ENDING THE CORRUPTION OF AMERICAN DEMOCRACY

ABSTRACT: Whatever your politics – Democratic, Republican or independent; conservative, moderate, or progressive – most people are frustrated that issues they believe are important aren’t being addressed by Congress. The fuel that is really driving this paralysis is Big Money in our political campaigns. It is distorting the operation of government and corrupting our democracy. This corruption is the result of concentrated wealth and power in corporations and wealthy individuals who use their money to buy influence over our government and its politics and policies. Many members of the House and Senate spend more time meeting with lobbyists and special interest groups and fundraising for their next campaign than they do on legislation and representing the people who voted to send them to Washington.

The most immediate action we can take is to push for passage of a carefully designed law that reduces and exposes the flow of political money and influence without violating the Supreme Court’s rulings on freedom of speech. The American Anti-Corruption Act (AACA) is a bold, comprehensive law that does this. I urge you to support it by learning more about it (see below for a summary) and becoming a citizen co-sponsor at http://anticorruptionact.org.

FULL POST: Whatever your politics – Democratic, Republican or independent; conservative, moderate, or progressive – most people are frustrated that issues they believe are important aren’t being addressed by Congress. For some it’s fracking or climate change. For others it’s the federal debt, income inequality, gun violence, immigration, health care, regulation of the financial industry (or other corporations), military spending, trade treaties, or something else. Each is an important issue that can evoke strong debate and real passion.

All of these issues deserve a full and open debate, require compromise, and should receive votes on meaningful pieces of legislation. None is receiving it. The system is broken. The pundits and the media say this dysfunction and gridlock in Congress reflect the deep partisan divide in the U.S. However, the fuel that is really driving this paralysis is Big Money in our political campaigns. It is distorting the operation of government and corrupting our democracy.

This corruption is the result of concentrated wealth and power in corporations and wealthy individuals who use their money to buy influence over our government and its politics and policies. We cannot expect action on important issues until we end this corruption, which is deep and pernicious, and threatens the heart of our democratic system. Today, many members of the House and Senate spend more time meeting with lobbyists and special interest groups and fundraising for their next campaign than they do on legislation and representing the people who voted to send them to Washington.

The most immediate action we can take is to push for passage of a carefully designed law that reduces and exposes the flow of political money and influence without violating the Supreme Court’s rulings on freedom of speech. The American Anti-Corruption Act (AACA) is a bold, comprehensive law that does this. The campaign to promote it has been launched nationally by a nonpartisan group, Represent.Us (https://represent.us).

Here is what the American Anti-Corruption Act would do:

1) Prohibit members of Congress from a) receiving contributions from the interests they oversee, and b) fundraising during congressional working hours;

2) Build the influence of small contributors by creating a $100 tax rebate that registered voters can use to contribute to federal candidates;

3) Require candidates to disclose the names of individuals (known as “bundlers”) who gather and package together multiple contributions, thereby presenting large sums of money to candidates;

4) Limit the amount that lobbyists and their clients can contribute to federal candidates, political parties, and political committees to $500 per year;

5) Limit political action committees’ contributions and their coordination with political campaigns and parties;

6) Mandate full, timely reporting of all spending of $10,000 or more on political activities;

7) Expand the legal definition of a lobbyist so anyone trying to influence our lawmakers has to play by the lobbying rules;

8) Close the “revolving door” through which former elected officials and their staffs capitalize on their connections and influence in high-paying lobbying jobs when they leave office; and

9) Strengthen enforcement of campaign finance laws.

I urge you to support the American Anti-Corruption Act by learning more about it and becoming a citizen co-sponsor at http://anticorruptionact.org.

SHORT TAKES ON CURRENT EVENTS

ABSTRACT:

CONFIRMING PRESIDENTIAL NOMINEES: The US Senate voted on 11/21 to change its rules and eliminate the use of the filibuster to block presidential nominees other than Supreme Court Justices, given that Republicans had returned to full-scale obstructionism since the deal to approve 7 nominees in July. Under the new rules, the Senate has confirmed 11 nominees and Senate Democrats are pursuing at least 10 more confirmations before the holiday recess. Roughly 70 nominees remain pending.

