WHICH CORPORATIONS SUPPORT SEDITIOUS REPUBLICANS AND WHICH SUPPORT DEMOCRACY

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

A year after January 6, 2021, when, even after the insurrectionists’ attack on the Capitol, 147 Republicans objected (with no factual basis) to certifying the Electoral College vote that made Joe Biden President, it’s important to identify the corporations that are supporting the 147 objectors who opposed the peaceful, democratic transfer of power to the new, overwhelmingly elected President.

Remember that in reaction to the insurrection and the votes of those 147 Republicans against a peaceful transfer of power based on the will of the voters, hundreds of corporations stated they were suspending political contributions to the objectors, or in some cases all political contributions. Many pledged never to support the objectors in the future.

Corporate support of politicians and political committees is done through corporations’ political action committees (PACs). Popular Information has been monitoring corporate PACs through their reporting to the Federal Election Commission (FEC). It has published its findings in a corporate accountability index that lists 183 corporations and whether or not they have kept their pledges not to support the objectors.

GOOD NEWS: So far, 79 major corporations have kept their pledges and not donated directly to any of the 147 objectors or to committees that support them, typically the fundraising committees of the Republican National Committee. These include Airbnb, Allstate, Amazon, American Express, CBS, Clorox, Coca-Cola, eBay, Facebook, General Mills, Hallmark, Hilton, Kraft Heinz, Lyft, Marriott, Mastercard, McDonalds, Microsoft, Nike, Sony, Target, Walgreens, Walt Disney, and Zillow. (See the full list at the corporate accountability index.)

Charles Schwab, one of the country’s biggest brokerage firms, went even further. Immediately after the insurrection, it announced the dissolution of its PAC and said it would no longer make donations to politicians. The PAC’s remaining funds were donated to The Boys & Girls Club of America and historically Black colleges and universities. Hewlett Packard also shut down its PAC soon after January 6. Hallmark Cards actually requested that two objectors, Senators Josh Hawley (R-MO) and Roger Marshall (R-KS), return its PAC’s donations. [1]

Overall, Popular Information found that corporate PAC donations to objectors was down roughly 60% in 2021 as compared to 2019 (the comparable year from the previous election cycle). Of the 183 major corporations it contacted, seven explicitly pledged not to support objectors in 2022: Airbnb, BASF, Eversource Energy, Lyft, Microsoft, Dow, and American Express. [2]

BAD NEWS: To-date, 103 corporations have either given directly to objectors or to committees that support them, despite pledges not to donate to objectors, to suspend all PAC donations, or to re-evaluate their donation criteria.

  • Four corporations have broken their pledges and given directly to objectors and to committees supporting them: PriceWaterhouseCoopers: $184,000; Eli Lilly: $72,500; Cigna: $60,000; and Pacific Gas & Electric: $44,500.
  • Fifty-two corporations pledged to suspend all PAC contributions but then gave directly to objectors and often to committees supporting them as well, including Boeing: $375,500; Lockheed Martin: $323,000; GM: $158,500; as well as Aflac, American Airlines, Jet Blue, Kroger, Molson Coors, Stanley Black and Decker, T-Mobile, and UPS. (See the full list at the corporate accountability index.)
  • Seventeen corporations pledged to re-evaluate their donation criteria but then donated directly to objectors and sometimes to committees supporting them as well, including: Toyota; $95,500; Chevron: $71,000; Ford: $59,000; as well as Delta, Exxon Mobil, and FedEx. (See the full list at the corporate accountability index.) Toyota, after substantial public attention and pushback, announced in June, 2021, that it would change course and stop contributing to objectors. A clear indication that public pressure can be effective. (See more about how to do this at the end of this post.)
  • Thirty corporations have violated the spirt of their pledge by giving indirectly to objectors through committees that support them, despite pledging not to donate to objectors, to suspend all PAC donations, or to re-evaluate their donation criteria. These include: NextEra: $105,000; Dell: $60,000; Walmart: $60,000; Cozen O’Connor: $55,000; AT&T: $35,000; and $30,000 each from Comcast / NBC, Genentech, General Electric, Google, Intel, and Verizon. (See the full list at the corporate accountability index.)

The organization Citizens for Responsibility and Ethics in Washington (CREW) has also been monitoring corporate and industry trade groups’ donations to the objectors. [3]

GOOD NEWS: One hundred thirty-four (134) out of 248 corporations and industry groups that said they were suspending donations to the objectors have not contributed to them to-date.

BAD NEWS: Over the last year, despite promises made to hold the objectors accountable, 717 corporations and industry groups have given over $18 million to objectors and the Republican National Committee’s fundraising committees that support them.

The four largest corporate donors to objectors and committees supporting them are: Koch Industries ($308,000), American Crystal Sugar ($285,000), General Dynamics ($234,000), and Valero Energy ($208,000). These corporations never pledged to stop or alter political donations despite the Jan. 6 insurrection and the unfounded objections to the Electoral College vote.

The five top donors among industry trade groups are: Council of Insurance Agents & Brokers ($432,000), National Association of Realtors ($303,000), Independent Insurance Agents & Brokers of America ($270,000), National Electrical Contractors Association ($222,000), and the Credit Union National Association ($217,500).

GOOD NEWS: Activism by consumers, voters, and stakeholders in general (i.e., us) can have an effect of corporations. For example, as noted above, Toyota stopped its financial support of objectors after public attention and push back from consumers. I encourage you to take action however you see fit. Here are some ideas for steps you can take:

  • Patronize businesses that support democracy (i.e., they are not donating to the objectors).
  • Boycott businesses that are donating to the objectors.
  • Send letters, emails, or social media postings to corporations to thank them for doing the right thing or highlighting their bad behavior and asking them to change it. Address your communication to the CEO and/or the shareholder or customer relations office. This is particularly effective if you are a shareholder, customer, employee, retiree, or other stakeholder in the company, which you should note in your communication.
  • Submit a letter to the editor of a local media outlet (hardcopy or on-line), post to social media, and/or spread the word to your family and friends.

Every action makes a difference and together, many small actions add up to something bigger than the apparent sum of those actions. We all need to do our part to save our democracy from the forces that are undermining it. Corporate America must stand up for our democracy and stop supporting those who are undermining it. In the 2020 election cycle, five of the objectors received over 60% of their campaign donations from corporate PACs. [4] This has to stop and it’s our job to make it happen, as we did with Toyota.

[1]      Li, A., & Shah, A., 1/3/22, “The corporate insurrectionists: How companies have broken promises and funded seditionists,” CREW (https://www.citizensforethics.org/reports-investigations/crew-reports/the-corporate-insurrection-how-companies-have-broken-promises-and-funded-seditionists/)

[2]      Legum, J., Crosby, R., & Zekeria, T., 1/4/22, “Seven major corporations pledge not to support GOP objectors in 2022,” Popular Information (https://popular.info/p/seven-major-corporations-pledge-not)

[3]      Li, A., & Shah, A., 1/3/22, see above

[4]      Evers-Hillstrom, K., 1/8/21, “Exploring the top donors to GOP Electoral College objectors,” OpenSecrets (https://www.opensecrets.org/news/2021/01/objectors-to-electoralcollege-donors)

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THE FUNDING OF THE JANUARY 6 INSURRECTION

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

I’m surprised we haven’t heard more from the U.S. House Select Committee to Investigate the January 6th Attack on the U.S. Capitol about the funding for the insurrectionists and the rally that preceded the attack on the Capitol. This, of course, was the rally at which Trump spoke for an hour, stated that our elections are corrupt, and then said to the crowd, “We fight like hell. And if you don’t fight like hell, you’re not gonna have a country any more. … So, we’re going to walk down Pennsylvania Avenue … we’re going to the Capitol … to take back our country.” After which, of course, the crowd walked to the Capitol and attacked it and the people there.

The organizations, people, and funding that organized and paid for that rally are a tangled web of inter-related people and entities. Many of them were also involved in the Trump campaign. The trail of the money, as well as the overlap and connections among people and organizations, was intentionally obscured. Money was run through multiple organizations before actually being spent on-the-ground. This served both to hide who the actual donors and funders were, as well as to hide who was actually paid to do the work.

Many of the entities the money flowed through are “dark money” groups; these are non-profit, social welfare organizations that do not have to reveal their donors, but are supposed to only engage in limited political activity. They are organized under section 501(c)(4) of the IRS regulations. However, the IRS is not enforcing any limitation on their political activity. (Note: Charitable non-profits, to which donations are tax deductible, are organized under section 501(c)(3) of the IRS regulations and are strictly limited in their political activity. Donations to 501(c)(4)  non-profits are not tax deductible.)

So, here’s some of the information that has been uncovered about some of the organizations involved in the January 6th rally that preceded and fomented the attack on the Capitol. [1] [2]

  • Women for America First (W4AF): got the permit for the rally from the National Park Service. It is a dark money group and Women for Trump is an affiliate. Julie Jenkins Fancelli (heir to the Publix supermarket money) donated $300,000 to W4AF for the rally.
  • Rule of Law Trust: a sponsor of the rally and a dark money group. It is affiliated with the Republican Attorneys General Association. It received $150,000 from Julie Jenkins Fancelli and often receives money from opaque non-profits including the Judicial Crisis Network (see below) and ones that are part of the right-wing Koch brothers’ funding network.
  • Turning Point: a sponsor of the rally and a dark money group. It received $39 million from undisclosed donors in fiscal year 2020. Turning Point USA and Turning Point Action are affiliates.
  • Tea Party Patriots: a sponsor of the rally and a dark money group. It has received over $4.7 million from the Judicial Crisis Network (see below) and nearly $4.3 million from 2016 through 2020 from Richard Uihlein (see below).
  • Judicial Crisis Network: a dark money group that gave money to multiple groups that were involved in organizing the rally. It is now known as the Concord Fund and gave over $4.7 million to the Tea Party Patriots and $50,000 to Turning Point. It has also given over $1.9 million to the Rule of Law Trust since 2013 and millions more to the Republican Attorneys General Association.
  • Event Strategies Inc.: was named on the permit for the rally and two individuals who were organizers for the rally were on its payroll. It was also used by the Trump campaign, receiving over $2.5 million from it, including over $800,000 in 2021 after the official election campaign was over.
  • American Made Media Consultants LLC: created by the Trump campaign apparently to hide the recipients of the over $770 million funneled through it by the campaign. It spent over $200,000 on text messages on January 6.
  • The Trump Campaign: in the 2020 election cycle, the Trump campaign paid over $4 million to individuals and organizations that were organizers of the January 6 rally. Because the campaign funneled hundreds of millions of dollars through layers of shell companies and opaque firms, it is unknown when and for what purpose these payments were made. What’s known is that there was a significant overlap between people and organizations working for the campaign and organizing the January 6 rally.

Here’s some of the information that has been uncovered about some of the people involved in the January 6th rally that preceded and fomented the attack on the Capitol.

  • Caroline Wren: a major fundraiser for the Trump campaign, she was named on the permit for the rally and boasted that she’d raised $3 million for the rally. She funneled this money through two dark money groups and a super PAC. This served to obscure the links between the donors and the use of the funds. She was paid over $170,000 for her work for the Trump campaign. She has been subpoenaed by the House Committee.
  • Richard Uihlein: CEO of the Ulinebusiness supplies company, he has given over $1 million to Turning Point over the last few years, about $4.3 million to Tea Party Patriots since 2016, and an undetermined amount of money to Women for America First.
  • Megan Powers: was listed on the rally permit as one of two operations managers. She was paid roughly $300,000 by the Trump campaign as its director of operations. She has been subpoenaed by the House Committee.
  • Justin Caporale, Maggie Mulvaney, and Tim Unes: were all organizers of the January 6 rally and have also been paid by the Trump campaign. They have been subpoenaed by the House Committee.

The catch phrase of the Watergate investigation of the 1970s was “Follow the money.” That may well apply to the January 6 insurrection as well. Although the House investigation seems to be focused on the flow of communications, I hope it’s also looking at the flow of money. Despite the fact that the rally organizers and the Trump campaign have worked hard to obscure the flow of money, I hope it can be traced because its flow would shed a lot of light on the scale of the conspiracy and who was involved in it.

The cost of the rally was at least half a million dollars and the costs of people getting to Washington and their staying overnight was greater than that. Knowing where that money came from and who coordinated the expenditures would undoubtedly be a very telling and important tale.

[1]      Massoglia, A., 10/25/21, “Details of the money behind Jan. 6 protests continue to emerge,” OpenSecrets (https://www.opensecrets.org/news/2021/10/details-of-the-money-behind-jan-6-protests-continue-to-emerge)

[2]      Massoglia, A., 8/30/21, “Trump’s political operation paid more than $4.3 million to Jan. 6 organizers but questions remain about the full extent of its involvement,” OpenSecrets (https://www.opensecrets.org/news/2021/08/trumps-political-operation-paid-more-than-4-3-million-to-jan-6-organizers-questions-remain-about-full-involvement)

LET’S JUST SAY IT: THE REPUBLICAN PARTY DOES NOT BELIEVE IN DEMOCRACY OR THE CONSTITUTION

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

It’s long past time to stop the charade that the Republican Party has any commitment to making democracy work. Or that it supports the Constitution. Or that it is patriotic. There are people who identify as Republicans who are at odds with these statements (Rep. Liz Cheney jumps to mind), but they are few and far between and are not the ones who are setting the official Republican Party agenda or messaging.

The Republican Party supports freedom of speech only when it’s speech it likes. Threats, violent speech (and acts), and name calling are fine when they serve its purposes and when they are aligned with its goals. However, speech by others, including peaceful protests, should be severely limited and if those peaceful protesters are injured or killed by a vehicle, the vehicle driver, not the protesters, should be protected by laws. [1]

According to the Republican Party and its judges, freedom of religion is paramount when it is Christianity practiced by white people, but others don’t deserve this freedom, despite its inclusion in the Constitution. For example, Muslims are, by definition, terrorists and should be monitored and restricted.

Democracy and the electoral processes laid out in the Constitution are valid, according to Republicans, only if Republicans win elections. Otherwise, the results of voting are fraudulent and should be disregarded and overturned by any means necessary, including violence.

No American, let alone member of Congress, is a patriot if they are willing to aid and abet an undemocratic and unconstitutional overturning of election results, or if they are unwilling to denounce and reject such efforts. Yet the great majority of Republicans are doing or have done these things, particularly in relation to the Jan. 6, 2021, insurrection at the U.S. Capitol. [2]

No American can claim to be a patriot if they are working to make it harder for citizens who might disagree with them to vote. However, Republicans in many states and in Congress are doing just this.

No member of Congress can claim to support democracy or the Constitution if, based on partisanship, they simply refuse to work meaningfully to pass important legislation. Such a blatant undermining of the functioning of a democratic government is unpatriotic at best and treasonous at worst.

Yet most Republicans in Congress have no interest in actually governing and, instead, are doing everything they can to keep the Democrats from governing, i.e., from actually doing things that the people of the country support doing and that a democratic government should do. For example, Senate Republicans are blocking confirmations of nominees for dozens of ambassadorships, at least a dozen high-ranking jobs at the Treasury Department, and roughly 200 other executive branch positions. This is nothing other than an effort to keep the Biden Administration and our democracy from functioning effectively; this presents a clear and present danger to America’s national security. [3] Again, it is unpatriotic at best and treasonous at worst.

The Republican Party is claiming that modest policies that support working men and women, as well as their families, are unaffordable and are socialism that would destroy democracy. First of all, it is hypocritical to say it is unaffordable because the expenditures of the Build Back Better bill (at which it levels these charges) is somewhere between one-fifth and two-fifths (20% – 40%) of the Defense Department budget that it supports. The Build Back Better bill would spend an amount equal to roughly 1% (one-hundredth) of the U.S. Gross Domestic Product. This wouldn’t put the U.S. anywhere close to the government spending of European countries, let alone that of Scandinavian countries and their social democracies. And by the way, all of those countries, despite a greater degree of socialism than in the U.S., are democracies! So, second of all, socialism and democracy are NOT incompatible; they co-exist in all the other wealthy countries and to some degree in the U.S. in Social Security, Medicare, and the Veterans Administration, for example.

The Republican Party does not want to play by the rules established by our Constitution or our democratic traditions because if it did it would lose elections and power. It is out to win at all costs as it struggles to retain its power and that of its wealthy and generally white backers. It has given up on democracy because success for democracy means failure for it. [4]

Sadly, the current Republican Party’s rhetoric about supporting democracy, the Constitution, and patriotism is a sham. It is the language and lies of autocrats who are desperate to hang on to power and are willing to say and do anything to do so. Actions speak louder than words and the Republican Party’s actions, and the hypocrisy and lies it engages in to try to justify them, make its true beliefs and character crystal clear.

[1]      American Civil Liberties Union, retrieved from the Internet 1/7/22, “Anti-protest bills around the country,” (https://www.aclu.org/issues/free-speech/rights-protesters/anti-protest-bills-around-country)

[2]      Lehigh, S., 1/7/22, “What real America patriotism means,” The Boston Globe

[3]      Boston Globe Editorial Board, 10/22/21, “US ambassadors, State Department officials held hostage,” The Boston Globe

[4]      Blow, C. M., 6/20/21, “Stop hoping the G.O.P. will play ball,” The New York Times

SOCIALISM IS THE ANSWER FOR SAVING DEMOCRACY FROM CAPITALISM

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

Bob Kuttner has written a powerful and poignant article raising the question of whether capitalism is compatible with democracy – or at least a version of democracy that lives up to the American ideals of equal opportunity and government of, by, and for the people. [1] The New Deal of the late 1930s and 1940s created a form of government-regulated capitalism that for 40 years (until 1980) produced a thriving working and middle class, as well as an economy where income and wealth inequality were stabilized, if not narrowed. However, in the last 40 years, the U.S. economy has evolved into a new form of hyper-capitalism (some call it vulture capitalism) that has destroyed the ability of many workers to thrive. (See my previous post for more detail.)

This post presents Kuttner’s thoughts on where we need to go from here to restore our democracy and create more equitable economic and political systems. It’s a bit long, so just read the bolded parts if it’s too much, but do read Kuttner’s conclusions at the end.

Kuttner writes that we need to reverse the deregulation and privatization of important public services and public goods. Health insurance is one example:

  • Deregulation allowed the transformation of health insurance from non-profit Blue Cross Blue Shield programs into for-profit insurance corporations. This is a key reason the U.S. health care system is the most expensive in the world with some of the worst outcomes.
  • Private insurers have been allowed to provide Medicare coverage. This has resulted in increased costs and a bewildering array of choices that often confuse and manipulate seniors. This privatization of Medicare ultimately makes health care more complex, confusing, and costly for seniors, thereby undermining confidence in Medicare and our government.

The overall result of this deregulation and privatization is that health insurance plans are so complex that it takes hundreds of pages to explain their benefits and limitations; no consumer fully understands what they are getting or can shop intelligently among plans.

Other examples of harmful deregulation and privatization include:

  • Drug companies that are allowed to charged exorbitant, unregulated prices in the U.S. that are almost always much higher than in Canada and other countries.
  • Deregulation of the airlines that allows fares and fees to fluctuate widely. It is also the reason it costs so much more to fly to closer but less frequent destinations than for longer trips to bigger cities.
  • Privatization of housing subsidies has resulted in the grafting of some incremental public objectives onto a capitalistic, for-profit system run by landlords, developers, and financiers. The results have been both totally inadequate and dramatically inefficient.

Weak regulation has allowed private sector capitalists to aggressively promote products that have caused serious harm to public health, often while lying about their ill effects. Examples include cigarettes and other tobacco products, oxycontin (the prescription, addictive opioid), and fossil fuels and other products that have polluted our air and water. The promotion of fossil fuels, of course, has far-reaching effects that go well beyond public health.

