (See the full list at the corporate accountability index.)
  • Seventeen corporations pledged to re-evaluate their donation criteria but then donated directly to objectors and sometimes to committees supporting them as well, including: Toyota; $95,500; Chevron: $71,000; Ford: $59,000; as well as Delta, Exxon Mobil, and FedEx. (See the full list at the corporate accountability index.) Toyota, after substantial public attention and pushback, announced in June, 2021, that it would change course and stop contributing to objectors. A clear indication that public pressure can be effective. (See more about how to do this at the end of this post.)
  • Thirty corporations have violated the spirt of their pledge by giving indirectly to objectors through committees that support them, despite pledging not to donate to objectors, to suspend all PAC donations, or to re-evaluate their donation criteria. These include: NextEra: $105,000; Dell: $60,000; Walmart: $60,000; Cozen O’Connor: $55,000; AT&T: $35,000; and $30,000 each from Comcast / NBC, Genentech, General Electric, Google, Intel, and Verizon. (See the full list at the corporate accountability index.)

The organization Citizens for Responsibility and Ethics in Washington (CREW) has also been monitoring corporate and industry trade groups’ donations to the objectors. [3]

GOOD NEWS: One hundred thirty-four (134) out of 248 corporations and industry groups that said they were suspending donations to the objectors have not contributed to them to-date.

BAD NEWS: Over the last year, despite promises made to hold the objectors accountable, 717 corporations and industry groups have given over $18 million to objectors and the Republican National Committee’s fundraising committees that support them.

The four largest corporate donors to objectors and committees supporting them are: Koch Industries ($308,000), American Crystal Sugar ($285,000), General Dynamics ($234,000), and Valero Energy ($208,000). These corporations never pledged to stop or alter political donations despite the Jan. 6 insurrection and the unfounded objections to the Electoral College vote.

The five top donors among industry trade groups are: Council of Insurance Agents & Brokers ($432,000), National Association of Realtors ($303,000), Independent Insurance Agents & Brokers of America ($270,000), National Electrical Contractors Association ($222,000), and the Credit Union National Association ($217,500).

GOOD NEWS: Activism by consumers, voters, and stakeholders in general (i.e., us) can have an effect of corporations. For example, as noted above, Toyota stopped its financial support of objectors after public attention and push back from consumers. I encourage you to take action however you see fit. Here are some ideas for steps you can take:

  • Patronize businesses that support democracy (i.e., they are not donating to the objectors).
  • Boycott businesses that are donating to the objectors.
  • Send letters, emails, or social media postings to corporations to thank them for doing the right thing or highlighting their bad behavior and asking them to change it. Address your communication to the CEO and/or the shareholder or customer relations office. This is particularly effective if you are a shareholder, customer, employee, retiree, or other stakeholder in the company, which you should note in your communication.
  • Submit a letter to the editor of a local media outlet (hardcopy or on-line), post to social media, and/or spread the word to your family and friends.

Every action makes a difference and together, many small actions add up to something bigger than the apparent sum of those actions. We all need to do our part to save our democracy from the forces that are undermining it. Corporate America must stand up for our democracy and stop supporting those who are undermining it. In the 2020 election cycle, five of the objectors received over 60% of their campaign donations from corporate PACs. [4] This has to stop and it’s our job to make it happen, as we did with Toyota.

[1]      Li, A., & Shah, A., 1/3/22, “The corporate insurrectionists: How companies have broken promises and funded seditionists,” CREW (https://www.citizensforethics.org/reports-investigations/crew-reports/the-corporate-insurrection-how-companies-have-broken-promises-and-funded-seditionists/)

[2]      Legum, J., Crosby, R., & Zekeria, T., 1/4/22, “Seven major corporations pledge not to support GOP objectors in 2022,” Popular Information (https://popular.info/p/seven-major-corporations-pledge-not)

[3]      Li, A., & Shah, A., 1/3/22, see above

[4]      Evers-Hillstrom, K., 1/8/21, “Exploring the top donors to GOP Electoral College objectors,” OpenSecrets (https://www.opensecrets.org/news/2021/01/objectors-to-electoralcollege-donors)

THE FUNDING OF THE JANUARY 6 INSURRECTION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

I’m surprised we haven’t heard more from the U.S. House Select Committee to Investigate the January 6th Attack on the U.S. Capitol about the funding for the insurrectionists and the rally that preceded the attack on the Capitol. This, of course, was the rally at which Trump spoke for an hour, stated that our elections are corrupt, and then said to the crowd, “We fight like hell. And if you don’t fight like hell, you’re not gonna have a country any more. … So, we’re going to walk down Pennsylvania Avenue … we’re going to the Capitol … to take back our country.” After which, of course, the crowd walked to the Capitol and attacked it and the people there.

The organizations, people, and funding that organized and paid for that rally are a tangled web of inter-related people and entities. Many of them were also involved in the Trump campaign. The trail of the money, as well as the overlap and connections among people and organizations, was intentionally obscured. Money was run through multiple organizations before actually being spent on-the-ground. This served both to hide who the actual donors and funders were, as well as to hide who was actually paid to do the work.

Many of the entities the money flowed through are “dark money” groups; these are non-profit, social welfare organizations that do not have to reveal their donors, but are supposed to only engage in limited political activity. They are organized under section 501(c)(4) of the IRS regulations. However, the IRS is not enforcing any limitation on their political activity. (Note: Charitable non-profits, to which donations are tax deductible, are organized under section 501(c)(3) of the IRS regulations and are strictly limited in their political activity. Donations to 501(c)(4)  non-profits are not tax deductible.)

So, here’s some of the information that has been uncovered about some of the organizations involved in the January 6th rally that preceded and fomented the attack on the Capitol. [1] [2]

  • Women for America First (W4AF): got the permit for the rally from the National Park Service. It is a dark money group and Women for Trump is an affiliate. Julie Jenkins Fancelli (heir to the Publix supermarket money) donated $300,000 to W4AF for the rally.
  • Rule of Law Trust: a sponsor of the rally and a dark money group. It is affiliated with the Republican Attorneys General Association. It received $150,000 from Julie Jenkins Fancelli and often receives money from opaque non-profits including the Judicial Crisis Network (see below) and ones that are part of the right-wing Koch brothers’ funding network.
  • Turning Point: a sponsor of the rally and a dark money group. It received $39 million from undisclosed donors in fiscal year 2020. Turning Point USA and Turning Point Action are affiliates.
  • Tea Party Patriots: a sponsor of the rally and a dark money group. It has received over $4.7 million from the Judicial Crisis Network (see below) and nearly $4.3 million from 2016 through 2020 from Richard Uihlein (see below).
  • Judicial Crisis Network: a dark money group that gave money to multiple groups that were involved in organizing the rally. It is now known as the Concord Fund and gave over $4.7 million to the Tea Party Patriots and $50,000 to Turning Point. It has also given over $1.9 million to the Rule of Law Trust since 2013 and millions more to the Republican Attorneys General Association.
  • Event Strategies Inc.: was named on the permit for the rally and two individuals who were organizers for the rally were on its payroll. It was also used by the Trump campaign, receiving over $2.5 million from it, including over $800,000 in 2021 after the official election campaign was over.
  • American Made Media Consultants LLC: created by the Trump campaign apparently to hide the recipients of the over $770 million funneled through it by the campaign. It spent over $200,000 on text messages on January 6.
  • The Trump Campaign: in the 2020 election cycle, the Trump campaign paid over $4 million to individuals and organizations that were organizers of the January 6 rally. Because the campaign funneled hundreds of millions of dollars through layers of shell companies and opaque firms, it is unknown when and for what purpose these payments were made. What’s known is that there was a significant overlap between people and organizations working for the campaign and organizing the January 6 rally.