FINING DRUG CORPORATIONS FOR COLLUSION: The European Union has fined two giant drug corporations, Johnson & Johnson and Novartis, $22 million for colluding to delay the availability of a cheaper generic drug.

FDA REDUCING ANTIBIOTIC OVERUSE AND DRUG-RESISTANT INFECTIONS: The Food and Drug Administration (FDA) is taking steps to reduce the unnecessary use of antibiotics in meat production. This overuse of antibiotics used for treating infections in humans is linked to the development of antibiotic-resistant infections in humans. 23,000 people are dying each year from such infections. The FDA is asking drug corporations to voluntarily stop labeling drugs used to treat human infections as acceptable for growth promotion in animals. The FDA is using this voluntary approach and giving the drug corporations 3 years to comply because it believes the complex regulatory process a mandatory rule would require would take many years and might not be successful.

FULL POST:

CONFIRMING PRESIDENTIAL NOMINEES

The US Senate voted on 11/21 to change its rules and eliminate the use of the filibuster to block presidential nominees other than Supreme Court Justices. Democrats in the Senate exercised this option, the so-called “nuclear option”, because after a deal in July that allowed the approval of 7 nominees for executive branch positions, Republicans had returned to full-scale obstructionism. With roughly 90 judicial vacancies and some key executive branch openings, the Democrats threatened again to change the filibuster rule and proceeded to do so when the Republicans refused to relent from their obstructionism.

Since then, the Senate has confirmed 11 nominees including the Secretary of Homeland Security, an Assistant Secretary of State, the Secretary of the Air Force, and 2 judges, despite continuing Republican use of delaying tactics. Interestingly, once the Republican blockade of the first two of these was overcome, they were confirmed by 78-16 votes.

Senate Democrats are pursuing at least 10 more confirmations before the holiday recess, including the Chair of the Federal Reserve and the head of the Internal Revenue Service. Roughly 70 nominees remain pending and some of them may have to be re-nominated and start the process all over again in the new year. (1. Alman, A., 12/16/13, “Jeh Johnson confirmed by Senate as Secretary of Homeland Security, The Huffington Post. 2. Reuters, 12/13/13, “U.S. Senate confirmation marathon approves two more Obama nominees,” Reuters) (See my post A Respite from Obstructionism on 7/25/13 at https://lippittpolicyandpolitics.org/2013/07/25/a-respite-from-obstructionism/, as well as those of 7/21/13 and 7/16/13, for more details on the July deal and obstruction of nominees’ confirmations.)

FINING DRUG CORPORATIONS FOR COLLUSION

The European Union has fined two giant drug corporations, Johnson & Johnson (J&J) and Novartis, $22 million for colluding to delay the availability of a cheaper generic drug. A patent on a J&J pain killer expired in 2005 but J&J paid Novartis to delay for 17 months production of a cheaper generic version of the drug. Both corporations were more profitable as a result. (Daily Briefing, 12/11/13, “EU fines drug firms over delay,” The Boston Globe)

FDA REDUCING ANTIBIOTIC OVERUSE AND DRUG-RESISTANT INFECTIONS

The Food and Drug Administration (FDA) is taking steps to reduce the unnecessary use of antibiotics in meat production. Many producers of cattle, hogs, and poultry give their animals antibiotics to make them grow faster. This overuse of antibiotics used for treating infections in humans is linked to the development of antibiotic-resistant infections in humans, which are much more difficult and expensive to treat, and can be fatal: 23,000 people are dying each year from such infections. The FDA is asking drug corporations to voluntarily stop labeling drugs used to treat human infections as acceptable for growth promotion in animals. This would make such use illegal without a prescription for use in a sick animal. The FDA is using this voluntary approach and giving the drug corporations 3 years to comply because it believes the complex regulatory process a mandatory rule would require would take many years and might not be successful. (Jalonick, M.C., 12/12/13, “FDA working to phase out some antibiotics in meat,” The Boston Globe from the Associated Press)

NOTE: There are so many issues and events that I think those of us trying to be well informed citizens and voters should know about that I can’t write full posts on all of them. And I’m sure you don’t have time to read full posts about them. Therefore, I’ll use this format to complement the full posts: Short Takes on current events. Please let me know if you find these valuable by commenting on them. I will provide references or links to more information for the topics, so you can pursue them in more depth if you have the interest and time.

