REGULATION OF THE FINANCIAL INDUSTRY IS BADLY NEEDED Part 2

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 previous post made the case for strong regulation of the financial industry to protect consumers with a strong Consumer Financial Protection Bureau (CFPB). The financial industry needs strong regulation because it has repeatedly shown that without regulation it will rip off consumers and engage in practices that put our economy and our whole financial system at-risk.

In addition to the Trump administration’s weakening of the CFPB and other regulation of the financial industry, pro-business judicial decisions have also weakened consumer protections from abusive financial industry practices. However, Congress can restore these consumer protections through appropriate legislation.

First, the Supreme Court ruled that the Federal Trade Commission (FTC) cannot seek monetary compensation for consumers defrauded by payday or other short-term lenders. The Consumer Protection and Recovery Act has been introduced in Congress and would make it clear that the FTC can seek financial compensation for these consumers. [1]

Second, the Comprehensive Debt Collection Improvement Act would strengthen a variety of protections for borrowers that were weakened by judicial decisions. For example, it would limit email and other electronic harassment by debt collectors and restrict abusive practices by medical debt collectors.

Finally, the Non-judicial Foreclosure Debt Collection Clarification Act would regulate any business involved in home foreclosures without a judge’s authorization as a debt collector under the Fair Debt Collection Practices Act. In 30 states and D.C., lenders can foreclose and repossess a home without going to court and getting a judge’s ruling. A Supreme Court ruling limited home owners’ rights in these states. This legislation would give these home owners the protections of the Fair Debt Collection Practices Act.

The Securities and Exchange Commission (SEC) is an independent federal regulatory agency responsible for protecting investors and maintaining the fair and orderly functioning of securities markets. It works to ensure full public disclosure of information so all investors are on an equal footing. To that end, it works to prevent, identify, and punish insider trading, where some people have information that is not available to the general public and therefore have an unfair advantage in making decisions about buying and selling securities. [2]

Classic insider trading was in the news a year ago. Some members of Congress, who had received private, closed-door briefings on the coronavirus, made substantial stock market trades that appeared to be informed by this non-public information. Similarly, some executives of firms working on coronavirus vaccines, who had knowledge of the progress of their vaccine development that was not public, made substantial stock market trades that appeared to be informed by this non-public information. There were also situations where an insider shared non-public information with an outsider who then appears to have made investment transactions based on this non-public information.

However, there is another type of insider trading that may be more insidious – using sophisticated computers to make large trades moments before other trades that are in the pipeline are executed and become public knowledge. This is referred to as “front-running” and is a systemic problem in securities markets. It allows those with these sophisticated computer systems to make profits at the expense of everyone else who’s buying and selling securities.

Although the SEC has the power to address these problems under existing laws, it has failed to stop these practices which unfairly disadvantage run-of-the-mill buyers and sellers of securities.

The SEC is also charged with preventing large-scale speculation, particularly with borrowed money, that puts banks and financial corporations at-risk of bankruptcy if a large speculative investment goes bad. This is exactly what caused the 2008 financial collapse. This type of systemic risk is substantial today in large part because the financial industry has created “investments” that are called derivatives – financial instruments that are derived from or based on other financial instruments. In 2008, for example, the core problem was derivatives based on home mortgages. These were packages of home mortgages, and portions of them (e.g., the interest and principal portions of payments), and speculation on how interest rates would change, etc. These and many other derivatives are hard for most investors to understand, can be very volatile, are hard to put a value on, are hard to regulate, and it’s almost impossible to predict how they will perform as an investment. Therefore, investing in them is basically gambling and the securities market for them is basically a casino.

The laws and regulations that were put in place after the 2008 collapse to prevent a recurrence have been watered down or unenforced to the point that many experts believe we are likely to see a repeat of that collapse, and possibly a worse one. The largest 40 banks across the world are larger than ever and so interconnected through derivative “investments,” loans, and other financial transactions, that governments would have no choice but to bail them out again to prevent a total collapse of the financial system if any piece of this complex, opaque, and highly speculative financial casino were to crash in value.

I urge you to contact your U.S. Representative and Senators and to ask them to support strong, effective regulation of the financial industry through federal agencies such as the Federal Trade Commission and the Securities and Exchange Commission. Consumers and our financial markets need to be protected from the no-holds-barred greed and hubris of those in the financial industry. The consistent, aggressive, and risky practices across the financial industry, including by its largest corporations, require no less. 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.

Please also contact President Biden and ask him to appoint individuals who will implement strong regulation of the financial industry at the Federal Trade Commission, the Securities and Exchange Commission, and other federal agencies. This is important because Biden has not always supported strong regulation of corporations and the financial industry. He is from Delaware, which is the legal home of many U.S. corporations because of its lax regulation of corporations. You can email President Biden via 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]      Cohen, R. M., 4/27/21, “Congress looks to judicial overrides to strength consumer protections,” The Intercept and The American Prospect (https://theintercept.com/2021/04/27/supreme-court-ftc-consumer-debt/)

[2]      Turner, L., & Kuttner, R., 2/18/21, “The financial reforms we need,” The American Prospect (https://prospect.org/economy/financial-reforms-we-need-lynn-turner-interview/)

REGULATION OF THE FINANCIAL INDUSTRY IS BADLY 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.

The financial industry needs strong regulation because it has shown time and time again that without regulation it will rip off consumers and engage in practices that put our economy at-risk. Apparently, greed and hubris are endemic in the financial industry – from the CEOs on down. However, many Members of Congress resist strong regulation because of the campaign money they get from the industry. In addition, some members of the Executive Branch have opposed strong regulation of the financial industry, particularly those who have come through the revolving door from the industry.

Enforcement of existing regulations was quite lax under President Trump’s administration and needs to be strengthened. Furthermore, new regulations are needed to rein in problems that weren’t previously addressed and ones that have newly cropped up. The industry is always inventing new ways to circumvent regulations and developing new, risky, financial transactions. It remains to be seen whether President Biden and the Democratically controlled Congress will implement strong regulation of the financial industry.

Federal regulators asked the financial industry to forego overdraft fees because of the financial hardships of the pandemic. Despite this, the industry collected $4 billion in overdraft fees from consumers during 2020. JPMorgan Chase alone collected almost $1.5 billion in overdraft fees, which contributed to its $29 billion in 2020 profits. Overall, the financial industry collected $17 billion in overdraft fees in 2019. Clearly, regulation is needed of overdraft fees and the circumstances in which they are charged. Both have been the subject of abuse by financial corporations.

To protect consumers from abusive financial industry practices, the Consumer Financial Protection Bureau (CFPB) needs to be powerful and aggressive. It was created in the aftermath of the 2008 financial collapse, which revealed huge fraud by the financial industry in the home mortgage market. The lack of any agency focused specifically on protecting the public from abusive financial practices was a key contributing factor. However, the financial industry has lobbied hard to weaken the CFPB. As a result, both Republicans and Democrats in Congress and many in the Executive Branch, particularly under President Trump, have worked to weaken the CFPB.

As an example of lax enforcement under President Trump, the CFPB recovered just $700 million for consumers in 2020, down from $5.6 billion in 2015. Meanwhile, consumer complaints to the CFPB rose to record levels in 2020. In the four years of the Trump administration, the CFPB recovered an annual average of less than $600 million for consumers, while under President Obama it had recovered an average of $2.1 billion a year, three and a half times as much. Furthermore, under Trump the focus was on small firms rather than the major financial industry corporations. [1]

Fortunately, the Consumer Financial Protection Bureau is being revitalized under President Biden and will:

  • Enforce legal protections for debtors, including renters behind on their rent and student borrowers, while limiting abusive debt collection practices,
  • Strengthen regulation of payday lenders, including requiring them to assess a borrower’s ability to repay a loan,
  • Strengthen regulation of overdraft fees, and
  • Seek systemic change in the industry not just penalties for individual cases.

Wells Fargo is one of the notoriously bad actors in the financial industry. For example, in 2016 it admitted to creating millions of unauthorized accounts for customers to meet high sales and revenue targets. This led to the resignation of CEO John Stumpf, who was replaced by Tim Sloan, the bank’s president and chief operating officer. Sloan, four months earlier, when the fake accounts scandal was well known and had been going on for years, said in an interview that Wells Fargo’s aggressive sales tactics were appropriate and were not going to change. After Sloan took over as CEO, the bogus accounts scandal worsened and Wells Fargo also admitted to fraud in other business areas from car insurance to mortgages, as well as using faked customer signatures to satisfy anti-money laundering rules. Regulators imposed fines and took the dramatic step of prohibiting Wells Fargo from growing its business. [2]

When CEO Sloan left Wells Fargo in March 2019, he had been paid $40 million in his 2 ½ scandal-laden years as CEO and tens of millions of dollars in his previous 30 years at Wells Fargo. Now, he wants to collect another $20 million in deferred compensation. Government regulators could block this compensation under a law allowing them to limit “golden parachute” payments to senior executives who were involved in illegal activity at a financial institution. Whether they will do so remains to be seen.

I urge you to contact your U.S. Representative and Senators and to ask them to support strong regulation of the financial industry and a strong Consumer Financial Protection Bureau. Consumers and our economy need to be protected from the no holds-barred greed and hubris of those in the financial industry. The consistent, repeated fraud and risky practices across the financial industry, including by its largest corporations, requires no less. 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.

Please also contact President Biden and ask him to appoint individuals who will implement strong regulation of the financial industry and to fully support Rohit Chopra, the strong regulator he has nominated to lead the Consumer Financial Protection Bureau. (Confirmation is pending in the Senate.) This is important because Biden has not always supported strong regulation of corporations and the financial industry. He is from Delaware, which is the legal home of many U.S. corporations because of its lax regulation of corporations. You can email President Biden via 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]      Newmyer, T., 1/28/21, “CFPB muzzled under Trump, prepares to renew tough industry oversight,” The Boston Globe from the Washington Post

[2]      Rucker, P. 3/10/21, “Bank regulator could block disgraced ex-Wells Fargo CEO from $20 million payout,” The American Prospect (https://prospect.org/power/bank-regulator-could-block-disgraced-ex-wells-fargo-ceo-from-payout/)

OPPOSITION TO “SOCIALISM” IS A DOG WHISTLE FOR RACISM

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.

As I imagine you’ve heard, Republicans are attacking President Biden’s and Democrats’ policy proposals as “socialism.” I thought, naively, that Republicans were just trying foster opposition based on Cold War fears by conflating socialism with communism and identifying it as the existential threat to American democracy.

Heather Cox Richardson, with her historical perspective, has opened my eyes to the fact that the opposition to “socialism” has deeper roots in our history and is a dog whistle for racism. (If this use of the term dog whistle is new to you, please see this footnote. [1])

First, socialism is formally defined as an economic and political system where workers own the means of production (e.g., factories, farms, and organizations that provide services as well as the raw materials, machines, tools, and physical facilities used in producing goods and services). This is NOT, by any stretch of the truth, what Biden and Democrats are proposing. Socialism recognizes workers as the essential input to the economy and, therefore, posits that they should own the means of production and be the beneficiaries of the fruits of the economy.

Social democracy, on the other hand, is a political and economic system where a democratic government manages and regulates capitalism (i.e., private ownership of the means of production) to ensure social and economic justice. In our democracy, the government’s commitment to social and economic justice for all is stated in our founding documents – that all people are created equal, that all people should be guaranteed life, liberty, and the ability to pursue happiness, and that all people have the rights delineated in the Bill of Rights.

The explicit recognition that equal opportunity and true freedom require economic security was stated by President Franklin D. Roosevelt in his proposal for an economic bill of rights [2] and by Senator Bernie Sanders in his statements on what democratic socialism means to him (although technically speaking, he was describing social democracy and not democratic socialism). [3] [4] (See this footnote for a definition of democratic socialism and communism. [5])

Currently, Republicans are using “socialism” as a dog whistle to mean the use of government resources to promote racial equity and justice. Their dog whistle definition of “socialism” is the use of taxes paid by hardworking white men (and women) to benefit lazy people of color who are happy to live on government benefits. Today’s Republicans claim this “socialism” will undermine American democracy and freedom. The dog whistle is that these policies will undermine the “freedom” and privilege of white people.

This use of “socialism” goes back to 1871 when southern Democrats claimed they opposed voting by Blacks, not due to racism, but because Black voters would elect policy makers who would promote “socialism,” i.e., taxing white property owners to pay for roads, schools, and hospitals that would benefit Blacks. [6] They argued that Black voting would lead to “socialism” that would destroy America (namely the America of white supremacy). [7] [8]

After the Brown v. Board of Education decision in 1954, which found racial segregation in public schools unconstitutional, the use of government resources to enforce desegregation and civil rights was attacked as “socialism” because the costs of implementing desegregation and civil rights (for “undeserving” Black people) would be paid for by taxes on hardworking white men (and women). In 1958, Republican Senator Barry Goldwater accused his own party’s President Eisenhower of succumbing to “the siren song of socialism” for his use of government resources (troops) to enforce desegregation of Little Rock, Arkansas, High School. The irony was that the Goldwater family had made its money from government funding for dam construction in Arizona. [9]

Republican attacks on government, on a public safety net, and on beneficiaries of public assistance (inaccurately stereotyped as people of color) took on new strength and significance with the election of President Reagan in 1980. Remember Reagan’s attack on the mythical “welfare queen” with her Cadillac and mink coat? The attacks on “socialism” as a dog whistle for racism have only escalated since then.

Today, Republicans are vigorously charging that President Biden and Democrats are working to bring “socialism” to America. They claim that a no-holds-barred fight is necessary to save American from “socialism.” They are even willing to dispense with a commitment to democracy to “save” America. This disregard for democracy dates to at least 1980 when Republican strategist Paul Weyrich stated, “I don’t want everybody to vote …our leverage in the elections quite candidly goes up as the voting populace goes down.” That’s why Republicans have been and are actively engaged in voter suppression efforts. (Weyrich was a co-founder of the Heritage Foundation, which today is deeply involved in promoting state voting suppression laws and with the “audit” of voting in Arizona and elsewhere.) In October 2020, Utah Senator Mike Lee tweeted, “Democracy is not the objective … liberty, peace, and prosperity are. … democracy can thwart that.” [10]

Republicans are claiming today, as white southern Democrats did after the Civil War, that keeping “socialism” from coming to America requires keeping Black and other likely Democratic voters from voting; democracy, our Constitution, and our founding principles (which make America exceptional) be damned. The racism of the post-Civil War white Democrats’ attacks on “socialism” was made clear by the brutal Jim Crow laws they implemented to keep Blacks in their place and to prevent them from voting.

The implications of today’s Republicans’ claims of needing to prevent “socialism” in America aren’t completely clear, but civil rights, police reform, and social and economic justice are definitely targets. However, the racism behind their attacks on “socialism” is clear and these attacks should no longer be a dog whistle; every American should hear the racism in their attacks on “socialism” loudly and clearly.

[1]      The term dog whistle here is a political adaptation of the fact that a dog whistle can’t be heard by humans but can be heard by dogs. In politics, it refers to language that will be heard as supporting white privilege and supremacy by those people attuned to such sentiments, but won’t be heard by many other people as being racist and where the politician opposing “socialism” – or using other dog whistles – can deny racist intent.

[2]      President Franklin Delano Roosevelt, 1/11/44, “The economic bill of rights,” retrieved from the Internet 5/22/21 at https://www.ushistory.org/documents/economic_bill_of_rights.htm

[3]    Senator Bernie Sanders, 11/19/15, “Senator Sanders on Democratic Socialism and Defeating ISIS,” retrieved from the Internet 5/22/21 at https://www.c-span.org/video/?400961-1/senator-bernie-sanders-address-democratic-socialism (Sanders begins speaking at 8 mins., defines socialism at 12 mins., and presents his and FDR’s vision at 30 mins. into this 1 hr. 40 min. video)

[4]    Golshan, T., 6/12/19, “Bernie Sanders defines his vision for democratic socialism in the United States,” Vox (https://www.vox.com/2019/6/12/18663217/bernie-sanders-democratic-socialism-speech-transcript)

[5]     Democratic socialism is socialism where both the economy and society are governed democratically, with decision making by citizens with a focus on economic and social justice. Democratic socialism is not compatible with capitalism, which is based on private ownership of the means of production and, therefore, where the benefits, economic and also social and political power, flow to the owners of capital, i.e., the owners of physical and monetary assets.

Communism is formally defined as an economic and political system where the workers own the means of production and that is dedicated to equality for all, implemented through an authoritarian government. The main difference between communism and socialism is that socialism is compatible with democracy and liberty, while communism requires authoritarianism and denies basic individual liberties.

[6]      Cox Richardson, H., 4/19/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/april-19-2021)

[7]      Cox Richardson, H., 5/14/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/may-14-2021)

[8]      Cox Richardson, H., 1/16/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/january-16-2021

[9]      Cox Richardson, H., 4/19/21, see above

[10]     Cox Richardson, H., 5/14/21, see above

KEEPING THE RICH FROM GETTING EVEN RICHER

The rich have been getting dramatically richer, generally at the expense of the rest of us, for the last 40 years. My previous post identified four ways the U.S. tax system favors the rich:

  • Lower tax rates on the types of income (i.e., unearned income) that are prevalent among the wealthy,
  • Weak enforcement of tax laws that allows the wealthy to engage in substantial illegal tax evasion,
  • The lack of a wealth tax on anything other than one’s home, and
  • Tax loopholes that allow the wealthy to significantly reduce the amount of income tax they pay.

Federal tax laws and regulations are, obviously, the result of policy decisions made by elected officials (i.e., Congress and the President) and bureaucrats in the executive branch who report to the President. Therefore, these four ways that the tax system is tilted in favor of the wealthy can and should be changed.

First, the tax rates on unearned income should be raised. There’s a strong argument for making the tax rates on unearned income the same as on earned income and there’s no good reason to tax unearned income at a lower rate than earned income. It would be fairer to treat all kinds of income the same and this would eliminate the perverse incentive to manipulate income to have it fall into a category with a lower tax rate.

Tax rates in general, for both unearned and earned income, should be made more progressive. This would make our tax system fairer. The current top income tax rate is 37%. In the 1950s, the top tax rate was over 90% and in 1980, it was 70%. [1] So, the rich have gotten huge tax cuts over the last 70 years. And by the way, the economy was doing just fine in the 1950s with those higher tax rates. Raising the top rate by 1% would increase government revenue for needed programs and investments by about $12 billion per year. President Biden has proposed increasing the top rate to 39.6% (where it was before the 2017 Republican tax cut). This would generate about $31 billion in annual revenue.

Second, the budget of the IRS needs to be increased to strengthen enforcement of tax laws. It is estimated that every dollar spent on enforcement will reduce tax evasion by about $10. President Biden has proposed increasing IRS funding by about $8 billion per year and estimates that this would decrease tax evasion and increase government revenue by about $70 billion per year.

The IRS’s funding has been cut dramatically in recent years. This has reduced its ability to enforce tax laws and stop tax evasion. According to a Congressional Budget Office (CBO) report, from 2010 to 2018, the IRS’s annual budget declined by 20% and its staff decreased by 22%. Funding for enforcement fell by nearly 33%. Reviews of individual tax returns fell by 46%, while reviews of corporate tax returns fell by 37%. With less money and fewer staff, the IRS has had reduced capacity to enforce tax laws. [2] Nonetheless, the IRS is auditing low-income households, particularly those claiming the Earned Income Tax Credit for low-wage workers, at about twice the average rate that it audits the overall population.

The CBO estimated that $381 billion per year of taxes owed are not collected, mostly because of under-reporting of income by wealthy Americans. Because nearly all wage income is reported to the IRS by employers, unearned income and business income are far more likely to be under-reported. Wealthy Americans receive far more of these kinds of income than middle- and lower-income households. Therefore, the wealthy are the primary ones guilty of tax evasion by under-reporting income and are the beneficiaries of reduced IRS enforcement.

Third, a wealth tax would be an important step in making our tax system fairer, reducing economic inequality, and limiting the ability of families to perpetuate multi-million-dollar fortunes across generations, which is contributing to the emergence of an oligarchy in American society and politics. (See my previous posts on oligarchy in America here and here.) Senators Warren and Sanders have proposed a wealth tax that would place a 2% annual tax on wealth over $50 million, rising to 3% on wealth over $1 billion. It is estimated that such a wealth tax would raise $300 billion a year in revenue for the federal government.

Fourth, tax loopholes for the wealthy should be closed. There are too many of them to go into detail or provide an exhaustive list. As a starting point, we should:

  • Eliminate the “carried interest” loophole for managers of real estate, venture capital, private equity, and hedge funds that lets them pay the lower unearned income tax rates on the income they earn from their jobs,
  • Reduce the amount of money that can be given as tax-free gifts,
  • Reduce the amount of money that can be put tax-free into retirement accounts,
  • Reduce the amount of money that can be transferred tax-free in an estate, and
  • Eliminate the “stepped up basis” law that allows for tax-free transfers of assets that have increased in value. (See my previous post for more details on these tax loopholes.)

I encourage you to contact your U.S. Representative and Senators and tell them you support policy changes such as those above that would make our tax system fairer, stop the runaway increase in economic inequality, and generate revenue to pay for needed government programs, such as improving infrastructure and providing better supports for children and families. You can find contact information for your US Representative at  http://www.house.gov/representatives/find/ and for your Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

I also encourage you to contact President Biden and to tell him you support his policy changes and others that would make our tax system fairer, reduce economic inequality, and generate revenue to pay for needed government programs. Contact the White House at https://www.whitehouse.gov/contact.

[1]      Reich, R., 4/2/21, “Tax the rich. Here’s how,” Common Dreams (https://www.commondreams.org/views/2021/04/02/tax-rich-heres-how)

[2]      Congressional Budget Office, July 2020, “Trends in the Internal Revenue Service’s funding and enforcement,” https://www.cbo.gov/system/files/2020-07/56422-CBO-IRS-enforcement.pdf

HOW THE RICH GET RICHER #2

Here’s number 2 in a series of posts on how the rich get richer, generally at the expense of the rest of us. (See number 1 here.)

The U.S. tax system favors the rich with:

  • Lower tax rates on the types of income (i.e., unearned income) that are prevalent among the wealthy,
  • Tax loopholes that allow the wealthy to significantly reduce the amount of income tax they pay,
  • Weak enforcement of tax laws that allows the wealthy to engage in substantial illegal tax evasion, and
  • The lack of a wealth tax on anything other than one’s home.

First, unearned income (e.g., income from dividends and the increased value of investments, aka capital gains) is generally taxed at a lower rate than earned income (i.e., income from wages). The wealthy, of course, receive the lion’s share of unearned income.

The overall federal tax rate on earned income for a typical household is 29.65%. The income tax rate is 22% on middle income households. The tax for Social Security is 6.2% and is matched by one’s employer. The tax for Medicare is 1.45% and is also matched by one’s employer. Income tax rates on earned income begin at 10% for lower income households and increases to 37% (on income over $622,000). Social Security only taxes earnings up to $142,800, so the effective tax rate for those with higher incomes declines as income increases. Therefore, the highest overall federal tax rate on earned income today is just about 40%. (Historically, the maximum federal income tax rate was 70% in 1980 and over 90% in the 1950s, compared with 37% today.)

The federal tax rate on most unearned income is roughly half of that on earned income – 15% for middle income taxpayers and a maximum of 20% for high income taxpayers. The tax on long-term capital gains (i.e., the increase in value of investments owned for more than one year) is zero for lower income households and increases to 20% (on income over $434,550). Most dividend income is taxed at the same rates as long-term capital gains. Unearned income  is not subject to Social Security and Medicare taxes. By the way, billionaires in the U.S. gained about $1 trillion in wealth due to the increased values of their investments during the pandemic year from March 2020 to March 2021.

In early 2011, the very wealthy investor Warren Buffett publicly stated that he believed it was wrong that rich people, like himself, paid a smaller portion of their incomes in income taxes than  middle class people, like his secretary. President Obama and some in Congress proposed changes in income tax laws to ensure that the wealthy paid more in income tax, but these proposals were not enacted.

Second, the broad variety of tax loopholes that benefit the wealthy constitute a form of welfare for the wealthy that is rarely discussed using this terminology. One of the most egregious loopholes is the so-called “carried interest” loophole. It allows managers of real estate, venture capital, private equity, and hedge funds (who are invariably wealthy) to claim the income they earn from their jobs to be capital gains (i.e., unearned income), which cuts the income taxes they pay roughly in half. This loophole is estimated to cost the federal government about $1.4 billion a year in lost tax revenue. [1]

An individual can make a gift of up to $15,000 per year to anyone they want to (e.g., children and grandchildren) and to as many people as they want to. The recipient(s) do not have to pay any tax on the gift they receive. Only the wealthy can afford to make gifts of this magnitude, of course.

An individual can contribute up to $19,500 ($26,000 if over 50) to a 401k retirement savings account and reduce their taxable income by the amount of their contribution. In some cases, an individual could also contribute $6,000 ($7,000 if over 50) to an Individual Retirement Account (IRA) and reduce their taxable income by this amount as well. Clearly, only wealthy individuals can afford to make contributions of this magnitude to retirement accounts, so this is another way the rich can dodge income taxes.

When a wealthy individual dies, roughly $11 million of their estate can be passed on tax-free. As a result, only about 3,000 estates are subject to the federal estate tax each year. The maximum tax rate on the assets passed on by an estate is 40%. Some in Congress have proposed eliminating the estate tax completely.

If investments or assets are left to children when a wealthy parent dies, the children never have to pay any tax on the increased value of the investment during the parent’s lifetime. If they were to sell the investment or asset on the day they received it, they would owe no tax. So, for example, Bill Gates can leave his billions of dollars of Microsoft stock to his children and they can sell it when they receive it and owe no tax, so no tax would ever be paid on the billions of dollars of increase in its value from the day Bill Gates got the stock.

Any homeowner can deduct the interest paid on up to $1 million of mortgages to reduce the amount of income on which they owe tax. (This limit has been reduced to $750,000 for mortgages obtained after 2017.) This applies to mortgages on first and second homes. This tax break costs the federal government more than it spends helping poor families pay rent and avoid homelessness. Homeowners can also reduce their taxable income by up to $10,000 for property taxes they paid. [2] This $10,000 limit was imposed in 2017; the deduction used to be unlimited. These tax breaks have the greatest benefit for the wealthy, of course.

The cost to the federal government of lost revenue due to the various income tax breaks (aka loopholes) is huge – more than $1.5 trillion a year, which is more than the cost of Social Security or of Medicare and Medicaid combined. The bulk of the benefits from these income tax breaks or loopholes goes to wealthy individuals, of course.

Third, the wealthiest 1% of U.S. households don’t report over one-fifth of their income costing the federal government an estimated $175 billion every year. Some simply don’t report all their income, but many use complex tax strategies to dodge income taxes. Because the IRS rarely audits wealthy taxpayers (only 6% of those with income over $10 million), much of this tax avoidance is never subject to enforcement actions. Budget cuts and staff shortages at the IRS are partly to blame, but policy decisions have also contributed to the fact that the poor are audited at about twice the rate (roughly 0.7%) of the overall population. [3]

Finally, wealth is not taxed in the U.S., with the exception of the major asset or investment of the middle-class – one’s home. The property tax on one’s home, typically levied by local government, is the only wealth tax in America. It ranges from a high of 2% per year to a low of an effective rate of 0.3%. Ownership of all other wealth, other assets or investments (e.g., stocks, bonds, and other financial instruments), which are mostly owned by the wealthy, are not taxed.

The wealthy and their political supporters have lots of rationales for why they shouldn’t pay more taxes. Many of these rationales contradict ones they present to argue against public assistance for the poor or increased unemployment benefits or an increase in the minimum wage.

The bottom line is that by pretty much any measure and also from an historical perspective, the wealthy are not paying their fair share. The U.S. tax system is rigged in favor of the wealthy. When the wealthy and their political supporters say the country can’t afford to help low- and middle-income people with health care, child care, higher education, or housing costs, or that Social Security benefits need to be cut, remember that the wealthy are getting hundreds of millions of dollars of benefits each year from the provisions or loopholes of our tax laws. On top of this, there would be additional hundreds of millions of dollars of revenues for the federal government each year if the wealthy were paying their fair share.

My next post will present a variety of proposals and strategies to make our tax system fairer.

[1]      Reich, R., 4/2/21, “Tax the rich. Here’s how,” Common Dreams (https://www.commondreams.org/views/2021/04/02/tax-rich-heres-how)

[2]      Buchheit, P., 3/22/21, “The boundless advantages of the welfare state – for the rich,” Common Dreams (https://www.commondreams.org/views/2021/03/22/boundless-advantages-welfare-state-rich)

[3]      Johnson, J., 3/22/21, “ ‘This is tax evasion’: Richest 1% of US households don’t report 21% of their income, analysis finds,” Common Dreams (https://www.commondreams.org/news/2021/03/22/tax-evasion-richest-1-us-households-dont-report-21-their-income-analysis-finds)

THE GAMES OLIGARCHS PLAY

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.

In three previous posts, I’ve summarized the three major systemic changes identified by Robert Reich in his latest book, The System. These systemic changes have occurred since 1980 and have shifted power, both economic and political, to a small group of very wealthy Americans. As a result, our democracy operates in many ways like an oligarchy. (Oligarchy “refers to a government of and by a few exceedingly rich people or families who … have power … . Oligarchs may try to hide their power … . But no one should be fooled. Oligarchs wield power for their own benefit.” pages 13-14) [1]

Reich’s three systemic changes have shifted power:

  • From a broad set of corporate stakeholders to shareholders (see this previous post for details),
  • From workers and their unions to large employers (see this previous post for details), and
  • From manufacturing and a broad set of stakeholders in our economy to the financial sector and Wall Street (see this previous post for details).

A dramatic result of these shifts in power has been rapidly growing inequality in income and wealth. A cause and symptom of this inequality is that a small number of wealthy people dominate as the sources of funding for the campaigns of elected officials. These are the oligarchs. In the 2016 election cycle, the wealthiest 25,000 people in America (0.01% of the population) made a record-breaking 40% of all campaign contributions – up from 15% in 1980. Over the period from 2009 through 2020, twelve very wealthy individuals and their spouses gave a total of $3.4 billion to federal candidates and political groups. This is over 7% of the total money raised. The 100 highest giving zip codes hold less than 1% of the U.S. population, but were responsible for 20% of the $45 billion that federal candidates and political groups raised from 2009 through 2020. The increasing amount and share of campaign money coming from oligarchs was accelerated by a series of U.S. Supreme Court decisions, including the 2010 Citizens United decision. [2]

This high level of campaign spending gives these oligarchs access to our elected officials that you and I don’t have. When one of them calls or requests a meeting, that call is answered or that meeting is scheduled. Because their voices are heard and elected officials want the money to keep flowing to them, these oligarchs generally get the policies they want and that benefit them.

Throughout the book, Reich uses Jamie Dimon, the CEO of JPMorgan, as an example or case study of how the oligarchs operate; how they have abandoned public responsibility and advance their self-interest. Dimon appears to believe that corporations do have social responsibilities and not just responsibility to maximize returns for shareholders (as pure shareholder capitalism asserts). Dimon touts JPMorgan’s financing of $2 billion in affordable housing annually, its lending in low- and moderate-income neighborhoods and to small businesses, its 5-year $350 million job training program, and its $500 million AdvancingCities initiative to help financially-strapped large cities.

Although JPMorgan’s social responsibility efforts are notable, they are small relative to the size of the problems they are tackling and small in comparison to JPMorgan’s yearly profits of $30 billion. Moreover, they are contradicted by other actions of JPMorgan and Dimon. Dimon has not supported raising the minimum wage or paying all JPMorgan workers a livable wage, which would do a lot to help many of the people targeted by JPMorgan’s philanthropy, despite his 2018 compensation package worth $31 million and his wealth of around $1.5 billion. In addition, JPMorgan paid $55 million in 2017 to settle charges that it discriminated against minority mortgage borrowers.

Furthermore, Dimon personally lobbied hard for the 2017 tax cut that reduced the corporate tax rate from 35% to 21% and increased JPMorgan’s profits by billions of dollars annually. The tax cut increased the federal deficit by $190 billion annually; a figure that has to be covered, sooner or later, by cuts in federal government programs or increased taxes on others.

JPMorgan, with Dimon in charge, paid $13 billion to settle claims that it defrauded borrowers and investors in the mortgage scandal that led to the 2008 economic collapse. In 2019, it required forced arbitration for credit card disputes, preventing aggrieved customers from suing in court or through a class action lawsuit.

Although Dimon publicly opposed President Trump pulling the U.S. out of the Paris Climate Agreement, JPMorgan is the biggest bank investor in fossil fuels, to the tune of $196 billion between 2016 and 2018. A 2019 report by an environmental coalition named Dimon the “world’s worst banker of climate change.” JPMorgan is also the largest U.S. bank providing financial services to the gun industry and loans to gun buyers.

So, a few hundred million dollars a year of philanthropy is a good investment in public relations for a wealthy Wall Street bank that has had numerous ethical lapses and that was a significant contributor to the economic collapse in 2008, resulting in millions of people losing their jobs, homes, and savings, while it got hundreds of millions of dollars in bailouts.

However, Dimon and JPMorgan are just one example. In 2019, the Business Roundtable, in an effort to counter unfavorable publicity about corporations being solely focused on benefiting shareholders, issued a highly publicized corporate responsibility statement signed by CEOs of 181 major U.S. corporations (including Dimon) stating they believed in “a fundamental commitment to all our stakeholders.” The statement included a commitment to treat employees fairly, support communities, and embrace sustainable practices. [3]

However, actions speak louder than words. Just weeks after the statement appeared, Whole Foods, a subsidiary of Amazon, announced it would cut health benefits for its part-time workers, despite multi-billionaire Jeff Bezos, CEO of Amazon, having signed the corporate responsibility statement. During the pandemic, billionaires did very well and big corporations did well (45 of the 50 biggest were profitable). Despite this, 27 of the 50 big corporations laid off workers, totaling more than 100,000 workers. For example, Walmart, whose CEO was a corporate responsibility statement signer, distributed $10 billion to shareholders while laying off over 1,200 workers. [4]

If the CEOs (i.e., oligarchs) signing the corporate responsibility statement were serious about their commitment to all stakeholders, they would support federal legislation to make those commitments laws (i.e., legally binding). Or, at least, they’d pay a fair share of taxes to the federal government so it could support workers, communities, and a sustainable economy. However, in 2020, 55 of the largest U.S. corporations paid no federal income tax on $40 billion in profits. Moreover, they received more than $3 billion in federal tax rebates, giving them an effective tax rate of negative 9%; a bit different than the stated tax rate of 21%. Twenty-six of them have paid no federal income tax since the 2017 tax cut (and received $5 billion in rebates) while generating $77 billion of profits.

In actuality, the corporate responsibility statement appears to be part of a PR campaign by oligarchs that, along with corporate philanthropy, is designed to slow or stop proposed legislation and regulations that would require oligarchs and their corporations to:

  • Share their power and wealth by treating workers and communities more fairly, and
  • Engage in sustainable business practices.

Reich quotes the theologian Reinhold Niebuhr as noting that “ The powerful are more inclined to be generous than to grant social justice.”

These are the games that oligarchs play to try to hide their power and to try to fool the rest of us into believing that they care about fairness and social responsibility.

[1]      Reich, R.B., 2020, The System: Who rigged it, how we fix it. NY, NY: Alfred A. Knopf.

[2]      Beckel, M., retrieved 4/21/21, “Outsized influence,” Issue One (https://www.issueone.org/wp-content/uploads/2021/04/Issue-One-Outsized-Influence-Report-final.pdf)

[3]      Business Roundtable, 8/19/19, “Statement on the Purpose of a Corporation,” https://system.businessroundtable.org/app/uploads/sites/5/2021/02/BRT-Statement-on-the-Purpose-of-a-Corporation-Feburary-2021-compressed.pdf

[4]      MacMillan, D., Whoriskey, P., & O’Connell, J., 12/16/20, “America’s biggest companies are flourishing during the pandemic and putting thousands of people out of work,” The Washington Post

OLIGARCHY OR DEMOCRACY: THE FINANCIAL INDUSTRY RULES OUR 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.

Robert Reich’s latest book, The System, presents his analysis of how our democracy is more like an oligarchy these days, how it got that way, and how to fix it. Oligarchy “refers to a government of and by a few exceedingly rich people or families who … have power … . Oligarchs may try to hide their power … . But no one should be fooled. Oligarchs wield power for their own benefit.” (pages 13-14) [1]

Reich identifies three major systemic changes that have occurred since 1980 that have shifted power, both economic and political, to a small group of very wealthy Americans. They are:

  • The shift of big corporations from stakeholder to shareholder capitalism (see this previous post for a summary of this shift),
  • The shift in bargaining power from unions to large employers and corporations (see this previous post for a summary of this shift), and
  • The shift in power in our economy and politics to the financial sector and Wall Street (see below).

The dramatic increase in power and influence of the financial sector and Wall Street began in the 1980s. It included two components:

  • The increased size and marketplace power of large financial corporations, and
  • The increased influence of these large financial corporations in our economy and politics.

The increased size and marketplace power of financial corporations, starting with banks, began in 1980 as the federal government began deregulating banking. After the financial crash of 1929, which was a significant contributor to the Great Depression, laws were enacted to prevent banks from crashing the financial system and the economy again. Laws and regulations banned banks from operating in more than one state and prohibited mergers of banks. A law named the Glass-Steagall Act separated consumer and commercial banking (i.e., taking deposits and making loans) from investment banking (i.e., making investments that were speculative with significant risks of losses).

In 1980, the ban on interstate banking and bank mergers was repealed and banks quickly began merging. This, of course, meant that there were fewer banks and bigger banks, and eventually we got the too-big-to-fail banks of 2008. As the banks and financial corporations increased in size and wealth, they also gained political power through campaign spending, lobbying, and the revolving door. The repeal of the Glass-Steagall Act under President Clinton in 1999 alone was the subject of $300 million of lobbying by the big financial corporations. Clinton’s Treasury Secretary from 1995 – 1999, by the way, was Robert Rubin, a former senior executive at Wall St. powerhouse Goldman Sachs, who returned to Wall St. at Citicorp in 1999.

Starting in the mid-1980s, federal regulators began easing the restrictions separating consumer and commercial banking (where customers’ deposits were insured by the federal government) from investment banking. The favorable policies and deregulation the financial sector was able to get led to the Savings and Loan crash of the late 1980s that cost taxpayers billions. The bursting of the dot.com stock market bubble and the collapse of various hedge funds were just bumps on the road to the huge financial collapse of 2008 which caused the Great Recession and cost homeowners trillions of dollars and taxpayers trillions more to rescue the too-big-to-fail financial institutions.

Between 1980 and 2008, $6.6 trillion in wealth was captured by the big financial corporations, sucked out of consumers and others, as the U.S. economy shifted from a focus on making things (i.e., manufacturing) to creating new, speculative financial instruments and from product entrepreneurship to financial entrepreneurship and vulture capitalism.

The big financial corporations’ control of our economy and politics was so profound that they, with an assist from their banker friends at the Federal Reserve, could tell President Clinton that he had to balance the federal budget and could not spend money on programs to benefit the American people as he had promised during his campaign. Today, the financial sector represents over 8% of our economy, while in the 1950s it was just 2.5% of the economy.

The big financial corporations made money funding corporate raiders and vulture capitalists. They made money aiding and abetting multi-national corporations as they moved jobs and facilities overseas, undermining U.S. workers. They made money providing debt to consumers on credit cards, student loans, and mortgages, while often not so secretly hoping that borrowers would fall behind on payments so they could collect big fees and escalated interest rates. Along the way, the financial corporations got bankruptcy laws written so that consumers could not escape mortgage or student debt in bankruptcy and had limited ability to reduce credit card debt. (Meanwhile, corporations can eliminate all debt and break contracts, including union contracts and retiree benefit contracts, when they file for bankruptcy and can be back on their feet in literally no time.)

The big financial corporations fueled the dramatic rise in home values – the average home cost $64,600 in 1980 and $246,500 in 2006 – by handing out more and more mortgages on more and more risk terms. They knew that the default rate on these riskier mortgages would be higher and, in some cases, very high because they made some of these loans using fraudulent lending practices. Nonetheless, they continued to sell securities backed by these mortgages as low risk investments.

In 2008, when homeowners started to default on their risky and sometimes fraudulent loans, the whole financial system built around these mortgages and securities based on them collapsed. This caused a collapse in home prices, causing many more homeowners to default on their mortgages. Millions of homeowners lost their homes and, as a result in many cases, lost all their savings – to the tune of trillions of dollars.

The federal government and we, the taxpayers, bailed out the too-big-to-fail financial institutions to the tune of trillions of dollars. For example, the financial giant Citigroup (parent of Citicorp and Citibank) received $45 billion in cash and a guarantee against any loss in value for an additional $300 billion of speculative investments.

The shift of wealth to the big financial corporations and their executives and traders (i.e., their high stakes gamblers using speculative financial instruments) has exacerbated economic inequality in America. For example, the typical bonus paid on Wall Street in 2020 was $184,000 and the total bonus pool was $31.7 billion for the roughly 170,000 people receiving bonuses. [2]

Huge and wealthy companies, as well as their extremely wealthy executives and shareholders, are a threat to workers, our economy, and our democracy. Policies that were put in place as part of the New Deal in the 1930s maintained a balance in our economy, including a reasonable level of economic inequality, and protected our democracy from oligarchy. Since 1980, these policies have been changed, economic and political power has shifted, and we are suffering for it. We need to reinstitute policies similar to those of the New Deal to preserve our democratic principles of equal opportunity and promotion of the general welfare.

The bottom line of Reich’s book is that, as Supreme Court Justice Louis Brandeis (1916-1939) said, “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” Similarly, H.D. Lloyd, in his 1894 book, Wealth against Commonwealth, wrote, “Liberty produces wealth, and wealth destroys liberty.”

I urge you to read Reich’s book and/or check out his writing and videos at https://robertreich.org/ and/or https://www.inequalitymedia.org/. His analysis of the current economic and political landscape is always insightful and clear, and often entertaining as well.

[1]      Reich, R.B., 2020, The System: Who rigged it, how we fix it. NY, NY: Alfred A. Knopf.

[2]      Surane, J., 3/26/21, “Wall Street bonuses rose 10% in 2020, N.Y. Comptroller says,” Bloomberg News (https://www.bloomberg.com/news/articles/2021-03-26/wall-street-bonuses-rose-10-last-year-n-y-comptroller-says)

CORPORATE INVOLVEMENT IN POLITICS & VOTER SUPPRESSION

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 role of large, wealthy corporations in our political system is coming under scrutiny again, this time in relation to voter suppression laws in states. Advocates for democracy and its basic principle that all citizen should vote are urging corporations and their executives to speak out against states’ voter suppression efforts. Given that these voter suppression efforts target black, brown, and/or low-income citizens, advocates for racial and economic justice are also urging corporate opposition to these efforts.

As-of March 24, 361 bills that would suppress voting have been introduced in state legislatures in 47 states. Five bills have already passed, including, perhaps most notably, in Georgia. In 24 states, 55 bills are actively moving through the legislative process; 29 have passed in one chamber and 26 have seen action in a legislative committee. These bills would restrict absentee and by-mail voting, cut back on early voting, impose strict, onerous voter ID requirements, make registering to vote harder, and / or expand purges of voter rolls. [1]

The rationale for these efforts is, of course, the big lies that the 2020 presidential election was stolen from Trump and that there was extensive voter fraud. As I imagine you know, the number of cases of voter fraud is miniscule and totally insignificant in terms of election outcomes. Furthermore, the voting restrictions in these bills do NOT specifically address the kind of rare fraud that does occur.

After the January 6th attack on the capitol, at least 123 corporations and corporate trade associations announced a rethinking of their political spending – a pause in political spending by their corporate political action committees (PACs), a cutoff of donations to the 147 members of Congress who voted against certifying the presidential election results, or a review of their corporate PAC spending.

However, they did not announce a rethinking of their giving to politically active non-profits, including industry trade associations (such as the Chamber of Commerce). Twenty-four of the corporations that announced a rethinking their PAC spending have given more than $100 million to politically active non-profits since 2015. These “dark money” non-profits (so-called because they don’t have to disclose their donors) spent $750 million on the 2020 elections. [2] (Note: Tracking the money flowing to these non-profits is difficult and slow because they don’t have to report donors and only infrequently report any information at all.)

In 2019 alone (the latest data available), many of the corporations announcing a rethinking of their PAC spending gave more to politically active non-profits than their PACs spent in the whole two-year 2020 election cycle. For example, CVS Health spent less than $1 million through its corporate PAC in the 2020 elections but disclosed giving nearly $9.6 million to political non-profits in 2019 alone. From 2015 to 2019, CVS Health gave over $31 million to political non-profits, Intel gave $18 million, Anthem Blue Cross Blue Shield health insurance $16 million, Dow $16 million, AT&T $9 million, and Microsoft $6 million.

Corporations have also been active political spenders at the state level. An analysis of the legislators supporting 245 state voter suppression bills found, as of March 1, 2021, corporate campaign spending of over $22 million in the 2020 election cycle to benefit state legislators who supported voter suppression. These legislators wrote voter suppression bills, co-sponsored them, or voted for them. Of the 100 largest U.S. corporations, 81 gave money to these state legislators, and of the 500 largest corporations, 225 did so. In addition, corporate trade associations gave $16 million to these state legislators in the 2020 election cycle. Of the 123 corporations or corporate trade associations that announced a rethinking of corporate PAC spending after January 6th, 94 have given money to state legislators who supported voter suppression. Among the top 12 of these corporate spenders are Altria / Philip Morris, AT&T, United Health, Comcast / NBC, Walmart, Pfizer, Koch Industries, State Farm, and Verizon. [3]

By the way, when some corporations and their leaders made statements opposing voter suppression, Senator McConnell (Republican of KY and Senate minority leader) called on them to stay out of politics. This is beyond disingenuous as McConnell and his Republican colleagues have been the beneficiaries of hundreds of millions of dollars of corporate campaign contributions and spending. If the corporate leaders actually heeded McConnell’s call, the Republican Party would be bankrupt.

I urge you to speak out against voter suppression whenever and wherever you get the chance – with state-level elected officials, with national office holders, and with business leaders. Ask them to support efforts to make it simple and easy for every citizen to vote, and to oppose all efforts to make voting harder. Please also speak out in support of full disclosure of all political spending by corporations and others and in opposition to efforts to hide the identities of donors, particularly through the use of  “dark money” non-profits.

If you would like to email the CEOs of companies with a significant presence in Georgia to ask them to speak out against the voter suppression bill just passed in Georgia, here’s a list courtesy of Robert Hubbell’s daily newsletter of 4/5/21. (Sign up for his “Today’s Edition” newsletter here.)

