Archive for January, 2011

Follow the Money

Thursday, January 27th, 2011

There is a common colloquialism which says that money talks.  This statement is as true in politics as it is in business.

So the best way to determine what a particular party or a particular politician is going to do is take a closer look at who is giving them money.  I’m not suggesting, by the way, that these legislators are taking bribes.  That would be illegal and most of these folks are lawyers and recognize the consequences of taking a bribe.  But what is going on is not too far removed from that. 

Let’s say that I’m the head of a big agribusiness.  I make my money selling corn.  If the price of corn goes up, I make more money.  If the price of corn goes down I make less money.  So I’m a big fan of ethanol because it makes my investments in corn more valuable.  I’m going to seek out those powerful legislators who have an opportunity to influence our energy policy and find out which ones either support or can be convinced to support legislation subsidizing or mandating the use of ethanol.  Those are the ones who are going to get my financial support for re-election.

Let’s say that I’m an ambitious politician in a corn growing state.  I’m going to try to educate myself on all government policies that can improve the economics of my state.  I’m also going to support policies like ethanol that increase the cost of corn even though this also raises the world-wide cost of food and may result in some people starving to death in poor countries.

Lobbyists complete the picture.  They are the matchmakers who introduce those with money to those who have the power to influence government policy.

So by looking at the how the flow of money changed in the last election cycle, we can start to get a picture of what the newly empowered Republicans are going to do during their time in power.  That should give us a clearer picture of what sort of policies they are going to actually support.  We can then compare those policies to the promises they made to the public when they were running for office.

So let’s step through the list


Republican leaders got $5M over the past two years from major health-care firms and employees.  Boehner and Cantor themselves received over $2M of that.  Why? Is it because these companies think the current health-care reform bill is socialist, job-killing, or budget-busting?  No.  It’s because attempts to reduce health-care spending will affect their bottom line.  They want things to stay as they are even though that status quo would ultimately bankrupt the country.

Banking and Finance

Cantor also raked in another $2.4M from finance, insurance, and real estate industries.  That represents a 40% increase over 2008 and puts Cantor well ahead of the rest of his Republican peers.  Why?  Is it because these companies think that the deficit is too high and government has to reduce spending? Is it because these companies are eager to hire more workers, but the government won’t let them?  No.  It’s because they want to return to the less regulated days of the Bush administration and Cantor has gone on record as supporting that as way to create jobs.

Spencer Bachus is the new Financial Services Chairman.  He received more than $1.2M from banks which was the majority of the money he raised.   Guess what he has said he is going to do? Yup, reverse the Wall Street regulatory changes put in place over the last two years to prevent a repeat of the recent financial meltdown.


Fred Upton is the new chairman of the Energy and Commerce commission.  His take was up 50% from 2008 as a result of contributions from DTE, CMS, and Edison Institute.  They are all looking for regulatory relief which will allow them to continue operating big coal burning power plants.  Upton has already indicated that this is something he supports.

Farmers gave their chairman $600K. 

Defense contractors gave their chairman half of his total contributions. 

Even Paul Ryan who is supposed to be the spending cop got $1.4M in contributions from banks, hedge funds, investment houses, and other financial services companies.  Gee, I wonder what they are interested in?

So based on this data what do the next two years look like?

Well my guess is that they will look surprising like the past eight years of the Bush administration.  Regulations will be relaxed.  During the Bush administration it was under the mantra that the free market can regulate itself.  This time the excuse will be that regulations kill jobs.  You would think that the whole Republican Party has amnesia, but it isn’t really amnesia, just business as usual.

They will do their best to unravel health care reform without any sincere effort to replace it even though the status quo is unsustainable.  They will roll back the financial regulations that were put in place to prevent another financial meltdown even though the bodies are not yet cold from the last financial meltdown.  They will put pressure on the administration to expand deep water oil drilling as if the BP Oil spill never happened.  They will expose us to new ecological disasters through the same cozy relationships between regulators and the industries that they regulate.  They will slow our transition away from fossil fuels because the industries that make money off those technologies have a vested interest in their continuation. 