THE FEDERAL BUDGET DEAL

ABSTRACT: As you probably know, Congress will vote this week on a budget deal for fiscal years 2014 and 2015. If the budget deal doesn’t pass, the government would shut down again on Jan. 15. The deal could fail to pass in Congress. Without a deal, the phase 2 sequester cuts take effect and would be much more painful than the phase 1 cuts were this year. Under the sequester, the 2013 cap on discretionary domestic and military spending is $986 billion. This cap is slated to drop to $967 billion for 2014.

The budget negotiators are proposing spending $1,012 billion in 2013 and $2,014 billion in 2015, claiming deficit reduction of $23 billion over 10 years and smarter budget cutting than the across-the-board sequester’s cuts. However, some of the shrink-the-government diehards are opposed to this increase in spending.

To cut costs, the contributions new federal civilian employees pay into their pension fund will increase and military pensions will receive smaller cost of living increases. To increase revenue, airlines’ fees to pay for the TSA will go up, resulting in a $5 increase in add-on fees on each airline ticket. This consumer fee increase has been criticized and some in Congress have suggested closing the private jet tax loophole as an alternative.

A bone of contention is that the deal does not extend the emergency unemployment benefits for the long-term unemployed. These benefits will expire on Dec. 28 for 1.3 million workers. Without an extension, an additional 850,000 workers’ will lose benefits in the first quarter of 2014. This would have an estimated impact on the economy of 300,000 fewer jobs in 2014 and a reduction in economic growth of 0.4%.

If there are issues in these budget negotiations that you feel strongly about, now is the time to contact your Congress people and get your two cents (or more) into the discussion.

FULL POST: As you probably know, Congress will vote this week on a budget deal for fiscal years 2014 (which started last Oct. 1) and 2015. Their deadline is this Friday because Congress is planning to adjourn and go home for the holidays then. Other deadlines are lurking behind this one: the temporary extension of the fiscal year 2013 budget in October expires on Jan. 15, the second round of automatic budget cuts (phase 2 of the sequester) goes into effective Jan. 1, and long-term unemployment benefits expire on Dec. 28.

If the budget deal doesn’t pass, the government would shut down again on Jan. 15, a result almost no one appears to want. The deal could fail to pass in Congress because the negotiating has been done by a small group and there is opposition to the deal from multiple sides. [1]

Without a deal, the phase 2 sequester cuts would take effect and would be much more painful than the phase 1 cuts were this year. Many federal agencies and programs were able to use surplus or reserve funds that are now exhausted. In the case of air traffic controllers, airport construction funds were used to fund them and aren’t available again. And some one-time accounting maneuvers were used. Therefore, the second round of cuts will have much greater impacts. [2] The phase 2 sequester cuts in government spending would also hurt the economy and cost an estimated 800,000 jobs in 2014. [3]

Nonetheless, a number of issues could derail the budget deal. One such issue is the overall spending caps currently in place under the sequester, officially known as the Budget Control Act (BCA) of 2011. The 2013 cap on discretionary domestic and military spending is $986 billion. This cap is slated to drop to $967 billion for 2014.

The budget negotiators are proposing spending $1,012 billion ($1.012 trillion) in 2013 and $2,014 billion in 2015. Military spending would be $521 billion and non-military spending $492 billion. [4][5] With some offsetting revenue increases and future cuts in spending, they are claiming deficit reduction of $23 billion over 10 years and smarter budget cutting than the across-the-board sequester’s cuts. [6] However, some of the shrink-the-government diehards are opposed to this increase in spending. Spending that Obama called for in his State of the Union speech on education and infrastructure (in part to create jobs) is not part of the budget deal.