In summary, the privatization and deregulation promoted by capitalists are not improvements or solutions to problems, they are problems. They have provided windfall profits to private investors as evidenced by unprecedented and growing economic inequality. Meanwhile consumers pay added costs and get degraded services, while the values and principles our democracy was founded on are debased. Successful privatization requires strong, effective public oversight to ensure that public goals and values are met, but this rarely happens. Important public goods, such as water and sewer systems, roads and bridges, parking on public property, etc. should not be privatized – as they have been – without strong regulation and reasonable provisions for terminating the privatization contract if goals are not achieved.

Attempts to remedy or ameliorate the problems of capitalism with incremental reforms or weak regulations (some have even argued for self-regulation by private companies) are not only ineffective, they also make service systems, government programs, and even markets for consumer goods convoluted, complex, confusing, and unfair. They create enormous, expensive, administrative bureaucracies that attempt to implement regulations or remedies. The resulting complexities benefit the capitalists and not workers or consumers. Perhaps the classic example of complexity that benefits wealthy individuals and corporations is our tax code. The exemptions, deductions, special provisions, and other loopholes benefit the capitalists to such an extent that average workers and middle-class households are paying a much higher portion of their incomes in taxes than the wealthy.

Delivery of services by the public sector, i.e., government, is not only fairer and more compassionate than delivery by the private sector, it is also more efficient, effective, and streamlined. The profit motive adds costs (i.e., profits, advertising, and administrative overhead) and incentivizes cost-cutting through denying services and cutting corners on quality. The private sector has no incentive to treat customers equitably; its only goal is to maximize profits.

Kuttner notes that “the history of the past century proves again and again, when market forces [i.e., capitalism] overwhelm the security and livelihood of working people, they are far more likely to turn to ultra-nationalism and fascism” than to collective action through democratic advocacy or labor unions. (page 11) This is particularly likely if there are demagogic “leaders” or “information” sources pushing them in that direction. The result typically is a rise in racism and xenophobia, as well as plutocratic control of the economy and policy making by wealthy individuals and corporations through the politicians they buy with campaign spending or otherwise.

Kuttner writes that “The signal disgrace of our era is the ease with which the corporate center-right has gone along with Trump and the Republican efforts to destroy what remains of democracy.” (page 14) He also notes that since 1980 “much of the Democratic Party has been so compromised and bedded down with Wall Street that displaced middle- and working-class people are skeptical that Democrats and liberal remedies can make much of a difference in their lives.” (page 13)

To ameliorate the economic hardship and insecurity of working Americans, Kuttner recommends providing public supports for workers and families, while resisting and reversing privatization and deregulation. Public supports should include paid family leave, cash support for families with children, subsidies for child care, easier access to good health insurance, regulation of drug prices, and free tuition at community colleges – all parts of the original Build Back Better bill proposed by President Biden and most Democrats in Congress.

Republicans will try to brand these programs as socialism and they do have a socialistic flavor when compared to our current, very individualistic, hyper-capitalism. However, they are immensely popular with the U.S. public and exist in all other wealthy countries. Moreover, socialism doesn’t elicit the negative reaction that it used to; 70% of millennials (i.e., people born between 1980 and 1995 who are 26 to 40 years old now) have a positive view of socialism. While Republicans will try to conflate socialism with communism, keep in mind that in communism the government owns all property and businesses. Not even the most aggressive policy proposals of Senator Sanders (a socialist) take any step in that direction. Also keep in mind that the branding of public policies as socialism was used by white supremacists in the post-Civil War years as their rationale for keeping Blacks from voting. Therefore, calling Democrats’ proposals socialism has racist undertones. (See this previous post for more detail.)

To reverse the scourge that the current version of hyper-capitalism has clearly become, we need to assert strong public control of our economy. Strong oversight and regulation of employers to protect workers and of companies to protect consumers are essential.

Promotion of the public good as the primary goal of government will drive workplaces and the economy to be fairer and more efficient, and to treat people with decency and respect. Think about how different our health care system would be if the public good was foremost instead of maximizing profits. Think about how different our financial system would be if we had public banks (as North Dakota does) and basic banking functions through the post office (as we once did). Think about having public broadband Internet service, which Chattanooga and Europe have, that is cheaper and higher speed than what most of us get in the U.S. Think about patent-free drugs that aren’t controlled and priced by monopolies. Think about the original Health Maintenance Organizations (HMOs) of the early 1970s that were cooperatively owned and run. Think about Medicare for all, especially without the distortions of the private insurers who’ve been allowed to offer complicating alternatives to Medicare. Think about savings and loan banks and health and other insurance companies that were non-profit, mutually-owned (by customers), and prevalent up until the 1970s. Think about publicly-owned, high-quality, mixed-income housing that is a major part of the housing market in Vienna, Austria.

Kuttner concludes that “Saving democracy, the planet, and decent lives for regular people requires moving beyond capitalism. To be an effective liberal today, you need to be a socialist.” (page 2) He states, “I’ve come around to this view gradually, not because my values have changed but because reality has changed.” (page 4)

He notes that our history has shown that the social democracy [2] of the New Deal did not stand up to the test of time. It deteriorated into a capitalistic welfare system with a supposed safety net that was politically vulnerable and, therefore, eroded over time. This produced today’s grossly inequitable U.S. economy where many workers and their families simply cannot survive on the compensation they are given.

Therefore, he concludes that the U.S. must move to democratic socialism [3] where there is substantial public or social control or ownership of important functions in our society that serve the public and the public good. This is necessary to dethrone capitalism as the dominant system of our society. Otherwise, as we’ve experienced, capitalism in a democracy will evolve into hyper-capitalism that serves wealthy individuals and corporations but leaves everyone else behind.

[1]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

[2]      Social democracy is a system of government that attempts to assert values to similar socialism, but within a capitalist framework. The people have a say in government, but the capitalistic, money-based, competitive economy means that a public safety net is needed to help people whose low-paying jobs do not support subsistence.

[3]      Democratic socialism is defined as having a socialist economy in which the means of production are socially and collectively owned or controlled, alongside a liberal democratic political system of government.

IS CAPITALISM COMPATIBLE WITH DEMOCRACY?

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

Bob Kuttner has written a powerful and poignant article raising the question of whether capitalism is compatible with democracy – or at least a version of democracy that lives up to the American ideals of equal opportunity and government of, by, and for the people. [1]

In the post-Depression and post-World War II era, the New Deal created a fundamental shift in ideology and power in American society and in our economy from laissez-faire capitalism to regulated and managed New Deal capitalism. It was based on a strong social contract that gave substantial power to government to regulate private companies and manage the economy. It gave substantial power to workers through collective bargaining over pay, benefits, and working conditions via their unions.

The results were a thriving working and middle class, where the rising tide of the economy did indeed lift all boats. Income and wealth inequality were stabilized, if not narrowed.

The era of New Deal capitalism lasted for 40 years until 1980. However, in the last 40 years, Kuttner argues, we’ve not just moved back toward the laissez-faire capitalism of pre-Depression days, but gone beyond it to a new form of hyper-capitalism that some call vulture capitalism. It has destroyed the ability of many workers to thrive by driving down wages, employment security, and benefits (including reducing retirement benefits and paid sick time). It has destroyed the ability of many working parents to provide their children with a safe, secure, and healthy childhood due to unaffordable and inaccessible child care, a lack of paid family and medical leave, unstable work hours, and poverty-level wages.

The life, liberty, and pursuit of happiness promised by the Declaration of Independence are a myth to many workers. They are unable to pursue any meaningful happiness for themselves due to their economic insecurity and low incomes, let alone provide happiness for their families. Any true feelings of liberty are constrained by their lack of the economic resources required to have meaningful freedom in making choices in our capitalist system. And life, literally in some cases, is at risk. Workers are getting injured, disabled, and killed in meat packing plants and other dangerous jobs, even without Covid. Sweatshop working conditions of the 1920s have returned in places like the meat packing industry and Amazon warehouses. When people have health problems or suffer injuries, many of them are bankrupted, and some die, because of our capitalistic health care system.

Deregulation at home and in global trade have produced giant corporations that often have monopolistic power nationally or regionally. These companies have the power as huge employers to strip workers of pay, benefits, and even their jobs, typically by moving jobs overseas (or threatening to do so). Similarly, consumers have limited choices and get reduced value in many important areas from health care to Internet service because of the monopolistic power of providers. These giant, monopolistic companies, particularly in technology-driven markets, have also stripped our economy of many small businesses and entrepreneurs through predatory acquisitions or market place practices that stifle competition.

Deregulation of financial practices has also fed these trends through venture capital, private equity, and hedge fund profiteers that aggressively minimize labor costs, strip companies of assets, and often drive companies into bankruptcy while they pocket huge profits. These vulture capitalists, as they have been called, are at the leading edge of the predatory, hyper-capitalism that Kuttner identifies as taking the laissez-faire capitalism of the early 1900s to a whole, new level of greed and economic inequality.

Kuttner states that rather than the theoretical “invisible hand” of capitalism creating efficient markets that work smoothly and produce high quality goods and services at competitive prices for consumers, the current U.S. version of capitalism creates inefficiency and market failure as its norm. It is efficient only from the perspective of profit and wealth maximization for large, wealthy companies and shareholders, including corporate executives.

Nonetheless, the capitalist market mentality is so deeply embedded in our collective psyche that we have allowed capitalistic values and market norms to overrule other norms and values, such as the importance of the public good, providing access to affordable health care, reducing child poverty, and addressing climate change.

Moreover, the incredible wealth of the giant companies and their shareholders has given them substantial power in our political system. Through their campaign spending, extensive lobbying of public officials, and the movement of senior company employees into and back from policy making positions in government (the revolving door), they have gotten public policies and regulation (or lack thereof) that work to their benefit.

We have seen the result of this political power in recent weeks in the opposition of many members of Congress (i.e., almost every Republican and a handful of Democrats) to the Build Back Better legislation that would support workers and their families in ways that are favored by over two-thirds of the country’s voters – for example, through paid family leave, support for families with children and for child care, and enhanced access and affordability for health care and drugs. Members of Congress have been weakening, undermining, and outright opposing these policies that their constituents overwhelmingly support. Congress is also opposing investments in human capital and in slowing climate change that have broad support among the public.

The Build Back Better opponents in Congress are reflecting the wishes of their wealthy campaign donors, not their constituents. This is emblematic of the power and influence of wealthy capitalists and a direct outgrowth of the hyper-capitalism of the last 40 years.

As a result of this hyper-capitalism in the U.S., many workers have had their economic security, their middle-class lifestyle, and their plans for retirement stripped from them. The frustrations of these workers, their feelings of helplessness and hopelessness, are what has led to the appeal of Senator Bernie Sanders and Donald Trump – both of whom promised to upset the current political system and restore economic security for workers.

In my next post, I will review Kuttner’s thoughts on where we need to go from here to restore our democracy and have fairer, more equitable economic and political systems.

[1]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

STOPPING CYBERCRIME AND CIVILIAN HARM FROM CYBERWARFARE

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

This is the final post of my nine-part series on computer hacking and cyberwarfare based on New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] These posts have summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; and have shared a number of examples. The previous post provided an overview of steps that can be taken to counter cybercrime at the personal, organizational, and governmental levels. This post discusses steps that are being taken to counter ransomware and to stop cyberwarfare from harming civilians.

The Biden Administration is working to reduce the frequency and profitability of ransomware attacks. It is disrupting the infrastructure ransomware hackers use to collect their ransom. It has put sanctions on cryptocurrency exchanges that are frequently used for ransomware payments and warned U.S. companies not to pay ransomware. In June, it was able to recover over half of the $4.4 million in cryptocurrency that Colonial Pipeline had paid to its ransomware attacker. [2] The U.S. Department of Justice (DOJ) reports that ransomware attacks have cost the U.S. almost $600 million in the first six months of 2021.

In November, the DOJ announced that a Ukrainian hacker had been arrested and charged in connection with a group of ransomware attacks. It also announced the recovery of $6.1 million from ransomware attacks by a Russian who was charged separately and is listed as wanted by law enforcement. In December, the head of the U.S. Cyber Command and the Director of the National Security Agency announced that the military had taken offensive actions against ransomware attackers who had targeted critical infrastructure. [3] These actions represent the strongest U.S. government response to ransomware attacks to-date and reflect a marshalling of resources across multiple agencies. European law enforcement officials also announced that seven ransomware hackers have been arrested in Europe since February. [4] Recently, a multi-national effort succeeded in shutting down, at least temporarily, a major Russian ransomware entity. In October, the Biden Administration convened over 30 countries to develop plans to combat ransomware attacks around the globe. [5]

Back in April, the Biden Administration announced tough sanctions on Russia for previous cyberattacks and, in June, President Biden warned Russian President Putin that future Russian cyberattacks would be grounds for additional retaliation.

Three former U.S. cyber intelligence agency employees, who had been hired by the United Arab Emirates (UAE) to conduct cyberespionage, pleaded guilty in September to cyber hacking and violating export laws by transferring military cyber technology to a foreign government. The DOJ is deferring criminal prosecutions of them if they pay hundreds of thousands of dollars in fines and abide by the terms of a three-year settlement agreement. They are also prohibited from ever receiving a U.S. security clearance. [6] Numerous former U.S. cyber intelligence employees have been lured to work for private companies and foreign governments to do cybersecurity or cyberespionage. Many do legitimate cybersecurity work but more than a few have done illegal or at least unethical work for their new employers.

In October, Biden’s Commerce Department announced a rule that limits the export and sale of hacking software to authoritarian and repressive governments. This effort is difficult for many reasons, in part because it needs to avoid inhibiting cybersecurity collaboration among countries and among companies located in different countries. Furthermore, some private companies and some other countries don’t share this goal of keeping hacking tools out of the hands of such governments. For example, the Israeli company NSO Group (with suspected but unproven connections to the Israeli government) sells spyware that can be hacked onto an individual’s phone, allowing the hacker to track the person’s location and monitor their communications. Governments and others have used it to track dissidents, activists, lawyers, politicians, and journalists. Saudi Arabia used it to track associates of Jamal Khashoggi, the journalist that it murdered. Most recently, it was identified as being used to spy on Palestinians. [7]

For 25 years, the U.S. and 42 other countries have blocked the sale of weapons and military technology to authoritarian and repressive governments. The Wassenaar Agreement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, originally signed in 1996, sets voluntary export controls on a list of weaponry. The list of controlled products is updated every December and cyber hacking and surveillance products were added to the list in 2013. However, the U.S. did not adopt controls on these products until now. This new Commerce Department rule will allow the U.S. to coordinate efforts to control the export of hacking tools with the 42 other countries that are part of the Wassenaar Agreement. [8]

Also on the international front, there have been calls for a treaty banning cyberwarfare from targeting civilians and civilian infrastructure, similar to the Geneva Convention for traditional warfare. Brad Smith, Microsoft’s president, called for such a treaty in 2017 after vulnerabilities in Microsoft software had been the vehicle for Russia’s devastating cyberattack on Ukraine’s civilian infrastructure and for North Korea’s worldwide ransomware attacks. Noting that the 1949 Geneva Convention protects civilians during traditional warfare, he called for a new convention to protect civilians from cyberwarfare – from attacks on hospitals, electric power grids, elections, and the intellectual property of private parties. Previously, after the 2010 U.S. attack on Iran’s uranium enrichment facility, European, Russian, and some U.S. officials had also called for such a treaty.

However, the U.S. has not pursued such a treaty, at least in part because it has been the world’s dominant cyber superpower. Nonetheless, U.S. businesses and civilians, as the most Internet-dependent ones in the world, are bearing the brunt of escalating cybercrime and cyberwarfare. Furthermore, the U.S. has continued to engage in its own cyberwarfare, including building its capacity to attack civilian infrastructure such as the Russian electric power grid.

I urge you to contact President Biden and thank him for his efforts to stop ransomware attacks and to keep cyber hacking tools out of the hands of authoritarian and repressive governments. Ask him to continue this work and to do more to protect civilians from cyberwarfare. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to let your U.S. Representative and Senators know that you support strong steps to reduce ransomware attacks and the potential harm to civilians from cyberwarfare. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., 10/25/21, “A rare win for the good guys in cat-and-mouse game of ransomware,” The Boston Globe from the New York Times

[3]      Barnes, J. E., 12/6/21, “US military has acted against ransomware groups, NSA chief says,” The Boston Globe from the New York Times

[4]      Tucker, E., & Suderman, A., 11/9/21, “US charges 2 suspected ransomware operators,” The Boston Globe from the Associated Press

[5]      McLaughlin, J., 10/13/21, “White House brings together 30 nations to combat ransomware,” National Public Radio (https://www.npr.org/2021/10/13/1045248842/white-house-brings-together-30-nations-to-combat-ransomware)

[6]      Mazzetti, M., & Goldman, A., 9/15/21, “Former intelligence officers admit crimes,” The Boston Globe from the New York Times

[7]      Kingsley, P., & Bergman, R., 11/9/21, “Spyware aimed at activists, group says,” The Boston Globe from the New York Times

[8]      Nakashima, E., 10/21/21, “US aims to limit sale of hack tools to dictators,” The Boston Globe from the Washington Post

STOPPING CYBERCRIME AT THE PERSONAL, ORGANIZATIONAL, AND GOVERNMENTAL LEVELS

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

This is the first of my final two posts (out of nine total) on computer hacking and cyberwarfare. These two posts discuss steps that can be taken to counter cybercrime at the personal, organizational, and governmental levels, as well as efforts to stop cyberwarfare from harming civilians. This series of posts presents my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] These posts have summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; shared a number of examples; and the previous post provided an overview of Russia’s continuing attacks on the U.S., including on the 2018 and 2020 elections.

It is clear today that passwords, antivirus software, and firewalls will not protect a computer from reasonably sophisticated cyber hacking. With entities willing to pay over a million dollars for a vulnerability in a widespread piece of basic software, such as Microsoft Windows, Apple operating systems, Adobe, Java, and countless others, cybersecurity needs to be designed into these basic pieces of software and to have many layers of protection. Traditionally, basic software has only been tested to make sure it works, not to identify and eliminate vulnerabilities that hackers could use. This needs to change. When complex software is everywhere, even in cars, software vulnerabilities are ubiquitous and our whole mindset about cybersecurity must change to include preventing vulnerabilities, as well as protecting computers when they are attacked.

Individuals and businesses should assume that passwords alone are no longer effective protection from serious hackers because passwords are likely to have been stolen in one of the hacks of a large customer database or some other way. Two-factor or multi-factor authorization (2FA or MFA) is the best basic defense against cyber hacking and cybercrime. This is the process where when one logs into a system, a one-time code is sent by phone text or email that has to be entered to gain access. Turn on 2FA wherever it’s available and for any function where security is important, such as banking and financial transactions.

Voting simply cannot be safely conducted on-line according to Perlroth. She notes that as-of the date of her book, there was not a single on-line voting system that hackers had not been able to penetrate – often quite quickly and easily. [2] Voter registration databases and other election support systems need to be rigorously protected and audited to ensure their security.

While the Trump Administration largely ignored cybercrime and civilian harm from cyberwarfare, the Biden Administration has already been aggressive in tackling them. The U.S. Cybersecurity and Infrastructure Security Agency has recently announced that it is working to develop a national cybersecurity strategy. It noted that public-private collaboration will be essential as critical infrastructure must be secured whether it is in private or public hands.

The U.S. needs to establish strong mandates for cybersecurity for public entities and private companies that are part of critical infrastructure. The U.S. lags far behind other countries in doing this. Norway in 2003 and Japan in 2005, for example, implemented national cybersecurity strategies that have made them among the safest countries in the world in terms of cyberattacks.  [3]

However, Congress has repeatedly failed to pass legislation that would establish even basic standards for companies operating critical infrastructure such as hospitals, fuel pipelines, the electric power grid, dams, and nuclear power plants. Such standards would, for instance, require operators of critical infrastructure to use up-to-date, well-maintained software; to change passwords regularly; to use two-factor authorization for system access; and to conduct regular, sophisticated tests of their protections against hackers.

The U.S. Chamber of Commerce and other business leaders have argued against even voluntary standards, claiming they are too onerous. Current events are proving that NOT having such standards and NOT having solid cybersecurity in place are far too dangerous and too costly for businesses and customers.