Here’s some of the information that has been uncovered about some of the people involved in the January 6th rally that preceded and fomented the attack on the Capitol.

  • Caroline Wren: a major fundraiser for the Trump campaign, she was named on the permit for the rally and boasted that she’d raised $3 million for the rally. She funneled this money through two dark money groups and a super PAC. This served to obscure the links between the donors and the use of the funds. She was paid over $170,000 for her work for the Trump campaign. She has been subpoenaed by the House Committee.
  • Richard Uihlein: CEO of the Ulinebusiness supplies company, he has given over $1 million to Turning Point over the last few years, about $4.3 million to Tea Party Patriots since 2016, and an undetermined amount of money to Women for America First.
  • Megan Powers: was listed on the rally permit as one of two operations managers. She was paid roughly $300,000 by the Trump campaign as its director of operations. She has been subpoenaed by the House Committee.
  • Justin Caporale, Maggie Mulvaney, and Tim Unes: were all organizers of the January 6 rally and have also been paid by the Trump campaign. They have been subpoenaed by the House Committee.

The catch phrase of the Watergate investigation of the 1970s was “Follow the money.” That may well apply to the January 6 insurrection as well. Although the House investigation seems to be focused on the flow of communications, I hope it’s also looking at the flow of money. Despite the fact that the rally organizers and the Trump campaign have worked hard to obscure the flow of money, I hope it can be traced because its flow would shed a lot of light on the scale of the conspiracy and who was involved in it.

The cost of the rally was at least half a million dollars and the costs of people getting to Washington and their staying overnight was greater than that. Knowing where that money came from and who coordinated the expenditures would undoubtedly be a very telling and important tale.

[1]      Massoglia, A., 10/25/21, “Details of the money behind Jan. 6 protests continue to emerge,” OpenSecrets (https://www.opensecrets.org/news/2021/10/details-of-the-money-behind-jan-6-protests-continue-to-emerge)

[2]      Massoglia, A., 8/30/21, “Trump’s political operation paid more than $4.3 million to Jan. 6 organizers but questions remain about the full extent of its involvement,” OpenSecrets (https://www.opensecrets.org/news/2021/08/trumps-political-operation-paid-more-than-4-3-million-to-jan-6-organizers-questions-remain-about-full-involvement)

LET’S JUST SAY IT: THE REPUBLICAN PARTY DOES NOT BELIEVE IN DEMOCRACY OR THE CONSTITUTION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

It’s long past time to stop the charade that the Republican Party has any commitment to making democracy work. Or that it supports the Constitution. Or that it is patriotic. There are people who identify as Republicans who are at odds with these statements (Rep. Liz Cheney jumps to mind), but they are few and far between and are not the ones who are setting the official Republican Party agenda or messaging.

The Republican Party supports freedom of speech only when it’s speech it likes. Threats, violent speech (and acts), and name calling are fine when they serve its purposes and when they are aligned with its goals. However, speech by others, including peaceful protests, should be severely limited and if those peaceful protesters are injured or killed by a vehicle, the vehicle driver, not the protesters, should be protected by laws. [1]

According to the Republican Party and its judges, freedom of religion is paramount when it is Christianity practiced by white people, but others don’t deserve this freedom, despite its inclusion in the Constitution. For example, Muslims are, by definition, terrorists and should be monitored and restricted.

Democracy and the electoral processes laid out in the Constitution are valid, according to Republicans, only if Republicans win elections. Otherwise, the results of voting are fraudulent and should be disregarded and overturned by any means necessary, including violence.

No American, let alone member of Congress, is a patriot if they are willing to aid and abet an undemocratic and unconstitutional overturning of election results, or if they are unwilling to denounce and reject such efforts. Yet the great majority of Republicans are doing or have done these things, particularly in relation to the Jan. 6, 2021, insurrection at the U.S. Capitol. [2]

No American can claim to be a patriot if they are working to make it harder for citizens who might disagree with them to vote. However, Republicans in many states and in Congress are doing just this.

No member of Congress can claim to support democracy or the Constitution if, based on partisanship, they simply refuse to work meaningfully to pass important legislation. Such a blatant undermining of the functioning of a democratic government is unpatriotic at best and treasonous at worst.

Yet most Republicans in Congress have no interest in actually governing and, instead, are doing everything they can to keep the Democrats from governing, i.e., from actually doing things that the people of the country support doing and that a democratic government should do. For example, Senate Republicans are blocking confirmations of nominees for dozens of ambassadorships, at least a dozen high-ranking jobs at the Treasury Department, and roughly 200 other executive branch positions. This is nothing other than an effort to keep the Biden Administration and our democracy from functioning effectively; this presents a clear and present danger to America’s national security. [3] Again, it is unpatriotic at best and treasonous at worst.

The Republican Party is claiming that modest policies that support working men and women, as well as their families, are unaffordable and are socialism that would destroy democracy. First of all, it is hypocritical to say it is unaffordable because the expenditures of the Build Back Better bill (at which it levels these charges) is somewhere between one-fifth and two-fifths (20% – 40%) of the Defense Department budget that it supports. The Build Back Better bill would spend an amount equal to roughly 1% (one-hundredth) of the U.S. Gross Domestic Product. This wouldn’t put the U.S. anywhere close to the government spending of European countries, let alone that of Scandinavian countries and their social democracies. And by the way, all of those countries, despite a greater degree of socialism than in the U.S., are democracies! So, second of all, socialism and democracy are NOT incompatible; they co-exist in all the other wealthy countries and to some degree in the U.S. in Social Security, Medicare, and the Veterans Administration, for example.

The Republican Party does not want to play by the rules established by our Constitution or our democratic traditions because if it did it would lose elections and power. It is out to win at all costs as it struggles to retain its power and that of its wealthy and generally white backers. It has given up on democracy because success for democracy means failure for it. [4]

Sadly, the current Republican Party’s rhetoric about supporting democracy, the Constitution, and patriotism is a sham. It is the language and lies of autocrats who are desperate to hang on to power and are willing to say and do anything to do so. Actions speak louder than words and the Republican Party’s actions, and the hypocrisy and lies it engages in to try to justify them, make its true beliefs and character crystal clear.