  • The Home Depot               Craig Menear           craig_menear@homedepot.com
  • United Parcel Service         Carol B. Tomé           carol@ups.com
  • Delta Air Lines                    Ed Bastian                bastian@delta.com
  • Arby’s                                 Paul Brown               pbrown@inspirebrands.com
  • The Coca-Cola Company   James Quincey         asktheboard@coca-cola.com
  • Cox Media Group              Daniel York                york@cmg.com
  • Genuine Parts Company    Paul D. Donahue       paul_donahue@genpt.com
  • Georgia Pacific                   Christian Fischer       cfischer@gapac.com
  • Porsche                              Oliver Blume             blume@porsche.de

[1]      Brennan Center for Justice, 4/1/21, “Voting laws roundup: March 2021,” (https://www.brennancenter.org/our-work/research-reports/voting-laws-roundup-march-2021)

[2]      Massoglia, A., 1/15/21, “Corporations rethinking PACs leave the door to ‘dark money’ open,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2021/01/corporations-rethinking-corporate-pacs-leave-dark-money-open/)

[3]      Tanglis, M., Lincoln, T., & Claypool, R., 4/5/21, “The corporate sponsors of voter suppression,” Public Citizen (https://www.citizen.org/article/corporate-sponsors-of-voter-suppression-state-lawmakers-50-million/)

SABOTAGE BY HOLDOVER TRUMP APPOINTEES

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.

Throughout his term, President Trump appointed some very political people to executive branch positions and worked to make them difficult for a successor to remove. He accelerated these efforts in his lame duck days in office after he’d lost the election. These appointments were across the whole executive branch from the Defense Department to the Justice Department, as well as in the Social Security Administration and the U.S. Postal Service.

In addition, in his final days in office, Trump did everything he could to sabotage President Biden and his administration. Some of Trump’s appointees continue this work to this day. Some of them and their actions have gotten a fair amount of attention and coverage in the media, notably some actions at Defense, Justice, and the Postal Service. However, many of these appointees and their sabotage have gotten little if any attention.

For example, Andrew Saul, Trump’s 2018 appointee for Commissioner of the Social Security Administration (SSA), delayed the $1,400 American Rescue Plan pandemic checks to 30 million of the country’s poorest and neediest people. Saul refused to send information on recipients of Social Security and Supplemental Security Income (SSI) to the IRS so checks could be sent to them. SSI recipients are people with disabilities or seniors with very low incomes. Two weeks after the Rescue Plan had passed, when many people had already received their $1,400 payments, Democratic Members of Congress wrote to Commissioner Saul demanding that he send the information to the IRS. He complied the next day. [1]

As another example, Commissioner Saul and his Trump appointed Deputy Commissioner David Black proposed a rule that would have required disabled SSI recipients to undergo more frequent and more stringent benefit eligibility reviews, which would have caused tens of thousands of people to lose benefits. This rule change was very similar to one enacted by the Reagan administration that led to a rash of suicides, among other harm, and was seen as so cruel that it was unanimously overturned by the Senate. In another example, Saul and Black tried to deny benefits for older and severely disabled non-English speakers that would have caused an estimated 100,000 people to lose $5 billion in benefits.

These are examples of Saul’s and Black’s consistent efforts to undermine the effective functioning of the SSA. They are emblematic of Republicans’ efforts to harm the credibility and effectiveness of government through sabotage from the inside. This makes their claims that government programs don’t work well and are a failure a self-fulling prophecy.

Saul and Black have terms that don’t expire until 2025. Many advocates for SSI recipients (and others) are calling on President Biden to fire them, but so far, he has not done so. If he does, Republicans will, of course, claim that partisanship is the reason rather than their failure to responsibly do their jobs. We’ve heard this before from Republicans and we will hear it again and again as Biden cleans house of Trump’s government saboteurs. Don’t fall for it. The politics and partisanship are on the Republican side in their work to undermine the functioning of our government.

In December, 88% of the members of the Association of Administrative Law Judges, who handle SSA disputes, voted no confidence in Saul and Black. Recently, the American Federation of Government Employees called on Biden to fire Saul and Black. It stated that they were sabotaging the SSA, undermining its mission, obstructing its operation, and asking employees to deny injured workers and veterans their rightful benefits, which would be a major ethical violation.

I urge you to contact President Biden and ask him to fire Commissioner Saul and Deputy Commissioner Black from the Social Security Administration. Tell him you support firing all the Trump appointees who are sabotaging the valuable work our government does. Contact President Biden at the White House at https://www.whitehouse.gov/contact.

[1]      Sammon, A., 3/26/21, “Trump appointees are sabotaging Biden’s stimulus checks,” The American Prospect (https://prospect.org/politics/trump-appointees-sabotaging-bidens-stimulus-checks/)

OLIGARCHY OR DEMOCRACY: CORPORATIONS VS. 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.

Robert Reich’s latest book, The System, presents his analysis of how our democracy is more like an oligarchy these days, how it got that way, and how to fix it. Oligarchy “refers to a government of and by a few exceedingly rich people or families who … have power … . Oligarchs may try to hide their power … . But no one should be fooled. Oligarchs wield power for their own benefit.” (page 13-14) [1]

Reich identifies three major systemic changes that have occurred since 1980 that have shifted power, both economic and political, to a small group of very wealthy Americans. They are:

  • The shift of big corporations from stakeholder to shareholder capitalism (see my previous post for a summary of this change),
  • The shift in bargaining power from unions to large employers and corporations (see below), and
  • The shift in power in our economy and politics to the financial sector and Wall Street.

The shift in power from workers and their unions to large employers and corporations began in the 1980s. It included three components:

  • The increased size and marketplace power of corporations,
  • The increased influence of large corporations and employers in policy making, and
  • The weakening of the power of workers and their unions.

The increased size, marketplace power, and political influence of corporations has occurred in large part because the federal government has, starting in the 1980s under President Reagan, basically abandoned enforcement of anti-trust laws limiting mergers and acquisitions. As a result, two-thirds of the business sectors of our economy have become more concentrated since the 1980s. This means that ever larger corporations have gained monopolistic power, allowing them to raise prices or reduce customer service or quality without losing business to the competition, because there is little or no competition in many local markets.

The resultant large companies have the resources to engage in extensive political activity including lobbying, making sizable campaign donations and expenditures, and moving employees through the revolving door to positions in government (and often back again). This has provided them with substantial political power and influence.

Because payroll costs are typically 70% of a business’s costs, reducing personnel costs is the quickest way to increase profits and share prices, the goals of shareholder capitalism. The increased size and reduced number of employers inherently suppress worker pay by leaving workers fewer choices of whom to work for in many locales. This means there is less competition among employers in hiring workers, and therefore less need to increase pay or benefits to attract workers.

On the policy front, a central focus of large companies’ political influence has been on undermining and weakening enforcement of laws supporting unionized workers. In addition, relaxed laws governing international trade have allowed employers to shift jobs overseas to cheaper labor markets. Finally, a bankruptcy filing, a technique frequently used by vulture capitalists (i.e., private equity investors and corporate raiders), allows employers to void union contracts, as well as benefits for retirees. Simply the threat of bankruptcy has become enough to get unions and workers to agree to cuts in pay and benefits. All of these factors mean that large employers have gained the ability to undermine and eliminate unionized workers, as well as to block the formation of new unions.

As a result, unionization of private sector U.S. workers has dropped precipitously from 35% in the 1950s to 6% today. Reduced unionization leaves employees with less power to bargain for good pay and benefits. It also means employers are able to effectively require workers to agree to disadvantageous employment conditions such as signing agreements prohibiting them from working for a competitor (i.e., non-compete agreements) and agreeing to engage in arbitration rather than going to court with a lawsuit when mistreatment or other grievances occur. Moreover, the economy-wide boost to pay and benefits due to employers having to compete against unionized jobs to attract workers, has effectively disappeared as unionization has dropped to today’s very low levels.

In addition, large employers have gotten states to enact so-called “right-to-work” laws. These laws allow workers at a unionized workplace to refuse to pay union dues, even though they benefit from the union’s negotiation of pay, benefits, working conditions, and grievance procedures. This undermines the financial resources and bargaining power of unions.

The increased size and reduced number of businesses has increased corporate profits and economic inequality. It has also stifled innovation as large companies block access to customers for newer companies and buy up smaller companies that are seen as threats to their monopolistic dominance. The rate of new business formation today is half of what it was in 1980.

The economic result is that today a greater share of businesses’ income goes to profits and a smaller share to workers’ compensation than at any time since World War II.

The societal result is that workers are economically insecure, frustrated, and angry. Therefore, they are susceptible to demagogues like Donald Trump selling racism, xenophobia, and oligarchic authoritarianism as the solution to their insecurity and anger.

The declining value of the minimum wage since 1968 is indicative of the decline of workers’ power and compensation. Increasing the federal minimum wage to $15 an hour in 2025, as is currently being proposed in Congress, would be a step in the right direction but would still not give workers the full value of their increases in productivity. Using 1968 as the reference point, today’s current federal minimum wage of $7.25 would be roughly:

  • $11.00 if it had kept up with inflation. (In other words, the minimum wage today has roughly 1/3 less purchasing power than it had in 1968.)
  • $22.00 if it had kept up with the increases in workers’ productivity, i.e., the increases in the value of the output of today’s workers over those in 1968. Instead, this increased value is going to profits and shareholders. [2]

I will summarize Reich’s book’s description of the shift in power in our economy and politics to the financial sector and Wall Street, the last of his three big systemic changes, in a subsequent post.

In the meantime, I urge you to read Reich’s book or check out his writing and videos at https://robertreich.org/ and/or https://www.inequalitymedia.org/. His analysis of the current economic and political landscape is always insightful and clear, and often entertaining as well.

[1]      Reich, R.B., 2020, The System: Who rigged it, how we fix it. NY, NY: Alfred A. Knopf.

[2]      Lee, T.M., 2/25/21, “Our deeply broken labor market needs a higher minimum wage,” Economic Policy Institute (https://www.epi.org/publication/our-deeply-broken-labor-market-needs-a-higher-minimum-wage-epi-testimony-for-the-senate-budget-committee/)

OLIGARCHY OR DEMOCRACY: THE SYSTEM BY ROBERT REICH

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.

Robert Reich’s latest book, The System: Who rigged it, how we fix it, presents his pointed, insightful, and relatively succinct analysis of how our democracy is more like an oligarchy these days, how it got that way, and how to get back to democracy. Oligarchy “refers to a government of and by a few exceedingly rich people or families who control the major institutions of society and therefore have power over other people’s lives. Oligarchs may try to hide their power behind those institutions, or … through philanthropy and ‘corporate social responsibility.’ But no one should be fooled. Oligarchs wield power for their own benefit.” (page 13-14) [1]

Reich identifies three major systemic changes that have occurred since 1980 that have shifted power, both economic and political, to a small group of very wealthy Americans. They are:

  • The shift of big corporations from stakeholder to shareholder capitalism,
  • The shift in bargaining power from unions to large employers and corporations, and
  • The shift in power in our economy and politics to the financial sector and Wall Street.

The shift of big corporations from stakeholder to shareholder capitalism began in the 1980s with “corporate raiders,” who were wealthy investors who would buy enough shares of a corporation’s stock to force the Chief Executive Officer (CEO) to make changes to increase the stock price or lose his job due to the raider taking control of the Board of Directors in what was called a hostile takeover. There were 13 hostile takeovers in the 1970s of corporations worth over $1 billion; there were 150 in the 1980s.

In addition, financial entrepreneurs or engineers, as they were referred to then and who more recently have been labeled vulture capitalists, developed the leveraged buyout technique that has been widely adopted by private equity funds. This technique, made possible by our tax and financial laws and regulations, allows the “investor” to borrow the huge sums of money needed to buy a corporation and then put the debt and risk on the corporation that was purchased, while receiving favorable tax treatment for the huge interest payments on the debt. In the 1980s, there were more than 2,000 leveraged buyouts of corporations worth over $250 million.

During the 1980s and 1990s, almost one out of every four U.S. corporations was the target of a hostile takeover and another quarter were the target of a takeover that was not deemed hostile because the CEO supported it (sometimes reluctantly).

As a result of all of this, CEOs shifted to focusing solely on maximizing the short-term price of the corporation’s stock and, therefore, the wealth of shareholders. Previously, the CEO’s job had been seen as having responsibility to a range of stakeholders, including employees, customers, the communities employees lived in, and the public, in addition to shareholders.

This shift from stakeholder to shareholder capitalism could not have occurred without tax and financial laws and regulations that allowed it or without lax enforcement of laws and regulations that could have stopped it. Some laws and regulations were changed to allow the corporate raiders’ practices. President Reagan’s administration in the 1980s failed to take enforcement actions that could have stopped or slowed corporate raiders and leverage buyouts, such as enforcement of anti-trust laws or a crackdown on large, risky loans by federally regulated and insured banks. Furthermore, the Reagan administration testified before Congress in opposition to laws that would have curbed the practices used by the corporate raiders.

Starting in the 1970s and growing in the 1980s, academic economists including Milton Friedman (University of Chicago) and Michael Jensen (Harvard Business School) gave academic and theoretical support to the takeovers (and threatened takeovers), asserting that they were increasing economic efficiency. They ignored the costs to workers and communities, focusing narrowly on the corporation, its profits, and its stock price. In other words, their focus was benefits to stockholders while ignoring costs to other stakeholders.

As a result, the mantra for CEOs, the business community, and many economists has become that the sole purpose of the corporation and its management is to maximize shareholder value at the expense of any and all other stakeholders.

Under the shift to shareholder capitalism, the “efficiency” gains go to shareholders, who are generally wealthy investors (including CEOs), while other stakeholders suffer the costs and burdens. This “efficiency” ignores any acknowledgement of a broader common good or the general welfare (which the preamble to the Constitution says our country was created to promote).

I will summarize Reich’s book’s description of the other two big systemic changes in subsequent posts:

  • The shift in bargaining power from unions to large employers and corporations, and
  • The shift in power in our economy and politics to the financial sector and Wall Street.

In the meantime, I urge you to read Reich’s book or check out his writing and videos at https://robertreich.org/ and/or https://www.inequalitymedia.org/. His analysis of the current economic and political landscape is always insightful and clear, and often entertaining as well.

[1]      Reich, R.B., 2020, The System: Who rigged it, how we fix it. NY, NY: Alfred A. Knopf.

PANDEMIC RELIEF, UNITY, AND BIPARTISANSHIP

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.

Passage of the American Rescue Plan (ARP), i.e., the pandemic relief package, is a milestone for unity because it fosters economic recovery and fairness for all Americans. Although it was a great opportunity for bipartisanship, unfortunately it has only been another milestone in the continuing, now decades-long, hyper-partisanship of Republicans.

President Biden had Republicans to the White House to try to obtain bipartisan support. He compromised by cutting unemployment benefits and reducing the number of Americans who qualified for relief payments by 17 million to address Republicans’ and conservative Democrats’ concerns about the costs of the bill and the targeting of benefits to those most in need. Nonetheless, the Republicans did everything they could to delay the bill, including demanding that the whole 628-page bill be read aloud in the Senate. And then, not one single Republican voted for it despite its overwhelming, bipartisan support for it among Americans. Roughly 75% of Americans supported the bill, including about 60% of Republicans.

Many in the media reported inaccurately that the passage of the ARP was also the death of bipartisanship because no Republican voted for it. The truth is that Republicans killed bipartisanship in the 1990s with their impeachment of President Clinton and put another nail in its coffin in 2008 with their pledge to make President Obama fail and to block every one of his legislative initiatives.

The ARP will cut the number of children living in poverty by one half. Child poverty in the U.S. is significantly higher than any other wealthy country and is incredibly harmful to children. Children in poverty in the U.S. are, of course, disproportionately children of color. The ARP will cut the overall number of Americans in poverty by 1/3. By the way, the official poverty line in the U.S. is well below any minimally realistic standard of living in many parts of the country at $26,500 for a family of four, which can be a single parent with three children.

The ARP provides a huge boost to middle-income families, increasing their after-tax incomes by an average of 5.5%, or about $2,750 for a family with a $50,000 income and $5,500 for a family with a $100,000 income.

Perhaps not surprisingly, Republicans’ calls for unity seem to have disappeared in the shadow of their blatantly partisan actions on the ARP. They have made it clear that their primary goal is obstruction of any initiative proposed by President Biden and supported by Democrats, even if it would do tremendous good for the country, its people and small businesses, as the ARP will. The Republicans will even obstruct policies that have broad bipartisan support among the public if somehow they believe that doing so will help them politically, i.e., in retaining their power and elected positions.

Perhaps not surprisingly as well, some Republicans are already trying to take credit for the benefits of the ARP, making it sound like they supported it. For example, Senator Wicker (R-MS) tweeted positively about the bill the same day that it passed, noting that it would help small businesses and restaurants, and giving the false impression that he had voted for it.

Republicans’ obstructionism has extended to President Biden’s nominees for his Cabinet and other positions. The precedent is that every President should be allowed to have whomever he wishes in his Cabinet, regardless of political differences. Unqualified and inappropriate nominees have been smoothly confirmed for President Trump and other Republican Presidents. Nonetheless, Senate Republicans have been dragging their feet and opposing some of Biden’s nominees solely for political reasons. They are even opposing nominees because of their partisan social media activity – a standard that would have disqualified a number of Trump nominees.

Looking ahead a bit, the For the People Act and the John Lewis Voting Rights Advancement Act were recently passed by the House and would take strong steps to guarantee the right to vote for all, a key step toward unifying America. (See this previous post for more details.) These bills have the broad, bipartisan support of about 70% of Americans. However, the Republicans plan to block them in the Senate with the filibuster. Meanwhile, Republicans in many state legislatures and Governors’ offices are pushing bills that would suppress voting, particularly of people of color and those with low-incomes. (See this previous post for more details.) The House has also passed the George Floyd Justice in Policing Act, which will presumably be blocked by a filibuster by Senate Republicans. Clearly, most Republicans in Congress and those in many states across the country have no interest in bipartisanship and no interest in unifying America.

The hypocrisy of Republicans in Congress was just highlighted by their filing of a bill to repeal the estate tax. Over the next ten years, this would give $350 billion to 2,000 very wealthy people (i.e., those with estates of over $11 million for an individual or $22 million for a couple). Yet, the Republicans pushed to stop 17 million middle class Americans from receiving the $1,400 pandemic relief payments to save $24 billion (7% of the estate tax giveaway) and also to reduce weekly unemployment benefits by $100. So, Republicans support a big tax cut for some of the wealthiest people in America but oppose a little help for those in the middle class. This makes it clear that their purported concern about government spending and the deficit is hypocritical. Clearly, their calls for unity are hypocritical as well.

On a personal note, I’m dismayed to be writing so negatively about most Republicans and the Republican Party. I believe in political competition and an honest debate over policies. I grew up in New York State when Nelson Rockefeller, a Republican, was a well-respected Governor for 16 years. Up until the 1980s, I was a proud Independent voter, not registered in either party. My first significant political involvement was in 1980 when I worked hard for John Anderson for President, a Republican running as an independent against Jimmy Carter and Ronald Reagan.

However, the 1980s made it clear to me that the Republicans had become wedded to an anti-government, anti-worker, anti-civil rights agenda. And their agenda has only gotten more extreme since then. In the 1990s, I became quite disillusioned with the national Democrats who adopted much of the Republican deregulation, pro-big business, pro-Wall Street agenda.

The Republican Party, for the most part, has now adopted an anti-democracy agenda that supports voter suppression, big corporations, and wealthy individuals without reservations. I hope President Biden can change the direction of the country and the Democratic national party while standing up to the radical revolutionaries of the Republican Party.

I urge you to contact the White House and let Biden know that you support his and the Democrats’ efforts to restore our democracy and its commitments to equal opportunity for all, the rule of law, and government of, by, and for ALL the people. You can contact the White House at https://www.whitehouse.gov/contact.

CRACKING DOWN ON CORPORATE CORRUPTION AND SHELL COMPANIES

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 piece of very good news in the battle against corporate corruption and the use of shell companies to engage in criminal and unsavory activity. You may recall the defense spending bill, called the National Defense Authorization Act, that Congress passed last December and then, on New Year’s Day, overrode President Trump’s veto of it. (Trump vetoed it because it renames military bases currently named for Confederate generals and because it doesn’t repeal the liability protection for social media platforms when third parties post offensive or libelous material.) Given that it was one of a very few pieces of legislation actual passed by Congress, a number of unrelated items (called riders) were attached to it as the only way to get them passed.

One of the riders attached to the recent defense spending bill was the Corporate Transparency Act (CTA), which will significantly inhibit the use of shell companies for money laundering and other illegal or unsavory activities. A shell company is a legal entity established without any actual business operation or significant assets that is typically used to obscure ownership and hide financial transactions from law enforcement and/or the public. The CTA is the most significant financial industry reform addressing money laundering since the Patriot Act, which was passed after the Sept. 11, 2001, terrorist attacks. [1]

The CTA will require a company to disclose the names of its owners, i.e., anyone with a 25% or greater ownership share or who exercises substantial control over the company. This information will be in a confidential registry maintained by the Financial Crimes Enforcement Network (FinCEN) at the U.S. Treasury Department. FinCEN captures and analyzes financial transactions in order to combat money laundering, terrorism financing, drug trafficking, and other illegal activity. Its data is available only to law enforcement and to financial institutions (that use it to scrutinize the entities involved in financial transactions). The CTA also increases penalties for money laundering, streamlines cooperation among banks and foreign law enforcement, and significantly expands the rewards for whistleblowers, allowing them to receive up to 30% of money seized by law enforcement. [2]

The CTA responded to a decade of disclosures of the abusive uses of shell companies led by the reporting of the International Consortium of Investigative Journalists (ICIJ). The ICIJ has repeatedly documented how criminals and the rich have used shell companies to hide their wealth and move their money. It investigated and reported on the use of shell companies based on the leaked Panama Papers in 2016, the 2017 Paradise Papers leak, and its Secrecy for Sale project, which began in 2012 and continues to today. ICIJ reporting has disclosed that Delaware, Wyoming, and Nevada are favorite locations to set up shell companies, in addition to offshore tax havens. [3] Its analysis in 2020 of leaked FinCEN reports of suspicious financial transactions identified shell companies transferring money through U.S. banks for criminals in Russia, China, Iran, and Syria.

ICIJ’s reporting has made it clear that the U.S. has been the country of choice for criminals and wealthy individuals to set up anonymous shell companies that, in addition to tax evasion, have facilitated bribery and other illegal payoff schemes, as well as money laundering for terrorism, political corruption, and a variety of criminal enterprises including drug, arms, and human trafficking.

The U.S. political system is a swamp of money and increasingly the true sources of political contributions and campaign spending are hidden, a trend exacerbated by the use of shell companies. While it is illegal for foreign individuals or entities to contribute to U.S. campaigns, a shell company makes the true source of campaign spending anonymous. Therefore, it is highly likely that illegal foreign money has been going into U.S. political campaigns via shell companies.

The Trump campaign created a shell company, American Made Media Consultants, that spent more than $759 million of Trump’s campaign funds (over 50% of the campaign’s spending). This obscured the flow of money including who was paid when and how much. Nonetheless, it is clear that at least eight individuals who were paid by the Trump campaign were also paid in connection with the January 6, 2021, rally that led to the storming of the Capitol. [4] Previously, Trump had personally used shell companies, including to pay off Stormy Daniels, the pornography actress who says Trump had an affair with her. [5]

The Corporate Transparency Act is an important step forward in increasing the transparency of financial transactions. It will, among other things, reduce corporate and political corruption, inhibit criminal and terrorism finances, and reduce tax evasion. This is a good step but there’s lots more to do, such as strengthening prosecution of white-collar crime. More on that in a future post.

[1]      Talking Points, 1/11/20, “New law cracks down on shell companies to combat corruption,” The Boston Globe from the Associated Press

[2]      Cox Richardson, H., 12/27/20, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/december-27-2020)

[3]      Mustufa, A., 12/11/20, “Advocates celebrate major US anti-money laundering victory,” International Consortium of Investigative Journalists (https://www.icij.org/investigations/paradise-papers/advocates-celebrate-major-us-anti-money-laundering-victory/)

[4]      Massoglia, A., 1/22/21, “Shell companies and ‘dark money’ may hide details of Trump ties to DC protests,” Center for Responsive Politics (https://www.opensecrets.org/news/2021/01/trump-tied-to-dc-protests-dark-money-and-shell-companies/)

[5]      Cox Richardson, H., 12/27/20, see above

UNITY MEANS VOTING FOR ALL: FEDERAL LEGISLATION

In a democracy built on the premise that all people are created equal and a commitment to one person, one vote, the electoral goal should be a guaranteed right to vote (which does not currently exist) and 100% voter participation. Work toward these goals would be a strong unifying force. Unfortunately, there are many Republicans who are working to restrict voting in ways that give them an electoral advantage. As my previous post documented, the good news is that at least 37 states are considering over 540 bills to expand or ease access to voting. This is almost three times as many such bills as had been introduced a year ago. The bad news is that 33 states are considering 165 bills that would restrict access to voting. This is almost five times as many such bills as were under consideration a year ago. [1]

There’s more good news at the federal level where there are  two important pieces of legislation that will protect and support every citizen’s right to vote: [2]

  • For the People Act (H.R. 1 in the House and S. 1 in the Senate) which addresses many issues related to making it easier to vote; promoting one person, one vote; controlling campaign spending; and enhancing ethical standards for public officials.
  • John Lewis Voting Rights Advancement Act which focuses on eliminating racial discrimination in states’ electoral systems and addresses election oversight shortcomings that the Supreme Court created when it gutted the Voting Rights Act in 2013.

The For the People Act was passed by the House in 2019 but ignored by Senate Republicans led by Senator McConnell (KY). It has been reintroduced in both the House and the Senate and would:

  • Improve access to voting by:
    • Streamlining voter registration
    • Expanding early voting and taking other steps to reduce waiting times at the polls
    • Expanding and simplifying voting by mail
    • Restoring voting rights to people who have completed their sentence for a felony
  • Promote one person, one vote, as well as voting integrity and security by:
    • Ending gerrymandering of districts
    • Regulating purges of voting rolls to prevent partisan voter suppression
    • Providing $1 billion for upgrading the security of state voting systems, including requiring auditable paper ballots
    • Increasing oversight of voting machine vendors
    • Restructuring the Federal Election Commission (FEC) to strengthen its enforcement of election laws
  • Increase disclosure of campaign spending by:
    • Requiring all organizations engaged in political activity to disclose large donors
    • Requiring disclosure of spending on on-line political ads
    • Eliminating the funneling of campaign spending through multiple entities in order to prevent donor identification
  • Enhance the value of small campaign donations and limit the influence of wealthy donors by:
    • Creating a 6 to 1 match for small donations to candidates who opt into a system that matches small donations with public funds (Note: This is a critically important strategy that is working in New York City and elsewhere to enlarge and diversify the pool of candidates who run, engage and amplify the voices of regular people, and limit the influence of wealthy donors. [3])
    • Raising the funds to match small donations through a surcharge on fines corporations pay for illegal activity and on tax cheating by the wealthy
    • Dramatically lowering the maximum campaign contribution limit for candidates who opt into the matching system
  • Enhance ethics laws governing public officials and strengthen their enforcement by:
    • Requiring Presidents to disclose their tax returns
    • Strengthening conflict of interest and financial divestment standards for public officials
    • Slowing the revolving door between related private and public sector jobs
    • Prohibiting Members of Congress from serving on corporate boards
    • Strengthening the Office of Government Ethics and its enforcement powers
    • Closing loopholes in the regulations governing lobbyists and foreign agents
    • Creating a code of ethics for Supreme Court Justices

The John Lewis Voting Rights Advancement Act is designed to respond to the Supreme Court’s 2013 decision that gutted the Voting Rights Act, fixing what the Court said made the law unconstitutional. The implementation of voting restrictions accelerated sharply immediately after the Supreme Court’s decision, with Republicans using them to target non-white and other voters who tend to vote for Democrats. The bill would also address other issues related to racial discrimination in voting systems. This bill was passed by the House in 2019 but was ignored by Senate Republicans led by Senator McConnell (KY). It has been reintroduced in both the House and the Senate and would:

  • Establish new criteria for determining which states and political subdivisions must obtain preclearance before changing voting procedures. (Preclearance means receiving approval from the Department of Justice before making changes to voting procedures.)
    • The new criteria focus on particular practices that have been problematic in the past because they restricted access to voting, often in a discriminatory way. These practices include onerous vote ID requirements and the changing of district boundaries, voting locations, early and mail-in voting opportunities, and voter registration list maintenance procedures.
    • All jurisdictions (e.g., counties, cities, and towns) would be required to obtain preapproval for implementing more stringent requirements for documentation to vote (such as IDs) than those established by federal law for vote by-mail registration or than those present in state law.
  • Require appropriate notification to the public of changes in voting procedures.
  • Clarify the circumstances under which a court must immediately block changes to voting procedures that have been challenged.
  • Establish standards and procedures for deploying federal election observers when problems with voting access are identified, particularly a serious threat of racial discrimination.

There is strong bipartisan support for the provisions of these bills that move toward guaranteeing the right to vote and making it easy to do so, as well as protecting the integrity of our elections. It is particularly noteworthy that this level of support exists despite all the Republican attacks on many of these aspects of our voting systems, especially voting by mail. For example: [4]

  • 86% support working to prevent foreign interference; 7% are opposed.
  • 84% want enhanced election security; 8% are opposed.
  • 74% support non-partisan determination of electoral districts; 11% are opposed.
  • 68% want 15 days of early voting; 19% are opposed.
  • 60% support same day voter registration; 29% are opposed.
  • 59% support automatic voter registration; 29% are opposed.
  • 58% want to vote by mail; 35% are opposed.

I encourage you to contact your U.S. Representative and Senators and urge them to support efforts to make it easier to vote, to encourage every citizen to vote, to end racial and partisan discrimination in states’ election systems, and to enhance the integrity and security of our elections.

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]      Brennan Center for Justice, 2/8/21, “Voting laws roundup 2021,” (https://www.brennancenter.org/our-work/research-reports/voting-laws-roundup-2021-0)

[2]      Perez, M., & Lau, T., 1/28/21, “How to restore and strengthen the Voting Rights Act,” The Brennan Center for Justice (https://www.brennancenter.org/our-work/research-reports/how-to-restore-and-strengthen-voting-rights-act)

[3]      Vandewalker, I., 2/4/21, “How to change incentives for both politicians and donors,” The Brennan Center for Justice (https://www.brennancenter.org/our-work/analysis-opinion/how-change-incentives-both-politicians-and-donors)

[4]      Cox Richardson, H., 2/25/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/february-25-2021)

EXAMPLES OF CORRUPT CAPITALISTIC BEHAVIOR Part 4

Here are eight recent examples of corporate corruption and of the overall corruption of our current system of capitalism, in which a lack of regulation of large corporations and Wall Street allows greed to run rampant. The frequency of these incidents 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, destroys news reporting that is essential to a well-functioning democracy, and makes the stock market vulnerable to manipulation and our financial system vulnerable to criminal money laundering. (This previous post highlighted three other examples of corrupt capitalistic behavior.)

Example #1: The power outage in Texas has dramatically illustrated what happens when the private sector is not properly regulated. This is, of course, particularly important when we rely on the private sector to deliver a vital public service (e.g., electricity or water) or an essential public product (e.g., health care supplies or food). In Texas, the private electric power generation companies and the private electric grid manager decided in the 1930s to avoid federal regulation by refusing to participate in the national power grid. Then, they got Texas regulators to let them cut corners to maximize profits. The result is an electric power system that doesn’t have the capacity to respond in an emergency and, therefore, left millions of people in the dark and cold, jeopardizing their health, safety, and, indeed, their lives, during a recent mid-February cold snap. [1]

Example #2: The wild fluctuations in GameStop stock, a small, previously little-known company, have focused attention on weaknesses in the regulation of the stock market and of the companies that facilitate stock trading. GameStop stock shot up from $4 to $5 a share in August to $20 in mid-January to $483 in late January. It then fell back to $41 by mid-February. This roller coaster ride has highlighted the risks and often unfair environment that individual investors face in the stock market, which is dominated by sophisticated, powerful, and wealthy traders, who too often are further advantaged by access to inside, non-public information. [2]

Example #3: Three big drug distributors (Cardinal Health, AmerisourceBergen, and McKesson) and Johnson & Johnson are paying big fines (a total of $26 billion) as part of the settlement for fraudulently marketing and selling opioids, which led to drug addictions, overdoses, and tens of thousands of deaths. However, they are deducting these fines from their taxes, reducing what they owe the government by a combined $4.6 billion. Under the settlement, the four companies will avoid having to admit to any guilt, wrongdoing, or legal responsibility. Many people involved with this case feel that the fines are too low based on the damage that was done and that the tax deductions and the lack of any admission of guilt are insulting to the victims. [3]

Example #4: Tribune Publishing, one of the last newspaper chains not already owned and gutted by private equity or hedge fund vulture capitalists, is being bought by the Alden Global Capital (AGC) hedge fund. AGC, along with other vulture capital newspaper purchasers, has consistently maximized financial returns by cutting the newspapers’ staffs, selling their real estate, busting their unions, and eliminating their pension liabilities, while pocketing as much cash as possible and loading debt onto the newspaper companies, often pushing them toward bankruptcy. The Tribune papers that will almost certainly be similarly decimated are in Chicago, Baltimore, Hartford, Orlando FL, New York (the Daily News), Annapolis, Allentown, Newport News, and Norfolk VA. AGC now owns over 200 newspapers. This purchase (and the others like it) is possible because of a lack of antitrust enforcement and special tax law provisions that favor debt-financed acquisitions and payment of special dividends from companies operating at a loss. [4]

Example #5: An investor lawsuit against Boeing is moving forward based on claims that the Board of Directors and management failed to uphold their responsibilities to shareholders relative to the safety issues and crashes of the 737 Max airplanes. Two of the planes crashed in the spring of 2019 killing 346 people. The suit questions the Board’s and management’s roles both in the initial testing of the plane and its software, and their actions after the crash of the first plane, when they decided not to ground all the 737 Max planes. Boeing has already agreed to pay more than $2.5 billion to resolve criminal charges that it conspired to defraud the Federal Aviation Administration (FAA) during the plane’s safety review and certification. The Board did fire Boeing’s CEO in 2020, but gave him a $62 million severance package. [5]

Example #6: Bristol-Myers Squibb and Sanofi, who jointly market the blood-thinning drug Plavix, were ordered by a judge to pay the State of Hawaii over $834 million for illegally marketing the drug. For 12 years, they failed to properly warn consumers about health risks and didn’t disclose that the drug was ineffective for up to 30% of users, both of which put some users’ lives at risk. They engaged in these practices in order to maximize their profits. [6]

Example #7: Google has agreed to pay a $1.3 million fine to French fraud and competition regulators for displaying misleading rankings for French hotels on Google Maps and in Search results. [7]

Example #8: Citigroup, parent of Citibank, was fined $400 million for deficient financial controls and related technology. In an ironic example of its lack of controls, Citibank, in what it says was a mistake, transferred over $500 million to a client’s lenders while intending to make a much smaller interest payment. A judge recently ruled that the lenders do not have to return the money. [8]

[1]      Cox Richardson, H., 2/16/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/february-16-2021)

[2]      Rosen, A., 2/18/21, “Mass. Investor ‘Roaring Kitty’ says he wasn’t part of any coordinated effort to boost GameStop,” The Boston Globe

[3]      MacMillan, D., & Schaul, K., 2/12/21, “Drug companies seek billion-dollar deductions from opioid settlement,” The Washington Post

[4]      Kuttner, R., 2/17/21, “Private equity swallows up yet another newspaper group,” The American Prospect blog (https://prospect.org/blogs/tap/private-equity-swallows-up-yet-another-newspaper-group/)

[5]      MacMillan, D., 2/17/21, “Boeing directors misled on safety, investor lawsuit claims,” The Boston Globe from the Washington Post

[6]      Bloomberg News, 2/16/21, “Bristol-Myers, Sanofi must pay $834 million over Plavix,” The Boston Globe Talking Points

[7]      Associated Press, 2/16/21, “Google fined $1.3M for misleading French hotel rankings,” The Boston Globe Talking Points

[8]      Bloomberg News, 2/17/21, “Citigroup loses $500 million legal battle over transfer blunder,” The Boston Globe Talking Points

UNITY MEANS VOTING FOR ALL

In a democracy built on the promise of all people created equal and a commitment to one person, one vote, the electoral goal should be 100% voter turnout. Working toward this goal would be a strong unifying force and would provide a strong unifying message for the country. The states, which run our elections, and their election officials should work to make it easy to vote and to encourage people to register and vote.

Unfortunately, there are many Republicans who are working to restrict voting in ways that give them an electoral advantage. This is anything but unifying. A national law establishing election standards and overseeing states to ensure they live up to our democracy’s voting goals would make sense.

At the federal level, there are  two pieces of legislation (which I will describe in more detail in a future post) that will protect and support every citizen’s right to vote: [1]

  • For the People Act (H.R. 1 in the House and S. 1 in the Senate) which addresses many of the election oversight issues that the Supreme Court eliminated in its 2013 decision gutting the Voting Rights Act
  • John Lewis Voting Rights Advancement Act which focuses on racial discrimination in voting.

At the state level, the very high voter turnout in 2020, partially propelled by no-excuse mail-in voting and early voting implemented as a response to the coronavirus pandemic, is a great starting point to work toward further increasing voter participation. Indeed, to-date, 37 states are considering 541 bills to expand or ease access to voting. This is almost three times as many such bills as had been introduced in 29 states at this point a year ago. [2]

However, 33 states are considering 165 bills that would restrict access to voting. This is almost five times as many such bills as were under consideration in 15 states a year ago. In general, these restrictive bills have been introduced by Republicans in Republican-dominated legislatures, particularly in states where Donald Trump, the Republican presidential candidate, lost. These efforts are not the way to unify America. [3]

The 541 bills to expand or ease access to voting have been introduced in a wide variety of states, from New York (87 bills) and New Jersey (38 bills) to Texas (67 bills), Mississippi (38 bills) and Missouri (26 bills). These bills primarily focus on:

  • Making it easy to vote by mail. Eleven states will consider bills allowing all voters to vote by mail without requiring a reason or “excuse” for needing an absentee ballot. Twelve states have bills that would give voters the opportunity to correct technical mistakes on their mailed-in ballots. Twelve states have bills that would allow or require drop boxes for returning mail ballots. Nine states might extend the postmark or delivery date deadline for mailed ballots. Fourteen states will consider allowing election officials to start processing mail ballots before election day, which would speed up the counting of votes and the availability of election results.
  • Expanding opportunities for early voting. Eighteen states will consider allowing early voting for the first time, lengthening the early voting period, and/or increasing the number of early voting sites.
  • Making it easier to register to vote. Fifteen states have bills that would allow same-day registration, i.e., registering to vote on the same day that one votes. Fifteen states will consider implementing automatic voter registration, e.g., registering people to vote when they get a driver’s license or have some other interaction with a state agency. Five states will consider adding on-line voter registration.
  • Restoring voting rights to those with criminal convictions. Nineteen states have bills to restore voting rights to or ease voting restrictions on people with a criminal conviction.

The 165 bills that would restrict or complicate access to voting are under consideration in 33 states, with Arizona (19 bills), Pennsylvania (14 bills), Georgia (11 bills), and New Hampshire (10 bills) having the most such bills. The rationale for these requirements is almost always the supposed danger of fraud, which is non-existent for all practical purposes. However, President Trump’s unrelenting but false assertion of voter fraud and a stolen election have fed this narrative. These bills primarily focus on:

  • Making it harder to vote by mail. Nine states will consider eliminating no-excuse voting by mail or tightening the excuse requirement. Seven states have bills to prevent the sending of a mail ballot to a voter unless they specifically request one, while four states might prohibit sending an application for a mail ballot without a request. Six states have bills that would reduce the ability of voters to register permanently for a mail ballot. Some states will consider bills that require witnesses or notarization for mail ballots or requests for mail ballots. Some states will consider restrictions on how mail ballots can be returned, including requiring an ID, prohibiting the use of drop boxes, and even prohibiting returning them by mail. Some states have bills proposing restrictions on the counting of mail ballots based on deadlines for postmark or receipt date, or through requiring signature matching.
  • Imposing stricter voter identification (ID) requirements. Eighteen states will consider imposing new or more stringent voter ID requirements for in-person or mail voting.
  • Making it harder to register to vote. Five states have bills that would eliminate same-day registration and ten more have bills that would cut back on same-day registration. Four states have bills that would require proof of citizenship to register to vote and four states have bills that would eliminate, prohibit, or suspend automatic voter registration.
  • Allowing more aggressive purges of registered voters. Twelve states have bills that would expand the purging of voters from the rolls of registered voters.

So, the good news is that there are more efforts in the states to expand and streamline access to voting than there are efforts to restrict voting. The bad news is that there are significant efforts to restrict voting plus there is much damage to be undone, given that Republicans have been engaged in successful efforts to restrict voting in ways that benefit them politically for at least ten years.

The efforts to and success in restricting voting accelerated after the Supreme Court gutted the Voting Rights Act in 2013. Republicans have blocked efforts in Congress to replace parts of the Act that are clearly necessary to prevent states from engaging in targeted voting restrictions, often aimed at non-white voters (who tend to vote for Democrats).

Targeted voter suppression has been a successful strategy for the Republicans. For example, the 2018 Governor’s race in Georgia and the 2016 presidential race were almost certainly stolen by the Republicans due to the success of their voter suppression activities. The 2000 presidential race, Gore versus Bush, was also almost certainly stolen, not by the vote counting debacle, but by the permanent disenfranchisement of hundreds of thousands of people with felony convictions in Florida (who are disproportionately Black and likely to vote for Democrats).

At the state level, I encourage you to contact your state officials – your Governor, State Senator, State Representative, and Secretary of State or whomever runs your state’s elections – and urge them to support efforts to make it easier to vote and to encourage every citizen to vote.

[1]      Perez, M., & Lau, T., 1/28/21, “How to restore and strengthen the Voting Rights Act,” The Brennan Center for Justice (https://www.brennancenter.org/our-work/research-reports/how-to-restore-and-strengthen-voting-rights-act)

[2]      Brennan Center for Justice, 2/8/21, “Voting laws roundup 2021,” (https://www.brennancenter.org/our-work/research-reports/voting-laws-roundup-2021-0)

[3]      Wines, M., 1/31/21, “After record turnout, GOP tries to make it harder to vote,” The Boston Globe from the New York Times

POLICIES FOR UNIFYING AMERICA

Unifying America requires economic security and equal opportunity for all. If one’s choices in life (i.e., one’s liberty and freedom) are constrained by an unfair criminal justice system or unaffordable necessities of life such as food, shelter, health care, and education, the result will be anger, frustration, and divisiveness. The fear and stress of economic insecurity, especially the loss of economic security one thought one had, make people susceptible to demagoguery and manipulation.

Among the public, there is strong bipartisan support for policies that support the well-being of all Americans and of our democracy. Most Americans actually agree on the problems we face and the solutions for them, so long as politicians do not make them partisan issues. This can be seen in the strong support President Biden is getting for his executive actions and his push for a strong pandemic relief bill, which will support the general welfare, i.e., the well-being of all Americans. (See my previous post for more detail on these.) Beyond these immediate steps, there are other policies that are needed to unify Americans by moving toward the aspirations of our democracy for liberty, justice, and equal opportunity for all.

Unity requires fair and even-handed accountability based on the rule of law. Ignoring violations of the law and “moving on” without accountability is unfair and divisive because it means some people are not held to the same standard of accountability as others are. Unity is not achieved by turning a blind eye to sedition, insurrection, and domestic terrorism (see my earlier post on this topic) or to other criminal behavior. If accountability does not make clear what is unacceptable behavior in our society, lawlessness and anarchy will be the result. Pardons of criminal behavior by allies are antithetical to the rule of law and accountability.

Accountability for white collar crimes is an essential part of achieving unity. When employers’ violations of labor laws (e.g., on pay, union organizing, and safe working conditions), when insider trading and financial manipulation on Wall Street, when corporate pollution and unsafe products, when conflicts of interest and self-dealing by government officials, and so forth are not punished, our criminal justice system is unfair and will be viewed, accurately, as biased. Lax enforcement of the law for certain types of crimes or criminals creates disunity, not unity.

Unity in our democracy means allowing and encouraging every citizen to vote and giving each vote equal impact. The suppression of voting, particularly when targeted at certain groups, is antithetical to our democracy’s promise of equality for all. Voting should be easy and convenient in terms of the places and times for voting. Early voting and mail-in voting (including drop boxes for mail-in ballots) should be broadly and easily available. Efforts to restrict voting do not promote unity. Onerous identification requirements for voters are voter suppression; there is absolutely no evidence of any voter fraud, except very occasional, isolated, local incidents that ID requirements typically would not address. Gerrymandering of districts for state and federal offices reduces the impact of some voters’ votes and has no place in our democracy; it fosters divisiveness, not unity. The standard of one person, one vote, means that each vote should have as equal an impact as possible.

Unity requires acknowledgement and healing of the effects of the deep and long-standing racism in our country. Racism and white supremacy are key components of our current disunity and of the heightened focus on the Confederate flag and Confederate statues and symbols.

The failure to hold the leaders of the Confederacy accountable after the Civil War and the “moving on” that let them resume control of state and local governments in the South was devastating to African-Americans.  It resulted in Jim Crow laws and a racist criminal “justice” system that subjugated the supposedly emancipated African-Americans after the Civil War. This failure to demand accountability led directly to the racism in our society today. Racism has been used politically by the Republican Party since Nixon’s Southern Strategy in 1968 and it exploded with Donald Trump and his presidency and takeover of the Republican Party. Our society’s racism has been aided and abetted by many Democrats and non-partisans, as well, over many years.

In the late 1700s, equal opportunity and “all men are created equal” applied only to white men with property. Over the past 230 years, the United States has slowly and fitfully moved toward its aspirational vision of equal opportunity for all people, regardless of race, ethnicity, country of origin, gender and gender identity, religion, and other characteristics. But we still have a long way to go. Our democracy’s vision has been and is undermined by intolerant white men and other white people who fail to realize or accept that it requires extending rights and equality to everyone – liberty, justice, and equal opportunity for ALL. [1]

America needs a Truth and Reconciliation Commission along the lines of what South Africa did to end apartheid and what Canada has done to address its treatment of its native populations. We must acknowledge the harm done and implement restorative justice for both Blacks and Native Americans. We need to act aggressively now to stop current discrimination, while pursuing a serious, in-depth examination of what has transpired and how to achieve justice.

On these issues and many others, unifying America requires that Congress, state legislators, and our political parties work together on policies that are in the public interest and support the well-being of all Americans. Obstructionism must end. It is anti-democratic and divisive. Ideas and policy proposals need to be considered based on whether they are fair and good for the general welfare, not whether they are Democratic or Republican. Decisions need to be made based on whether they move our society toward the aspirational vision of our democracy, not based on some politicizing label someone may try to attach to them or to a proposed solution.

Polling of the public can provide important guidance on what people want, but true leadership by our elected officials is also needed. There’s strong evidence from polling and elsewhere that people want:

  • Health care for all and reduced drug prices;
  • Serious actions to address climate change;
  • Steps to reduce gun violence;
  • Wealthy individuals and corporations to pay their fair share of taxes and other steps to reduce economic inequality;
  • An end to special interest influence on policy making through campaign spending, lobbying, and the revolving door;
  • Actions to increase economic security, including increasing the minimum wage and addressing housing and food insecurity;
  • Improvements to our education systems: affordable higher education; affordable, universal, high quality early education and child care; and equity and quality in K-12 education; and
  • Strong enforcement of antitrust laws to reduce the monopolistic marketplace power of large corporations as well as the undemocratic concentration of economic and political power they hold.