The Biden Administration is urging all companies to enhance their cybersecurity practices, including requiring two-factor authorization for employees to log in to computer systems. [4] It also needs to educate the American public about cybersecurity and about on-line disinformation campaigns; these need to be part of our national consciousness.

Public and private entities should be required to report and make public successful cyberattacks so:

  • Customers and the public can be appropriately warned and protected,
  • The entities have an incentive to fix problems and prevent successful future attacks, and
  • Appropriate law enforcement and national security responses can occur.

On the flip side, when U.S. intelligence agencies become aware of a vulnerability in computer software or hardware, they should be required to inform the product’s vendor and work with it to eliminate the vulnerability.

The private sector is not only stepping up its defensive measures against hacking but also going after hackers directly, rather than leaving this work to law enforcement as has been the practice. Google is suing two Russia-based individuals for using a massive network of hacked computers for a range of criminal activity. It is also working with other private companies to disable the computers used by the hackers. The hacked network has been tracked by law enforcement and cybersecurity experts for years and is estimated to include about a million Microsoft Windows-based computers around the globe. In cleaning up the damage that has been done and the vehicles the hackers used to spread their harmful software, Google has removed from the Internet about 63 million Google Docs, more than 1,000 Google accounts, and over 900 Google Cloud projects. Microsoft has also been active in this direct action, deleting from the Internet websites used by a China-based hacking group. [5]

I urge you to contact President Biden and thank him for his work to improve cybersecurity, including his efforts to create and implement a national cybersecurity plan. Ask him to continue this work and to do more to require private entities operating critical infrastructure to strengthen their cybersecurity. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to let your U.S. Representative and Senators know that you support strong steps to improve cybersecurity, including requiring private businesses, especially those operating critical infrastructure or large aggregations of consumer data, to take meaningful steps to improve their cybersecurity. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

My next post will provide an overview of the Biden Administration’s efforts to combat ransomware attacks, address cybersecurity internationally, and protect civilians from harm from cyberwarfare.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., 2021, see above, page 397

[3]      Perlroth, N., 2021, see above, page 398-399

[4]      De Vynck, G., 9/22/21, “Treasury’s fight against hackers targets crypto payments,” The Boston Globe from the Washington Post

[5]      De Vynck, G., 12/8/21, “Google sues hackers tied to vast ring of infected devices,” The Boston Globe from the Washington Post

CYBERWARFARE: RUSSIA’S ATTACKS ON THE 2018 AND 2020 ELECTIONS AND THE TRUMP ADMINISTRATION’S RESPONSE

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

This is my seventh post on computer hacking and cyberwarfare and part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 North Korean ransomware attack; and the 2009 U.S. National Security Agency (NSA) cyberwarfare attack on Iran. My second post covered the leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine. The fourth and fifth posts described China’s cyberattack on Google and Google’s response. The sixth post described Russia’s cyberattack on the 2016 U.S. election.

This post summarizes Russia’s attacks on the 2018 and 2020 U.S. elections and the responses of the Trump and Biden administrations.

Under the Trump Administration, concern for cyberwarfare and cybercrime seemed absent. For example, the Obama Administration had reached an agreement with China to stop its industrial espionage, however this ended when Trump began his very public trade war with China. Similarly, the Iran nuclear agreement worked to keep Iranian hackers at bay. Trump’s voiding of the nuclear deal resulted in levels of Iranian cyberattacks that were unprecedented. Furthermore, as Trump backed off both sanctions and rhetoric against Russia for its hacking and election interference, Russia continued to hack our election systems and infrastructure, as well as to spread division, distrust, and chaos through social and other media. Even Saudi Arabia, with no sanctions from the Trump Administration for its murder of Washington Post journalist Khashoggi, was emboldened to engage in cyber espionage targeting the U.S. Cybercriminals engaged in ransomware attacks on cities, towns, and other infrastructure with regularity – and with little response from the Trump Administration.

By 2018, Trump had eliminated the position of White House cybersecurity coordinator and had made it clear that he never wanted to hear anyone in his administration, including the director of Homeland Security, mention election interference or election security. As the 2018 elections approached, the Russian social media propaganda agency, the Internet Research Agency (IRA), was engaging in sophisticated election disinformation on social media. In the six months before the elections, it spent at least $10 million on its efforts to influence the U.S. elections and to sow division, distrust, and chaos.

Fortunately, in September 2018, Trump had ceded decision-making for offensive cyberattacks to the new director of the NSA, General Paul Nakasone, who also served as the head of the Pentagon’s Cyber Command. John Bolton, in his brief tenure as Trump’s national security advisor, had developed a new cyber strategy that gave the Cyber Command increased flexibility. So, in October, the Cyber Command posted warnings directly to the IRA’s computers threatening indictments and sanctions if Russia continued to meddle in the 2018 elections. Then, on Election Day, the Cyber Command shut down the Russian hackers’ computer servers and kept them offline for several days as votes were tabulated and certified. No one knows what might have happened if the Cyber Command had not done this, but the 2018 election results were processed without any serious glitches.

“By 2020, the U.S. was in the most precarious position it had ever been in the digital realm,” according to Perlroth. [2] More than 1,000 local governments had been hit with ransomware attacks over the previous year. Russian cybercriminals were getting billions of dollars because local governments and their insurers calculated that it was cheaper to pay the ransom than to have to recreate computer systems and data. Cybersecurity experts worried that the ransomware attacks were a smokescreen to probe municipal computers and develop the capability to disrupt voter and election related systems during the 2020 election. Some of these experts also thought the election hacking and interference in 2016 and 2018 might be trial runs for more extensive efforts planned for the 2020 elections. Apart from the elections, in September 2020, over 400 hospitals were the subject of ransomware attacks, coming, of course, at the worst possible time – in the middle of the pandemic.

In Congress, a number of efforts were made to address concerns about election security, including bills requiring paper trails for every ballot and rigorous post-election audits, banning voting machines from being connected to the Internet, and mandating that campaigns report contacts with foreign entities. These were largely uncontroversial security measures that generally had bipartisan support and were deemed critical by election integrity experts. However, Senator Mitch McConnell, the Republican Majority Leader, refused to let any election security bill move forward toward passage. Only after critics took to calling him “Moscow Mitch” did he relent and begrudgingly allow approval of $250 million to help states protect election infrastructure – a tiny amount of money when split among the 50 states (only $5 million each on average), especially given the seriousness of the threats their election systems were facing.

In early 2020, U.S. intelligence officials warned the White House and Congress that Russian hacking and election interference were working hard at promoting Trump’s re-election. Trump was so incensed that this information had been shared with Democrats that he fired his acting director of national intelligence and publicly dismissed the intelligence findings as misinformation. Beginning in August, Trump’s new head of intelligence refused to provide in-person briefings on election interference to Congress. The U.S. intelligence agencies had always been non-partisan, but the Trump administration increasingly manipulated their actions and statements to serve their political interests. Meanwhile, Microsoft revealed that in one two-week period Russian hackers had attempted to access 6,900 personal email accounts of politicians, campaign workers, and consultants of both parties.

During the 2020 election cycle, the Russians didn’t have to create “fake news” to foster distrust, division, and chaos; Americans, including President Trump, were providing plenty of such content on a daily basis. The Russian trolls simply worked to amplify, among other things, the vaccination debate, the lockdown protests, the misinformation about the benefits of mask wearing, and the blaming of the racial justice protests and any violence that occurred on violent, left-wing radicals.

As the 2020 election approached, the Cyber Command, the Cybersecurity and Infrastructure Security Agency (CISA) in the Department of Homeland Security, the NSA, and the FBI worked diligently to protect election infrastructure in the states and nationally, as well as to actively counterattack. Many of the officials involved figured it was likely that Trump would fire them for their hard work as soon as the election was over, but they persisted in doing their jobs. On Election Day, CISA officials briefed reporters every three hours and, in the end, Election Day came and went with no evidence of fraud, outside efforts to alter vote tallies, or even a ransomware attack.

Perlroth notes that while she would like to credit the work of our cybersecurity agencies for the uneventful Election Day, she feels that the 2020 election went as smoothly as it did, not because the Russians were deterred, but because they (and specifically Russian President Putin) concluded that their work here was done and had been successful. Discord, distrust, and chaos were being created by American actors without the need for Russian interference. If Putin’s goal, in the U.S. elections and otherwise, was to undermine American democracy and American influence in world diplomacy, he had probably succeeded beyond his wildest dreams.

Nonetheless, Russian cyber hacking continues. In 2020, Russia’s premier intelligence agency, SVR was responsible for the cyberattack via the Solar Winds security software, a highly sophisticated attack that affected many government agencies and large companies. It gave the Russians access to tens of thousands of users’ computer systems. (By the way, SVR was also the first hacker to gain access to the Democratic National Committee’s computers in 2016.)

In October 2021, the Russians engaged in another massive campaign to hack into computer networks in the U.S. Microsoft announced that it had notified 600 organizations that they had been targeted by SVR with about 23,000 attempts to illegally access their computer systems in October alone. It noted that the attacks were relatively unsophisticated and were or could have been blocked by basic cybersecurity practices. It also stated that, for comparison, there had been only 20,500 such attempts by all other international governmental actors over the past three years. [3]

This Russian cyberattack occurred only six months after President Biden imposed sanctions on Russian financial and technology companies in April 2021 as punishment for previous cyberattacks. At the time, he noted that the sanctions could have been more severe but that he was trying to de-escalate confrontation between the two superpowers.

My next post will review things that can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021. page 347

[3]      Sanger, D.E., 10/26/21, “Russia tests US again with broad cybersurveillance,” The Boston Globe from The New York Times

CYBERWARFARE: RUSSIA’S ATTACK ON THE 2016 ELECTION

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

This is my sixth post on computer hacking and cyberwarfare and part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 North Korean ransomware attack; and the 2009 U.S. National Security Agency (NSA) cyberwarfare attack on Iran. My second post covered the leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine. The fourth and fifth posts described China’s cyberattack on Google and Google’s response.

This post summarizes Russia’s attack on the 2016 U.S. election which began in June 2014 when Russia sent two agents to the U.S. for a three-week reconnaissance tour to gather intelligence on U.S. politics and elections. Their report became the field guide for Russia’s interference in the 2016 election. Starting in 2014, the Russians tried to hack into voter registration and election systems in all 50 states. They are known to have succeed in accessing Arizona’s and Illinois’s voter databases. In 2015 (and probably before then), the Russians aggressively hacked into computer networks at the State Department, White House, and Joint Chiefs of Staff of the Defense Department, although this was probably unrelated to the election and was just “routine” espionage. Occurring in the midst of the unprecedented and mind-boggling presidential campaign that was ongoing at the time, these cyberattacks got little coverage in the mainstream media.

Russia’s social media propaganda agency, known as the Internet Research Agency (IRA), had as its goal for the U.S. election in 2016 to “spread distrust toward the candidates and the political system in general. … [to create] division, distrust, and mayhem.” [2] In September 2014, the IRA created a Facebook group, Heart of Texas, focused on right-wing Texans that generated 5.5 million likes within a year. It also created another Facebook group, United Muslims of America. Then, among other things, it used these two Facebook groups to promote rallies and counter-rallies at the Islamic Center in Houston that led to real-world confrontations. The IRA used the stolen identities of Americans to make their work more credible, but nonetheless its cyber manipulators were surprised at how gullible and susceptible the Americans were to their Facebook disinformation.

Based on its success in Texas, the IRA began replicating this approach across the country, focusing on purple states. Its staffing grew to more than 80 people who were directed to “Use any opportunity to criticize Hillary and the rest (except Sanders and Trump – we support them)” according to leaked memos. [3] The IRA:

  • Communicated with Trump campaign volunteers.
  • Bought Facebook ads promoting Trump and attacking Clinton.
  • Promoted race-baiting and xenophobic messages.
  • Worked to suppress minority voter turnout and to encourage voting for third party candidates instead of for Clinton.
  • Paid an unwitting Florida Trump supporter to put a cage on a flatbed truck and paid an actress to dress up as Clinton and sit in the cage as Trump rally goers chanted “Lock her up!” Based on this success, they promoted similar rallies in other states.
  • Reached 126 million Facebook users and generated 288 million Twitter actions, which are staggering numbers given that 139 million people voted in the 2016 election.

In June 2016, it was discovered that two other Russian groups had hacked into the Democratic National Committee’s computer network months earlier, extracting and releasing embarrassing emails, among other things.

The Obama Administration, facing multi-faceted and snowballing Russian interference in the election, finally decided in the fall of 2016 that a strong bipartisan statement (so it wouldn’t appear political) was necessary. Top Homeland Security and FBI officials were sent to brief Congress. But the response from the Republicans was completely partisan. Republican Senate Majority Leader Mitch McConnell refused to warn Americans about Russia’s efforts to influence and undermine the 2016 elections. He refused to sign any bipartisan statement, argued (falsely) that the intelligence on the cyberattacks was wrong, and claimed (falsely) that this was all just Democratic partisan politics.

After the election, the Obama Administration imposed significant sanctions on the Russians, but they were too little and too late. Although there’s some argument over the ultimate impact of the Russian’s efforts, Perlroth concludes that the Russian actions may well have tipped the election to Trump. Black voter turnout declined sharply in 2016 for the first time in 20 years, which was a constituency and an outcome that the Russians had aggressively targeted. Black voter turnout fell from 66.6% in 2012 to 59.6% in 2016, its lowest level since 2000. This represented a decline of 765,000 votes when less than 80,000 votes in three key states determined the outcome of the election. Furthermore, Trump’s margin in each of these three key states – Wisconsin (22,800 votes, a 0.8% margin), Pennsylvania (44,300 votes, a 0.7% margin), and Michigan (10,700 votes, a 0.2% margin) – was less in each state than the vote for the Green Party candidate. This voting for third party candidates instead of Clinton was another outcome that the Russians had aggressively targeted. Given the closeness of the election, a relatively small change in either (let alone both) of Black voter turnout or the number of votes for the Green Party instead of for Clinton would have changed the outcome of the election – and both of these were factors that the Russians specifically worked to influence.

Subsequent posts will outline the Perlroth book’s reporting on:

  • Russia’s continuing cyberattacks on the 2018 and 2020 U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N., see above, page 310

[3]      Perlroth, N., see above, page 311

CYBERWARFARE: GOOGLE’S RESPONSE TO CHINA’S ATTACK

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

This is my fifth post on computer hacking and cyberwarfare, all of which are part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 worldwide ransomware attack by North Korea; and the 2009 cyberwarfare attack by the NSA on Iran’s uranium enrichment plant. My second post provided an overview of the book’s reporting on leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine and the fourth post  described China’s cyberattack on Google.

Google had begun doing business in China in 2006, agreeing to the censorship of search results that the government demanded. In 2009, it was still struggling to accommodate China’s increasingly draconian censorship rules. Nonetheless, China waged a cyberattack on Google in 2009 in an effort to make Google an unwitting accomplice in Chinese surveillance of dissidents. (See my previous post for more details about this cyberattack.)

In response, on January 12, 2010, Google publicly revealed the Chinese cyberattack and its decision to pull out of China, despite its being the largest and most sought-after market in the world. Fearing for its employees’ safety, it had briefed the State Department and the U.S. embassy in Beijing was prepared to undertake a mass evacuation of Google’s Chinese employees and their families. Google shut down its Chinese operation and routed all Chinese Internet traffic to Hong Kong. In response, the Chinese government scrambled to censor and block Internet content flowing from Hong Kong, lambasted Google, denied involvement in the cyberattack, and accused the U.S. government of conducting an anti-China propaganda campaign. It permanently blocked Internet access to Google and three years later, under new President Xi Jinping, took over total control of the Internet in China.

The Chinese hackers who had executed the attack, having been outed, unplugged their Internet computer servers and abandoned their hacking tools. They abstained from hacking in the U.S. for a number months, but one year later engaged in a sophisticated attack on RSA, the cybersecurity company that sold security services to, among others, high profile defense contractors. Based on this successful attack, the Chinese hackers were able to infiltrate Lockheed Martin and thousands of other western companies including banks, automakers, chemical companies, law firms, non-profit organizations, and more. They stole billions of dollars-worth of proprietary information, including military and trade secrets.

Back at Google, less than a year after the 2010 pullout, some executives began pushing to go back to doing business in China. As Google diversified its businesses and re-organized under the over-arching corporation Alphabet in 2015, re-entry into the Chinese market, with its 750 million Internet users, became a hot topic of debate. Ultimately, human rights, ethical considerations, and Google’s motto of “Don’t be evil” were overwhelmed by a focus on profits.

In 2016, Google established a new, artificial intelligence research center in Beijing and released some small-scale products, e.g., an app and a mobile game, into the Chinese market. Simultaneously, it was working on a search engine for the Chinese market, code-named Dragonfly, that met government censorship requirements. In August 2018, an employee leaked information about the work on Dragonfly. After protests by Google employees and others, the Dragonfly project was terminated in July 2019. Google does not offer a search engine in China at this time.

Google’s business ethics have been questioned not just for doing business in China, but for its behavior in the U.S. and elsewhere. It profits off sites that spread disinformation and conspiracy theories, and its YouTube subsidiary allows the spread of videos that harm the well-being of children. In Saudi Arabia, it hosted an app that allowed men to track and, thereby, control the movements of female family members.

In subsequent posts, I will outline the Perlroth book’s reporting on:

  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

CORPORATE CRIMINALS GET OFF SCOT-FREE

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.

Corporate criminals in the U.S. almost always get off scot-free regardless of how serious their crimes or how many offenses they have committed. Federal prosecutions of white-collar crime have been rare over the last 40 years and, nonetheless, dropped dramatically during the Trump administration to a 25-year low in 2020.

The Department of Justice (DOJ) announced last week that it would take a new, more aggressive approach to corporate crime. A similar statement was made in 2015 by the Obama administration, but nothing of substance changed. Therefore, this current announcement won’t be taken seriously until the DOJ begins taking significant actions. [1]

Typically, corporate crime has been settled with fines and signed agreements with the DOJ promising not to engage in the same illegal behavior again for a specified period of time, typically only three years. These agreements are called deferred prosecution agreements (DPAs) or non-prosecution agreements (NPAs). The corporations typically do not admit to being guilty of any crimes.

Furthermore, these settlement agreements have rarely been enforced and there are numerous examples of corporations engaging in prohibited behavior again without penalties being imposed. The watchdog group Public Citizen reviewed 500 of these settlement agreements and found only seven cases where the corporation had even been notified that they had violated the agreement and only three where any prosecutorial action was taken.

Public Citizen recently issued a report identifying 20 major corporations with current settlement agreements. [2] In an indication that the DOJ may be stepping up enforcement of such agreements, two corporations were recently notified that they were in violation of their agreements: Ericsson, a Swedish telecom company, and NatWest, a British bank.

The 20 corporations with active settlement agreements ALL had previous violations; in 16 cases over ten violations and in five cases over 90 violations. The list includes seven banks and financial corporations, including Merrill Lynch (a subsidiary of Bank of America) with 97 total violations, JP Morgan Chase with 92 violations, Wells Fargo with 92, Deutsche Bank with 41, and Goldman Sachs with 38. Also included are United Airlines with 533 violations (464 of them from the Federal Aviation Administration), Walmart with 330 (292 from the Labor Department), Boeing with 84, and the pharmaceutical company Novartis with 18.

The DOJ announcement included a statement that when determining penalties for violations it will consider the corporation’s overall record, not only previous violations of the same type as had been the practice. It also stated that the DOJ will require corporations to disclose the individuals involved in corporate crime. In the last 30 years, it has been very rare that individuals at corporations have been held personally accountable for corporate crime.