To cut costs, the contributions new federal civilian employees pay into their pension fund will increase ($6 billion over 10 years). This is causing some pushback given that federal workers have already experienced a 3 year pay freeze, unpaid furloughs due to the sequester, and delays in receiving their pay during the government shutdown. [7] Military pensions will receive smaller cost of living increases ($6 billion over 10 years). A cut in payments to Medicare health care providers is extended 2 years to 2023 ($23 billion). [8] Costs of mineral leases and petroleum extraction research will also be cut.

To increase revenue, airlines’ fees to pay for the Transportation Security Administration (TSA) will go up, resulting in a $5 increase in add-on fees on each airline ticket. This consumer fee increase has been criticized and some in Congress have suggested closing the private jet tax loophole as an alternative way to raise revenue. [9] Companies’ premiums for insuring pension plans will increase, however, the closing of corporate tax loopholes, including the use of offshore tax havens (which alone could generate over $20 billion a year in revenue), that some in Congress had called for, are not part of the deal. [10]

A bone of contention is that the deal does not extend the emergency unemployment benefits for the long-term unemployed. These benefits will expire on Dec. 28 for 1.3 million workers who have been out of work for longer than the usual 26 week limit on benefits. An extension of benefits would cost $25 billion for 2014. Not only do such benefits help the workers and their families, but they also support the economy by helping to maintain household incomes and consumer spending, which is two-thirds of our economy. [11] Without an extension, an additional 850,000 workers’ will lose benefits in the first quarter of 2014 when their regular 26 weeks of benefits run out, and 4.8 million workers would be affected by expiring benefits over the course of 2014. This would have an estimated impact on the economy of 300,000 fewer jobs in 2014 and a reduction in economic growth of 0.4% (from a current level of 2.4% for 2013) in the first quarter of 2014. [12] Some Democrats would still like to see this in the budget deal, while others are planning to push it separately in the near future.

Although unemployment is down to 7.0%, long-term unemployment is still a serious problem. Furthermore, the emergency long-term unemployment benefits were started under President George W. Bush when unemployment was only 5.6%. Over 37% of the unemployed have been unemployed for over 26 weeks, and this percentage is still rising. [13]

If a budget deal is successfully passed by Congress and signed by the President, it will be the first official budget since 2011. However, a number of issues could present challenges to passage in the House or the Senate.

If there are issues in these budget negotiations that you feel strongly about, now is the time to contact your Congress people and get your two cents (or more) into the discussion.

[1] Everett, B., & Gibson, G., 12/8/13, “Budget talks worry those not in the room,” Politico

[2] Taylor, A., 11/12/13, “Mandated cuts expected to be more painful in ’14,” The Boston Globe

[3] Montgomery, L., 12/6/13, “Congressional GOP may be willing to let emergency unemployment benefits lapse,” The Washington Post

[4] Weisman, J., 12/11/13, “Congressional negotiators reach deal on federal budget,” The Boston Globe from The New York Times

[5] Przybyla, H., 12/11/13, “Budget deal easing spending cuts faces Republican ire,” Bloomberg

[6] Weisman, J., 12/6/13, “Congress appears near a modest accord on the budget,” The Boston Globe from The New York Times

[7] Montgomery, L., 12/9/13, “Budget deal expected this week amounts to a cease-fire as sides move to avert a standoff,” The Washington Post

[8] Espo, D., & Taylor, A., 12/10/13, “Congressional negotiators reach budget pact,” The Boston Globe

[9] Przybyla, H., 12/6/13, “Budget negotiators seek limited deal as opposition mounts,” Bloomberg

[10] Tong, J., 12/5/13, “Representatives Doggett and DeLauro introduce legislation to end sequestration and corporate offshore tax havens,” Common Dreams (www.commondreams.org/newswire/2013/12/05-4)