[1]      American Civil Liberties Union, retrieved from the Internet 1/7/22, “Anti-protest bills around the country,” (https://www.aclu.org/issues/free-speech/rights-protesters/anti-protest-bills-around-country)

[2]      Lehigh, S., 1/7/22, “What real America patriotism means,” The Boston Globe

[3]      Boston Globe Editorial Board, 10/22/21, “US ambassadors, State Department officials held hostage,” The Boston Globe

[4]      Blow, C. M., 6/20/21, “Stop hoping the G.O.P. will play ball,” The New York Times

SOCIALISM IS THE ANSWER FOR SAVING DEMOCRACY FROM CAPITALISM

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Bob Kuttner has written a powerful and poignant article raising the question of whether capitalism is compatible with democracy – or at least a version of democracy that lives up to the American ideals of equal opportunity and government of, by, and for the people. [1] The New Deal of the late 1930s and 1940s created a form of government-regulated capitalism that for 40 years (until 1980) produced a thriving working and middle class, as well as an economy where income and wealth inequality were stabilized, if not narrowed. However, in the last 40 years, the U.S. economy has evolved into a new form of hyper-capitalism (some call it vulture capitalism) that has destroyed the ability of many workers to thrive. (See my previous post for more detail.)

This post presents Kuttner’s thoughts on where we need to go from here to restore our democracy and create more equitable economic and political systems. It’s a bit long, so just read the bolded parts if it’s too much, but do read Kuttner’s conclusions at the end.

Kuttner writes that we need to reverse the deregulation and privatization of important public services and public goods. Health insurance is one example:

  • Deregulation allowed the transformation of health insurance from non-profit Blue Cross Blue Shield programs into for-profit insurance corporations. This is a key reason the U.S. health care system is the most expensive in the world with some of the worst outcomes.
  • Private insurers have been allowed to provide Medicare coverage. This has resulted in increased costs and a bewildering array of choices that often confuse and manipulate seniors. This privatization of Medicare ultimately makes health care more complex, confusing, and costly for seniors, thereby undermining confidence in Medicare and our government.

The overall result of this deregulation and privatization is that health insurance plans are so complex that it takes hundreds of pages to explain their benefits and limitations; no consumer fully understands what they are getting or can shop intelligently among plans.

Other examples of harmful deregulation and privatization include:

  • Drug companies that are allowed to charged exorbitant, unregulated prices in the U.S. that are almost always much higher than in Canada and other countries.
  • Deregulation of the airlines that allows fares and fees to fluctuate widely. It is also the reason it costs so much more to fly to closer but less frequent destinations than for longer trips to bigger cities.
  • Privatization of housing subsidies has resulted in the grafting of some incremental public objectives onto a capitalistic, for-profit system run by landlords, developers, and financiers. The results have been both totally inadequate and dramatically inefficient.

Weak regulation has allowed private sector capitalists to aggressively promote products that have caused serious harm to public health, often while lying about their ill effects. Examples include cigarettes and other tobacco products, oxycontin (the prescription, addictive opioid), and fossil fuels and other products that have polluted our air and water. The promotion of fossil fuels, of course, has far-reaching effects that go well beyond public health.

In summary, the privatization and deregulation promoted by capitalists are not improvements or solutions to problems, they are problems. They have provided windfall profits to private investors as evidenced by unprecedented and growing economic inequality. Meanwhile consumers pay added costs and get degraded services, while the values and principles our democracy was founded on are debased. Successful privatization requires strong, effective public oversight to ensure that public goals and values are met, but this rarely happens. Important public goods, such as water and sewer systems, roads and bridges, parking on public property, etc. should not be privatized – as they have been – without strong regulation and reasonable provisions for terminating the privatization contract if goals are not achieved.

Attempts to remedy or ameliorate the problems of capitalism with incremental reforms or weak regulations (some have even argued for self-regulation by private companies) are not only ineffective, they also make service systems, government programs, and even markets for consumer goods convoluted, complex, confusing, and unfair. They create enormous, expensive, administrative bureaucracies that attempt to implement regulations or remedies. The resulting complexities benefit the capitalists and not workers or consumers. Perhaps the classic example of complexity that benefits wealthy individuals and corporations is our tax code. The exemptions, deductions, special provisions, and other loopholes benefit the capitalists to such an extent that average workers and middle-class households are paying a much higher portion of their incomes in taxes than the wealthy.

Delivery of services by the public sector, i.e., government, is not only fairer and more compassionate than delivery by the private sector, it is also more efficient, effective, and streamlined. The profit motive adds costs (i.e., profits, advertising, and administrative overhead) and incentivizes cost-cutting through denying services and cutting corners on quality. The private sector has no incentive to treat customers equitably; its only goal is to maximize profits.

Kuttner notes that “the history of the past century proves again and again, when market forces [i.e., capitalism] overwhelm the security and livelihood of working people, they are far more likely to turn to ultra-nationalism and fascism” than to collective action through democratic advocacy or labor unions. (page 11) This is particularly likely if there are demagogic “leaders” or “information” sources pushing them in that direction. The result typically is a rise in racism and xenophobia, as well as plutocratic control of the economy and policy making by wealthy individuals and corporations through the politicians they buy with campaign spending or otherwise.

Kuttner writes that “The signal disgrace of our era is the ease with which the corporate center-right has gone along with Trump and the Republican efforts to destroy what remains of democracy.” (page 14) He also notes that since 1980 “much of the Democratic Party has been so compromised and bedded down with Wall Street that displaced middle- and working-class people are skeptical that Democrats and liberal remedies can make much of a difference in their lives.” (page 13)

To ameliorate the economic hardship and insecurity of working Americans, Kuttner recommends providing public supports for workers and families, while resisting and reversing privatization and deregulation. Public supports should include paid family leave, cash support for families with children, subsidies for child care, easier access to good health insurance, regulation of drug prices, and free tuition at community colleges – all parts of the original Build Back Better bill proposed by President Biden and most Democrats in Congress.

Republicans will try to brand these programs as socialism and they do have a socialistic flavor when compared to our current, very individualistic, hyper-capitalism. However, they are immensely popular with the U.S. public and exist in all other wealthy countries. Moreover, socialism doesn’t elicit the negative reaction that it used to; 70% of millennials (i.e., people born between 1980 and 1995 who are 26 to 40 years old now) have a positive view of socialism. While Republicans will try to conflate socialism with communism, keep in mind that in communism the government owns all property and businesses. Not even the most aggressive policy proposals of Senator Sanders (a socialist) take any step in that direction. Also keep in mind that the branding of public policies as socialism was used by white supremacists in the post-Civil War years as their rationale for keeping Blacks from voting. Therefore, calling Democrats’ proposals socialism has racist undertones. (See this previous post for more detail.)

To reverse the scourge that the current version of hyper-capitalism has clearly become, we need to assert strong public control of our economy. Strong oversight and regulation of employers to protect workers and of companies to protect consumers are essential.