The non-prosecution of corporate, white-collar crime stands in stark contrast to the aggressive prosecution of non-corporate, non-white-collar crime by individuals. For crimes by individuals, the U.S. has had a tough-on-crime approach for 40 years, which includes mandatory sentences and three strikes you’re out laws. Clearly, anything approaching this type of tough-on-crime prosecution of corporate criminal behavior would have put corporations out of business, i.e., their corporate charters would have been revoked, and would have put their executives in jail. Similarly, the practice of ignoring corporate violations of different types when determining penalties for a crime is unlike individual sentencing when all types of crimes are considered, e.g., theft, assault, drug crimes, and gun violations. Finally, individuals (with the exception of juveniles) don’t get a clean slate after three or so years as corporations do when their non-prosecution agreements expire.

I urge you to contact President Biden to let him know that you support strong action by the Department of Justice to hold corporate criminals accountable, both the corporations themselves and their executives.  You can email President Biden at https://www.whitehouse.gov/contact/ or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414. You can also send letters to the White House; details are here: http://www.whitehouse.gov/contact/submit-questions-and-comments.

[1]      Dayen, D., 11/12/21, “The corporate most-wanted list,” The American Prospect (https://prospect.org/power/corporate-most-wanted-list/)

[2]      Claypool, R., 11/12/21, “The usual corporate suspects,” Public Citizen (https://www.citizen.org/article/usual-corporate-suspects-report/)

CYBERWARFARE: CHINA’S ATTACK ON GOOGLE

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

This is my fourth post on computer hacking and cyberwarfare and part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare; the 2017 worldwide ransomware attack by North Korea; and the 2009 cyberwarfare attack by the U.S. National Security Agency (NSA) on Iran’s uranium enrichment plant. My second post provided an overview of the book’s reporting on leaks from the NSA, electronic surveillance in the U.S., and the use of encryption to protect privacy. My third post described Russia’s cyberattacks on Ukraine.

This post summarizes China’s cyberwarfare and, in particular, its attack on Google. The Chinese government’s cyberwarfare initiatives use both army personnel and contracts with non-government hackers at Chinese universities and technology companies. This contracting with private hackers is similar to President Putin’s strategy in Russia, where cyberattacks had been outsourced to cybercriminals for years to give the government some marginally credible deniability of responsibility. As in Russia, many of the private hackers in China are likely to have been conscripted, rather than hired in the private market.

For years, the Chinese have been hacking into defense companies where they focus on stealing aerospace, missile, space, and satellite technologies, as well as nuclear propulsion and weapon information. They have also been hacking into a broad range of U.S. businesses  and stealing intellectual property. A former Director of the NSA, Keith Alexander, called Chinese cyber theft the “greatest transfer of wealth in history.” [2]

In December 2009, now ancient history in the annals of cyber hacking, Google’s digital security team noticed an electronic intruder in their computer network. It was moving from computer to computer in what they called the fastest cyberattack they had ever seen. It had managed to breach what was one of the toughest digital security systems in existence at the time and was conducting a very sophisticated search across Google’s extensive computer network. As is often the case, the intruder’s access had been initiated by unsuspecting Google employees who had clicked on a link in a hacker’s phishing message. The link went to a website in Taiwan that put the hacker’s computer program, i.e., malware, onto the employee’s computer via a vulnerability in Microsoft’s Internet Explorer browser. The malware allowed the hacker to access the employee’s computer and Google’s network.

The attack was very sophisticated – the work of highly skilled, well-resourced hackers, not a small-time, individual cybercriminal. This was made clear by the hackers’ encrypting of their attacking computer program and obfuscating of their tracks, along with the expertise needed to use the Internet Explorer vulnerability.

Over a couple of weeks, Google assembled a team of 250 inside and outside security experts to counter the attack, and then determine who had attacked and what they were trying to accomplish. Team members worked 24/7 and December holiday vacations were canceled.

Eventually, the team’s work identified the attacker as a group contracted with by the Chinese government. It was being monitored by the NSA, which had code-named it “Legion Yankee.” It was one of the most active of the more than two dozen Chinese hacking groups that the NSA monitored. These groups had attacked U.S. government agencies, technology companies, think tanks, and universities in attempts to steal intellectual property, military secrets, and correspondence.

As Google and outside security experts dug into the attack, they traced it back to Legion Yankee’s computer server and discovered that dozens of other U.S. companies had been attacked as well, including Adobe, Intel, Northrop Grumman, Dow Chemical, and Morgan Stanley. As Google tried to warn these other companies, they found it was hard to reach someone who would take their warning seriously and understand its implications. Many of the companies refused to acknowledge that their computer systems had been breached – not wanting the bad publicity.

Google and its outside experts also eventually figured out what the attacker was after: Google’s source code. This is the computer programming that runs the Google application – it’s what displays its screens when you access Google, it’s what runs the search engine and displays the results, it’s what determines what ads to show you and what to do when you click on an ad or search result, etc. Microsoft’s Windows computer operating system, which runs many of our computers, is probably the best-known example of source code, along with Apple’s Operating System (OS) or the Android software that runs your phone.

This kind of attack wasn’t about short-term gain, e.g., theft of money or information, this was a long-term strategy that could bear fruit immediately but also for years to come. The hackers would insert code into or change the programming of Goggle’s source code to allow them access to the information that was flowing through Google, to Gmail accounts, and also to the computers and networks that were using Google.

Ultimately, Google determined that Chinese government wanted to change Google’s source code so it would have long-term access to any Gmail account and that its interest was in accessing the Gmail accounts of Chinese dissidents, including pro-democracy activists in Hong Kong, Tibetan and Uighur Muslim dissidents, pro-independence Taiwanese, the Dalai Lama, and others. In other words, China’s goal for its most sophisticated cyberattack capabilities was to be able to monitor, threaten, and thereby control its own people.

U.S. State Department officials would eventually connect Legion Yankee and the Google attack to the Chinese government’s top security official, Zhou Yongkang, and to Li Changchun, a member of China’s top ruling body (the Politburo Standing Committee) and China’s top propaganda official. Li had reportedly googled himself and was not happy with what he found and, therefore, ordered the attack on Google.

My next post will summarize Google’s response to the Chinese attack: it made a big splash by publicizing China’s attack and pulling out of the Chinese market completely in 2010 – only to re-enter the Chinese market in 2016. Subsequent posts will outline the Perlroth book’s reporting on:

  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021. page xix

CYBERWARFARE: RUSSIA’S ATTACKS ON UKRAINE AND USE OF NSA’S CYBER WEAPONS

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

This is my third post on computer hacking and cyberwarfare, part of my overview of New York Times cybersecurity reporter Nicole Perlroth’s outstanding book, This Is How They Tell Me the World Ends. [1] My first post summarized the book’s information on:

  • The scale of computer hacking, cybercrime, and cyberwarfare,
  • The 2017 worldwide ransomware attack by North Korea using a Microsoft Windows vulnerability stolen from the U.S. National Security Agency (NSA), and
  • The 2009 cyberwarfare attack by the NSA on Iran’s uranium enrichment plant.

My second post provided an overview of the book’s reporting on:

  • Electronic surveillance in the U.S. and the use of encryption to protect privacy, and
  • Leaks from the NSA, including of its cyberwarfare weapons.

This post provides an overview of Russia’s cyberattacks on Ukraine. Russia is and has been a formidable and active player in espionage and international warfare since the 1950s Cold War, which Perlroth touches on as background for her reporting on cyberwarfare.

Not surprisingly then, Russia has been an early, active, and formidable participant in cyberwarfare. It has attacked Ukraine both to demonstrate its capabilities to the world and to display its ongoing displeasure with independence in Ukraine, which threw out the Russian puppet government in 2014. Russia’s cyberwarfare has interfered with Ukraine’s elections and its everyday life. In 2014, Russia planted disinformation during Ukraine’s election and engaged in serious cyber hacking of its election infrastructure. Ukrainian election officials discovered the hacking just before manipulated results would have been announced to the media. It was the most brazen cyberattack on a national election ever at the time.

For its next attack, on Christmas Eve in 2015, Russia’s cyber warriors flipped off circuit breakers in the Ukrainian power grid, turning off electricity for hundreds of thousands of people. They also shut off backup power in many locations and shut down emergency phone lines. Things were turned back on roughly six hours later, but the message and the capabilities were clear. This represented an escalation of cyberwarfare; no country had ever shutdown another country’s civilian power grid before. A year later, Russia did it again, this time shutting down the power and heat in the Ukrainian capital of Kyiv.

On June 27, 2017, Russia launched another, much more devastating cyberattack on the Ukraine, this time using weapons from the U.S. National Security Administration (NSA) that had been stolen and leaked in 2016 and 2017. (See my previous post for more details on this leak.) Russia specifically timed its attack to occur on Ukraine’s independence day to underscore its political message. The attack shutdown government offices, trains, ATMs, the postal service, and almost all financial systems so people couldn’t get paid and electronic cash registers didn’t work so people couldn’t buy anything, even food and gas. Even the radiation monitors at the Chernobyl nuclear disaster site were shutdown. The attack destroyed the data on 80% of the computers in Ukraine. The damage was so severe that it took over two years for Ukraine to recover from this Russian cyberattack.

Not unexpectedly, the cyberweapons (i.e., malicious computer programming) that Russia used in the attack on Ukraine self-propagated through the Internet and other computer networks so that any company doing business in Ukraine was vulnerable. The cyberweapons shutdown factories in Tasmania, destroyed vaccines at pharmaceutical companies Pfizer and Merck, infected FedEx’s computer systems, and brought the world’s biggest shipping company, Maersk, to a halt. The cyberweapons even spread back to Russia, destroying data at the giant, Russian government-owned oil company, Rosneft, and at the Russian steelmaker, Evraz.

When author Perlroth visited Ukraine in the winter of 2019, a year and a half after the attack, the damage estimate there was $10 billion and climbing, and significant disruption of daily life was still evident. Railroad and shipping systems were still not back to normal, pension checks still hadn’t been received, and people were still trying to find packages that had gone missing when shipment tracking data was lost, for example. It was also estimated that the attack cost just Merck, Fed Ex, and all the other companies that were affected billions of dollars. Some insurers refused to pay for damages from this cyberattack, claiming it was an act of war and therefore fell under a war exemption clause in their policies.

This Russian cyberattack made it clear that cyberweapons are weapons of mass destruction. Russia could have done much worse. It could have crashed trains and planes instead of just disabling scheduling, ticketing, and payment systems. It could have created explosions or toxic incidents at manufacturing plants or nuclear power plants.

Some experts believe Russia used the NSA’s tools in this attack to discredit and expose the NSA and the U.S. government.  Others believe Russia was just using this attack, and the earlier ones in the Ukraine, to test its capabilities and prepare or signal its capability to execute even more devastating attacks in the future. By the way, Russia has continued to harass Ukraine. For example, in 2019, it inundated Ukrainian Facebook accounts with anti-vaccination propaganda as the worst measles outbreak of recent times spread there.

In subsequent posts, I will outline the Perlroth book’s reporting on:

  • The Chinese attack on Google and Google’s response,
  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

CYBERSECURITY AND THE DEVASTATING LEAK OF THE NSA’S CYBER TOOLS

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 on computer hacking and cyberwarfare began my overview of New York Times cybersecurity reporter Nicole Perlroth’s book, This Is How They Tell Me the World Ends. [1] My post summarized the book’s information on the scale of computer hacking, cybercrime, and cyberwarfare, while also outlining two examples from the book:

  • The 2017 worldwide ransomware attack by North Korea using a Microsoft Windows vulnerability stolen from the U.S. National Security Agency (NSA), and
  • The 2009 cyberwarfare attack by the NSA on Iran’s uranium enrichment plant.

This post provides an overview of the book’s reporting on:

  • Electronic surveillance in the U.S. and the use of encryption technology to protect privacy, and
  • Leaks from the NSA, including of its cyberwarfare tools.

After the September 11, 2001, attacks, the U.S. greatly expanded its electronic surveillance within the U.S. In 2013, Edward Snowden, a consultant for the NSA and a former CIA employee, released thousands of classified NSA documents. They described activities the NSA was engaged in, including mass surveillance of Americans. Among many other things, the documents revealed that the NSA was secretly surveilling users of Microsoft, Facebook, Google, and Yahoo and that in a single day it had collected roughly 445,000 Yahoo email address books, 105,000 from Hotmail, 83,000 from Facebook, 34,000 from Gmail, and 23,000 from other providers.

Snowden was charged with espionage. He left the country prior to releasing the NSA documents and is living in Russia under a grant of asylum. In 2020, a U.S. federal court ruled that the NSA’s mass surveillance program exposed by Snowden was illegal and possibly unconstitutional.

As a response to U.S. government surveillance and cyber hacking, software and hardware providers started offering users’ the ability to encrypt their data. Initially, intelligence agencies and law enforcement had ways to overcome the encryption and access the data, typically with the assistance of the product’s provider. Then in 2014, in the wake of the Snowden revelations, Apple announced that the iPhone 6 would automatically encrypt everything on the phone using the phone user’s unique password, making the data impossible to unencrypt by anyone else. Previously, Apple had a key that could unencrypt a user’s data when requested by law enforcement. The FBI and those running government surveillance programs were upset and concerned about this truly secure encryption, but there was strong support from users because they valued their privacy.

A year later, two terrorists, who had sworn allegiance to ISIS, shot and killed 14 people and injured 22 at the San Bernadino, CA, health department. The terrorists fled and were killed in a shootout within hours. One piece of evidence recovered was an encrypted iPhone. The FBI demanded that Apple unencrypt the phone, which apparently it could not, and also demanded that Apple change its software to allow the FBI to unencrypt data in the future. Apple refused, pointing out that if there was such a capability others would want access to it too and that hackers would be able to find it as well.

The FBI initiated a court case to force Apple to allow it access to iPhone data, but four months after the shooting it abruptly dropped the case. It turned out that an unidentified hacker had sold the FBI a way to overcome the encryption. Surprisingly, the FBI Director, Comey, admitted that it had paid the hacker at least $1.3 million for this capability. This was the first time the U.S. government had admitted to paying a hacker a large sum to give it access to a vulnerability in a widely used electronic device or piece of software. The FBI claimed that it did not know what the underlying flaw was and that it had no intention of letting Apple know so it could fix it.

Apple was correct, of course, in stating that any ability of the FBI or U.S. intelligence agencies to circumvent the encryption of users’ data would eventually be available to others, including those with less scrupulous intentions (assuming you believe U.S. intelligence agencies and the FBI always have scrupulous intentions). International adversaries and individual computer hackers are constantly uncovering computer software and hardware vulnerabilities. They use or sell these vulnerabilities to obtain unauthorized access to data, for use in international cyberwarfare, or for use for private gain through theft of money, trade secrets, or other valuable information. These computer vulnerabilities can also be used in ransomware attacks, where computer systems are disabled or data stolen for nefarious use unless a ransom is paid.

Probably the worst piece of news for the U.S. intelligence agencies in the history of cyberwarfare was the leak of the NSA’s tools and techniques in 2016 and 2017. While Snowden’s leaks revealed what the NSA was doing, these leaks revealed, in detail, specifically how it was doing its cyber espionage and cyberwarfare.

Over a nine-month period, an unknown individual or individuals leaked specific software vulnerabilities and the computer code the NSA was using to exploit them. These NSA hacking tools had been stolen and were now being released publicly on the Internet, sharing the world’s most powerful cyber arsenal with anyone and everyone who might want to use it. These NSA cyber weapons were used, for example, by North Korea in its global ransomware attack (described in my previous post) and by Russia in its devastating attack on the Ukraine in 2017 (to be described in my next post).

The leak of the NSA’s cyber weapons exposed what was probably the biggest federal program the public had never heard of, a cyber espionage and warfare effort so classified it was invisible: hidden through blacked out budgets, large cash transactions, shell companies, contractors, and nondisclosure agreements required of everyone involved in it.

In subsequent posts, I will outline the Perlroth book’s reporting on:

  • Russia’s cyberattacks on Ukraine,
  • The Chinese attack on Google and Google’s response,
  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

THE COST, DAMAGE, AND THREAT OF CYBERCRIME AND WARFARE

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 lines between computer hacking, cybercrime, and cyberwarfare are blurry. They are threats to our national security and also to you. At risk is not only your financial welfare and identity, but also your health and well-being. Cyberwarfare is at a level of threat that has similarities to nuclear weapons in that it can inflict major societal harm and is restrained or deterred only by the threat of retaliatory harm and damage, similar to the mutual assured destruction that deters nuclear war.

This is not an exaggeration, as the book by New York Times cybersecurity reporter, Nicole Perlroth, This Is How They Tell Me the World Ends, [1] makes clear in great detail. She presents the development and evolution of cyber hacking, crime, and warfare since she began reporting on it for the Times in 2013. She also puts it in an historical context of espionage going back to the Cold War and the 1950s and then outlines its transition from human agents to cyber capabilities over the last 40 years. I encourage you to read her 406-page, revealing, convincing, and downright scary book if you are so motivated. I will attempt to summarize it in this and subsequent blog posts.

The scale of computer hacking, cybercrime, and cyberwarfare is much greater than I had any idea it was. The costs to individuals, businesses, governments, and other organizations (such as hospitals) are enormous. A 2018 RAND Corporation report, the most comprehensive study of cyberattacks at the time, estimated that the worldwide losses for the year from cyberattacks were hundreds of billions of dollars. By comparison, the estimated cost of terrorist attacks in 2018 was just $33 billion. Some current estimates put the costs of cyberattacks at over $2 trillion a year and growing.

The number of ransomware attacks, where hackers prevent an organization from accessing its computer systems and data until a ransom is paid, more than doubled from 2019 to 2020, for example. [2] Much of this is done by cyber criminals looking to make money. However, back in May 2017, one of the cyber hacking tools stolen from the U.S. National Security Agency (NSA) (more on this in a subsequent post) was put to use by North Korea in ransomware attacks all around the globe. Within 24 hours, 200,000 organizations in 150 countries were attacked. For example, nearly 50 British hospitals were incapacitated as were Russian railroads and banks, Indian airlines, Germany’s railroads, Spain’s largest telecommunications company, Japanese police, South Korean movie theaters, many gas stations and universities in China, and small electric utilities and Fed Ex in the U.S. Russia and China suffered the most, partially because vulnerable, pirated software was widely used there.

The attack used a vulnerability in Microsoft’s Windows operating system that the NSA had discovered and exploited for years. When knowledge of it was stolen from the NSA and released publicly, the NSA notified Microsoft, but, needless to say, there was not enough time to fix the vulnerability (aka bug) and get the fix onto millions of customers’ computers before the vulnerability was exploited by North Korea and others. Exacerbating the problem, many customers are not always quick to install Microsoft’s Windows updates, particularly at companies using it on computers performing critical functions where software updates must be closely managed to minimize downtime. Making matters worse, many computers, including ones controlling critical infrastructure, were running an old version of Windows that Microsoft had stopped updating three years earlier. Now, Microsoft had to go back and update this software so its users wouldn’t be held hostage by cyberattacks from North Korea or run-of-the-mill cyber criminals.

Microsoft’s President, Brad Smith, was angry; this was not the first time the NSA had put Microsoft in this position. He publicly criticized the NSA for withholding the Windows vulnerability from Microsoft and then, when it became a problem, dumping it in Microsoft’s lap to fix on short notice. At the time, this story got short shrift in the U.S. media because of all the focus on the new Trump administration and the controversies it was generating. The administration was, however, quick to identify North Korea as the culprit, in stark contrast to its failure to out Russia for its cyberattacks, including its meddling in the 2016 U.S. election. (More on this in a subsequent post.)

Initially, government-sponsored cyber hacking, with the U.S. leading the pack, was used for espionage and surveillance of foreign governments and agents. The U.S. has multiple agencies spending billions of dollars developing and using cyber hacking capabilities. It has large teams of computer experts identifying vulnerabilities in computer software. Rather than alerting companies to the vulnerabilities in their products, U.S. intelligence agencies developed the software vulnerabilities into weapons for spying on adversaries (e.g., by stealing data from their computers). This use of cyber hacking is considered defensive as it is used to protect the U.S. and not to harm others.

The U.S. government also bought software vulnerabilities from private hackers who had discovered them, sometimes paying millions of dollars for them. Private computer hackers’ uncovering and selling of software vulnerabilities is a worldwide entrepreneurial business, given that any computer-savvy individual with a computer can do this.