They will do all this while telling voters that these laws increase jobs and decrease the deficit, but their actions won’t result in any significant job growth or any dramatic deficit reduction.

Want to know how they manage to do that? 

We’ll cover that in the next post.

Meet the New Boss

Monday, January 24th, 2011

Governing is a tough and messy business.

No better evidence of that than a quick review of how the Republican Party is doing now that they have regained control of the house after a four year hiatus.

Here’s a quick recap of a subset of their promises this past November.

  1. Cut government spending to pre-stimulus, prebailout levels saving at least $100 billion in the first year alone.
  2. Ensure an open and bipartisan debate on all spending bills.
  3. Put government on a path to a balanced budget.
  4. Ensure transparency and accountability in Congress and throughout government.
  5. Create more jobs.
  6. Pay down the debt.

Let’s see how they are doing so far.

Cut $100B from the budget in their first year in power

This one is easy.  After promising that they were going to cut $100B from the budget, they have determined that their original plan of rolling back non-discretionary spending to 2008 levels won’t work.  So they have cut their target in half without even so much as an oops.

 Ensure an open and bipartisan debate on all spending bills

This is an easy one too.  This promise was broken on the introduction of the bill to repeal the Healthcare Reform act.  No amendments or changes were allowed to that bill.  It was simply introduced, debated for a limited period of time, and then put to a simple up or down vote.   Some would say that this wasn’t a spending bill, but clearly according to the CBO there is cost associated with repealing the healthcare reform, and even if Republicans don’t believe that, to keep this promise they should have provided data to support the claim that this repeal didn’t break this promise.  They did none of that.  So all we are left to assume is that perhaps they thought the voters weren’t paying attention.

Put government on a path to a balanced budget 

This one is a little bit more complicated, because the Republicans have introduced a new set of rules called “Cut as you go”.  Unfortunately the rules aren’t really what they appear to be.  These rules replace the “Pay as you go” rule that was previously in place.  The “Pay as you go” rule says that every new piece of legislation must have a revenue source or a corresponding spending cut to balance the cost of the bill.  The Obama administration has been funding new legislation, for example, by closing tax loopholes which then will generate new revenue to cover the cost of the bill.

In the “Cut as you go” model, any new expenditures must be offset by spending cuts exclusively.  That on the face of it might not be bad, but it isn’t clear where these spending cuts would come from.  Still if you were able to find the spending cuts to balance new legislation, at least you would not be adding to the deficit through new legislation.

What really blows the “Cut as you go” model out of the water, however, is the exemption of all tax cuts from the overall calculation of deficit reduction.  So any reduction in federal revenue, which is after all what a tax cut is, will not have to be offset by an equal or greater reduction in federal spending. 

Since a significant portion of the current deficit problem can be traced directly to the Bush tax cuts, and most of the rest came from two wars that were funded “off the books”, it’s pretty clear that the Republicans are back to their old accounting tricks.  They don’t have any real plans to do anything substantive about the deficit.  Instead they will engage in some “kabuki theater” over cutting spending and hope that their supporters are sufficiently distracted to not notice that the deficit continues to rise.

Ensure transparency and accountability in Congress

 Unfortunately this one died an early death too.  Part of the new rules included appointing Rep Paul Ryan as a defacto spending cop.  He will be able to unilaterally set the budgets of every House committee without a review or vote by the members either of that committee or the house.

Norman Ornstein of the American Enterprise Institute writes:

“This is breathtaking: It demolishes the Congressional budget process in one fell swoop, and it takes away the accountability, openness and deliberation that a regular budget process provides. This is the opposite of accountability; Members, by voting in lockstep to enact a package of rules, will implicitly vote for a budget they have never seen. It will be binding in the House.

When individual appropriations come up, any proposal that changes the edicts of Budget Chairman Paul Ryan (R-Wis.) by restoring cuts in spending will be ruled out of order. Dramatic and Draconian budget cuts without votes or debate. That is the new open and deliberative House?”