[11] Krugman, P., 12/8/13, “The punishment cure,” The New York Times

[12] Lowrey, A., 11/17/13, “Extension of benefits for jobless set to end,” The New York Times

[13] Needham, V., 12/8/13, “Advocates see hope for renewal of unemployment benefits extension,” The Hill

THOUGHTS ON SOCIAL AND ECONOMIC JUSTICE

FULL POST: Social and economic justice have been in the news lately. Here are some quotes from Nelson Mandela, the Pope, and President Obama that appeared in the news over the last week.

Nelson Mandela [1]

“Overcoming poverty is not a task of charity, it is an act of justice. Like Slavery and Apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. Sometimes it falls on a generation to be great. YOU can be that great generation. Let your greatness blossom.”

“Gandhi rejects the Adam Smith notion of human nature as motivated by self-interest and brute needs and returns us to our spiritual dimension with its impulses for nonviolence, justice and equality. He exposes the fallacy of the claim that everyone can be rich and successful provided they work hard. He points to the millions who work themselves to the bone and still remain hungry.”

Pope Francis [2]

“… some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting. … Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor … as though all this were someone else’s responsibility and not our own. … In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.”

“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.”

“While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. … To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market … Behind this attitude lurks a rejection of ethics and a rejection of God.”

President Obama

President Obama spoke about the issue of growing income equality, saying “dangerous and growing inequality and lack of upward mobility … has jeopardized middle-class America’s basic bargain — that if you work hard, you have a chance to get ahead. I believe this is the defining challenge of our time. … I am convinced that the decisions we make on these issues over the next few years will determine whether or not our children will grow up in an America where opportunity is real. … The problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years. … The idea that so many children are born into poverty in the wealthiest nation on Earth is heartbreaking enough. But the idea that a child may never be able to escape that poverty because she lacks a decent education or health care, or a community that views her future as their own, that should offend all of us and it should compel us to action. We are a better country than this. … we can make a difference on this. In fact, that’s our generation’s task — to rebuild America’s economic and civic foundation to continue the expansion of opportunity for this generation and the next generation.” [3]

These thoughts have particular resonance for me during this holiday season. Perhaps they do for you as well.

[1] Common Dreams, 12/7/13, “Mandela quotes that won’t be in the corporate media obituaries,” http://www.commondreams.org/headline/2013/12/06-0

[2] Pope Francis, 11/24/13, “Evangelii Gaudium,” as published in The Washington Post

[3] President Obama, 12/4/13, “Remarks by the President on Economic Mobility,” http://www.whitehouse.gov/the-press-office/2013/12/04/remarks-president-economic-mobility

FUNDING SOCIAL SECURITY

ABSTRACT: Advocates for cutting Social Security benefits claim that cuts are needed because of a future funding shortfall. However, Social Security’s projected shortfall is small and 20 years in the future. Moreover, there are adjustments to the funding for Social Security that will easily eliminate the future funding shortfall.

The two most frequently mentioned ways of cutting Social Security’s costs are reducing future benefit payments and increasing the retirement age. The leading proposal would cut benefits by reducing the annual cost of living increases that seniors receive. However, to most accurately reflect the change in the cost of living that seniors actually experience, the annual increase in benefits should be greater than it is currently, not less. Cutting benefits will hurt retirees who rely on their modest Social Security benefits to make ends meet.

Another way to reduce Social Security’s cost is by increasing the age for receiving Social Security. The age for collecting full Social Security benefits is being increased from 65 to 67. People are living longer on average, but those with low incomes and less education have seen very little change in their life expectancy. Therefore, it hardly seems fair to increase the Social Security retirement age further.

The simplest and probably fairest way to address the Social Security shortfall would be to eliminate or increase the cap on the earnings that are subject to the Social Security tax. If the cap were eliminated, Social Security’s shortfall would be solved for at least 75 years.