However, as was probably inevitable, computer hacking shifted to being used offensively, to harm adversaries, given that it has the inherent capability to disrupt computer-controlled equipment and communications. In 2008 and 2009, the U.S. government, led by the NSA, probably with Israel’s participation, successfully executed a cyberwarfare attack on Iran’s nuclear enrichment plant. It damaged the centrifuges used to enrich uranium in order to delay Iran’s ability to generate enough, sufficiently enriched uranium to build an atomic bomb. Many experts view this attack as marking the shift of cyberwarfare from espionage and defensive uses to offensive uses.

After a cyberattack, given time, effort, and expertise, the target can almost always identify the source of the attack. So, when U.S. intelligence agencies say they “think” a cyberattack came from say Russia, they know that it came from Russia. Furthermore, they usually know what organization was behind the attack, although sometimes it can be difficult to ascertain whether it was a government-sponsored attack or private hackers physically located say in Russia (or China, Iran, or North Korea, etc.).

After the successful attack on its nuclear enrichment plant, Iran, not surprisingly, was looking for revenge. When it discovered the cyberattack, it also then had possession of the weapon – the software that had been used – and could turn it back on the attacker.

Furthermore, the weapon, as cyber weapons often do, spread itself out from the Iranian centrifuge plant over the Internet and around the globe, eventually reaching the U.S. and infecting computers at Chevron. Fortunately, because it was designed to specifically attack the Iranian centrifuges, it didn’t do a lot of damage at Chevron or at other sites it infected.

Despite this experience, the U.S. government continued to focus on its offensive cyberwarfare programs and largely ignored building cyber defenses. Surprisingly, it ignored the clear vulnerability of U.S. computers and systems to the types of attacks it was undertaking, despite the fact that the U.S. is more dependent on computers and the Internet than other countries, making the U.S. more vulnerable to a cyberattack than anyone else.

In subsequent posts, I will outline the Perlroth book’s reporting on:

  • Electronic surveillance in the U.S. and the use of encryption technology to protect privacy,
  • Leaks from the NSA, including of its cyberwarfare tools,
  • Russia’s cyberattacks on Ukraine,
  • The Chinese attack on Google and Google’s response,
  • The cyberattacks on U.S. elections and the Trump administration’s response, and
  • What can be done to counter cybercrime and warfare at the individual and governmental levels.

[1]      Perlroth, N. This Is How They Tell Me the World Ends. Bloomsbury Publishing, NY, NY. 2021.

[2]      De Vynck, G., 9/22/21, “Treasury’s fight against hackers targets crypto payments,” The Boston Globe from the Washington Post

HOW TO REIN IN FACEBOOK’S THREATS TO OUR CHILDREN, OUR DEMOCRACY, AND ALL OF US

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

Facebook IS a serious threat to our children, our democracy, and all of us, as my previous post documented. Facebook is finally getting the attention and scrutiny it deserves, with a former insider turned whistleblower being the catalyst. Without government regulation Facebook and other social media sites will facilitate a race to the bottom driven by our basest proclivities and instincts. This will occur because there is greater profit in spurring anger, encouraging extremism and violence, promoting false information, and triggering emotional responses than there is in creating a safe place for people to have healthy relationships and to engage in civil discourse based on facts. [1] Facebook has consistently chosen profits over the health and safety of children, the sharing of factual information, and the public good, so it isn’t going to fix itself. Meaningful action by Congress will take time, so regulatory action by the executive branch is needed now. [2]

Here are possible actions that could be taken to address the problems with Facebook and its harmful behaviors: [3]

  • Require Facebook to publicly share its internal data and algorithms. This transparency would allow independent experts to analyze how its algorithms prioritize and promote content so we would know what messages they are amplifying and if they have toxic effects and bias. This would also allow monitoring of Facebook’s use of consumer data and its adherence to privacy standards. These data are also necessary to be able to design effective regulation. [4] They are also important for monitoring and ameliorating toxic effects on children and for the protection of children’s privacy – areas where Facebook does not have a good track record.
  • Break up Facebook through use of antitrust laws, forcing it to spin off Instagram, WhatsApp, and perhaps other business units, while prohibiting it from making acquisitions of other companies. (See rationale for this below.)
  • Institute a fairness or balance standard requiring Facebook to show users content with opposing views. (Prior to deregulation in the 1980s, there was a “fairness doctrine” that applied such standards to TV and radio stations.)
  • Investigate Facebook for withholding or distorting significant financial information provided to investors.
  • Require Facebook to substantially expand its efforts and meet standards for success in blocking harmful and inaccurate content (i.e., engage in effective content moderation).
  • Strengthen or pass laws regulating Facebook’s pushing of inappropriate content and inappropriate marketing on children, e.g., strengthen the Children’s Online Privacy Protection Act (COPPA) and pass the KIDS Act.
  • Make Facebook and other social media sites liable for promoting, and perhaps even for allowing users to post, hateful, threatening, violence-promoting, and other harmful content.
  • Create and invest in public Internet sites that provide news and human interaction opportunities as an alternative to Facebook. These public sites would not have profit-driven motives and, therefore, would adhere to consumer and ethical standards, as well as a commitment to serving the public good.

Regulating Facebook and other social media will not be easy and multiple iterations of regulatory steps and efforts will be needed as regulators learn what works and adjust to changes by Facebook and other social media. Given Facebook’s tremendous financial resources, its fight against efforts to control and regulate it will go on in the courts, in regulatory agencies, and in Congress for years.

Breaking up Facebook (and other huge corporations) is necessary to:

  • Reduce monopolistic power and allow the power of the marketplace and competition to rein in harmful practices on privacy, misinformation, manipulation of users, etc.
  • Reduce the almost limitless financial resources of huge corporations, which are used to overwhelm (or buy) our policymaking, regulatory, and judicial processes.
  • Reduce the massive aggregation of consumer data that allows the manipulation of users, including children.

I encourage you to pay at least some attention to the unfolding expose of how Facebook (and social media generally) works and what its effects are, because it has a significant impact on each of us and our families, as well as broad impacts on our society and democracy.

Government regulation of social media is needed to protect children, our democracy, and all of us. Facebook and its CEO Mark Zuckerberg have been skillful at ducking accountability. This must end. For example, Facebook knows of the harm it does to children and how to mitigate it, but it has chosen not to take action because it prioritizes profits over the safety of children (and everything else). Moreover, internal documents disclosed by the whistleblower reveal that in 2020 Facebook studied better ways to market products to preteens, even though it supposedly bars anyone under 13 from having an account. [5]

I encourage you to sign up for the Facebook boycott on November 10 here. Staying off of Facebook and Instagram for a day or two is probably the best way to send the message that we’re not happy with their behavior.

I also urge you to let your U.S. Representative and Senators, along with President Biden, know that you support strong regulation of Facebook (and other social media) to reduce the harm it is doing to us, our children, our society, and our democracy.

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.

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]      Hubbell, R., 10/6/21, “Today’s edition: Progress, at last” (https://roberthubbell.substack.com/p/todays-edition-progress-at-last)

[2]      Verma, P., 10/8/21, “What’s next for Facebook,” The Boston Globe

[3]      Bernoff, J., 10/7/21, “Facebook must be stopped,” The Boston Globe

[4]      Ghaffary, S., 10/5/21, “Facebook’s whistleblower tells Congress how to regulate tech,” Vox (https://www.vox.com/recode/22711551/facebook-whistleblower-congress-hearing-regulation-mark-zuckerberg-frances-haugen-senator-blumenthal)

[5]      Boston Globe Editorial Board, 10/12/21, “If Facebook won’t protect kids, Congress should force the company’s hand,” The Boston Globe

FACEBOOK IS AN EXISTENTIAL THREAT TO ALL OF US, OUR CHILDREN, AND OUR DEMOCRACY

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

This title is NOT an exaggeration: Facebook IS an existential threat to all of us, our children, and our democracy. I’ve been meaning to write a series of blog posts about Facebook and social media in general – and the harm they are doing – for almost a year. I recommend that you watch the award-winning documentary, “The Social Dilemma” (which is free on YouTube until October 31st). It’s produced by the Center for Humane Technology and was an eye-opener for me. (The documentary is 1 hour 34 minutes; there’s also a 2 ½ minute trailer.) The Center provides great resources for parents, teachers, and all of us on how to be intelligent users of social media – and how to protect our children from social media’s potential negative influences.

Facebook is finally getting the attention and scrutiny it has warranted for some time, with a former insider turned whistleblower being the catalyst. The whistleblower, Frances Haugen, had been a product manager at the Civic Integrity unit at Facebook. The unit was dissolved after the 2020 election. She subsequently left Facebook and has shared documents and her personal experiences with the Wall Street Journal, which has done a series of articles based on her information that are called The Facebook Files. She appeared on the 60 Minutes TV show on October 3, 2021. A blog post by Whitney Tilson, an investment professional, includes a series of links to segments of Haugen’s interview on 60 Minutes, links to the Wall Street Journal articles (which are behind a paywall unless you have a subscription or can access them through a library), and a letter from Tilson, as an investor, to Facebook COO Sheryl Sandberg. [1]

I hope you’ve been following, at least at some level, the recent revelations that have laid bare the incredible influence Facebook has on us, including on what we believe and how we feel. We are both the product that Facebook is selling and the customers who are being influenced by the most sophisticated and manipulative marketing strategies and capabilities humankind has ever experienced. [2]

I provide here a very high-level overview of the information about Facebook that’s been uncovered and reported lately, while providing links to the detail. I have written previously about the intentional promotion of disinformation by Facebook, but that is just the tip of the iceberg, as current revelations are making starkly clear.

Facebook is single-handedly controlled by Mark Zuckerberg, who owns the majority of the controlling stock of the corporation. It seems clear that his commitment to generating profits (and increasing his wealth of $134 billion) outweighs everything else. Actions (e.g., likes and shares) and time on Facebook are money in his pocket and the recent revelations indicate that every time a decision was made where accuracy or any other social good was pitted against more clicks and money, Zuckerberg went for the money – despite knowing the  downsides. Facebook’s revenue has soared to $119 billion and the corporation’s market value is up to almost $1 trillion.

Facebook has internal studies and statistics that show, for example, that misinformation gets six times more clicks than factual news and that right-leaning sites produce more misinformation than any other sites. Facebook and Zuckerberg have been promoting misinformation and right-wing sites because more clicks mean more money in their pockets.

Facebook also knows how to elicit emotional responses and how its users respond to likes, shares, clicks on emoji buttons, and other actions on its site. It’s happy to use this knowledge to manipulate its users. Its internal research has concluded that its algorithms, which determine what to promote and show to whom, contribute to mental health and emotional problems among teens, particularly girls. However, it has done nothing to ameliorate this harm. [3]

Facebook seems to be immune to any sense of civic obligation to its roughly 3 billion users. It appears to have no qualms about helping undermine elections and democracies, the free and factual media, and accurate information about Covid and vaccination, which has literally deadly consequences. Zuckerberg has allowed terrorist recruitment, human trafficking, abuses by authoritarian governments, and promotion of hate, violence, genocide, and racism on Facebook. Is it any wonder that in the Russians’ efforts to disrupt U.S. elections and sow discord in our society that Facebook was their most frequently employed tool? [4] Facebook’s negative effects are probably even greater in countries other than the U.S., particularly in authoritarian ones, where the effects may be literally deadly for regime opponents.

Although the concerns that have been raised about Facebook are relevant to all of social media, Facebook is the dominant entity. Its algorithms govern the news we receive and what is promoted and prioritized, which shapes our society and affects our well-being and our democracy. Without government regulation Facebook and other social media will facilitate a race to the bottom driven by our basest proclivities and instincts. This will occur because there is greater profit in spurring anger, encouraging extremism, promoting false information, and triggering emotional responses than there is in creating a safe place for civil discourse and human interactions based on facts and healthy relationships. [5]

My next post will present some options for reining in Facebook, as well as social media in general.

[1]      Tilson, W., 10/5/21, “Facebook whistleblower Frances Haugen; An open letter to Sheryl Sandberg,” (https://empirefinancialresearch.com/articles/facebook-whistleblower-frances-haugen-an-open-letter-to-sheryl-sandberg-come-work-with-enrique-barcelona-pictures)

[2]      Hubbell, R., 10/7/21, “Today’s edition: Nine months of silence,” (https://roberthubbell.substack.com/p/todays-edition-nine-months-of-silence)

[3]      Bauder, D., and Liedtke, M., 10/4/21, “Facebook fed Capitol riot, former manager alleges,” The Boston Globe from the Associate Press

[4]      Alterman, E., 10/1/21, “Altercation: The Facebook threat to democracy – and us all,” The American Prospect (https://prospect.org/politics/altercation-facebook-threat-to-democracy-and-us-all/)

[5]      Hubbell, R., 10/6/21, “Today’s edition: Progress, at last” (https://roberthubbell.substack.com/p/todays-edition-progress-at-last)

THE DAMAGE THE RADICAL REACTIONARIES ARE DOING TO THE SUPREME COURT AND OUR DEMOCRACY AND HOW TO FIX IT

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 radical, reactionary decisions of the Supreme Court’s six-justice majority not only affect society (see my previous post), they have implications for our democracy and the future of the Court itself. Their decisions undermine the credibility of the Court, the rule of law, and American democracy. They mean that government will not be able to regulate businesses, protect workers, or protect people’s civil rights. They mean that our government will not be able to provide a safety net for individuals when they fall on hard times and will not be able to promote public health and infrastructure.

The way the Supreme Court is making decisions is undermining its credibility and eroding respect for it among the public. The majority of the Court’s decisions since 2017 have been on the “shadow docket,” i.e., decisions made without the benefit of written or oral arguments. These decisions are often made and released in the dead of night, and often with an unsigned written statement (aka opinion). These opinions are typically short and fail to present a rationale for the decision. They almost exclusively advance a right-wing political agenda. Prior to 2017, such emergency rulings were rare and were used for uncontroversial decisions or when time was of the essence, such as death penalty executions. In less than three years, the Trump administration filed for at least 28 such rulings (an average of almost 9 per year), while there were only eight in the previous 16 years (an average of one every other year). [1]

The Court is emasculating the rule of law and degrading American democracy. It is failing to enforce federal laws, making decisions without considering the merits of cases, and allowing states to do as they please, even when they violate the Constitution and people’s rights. As Justice Sotomayor wrote in her dissent on the case on the Texas law limiting pregnancy terminations, “The Court should not be so content to ignore its constitutional obligations to protect not only the rights of women, but also the sanctity of its precedents and of the rule of law.” [2]

Justice Kagan, in her dissent on the Texas case, noted that the Court’s recent actions, “which every day becomes more unreasoned,  inconsistent, and impossible to defend,” are undermining the legitimacy of the Court. She noted, by way of example, that the Court failed to intervene to protect the rights of millions of Texas women, despite having intervened aggressively to protect alleged religious rights, such as when a California church had been prohibited from meeting in-person by Covid restrictions. Since Justice Barrett was seated in October 2020, the Court has issued seven emergency injunctions (e.g., blocking state coronavirus restrictions), while only four such injunctions had been issued during the previous 15 years of Justice Robert’s tenure. [3]

Making things even worse, the Supreme Court is treating its shadow docket decisions, promulgated without any reasoning to back them up, as creating new legal precedents that lower courts must follow. According to precedent, shadow docket cases do not establish new law, in part because the merits of the case have not been argued and considered. However, the current Court has had no problem asserting that its shadow docket decisions establish new law and legal precedents, particularly when infringements of religious rights have been alleged.

Given that the Court is ruling inconsistently, ignoring even its own recent precedents, making decisions without hearing or considering the merits of a cases, and promulgating its decisions without justifications, it is clear that the Court is advancing an ideological and partisan political agenda and not a legal one. This dramatically undermines the legitimacy of the Court and powerfully supports the case for Court reform.

In addition to the behavior of the radical, reactionary majority on the Court, the way two of the justices got on the Court also argues for reform. As you probably remember, in the spring of 2016, Senate Majority Leader McConnell (Republican of Kentucky) refused to even consider President Obama’s nomination of Merrick Garland for an open seat on the Supreme Court, supposedly because it was an election year and the decision should be left to the new president. This reduced the size of the Court from nine to eight justice for roughly a year. However, when an opening occurred in September, 2020, also an election year, McConnell and the Republicans were happy to rush through the nomination of Amy Barrett, literally days before the election. So, the Republicans stole two seats on the Court and filled them with radical reactionaries.

These appointments raised issues about the appointment process and the lifetime terms of justices, given that it was the deaths of two sitting justices that led to these openings. However, there are other long-term issues with the Supreme Court. For example, there is no Code of Ethics that covers Supreme Court justices; they are exempt from the ethics rules that apply to other federal judges.

President Biden has appointed a Presidential Commission on the Supreme Court of the United States to study the issues with the Court and the need for reform. Testimony was received from a long list of people, including Harvard Law Professor Michael J. Klarman, who has written a 260-page Harvard Law Review article on the degradation of American democracy and the Supreme Court’s role in it. In his testimony to the Commission, Klarman recommends and provides a strong rationale for: [4]

  • 18-year, non-renewable, staggered terms for justices, so that a seat is filled every two years, and
  • Expanding the Court by four seats immediately.

Others have recommended adding two seats to the Court to make up for the two that were stolen by Republican shenanigans. Robert Hubbell, a retired lawyer, recommends: [5]

  • Expanding the Court, noting that this would require bypassing the filibuster,
  • Limiting the terms of justices,
  • Implementing a code of judicial ethics for the justices, and
  • Limiting the Court’s ability to decide substantive issues on the shadow docket.

I urge you to let your U.S. Representative and Senators, along with President Biden, know that you support reform of the Supreme Court to restore its legitimacy and non-partisan operation. Urge them to push for a strong, substantive report and set of recommendations from the Presidential Commission on the Supreme Court to achieve these goals. Then, we will all need to work to ensure that needed changes in the Supreme Court are implemented.

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.

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]      Richardson, H. C., 9/1/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/september-1-2021)

[2]      Sotomayor, S., 9/3/21, “Sotomayor’s defiant dissent,” The Nation (https://www.thenation.com/article/society/sotomayor-abortion-dissent/)

[3]      Vladeck, S., 9/3/21, “The Supreme Court doesn’t just abuse its shadow docket. It does so inconsistently,” The Washington Post

[4]      Klarman, M. J., 7/20/21, “Court expansion and other changes to the Court’s composition,” Written statement to the Presidential Commission on the Supreme Court of the United States (https://www.whitehouse.gov/wp-content/uploads/2021/07/Klarman-Testimony.pdf)

[5]      Hubbell, R., 9/2/21, “Today’s Edition: Susan Collins should resign in disgrace,” (https://roberthubbell.substack.com/p/todays-edition-susan-collins-should)

THE IMPLICATIONS OF RADICAL, REACTIONARY RULINGS BY THE SUPREME COURT

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

My previous post made the case that six of the nine Supreme Court justices (Alito, Barrett, Gorsuch, Kavanaugh, Roberts, and Thomas) are radical reactionaries both in the content of their rulings and in their decision-making process. This post will outline some of the societal implications of their rulings, particularly the ruling on the Texas law prohibiting most pregnancy terminations.

As you’re probably aware, the Supreme Court blocked a lower court from delaying the implementation of a Texas law restricting pregnancy termination (aka abortion) that is clearly unconstitutional and uses a highly unusual and fraught enforcement mechanism. The Court did so without hearing any arguments on the merits of the case. Implementation of the Texas law, even temporarily, will allow nuisance lawsuits that will probably bankrupt or otherwise put out of business all abortion providers in Texas. The Supreme Court, in an unprecedent action, has allowed immediate implementation of this law despite the facts that it clearly violates a constitutional right and does immediate harm by stopping 85% of pregnancy terminations that happen in Texas.