Create more jobs

The new rules also altered how the Highway Trust Fund will be administered.  This fund is created out of gas taxes and fees that transportation companies pay to use the highways.  That money is supposed to be used to repair and update our highway infrastructure.   Though the money has been protected for decades by both parties, the Republicans now want to treat this fund a part of the general revenue and apply the same “Cut as you go” rules to transportation funding as will be applied to all other spending bills.  That means that even though there is money in the fund to pay for highway repairs, any highway repair appropriation must be balanced by a cut in some other government program. 

The financial firm UBS immediate downgraded the stocks of many leading construction firms when this rule became public.   The U.S. Chamber of Commerce, the Laborers International Union, the American Trucking Association, the Associated General Contractors of America and 17 other groups have all predicted that the already devastated construction industry will suffer significant additional job losses as a result of this rule change.

Reduce the deficit

This one, unfortunately, is easy too.

The non-partisan Congressional Budget Office has documented the amount of deficit reduction that will come from full implementation of the Healthcare Reform bill.  The whole purpose of this office is to allow Congressional debates to proceed on an apple to apples basis.  The Republicans had an opportunity to submit their own plans to the same scoring by the same office.  Their plans failed to produce even close to the same savings as the bill that passed.

So what has the Republican leadership done?

They have excluded repeal of Healthcare Reform from their calculations of promised deficit reduction.  They have chosen to ignore the CBO, and they have not submitted any alternative plans for comparative scoring.  Instead they have taken a bill that they don’t like for political purposes, have ignored the data that suggests that it decreases the deficit, and they voted to repeal it. 

If they were sincere about reducing the deficit, they would have also proposed additional spending cuts or tax increases to cover the $230B that this repeal will add to the deficit according to the CBO.  Instead they have told the American people a big lie about how this bill will cost jobs and add to the deficit.  I’ll go into this big lie in more detail in another post.

This last example, pretty much summarizes what is going on in Washington. 

It is all politics without much principle.

When it gets down to what actually gets done, the ugly reality of power is hard to hide.

Next let’s follow the money and see what organizations are funding the positions that Republican leaders have taken.

Content of Character

Monday, January 17th, 2011

We use this day to celebrate Martin Luther King’s life and well as his philosophy.

One of my favorite quotations comes from his “I have a dream” speech.

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”

Thinking about it this day, it raises another question.

What is the content of the character of the current debate between liberals and conservatives and do we actually share a common dream?

The liberal view is that the modern welfare state comprised of Social Security, Medicare, Medicaid, and unemployment insurance is a necessary safety net to catch the less fortunate.  CHIP, public education, and Pell Grants are a way for at least some of the next generation to break the cycle of poverty and dependence.  Regulations are required to keep private enterprise honest and government should be the protector of the worker and the small guy.  Finally, liberals believe that it is only right for the wealthy that have benefited from the freedom and opportunity that this society has to offer to help those who have not been as fortunate.

Conservatives believe that people have the right to keep what they earn.  They believe that taxing wage earners to help those who are not supporting themselves, for whatever reasons, amounts to theft.  They believe that misfortune is the necessary and proper punishment for bad decisions.  Any effort to minimize that pain only encourages continued dependence.  They believe that the free market makes better decisions than any government or agency.  They believe that unfettered commerce will generate the best economic and social results.  As a result, they view taxes and government regulation as tyrannical impositions on their liberty.

The most recent health care reform bill is a perfect example.  Liberals saw it as the fulfillment of a moral imperative.  They believe that wealthy nations have an obligation to provide all of their citizens with basic care.  They also feel that the United States has been woefully out of step with the rest of the industrialized world in that regard, and the high cost of healthcare in this country is the direct result of the largely unregulated free market way that health care is provided.

Conservatives saw the same reform as a moral outrage.  They see it as a huge entitlement program for the undeserving.  An outright assault on the right of Americans to spend their money any way they choose.

Even though a recent poll shows that opposition to healthcare reform has softened significantly, the new Republican majority feels they were elected to repeal the bill.  In fact the current Republican Party sees much of what modern federal government does as illegitimate, while liberals feel that government still has an important role to play in the lives of Americans.