Promotion of the public good as the primary goal of government will drive workplaces and the economy to be fairer and more efficient, and to treat people with decency and respect. Think about how different our health care system would be if the public good was foremost instead of maximizing profits. Think about how different our financial system would be if we had public banks (as North Dakota does) and basic banking functions through the post office (as we once did). Think about having public broadband Internet service, which Chattanooga and Europe have, that is cheaper and higher speed than what most of us get in the U.S. Think about patent-free drugs that aren’t controlled and priced by monopolies. Think about the original Health Maintenance Organizations (HMOs) of the early 1970s that were cooperatively owned and run. Think about Medicare for all, especially without the distortions of the private insurers who’ve been allowed to offer complicating alternatives to Medicare. Think about savings and loan banks and health and other insurance companies that were non-profit, mutually-owned (by customers), and prevalent up until the 1970s. Think about publicly-owned, high-quality, mixed-income housing that is a major part of the housing market in Vienna, Austria.

Kuttner concludes that “Saving democracy, the planet, and decent lives for regular people requires moving beyond capitalism. To be an effective liberal today, you need to be a socialist.” (page 2) He states, “I’ve come around to this view gradually, not because my values have changed but because reality has changed.” (page 4)

He notes that our history has shown that the social democracy [2] of the New Deal did not stand up to the test of time. It deteriorated into a capitalistic welfare system with a supposed safety net that was politically vulnerable and, therefore, eroded over time. This produced today’s grossly inequitable U.S. economy where many workers and their families simply cannot survive on the compensation they are given.

Therefore, he concludes that the U.S. must move to democratic socialism [3] where there is substantial public or social control or ownership of important functions in our society that serve the public and the public good. This is necessary to dethrone capitalism as the dominant system of our society. Otherwise, as we’ve experienced, capitalism in a democracy will evolve into hyper-capitalism that serves wealthy individuals and corporations but leaves everyone else behind.

[1]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

[2]      Social democracy is a system of government that attempts to assert values to similar socialism, but within a capitalist framework. The people have a say in government, but the capitalistic, money-based, competitive economy means that a public safety net is needed to help people whose low-paying jobs do not support subsistence.

[3]      Democratic socialism is defined as having a socialist economy in which the means of production are socially and collectively owned or controlled, alongside a liberal democratic political system of government.

IS CAPITALISM COMPATIBLE WITH DEMOCRACY?

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

Bob Kuttner has written a powerful and poignant article raising the question of whether capitalism is compatible with democracy – or at least a version of democracy that lives up to the American ideals of equal opportunity and government of, by, and for the people. [1]

In the post-Depression and post-World War II era, the New Deal created a fundamental shift in ideology and power in American society and in our economy from laissez-faire capitalism to regulated and managed New Deal capitalism. It was based on a strong social contract that gave substantial power to government to regulate private companies and manage the economy. It gave substantial power to workers through collective bargaining over pay, benefits, and working conditions via their unions.

The results were a thriving working and middle class, where the rising tide of the economy did indeed lift all boats. Income and wealth inequality were stabilized, if not narrowed.

The era of New Deal capitalism lasted for 40 years until 1980. However, in the last 40 years, Kuttner argues, we’ve not just moved back toward the laissez-faire capitalism of pre-Depression days, but gone beyond it to a new form of hyper-capitalism that some call vulture capitalism. It has destroyed the ability of many workers to thrive by driving down wages, employment security, and benefits (including reducing retirement benefits and paid sick time). It has destroyed the ability of many working parents to provide their children with a safe, secure, and healthy childhood due to unaffordable and inaccessible child care, a lack of paid family and medical leave, unstable work hours, and poverty-level wages.

The life, liberty, and pursuit of happiness promised by the Declaration of Independence are a myth to many workers. They are unable to pursue any meaningful happiness for themselves due to their economic insecurity and low incomes, let alone provide happiness for their families. Any true feelings of liberty are constrained by their lack of the economic resources required to have meaningful freedom in making choices in our capitalist system. And life, literally in some cases, is at risk. Workers are getting injured, disabled, and killed in meat packing plants and other dangerous jobs, even without Covid. Sweatshop working conditions of the 1920s have returned in places like the meat packing industry and Amazon warehouses. When people have health problems or suffer injuries, many of them are bankrupted, and some die, because of our capitalistic health care system.

Deregulation at home and in global trade have produced giant corporations that often have monopolistic power nationally or regionally. These companies have the power as huge employers to strip workers of pay, benefits, and even their jobs, typically by moving jobs overseas (or threatening to do so). Similarly, consumers have limited choices and get reduced value in many important areas from health care to Internet service because of the monopolistic power of providers. These giant, monopolistic companies, particularly in technology-driven markets, have also stripped our economy of many small businesses and entrepreneurs through predatory acquisitions or market place practices that stifle competition.

Deregulation of financial practices has also fed these trends through venture capital, private equity, and hedge fund profiteers that aggressively minimize labor costs, strip companies of assets, and often drive companies into bankruptcy while they pocket huge profits. These vulture capitalists, as they have been called, are at the leading edge of the predatory, hyper-capitalism that Kuttner identifies as taking the laissez-faire capitalism of the early 1900s to a whole, new level of greed and economic inequality.

Kuttner states that rather than the theoretical “invisible hand” of capitalism creating efficient markets that work smoothly and produce high quality goods and services at competitive prices for consumers, the current U.S. version of capitalism creates inefficiency and market failure as its norm. It is efficient only from the perspective of profit and wealth maximization for large, wealthy companies and shareholders, including corporate executives.

Nonetheless, the capitalist market mentality is so deeply embedded in our collective psyche that we have allowed capitalistic values and market norms to overrule other norms and values, such as the importance of the public good, providing access to affordable health care, reducing child poverty, and addressing climate change.

Moreover, the incredible wealth of the giant companies and their shareholders has given them substantial power in our political system. Through their campaign spending, extensive lobbying of public officials, and the movement of senior company employees into and back from policy making positions in government (the revolving door), they have gotten public policies and regulation (or lack thereof) that work to their benefit.

We have seen the result of this political power in recent weeks in the opposition of many members of Congress (i.e., almost every Republican and a handful of Democrats) to the Build Back Better legislation that would support workers and their families in ways that are favored by over two-thirds of the country’s voters – for example, through paid family leave, support for families with children and for child care, and enhanced access and affordability for health care and drugs. Members of Congress have been weakening, undermining, and outright opposing these policies that their constituents overwhelmingly support. Congress is also opposing investments in human capital and in slowing climate change that have broad support among the public.

The Build Back Better opponents in Congress are reflecting the wishes of their wealthy campaign donors, not their constituents. This is emblematic of the power and influence of wealthy capitalists and a direct outgrowth of the hyper-capitalism of the last 40 years.