President Biden is taking actions that are unifying America. He is making all Americans feel like the government is doing something good for them, for the good of our country, and not just for special interests and wealthy individuals and corporations. Biden has stated repeatedly that he will work for the good of all Americans whether they voted for him or not, and that he will reach out for sincere bipartisanship. This rhetoric and these actions are essential if we want unity.

People calling for unity are being hypocritical if they aren’t committed to honestly working toward the vision of our democracy and our Constitution for liberty, justice, and equal opportunity for all. Without such a commitment, both in action and in rhetoric, there can be no unity. Our aspirational principles and ideals are what make our democratic republic exceptional. To work toward unity and achieving our democracy’s goals, we and our elected leaders must undertake an honest search for the common good, common ground, and how to best to promote the general welfare via government of, by, and for all the people.

[1]      Baptiste, N., Jan.-Feb. 2021,  “Trump lost. But racism will probably win again,” Mother Jones  (https://www.motherjones.com/politics/2020/12/trump-lost-but-racism-will-probably-win-again/)

PRESIDENT BIDEN: STAND UP FOR A STRONG PANDEMIC RELIEF BILL

I just sent the following message to President Biden about the pandemic relief bill that he is meeting with ten Republican Senators today to negotiate. I had to break it into two pieces because of the limit on how many words you can submit in their contact form.

I urge you to contact him at https://www.whitehouse.gov/contact/ with your thoughts about the  pandemic relief bill.

President Biden,

Please stand up firmly for a strong pandemic relief bill. Americans need economic security in the face of this pandemic. Many Americans need financial assistance, including direct payments and enhanced unemployment benefits. Over 1 million workers are still applying for unemployment each week. Millions of families are facing hunger and homelessness. Many small businesses need financial assistance too. Thousands of small businesses have gone out of business and thousands more are on the verge of doing so.

Funding for the COVID vaccination program and other steps to fight the pandemic are essential and should not be short-changed. This is a matter of life and death. It is also about reducing suffering by reducing the numbers of people that get COVID.  And it is essential to the recovery of the economy. If there’s an area where we should not worry about allocating more money than may eventually be needed, this is it.

Finally, state and local governments need financial assistance. They’ve seen their revenues fall dramatically and their costs increase with the pandemic. Without assistance, state and local governments have been laying off tens of thousands of workers which hurts the workers, the economy and its recovery, and the delivery of badly needed government services. Support for getting children back in schools is a critical component of this. We know from the Great Recession in 2008 how harmful cutbacks in state and local spending were.

While I support bipartisanship, please do not let the Republicans undermine support for working families, the COVID programs, small businesses, or state and local governments. Many Republicans’ concerns about the cost of the benefits and the deficit are hypocritical. Their concern about the deficit did not stop the bailout of large corporations nor the huge tax cuts for wealthy individuals and corporations back in 2017. If they are truly concerned about the deficit, ask them to support repealing the 2017 tax cuts.

President Biden,

Please stand up firmly for a strong pandemic relief bill. Do not let Republicans give the cold shoulder to working Americans and small businesses after they very generously – and successfully – provided financial assistance to large corporations. The financial assistance to large corporations has their stocks at record high prices and their executives and large shareholders taking in billions of dollars.

I urge you to approach the negotiations with Republicans with caution. There are multiple examples where Republicans have not negotiated in good faith. They have pushed for compromises, then pushed for more compromises, and then have failed to support the final, compromise legislation. The Affordable Care Act is a classic example of this. Their supposed negotiations on pandemic relief bills that never passed this summer were similar. They demanded poison pills, moved the goal posts, and added new demands at the last minute. Their threat that failing to meet their demands will poison the well of bipartisanship rings very hollow; their lack of bipartisanship and bad faith negotiations through the Trump presidency and the whole Obama administration poisoned the well of bipartisanship long ago.

Please do not let your commitment to bipartisanship blind you to the Republicans’ disingenuous and divisive partisan tactics over the last 12 years and beyond. Their tactics had nothing to do with unity and everything to do with dividing and conquering or delaying and killing legislation.

Unity means providing economic security and equal opportunity for all Americans. Calling for unity is hypocritical without a commitment to honestly work toward the vision of our democracy and our Constitution for liberty, justice, and equal opportunity for all. In the face of the pandemic, Americans need you to act boldly to move toward that vision. The danger is not in doing too much, it’s in doing too little.

POLICIES FOR UNITY, i.e., FOR LIBERTY, JUSTICE, AND EQUAL OPPORTUNITY FOR ALL

What unites all truly patriotic Americans are the promises of our democracy: liberty, justice, and equal opportunity for all. These aspirational principles and ideals are what make our democratic republic exceptional. (See my previous post for more detail.) To work toward unity and achieving our democracy’s goals, we and our elected leaders must undertake an honest search for the common good, common ground, and how to best promote the general welfare via government of, by, and for all the people.

Unity requires economic security and equal opportunity for all, so one’s choices in life (i.e., one’s liberty and freedom) are not constrained by economic deprivation or unaffordable necessities of life such as food, shelter, health care, and education. Unity means equal opportunity for all, particularly for every child. This is what valuing families or “family values” should mean to all of us.

We can’t have unity when a million people a week are requesting unemployment benefits and millions are struggling to put food on the table and avoid eviction, while 660 billionaires have added $1.1 trillion (an average of $1.7 billion each) to their wealth since March.

Unity requires adherence to facts and a commitment to seeking and promoting truth. Without this, there is no common ground on which to formulate policies and make decisions. Unity requires acknowledging the results of the 2020 election and stating that they were legitimate and fair. The media must stop promoting false equivalencies – of truth with untruth and alternative “facts” (which aren’t facts, of course) – and either ignore or prominently label false narratives and statements as such. A return to the Fairness Doctrine governing broadcast media (TV and radio), which was repealed in 1987, should be considered to require those using the public airwaves (which requires a public license) to present information on issues of public importance and to do so honestly, equitably, and in a balanced manner. Similar regulation of social and cable media should also be explored.

Unity requires a fair and unbiased application of the rule of law. Everyone must be held accountable to the same set of legal standards or a society cannot function; it would be riven with divisiveness and fighting among factions. Violent protesters of all stripes need to face equal justice and those who aided and abetted violent protests must be held accountable under the law as well. There needs to be acknowledgement of racial bias and harm. Then, there needs to be restorative justice if unity is to be achieved.

Unity requires our elected officials to work together in good faith to promote the general welfare. Certainly, there will be differences of opinion, but they must be resolved through good faith negotiations and compromise. Obstructionism is antithetical to unity.

Hypocrisy is also antithetical to unity. Different standards or principles cannot be applied in the same or similar situations. There are too many examples of this in our politics and society today to do justice to them all, but examples include:

  • Condemning violence against police that occurs in demonstrations for racial justice but not when it occurs in an insurrection targeted at stopping the democratic transition of power.
  • Blocking the confirmation of a Supreme Court justice nine months before the end of a Democratic president’s term but confirming a Republican President’s nominee on short notice just three months before the end of his term.
  • Opposing deficit spending when proposed by Democrats to help working Americans but not when proposed by Republicans to cut taxes on wealthy individuals and corporations.

Here are some specific, largely short-term, actions and policies our elected leaders must embrace if they truly wish to strive for unity:

  • President Biden’s appointees must be approved in a timely fashion, with appropriate oversight of course. This applies to Cabinet members, other executive branch positions, and to judges.
  • Financial assistance must be provided to working Americans. Over 1 million workers are still applying for unemployment each week. The economy has not rebounded to the point where emergency assistance is no longer needed; millions of families are facing hunger and homelessness. Additional direct financial assistance is needed, as Treasury Secretary Janet Yellen, among many others, has stated. Furthermore, unemployment benefits need to be extended and enhanced and the minimum wage needs to be raised – for those who have jobs and those re-entering the workforce.
  • For workers doing face-to-face work, their safety must be assured. Strong, enforceable and enforced safety standards are a necessity.
  • Financial assistance must be provided to small businesses. Thousands of small businesses have gone out of business and thousands more are on the verge of doing so. Financial supports for large corporations through Federal Reserve and Treasury programs that operate largely out of the public eye have been very generous (trillions of dollars) and very successful. This is evidenced by the fact that the stock markets are at all-time highs, believe it or not, despite the struggles of small businesses and working Americans.
  • Funding is needed for COVID vaccinations. Money is needed for distribution of the vaccines and to help financially strapped states and communities implement vaccination programs. The quicker and more effective the rollout of vaccinations, the greater the number of lives that will be saved and of illnesses that will be prevented. The Federal Reserve and others have also noted the importance of vaccinations to the recovery of the economy.
  • Financial assistance is needed for state and local governments, as they have seen their revenue fall dramatically and their costs increase with the pandemic. Without this assistance, state and local governments have been laying off tens of thousands of workers which hurts the workers, the economy and its recovery, and the delivery of badly needed government services.
  • Criminal justice system reform must be undertaken aggressively. Racism needs to be eliminated from all components of the system. Police need strong national standards and oversight on the use of force and racism. The school (and even preschool) to prison pipeline needs to be ended and more appropriate interventions and discipline instituted. Mental health services need to be made available to children, youth, and adults instead of throwing these problems to the criminal justice system. Prosecution and sentencing need to fair and the use of restorative justice needs to be expanded. Rehabilitation and successful re-entry to society need to be the focus of imprisonment, probation, and parole.

President Biden’s Executive Orders are beginning to address many of these issues. They are promoting unity (despite claims otherwise by some Republicans) because they are implementing policies that most Americans support, but which haven’t made it through Congress due to partisanship. For example, 83% of Americans support a ban on workplace discrimination based on sexual identification, 77% want the government to promote racial equity, 75% support the government requiring masks on federal property, and 68% support the continued suspension of federal student loan repayments. A majority of Americans support rejoining the World Health Organization and the Paris climate accords. [1]

People calling for unity are hypocrites unless they are committed to honestly working toward the vision of our democracy and our Constitution for liberty, justice, and equal opportunity for all or, in other words, for promotion of the general welfare. Without such a commitment, there can be no unity.

My next post will highlight more specific and longer-term policies that will promote unity and our shared vision of liberty, justice, and equal opportunity for all.

[1]      Richardson, H.C., 1/29/21, Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/january-29-2021)

UNIFYING AMERICA

We do need to unify America, both among the public and our policy makers, particularly our partisan Members of Congress. However, there are some people whose minds are like concrete, thoroughly mixed and permanently set – often based on false information – who cannot be convinced to share in a unified vision of America. We will need to ignore them at times and at other times to counter their destructive messages and acts.

What we have that truly unites us all are the promises of our democracy: its principles and ideals of liberty, justice, and equal opportunity for all. As the preamble to Constitution states, the United States of America was formed to create “a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.”

These principles and ideals are what make our democratic republic exceptional – not what was actually established in 1789, not what it looks like today, and not what it has been at any time in between. The aspiration to achieve this vision is what is exceptional and we have struggled to live up to it to this day.

There is great diversity in America – which can and should be one of our strengths – and significant differences of opinion on how to achieve the promises of our democracy. We need to approach these differences rationally and collegially, with an eye on the overarching vision.

To unify America, we need a unity of purpose, driven by our vision for our democracy, and to be delivered by government of, by, and for all the people. Unifying America requires an honest search for the common good, common ground, and how to best to “promote the general welfare”. Loyal opposition is fine but not destructive opposition, not obstructionism, nor radical revolutionaries trying to tear down our democratic institutions and processes.

In today’s economy and society, we need to reconceptualize the commitments to liberty, freedom, and the promotion of the general welfare. President Franklin D. Roosevelt (FDR) in his State of the Union Address in 1944 argued that the “political rights” guaranteed by the Constitution and the Bill of Rights had “proved inadequate to assure us equality in the pursuit of happiness”. FDR proposed an “economic bill of rights” to guarantee equal opportunity and freedom from want that included the:

  • Right to a job and a fair income that could support a family,
  • Right to a decent home,
  • Right to health care and health,
  • Right to social security in old age, sickness, unemployment, and injury,
  • Right to a good education, and
  • Freedom from unfair competition and domination by monopolies.

To unify America, we need to work toward liberty and freedom for all built on economic security and equal opportunity so one’s choices (i.e., one’s liberty and freedom) in life are not constrained by poverty, economic deprivation, or unaffordable necessities of life such as food, shelter, health care, and education.

To ensure liberty and freedom for all in our new democratic republic, the Bill of Rights, the first ten amendments to the Constitution, was adopted in 1791. These rights remain critically important. However, we need to review the implementation of some of them in light of current technology and current politics.

On freedom of speech, we need to figure out how to regulate free speech on social media; to figure out what is the social media equivalent of yelling “FIRE” in the middle of a crowded theater. Recent events have made it clear that unbridled free speech on social media has contributed to violence and terrorism (i.e., speech that puts people in fear or psychological distress). In addition, social media have contributed to the dissemination of harmful misinformation. How to appropriately control speech on social media – allowing robust speech and conversations while limiting harm – is something we need to figure out.

Freedom of speech in our democracy, where all people are promised equality, means giving equal volume to every voice in America. Giving a bullhorn to those with money and a muzzle to those without money is antithetical to our vision for American democracy. Current legal interpretations equate spending money with free speech, including spending by corporations (not just spending by human beings). This needs to be reconsidered if we want to unify America.

Freedom of religion was meant to allow each individual to practice his or her own religion without the government dictating what an individual could believe or practice. Today, legal interpretations have gone beyond this and, for example, given employers the right to deny contraceptives and other health care to women because of the employer’s religious beliefs. Legal interpretations have also given health care provider institutions and individuals, who are licensed by the government, the right to deny both services and information to patients based on the provider’s religious beliefs. If we want to unify America, freedom of religion should not impede an individual’s right to make decisions with full information and with all choices available to her or him. Individual’s choices should not be dictated or constrained by others’ religious beliefs.

Justice for all means that everyone’s treatment in our society and justice system should be equal and fair, and that the rule of law should be applied fairly and equally to everyone. Anyone and everyone who violates the law must be held accountable. If some people are allowed to violate the law with impunity and others are prosecuted and punished, there won’t be unity. A dramatic, historical example is that after the Civil War we failed to hold the leaders of the Confederacy accountable. We allowed them to return to power in state and local governments. The result was Jim Crow laws and the re-subjugation of African Americans. This underscores the importance of holding white supremacists and racists accountable for their domestic terrorism and other violations of the law today, 150 years later.

Justice for all also means that if some people have received unfairly harsh treatment from our laws and criminal justice system, there cannot by unity until those wrongs are acknowledged and corrected, including providing just compensation.

Unifying America means providing equal opportunity to everyone, particularly to every child. This is what valuing families or “family values” should mean to all of us. One test for a just society is what ethicist John Rawls called the veil of ignorance. He defined a fair society as one where, if confronted with a veil of ignorance about our position and role in society, we would be willing to accept anyone’s position and role in the society. As an early childhood advocate, I’ve presented this as thinking that you are the baby that the stork is about to deliver and if you are comfortable being delivered to any parent in the society, then it’s a fair society. But if there are some parents (or for the previous description, some positions and roles in society) that you would not want to be delivered to or put in, then the society is unfair and unjust, as it does not provide equal opportunity for everyone.

If people truly want to unify America, they must be committed to honestly working toward the vision of our democracy and our Constitution for liberty, justice, and equal opportunity for all or, in other words, for promotion of the general welfare. Without this, there can be no unity.

In my next post, I will discuss these topics more specifically in terms of public policies and actions that are needed to unify America.

BIDEN-HARRIS ADMINISTRATION CAN DO A LOT WITH EXECUTIVE ACTIONS Part 2

There are literally hundreds of important executive actions that the Biden-Harris Administration could take on day one (or shortly thereafter) that are well within its existing authority. The American Prospect magazine and the Biden-Sanders unity taskforce (which was created at the end of the Democratic primaries last summer) have identified 277 executive actions that it could take. All of them are policies that have broad support within the Democratic Party. Many of them simply more fully implement or better enforce current laws. They would take important steps toward addressing important problems. [1] [2]

In summary, the Biden-Harris Administration could, without having to wait for Congress to act:

  • Revamp many aspects of our immigration system (specific examples were in my previous post),
  • Address climate change along with energy and environmental issues (see my previous post),
  • Improve our education system and reduce the burden of student debt (see my previous post),
  • Make our tax system and economy fairer (see specific examples below),
  • Make important reforms in the criminal justice system (see below),
  • Expand access to health care and lower drug prices (see below), and
  • Strengthen the safety net by expanding unemployment benefits as well as housing and food assistance (see below).

Specific executive actions could include:

  • Change economic and tax policies
    • Require federal contractors to pay a $15 minimum wage and not to oppose unionization of their workers, not to move jobs overseas, and not to have violated labor laws
    • Enforce antitrust laws and broaden antitrust criteria to include factors other than hypothetical consumer cost savings
    • Strengthen the Consumer Financial Protection Bureau and regulation of the financial industry, especially payday lenders and the vulture capitalists of private equity
    • Ensure strong and binding labor, environmental, and human rights standards in every trade agreement
    • Direct the National Labor Relations Board to make unionization easier and to penalize companies that don’t bargain in good faith with their workers
    • Enforce existing tax laws to reduce tax avoidance and close tax loopholes, including ones created under the 2017 tax cut and especially those for multi-national corporations
    • Re-prioritize and expand IRS tax law enforcement with a focus on high-income individuals and large corporations instead of on low-income individuals [3]
    • Roll back policies that gutted fair lending and fair housing protections
    • Restore the requirement for net neutrality by Internet Service Providers (ISPs)
    • Catalyze the creation of public banking by initiating banking and financial services through the U.S. Postal Service
    • Ban arbitration clauses in consumer and employment contracts that prohibit aggrieved parties from suing in court
    • Direct government procurement of goods and services to prioritize purchasing from small businesses and those owned by people of color, women, and veterans
    • Expand job training programs particularly for green and environmental jobs, as well as for formerly incarcerated persons
  • Reform the criminal justice system
    • Rescind the policy directing prosecutors to pursue the harshest criminal penalties possible
    • Stop executions of federal prison inmates
    • Withhold funds from states that use cash bail
    • Reduce criminal penalties for drug possession and increase availability and use of treatment instead of incarceration for drug crimes
    • Investigate racial discrimination by police departments, prosecutors, and others in the criminal justice system
    • Enforce the requirement that police departments capture and report data on use of force
    • Establish national standards on police use of force and create a national police review commission to provide oversight and make recommendations to local departments
    • Empower the Civil Rights Division of the Department of Justice to aggressively fight racial discrimination within the federal government and in all federal policies
    • Nominate judges with backgrounds as public defenders, legal aid attorneys, and civil rights lawyers
    • Prosecute white collar crimes from illegal polluting to money laundering
    • Prosecute employers who violate wage and labor laws
    • Launch a federal restorative justice program
  • Improve health and health care
    • Re-join the World Health Organization
    • Allow new enrollments in health insurance through the Affordable Care Act (aka Obama Care) outside of the normal enrollment period due to COVID-19
    • Direct Medicare to reduce excessive prices and price increases for drugs
    • Issue and enforce strong workplace safety standards related to infectious diseases
    • Commit to study gun violence as a public health issue
    • Enforce the Mental Health Parity and Addiction Equity Act
  • Address other issues
    • Reestablish the White House’s pandemic response unit
    • End the work requirement for receiving food stamps
    • Change the definition of poverty and the eligibility for government assistance programs based on it
    • Make housing subsidy vouchers an entitlement to all those who qualify
    • Direct the Federal Communication Commission to use its Lifeline program to offer subsidies for high-speed internet access to low-income households
    • Strengthen enforcement of the Americans with Disabilities Act

Once President Biden and Vice President Harris have been inaugurated, I urge you to contact them and encourage them to act boldly using executive orders to improve racial and social justice as well as the economic well-being of every working American. Taking these bold policy actions will go a long way toward restoring the public’s faith in government and their belief that government can and is working for their benefit and not just for the benefit of big businesses and the wealthy. This is essential to rebuilding our economy, strengthening our society, and unifying our country by showing that the Biden-Harris Administration and the federal government are actively working to advance the principles and ideals of our democracy, namely liberty, justice, and equal opportunity for all.

[1]      Moran, M., 7/28/20, “The 277 policies for which Biden need not ask permission,” The American Prospect (https://prospect.org/day-one-agenda/277-policies-biden-need-not-ask-permission/)

[2]      Dayen, D., Fall 2019, “The day one agenda” and related articles, The American Prospect (https://prospect.org/day-one-agenda)

[3]      Wamhoff, S. & Gardner, M., 12/16/20, “The day one agenda for corporate taxes,” The American Prospect (https://prospect.org/day-one-agenda/day-one-agenda-for-corporate-taxes/)

BIDEN-HARRIS ADMINISTRATION CAN DO A LOT WITH EXECUTIVE ACTIONS

The Biden-Harris Administration can make needed policy changes through executive actions or legislation. These two approaches are complementary and should both be used. Getting progressive legislation passed by Congress will be difficult but possible with narrow control of both the Senate and the House. However, there are literally hundreds of important executive actions that the Biden-Harris Administration could take on day one (or shortly thereafter) that are well within its existing authority.

President Franklin D. Roosevelt (FDR) issued 99 executive orders in his first 100 days and 3,721 over the course of his presidency. Some of them were monumental, such as the creation of the Rural Electrification Administration, which addressed a major infrastructure issue, and the Civil Works Administration, which created millions of jobs to address the unemployment of the Great Depression. These times call for the Biden-Harris Administration to be bold and to aggressively use executive orders to address the serious problems facing our country. Similar to FDR’s situation, Biden and Harris are facing a country in need of relief from a serious recession and high unemployment coupled with a need for major infrastructure investments. They also, of course, have to deal with the coronavirus pandemic and its effects.

The American Prospect magazine and the Biden-Sanders unity taskforce (which was created at the end of the Democratic primaries last summer) have identified 277 executive actions that the Biden-Harris Administration could take immediately. All of them are policies that have broad support within the Democratic Party. Many of them simply more fully implement or better enforce current laws. They would take important steps toward addressing important problems. [1] [2]

In summary, the Biden-Harris Administration could, without having to wait for Congress:

  • Revamp many aspects of our immigration system (see specific examples below),
  • Address climate change along with energy and environmental issues (see specific examples below),
  • Improve our education system and reduce the burden of student debt (see specific examples below),
  • Make our tax system and economy fairer (specific examples will be in my next post),
  • Make important reforms in the criminal justice system (specific examples will be in my next post),
  • Expand access to health care and lower drug prices (specific examples will be in my next post), and
  • Strengthen the safety net by expanding unemployment benefits as well as housing and food assistance (specific examples will be in my next post).

Specific executive actions could include:

  • Change immigration policies
    • Enact a 100-day ban on deportations while reviewing current immigration and border practices
    • Rescind the “Zero Tolerance” immigration policy, which is effectively a family separation policy
    • Rescind policies limiting admissions of refugees and asylees
    • End the freeze on issuing new green cards, which allow non-citizens to permanently live and work in the U.S.
    • Rescind the declaration of an emergency for the purpose of funding a Mexico border wall
  • Address climate change, energy, and environmental issues
    • Rejoin the Paris Climate Agreement
    • Re-protect federal land including reinstituting bans on mining and drilling
    • Reinstate the Clean Power rule limiting carbon emissions from power plants
    • Re-institute and then strengthen auto and truck emissions standards
    • Reinstate the Cabinet-level Interagency Council on Environmental Justice
    • Tighten regulations on the release of methane, sulfur dioxide, ozone, mercury, and coal ash
    • Make all 3 million government vehicles at all levels of government zero-emission vehicles
    • Buy clean energy and require federal contractors to do so as well
    • Make home energy efficiency programs accessible for low-income households
    • Establish a task force for planning the transition to clean energy including supports for displaced workers
  • Improve our education system
    • Reduce student debt through various loan forgiveness programs and suspend debt payments during the pandemic
    • Reinstate the program to eliminate racial disparities in school discipline
    • End federal contracts with student loan servicers who have a history of misleading clients
    • Encourage states to develop and adopt a “multiple measures” approach to assessment
    • Appoint a federal task force to study charter schools’ impact on public education and make recommendations to strengthen public schools
    • Aggressively enforce the Individuals with Disabilities Education Act
    • Facilitate pathways for early childhood educators to obtain higher education degrees
    • Require for-profit colleges to demonstrate their return on investment before allowing their students to be eligible for federal student loans

Once President Biden and Vice President Harris have been inaugurated, I urge you to contact them and encourage them to act boldly using executive orders to improve racial and social justice as well as the economic well-being of every working American.

My next post will present examples of executive actions the Biden-Harris Administration could take on economic, criminal justice, health and health care, and other issues.

[1]      Moran, M., 7/28/20, “The 277 policies for which Biden need not ask permission,” The American Prospect (https://prospect.org/day-one-agenda/277-policies-biden-need-not-ask-permission/)

[2]      Dayen, D., Fall 2019, “The day one agenda” and related articles, The American Prospect (https://prospect.org/day-one-agenda)

ACCOUNTABILITY FOR INSURRECTION AND DOMESTIC TERRORISM

Now that we’ve all had a bit of time to get more information and to reflect on the insurrection and domestic terrorism that occurred at the U.S. Capitol on January 6, I wanted to share two information sources that I found valuable in helping me understand that event, as well as to share some reflections on it. I use the terms insurrection and domestic terrorism purposefully because they are accurate terminology for what happened – as are sedition [1] and treason [2]. I believe it’s important to call the events and the behavior what they are. The significance of what occurred is demeaned by simply referring to it as a protest or a violent mob. I believe it is also important to call out the racism, as well as the white and male supremacy, that were central to and at the root of the chain of misinformation, brain washing, and other events that led to what occurred on January 6.

I strongly urge you to listen to Bill Moyers (one of my long-time heroes) on his Moyers on Democracy podcast interviewing Heather Cox Richardson (rapidly becoming one of my heroes) as they discuss the domestic terrorist attack on the Capitol and the current political situation in the U.S.  Richardson’s historical perspective (she’s a history professor at Boston College) is valuable for putting the attack in perspective. The podcast is 40 minutes and is well worth listening to. Or you can read the transcript. https://billmoyers.com/story/podcast-bill-moyers-and-heather-cox-richardson/

I also found Rachel Maddow’s show on January 7 valuable. First, she reviews the events of the 6th with videos and interviews that provide additional information on how violent and threatening the insurrection was and how close Members of Congress came to being personally confronted or captured by the terrorists. Then, she highlights passages from the book On Tyranny and interviews its author (at 21 minutes into the show). She follows this with a video of the arrest in the Capitol Rotunda in 2017 of five non-white ministers, including Raphael Warnock (who was just elected to the U.S. Senate in Georgia), for a peaceful protest of praying and singing (at 36 minutes into the show). This is followed by an interview with Sherrilyn Ifill, President of the Legal Defense Fund of the NAACP. These latter portions of the broadcast are the ones I found most valuable for gaining perspective on the seriousness of the January 6 events and the importance of holding perpetrators and enablers accountable. https://www.nbc.com/the-rachel-maddow-show/video/rachel-maddow-1721/4282029

The information and perspectives from these sources and others have left me even more convinced that everyone who participated in and enabled these acts of sedition, treason, insurrection, and terrorism needs to be held accountable. The people who stormed the Capitol should be arrested and tried. Thank God D.C.’s strict gun laws discouraged them from bringing guns or I bet there would have been more bloodshed.

Those who contributed to building the false story that the election was stolen are complicit and need to be held accountable. Many of those who stormed the Capitol were motivated by their belief that the election had been stolen and there are many more people across the country who hold this dangerous belief as well. Those who are responsible include Republican Members of Congress, the media and especially the social media platforms, lawyers involved in claiming non-existent election fraud, and others who through silence or action gave credence to the false narrative of a stolen election. This includes the wealthy Americans, corporate leaders, and corporations who have supported politicians who promoted the stolen election story with campaign donations and otherwise, including the President and Members of Congress. There are various ways to hold these co-conspirators accountable, but they all should be held accountable in one way or another.

Some people are now referring to the Republican Party as the Insurrection Party, a name it deserves unless it takes active, very public steps to eliminate the Trump cult and its seditious behavior from its leadership and membership. It would also need to repudiate or reform many policies it supports that undermine democracy, including voter suppression and gerrymandering. Its leaders, many of them Members of Congress, must stop putting their personal political ambitions ahead of their oath of office, i.e., their pledge to uphold the Constitution and our democracy.

The goal of my blog is to promote democracy – government of, by, and for the people – through polices that move us toward the principles and ideals of our democracy, such as social and economic justice. I try to avoid taking sides politically. I have strongly criticized Democrats for their very significant role in our growing economic inequality and their failure to address some social justice issues, such as our criminal justice system. However, the dominant attack on democracy and social and economic justice of the last four years has come from President Trump, his administration, and his Republican enablers in Congress. Therefore, I feel I must, at this time, single out the Republican Party for its undemocratic, to say the least, behavior.

Our country and all of us need to seriously tackle the racism and white privilege, as well as the white and male supremacy, that are at the root of the chain of misinformation, brain washing, and other events that led to what occurred on January 6. Racism and white privilege were not only evident in the explicit messages of the terrorists, but also, as has been widely noted, in the difference between the treatment of these largely white “protesters” and the treatment last summer of the diverse protesters, especially the Black protesters, who were calling for racial and social justice. The arresting and handcuffing of non-white ministers peacefully praying and singing in the Rotunda to protest budget cuts (shown on the Rachel Maddow show) stand in stark contrast to what happened in the Rotunda and the Capitol on January 6.

The big picture for our country is that the insurrection was an attempt to overthrow our democracy by stopping the peaceful transition of power based on a legitimate election. If the insurrection had ultimately been successful, it would have resulted in an authoritarian, fascist [3] government, where the rule of law would be ignored, and where control would rest with a small group of wealthy elites, primarily business executives and owners. I do not use these terms lightly; they are accurate labels for the behavior and rhetoric of Trump and his cult. The trend toward plutocracy [4] and oligarchy [5] has been going on for 40 years in the U.S. as income and wealth inequality have skyrocketed due to federal government policies by and for wealthy individuals and corporations.

I will close by repeating the bottom line of my previous post: Please contact your Members of Congress and ask them to immediately begin impeachment proceedings against President Trump for sedition and incitement of domestic terrorism. Please also ask them to contact the Vice President and the Cabinet to encourage them to invoke the 25th Amendment and remove Trump from power.

Furthermore, the Members of Congress who have aided or abetted the efforts to overturn a clearly valid election have violated their oath of office and should be investigated by Congress’s Ethics Committee and censured or expelled from Congress.

There must be accountability and consequences for the President and others who fostered this domestic terrorism, otherwise it will happen again, sooner or later, and may well be worse next time.

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]      Sedition: conduct or speech inciting people to rebel against the authority of the state.

[2]      Treason: the crime of betraying one’s country, especially by attempting to overthrow the government.

[3]      Fascist: far-right, authoritarian, ultra-nationalistic government characterized by dictatorial power and forcible suppression of opposition.

[4]      Plutocracy: government by the wealthy.

[5]      Oligarchy: control of a country by a small group of people.

REMOVING TRUMP AND CO-CONSPIRATORS FROM OFFICE

I urge you to contact your Members of Congress and ask them to immediately begin impeachment proceedings against President Trump for treason and incitement of domestic terrorism to overthrow the U.S. government. Please also ask them to contact the Vice President and the Cabinet to encourage them to invoke the 25th Amendment to remove Trump from power.

Trump must be removed NOW by any legal means before he does more harm. He is a clear and present danger to the country, both in terms of domestic matters and because his and his administration’s instability makes our country vulnerable to a foreign military, cyber, or terrorist attack anywhere in the world.

Furthermore, the Members of Congress who have in any way aided or abetted Trump’s efforts to overturn a clearly valid election have violated their oath of office and should be investigated by the Ethics Committee, potentially leading to their expulsion from Congress. This should also apply to any Members of Congress who aided, abetted, or gave encouragement to the domestic terrorist mob that invaded the Capitol.

There must be accountability and consequences for the President and others who fostered this domestic terrorism, otherwise it will happen again, sooner or later, and may well be worse next time.

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.

BIDEN’S OPPORTUNITY TO IMPROVE ECONOMIC SECURITY WITH PROGRESSIVE POLICIES

Looking ahead to 2021, many challenges face the country and President-elect Biden. Most of them have negatively affected the economic well-being of many Americans,  including the pandemic, the lack of racial justice, and the economic recession. All of them and others (e.g., climate change) can and should be addressed in a way that will improve the economic security of working and middle-class Americans. This would also go a long way toward restoring their faith in government and their belief that government can and is working for their benefit and not just for the benefit of big businesses and the wealthy.

Since the 1990s, the Democratic Party has joined the Republican Party in aligning itself with large corporations and the wealthy elites that run and own them through deregulation, trade deals, and tax policies that work to their benefit. As a result, the middle class has been decimated and blue collar, often unionized, workers have lost their economic security; 90% of Americans have lost ground economically over the last 30 years. Income and wealth inequality have spiraled to levels unseen since the 1920s and the economy of the 1950s and 1960s that lifted all boats has disappeared. [1]

Abandoned by the Democratic Party, which traditionally had stood up for them, white, blue collar workers and their families have been convinced to support demagogues, including Trump, who promote divisive, anti-immigrant, racist, reactionary, and undemocratic policies.

To address mainstream Americans’ loss of economic security, Biden must implement  progressive policies that will enhance their economic well-being. The public strongly supports such policies as poll after poll shows. For example, polls find that: [2]

  • 68% believe our tax system should require the wealthy to pay more,
  • 75% support paying higher income taxes to support health care, education, welfare, and infrastructure, and
  • 92% say they would rather live in a country with a low level of income inequality than one with high inequality.

There also was plenty of evidence of support for progressive policies and candidates in the 2020 election results. (See my previous post on this topic for some details.)

A key factor contributing to economic insecurity and inequality, and one Americans clearly understand, is that large corporations and their executives and lobbyists have undue influence on U.S. policies. By margins of more than two-to-one they don’t want President Biden appointing corporate executives or lobbyists to positions in his administration. Roughly 75% of poll respondents say that an administration official overseeing or regulating an industry they have a connection to is a “big problem” and about 90% say it is at least “a little bit of a problem.” The public knows that the so-called “revolving door” between positions in large corporations and ones in government lead to policies that benefit the corporations and their wealthy executives and investors. Sixty-seven percent of respondents, including 60% of Republicans, say that this revolving door is “corrupt and dangerous.” [3]

In government, personnel is policy. In other words, the personnel in key positions in the Biden administration will strongly influence who benefits from policies and their implementation – the working and middle-class or the upper class and big businesses. Therefore, it is important that Biden select people for his administration who are committed to working for the good of the people and not for the economic elites, many of whom are big campaign donors.

President Biden has two main avenues for creating needed policy changes: executive actions and legislation. These two are complementary and should both be used. Getting progressive legislation passed by Congress will be difficult even if Senate control is nominally with the Democrats (i.e., with a 50-50 split among Senators if Democrats win the two Georgia runoffs). But Senator Warren and others have shown that bipartisan legislation is possible even in the current contentious and polarized environment in Congress. Her successes include making hearing aids more affordable, enhancing consumer protection in various financial transactions, strengthening oversight and regulation of the financial industry, expanding access to affordable housing, and reining in abuses in housing financing. (I will write a post about this in the near future.)

There are also literally hundreds of executive actions that a Biden administration could take that are well within its existing authority. As many as 277 such actions have been enumerated by the writers at the American Prospect magazine and the document produced by the Biden-Sanders unity taskforce at the end of the Democratic primary last summer. They include steps to make our tax system fairer, to strengthen the safety net (including unemployment benefits and housing and food assistance), to expand access to health care and lower drug prices, to increase pay and benefits for employees of federal contractors, and to make it easier for workers to bargain collectively for better pay, benefits, and working conditions. (I will write a post about possible executive actions in the near future.)

I encourage you to contact your U.S. Senators and Representative to express your support for issues you would like to see them address in 2021, including policies such as the examples above that would improve the economic security of mainstream Americans. 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.

You can get information and sign-up for updates from the Biden-Harris transition at https://buildbackbetter.gov/.

[1]      Lemann, N., 10/19/20, “Losing ground: the crisis of the two-party system,” The Nation (https://www.thenation.com/article/politics/let-them-eat-tweets-the-system-never-trump/)

[2]      Hightower, J., Nov. 2020, “Timeless truths for trying times,” The Hightower Lowdown (https://hightowerlowdown.org/article/timeless-truths-for-trying-times/)

[3]      Demand Progress, Dec., 2020, “Americans want a progressive Biden administration,” (https://s3.amazonaws.com/demandprogress/reports/Americans_Want_A_Corporate-Free_Biden_Administration.pdf)

EXAMPLES OF CORRUPT CORPORATE BEHAVIOR Part 3

Here are three recent examples of corrupt corporate behavior in the financial industry, where corruption is persistent and seems to know no bounds. The exposure of corruption and its triggering of the 2008 financial crash doesn’t seem to have changed anything. It seems that every week there’s another report of serious corruption in the financial industry. Here are three examples that show the depth and breadth of that corruption: one of long-term systemic corruption at a major bank, one of a specific example of corruption from a different major bank, and one from a small, relatively new member of the industry. (This previous post highlighted three other examples of corporate corruption, two from the pharmaceutical industry and one from the financial industry.)

Example #1: Deutsche Bank has fallen from the second largest bank in the world in 2008 to the 21st largest in 2020 due to a wide range of corrupt behavior that finally caught up with it. It postponed its financial collapse and shrinkage by overvaluing its assets, among other fraudulent accounting strategies. Its history of corruption is meticulously detailed in the book, Dark Towers. [1] In 2018, its long-time involvement in tax evasion and money laundering for wealthy individuals resulted in police raiding its Frankfurt, Germany, headquarters. This wasn’t the first time this had happened. In 2012, hundreds of government police had raided its office to gather evidence in a different tax evasion scheme that involved permits for carbon dioxide emissions.

Since 2012, Deutsche Bank has paid over $15 billion in settlements for illegal activities. As-of 2016, it was involved in over 7,000 legal cases and had set aside over $5 billion for the potential impact of those cases. It was a major contributor to the 2008 financial crash, which led to its payment in 2017 of over $7 billion in settlements for fraud in its sales of mortgage-backed securities. In 2015, it agreed to pay a fine of $2.5 billion for manipulating international interest rates, pleading guilty to fraud and agreeing to fire 29 employees who had been involved. (Not a single individual was charged with a crime, however.) In 2017, it was fined over $600 million for money laundering that moved over $10 billion of suspicious money out of Russia. In 2018, it agreed to pay $75 million to settle charges of improperly handling U.S. transactions involving foreign securities.

Deutsche Bank is or has been investigated for numerous other corrupt behaviors including manipulating foreign currency exchange rates and violating international sanctions by engaging in over $10 billion of illegal financial transaction with Iran, Syria, Libya, Sudan, and other sanctioned countries. Some of these transactions involved funding for terrorism and drug trafficking. It is under investigation for participating in a criminal cartel in Australia, $150 billion of money laundering with a Danish bank, and a multi-billion fraud scheme with a Malaysian development fund. And by the way, it has engaged in illegal spying on its critics. Its corruption goes back at least to the 1930s when it cooperated with the Nazis and funded their activities, which it tried to hide for many years thereafter.

Example #2: Goldman Sachs, the fifth largest U.S. bank, has agreed to pay $3 billion to regulators in multiple countries for a massive bribery scheme that stole hundreds of millions of dollars from the Malaysian government. Goldman Sachs took in $593 million in unusually large fees for its role in the underlying transactions. Although two of its executives have been indicted (a partner and a managing director) and its Malaysian subsidiary has pleaded guilty to bribery, many have criticized the settlement as not being a meaningful punishment both because of the scale of the criminal activity and the dollar amount of the settlement, which is less than 3 months of profits. Furthermore, Goldman Sachs has only partially cooperated with the investigation, delayed providing crucial information, and failed to self-report illegal activity that it knew about and is required by law to report. [2] By the way, this will bring the fines it has paid out since 1998 to over $10 billion. [3]

Example #3: Robinhood Financial LLC, a 2015 start-up that provides a smart phone app for buying and selling stocks, has agreed to pay a $65 million penalty to the federal Securities and Exchange Commission for misleading customers and costing them an estimated $34 million. Robinhood advertised no commission trades, however, it generated revenue by executing customers’ trades through companies that paid it fees for the trades. It failed to disclose this to its customers. It had an incentive to select companies that paid it the most for those trades even if customers got worse prices on the stocks they were buying. Nonetheless, Robinhood claimed the quality of its execution of its customers’ trades was as good or better than its rivals. [4] In addition to this federal settlement, Massachusetts regulators are pursuing a complaint against Robinhood for violating state securities laws by not providing accurate information to customers. The complaint also states Robinhood’s website has had several outages that have prevented customers from trading during important periods when stock prices were shifting significantly. [5]

To put financial industry corruption in a larger perspective, often federal cases of financial misbehavior, as in the Deutsche Bank and Goldman Sachs cases above, result in the financial corporations signing a Deferred Prosecution Agreement (DPA). This requires the corporation to pay a fine and agree to a period of probation (during which it promises not to repeat its bad behavior), but usually the corporation and its executives avoid criminal prosecution. However, there are multiple examples of money laundering cases against big banks where the corporations had already signed DPAs in previous money laundering cases, repeated their bad behavior, and received the same lenient treatment all over again. As a result, the big financial corporations appear to view fines for corrupt behavior as a routine cost of doing business. [6]

The persistence of corruption in the financial industry makes clear the need for stronger steps to deter future illegal behavior. Stronger government regulation and significant financial and criminal punishments for the corporations (e.g., truly significant fines and, ultimately, revocation of their corporate charters, putting them out of business) and for their executives (e.g., jail time and personal fines) are needed. The industry and its supporters among our elected officials have fought back hard and largely successfully against efforts to strengthen regulation and consumer protection in the wake of the 2008 financial collapse, so not only is there much work to do but, in addition, it will be a tough fight.

[1]      Enrich, D., 2020, “Dark Towers,” HarperCollins Publishers, NY, NY.

[2]      Woodman, S., 11/2/20, “Goldman Sachs 1MDB settlement: a meaningful punishment for major financial crimes?” International Consortium of Investigative Journalists (https://www.icij.org/inside-icij/2020/11/goldman-sachs-1mdb-settlement-a-meaningful-punishment-for-major-financial-crimes/)

[3]      Collins, C., 11/30/20, “Petulant plutocrat of the week,” Inequality.org weekly blog post from the Institute for Policy Studies (https://inequality.org/wp-content/uploads/2020/11/inequality-newsletter-november-30-2020.html)

[4]      Michaels, D., & Osipovich, A., 12/17/20, “Robinhood Financial to pay $65 million to settle SEC probe,” The Wall Street Journal

[5]      Denham, H., 12/18/20, “Robinhood agrees to $65m penalty to resolve SEC charges,” The Boston Globe from the Washington Post

[6]      Woodman, S., 11/2/20, see above

PROGRESSIVE PROGRESS IN THE 2020 ELECTIONS

Despite the mixed messages of the 2020 elections, there were significant progressive gains and the public continues to strongly support many progressive policies. Despite the claims of some centrist or corporate Democrats that progressive candidates and messages undermined some Democratic candidates, the four most visible progressives in the U.S. House (the so-called Squad) all got re-elected with between 64% and 87% of the vote: Ocasio-Cortez (NY), Omar (MN), Pressley (MA), and Tlaib (MI). In addition, five new, similarly progressive candidates were elected to the House, three of whom beat conservative Democratic incumbents in their primary races: Newman (IL), Bush (MO), Leger Fernandez (NM), Bowman (NY), and Jones (NY). [1] Furthermore, the grassroots organizing and energizing of Representatives Omar and Tlaib were significant factors in Biden’s wins in Minnesota and Michigan. In Omar’s district, her extensive grassroots efforts resulted in 88% turnout, compared to 67% nationally. [2]

Of the 93 sponsors of the Green New Deal in the U.S. House, 92 won re-election. All the congressional candidates running for re-election who supported Medicare for All won. [3] A recent poll found that 72% of the public support “transitioning to a government-run healthcare plan.”

In addition to the U.S. House, progressive candidates are running and winning in state and local races all over the country. Some of these candidates are in places and races you wouldn’t expect, such as an openly lesbian woman running and winning for sheriff in southwestern Ohio  (70% of the vote against the incumbent). [4] In Maine, Chloe Maxmin upset the Republican leader of the state Senate in a rural, Republican district. A one-term Representative, she had introduced Green New Deal legislation and campaigned on progressive issues such as broadband access and public transportation. [5] She won with 51% of the vote. Eight of nine state Senate candidates endorsed by the progressive Maine People’s Alliance, including Maxmin, won. In addition,  nine members of a progressive group of former teachers running for the Maine legislature won their races. [6]

Many progressive ballot initiatives were passed across the country in November: [7]

  • Arizona: Increased its income tax rate by 3.5% on those making over $250,000 to increase funding for public education.
  • Colorado: Provided 12 weeks of paid family leave.
  • Colorado: Joined the National Popular Vote Interstate Compact to bypass the Electoral College.
  • Florida: Increased its minimum wage to $15 an hour by 2026.
  • Mississippi: Required a run-off election in statewide office races if the winner doesn’t receive 50% of the vote.
  • Oregon: Limited campaign contributions and spending, as well as required disclosure of contributions, expenditures, and sponsors of political ads.
  • Virginia: Established an independent redistricting commission to draw electoral district lines rather than letting the legislature do so.

The expansion of Medicaid under the Affordable Care Act (aka Obama Care), which provides free health insurance to low-income families and individuals, continues to enjoy broad public support, including by two-thirds of the adults in the 12 states that have not taken advantage of this federal program. In 2020, Missouri (in August) and Oklahoma (in June) used ballot initiatives to expand Medicaid when their state legislators refused to do so. Idaho, Nebraska, and Utah had done this in 2018 and Maine did it in 2017. An estimated 650,000 essential, front-line workers would get health insurance if the remaining 12 states adopted Medicaid expansion. In states that have expanded Medicaid, only 17% of workers are uninsured compared to 30% in states that haven’t done so. [8]

Finally, without the voter suppression tactics of the Republicans, the November election would have been an overwhelming landslide for Biden. In nineteen states, Republicans have implemented needlessly strict voter ID requirements that keep disproportionately Democratic voters from voting. It is estimated that 25 million citizens do not have a government-issued ID that is required to vote. With reasonable voter ID requirements, Biden would most probably have won Texas and Ohio and the Georgia result wouldn’t have been close. In Florida, the Republicans most probably stole the election from Biden by defying a successful ballot initiative that restored the voting rights of people who had been convicted of a felony and had completed their prison sentences. Republicans’ voter suppression efforts also included limiting the number of drop-off boxes for early voters’ ballots and closing polling locations in multiple states, making it more difficult for voters to vote and leading to long waiting lines to vote. No one knows how many voters were unable to vote or were discouraged from voting by these tactics. [9]

The debacle President Trump and his Postmaster General DeJoy created at the U.S. Postal Service resulted in hundreds of thousands of ballots not being counted. The exact number is unknown but some ballots were simply not delivered and many were delivered after the deadlines for counting them; 30 states do not count ballots that arrive after election day and the others require them to be postmarked by election day and set various deadlines for their receipt. [10]

So, for all of you who are supporters of progressive policies as I am, we’re making progress. Let’s keep organizing, lobbying, and working for our progressive goals of economic and social justice and a democracy that works. Poll after poll shows that the American public supports progressive policies. We need to get our elected officials to act on behalf of all of us rather than on behalf of their wealthy campaign contributors.