 The Texas law allows any citizen to sue anyone or any organization that is in any way involved in a pregnancy termination that occurs roughly six weeks or more into a pregnancy. (At six weeks, most women don’t even know they are pregnant yet.) The citizen would get a $10,000 reward or bounty plus reimbursement for legal costs if they win the suit. If the defendant wins the suit, they are not eligible to recover legal costs. This makes a pregnant woman who would like to terminate her pregnancy prey for bounty hunters.

The Texas law encourages and rewards vigilantism, where neighbors sue neighbors. This is the type of “justice” system – with neighbors incriminating neighbors – that totalitarian regimes use to control people. It was used in pre-WWII Germany, in the Soviet Union, and in Iraq under Saddam Hussein, for instance.

This citizen enforcement mechanism was used – as opposed to the normal use of public law enforcement agencies – specifically to bypass federal judicial oversight and inhibit federal enforcement of a woman’s constitutional right to terminate a pregnancy as established by the 1973 Roe vs. Wade Supreme Court decision. As Justice Sotomayor wrote in her dissent, “Because the Court’s failure to act rewards tactics designed to avoid judicial review and inflicts significant harm on the applicants and on women seeking abortions in Texas, I dissent. … This is untenable. It cannot be that a state can evade federal judicial scrutiny by outsourcing the enforcement of unconstitutional laws to its citizenry.” [1]

As historian Heather Cox Richardson wrote in her blog, “The Republican Party is empowering vigilantes to enforce their beliefs against their neighbors.” [2] With vigilantism already escalating in our country, it needs no encouragement. It is occurring at school board meetings discussing mask mandates, it is being used to intimidate election and public health officials, and it was the foundation of the January 6 attack on the Capitol.

Vigilante “justice” and states’ rights (to ignore federal constitutional rights) are what was used to maintain white supremacy in the post-Civil War south. For eighty years, law enforcement in the south depended on your skin color, your gender, and whom you knew. Vigilantes kept Blacks from voting and kept education separate and unequal. Southern vigilantes could literally get away with murder up until the 1960s. [3]

The Supreme Court decision on the Texas pregnancy termination case and decisions on other cases related to religious beliefs and practices are allowing white, Christian religious beliefs to function as civil law. These decisions allow private organizations (e.g., employers and health care providers) and state governments to engage in discrimination and oppression based on religious beliefs in providing (or not providing) women’s health care and services to LGBTQ people, for example. The Texas law encourages and rewards citizens who act based on their religious beliefs about pregnancy termination and sue fellow citizens. [4]

In allowing Texas to implement unconstitutional pregnancy termination restrictions and to avoid federal enforcement of civil rights by empowering citizen enforcement of state laws, the Supreme Court has opened a barn door. This strategy, having been successful at least temporarily in Texas, will almost undoubtedly now be used by other states on this and other issues in ways that violate people’s civil rights. [5]

In summary, the Supreme Court is failing to enforce federal law and uphold civil rights, giving states free rein to ignore the due process and equal protection provisions of the 14th amendment. These are the provisions that allow the federal government to ensure the protections of the Bill of Rights for people, even when a state government tries to undermine them. These Supreme Court decisions mean the federal government cannot protect the rights of people of color, women, religious minorities, or otherwise-abled people. The Supreme Court has handed power over civil rights back to the states and the vigilantes, as it was in the 80 years after the civil war. [6]

It is unclear how this door, now opened, will be closed, but it is clear that reform of the Supreme Court to disempower its radical, reactionary, and ill-gotten majority is an essential part of that process.

In my next post, I will discuss the implications of the behavior of the Court’s radical reactionaries for the legitimacy and future of the Court. I’ll also present possible solutions to the current unprecedented and undemocratic actions of the Court.

[1]      Sotomayor, S., 9/3/21, “Sotomayor’s defiant dissent,” The Nation (https://www.thenation.com/article/society/sotomayor-abortion-dissent/)

[2]      Richardson, H. C., 9/1/21, “Letters from an American blog,” page 2, (https://heathercoxrichardson.substack.com/p/september-1-2021)

[3]      Richardson, H. C., 9/1/21, see above.

[4]      Hubbell, R., 9/2/21, “Today’s Edition: Susan Collins should resign in disgrace,” (https://roberthubbell.substack.com/p/todays-edition-susan-collins-should)

[5]      Hubbell, R., 8/31/21, “Today’s Edition: The U.S. war in Afghanistan is over,” (https://roberthubbell.substack.com/p/todays-edition-the-us-war-in-afghanistan)

[6]      Richardson, H. C., 9/3/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/september-3-2021)

REPUBLICAN HYPOCRISY ON THE FEDERAL DEFICIT

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 Republican Party is guilty of lots of hypocrisy these days, some of it new and some of it old. One of the older elements that’s resurfacing today is concern about the federal government’s annual budget deficit and its overall accumulated debt. One of my real frustrations with the mainstream media is that they rarely call out Republican hypocrisy. They typically report the Democratic and Republican rhetoric as a he said / she said conflict without any historical or factual context.

Therefore, I was pleased to see a front-page story in the Boston Globe on 9/17/21 explicitly calling out the Republicans’ current hypocrisy on the federal deficit. The title and subtitle, no less, highlighted the hypocrisy: “Democrat in office, GOP focuses on the debt; But true to form, Republicans were silent as Trump ran up spending.” [1] What follows is a summary of the article.

Republicans are trying to build support for their opposition to President Biden’s and congressional Democrats’ infrastructure investment bills by saying they’re concerned about the federal budget deficit and overall debt. This is hypocritical because congressional Republicans remained largely silent as the debt grew by $8 trillion (40%) under President Trump in just four years. It’s also inaccurate because the Democrats are planning to pay for most if not all of the costs of the bills with tax increases on wealthy individuals and corporations, along with other revenue increases, so the deficit and debt would not grow as a result.

The hypocrisy is quite blatant because congressional Republicans pushed through a tax cut in 2017 that increased the debt by about $200 billion a year. Trump’s hypocrisy was stunning, given that he had promised during his campaign to balance the federal budget in four or five years. Instead, his four budgets ran deficits of an average of $2 trillion per year! Voters appeared to believe his campaign promise, in part because the mainstream media didn’t provide the context that would have shown it was a lie, particularly in the context of his other promises.

Republicans are saying they won’t vote to increase the federal government’s ceiling on its total amount of debt. However, they raised or suspended the debt ceiling three times when Trump was president. Moreover, most of the increase in the federal debt that has occurred since the debt ceiling was last raised in 2019, occurred under President Trump. Republicans are resurrecting their opposition to increasing the debt ceiling that they exhibited when Obama (a Democrat) was president. Then, they pushed the government to the brink of defaulting on its debt, which would create an unprecedented economic crisis.

This hypocritical opposition to increasing the debt ceiling and to increased spending because it might increase the annual budget deficit reflects a 40-year pattern of Republican presidents and congresspeople creating large budget deficits and then leaving a fiscal and economic mess for Democratic presidents to deal with and clean up. Brian Riedl, a senior fellow at the Manhattan Institute (a conservative, free-market think tank) and a Republican economic and tax policy expert, is quoted in the article as saying, “Republicans are absolutely guilty of hypocrisy in that they focus on the debt during Democratic presidents and then run up spending during Republican presidents.”

[1]      Puzzanghera, J., 9/17/21, “Democrat in office, GOP focuses on the debt,” The Boston Globe

THE RADICAL, REACTIONARY MAJORITY ON THE SUPREME COURT

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

You’ve almost certainly heard about the Texas law prohibiting most pregnancy terminations (aka abortions). It’s blatantly unconstitutional and also radical in multiple ways. I’m not going to discuss the law itself in any detail, rather I want to focus on the behavior of the Supreme Court’s six radical, reactionary justices on this case and others.

Many people refer to the five Supreme Court justices (Alito, Barrett, Gorsuch, Kavanagh, and Thomas) who allowed the Texas law to go into effect and Chief Justice Roberts (who dissented in the Texas case for procedural reasons) as “conservative.” This is not accurate. Although they do fit with political conservatives in favoring free enterprise and private ownership, they do so in a way that ignores the whole post-Depression and post-WWII form of managed capitalism. Somewhat similarly, they only uphold traditional values and social norms if one turns back the clock at least 50 year and probably closer to 100 years. Finally, they are not conservative in terms of being averse to change or innovation, rather they are radical, judicial activists ignoring longstanding precedents and creating wholly new judicial theory and reasoning.

A number of court observers and journalists have taken to calling them “reactionary.” A reactionary holds political views that favor a return to a previous state of society, which they believe possessed positive characteristics that are absent from contemporary society. For example, these justices apparently want to return to the days when:

  • Abortion was banned and women’s roles and decisions were controlled by husbands, restrictive societal norms, and, in some cases, laws.
  • State governments were much more powerful and the federal government couldn’t enforce national laws protecting individuals’ rights, including the rights of people of color, women’s rights, immigrants’ rights, and others’ civil rights.

To call those six justices “radical” also seems appropriate as they are clearly upending fundamental principles, precedents, and processes of the Supreme Court and our system of jurisprudence. They have repeatedly shown a lack of respect for precedents that don’t fit their ideology.

Their radicalism isn’t limited to the Texas case or the substance of their decisions, but is also evident in the processes they have used to make numerous significant rulings. For example, rulings in three recent cases were made without hearing the merits of the cases:

  • The Texas pregnancy termination case: failed to stop implementation of a clearly unconstitutional law with a highly unusual enforcement mechanism – deputizing private citizens to sue – that is intended to evade federal judicial oversight.
  • The case on forcing asylum seekers to stay in Mexico: required the Biden administration to enter into an agreement with Mexico on asylum seekers, despite the fact that the Court has no jurisdiction or way to enforce Mexico’s participation. In addition, for the Court to direct the foreign policy of the U.S. is completely unprecedented and does violence to the separation of powers in the Constitution.
  • The termination of the eviction moratorium case: overturned a CDC-driven executive order that will impact the housing and health of millions of people in the face of a pandemic.

In these three cases, and in numerous others, the Supreme Court has issued rulings with significant effects based on procedural matters without the normal full briefing and arguments, which would provide them vital information needed to make an appropriately considered decision. This seems to be the Court’s new strategy for deciding major cases – ruling on procedural motions without hearing the merits of the cases. These rulings are typically unsigned, which is also unusual. Even Chief Justice Roberts, normally part of the radical, reactionary cabal, criticized the rush to judgement in the Texas case without consideration of the merits of the case, writing in his dissenting opinion, “We are at this point asked to resolve these novel questions … in the course of two days, without the benefit of consideration by the District Court or Court of Appeals. We are also asked to do so without ordinary merits briefing and without oral argument.” [1]

The lack of hearings also avoids a public airing of the issues, arguments, facts, and implications of a case and the Court’s decision. This and the fact that a number of the rulings have been issued outside of normal business hours seem to indicate a desire to minimize news coverage, public awareness, and public discussion of cases.

Both the substance of these rulings (and numerous others) and the Court’s failure to hold hearings make it appear that these decisions are based on ideology and politics, not legal precedents, the law, or the merits of the cases. As Robert Hubbell, a retired lawyer writes: “the Supreme Court has dropped all pretense of due process or respect for precedent … to implement the conservative social agenda … without regard to logic, precedent, or the Constitution.” [2]

Another indication that these decisions are partisan is that the Court had no problem with President Trump’s dramatic and sweeping executive orders but finds President Biden’s less dramatic orders unconstitutional. In the Mexico asylees case, the Court ordered Biden to reinstate an agreement with Mexico that had expired in 2020 before Biden was elected. However, the Court didn’t order Trump to reinstate it. [3] The six radical, reactionary justices appear to be acting aggressively to exert their power in support of a partisan, ideological agenda.

All six of these justices, unless I’m much mistaken, pledged at their confirmation hearings to abide by legal precedents, including previous Supreme Court decisions such as the Roe v. Wade decision, which made it a constitutional right to be able to terminate a pregnancy before fetal viability at about 22 – 24 weeks of pregnancy. It now seems clear that they all lied, meaning they committed perjury given that they were testifying under oath.

In a future post, I’ll review the implications of the radical Texas pregnancy termination law and the Supreme Court’s failure to delay its implementation to allow time for judicial review. I’ll also discuss ways to respond to the Court’s radical, reactionary behavior.

[1]      Hubbell, R., 9/3/21, “Today’s Edition: A judicial coup d’état,” (https://roberthubbell.substack.com/p/todays-edition-a-judicial-coup-detat)

[2]      Hubbell, R., 9/2/21, “Today’s Edition: Susan Collins should resign in disgrace,” (https://roberthubbell.substack.com/p/todays-edition-susan-collins-should)

[3]      Hubbell, R., 8/27/21, “Today’s Edition: The backbone of America,” (https://roberthubbell.substack.com/p/todays-edition-the-backbone-of-america)

HOW THE GOVERNMENT CAN SUPPORT THE ECONOMY AND 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.

Effective governments are critical components of our societal infrastructure. They are needed to combat public health threats such as the coronavirus, to keep people safe, and to provide a safety net for workers and families in economic hard times, among other things. Government programs and actions can provide important supports for our economy and its workers. Economic growth and workers’ pay and employment are inextricably linked as consumer spending, i.e., workers spending their pay, is what drives our economy, representing about two-thirds of all economic activity.

My previous two posts (here and here) focused on efforts to undermine and weaken government. They outlined negative effects of weak government infrastructure and of privatization of public sector work. This post highlights the benefits of government action.

The “Biden Plan,” as the President calls it, uses aggressive federal government action to combat the coronavirus and to stimulate the economy. The first piece of it was an aggressive effort to get people vaccinated along with other steps to reduce the impact of Covid on people’s health. The second major piece, the American Rescue Plan (ARP), was passed in March 2021 and provides $1.9 trillion to combat the pandemic and its harmful effects on workers, businesses, and the economy. It strengthens our healthcare system; provides funding for schools, housing, small businesses, and local governments; and supports low- and middle-income workers by extending unemployment benefits and providing monthly support checks for families with children.

Given the popularity of the American Rescue Plan (75% of voters like it) and support from local and state governments (including a number of Republican governors), it wouldn’t seem to be a partisan issue, but every Republican member of Congress voted against it. Every President, Democrat or Republican, from WWII to 1980 used government actions to support the economy and workers, and to ensure that the rising tide did indeed lift all boats somewhat equitably. [1]

However, since 1980, Republican ideology has opposed such government action, taking the position that government action is unnecessary because the private sector, stimulated by tax cuts, will meet society’s needs even in the face of crises and economic recessions. This ideology claims that cutting taxes, particularly for wealthy individuals and corporations, will stimulate the economy, generate growth that will more than make up for the revenue lost due to the tax cuts, and that benefits will “trickle down” to workers.

Republican Presidents Reagan, George W. Bush, and Trump all cut taxes and in every case the economy did NOT boom, tax revenue did NOT grow, and workers did NOT benefit, but the deficit DID grow substantially. Republicans’ concern about the federal government’s deficit seems to only apply to Democratic initiatives. Moreover, Republican President George H. W. Bush promised not to raise taxes when he ran in 1988, but when the previous Reagan tax cuts led to dramatic growth of the  deficit, Bush raised taxes to reduce the deficit – for which he was basically disowned by the Republican Party.

According to Republicans, the American Rescue Plan and any government actions like it will (supposedly) kill economic growth and job creation, leading to high unemployment and growing deficits.

However, recent economic data show that Republican predictions have NOT come true. Rather, the data show growth in the number of jobs, falling unemployment, increased pay for workers, a growing economy, and a falling deficit. This provides solid validation for the government actions President Biden and Democrats in Congress have taken in response to the pandemic and its negative effects on workers and the economy. By the way, economic and job growth also occurred after Democratic President Clinton raised taxes. Moreover, the resultant increase in revenue and economic growth made the deficit disappear! Both the current experience and that under President Clinton clearly debunk Republican fear mongering about tax increases, a strong safety net, and government intervention in the economy.

Perhaps convinced by these data, 19 Republicans in the U.S. Senate (out of 50) along with all 50 Democrats voted for a $1 trillion infrastructure bill that will make major government investments in roads, bridges, railroads, mass transit, water systems, pollution clean-up, and high-speed Internet access among other things. This spending over the next ten years is projected to create 3 million jobs.

However, Republicans are still unified in opposition to an additional $3.5 trillion infrastructure bill that would address climate change and more directly support workers and their families through funding for education, health care, housing, paid family leave, elder care, early education and child care, and making the temporary child tax credit of the ARP permanent. This last provision alone is projected to cut child poverty in half – disproportionately benefiting children of color – and would keep families with children from slipping back into poverty if the temporary ARP child tax credit were allowed to expire. The climate change investments in clean energy and reduction of carbon emissions are likely to save trillions of dollars in damages and mitigation measures that would occur if climate change continues unabated.

In response to Republicans’ concerns about the costs for the infrastructure bills, Treasury Secretary and former Chair of the Federal Reserve Janet Yellen said: “My largest concern is not: What are the risks if we make these big investments? It is: What is the cost if we don’t?” [2]

I encourage you to let your U.S. Representative and Senators, along with President Biden, know that you support government investments in our infrastructure to support a strong economy, and workers and their families as well.

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.

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]      Richardson, H. C., 8/10/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/august-10-2021)

[2]      Richardson, H. C., 8/10/21, see above

WE NEED SOLID GOVERNMENT INFRASTRUCTURE 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.

Governments are critical components of our societal infrastructure. Effective governments are needed to deliver the services, supports, and public amenities that Americans want and need. For 40 years, small government advocates – led by Republicans but with the acquiescence or assistance of many Democrats – have successfully shrunk and weakened government infrastructure and capacity. (My previous post focused on the targeting of public employees.)

One reason for the attacks on government infrastructure has been to privatize government functions so the private sector can make profits by performing work previously done by public employees. This has always been justified by the claim that the private sector will do things more efficiently and save taxpayers money. However, numerous real-life experiences have shown that this is often not the case.

The Internal Revenue Service (IRS), the nation’s tax collector, is a classic example of the harm that results from privatizing and weakening public infrastructure. In 2004, President G. W. Bush privatized the efforts to collect hundreds of billions of dollars owed to the IRS, claiming the private sector would do a better job. The private collectors brought in $86 million from the easy to win cases. The IRS then brought the work back in-house and its agents collected about $140 million in just a few months from more difficult cases that the private collectors had skipped over. This experience demonstrated that privatizing the collection of owed taxes was inefficient and a waste of money. [1]

Nonetheless, the Republicans persisted in slashing the budget, staff, and enforcement capacity of the IRS. From 2010 to 2018, the Republicans slashed the IRS’s budget by 20% and its staff by 22%. The number of audits of taxpayers with over $1 million in income dropped by 72% and money collected from audits dropped by 40%. Now, President Biden is proposing increasing funding for the IRS and its enforcement activities, which will more than pay for itself in increased tax collections. (See my previous post on the IRS for more details.)

Other examples of privatization that have been problematic include:

  • Privatized prisons and detention centers are less safe, less secure, and more costly than government-run facilities. (See my previous posts on this here and here.)
  • Disaster response to hurricanes Irma and Maria in Puerto Rico was privatized by the Federal Emergency Management Administration because of insufficient staff. The results were substantial delays in the delivery of critical supplies, cost overruns of $179 million, and another $50 million in questionable costs.
  • Paying bills, monitoring quality of care, and transmission of funds to states for Medicaid and Medicare have been privatized leading to a labyrinthian maze that is challenging to navigate when problems or questions arise.
  • Housing for refugees arriving at the Mexican border has been privatized resulting in an unresponsive amalgamation of contractor-run shelters.

With privatized services, quality problems and cost overruns are frequent, but it’s the government that gets blamed. A classic example is the problem with the Affordable Care Act (aka Obama Care) website rollout. The problems stemmed from the 62 contracts with private firms that were hired to build the website. The government’s failing, beyond perhaps the decision to privatize this work, was that it didn’t have the capacity to effectively manage this complex set of private contractors.