As a result of this hyper-capitalism in the U.S., many workers have had their economic security, their middle-class lifestyle, and their plans for retirement stripped from them. The frustrations of these workers, their feelings of helplessness and hopelessness, are what has led to the appeal of Senator Bernie Sanders and Donald Trump – both of whom promised to upset the current political system and restore economic security for workers.

In my next post, I will review Kuttner’s thoughts on where we need to go from here to restore our democracy and have fairer, more equitable economic and political systems.

[1]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

STOPPING CYBERCRIME AND CIVILIAN HARM FROM CYBERWARFARE

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This is the final post of my nine-part series on computer hacking and cyberwarfare based on New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] These posts have summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; and have shared a number of examples. The previous post provided an overview of steps that can be taken to counter cybercrime at the personal, organizational, and governmental levels. This post discusses steps that are being taken to counter ransomware and to stop cyberwarfare from harming civilians.

The Biden Administration is working to reduce the frequency and profitability of ransomware attacks. It is disrupting the infrastructure ransomware hackers use to collect their ransom. It has put sanctions on cryptocurrency exchanges that are frequently used for ransomware payments and warned U.S. companies not to pay ransomware. In June, it was able to recover over half of the $4.4 million in cryptocurrency that Colonial Pipeline had paid to its ransomware attacker. [2] The U.S. Department of Justice (DOJ) reports that ransomware attacks have cost the U.S. almost $600 million in the first six months of 2021.

In November, the DOJ announced that a Ukrainian hacker had been arrested and charged in connection with a group of ransomware attacks. It also announced the recovery of $6.1 million from ransomware attacks by a Russian who was charged separately and is listed as wanted by law enforcement. In December, the head of the U.S. Cyber Command and the Director of the National Security Agency announced that the military had taken offensive actions against ransomware attackers who had targeted critical infrastructure. [3] These actions represent the strongest U.S. government response to ransomware attacks to-date and reflect a marshalling of resources across multiple agencies. European law enforcement officials also announced that seven ransomware hackers have been arrested in Europe since February. [4] Recently, a multi-national effort succeeded in shutting down, at least temporarily, a major Russian ransomware entity. In October, the Biden Administration convened over 30 countries to develop plans to combat ransomware attacks around the globe. [5]

Back in April, the Biden Administration announced tough sanctions on Russia for previous cyberattacks and, in June, President Biden warned Russian President Putin that future Russian cyberattacks would be grounds for additional retaliation.

Three former U.S. cyber intelligence agency employees, who had been hired by the United Arab Emirates (UAE) to conduct cyberespionage, pleaded guilty in September to cyber hacking and violating export laws by transferring military cyber technology to a foreign government. The DOJ is deferring criminal prosecutions of them if they pay hundreds of thousands of dollars in fines and abide by the terms of a three-year settlement agreement. They are also prohibited from ever receiving a U.S. security clearance. [6] Numerous former U.S. cyber intelligence employees have been lured to work for private companies and foreign governments to do cybersecurity or cyberespionage. Many do legitimate cybersecurity work but more than a few have done illegal or at least unethical work for their new employers.

In October, Biden’s Commerce Department announced a rule that limits the export and sale of hacking software to authoritarian and repressive governments. This effort is difficult for many reasons, in part because it needs to avoid inhibiting cybersecurity collaboration among countries and among companies located in different countries. Furthermore, some private companies and some other countries don’t share this goal of keeping hacking tools out of the hands of such governments. For example, the Israeli company NSO Group (with suspected but unproven connections to the Israeli government) sells spyware that can be hacked onto an individual’s phone, allowing the hacker to track the person’s location and monitor their communications. Governments and others have used it to track dissidents, activists, lawyers, politicians, and journalists. Saudi Arabia used it to track associates of Jamal Khashoggi, the journalist that it murdered. Most recently, it was identified as being used to spy on Palestinians. [7]

For 25 years, the U.S. and 42 other countries have blocked the sale of weapons and military technology to authoritarian and repressive governments. The Wassenaar Agreement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, originally signed in 1996, sets voluntary export controls on a list of weaponry. The list of controlled products is updated every December and cyber hacking and surveillance products were added to the list in 2013. However, the U.S. did not adopt controls on these products until now. This new Commerce Department rule will allow the U.S. to coordinate efforts to control the export of hacking tools with the 42 other countries that are part of the Wassenaar Agreement. [8]

Also on the international front, there have been calls for a treaty banning cyberwarfare from targeting civilians and civilian infrastructure, similar to the Geneva Convention for traditional warfare. Brad Smith, Microsoft’s president, called for such a treaty in 2017 after vulnerabilities in Microsoft software had been the vehicle for Russia’s devastating cyberattack on Ukraine’s civilian infrastructure and for North Korea’s worldwide ransomware attacks. Noting that the 1949 Geneva Convention protects civilians during traditional warfare, he called for a new convention to protect civilians from cyberwarfare – from attacks on hospitals, electric power grids, elections, and the intellectual property of private parties. Previously, after the 2010 U.S. attack on Iran’s uranium enrichment facility, European, Russian, and some U.S. officials had also called for such a treaty.

However, the U.S. has not pursued such a treaty, at least in part because it has been the world’s dominant cyber superpower. Nonetheless, U.S. businesses and civilians, as the most Internet-dependent ones in the world, are bearing the brunt of escalating cybercrime and cyberwarfare. Furthermore, the U.S. has continued to engage in its own cyberwarfare, including building its capacity to attack civilian infrastructure such as the Russian electric power grid.

I urge you to contact President Biden and thank him for his efforts to stop ransomware attacks and to keep cyber hacking tools out of the hands of authoritarian and repressive governments. Ask him to continue this work and to do more to protect civilians from cyberwarfare. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to let your U.S. Representative and Senators know that you support strong steps to reduce ransomware attacks and the potential harm to civilians from cyberwarfare. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., 10/25/21, “A rare win for the good guys in cat-and-mouse game of ransomware,” The Boston Globe from the New York Times

[3]      Barnes, J. E., 12/6/21, “US military has acted against ransomware groups, NSA chief says,” The Boston Globe from the New York Times

[4]      Tucker, E., & Suderman, A., 11/9/21, “US charges 2 suspected ransomware operators,” The Boston Globe from the Associated Press

[5]      McLaughlin, J., 10/13/21, “White House brings together 30 nations to combat ransomware,” National Public Radio (https://www.npr.org/2021/10/13/1045248842/white-house-brings-together-30-nations-to-combat-ransomware)

[6]      Mazzetti, M., & Goldman, A., 9/15/21, “Former intelligence officers admit crimes,” The Boston Globe from the New York Times

[7]      Kingsley, P., & Bergman, R., 11/9/21, “Spyware aimed at activists, group says,” The Boston Globe from the New York Times

[8]      Nakashima, E., 10/21/21, “US aims to limit sale of hack tools to dictators,” The Boston Globe from the Washington Post

STOPPING CYBERCRIME AT THE PERSONAL, ORGANIZATIONAL, AND GOVERNMENTAL LEVELS

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This is the first of my final two posts (out of nine total) on computer hacking and cyberwarfare. These two posts discuss steps that can be taken to counter cybercrime at the personal, organizational, and governmental levels, as well as efforts to stop cyberwarfare from harming civilians. This series of posts presents my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] These posts have summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; shared a number of examples; and the previous post provided an overview of Russia’s continuing attacks on the U.S., including on the 2018 and 2020 elections.