[1]      Ballotpedia, retrieved 12/12/20, “United States House of Representatives elections, 2020,” (https://ballotpedia.org/United_States_House_of_Representatives_elections,_2020)

[2]      Stancil, K., 11/5/20, “Omar and Tlaib credited as ‘major factors’ in securing Biden victories in Minnesota and Michigan,” Common Dreams (https://www.commondreams.org/news/2020/11/05/omar-and-tlaib-credited-major-factors-securing-biden-victories-minnesota-and)

[3]      Stancil, K., 11/9/20, “99% of Green New Deal co-sponsors won their races this cycle: analysis,” Common Dreams (https://www.commondreams.org/news/2020/11/09/99-green-new-deal-co-sponsors-won-their-races-cycle-analysis)

[4]      Hightower, J., October 2020, “ ‘Good trouble’ candidates are winning – and rebuilding politics from the ground up,” The Hightower Lowdown (https://hightowerlowdown.org/article/good-trouble-candidates-are-winning-and-rebuilding-politics-from-the-ground-up/)

[5]      Conley, J., 11/6/20, “ ‘I mostly listen’: Offering blueprint for Democrats, Green New Deal champion Chloe Maxmin unseats powerful GOP incumbent in rural Maine,” Common Dreams (https://www.commondreams.org/news/2020/11/06/i-mostly-listen-offering-blueprint-democrats-green-new-deal-champion-chloe-maxmin)

[6]      McFadden, A., 11/4/20, “Maxmin topples Dow as Democrats keep majorities in Maine Legislature,” Maine Beacon (https://mainebeacon.com/maxmin-topples-dow-as-democrats-hold-onto-majorities-in-maine-legislature/)

[7]      Ballotpedia, retrieved 12/12/20, “2020 ballot measures,” (https://ballotpedia.org/2020_ballot_measures#Notable_topics_and_unique_measures_in_2020)

[8]      Covert, B., 10/21/20, “The pandemic sent Americans’ health care coverage into free fall,” The Nation (https://www.thenation.com/article/society/covid-healthcare-unemployment/)

[9]      Kuttner, R., 11/4/20, “The shadow election you didn’t see,” The American Prospect (https://prospect.org/politics/shadow-election-you-didnt-see-voter-suppression/)

[10]     Editorial, 11/7/20, “Louis DeJoy must be investigated,” The Boston Globe

MONEY IN THE 2020 ELECTIONS

Our elections are, sadly, largely about money. The 2020 elections were the most expensive on record by a good margin; roughly $14 billion was spent on federal campaigns. This is over twice as much as the runner up, the 2016 election. The presidential race cost roughly $6.6 billion, a record, up from $2.4 billion in 2016. [1]

The big news is that nine of the ten most expensive U.S. Senate races of all time occurred in 2020. Those nine races cost close to $2.1 billion (so far) with North Carolina ($299 million) and South Carolina ($277 million) leading the way with Kentucky ($180 million) at the bottom of the top ten. Amazingly, these are not states with big populations and expensive advertising markets, which is where the expensive races often occur. The two Georgia Senate races, currently engaged in run-off elections, will almost certainly be in the top ten when the regular and run-off election spending is combined. Of the eight decided 2020 races, Republican incumbents won all of them except the Arizona race where Mark Kelly won the special election against Senator McSally, who had been appointed to replace Senator Kyl. [2]

The candidate who spends the most money typically wins, although this year “only” 72% of Senate candidates who spent the most won, which is a two-decade low. Notably, in very expensive races, incumbents who held onto their seats spent less than their challengers. This reflects the value of incumbency, but may also reflect that there is a saturation point for money, which is largely spent on advertising. At some point, the voters may get overwhelmed by the avalanche of advertising and more spending on more advertising may have diminishing or no benefit. Another unusual characteristic of the 2020 elections was that Democratic congressional candidates out-raised Republicans by $1.2 billion to $691 million. Nonetheless, Democrats lost seats in the House and made only slight gains in the Senate.

The amount of money spent by outside groups (i.e., not by the candidates themselves) set a record. More and more of this outside money is flowing through “dark money” groups that hide the identities of their donors.  Outside spending is theoretically independent of the candidates’ campaigns and therefore lacks any accountability for what is said and done. The top two Senate races for outside spending were North Carolina at $221 million and Iowa at $174 million.

On the other end of the spectrum, small individual donations ($200 or less) to federal candidates set a record at $1.8 billion. As-of mid-October, small donors had already contributed over three times as much as they did through election day in 2016. Their donations represent 27% of contributions to federal candidates (up from 21% in 2016) but still only 13% of total spending. This record giving probably results from the increased ease of contributing using on-line technology and the heightened focus on and polarization of national politics.

Out-of-state contributions to congressional candidates set records, increasing for both Democrats and Republicans in both House and Senate races. Notably, Democrats running for the Senate raised a record 80% of donations from out-of-state; Democratic candidates in Kentucky and South Carolina raised more than 90% of their money from out-of-state.

Campaign contributions by women set a record. Their giving to federal candidates was $1.4 billion or 41% of the total, up from $590 million and 36% in 2016. Their giving represented 45% of Democratic candidates’ fundraising and 33% for Republicans; both of which are records.

In summary, the bad news is that huge contributions are fueling incredible levels of campaign spending. It is important to reflect on who is contributing these huge amounts to candidates and outside groups, why are they doing it, and what they expect in return. People and organizations that give this kind of money don’t just throw their money away, they invest it and are looking for a return on investment. They are looking for policies that benefit them and their companies.

The good news is that contributions from small donors are increasing and can fuel a serious campaign even for our highest elected offices. Increasing participation by women is also good news. Nonetheless, the people who contribute at all to political campaigns are a very small fraction of voters.

A major transformation of our campaign finance system is needed if we want elected officials to be beholden to their constituents and not to wealthy campaign contributors; in other words, if we want democracy instead of plutocracy. Limits are needed on who can contribute (e.g., not corporations) and how much can be contributed – which will require a constitutional amendment given Supreme Court decisions such as Citizens United. In the meantime, increased disclosure of campaign contributions is needed, in part to eliminate “dark money” so voters know who is spending money on a candidate’s campaign.

A campaign finance system that encourages and rewards small contributions to candidates is needed. Such a system would match small contributions with public money. This would allow and encourage a greater diversity of candidates to run for office.  It would also allow limitations on who and how much can be given to anyone who accepts the public funding. The ultimate result would be elected officials who are beholden to voters, not wealthy contributors, and a return to government of, by, and for the people, rather than a plutocracy where the wealthy rule and get favorable treatment from government.

 

[1]      OpenSecrets.org & Followthemoney.org, 11/19/20, “Unprecedented donations poured into 2020 state and federal races,” Center for Responsive Politics (https://www.opensecrets.org/news/2020/11/2020-state-and-federal-races-nimp)

[2]      Miller, E., 12/9/20, “Nine of the 10 most expensive Senate races of all time happened in 2020,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/12/most-expensive-races-of-all-time-senate2020)

REPUBLICANS ARE ALREADY UNDERMINING BIDEN’S PRESIDENCY

Republicans, led by President Trump and Senator Mitch McConnell (KY), are already  undermining Senator Biden’s presidency. This is all about politics. They want the Biden presidency and the Democrats to be unable to do much to help working people and the economy because that will make it easier for them to win seats in Congress in 2022 and the presidency in 2024. This is the same reason that Sen. McConnell said at the beginning of each of Obama’s terms as president that his goal was to keep Obama from passing any legislation.

Trump and McConnell are working to ensure that Biden begins his presidency with crises to face: a high number of COVID cases; an economy in a shambles; a safety net with as many holes in it as possible; angry divisions in the country over election results, racism, and immigration; and international crises with Iran and China and in Afghanistan and the Middle East.

Moreover, Trump and McConnell are trying to limit the resources and flexibility that President Biden has to tackle these crises. They are undermining efforts to control the pandemic and provide economic relief by:

  • Letting the coronavirus spread with no effort from the federal government to slow it,
  • Retracting funding Congress has appropriated for pandemic relief from the Federal Reserve and perhaps other agencies or programs, and
  • Refusing to pass any significant pandemic relief and predicating any relief on the elimination of employer and business liability for workers or customers who get COVID.

Normally, the outgoing president defers important decisions to the incoming president and refrains from making personnel changes in his lame duck period. George W. Bush did so after Obama was elected and Obama did so for Trump. However, Trump is doing just the opposite. He is aggressively replacing personnel at the Defense Department and elsewhere. He is issuing executive orders and making personnel policy changes that will make it hard for President Biden to undo his actions. He is appointing partisan loyalists to scientific and advisory panels, weakening environmental regulations, and repealing health care regulations. He is carrying out executions, giving out oil drilling leases on public lands, and withdrawing troops from Somalia and Afghanistan. He is inflaming tensions with Iran, which will make it harder for President Biden to re-engage Iran in a treaty to block its ability to build a nuclear bomb. (Iran now has twelve times as much enriched uranium as it would have had if Trump hadn’t abrogated the Iran nuclear accord.) Some of Trump’s advisors have been upfront in stating that their actions are meant to limit President Biden’s policy options. [1]

Treasury Secretary Mnuchin is taking multiple actions that will prevent President Biden from having the flexibility to quickly use remaining resources from the March relief bill to respond to economic hardship. Mnuchin announced that on December 31 he will suspend the Treasury Department’s lending program that supports businesses and local governments. He is also requiring the Federal Reserve to return about $250 billion that was appropriated for pandemic relief and putting $455 billion into a fund that will require congressional authorization before Biden can spend it. [2] Even the U.S. Chamber of Commerce, the lobbying arm of big corporations, objected to Mnuchin’s actions and called for Congress to pass additional pandemic relief to support the economy. David Wilcox, a former chief economist for the Federal Reserve, said, “The most obvious interpretation is that the Trump administration is seeking to debilitate the economic recovery as much as possible on the way out of the door.” [3] [4]

Senator McConnell has refused to act on a $3 trillion pandemic relief bill the House passed in May, despite a call from 125 bipartisan economists for a relief package to address the economic crisis, which includes quickly escalating poverty as the benefits of the March relief bill expire. (Just about the only business McConnell has the Senate doing is approving right-wing federal judges.) As poverty and hunger are surging across the country, key components of a relief bill are enhanced unemployment benefits, aid to state and local governments, and increased food assistance. Some sustained relief will be needed until the pandemic is under control and the economy has recovered. [5]

Aid to state and local governments is critical because, faced with plunging tax revenue, they have cut 1.3 million jobs since February. There is no more effective, tried and true way of reducing unemployment and supporting economic recovery than providing aid to state and local governments; we know this from the 2008 recession. If families don’t have jobs and income, if parents can’t work because schools and child care are closed, local economies suffer. Every dollar of assistance to state and local governments boosts local economies by $1.70 due to the spending and re-spending of that dollar as it cycles through local workers and businesses. [6]

Senator McConnell appears to be more focused on limiting the liability of corporations when workers or customers get COVID than providing relief to workers, such as unemployment benefits for the 12 million workers whose benefits will run out before the end of December. He is also talking about imposing austerity on the federal government by focusing on cutting the deficit during Biden’s presidency. He wasn’t concerned about the deficit when President Trump increased it to levels not seen since World War II or when he cut taxes in 2017 for wealthy individuals and corporations, which increased the deficit by over one hundred billion dollars a year. Furthermore, austerity, i.e., cutting federal spending, will weaken and slow the economic recovery, hurting all Americans other than the wealthy, as we know from the aftermath of the 2008 recession. [7]

Despite the good news that vaccines will be ready for distribution soon, Republicans in Congress and the White House are not even talking about providing the funding needed to distribute the vaccines, which is estimated to be $30 billion. It also appears that there’s no or little planning happening in the Trump administration for vaccine distribution. With over a thousand people dying daily of COVID, one would think this would be a bipartisan priority, but Republican politics appear to trump even this essential public health initiative. [8]

Trump, McConnell, and many other Republicans are putting politics ahead of the best interests of the country and its people. This is sabotage and treasonous. We must all speak up against this unprecedented, corrupt behavior. I urge you to contact your U.S. Representative and Senators and ask them to take action to provide necessary relief in the face of this pandemic and to ensure a smooth and respectful transition to the Biden presidency.

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]      Shear, M. D., 11/22/20, “Trump using last days to lock in policies and make Biden’s task more difficult,” The Boston Globe from The New York Times

[2]      Mohsin, S., 11/25/20, “Mnuchin to put $455 billion in funds out of Yellen’s easy reach,” The Boston Globe from Bloomberg News

[3]      Richardson, H. C., 11/24/20, “Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/november-24-2020

[4]      Smialek, J., & Rappeport, A., 11/20/20, “Mnuchin to end some emergency Fed programs,” The Boston Globe from The New York Times

[5]      Johnson, J., 11/24/20, “ ‘Go big, and stay big’: Economists call for $3 trillion Covid relief package to stop nation’s descent into ruin,” Common Dreams (https://www.commondreams.org/news/2020/11/24/go-big-and-stay-big-economists-call-3-trillion-covid-relief-package-stop-nations)

[6]      Tahmincioglu, E., 8/25/20, “The way out through state and local aid,” Economic Policy Institute (https://www.epi.org/blog/state-and-local-aid-bipartisan-economists-video/)

[7]      Johnson, J., 12/2/20, “Critics smell ‘economic sabotage’ as McConnell unveils Covid plan with $0 for unemployment boost, direct payments,” Common Dreams (https://www.commondreams.org/news/2020/12/02/critics-smell-economic-sabotage-mcconnell-unveils-covid-plan-0-unemployment-boost)

[8]      Dayen, D., 11/30/20, “Unsanitized: The COVID-19 Report for Nov. 30, 2020,” The American Prospect (https://prospect.org/coronavirus/unsanitized-vaccine-distribution-gaps-transparency-funding/)

EXAMPLES OF CORRUPT CORPORATE BEHAVIOR Part 2

Here are three recent examples of corrupt corporate behavior. They show the breadth of greed-driven corporate corruption from seriously harming public health to illegal market manipulation to criminal money laundering. (This previous post highlighted three other examples.)

Example #1: As one of the most egregious cases of corporate corruption moves toward an end, Purdue Pharma (the maker and incredibly corrupt promoter of the addictive, opioid pain killer OxyContin) has pleaded guilty to criminal charges. It has admitted to:

  • Impeding the Drug Enforcement Agency (DEA) in its efforts to stem the crisis of opioid addiction,
  • Failing to have effective procedures to prevent diversion of prescription OxyContin to the black market while assuring the DEA that it did,
  • Lying to the DEA to get approval to produce greater amounts of OxyContin, and
  • Paying kickbacks to doctors and engaging in other illegal schemes to get doctors to increase their prescribing of OxyContin.

These guilty pleas were part of a settlement of criminal and civil charges with the federal Department of Justice that will require the company to pay $8.3 billion in penalties and forfeitures over a number of years. The majority of this money will go to state, local, and tribal governments to pay for treatment and prevention of opioid addiction. Over the last 20 years, the opioid crisis has contributed to over 470,000 deaths in the U.S. and it appears to be getting worse during the coronavirus pandemic. [1] The $8.3 billion amount, if calculated on a per death basis, values each death at less than $18,000, without including any calculation of the harm to those who have or are suffering from OxyContin-related drug abuse but have, so far, survived.

Attorneys general of about half of the states are opposing the settlement, asking for harsher penalties for the company and particularly for the members of the Sackler family who owned and controlled Purdue. Under current settlement provisions, the very wealthy Sackler family will pay only $225 million to settle civil charges. No criminal charges have been filed against them, although that is still a possibility. (Here’s a previous post with more details about Purdue.)

Example #2: Teva Pharmaceutical has been charged by the U.S. Department of Justice with conspiring to fix prices and manipulate the market for generic drugs. The criminal charges allege that these actions resulted in at least $350 million in overcharges over a 3 ½ year period. Five other generic drug makers that were also part of this investigation have pleaded guilty and have agreed to pay a total of $426 million to settle the charges against them. Teva and these other companies are also facing civil lawsuits by states’ attorneys general and others. [2]

Teva fills 10% of the generic drug prescriptions in the U.S. and a criminal conviction could lead to it being banned from doing business with Medicare and Medicaid. A conviction would also weaken its defense against the civil lawsuits.

Example #3: At least $100 billion a year of cash flows through U.S. banks that is abetting tax dodging, fraud, corruption, or money laundering for drug dealers, terrorists, and other unsavory individuals and entities. Banks are required to file Suspicious Activity Reports for transactions that may involve criminal activity. Typically, these reports are not public but over 2,000 of them were recently leaked and they identified over 18,000 suspicious transactions between 1999 and 2017. And this may just be the tip of the iceberg. Banks report these suspicious transactions but go ahead and process them (instead of blocking them) because they earn significant fees on them. Almost half of the suspicious money flowed through Deutsche Bank’s U.S. subsidiary, but just about every prominent U.S. bank was involved. [3]

Exacerbating the problem is the fact that often the corporations that conduct these cash transfers are created and registered in states, notably Delaware, or offshore tax havens (e.g., Cayman Islands and the Virgin Islands) where disclosure of the true owner(s) of the corporation (those who will benefit from its activities) is not required. This combination of corrupt banks, weak banking regulations, and lax corporate registration requirements has led to the U.S. being one of the preferred global destinations for tainted money.

One of the frequent activities of these shell companies (i.e., companies with unidentified owners and no purpose other than to facilitate anonymous movement of cash) is to purchase high-end real estate. A large portion of luxury real estate in Boston and Seattle, for example, is purchased by shell companies, often with cash (i.e., no mortgage loan). Experiments with temporary local transparency rules, such as requiring the disclosure of the true owners on cash real estate transactions of over $1 million, has resulted in declines in such transactions of 70% to 95%. Legislation has been introduced in Congress to require full disclosure of the beneficial owner(s) of all corporations but it is not making any progress.

Clearly, to prevent corrupt corporate behavior, the U.S. needs stronger regulation of corporations, from its biggest banks to drug companies to shell corporations. Without it, greed runs wild and corrupt U.S. corporations will aid and abet drug dealing, terrorism, and harm to the health and financial well-being of mainstream Americans. These corrupt activities also, of course, result in the rich in getting richer at the expense of everyday Americans.

[1]      Mulvihill, G., 11/25/20, “OxyContin maker Purdue pleads guilty to criminal charges,” The Boston Globe from the Associated Press

[2]      Griffin, R., 8/27/20, “Teva fights US claims of price fixing,” The Boston Globe from Bloomberg News

[3]      Collins, C., 9/21/20, “FinCen files shine spotlight on suspicious bank transfers,” Common Dreams (https://www.commondreams.org/views/2020/09/21/fincen-files-shine-spotlight-suspicious-bank-transfers)

FACEBOOK KNOWINGLY PROMOTES DISINFORMATION

Facebook (FB) facilitates an accelerating spread of disinformation; this is widely recognized and well-documented. (See my previous post on this.) Facebook allows toxic speech and dangerous misinformation to spread unchecked on its monopolistic platform. This affects and infects our public discourse and knowledge base, undermining the health of our democracy. However, stopping it runs counter to Facebook’s economic interests because increased activity, regardless of its content, is what increases its revenue. [1]

Recently, damning evidence has come to light of Facebook’s manipulation of its News Feed to favor right-wing sources that are known to be deceptive over trustworthy news sources.

In late 2017, Facebook was in the process of making significant changes in the computer programming code or algorithm it uses to determine which of the overwhelming plethora of sources each of us is shown in our Facebook News Feed. It claimed it was working to bring people together and to prioritize trusted and informative news sources.

It was uncovered recently that FB ran experiments with its first iteration of a revised News Feed algorithm that revealed it would dramatically curtail the dissemination of right-wing, less-than-trustworthy sites, such as Breitbart, the Daily Wire, and the Daily Caller. FB’s software engineers were told to modify the algorithm to reduce the negative effects on these right-wing sites.

A second iteration of the new algorithm was ready in January 2018 and its effects were presented to senior executives at FB. The data showed that it reversed the curtailment of right-wing, less-than-trustworthy sites and instead curtailed distribution of progressive-leaning, credible news sources. The presentation included bar charts showing the impact on a dozen or so specific news sources.

This second iteration of the new News Feed algorithm was, nonetheless, put into use, based in part on support from FB’s Vice President of Global Public Policy, Joel Kaplan, and right-wing-leaning employees working for him. (Kaplan would later loudly support his friend Brett Kavanaugh during Kavanaugh’s Supreme Court confirmation hearings.) This was not the first time Kaplan had acted to promote right-wing disinformation. For example, in December 2016, when an internal investigation found that a group of FB accounts, mostly based overseas, were behind a lot of the promotion of right-wing disinformation, Kaplan objected to disabling these accounts because “it will disproportionately affect conservatives.” He also has defended and protected right-wing sites that violated FB policies, opposing sanctions on them. [2]

The new News Feed algorithm expanded dissemination of content from the right-wing Daily Wire that routinely shares false content and spreads malicious stories such as ones describing being transgendered as a “delusion,”  calling abortion providers “assassins,” and labeling progressive members of Congress as not “loyal to America.” On the other hand, the new algorithm reduced dissemination of content from left-leaning Mother Jones magazine that provides rigorously fact-checked reporting and investigative journalism that has won it numerous journalism awards, including seven National Magazine Awards (three times for General Excellence). It has also been a National Magazine Award finalist 24 other times. In 2017, it won the Magazine of the Year award from the American Society of Magazine Editors.

In the six months after implementation of the changes in Facebook’s News Feed algorithm, FB traffic to trustworthy, left-leaning Mother Jones articles declined 37% from the previous six months. This means that the over one million Mother Jones followers and others on FB saw fewer of its articles in their News Feeds. On the other hand, over the summer of 2020, the deceptive right-wing Daily Wire had more Facebook engagement (i.e., likes, comments, and shares) than any other English-language publisher in the world. [3]

These data belie Zuckerberg’s claim when he announced the News Feed changes in January 2018 that the goals were “bringing people closer together” and fighting “sensationalism, misinformation and polarization.” He didn’t mention that he and FB were tipping the scales to favor less-than-factual right-wing sources.

Why did this happen? Facebook was tweaking its News Feed algorithm because user engagement was falling, which threatened its revenue and stock price. Zuckerberg and FB may also have wanted to avoid antagonizing Trump and the right-wing Republicans in power in the federal government, thereby reducing the likelihood that they would attack FB either verbally or through government investigations and regulations. Right-wing and “conservative” politicians had been criticizing FB for “liberal” bias (without evidence). A former Facebook employee said that it was made clear  that changes to the News Feed algorithm could not hurt Breitbart, Trump-advisor Steve Bannon’s mouthpiece.

Facebook uses its monopolistic power to determine which publishers’ content the public sees. This power of selective partial censorship and propaganda promotion is Big Brother-type power that we all should be concerned about and fear. Free speech in today’s America  is relative; it is based on how much money one has to broadcast one’s voice or on how FB treats you. Zuckerberg’s claim that he supports unfettered free speech is disingenuous given that FB tips the scales to favor certain sources and disfavor others.

FB’s marketplace power and dissemination of harmful disinformation need to be addressed by government policies and regulations. Slowing the spread of  misinformation and malicious content from a handful of the most active and therefore most harmful sites would have a dramatic effect.

Facebook should be held accountable for disseminating false, misleading, or inflammatory content. Regulation is one way to do this and competition is another. As a monopolistic platform lacking competition, FB has no incentive to do anything but pursue profits and/or Zuckerberg’s personal agenda. FB should be regulated like a monopolistic utility as the phone company once was or as private electricity and gas utilities are. Anti-trust laws should be used to stop FB’s anti-competitive practices and its acquisitions of Instagram and WhatsApp should be reversed. Competition should be facilitated, for example, by creating a not-for-profit, free to users, Internet platform for responsible information sharing and journalism akin to public radio and TV.

I’m not a heavy FB user so my expertise on its on-the-ground operation is limited. Therefore, I welcome your suggestions on how we can send a message to Facebook and Zuckerberg that will be heard loudly and clearly on the issue of the quality of content in its News Feed as well as other issues such as its repeated violations of users’ privacy. Would a one-day boycott where we don’t log into FB be effective? Or would a week where we never click on a FB ad be more meaningful? What else can we do? In addition, of course, to lobbying our elected officials to rein in Facebook and Zuckerberg with regulations and anti-trust laws.

[1]      Alba, D., 10/13/20, “False info thriving on social media,” The Boston Globe from The New York Times

[2]      Bauerlein, M., & Jeffrey, C., 10/21/20, “Facebook manipulated the news you see to appease Republicans, insiders say,” Mother Jones (https://www.motherjones.com/media/2020/10/facebook-mother-jones/)

[3]      Bauerlein, M., & Jeffrey, C., 10/21/20, see above

FACEBOOK’S DISSEMINATION OF DISINFORMATION ACCELERATES

 Facebook’s (FB) spreading of disinformation is accelerating, despite any claims to the contrary. Its CEO, Mark Zuckerberg, repeatedly says that he does not want FB to be an arbiter of free speech, but it is the arbiter of what information or speech FB users see.

Zuckerberg also asserts that the best way to fight offensive bad speech is with good speech. [1] However, this is a false equivalency as good speech that tries to counter bad speech has to mention the bad speech which furthers its presence in our public discourse. This has been shown by research to further embed the bad or false speech in people’s minds. For example, reporting on Trump’s tweets and stating they are false or misleading, still puts Trump’s tweets in front of the viewing or reading audience.

Facebook’s current stated standard is that posts that are not calling for harm or violence, however offensive, should be protected as free speech. Its new policy announced in October will finally ban posts that deny or distort the Holocaust. This is a very small and belated step forward against some of the worst and most obviously harmful disinformation that FB has spread. Almost a quarter of Americans between ages 18 and 39 say they believe the Holocaust either didn’t happen or was exaggerated. It may be difficult to link this directly to FB or to harm or violence but it’s hard to believe there is no linkage. [2]

Facebook allows toxic speech and dangerous misinformation to spread largely unchecked on its monopolistic platform. Engagement with FB posts (i.e., liking, sharing, or commenting on them) that are from sources that routinely publish misleading or false content tripled from 2016 to 2020, exceeding the rate of increase for outlets that uphold traditional journalistic standards.

This affects and infects our public discourse and knowledge base, undermining the health of our democracy. However, stopping it runs counter to Facebook’s economic interests because increased activity, regardless of its content, is what increases FB’s revenue. [3]

Over the summer and early fall of 2020, the Digital New Deal (DND) project examined engagement with posts on FB and analyzed the reliability of the posts’ sources. It partnered with NewsGuard, a non-partisan service that rates news and information sources for their accuracy. (See note on its methodology at the end of this post.) The DND project focused on 721 deceptive information sources and compared them with a selected group of non-deceptive sources. It categorized the sources into three types:

  1. False Content Producers: repeatedly publish verifiably false content (396 sources)
  2. Manipulators: fail to gather and present information responsibly (325 sources)
  3. Trustworthy Outlets (46 selected sources for comparison)

Engagement with posts from type 1 and 2 sources (referred to as deceptive sources) has grown 242% since 2016. Engagement with posts from Manipulators (type 2 sources) represents 84% of all deceptive source engagement and has grown from 390 million engagement actions in the 3rd quarter of 2016 to 1,520 million in the 3rd quarter of 2020 (almost fourfold). The deceptive sources with the most engagement on FB, including the top five in each of types 1 and 2, promote right-wing or “conservative” politics.

These deceptive sources, masquerading as news outlets, are spreading false information, manipulative messaging, and concocted conspiracies that degrade democratic discourse. This harms the health of our democracy because it undermines informed participation by citizens and voters. [4]

The top ten deceptive sources are all of the Manipulator type and account for 62% of FB engagement interactions with deceptive sources, while the other 711 deceptive sites are responsible for 38% of these interactions. Fox was the most frequent source in the Manipulator category. It is rated more positively by NewsGuard than many other deceptive sources because it sometimes does correct errors, avoids deceptive headlines, labels advertising, and discloses its ownership and financing. Other examples of Manipulators are the Daily Wire, Breitbart, and The Blaze.

My next post will provide even more damning evidence that FB’s goal is not to bring people together, to provide accurate information, or to fight sensationalism, misinformation, and polarization as Zuckerberg has said, but rather to maximize user engagement and profits, and perhaps to promote right-wing politics and curry favor with those in power in Washington, D.C. The post will highlight FB’s 2018 changes to its News Feed algorithm that determines what information or disinformation is presented to FB users. It will also present some ways to address FB’s monopolistic power and its dissemination of false and harmful content.

Note on the methodology for rating information sources used in the DND study summarized above: NewsGuard rates online news outlets based on nine criteria of responsible journalism including:

  • Does not repeatedly publish false content (22 points)
  • Gathers and presents information responsibly (18 points)
  • Regularly corrects or clarifies errors (12.5 points)
  • Handles the difference between news and opinion responsibly (12.5 points)
  • Avoids deceptive headlines (10 points)
  • Website discloses ownership and financing (7.5 points)
  • Clearly labels advertising (7.5 points)
  • Reveals who is in charge, including any possible conflicts of interest (5 points)
  • The site provides the names of content creators, along with either contact or biographical information (5 points)

Outlets receive points for passing a given criteria or they receive zero for failing. A total score of less than 60 merits a Red rating, meaning the site fails to adhere to basic journalistic standards.

[1]      The Associated Press, 10/12/20, “Facebook bans Holocaust denial, distortion posts”

[2]      Frenkel, S., 10/13/20, “Facebook bans Holocaust denial content,” The Boston Globe from The New York Times

[3]      Alba, D., 10/13/20, “False info thriving on social media,” The Boston Globe from The New York Times

[4]      Kornbluh, K., Goldstein, A., & Weiner, E., 10/12/20, “New study by Digital New Deal finds engagement with deceptive outlets higher on Facebook today than run-up to 2016 election,” Digital New Deal, German Marshall Fund of the United States (https://www.gmfus.org/blog/2020/10/12/new-study-digital-new-deal-finds-engagement-deceptive-outlets-higher-facebook-today)

HOW THE RICH GET RICHER Part 1

I’m planning on doing a series of, hopefully, short posts (although this one’s on the long side) with anecdotes on how the rich get richer, often at the expense of the rest of us. Here’s the first installment with three examples.

Example #1: At least 18 large companies have given executives large payouts just before filing for bankruptcy. These companies have laid off tens of thousands of workers but gave a collective $135 million to executives just before filing for bankruptcy. Bankruptcy attorneys note that the payouts were timed to skirt a 2005 law intended to prevent executives from prospering as their companies failed. The intent was to ban payouts that unfairly enrich the executives who drove their companies into bankruptcy. Such huge payouts are particularly egregious during an economic crisis when employees of the companies are suffering severe hardships. [1]

Example #2: Some members of Congress and some Trump administration supporters, who were privy to private early briefings on the seriousness of the coronavirus, made investment decisions that appear to have  been based on this non-public, inside information. Under the Stock Act of 2012, members of Congress are barred from using non-public information they get as a member of Congress to buy or sell personal stock holdings. However, at least four members of Congress made significant stock transactions in late February just before the stock market crashed. The private briefings they received on the potential seriousness of a pandemic would be considered insider information because this information was not available to the public. Moreover, at that time, the public information from the Trump administration and from an Op-Ed written by Senator Burr was reassuring the public that the U.S. was well prepared for a pandemic and had the coronavirus under control.

Senator Burr of North Carolina, as chair of the Senate Intelligence Committee, had received multiple briefings on the seriousness of the coronavirus. On February 13, 2020, less than a week after publishing his upbeat Op-Ed, he sold 33 stocks worth over $600 thousand (and perhaps as much as $1.7 million) in several industries likely to be hard hit by a pandemic. Senator Kelly Loeffler of Georgia made 29 stock transactions in late February, including buying over $100,000 worth of a company providing software tools for working remotely. Senator Inhofe of Oklahoma sold up to $750,000 worth of stock and Senator Dianne Feinstein of California sold millions of dollars of stocks. All four Senators have denied doing anything illegal. Senator Burr’s brother-in-law also sold significant stock holdings on the same day as the Senator. Providing investment tips to others based on inside information is illegal. [2]

On February 24 and 25, at a private meeting of the conservative Hoover Institution’s board, senior members of Trump’s economic team expressed uncertainty about how the coronavirus would affect the economy. However, on these same days, President Trump and the same economic advisers were saying publicly that the coronavirus was under control and that the economy and the stock market looked good. The president’s advisers appear to have been giving an early warning to wealthy party donors that contradicted their public statements. A hedge fund consultant, William Callanan, who is a Hoover board member and attended the meeting, circulated a memo about this to a hedge fund founder and others that gave them the ability to make investment decisions based on this non-public information. [3] This would appear to be illegal insider trading facilitated by the Trump administration’s private briefings.

Example #3: Insiders at companies developing COVID vaccines and treatments have been selling their companies’ stock and making millions of dollars. Insiders, including executives and board members, at a dozen of these companies have sold more than $1.3 billion in company stock since March 2020 when the seriousness of COVID became evident. In the same period last year, insiders at these companies sold just $74 million of stock, less than 6% of 2020 sales. Over $1.1 billion of these stock sales occurred at just three companies – Moderna, Regeneron Pharmaceuticals, and Vaxart. In particular, the chief medical officer (CMO) at Moderna is systematically liquidating all his stock, including stock obtained by exercising stock options granted to him, through planned weekly trades that are making him $1 million a week. Moderna’s chief executive officer (CEO) has sold nearly $58 million in stock, although he still retains substantial company stock.

Insiders are not allowed to sell company stock based on insider information, but can legally sell company stock under plans that schedule the stock sales in advance. However, these plans are relatively easy to change on short notice, which can make them at least appear to be an end run around illegal insider trading. Moderna’s CMO modified his plan on March 13 and its CEO did so on May 21 shortly after the company announced positive preliminary results from its vaccine development. Insiders have an incentive to exaggerate and hype good news while downplaying possible challenges or uncertainties in order to inflate their company’s stock price and increase their personal profit from sales of company stock. Vaxart is being sued by shareholders for misleading them while a hedge fund with ties to a board member was selling hundreds of millions of dollars of company stock.

This insider stock selling at companies working on COVID responses is particularly concerning because many of these companies have received substantial funding from the federal government under Operation Warp Speed, the government’s initiative to accelerate development of a COVID vaccine. Moderna is receiving $1 billion to support the clinical trial of a possible vaccine and has been promised another $1.5 billion to manufacture and distribute a successful vaccine. Taxpayers are paying for the risky up-front investments while executives and shareholders are (already) reaping the financial benefits even though no vaccine has yet completed testing. [4]

These last two examples indicate that selling (and buying) stocks based on non-public information is not uncommon. Some of it is clearly illegal but enforcement is sometimes difficult or lax and some of it either isn’t illegal or has been given a gloss of legality by allowing company insiders to engaged in scheduled stock sales.

In any case, it appears that the Trump Administration and federal government regulations have effectively institutionalized insider trading. Those investing in the stock market without insider connections should stand forewarned.

[1]      Washington Post, 10/28/20, “Failing firms’ executives got millions,” The Boston Globe

[2]      Burns, K., & Millhiser, I., 5/14/20, “Sen. Richard Burr and the coronavirus insider trading scandal, explained,” Vox (https://www.vox.com/policy-and-politics/2020/5/14/21258560/senator-richard-burr-coronavirus-insider-trading-scandal-explained)

[3]      Kelly, K., & Mazzetti, M., 10/15/20, “As virus spread early on, briefings from Trump administration fueled sell-off,” The Boston Globe from The New York Times

[4]      Wallack, T., 10/24/20, “Drug company insiders are profiting handsomely from the world’s desperate hope for a COVID-19 vaccine,” The Boston Globe

THE MOST EXPENSIVE ELECTION EVER

Our elections are, sadly, largely about money. Therefore, an election season can’t go by without a post about campaign spending.

The 2020 elections will be the most expensive on record by a good margin – over twice as expensive as the runner up, the 2016 election – and the amount of that money spent by outside groups (i.e., not by the candidates themselves) will also set a record. More and more of this outside money is flowing through entities that hide the identities of their donors.

It is projected that over $14 billion (yes, that’s billion) will be spent on the 2020 campaigns. Well over $2.5 billion of that total will be spent by outside groups, where candidates (supposedly) don’t control the spending or the message. This means there’s little or no accountability for the content and that the names of donors are often hidden. The spending by outside groups has skyrocketed since the 2010 Supreme Court decision called Citizens United that allowed these groups to raise and spend unlimited amounts of money, including money from corporations. [1] Spending by these groups is roughly double what it was in 2016. Only 30% of outside spending is being done by groups that fully disclose their donors, which is a record low. [2]

The presidential race is projected to see a record $6.6 billion in spending, up from $2.4 billion in 2016. Democratic presidential candidate Senator Joe Biden is setting fundraising records as he and Democratic Congressional candidates are, uncharacteristically, out-raising Republican candidates. After a slow start, Biden has raised $949 million, setting a monthly fundraising record recently – a stunning $282 million raised in September. $368 million of that total (39%) has come from small donors ($200 or less) with the remaining $581 million coming from big donors. President Trump has raised $594 million. His September amount was down significantly after having consistently raised about $100 million a month in 2020. $268 million of his total (45%) has come from small donors with the remaining $326 million coming from big donors. [3]

Races for the U.S. Senate are setting spending records as well. The North Carolina Senate race has already set the record for the most expensive congressional race ever with $265 million in spending by the candidates and outside groups. The Iowa Senate race is second with $218 million in spending. As-of mid-October, 2020 already has eight of the ten most expensive Senate races ever. [4] As has happened before, the highest profile races are raising high percentages of their funding from out-of-state, with races in Maine, Kentucky, and South Carolina receiving over 90% of their funding from out-of-state. [5]

A new wrinkle in this year’s campaigns has been the $1 billion spent on digital advertising. There are over 80,000 on-line political advertisers, which is four times the number of political committees registered with the Federal Elections Commission. The great bulk of this spending is, of course, going to Facebook and Google. [6]

Although more money than ever is coming from small donors ($200 or less), it still represents less than one-quarter of the money raised. More women are donating more money than ever before as well. Democrats have raised $1.7 billion in small donations and Republicans $1 billion. These small donors account for 22% of the money raised in 2020 compared to 15% in 2016. One and a half million women have donated to candidates for federal offices, accounting for 44% of donors and $2.5 billion by mid-October, up from 37% of donors and $1.3 billion for the whole election period in 2016.  Self-funding of campaigns by billionaires was also up, accounting for over 13% of total spending. Democrats Bloomberg and Steyer were responsible for much of this. [7]

Money skews our elections in many ways. First and foremost, the candidate with the most money usually wins. Second, the great majority of the money is contributed by a very small slice of the population. A big chunk of it is given by a very few, very wealthy donors who contribute huge sums. The top ten donors and their spouses have contributed over $642 million with almost all of it (98%) going to outside groups. This has been skewed toward supporting Republicans, although Democrats aren’t too far behind. Sheldon Adelson (a casino magnate) and his spouse set a new individual record with $183 million in donations, all to outside groups supporting Republicans. Business interests have given almost $4.6 billion through mid-October – 40% of total election contributions, compared to $3.6 billion for the whole 2016 election. Contributions from labor interests, on the other hand, are declining and have been only $175 million so far. [8]

The high cost of running a successful campaign, from President all the way down to state representative, skews our politics because it makes it necessary for almost all candidates to solicit large donations from wealthy individuals. (Senators Sanders and Warren have shown that it is possible to run competitive primary campaigns without the majority of campaign funding coming from wealthy donors, but they are the exceptions.) This skews candidates’ time and attention, both when running for office and when they are in office, toward these wealthy individuals rather than toward the needs and interests of the everyday Americans who are their constituents.

In addition, the high cost of campaigning skews our politics because people who can’t raise these large sums of money don’t even bother to run for office.

If we want democracy, where policies represent the needs and wishes of the majority of the population, if we want the government of, by, and for the people that our American democratic vision promised, we must reduce the amount of money it takes to run a successful campaign and dramatically curtail the influence of wealthy individuals and interests who have large sums of money they can spend on our elections.

In a future post, I will discuss the importance of overturning the Citizens United Supreme Court decision and other possible steps for reforming campaign financing.

[1]      Evers-Hillstrom, K.., 10/19/20, “Outside spending surpasses $2 billion as super PACs hammer Trump,” Center for Responsive Politics, OpenSecrets.org (https://www.opensecrets.org/news/2020/10/super-pacs-hammer-trump)

[2]      OpenSecrets.org, 10/28/20, “2020 election to cost $14 billion, blowing away spending records,” Center for Responsive Politics, OpenSecrets.org (https://www.opensecrets.org/news/2020/10/cost-of-2020-election-14billion-update/)

[3]      Evers-Hillstrom, K.., 10/21/20, “Biden heads into final weeks with record cash advantage,” Center for Responsive Politics, OpenSecrets.org (https://www.opensecrets.org/news/2020/10/biden-crushed-fundraising-september)

[4]      OpenSecrets.org, 10/28/20, see above

[5]      Geng, L., 10/22/20, “From South Carolina to Maine, out-of-state donors give big in Senate races,” Center for Responsive Politics, OpenSecrets.org (https://www.opensecrets.org/news/2020/10/senate-races-outstate-donors)

[6]      OpenSecrets.org, 9/3/20, “OpenSecrets unveils new online ads database,” Center for Responsive Politics, OpenSecrets.org (https://www.opensecrets.org/news/2020/09/opensecrets-unveils-new-online-ads-database/)

[7]      OpenSecrets.org, 10/28/20, see above

[8]      OpenSecrets.org, 10/28/20, see above

OUR FEDERAL COURTS HAVE BEEN PACKED WITH RIGHT-WING JUDGES

Republicans are rushing confirmation of a Supreme Court nominee just before the election, which is emblematic of their packing of the federal courts at all levels with right-wing judges. [1] (See my previous post for more details.) Rushing through the confirmation of Judge Barrett threatens to complete the delegitimization of the Supreme Court – and to some extent the whole federal judiciary – by making it clear that the federal court system is not an  impartial arbiter of the law, but a fully politicized institution.

Over 200 federal judges have been confirmed since Trump took office (including over 100 that were carried over from the Obama administration due to Republican blocking of confirmations) and basically all of them are proponents of the extreme right-wing legal philosophy of the Federalist Society. [2] Right-wing Republicans have used a Federalist Society endorsement as a litmus test for nominees while ignoring input from the American Bar Association, which always used to provide an independent analysis of the qualifications of nominees. [3]

This packing of the federal courts with right-wing jurists, which is the result of McConnell and the Republicans breaking the norms of our democratic processes, will benefit Republicans and their wealthy, corporatist backers for a generation or longer because their right-wing judicial philosophy favors corporations and the wealthy over workers, consumers, and the middle and lower classes.

These right-wing, Federalist Society-endorsed judges typically claim to support “originalism,” a legal philosophy that claims the original intent and meaning of the Constitution, written in 1787, should determine judicial decisions. “Originalists” claim that government cannot constitutionally do anything that is not explicitly provided for in the Constitution. This legal philosophy has been very effective in driving right-wing legal politics, although the appropriateness of applying the meaning of the words of the Constitution to today’s technology strains credulity; its writers couldn’t have dreamed of our current medical and health care capabilities, our transportation and communications systems, our financial instruments and guns, or our huge, multi-national corporations.

An alternative legal interpretation of the Constitution, as a living document that requires interpretation in the context of current times, was prevalent from the late 1930s into the 1980s. In the late 1930s, during the recovery from the Depression, judges interpreted the law and the Constitution to allow American democracy to live up to its principles. Right-wing politicians and legal theorists labeled this “judicial activism” or “legislating from the bench.”

The “originalist” legal philosophy was developed by right-wing scholars in the 1970s and 1980s in reaction to laws and judicial support for economic and civil rights. The New Deal worked to level the economic playing field, to regulate business, to provide voice and a balance of power for workers through unions, and to provide a social safety net. After World War II, these efforts continued with more of a focus on leveling the social playing field and treating all people as equals before law, by ending segregation and discrimination, protecting the rights of prisoners and those accused of breaking the law, and providing access to contraception and abortion. The judicial-established principle of one person, one vote and the Voting Rights Act worked to level the political playing field. Judicial decisions supporting economic and civil rights, many of them made by the Supreme Court under Republican Chief Justices Earl Warren and Warren Burger between 1953 and 1986, were, at the time, largely viewed as non-partisan. They reflected a belief that the Bill of Rights applies to state laws and governments, as well as at the federal level. [4] This dramatically expanded civil rights and overturned the “states’ rights” doctrine that had allowed states to, among other things, engage in discrimination, particularly against Black Americans.

“Originalist” judges have ignored and will continue to ignore precedents and are reversing 80 years of legislation and legal decisions on individual and civil rights, as the hearings on the latest Supreme Court nominees and recent Supreme Court decisions have made clear. While the attention of these hearings has been focused on social and religious issues, from abortion to affirmative action and discrimination to LGBTQ rights, the often-overlooked issues about our economy and capitalism, such as the balance of power between employers and workers, the ability to earn a living wage, and the availability of an economic safety net, are critically important as well.

Under “originalist” legal theory, the federal government has little power and much of what it currently does should be left to state governments. Under “originalism,” the federal government does not have the power to regulate corporations or the wealthy, including restricting their use of their money in our elections, as the spending of money is viewed as exercising free speech. Decisions by the federal judiciary at all levels make it clear that “originalist” theory favors private interests over public interests, corporations and employers over consumers and workers, law enforcement over defendants’ rights, and gun rights over voting rights. Such decisions deprive employees and other vulnerable populations of their civil rights. [5] [6]

Moreover, the “originalist” judges assert that the rights of the Bill of Rights, such as freedom of speech, are rights that belong to corporations as well as to natural human beings. I find it hard to believe that this was the intent of the writers of the Constitution and the Bill of Rights. They clearly were focused on the rights of individual human beings. Furthermore, corporations, in anything approaching their current form, were unknown in those times.

Americans for Prosperity and other pro-business groups, many of them backed by billionaire, fossil-fuel businessman Charles Koch (and his deceased brother), have spent tens of millions of dollars on campaigns to pressure Senators to back controversial, right-wing judicial nominations, often using “dark money” (whose donors are hidden from the public).

The weak federal government response to the coronavirus pandemic is emblematic of “originalist” thinking. Some in the Trump administration simply didn’t believe it was the role of the federal government or within the legitimate powers of the federal government to respond, and, therefore, the response should be left to the states and the private sector.