FULL POST: Advocates for cutting Social Security benefits claim that cuts are needed because of a future funding shortfall. However, Social Security’s projected shortfall is small and 20 years in the future. It has no impact on the federal deficit because Social Security has its own, dedicated funding stream. So cutting benefits will do nothing to reduce the deficit but would hurt retirees who rely on their modest Social Security benefits to make ends meet. (See my post The Retirement Crisis and Social Security of 11/26/13 for more information. https://lippittpolicyandpolitics.org/2013/11/26/the-retirement-crisis-and-social-security/) Moreover, there are adjustments to the funding for Social Security that will easily eliminate the future funding shortfall.

The two most frequently mentioned ways of cutting Social Security’s costs are reducing future benefit payments and increasing the retirement age. The Republican budget and President Obama and some Democrats have proposed that benefits be cut by reducing the annual cost of living increases that seniors receive. This would be accomplished by using a different and lower measure of the Consumer Price Index (CPI) to calculate the annual adjustment in benefits – the “Chained CPI” instead of the regular CPI. (See my post Social Security and Chained CPI of 4/13/13 for more information. https://lippittpolicyandpolitics.org/2013/04/13/social-security-and-chained-cpi/)

However, the most accurate measure of the change in the cost of living for seniors is the CPI-E (for Elderly), and it is typically higher than either of the regular CPI (which is currently used) or the proposed “Chained CPI”. This means that to most accurately reflect the change in the cost of living that seniors actually experience, the annual increase in benefits should be greater than it is currently, not less. The bills in Congress to strengthen Social Security generally include the use of CPI-E for the annual cost of living adjustment. [1]

Another way to reduce Social Security’s cost is by increasing the age for receiving Social Security. The age for collecting full Social Security benefits is being increased from 65 to 67. (One can get Social Security benefits at younger ages but the amount received is reduced.) The major argument for this is that people are living longer on average. They are, but it is the well educated and affluent who are living longer. Those with low incomes and less education have seen very little change in their life expectancy and those with the least education have seen their life expectancy decline. [2] Therefore, it hardly seems fair to increase the Social Security retirement age further.

The simplest and probably fairest way to address the Social Security shortfall that’s 20 years in the future would be to eliminate or increase the cap on the earnings that are subject to the Social Security tax. (This Social Security tax is the dedicated and sole funding source for Social Security.)

Currently, Social Security tax is only paid on the first $113,700 of earnings. Amounts above that are untaxed. For workers earning up to that amount, they pay a 6.2% tax that is deducted from their paychecks and their employers match that amount. But because of the cap, someone making $1 million only pays tax on $113,700 of earnings, meaning that overall they pay less than 1% (instead of 6.2%) of their earnings into Social Security. If the cap were eliminated, Social Security’s shortfall would be solved for at least 75 years.

The bills in Congress to strengthen Social Security generally solve the funding shortfall by increasing the funding from the Social Security tax. Some raise or eliminate the cap on earnings subject to the tax. Others apply the tax to earnings over $250,000 but not to earnings between the current cap and $250,000 to avoid increasing taxes on people in that upper middle class earning range. It seems fairer and simpler to me to eliminate the cap and cut the tax rate slightly. This would give a small tax cut to everyone earning less than the $113,700 cap.

There are other ways to increase Social Security funding. One that has been suggested is to increase income taxes on high income individuals getting Social Security benefits and putting this revenue back into Social Security. Another is to use some of the revenue from the estate tax to fund Social Security. There are other options, but raising or eliminating the cap on earnings subject to the Social Security tax is the simplest and most straight forward solution to Social Security’s long-term funding shortfall. (See my post Social Security: Facts and Fixes of 12/4/11 for more information. https://lippittpolicyandpolitics.org/2011/12/04/social-security-facts-and-fixes/)

[1] McAuliff, M., 11/18/13, “Elizabeth Warren: Expand Social Security,” The Huffington Post

[2] Krugman, P., 11/21/13, “Expanding Social Security,” The New York Times