It is clear today that passwords, antivirus software, and firewalls will not protect a computer from reasonably sophisticated cyber hacking. With entities willing to pay over a million dollars for a vulnerability in a widespread piece of basic software, such as Microsoft Windows, Apple operating systems, Adobe, Java, and countless others, cybersecurity needs to be designed into these basic pieces of software and to have many layers of protection. Traditionally, basic software has only been tested to make sure it works, not to identify and eliminate vulnerabilities that hackers could use. This needs to change. When complex software is everywhere, even in cars, software vulnerabilities are ubiquitous and our whole mindset about cybersecurity must change to include preventing vulnerabilities, as well as protecting computers when they are attacked.

Individuals and businesses should assume that passwords alone are no longer effective protection from serious hackers because passwords are likely to have been stolen in one of the hacks of a large customer database or some other way. Two-factor or multi-factor authorization (2FA or MFA) is the best basic defense against cyber hacking and cybercrime. This is the process where when one logs into a system, a one-time code is sent by phone text or email that has to be entered to gain access. Turn on 2FA wherever it’s available and for any function where security is important, such as banking and financial transactions.

Voting simply cannot be safely conducted on-line according to Perlroth. She notes that as-of the date of her book, there was not a single on-line voting system that hackers had not been able to penetrate – often quite quickly and easily. [2] Voter registration databases and other election support systems need to be rigorously protected and audited to ensure their security.

While the Trump Administration largely ignored cybercrime and civilian harm from cyberwarfare, the Biden Administration has already been aggressive in tackling them. The U.S. Cybersecurity and Infrastructure Security Agency has recently announced that it is working to develop a national cybersecurity strategy. It noted that public-private collaboration will be essential as critical infrastructure must be secured whether it is in private or public hands.

The U.S. needs to establish strong mandates for cybersecurity for public entities and private companies that are part of critical infrastructure. The U.S. lags far behind other countries in doing this. Norway in 2003 and Japan in 2005, for example, implemented national cybersecurity strategies that have made them among the safest countries in the world in terms of cyberattacks.  [3]

However, Congress has repeatedly failed to pass legislation that would establish even basic standards for companies operating critical infrastructure such as hospitals, fuel pipelines, the electric power grid, dams, and nuclear power plants. Such standards would, for instance, require operators of critical infrastructure to use up-to-date, well-maintained software; to change passwords regularly; to use two-factor authorization for system access; and to conduct regular, sophisticated tests of their protections against hackers.

The U.S. Chamber of Commerce and other business leaders have argued against even voluntary standards, claiming they are too onerous. Current events are proving that NOT having such standards and NOT having solid cybersecurity in place are far too dangerous and too costly for businesses and customers.

The Biden Administration is urging all companies to enhance their cybersecurity practices, including requiring two-factor authorization for employees to log in to computer systems. [4] It also needs to educate the American public about cybersecurity and about on-line disinformation campaigns; these need to be part of our national consciousness.

Public and private entities should be required to report and make public successful cyberattacks so:

  • Customers and the public can be appropriately warned and protected,
  • The entities have an incentive to fix problems and prevent successful future attacks, and
  • Appropriate law enforcement and national security responses can occur.

On the flip side, when U.S. intelligence agencies become aware of a vulnerability in computer software or hardware, they should be required to inform the product’s vendor and work with it to eliminate the vulnerability.

The private sector is not only stepping up its defensive measures against hacking but also going after hackers directly, rather than leaving this work to law enforcement as has been the practice. Google is suing two Russia-based individuals for using a massive network of hacked computers for a range of criminal activity. It is also working with other private companies to disable the computers used by the hackers. The hacked network has been tracked by law enforcement and cybersecurity experts for years and is estimated to include about a million Microsoft Windows-based computers around the globe. In cleaning up the damage that has been done and the vehicles the hackers used to spread their harmful software, Google has removed from the Internet about 63 million Google Docs, more than 1,000 Google accounts, and over 900 Google Cloud projects. Microsoft has also been active in this direct action, deleting from the Internet websites used by a China-based hacking group. [5]

I urge you to contact President Biden and thank him for his work to improve cybersecurity, including his efforts to create and implement a national cybersecurity plan. Ask him to continue this work and to do more to require private entities operating critical infrastructure to strengthen their cybersecurity. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to let your U.S. Representative and Senators know that you support strong steps to improve cybersecurity, including requiring private businesses, especially those operating critical infrastructure or large aggregations of consumer data, to take meaningful steps to improve their cybersecurity. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

My next post will provide an overview of the Biden Administration’s efforts to combat ransomware attacks, address cybersecurity internationally, and protect civilians from harm from cyberwarfare.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., 2021, see above, page 397

[3]      Perlroth, N., 2021, see above, page 398-399

[4]      De Vynck, G., 9/22/21, “Treasury’s fight against hackers targets crypto payments,” The Boston Globe from the Washington Post

[5]      De Vynck, G., 12/8/21, “Google sues hackers tied to vast ring of infected devices,” The Boston Globe from the Washington Post

CYBERWARFARE: RUSSIA’S ATTACKS ON THE 2018 AND 2020 ELECTIONS AND THE TRUMP ADMINISTRATION’S RESPONSE

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This is my seventh post on computer hacking and cyberwarfare and part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 North Korean ransomware attack; and the 2009 U.S. National Security Agency (NSA) cyberwarfare attack on Iran. My second post covered the leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine. The fourth and fifth posts described China’s cyberattack on Google and Google’s response. The sixth post described Russia’s cyberattack on the 2016 U.S. election.

This post summarizes Russia’s attacks on the 2018 and 2020 U.S. elections and the responses of the Trump and Biden administrations.

Under the Trump Administration, concern for cyberwarfare and cybercrime seemed absent. For example, the Obama Administration had reached an agreement with China to stop its industrial espionage, however this ended when Trump began his very public trade war with China. Similarly, the Iran nuclear agreement worked to keep Iranian hackers at bay. Trump’s voiding of the nuclear deal resulted in levels of Iranian cyberattacks that were unprecedented. Furthermore, as Trump backed off both sanctions and rhetoric against Russia for its hacking and election interference, Russia continued to hack our election systems and infrastructure, as well as to spread division, distrust, and chaos through social and other media. Even Saudi Arabia, with no sanctions from the Trump Administration for its murder of Washington Post journalist Khashoggi, was emboldened to engage in cyber espionage targeting the U.S. Cybercriminals engaged in ransomware attacks on cities, towns, and other infrastructure with regularity – and with little response from the Trump Administration.