President Trump and the Republicans in the Senate have packed the federal court system from top to bottom with hundreds of right-wing, Federalist Society-endorsed, “originalist” judges who are on the fringe of what was previously considered appropriate for a federal judge. If our Founding Fathers had intended an “originalist” interpretation of the Constitution, I have to believe they would have realized frequent amendments would be required and they would have made it much easier to amend it. I believe that “originalism” is a rationalization for public relations purposes developed by wealthy corporations and individuals as a way to “justify” laws and court decisions that work to their benefit. This is just like their claim of non-existent voter fraud as the public relations rationale for voter suppression tactics.

Our federal court system is currently unbalanced and biased in favor of corporations and the wealthy. Right-wing judges will skew court decisions and harm the well-being of everyday Americans for the next 20 to 30 years unless Democrats are elected and actively work to rebalance the federal courts toward mainstream legal philosophy and historical precedent. This will not be easy given how skewed the system currently is.

Dramatic steps will need to be taken, including expanding the number of judges in the federal court system, possibly including the number of justices on the Supreme Court, given that removing judges is basically impossible. This is the only way to return to laws and government programs that protect and support a fair and just society with civil, political, and economic rights for all, women able to make decisions about their reproductive health, workers able to support their families and have safe working conditions, consumers able to use products and services safely, and a safety net that protects people when they hit hard times.

[1]      Richardson, H. C., 10/11/20, “Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/october-11-2020)

[2]      The Federalist Society for Law and Public Policy Studies, most frequently called the Federalist Society, is an organization of conservatives and libertarians that advocates for a textualist and originalist interpretation of the United States Constitution. (https://en.wikipedia.org/wiki/Federalist_Society)

[3]      Heer, J., 10/14/20, “Barrett’s evasions show why expanding the Court is necessary,” The Nation (https://www.thenation.com/article/politics/barrett-confirmation-court-packing/)

[4]      Richardson, H. C., 10/23/20, “Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/october-23-2020)

[5]      Richardson, H. C., 10/14/20, “Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/october-14-2020)

[6]      Dayen, D., 10/13/20, “Judge Barrett’s record: Siding with businesses over workers,” The American Prospect (https://prospect.org/justice/judge-barretts-record-siding-with-businesses-over-workers/)

WHO’S FOR PACKING OUR FEDERAL COURTS?

As Republicans are ramming through a Supreme Court nominee just before the election, they are also attacking Democratic presidential nominee Senator Biden for not saying whether he will “pack the court.”  The irony of this seems to be lost on them, many in the media, and most of the public.

Republicans are claiming that increasing the size of the Supreme Court (aka “packing the court”) would be “the absolute biggest power grab in the history of our country,” when in fact their packing of the federal courts at all levels with right-wing judges for the last four years and beyond is a far bigger power grab. [1]

Rushing through the nomination of Judge Barrett threatens to complete the delegitimization of the Supreme Court, making it clear it is not an impartial arbitrator of the law, but a fully politicized institution. Senator McConnell and his Republican colleagues in the Senate blocked the appointment of a centrist judge nominated by President Obama, Merrick Garland, for ten months, solely for political purposes. Now, they are ramming through an extreme, right-wing nominee in a matter of weeks, solely for political purposes. And closer to an election than has ever been done before.

If Barrett is confirmed, 15 of the last 19 Supreme Court appointments will have been made by Republican Presidents. Furthermore, five of the nine justices will have been appointed by Presidents who lost the popular vote and they will also have been confirmed by the votes of Senators who represent less than half of the American population. [2]

The Supreme Court has had nine justices since 1869, but its size is not specified in the Constitution. Republicans changed the size of the Court three times between 1863 and 1869 to give appointments to their Presidents and deny them to the opposition. [3] Furthermore, Republicans announced in 2016 that they would not fill any Supreme Court seats with nominees of Hillary Clinton (if she were elected), thereby effectively shrinking the size of the Court. Moreover, in 2013, Republicans proposed shrinking the number of justices on the D.C. Appellate Court, the second most important appellate court in the country, from 11 to 8 to lock in a conservative majority and prevent President Obama from appointing judges to the court. [4]

The packing-the-court issue is far bigger than just the Supreme Court. Senator McConnell and the Senate Republicans blocked dozens of Obama’s nominees to other courts, so that there were over 100 vacancies for federal judges when Trump took office. Over 200 federal judges have been confirmed since Trump took office and basically all of them are proponents of the extreme right-wing legal philosophy of the Federalist Society. [5] (More on this is my next post.) Right-wing Republicans have used Federalist Society endorsement as a litmus test for nominees while ignoring input from the American Bar Association, which always used to provide an independent analysis of the qualifications of nominees. [6] Republicans have also intentionally been installing young judges so their lifetime tenures and influence will last as long as possible.

This packing of the federal courts with right-wing justices, which is the result of McConnell and the Republicans breaking the norms of our democratic processes, will benefit Republicans and their wealthy, corporatist backers for a generation or longer. The only remedy for this political corruption, the only way to keep its perpetrators from realizing on-going benefits, is to increase the size of the federal courts, including the Supreme Court. New judges, appointed by Democrats, will rebalance the courts to reflect the interests and well-being of the American public. Furthermore, the federal district and appellate courts have not been enlarged since the late 1970s, despite a 40% growth in population.

It is important for the Democrats to stand up and make it clear that Republicans can’t steal two Supreme Court seats (and dozens of seats on other federal courts) and get away with it. They should couple an increase in the size of the Supreme Court with a proposal for a Constitutional Amendment to set term limits and/or a mandatory retirement age for Supreme Court justices.

By rebalancing the federal courts, Democrats would demonstrate a needed commitment to America’s democratic principles and promises, as well as to economic and social justice.

My next post will discuss the right-wing judicial philosophy called “originalism” to which these Republican judges typically adhere and its implications for economic and social justice.

[1]      Richardson, H. C., 10/11/20, “Letters from an American blog post,” (https://heathercoxrichardson.substack.com/p/october-11-2020)

[2]      Richardson, H, C., 10/11/20, see above

[3]      Starr, P., 9/23/20, “How to rebalance the Supreme Court,” The American Prospect (https://prospect.org/justice/how-to-rebalance-the-supreme-court/)

[4]      Kuttner, R., 10/13/20, “Biden needs to give a major speech on court expansion,” The American Prospect (https://prospect.org/politics/biden-speech-supreme-court-expansion-court-packing/)

[5]      The Federalist Society for Law and Public Policy Studies, most frequently called the Federalist Society, is an organization of conservatives and libertarians that advocates for a textualist and originalist interpretation of the United States Constitution. (https://en.wikipedia.org/wiki/Federalist_Society)

[6]      Heer, J., 10/14/20, “Barrett’s evasions show why expanding the Court is necessary,” The Nation (https://www.thenation.com/article/politics/barrett-confirmation-court-packing/)

TRUMP’S WAR ON WORKERS

Despite Trump’s rhetoric, his 2016 campaign promises, and an occasional symbolic gesture, his administration has shown a total lack of empathy or concern for the plight of American workers. He has:

  • Undermined workers’ health and safety, as well as job security,
  • Repeatedly supported employers and business interests rather than workers,
  • Depressed workers’ pay and benefits, and
  • Failed to support workers’ rights, including their ability to bargain collectively with employers through unions.

During the coronavirus pandemic, the Trump administration has consistently sided with employers and against protecting workers from the very contagious virus. It has refused to promulgate mandatory standards and safety measures to protect workers. The most notable example has been in the meat packing industry, where the Trump administration has ordered workers back to work using emergency powers meant to ensure the supply of “scarce and critical material essential to the national defense.” Local public health officials are prohibited from closing plants and workers have to obey employers’ orders to return to work or be fired and lose their eligibility for unemployment benefits. [1]

Over 200 workers in the meatpacking industry have died and tens of thousands have been infected. Nonetheless, the Trump administration’s Occupational Safety and Health Administration (OSHA) has not issued any regulations to protect these workers. Its fines for violations have been a slap-on-the-wrist few thousand dollars, despite thousands of complaints from workers about unsafe working conditions. The neglect of workers’ health and safety has undoubtedly cost many thousands of lives. [2]

Trump has consistently appointed pro-corporate, pro-employer, anti-worker officials to his cabinet and government agencies, as well as to judgeships. His Secretary of Labor, Eugene Scalia (son of the right-wing Supreme Court Justice), and all but one of his appointees to the National Labor Relations Board have spent their careers fighting for corporate employers and against workers’ rights and protections, despite the fact that they are now, supposedly, enforcing workers’ rights and protections.

On the other hand, Trump has failed to appoint anyone to head OSHA and has reduced its number of inspectors to a 50-year low. It would take these inspectors 165 years to visit every U.S. workplace once, despite an annual toll of 14 workers killed and 5 million injured on the job (not including the impact of COVID-19). [3]

Trump’s Department of Labor (DOL) has relaxed rules on overtime pay, resulting in millions of workers being denied overtime when they work over 40 hours in a week. The DOL and the Trump-appointed National Labor Relations Board (NLRB) have let McDonalds and other corporations that use a franchisee business model escape responsibility for franchisees who engage in wage theft (e.g., by failing to pay overtime, minimum wage, or for all hours at work) and other illegal practices.

The Trump administration and Republicans in Congress have worked relentlessly to weaken and repeal the Affordable Care Act (aka Obama Care), which has increased costs and denied health insurance to millions of workers, including many of those who have lost jobs during the pandemic. On the other hand, the Trump administration and Republicans in Congress have done nothing about increasing the minimum wage (which has been unchanged for a decade) or the Earned Income Tax Credit, which augments the income of low wage workers. They also have done nothing to increase the availability of paid sick time or to provide paid leave for new parents. [4]

The Trump administration has acted favorable on all ten items on an employer-friendly, anti-worker wish list from the U.S. Chamber of Commerce, the lobbying organization of large corporations. All of these items involved undermining workers’ rights and unions, such as allowing employers more opportunities to interfere in union organizing efforts. The Trump NLRB has stripped Uber drivers and other similar workers of their rights under labor laws and has also proposed a ban on union organizing by tens of thousands of graduate students who work as teaching and research assistants. [5]

Trump’s 2017 tax cut legislation gave billions of dollars in tax cuts to wealthy individuals and corporations, while neglecting workers. It also increased incentives for multi-national corporations to move jobs overseas.

The Trump administration’s mismanagement of the coronavirus pandemic has hurt the economy, increasing the number of jobs lost and the length of unemployment. The administration and Republicans in Congress have limited the amount and duration of unemployment benefits for those out of work. They provided limited pandemic relief for workers in general and have let it run out, refusing to extend it, even though the end of the pandemic is nowhere in sight, unemployment remains high, and millions of households are struggling to make ends meet.

The litany of the Trump administration’s anti-worker actions is long. Here are a few more examples:

  • Repealed the fiduciary rule that required investment advisors to act in workers’ best interests in handling their retirement savings. Instead, the advisors can select investments that pay them higher fees.
  • Relaxed or rescinded safety rules in numerous industries, such as more than a dozen rules protecting mine workers from such things as explosive coal dust and mining chemicals. However, the effort to relax safety inspections in coal mines was blocked by a federal court.
  • Made it easier to award federal contracts to companies with multiple violations of laws on fair wages, sexual harassment, racial discrimination, and workers’ rights to form a union.
  • Relaxed rules on toxic chemicals that harm farmworkers and children.
  • Relaxed requirements on reporting of workplace injuries and ended requirements for large corporations to report payroll data by race and gender, which allowed analysis of possible pay discrimination.
  • Rolled back regulations on usurious practices of payday lenders who prey on financially struggling workers.
  • Supported, both through legal arguments and court appointments, a prohibition on class action lawsuits by workers against employers (instead requiring them to submit grievances to arbitration) and a prohibition on requiring public sector workers to pay union fees or dues for the benefits they receive from union actions on their behalf.
  • Is pushing hard for blanket corporate / employer immunity from lawsuits if workers or customers get sick or die from COVID-19, regardless of any failure by the business to implement appropriate or required protection measures.

I hope America’s workers and voters are paying attention and not letting themselves be fooled by Trump’s rhetoric. Even a quick look at the actions and personnel of the Trump administration make it clear that it supports corporations and employers to the explicit detriment of workers.

[1]      Hightower, J., July 2020, “Something is rotten at Big Meat, Inc.,” The Hightower Lowdown (https://hightowerlowdown.org/article/something-is-rotten-at-big-meat-inc/)

[2]      Lee, T.M., 9/25/20, “Trump’s war on workers,” The American Prospect (https://prospect.org/labor/trump-war-on-workers/)

[3]      Hightower, J., Aug. 2020, “Behind his daily spectacle, Trump is pounding workers and their rights,” The Hightower Lowdown (https://hightowerlowdown.org/article/behind-his-daily-spectacle-trump-is-pounding-workers-and-their-rights/)

[4]      Greenhouse, S., 8/30/19, “The worker’s friend? Here’s how Trump has waged his war on workers,” The American Prospect (https://prospect.org/power/worker-s-friend-trump-waged-war-workers/)

[5]      McNicholas, C., Rhinehart, L., & Poydock, M., 9/16/1/20, “50 reasons the Trump administration is bad for workers,” Economic Policy Institute (https://www.epi.org/publication/50-reasons/)

THE U.S. IS AT A HISTORICALLY SIGNIFICANT FORK IN THE ROAD

Bob Kuttner has written another one of his eloquent, incredibly insightful and provocative articles. This one analyzes the historically significant fork in the road the U.S. is facing, puts this inflection point in historical and political perspective, and offers his views on where we should go and what it will take to get there. [1] He doesn’t mince words and is not afraid to speak truth to political and economic power. I will summarize the article here, but I encourage you to read the whole article at the link in the footnote as I cannot do it justice. The article is relatively short, under 2,000 words; it’s only two pages in The American Prospect magazine.

(Note: Kuttner is the most knowledgeable, thoughtful, eloquent, and insightful progressive policy analyst I know of. The breadth of his knowledge across policy topics and history leaves me in awe. He is the co-founder and co-editor of The American Prospect magazine, which is my go-to source for progressive policy analysis and proposals. He is a professor at Brandeis University’s Heller School, where I got my Ph.D. in Social Policy with a focus on early childhood policies and programs.)

Kuttner starts the article with this statement: “We will soon know whether America will surmount its worst catastrophe since the Civil War. We have every reason to worry.” He goes on to note that “We Americans grow up learning our history as a chronicle of near disasters that narrowly come out right.” He cites the following examples of other historical inflection points where the U.S. surmounted significant challenges and put itself on a positive path for the future:

  • The Revolutionary War
  • The writing of the Constitution in 1787
  • The Civil War and the ending of slavery
  • The Great Depression
  • World War II

He states that “Now, we are at another inflection point where history could go disastrously wrong. … Things have already occurred that were inconceivable to most Americans.” He cites examples of the inconceivable that include:

  • The undermining of the U.S. Postal Service (at least in part to rig the election),
  • The failure to combat Russian interference in our elections,
  • The President stating he might not abide by the election’s results, and
  • The Attorney General failing to stand up for the rule of law.

Kuttner excoriates Republicans in Congress, governors’ offices, and state legislatures who have violated the fundamental principles of the historical Republican Party and our democracy to benefit their wealthy benefactors and maintain their political power.

He states that “America’s corporate and financial elite, given a corrupt, incompetent dictator who serves their economic interests, will choose the dictator over a democracy that might trim their billions. This is full-on fascism — the alliance of the business class with a tyrant who confuses the masses with appeals to jingoism and racism, while the plutocrats steal working people blind.”

His analysis concludes that “Trump is the logical extreme of a long downward spiral. … Trump merely makes flagrant what was tacit.” He states that in addition to Republican presidents, Presidents Clinton and Obama allowed a continuation of the 40-year slide where “money relentlessly crowded out citizenship, while economic concentration and political concentration [of power] fed on each other.” The concentration of economic power has occurred due to the emergence of huge corporations with monopolistic power in numerous industries due to the lack of enforcement of anti-trust laws. This economic concentration has led to great wealth in the hands of a small number of investors and corporate executives. They have used that wealth to gain great political power, which has led to policies that benefit them and their businesses. This self-reinforcing cycle has been a spiral leading to great inequality in income, wealth, personal well-being, and opportunity.

Kuttner states that reversing this long, downward spiral will be difficult and will require repairing damage to essential institutions in government, society, and the economy. These include facilitating voting rather suppressing it, using anti-trust laws to break up monopolistic corporations, reversing growing economic inequality, and supporting workers through higher wages, job security, and the right to bargain collectively with employers. Public agencies that have been hollowed out need to be rebuilt, including the Centers for Disease Control and Prevention, the Environmental Protection Agency, the Occupational Safety and Health Administration, and more.

He notes that there are two serious obstacles to accomplishing this revival even if Democrats win the White House and control of the U.S. Senate. First, the Republicans in Congress and President Trump (but also Republican presidents before him) have packed the federal court system at all levels with right-wing judges. Kuttner states that “Reclaiming democracy will require reclaiming an honest judiciary. … Republicans have been so relentless in their blockage of Obama appointees and their ramming through of far-right judges that the very legitimacy of the judicial system is in question.”  Kuttner makes a case for adding judges and expanding the federal courts at all levels as the only way to achieve balance and avoid judicial blockages of needed policy changes.

The second serious obstacle to revival of the American promise is the immense influence of corporate power brokers and the many corporate-leaning Democrats for whom current economic policies are the conventional wisdom. Kuttner believes that absent massive grassroots pressure the likelihood is that a Biden administration will not seriously challenge economic power and concentration, particularly in the financial and high-tech industries. The concentration of market and political leverage in huge corporations and in their executives and large investors has led to dramatic economic inequality, job insecurity, and hardship for American workers.

Kuttner proposes that the trillions of dollars the Federal Reserve has pumped into large corporations to bail them out in the current financial crisis should instead be focused on rebuilding infrastructure, addressing climate change, and ending racism, including paying reparations.

Kuttner closes by stating that if the U.S. returns to the path laid out by its core principles through the results of the November elections and subsequent actions that “it will be the narrowest of great escapes ever.”


[1]      Kuttner, R., 9/17/20, “The terror of the unforeseen,” The American Prospect (https://prospect.org/politics/the-terror-of-the-unforeseen/)

OUR ELECTIONS ARE RIGGED Part 2

Our elections are indeed rigged – by Republicans and the country’s wealthy capitalists to skew results to their benefit. One of their strategies is to reduce voting by those who are not part of their primary constituency of well-off, white voters. [1] My previous post describes the four main barriers to voting that states have been imposing. Studies show they disproportionately disenfranchise non-white, low-income, student, and/or elderly voters, groups who tend to vote for Democrats:

  • Imposing voter identification requirements
  • Reducing places and times for voting
  • Purging eligible voters from voter registration lists
  • Denying people with a felony conviction the right to vote

There are a variety of strategies that are being used to suppress voter participation in general and participation by likely Democratic voters in particular, in addition to the four above. In some states, Republican gerrymandering of state legislative districts has given Republicans undeserved power to enact barriers to voting. In Wisconsin, for example, in 2018, Democrats won a majority of the statewide vote for the state legislature (52%) but got only 36 of 99 seats in the legislature (36%).

Voter suppression strategies being used in various places across the country include:

  • Impeding voter registration: While some states are making it easier to register to vote, for example through election day registration and automatic voter registration at motor vehicle offices and other state agencies, many Republican-controlled states are making it harder to register. For example, some states have made the process for conducting voter registration drives so onerous that the effect has been to ban them. In Georgia, in 2018, the Secretary of State (who oversees elections and was a white male running against a Black woman for Governor) was charged with blocking the registration of 50,000 voters (80% of whom were non-white) due to minor discrepancies in the spelling or spacing of their names. [2]
  • Failing to update voter registration systems with address changes: Without up-to-date addresses for people who move frequently, e.g., young people, students, and low-income workers, these voters (who tend to vote for Democrats) do not receive ballots or voting information, and hence are less able and likely to vote.
  • Undermining confidence in our elections: Spreading lies about the existence of voter fraud and the validity and honesty of our elections creates skepticism about the importance of voting. Failure to combat foreign efforts to affect the outcome of our elections and to undermine faith in their credibility also damages voters’ enthusiasm for voting. Calling ballots that are counted after election day fraudulent (for example, mailed-in ballots that were postmarked on time) contributes to the false perception that our elections are dishonest. All of these techniques and other related ones undermine voters’ motivation to turnout to vote.
  • Providing misinformation about voting and registering to vote: This is a classic “dirty trick” used to confuse voters and keep them from registering to vote and from voting.
  • Creating barriers to or doubts about mail-in or absentee ballots: The President and some Republican-led states are erecting barriers to mail-in voting because it has been shown to increase voter participation, which does not work to their benefit. In addition, the President, in particular, is trying to sow doubt about the validity and effectiveness of mail-in voting despite its very successful use in many states, including as the sole method of voting in Oregon since 1998. Some states are making it complicated to correctly complete a mail ballot. In Alabama, for example, the signature on an absentee ballot must have two witnesses or a notarization. [3] A complicated process increases the likelihood that ballots can be disqualified due to a technical error in completing them and most states do not have a process for remedying a minor technical error; the ballot is simply not counted. Some states are setting strict deadlines for receipt of mail ballots (e.g., they must be received by election day not just postmarked by election day). In one county in Florida, 1,200 ballots were not counted for being too late despite being postmarked on time. And, as I imagine you’ve heard, the Trump administration is working to harm the U.S. Postal Service’s ability to process mail in a timely fashion. Finally, some states prohibit the opening of mail ballots until election day or even until the polls have closed. This delays the finalization of election results and gives Republicans the opportunity to assert that the late counting of ballots is indicative of fraud, as they did in Florida in the 2000 presidential election.
  • Intimidating voters: In Pennsylvania, the Republicans have sued all 67 counties to allow Republican-hired, outside “poll watchers” at the polls. Poll watchers such as these have typically been used to harass, challenge, and intimidate targeted voters, namely those who are likely to be voting for Democrats. They do this by, for example, demanding proof of eligibility to vote. They are typically deployed in low-income, non-white neighborhoods and sometimes wear uniforms and carry badges, cameras, and guns. This kind of intimidation was so bad back in 1982 that a federal judge imposed restrictions on activities that might intimidate voters. However, in 2018, with the Trump campaign’s support, these restrictions were lifted. [4]
  • Refusing to give workers time to vote: In most states, election day is not a holiday and most employers do not give workers time off (let alone paid time off) to vote, although this may be starting to change.
  • Negative campaigning: Negative messages and nasty campaigning create disillusionment with candidates (whether the information is true or not) and with voting in general. The result is lower voting participation both in general and for the targeted candidate.

Republicans have amassed a $20 million fund to bring lawsuits aimed at reducing voting and blocking the counting of ballots, such as provisional ballots cast by people whose voter registration was purged or blocked by voter suppression techniques. In Florida, for example, Republicans have sued to prevent postage-paid return envelopes from being sent with mail-in ballots, hoping to reduce the rate at which they are returned. In Nevada, they have sued to prevent the state from sending mail-in ballots to all registered voters.

President Lyndon Johnson called voting “the first duty of democracy”. However, President Trump and Republicans in Congress and in the states have been doing everything they can to denigrate that duty and to make it as hard as possible for those likely to vote for Democrats to fulfill their duty to vote. [5] This is stunningly unpatriotic and in violation of our Constitution and the founding principles of this country. Democracy’s foundational principle is that all citizens have a right and duty to vote. Undermining the ability to vote and the importance of voting are antithetical to democracy.

There are steps we can take to increase voter participation and, thereby, improve the health of our democracy. Steps to make it easy to vote and to block strategies inhibiting voting are occurring in the courts and in some states. The battle over allowing voting by those convicted of felonies in Florida has gone through three levels of courts already and is on-going, although it appears likely that 775,000 of them will not be able to vote this fall. In Virginia, where Democrats gained control of the state government in the 2019 election, they have repealed the state’s voter ID law, made election day a state holiday, expanded the early voting period to 45 days, and implemented automatic voter registration for people using services from the Department of Motor Vehicles. Mail-in ballots will have pre-paid postage and drop boxes for returning them will be installed throughout the state. Voters will be able to fix technical errors on mail-in ballots, while absentee ballots will no longer require a witness’s signature. [6] In North Carolina, a Democratic Governor, a state Board of Elections with a non-partisan leader, and court orders have reversed the tide in a state that was one of the leaders in voter suppression in 2016. [7]

The ultimate solution is a national one, namely reinstituting the protections that were in place under the Voting Rights Act before the Supreme Court disingenuously eviscerated it in 2013. To this end, I encourage you to contact your U.S. Representative and Senators and let them know you support the Voting Rights Advancement Act, which passed the House in December 2019 but has not been acted on by the Senate. In addition, our election systems need extra financial support to operate safely, effectively, and accurately during the current pandemic. To this end, I also urge you to let your Members of Congress know you support the VoteSafe Act and the funding for election systems in the House-passed HEROES Act. [8] Given that the Republicans in control of the Senate are not likely to act on these bills this year, in the meantime, encourage your state and local election officials to make it as easy as possible for all eligible voters to register and vote.

To live up to our principles, every citizen needs to be readily able to fulfill that first duty of democracy – to vote.

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]      Hightower, J., 9/1/20, “Six ways the Right is shredding the right to vote,” Common Dreams from The Hightower Lowdown (https://www.commondreams.org/views/2020/09/01/six-ways-right-shredding-vote)

[2]      Durkin, E., 10/19/18, “GOP candidate improperly purged 340,000 from Georgia voter rolls, investigation claims,” The Guardian (https://www.theguardian.com/us-news/2018/oct/19/georgia-governor-race-voter-suppression-brian-kemp)

[3]      Bidgood, J., 9/20/20, “Alabama: ‘They’re doing everything to stop us from voting’,” The Boston Globe

[4]      Hightower, J., 9/1/20, see above

[5]      Graham, R., 9/14/20, “Vote!” The Boston Globe

[6]      Gibson, B., 9/14/20, “How Virginia made voting easier and fairer,” The American Prospect (https://prospect.org/politics/how-virginia-made-voting-easier-and-fairer/)

[7]      Kuttner, R., 9/16/20, “Election night could be smoother for Senate races,” The American Prospect (https://prospect.org/blogs/tap/election-night-could-be-smoother-for-senate-races/)

[8]      Fudge, M., 9/21/20, “The struggle to vote continues,” The Boston Globe

OUR ELECTIONS ARE RIGGED

Our elections are indeed rigged, but not in the direction or way President Trump claims. For decades now, Republicans and the country’s wealthy capitalists have been working to skew election results to their benefit by reducing voter participation. As Republican campaign strategist Paul Weyrich said in 1980, “I don’t want everybody to vote. … Our leverage in the elections quite candidly goes up as the voting populace goes down.” [1]

Low participation in elections works to the advantage of corporations, wealthy individuals, and Republicans. They know that their constituency – white, well-off voters – will continue to vote but that others can be prevented or discouraged from voting by barriers to voting and by spreading doubts about candidates and our elections.

Since the 1980s, Republicans and their wealthy donors have engaged in an escalating, coordinated, well-funded, multi-pronged effort to prevent targeted people from voting and to suppress voting in general. It now seems that no holds are barred; serious distortions of candidates’ positions, beliefs, and experiences and blatant lies are commonplace. One prong of their effort was getting “conservative” judges appointed to courts at all levels including the U.S. Supreme Court. This culminated in the Supreme Court’s ruling in 2013 that key portions of the Voting Rights Act (VRA) were unconstitutional because discriminatory voting practices were (supposedly) no longer a significant issue. This was essential to the escalation of Republicans’ targeted voter suppression efforts.

The states have proved the Supreme Court wrong; every one of the nine states that had been subject to Voting Rights Act oversight (which occurs because of past discriminatory practices) has implemented new discriminatory barriers to voting. All told, over half of the 50 states have enacted hundreds of barriers to voting in the seven years since the Supreme Court’s decision, some literally within days of the decision.

The four main barriers to voting that states have imposed are:

  • Implementing voter identification laws: Eleven states had strict voter ID laws in 2016, where without the required ID a vote will not be counted unless the voter quickly takes the steps required to validate the provisional ballot they are allowed to cast. These strict voter ID laws first appeared in 2006. In 2000, only 14 states had any ID requirement and all of them allowed a voter to cast a ballot that would be counted through a relatively simple, on-the-spot process. By 2016, 33 states had an ID requirement. [2] For example, in Alabama, a state that had been subject to VRA oversight, a strict voter ID requirement was enacted the year after the Supreme Court’s decision. Motor vehicle offices were where most people would go to get the required photo ID. However, soon after enactment of the voter ID requirement many of these offices in predominantly Black communities were closed, although some of them were later reopened. [3] In Iowa, a very strict voter ID law was enacted in 2017, which it is estimated will keep 260,000 people from voting this fall. Studies have shown that voter ID laws disproportionately disenfranchise non-white, low-income, and elderly voters. There is no evidence of voter fraud, however, it is, nonetheless, given as the rationale for voter ID laws. Moreover, voter ID requirements would NOT prevent the kind of voter fraud Republicans claim is happening. [4]
  • Reducing places and times for voting: A number of states have reduced the number of polling places. The nine states subject to the Voting Rights Act before its evisceration by the Supreme Court in 2013 have closed 1,688 polling places, typically in areas with high proportions of Black voters. Some states have reduced the number of days of early voting and Alabama, for example, does not allow early voting.
  • Purging eligible voters: While election officials do need to clean up voting registration lists (e.g., to remove people who’ve died or moved out of the jurisdiction), Republicans have turned the updating of voting lists into a technique for purging likely Democratic voters. Nationally, an unusually high number of voters (17 million) have been removed from voting lists since the 2016 election. The purges often target people who move frequently (e.g., young people, students, low-income workers, and non-white voters). These groups also happen to tend to vote Democratic. Often a postcard is mailed to the targeted voters (but not forwarded) and if it isn’t returned, they are removed from the voting rolls. Sometimes voters who haven’t voted in a couple of elections are summarily removed from voting lists. Georgia, for example, purged more than 534,000 voters from its voting rolls in 2016 and 2017. However, a study found that 340,000 of them were valid voters, predominantly non-white, and still living at the addresses on their voter registration information. [5]
  • Denying people with a felony conviction the right to vote: Forty-eight states deny those convicted of a felony the right to vote while they are incarcerated. Eleven states deny them the right to vote even after they have completed their sentences (including any probation or parole), although there typically is, in theory, a process for regaining their voting rights. [6] These laws denying voting rights reflect the racism of Jim Crow laws, where whites were looking for ways they could legally keep Blacks from voting (among other things). Laws were written and selectively enforced so that Black males were convicted of felonies at a high rate and therefore prevented from voting. (Women couldn’t vote at that time.) In 2016, there were over 4.7 million citizens out of prison but disenfranchised by their criminal record. One-third of them are Black. [7] In recent years, there has been a trend toward reinstating their right to vote often with some conditions. For example, in Florida in 2018, voters overwhelmingly approved a ballot question to repeal the law preventing those who had been convicted of a felony from voting after completing their sentences (except for those convicted of murder or a sex crime). However, the Republican Governor and legislature have gone out of their way to thwart the will of the people. As it currently stands, those who have completed their sentences, now also have to pay all restitution, fines, fees, and court costs before they are allowed to vote. This is effectively a new kind of poll tax and will keep an estimated 775,000 people, who are predominantly Black men, from voting this fall.

My next post will cover some of the secondary techniques for suppressing voting and steps we can take to increase voter participation and, thereby, the health of our democracy.

[1]      Hightower, J., 9/1/20, “Six ways the Right is shredding the right to vote,” Common Dreams from The Hightower Lowdown (https://www.commondreams.org/views/2020/09/01/six-ways-right-shredding-vote)

[2]      National Conference of State Legislatures, retrieved 9/20/20, “History of voter ID,” (https://www.ncsl.org/research/elections-and-campaigns/voter-id-history.aspx)

[3]      Bidgood, J., 9/20/20, “Alabama: ‘They’re doing everything to stop us from voting’,” The Boston Globe

[4]      Gibson, B., 9/14/20, “How Virginia made voting easier and fairer,” The American Prospect (https://prospect.org/politics/how-virginia-made-voting-easier-and-fairer/)

[5]      Durkin, E., 10/19/18, “GOP candidate improperly purged 340,000 from Georgia voter rolls, investigation claims,” The Guardian (https://www.theguardian.com/us-news/2018/oct/19/georgia-governor-race-voter-suppression-brian-kemp)

[6]      National Conference of State Legislatures, retrieved 9/21/20, “Felon voting rights,” (https://www.ncsl.org/research/elections-and-campaigns/felon-voting-rights.aspx)

[7]      Wood, E., 2016, “Florida: An outlier in denying voting rights,” Brennan Center for Justice (https://www.brennancenter.org/sites/default/files/publications/Florida_Voting_Rights_Outlier.pdf)

MAKE THE POST OFFICE GREAT AGAIN

The scandalous behavior of Louis DeJoy, the Trump administration’s new Postmaster General for the U.S. Postal Service (USPS), has gotten quite a bit of attention in the mainstream media; my previous two posts presented at least some of the rest of the USPS story. (My last post described the efforts to undermine and privatize the USPS, and, on the other hand, growing interest in reviving postal banking. My previous post described DeJoy’s Friday night massacre of personnel and the role of Treasury Secretary Mnuchin in the USPS shenanigans.)

In case you missed it, two new scandals have emerged involving the Trump administration’s leaders at the USPS. First, Postmaster General DeJoy faces multiple allegations that he pressured employees of his private business to make political contributions and rewarded employees if they did so with bonuses or raises. If true, this is a blatant violation of campaign finance laws. [1] Second, Robert Duncan, the chairman of the USPS Board of Governors (which formally appointed DeJoy), is a long-time major Republican fundraiser (as DeJoy is). Duncan recently was identified as one of three directors of a Republican Super PAC that has already spent nearly $18 million supporting Senate Republican candidates in the 2020 elections. Senate Majority Leader Mitch McConnell basically controls this Super PAC. Duncan’s long-time relationship with McConnell and his role with the Super PAC are coming under scrutiny as concerns are growing about political manipulation of the USPS. [2]

Here are a number of actions and policy changes that Congress should initiate to restore and strengthen the USPS and its ability to deliver quality services, which would make the USPS great again. After all, it is a public good that connects us with each other and supports our democracy and our economy. [3]

  • Investigate Postmaster General DeJoy and ultimately remove and replace him with a qualified, non-partisan leader.
  • End the Treasury Department’s and Secretary Mnuchin’s control over and involvement with the USPS.
  • Repeal the provisions of the 2006 Postal Accountability and Enforcement Act that require the USPS to pre-fund its retiree benefits and instead allow the USPS to account for its retiree benefits and present its finances using Generally Accepted Accounting Principles.
  • Repeal the provisions of the 1970 Postal Reorganization Act that require the USPS to be considered a private business and instead treat it like a public agency and a public service.
  • Rescind restrictions on the USPS’s operations and, for example, allow it to pursue postal banking to provide a valuable service to unbanked Americans and others poorly served by private, for-profit financial corporations.
  • Remove the requirement that the USPS invest its retiree benefits funds solely in Treasury Bonds; no private retirement fund would do this and it negatively affects investment returns and, therefore, increases costs for the USPS.
  • Explore the possibility of enrolling retirees in Medicare to more efficiently provide retiree health benefits.

These steps would allow the USPS to provide efficient, quality, universal service, while providing good jobs for its workers. They would stabilize and normalize the finances of the USPS and benefit the public.

DeJoy, Mnuchin, and Trump are engaged in sabotage of the USPS, plain and simple. They want to discredit it as a public agency, undermine its union workers, and shift its revenue to private companies (namely their friends and campaign contributors).

I urge you to contact your U.S. Representative and Senators to tell them that you support the U.S. Postal Service and oppose efforts to undermine it. Please also ask them to support postal banking to provide affordable and convenient basic financial services to the public, particularly low-income households. Private banks have failed to provide such services to many Americans and payday lenders have emerge to fill this gap but are taking advantage of desperate low-income workers.

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]      Queally, J., 9/6/20, “ ‘This is against the law and DeJoy must be fired’: Postmaster General accused of criminal violation of campaign laws,” Common Dreams (https://www.commondreams.org/news/2020/09/06/against-law-and-dejoy-must-be-fired-postmaster-general-accused-criminal-violation)

[2]      Johnson, J., 9/1/20, “ ‘The corruption is bottomless’: Documents reveal chair of postal service board is Director of McConnell-allied Super PAC,” Common Dreams (https://www.commondreams.org/news/2020/09/01/corruption-bottomless-documents-reveal-chair-postal-service-board-director-mcconnell)

[3]      Anderson, S., Klinger, S., & Wakamo, B., 7/15/19, “How Congress manufactured a postal crisis – and how to fix it,” Institute for Policy Studies (https://ips-dc.org/how-congress-manufactured-a-postal-crisis-and-how-to-fix-it/)

THE REST OF THE POST OFFICE STORY Part 2

The scandalous behavior of Louis DeJoy, the Trump administration’s new Postmaster General for the U.S. Postal Service (USPS), has gotten quite a bit of attention in the mainstream media, but there’s more to the story than they have been reporting. This post and my previous post present at least some of the rest of the story. (My previous post described DeJoy’s Friday night massacre of personnel and the role of Treasury Secretary Mnuchin, who obtained sweeping operational control over the USPS and unprecedented access to its information through negotiation of a $10 billion line of credit for the USPS from the Treasury. [1] [2] )

Despite the current characterization of the USPS has operating at a loss, the postal service wasn’t viewed as a profit-making business by our country’s founders or throughout most of its history. Moreover, Congress has put requirements and restrictions on it that mean it can’t be run like a business.

The USPS is a public good that supports our democracy, a civil society, and other economic activity, as roads and schools do; it shouldn’t be run like a business to make a profit. We don’t expect the military or the National Park Service to generate a profit, so why should we expect the USPS to generate a profit? Our country’s founders thought of the postal service as critical to ensuring that citizens of the new democracy were well informed and therefore believed it should, among other things, subsidize delivery of newspapers. According to the Postal Policy Act of 1958, the USPS provides an essential public service that promotes “social, cultural, intellectual, and commercial intercourse among the people of the United States”. The Act also states that the USPS is “clearly not a business enterprise conducted for profit.” [3]

However, in 1970, as the era of deregulation and privatization began under President Nixon, the Postal Reorganization Act made the USPS an independent federal agency (instead of a Cabinet agency like the Departments of Education or Defense) and required it to cover its costs. Nonetheless, the law limited the USPS’s ability to increase prices for its services, expected it to deliver mail to every household and business in America six days a week, and required it to keep postal rates the same across the whole country despite substantial differences in the costs of delivering mail in different areas. [4]

Since then, Republicans have been trying to privatize the USPS because it represents a large revenue stream, $71 billion a year, that they would like to see go to their friends and campaign contributors in the private sector. One strategy for doing this has been to undermine the USPS and make it look bad, to make it look like it’s poorly run, and to make it look like it’s operating at a deficit, in order to build an argument that privatizing it would make sense.

In 2006, in what many observers felt was an effort to make the USPS look financially unstable and therefore ripe for privatization, the Postal Accountability and Enforcement Act (PAEA) was passed. It required the USPS to pre-fund retiree health benefits far into the future, which no other federal agency or private business is required to do. Specifically, it required the USPS to pay $5 billion to $6 billion a year into a retiree health benefit fund from 2007 to 2017. This has made the USPS appear to be running a deficit, when, without these payments, the USPS would have reported operating surpluses from 2013 through 2018. [5]

The current slowing of mail service is just another tactic in the effort to make the USPS look bad. The resultant inability to deliver ballots or medicines in a timely fashion, not only makes it look bad, but also undermines its revenue because mailers and shippers are shifting their business to competing, private service providers. For example, the slowdown is forcing the Veterans’ Administration to use private shipping services to get medicines to patients in a timely fashion and Amazon is building up its in-house delivery capacity and its fleet of vehicles.

The USPS is prohibited by law from branching out into new business lines that could boost its revenue and its services to the public. Offering basic banking services is one example, for which there is historical precedent. From 1911 to 1967, the USPS offered savings accounts. In 1967, the Postal Savings System was terminated at the behest of private bankers who did not want its competition. Today, money orders are the only financial service offered by the USPS. [6]

Postal banking is now receiving renewed attention because there are sizable poor urban and rural areas where bank branches are scarce. In addition, private banks have a track record of charging high interest rates and fees to low-income account holders, as well as failing to provide equitable treatment in access to credit and other financial services. As a result, 9 million U.S. households are effectively excluded from banking services and are described as “unbanked”.

The payday lending business has emerged to fill this gap and has grown into a $90 billion business. However, its usurious interest rates and fees, and its business model of locking customers into a cycle of debt that it’s often difficult to escape from, have led to a search for more consumer-friendly alternatives. In 2014, the USPS’s Inspector General noted that the USPS could make profitable loans at a much lower costs to consumers than what payday lenders were and are providing.

In the presidential primaries, a number of the Democratic candidates proposed allowing the USPS to offer basic banking services and Senator Biden, the Democratic nominee for President, supports this policy proposal. It would make basic banking services more accessible and affordable, particularly for low-income households.

In the face of this revived interest in postal banking, which would help the finances of the USPS and benefit the public, Postmaster General DeJoy and Treasury Secretary Mnuchin have reportedly engaged in discussions with megabank JPMorgan Chase (JPMC) about putting its ATMs in post offices and giving JPMC the exclusive right to solicit banking business from postal customers. This is clearly a backdoor effort to eliminate the possibility of postal banking – competition private sector bankers and payday lenders vehemently oppose. (So much for the private sector’s belief in a free market and competition!) Moreover, this doesn’t address the issue of unbanked people because if they don’t have a bank account, they can’t use the ATM. JPMC has a particularly troubling track record in this regard as it has historically failed to provide branch services in low-income, minority, or immigrant neighborhoods. [7]

A postal banking system would provide free usage of Treasury Direct Express cards and other government payment services. This would have streamlined and simplified the distribution of the pandemic emergency relief funds to low-income households who badly needed the $1,200 but didn’t have bank accounts to which the money could be electronically transmitted. Furthermore, the privacy of users’ information would be much better protected by the USPS, which could only collect limited user information and is barred from sharing it. A private bank, on the other hand, will collect as much information as it possibly can and will use it, share it, and sell it for commercial, profit-making purposes.

Mnuchin and DeJoy are engaged in sabotage of the USPS, plain and simple. They want to discredit it as a public agency, undermine its union workers, and shift its revenue to private companies (namely their friends and campaign contributors).

My next post will review policy changes that would strengthen the USPS and better serve the public.

[1]      Dayen, D., 8/18/20, “Treasury’s role in postal sabotage,” The American Prospect (https://prospect.org/blogs/tap/treasurys-role-in-the-postal-sabotage)

[2]      Queally, J., 8/8/20, “ ‘Friday night massacre’ at US Postal Service as Postmaster General – a major Trump donor – ousts top officials,” Common Dreams (https://www.commondreams.org/news/2020/08/07/friday-night-massacre-us-postal-service-postmaster-general-major-trump-donor-ousts)

[3]      Editorial, 8/21/20, “The US postal service lost $0,” The Boston Globe

[4]      Morrissey, M., 8/11/20, “Trump’s war on the Postal Service helps corporate rivals at the expense of working families,” Economic Policy Institute (https://www.epi.org/blog/trumps-war-on-the-postal-service-helps-corporate-rivals-at-the-expense-of-working-families)

[5]      McCarthy, B., 4/15/20, “Widespread Facebook post blames 2006 law for US Postal Service’s financial woes,” PolitiFact, The Poynter Institute (https://www.politifact.com/factchecks/2020/apr/15/afl-cio/widespread-facebook-post-blames-2006-law-us-postal)

[6]      Shaw, C. W., 7/21/20, “Postal banking is making a comeback. Here’s how to ensure it becomes a reality.” The Washington Post (https://www.washingtonpost.com/outlook/2020/07/21/postal-banking-is-making-comeback-heres-how-ensure-it-becomes-reality/)

[7]      Carrillo, R., 8/30/20, “Postal banking: Brought to you by JPMorgan Chase?” Inequality.org (https://inequality.org/research/postal-banking-jpmorgan/)

THE REST OF THE POST OFFICE STORY

The scandalous behavior of Louis DeJoy, the Trump administration’s new Postmaster General for the U.S. Postal Service (USPS), has gotten quite a bit of attention in the mainstream media, but there’s more to the story than they have been reporting. Here’s at least some of the rest of the story.

First, to provide some context, the USPS delivers 472 million pieces of mail every day, including 182 million pieces of first-class mail. It delivers mail to 159 million households and businesses each year, including 1.2 billion prescribed medications, and generates $71 billion a year in operating revenue. It employs 500,000 career employees, who receive stable jobs with decent benefits and include a disproportionate share of military veterans and Black Americans. The USPS, until recently, had an excellent service record and has low costs compared to other countries. [1] (You know this if you’ve ever bought postage in another country.)

Despite what some people are saying, the USPS has plenty of capacity to handle mail-in ballots, which in the extreme might produce 10 – 20 million ballots on any given day, which is only about 10% of normal daily volume. Delaying the delivery of ballots, however, could be serious as this could mean that ballots aren’t delivered by the required deadlines for being counted. DeJoy’s management edicts have already made delivery delays a reality due to the removal of sorting machines and banning of overtime (despite the fact that thousands of USPS employees are out sick due to the coronavirus).

Again, despite what some people are saying, the USPS has more than enough funds to operate through the end of the year, although it has lost substantial revenue during the pandemic and deserves special support just like businesses are getting. It has almost $13 billion on hand (as-of Aug. 7) and it has a $10 billion line of credit from the U.S. Treasury that was included in the original coronavirus bill enacted in March. [2] By the way, commercial package delivery does not lose money for the USPS. Its agreements with Amazon, FedEx, and UPS, who regularly use the USPS to perform the most expensive portion of delivery service, the “last mile” to places other delivery services won’t bother to go, are profitable. Commercial packages are the only growing line of business for the USPS, especially since the pandemic hit. [3]

Treasury Secretary Mnuchin negotiated the terms of the $10 billion line of credit for the USPS that was included in the coronavirus relief law to give him and the Treasury Department sweeping operational control over the USPS and unprecedented access to its information. As a result, Mnuchin has played a major role in USPS affairs, including in the appointment of DeJoy as the Postmaster General. The Trump administration has claimed that an executive search firm was used to find the new Postmaster General. However, recent evidence has revealed that DeJoy was not one of the candidates from the search process but was put forth by Mnuchin. The USPS Board of Governors, all of them Trump appointees, formally appointed DeJoy the Postmaster General on June 15th. DeJoy is a North Carolina businessman and a major Republican fundraiser. His knowledge of the USPS is limited to the fact that a company of his did some subcontract work for the USPS. The company was a virulently anti-union company and some of his (and Mnuchin’s) initiatives appear targeted at undermining the USPS workers’ union.