Good management and oversight of contractors requires time and skill, which costs money. Privatization deals rarely provide for this because the focus is on cutting costs. So, the government can end up with private contractors managing other contractors. Contractors also end up writing policies – that sometimes benefit themselves. Private employees under long-term contracts end up sitting in the same offices and doing the same work as government employees, often at significantly greater cost. Members of the public dealing with the government have no idea whether they are interacting with a government employee or a contractor, but if things don’t go well the government gets the blame.

The number and complexity of privatization arrangements and a lack of transparency about some of them (often very intentional) mean that the number of private, contracted personnel and their cost to taxpayers are impossible to accurately aggregate. The effectiveness and efficiency of their performance is also often impossible to determine.

Reversing the trend toward privatization will be difficult for multiple reasons, but partly because companies with federal contracts are active lobbyists and campaign contributors. A 2011 study found that of the 41 companies making the most in campaign contributions over the previous 20 years, 33 had federal contracts.

I encourage you to let your elected officials at all levels, particularly the federal and state levels, know that you support strong government infrastructure as an essential component of a well-functioning society. We need President Biden and Members of Congress to support the rebuilding of government infrastructure and capacity, and to oppose privatization of core government responsibilities. The importance of this has become particularly evident during the pandemic, when the capacity of government public health agencies was essential to keeping people safe, through everything from economic assistance to eviction moratoriums to the distribution of vaccines and personal protective equipment. As Bob Kutner wrote in a recent blog from The American Prospect, “Face it, the only way to keep relatively safe is to elect people to run the government who believe in the government, and who operate it competently and relatively free of corruption.” [2] In other words, the only way to have the effective government that we need is to have solid, well-run government infrastructure.

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.

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]      Kettl, D. F., & Glastris, P., 7/1/21, “Memo to AOC: Only you can save the government,” Washington Monthly (https://washingtonmonthly.com/magazine/july-august-2021/memo-to-aoc-only-you-can-fix-the-federal-government/) This blog post is primarily a summary of this article.

[2]      Kuttner, R., 7/2/21, “The Condo, the Inspector, the Market, and the Government,” Today on The American Prospect blog (http://americanprospect.activehosted.com/index.php?action=social&chash=61b4a64be663682e8cb037d9719ad8cd.839&s=6009966078bda0f5056f960a346ead8a)

WE NEED STRONG GOVERNMENT INFRASTRUCTURE

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.

Governments are critical components of our societal infrastructure. Effective governments are needed to deliver the services, supports, and public amenities that Americans want and need. As I noted in my last post, an important reason that massive unemployment insurance fraud occurred during the pandemic was that government infrastructure wasn’t up to the task of effectively administering expanded benefits. State computer systems and personnel didn’t have the capacity to accurately enroll and pay the wave of new beneficiaries. And law enforcement lacked the capacity to identify and punish fraudulent applicants.

For 40 years, small government advocates – mostly Republicans but with the acquiescence or assistance of many Democrats – have successfully pushed to shrink government infrastructure and capacity. President Reagan (a Republican) asserted in 1980 that government was the problem and not the solution – a claim that went unanswered by Democrats. This marked the beginning of a concerted effort by Republicans to downsize the federal government – except for the Defense Department – in terms of number of personnel, regulatory capacity and responsibility, provision of a safety net, emergency response and public health capacity, scientific and policy analysis expertise and data, etc. President Clinton (a Democrat) in 1992 declared the end of the era of big government and of welfare as we’d known it – supporting and furthering the weakening of government infrastructure.

One component of this attack on government infrastructure has targeted public employees, both to reduce their numbers and to denigrate them. One reason for this has been to discredit government by claiming that its employees are inefficient, incompetent, and overpaid. Another reason has been to undermine unions, which today are strongest in the public sector given the very successful efforts by corporatists and oligarchs to undermine private sector unions. (The percentage of private sector workers represented by a union has fallen to 20% of what it was 60 years ago – from over 30% to under 7%.)

Federal civilian employment is a little over 2 million, roughly the same as it was in 1966, despite a quintupling of federal spending and a population that has grown by 68%. The government has added agencies in that time such as the Environmental Protection Agency, the Department of Homeland Security, and the Department of Energy. In these new agencies and others, the government’s roles and responsibilities have grown and have also become much more complex. Nonetheless, the number of federal employees has not grown to meet these needs. Moreover, under the Trump administration, employment at the Department of Labor declined 11%, 9% at the State Department, and 8% at the Education Department, although their workloads were not declining. Scientists were a particular target of the Trump administration. For example, the Agriculture Department had 50% of its research jobs vacant under Trump. [1]

To maintain the services that Americans want and the functions government must perform (such as tax collection) with a limited number of federal employees has required a dramatic increase in the number of consultants and contractors working for the government. This has become big business for many companies including some of the well-known consulting companies such as McKinsey and Booz Allen. Booz Allen now gets 96% of its revenue from federal government contracts.

There are now over twice as many private contractors working for the federal government as there are employees. The Government Accountability Office has warned for years that the extensive use of contractors was eroding the government’s ability to govern, including the making of important policy decisions. President Obama worked diligently to reduce the number of contractors, having noted that they are “often unaccountable and often less efficient than government workers.” His administration succeeded in reducing the ratio of contractors to employees from 3.38 to 2.34. Trump reversed this trend and the contractor workforce grew by about 1.4 million people in his four years as President.

A 2010 study by the Project on Government Oversight examined 35 government job categories and found that for 33 of them government employees were less expensive than private contractors even when federal fringe benefits were included. For one job category, contractors were almost five times more expensive.

As a result of the weakening of the federal government’s infrastructure and the extensive use of privatization and contractors, the rate of highly visible failures of government services as risen from 1.6 per year in the 1980s to 4.3 during the Trump administration.

My next post will more closely examine the privatization of government functions and its effects.

Note: In addition to personnel, computer systems are another essential component of government infrastructure. Many government computer systems, at the federal and state levels, are out-of-date, if not antiquated, due to a lack of investment over the last 40 years. As a result, many government computer systems can barely perform essential functions, are difficult to update, and are unable to share data with other systems. This is a story for another day and another post or two.

[1]      Kettl, D. F., & Glastris, P., 7/1/21, “Memo to AOC: Only you can save the government,” Washington Monthly (https://washingtonmonthly.com/magazine/july-august-2021/memo-to-aoc-only-you-can-fix-the-federal-government/) This blog post is primarily a summary of this article.

CAUSES OF MASSIVE UNEMPLOYMENT INSURANCE FRAUD

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 massive unemployment insurance (UI) fraud that occurred during the pandemic was caused by a failure to invest in public infrastructure (broadly defined). Three types of public infrastructure were not adequate to accurately perform and police the distribution of enhanced unemployment benefits that were put in place due to the high job losses of the pandemic.

  1. States’ unemployment computer systems that pay out UI benefits are, in general, antiquated.
  2. Law enforcement capacity to detect and punish UI fraud is inadequate.
  3. Government regulation and oversight of Internet platforms, as well as detection and punishment of Internet-based criminals, has lagged far behind their explosive growth and sophistication.

The convergence of these three failures to invest in public infrastructure allowed as much as $400 billion in fraudulent UI claims to be paid – a staggering loss for taxpayers. This is perhaps the largest wave of fraud in U.S. history. Fraudulent claims for UI benefits occurred through:

  • The use of stolen identities,
  • The use of false identities, and
  • The filing of multiple claims for the same identity, usually in multiple states.

Warnings of weaknesses in states’ UI systems, which often use aging or obsolete technology, have been on-going since a 1998 federal Labor Department’s Inspector General’s report about the proliferation of UI fraud. In 2002, a subsequent report highlighted the use of stolen or fake identities to apply for UI benefits and the repetitious use of an identity across multiple states. A 2015 report, detailed systemic weaknesses that made states’ systems vulnerable to fraud. Both the Obama and Trump administrations proposed efforts to boost information sharing among states and with the federal government to reduce fraud, but Congress failed to enact their proposals. [1] Despite over 20 years of warnings, needed investments in this public infrastructure haven’t been made.

State funding for UI administration has fallen in recent years, in part because unemployment was low. At the start of 2020, as the pandemic hit, states’ funding for UI administration was at a 30-year low and states had cut funding to detect fraud. Federal regulations require states to cross-check UI benefit applicants against other state and federal databases to determine eligibility and to detect fraud. However, many of the states’ systems do not have the technological capability to do those cross-checks efficiently and electronically. Furthermore, the surge of UI claims during the pandemic overwhelmed the capacity of state systems from both a technological and a human resources perspective. As a result, 20 states did not perform all of the required cross-checks and 44 states did not perform all the recommended ones.

Budget cuts have also occurred at the federal level. Between 2012 and 2020, the number of criminal investigators at the Labor Department declined by 28%.

It is projected that from March 2020 to September 2021 (when enhanced federal UI benefits expire) roughly $1 trillion in UI benefits will have been paid out – which is done through state UI systems using state and federal funds. A very conservative estimate is that $100 billion of this will represent fraudulent payments and some experts think the number could be as high as $400 billion.

Multiple Internet platforms host forums and ads explicitly offering tips and techniques, often for a price, for obtaining UI benefits fraudulently. For example, the messaging app Telegram, hosted dozens of chat forums, some of which had thousands of participants, that provided state-specific instructions on how to file fake UI claims and how to avoid fraud detection efforts. These guides provided lengthy step-by-step instructions, with screenshots, on how to enter information. One Telegram user, with the handle “VerifiedFraud,” provided regular updates to his 1,300 chat room participants on how to file state-specific claims and avoid fraud detection as states enhanced their anti-fraud efforts.

In addition, these Internet sites also regularly offer stolen identities for sale. Ads would offer an identity for sale for $70 along with $200 for detailed instructions on how to use the information to defraud a specific state’s UI system. (Incidentally, the chats also reflected serious concerns about fraud by the sites, e.g., that the instructions purchased might not work.)

This UI fraud represents part of an explosion of Internet-based crime that has occurred over the past 25 years. Much of this criminal activity is based on the use of stolen or fraudulent identities, which are often used to file claims for public benefits. From 2010 to 2019, over 2,000 large-scale data breaches of business and government sites have occurred that have accessed 6.9 billion records with personal identities. In 2020, nearly 400,000 complaints of identity theft were reported, up from 13,000 in 2019. Law enforcement needs to be beefed up, both in capacity and sophistication, to reduce identity theft and Internet-based crime.

The scale of the UI fraud is truly mind-boggling. During the pandemic, the number of UI claims far exceeded the number of jobs lost. From March to December of 2020, the number of UI benefit claims was over 110 million while 38 million workers were out of a job or underemployed at the peak of the pandemic. (A small piece of this discrepancy is explained by the fact that if a person lost more than one job during this period, they could legitimately claim UI more than once.) In five states, the number of UI claims was larger than the entire civilian workforce. Maryland reported detecting 508,000 fraudulent UI claims in the six weeks from the beginning of May through mid-June of 2021. In Vermont, 90% of claims in some months were determined to be fraudulent. In Rhode Island, 43% of claims in March were suspected cases of fraud. California confirmed that 10% of its UI payments were fraudulent and it is investigating another 17%. In Washington State, auditors have identified 250,000 potentially fraudulent claims costing $1.1 billion.

The most fraud-prone piece of UI benefits was the federally funded Pandemic Unemployment Assistance (PUA) program, which funded 39 weeks of benefits for workers typically outside of UI systems such as self-employed individuals, “temporary” contractors, and gig workers. Congress did not require the normal verification of prior income and employment for the PUA program, so it was ripe for fraud. Pennsylvania estimated that 84% of its PUA claims were fraudulent and California found that 95% of its confirmed cases of fraud were PUA claims.

The Biden Administration is taking steps to reduce fraud in UI claims. The Labor Department’s Inspector General’s office is getting increased access to states’ UI payment date so they can more quickly and efficiently look for fraud. The $1.9 trillion coronavirus stimulus bill passed in March contains $2 billion to help states modernize their UI systems. There have been some prosecutions of individuals who are repeat offenders, often not just of UI fraud but also of tax and other fraud. Furthermore, a company called ID.me, which verifies claimants by having them submit pictures to match to those in identifying documents, has been hired by 27 states since mid-2020 and the Biden Administration is providing $1 billion to expand its services to other states. The experience with ID.me has highlighted the degree of fraud. In New York, new claims under the PUA program fell by 89% after ID.me was implemented in late March. Data from five states indicated that 50% of UI claimants did not respond when asked by ID.me to submit a picture to confirm their identity.

So, investments in this public infrastructure are being made – better late than never – to improve fraud detection and reduction in state UI systems and to enhance law enforcement. However, the regulation and oversight of Internet-based entities seems to be largely unaddressed. Although some platforms and sites have been shamed into taking some steps and shutting down some users by unfavorable publicity, this is not a long-term or efficient solution. The federal government needs to enhance its regulation and oversight of Internet-based entities whose explosive growth and sophistication resulted in massive fraud in the UI system during the pandemic.

[1]      Podkul, C., 7/26/21, “How unemployment insurance fraud exploded during the pandemic,” ProPublica (https://www.propublica.org/article/how-unemployment-insurance-fraud-exploded-during-the-pandemic) This blog post is primarily a summary of this article.

THE RADICALS ON THE SUPREME COURT STRIKE AGAIN

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 current “conservative” majority on the Supreme Court is actually a group of ideologically-driven, radical, judicial activists who have no intention of honoring precedents, despite their promises during confirmation hearings to do so. Although some of their radical precedent-breaking decisions get covered by the mainstream media, such as the recent voting rights case and the upcoming decision on pregnancy termination, many of them do not.

A recent Supreme Court case, known as Cedar Point Nursery vs. Hassid, involves the ability of union organizers to visit farms to talk to farm workers (as allowed under a 1975 California regulation). It’s a very significant decision that got very little attention in the mainstream media. A 1975 California regulation has required corporate farmers like Cedar Point (a 300-acre strawberry farm) to allow union organizers on its property to talk to workers for up to three one-hour periods on up to 120 days out of a year (one hour each before work, at lunch time, and after work to avoid interrupting work). Cedar Point sued claiming this was a government seizure of their property without compensation and was a violation of the Fifth Amendment (which states that “No person shall be … deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.”). Cedar Point claimed that this was a “taking” of its property because it is deprived of the “right to exclude” trespassers from its property, which, it claimed, is fundamental to true property ownership rights.

A lower court had ruled against Cedar Point, but it appealed to the Supreme Court. The Supreme Court ruled 6 to 3 in favor of Cedar Point, finding that the regulation was a “taking” of private property and therefore Cedar Point was entitled to compensation. The six radical “conservative” justices were the majority.

This ruling overturns important elements of a 1978 Supreme Court precedent. That ruling established a framework for evaluating whether a governmental restriction on personal property rises to the level of a “taking”. The framework’s criteria include the economic impact of the law or regulation and the extent of its interference with a business. The requirements of the California regulation specifically minimized these impacts and had been in place and operating since 1975.

This ruling has potentially far-reaching implications. For example, a property owner’s “right to exclude” is the argument segregationists used to defend their exclusion of Blacks from places of business and other private venues. By giving new life to this argument (which the Supreme Court rejected in 1964), Roberts and his six-justice majority are opening the door to a whole range of lawsuits against anti-discrimination laws. Sooner or later the argument will probably be made that preventing a business, a private club, or an employer from excluding men or women, pregnant women, people of color (POC), or LGBTQ+ people is a “taking” of property rights. Also, it may well be argued that fair housing laws are a “taking” because they limit landlords’ “right to exclude” people, such as POC, LGBTQ+ people, families with children, or renters with a low-income governmental housing subsidy. [1]

Furthermore, worker safety inspectors from the Occupational Safety and Health Administration (OSHA), food safety inspectors from the Department of Agriculture, and pollution inspectors from the Environmental Protection Agency could be banned from companies’ property unless the companies are compensated. Although some language in the decision written by Chief Justice Roberts would appear to allow these inspections without compensation, challenges to them are likely. The possibility of challenging endangered species laws that require landowners to protect a species’ habitat has already been raised and a challenge to anti-pollution regulations would seem to be possible as well under the Supreme Court’s redefinition of what constitutes a “taking”.

In the Cedar Point decision, the six radical “conservative” justices on the Supreme Court have again shown their willingness to toss aside well-established precedents and to prioritize the rights of property owners over the civil rights of individuals. This decision may well lead to a variety of challenges from property owners – including landowners, landlords, employers, and businesses – to laws and regulations that protect civil rights, the safety of workers and consumers, and the environment, including initiatives to counter global warming and climate change.

[1]      Mystal, E., 6/24/21, “Yesterday’s union-busting Supreme Court decision was a segregationist throwback,” The Nation (https://www.thenation.com/article/society/cedar-point-court/)

HOW THE RICH GET RICHER #4

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 inability of the Internal Revenue Service (IRS) to enforce tax laws has resulted in a high level of tax evasion by wealthy individuals and corporations. Some experts estimate that as much as $1 billion a year in taxes owed are not paid.

As the country’s tax collector and tax enforcer, the IRS has never been a popular agency among the public or politicians. However, the importance of the IRS’s work in enforcing tax laws, maintaining a fair and functional tax system, and collecting the revenue the government needs to operate had been broadly respected.

This changed when Republicans gained control of the U.S. House of Representatives and Newt Gingrich became the House leader in 1994. Republicans began vilifying the IRS and using “abolish the IRS” as a sound bite. Republican presidential candidates, including Sen. Lugar in 1996 and Sen. Cruz in 2016, made abolishing the IRS a central policy proposal. In 1998, Republicans introduced a bill in Congress to repeal the Internal Revenue Code (the country’s tax laws) and abolish the IRS. [1]

The Republicans have held congressional hearings on alleged abuses by the IRS. Despite the fact that in most cases investigations by the Government Accountability Office (GAO) and others have debunked the alleged abuses, the IRS’s reputation has been seriously undermined. This gave Republicans cover for passing laws weakening the IRS and its tax enforcement.

Beginning in 2010, Republicans in Congress undertook a multi-year initiative to cut the IRS’s budget and enforcement capacity. Since 2010 when its budget peaked at $14 billion, the IRS’s budget has been cut by about 20% (adjusted for inflation). Its staff has been cut by nearly one-quarter to 76,000 full-time employees and the number doing enforcement has fallen from 23,500 to 6,500, a 72% reduction. [2] It has the fewest auditors it has had since the 1940s and it has the oldest computer technology in the federal government.

The IRS recently announced a backlog of 35 million unprocessed tax returns, three times the number from a year ago and four times what it was in 2019. This means taxpayers have to wait longer for their refunds, payments from the Earned Income Tax Credit to low-income families will be delayed, and some transactions, like mortgage approvals, that require current income tax documentation will be delayed. It also revealed that only 3% of the calls to its most popular, toll-free hotline reach a real person. Despite its challenges, it has processed 137 million individual tax returns and sent refunds of more than $281 billion.

Tax obligations expire (i.e., become uncollectible) after ten years if the IRS doesn’t pursue them. In 2017, $8.3 billion of tax obligations expired, up from $482 million in 2010 (a 17-fold increase). Investigations of people who didn’t file a tax return have fallen from 2.4 million in 2011 to 362,000 in 2018 (down 85%). Similarly, collections from people who file but don’t pay have dropped dramatically. In 2017, the IRS conducted 675,000 fewer audits than in 2010, a 42% drop in the audit rate. The audit rate has dropped roughly 70% on those with incomes over $200,000 and but only about 40% for those with incomes under $200,000. This is a key contributor to increased tax evasion by the wealthy.

The impact of the IRS’s budget cuts has been exacerbated by substantial new responsibilities that it has been given under the Affordable Care Act and the response to the pandemic. In responding to the pandemic, the IRS has been tasked with distributing three rounds of relief payments, implementing changed rules on unemployment benefits and tax credits, and, most recently, sending out monthly checks to most families with children. With a significantly reduced budget and staff, it has been expected to do all of these things while trying to maintain its core business of processing tax returns. [3]

President Biden has proposed increasing the budget of the IRS by $40 billion over ten years to reduce tax evasion and generate revenue to help pay for infrastructure investments. He estimates that this increased IRS funding would raise government revenue by $140 billion over those ten years. The Congressional Budget Office (CBO) estimates added revenue of $103 billion and others have other estimates, but everyone agrees that increased enforcement would generate significant revenue. It would also make our tax system fairer by reducing tax evasion, which is largely done by wealthy individuals and corporations. However, it might well take five years to make the upgrades to the IRS’s computer systems and to hire and train the new staff needed to achieve these results.