By 2018, Trump had eliminated the position of White House cybersecurity coordinator and had made it clear that he never wanted to hear anyone in his administration, including the director of Homeland Security, mention election interference or election security. As the 2018 elections approached, the Russian social media propaganda agency, the Internet Research Agency (IRA), was engaging in sophisticated election disinformation on social media. In the six months before the elections, it spent at least $10 million on its efforts to influence the U.S. elections and to sow division, distrust, and chaos.

Fortunately, in September 2018, Trump had ceded decision-making for offensive cyberattacks to the new director of the NSA, General Paul Nakasone, who also served as the head of the Pentagon’s Cyber Command. John Bolton, in his brief tenure as Trump’s national security advisor, had developed a new cyber strategy that gave the Cyber Command increased flexibility. So, in October, the Cyber Command posted warnings directly to the IRA’s computers threatening indictments and sanctions if Russia continued to meddle in the 2018 elections. Then, on Election Day, the Cyber Command shut down the Russian hackers’ computer servers and kept them offline for several days as votes were tabulated and certified. No one knows what might have happened if the Cyber Command had not done this, but the 2018 election results were processed without any serious glitches.

“By 2020, the U.S. was in the most precarious position it had ever been in the digital realm,” according to Perlroth. [2] More than 1,000 local governments had been hit with ransomware attacks over the previous year. Russian cybercriminals were getting billions of dollars because local governments and their insurers calculated that it was cheaper to pay the ransom than to have to recreate computer systems and data. Cybersecurity experts worried that the ransomware attacks were a smokescreen to probe municipal computers and develop the capability to disrupt voter and election related systems during the 2020 election. Some of these experts also thought the election hacking and interference in 2016 and 2018 might be trial runs for more extensive efforts planned for the 2020 elections. Apart from the elections, in September 2020, over 400 hospitals were the subject of ransomware attacks, coming, of course, at the worst possible time – in the middle of the pandemic.

In Congress, a number of efforts were made to address concerns about election security, including bills requiring paper trails for every ballot and rigorous post-election audits, banning voting machines from being connected to the Internet, and mandating that campaigns report contacts with foreign entities. These were largely uncontroversial security measures that generally had bipartisan support and were deemed critical by election integrity experts. However, Senator Mitch McConnell, the Republican Majority Leader, refused to let any election security bill move forward toward passage. Only after critics took to calling him “Moscow Mitch” did he relent and begrudgingly allow approval of $250 million to help states protect election infrastructure – a tiny amount of money when split among the 50 states (only $5 million each on average), especially given the seriousness of the threats their election systems were facing.

In early 2020, U.S. intelligence officials warned the White House and Congress that Russian hacking and election interference were working hard at promoting Trump’s re-election. Trump was so incensed that this information had been shared with Democrats that he fired his acting director of national intelligence and publicly dismissed the intelligence findings as misinformation. Beginning in August, Trump’s new head of intelligence refused to provide in-person briefings on election interference to Congress. The U.S. intelligence agencies had always been non-partisan, but the Trump administration increasingly manipulated their actions and statements to serve their political interests. Meanwhile, Microsoft revealed that in one two-week period Russian hackers had attempted to access 6,900 personal email accounts of politicians, campaign workers, and consultants of both parties.

During the 2020 election cycle, the Russians didn’t have to create “fake news” to foster distrust, division, and chaos; Americans, including President Trump, were providing plenty of such content on a daily basis. The Russian trolls simply worked to amplify, among other things, the vaccination debate, the lockdown protests, the misinformation about the benefits of mask wearing, and the blaming of the racial justice protests and any violence that occurred on violent, left-wing radicals.

As the 2020 election approached, the Cyber Command, the Cybersecurity and Infrastructure Security Agency (CISA) in the Department of Homeland Security, the NSA, and the FBI worked diligently to protect election infrastructure in the states and nationally, as well as to actively counterattack. Many of the officials involved figured it was likely that Trump would fire them for their hard work as soon as the election was over, but they persisted in doing their jobs. On Election Day, CISA officials briefed reporters every three hours and, in the end, Election Day came and went with no evidence of fraud, outside efforts to alter vote tallies, or even a ransomware attack.

Perlroth notes that while she would like to credit the work of our cybersecurity agencies for the uneventful Election Day, she feels that the 2020 election went as smoothly as it did, not because the Russians were deterred, but because they (and specifically Russian President Putin) concluded that their work here was done and had been successful. Discord, distrust, and chaos were being created by American actors without the need for Russian interference. If Putin’s goal, in the U.S. elections and otherwise, was to undermine American democracy and American influence in world diplomacy, he had probably succeeded beyond his wildest dreams.

Nonetheless, Russian cyber hacking continues. In 2020, Russia’s premier intelligence agency, SVR was responsible for the cyberattack via the Solar Winds security software, a highly sophisticated attack that affected many government agencies and large companies. It gave the Russians access to tens of thousands of users’ computer systems. (By the way, SVR was also the first hacker to gain access to the Democratic National Committee’s computers in 2016.)

In October 2021, the Russians engaged in another massive campaign to hack into computer networks in the U.S. Microsoft announced that it had notified 600 organizations that they had been targeted by SVR with about 23,000 attempts to illegally access their computer systems in October alone. It noted that the attacks were relatively unsophisticated and were or could have been blocked by basic cybersecurity practices. It also stated that, for comparison, there had been only 20,500 such attempts by all other international governmental actors over the past three years. [3]

This Russian cyberattack occurred only six months after President Biden imposed sanctions on Russian financial and technology companies in April 2021 as punishment for previous cyberattacks. At the time, he noted that the sanctions could have been more severe but that he was trying to de-escalate confrontation between the two superpowers.

My next post will review things that can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021. page 347

[3]      Sanger, D.E., 10/26/21, “Russia tests US again with broad cybersurveillance,” The Boston Globe from The New York Times

CYBERWARFARE: RUSSIA’S ATTACK ON THE 2016 ELECTION

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This is my sixth post on computer hacking and cyberwarfare and part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 North Korean ransomware attack; and the 2009 U.S. National Security Agency (NSA) cyberwarfare attack on Iran. My second post covered the leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine. The fourth and fifth posts described China’s cyberattack on Google and Google’s response.

This post summarizes Russia’s attack on the 2016 U.S. election which began in June 2014 when Russia sent two agents to the U.S. for a three-week reconnaissance tour to gather intelligence on U.S. politics and elections. Their report became the field guide for Russia’s interference in the 2016 election. Starting in 2014, the Russians tried to hack into voter registration and election systems in all 50 states. They are known to have succeed in accessing Arizona’s and Illinois’s voter databases. In 2015 (and probably before then), the Russians aggressively hacked into computer networks at the State Department, White House, and Joint Chiefs of Staff of the Defense Department, although this was probably unrelated to the election and was just “routine” espionage. Occurring in the midst of the unprecedented and mind-boggling presidential campaign that was ongoing at the time, these cyberattacks got little coverage in the mainstream media.