Using his negotiated operational control of the USPS, Mnuchin had a Treasury (not USPS) task force set USPS policies that included reducing employee pay and benefits, partially by reducing overtime. He has inserted himself into hiring decisions, including the selection of the new Postmaster General. He also exerted influence on the terms of large USPS contracts. Union leaders warned that the implementation of Mnuchin’s task force’s policies would slow delivery of the mail and lead to privatization. So far, they have been right. [4]

David Williams, vice chair of the USPS Board of Governors and a Trump appointee, resigned in May to protest the handing over of effective operational control of the USPS to Mnuchin. He recently reported that Mnuchin required the members of the supposedly independent Board of Governors to meet with him to discuss the process for selecting the Postmaster General. He stated that the Board interviewed candidates who were qualified, but that DeJoy had to be coached and supported during his interview, demonstrating a lack of knowledge about the USPS and that he was unfit for the job. [5] DeJoy was not a candidate identified by the executive search company the USPS hired to find the new Postmaster General. Williams also stated that the removal of blue, street-corner mailboxes had not been previously planned and that it was specifically promoted by Mnuchin.

DeJoy quietly conducted a Friday night (literally) massacre of personnel while the mainstream media focused on the slowing of mail service and the removal of blue, street-corner mailboxes and sorting machines. (So-called Friday night massacres are done late in the day on Fridays to avoid news coverage and to hide them from public attention.) On Friday, August 7, DeJoy reassigned or displaced 23 USPS senior management personnel. He has also implemented a hiring freeze and is pushing for employees to take early retirement. [6]

The loss of so many people and their expertise through DeJoy’s personnel moves would seem likely to undermine the effective operation of the USPS, given that DeJoy has no experience at and little knowledge of the USPS and its operations. (The previous Postmaster General retired after a 34-year career at the USPS.) Coupled with other operational changes DeJoy has made, the USPS’s ability to deliver the mail in a timely fashion and its longer-term financial outlook seem likely to be harmed.

My next post will provide some historical perspective and identify some steps that should be taken to strengthen the USPS.

 

[1]      Morrissey, M., 8/11/20, “Trump’s war on the Postal Service helps corporate rivals at the expense of working families,” Economic Policy Institute (https://www.epi.org/blog/trumps-war-on-the-postal-service-helps-corporate-rivals-at-the-expense-of-working-families)

[2]      Kuttner, R., 8/17/20, “Postal service has plenty of capacity to deliver mail-in ballots,” The American Prospect (https://prospect.org/politics/postal-service-mail-in-ballots-10-billion-dollar-credit-treasury)

[3]      Brody, B., 8/19/20, “Amazon, USPS deal profitable,” The Boston Globe from Bloomberg News

[4]      Dayen, D., 8/18/20, “Treasury’s role in postal sabotage,” The American Prospect (https://prospect.org/blogs/tap/treasurys-role-in-the-postal-sabotage)

[5]      Johnson, J., 8/21/20, “ ‘Complete bombshell’: Former top USPS official reveals ‘disturbing’ new details of DeJoy selection and Mnuchin sabotage of mail service,” Common Dreams (https://www.commondreams.org/news/2020/08/21/complete-bombshell-former-top-usps-official-reveals-disturbing-new-details-dejoy)

[6]      Queally, J., 8/8/20, “ ‘Friday night massacre’ at US Postal Service as Postmaster General – a major Trump donor – ousts top officials,” Common Dreams (https://www.commondreams.org/news/2020/08/07/friday-night-massacre-us-postal-service-postmaster-general-major-trump-donor-ousts)

EXAMPLES OF CONTINUAL CORRUPT CORPORATE BEHAVIOR

Here are three recent examples of corrupt corporate behavior. They show the breadth of the corruption – the leveraging of undeserved power and wealth – from corrupting government policy making to exacerbating economic inequality to corruptly maximizing profits.

U.S. Representative Richie Neal (Democrat of Massachusetts) received $54,000 in a two-month period from lobbyists for corporations with a financial stake in his actions that blocked meaningful control of health care costs. In December 2019, a bipartisan, House and Senate compromise on controlling health care costs was all set to pass as part of a larger appropriations bill. Among other things, the Lower Health Care Costs Act would have eliminated exorbitant surprise medical bills for out-of-network services by limiting their cost to that of equivalent in-network services. It also would have required pharmaceutical firms to disclose information related to increases in drug prices. [1]

Three days after the Lower Health Care Costs Act was finalized and on track to become law, Neal, Chairman of the powerful Ways and Means Committee, undermined it and got it dropped from the larger appropriations bill that was destined to pass into law. He did this by announcing that he and his Republican counterpart would draft a counterproposal, although no details were presented.

On February 7, 2020, less than two months later, Neal released his alternative bill. Key provisions of the Lower Health Care Costs Act had been eliminated or weakened. For example, rather than eliminating surprise medical bills, it included a weak substitute: voluntary negotiations and arbitration. The previous requirement for disclosures relevant to drug price increases was eliminated. In the two-month window from Neal’s blocking of the original bill to the release of his own much weaker bill, he collected $54,000 in donations from 12 lobbyists who worked for clients opposed to the original Lower Health Care Costs Act. These 12 donations represented two-thirds of his campaign contributions in the first quarter of 2020.

If this isn’t corruption, I don’t know what is. It appalls me that this is a legal and accepted campaign fundraising pattern. Clearly, we need to strengthen our campaign finance laws.

On a different front, a report from the Economic Policy Institute [2] found that in 2019 average pay was $21 million for Chief Executive Officers (CEOs) at the 350 largest corporations in the U.S. This is up 14% from the year before and 1,167% since 1978, while a typical worker’s pay has grown by only 14% since 1978. In other words, each $1.00 of a worker’s pay grew to $1.14 over those 40 years while each $1.00 of a CEO’s pay grew to $12.67. The ratio of CEO pay to the average worker’s pay is now 320 to 1, having grown dramatically from 61 to 1 in 1989 and 21 to 1 in 1965.

Skyrocketing CEO pay is a significant contributor to economic inequality, which continues to rise to unprecedented levels. The economy would not be harmed in the slightest if CEOs were paid less and/or taxed more.

There are many policy changes that would address excessive CEO pay if policy makers had the will to enact them, including:

  • The income tax rate on high incomes could be increased to previous levels (which in the 1970s were roughly double current rates),
  • Corporate tax rates could be increase for firms with high CEO-to-worker pay ratios, and
  • A vote by shareholders could be required annually to approve CEO pay.

And then there’s the pharmaceutical industry that continually engages in corrupt corporate behavior, which displays its greed, market power, and lack of concern for stakeholders other than shareholders and executives. Two recent examples are summarized below.

First, Teva Pharmaceuticals is being sued by the federal government for illegally funneling $300 million through two charitable foundations to support the price and sales of its multiple-sclerosis drug, Copaxone. The Justice Departments suit claims the company used the foundations to insulate some patients from big price increases in order to prop up the excessive price of Copaxone for others. From 2007 to 2015, Copaxone’s price more than quadrupled from roughly $17,000 per year to over $73,000. [3]

In addition, in January 2020, Teva had paid a $54 million settlement for bribing doctors with fraudulent “speaking fees” to prescribe Copaxone and other drugs it makes.

Second, Gilead Sciences announced recently that it will charge patients with private insurance $3,120 for the five-day course of treatment with the experimental COVID-19 drug remdesivir. Some government programs may get a lower price and other developed countries will pay about 75% of the U.S. price. Reaction to the price has been mixed with some advocates and members of Congress saying Gilead is taking advantage of Americans during a pandemic. Taxpayers have invested about $100 million in the drug and some feel it should be public owned and not in private hands as a result. The U.S. Department of Health and Human Services (DHHS) recently purchased 500,000 treatment courses, three months’ worth of Gilead’s production, for an estimated $1.5 billion. DHHS will distribute the drug to hospitals around the country. [4]

Clearly, the U.S. needs stronger regulation of pharmaceutical firms, including disclosures relevant to drug pricing (like those in the Lower Health Care Cost Act). We also need to allow and empower Medicare and Medicaid to negotiate drug prices paid to pharmaceutical corporations, as the U.S. Veterans’ Administration, private insurers, and other countries do.

[1]      Shaw, D., 5/5/20, “Neal took big bucks from lobbyists while killing a surprise medical bill fix,” Sludge (https://readsludge.com/2020/05/05/neal-took-big-bucks-from-lobbyists-while-killing-a-surprise-medical-bills-fix/)

[2]      Mishel, L., & Kandra, J., 8/18/20, “CEO compensation surged 14% in 2019 to $21.3 million,” Economic Policy Institute (https://www.epi.org/publication/ceo-compensation-surged-14-in-2019-to-21-3-million-ceos-now-earn-320-times-as-much-as-a-typical-worker/)

[3]      Bloomberg News, 8/19/20, “Talking points: Pharmaceuticals,” The Boston Globe

[4]      Lupkin, S., 6/29/20, ”Remdesivir priced at more than $3,100 for a course of treatment,” National Public Radio (https://www.npr.org/sections/health-shots/2020/06/29/884648842/remdesivir-priced-at-more-than-3-100-for-a-course-of-treatment)

PERSONNEL IS POLICY AND LARRY SUMMERS IS A DISASTER Part 2

As Senator Elizabeth Warren has stated on numerous occasions, “Personnel is policy.” The people who implement policies are the ones who ultimately determine what the policy is; their actions are more important than their or anyone else’s words.

Larry Summers is a classic example of this. My last post summarized his resume and his disastrous performance in President Clinton’s Treasury Department. It also noted that he is currently a senior adviser to Senator Joe Biden’s presidential campaign and that he may well aspire to a senior post under Biden if he is elected president. [1] Here are some additional reasons Biden needs to reject Summers and his policies.

After serving as Treasury Secretary under President Clinton, Summers returned to Harvard as its president in 2001 after George W. Bush won the 2000 presidential election. At Harvard he:

  • Alienated faculty members by denigrating many of them, including the whole sociology department,
  • Questioned the scholarship of Cornel West (a high-profile black professor),
  • Also questioned the ability of women to succeed in math and the sciences, and
  • Commandeered investment decision making, despite Harvard’s well-paid and highly successful money managers. Summers’ investment mistakes cost Harvard roughly $1.8 billion and had serious effects on its budget. [2]

As a result of all of this, and after a no-confidence vote by the faculty, Summers resigned as Harvard’s president in 2006. In 2008, before returning to the government, Summers earned $600,000 as a Harvard “University Professor”, $5.2 million from the private equity firm D.E. Shaw, and $2.7 million from speaking fees, largely from financial corporations. Clearly, Wall St. was the butter on his bread.

In 2009, Summers returned to the federal government as head of the President Obama’s Economic Council. As the Obama administration formulated its response to the Great Recession from the 2008 financial collapse (for which Summers bears significant responsibility), he pushed to reduce the size of the economic stimulus, to minimize the support for state and local governments, and for the budget deficit to be kept as small as possible. As a result, the recovery was slowed and high unemployment persisted. Summers promised substantial spending to provide foreclosure relief for homeowners and a reform of bankruptcy laws so that underwater homeowners could reduce the principal on their mortgages. However, he did not deliver on this rhetoric and seemed much more focused on rescuing the banks than homeowners. He also opposed a financial transaction tax, which would have generated needed revenue and curbed short-term trading that can destabilize financial markets, even though in 1989 he had co-authored an academic article arguing for such a tax. [3]

To summarize, no single person bears more responsibility than Larry Summers for Democrats’ support for Wall St. deregulation, outsourcing of jobs to foreign countries, fiscal austerity at home and abroad (even in the face of recessions and economic hardship for the masses), and privatization of public assets and responsibilities both in the U.S.  and internationally. [4] Summers’ consistent policy prescription has been to apply free market theory (which benefits his cronies in the financial industry, wealthy individuals, and large multi-national corporations), even when this was inappropriate for the situation. Other economists and policy makers raised concerns about Summers’ policies, but he persisted even after they led to disaster after disaster.

For example, Summers’ catastrophic policy decisions or miscalculations led to:

  • The 2008 financial collapse whose key triggers were his blocking of regulations on the financial industry and of all regulation of derivatives,
  • The slow recovery and enduring high levels of unemployment from the 2008 Great Recession due to his prioritizing of support for financial corporations while minimizing support for homeowners, workers, and the economy as a whole, and
  • Hyper-inflation, economic hardship for workers, and the discrediting of democracy as an effective form of government in Russia and Third World countries due to his policies demanding rapid privatization and free marketization.

Although Summers’ rhetoric has turned more progressive lately as he jockeys for a role in the Biden campaign and in the government if Biden wins, he has denounced wealth tax proposals from Senators Warren and Sanders in the presidential campaign, which are supported by many progressives. Moreover, his actions speak louder than his words and he has consistently supported deregulation and policies that benefit wealthy individuals and corporations – including his own work in the financial industry.

If you believe that:

  • Economic inequality is a problem that the U.S. needs to address,
  • The financial industry should be regulated so it doesn’t crash our economy again and again,
  • Consumers should be protected from dangerous, predatory financial products,
  • The world should be protected from destructive free market privatization and speculation, and
  • Workers should be protected from trade treaties that benefit large multi-national corporations and drive a race to the bottom for workers,

then Larry Summers is NOT your man – and he shouldn’t be Biden’s man either. Personnel is policy and if Summers is influential in Biden’s campaign or administration these issues will NOT be tackled through any significant policy initiatives.

I encourage you to keep an eye out for Summers and his policies. If they appear to be gaining traction with Biden or his administration if he’s elected, please be ready to object.

[1]      Kuttner, R., 8/7/20, “Did Summers jump, or was he pushed?” The American Prospect (https://prospect.org/blogs/tap/did-larry-summers-jump-or-was-he-pushed/)

[2]      Kuttner, R., 7/13/20, “Falling upward: The surprising survival of Larry Summers,” The American Prospect (https://prospect.org/economy/falling-upward-larry-summers/)

[3]      Kuttner, R., 7/13/20, see above

[4]      Dayen, D., 5/13/20, “Dr. Jekyll, or Mr. Biden?” The American Prospect (https://prospect.org/politics/dr-jekyll-or-mr-biden/)

PERSONNEL IS POLICY AND LARRY SUMMERS IS A DISASTER

As Sen. Elizabeth Warren has stated on numerous occasions, “Personnel is policy.” Platforms, policy statements, and rhetoric are nice, but the people who are in charge of implementing policies are more influential. In judging personnel, as well as candidates or elected officials, past actions are more important than words.

There is perhaps no better example of this than Larry Summers, who is a senior adviser to Sen. Joe Biden’s presidential campaign. Everyone seems to agree that he is brilliant, politically nimble (or some might say shifty), and a consummate bureaucratic infighter. He is known for his boundless self-confidence and his vindictive retribution against those who oppose or expose him. He is well-connected, particularly to powerful Wall St. elites, and has numerous proteges who are or have been in powerful positions in government and the financial industry.

Summers recently announced that he would not take a job in a Biden administration. This was likely due to the strong resistance to him from progressives, which may have led Biden to decide that Summers should not be part of his administration. Nonetheless, Summers is still likely to be, either directly or through this proteges, an informal and potentially influential adviser to Biden. Summers is also known to covet the job as Chair of the Federal Reserve, a position he previously tried to get. Because it is technically not in the Biden administration but is a presidential appointment at the independent Federal Reserve, this position may not be ruled out by his statement. So, Summers, his influence and his potential to play a major role in a government entity, cannot be ignored. [1]

As background, his resume includes:

  • Harvard economics professor (1983-1991)
  • Chief Economist and Vice President of Development Economics at the World Bank (1991-1993)
  • S. Treasury Department (1993 – 2001 under President Clinton) as Undersecretary for international affairs (1993-1995), Deputy Secretary (1995-1999), and Treasury Secretary (1999-2001)
  • President of Harvard University (2001-2006); faculty member (2006-2008)
  • Simultaneously, Managing Director, D.E. Shaw (private equity firm) and highly paid speaker, typically for Wall St. firms (2006-2008)
  • Director, National Economic Council (2009-2010 under President Obama)
  • Harvard faculty member (2011 – current)
  • Simultaneously, Managing Director, D.E. Shaw (private equity firm) (2011 – current)

In his time at the U.S. Treasury, Summers pressured the former Soviet Union and Third World countries to rapidly adopt free market economies and privatize public assets. These efforts repeatedly proved to be disastrous. Financial crises in Russia, Mexico, and East Asia were the result. Typically, inflation soared, workers’ wages fell, government services were cut, oligarchs became rich and powerful, and in Russia, Putin took dictatorial power after the supposed transition to democracy was a total disaster and democratic governance was completely discredited. [2]

As Summers was driving U.S. Russia policy, his close friend and Harvard colleague, Andrei Shleifer, got a government contract and engaged in insider trading based on it. Shleifer headed up a Harvard-based project in Moscow that was the lead contractor for USAID in helping with Russia’s economic transition. According to federal prosecutors, Shleifer and his wife were making investments based on insider information they got through the USAID project. The case was finally settled in 2004, when Summers was president of Harvard, and Harvard paid a $26.5 million settlement and Shleifer paid $2 million but retained his tenured professorship at Harvard. This was one of the issues that led to Summers departure as Harvard’s president.

Summers also promoted trade agreements that benefited Wall St. financial businesses and large, multi-national corporations, at the expense of American workers. For example, he advocated for admitting China to the World Trade Organization and promoted the North American Free Trade Agreement (NAFTA). He also opposed reviving enforcement of antitrust laws, despite the clear growth in size and market power of huge corporations, and ignored the need to address climate change.

Summers aggressively opposed regulation of derivatives (financial instruments / investments based on or derived from other financial instruments such as mortgage-backed securities, options to buy or sell securities, credit default swaps, etc.). Through his efforts and those of his cronies regulation of derivatives by the federal government was banned by the Commodity Futures Modernization Act of 2000. It also banned states from regulating them.

Predatory lending practices (where borrowers had a high risk of default) proliferated under Summers’ deregulation of financial markets. “The interaction of predatory subprime lending with unregulated and opaque derivatives such as credit default swaps was the single most important cause of the 2008 financial collapse.” (page 23) [3]

Summers returned to Harvard as President in 2001 after George W. Bush won the 2000 presidential election. My next post will present a summary of his performance at Harvard and his return to government under President Obama.

[1]      Kuttner, R., 8/7/20, “Did Summers jump, or was he pushed?” The American Prospect (https://prospect.org/blogs/tap/did-larry-summers-jump-or-was-he-pushed/)

[2]      Kuttner, R., 7/13/20, “Falling upward: The surprising survival of Larry Summers,” The American Prospect (https://prospect.org/economy/falling-upward-larry-summers/)

[3]      Kuttner, R., 7/13/20, see above

ENHANCED UNEMPLOYMENT BENEFITS NEEDED BY WORKERS – AND BUSINESSES

The enhanced unemployment benefits provided by the federal government expired this week and whether Congress will extend them is unknown. The federal program added $600 per week to the unemployment benefits provided by the states, which vary substantially from Mississippi’s $235 per week to Massachusetts’s $795. The amount received typically depends on how much a worker was earning and, in some states, the amount can increase based on the number of dependents a worker has.

Republicans are claiming that the added $600 per week serves as a disincentive for people to return to work and therefore this program should not be continued. It is possible that a few people would choose to continue to collect the enhanced unemployment benefit and not go back to work, but this number and its impact would be negligible, especially when compared to the positive effects of continuing the enhanced unemployment benefit.

The assertion that large numbers of workers wouldn’t go back to work is a myth with racist overtones as its premise is that many of “those people” are lazy and happy to collect welfare or other public benefits rather than work. [1]

Here are five reasons that make the case for continuing the enhanced unemployment benefit and that rebut the argument that doing so would mean workers wouldn’t return to work.

First, roughly 24.5 million Americans are unemployed, largely due to the coronavirus pandemic, and need financial assistance. Many of these workers simply cannot support their families on the unemployment benefit amounts provided by their states and a significant number of these families would fall into poverty without the enhanced benefit.

Second, given that consumer spending is roughly two-thirds of economic activity in the U.S., the enhanced unemployment benefit means people have money to spend, which keeps our economy and businesses going. Putting this money directly into workers’ pockets is one of the most effective ways to counter the economic slowdown of the pandemic. If all 24.5 million people without jobs were collecting the $600 per week federal supplement, that would be $14.7 billion that workers would be receiving. The great majority of that would be spent immediately on living expenses. That’s $14.7 billion a week that would not be spent in the U.S. economy if these benefits stop. It is estimated that the loss of this spending would result in the loss of 5.1 million jobs. [2]

Third, Americans were returning to work in record numbers and the unemployment rate was falling in May and June even though the enhanced unemployment benefit was being paid. Clearly, people want to work even if their unemployment benefit is greater than what they would get paid to work, given that for two-thirds of those who qualify for unemployment benefits the enhanced benefit is greater than what they were paid at work. (The fact that the enhanced unemployment benefit is more than they earned is a sad commentary on our low minimum wage and the low wages paid by many employers.) Workers know that the unemployment benefit is temporary and that they can lose the benefit if they aren’t actively looking for work, so if a job is available, the great majority of them will take it. [3]

Fourth, the still high unemployment rate (over 11% at the end of June) reflects the lack of available jobs. Workers can’t be incentivized by reduced benefits to take jobs that don’t exist. Moreover, the biggest disincentive to returning to work is the danger of becoming infected with the coronavirus, which is killing over 1,000 Americans a day.

Fifth, cutting unemployment benefits, when paid sick leave is far from universal, increases the risk that workers will go back to work even if they don’t feel well or have been exposed to the coronavirus because they would need the income from work if they aren’t getting the enhanced unemployment benefit. This obviously increases the risk they will spread the coronavirus to co-workers, customers, and others they come in contact with at work or in getting to and from work. This risk is exacerbated by the difficulty of getting a test for COVID-19 and the lack of quick availability of test results.

For all these reasons, not to mention a basic sense of fairness and humane decency, the $600 per week enhanced unemployment benefit from the federal government should be continued. I urge you to contact your U.S. Representative and your Senators and ask them to support the continuation of this emergency unemployment benefit. Please do this NOW as this decision may well be made this week as part of the pandemic relief bill currently moving through Congress.

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]      Editorial, 7/30/20, “No, unemployment benefits do not discourage work,” The Boston Globe

[2]      Sainato, M., 7/13/20, “Millions of U.S. workers still unemployed as enhanced benefits set to expire,” The American Prospect (https://prospect.org/coronavirus/millions-workers-still-unemployed-as-benefits-expire/)

[3]      Editorial, 7/30/20, see above

WE CAN’T AFFORD OUR RIGGED TAX SYSTEM

Our unfair tax system is one piece of our rigged economic system. To put our tax system in some perspective, the Internal Revenue Service (IRS) collects nearly 95% of all the federal government’s revenue; it collected $3.5 trillion in taxes in 2018.

My previous post on how our overall economic system is rigged, noted that the CARES Act, the $2.2 trillion coronavirus pandemic response, tilted our tax system further in favor of the wealthy by providing $135 billion in tax cuts for the richest 1% of Americans. This is money that could have been used to provide aid to workers who lost their jobs or to buy personal protective equipment for front-line workers or other needs related to the effects of the pandemic. Ironically, Republicans are now complaining about the cost of the pandemic relief efforts!

Another example of the rigging of our tax system in favor of wealthy individuals and corporations is the substantial tax cuts for corporations and wealthy individuals that were at the center of the 2017 Tax Cuts and Jobs Act (TCJA). The Act failed to deliver any significant benefits to workers and the middle class, despite politicians’ promises. (See this post for more detail.)

However, the tax cuts of the TCJA weren’t enough for the big multi-national corporations, so they lobbied, quite successfully, to rig the tax system even further to their benefit by getting additional tax reductions in the rules and regulations that were written to implement the TCJA. (See this post for more detail.)

A year after the TCJA passed, a study of the largest corporations in the U.S. found that of 379 large, profitable corporations:

  • 91 (almost a quarter of them) paid no federal income tax including Amazon, Chevron, Halliburton, and IBM.
  • Another 56 of them (15%) paid less than 5% of profits in taxes.
  • The average effective federal income tax rate for these 379 large, profitable corporations was 11.3%, barely half of the reduced tax rate of 21% in the TCJA (down from 35%), and the lowest rate in the history of this analysis, which was first done in 1984. [1]

So, not only are wealthy individuals and corporations successful in getting politicians to cut the taxes they owe, but many of them then do everything they can to avoid paying even the reduced (I’m tempted to say, minimal) taxes they owe under our rigged tax system.

Some of them simply don’t pay the taxes they owe. According to a recent report from the Congressional Budget Office (CBO) [2] unpaid taxes averaged $381 billion per year (roughly 14% of federal taxes owed) from 2011 to 2013. The richest 1% of taxpayers are responsible for 70% ($267 billion) of this total. [3]

The amount of unpaid taxes is growing because the IRS’s budget has been cut by 20% since 2010 (after adjusting for inflation), reducing its capacity to crack down on tax avoidance. Audits of the tax returns of the highest income taxpayers have declined by 63% from 2010 to 2018 and now occur at the same rate as for the poorest taxpayers. This has happened because the IRS no longer has the capacity to engage in audits of the complex tax returns of the rich. The number of IRS personnel who handle these complex cases fell by about 40% between 2010 and 2018. [4] Enforcement action against high-income individuals who do not file a tax return has been reduced to simply mailing a notice to them.

The CBO report estimated that for every dollar added to the IRS budget for tax law enforcement, about three dollars in unpaid taxes would be collected. In addition to reduced auditing of wealthy individuals, the frequency of audits of the largest corporations (those with over $20 billion in assets) also dropped from 2010 to 2018; it dropped by roughly 50%.

In his reaction to the CBO report, Senator Sanders stated that “the primary beneficiaries of IRS funding cuts are wealthy tax cheats and large corporations.” [5] In response to an earlier study of audit rates, Senator Wyden stated that “We have two tax systems in this country, and nothing illustrates that better than the IRS ignoring wealthy tax cheats while penalizing low-income workers over small mistakes.” [6]

Our tax system is rigged from top to bottom – from reduced tax rates for wealthy individuals and corporations, to tax loopholes and subsidies for them, to tax dodging by them, to weak enforcement of tax laws to stop their tax avoidance. Hundreds of billions of dollars (actually probably well over a trillion dollars) of tax revenue from wealthy individuals and businesses are lost every year because of unfairly low tax rates, special interest tax breaks, and tax dodging.

When politicians say we can’t afford to support education or unemployment benefits or food assistance or whatever, don’t believe them. What we can’t afford is rich individuals and corporations who don’t pay their fair share in taxes due to our rigged tax system.

[1]      Gardner, M., Roque, L., & Wamhoff, S., Dec. 2019, “Corporate tax avoidance in the first year under the Trump tax law,” Institute on Taxation & Economic Policy (https://itep.org/corporate-tax-avoidance-in-the-first-year-of-the-trump-tax-law/)

[2]      Congressional Budget Office, July 2020, “Trends in the Internal Revenue Service’s funding and enforcement,” (https://www.cbo.gov/system/files/2020-07/56422-CBO-IRS-enforcement.pdf)

[3]      Johnson, J., 7/9/20, “‘An absolute outrage’: Sanders rips ‘wealthy tax cheats’ as CBO estimates $381 billion in annual unpaid taxes,” Common Dreams (https://www.commondreams.org/news/2020/07/09/absolute-outrage-sanders-rips-wealthy-tax-cheats-cbo-estimates-381-billion-annual)

[4]      Congressional Budget Office, July 2020, see above

[5]      Johnson, J., 7/9/20, see above

[6]      Kiel, P., 5/30/19, “It’s getting worse: The IRS now audits poor Americans at about the same rate as the top 1%,” ProPublica (https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent)

RECENT EXAMPLES OF A RIGGED ECONOMIC SYSTEM

Here are some recent examples of how our rigged economic system favors wealthy individuals and big corporations.

In the CARES Act, the $2.2 trillion coronavirus pandemic response, Republican Senators slipped in a tax break that will give each of 43,000 wealthy business owners a $1.6 million tax cut, on average. Hedge fund investors and owners of real estate businesses (including President Trump and his family) will receive the great majority of this tax cut windfall. [1]

Overall, the CARES Act provides $135 billion in tax cuts for the richest 1% of Americans. This is money that could have been used to provide aid to workers who lost their jobs or to buy personal protective equipment for front-line workers.

Moreover, the Trump Administration and Republicans in Congress are considering a variety of additional tax cuts for investors and businesses for the next pandemic relief bill. [2] Supposedly, these tax cuts will stimulate the economy and help it return to normal, but what they really do is make the rich richer. And while Trump and the Republicans claim that there should be no more spending on unemployment and payments to individuals because we’ve spent enough, tax cuts are simply spending before the fact of revenue collection rather than after the fact. Conceptually, there is no difference, other than who gets the money.

Perhaps the ultimate indication of how rigged our economic system is, is that the wealth of billionaires in the U.S. increased almost $600 billion or 20% between March 18 and June 17 as the pandemic crushed the lives and livelihoods of mainstream Americans. The 643 U.S. billionaires, who are overwhelmingly white males, saw their aggregate wealth increase from $2.9 trillion to $3.5 trillion, an increase of about $1 billion a piece, on average. [3] [4]

Meanwhile, working and middle-class households lost $6.5 trillion in wealth and over 45 million Americans applied for unemployment insurance. The 643 billionaires’ increase in wealth was twice as much as what the federal government spent on the one-time stimulus checks that went to 150 million Americans.

The billionaires and other wealthy individuals have used their incredible wealth to gain extraordinary influence over our politics and policy making. This led to the tax cuts in the CARES Act, in the 2017 Tax Act, and on numerous other occasions. As a result, the taxes paid by these billionaires decreased by 79% as a percentage of their wealth from 1980 to 2018. [5]

As another indicator of a rigged economic system, as the pandemic hit in early 2020 only the richest 20% of U.S. households had regained the same level of wealth that they had had prior to the Great Recession of 2008. The other 80% of households were still struggling with the economic hangover of the 2008 financial industry crash. The 400 wealthiest billionaires, on the other hand, recovered their wealth in three years and in ten years had increased their wealth by over 80%.

On the corporate front, corporations are rewarding their investors, i.e., shareholders, while laying off their workers. For example, Caterpillar closed three facilities in late March and two weeks later made a $500 million distribution to shareholders. Levi Strauss announced on April 7th that it would stop paying workers and furloughed about 4,000 over the following month. Nonetheless, it paid $32 million to shareholders in April. Stanley Black & Decker announced furloughs and layoffs on April 2nd, but within two weeks issued a $106 million dividend to shareholders. [6]

You may recall that in August 2019 the chief executives of 181 companies from the Business Roundtable released a statement announcing that companies should deliver value to customers, workers, and suppliers, as well as shareholders. To-date, three of the executives who signed that statement – ones from Caterpillar, Stanley Black & Decker, and Steelcase – have furloughed workers while paying dividends to shareholders.

In our rigged economic system, the capitalists in government bailout capitalists (i.e., business owners and investors), not workers, home owners, parents, students, schools, states and cities, our social services, or our so-called safety net. Even small businesses get left behind as wealthy investors and corporations are taken care of first and foremost. This was evident in the 2008 bailout after the collapse of the financial and mortgage sectors and it’s evident again in the response to this pandemic.

I urge you to contact your U.S. Representative and Senators and to tell them that pandemic relief should go to workers, middle-class and low-income households, and small businesses. Not only is this what would be fair and democratic, this would support our economy because two-thirds of economic activity is consumer purchases. If consumers can buy, they will keep the economy going and create demand for the goods and services businesses produce. Bailouts to corporations and investors will make them wealthier but will do little to keep the economy going and very little to help the mainstream residents of America.

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]      Stein, J., 4/14/20, “Tax change in coronavirus package overwhelmingly benefits millionaires, congressional body finds,” The Washington Post

[2]      Tankersley, J., 5/6/20, “Trump considers tax-cut proposal for new bill,” The New York Times

[3]      McCarthy, N., 6/22/20, “U.S. billionaire wealth surged since the start of the pandemic,” Forbes

[4]      Americans for Tax Fairness, 6/18/20, “3 months into COVID-19 pandemic: Billionaires boom as middle class implodes,” (https://americansfortaxfairness.org/issue/3-months-covid-19-pandemic-billionaires-boom-middle-class-implodes/)

[5]      Collins, C., 5/11/20, “Billionaires are getting even richer from the pandemic. Enough is enough,” CNN Business (https://www.cnn.com/2020/04/28/perspectives/inequality-coronavirus-billionaires/index.html)

[6]      Whoriskey, P., 5/6/20, “Amid layoffs, investors reap dividends,” The Boston Globe from The Washington Post

EFFECTS OF RACISM Part 2

The murder of George Floyd, a black man, by a white police officer kneeling on his neck for nine minutes (while three other officers facilitated the killing) has put the racism of U.S. society in the forefront. The attention to racism is going beyond this specific episode and is including the underlying, long-term racism of the U.S. economy, our society, and the policies, funding, and practices of federal, state, and local governments. (See my previous post here for more background.)

The effects of racism – of racial prejudice and discrimination – on black people today are broad and pervasive. They are the aggregation of current policies, practices, and characteristics of the U.S. economy and society, as well as the cumulative effects of 400 years of racism. I can’t do justice to all the effects in a couple of posts (Even long ones. My apologies.), but I will start by highlighting some of them. Some, particularly the better-known ones, I will just mention and for some I will present more detail. They are presented in no particular order, in part because they are all intertwined and the relative importance or severity of them is difficult, if not impossible, to determine. (See my previous post for effects in Education and Health and health care.)

Some of the detrimental effects of racism on black people that are evident today include:

Economic inequality

  • The median income for black households is only 60% of that of white households ($37,000 vs. $60,000).
  • Median wealth (assets minus liabilities) for black households is only 8% of that of white households ($11,000 vs. $134,000).
  • Most Blacks were excluded from many of the benefits of the New Deal legislation of the 1930s, including the minimum wage, union membership, and participation in Social Security. Much of this was corrected in the 1960s and 1970s, but the loss of 30 to 40 years of these economic benefits is a big contributor to today’s economic inequality. (See more detail in this previous post.)
  • One-third of low-income black households (incomes under $30,000) do not have a bank account (versus one-ninth of low-income white households). This means they must rely on check cashing services and payday lenders for financial transactions, which involve high fees and often usurious interest rates. This made it difficult (or expensive) for them to get their coronavirus relief checks, for example. [1]

Housing (See my previous post for an overview of government policies and practices that led to housing segregation and low levels of black home ownership.)

  • The effects of federal government and bank redlining are still discernible in the segregation patterns of our cities. Black people disproportionately live in areas with high concentrations of low-income households, poor air quality, and low social capital. These neighborhood characteristics are strongly linked to a whole range of negative life outcomes, including lower educational attainment, more unemployment and lower-wage jobs, shorter life spans, higher stress, and worse health and health care. On the other hand, the (white) suburbs created wealth for their residents and provided strong social capital and healthy, low-stress environments. [2] For example, in the post-World War II period, homes in the suburbs, which typically excluded Blacks, were purchased by whites for around $15,000. Those homes are now worth hundreds of thousands of dollars, a substantial increase in wealth that was denied to Blacks.
  • The home ownership rate for black households is over 30 percentage points lower than for white households. This home ownership gap has increased from just over 20% to over 30% during the last 40 years. It had been relatively stable at just over 20% for the previous 30 years. Given that equity in a home is the primary source of wealth for middle-class and working families in the U.S., the lower rate of home ownership among black households is a significant contributor to racial economic inequality, as well as other unequal outcomes. Equity in one’s home is frequently used to pay for college for children or to cover a short-term financial setback such as the loss of a job or a medical emergency. It is also a key source of retirement savings and inheritance for children. The lack of the economic security that home equity provides also is presumably linked to the higher levels of stress that black people experience.
  • Today, in 2020, interest rates on mortgage loans for black home buyers tend to be higher than for whites because the Federal Housing Finance Agency requires that mortgage interest rates be adjusted based on the borrower’s credit score, down payment, and mortgage type. These adjustments may double the interest rate on a mortgage loan and disproportionately harm black borrowers, either by pricing them out of the market or making the cost of home ownership significantly higher. These mortgage rate adjustments are a dysfunctional and discriminatory holdover from the early 2000s and could and should be changed. [3]

Criminal justice (The pervasive racism of the U.S. criminal justice system – from policing to prosecution and sentencing – that has led to mass incarceration of black males is well known, so I won’t go into it here. I have written about it previously here and here.)

  • Lynching is not a federal crime. Although bills to make it a crime have been introduced in Congress multiple times, no bill has ever been passed and become law.
  • Black people are 23% of those shot and killed by police but are only 13% of the population. Recently released statistics show that in 2019, 69% of the people subject to stop-and-frisk by police in Boston were Black, although Blacks are only 25% of the population. [4]
  • The police (and others) tend to presume that black people, particularly black men and boys, are dangerous and criminals. Being stopped for driving while black is a frequent experience for Blacks, especially if driving a nice car or in a white neighborhood. Former Massachusetts Governor Deval Patrick experienced this while he was Governor, riding in an official car. [5] This racial profiling also occurs when shopping while black, walking down the street in a white neighborhood while black, and on and on. In May 2020, a tall, (6’ 8”) black man, a home owner in Newton, MA, an upper-middle class, largely white, Boston suburb, was walking to the supermarket with his wife when four police cruisers descended them. One of the five officers drew his gun. When asked for identification, the black man knew better than to reach into his pocket – a motion police officers in other situations claimed they found threatening and a reason to shoot. He told the officers that his wallet was in his back pocket and let them retrieve it. [6]

Voting

  • Republicans have been leading efforts for decades to make it harder or impossible for black people to vote – stealing an essential democratic right they were supposedly given after the Civil War. Multiple states have enacted laws that make it harder to register to vote and harder to vote through onerous voter ID requirements. States have also imposed what are effectively poll taxes, reduced the number of polling places in black neighborhoods, and reduced the hours for voting (including early voting that many blacks took advantage of, in part because it can be difficult for them to get to the polls on a work day). All these disproportionately harm black voters. In addition, states have purged lists of registered voters in ways that, again, disproportionately remove black voters. States have banned convicted criminals from voting, sometimes for life, which again disproportionately affects black voters. Finally, the boundaries of voting districts, especially for the U.S. House of Representatives and state legislatures, have been manipulated (i.e., gerrymandered) to reduce the impact of black voters.

The documentation of the detrimental effects of racism is not new. For example, the 1968 Kerner Commission Report on the “race riots” of the 1960s, stated that “Segregation and poverty have created in the racial ghetto a destructive environment totally unknown to most of white Americans. … White institutions created it, white institutions maintain it, and white society condones it.” It noted that not only had the racism of white society created this situation, but that the (white) public and policy makers were apathetic to the issue of black poverty. The Report recommended large-scale government programs to undo segregation and build wealth for black communities. Obviously, the Report was largely ignored. [7]

As one Boston Globe columnist recently wrote of the racism in the U.S., “I’ve spent years calling the system broken, but it wasn’t. This system was designed to dehumanize and exploit Black folk and other people of color.” [8] As former Massachusetts Governor Deval Patrick, who is black noted, “For America, where freedom was the point from the start, only equality, opportunity and fair play make freedom possible.” [9] He probably should have clarified this by saying freedom for ALL or for black people.

It is long past time to address the racism that has persisted in the U.S. for the 140 years since the Civil War and indeed for the last 400 years since black slaves were first brought to America. We need to reform our police and criminal justice system, our housing policies and practices, and all the factors that lead to economic, environmental, and social injustice.

We need to have a serious discussion about reparations – remedies for the enduring harm that past and current policies and practices have caused to Blacks in the U.S. More on this in a future post.

I encourage each and every one of us to think long and hard about how we can contribute to the effort to end racism in our society and to erase its enduring scars. I’d appreciate your comments and questions on this post, including about:

  • Other policies and practices that need to be remedied,
  • Steps we should take to change policies and practices, and
  • How we should tackle the question of reparations for the enduring, cumulative harm that racism has done to Blacks in the U.S.

Thank you for your comments with reactions, suggestions, and questions. This is a discussion we need to have – and to turn into action.

[1]      Guzman, L., & Ryberg, R., 6/11/20, “The majority of low-income Hispanic and Black households have little-to-no bank access, complicating access to COVID relief funds,” National Research Center on Hispanic Children and Families (https://www.hispanicresearchcenter.org/research-resources/the-majority-of-low-income-hispanic-and-black-households-have-little-to-no-bank-access-complicating-access-to-covid-relief-funds/)

[2]      Baradaran, M., 6/17/20, “No justice. No peace. Underlying the nationwide protests for black lives is the racial wealth gap,” The American Prospect (https://prospect.org/civil-rights/no-justice-no-peace-fix-the-racial-wealth-gap/)

[3]      Levitin, A.J., 6/17/20, “How to start closing the racial wealth gap,” The American Prospect (https://prospect.org/economy/how-to-start-closing-the-racial-wealth-gap/)

[4]      Osterheldt, J., 6/17/20, “An oppression that should have been so clear,” The Boston Globe

[5]      Patrick, D., 6/16/20, “America is awakening to what it means to be Black. Will we also awaken to what it means to be American?” (https://medium.com/@DevalPatrick/america-is-awakening-to-what-it-means-to-be-black-3eb938969f7f)

[6]      Krueger, H., 6/6/20, “A walk to the grocery store, interrupted,” The Boston Globe

[7]      Baradaran, M, 6/17/20, see above

[8]      Osterheldt, J., 6/17/20, see above

[9]      Patrick, D., 6/16/20, see above

EFFECTS OF RACISM Part 1

The murder of George Floyd, a black man, by a white police officer kneeling on his neck for nine minutes (while three other officers facilitated the killing) has brought the racism of U.S. society to the forefront. The attention to racism is going beyond this specific episode and is including the underlying, long-term racism of the U.S. economy, our society, and the policies, funding, and practices of federal, state, and local governments. (See my previous post here for more background.)

The effects of racism, of racial prejudice and discrimination, on black people today are broad and pervasive. They are the aggregation of current policies, practices, and characteristics of the U.S. economy and society, as well as the cumulative effects of 400 years of racism. I can’t do justice to all the effects in a couple of posts, but I will start by highlighting some of them. Some, particularly the better-known ones, I will just mention and others I will present in more detail. They are in no particular order, in part because they are all intertwined and the relative importance or severity of them is difficult, if not impossible, to determine.

Some of the detrimental effects of racism on black people evident today include:

Education

  • Black students, on average, attend K-12 schools of lower quality (e.g., less experienced and qualified teachers, less funding, lower quality materials and facilities) than white students. Housing segregation has been widely acknowledged for decades as the driver of racially unequal access to a good K-12 education. This is a result, in large part, of the fact that funding for K-12 schools comes primarily from local property taxes. As a result:
    • Black students have less success in our K-12 school systems than white students. Notably, their graduation rates are lower.
    • After their K-12 education, black students attend and succeed at lower rates in higher education than their white peers.
  • Good, development-nurturing early care and education (aka child care) is generally less accessible for black families and children than for white ones. Except for the federal Head Start program, good quality early care and education (ECE) is unaffordable and often not conveniently located for black families. The Head Start program, which targets children in families below the federal poverty line (about $22,000 in annual income for a family of three, which could be a single parent with two young children), only receives enough funding to serve about half of the eligible 3 and 4 year olds and about one in ten of the eligible infants and toddlers.

Health and health care

  • Black people have a shorter life expectancy than whites: 75.5 years versus 79.1 years.
  • Black mothers experience higher pregnancy-related maternal mortality rates than whites: 4.1 vs. 1.3 deaths per 10,000 live births. This difference persists even after adjusting for potentially related factors such as age, education, and income.
  • Black infants experience higher mortality rates than whites: 109 versus 47 deaths per 10,000 live births.
  • The coronavirus pandemic has highlighted the inequities in health and health care for black Americans. Black people in the U.S. have had somewhere between 33% and 40% of COVID-19 cases despite being only 13% of the population. Their cases tend to be more severe and the black death rate is over twice that of whites (62 vs. 26 per 100,000). (See previous posts on the disproportionate impact on Blacks and the reasons for this.)
  • Research has found that respiratory conditions (including asthma) that make one more vulnerable to COVID-19 are more common among people with long-term exposure to air pollution and that a small increase in exposure to fine particulate air pollution — tiny particles in the air — leads to a significant increase in the COVID-19 death rate. Low-income and densely populated areas (whose residents are disproportionately black) have higher levels of air pollution due to higher levels of vehicular exhaust, emissions from buildings’ heating systems, and emissions from power generation and industrial facilities.
  • Hospitals that serve primarily white people have 60% higher per patient funding ($8,325) than ones that serve the highest proportions of black people ($5,197). The primarily white-serving hospitals had nearly twice as much capital spending (e.g., for new equipment and modernization) as the hospitals with the most black patients. The white-serving hospitals had more specialty services, better nurse-to-patient ratios, fewer safety hazards, and lower readmission rates. [1]
  • Black people have less access to health care, both based on the locations of services and due to lack of insurance. In addition, they receive lower quality and biased care when they receive health services. For example, a 2003 National Academy of Sciences report, “Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care” examined 480 studies and found that for every medical intervention black people received poorer-quality care than white people, even when income and insurance were equal. [2] Medical decisions, diagnoses, and treatments have been found to be racially biased with worse outcomes for black patients than white ones.
  • The high levels of stress that black people experience due to racism, economic insecurity, and other factors have been linked, for both children and adults, to chronic health problems (e.g., asthma, obesity, high blood pressure, heart disease, and diabetes) and mental / behavioral health problems (e.g., behavior and anxiety disorders and substance abuse). The stresses of what are referred to as adverse childhood experiences (e.g., child abuse or neglect, violence in the home or neighborhood, parents’ mental health problems) have been found to contribute to a higher prevalence years later of chronic adult health conditions such as high blood pressure, heart disease, diabetes, obesity, and anxiety disorders. The stresses of economic insecurity, neighborhood and household violence, and racism, collectively sometimes referred to as allostatic load, have been linked to higher rates of negative health outcomes, including shorter lifespans and more low birthweight babies. For example, the prevalence of diabetes is 66% higher among Blacks than whites and elevated blood pressure is 49% higher. Blacks have more chronic health conditions even when researchers compare them with whites with similar levels of education and income.
    • Examples of stressors that black people deal with regularly include being presumed to be dangerous or a criminal and being presumed to be in a non-professional or subservient role. For example, black people are often presumed to be staff in a hotel, restaurant, store, or golf club, rather than a customer. Or, as former Massachusetts Governor Patrick stated, “Like every other Black trial lawyer I know, I have been mistaken for a defendant awaiting trial” when arriving in a courthouse or courtroom to argue a case. [3] These types of role misidentification are commonplace. Almost every black person – if not every black person – can cite multiple times when this has happened to them. This requires them to control their anger, frustration, and sometimes their fear time after time after time. This takes a toll on one’s stress level, happiness, and well-being.
    • Black parents routinely feel anxious when their sons and daughters are not in their home because they know of the dangers that discrimination and prejudice present when they are out in public. Black parents know they must have “the talk” with their children, especially their sons, where they tell them that regardless of the situation or provocation they must stay calm, keep their hands visible, and avoid confrontation, particularly with police officers.
  • Because they are concentrated in low-income neighborhoods, black people often live in food deserts, where access to affordable, good quality food is difficult. Supermarkets are typically not located in those neighborhoods, so a long trip, often on public transportation, is required to reach them.