These are big differences which you can’t just paper over with pleasantries and empty promises of bipartisanship.

So now comes the question, do we have the character as a country to accommodate these differences and still govern effectively?

Fortunately, we do have a template.

The debate over abortion is similarly polarized, but we have agreed on some basic ground rules which have allowed us to continue to co-exist.  It is acceptable to criticize the other side, but it is not acceptable to engage in violence or to encourage others to do so.  Bill O’Reilly, for example, was criticized by both sides for his eliminationist rhetoric which led to Dr. Tiller’s murder.

We may be seeing the green shoots of a similar basic understanding the wake of the Arizona shooting.  Even though it appears that there isn’t much of a connection between inflammatory language and the shooter, the country recognizes that a line has been crossed and we must find a way to walk ourselves back to a better place where we can co-exist.

That place isn’t even close to the dream that Dr. King had, but it may be the first steps in the right direction that will one day get us there.

Whose Constitution is it?

Friday, January 7th, 2011

The Republicans now control the House. 

They were voted in because of the country’s discontent with the level of unemployment.

Instead of making jobs their top priority, they are positioning themselves as the party of that “old time religion” – strict constitutionalism. 

One might ask, why are they wasting time on this?

Look no further than the NBC/WSJ poll right before the midterms. In it, 38% of conservatives, 41% of Republicans, and 50% of Tea Party supporters said one of the top messages they wanted to send in the election was returning to “the principles of the Constitution.” By comparison, just 8% of Democrats, 8% of liberals, 17% of moderates, and 22% of independents said that. Simply put, this is a hat tip to the GOP’s fired-up base that the party believes propelled them into the House majority.

The problem is that the constitution doesn’t appear to be cooperating.

Congress for example isn’t supposed to interpret the constitution.  That role was assumed by the Supreme Court in the famous 1803 Marbury v. Madison decision.  So the Tea Partiers may gain some comfort from citing how the constitution permits a particular piece of legislation, but it doesn’t mean anything substantive until the Supreme Court weighs in.

The document simply defies the ability for any single party to embrace it as their road map.  For every clause that supports individual gun ownership there is another clause that prohibits cruel and unusual punishment.   For every clause that supports states rights, there is another clause that cedes all unspecified power to the Congress. 

Even when it comes to celebrating the intent of the framers, they can’t cite Madison’s intentions and ignore Jefferson.   All those troublesome amendments make it even worse – the first which guarantees free speech and prohibits the establishment of a state religion, or the 14th which guarantees citizenship to every child born in this country, or the 16th which authorized an income tax, or the 17th which allows direct public election of senators.  Like it or not, these are all part of the document as much as the document itself.  They weren’t the result of an activist court or a pernicious liberal majority.

Being a strict constitutionalist doesn’t give you the option of picking those parts which agree with your political view and ignoring the parts that don’t. 

To quote a wonderful Dahlia Lithwick Slate Article, “The fact that the Constitution is sufficiently open-ended to infuriate all Americans almost equally is part of its enduring genius. The Framers were no more interested in binding future Americans to a set of divinely inspired commandments than any of us would wish to be bound by them. As Justice Stephen Breyer explains in his recent book, Making Our Democracy Work: A Judge’s View, Americans cannot be controlled by the “dead hands” of one moment frozen in time. The Constitution created a framework, not a Ouija board, precisely because the Framers understood that the prospect of a nation ruled for centuries by dead prophets would be the very opposite of freedom.”

What is happening instead is that the Tea Party and their supporters are attempting to validate their own radical form of populist libertarianism through both revisionist history and co-opting the constitution as somehow uniquely theirs. 

That’s no truer than fundamentalists claiming that their attempts to literally interpret the Bible somehow sanctify their own narrow bigoted view of the world.  Just because you can quote the document, or carry a copy around in your pocket doesn’t mean that you own it or even understand it. 

As conservative columnist Charler Krauthammer wrote in a recent column, the Constitution is becoming the new label pin for the conservative movement.  If they are successful, every politician will have to have a copy in their pocket.

Next let’s look at what happens when ideology becomes inconvenient.