Russia’s social media propaganda agency, known as the Internet Research Agency (IRA), had as its goal for the U.S. election in 2016 to “spread distrust toward the candidates and the political system in general. … [to create] division, distrust, and mayhem.” [2] In September 2014, the IRA created a Facebook group, Heart of Texas, focused on right-wing Texans that generated 5.5 million likes within a year. It also created another Facebook group, United Muslims of America. Then, among other things, it used these two Facebook groups to promote rallies and counter-rallies at the Islamic Center in Houston that led to real-world confrontations. The IRA used the stolen identities of Americans to make their work more credible, but nonetheless its cyber manipulators were surprised at how gullible and susceptible the Americans were to their Facebook disinformation.

Based on its success in Texas, the IRA began replicating this approach across the country, focusing on purple states. Its staffing grew to more than 80 people who were directed to “Use any opportunity to criticize Hillary and the rest (except Sanders and Trump – we support them)” according to leaked memos. [3] The IRA:

  • Communicated with Trump campaign volunteers.
  • Bought Facebook ads promoting Trump and attacking Clinton.
  • Promoted race-baiting and xenophobic messages.
  • Worked to suppress minority voter turnout and to encourage voting for third party candidates instead of for Clinton.
  • Paid an unwitting Florida Trump supporter to put a cage on a flatbed truck and paid an actress to dress up as Clinton and sit in the cage as Trump rally goers chanted “Lock her up!” Based on this success, they promoted similar rallies in other states.
  • Reached 126 million Facebook users and generated 288 million Twitter actions, which are staggering numbers given that 139 million people voted in the 2016 election.

In June 2016, it was discovered that two other Russian groups had hacked into the Democratic National Committee’s computer network months earlier, extracting and releasing embarrassing emails, among other things.

The Obama Administration, facing multi-faceted and snowballing Russian interference in the election, finally decided in the fall of 2016 that a strong bipartisan statement (so it wouldn’t appear political) was necessary. Top Homeland Security and FBI officials were sent to brief Congress. But the response from the Republicans was completely partisan. Republican Senate Majority Leader Mitch McConnell refused to warn Americans about Russia’s efforts to influence and undermine the 2016 elections. He refused to sign any bipartisan statement, argued (falsely) that the intelligence on the cyberattacks was wrong, and claimed (falsely) that this was all just Democratic partisan politics.

After the election, the Obama Administration imposed significant sanctions on the Russians, but they were too little and too late. Although there’s some argument over the ultimate impact of the Russian’s efforts, Perlroth concludes that the Russian actions may well have tipped the election to Trump. Black voter turnout declined sharply in 2016 for the first time in 20 years, which was a constituency and an outcome that the Russians had aggressively targeted. Black voter turnout fell from 66.6% in 2012 to 59.6% in 2016, its lowest level since 2000. This represented a decline of 765,000 votes when less than 80,000 votes in three key states determined the outcome of the election. Furthermore, Trump’s margin in each of these three key states – Wisconsin (22,800 votes, a 0.8% margin), Pennsylvania (44,300 votes, a 0.7% margin), and Michigan (10,700 votes, a 0.2% margin) – was less in each state than the vote for the Green Party candidate. This voting for third party candidates instead of Clinton was another outcome that the Russians had aggressively targeted. Given the closeness of the election, a relatively small change in either (let alone both) of Black voter turnout or the number of votes for the Green Party instead of for Clinton would have changed the outcome of the election – and both of these were factors that the Russians specifically worked to influence.

Subsequent posts will outline the Perlroth book’s reporting on:

  • Russia’s continuing cyberattacks on the 2018 and 2020 U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., see above, page 310

[3]      Perlroth, N., see above, page 311

CYBERWARFARE: GOOGLE’S RESPONSE TO CHINA’S ATTACK

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

This is my fifth post on computer hacking and cyberwarfare, all of which are part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 worldwide ransomware attack by North Korea; and the 2009 cyberwarfare attack by the NSA on Iran’s uranium enrichment plant. My second post provided an overview of the book’s reporting on leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine and the fourth post  described China’s cyberattack on Google.

Google had begun doing business in China in 2006, agreeing to the censorship of search results that the government demanded. In 2009, it was still struggling to accommodate China’s increasingly draconian censorship rules. Nonetheless, China waged a cyberattack on Google in 2009 in an effort to make Google an unwitting accomplice in Chinese surveillance of dissidents. (See my previous post for more details about this cyberattack.)

In response, on January 12, 2010, Google publicly revealed the Chinese cyberattack and its decision to pull out of China, despite its being the largest and most sought-after market in the world. Fearing for its employees’ safety, it had briefed the State Department and the U.S. embassy in Beijing was prepared to undertake a mass evacuation of Google’s Chinese employees and their families. Google shut down its Chinese operation and routed all Chinese Internet traffic to Hong Kong. In response, the Chinese government scrambled to censor and block Internet content flowing from Hong Kong, lambasted Google, denied involvement in the cyberattack, and accused the U.S. government of conducting an anti-China propaganda campaign. It permanently blocked Internet access to Google and three years later, under new President Xi Jinping, took over total control of the Internet in China.

The Chinese hackers who had executed the attack, having been outed, unplugged their Internet computer servers and abandoned their hacking tools. They abstained from hacking in the U.S. for a number months, but one year later engaged in a sophisticated attack on RSA, the cybersecurity company that sold security services to, among others, high profile defense contractors. Based on this successful attack, the Chinese hackers were able to infiltrate Lockheed Martin and thousands of other western companies including banks, automakers, chemical companies, law firms, non-profit organizations, and more. They stole billions of dollars-worth of proprietary information, including military and trade secrets.

Back at Google, less than a year after the 2010 pullout, some executives began pushing to go back to doing business in China. As Google diversified its businesses and re-organized under the over-arching corporation Alphabet in 2015, re-entry into the Chinese market, with its 750 million Internet users, became a hot topic of debate. Ultimately, human rights, ethical considerations, and Google’s motto of “Don’t be evil” were overwhelmed by a focus on profits.

In 2016, Google established a new, artificial intelligence research center in Beijing and released some small-scale products, e.g., an app and a mobile game, into the Chinese market. Simultaneously, it was working on a search engine for the Chinese market, code-named Dragonfly, that met government censorship requirements. In August 2018, an employee leaked information about the work on Dragonfly. After protests by Google employees and others, the Dragonfly project was terminated in July 2019. Google does not offer a search engine in China at this time.

Google’s business ethics have been questioned not just for doing business in China, but for its behavior in the U.S. and elsewhere. It profits off sites that spread disinformation and conspiracy theories, and its YouTube subsidiary allows the spread of videos that harm the well-being of children. In Saudi Arabia, it hosted an app that allowed men to track and, thereby, control the movements of female family members.

In subsequent posts, I will outline the Perlroth book’s reporting on:

  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.