In my next post, I will provide an overview of the detrimental effects of racism on black people in terms of economic inequality, housing, criminal justice, and voting. I welcome your comments with reactions, thoughts, and questions relative to this post and the larger issue of racism in the U.S.

[1]      Dayen, D., 6/19/20, “Unsanitized: Structural racism and the coronavirus crisis,” The American Prospect (https://prospect.org/coronavirus/unsanitized-structural-racism-and-the-coronavirus-crisis/)

[2]      Villarosa, L., 4/29/20, “ ‘A terrible price’: The deadly racial disparities of Covid-19 in America,” The New York Times Magazine (https://www.nytimes.com/2020/04/29/magazine/racial-disparities-covid-19.html)

[3]      Patrick, D., 6/16/20, “America is awakening to what it means to be Black. Will we also awaken to what it means to be American?” (https://medium.com/@DevalPatrick/america-is-awakening-to-what-it-means-to-be-black-3eb938969f7f)

RACISM IN HOUSING HAS BEEN EXPLICIT GOVERNMENT POLICY

The murder of George Floyd, a black man, by a white police officer kneeling on his neck for nine minutes (while three other officers facilitated the killing) has brought the racism of U.S. society to the forefront. The attention to racism has gone beyond this specific episode and has included the underlying, long-term racism of policies, practices, and funding of federal, state, and local governments. (See my previous post for more background.)

Throughout U.S. society, a powerful element of racism is discrimination in housing and the segregation that it has produced. The conventional wisdom in the U.S., including in legal circles and the courts, is that racial housing segregation is de facto, i.e., the result of private practices and personal preferences and not the result of government policies and laws. This belief has led courts to declare that governments have no responsibility to address segregation and its negative effects, other than perhaps in our public schools.

The truth is that housing segregation is clearly the result of government policies and practices throughout the last 140 years, including ones that persist to this day. The legal term for effects that are direct or intentional results of actions is de jure. Therefore, racial housing desegregation in the U.S. is de jure. If legally acknowledged as such, it is a violation of our Constitution, specifically the Fifth, Thirteenth, and Fifteenth Amendments, and of the Bill of Rights. Acknowledgement of this would mean that our governments have an obligation to respond to housing segregation and the harm that it has caused. The definitive case for this is made by Richard Rothstein in his book The Color of Law: A forgotten history of how our government segregated America. [1]

The Color of Law describes in detail the government policies and practices at the local, state, and federal levels that promoted and enforced racial segregation in housing, and even forced the segregation of communities that had been integrated. Some of this dates from the late 1800s and some still exists today. Furthermore, many discriminatory private policies and practices have been supported by the action (or inaction) of government entities, such as the police, the courts, and various government agencies and regulators.

I apologize for the length of this post, but I felt it was important to give a good sense of the breadth and depth of the government policies and practices behind the racism in housing. Skim by reading the bolded portions if your time is limited. Policies and practices that contributed to housing segregation include:

  • In the late 1800s, Jim Crow laws and explicit, enforced segregation became the way of life in the South after the 1878 removal of federal troops that had been protecting blacks and implementing Reconstruction. The discrimination and segregation of the South proceeded to spread throughout the country. For example, in the early 1900s, blacks were systematically expelled from Montana, where they had previously thrived. In 1890, there were blacks in all 56 counties in Montana. By 1930, there were none in eleven counties and few left in the others. In the state capital of Helena, there were 420 blacks in 1910, but only 131 in 1930 and 45 in 1970.
  • Beginning in 1910 and continuing to today, zoning restrictions have been widely and intentionally used to segregate housing, sometimes explicitly and sometimes by banning multiple family housing or requiring large lot sizes (which make property very expensive). These latter types of zoning laws exist quite widely today. In 1910, Baltimore was the first city to adopt an explicitly segregationist zoning law. It prohibited blacks from buying homes on blocks where whites were the majority and vice versa. Implementing the zoning ordinance proved difficult because many areas of the city were quite integrated at the time. West Palm Beach adopted a racial zoning ordinance in 1929 and maintained it until 1960. Kansas City and Norfolk, VA, maintained racist zoning practices until at least 1987. Racist zoning ordinances effectively prevented blacks from moving to the suburbs and, in many cases, effectively prevented them from buying homes, forcing them to rent their homes.
  • In the 1920s, restrictions written into in home ownership deeds prohibiting the selling of a home to a black person spread throughout the country and in some cases persisted into the 1970s. Governments at the local, state, and federal levels promoted and enforced these restrictive covenants. State courts upheld them. In 1948, the U.S. Supreme Court ruled that these covenants were private agreements and therefore not unconstitutional. However, it ruled that they represented discrimination that was illegal for the government to be a party to. Therefore, the power and resources of the government, including law enforcement and the courts, should not be used to enforce them. Shockingly, the FHA and other federal agencies, in complicity with state and local governments, effectively ignored this Supreme Court ruling for at least another decade. It wasn’t until 1972 that a federal court ruled that these covenants were illegal as a violation of the Fair Housing Act of 1968.
  • In the 1930s, the Federal Housing Authority (FHA) was created to promote home ownership, including by insuring home mortgage loans. Mortgage loans were newly available to middle class borrowers and insurance against default by the borrower made banks much more willing to make these loans. This insurance was, for all practical purposes, required by banks for mortgage loans. However, the FHA generally refused to insure mortgage loans for blacks, and definitely would not do so if the home being purchased was in a white neighborhood. Furthermore, the FHA would not insure a mortgage for a white person if the home was in a neighborhood where blacks were present. The FHA explicitly stated in its Underwriting Manual that segregated neighborhoods were preferable because segregated schools made neighborhoods more stable and desirable. (See pages 65 – 66 in The Color of Law.)
  • Up until 1962, the FHA also supported financing for developers building whites-only subdivisions in suburbia. It wasn’t until 1962, when President Kennedy issued an executive order banning the use of federal funds to support racial discrimination in housing, that the FHA stopped supporting subdivisions by developers who refused to sell homes to blacks.
  • As mortgage loans proliferated in the 1930s, federal bank regulators allowed banks to deny mortgages to blacks, as well as to whites buying in an integrated neighborhood. State regulated insurance companies that issued mortgages had similar policies. Federal bank regulators also allowed banks to “redline” areas and refuse to make mortgage loans for the purchase of any home within those areas, which were typically neighborhoods where blacks lived. This practice continued at least into the 1980s.
  • Starting in the 1940s, public housing was built. Initially, it was primarily for working- and lower-middle-class white families and was not heavily subsidized. In the late 1940s, as whites increasingly purchased homes in the suburbs and public housing became more available to blacks, most public housing was explicitly segregated until the 1970s and developments for whites were typically better built and built in nicer areas. By the 1960s, urban public housing had mostly poor, black residents and, by government policy, was built almost exclusively in black neighborhoods.
  • In the late 1940s, black World War II veterans were denied the government-guaranteed mortgages for purchasing homes that white veterans used in great numbers to buy suburban homes.
  • Beginning in the late 1940s, violence against blacks trying to move into white neighborhoods was not uncommon. However, law enforcement at the local, state, and federal levels rarely responded to these incidents until the 1980s. The proportion of these incidents where charges were filed against perpetrators grew from only 25% in 1985-6 to 75% in 1990, when roughly 100 such incidents occurred.
  • Numerous studies in the 1960s and 1970s found that blacks paid higher effective property tax rates on their homes than whites. This was typically accomplished by assessing black-owned properties at a high value compared to market value, while white-owned properties were assessed at a low comparative value. A 1973 study of ten cities by the U.S. Department of Housing and Urban Development found systematic under-assessment in white middle-class neighborhoods and over-assessment in black neighborhoods. In Baltimore, it found an effective property tax rate 9 times higher for blacks than for whites; in Philadelphia it was 6 times higher and in Chicago it was twice as high. A 1979 analysis of Chicago property taxes found the effective rate for blacks to be 6 times that for whites.
  • In the early 2000s, federal bank regulators failed to stop banks from providing subprime mortgages disproportionately to black customers – at two to three times the rate of white customers. Subprime mortgages were mortgage loans with onerous provisions or deceptive presentation that made it likely that the borrower would be unable to meet the terms the loan. Defaults on these subprime mortgages were a key factor in the 2008 financial collapse and the resultant foreclosures represented a huge loss of wealth for blacks in the U.S. Moreover, many of the blacks who received these predatory, subprime mortgages qualified for regular mortgages but were steered to these subprime mortgages typically because the mortgage broker made more money on them.

These policies, and others, both reinforced racially segregated housing where it existed and imposed segregation in places where it hadn’t previously existed. “In 1973, the U.S. Civil Rights Commission concluded that the ‘housing industry, aided and abetted by the Government, must bear the primary responsibility for the legacy of segregated housing. … Government and private industry came together to create a system of residential segregation.’” (page 75)

My next post will summarize effects on black people of housing and other discrimination that are evident today. I’ll also ask you to share your thoughts on how we should address racism in the U.S.

[1]      Rothstein, R., 2017, The Color of Law: A forgotten history of how our government segregated America, W. W. Norton & Co., Inc., NY, NY.

RACISM IS AND HAS BEEN EXPLICIT GOVERNMENT POLICY

The murder of George Floyd, a black man, by a white police officer kneeling on his neck for nine minutes (while three other officers aided and abetted the act) has brought the racism of U.S. society to the forefront. The discussion it has spurred is going beyond this specific episode and has embraced the broader themes of racism in police personnel, training, and practices. In addition, the overall racism of U.S. society is being confronted, including the underlying, long-term racism of policies, funding, and practices of federal, state, and local governments.

For several years, the U.S. has been experiencing a simmering discussion about the racist practices and results of our criminal justice system. They typically start with police, or sometimes school disciplinary practices, and extend through prosecutors, courts, and prisons. (I’ve posted about the need for criminal justice reform, in large part because of embedded racism, here and here.)

Some of the racism in criminal justice is the result of public policies – laws defining crimes and penalties for them. Drug laws with much stiffer penalties for crack cocaine (typically used by blacks) than powdered cocaine (typically used by whites) are one clear example. Mandatory sentencing laws and three strikes laws are others. The racism of laws is exacerbated by their implementation, i.e., the practices of police, prosecutors, and courts. For example, blacks have been much more likely to be arrested and prosecuted for marijuana possession than whites, although good research has found no significant difference in use of marijuana (or other illegal drugs) between blacks and whites. Criminal justice system outcomes are different by race in part because whites can afford and have access to better legal representation.

I’ve previously posted on other topics related to racism that are embedded in laws, policies, and practices of governments at all levels, including:

  • The need for a political revolution to restore democracy and overcome economic inequality and other effects of hardcore capitalism as described in Ben Fountain’s book, Beautiful Country Burn Again: Democracy, rebellion, and revolution. [1] The book is based on his reporting on the 2016 presidential campaign. It now looks prescient in its analysis and title. Although this argument didn’t focus on racism, race was certainly an underlying theme. (link)
  • The racism of the Supreme Court in overturning the Voting Rights Act in 2013 (as analyzed in Fountain’s book). (link)
  • The largely racially motivated voter suppression and gerrymandering that has exploded since the Supreme Court decision overturning the Voting Rights Act in 2013.
  • The disparate impact of the coronavirus pandemic on people of color. (here and here)

Underlying all of this, and a powerful element of racism throughout U.S. society, is racism in housing and the segregation that it has produced. Housing segregation has been widely acknowledged for decades as the driver of racially unequal access to education in K-12 schools, which are largely funded by local property taxes. It is also a major driver of economic inequality, the unequal impact of the coronavirus, and many disparities in health and mental health conditions and in access to health care services. Housing segregation is, of course, also linked to the racial biases in law enforcement.

The conventional wisdom in the U.S., including in legal circles and the courts, is that housing segregation is de facto, i.e., the result of private practices and personal preferences, but not the result of government policies and laws. This belief has led courts to declare that because racial housing segregation is de facto, governments have no responsibility to address it and its negative effects, other than perhaps in our public K-12 schools.

The truth is that housing segregation is clearly the result of government actions of the whole 20th century, including policies and practices that persist to this day. The legal term for effects that are intentional results of explicit policies and laws is de jure. Therefore, racial housing desegregation in the U.S. is de jure segregation. If housing segregation is legally acknowledged to be de jure, it is a violation of our Constitution, specifically the Fifth, Thirteenth, and Fifteenth Amendments, and of the Bill of Rights. This acknowledgement would mean that our governments have an obligation to respond to the harms caused by housing segregation. The definitive case for this is made by Richard Rothstein in his book The Color of Law: A forgotten history of how our government segregated America. [2] I will summarize the book in my next post.

An important but less direct way that housing segregation has been created and maintained is by keeping the incomes and wealth of black households low so that they cannot afford to buy homes in white areas. Long after the end of the sharecropping system, which was indentured servitude that was barely distinguishable from slavery, many public policies have kept blacks poor.

In the 1930s, President Franklin Roosevelt needed the votes of southern Democrats to pass New Deal legislation. To get their votes, the Fair Labor Standards Act (FLSA) of 1938 and other legislation that benefited workers excluded industries in which blacks were the predominant workers, such as agriculture and domestic services. Therefore, these occupations and many blacks didn’t receive the benefits of the minimum wage, participation in labor unions, or coverage from Social Security. Furthermore, many of the New Deal’s employment programs rarely employed blacks or restricted them to lower paying jobs. The minimum wage and some, but not all, of the other protections and benefits of the FLSA were finally given to most farm and domestic workers in the 1960s and 1970s.

From the 1930s to the 1960s, blacks who worked in unionized jobs were often in segregated unions, which typically had lower pay and represented less skilled jobs. Federal agencies continued to recognize segregated unions until President Kennedy ended the practice in 1962. In 1964, the National Labor Relations Board finally refused to certify whites-only unions and it was another decade before blacks were admitted to construction trade unions. Even then, their lack of seniority in the union meant that it would be many years before their incomes were comparable to white union members’ earnings.

Although many of the racist policies and practices that were once allowed and facilitated by governments are no longer in place, their effects have never been remedied and their discriminatory results endure. Economic inequality is one of their enduring legacies. In 2017, the median income for white households was about $60,000, while it was roughly $37,000 for black households – only 60% as much. Median white household wealth (assets minus liabilities) was about $134,000 versus $11,000 for black households – only 8% as much. Given that equity in a home is the primary source of wealth for middle-class households in the U.S., housing discrimination and segregation have been big contributors to racial economic inequality.

It is long past time to address the racial discrimination that has persisted in the U.S. over the last 140 years since Reconstruction of the South was abandoned and indeed over the last 400 years since black slaves were first brought to America. We need to reform our police and criminal justice system, our housing policies and practices, and so much more.

We need to have a serious discussion about reparations – remedies for the enduring harm that past and current policies and practices have caused to blacks in the U.S. I encourage each and every one of us to think long and hard about how we can contribute to the effort to end racism in our society and to erase its enduring scars.

[1]      Fountain, B., 2018, Beautiful Country Burn Again: Democracy, rebellion, and revolution, HarperCollins Publishers, NY, NY.

[2]      Rothstein, R., 2017, The Color of Law: A forgotten history of how our government segregated America, W. W. Norton & Co., Inc., NY, NY.

WHY THE CORONA VIRUS HITS PEOPLE OF COLOR HARDER THAN WHITES

The corona virus pandemic has highlighted critical issues in the U.S. economy and society that have led to unnecessary hardship, suffering, and deaths. The infection and death rates have been higher among people of color than among whites. In addition, low-income households and people living in densely populated areas are at higher risk for COVID-19 than others. These three risk factors occur concurrently for many, resulting in a particularly high-risk population. [1] (See my previous post for more detail.)

There are multiple factors that lead to the corona virus hitting people of color harder than whites. It is important to recognize and acknowledge that these disparities are not linked to individual decisions and behaviors, but to longstanding characteristics of the social and physical environments they live in in the U.S. These social determinants of health, as they are called, are most often driven by public policies and spending patterns, as well as by institutional racism. [2]

One of the reasons for the elevated death rate among people of color, low-income households, and people living in densely populated areas is that COVID-19 is especially dangerous to people with underlying health problems, particularly respiratory conditions, given that the virus typically attacks the lungs. Chronic health problems, including asthma, are higher among these at-risk populations. Research has found that respiratory conditions that make one vulnerable to the virus are more likely among people with long-term exposure to air pollution and that a small increase in exposure to fine particulate air pollution — tiny particles in the air — leads to a significant increase in the COVID-19 death rate. Low-income and densely populated areas (whose residents are disproportionately people of color) have higher levels of air pollution due to higher levels of vehicular exhaust, emissions from buildings’ heating systems, and emissions from power generation and industrial plants. Coincidentally, less than two weeks after the research on air pollution and COVID-19 was released, the Trump administration declined to impose stricter controls on the lung-harming particulate pollution that the researchers identified as hazardous.

People of color and low-income households typically live in densely populated areas where they have more face-to-face contact with other people, which makes exposure to the virus more likely. Multi-family housing, crowded living conditions (i.e., many people for the size of the dwelling unit), and more crowded streets and stores increase contact and exposure. Non-white and low-income people are also more likely to rely on public transportation and to work in essential front-line jobs (such caregiving, public transportation, grocery store work, or delivery jobs), which put them in close contact with other people. [3] One dramatic recent example of a high exposure-risk job is work in meat processing facilities, where infection rates have been very high and where workers are primarily people of color.

Research has documented that chronic health conditions are linked to the high levels of stress that people of color experience, including the stress of discrimination and what are referred to as adverse childhood experiences (ACEs). ACEs have been found to contribute to a higher prevalence of chronic adult health conditions such as high blood pressure, heart disease, diabetes, obesity, and anxiety disorders. In addition, the stresses of economic insecurity, neighborhood and household violence, and discrimination, collectively sometimes referred to as allostatic load, have been linked to higher rates of chronic health conditions. Not surprisingly, then, people of color and those in low-income households have higher rates of these chronic health conditions. This puts them at higher risk for infection, serious illness, and death from the corona virus. For example, the prevalence of diabetes is 66% higher among Blacks than whites and elevated blood pressure is 49% higher. People of color have more chronic health conditions even when researchers compare them with whites with similar levels of education and income.

Finally, people of color and low-income households are at high risk because they have less access to health care, both based on the locations of services and due to lack of insurance. In addition, they receive lower quality and biased care when they receive health services, adding to their risk. For example, a 2003 National Academy of Sciences report, “Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care” documented bias in the medical system. It examined 480 studies and found that for every medical intervention Black people and other people of color received poorer-quality care than white people, even when income and insurance were equal. [4]

All of these factors contribute to COVID-19’s higher infection rate, greater severity of illness, and higher death rate for people of color. This makes it extremely important to have good data on race and ethnicity for COVID-19 tests and patients in order to effectively target testing, response, and treatment. These data are needed for our society as a whole to effectively control the spread of the virus and develop effective treatment. Because these data were not being captured, a group of U.S. Senators and the American Medical Association both sent letters to senior federal officials at the Department of Health and Human Services underscoring the importance of capturing data on race and ethnicity in all COVID-19 response activities.

I hope we will learn lessons from this COVID-19 pandemic and address the issues and risks faced by people of color, low-income households, and those living in densely populated areas. These lessons should include the need to address inequality and racism to make our economy and society fairer and to help our country live up to its ideal of equal opportunity. This would make access to life (literally), liberty, and the pursuit of happiness available to all Americans, both in good times and in the face of the inevitable, next pandemic. To do so, we will need to implement effective long-term fixes for the critical issues of racism and inequality in the U.S., which have been laid bare by this pandemic.

[1]      Ryan, A., & Lazar, K., 5/10/20, “Disparities drive up coronavirus death rates,” The Boston Globe

[2]      Villarosa, L., 4/29/20, “ ‘A terrible price’: The deadly racial disparities of Covid-19 in America,” The New York Times Magazine (https://www.nytimes.com/2020/04/29/magazine/racial-disparities-covid-19.html)

[3]      Osterheldt, J., 4/11/20, “With virus, racism is underlying ill,” The Boston Globe

[4]      Villarosa, L., 4/29/20, see above

CORONA VIRUS PANDEMIC HIGHLIGHTS RACISM AND INEQUALITY IN U.S.

The corona virus pandemic has highlighted critical issues in the U.S. economy and society that have led to unnecessary hardship, suffering, and deaths. These include racism and economic inequality. Despite limited data on COVID-19 by race and ethnicity (because some jurisdictions have not been collecting or reporting these data), clear patterns emerge.

The infection and death rates have been higher among people of color than among Whites. In addition, low-income households and people living in densely populated areas are at higher risk for COVID-19 than others. These three risk factors occur concurrently for many, resulting in a particularly high-risk population. The infection rate for these populations is likely to be understated because there has probably been less testing among them than among well-off, White populations who typically have better access to health care. People of color also have more severe cases when they get the virus. One study of COVID-19 patients, where 18% of the patients were Black, found that 33% of the severe cases were with a Black patient.

The death rate for these at-risk populations may well be understated as well. Research has found that the national 2020 death rate has been significantly higher than usual after adjusting for the known COVID-19 deaths. This almost certainly means there have been COVID-19 deaths that were not recognized as being caused by the virus. These unrecognized COVID-19 deaths are likely to be disproportionately among these at-risk populations because of their reduced access to health care and virus testing.

At the state level, analyses at various points in time in April and May of 2020 have found significantly higher death rates for Blacks (60% to 370% higher than their presence in the overall population): [1]

  • Wisconsin: 33% of deaths were Blacks, who make up 7% of the population
  • Michigan: 40% of deaths were Blacks, who make up 14% of the population
  • Louisiana: 70% of deaths were Blacks, who make up 33% of the population
  • Mississippi: 61% of deaths were Blacks, who make up 38% of the population

Similarly, Chicago and New York City have death rates of minorities that are roughly twice the rate of their presence in the population.

Rates of COVID-19 infections are also significantly higher for Blacks and Latinos than for Whites: [2]

  • Nationally, based on limited data, 33% of people with COVID-19 infections were Black, while they are only 13% of the population.
  • In Massachusetts,
    • 18% of people with COVID-19 infections were Black, while they are only 9% of the population.
    • 23% of people with COVID-19 infections were Latino, while they are only 12% of the population.
  • In Boston, 40% of people with COVID-19 infections were Black, while they are only 25% of the population.

Researchers in Massachusetts have also looked at the density of population and poverty based on the zip codes of COVID-19 patients’ addresses, along with data on race and ethnicity. They found that death rates were: [3]

  • 40% higher in cities or towns with the highest proportions of people of color versus those with the lowest proportions.
  • 14% higher in cities or towns with the highest population densities versus those with the lowest densities.
  • 9% higher in cities or towns with the highest poverty rates versus those with the lowest rates.

Native Americans, especially the Navajo Nation, have been extremely hard hit by the pandemic. The Navajos have experienced an infection rate higher than any U.S. state, with over 4,000 cases and over 140 deaths as-of May 17. As with other low-income communities, this reflects a lack of public infrastructure, including a lack of access to health care, shortages of protective equipment and supplies, and in some places a lack of water and/or sewer systems. [4]

There are multiple factors that lead to the higher coronavirus infection and death rates among people of color, low-income households, and people living in densely populated areas. It is important to recognize and acknowledge that these disparities are not linked to individual decisions and behaviors, but to long standing characteristics of their social and physical environments. These social determinants of health, as they are called, are most often driven by public policies and spending patterns, as well as by institutional racism. [5]

My next post will review the reasons for the disproportionate impact of COVID-19 on people of color, low-income households, and people living in densely populated areas.

[1]      Villarosa, L., 4/29/20, “ ‘A terrible price’: The deadly racial disparities of Covid-19 in America,” The New York Times Magazine (https://www.nytimes.com/2020/04/29/magazine/racial-disparities-covid-19.html)

[2]      Osterheldt, J., 4/11/20, “With virus, racism is underlying ill,” The Boston Globe

[3]      Ryan, A., & Lazar, K., 5/10/20, “Disparities drive up coronavirus death rates,” The Boston Globe

[4]      Goodluck, K., 5/21/20, “Every corner of the Navajo Nation has been hit by COVID-19,” Mother Jones (https://www.motherjones.com/politics/2020/05/every-corner-of-the-navajo-nation-has-been-hit-by-covid-19/)

[5]      Villarosa, L., 4/29/20, see above

CORONA VIRUS PANDEMIC HIGHLIGHTS WEAKNESS OF PUBLIC INFRASTRUCTURE

The corona virus pandemic has highlighted critical issues in the U.S. economy and society that have led to unnecessary hardship, suffering, and deaths. These include the neglect of public infrastructure that led to the inability of governments to respond effectively to a pandemic.

Although the Trump administration’s disorganized and incompetent response to the pandemic (aided and abetted by some in Congress) bears significant responsibility for the high death rate in the U.S. (as documented in this previous post), the long-term neglect of public agencies and capacities shares some of the blame.  [1]

For forty years the U.S. has been neglecting, weakening, and, in some cases, literally dismantling public infrastructure, including government agencies, programs, and capabilities. Much of this has been done because of tax cuts and reductions in government revenue. (By the way, these have disproportionately benefited wealthy individuals and corporations.) When a politician tells you he can cut taxes without harming the services government provides, remind him that there’s no such thing as a free lunch; this pandemic has painfully shown this to be true.

At both the federal and state levels, bipartisan neglect of investments in government infrastructure, typically with Republicans leading the way but with many Democrats jumping on board, is now painfully obvious. Often the people who use the government’s safety net infrastructure are our poor and vulnerable residents who have the least political influence. Now, middle-class Americans are discovering the shortcomings and challenges of these programs, which include unemployment insurance. One particular area of weakness is information technology, where investments in updating and enhancing computer systems has been sorely lacking. It’s important to note that other wealthy countries are not experiencing the same breakdowns of government systems. [2]

A successful response to a disease threat requires not only treatment capacity (personnel and equipment), but the ability to identify individuals who have contracted it, track them and their contacts, and quarantine those individuals to contain, slow, and eventually stop the spread of the disease.

The U.S., theoretically, learned all of this from the 2014 Ebola outbreak. However, the Trump administration ignored the response plan prepared by the Obama administration. It disbanded or weakened the agencies needed to respond. So, in the face of the current pandemic, these lessons learned were ignored. (See more here.) The lack of investment in pandemic preparedness has left the U.S. with an insufficient supply of ventilators, protective masks, and other medical supplies. It also lacks a plan to obtain these supplies, a trigger to initiate a pandemic response, and the capacity to implement testing, tracking, and containment of a deadly disease.

The threat of a deadly virus shouldn’t have come as any surprise. Bill Gates (the Microsoft billionaire) did a TED Talk in 2015 entitled, “The next outbreak? We’re not ready,” in which he states that the biggest threat of mass deaths is not war or terrorism – it’s a virus. Gates states that the U.S. needs to treat pandemic preparedness the same way we treat military readiness: we need to have people, equipment, and plans in place and ready to go at a moment’s notice.

Other warnings were ignored as well. In the fall of 2019, a government exercise revealed that the U.S. was woefully unprepared for a pandemic. In January 2020, U.S. intelligence agencies’ warnings that a pandemic was on its way went unheeded. Also in January, a medical mask manufacturer in Texas contacted senior federal government officials and offered to increase production of masks but was ignored. [3] The country – and the world – later scrambled to address serious shortages of these masks.

In addition to providing a direct response to the disease, public infrastructure is critical to supporting society and the economy in the wake of a pandemic. An essential response to the economic shutdown is to provide unemployment benefits. However, the state unemployment systems that deliver these benefits are a case study example of public sector systems and agencies that have been under-invested in and allowed to decay. State unemployment agencies have been completely overwhelmed and unable to deliver benefits, despite the availability of funding for emergency benefits. Applicants in states across the country report an inability to get a response from their state unemployment agencies. [4] An important factor has been old computer systems that are unable to support the workload and respond to changed eligibility requirements and benefits.

Similarly, the Small Business Administration has been overwhelmed by requests for emergency relief. Its staff and technology have been unable to process applications, let alone get money out the door. The Internal Revenue Service is struggling to get stimulus checks to people due to years of cuts that have resulted in reduced staffing and antiquated computer systems. It has had problems identifying recipients and delivering checks accurately. The people most in need are likely to be the last ones to actually get checks.

The neglect of public investment has left our economy less resilient and our public and private, physical and social infrastructure less able to respond to a crisis, such as this corona virus pandemic. Basic democratic institutions and capabilities, such as holding safe and fair elections and delivering the mail, have been undermined.

In the response to this pandemic, as with the 2008 financial industry implosion, the government has stepped in to bail out corporations (and their wealthy executives and investors) first and foremost, providing them the protections of socialism for their losses in bad times, after having let them take the out-sized profits of capitalism in the good times.

However, despite the public bailout of the private sector, the private sector has let workers go by the millions, leaving them to depend on the public sector for a safety net of unemployment benefits, food and housing subsidies, public health insurance, and other essentials. The pandemic has shown that a capitalistic economy and society built on catering to the rich and their large corporations (a plutocracy), promising (falsely) that some of the riches will trickle down to the masses, is literally willing to sacrifice the lives of its elders and others vulnerable to disease for the sake of the wealth of its plutocrats. [5]

I hope we will learn some lessons from and implement long-term fixes for the critical issues in the U.S. economy and society laid bare by the pandemic. These lessons include the need to invest in public infrastructure (such as pandemic preparedness), address inequality and racism in our economy and society, and provide an effective safety net.

In my next post I’ll explore how the pandemic is exposing the underlying racism in U.S. society and the devastating effects it’s having on Blacks, Latinos, Native Americans, and immigrants.

[1]      Hanauer, N., 4/14/20, “Our uniquely American virus,” The American Prospect (https://prospect.org/coronavirus/our-uniquely-american-virus/)

[2]      Cohen, M. A., 4/12/20, “Decades of neglect in basic services now exposed,” The Boston Globe

[3]      Davis, A. C., 5/10/20, “HHS turned down offer to manufacture N95 masks,” The Boston Globe

[4]      Cohen, M. A., 4/12/20, see above

[5]      Hanauer, N., 4/14/20, see above

CORONA VIRUS PANDEMIC HIGHLIGHTS ILLS OF U.S. ECONOMY AND SOCIETY

The corona virus pandemic has highlighted critical issues in the U.S. economy and society that have led to unnecessary hardship, suffering, and deaths. These include the economic inequality, insecurity, and instability of plutocratic economics, where the playing field is tilted in favor of wealthy corporations and individuals and workers struggle to survive, in some cases literally, with this pandemic.

The neglect of public infrastructure is another such issue highlighted by the pandemic, including the inability of the government to respond effectively to the crisis and the weakened safety net that is now literally leaving people at risk of dying. The pervasive racism of U.S. society has been highlighted by the disproportional rate at which Blacks, Latinos, and Native Americans have gotten ill with COVID-19 and have died from it.

Although the Trump administration’s disorganized and incompetent response to the pandemic (aided and abetted by some in Congress) bears significant responsibility for the high death rate in the U.S. (as documented in this previous post), the larger context is important and provides many lessons that should be learned.

The pandemic has highlighted the value of and risks to front-line workers who meet essential needs, such as providing food, transportation, and care services. They typically receive low pay and often limited benefits (such as paid sick leave and health insurance). They are disproportionately people of color. They interact with the public and therefore are disproportionately likely to be exposed to the virus. Increasing numbers of them are part-time or contract workers who have little if any job security and typically no benefits, including not being covered by unemployment insurance.

Over the last 40 years, safety, health, and economic protections for workers have been undermined. This includes the weakening of the Occupational Safety and Health Administration and more recently the Consumer Financial Protection Bureau (see previous posts on this here and here). Unions, which provide important protections to workers, and the ability to unionize have been weakened. This has resulted in stagnant wages, deteriorating working conditions, and increased economic insecurity for the middle- and lower-income households.

One result has been the highest level of economic inequality in the U.S. in one hundred years. Over 40% of households don’t have $400 for an emergency expense, let alone the savings to support months of self-quarantine. Furthermore, over 40% of full-time workers get no paid sick time. And, given the employer-based health insurance system, a worker (and often his or her family) has no health insurance once he or she loses a job – as over 20 million Americans have by early May 2020. [1] (By the way, the Trump administration has refused to allow these workers to enroll in health insurance through the Affordable Care Act’s insurance marketplaces.)

Plutocratic economics’ beliefs that the private sector is the best solution for all of society’s needs and that bigger businesses are better have led to policies that have benefited the private sector and corporate shareholders and executives over everyone else and over the greater public good. Examples include corporate-friendly trade treaties, the failure to enforce antitrust laws, and the relaxation of corporate regulation, or perhaps more accurately, the skewing of it to benefit large, often multi-national corporations.

Plutocratic economics have resulted in near-monopolistic corporations in everything from the food industry to medical equipment suppliers and medicine manufacturers. The pandemic has highlighted the lack of capacity in the U.S. to produce important goods, including reliance on China for medical supplies needed to respond to a pandemic, such as medical masks and ventilators. It has also highlighted dependence on a few huge corporations and their plants for key food items, such as meat.

In the health care industry, forty years of deregulation, lack of antitrust enforcement, and increasing numbers of for-profit entities have led to, among other things, mergers and closures of hospitals in search of greater profits. This has left the U.S. with some of the lowest numbers of both doctors and hospital beds per capita among countries with advanced economies. This is particularly surprising given that the U.S. spends almost twice as much per capita on health care as other wealthy nations. (The U.S. also has notably worse health outcomes than these other countries, even in good times.) Many localities now have a single provider of hospital services and many rural communities have no local hospital services. (See this previous post for more detail.)

Another example of the failure of this privatized, for-profit health care industry, is that the federal government’s plan to produce thousands of ventilators for pandemic preparedness collapsed in 2012 when the government’s contracted supplier was purchased by a large manufacturer that shut the supplier because it didn’t produce sufficient profit.

Another industry where the vulnerability of our dependence on large, dominant corporations has been exposed is meat processing. The presence of a few dominant meat processors and weak regulation has created the conditions for the inability to supply meat that we are now experiencing. The spread of COVID-19 in the huge processing plants is forcing them to shut down. Fourteen major slaughterhouses, each of which may process 10,000 animals a day, have had to close at least temporarily. The huge Smithfield Foods pork processing plant in South Dakota, which had to close, produces about 4% of the country’s supply of pork. [2]

In pork processing, after decades of mergers that receive little or no antitrust scrutiny, the four largest corporations control at least 70% of the market. This is bad for producers and consumers. Pig farmers often face a single local purchaser for their pigs, leaving them vulnerable to monopolistic business practices. Furthermore, U.S. Department of Agriculture (USDA) regulation favors large slaughterhouses over small ones. The USDA inspection regime for large slaughterhouses has been relaxed to the point that most health and safety inspections are self-performed. The regulation of speed on production lines has been rescinded and workers now report they must move so fast that they can’t stop to cover their faces if they cough or sneeze. In addition, it means they are working shoulder to shoulder, conditions that make it impossible to stop the transmission of disease, such as COVID-19. In the beef market similar concentration has occurred. As a result, the large slaughterhouses are now making a profit of about $550 per cow, while the ranchers make only about $25.

My next posts will discuss the neglect of public infrastructure and the pervasive racism in the U.S. and how they have been exposed by this pandemic.

[1]      Hanauer, N., 4/14/20, “Our uniquely American virus,” The American Prospect (https://prospect.org/coronavirus/our-uniquely-american-virus/)

[2]      Knox, R., 5/4/20, “Monopolies in meat: Endangering workers, farmers, and consumers,” The American Prospect (https://prospect.org/economy/meat-monopolies-endanger-workers-farmers-consumers/)

THE CONSUMER FINANCIAL PROTECTION BUREAU IS NEEDED TO PROTECT US FROM PREDATORY LENDING

The 2008 financial crash was triggered by predatory mortgage loans. As a result, the Consumer Financial Protection Bureau (CFPB) was created to protect consumers from dangerous financial products. There’s a Consumer Product Safety Commission to protect us from dangerous physical products, but prior to the creation of the CFPB, there wasn’t an agency dedicated to protecting consumers from dangerous financial products, such as predatory mortgages and other predatory loans.

Predatory loans are loans where the lender isn’t concerned about the borrower’s ability to repay the loan. In many cases, the lender is just as happy – and may benefit financially – if the borrower defaults on the loan. Predatory lenders usually target people who are desperate for cash or dying to purchase a home, a car, or a consumer product they can’t afford. The loans typically charge very high interest rates, as well as high fees for obtaining the loan and big penalties for failing to meet the terms of the loan, such as being late on a loan payment.

Unethical, deceptive, and/or blatantly fraudulent practices are almost inevitably part of predatory lending. These practices include lying to consumers about the interest rate, fees and other charges, or future payments. Borrowers are often convinced to accept unfair terms through deceptive, coercive, or unscrupulous statements and actions. A predatory lender may add costs for insurance or other services that the borrower doesn’t need or benefit from by presenting them deceptively or as a requirement for the loan.

Predatory lenders routinely target the poor, minorities, the elderly, people with low levels of education, those who don’t understand English well, and people who don’t understand loans or finances well.

Predatory lending is what free market capitalism looks like without regulation. It occurs across the financial industry when good regulation and enforcement aren’t in place, from student loans to car loans and from mortgage loans to payday loans.

Predatory lending is the bread and butter of much of the financial industry as it is a source of big profits. Therefore, the financial industry has fought hard against the CFPB and its efforts to regulate lending since the day the CFPB was conceived.

As a specific example, the predatory lending industry fought a CFPB rule known as the payday lending rule. Promulgated under the Obama administration, it required lenders to assess customers’ ability to repay their loans. This was unwelcome, to say the least, in an industry that makes huge sums of money by charging high fees when customers miss a loan payment (as the lender often expected they would) and then rolling the loan over into a new loan so they can repeat this process over and over. [1]

The predatory lending industry bought access to and influence in the Trump administration by making millions of dollars of contributions to Trump’s campaign and engaging in heavy lobbying. Trump replaced the Obama-appointed Director of the CFPB with a person who is much friendlier to the financial industry.

In addition to an industry-friendly Director, Trump further undermined the work of the CFPB by appointing Christopher Mufarrige as an “attorney-advisor” to the Director. Mufarrige had been the owner of a car dealership that used the “Buy Here Pay Here” model of selling used cars, which provides on-the-spot loans to buyers with poor credit ratings. The loans carry high interest rates and Mufarrige was quick to repossess the car if there was a default, i.e., a late payment. Then, he would sell the same car again and do the same deal all over again.

Mufarrige’s business was covered by the CFPB’s payday lending rule that required a lender to assess each borrower’s ability to repay. Mufarrige had stated that this rule was flawed and unnecessary. Nationwide, Buy Here Pay Here model car dealers were making $80 billion in loans annually and an investigation by the New Jersey Attorney General found that roughly one-quarter of their customers default on their loans.

Mufarrige and other political appointees at the CFPB used false statistics and manipulated evidence to claim there was no value to the requirement to assess a borrower’s ability to repay. This allowed the CFPB to justify proposing watered-down regulation of the payday lending industry that does not require it to assess customers’ ability to repay their loans.

Another example of the need for CFPB regulation of predatory financiers is Progressive Leasing, LLC, (a subsidiary of Aaron’s Inc.), which has as its mission “to provide convenient access to simple and affordable purchase options for credit challenged consumers.” It offers rent-to-own programs through major retailers at over 30,000 stores (including Best Buy, Lowe’s, Big Lots, and Kay Jewelers). In effect, its programs are predatory loans to consumers who can’t afford to pay for their purchases up-front.

Progressive Leasing, LLC, has just settled with the Federal Trade Commission (FTC) for the second time in three months over complaints that it uses deceptive practices. It leads customers to believe they are not being charged extra for financing their purchase. In reality, many customers end up paying more than double the sticker price of the item they purchased. In its training materials, Progressive Leasing instructs retail sales staff to say there isn’t an interest rate associated with the rent-to-own program because it is not a loan. They don’t inform customers of the fees and other charges that are part of the program. [2]

In April, Progressive Leasing paid $175 million to settle claims that it misled consumers after having paid another $175 million in February to settle claims about its disclosure practices. Despite tens of thousands of customer complaints, Progressive Leasing had continued to use the same practices. One FTC Commissioner said the most recent penalty did not go far enough, noting that customers had paid Progressive Leasing more than $1 billion in undisclosed fees and charges.

The Consumer Financial Protection Bureau is badly needed to protect consumers from the greed and unethical behavior of unrestrained lenders. Capitalism without regulation will prey on all of us when we are most in need of financial assistance. The financial industry has shown time and again that without good regulation and enforcement it will ruin people’s lives and our nation’s economy.

I urge you to contact your U.S. Representative and your Senators and ask them to support and protect the integrity of the Consumer Financial Protection Bureau. Encourage them to advocate for strong regulation and enforcement of responsible behavior in the financial industry.

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]      Dayen, D., 5/4/20, “CFPB appointee who helped water down payday lending rule operated a high-cost auto lender,” The American Prospect (https://prospect.org/power/cfpb-appointee-helped-water-down-payday-lending-rule/)

[2]      Bhattarai, A., 4/21/20, “Leasing company agrees to pay $175m,” The Boston Globe from the Washington Post

THE PROOF IN THE PUDDING OF TRUMP’S CORONA VIRUS RESPONSE

Although President Trump and his administration have not been wrong about everything they have said and done, they’ve been wrong about most things. The ultimate proof is in the results. Although final results aren’t in yet, of course, the results as-of late April are pretty damning: [1]

  • 4% of the world’s population is in the U.S. (330 million)
  • 33% of the world’s COVID-19 cases are in the U.S. (929,000)
  • 25% of the world’s COVID-19 fatalities are in the U.S. (52,500)
  • The U.S. death rate is 50 times that of Australia and New Zealand (see details below)

I could stop right here, but as long as I’ve started, here are some facts to back up the laying of the blame for these statistics at the feet of Trump and his administration.

In 2018, the Trump administration dissolved the office of pandemic preparedness in the National Security Council and cut funding for the Centers for Disease Control and Prevention (CDC). Those groups would have been the leaders in responding to the pandemic, using a plan (that the Trump administration ignored) prepared after the Ebola crisis in 2014. Trump had been briefed by outgoing Obama administration officials about the plan and its importance, but obviously ignored the briefing and the plan. [2]

If the pandemic response plan had been followed, the federal government would have started getting equipment to doctors in late January or February (rather than late March and April), given that by mid-January intelligence reports were warning of a likely pandemic. On January 18, Health and Human Services Secretary Azar warned Trump of the threat of the corona virus outbreak in Wuhan, China, which had begun in December 2019. As U.S. diplomats were being evacuated from Wuhan, cases of the virus were confirmed in South Korea and the U.S. (on Jan. 22).

The week of January 20th, South Korea began mass production of test kits for the virus and the World Health Organization (WHO) declared a global health emergency, while Trump did nothing. When China locked down Hubei Province (where Wuhan is located), Trump banned entry of foreigners from China but did nothing else.

By February, there were fourteen COVID-19 cases in the U.S. but few test kits for it – and the initial ones from the CDC proved faulty. Trump was actively downplaying the threat, saying things like, “We pretty much shut it down.”

On Feb. 25, the CDC announced that daily life could be seriously disrupted. It noted that containment was not in place, nor was the testing needed to effectively execute it. Meanwhile, Trump called the emerging crisis a hoax by Democrats. With 100 cases in the U.S., Trump declined to declare a national emergency. Testing in South Korea was ramping up 40 times faster than in the U.S.

Trump didn’t declare a national emergency until March 13th, when there were 1,645 cases in 47 states. [3] Even then, Trump did not take the steps needed to ensure the availability of sufficient test kits and of the equipment needed by hospitals and front-line workers.

In late April, even the military – the defenders of our country – can’t get enough COVID test kits. It is testing 7,000 troops a day and hopes to be able to test 60,000 a day by June – over eight times as many as it can test now. This would allow it to test all military personnel by some time this summer in order to ensure their readiness to fight.

Trump’s daily press briefings are more misinformation than information because he doesn’t attend corona virus task force meetings and doesn’t prepare for the press briefings. The official in charge of the agency working on vaccine development has been fired, apparently for political reasons, and there’s regular speculation on whether Trump will fire the other experts in the federal government who correct his press briefing statements. Trump appears to be detached from reality, indifferent to the suffering, and focused on the well-being of his ego and on his political popularity rather than the well-being of the American public and managing a public health crisis.

In case you’ve been wondering, the course of the pandemic is different with different leadership. In Australia (AU), with a conservative Prime Minister (PM) and states with significant power as in the U.S., there are just a handful of new cases a day, down from hundreds in March, while there are 25,000 – 30,000 new cases a day (and growing) in the U.S. The situation is the same in New Zealand (NZ) with a progressive Prime Minister.

In both Australia and New Zealand, partisanship has been put aside, experts and data are driving the response, and coordination and collaboration are the operating principles. Leaders in both countries responded to their country’s first case (1/25 in AU and 2/28 in NZ) with strong action and clear warnings. In Australia, the PM labeled the outbreak a pandemic on Feb. 27, two weeks before the WHO did and two weeks before the declaration of a national emergency in the U.S. He formed a national taskforce of federal and state leaders who worked together to build hospital capacity and guide the response. In New Zealand, the PM ordered a total lockdown less than one month after the first case. [4]

The results:

  • Australia (population 25 million): first case Jan. 25
    • 6,670 cases (27 per 100,000 people), <1% daily rate of new cases
    • 78 deaths (0.3 per 100,000 people)
  • New Zealand (population 5 million): first case Feb. 28
    • 1,456 cases (29 per 100,000 people), <1% daily rate of new cases
    • 17 deaths (0.3 per 100,000 people)
  • United States (population 330 million): first case Jan. 22
    • 929,000 cases (282 per 100,000 people), 3.5% daily rate of new cases
    • 52,500 deaths (15.9 per 100,000 people)

Leadership does make a difference. The U.S. would better off if Trump would simply get out of the way and let others lead – and had done so three months ago. His “leadership” has done startling harm. Given that the death rate in the U.S. is 50 times that of Australia or New Zealand, it seems safe to say that Trump’s lack of leadership has led to tens of thousands of unnecessary deaths.

[1]      Cohen, M., 4/26/20, “Say it loud, say it clear: Donald Trump needs to resign,” The Boston Globe

[2]      Reich, R., 4/16/20, “Trump’s failed coronavirus response,” The American Prospect (https://prospect.org/coronavirus/trumps-failed-coronavirus-response/)

[3]      Trump Administration, 3/13/20, “Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak,” (https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/)

[4]      Cave, D., 4/26/20, “Australia and New Zealand pave the way for virus eradication,” The Boston Globe from the New York Times

THE TRUMP ADMINISTRATION’S SWAMP OF CORRUPTION Part 2

President Trump campaigned on a promise to drain the Washington, D.C., swamp of special interests and insider dealing. This is one promise he clearly hasn’t kept – and probably never meant. I provided some background on this and an overview of the personal corruption of Trump and his family in my previous post.