Initially, the Republicans who were part of the bipartisan group of 21 Senators working on the infrastructure investment bill endorsed the increased funding for the IRS, but now they are backing away from it after hearing opposition from some of their wealthy backers.

Support for increased funding for the IRS has come from five former Secretaries of the Treasury, from both Republican and Democratic administrations. They state that increased funding for the IRS would “raise significant revenue and create a fairer, more efficient” tax system. [4]

The IRS and our income tax system depend, in large part, on the voluntary compliance and honesty of taxpayers. If taxpayers’ come to believe that the tax system is not fairly administered, voluntary and honest tax compliance is likely to decline. This could have dire implications for government revenue and for the IRS’s ability to do its job. It is important that the public believe that people pay the taxes the law says they owe. This encourages compliance with tax laws even if the overall perception is that the wealthy are not paying their fair share under our current tax laws. Then, the focus can be on making our tax laws fairer.

I urge you to contact your U.S. Representative and Senators and to ask them to support additional funding for the IRS so it can effectively enforce our tax laws. 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 thank him for proposing increased funding for the IRS because this will mean it can more effectively implement our tax laws. 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]      Kiel, P., & Eisinger, J., 12/11/18, “How the IRS was gutted,” ProPublica and The Atlantic (https://www.propublica.org/article/how-the-irs-was-gutted)

[2]      Puzzanghera, J., 7/5/21, “Aggressive IRS could help with roads bill,” The Boston Globe

[3]      Stein, J., 6/30/21, “IRS faces 35 million unprocessed tax returns as backlog swells, watchdog says,” The Washington Post

[4]      Puzzanghera, J., 7/5/21, see above

TODAY’S VOTER SUPPRESSION IS HISTORY REPEATING ITSELF

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 efforts of states to suppress voting of Blacks (and other targeted groups that tend to vote for Democrats) are an historical repeat of what happened after the Civil War. These and other efforts that assert states’ power to restrict individuals’ rights are confronting the 14th Amendments’ provisions (from 1868) that give the federal government the power to protect individuals’ rights in the face of state efforts to deny them. Historian Heather Cox Richardson’s daily blog puts these current events in the perspective of our history, which is a very valuable insight to have.

The Declaration of Independence, when it stated “that all men are created equal,” meant white men. Nonetheless, this was a radical concept at the time – that no man’s birthright made him better than any other man. The Civil War was fought, in effect, to maintain a system that elevated America’s white men above African Americans, Native Americans, other men of color, and even Irishmen. As in the mid-1800s, we are now facing efforts that reject the principle of the equality of all human beings and seek to recast America as a country where certain people are better than others. These efforts are being led by white men for the most part, and are empowered by a relatively small group of wealthy white men (and a few women). [1]

In 1865, the 13th Amendment to the U.S. Constitution banned slavery in an important step toward equality. However, this did not stop white men in the South from working to establish systems that continued to make African Americans unequal and subservient to whites. These white men worked to deny African Americans the right to vote, to testify in court, and to sit on a jury. The infamous 1857 Dred Scott Supreme Court decision furthered this effort by denying citizenship to African Americans. The contorted opinion for the 7 to 2 decision was poorly reasoned and written by Chief Justice Roger Taney. These steps to institutionalize inequality occurred despite the fact that the 1870 Census would count African Americans as whole persons for the first time. Ironically, this would give the southern states more representation and power in Congress and in the Electoral College. [2]

To counter efforts to keep African Americans subservient, in July 1868, the 14th Amendment was passed, declaring that “All persons born or naturalized in the United States … are citizens of the United States and of the State wherein they reside.” It guaranteed all citizens due process and equal protection under the law. To counter white southern men’s and the Dred Scott case’s assertion of states’ rights to write laws that determined who could vote, among other things, the 14th Amendment gave the federal government the power to protect individuals’ rights when state legislatures passed laws that were discriminatory and infringed on those rights.

Nonetheless, two months later in September 1868, the Georgia legislature voted to expel the 33 newly elected African American state legislators. In 1870, with African American voting reduced by the terrorism of the Ku Klux Klan, African Americans were not elected. Similar events took place in other southern states. [3]

In response, the federal Department of Justice was created in 1870 with a primary mission of stopping the Ku Klux Klan (KKK) and its suppression of the rights and voting of African Americans. The KKK was a domestic terrorist group then as it is today.

In February 2021, Black legislators in Georgia opposed proposed voting restrictions noting that they reminded them of the 1870s when Jim Crow laws and lynching were used to deter African Americans from voting. Nonetheless, Georgia legislators passed the voting restrictions. Although the means have changed, they are still presented as supposedly race-blind restrictions. However, the fact that white men (for the most part) are rewriting the rules of our democracy to protect white power is unchanged. Similar actions are taking place in other states, not all of which are in the South.

There are striking similarities between the voting suppression efforts of the late 1800s and what’s happening today. For example, in 1890, the U.S. House of Representatives passed a bill empowering the federal government to oversee voter registration, voting, and ballot counting in the South. Then, Senate Democrats blocked its passage by staging the first of many southern-led filibusters that killed civil rights legislation.

The civil rights laws and court decisions of the 1950s, 1960s, and 1970s are based on the 14th Amendment giving the federal government the power to protect individuals’ rights. For example, the Brown vs. Board of Education decision that outlawed public school segregation and separate but supposedly equal treatment of Blacks, and the Loving vs. Virginia decision legalizing inter-racial marriage, were possible because of the 14th Amendment.

Opponents of civil rights laws and decisions revived the post-Civil War states’ rights arguments in the 1960s and 1970s. They began advocating for “originalism” in interpreting the Constitution when making court decisions. “Originalism” asserts that the Constitution should be interpreted as its writers envisioned it at the time they wrote it and that this would mean much stronger state governments and a weaker federal government, including in the establishment and enforcement of individuals’ rights.

In 1987, President Reagan nominated an “originalist,” Robert Bork, to become a Supreme Court Justice. He was rejected on a bipartisan basis. Bork had advocated for a rollback of Supreme Court civil rights decisions and of federal protections of individuals’ rights under the 14th Amendment. As Senator Ted Kennedy pointed out, rolling back such protections would not only raise the specter of re-segregation, but also the reduction of women’s rights to reproductive health services, citizens’ protections from rogue police officers, the teaching of evolution in schools, protection from censorship, and other individual rights.

Nonetheless, today’s Supreme Court is dominated by “originalists” and the individual rights protections of the 14th Amendment for voting, women’s and LGBTQ people’s health services, and the teaching of factual material, for example, are again being challenged by state governments, led mostly by white men.

On July 1, 2021, by a 6 to 3 vote, the Supreme Court decided that the state of Arizona did not violate the 1965 Voting Rights Act or the 14th or 15th Amendments with voting restrictions that disproportionately affect non-white racial or ethnic groups. President Biden stated that this “decision by the Supreme Court undercuts voting rights in this country and makes it all the more crucial to pass the For the People Act and the John Lewis Voting Rights Advancement Act to restore and expand voting protections. … Our democracy depends on it.” [4] However, to pass these bills, which have already passed in the House, the Senate will have to either eliminate or limit the use of the filibuster to block them. The Republicans have made it clear that they have no intention of providing any support for these bills.

I urge you to contact your U.S. Senators and ask them to support the For the People Act and the John Lewis Voting Rights Advancement Act, and to support eliminating or limiting the filibuster as the only way to pass these bills. The protections for voting rights in these bills are critically important to our democracy. You can find contact information 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 support eliminating or limiting the filibuster as the only way to pass these bills that he’s said our democracy depends on. 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]      Cox Richardson, H., 7/3/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/july-3-2020-bad)

[2]      Cox Richardson, H., 7/9/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/july-9-2021)

[3]      Berman, A., 6/2/21, “Jim Crow killed voting rights for generations. Now the GOP is repeating history,” Mother Jones (https://www.motherjones.com/politics/2021/06/jim-crow-killed-voting-rights-for-generations-now-the-gop-is-repeating-history/)

[4]      Cox Richardson, H., 7/1/21, “Letters from an American blog,” (https://heathercoxrichardson.substack.com/p/july-1-2021)

HOW THE RICH GET RICHER #3

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 Internal Revenue Service’s webpage on Individual Retirement Accounts (IRAs) says, “IRAs allow you to make tax-deferred investments to provide financial security when you retire.” However, they allow the wealthy to do much more.

When IRAs were first created in 1974 and then expanded to all workers in 1981, the goal was to encourage saving for retirement by offering a tax incentive, given that Americans were notoriously bad at saving. Initially, the maximum annual contribution was $2,000. It’s now $6,000 or $7,000 if one is over 50. The contribution can be deducted from one’s income, so it isn’t taxed up-front. Tax on the increased value of the investments in the IRA is deferred until the money is removed from the IRA. Money had to be taken out of the IRA starting at 70 ½ years of age (now 72) at a rate the would be expected to deplete it within the lifespan of the owner of the IRA. All earnings and any contributions that had been deducted from income up-front are subject to income tax, which for most taxpayers will probably be at a low rate due to lower income in retirement than when working. This all made good sense and was good policy.

Then came the Roth IRA in 1997. Contribution limits were the same as for the traditional IRA, but the contributions were subject to income tax up-front. However, when money is taken out of a Roth IRA there is NO income tax due on the increased value of investments nor on the contributions. There also is no requirement that money be taken out in one’s lifetime.

The wealthy and their tax / financial advisers quickly recognized that this was a huge opportunity for tax avoidance. It’s clear that some policy makers were aware of this and had no problem with it; in some cases, it may have been their intent. As a further example of how tax policy in general and Roth IRA policies specifically favor the wealthy, if a U.S. citizen renounces their citizenship they are taxed on the value of their assets, including ones that have increased in value even if they have not been sold. However, there are exemptions from the tax for certain kinds of assets, one of which is assets in a Roth IRA! [1]

ProPublica’s investigative reporting on how the wealthy pay very little in income taxes, perfectly legally, while their wealth is growing by leaps and bounds, [2] has also revealed how extensively Roth IRAs are being used for tax avoidance. Their reporting reveals that, among others, investors Warren Buffett and Ted Wechsler of the Berkshire Hathaway fund, Randall Smith of the Alden Capital hedge fund, Robert Mercer of the Renaissance Technologies hedge fund, and Peter Thiel and Max Levchin of PayPal all have Roth IRAs with hundreds of millions of dollars in them. [3]

Clearly, these mega-million-dollar Roth IRAs have nothing to do with saving for retirement and everything to do with avoiding taxes. Thiel has $5 billion in his Roth IRA. He and all the others will pay NO taxes on any money they take out of their Roth IRAs. Keep in mind that these huge IRA balances have supposedly come from contributions of a few thousand dollars a year. The huge gains on the investment of those small contributions will be subject to NO income (or other) tax when they are removed from the Roth IRAs. By the way, Thiel renounced his U.S. citizenship in 2011, allowing him to take advantage of this exemption from taxation for Roth IRA assets. (He became a citizen of New Zealand, which happens to have no estate tax.)

Recognition of the abuse of Roth IRAs for tax avoidance is not new. Forbes magazine and others have written about it since at least 2012. Senator Wyden proposed legislation to reform Roth IRAs in 2016, but it went nowhere in the Republican-controlled Senate. Simple policy changes could address the problem. For example, the dollar amount of investment gains in Roth IRAs that are exempt from taxation could be limited, to say a few million dollars. And the exemption of these gains from taxation could end when the account owner dies instead of allowing them to be passed on tax-free to heirs. [4]

One strategy for creating huge IRA balances is to put knowingly under-valued assets into them. When Thiel contributed 1.7 million shares of the company that would become PayPal into his Roth IRA in 1999, he claimed that they were only worth one-tenth of a cent per share ($0.001 per share). (They were not publicly traded at the time so a fair market value was subject to interpretation.) This meant that his contribution was under the $2,000 limit in place at the time. PayPal later admitted that this per share value was “below market value.” The shares are now worth billions.

Senator Wyden’s 2016 Roth IRA reform proposal would have addressed the problem of under-valuing assets contributed to an IRA by removing the tax exemption of any IRA that received an asset for less than fair market value. Others have proposed requiring IRAs to only receive assets that are traded on a public market so their true value is clearly established.

The financial industry opposes reforms to Roth IRAs because they make significant money from them by acting as custodians for IRAs (and other retirement accounts) and by processing the transactions that these accounts generate.

The IRA was originally designed to enhance the retirement security of working Americans, but it has become another way for the wealthy to avoid paying taxes, even when passing their wealth on to their heirs. Note that there are other types of retirement savings vehicles that also provide tax avoidance and other benefits to the wealthy. “Retirement” savings policies are one example of how the wealthy have gotten elected policy makers to tip the economic playing field in their favor. This is oligarchy in America. (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 … no one should be fooled. Oligarchs wield power for their own benefit” as Robert Reich writes in his latest book, The System: Who rigged it, how we fix it. (See my previous posts summarizing the book starting here.)

I urge you to contact your U.S. Representative and Senators and to ask them to support reforms that would end the abuse of retirement savings accounts by the wealthy. 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 support reform of retirement savings accounts. 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]      Elliott, J., Callahan, P., & Bandler, J. 6/25/21, “The ultrawealthy have hijacked Roth IRAs. The Senate Finance Chair is eyeing a crackdown,” ProPublica (https://www.propublica.org/article/the-ultrawealthy-have-hijacked-roth-iras-the-senate-finance-chair-is-eyeing-a-crackdown)

[2]      Eisinger, J., Ernsthausen, J., & Kiel, P. 6/8/21, “The secret IRS files: Trove of never-before-seen records reveal how the wealthiest avoid income tax,” ProPublica (https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax)

[3]      Lord, B., 6/29/21, “Peter Thiel will pay zero in federal income tax on his $5 billion in gains,” Common Dreams (https://www.commondreams.org/views/2021/06/29/peter-thiel-will-pay-zero-federal-income-tax-his-5-billion-gains)

[4]      Elliott et al., 6/25/21, see above

THE CASE FOR A WEALTH TAX

Note: I apologize for the infrequent blog posting. I’m on sabbatical with out-of-town grandchildren visiting.

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.

Recent revelations about how little federal income tax the ultrawealthy pay and how they legally avoid income tax liability make the case that a wealth tax is essential for a fair tax system. A fair tax system is necessary a) to provide sufficient funds for the public programs needed to serve the public and the public good, and b) to preserve public support for the tax system.

ProPublica, an independent, nonprofit newsroom that does investigative journalism in the public interest, has obtain and analyzed 15 years of data on the tax returns of thousands of the country’s wealthiest households. Its analyses show the wealthy pay very little in income taxes, perfectly legally, despite the fact that their wealth is growing by leaps and bounds. [1] (This post is largely a summary of this ProPublica reporting.)

The median American household earns about $70,000 a year and pays about 15% of this in income taxes. For the period from 2014 to 2018, a typical middle class American household paid a total (for these five years) of about $62,000 in federal income tax on total earnings of around $350,000. Meanwhile, its wealth, primarily the value of its home, grew by $65,000. Its effective tax rate on the combine total of earned income and increase in wealth was about 15%.

ProPublica’s detailed analysis of the 25 wealthiest Americans found that collectively their wealth increased by $401 billion in the five-year period from 2014 to 2018. Their earned income was tiny by comparison. They paid an aggregate total of $13.6 billion in federal income taxes. Their effective tax rate on the combined total of their earned income and increase in wealth was about 3.4% (versus the 15% paid by a typical middle-income taxpayer).

Another analysis found that in 2018, in comparison to their wealth, a typical middle-income household paid 75 times as much in income tax as those 25 ultrawealthy Americans. At the end of 2018, the 25 wealthiest Americans had an estimated wealth of $1.1 trillion and in 2018 paid federal income taxes of $1.9 billion. It would take 14.3 million typical American households to have this much wealth and those 14.3 million households paid federal income taxes of $143 billion in 2018.

This disparity in income tax paid when wealth is factored in is the result of a 1920 Supreme Court decision where the Court ruled that the income tax laws as written apply only to income received in cash and not to an increase in wealth (i.e., the value of assets), unless assets are sold and cash (or other forms of proceeds) are received. Before this decision, the income tax had applied to increases in wealth.

This decision provided the wealthy with a huge loophole for tax avoidance. The ultrawealthy own billions of dollars worth of stock, often in companies they own or control. The 25 wealthiest Americans have seen the value of their stocks skyrocket in recent years. To minimize earned income (and income tax), they often take modest salaries from their companies; some take salaries of only $1.

Some of the ultrawealthy avoid having income (and therefore paying income tax) because they are able to pay their living expenses by borrowing large sums of money, sometimes billions of dollars, using their stock wealth as collateral for loans. These loans are not considered income and therefore are not subject to income tax. Furthermore, the interest on the loans is often tax deductible and can be used to offset (i.e., cancel out) income, reducing or eliminating taxable income and the amount of income tax owed.

The wealthy often avoid income tax by reducing taxable income with deductions. Deductions can be losses on various investments or business ventures, such as real estate or sports teams. Charitable contributions are another deduction that reduces taxable income. And, of course, if they do sell some of their stock or other assets, the profits on those sales, as well as the dividends and interest they get from their investments, are unearned income, which is taxed at a lower rate than earned income (if it isn’t eliminated by deductions).

The wealthy have gotten these tax breaks (and others) written into U.S. tax laws through their spending on and donations to the political campaigns of many of our elected officials, as well as through their lobbying of elected and appointed officials. (See my previous posts on how the U.S. tax system favors the rich and what can be done to make it fairer.)

The degree to which the wealthy control the debate on tax policy is reflected in the fact that the current tax reform proposals from President Biden would have little impact on the wealthy. Nonetheless, these tax reform proposals are reported as being big and controversial changes in our income tax laws. One proposal is to raise the income tax rate on high earned incomes back to 39.6% from 37%. (For perspective, it was over 90% in the 1950s and 70% in 1980.) This would have little effect on the wealthy because only a small portion of their income is earned income and this is a small percentage increase. A second proposal, would make the income tax rate on unearned income (e.g., dividends and the gain on the sale of assets) the same as the higher rate on earned income. This would have more of an effect on the wealthy, but little effect on the ultrawealthy that ProPublica analyzed in detail as they rarely sell their assets or they have deductions that reduce or eliminate their taxable income.

The failure of the wealthy in America to pay their fair share in taxes harms our country in two main ways. First, government is under-funded and can’t do the things we need it to do – from maintaining and building infrastructure, to investing in human capital, to maintaining a just and sufficient safety net for those who fall on hard times, to building and maintaining a public health system that can save lives during a pandemic or other health crisis. Second, taxes are citizens’ collective contributions to having a civil society and supporting the public good. Such a system is viable only if citizens believe it is fair and everyone is contributing their fair share.

ProPublica’s investigative reporting on the U.S. tax system is performing a valuable public service. An informed debate about our tax system and the design of policies for a fair system can only happen if there is good data and an accurate picture of how the tax system is working.

These data and the picture they paint make it clear that the only way to have a truly fair tax system is to tax wealth (as Senators Warren and Sanders have proposed) or to tax increases in wealth as income even if assets are not sold and no cash or other proceeds are received (i.e., to tax unrealized capital gains).

I urge you to contact your U.S. Representative and Senators and to ask them to support a tax on wealth or increases in wealth as the only way to make our tax system fair. 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 support a tax on wealth or increases in wealth, in addition to his current proposals, as such a tax is essential to making our tax system truly fair. 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]      Eisinger, J., Ernsthausen, J., & Kiel, P. 6/8/21, “The secret IRS files: Trove of never-before-seen records reveal how the wealthiest avoid income tax,” ProPublica (https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax)

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)