The level of corruption – of special interests running our government for their own benefit and of outright self-enrichment by individuals in the Trump administration – is stunning. The American Prospect magazine has begun mapping the Trump Swamp of conflicts of interest and unethical behavior agency by agency. [1] They have created an interactive map of Washington where you can click on an agency’s headquarters building and get highlights of the swamp of corruption at each agency.

Here are some examples of Trump appointees who have on-going conflicts of interest, have oversight of industries they used to work in (and may well work in again), and/or have committed serious ethical violations: [2]

  • Steve Mnuchin, Secretary of the Treasury, a former Goldman Sachs (GS) partner. His specialty at GS was mortgage securities, which were at the heart of the 2008 economic collapse. He capitalized on the collapse by buying a failing bank and foreclosing on 36,000 homeowners, many of whom were elderly and who had been targeted with high-risk reverse mortgages, supposedly intended to keep them in their homes. Furthermore, he simultaneously collected federal subsidies that were meant to keep people in their homes. At the Treasury, he has weakened regulation of banks and reduced scrutiny of financial activities, which benefits his colleagues still in the financial industry (and to which he will likely return). Under Mnuchin, the Treasury has provided favorable tax rulings for wealthy individuals and businesses, again rewarding his former colleagues. It also put forth tax regulations that were almost identical to those proposed by a group of large corporations. It tweaked the rules for Opportunity Zone tax credits so they would be more available to real estate magnates including Jared Kushner (Trump’s son-in-law), Chris Christie (former Governor of New Jersey), Richard LeFrak (longtime Trump associate in NYC), Anthony Scaramucci (former White House aide), and Michael Milken (longtime Mnuchin friend and convicted junk bond dealer).
  • Elaine Chao, Secretary of the Department of Transportation (DOT), heiress to a shipping company fortune. While her DOT regulates international shipping, her family runs a huge international shipping business that has ship building done by Chinese government-linked entities, while also getting hundreds of million dollars of loans from them. Numerous actions by Chao and DOT have benefited the family business, including cutting subsidies for competing shippers, public appearances with her father, and a joint trip with him to China to meet with government officials. Until June 2019, she also owned an investment in a manufacturer of road construction materials, an industry very much affected by DOT policies. She sold this investment only when the holding was publicly reported. Kentucky (which her husband, Sen. Mitch McConnell, represents) has seen its transportation projects receive favorable treatment. Kentucky has received at least $78 million in DOT grants, including for a project rejected twice before. A former aide to Sen. McConnell, now a top aide to Chao, provides special attention for Kentucky projects.
  • Wilbur Ross, Secretary of Commerce, a former private equity manager. His firm paid a $2.3 million fine in 2016 for unethically siphoning $120 million from former associates. Companies his firm controlled found ways to escape obligations to provide workers pensions and health benefits. After he became Secretary, and with his department regulating shipping, he retained ownership in a shipping company with ties to Russian oligarchs and members of Russian President Putin’s family. As Secretary, he personally negotiated a deal to ship liquified natural gas (LNG) to China while his shipping company owned the world’s largest fleet of LNG tankers. Ross has conferred on official business with leaders of government-controlled funds in Qatar, Japan, and Singapore who had invested in his private equity firm. He had official meetings with the CEOs of Chevron and Boeing, while his wife held investments in those corporations of $400,000 and $2 million, respectively.
  • Betsy DeVos, Secretary of the Department of Education (DOE), rich, major campaign contributor with no expertise in education other than advocacy for charter schools. For numerous top jobs at DOE, she has hired former employees of private, for-profit college companies that had paid fines or signed legal settlements for deceptive advertising. The DOE has maintained the flow of federal funds (via student loans) to for-profit schools with questionable track records, while insisting that students defrauded by private colleges continue to make loan payments. The DOE also effectively stopped the public-service loan forgiveness program, requiring tens of thousands of teachers, nurses, police officers, and others to continue to pay off their student loans. She has done nothing to help ease the $1.5 trillion student debt crisis, despite promises by President Trump to do so.
  • David Bernhardt, Secretary of the Department of the Interior, former partner in a Denver law and lobbying firm that represented mining, oil, and gas companies. He disclosed 20 separate conflicts of interest, but nonetheless acted at least 25 times to benefit former clients of his law firm. His former law firm has quadrupled its revenue since he became Secretary.
  • Andrew Wheeler, head of the Environmental Protection Agency, a former lawyer and lobbyist for the coal industry.
  • Alex Azar, Secretary of Health and Human Services, a former executive of the giant drug corporation, Eli Lilly, where dramatic increases in drug prices were a common practice.

The list goes on and on and includes many staffers in these and other agencies. Overall, as-of October 2019, less than three years into Trump’s term, there are 281 former lobbyists working in the Trump administration, four times as many as the Obama administration hired in six years.

This is not how a democracy is supposed to operate, let alone our democracy, which is supposed to be the exceptional shining light on the hill. This is how a plutocracy operates – where government is of, by, and for the wealthy.

I urge you to contact your U.S. Representative and Senators to ask them to investigate the conflicts of interest, the self-enrichment, and the ethics of the many members of the Trump administration identified in The American Prospect’s expose. Please ask your Senators to refuse to confirm any Trump appointee with conflicts of interest or histories of unethical behavior. Because of current vacancies and the high level of turnover, additional appointments of senior officials will continue to come before the Senate.

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]      Lardner, J., 4/9/20, “Mapping corruption: Donald Trump’s executive branch,” The American Prospect (https://prospect.org/power/mapping-corruption-donald-trump-executive-branch/)

[2]      Lardner, J., 4/9/20, see above

THE TRUMP ADMINISTRATION’S SWAMP OF CORRUPTION

President Trump campaigned on a promise to drain the Washington, D.C., swamp of special interests and insider dealing. This is one promise he clearly hasn’t kept – and probably never meant – although it was good rhetoric for the campaign because many of his potential supporters wanted to hear this. They were working and middle-class people who wanted to see the federal government turned upside down because they had lost their economic security to:

  • Trade deals that sent their jobs overseas,
  • Anti-union policies that made it impossible for them to strike or to organize, so their wages stagnated and their overall compensation (including benefits) declined,
  • Financial policies that let already wealthy executives and stockholders capture the benefits of increased productivity of workers,
  • A health care system that increased their costs while decreasing coverage,
  • A retirement system that either abandoned them or shifted investment risk onto their shoulders, and
  • A government that repeatedly bailed out the financial industry, reduced taxes on huge corporations, and allowed leveraged buyouts and bankruptcies that cut jobs and eliminated retirement benefits.

While these policies were benefiting wealthy corporations and individuals, blue collar and middle-class workers lost their jobs, had mortgages foreclosed on, and saw their credit card balances and their children’s student debt skyrocket. (See this previous post for more detail.)

The American Prospect magazine has begun mapping the Trump Swamp of conflicts of interest and unethical behavior agency by agency. [1] They have created an interactive map of Washington where you can click on an agency’s headquarters building and get highlights of the swamp of corruption at each agency.

The level of corruption – of special interests running our government for their own benefit and the outright self-enrichment by individuals in the Trump administration – is stunning. Much of this flies beneath the radar of all the bluster, lies, and shocking policy proposals the Trump administration throws out daily. It relies on misdirection delivered through words to distract attention from corrupt actions. Our mainstream media is just too focused on the theater of Trump and his minions, and too overwhelmed to report everything that’s being done. And the American public is too distracted – having had its attention diverted from the real action just as a magician does – and too overwhelmed to take it all in.

The personal self-dealing of President Trump is appalling even before one considers what’s going on in executive branch agencies. For example, foreign diplomats and domestic lobbyists are paying untold sums of money to stay in Trump hotels and at Trump resorts. This money is functionally a bribe, buying access, attention, often face-time, and sometimes outright rewards. The President has spent one out of every three days at one of his resorts, giving the resorts free advertising and revenue from the lodging and other expenses of his Secret Service detail and his retinue. The Secret Service, for example, in protecting the President as he golfs, has spent over $500,000 on golf carts alone.

Family members have benefited, too. Perhaps most notably, Ivanka Trump got rare and valuable trademarks from China the same day she dined with China’s leader. Trump’s spokesperson also touted Ivanka’s products in official TV interviews.

In another example of what’s functionally bribery, two large private prison corporations, GEO Group and CoreCivic, after hundreds of thousands of dollars of political spending, have received over $3 billion in payments for their services from Immigration and Customs Enforcement (ICE), a unit of the federal Department of Homeland Security. Together, they run 41 detention centers that house more than half of ICE detainees. They’re providing these services because the Trump administration has reversed the phaseout of the use of private prisons that was occurring under the Obama administration. The phaseout was happening because of a series of scandals at private prisons including deaths, high suicide rates, substandard medical care, and other malfeasance. (See previous posts here and here for more detail.)

This dramatic reversal of policy by the Trump administration didn’t happen by accident; it happened because of a concerted effort by the private prison corporations through campaign contributions and use of the revolving door. GEO-associated executives and entities gave at least $675,000 to Trump’s campaign and inauguration and other Republican campaigns. GEO hired two former aides to Sen. Sessions, the new Attorney General, as lobbyists. When AG Sessions formally reversed the Obama administration’s phaseout of the use of private prisons, GEO stock had already doubled in value and CoreCivic’s stock was up 140%. As a thank you, the private prison industry gave another $1 million to the Trump campaign. [2]

Payday lenders also functionally bribed the Trump administration to get a reprieve from Obama administration policies, which were working to protect borrowers from usurious fees and interest rates (sometimes over 100% a year when annualized). The payday lending industry donated over $2.2 million to Trump’s campaign and inauguration. The CEO of one large payday lending chain told his peers that the money would buy access to top administration officials and the chair of the Republican National Committee, who could get them an audience with the President.

The change in payday lending oversight policy was facilitated by Trump’s appointment of his top budget official, Mick Mulvaney, to head the Consumer Financial Protection Bureau (CFPB). The appointment process was probably illegal, but the White House Office of Legal Counsel said it was okay in a memo written by a lawyer who had been the lead attorney for a payday lender fighting CFPB regulations. The CFPB dropped that enforcement action after Mulvaney took over.

Trump’s personal corruption is mind boggling, but it is only the tip of the iceberg. The overarching economic philosophy and purpose of the Trump administration has been to handover government regulation and policy making to large corporations, while sending as much as possible of government spending and program operation to them as well in an unprecedented spurt of privatization. As a result, there are numerous issue areas where policies that are widely supported by the public and are clearly in the public interest go nowhere as the corrupt influence of wealthy corporations and individuals blocks them. Instead, policies are often enacted that benefit the self-interests of wealthy corporations and individuals.

Beyond bad policies – ones that are uninformed and dangerous to public health, safety, and well-being – the Trump administration has made no effort to stop its bureaucrats, from Cabinet members on down, from enriching themselves from their work as government employees.

I urge you to visit The American Prospect’s interactive map of Washington and to click on one or more agency’s headquarters building to review highlights of the swamp of corruption at that agency.

In my next post, I will highlight some of the corrupt individuals in the Trump administration and their corrupt actions. I’ll also ask you to contact your elected officials to ask them to crack down on this corruption.

[1]      Lardner, J., 4/9/20, “Mapping corruption: Donald Trump’s executive branch,” The American Prospect (https://prospect.org/power/mapping-corruption-donald-trump-executive-branch/)

[2]      Lardner, J., 4/9/20, see above

BIG BUSINESS HAS FAILED US IN THE PANDEMIC

Big businesses and their executives have failed us in the coronavirus pandemic, but nonetheless they are standing at the public trough getting more bailout money than anyone else. This sounds just like what happened in 2008.

Big corporations and their so smart executives didn’t see the business opportunity and respond to the pandemic when it appeared in late 2019 in China. They could and should have seen what was coming and increased the production of ventilators and personal protection equipment (PPE). This was a great opportunity for them to make a profit and garner good publicity but with their short-term, finance-focused mentality, they totally missed the opportunity.

Corporate executives have failed to push back on the Trump administration and the right-wing movement in their disdain for science and expertise. At times, they have promoted it, for example in climate change denial. In the case of the coronavirus, shortly before Trump made his dangerous call for the country to get back to normal by Easter, he had been on a conference call with financial executives who apparently told him that ending social distancing would be good for the financial markets.

Corporate executives – supposedly leaders – have failed to stand up for rational policies and preparedness. In doing so, they have aided and abetted the right-wing anti-government, anti-knowledge, anti-truth movement. By doing everything they can to avoid paying taxes, corporate executives have undermined government capacity to respond to public health crises, among other things.

Lessons that were learned during the Ebola outbreak in 2014 have been ignored and undermined by the Trump administration and its enablers in Congress. They have weakened our public health system and undermined our global health security, including eliminating the key position that coordinates U.S. global health efforts. [1] The Trump administration ignored the plans the Obama administration gave them, developed based on the Ebola outbreak, on how to respond to a public health crisis.

The right-wing movement reflexively opposes government policies and programs, both because it wants unbridled, unregulated opportunities to make profits at any cost to the public good, and because they don’t want to take the chance that any government action would appear to be valuable or successful. They don’t want voters to ever get the sense that government does important things that serve the public interest. [2]

Deregulation, particularly of the financial industry and financial standards, has undermined the financial stability of multiple corporations and industries. There are many financially unstable corporations in the U.S. that are likely to be in or on the brink of bankruptcy without government assistance in the face of the coronavirus pandemic. This is the result of big banks making high-risk loans, vulture capitalists’ leverage buyouts (with high-risk loans), and corporations using virtually all their profits and even borrowed money to buy back stock and pay dividends (which enriches executives and wealthy shareholders). The systematic weakening of the regulation of the big banks since the 2008 crash, including the undermining of the Dodd-Frank law’s financial safeguards put in place after that crash, have contributed significantly to this dangerous situation. [3]

For example, over the last decade the airline industry has spent 96% of the cash generated by profits to buy back its own shares of stock. Therefore, it failed to build a reserve against tough times and is now standing at the public trough asking for a bailout of $50 billion. Coincidentally, the six biggest U.S. airlines spent $47 billion over the last ten years buying their own stock, endangering the financial stability and future of the corporations. [4]

A corporation buying its own stock boosts the price of its shares, which enriches big stockholders and executives. In 2012, for example, the 500 highest paid executives at public U.S. corporations received, on average, $30 million each in compensation with 83% of it based on stock options and stock awards. Therefore, a boost in the price of the corporation’s stock enriches these executives substantially. [5]

Over five decades, corporate executives have outsourced their supply chains to foreign countries, notably China, while ignoring the risks and hidden costs of being dependent on global trade. They did so to increase profits by dramatically reducing labor costs. The coronavirus pandemic has brought the risks and hidden costs of globalization home to roost. Manufacturing operations in China and other countries have shut down due to the pandemic, which has also made the shipping of goods problematic. Foreign governments, especially authoritarian ones like China, are controlling exports, including of critically needed supplies to respond to the pandemic. As a result, corporations dependent on global operations to produce goods for export to and sale in the U.S., don’t have products to sell and consumers can’t get things they need, including critical health care supplies and drugs.

The risks of global supply chains shouldn’t have come as a surprise to smart corporate executives. In the 1930s, when dealing with the Great Depression, economist John Maynard Keynes argued for the globalization of ideas and arts, but the retention at home of the manufacturing of goods. [6]

The bottom line is that corporate executives exacerbated the coronavirus pandemic by:

  • Failing to respond to the emergence of the coronavirus in a timely and effective manner,
  • Failing to support preparedness for a public health crisis and a knowledge-based response when the coronavirus hit,
  • Supporting deregulation of finances that have made their own corporations and our economy more vulnerable to economic stress, and
  • Outsourcing global supply lines making their own corporations and all of us more vulnerable to disruptions in global trade.

[1]      Warren, E., retrieved from the Internet 4/5/20, “Preventing, containing, and treating infectious disease outbreaks at home and abroad,” https://elizabethwarren.com/plans/combating-infectious-disease-outbreaks

[2]      Krugman, P., 3/28/20, “COVID-19 brings out all the usual zombies,” The New York Times

[3]      Warren, E., retrieved from the Internet on 4/5/20, “My updated plan to address the coronavirus crisis,” https://elizabethwarren.com/plans/updated-plan-address-coronavirus

[4]      Van Doorn, P., 3/22/20, “Airlines and Boeing want a bailout – but look how much they’ve spent on stock buybacks,” MarketWatch (https://www.marketwatch.com/story/airlines-and-boeing-want-a-bailout-but-look-how-much-theyve-spent-on-stock-buybacks-2020-03-18)

[5]      Lazonick, W., Sept. 2014, “Profits without prosperity,” Harvard Business Review (https://hbr.org/2014/09/profits-without-prosperity)

[6]      Prestowitz, C., & Ferry, J., 3/30/20, “The end of the global supply chain,” The Boston Globe

REMEDIES FOR THREATS TO OUR ELECTIONS

My previous post highlighted threats to our election and voting systems. There are remedies for these threats, including the new and exacerbated ones due to the corona virus pandemic.

Surprisingly, there are lessons about cybersecurity that we should learn from Estonia. As a former state within the Soviet Union, it has decades of experience with Russian propaganda. It also has over a decade of experience dealing with Russian cyberattacks. In 2007, Russian hackers executed the first politically motivated cyberattack against a nation, bringing down much of Estonia’s Internet. They disabled government, newspaper, and bank websites. In response, Estonia built a Cyber Defense League based on a small staff and budget ($300,000) and a network of hundreds of volunteers. The volunteers do public education and plan simulated cyberattacks to test the government’s response. Estonia also has an ambassador at-large for cyber diplomacy and a federal Information System Authority that includes a cyber emergency response team. [1]

Estonia’s national government offers free cybersecurity trainings and screenings to candidates and political parties. In the lead-up to each election, it holds a hackathon where security experts try to break into the country’s election systems. Any vulnerabilities and the steps taken to fix them are publicly reported. The State Electoral Office has a working group that meets daily during elections to monitor the media and identify disinformation campaigns.

When Estonia joined NATO in 2004, it proposed hosting a center for cyber defense. Initially, NATO members were cool to the idea, but after Russia’s attack on Estonia in 2007, NATO agreed to create the NATO Cooperative Cyber Defense Center of Excellence housed in Tallinn, Estonia. It now hosts the largest cyber defense exercise in the world with over 1,200 participants from nearly 30 countries. In April 2019, the exercise’s scenario involved a coordinated cyberattack during a national election that affected vital services and also sought to manipulate public perception of the election results.

Estonia has become the model for countries working to counter Russian (and other) electronic meddling. It has developed cybersecurity expertise and a secure on-line voting system (over 40% of Estonians vote on-line). It requires high school students to take a 35-hour course on media and manipulation.

A key underlying element of Estonia’s preparedness for election meddling is broad public understanding that cybersecurity requires eternal vigilance, a sense of urgency, and a unity of purpose that leads to coordination among public agencies and private entities. These elements have, unfortunately, been lacking in the U.S. due to the lack of urgency from the Trump administration and Republicans in Congress about meddling in our elections.

To address cybersecurity and the other threats to our elections, and to ensure that everyone can vote safely and securely the U.S. needs to do the following: [2]

  • Establish an overarching national strategy on election security that coordinates efforts by governments, the private sector, academia, and the public,
  • Replace paperless voting machines with ones that have a paper backup and audit trail,
  • Expand alternative voting opportunities such as early voting and mail-in voting,
  • Enhance the ease of voter registration (e.g., on-line and same day registration) and the security of voter registration databases,
  • Provide federal funding to states to enhance voting systems and election-related security,
  • Increase oversight of and security requirements for vendors of voting systems,
  • Establish national standards for voting machines, registration databases, and voting procedures (e.g., post-election audits to verify the accuracy of results) to ensure that every eligible voter can vote safely and securely, and
  • Enhance the monitoring and response to misinformation and foreign attempts to influence our elections.

I urge you to contact your state election agency, often the Secretary of State, as well as your local, state, and national elected officials to encourage them to enhance the security and user-friendliness of our voting and election systems and procedures.

We need to make it as easy and as secure as possible for every citizen to vote!

[1]      Bryant, C. C., 2/4/20, “Cybersecurity 2020: What Estonia knows about thwarting Russians,” The Christian Science Monitor (https://www.csmonitor.com/World/Europe/2020/0204/Cybersecurity-2020-What-Estonia-knows-about-thwarting-Russians)

[2]      Brennan Center for Justice, retrieved 3/20/20, “Defend our elections,” (https://www.brennancenter.org/issues/defend-our-elections)

HEIGHTENED THREATS TO OUR ELECTIONS

Our election and voting systems were facing serious challenges before the corona virus pandemic hit; it has added new challenges and exacerbated old ones. Although the final federal election isn’t until November, state and local elections are occurring (or getting postponed) now, including primaries for the federal election.

The need to postpone elections or adjust procedures for them due to the pandemic highlight the need for effective voter communication and the threat of misinformation. Voters need to know about changes in the date of an election or the location of a polling place, e.g. to move it out of a senior living facility. Voters also need to know about changes in voting procedures such as expansions of early voting and absentee / mail-in voting.

Changes in election dates and procedures provide fertile ground for misinformation that could suppress voting or manipulate it for partisan or other purposes. The pandemic also provides opportunities for divisive misinformation aimed at stirring up social unrest and manipulating election outcomes. Such misinformation can also be used to undermine trust in government and our elections. [1]

One election strategy for addressing the challenge of keeping a safe social distance from others to limit the spread of the virus would be to conduct as much voting as possible by mail. For state or localities that have the capacity, mail-in ballots could be sent to every registered voter. In other places, absentee voting could be expanded to include anyone who would prefer to vote by mail. The options for requesting an absentee ballot should be expanded to include mail, on-line or email, phone, and in-person requests.

Before the corona virus hit, our voting systems and elections were vulnerable to operational glitches and ill-intentioned manipulation. Most states use electronic voting systems that are at least a decade old and prone to malfunction. Their software is old and doesn’t have up-to-date protections from hacking. Many states have voter registration databases that are similarly antiquated and vulnerable to hacking. Finally, poor design of ballots in some states leads to voter confusion and errors in voting. [2]

Issues with our voting and election systems are of particular concern given Russian cyber attacks on the 2016 U.S. election. Russian hackers probed election networks in all 50 states, breached at least one state voter registration database, attacked local election boards, got into at least two Florida counties’ computer networks, and infected the computers at a voting technology company. Russians hacked into the Clinton campaign’s email system and two units of the Democratic National Committee, stealing hundreds of thousands of documents and emails. These purloined documents then were leaked at multiple times, frequently when the timing had particular benefit for the Trump campaign. [3]

In addition, Russian entities engaged in extensive election-related misinformation campaigns in 2016. Probably most notably, the Internet Research Agency (IRA), a Russian government-linked organization, reached over 100 million Americans via social media using a budget of over $1 million a month. Through 470 Facebook accounts and 3,814 Twitter accounts, the IRA reached over 127 million people.

The goal of the Russian social media campaign was to sow political discord in the U.S. and to build doubts about American democracy by undermining trust in our political institutions, including the validity of our elections. It used hot-button topics such as race, immigration, and religion to inflame political polarization and heighten fear and confusion. Russia seeks to undermine and delegitimize Western democracies in general, both to boost its own international prestige and to discourage democratic aspirations at home. It hopes to exacerbate divisions within the U.S. and also to fracture NATO and other international alliances.

The U.S. Justice Department’s Mueller investigation of Russian interference in the 2016 election led to the indictment of 25 Russian individuals and three Russian organizations. They had infiltrated individual, public, and private computers and networks, including voting lists and banking systems.

Although a federal information clearinghouse for election infrastructure has been created and $380 million was provided to states for election security, most cyber experts believe our election infrastructure is quite vulnerable. In January 2019, the U.S. Director of National Security warned that Russia was looking at opportunities to advance its interests in our 2020 elections and that it would use social media to weaken our democratic institutions, influence U.S. policies, and undermine U.S. alliances and partnerships.

My next post will outline steps we should take to ensure the accessibility and security of voting for all citizens.

[1]      Weiser, W. R., & Feldman, M., 3/16/20, “How to protect the 2020 vote from the coronavirus,” Brennan Center for Justice (https://www.brennancenter.org/our-work/policy-solutions/how-protect-2020-vote-coronavirus)

[2]      Brennan Center for Justice, retrieved 3/20/20, “Election security,” (https://www.brennancenter.org/issues/defend-our-elections/election-security)

[3]      Bryant, C. C., 5/14/19, “Amid growing concerns about 2020, a primer on Russian election interference,” The Christian Science Monitor (https://www.csmonitor.com/USA/Politics/2019/0514/Amid-growing-concerns-about-2020-a-primer-on-Russian-election-interference)

WORKERS’ PAY NOT GROWING AND INEQUALITY STILL HIGH

Despite what President Trump said in his State of the Union speech, workers’ pay is still not growing. While the January 2020 monthly data on the dollar amount of earnings showed an increase from a year earlier, when adjusted for inflation and fringe benefits, workers’ overall compensation has declined.

The detailed quarterly data released in December 2019 showed that the dollar amount of average wages had increased 6.8% over the last three years, but that total compensation had declined after adjusting for inflation and fringe benefits. Over the three-year period from 2016 to 2019, the average dollar amount of wages (i.e., “nominal” wages) had increased from $22.83 to $24.38 per hour (i.e., $45,660 to $48,760 per year).

After adjusting for inflation (i.e., the decline in the purchasing power of a dollar), “real” wages had increased only 0.4% over the three years from 2016 to 2019. [1]

Total compensation (including fringe benefits such as health insurance, retirement contributions, and bonuses) declined 0.2% over the three years. The inflation-adjusted value of fringe benefits declined 1.7%. Since fringe benefits are almost one-third of total compensation, their decline wiped out the small increase in wages.

Meanwhile, income inequality continues to grow as compensation for high income individuals grows substantially while the average workers’ compensation is declining.

For workers with the lowest 10% of wages, increases in the minimum wage have boosted pay. Between 2013 and 2019, 26 states and D.C. (but not the federal government) have increased their minimum wages. This led to wage growth of 17.6% over this six-year period for low-wage workers in these areas, as compared to only 9.3% growth in states that did not increase their minimum wages. [2]

The black-white wage gap is growing and is substantially larger now than it was in 2000. After adjusting for differences in education, age, and other relevant worker characteristics, the black-white wage gap as-of 2019 is 14.9%, up from 10.2% in 2000. (The gap is 26.5% without the adjustment for worker characteristics.) Meanwhile, the Hispanic-white wage gap narrowed to 10.8% in 2019, down from 12.3% in 2000 (adjusted for worker characteristics). [3]

The gender pay gap is still substantial. A woman earns 77 cents for each $1 a man earns: a 23% gap after adjusting for differences in education, age, and other relevant worker characteristics. (The gap is 15% without the adjustment for worker characteristics.) The gender wage gap narrowed slightly from 2000 to 2019.

The defining features of the U.S. labor market over the last 40 years have been slow growth in wages and rising inequality, despite steady increases in worker productivity. The median hourly wage is $19.33, less than $40,000 a year. (The median wage is the point in the distribution of wages where half of workers get less and half of workers get more. The average wage is higher than the median wage because of the very high wages at the top of the distribution.)

The slow growth of wages, despite growing productivity, cannot be explained by education levels, increases in fringe benefits, or factors other than the decreasing clout of workers and the increasing power of employers and corporate executives. This is the result of policy decisions, largely by the federal government, that have reduced the power of workers, mainly by making it harder to organize unions and more difficult for unions to bargain collectively on behalf of workers. [4]

[1]      Salkever, D., 3/1/20, “Blue collar bust,” The Boston Globe

[2]      Gould, E., 2/20/20, “State of working America wages 2019,” Economic Policy Institute (https://www.epi.org/publication/swa-wages-2019/)

[3]      Gould, E., 2/27/20, “Black-white wage gaps are worse today than in 2000,” Economic Policy Institute (https://www.epi.org/blog/black-white-wage-gaps-are-worse-today-than-in-2000/)

[4]      Gould, E., 2/20/20, see above

THE LEGACY OF WARREN’S RUN FOR PRESIDENT

As a policy wonk and someone who believes governments have an important role to play in addressing issues in our economy and society, I’m disappointed to see Sen. Elizabeth Warren drop out of the Democratic presidential race. Her highlighting of the work we need to do on social and economic justice will have a lasting legacy.

Warren has more clearly and specifically laid out a progressive vision for this country than anyone since President Franklin D. Roosevelt. She spelled out not only what that vision looked like but how to achieve it. She focused attention on the role of government, who it is supposed to work for in a democracy, and how those with wealth and power have undermined the basic principles and promise of our democracy. [1]

The detailed roadmap Warren put forth of how to solve problems in our society and economy, and to return to government of, by, and for the people will, fortunately, long outlive her presidential campaign. In February 2019, she put forth the first of her numerous plans to address our problems with a proposal to make affordable, high quality child care available for all children under school age. And she put forth her proposal for a wealth tax on ultra-millionaires as the way to pay for it and a number of her other plans.

Warren next presented a plan to break up and regulate the Big Tech corporations that are engaging in monopolistic practices and abusing the personal information they gather from all of us. She followed this up with a proposal to reverse decades of racist housing policies implemented by governments at all levels along with private sector lenders and the real estate industry. She followed up with plans to tackle the cost of higher education and student debt, a detailed plan to pay for health care for all, and policies to lessen the influence of big corporations and wealthy individuals in our policy making process.

Warren’s meticulous policy proposals set the agenda for the Democratic race for the presidential nomination. Hopefully, they will set the agenda for the final presidential race and future policy debates in Congress and governments at all levels.

Her proposals and arguments on the campaign trail hammered home the message that America’s problems are not inevitable but are the results of choices reflected in government policies. Warren highlighted how these decisions have been driven by the power of wealthy individuals and corporations, and how they have put their profits, power, and personal gain ahead of the common good.

Warren’s abilities as a storyteller made our problems and her solutions resonate with many Americans, as she wove her personal life story and America’s history into a clear, understandable, and persuasive narrative.

In keeping with her message that government needs to better serve the broad public, she raised the majority of her campaign’s $92 million (which, sadly, is necessary to run a competitive campaign these days) from small donors giving $200 or less. She refused to hold big ticket fundraisers where attendees make contributions in the thousands of dollars. She received more than half of her fundraising total from women, which is highly unusual if not unprecedented. This all demonstrated, as Sen. Sanders has as well, that a viable presidential campaign can be run without relying on large sums of money from wealthy individuals (who have vested, special interests). [2]

Warren has changed the way many Americans view our society and economy. Many people have learned about a wealth tax and the racial wealth gap for the first time, for example.

I believe she has changed the course of our country. Only time will tell how quickly and extensively her vision will affect the policies of our governments and the characteristics of our economy and society.

[1]      Voght, K., 3/5/20, “What Elizabeth Warren taught us,” Mother Jones (https://www.motherjones.com/politics/2020/03/what-elizabeth-warren-taught-us/)

[2]      Hasan, I., & Monnay, T., 3/5/20, “Low on cash and delegates, Warren ends her White House bid,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/03/warren-ends-her-bid/)

BIG MONEY IS ALREADY PLAYING A BIG ROLE IN THE 2020 CAMPAIGN

Big money is already pouring into the 2020 election campaigns. The spending by wealthy individuals and corporations continues to grow. Federal candidates have already raised $2.2 billion (yes, Billion) with $1.6 billion of that belonging to the presidential candidates.

Here’s a quick summary of what the major presidential candidates and (supposedly) independent outside groups have spent so far (with 264 days to go!): [1]

  • Bloomberg: $464 million (self-funded, not accepting any contributions)
  • Steyer: $271 million
  • Trump: $218 million plus $35 million of outside money
  • Sanders: $133 million plus $  4 million of outside money
  • Warren: $  92 million plus $33 million of outside money
  • Buttigieg: $  81 million
  • Biden: $  68 million plus $  8 million of outside money
  • Klobuchar: $  34 million
  • Gabbard: $  14 million
  • Weld: $    2 million

Bloomberg is spending roughly $6 million a day of his own money on his presidential campaign. The bulk of his spending, roughly $400 million so far, has gone to advertising on TV, radio, and digital media. He is paying higher compensation to campaign staff than other campaigns in order, in numerous cases, to steal them away from other campaigns. [2] He is literally trying to buy the presidency with his personal fortune.

The 2010 Citizens United Supreme Court decision allowing unlimited spending in election campaigns by (supposedly) independent, outside groups and wealthy individuals continues to exacerbate the role of money in our elections. The securities and investment industry, for example, continues to increase its campaign spending and was the top industry donor to outside groups in each of the last four election cycles. Since 2012, the industry has spent more than $80 million in each two-year federal election cycle, over $320 million in total. Before the Citizens United decision, it never spent more than $18 million in an election cycle. [3]

Much of the campaign spending by corporations and their industry associations is done through Political Action Committees (PACs). Business PACs have already contributed $179 million to federal candidates and parties in the 2020 election cycle. Business PACs account for 73% of PAC contributions, dwarfing the spending by unions and issue-focused groups. Although the contributions themselves must be made by employees, shareholders, and their family members, the business can pay for all the PAC’s expenses and provide incentives to donors for giving to the PAC. The corporation’s direct spending on PAC expenses does not have to be disclosed. Business interests couple their dominant PAC spending with dominant spending on lobbying to give them great influence in policy making. They target specific candidates, often incumbents, who will be in influential policy making positions (e.g., on committees) relevant to their interests. [4]

PACs are supposedly independent of candidates’ campaigns, but they often share office space, staff, and other resources with candidates, House or Senate leaders, or the political parties. [5]

The amount of “dark money” in campaigns is growing, which means voters know less about who’s spending money to influence their votes. (“Dark money” is money that is laundered through non-profit entities that supposedly don’t have political spending as their main purpose and therefore do not have to disclose who their donors are.) In 2019, $65 million in “dark money” has flowed into PAC spending on 2020 election campaigns. In the 2018 election cycle, $176 million in “dark money” was given to PACs. The total for the 2020 election cycle is all but certain to be higher.

A recent report from the federal Government Accountability Office (GAO) found that campaign finance laws and enforcement capabilities have not kept up with the issues presented by “dark money,” unlimited spending, and on-line political spending. The Internal Revenue Service (IRS) doesn’t have clear standards on what constitutes political activity in non-profit entities or the extent to which non-profit entities can engage in political activity. Furthermore, it is not reviewing donor lists or sharing them with other federal law enforcement agencies for review. The Federal Election Commission (FEC) is non-functional due to partisan deadlock, the President’s failure to appoint Commissioners, and under-funding. As a result, for example, the flow of illegal foreign money into our elections through “dark money” channels is not being monitored and no enforcement is occurring. [6]

One often overlooked effect of our money-driven elections is that people of color and their interests are severely underrepresented by elected officials. Ninety percent of elected officials are white, while only 63% of the population is white. The great majority of campaign money at the federal and state levels comes from less than 1% of the population who make donations of over $1,000. The bulk of these donors come from the richest 1% of the population, which is over 90% white. Money is, of course, crucial to election campaigns, with the candidate with more money winning about 90% of the time. The record spending on campaigns, especially by wealthy individuals and corporations unleashed by the Citizens United decision, has exacerbated the political marginalization of people of color. Wealth and political power have been increasingly consolidated in the hands of a very small, very white portion of the population. The bottom line is that people of color are underrepresented among elected officials, among candidates for office, among donors to campaigns, and as having their interests reflected in policies that are enacted. [7]

Given the obscene amounts of money being spent on election campaigns, voters who wish to make good decisions on candidates must now spend more time and effort to wade through the barrage of self-serving ads, misinformation, and noise to ferret out good and truthful information about candidates. If our democracy is to work, this requires all of us to pay more attention and spend more time researching candidates before we make our voting decisions. Voters will need to be consciously skeptical, so they are less swayed by paid media and slick messaging.

Ultimately, we need to change our campaign finance laws to reduce the influence of money and make it easier for voters to discern candidates’ positions on issues. But until that happens, to be informed voters, we will have to wade through the barrage of political advertising and messaging to discern between quality from quantity and differentiate truth from half-truth or outright fiction.

[1]      OpenSecrets.org, retrieved 2/23/20, “2020 presidential race,” Center for Responsive Politics (https://www.opensecrets.org/2020-presidential-race)

[2]      Evers-Hillstrom, K., 2/20/20, “Michael Bloomberg is spending nearly $6 million per day on campaign,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/02/bloomberg-spent-6-million-per-day/)

[3]      Monnay, T., 1/23/20, “Wall Street donor influence shows unprecedented growth 10 years after Citizens United,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/01/wall-street-donor-influence-growth-10-years-citizens-united/

[4]      Evers-Hillstrom, K., 2/14/20, “Why corporate PACs have an advantage,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/02/why-corporate-pacs-have-an-advantage/)

[5]      Massoglia, A., 2/7/20, “ ‘Dark money’ groups steering millions to super PACs in 2020 elections,” OpenSecrets.org, Center for Responsive Politics (https://www.opensecrets.org/news/2020/02/dark-money-steers-millions-to-super-pacs-2020/)

[6]      Massoglia, A., 2/7/20, see above

[7]      Lioz, A., 12/14/19, “Stacked deck: How racial bias in our big money political system undermines our democracy and our economy,” Demos (https://www.demos.org/sites/default/files/publications/StackedDeck2_1.pdf)

UNDER-TAXED CORPORATIONS AND WAYS TO MAKE THEIR TAXES FAIRER

A year’s worth of data on what corporations are actually paying in taxes under the 2017 Tax Cuts and Jobs Act (TCJA) is now available. The TCJA cut the stated federal corporate income tax rate to 21% from 35%, a 40% reduction. It created many new tax breaks and loopholes, while (supposedly) closing some existing ones. However, as a previous post highlighted, corporations have been lobbying vigorously, and in many cases successfully, to have the rules and regulations implementing the TCJA weaken or eliminate its closing of tax breaks and loopholes.

An in-depth review of the financial filings of the Fortune 500 largest corporations revealed that 379 of them were profitable in 2018 and found enough information to calculate an effective federal income tax rate for them. (Their effective tax rate is the portion of their profits they paid in federal income taxes.)

The average effective federal income tax rate for these 379 large, profitable corporations was 11.3%, which is barely half of the stated rate. Ninety-one (91) paid no federal income tax including Amazon, Chevron, Halliburton, and IBM. Another fifty-six (56) of them paid less than 5% of profits in taxes.

The 11.3% average rate is the lowest rate since this analysis was begun in 1984. [1]  The industries with the lowest effective federal income tax rates, all of which paid less than half of the stated rate, were:

  • Industrial machinery (which paid an average effective tax of a negative 0.6%, meaning that on average they got back money from the government)
  • Gas and electric utilities (-0.5%)
  • Motor vehicles and parts (1.5%)
  • Oil, gas, and pipelines (3.6%)
  • Chemicals (4.4%)
  • Transportation and also Engineering & construction (8.0%)
  • Miscellaneous services (8.3%)
  • Publishing and printing (9.8%)
  • Financial (10.2%)

Twenty-five very large corporations received the bulk of the tax breaks that led to these low effective tax rates. They received $37 billion in tax breaks, half of the $74 billion in tax breaks that all 379 corporations received. This is the result of their capacity to influence public policy through lobbying, campaign spending, and use of the revolving door. (Two previous posts here and here provide more details on corporate manipulation of public policies.)

Five of those very large corporations received more than $16 billion in tax breaks (22% of the total for all 379 corporations): Amazon, Bank of America, J.P. Morgan Chase, Verizon, and Wells Fargo.

Large corporations have succeeded in manipulating tax laws, including through the TCJA and its implementing rules and regulations, to unfairly reduce their taxes. This results in small businesses and individuals having to pay more taxes and to bear an unfair portion of the taxes needed to support government at the federal, state, and local levels. Furthermore, it means governments don’t have the resources they need to perform important functions that are in the public interest and desired by taxpayers.

Here are some examples of changes in tax laws that would lead to large corporations paying a fairer share of taxes: [2]

  • Remove tax incentives and loopholes that reward the shifting of profits and jobs to offshore entities. This includes effective implementation of provisions of the TCJA that were meant to address this problem but have been undermined by successful lobbying by multi-national corporations during the writing of implementation rules and regulations. (See this previous post for more details.)
  • Reinstate a corporate Alternative Minimum Tax to ensure that all profitable corporations pay a reasonable amount of income tax each year.
  • Repeal TCJA and previous tax law provisions that allow corporations to deduct expenses for equipment and other capital expenditures much more quickly than the equipment actually depreciates in value. This is an accounting “trick” that reduces profits and, therefore, income taxes.
  • Stop the fictitious creation of large expenses for granting stock options to executives. This is another accounting “trick” that reduces profits and, therefore, income taxes.
  • Require public disclosure of key corporate financial data, including profits and taxes paid, on a country-by-country basis as a routine part of corporate financial reporting. This transparency will allow policy makers and the public to understand whether corporations are paying a fair share of their income in taxes and to adjust policies accordingly.

I urge you to contact your U.S. Representative and Senators to ask them to fix corporate tax laws so that corporations, particularly large, multi-national corporations, are paying their fair share in taxes. Otherwise, you and I and the small businesses we patronize in our communities will continue to bear an unfair burden in funding the public services we need from our governments at all levels.

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]      Gardner, M., Roque, L., & Wamhoff, S., Dec. 2019, “Corporate tax avoidance in the first year under the Trump tax law,” Institute on Taxation & Economic Policy (https://itep.org/corporate-tax-avoidance-in-the-first-year-of-the-trump-tax-law/)

[2]      Gardner, M., Roque, L., & Wamhoff, S., Dec. 2019, see above

CORPORATE LOBBYING AND WHAT THEY GET FOR IT

In 2019, corporate spending on lobbying the federal government grew to a nine-year high of $3.47 billion (yes, Billion).

The health industry spent a record $594 million on lobbying in 2019 as it fought against various proposed reforms of our health care system. Roughly half of this money was spent in opposition to controls on drug prices. As a result, proposals from both the Trump administration and Congress have stalled. [1]

The health industry also lobbied heavily against bipartisan legislation to control surprise medical bills. These are typically bills for services delivered by out-of-network providers that aren’t covered by insurance when patients had no idea this was occurring. New players in this industry, private equity vulture capitalists who have bought emergency medical providers and physician staffing services, opposed this legislation with a $54 million ad campaign funded by “dark money,” i.e., money whose actual source was obscured. As a result of this ad campaign and all the lobbying, despite bipartisan support in Congress and support from the Trump administration, this legislation to limit the dollar amount of surprise medical bills has stalled.

Trade and tariff actions were the target of lots of corporate lobbying; 1,430 lobbyists reported lobbying on trade issues, a record high. The giant corporations with huge resources are lobbying for exemptions from tariffs, while smaller businesses, without the resources to engage in major lobbying campaigns, will probably suffer from the tariffs. One example of lobbying on trade issues is that the Semiconductor Industry Association succeed in getting the Trump administration to reverse its ban on the sale of computer chips to the Chinese corporation, Huawei. [2]

The communications and electronics industry spent a record $435 million on lobbying in 2019. Amazon, Apple, and Facebook all set new records for lobbying expenditures in response to concerns in Congress about their business practices and antitrust investigations in Congress and the Department of Justice.

Corporations are spending huge sums on lobbying because they know there will be a high return on their investment. Success in lowering taxes or tariffs, or in allowing higher prices and revenue, will result in higher profits generally well in excess of the amount spent lobbying.

One argument against allowing huge corporations to exist is that they have huge resources to pay for lobbying and to use to pursue legal actions that skew the balance of power in our society and overwhelm the voice of the people and the public interest.

[1]      Evers-Hillstrom, K., 1/24/20, “Lobbying spending in 2019 nears all-time high as health sector smashes records,” Common Dreams and the Center for Responsive Politics (https://www.commondreams.org/views/2020/01/25/lobbying-spending-2019-nears-all-time-high-health-sector-smashes-records)

[2]      Evers-Hillstrom, K., 1/24/20, see above

HOW CORPORATIONS MANIPULATE PUBLIC POLICY

Big corporations use a variety of techniques to manipulate public policies. The standard tactics that receive the most publicity are lobbying, campaign contributions and (supposedly) independent campaign spending, and the revolving door between jobs in corporations and related jobs in the public sector, including as regulators of the industry where the person formerly worked.

Less recognized and publicized techniques for affecting policy include funding think tanks and (supposedly) independent research and academic publications. Corporations also have funded (supposedly) grassroots organizations to advance their interests. Probably the most famous (or infamous) one is the National Rifle Association (NRA). Although it is a membership organization and is viewed and presented as a grassroots organization, it is heavily funded and supported by the manufacturers of guns and ammunition. It is what is called an “astroturf” organization, i.e., fake grass(roots).

Another tactic that is being adopted by the Big Tech corporations has more traditionally been associated with the military and the defense industry: putting jobs in the districts of key and powerful legislators. The military has for decades worked to have bases, other facilities, and contractors in every state and congressional district. The defense industry corporations have worked to spread their facilities and jobs widely across the country. This meant that when cuts to defense spending, such as closing of some bases, was discussed or when cutting funding for a specific weapon system was raised, it meant that congressional representatives considering voting to cut spending were painted as cutting jobs, often in their own districts. That’s a tough vote to make!

Recently, the four Big Tech corporations, Amazon, Apple, Facebook, and Google, all appear to have adopted this job placement strategy. In late 2017, Rep. Jerry Nadler of New York City became the ranking minority member of the House Judiciary Committee and became its chair when the Democrats won control of the House in the 2018 elections. The House Judiciary Committee is currently investigating the four Big Tech corporations for antitrust violations and anti-competitive behavior.

All four of the Big Tech corporations have announced they are opening offices and bringing jobs to the section of Manhattan which just happens to be in Judiciary Committee chair Jerry Nadler’s district. Amazon has recently signed a lease for space that will house over 1,500 employees. Not only does this put these jobs in Nadler’s district, but if the employees happen to live nearby, they will be voters in his district as well. (Remember that Amazon only months earlier had pulled out of a deal to locate its second headquarters in nearby Queens, despite having been promised (extorted?) $3 billion in public subsidies to locate a promised 25,000 jobs there.) [1]

Apple, Facebook, and Google have either opened new offices in New York City or announced plans to do so. All of them are on the west side of Manhattan in Nadler’s district. There is plenty of real estate elsewhere in the New York City area, so the fact that all four Big Tech firms happen to be locating in Nadler’s district is more than a little suspicious. (By the way, the runner-up for the position Nadler got on the Judiciary Committee was Rep. Zoe Lofgren, whose district includes a chunk of Silicon Valley.)

It is projected that by 2022 the four Big Tech corporations will have over 20,000 employees (and potentially voters) in nine different locations all on the west side of Manhattan in Nadler’s district.

The Judiciary Committee’s investigations, under Chairman Nadler, are the most significant antitrust investigations in decades and their outcomes could have significant effects on how the Big Tech corporations conduct their businesses and on their profits. Placing jobs in Nadler’s district, with the implicit or potential threat that those jobs might be at risk if Nadler and the Judiciary Committee take action that is viewed unfavorably by the Big Tech firms, is an escalation of these corporations’ on-going and persistent efforts to manipulate public policies in their favor. [2]

[1]      Dayen, D., 1/10/20, “Silicon Valley’s big apple gambit,” The American Prospect (https://prospect.org/power/silicon-valleys-big-apple-gambit/)

[2]      Dayen, D., 1/10/20, see above